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L E A S E A G R E E M E N T
[PERCENTAGE RENT LEASE]
[LANDLORD]
as
Landlord
and
[TENANT]
as
Tenant
Dated as of _________, 1998
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TABLE OF CONTENTS
Page
RECITALS.....................................................................1
ARTICLE I....................................................................1
INTERPRETATION AND DEFINITIONS.........................................1
ARTICLE II...................................................................11
PROPERTY AND TERM......................................................11
2.1 Property..................................................11
2.2 Initial Term..............................................11
2.3 Extended Terms............................................11
ARTICLE III..................................................................12
RENT...................................................................12
3.1 Rent......................................................12
3.2 Percentage Rent...........................................13
3.2.1 Monthly Payment of Estimated Percentage Rent....13
3.2.2 Quarterly Calculation and Reconciliation........13
3.2.3 Annual Reconciliation...........................14
3.2.4 Record-keeping..................................14
3.2.5 Audits..........................................14
3.3 Additional Rent...........................................15
3.4 Late Payment of Rent......................................15
3.5 Net Lease.................................................16
3.6 Income and Expense Prorations.............................16
3.7 Best Efforts to Maximize Facility Revenues................16
ARTICLE IV...................................................................16
IMPOSITIONS............................................................16
4.1 Payment of Impositions....................................16
4.2 Information and Reporting.................................17
4.3 Assessment Challenges.....................................17
4.4 Prorations; Payment in Installments.......................17
4.5 Refunds...................................................17
4.6 Utility Charges...........................................18
4.7 Assessment Districts......................................18
ARTICLE V....................................................................18
TENANT WAIVERS.........................................................18
5.1 No Termination or Abatement...............................18
5.2 Condition of Leased Property..............................19
ARTICLE VI...................................................................20
OWNERSHIP OF PROPERTY..................................................20
6.1 Leased Property...........................................20
6.2 Tenant's Personal Property................................20
6.3 Purchase of Tenant's Personal Property....................21
6.4 Removal of Personal Property..............................21
6.5 Landlord's Personal Property..............................22
ARTICLE VII..................................................................22
USE OF PROPERTY........................................................22
7.1 Permitted Use.............................................22
7.1.1 Primary Intended Use............................22
7.1.2 Necessary Approvals.............................22
7.1.3 Continuous Operation............................23
7.1.4 Lawful Use......................................23
7.1.5 Determination of Facility Revenues
During Breach..................................23
7.2 Compliance with Applicable Medicaid and
Medicare Requirements....................................24
7.3 Environmental Matters.....................................24
7.4 Landlord to Grant Easements...............................25
7.5 Management Agreements.....................................25
ARTICLE VIII.................................................................26
SECURITY FOR LEASE OBLIGATIONS.........................................26
8.1 Security Deposit..........................................26
8.2 Guarantee.................................................26
ARTICLE IX...................................................................27
HAZARDOUS MATERIALS....................................................27
9.1 Remediation...............................................27
9.2 Tenant's Indemnification of Landlord......................27
9.3 Survival of Indemnification Obligations...................28
9.4 Environmental Violations at Expiration or
Termination of Lease.....................................28
9.4.1 Breach..........................................28
9.4.2 Determination of Facility Revenues
During Breach..................................28
ARTICLE X....................................................................29
MAINTENANCE AND REPAIR.................................................29
10.1 Tenant's Maintenance and Repair Obligation...............29
10.2 Waiver of Statutory Obligations..........................29
10.3 Mechanic's Liens.........................................29
10.4 Surrender of Property....................................30
10.5 Required Capital Expenditures............................30
10.5.1 Required Years; Required Amounts;
Permitted Expenditures........................30
10.5.2 Payment Provisions.............................30
10.5.3 No Liability of Landlord.......................31
ARTICLE XI...................................................................31
TENANT IMPROVEMENTS....................................................31
11.1 Tenant's Right to Construct..............................31
11.2 Construction.............................................32
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11.3 Scope of Tenant's Right..................................34
11.4 Cooperation of Landlord..................................34
11.5 Rights in Tenant Improvements............................34
ARTICLE XII..................................................................34
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS...........................34
12.1 Liens....................................................34
12.2 Encroachments and Other Title Matters....................35
ARTICLE XIII.................................................................36
PERMITTED CONTESTS.....................................................36
ARTICLE XIV..................................................................37
INSURANCE..............................................................37
14.1 General Insurance Requirements...........................37
14.1.1 All Risk.......................................38
14.1.2 Liability......................................38
14.1.3 Flood..........................................38
14.1.4 Worker's Compensation..........................38
14.1.5 Business Interruption..........................38
14.1.6 Builder's Risk.................................38
14.1.7 Boiler and Machinery...........................39
14.1.8 Earthquake.....................................39
14.1.9 Environmental Impairment.......................39
14.1.10 Subsidence....................................39
14.1.11 Other Insurance...............................39
14.2 Replacement Cost.........................................39
14.3 Waiver of Subrogation....................................40
14.4 Insurance Company Satisfactory...........................40
14.5 Change in Limits.........................................41
14.6 Blanket Policy...........................................41
ARTICLE XV...................................................................41
APPLICATION OF INSURANCE PROCEEDS......................................41
15.1 Insurance Proceeds.......................................41
15.1.1 Disbursement of Proceeds.......................42
15.1.2 Excess Proceeds................................43
15.2 Reconstruction Covered by Insurance......................43
15.2.1 Destruction Rendering Facility
Unsuitable for its Primary Intended
Use...........................................43
15.2.2 Destruction Not Rendering Facility
Unsuitable for its Primary
Intended Use..................................44
15.2.3 Costs of Repair................................44
15.3 No Abatement of Rent.....................................45
15.4 Waiver...................................................45
15.5 Damage Near End of Term..................................45
ARTICLE XVI..................................................................45
CONDEMNATION...........................................................45
16.1 Total Taking.............................................45
