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EXHIBIT 10.30
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L E A S E
HCPI TRUST
Lessor
AND
BCC AT MT. ROYAL PINES, INC.
Lessee
Dated as of March 21, 1996
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TABLE OF CONTENTS
Page
ARTICLE I....................................................................................................... 1
1. Leased Property; Term......................................................................... 1
ARTICLE II...................................................................................................... 2
2. Definitions................................................................................... 2
ARTICLE III..................................................................................................... 11
3.1 Rent.......................................................................................... 11
3.2 Quarterly Calculation and Payment of Additional Rent; Annual Reconciliation................... 13
3.3 Confirmation of Additional Rent............................................................... 14
3.4 Additional Charges............................................................................ 15
3.5 Late Payment of Rent.......................................................................... 15
3.6 Net Lease..................................................................................... 15
ARTICLE IV...................................................................................................... 15
4.1 Impositions................................................................................... 15
4.2 Utilities..................................................................................... 17
4.3 Insurance..................................................................................... 17
4.4 Impound Account............................................................................... 17
4.5 Tax Service................................................................................... 17
ARTICLE V....................................................................................................... 17
5. No Termination, Abatement, etc................................................................ 17
ARTICLE VI...................................................................................................... 18
6.1 Ownership of the Leased Property.............................................................. 18
6.2 Personal Property............................................................................. 18
6.3 Transfer of Personal Property and Capital Additions to Lessor................................. 18
ARTICLE VII..................................................................................................... 19
7.1 Condition of the Leased Property.............................................................. 19
7.2 Use of the Leased Property.................................................................... 19
7.3 Lessor to Grant Easements, etc................................................................ 20
7.4 Preservation of Gross Revenues................................................................ 20
ARTICLE VIII.................................................................................................... 21
8. Compliance with Legal and Insurance Requirements, Instruments, etc............................ 21
ARTICLE IX...................................................................................................... 22
9.1 Maintenance and Repair........................................................................ 22
9.2 Encroachments, Restrictions, Mineral Leases, etc.............................................. 23
9.3 Capital Repairs to be Performed by Lessee..................................................... 24
ARTICLE X....................................................................................................... 24
10. Construction of Capital Additions to the Leased Property...................................... 24
ARTICLE XI...................................................................................................... 24
11. Liens......................................................................................... 24
ARTICLE XII..................................................................................................... 25
12. Permitted Contests............................................................................ 25
ARTICLE XIII.................................................................................................... 26
13.1 General Insurance Requirements................................................................ 26
13.2 Replacement Cost.............................................................................. 27
13.3 Additional Insurance.......................................................................... 27
13.4 Waiver of Subrogation......................................................................... 27
13.5 Policy Requirements........................................................................... 27
13.6 Increase in Limits............................................................................ 28
13.7 Blanket Policies and Policies Covering Multiple Locations..................................... 28
13.8 No Separate Insurance......................................................................... 28
ARTICLE XIV..................................................................................................... 29
14.1 Insurance Proceeds............................................................................ 29
14.2 Insured Casualty.............................................................................. 29
14.3 Uninsured Casualty............................................................................ 30
14.4 No Abatement of Rent; Construction of Lease................................................... 30
14.5 Waiver........................................................................................ 31
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ARTICLE XV...................................................................................................... 31
15. Condemnation.................................................................................. 31
15.1 Total Taking.................................................................................. 31
15.2 Partial Taking................................................................................ 31
15.3 Restoration................................................................................... 31
15.4 Award-Distribution............................................................................ 31
15.5 Temporary Taking.............................................................................. 31
ARTICLE XVI..................................................................................................... 32
16.1 Events of Default............................................................................. 32
16.2 Certain Remedies.............................................................................. 34
16.3 Damages....................................................................................... 34
16.4 Receiver...................................................................................... 36
16.5 Lessee's Obligation to Purchase............................................................... 36
16.6 Waiver........................................................................................ 36
16.7 Application of Funds.......................................................................... 36
16.8 Facility Operating Deficiencies............................................................... 36
ARTICLE XVII.................................................................................................... 38
17. Lessor's Right to Cure Lessee's Default....................................................... 38
ARTICLE XVIII................................................................................................... 39
18. Purchase of the Leased Property............................................................... 39
ARTICLE XIX..................................................................................................... 39
19. Renewal Terms................................................................................. 39
ARTICLE XX...................................................................................................... 40
20. Holding Over.................................................................................. 40
ARTICLE XXI INTENTIONALLY OMITTED............................................................................... 40
ARTICLE XXII.................................................................................................... 40
22. Risk of Loss.................................................................................. 40
ARTICLE XXIII................................................................................................... 40
23. General Indemnification....................................................................... 40
ARTICLE XXIV.................................................................................................... 41
24. Subletting and Assignment..................................................................... 41
24.1 Prohibition................................................................................... 41
24.2 Consent....................................................................................... 42
24.3 Costs......................................................................................... 43
24.4 No Release of Lessee's Obligations............................................................ 43
24.5 Assignment of Lessee's Rights Against Sublessee............................................... 43
24.6 Special Transactions.......................................................................... 44
24.6.1 Assignment to Affiliate....................................................................... 44
24.6.2 Public Offering............................................................................... 44
24.6.3 Other Transfers of Stock or Assets to Third Parties........................................... 45
24.7 REIT Protection............................................................................... 45
24.8 Transfers In Bankruptcy....................................................................... 45
ARTICLE XXV..................................................................................................... 46
25. Officer's Certificates and Financial Statements............................................... 46
25.1 Officer's Certificate......................................................................... 46
25.2 Statements.................................................................................... 46
25.3 Charges....................................................................................... 48
ARTICLE XXVI.................................................................................................... 48
26. Lessor's Right to Inspect and Show the Leased Property........................................ 48
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ARTICLE XXVII................................................................................................... 48
27. No Waiver..................................................................................... 48
ARTICLE XXVIII.................................................................................................. 48
28. Remedies Cumulative........................................................................... 48
ARTICLE XXIX.................................................................................................... 49
29. Acceptance of Surrender....................................................................... 49
ARTICLE XXX..................................................................................................... 49
30. No Merger..................................................................................... 49
ARTICLE XXXI.................................................................................................... 49
31. Conveyance by Lessor.......................................................................... 49
ARTICLE XXXII................................................................................................... 49
32. Quiet Enjoyment............................................................................... 49
ARTICLE XXXIII.................................................................................................. 50
33. Notices....................................................................................... 50
ARTICLE XXXIV................................................................................................... 51
34. Appraiser..................................................................................... 51
ARTICLE XXXV INTENTIONALLY OMITTED.............................................................................. 51
ARTICLE XXXVI................................................................................................... 51
36.1 Lessor May Grant Liens........................................................................ 51
36.2 Attornment.................................................................................... 52
36.3 Breach by Lessor.............................................................................. 52
ARTICLE XXXVII.................................................................................................. 52
37.1 Hazardous Substances.......................................................................... 52
37.2 Notices....................................................................................... 52
37.3 Remediation................................................................................... 53
37.4 Indemnity..................................................................................... 53
37.5 Environmental Inspection...................................................................... 54
ARTICLE XXXVIII................................................................................................. 54
38. Memorandum of Lease........................................................................... 54
ARTICLE XXXIX................................................................................................... 54
39. Sale of Assets................................................................................ 54
ARTICLE XL INTENTIONALLY OMITTED................................................................................ 55
ARTICLE XLI..................................................................................................... 55
41. Authority..................................................................................... 55
ARTICLE XLII.................................................................................................... 55
42. Attorneys' Fees............................................................................... 55
ARTICLE XLIII................................................................................................... 56
43. Brokers....................................................................................... 56
ARTICLE XLIV.................................................................................................... 56
44.1 Miscellaneous................................................................................. 56
44.1.1 Survival...................................................................................... 56
44.1.2 Severability.................................................................................. 56
44.1.3 Non-Recourse.................................................................................. 56
44.1.4 Licenses...................................................................................... 56
44.1.5 Successors and Assigns........................................................................ 57
44.1.6 Termination Date.............................................................................. 57
44.1.7 Governing Law................................................................................. 58
44.1.8 Waiver of Trial by Jury....................................................................... 59
44.1.9 Lessee Counterclaim and Equitable Remedies.................................................... 59
44.1.10 Entire Agreement.............................................................................. 60
44.1.11 Headings...................................................................................... 60
44.1.12 Counterparts.................................................................................. 60
44.1.13 Joint and Several............................................................................. 60
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44.1.14 Interpretation................................................................................ 60
44.1.15 Time of Essence............................................................................... 60
44.1.16 Further Assurances............................................................................ 60
Exhibits
Exhibit A Legal Description of the Land
Exhibit B List of Lessor's Personal Property
Exhibit C-1 Form of Amendment (Commencement Date and Treasury Rates)
Exhibit C-2 Form of Amendment (Minimum Rent)
Exhibit D Summary of Capital Renovation Project
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LEASE
THIS LEASE ("Lease") is dated as of the 21st day of March,
1996, and is between HCPI TRUST, a Maryland real estate investment trust
("Lessor") and BCC AT MT. ROYAL PINES, INC., a Delaware 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 interest 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"); and
(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 all replacements and substitutes therefor (collectively,
"Lessor's Personal Property").
SUBJECT, HOWEVER, to the easements, encumbrances, covenants,
conditions and restrictions and other matters which affect the Leased Property
as of the date hereof or the
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Commencement Date or created thereafter as permitted hereunder 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 time on the
expiration of the fifteenth (15th) Lease Year, and (2) the Extended Terms
provided for in Article XIX unless this Lease is earlier terminated as
hereinafter provided. Promptly after the Commencement Date, the parties shall
execute an amendment to this Lease in substantially the form attached hereto as
Exhibit C-1 to confirm certain matters; notwithstanding the foregoing, the
failure of Lessee to so execute and deliver such amendment shall not affect
Lessor's determination of any such matters.
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:
Additional Charges: As defined in Article III.
Additional Rent: As defined in Article III.
Affiliate: Any Person which, directly or indirectly, controls
or is controlled by or is under common control with any other Person. For
purposes of this definition, "control" (including the correlative meanings of
the terms "controlled by" and "under com mon control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, through the ownership of voting securities, partnership interests
or other equity interests. When used with respect to any corporation, the term
"Affiliate" shall also include any Person which owns, directly or indirectly,
fifty percent (50%) or more of any class of security of such corporation.
Appraiser: As defined in Article XXXIV.