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16.2 Partial Taking..........................................46
16.3 Restoration.............................................46
16.4 Award Distribution......................................46
16.5 Temporary Taking........................................46
ARTICLE XVII................................................................47
EVENTS OF DEFAULT.....................................................47
17.1 Events of Default.......................................47
17.2 Payment of Costs........................................49
17.3 Certain Remedies........................................49
17.4 Damages.................................................50
17.5 Additional Remedies.....................................51
17.6 Appointment of Receiver.................................51
17.7 Waiver..................................................51
17.8 Application of Funds....................................51
17.9 Impounds................................................51
ARTICLE XVIII...............................................................52
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT.............................52
ARTICLE XIX.................................................................52
LEGAL REQUIREMENTS....................................................52
ARTICLE XX..................................................................53
HOLDING OVER..........................................................53
ARTICLE XXI.................................................................53
RISK OF LOSS..........................................................53
21.1 Risk of Loss............................................53
21.2 Unavoidable Events......................................54
ARTICLE XXII................................................................54
INDEMNIFICATION.......................................................54
22.1 Tenant's Indemnification of Landlord....................54
22.2 Landlord's Indemnification of Tenant....................55
22.3 Mechanics of Indemnification............................55
22.4 Survival of Indemnification Obligations.................56
ARTICLE XXIII...............................................................56
SUBLETTING AND ASSIGNMENT.............................................56
23.1 Prohibition Against Subletting and Assignment...........56
23.2 Changes of Control......................................56
23.3 Subleases...............................................57
23.3.1 Permitted Subleases...........................57
23.3.2 Terms of Sublease.............................57
23.3.3 Copies........................................58
23.3.4 Assignment of Rights in Subleases.............58
23.3.5 Licenses......................................58
23.4 Assignment..............................................59
23.4.1 Financial Condition ofAssignee................59
23.4.2 Assignment to Affiliate.......................59
23.4.3 Assignment in Bankruptcy......................60
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23.4.4 Adequate Assurance of Future Performance.......60
23.4.5 Disaffirmance or Rejection.....................60
23.4.6 Costs..........................................60
23.4.7 No Release of Tenant's Obligation..............61
ARTICLE XXIV.................................................................61
ESTOPPEL CERTIFICATES AND OTHER STATEMENTS.............................61
24.1 Estoppel Certificates....................................61
24.1.1 Estoppel Certificate of Tenant.................61
24.1.2 Estoppel Certificate of Landlord...............62
24.2 Financial Statements of Tenant...........................63
24.2.1 Quarterly Financial Statements.................63
24.2.2 Annual Financial Statements....................63
24.3 Environmental Statements.................................63
24.4 Charges..................................................63
ARTICLE XXV..................................................................64
LANDLORD MORTGAGES.....................................................64
25.1 Landlord May Grant Liens.................................64
25.2 Tenant's Non-Disturbance Rights; Attornment..............64
25.3 Breach by Landlord.......................................64
25.4 Facility Mortgage Protection.............................65
ARTICLE XXVI.................................................................65
TENANT'S RIGHT OF FIRST REFUSAL........................................65
26.1 Right of First Refusal...................................65
26.1.1 Landlord's Original Notice.....................65
26.1.2 Tenant's Original Offer and Right to
Purchase......................................65
26.1.3 Sale or Lease by Landlord......................67
ARTICLE XXVII................................................................67
MISCELLANEOUS..........................................................67
27.1 Landlord's Right to Inspect..............................67
27.2 No Waiver................................................67
27.3 Remedies Cumulative......................................68
27.4 Acceptance of Surrender..................................68
27.5 No Merger of Title.......................................68
27.6 Conveyance by Landlord...................................68
27.7 Quiet Enjoyment..........................................68
27.8 Notices..................................................69
27.9 Survival of Claims.......................................70
27.10 Invalidity of Terms or Provisions.......................70
27.11 Prohibition Against Usury...............................70
27.12 Amendments to Lease.....................................70
27.13 Successors and Assigns..................................70
27.14 Titles..................................................70
27.15 Governing Law...........................................70
27.16 Memorandum of Lease.....................................70
27.17 Attorneys' Fees.........................................71
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27.18 Non-Recourse as to Landlord.............................71
27.19 No Relationship.........................................71
27.20 Signs; Reletting........................................71
27.21 Facility Names..........................................72
27.22 Further Assurances......................................72
27.23 Arbitration.............................................72
SCHEDULE 1 Leased Property
SCHEDULE 2 Legal Description of Land
SCHEDULE 3 Simultaneous Leases
EXHIBIT A [RESERVED]
EXHIBIT B [INTENTIONALLY DELETED]
EXHIBIT C Appraisal Process
EXHIBIT D Form of Guarantee
EXHIBIT E Arbitration
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LEASE AGREEMENT
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THIS LEASE AGREEMENT (the "Lease"), dated as of __________,
1998, is made and entered into by and between _________________________________
___________________________________________ ("Landlord"), and [TENANT], a
____________________ ("Tenant").
RECITALS
--------
WHEREAS, Landlord owns the Leased Property (as defined below)
identified on Schedule 1 hereto;
WHEREAS, Tenant wishes to lease from Landlord the Leased
Property for the purpose of operating the Facility (as defined below) on the
Leased Property;
NOW, THEREFORE, in consideration of the foregoing, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant agree as follows:
ARTICLE I
---------
INTERPRETATION AND 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 I shall have the meanings assigned to them in this Article I and include
the plural as well as the singular, (ii) all accounting terms not otherwise
defined herein shall have the meaning assigned to them in accordance with
generally accepted accounting principles consistently applied, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and subdivisions of this
Lease and (iv) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Lease as a whole and not to any particular Article,
Section or other subdivision.
Additional Annual Percentage Rent: As defined in Section
3.2.3.
Additional Quarterly Percentage Rent: As defined in Section
3.2.2.
Additional Rent: As defined in Section 3.3.
Affiliate: As applied to any Person, means any other Person
directly or indirectly Controlling, Controlled by, or under common Control with,
that Person, and, with respect to Guarantor, shall include The Multicare
Companies, Inc.
Award: Means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation.
Bankruptcy Code: As defined in Section 23.4.3.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banks in the City of New York, are
authorized, or obligated, by law or executive order, to close.
Change of Control: As defined in Section 23.2.
Code: Means the Internal Revenue Code of 1986, as amended.
Commencement Date: Means __________________________________..
Condemnation: Means (a) the exercise of any governmental
power, whether by legal proceedings or otherwise, by a Condemnor, and (b) a
voluntary sale or transfer by Landlord to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.
Condemnor: Means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
Control: Means (including, with correlative meanings, the
terms "Controlling" and "Controlled by"), as applied to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise, but shall not include
any powers arising by virtue of a contract to manage property owned by that
Person.
CPI: Means, as of any date, the current United States
Department of Labor, Bureau of Labor Statistics Consumer Price Index, United
States Average, "All Items" (1982-84=100); provided, however, that if
compilation of the CPI is discontinued or transferred to any other governmental
department or bureau, then the index most nearly the same as the CPI shall be
used as reasonably chosen by Landlord. No delay by Landlord in providing notice
of the CPI applicable at any time shall be deemed a waiver of Landlord's right
to apply the CPI in respect of any Cumulative CPI Adjustment to be made under
this Lease.
Cumulative CPI: Means, for any period, the CPI as of the last
day of such period divided by the CPI as of the first day of such period.
2
Cumulative CPI Adjustment: Means, with respect to any amount
at the end of any period, such amount multiplied by the Cumulative CPI for such
period.
Date of Taking: Means the date the Condemnor has the right to
possession of the property being condemned.
▇▇▇▇▇▇▇ Money: As defined in Section 26.1.3.
Environmental Law: Means all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, common law, orders, demands,
approvals, authorizations and similar items of all governmental agencies,
departments, commissions, boards, bureaus or instrumentalities of the United
States, states and political subdivisions thereof and all applicable judicial,
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment as in effect on the date hereof or
as later amended, including but not limited to those pertaining to reporting,
licensing, permitting, investigation, removal and remediation of emissions,
discharges, releases or threatened releases of Hazardous Materials, into the
air, surface water, ground water or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials, including: (x) the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ▇▇.▇▇. 9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901 et seq.), the
Clean Air Act (42 U.S.C. ▇▇.▇▇. 7401 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. ss. 1251 et seq.), the Safe Drinking Water Act (42 U.S.C.
▇▇.▇▇. 300f et seq.), the Toxic Substances Control Act (15 U.S.C. ▇▇.▇▇. 2601 et
seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ▇▇.▇▇.
11001 et seq.), and the regulations implementing these statutes and (y)
analogous state and local provisions.
Environmental Reports: As defined in Section 26.1.2.
Estimated Percentage Rent: As defined in Section 3.2.1.
Event of Default: As defined in Section 17.1.
Excess Amount: As defined in Section 10.5.2.
Expended Amount: As defined in Section 10.5.2.
Extended Term: As defined in Section 2.3.
Extended Term Commencement Date: As defined in Section 2.3.
Facility: The assisted living facility to be operated on the
Leased Property commonly known as ____________________.
3
Facility Mortgage: As defined in Section 14.1.
Facility Mortgagee: Means the holder or beneficiary of a
Facility Mortgage, if any, and only to the extent Landlord gives Tenant notice
of the identity and address of the Person.
Facility Revenues: Means all revenues (determined in
accordance with generally accepted accounting principles applied on a consistent
basis, except as provided below) whether or not directly or indirectly received
or receivable from or by reason of the operation of the Facility, including,
without limitation, all resident or client revenues received or receivable for
the use of or otherwise by reason of all rooms, beds and other facilities
provided, meals served, services performed or provided (including, without
limitation, personal care and nursing services, when provided by an employee of
Tenant), space or facilities subleased or goods sold at or from the Facility, or
any other use of the Leased Property, including, without limitation, subleases,
licenses or any other arrangements with third parties relating to the possession
or use of any portion of the Facility; provided, however, that Facility Revenues
shall not include:
(a) revenues from professional fees or charges by
physicians and all providers of ancillary services,
including without limitation, physical therapy
services, whether or not such providers are employees
of Tenant;
(b) non-operating revenues such as interest income or
income from the sale of assets not sold in the
ordinary course of business;
(c) federal, state or local excise taxes imposed
upon, and any tax based upon or measured by, such
revenues which is added to or made a part of the
amount billed to the resident, client or other
recipient of such services or goods, whether included
in the billing or stated separately;
(d) contractual allowances (relating to any period
during the Term) for ▇▇▇▇▇▇▇▇ not paid by or received
from the appropriate governmental agencies or third
party providers; and
(e) all proper patient billing credits and
adjustments (including, without limitation,
allowances for uncollectable accounts) according to
generally accepted accounting principles relating to
health care accounting.
Fiscal Quarter: The three-month periods (or applicable
portions thereof) in any Fiscal Year from January 1 through March 31, April 1
through June 30, July 1 through September 30 and October 1 through December 31.
4
Fiscal Year: Each twelve-month period from October 1 through
September 30.
Fixtures: Means all permanently affixed equipment, machinery,
fixtures, and other items of real 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,
without limitation, all furnaces, boilers, heaters, electrical equipment,
kitchen equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, all of which, to the greatest extent permitted by law, are
hereby deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto, but specifically
excluding all items included within the category of Tenant's Personal Property.
Full Replacement Cost: Means the actual replacement cost
thereof from time to time including increased cost of construction endorsement,
less exclusions provided in the normal fire insurance policy.
GAAP: Means generally accepted accounting principles.
Guarantee: Means the Guarantee of even date herewith executed
by Guarantor in favor of Landlord, the form of which is attached hereto as
Exhibit D.
Guarantor: Means Genesis Health Ventures, Inc., a Pennsylvania
corporation, and its successors and assigns.