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.
Section 101 et seq.), and any successor statute or legislation thereto.
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Base Gross Revenues: (i) For the Fixed Term, the Gross
Revenues for the second Lease Year of the Fixed Term and (ii) for each Extended
Term, the Gross Revenues for the first Lease Year of such Extended Term.
Base Period: The period commencing on that date which is
eighteen (18) months prior to the date any appraisal of the Facility is made
pursuant to the provisions of Article XXXIV and ending on the date which is six
(6) months prior to the date any such appraisal of the Facility is made.
BLS: Bureau of Labor Statistics, U.S. Department of Labor.
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. The Capital Renovation Project shall be
treated for all purposes of this Lease as a "Capital Addition," and all amounts
advanced to Lessee, or otherwise expended by Lessor with respect thereto shall
be treated as Capital Additions Costs funded by Lessor.
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; (f) rating agency fees; and (g)
commitment fees charged by any Person advancing or offering to advance any
portion of the financing for such Capital Addition.
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Cash Flow: The net income from the Facility, determined on
the basis of GAAP applied on a consistent basis, plus the sum of (i)
depreciation and amortization expense; (ii) Rent and other expenses payable
hereunder, excluding, however, Impositions; plus (iii) management fees; less
the sum of (y) a management fee allowance of five percent (5%) of Gross
Revenues for the corresponding period plus (z) an annual, cumulative Two
Hundred Dollar ($200) per bed reserve, pro-rated for the corresponding period.
Capital Renovation Project: As defined in Section 9.3.
Cash Flow Coverage: For any period, calculated as of the last
day of the period, the ratio of Cash Flow attributable to such period to total
Rent payable for such period under the Lease.
Closing Date: As defined in the Contract of Acquisition.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: The Closing Date.
Commercial Occupancy Arrangement: Any commercial (as opposed
to resident or patient) subletting, licensing, or other arrangement with third
parties relating to the possession or use of any portion of the Leased Property
and all Capital Additions.
Commercial Occupant: Any Person under a Commercial Occupancy
Arrangement.
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 Lessee 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 at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding
period in the preceding fiscal year, and prepared in accordance with GAAP.
Consolidated Net Worth: At any time, the sum of the following
for Lessee and its consolidated Subsidiaries, on a consolidated basis
determined in accordance with GAAP:
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(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 and (ii)
write-up resulting from a change in methods of accounting for
inventory.
Contract of Acquisition: The agreement of even date herewith
by and among Lessor and Lessee relative to the acquisition by Lessor of the
Leased Property.
Date of Taking: The date the Condemnor has the right to
possession of the property being condemned.
Environmental Costs: As defined in Article XXXVI.
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.
Event of Default: As defined in Article XVI.
Extended Term(s): As defined in Article XIX.
Facility: The 40-unit, assisted living facility being
operated on the Leased Property.
Facility Mortgage: As defined in Article XIII.
Facility Mortgagee: As defined in Article XIII.
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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
jeopardizing the Facility's licensure or certification under government
reimbursement programs, to the extent applicable.
Fair Market Rental: The fair market rental value of the
Leased Property, or applicable portion thereof, based upon the Fair Market
Value, including any periodic increases therein, determined in accordance with
the appraisal procedures set forth in Articles XXXIV.
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. Fair Market Value shall be the
higher value obtained by assuming that the Leased Property is unencumbered by
this Lease or encumbered by this Lease. Further, in determining Fair Market
Value the positive or negative effect on the value of the Leased Property
attributable to the interest rate, amortization schedule, maturity date,
prepayment penalty and other terms and conditions of any encumbrance which will
not be removed at or prior to the date as of which such Fair Market Value
determination is being made shall be taken into account. The Leased Property
shall be valued at its highest and best use which shall be presumed to be as a
fully-permitted Facility operated in accordance with the provisions of this
Lease. Fair market value of the Leased Property shall not include "going
concern" or "business enterprise" value attributable to factors other than the
highest and best use of the Leased Property. In addition, except as provided in
Section 16.9, the following specific matters shall be factored in or out, as
appropriate, in determining Fair Market Value:
(i) The negative value of (a) any deferred maintenance or
other items of repair or replacement of the Leased Property, (b) any
then current or prior licensure or certification violations and/or
admissions holds and (c) any other breach or failure of Lessee to
perform or observe its obligations hereunder shall not be taken into
account; rather, the Leased Property, and every part thereof, shall be
deemed to be in the condition required by this Lease (i.e., good order
and repair) and Lessee shall at all times be deemed to have operated
the Facility in compliance with and to have performed all obligations
of the Lessee under this Lease.
(ii) The occupancy level of the Facility shall be deemed to
be the greater of (a) the occupancy level as of the date any appraisal
of the Facility is performed in accordance with the provisions of
Article XXXIV and (b) the average occupancy during the Base Period.
(iii) If the Facility's Primary Intended Use includes a mixed
use, then either (a) the resident mix, patient mix, case mix, and/or
diagnostic related group or acuity mix, as applicable, as of the date
any appraisal of the Facility is performed in accordance with the
provisions of Article XXXIV or (b) the average of such mix during the
Base Period, whichever produces the highest positive value, shall be
taken into account.
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Fixed Term: As defined in Article I.
Fixtures: As defined in Article I.
GAAP: Generally accepted accounting principles.
Guarantor: Balanced Care Corporation, a Delaware corporation.
Guaranty: The Guaranty of even date herewith executed by
Guarantor.
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;
(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;
(iii) uncollected or uncollectible credit accounts and other
bad debts in accordance with GAAP relating to health care accounting;
provided, however, that if Lessee recovers any amount on account of an
item deducted pursuant to this clause, the amount so recovered shall
be included in Gross Revenues for the month of such receipt; and
(iv) security deposits paid to Lessee by residents or
patients of the Facility until applied by Lessee against amounts owing
or payable by such residents or to patients.
Gross Revenues for each Lease Year shall include all cost report
settlement amounts received in or payable during such Lease Year in accordance
with GAAP relating to health care accounting, regardless of the year that such
settlement amounts are applicable to; provided, however, that to the extent
settlement amounts are applicable to years, or portions thereof, prior to the
Commencement Date, such settlement amounts shall not be included in Gross
Revenues for the Lease Year in which such settlement amounts are received or
paid. Gross Revenues shall also include the Gross Revenues of any Commercial
Occupant, i.e., the Gross Revenues generated from the operations conducted on
or from such subleased, licensed
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or other used portion shall be included directly in the Gross Revenues;
provided, however, that notwithstanding anything else herein to the contrary,
the rent received or receivable by Lessee from or under such Commercial
Occupancy Arrangement shall be excluded from Gross Revenues for such purpose.
Handling: As defined in Article XXXVII.
Hazardous Substances: Collectively, any petroleum, petroleum
product or byproduct or any substance, material or waste regulated or listed
pursuant to any Environmental Law.
HCPI: Health Care Property Investors, Inc., a Maryland
corporation.
Impositions: Collectively, all taxes, including capital
stock, franchise and other state taxes of Lessor (or, 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 and/or the
Rent and all interest and penalties thereon attributable to any failure in
payment by Lessee which at any time prior to, during or in respect of the Term
hereof may be assessed or imposed on or in respect of or be a lien upon (i)
Lessor or Lessor's interest in the Leased Property, (ii) the Leased Property or
any part 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 or the
leasing or use of the Leased Property or any part 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 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, assess ment, tax levy or charge, which is
otherwise included in this definition, and a tax, assessment, tax levy or
charge set forth in clause (a) or (b) is levied, assessed or imposed in lieu
thereof or as a substitute therefor.
Incremental Gross Revenues: The positive amount, if any, by
which the Gross Revenues for the current Lease Year exceeds the Base Gross
Revenues. The Incremental Gross Revenues for any partial Lease Year shall be
the positive amount, if any, by which the Gross Revenues for such partial Lease
Year exceeds the Base Gross Revenues for the corresponding period of the
applicable Lease Year in which Base Gross Revenues is determined.
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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; 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; all licenses and permits now owned or hereinafter acquired by Lessee,
which are necessary or desirable for Lessee's use of the Leased Property for
its 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; 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.
Leasehold FMV: As defined in Article XXIV.
Legal Requirements: 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 (i)
require repairs, modifications or alterations in or to the Leased Property,
Lessee's Personal Property and all Capital Additions, (ii) in any way adversely
affect the use and enjoyment thereof, or (iii) regulate the transport,
handling, use, storage or disposal or require the cleanup or other treatment of
any Hazardous Substance.
Lessee: As defined in the preamble.
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Lessee's Personal Property: The Personal Property other than
Lessor's Personal Property.
Lessor: As defined in the preamble.
Lessor's Personal Property: As defined in Article I.
Minimum Rent: As defined in Article III.
Minimum Repurchase Price: The Purchase Price plus any Capital
Addition Costs funded by Lessor.
Officer's Certificate: A certificate of Lessee signed by an
officer authorized to so sign by its board of directors or by-laws.
Overdue Rate: On any date, a rate equal to 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 Minimum Rent, Additional Rent or any other sums payable under
this Lease.
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 for
its Primary Intended Use, other than Fixtures.
Primary Intended Use: Personal care and assisted living
facility (including assisted living for Alzheimer's patients/residents) and
such other uses necessary or incidental to such use.
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.
Purchase Price: As defined in the Contract of Acquisition.
Purchase Price Adjustment Date: As defined in the Contract of
Acquisition.
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Quarter: During each Lease Year, the first three (3) calendar
month period commencing on the first (1st) day of such Lease Year and each
subsequent three (3) calendar month period within such Lease Year; provided,
however, that the last Quarter during the Term may be a period of less than
three (3) calendar months and shall end on the last day of the Term.
Rent: Collectively, the Minimum Rent, Additional Rent and
Additional Charges.
SEC: Securities and Exchange Commission.
State: The Commonwealth of Pennsylvania.
Subsidiaries: Corporations or partnerships, each of which
Lessee owns, directly or indirectly, more than 50% of the voting stock or
partnership interest, or in which Lessee owns 50% of the voting stock and has a
voting majority.
Term: Collectively, the Fixed Term and any Extended Term(s),
as the context may require, unless earlier terminated.
Transfer Consideration: As defined in Article XXIV.
Unavoidable Delays: Delays due to strike, lockout, inability
to procure materials, power failure, act of God, governmental restriction,
enemy action, civil commotion, fire, unavoidable casualty or other cause beyond
the control of the party responsible for performing an obligation hereunder;
provided, however, that a lack of funds shall not be deemed a cause beyond the
control of either party hereto.