Hazardous Materials: Means any substances, pollutants,
contaminants, materials or wastes, whether solid, liquid or gaseous in nature
(including, without limitation, any medical waste):
(i) the presence of which requires investigation or
remediation under any federal, state or local
statute, regulation, ordinance, order, action or
policy, administrative request or civil complaint
under any of the foregoing or under common law;
(ii) which is defined as a "hazardous waste,"
"pollutant or contaminant" or "hazardous substance"
under any federal, state or local statute, regulation
or ordinance or amendments thereto as in effect as of
the Commencement Date, or as thereafter amended,
including the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ▇▇.▇▇. 9601
et seq.) or the Resource Conservation and Recovery
Act (42 U.S.C. ▇▇.▇▇. 6901 et seq.);
5
(iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and as of the
Commencement Date, or as thereafter amended, is
regulated by any governmental authority, agency,
department, commission, board, or instrumentality of
the United States, or any state or any political
subdivision thereof having or asserting jurisdiction
over the Leased Property;
(iv) the presence of which on the Leased Property
causes or threatens to cause a nuisance upon the
Leased Property or to other properties or poses a
hazard to the health or safety of persons on or about
the Leased Property;
(v) which, except as contained in building materials,
contains gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenyls (PCBs) or
friable asbestos or friable asbestos-containing
materials or urea formaldehyde foam insulation; or
(vi) radon gas.
Impartial Appraiser: As defined in Section 14.2.
Impositions: Means collectively:
(a) all taxes (including all real and personal
property, ad valorem, sales and use, single business,
gross receipts, transaction privilege, rent or
similar taxes);
(b) assessments and levies (including all assessments
for public improvements or benefits, whether or not
commenced or completed prior to the date hereof and
whether or not to be completed within the Term);
(c) excises;
(d) fees (including license, permit, inspection,
authorization and similar fees); and
(e) 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, the business conducted thereon by Tenant or the Rent payable
with respect thereto (including all interest and penalties thereon due to any
failure in payment by Tenant), which at any time during or in respect of the
Term hereof may be assessed or imposed on or in respect of or be a lien upon (i)
6
Landlord or Landlord'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 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
Impositions shall not include:
(aa) any tax based on net income (whether denominated
as an income, franchise, capital stock or other tax)
imposed on Landlord or any other Person other than
Tenant;
(bb) any transfer, or net revenue tax of Landlord or
any other Person other than Tenant;
(cc) any tax imposed solely with respect to the sale,
exchange or other disposition by Landlord of the
Leased Property or the proceeds thereof; or
(dd) any tax imposed with respect to any principal or
interest on any indebtedness on the Leased Property.
Impound Charges: As defined in Section 17.9.
Impound Payment: As defined in Section 17.9.
Initial Term: As defined in Section 2.2.
Insurance Requirements: All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
Land: As defined in Section 2.1.
Landlord: As defined in the Preamble.
Landlord's Encumbrance: As defined in Section 25.1.
Landlord's Original Notice: As defined in Section 26.1.2.
Landlord's Personal Property: As defined in Section 2.1.
Lease: As defined in the Recitals.
Leased Improvements: As defined in Section 2.1.
Leased Property: As defined in Section 2.1.
7
Lease Year: Means each period of one (1) year that commences
on the Commencement Date (or anniversary thereof) and ends on the day
immediately prior to the next anniversary of the Commencement Date.
Legal Requirements: All federal, state, county, municipal and
other governmental statutes, laws (including the Americans with Disabilities Act
and any Environmental Laws), rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property 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; (ii) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Tenant (other than
encumbrances created by Landlord without the consent of Tenant), at any time in
force affecting the Leased Property; or (iii) require the cleanup or other
treatment of any Hazardous Material.
MAI Appraiser: As defined in Exhibit C.
Management Agreement: Any agreement, whether written or oral,
between Tenant and any other Person pursuant to which Tenant provides any
payment, fee or other consideration to any other Person to operate or manage the
Facility.
Manager: Means any Person having at least ___ years experience
in the management of ________ living facilities of at least similar size and
quality to the Facility that manages the Facility in accordance with the terms
hereof.
Memorandum of Lease: As defined in Section 27.16.
Occupancy Rate: Means, for a given period, the average daily
occupancy rate for beds or units, as applicable, at the Facility during such
period, expressed as a percentage.
Officer's Certificate: A certificate of Tenant signed by an
officer authorized to so sign by the board of directors or bylaws.
Operating Standards: Means the standards for operating and
maintaining the Facility and the Leased Property set forth in Exhibit B.
Original Lease Terms: As defined in Section 26.1.1.
Original Notice Delivery Date: As defined in Section 26.1.2.
Original Purchase Price: As defined in Section 26.1.1.
8
Overdue Rate: On any date, a rate equal to the Prime Rate on
such date plus two percent (2%), but in no event greater than the maximum rate
then permitted under applicable law.
Participating Revenue Percentage: Means ________ percent
(_____%) during the Initial Term and shall be determined in accordance with
Section 2.3 for each Extended Term.
Pending Contract: As defined in Section 26.1.3.
Percentage Rent: As defined in Section 3.2.
Permitted Expenditure: As defined in Section 10.5.1.
Person: Means and includes natural persons, corporations,
limited liability companies, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, Indian tribes or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
Primary Intended Use: As defined in Section 7.1.1.
Prime Rate: On any date, a rate equal to the annual rate on
such date announced by Citibank, N.A. to be its prime rate or base rate for
ninety (90) day unsecured loans to its corporate borrowers of the highest credit
standing.
Registered Offering: As defined in Section 23.2.
Related Rights: As defined in Section 2.1.
Rent: Collectively, Estimated Percentage Rent and Additional
Rent, each as defined in Article III.
Required Amount: Means $______________ [$3,000 multiplied by
the number of units].
Required Period: As defined in Section 10.5.2.
Required Year: As defined in Section 10.5.1.
Right of First Refusal Terms: As defined in Section 26.1.2.
Rules: As defined in Exhibit E.
Sale Activity: As defined in Section 26.1.3.
Security Deposit. As defined in Section 8.1.
9
Simultaneous Leases: Means the Leases set forth on Schedule 3
hereto.
State: Means the State or Commonwealth in which the Leased
Property is located.
Tenant: As defined in the Preamble.
Tenant Improvement: As defined in Section 11.1.
Tenant-Owned Name: As defined in Section 27.21.
Tenant's Original Offer: As defined in Section 26.1.2.
Tenant's Personal Property: All machinery, equipment,
furniture, furnishings, movable walls or partitions, phone system, computers or
trade fixtures or other personal property, and consumable inventory and
supplies, owned by Tenant and used or useful in Tenant's business on the Leased
Property, including all items of furniture, furnishings, equipment, supplies and
inventory, kitchen fixtures, flatware, lawn mowers and other gardening tools,
and tractors and other motorized vehicles.
Term: Collectively, the Initial Term and the Extended Terms,
as the context may require, unless earlier terminated pursuant to the provisions
hereof.
Third MAI Appraiser: As defined in Exhibit C.
Title Commitment: That certain Commitment for Owner's Title
Insurance No. ______________, dated __________________, issued by Commonwealth
Land Title Insurance Company, and any and all amendments and endorsements
thereto.
Title Company: As defined in Section 26.1.2.
Title Insurance: As defined in Section 26.1.2.
Unavoidable Delays: Delays due to strikes, lockouts, inability
to procure materials, power failure, acts of God, governmental restrictions,
enemy action, civil commotion, fire, unavoidable casualty or other causes beyond
the control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto unless such lack of funds is caused by the failure of the
other party hereto perform any obligations of such party, under this Lease.
Unavoidable Event: As defined in Section 21.2.
10
Unsuitable For Its Primary Intended Use: A state or condition
of the Facility such that in the good faith judgment of Tenant, reasonably
exercised, the Facility cannot be operated on a commercially practicable basis
for its Primary Intended Use.
ARTICLE II
----------
PROPERTY AND TERM
-----------------
2.1 Property.
Upon and subject to the terms and conditions set forth in this
Lease, Landlord leases to Tenant and Tenant leases from Landlord all of the
following (collectively the "Leased Property"):
(a) that certain tract, piece and parcel of land, as more
particularly described on Schedule 2 hereto (the "Land");
(b) all buildings, structures, Fixtures and other improvements
of every kind now or hereafter located on the Land including,
but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and
off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land
including any Tenant Improvements (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 personal property, if any, owned by Landlord and
located on the Leased Property ("Landlord's Personal
Property").
2.2 Initial Term.
The initial term of each Lease shall commence on the
Commencement Date and shall expire on the day prior to the tenth anniversary of
the Commencement Date (the "Initial Term").
2.3 Extended Terms.
Provided that (i) no Event of Default shall have occurred and
be continuing, (ii) this Lease shall be in full force and effect and (iii) the
tenant under each Simultaneous Lease shall have simultaneously exercised its
11
option to extend the term of the Simultaneous Lease to which it is a party
(other than Simultaneous Leases that have been terminated in accordance with the
provisions thereof, or by the mutual agreement of the landlord and tenant
thereunder). Tenant shall have the right to extend the Term for up to two
consecutive extended terms of five years each (each, an "Extended Term").
Each Extended Term shall commence on the day succeeding the
expiration of the Initial Term or the preceding Extended Term therefor, as the
case may be (any such day, an "Extended Term Commencement Date"), and shall
expire on the day prior to the fifth (5th) anniversary of such Extended Term
Commencement Date. For any Extended Term, the Participating Revenue Percentage
shall be equal to the fair market rate as of the applicable Extended Term
Commencement Date as reasonably determined by Landlord. All of the other terms,
conditions, covenants and provisions of this Lease shall apply for such Extended
Term. If Tenant shall elect to exercise any of the aforesaid extensions, Tenant
shall do so by giving Landlord notice therefor not later than twelve (12) months
prior to the expiration of the then current Term, it being agreed that time is
of the essence with respect to the giving of such notice. Tenant may not
exercise this extension right with respect to more than one Extended Term at a
time. If Tenant shall fail to give any such notice, this Lease shall
automatically terminate at the end of the then current Term, and Tenant shall
have no further right to extend the Term of this Lease. If Tenant shall give
such notice, the extension of the Lease shall be automatically effected without
the execution of any additional documents; it being understood and agreed,
however, that Tenant and Landlord shall execute such documents and agreements as
either party shall reasonably require to evidence the same.
ARTICLE III
-----------
RENT
----
3.1 Rent.
Tenant shall pay to Landlord, in lawful money of the United
States of America, which shall be legal tender for the payment of public and
private debts, without offset, abatement, demand or reduction, Percentage Rent
(as defined below), and Additional Rent (as defined below) during the Term as
hereinafter provided. Payment of Rent during the Term shall be made at
Landlord's address set forth in Section 27.8 or at such other place or to such
other Person as Landlord from time to time may designate in writing. If any
payment owing hereunder shall otherwise be due on a day that is not a Business
Day, such payment shall be due on the next succeeding Business Day. All payments
12
to Landlord shall be made by corporate check, certified check, wire transfer of
immediately available funds or by such other method acceptable to Landlord in
its sole discretion.
3.2 Percentage Rent.
Tenant shall pay to Landlord Percentage Rent as provided
below. "Percentage Rent" for a given period shall be equal to the Participating
Revenue Percentage times the Facility Revenues for such period, and shall be
comprised of Estimated Percentage Rent payable during such period plus any
Additional Quarterly Percentage Rent and Additional Annual Percentage Rent
payable with respect to such period.
3.2.1 Monthly Payment of Estimated Percentage Rent.
Tenant shall pay Estimated Percentage Rent for each month in
advance. "Estimated Percentage Rent" for each month in a Fiscal Quarter shall be
equal to one-third (1/3) of the Percentage Rent for the immediately preceding
Fiscal Quarter for which the quarterly calculation and reconciliation of
Percentage Rent has been made as provided in Section 3.2.2. Monthly Estimated
Percentage Rent shall be paid to Landlord on or before the fifth (5th) Business
Day of each month.