Unsuitable for Its Primary Intended Use: A state or condition
of the Facility such that by reason of damage or destruction or Condemnation,
in the good faith, reasonable judgment of Lessor, 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 and Additional Rent during the Term. Payments of
Minimum Rent shall be made on the first day of each calendar month by either a
prearranged payment deposit through the Electronic Automated Clearing House
Network ("ACH") initiated by Lessee to Lessor's account at an ACH member bank
or by wire transfer to Lessor's account as Lessor may designate from time to
time. Payments of Additional Rent shall be made at Lessor's address set forth
in Article XXXIII or at such other place or to such other Person as Lessor from
time to time may designate in writing.
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3.1.1 Minimum Rent.
(i) Subject to an upward adjustment(s) with respect to
Capital Renovation Project funded by Lessor as described below, for the period
from the Commencement Date through the expiration of the first Lease Year,
Lessee shall pay to Lessor "Minimum Rent" monthly, in advance on or before the
first day of each calendar month, an amount equal to $19,975.00. In addition to
any increase pursuant to clause (ii) below, such monthly Minimum Rent shall be
increased from time to time on the date of any payment by Lessor with respect
to the Capital Renovation Project provided for in Section 9.3 by one-twelfth
(1/12th) of the product of (y) the amount of the particular payment, times (z)
Three and Seventy-Five Hundredths Percent (3.75%) above the ten-year U.S.
Treasury Note Rate, published in the Wall Street Journal three (3) Business
Days prior to the date of such payment by Lessor and quoting the rate for the
immediately prior Business Day. The first monthly payment of Minimum Rent shall
be payable on the Commencement Date (prorated as to any partial calendar month
of the beginning of the Term). Monthly Minimum Rent payable for months during
which a change in the Minimum Rent occurs by reason of any payments made by
Lessor on account of the Capital Renovation Project, by reason of any Capital
Additions funded by Lessor or otherwise as provided herein, shall be prorated
based upon the number of days for which the adjusted rental amounts apply. From
time to time at Lessor's reasonable request, Lessor and Lessee shall enter into
an amendment to this Lease in substantially the form attached hereto as Exhibit
C-2 to reflect the Minimum Rent payable hereunder. Notwithstanding the
foregoing, the failure of Lessee to so execute and delivery such amendment
shall not affect the determination of such matters.
(ii) As of the expiration of the first Lease Year, the annual
Minimum Rent then in effect shall be increased by an amount equal to the
product of (i) Thirty One Hundredths Percent (.30%) times (ii) the Minimum
Repurchase Price as of such date.
(iii) If the rate in (y) below is greater than the rate in
(x) below, then as of the expiration of the tenth (10th) Lease Year, the annual
Minimum Rent then in effect shall be increased by an amount equal to the
product of (i) the difference between (x) the 5-year U.S. Treasury Note rate,
published in the Wall Street Journal, three (3) Business Days prior to the
Commencement Date and quoting the rate as of the immediately prior Business
Day, and (y) the 5-year U.S. Treasury Note rate, published in the Wall Street
Journal, three (3) Business Days prior to expiration of the tenth (10th) Lease
Year and quoting the rate as of the immediately prior Business Day, times (ii)
the Minimum Repurchase Price as of such date.
In no event shall the Minimum Rent after any such adjustment
pursuant to this clause (iii) be less than One Hundred Percent (100%) nor more
than One Hundred Three Percent (103%) of the Minimum Rent in effect immediately
prior to such adjustment (without taking into account any increase in Minimum
Rent resulting from any payments made by Lessor on account of a Capital
Renovation Project). If either the 5-Year or 10-Year U.S. Treasury Note rate is
discontinued prior to that date which is three (3) Business
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Days prior to the applicable adjustment date, then such calculation shall be
made instead by reference to a substitute rate selected by Lessor that is
comparable to the 5-Year or 10-Year U.S. Treasury Note rate, as applicable, and
such substitute rate shall be compared to the 5-Year or 10-Year U.S. Treasury
Note, as applicable, published in the Wall Street Journal, three (3) Business
Days prior to the Commencement Date or adjustment date, as applicable, and
quoting the rate as of the immediately prior Business Day. Similarly, if the
Wall Street Journal is discontinued, a substitute publication selected by
Lessor shall be used.
3.1.2 Additional Rent. In addition to the Minimum Rent,
Lessee shall, commencing with the first Quarter of the third Lease Year of the
Fixed Term and continuing through the expiration of the Fixed Term, pay to
Lessor annual "Additional Rent" in the amount of Twenty Percent (20%) of
Incremental Gross Revenues. Beginning in the fourth Lease Year of the Fixed
Term and in each Lease Year thereafter during the Fixed Term, Additional Rent
shall be at least equal to the highest annual Additional Rent attributable to
any prior Lease Year during the Fixed Term. During each Extended Term, if any,
Lessee shall, commencing with the first Quarter of the second Lease Year of
such Extended Term and continuing through the expiration of such Extended Term,
pay to Lessor annual "Additional Rent" in the amount of Twenty Percent (20%) of
Incremental Gross Revenues. Beginning in the third Lease Year and in each Lease
Year thereafter during each such Extended Term, Additional Rent shall be at
least equal to the highest annual Additional Rent attributable to any prior
Lease Year during the applicable Extended Term.
3.2 Quarterly Calculation and Payment of Additional Rent;
Annual Reconciliation.
3.2.1 Lessee shall calculate and pay Additional Rent
quarterly, in arrears, for the portion of the entire Lease Year, on a
cumulative basis, up to the end of the Quarter then most recently ended, less
the Additional Rent already paid and attributable to such Lease Year. If at the
time any calculation on account of Additional Rent is to be made the applicable
Gross Revenues are not yet available, Lessee shall use its best estimate of the
applicable Gross Revenues. Each quarterly payment of Additional Rent shall be
delivered to Lessor, together with an Officer's Certificate setting forth the
calculation thereof, on or before the last Business Day of the calendar month
immediately following the end of the corresponding Quarter.
3.2.2 Within sixty (60) days after the end of each Lease
Year, Lessee shall deliver to Lessor an Officer's Certificate setting forth the
Gross Revenues for such Lease Year. As soon as practicable following receipt by
Lessor of such Certificate, Lessor shall determine the Additional Rent for such
Lease Year and give Lessee notice of the same together with the calculations
upon which the Additional Rent was based. If such Additional Rent exceeds the
sum of the quarterly payments of Additional Rent previously paid by Lessee with
respect to such Lease Year, Lessee shall forthwith pay such deficiency to
Lessor. If such Additional Rent for such Lease Year is less than the amount
previously paid by Lessee with respect thereto, Lessor shall, at Lessee's
option, either (i) remit to Lessee its check in an amount equal to such
difference, or (ii) credit such difference against the quarterly payments of
Additional Rent next coming due.
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3.2.3 Any difference between the annual Additional Rent for
any Lease Year as shown in said Officer's Certificate and the total amount of
quarterly payments for such Lease Year previously paid by Lessee, whether in
favor of Lessor or Lessee, shall bear interest at a rate equal to the rate
payable on 90-day U.S. Treasury Bills as of the last Business Day of such Lease
Year until the amount of such difference shall be paid or otherwise discharged.
3.2.4 If the expiration or earlier termination of the Term is
a day other than the last day of a Lease Year, then the amount of the last
quarterly installment of Additional Rent shall be paid pro rata on the basis of
the actual number of days in such Lease Year.
3.2.5 As soon as practicable after the expiration or earlier
termination of the Term, a final reconciliation of Additional Rent shall be
made taking into account, among other relevant adjustments, any unresolved
contractual allowances which relate to Gross Revenues accrued prior to such
expiration or termination; provided that if the final reconciliation has not
been made within six (6) months of such expiration or termination, then a final
reconciliation shall be made at that time based on all available relevant
information, including Lessee's good faith best estimate of the amount of any
unresolved contractual allowances.
3.3 Confirmation of Additional Rent. Lessee shall utilize, or
cause to be utilized, an accounting system for the Leased Property 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 Lease Year reasonably
adequate records conforming to such accounting system showing all Gross
Revenues for such Lease 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, Lessee shall
forthwith pay to Lessor the amount of the deficiency together with interest
thereon at the Overdue Rate compounded monthly 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
Lease Year exceed those reported by Lessee by more than two percent (2%),
Lessee shall pay the costs of such review and/or audit. 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.
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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 non-payment 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. 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 five (5) Business Days
after its due date, Lessee will pay Lessor on demand a late charge equal to the
lesser of (i) five percent (5%) 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.
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. The Rent shall
be paid absolutely net to Lessor, so that this Lease shall yield to Lessor the
full amount of the installments of Minimum Rent, Additional Rent and Additional
Charges throughout the Term.
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 non-payment. 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 shall be
absolutely
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fixed upon the date such Impositions become a lien upon the Leased Property or
any part 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.
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 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 terminates shall be adjusted and prorated between Lessor
and Lessee, whether or not such Imposition is imposed before or after such
termination.
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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 thereto. 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 covenants, conditions and/or restrictions affecting the Leased
Property or any portion 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, including any and all costs and expenses
associated with any utility, drainage and parking easements.
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. Lessor may, at its option to be
exercised by thirty (30) days' written notice to Lessee, at any time after the
occurrence of a late payment of any Impositions or premiums for insurance
coverage required to be maintained by Lessee hereunder, require Lessee to
deposit, at the time of any payment of Minimum Rent, an amount equal to
one-twelfth of Lessee's estimated annual taxes, of every kind and nature,
required pursuant to Section 4.1 plus one-twelfth of 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. In the event that Lessee shall at any time
during the Term fail to pay any Impositions as and when due hereunder (whether
or not the same constitutes an Event of Default), then Lessee shall, at its
sole cost and expense, upon written request by Lessor cause to be furnished to
Lessor a tax reporting service, to be designated by Lessor, covering the Leased
Property.
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. The
respective obligations of Lessor and Lessee shall not be affected by reason of
(i) any damage to or destruction of the Leased Property or any portion thereof
from whatever cause or any Condemnation of the Leased Property or any portion
thereof; (ii) the lawful or unlawful prohibition of, or restriction upon,
Lessee's use of the Leased Property, or any portion thereof, the interference
with such use by any Person or by reason of eviction by paramount title; (iii)
any claim that Lessee has or might have against Lessor by reason of any default
or breach of any warranty by Lessor hereunder or under any other agreement
between Lessor and Lessee or to which Lessor and Lessee are parties; (iv) any
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bankruptcy, insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceedings affecting Lessor or any assignee
or transferee of Lessor; or (v) 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 or any portion 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 the
right to the exclusive possession and use of the Leased Property upon the terms
and conditions of this Lease. Lessee shall, at its expense, 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.
ARTICLE VII
7.1 Condition of the Leased Property. Lessee acknowledges
receipt and delivery of possession of the Leased Property and that Lessee has
examined and otherwise has knowledge of the condition of the Leased Property
prior to the execution and delivery of this Lease and has found the same to be
in good order and repair, free from Hazardous Substances not in compliance with
Legal Requirements, and satisfactory for its purposes hereunder. Regardless,
however, of any examination or inspection made by Lessee and whether or not any
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patent or latent defect or condition was revealed or discovered thereby, Lessee
is leasing the Leased Property "as is" in its present condition. 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. 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,
IT BEING AGREED THAT ALL SUCH RISKS, LATENT OR PATENT, ARE TO BE BORNE SOLELY
BY LESSEE INCLUDING ALL RESPONSIBILITY AND LIABILITY FOR ANY ENVIRONMENTAL
REMEDIATION AND COMPLIANCE WITH ALL ENVIRONMENTAL LAWS.
7.2 Use of the Leased Property.
7.2.1 Lessee covenants that it will obtain and maintain all
authorization and approvals needed to use and operate the Leased Property and
the Facility for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder in accordance
with 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 and the improvements thereon for its Primary Intended Use. Lessee
shall not use the Leased Property or any portion thereof or any Capital
Addition thereto for any other use without the prior written consent of Lessor,
which consent Lessor may withhold in its sole discretion.
7.2.3 Lessee shall operate continuously the Leased Property
and all Capital Additions thereto in accordance with its Primary Intended Use.
Lessee shall devote the entire Facility and all Capital Additions thereto 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) which would materially
reduce Gross Revenues. Lessee shall at all times maintain an adequate staff
for the service of its residents and/or patients, in each case assuming an
occupancy level for the Facility which is not less than the average occupancy
level for similar facilities in the State. Lessee shall employ its best
judgement, efforts and abilities to operate the Facility in such a manner so as
to maximize Gross Revenues and to enhance the reputation and attractiveness of
the Facility, in each case within the limits and bounds of all Legal
Requirements.
7.2.4 Lessee shall conduct its business at the Facility in
conformity with the customary standards of patient or resident care practice
provided in similar facilities in the State.
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7.2.5 Lessee shall not commit or suffer to be committed any
waste on the Leased Property or any Capital Addition thereto or cause or permit
any nuisance thereon.
7.2.6 Lessee shall neither suffer nor permit the Leased
Property or any portion thereof or any Capital Addition thereto, or Lessee's
Personal Property, to be used in such a manner as (i) might reasonably tend to
impair Lessor's title thereto or to any portion thereof or (ii) may make
possible a claim of adverse use or possession, or an implied dedication of the
Leased Property or any portion thereof or any Capital Addition thereto.
7.2.7 For purposes of computing Incremental Gross Revenues
for any Lease Year or other period during which Lessee is in breach or
violation of any of the covenants set forth in Sections 7.2.1 through 7.2.4,
Lessee's Gross Revenues for such Lease Year or other period shall be deemed to
be the greater of Lessee's Gross Revenues for (i) such Lease Year or other
period, or (ii) 110% of the highest Gross Revenues for any prior Lease Year or
any corresponding period of any prior Lease Year, as applicable, as determined
by Lessor.
7.3 Lessor to Grant Easements, etc. Lessor shall, from time
to time so long as no Event of Default has occurred and is continuing, at the
request of Lessee and at Lessee's cost and expense, but subject to the approval
of Lessor, which approval shall not be unreasonably withheld or delayed (i)
grant easements and other rights in the nature of easements; (ii) release
existing easements or other rights in the nature of easements which are for the
benefit of the Leased Property; (iii) dedicate or transfer unimproved portions
of the Leased Property for road, highway or other public purposes; (iv) execute
petitions to have the Leased Property annexed to any municipal corporation or
utility district; (v) execute amendments to any covenants, conditions and
restrictions affecting the Leased Property; and (vi) execute and deliver to any
Person any instrument appropriate to confirm or effect such grants, releases,
dedications and transfers to the extent of its interest in the Leased Property,
but only upon delivery to Lessor of an Officer's Certificate stating that such
grant release, dedication, transfer, petition or amendment is not detrimental
to the proper conduct of the business of Lessee on the Leased Property and does
not materially reduce the value of the Leased Property.
7.4 Preservation of Gross Revenues. Lessee acknowledges that
a fair return to Lessor on its investment in the Leased Property is dependent,
in part, on the concentration on the Leased Property during the Term of the
skilled nursing home business of Lessee and its Affiliates in the geographical
area of the Leased Property. Lessee further acknowledges that diversion of
residents and/or patients, as applicable, from the Facility to 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. 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 operate, own, manage or have any interest in or otherwise participate in
or receive revenues from any other facility or
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institution providing services or similar goods to those provided in connection
with the Facility and the Primary Intended Use, within a five (5) 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 other facility or institution is located within
such restricted area the entire facility or institution shall be deemed located
within such restricted area. Without limiting Lessor's remedies, if Lessee
should violate the covenant contained in this Section during the Term of this
Lease, Lessor may, at its option, include the Gross Revenues of such other
facility or institution in the Gross Revenues from the Leased Property for the
purpose of computing Incremental Gross Revenues hereunder. If Lessor so elects,
all the provisions of Article III hereof shall be applicable to all records
pertaining to such facility or institution.
7.4.2 Except as required for medically appropriate reasons,
prior to 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 Leased Property to any other facility or institution (i) in
which Lessee or any Affiliate of Lessee, directly or indirectly has any
interest or (ii) which otherwise materially affects Gross Revenues from the
Facility.
ARTICLE VIII
8. Compliance with Legal and Insurance Requirements,
Instruments, etc. Subject to Article XII regarding permitted contests, Lessee,
at its expense, shall promptly (i) comply 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 Capital Additions thereto 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. Lessor may, but shall not be obligated to, upon prior
written notice to Lessee (except in an emergency, where prior notice shall not
be required) enter upon the Leased Property and all Capital Additions thereto
and take such actions and incur such costs and expenses to effect such
compliance as it deems reasonably advisable to protect its interest in the
Leased Property and Capital Additions thereto, 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.
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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, except as otherwise expressly
provided in Article XIV 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 non-structural, 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 or
any part thereof or any Capital Addition thereto for its Primary Intended Use.
9.1.2 Lessor shall not under any circumstances be required to
(i) build or rebuild any improvements on the Leased Property; (ii) make any
repairs, replacements, alterations, restorations or renewals of any nature to
the Leased Property, whether ordinary or extraordinary, structural or
non-structural, foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto; or (iii) maintain the Leased Property 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 or any part thereof or any Capital Addition thereto; 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, or any portion thereof or any
Capital Addition thereto.
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 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 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 ordinary
wear and tear.
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9.2 Encroachments, Restrictions, Mineral Leases, etc. If any
of the Leased Improvements or Capital Additions 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, or any part thereof
or any Capital Addition thereto, or shall impair the rights of others under any
easement or right-of-way to which the Leased Property is subject, or the use of
the Leased Property or any Capital Addition thereto is impaired, limited or
interfered with by reason of the exercise of the right of surface entry or any
other provision of a lease or reservation of any oil, gas, water or other
minerals, then promptly upon the request of Lessor or any Person affected by
any such encroachment, violation or impairment, Lessee, at its sole cost and
expense, but subject to its right to contest the existence of any such
encroachment, violation or impairment, 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, violation or impairment. In the
event of an adverse final determination with respect to any such encroachment,
violation or impairment, 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 the Leased Improvements and any
Capital Addition thereto, 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 of the Leased Improvements or any Capital Addition
thereto, 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 thereto 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, violation
or impairment, Lessee shall either be entitled to (i) a credit for any sums
recovered by Lessor under any such policy of title or other insurance or (ii)
to proceed against any such insurer in the name of Lessor and retain any
amounts received by Lessee in the name of Lessor under any such policy of title
or other insurance on account of such encroachment, violation or impairment.
9.3 Capital Repairs to be Performed by Lessee. Lessee shall,
on or before March 31, 1997, make certain repairs to the Facility based on the
recommendations of Barge, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, Inc. as described in the
Building Condition Evaluation Report dated January 19, 1996, and agreed upon by
Lessee and Lessor, which agreed upon improvements and repairs are summarized on
Exhibit D attached hereto (the "Capital Renovation Project"). Provided no Event
of Default exists and no event has occurred or conditions exist which with
notice or lapse of time or both would constitute an Event of Default, Lessor
has agreed to fund one-half (1/2) of the out-of-pocket costs and expenses
incurred by Lessee in completing such Capital Renovation Project; provided,
however, that in no event shall the amount to be funded by Lessor hereunder
exceed the sum of $75,000. Any costs in excess of those which Lessor has agreed
to fund shall be the sole responsibility of
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Lessee. Such funding by Lessor shall be advanced to Lessee upon completion of
the entire Capital Renovation Project and Lessor's receipt of the following:
(a) Any information, certificates, licenses, permits or other
documents requested by Lessor which are necessary to confirm that Lessee is
able to use the Facility upon completion of the Capital Renovation Project in
accordance with its Primary Intended Use, including all required federal, state
or local government licenses and approvals;
(b) An Officer's Certificate and, if requested, a certificate
from Lessee's Architect or contractor, setting forth in reasonable detail the
actual out-of-pocket costs incurred by Lessee in connection with such Capital
Renovation Project;
(c) Endorsements to any then existing policy of title
insurance covering the Leased Property or commitments thereof satisfactory in
form and substance to Lessor (i) updating the same without any additional
exceptions except as may be approved by Lessor and (ii) increasing the coverage
thereof by an amount equal to the amounts advanced to Lessee hereunder with
respect to the Capital Renovation Project; and
(d) Such other billing statements, invoices, certificates,
endorsements, opinions, site assessments, surveys, resolutions, ratifications,
lien releases and waivers and other instruments and information that may be
reasonably required by Lessor.