3.2.2 Quarterly Calculation and Reconciliation.
Within thirty (30) days after the end of each Fiscal Quarter,
Tenant shall deliver to Landlord an Officer's Certificate setting forth for each
Facility (i) the Occupancy Rate for such Fiscal Quarter, (ii) on an unaudited
basis, the Facility Revenues for the Fiscal Quarter just ended and (iii) a
comparison of the amount of Estimated Percentage Rent paid during such Fiscal
Quarter versus the amount of Percentage Rent owing on the basis of the quarterly
calculation of the Facility Revenues. If the Percentage Rent for such Fiscal
Quarter is greater than the amount paid by Tenant as Estimated Percentage Rent
during such Fiscal Quarter, Tenant shall pay to Landlord such difference plus
the excess of the Estimated Percentage Rent payable with respect to each month
in the current Fiscal Quarter determined in accordance with Section 3.2.1 (after
determination of the Percentage Rent for the immediately preceding Fiscal
Quarter in accordance with this Section 3.2.2) over the amount paid by Tenant as
Estimated Percentage Rent for the first month of the current Fiscal Quarter
(collectively, "Additional Quarterly Percentage Rent"), as Additional Rent (as
defined below) in accordance with the provisions of Section 3.3, together with
the next monthly payment of Estimated Percentage Rent on the date on which the
next monthly payment of Estimated Percentage Date is due and payable. Solely for
purposes of Section 3.2.3, any payment of Additional Quarterly Percentage Rent
shall be deemed to be a payment of Percentage Rent with respect to the Fiscal
Quarter and Fiscal Year for which such Additional Quarterly Percentage Rent was
calculated without regard to when such Additional Quarterly Percentage Rent is
actually paid. If the Percentage Rent for such Fiscal Quarter is less than the
13
amount paid by Tenant as Estimated Percentage Rent during such Fiscal Quarter,
Landlord shall, at Landlord's option, either (i) remit to Tenant its check in an
amount equal to such difference, or (ii) grant Tenant a credit against the
payment of Estimated Percentage Rent next coming due.
3.2.3 Annual Reconciliation.
Within ninety (90) days after the end of each Fiscal Year, or
after the expiration or termination of the Lease, Tenant shall deliver to
Landlord an Officer's Certificate setting forth for the Facility (i) the
Occupancy Rate for such Fiscal Year, (ii) on an audited basis, the Facility
Revenues for the Fiscal Year just ended, and (iii) a comparison of the amount of
Percentage Rent actually paid during such Fiscal Year versus the amount of
Percentage Rent actually owing on the basis of the annual calculation of the
Facility Revenues. If the Percentage Rent for such Fiscal Year is greater than
the amount paid by Tenant in respect of Percentage Rent during such Fiscal Year,
Tenant shall immediately pay to Landlord such difference ("Additional Annual
Percentage Rent") as Additional Rent in accordance with the provisions of
Section 3.3. If the Percentage Rent for such Fiscal Year is less than the amount
previously paid by Tenant, Landlord shall, at Landlord's option, either (i)
remit to Tenant its check in an amount equal to such difference, or (ii) grant
Tenant a credit against the payment of Estimated Percentage Rent next coming
due.
3.2.4 Record-keeping.
Tenant shall utilize an accounting system for the Leased
Property in accordance with its usual and customary practices and in accordance
with GAAP (applied on a basis consistent with all of the properties subject to
the Simultaneous Leases) which will accurately record all Facility Revenues.
Tenant shall retain reasonably adequate records for each Fiscal Year conforming
to such accounting system until the later of (i) five years after the expiration
of such Fiscal Year and (ii) until the reconciliation described in Section 3.2.3
above for such Fiscal Year has been made.
3.2.5 Audits.
Landlord, at its own expense except as provided herein, shall
have the right, but not the obligation, from time to time directly or through
its accountants to audit the information set forth in the Officer's Certificate
referred to in Section 3.2.3 and in connection with such audits to examine
Tenant's books and records with respect thereto (including supporting data,
sales tax returns and Tenant's work papers). If any such audit discloses a
deficiency in the payment of Percentage Rent, Tenant shall forthwith pay to
Landlord the amount of the deficiency, as finally agreed or determined, together
with interest at the rate of interest per annum equal to the Prime Rate plus two
percent (2%) from the date when said payment should have been made to the date
14
of payment thereof. If any such audit discloses that the Facility Revenues
actually received by Tenant for any Fiscal Year exceeds the Facility Revenues
reported by Tenant by more than four percent (4%), Tenant shall pay the
reasonable cost of such audit and examination.
3.3 Additional Rent.
In addition to Estimated Percentage Rent, (1) Tenant shall
also pay and discharge when due and payable any Additional Quarterly Percentage
Rent, any Additional Annual Percentage Rent and all other amounts, liabilities,
obligations and Impositions which Tenant assumes or agrees to pay under this
Lease, and (2) in the event of any failure on the part of Tenant to pay any of
those items referred to in clause (1) above, Tenant shall also 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 (1) and (2) above
being referred to herein collectively as the "Additional Rent"). Except for
payments of Additional Quarterly Percentage Rent and Additional Annual
Percentage Rent which are due immediately upon determination thereof as provided
in Section 3.2.2 and Section 3.2.3, respectively, and except as otherwise
provided in this Lease, all Additional Rent shall be due and payable ten (10)
days after either Landlord or the applicable third party who may be billing
Tenant therefor shall deliver an invoice to Tenant therefor or, if earlier, the
due date set forth in such notice. To the extent that any Additional Rent is
required to be paid to Landlord pursuant to this Lease, Tenant shall be relieved
of its obligation to pay such Additional Rent to the entity to which they would
otherwise be due.
3.4 Late Payment of Rent.
Tenant hereby acknowledges that late payment by Tenant to
Landlord of Estimated Percentage Rent or Additional Rent will cause Landlord to
incur costs not contemplated under the terms of this Lease, 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 Landlord by the terms of any mortgage or deed of trust covering
the Leased Property and other expenses of a similar or dissimilar nature.
Accordingly, if any installment of Estimated Percentage Rent or Additional Rent
(but only as to those items of Additional Rent which are payable directly to
Landlord) shall not be paid within five (5) Business Days after its due date,
Tenant will pay Landlord on demand, as Additional Rent, a late charge equal to
five percent (5%) of such installment. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of late payment by Tenant. In addition, if any installment of
Estimated Percentage Rent or Additional Rent (but only as to those items of
Additional Rent which are payable directly to Landlord) shall not be paid on its
due date, the amount unpaid shall bear interest, from the due date of such
15
installment to the date of payment thereof, computed at the Overdue Rate on the
amount of such installment, and Tenant will pay such interest to Landlord on
demand, as Additional Rent. The payment of said late charge or such interest
shall not constitute a waiver, nor excuse or cure, of any default under this
Lease, nor prevent Landlord from exercising any other rights and remedies
available to Landlord.
3.5 Net Lease.
The Rent shall be paid absolutely net to Landlord and, except
as expressly provided in Article XV and Article XVI, without notice or demand
and without set-off, counterclaim, recoupment, abatement, suspension, determent,
deduction or defense, so that this Lease shall yield to Landlord the full amount
of the installments of Estimated Percentage Rent and Additional Rent throughout
the Term, all as more fully set forth in Article V.
3.6 Income and Expense Prorations.
Income and expense items received or paid with respect to the
period in which the Term terminates shall be adjusted and prorated between
Landlord and Tenant as of the date the Term terminates.
3.7 Best Efforts to Maximize Facility Revenues.
Tenant hereby covenants and agrees that the operation of each
Facility shall be conducted in a manner consistent with the prevailing standards
and practices recognized in the health care industry as those customarily
utilized by first-class business operations. Subject to any applicable Legal
Requirements, Tenant shall use its best efforts to maximize the Facility
Revenues for the Facility, and to that end, (i) Tenant shall maintain or cause
to be maintained a full staff of employees at the Facility and (ii) a maximum
amount of space in the Facility shall be devoted to revenue producing activities
and only such part thereof shall be devoted for office, storage and non-revenue
producing purposes as shall be reasonably necessary.
ARTICLE IV
----------
IMPOSITIONS
-----------
4.1 Payment of Impositions.
Subject to Section 17.9, Tenant will pay, or cause to be paid,
all Impositions before any fine, penalty, interest or cost may be added for
non-payment, such payments to be made directly to the taxing authorities where
feasible. All payments of Impositions shall be subject to Tenant's right of
contest pursuant to the provisions of Article XIII. Tenant shall promptly
furnish to Landlord copies of official receipts, if available, or other
16
satisfactory proof evidencing such payments, such as canceled checks.
4.2 Information and Reporting.
Landlord shall give prompt notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has knowledge, but
Landlord's failure to give any such notice shall in no way diminish Tenant's
obligations hereunder to pay such Impositions. Landlord and Tenant shall, upon
request of the other, provide such data as is maintained by the party to whom
the request is made with respect to the Leased Property as may be necessary to
prepare any required returns and reports. In the event any applicable
governmental authorities classify any property covered by this Lease as personal
property, Tenant shall file all personal property tax returns in such
jurisdictions where it must legally so file and shall pay all associated
personal property taxes. Each party, to the extent it possesses the same, will
provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property.
4.3 Assessment Challenges.
In addition to Tenant's rights under Article XIII but subject
to the requirements thereof, Tenant may, upon notice to Landlord, at Tenant's
option and at Tenant's sole cost and expense, protest, appeal, or institute such
other proceedings as Tenant may deem appropriate to effect a reduction of real
estate or personal property assessments and Landlord, at Tenant's expense as
aforesaid, shall fully cooperate with Tenant in such protest, appeal, or other
action.
4.4 Prorations; Payment in Installments.
Impositions imposed in respect of the tax-fiscal period during
which the Term terminates shall be adjusted and prorated between Landlord and
Tenant, whether or not such Imposition is imposed before or after such
termination, and Tenant's obligation to pay its prorated share thereof shall
survive such termination. 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), Tenant may elect to pay in installments, in
which event Tenant shall pay all installments (and any accrued interest on the
unpaid balance of the Imposition) that are due during the Term hereof before any
fine, penalty, premium, further interest or cost may be added thereto.
4.5 Refunds.
If any refund shall be due from any taxing authority in
respect of any Imposition paid by Tenant, the same shall be paid over to or
retained by Tenant if no Event of Default shall have occurred hereunder and be
continuing. Any such funds retained by Landlord due to an Event of Default shall
17
be applied as provided in Article XVII.
4.6 Utility Charges.
Tenant shall pay or cause to be paid prior to delinquency
charges for all utilities and services, including, without limitation,
electricity, telephone, trash disposal, gas, oil, water, sewer, communication
and all other utilities used in the Leased Property during the Term.
4.7 Assessment Districts.
Neither party shall voluntarily consent to or agree in writing
to (i) any special assessment or (ii) the inclusion of any material portion of
the Leased Property into a special assessment district or other taxing
jurisdiction unless the other party shall have consented thereto, which consent
shall not be unreasonably withheld.
ARTICLE V
---------
TENANT WAIVERS
--------------
5.1 No Termination or Abatement.
Except as otherwise specifically provided in this Lease, to
the extent permitted by law, (i) Tenant shall remain bound by this Lease in
accordance with its terms and shall neither take any action without the consent
of Landlord to modify, surrender or terminate this Lease, nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent by reason of, and (ii) the respective obligations of Landlord and Tenant
shall not be otherwise affected by reason of:
(a) any damage to, or destruction of, the Leased Property or
any portion thereof caused primarily by the actions,
omissions, negligence or intentional misconduct of Tenant;
(b) the lawful or unlawful prohibition of, or restriction
upon, Tenant's use or occupancy of the Leased Property, or any
portion thereof, caused primarily by the actions, omissions,
negligence or intentional misconduct of Tenant; or
(c) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee
of Landlord.
18
Tenant hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law
(i) to modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) to entitle Tenant to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Tenant
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Landlord and Tenant under this Lease shall continue to be payable
in all events unless such obligations 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.