ARTICLE X
10. Construction of Capital Additions to the Leased Property.
Without the prior written consent of Lessor which consent may be withheld or
granted by Lessor in its sole and absolute discretion, Lessee shall make no
Capital Additions on or structural alterations to the Leased Property and shall
not enlarge or reduce the size of the Facility.
ARTICLE XI
11. Liens. 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 Addition thereto 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;
and (viii) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXVI.
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ARTICLE XII
12. Permitted Contests. 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; provided, however, 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 Addition thereto; (ii) neither the Leased Property or any Capital
Addition thereto, the Rent therefrom nor any part or interest in either thereof
would be in any 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 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, unless waived in writing by
Lessor, 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 Addition thereto or the Rent by reason of such non-payment or
noncompliance; (vi) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained; and (vii) if such contest be
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
13.1 General Insurance Requirements. During the Term, Lessee
shall at all times keep the Leased Property, and all property located in or on
the Leased Property, including 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
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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; provided, however, that
Lessor's consent shall not be required to adjust any loss, the amount in
controversy of which is less than $10,000.00, so long as Lessee provides prior
written notice to Lessor of Lessee's intent to make such loss adjustment.
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.
13.2 Replacement Cost. 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, it shall have the right to have such
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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, 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.
13.3 Additional Insurance. 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 Addition thereto in accordance
with Legal Requirements.
13.4 Waiver of Subrogation. All insurance policies carried by
either party covering the Leased Property and any Capital Addition thereto 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.
13.5 Policy Requirements. 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 not less than 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.
13.6 Increase in Limits. 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
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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 third
party reasonably selected by Lessor, who shall take into account the limits for
insurance typically maintained by operator of facilities similar to the
Facility in the State. Nothing herein shall permit the amount of insurance to
be reduced below the amount or amounts required by any of the Facility
Mortgagee.
13.7 Blanket Policies and Policies Covering Multiple
Locations. 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.
13.8 No Separate Insurance. 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
14.1 Insurance Proceeds. All proceeds payable by reason of
any loss or damage to the Leased Property, or any portion thereof, under any
policy of insurance required to be carried hereunder shall be paid to Lessor
and made available by Lessor 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, or any portion thereof. Any excess proceeds
of insurance remaining after the completion of the restoration or
reconstruction of the Leased Property (or in the event neither Lessor nor
Lessee is required or elects to repair and restore, all such insurance
proceeds) shall be retained by Lessor except as otherwise specifically provided
below in this Article XIV. All salvage resulting from any risk covered by
insurance shall belong to Lessor.
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14.2 Insured Casualty.
14.2.1 If the Leased Property is damaged or destroyed from a
risk covered by insurance carried by Lessee such that the Facility thereby is
rendered Unsuitable for its Primary Intended Use, Lessee shall either (i)
restore the Leased Property 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 greater of (y)
the Minimum Repurchase Price or (z) the Fair Market Value immediately prior to
such damage or destruction. If Lessor does not accept Lessee's offer to so
purchase the Leased Property, 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. Upon any such
early termination of this Lease, the provisions of Section 44.6 shall apply.
14.2.2 If the Leased Property is damaged from a risk covered
by insurance 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 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 greater of (y) the Minimum Repurchase Price or
(z) the Fair Market Value immediately prior to such damage. If Lessee shall
make such offer and Lessor does not accept the same, 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. Upon any such early termination of this Lease, the
provisions of Section 44.6 shall apply.
14.2.3 If 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
and disbursement to Lessee in accordance with the provisions of Section 14.1.
14.2.4 If Lessor accepts Lessee's offer to purchase the
Leased Property pursuant to either of Section 14.2.1 or 14.2.2, as applicable,
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.
14.3.1 If the Leased Property is damaged or destroyed from a
risk not covered by insurance 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, or (ii) offer to
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acquire the Leased Property from Lessor for a purchase price equal to the
greater of (y) the Minimum Repurchase Price or (z) the Fair Market Value
immediately prior to such damage or destruction. If Lessor does not accept
Lessee's offer to so purchase the Leased Property, which Lessor shall have the
right to accept or reject in its sole and absolute discretion, Lessee shall
immediately proceed to restore the Leased Property to substantially the same
condition as existed immediately prior to such damage or destruction.
14.3.2 If the Leased Property is damaged from a risk not
covered by insurance 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. 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 greater of (y) the Minimum Repurchase Price or
(z) the Fair Market Value immediately prior to such damage. If Lessor does not
accept Lessee's offer to so purchase the Leased Property, which Lessor shall
have the right to accept or reject in its sole and absolute discretion, Lessee
shall immediately proceed to restore the Leased Property to substantially the
same condition that existed immediately before such damage or destruction.
14.3.3 If Lessor accepts Lessee's offer to purchase the
Leased Property pursuant to either of Sections 14.3.1 or 14.3.2, as applicable,
this Lease shall terminate as to the Leased Property upon payment of the
applicable purchase price.
14.4 No Abatement of Rent; Construction of Lease. 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, or
conducting repair and restoration, except to the extent Lessor receives
proceeds from the insurance required to be carried by Section 13.1.4 hereof in
an amount sufficient to satisfy Lessee's Rent obligations. In addition, if the
Term of the Lease shall expire prior to Lessee's completion of any repair
and/or restoration obligations pursuant to this Article XIV, the provisions of
Article XX shall apply.
14.5 Waiver. Lessee waives any statutory rights of
termination which may arise by reason of any damage or destruction of the
Leased Property.
ARTICLE XV
15. Condemnation.
15.1 Total Taking. If the Leased Property is totally and
permanently taken by Condemnation, this Lease shall terminate as of the day
before the Date of Taking.
15.2 Partial Taking. If a portion of the Leased Property is
taken by Condemnation, this Lease shall remain in effect if the Facility is not
thereby rendered
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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 day before the Date of Taking. If (a) this Lease remains in effect after
such Condemnation, (b) such Condemnation does not include a de minimis portion
of the Leased Property (e.g., other than for a street widening or easement) and
(c) such Condemnation materially and adversely affects Lessee's use of the
Leased Property for its Primary Intended Use, but does not thereby render the
Facility Unsuitable for its Primary Intended Use, Lessor and Lessee shall in
good faith attempt to agree upon a reduction of the Minimum Rent to an extent
that is fair, just and equitable, taking into consideration, among other
relevant factors, the reduction in useable square feet of the building on the
Leased Property and the amount of the Award received by Lessor.
15.3 Restoration. If there is a partial taking of the Leased
Property and this Lease remains in full force and effect pursuant to Section
15.2, Lessor shall make available to Lessee the portion of the Award necessary
and specifically identified for restoration of the Leased Property and Lessee
shall accomplish all necessary restoration whether or not the amount provided
by the condemnor for restoration is sufficient.
15.4 Award-Distribution. The entire Award shall belong to and
be paid to Lessor, except that, subject to the rights of the Facility
Mortgagees, Lessee shall be entitled to receive from the Award, if and to the
extent such Award specifically includes such item, lost profits value and
moving expenses and a sum attributable to the value, if any, of Lessee's
leasehold interest under this Lease; provided, however, that in any event
Lessor shall receive from the Award, subject to the rights of the Facility
Mortgagees, no less than the greater of the Fair Market Value prior to the
institution of the Condemnation or the Minimum Repurchase Price.
15.5 Temporary Taking. The taking of the Leased Property, or
any part thereof, shall constitute a taking by Condemnation only when the use
and occupancy by the taking authority has continued 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 of the taking shall be paid to Lessee.
ARTICLE XVI
16.1 Events of Default. Any one or more of the following
shall constitute an "Event of Default":
(a) a default shall occur under any other lease or
other agreement or instrument, including the Contract of Acquisition, with or
in favor of Lessor or any Affiliate of Lessor and made by or with Lessee or any
Affiliate of Lessee 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 seven (7) days after receipt (or deemed receipt) by Lessee
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;
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(c) 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 receipt (or deemed receipt) by Lessee
of 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;
(d) 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;
(e) 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;
(f) except as otherwise permitted pursuant to
Article XXIV, 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;
(g) except as expressly permitted pursuant to
Article XII hereof, the estate or interest of Lessee in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding and the
same shall not be stayed, vacated or discharged within
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the later of ninety (90) days after commencement thereof or thirty (30) days
after receipt (or deemed receipt) by Lessee 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;
(h) except as a result of damage, destruction or
Condemnation, Lessee voluntarily ceases operations on the Leased Property for a
period in excess of thirty (30) days;
(i) any of the representations or warranties made by
Lessee or any Guarantor in the Contract of Acquisition, the Guaranty or
otherwise proves to be untrue when made in any material respect which
materially and adversely affects Lessor;
(j) 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;
(k) 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;
(l) except for medically appropriate reasons, Lessee
voluntarily transfers ten (10) or more patients or residents located in the
Facility (i) to any other facility in which Lessee or any Affiliate of Lessee,
directly or indirectly, has any interest or (ii) which otherwise materially
affects Gross Revenues from the Facility;
(m) if applicable, Lessee fails to give notice to
Lessor not later than ten (10) days after Lessee's receipt thereof of any Class
A or equivalent fine notice from any governmental authority or officer acting
on behalf thereof relating to the Facility;
(n) Lessee fails to notify Lessor within three (3)
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;
(o) 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 law,
order, ordinance, rule or regulation with respect to the operation of the
Facility which would have a material adverse effect on the operations of the
Facility or its licensure;
(p) 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 for such cure or
abatement;
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(q) if applicable, any proceedings are instituted
against Lessee by any governmental authority which are reasonably likely to
result in (i) the revocation of any license granted to Lessee for the operation
of the Facility, (ii) the decertification of the Facility from participation in
the Medicare or Medicaid reimbursement program, or (iii) the issuance of a stop
placement order against Lessee;
(r) any default and acceleration of any indebtedness
of Lessee or Guarantor in excess of $100,000.00 has occurred; and
(s) any default shall occur under the Guaranty.
16.2 Certain Remedies. 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 Section 16.1, 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 thereto and quit the same and Lessor may enter upon and
repossess the Leased Property and any Capital Addition thereto 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 Addition thereto, subject to rights, if any, of
residents or patients and to any Legal Requirements.
16.3 Damages. (a) The termination of this Lease; (b) the
repossession of the Leased Property and any Capital Addition thereto; (c) the
failure of Lessor, notwithstanding reasonable good faith efforts, to relet the
Leased Property; (d) the reletting of all or any portion of the Leased
Property; or (e) 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:
Lessee shall forthwith pay to Lessor, at Lessor's option, as
and for liquidated and agreed current damages for Lessee's
Default, either:
(i) the sum of:
(A) the worth at the time of award of the unpaid
Rent which had been earned at the time of termination,
(B) 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,
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(C) 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
(D) any other amount necessary to compensate Lessor
for all the detriment 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 (i) and (ii) above, the "worth at the time of
award" shall be computed by allowing interest at the Overdue Rate. As
used in clause (iii) 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 two
percent (2%). 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 demonstrate could reasonably have been earned.
or (ii)
without termination of Lessee's right to possession of the Leased
Property, 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.
16.4 Receiver. 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 Addition thereto 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, subject, however, to rights, if
any, of residents or patients and to any Legal Requirements.
16.5 Lessee's Obligation to Purchase. If an Event of Default
shall have occurred, Lessor may 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, which notice may be included
in any notice of termination of this Lease given to Lessee pursuant to Section
16.2 or by separate written notice given by Lessor to Lessee at any time
thereafter, requiring such purchase for an amount equal to the greater of (i)
the Fair Market Value, or (ii) the Minimum Repurchase 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
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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.
16.6 Waiver. If Lessor initiates judicial proceedings or if
this Lease is terminated by Lessor pursuant to this Article, Lessee waives, to
the extent permitted by ap plicable 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.
16.7 Application of Funds. 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.
16.8 Facility Operating Deficiencies. 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 and make recommendations to remedy the
Facility Operating Deficiency(ies). Such management consultant shall prepare a
written report of its findings and recommendations, and Lessee shall cause the
same to be delivered to Lessor for approval.
The management consultant shall have complete access to the
Facility, its records, offices and facilities, in order that it may carry out
its duties and make its recommendations. 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. Promptly following Lessor's and Lessee's
receipt of such management consultant's written report and recommendations, the
parties shall hold a telephone conference or meeting to discuss the contents of
such report and such recommendations for purposes of reaching mutual agreement
as to which recommendations Lessee shall implement. In the event that the
parties are unable to mutually agree on such recommendations, Lessor's sole,
but reasonable decision shall be final and binding. Promptly following the
parties agreement on such recommendation, or Lessor's decision, as the case may
be, Lessee shall implement the applicable recommendations in a diligent manner.
16.9 Lessor's Right of Appraisal. Without limiting any other
right or remedy of Lessor hereunder, upon the expiration or earlier termination
of this Lease, and whether or not Lessor has ever formally declared an Event of
Default, Lessor shall have the right to conduct an appraisal of the Leased
Property in accordance with the provisions of Article XXXIV in order to
determine its Fair Market Value. If Lessor so elects, the Appraiser shall (i)
appraise the Leased Property in accordance with the provisions of Article XXXIV
and the
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definition of Fair Market Value set forth in Article I and (ii) appraise the
Leased Property in accordance with clause (i) but with the following
adjustments:
(a) The negative value of (1) any deferred
maintenance or other items of repair or replacement of the Leased
Property, (2) any then current or prior licensure or certification
violations and/or admission holds and (3) any other breach or failure
of Lessee to perform or observe its obligations under this Lease
during the Term shall be taken into account and deducted from the Fair
Market Value determined in accordance with this clause (ii).
(b) The actual occupancy level and the actual
residence mix, patient mix, case mix, or diagnostic related group or
acuity mix, as applicable, of the Facility as of the date of
termination shall each be considered and any positive or negative
value attributable thereto shall be taken into account and either
deducted from or added to the Fair Market Value determined in
accordance with this clause (ii).
In the event the Fair Market Value of the Leased Property determined pursuant
to clause (ii) is less than the Fair Market Value determined pursuant to clause
(i), then the difference between the two, together with the costs and expenses
incurred by Lessor for the Appraiser, shall be paid by Lessee to Lessor upon
demand as an Additional Charge hereunder and shall be treated by Lessor and
Lessee as the payment of additional rent for federal income tax purposes. The
obligation of Lessee to pay such amount, if any, shall survive the expiration
or earlier termination of this Lease.
16.10 Lessor's Security Interest. The parties intend that if
this Lease is terminated due to an Event of Default 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 Leased Property
intact for its 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, 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 security agreement and the security interest created
herein shall survive the expiration or earlier termination of this Lease.
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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 hereinafter 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
17. Lessor's Right to Cure Lessee's Default. If Lessee shall
fail to make any payment or to perform any act required to be made or performed
hereunder as and when required, 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 Addition thereto 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
18. Purchase of the Leased Property. 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 deed or other conveyance conveying
the entire 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) those liens and
encumbrances which were in effect on the date of conveyance of the Leased
Property to Lessor; and (iv) any other encumbrances permitted hereunder to be
imposed on the Leased Property which are assumable at no cost to Lessee or
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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. All expenses of such conveyance, including the cost of title
insurance, attorneys' fees incurred by Lessor in connection with such
conveyance and release, transfer taxes and recording and escrow fees, shall be
paid by Lessee.
ARTICLE XIX
19. Renewal Terms. Provided that no Event of Default, or
event which, with notice or lapse of time or both, would constitute an 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 (10) year renewal terms
(each, an "Extended Term), upon (i) giving written notice to Lessor of such
renewal not less than nine (9) months and not more than fifteen (15) months
prior to the expiration of the then current Term and (ii) delivering to Lessor
concurrent with such notice a reaffirmation of the Guaranty executed by
Guarantor stating, in substance, that Guarantor's obligations under the
Guaranty shall extend to this Lease, as extended by the Extended Term. During
each Extended Term, 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 for the Leased Property and (b) One Hundred Two and Five
Tenths Percent (102.5%) of the sum of the annual Minimum Rent and Additional
Rent payable for the last Lease Year of the immediately preceding Term.
Notwithstanding anything to the contrary in this Section
19.1, 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
20. Holding Over. If Lessee shall for any reason remain in
possession of the Leased Property after the expiration or earlier termination
of the Term, such possession shall be as a month-to-month tenant during which
time Lessee shall pay as Minimum Rent each month twice the sum of (i) monthly
Minimum Rent applicable to the prior Lease Year, plus (ii) one-twelfth of the
aggregate Additional Rent payable applicable to the prior Lease Year, together
with 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. 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.
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ARTICLE XXI
[INTENTIONALLY OMITTED]
ARTICLE XXII
22. Risk of Loss. The risk of loss or of decrease in the enjoyment
and beneficial use of the Leased Property 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
23. General Indemnification. 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: (i) any accident,
injury to or death of Persons or loss of or damage to property occurring on or
about the Leased Property or adjoining sidewalks; (ii) any use, misuse,
non-use, condition, maintenance or repair by Lessee of the Leased Property;
(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 existing and future subleases of the Leased Property
to be performed by any party there under; (v) any claim for malpractice,
negligence or misconduct committed by any Person on or working from the Leased
Property; and (vi) the violation of any Legal Requirement. Any amounts which
become payable by Lessee under this Article shall be paid within ten (10) 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. 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.
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ARTICLE XXIV
24. Subletting and Assignment.
24.1 Prohibition. Lessee shall not, without Lessor's prior
written consent, which may be withheld in Lessor's sole and absolute
discretion, voluntarily or by operation of law assign (which term includes any
sale, encumbering, pledge or other transfer or hypothecation) this Lease,
master sublet all or any part of the Leased Property or engage the services of
any Person for the management or operation of the Facility, or any portion
thereof. Lessee acknowledges that Lessor is relying upon the expertise of
Lessee in the operation of the Facility and that Lessor entered into this Lease
with the expectation that Lessee would remain in and operate the Facility
during the entire Term and for that reason Lessor retains sole and absolute
discretion in approving or disapproving any assignment, master sublease or
management arrangement. If Lessee is a corporation or partnership, any transfer
of its stock or partnership interests (or the stock or partnership interests of
the entity(ies) that controls Lessee) or any dissolution or merger or
consolidation of Lessee (or its controlling entity(ies)) with any other entity,
which results in a change in the control of Lessee (or its controlling
entity(ies)) from the Person or Persons owning a majority of its voting stock
or partnership interests immediately prior thereto, or the sale or other
transfer of all or substantially all of the assets of Lessee (or its
controlling entity(ies)), shall constitute an assignment of Lessee's interest
in this Lease within the meaning of this Article XXIV and the provisions
requiring consent contained herein shall apply. Any sublease of more than ten
percent (10%) of the Facility to any Person or its Affiliates, in one
transaction or in a series of transactions, shall be deemed to be a "master
sublease" hereunder. For any sublease transaction not requiring the consent of
Lessor hereunder (i.e., a sublease not constituting a master sublease), Lessee
shall, within ten (10) days of entering into any such sublease, notify Lessor
of the existence of such sublease and the identity of the sublessee and supply
Lessor with a copy of the sublease, any related documentation and any other
materials or information reasonably requested by Lessor.
24.2 Consent. If Lessee desires at any time to assign this
Lease, to master sublet the Facility or any portion thereof or engage the
services of any Person for the management or operation of the Facility, it
shall first notify Lessor of its desire to do so and shall submit in writing to
Lessor: (i) the name of the proposed master sublessee, assignee or manager;
(ii) the terms and provisions of the proposed master sublease, assignment or
management agreement; and (iii) such financial information as Lessor reasonably
may request concerning the proposed master sublessee, assignee or manager.
(a) Lessor may, as a condition to granting such
consent, require that the obligations of any sublessee, assignee, or manager
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 subletting, assignment or management
arrangement. Any sublease (including a sublease which does not constitute a
master lease) 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 sublessee to attorn to Lessor,
in which event Lessor shall undertake the obligations of Lessee, as sublessor
under such sublease from the time of the exercise of such option to the
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termination of such sublease and in such case Lessor shall not be liable for
any prepaid rents or security deposit paid by such sublessee to Lessee or for
any other prior defaults of Lessee under such sublease. In the event that
Lessor shall not require such attornment with respect to any sublease, then
such sublease 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 sublease, assignment or management
agreement shall expressly provide that the sublessee, assignee or manager shall
furnish Lessor with such financial and operational information and 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.
(b) Lessor may, as a condition to its consent to any
such master subletting, require Lessee to pay to Lessor one hundred percent
(100%) of all Transfer Consideration (defined below). "Transfer Consideration"
shall mean the positive difference, if any, between the Fair Market Rental and
the Rent payable by Lessee determined on a monthly basis, prorating the Rent,
as appropriate, if less than all of the Facility is sublet. The difference for
each month shall be paid by Lessee to Lessor monthly when the Minimum Rent is
due.
(c) Lessor may, as a condition to its consent to any
assignment or management arrangement, require Lessee to pay to Lessor one
hundred percent (100%) of the gross fair market value of Lessee's leasehold
interest (the "Leasehold FMV"), determined by appraisal in accordance with the
appraisal procedures set forth in Article XXXIV, excluding any business value
in excess of real estate value.
(d) The consent by Lessor to any assignment, master
subletting or management arrangement shall not constitute a consent to any
subsequent assignment, master subletting or management arrangement by Lessee or
to any subsequent or successive assignment, master subletting or management
arrangement by the master sublessee, assignee or manager. Any purported or
attempted assignment, sublease, management agreement or other permission to use
the Facility contrary to the provisions of this Article shall be void and, at
the option of Lessor, shall terminate this Lease.
24.3 Costs. Lessee shall reimburse Lessor for Lessor's
reasonable costs and expenses incurred in conjunction with the processing and
documentation of any assignment, master subletting or management arrangement,
including attorneys', architects', engineers' or other consultants' fees
whether or not such master sublease, assignment or management agreement is
actually consummated.
24.4 No Release of Lessee's Obligations. No assignment,
subletting or management agreement 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 (by assignment or otherwise), 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)
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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 assignee, sublessee or manager 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 assignee, sublessee or manager.
24.5 Assignment of Lessee's Rights Against Sublessee. If
Lessor shall consent to a master subletting, then the written instrument of
consent, executed and acknowledged by Lessor, Lessee and sublessee, shall
contain a provision substantially similar to the following:
(i) Lessee and sublessee hereby agree that, if
sublessee shall be in default of any obligation of Lessee under the sublease,
which default also constitutes a default by Lessee under the Lease, then Lessor
shall be permitted to avail itself of all of the rights and remedies available
to Lessee 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 sublessee in the name
of Lessee in order to enforce Lessee's rights under the 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.
24.6 Special Transactions.
24.6.1 Assignment to Affiliate. Notwithstanding anything to
the contrary in Section 24.1, and subject to the provisions of Section 24.7
below, Lessor's consent shall not be required in connection with any assignment
of this Lease to an Affiliate of Lessee, so long as in connection therewith,
each of the following conditions is met:
(a) In connection with such assignment, there is no
change in the use of the Leased Property from the Primary Intended Use;
(b) Such Affiliate-assignee shall assume all of the
obligations of Lessee hereunder accruing subsequent to the effective date of
such assignment 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 (d) below;
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(c) Neither the original Lessee nor Guarantor shall
be released from any of the obligations of the Lessee hereunder or the
Guarantor under the Guaranty, as applicable, whether occurring prior to or
after the effective date of such assignment;
(d) Within ten (10) days after the effectiveness of
such assignment, 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 24.6.1 and any other change in the address for
▇▇▇▇▇▇▇▇ and notices to Lessee pursuant to this Lease, accompanied by an
executed copy of the assumption required pursuant to this Lease.
24.6.2 Public Offering. Notwithstanding anything to the
contrary in Section 24.1, Lessor's consent shall not be required in connection
with any transfer of any stock of Lessee or any parent of Lessee as a result of
a public offering of Lessee's or its parent's stock which (a) constitutes a
bona fide public distribution of such stock pursuant to a firm commitment
underwriting registered under the Securities and Exchange 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.
24.6.3 Other Transfers of Stock or Assets to Third Parties.
Notwithstanding anything to the contrary in Section 24.1, and subject to the
provisions of Section 24.7 below, Lessee shall not unreasonably withhold its
consent to the assignment of this Lease (a) to the surviving corporation or
other Person in connection with a merger, consolidation or stock exchange to
which Lessee is a party or (b) to any person which acquires, in a single
transaction, all or substantially all of the assets or stock of Lessee. Without
limiting any of Lessor's rights hereunder, Lessor shall have the right to
require as a condition to giving such consent that the new controlling
Person(s) execute a guaranty for this Lease if (a) the Consolidated Net Worth
of Lessee or Guarantor will be diminished as a result of a transaction of the
type described in this Section 24.6.3.
24.7 REIT Protection. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not (i) sublet, assign or enter into a
management arrangement for the Leased Property on any basis such that the
rental or other amounts to be paid by the sublessee, assignee or manager
thereunder would be based, in whole or in part, on the income or profits
derived by the business activities of the sublessee, assignee or manager; (ii)
furnish or render any services to the sublessee, assignee or manager or manage
or operate the Leased Property so subleased, assigned or managed; (iii) sublet,
assign or enter into a management arrangement for the Leased Property to any
Person in which Lessee or Lessor owns an interest, directly or indirectly (by
applying constructive ownership rules set forth in Section 856(d)(5) of the
Code); or (iv) sublet, assign or enter into a management arrangement for the
Leased Property in any other manner which could cause any portion of the
amounts
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received by Lessor pursuant to this Lease or any sublease 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.
24.8 Transfers In Bankruptcy. In the event that this Lease is
assigned to any Person pursuant to the provisions of the Bankruptcy Code, all
consideration payable or otherwise to be delivered in connection with such
assignment 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 24.7, the term "consideration" shall mean and included
money, services, property and any other thing of value such as payment of
costs, cancellation of indebtedness, discounts, rebates and the like. In the
event any such consideration is other than cash, the fair market value of such
consideration shall be paid or delivered to Lessor in cash.
ARTICLE XXV
25. Officer's Certificates and Financial Statements
25.1 Officer's Certificate. 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.
25.2 Statements. 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
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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; provided, however, that if Lessee and its subsidiaries
(if any) are consolidated with Guarantor, then Lessee shall only be
required to furnish such audited consolidated balance sheets of
Guarantor together with related audited consolidated statements of
income, changes in common stock and other stockholders' equity and
changes in financial position of Guarantor;
(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 thirty (30) days after the end of each
month for those months occurring from the Commencement Date to three
months after the first month in which the average Cash Flow Coverage
for the Facility equals or exceeds 1.3 for such month, all
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; and thereafter within sixty
(60) 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 120 days after the end of each of
Lessee's fiscal years, a copy of each cost report filed with the
appropriate governmental agency 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,
if applicable, 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
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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) within 120 days after the end of each fiscal
year of the financial institution issuing the letter of credit
required under Article XXI, a copy of the audited consolidated balance
sheets of such financial institution as of the end of such fiscal
year, and related unaudited consolidated statements of income, changes
in common stock and other stockholders equity and changes in the
financial position of such financial institution and its consolidated
subsidiaries for each such fiscal year, prepared in accordance with
generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved, such
consolidated financial statements to be certified by nationally
recognized certified public accountants;
(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
Lessee's use thereof; and
(i) with reasonable promptness, such other
information respecting the financial and operational condition and
affairs of Lessee and the Facility and the physical condition of the
Leased Property and any Capital Addition thereto as Lessor may
reasonably request, in the form of a questionnaire or otherwise, from
time to time.
25.3 Charges. 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 $1,000 for each such failure as Additional Charges, which
shall be treated by Lessor and Lessee as the payment of additional rent for
federal income tax purposes. 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 Property.
Lessee shall permit Lessor and its authorized representatives to (i) inspect
the Leased Property and any Capital Addition thereto 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.
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Lessee shall cooperate with Lessor in exhibiting the Leased Property and any
Capital Additions thereto to prospective purchasers, lenders, lessees and
managers.
ARTICLE XXVII
27. No Waiver. 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
28. Remedies Cumulative. Each legal, equitable or contractual
right, power and remedy of Lessor 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 of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor of any or all of such other rights, powers and remedies.
ARTICLE XXIX
29. Acceptance of Surrender. No surrender to Lessor of this
Lease or of the Leased Property, or any part thereof or of any interest
therein, shall be valid or effective unless agreed to and accepted in writing
by Lessor and no act by Lessor or any representative or agent of Lessor, other
than such a written acceptance by Lessor, shall constitute an acceptance of any
such surrender.
ARTICLE XXX
30. No Merger. 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
31. Conveyance by Lessor. If Lessor or any successor owner of
the Leased Property shall convey the Leased Property other than as security for
a debt, 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 so long as the transferee shall have assumed in writing all
obligations of the Lessor or successor owner hereunder arising or accruing from
and after the date of such conveyance.
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ARTICLE XXXII
32. Quiet Enjoyment. 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 liens and encumbrances of record as of the date hereof, or the
Commencement Date or created thereafter as permitted hereunder or thereafter
consented to by Lessee. No failure by Lessor to comply with the foregoing
covenant shall give Lessee any right to cancel or terminate this Lease or
▇▇▇▇▇, reduce or make a deduction from or offset against the Rent or any other
sum payable under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right,
by separate and independent action to pursue any claim it may have against
Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
contained in this Article.
ARTICLE XXXIII
33. Notices. 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: BCC at Mt. Pines, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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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 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
34. Appraiser. If it becomes necessary to determine the Fair
Market Value, Fair Market Rental or Leasehold FMV for any purpose of this
Lease, the same shall be determined by Valuation Counselors Group, Inc., or in
the event Valuation Counselors Group, Inc. no longer exists upon the date the
same is to be determined, any other nationally recognized appraisal firm, in
which one or more of the members, officers or principals of such firm are
members of the American Institute of Real Estate Appraisers (or any successor
organization thereto), as may be selected by Lessor (the "Appraiser"). Lessor
shall cause such Appraiser to determine the Fair Market Value, Fair Market
Rental or Leasehold FMV 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. If the Facility had reached stabilized operations prior to the
Commencement Date, to the extent consistent with sound appraisal practice as
then existing at the time of any such appraisal, an appraisal for Fair Market
Value shall be made on a basis consistent with the basis on which the Leased
Property was appraised for purposes of determining its fair market value at the
time the Leased Property was acquired 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 and one-half of all other cost and expenses incurred
in connection with such appraisal.
ARTICLE XXXV
[INTENTIONALLY OMITTED]
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
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to exist any ground lease, mortgage, trust deed, lien, encumbrance or title
retention agreement (collectively, an "encumbrance") upon the Leased Property
and any Capital Addition thereto, or any portion thereof or interest 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 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 the subjection and
subordination of this Lease and Lessee's leasehold interest hereunder to any
encumbrance imposed after the Commencement Date shall be conditioned upon the
execution by the holder of such encumbrance and delivery to Lessee of a
nondisturbance and attornment agreement which provides, in substance, that so
long as no Event of Default has occurred and is continuing hereunder beyond any
applicable cure period, 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. If, in connection with obtaining financing or
refinancing for the Leased Property, a Facility Mortgagee or prospective
Facility Mortgagee shall request reasonable modifications to this Lease as a
condition to such financing or refinancing, Lessee shall not withhold or delay
its consent thereto.
36.2 Attornment. If Lessor's interest in the Leased Property
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.
36.3 Breach by Lessor. It shall be a breach of this Lease if
Lessor shall fail to observe or perform any term, covenant or condition of this
Lease on its part to be performed (if any) and such failure shall continue for
a period of thirty (30) days after notice thereof from Lessee, unless such
failure cannot with due diligence be cured within such 30- day period, in which
case such failure shall not constitute a breach of this Lease by Lessor if
Lessor, within such 30-day period commences to cure such alleged breach and
thereafter diligently prosecutes the same to completion. The time within which
Lessor shall be obligated to cure any such failure shall also be subject to an
extension of time due to the occurrence of any Unavoidable Delay.
ARTICLE XXXVII
37.1 Hazardous Substances. Lessee shall not allow any
Hazardous Substance to be located in, on, under or about the Leased Property or
incorporated in the
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Facility; provided, however, that Hazardous Substances may be brought, kept,
used or disposed of in, on or about the Leased Property 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 strict compliance with Legal
Requirements. Lessee shall not allow the Leased Property 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 with respect to, (i) any violation of a Legal Requirement relating
to Hazardous Substances located in, on, or under the Leased Property or any
adjacent property; (ii) any enforcement, cleanup, removal, or other
governmental or regulatory action instituted, completed or threatened with
respect to the Leased property; (iii) any claim made or threatened by any
Person against Lessee or the Leased Property 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,
including any complaints, notices, warnings or asserted violations in
connection therewith.
37.3 Remediation. If Lessee becomes aware of a violation of
any Legal Requirement relating to any Hazardous Substance in, on, under or
about the Leased Property or any adjacent property, or if Lessee, Lessor or the
Leased Property becomes subject to any order of any federal, state or local
agency to repair, close, detoxify, decontaminate or otherwise remediate the
Leased Property, Lessee shall immediately notify Lessor of such event and, at
its sole cost and expense, cure such violation or effect such repair, closure,
detoxification, decontamination or other remediation. 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.
37.4 Indemnity. 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,
before or 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 (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, (ii) the presence of any Hazardous
Substances in, on, under or about the Leased Property and (iii) the violation
of any Legal Requirements (including Environmental Laws). "Environmental Costs"
include interest, costs of response, removal, remedial action, containment,
cleanup,
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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:
(a) In investigating any and all matters relating to the
Handling of any Hazardous Substances, in, on, from, under or about the
Leased Property;
(b) In bringing the Leased Property 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 offsite.
If any claim is made hereunder, Lessee agrees to pay such
claim promptly, and in any event to pay such claim within sixty (60) 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.
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 to determine the
existence or presence of Hazardous Substances on or about the Leased Property.
Lessor shall have the right to enter and inspect the Leased Property, conduct
any testing, sampling and analyses it deems necessary and shall have the right
to inspect materials brought into the Leased Property. 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.
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 the
Lease. The obligations set forth in this Article shall survive the expiration
or earlier termination of the Lease.
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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 (i) sell or transfer the Leased
Property, or any portion thereof, which is a real estate asset as defined in
Section 856(c)(6)(B), or functionally equivalent successor provision, of the
Code, to Lessee if Lessor's counsel advises Lessor that such sale or transfer
may not be a sale of property described in Section 857(b)(6)(C), or
functionally equivalent successor provision, of the Code or (ii) sell or
transfer the Leased Property, or any portion thereof, to Lessee if Lessor's
counsel advises Lessor that such sale or transfer could result in an
unacceptable amount of 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. If Lessee has the right or
obligation to purchase the property pursuant to the terms herein, and if Lessor
determines not to sell such property pursuant to the above sentence, then
Lessee shall purchase such property, upon and subject to all applicable terms
and conditions set forth in this Lease, including the provisions of Article
XXXV, at such time as the transaction, upon the advice of Lessor's counsel,
would be a sale of property (to the extent the Leased Property is a real estate
asset) described in Section 857(b)(6)(C), or functionally equivalent successor
provision, of the Code, and would not result in an unacceptable amount of 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 and until such time Lessee shall lease the Leased Property from
Lessor at the Fair Market Rental determined in accordance with Article XXXIV.
The provisions of this Article shall not be applicable if Lessor or a partner
of Lessor does not at the time of the Closing of the sale or transfer of the
Leased Property maintain status as a qualified real estate investment trust
under the Code.
ARTICLE XL
[INTENTIONALLY OMITTED]
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 within thirty (30) days after
execution of this Lease deliver to Lessor evidence of such authority reasonably
satisfactory to Lessor.
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ARTICLE XLII
42. Attorneys' Fees. If Lessor or Lessee brings an action or
other proceeding 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. In addition to the
foregoing and other provisions of this Lease that specifically require Lessee
to reimburse, pay or indemnify against Lessor's attorneys' fees, Lessee shall
pay, as Additional Charges, all of Lessor's reasonable attorneys' fees incurred
in connection with the administration or enforcement of this Lease, including
attorneys' fees incurred in connection with the renewal of this Lease for any
Extended Term, the review of any letters of credit, the review, negotiation or
documentation of any subletting, assignment, or management arrangement or any
consent requested in connection therewith, and the collection of past due Rent.
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
44.1 Miscellaneous.
44.1.1 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.
44.1.2 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.
44.1.3 Non-Recourse. Lessee specifically agrees to look
solely to the Leased Property for recovery of any judgment from Lessor. It is
specifically agreed 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
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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. Furthermore, except as otherwise expressly provided herein, in no
event shall Lessor ever be liable to Lessee for any indirect or consequential
damages suffered by Lessee from whatever cause.
44.1.4 Licenses. Upon the expiration or earlier termination
of the Term, Lessee shall use its best efforts to transfer to Lessor or
Lessor's nominee and shall cooperate with Lessor or Lessor's designee or
nominee in connection with the processing by Lessor or Lessor's designee or
nominee of any applications for all licenses, operating permits and other
governmental authorization, 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
necessary or useful for the operation of the Facility; provided that the costs
and expenses of any such transfer or the processing of any such application
shall be paid by Lessor or Lessor's designee or nominee. Lessee shall not
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 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 books and records relating to the Leased Property and its
operation to Lessor or Lessor's designee or nominee. Lessee shall indemnify,
defend, protect and hold harmless Lessor from and against any loss, damage,
cost or expense incurred by Lessor or Lessor's designee or nominee in
connection with the correction of any and all deficiencies of a physical nature
identified by any governmental authority responsible for licensing the Leased
Property in the course of any change of ownership inspection and audit.
44.1.5 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.
44.1.6 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, subject to the rights, if any, of
patients and residents and any Legal Requirements, immediately vacate and
surrender the Leased Property, Lessee's 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
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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 clause (i), those obligations hereunder which are intended to
survive the expiration or earlier termination of this Lease and those specific
obligations set forth in clause (ii) below.
(b) Notwithstanding the provisions of clause (i),
upon any such termination or expiration of this Lease, the following shall
pertain:
(i) Lessee agrees to defend, protect,
indemnify, defend and hold harmless Lessor from and against any and all claims,
costs, losses, expenses, damages, actions, and causes of action for which
Lessee is responsible under this Lease (including Lessee's indemnification
obligations under Articles XXIII and XXXVII) and which accrue or have accrued
on or before the termination date.
(ii) 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.
(iii) Lessee shall remain responsible 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 non-payment thereof.
(iv) Lessee shall (y) execute all documents
and take any actions reasonably necessary to (1) cause the transfer of all of
Lessee's Personal Property and any Capital Additions not owned by Lessor to
Lessor, in each case free of any
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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 XXVIII and (z) comply with its covenants set forth in
Section 44.4.
(v) Lessee shall continue to observe the
covenants of Lessee set forth in Section 7.4.2.
(vi) Lessee shall remain responsible for
and shall promptly pay to Lessee any Additional Charge owned to Lessor pursuant
to Section 16.9.
44.1.7 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. Lessee and Lessor each hereby (i) irrevocably submit to the
jurisdiction of the State and federal courts of the State and consent to
service of process in any legal proceedings arising out of, or in connection
with, this Lease (or any agreement formed pursuant to the terms hereof), by any
means authorized by applicable law; (ii) irrevocably waive, to the fullest
extent permitted by law, any objection to which such party may now or
hereinafter have to the lying or to the laying of venue of any litigation
arising out of, in connection with, this Lease (or any agreement formed
pursuant to the terms hereof), brought in the State courts of Allegheny County,
of the State, or in the United States District Court for the district in which
such County is located; and (iii) irrevocably waive any claim in any litigation
brought in any such court that the same has been brought in an inconvenient
forum.
44.1.8 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 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.
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LESSOR'S INITIALS: _______
LESSEE'S INITIALS: _______
44.1.9 Lessee Counterclaim and Equitable Remedies. Lessee
hereby waives the right to interpose counterclaim in any summary proceeding
instituted by Lessor against Lessee or in any action instituted by Lessor for
unpaid Rent under this Lease. 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 in no event shall Lessee be entitled to any
monetary damages for a breach of such covenant, and in no event shall Lessee
claim or assert any claims for monetary damages in any action or by way of
set-off defense or counterclaim, and Lessee hereby specifically waives the
right to any monetary damages or other remedies in connection with any such
claim or assertion.
44.1.10 Entire Agreement. This Lease, together with the other
Lessee Documents, as defined in the Contract of Acquisition, 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.
44.1.11 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.
44.1.12 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.
44.1.13 Joint 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.
44.1.14 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.
44.1.15 Time of Essence. Time is of the essence of this Lease
and each provision hereof in which time of performance is established.
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44.1.16 Further Assurances. The parties agree to promptly
sign all documents reasonably requested to give effect to the provisions of
this Lease.
IN WITNESS WHEREOF, the parties have caused this Lease to be
executed and attested by their respective officers thereunto duly authorized.
HCPI TRUST, a Maryland real estate BCC AT MT. ROYAL PINES, INC., a
investment trust Delaware corporation
By: /s/ [illegible] By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ ------------------------------
Its: Vice President Its: Vice President
----------------------------- -----------------------------
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