5.2 Condition of Leased Property.
Notwithstanding anything contained in this Lease to the
contrary (including without limitation, the provisions of Section 10.4 hereof),
Tenant acknowledges receipt and delivery of possession of the Leased Property
and that Tenant has examined or otherwise has knowledge of the condition of the
Leased Property prior to the execution and delivery of this Lease. Regardless,
however, of any inspection made by Tenant of the Leased Property and whether or
not any patent or latent defect or condition was revealed or discovered thereby,
Tenant is leasing the Leased Property "as is" in its present condition. Tenant
waives and releases any claim or action against Landlord in respect of the
condition of the Leased Property including any defects or adverse conditions
latent or patent, matured or unmatured, known or unknown by Tenant or Landlord
as of the date hereof. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS
LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR
SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO (A) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE
OR PURPOSE, (B) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (C) THE
EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (D) VALUE, (E) COMPLIANCE WITH
SPECIFICATIONS, (F) LOCATION, (G) USE, (H) CONDITION, (I) MERCHANTABILITY, (J)
QUALITY, (K) DESCRIPTION, (L) DURABILITY, (M) OPERATION, (N) THE EXISTENCE OF
ANY HAZARDOUS MATERIAL OR (O) COMPLIANCE OF THE LEASED PROPERTY WITH ANY LAW
(INCLUDING ANY ENVIRONMENTAL LAW) OR LEGAL REQUIREMENTS. TENANT ACKNOWLEDGES
THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT
AND THAT TENANT IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR
LANDLORD'S AGENTS OR EMPLOYEES. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN THE
LEASED PROPERTY OF ANY NATURE, WHETHER LATENT OR PATENT, AS BETWEEN LANDLORD AND
TENANT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT
19
LIABILITY IN TORT), IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY
TENANT. THE PROVISIONS OF THIS SECTION 5.2 HAVE BEEN NEGOTIATED, AND ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD,
EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE. To the extent permitted by law, however, Landlord hereby assigns to
Tenant all of Landlord's rights to proceed against any predecessor in title for
breaches of warranties or representations or for latent defects in the Leased
Property. Landlord shall fully cooperate with Tenant in the prosecution of any
such claims, in Landlord's or Tenant's name, all at Tenant's sole cost and
expense. Tenant shall indemnify, defend and hold harmless Landlord from and
against any loss, cost, damage or liability (including reasonable attorneys'
fees and expenses) incurred by Landlord in connection with such cooperation.
ARTICLE VI
----------
OWNERSHIP OF PROPERTY
---------------------
6.1 Leased Property.
Tenant acknowledges that the Leased Property is the property
of Landlord and that Tenant has only the right to the exclusive possession and
use of the Leased Property during the Term of and upon the terms and conditions
of this Lease. Subject to the provisions of Article XXV below, Landlord hereby
represents and warrants to Tenant that as of the Commencement Date, Landlord has
good and marketable title to the Leased Property free and clear of all liens and
encumbrances, except for those encumbrances referenced on Schedule B to the
Title Commitment or other liens and encumbrances that would not materially
impair the use of the Leased Property for its Primary Intended Use.
6.2 Tenant's Personal Property.
Tenant may (and shall as provided below), at its expense,
install, affix or assemble or place on the Land or in any of the Leased
Improvements, any items of Tenant's Personal Property, and Tenant may, subject
to the conditions set forth in this Lease, remove the same upon the expiration
or any prior termination of the Term. Tenant shall provide and maintain during
the entire Term all such Tenant's Personal Property as shall be necessary in
order to operate the Facility in compliance with all applicable Legal
Requirements and Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use and in
accordance with its past practices.
20
6.3 Purchase of Tenant's Personal Property.
Upon the expiration or sooner termination of this Lease,
Landlord shall have the right (but not the obligation) to purchase from Tenant
all or any portion of tangible Tenant's Personal Property (which shall not
include software):
(i) if owned by Tenant and not subject to any secured
financing, at the fair market value thereof;
(ii) if owned by Tenant, but subject to a secured financing,
at the greater of the amount of the debt owing under such
financing and the fair market value thereof; and
(iii) if leased by Tenant and the applicable lease provides
for termination of the lease as to such property upon the
payment of a given sum, at the greater of the amount of the
payment so provided and the fair market value thereof;
provided, that at Landlord's option and if the lessor of such
Tenant's Personal Property will permit Landlord to assume the
obligations under the applicable lease with respect to such
property (separate from the obligations under a master lease
if in effect), Tenant shall, upon the request of Landlord,
assign the applicable lease (or portion thereof) to Landlord.
Landlord may elect to purchase Tenant's Personal Property by
giving notice to Tenant not later than, as the case may be, ninety (90) days
prior to the expiration of this Lease or upon the termination of this Lease
following any Event of Default. Tenant shall transfer title to such property by
a ▇▇▇▇ of sale without warranty (except as to ownership) upon concurrent payment
in cash by Landlord.
6.4 Removal of Personal Property.
All items of Tenant's Personal Property not removed by Tenant
within fourteen (14) days following the expiration or earlier termination of
this Lease shall be considered abandoned by Tenant and may, at Landlord's
discretion and without any obligation, be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor. Tenant shall, at its expense, restore the Leased Property to the
condition required by Article X, including repair of all damage to the Leased
Property caused by the removal of Tenant's Personal Property, whether effected
by Tenant or Landlord. Landlord shall not be responsible for any loss or damage
to Tenant's Personal Property, or any other property of Tenant, by virtue of
Landlord's removal thereof at any time subsequent to the fourteen (14) day
period provided for herein.
21
6.5 Landlord's Personal Property.
If Landlord has provided any Landlord's Personal Property with
respect to the Facility, Tenant shall maintain such property in the same manner
as Tenant maintains Tenant's Personal Property. Upon the loss, destruction, or
obsolescence of any of the Landlord's Personal Property, Tenant shall replace
such property with Tenant's Personal Property, which such property shall be
owned by Tenant but which shall nevertheless be deemed to be Landlord's Personal
Property for purposes of this Article VI.
ARTICLE VII
-----------
USE OF PROPERTY
---------------
7.1 Permitted Use.
7.1.1 Primary Intended Use.
Tenant shall, at all times during the Term, and at any other
time Tenant shall be in possession of the Leased Property, continuously use or
cause to be used the Leased Property as an appropriately licensed assisted
living facility, and for such other uses as may be necessary or incidental
thereto (such use referred to herein as the Leased Property's "Primary Intended
Use"). Tenant shall not use the Leased Property or any portion thereof for any
other use without the prior written consent of Landlord (which consent may be
granted or withheld in Landlord's reasonable discretion). No use shall be made
or permitted to be made of the Leased Property and no acts shall be done thereon
which will cause the cancellation of any insurance policy covering the Leased
Property or any part thereof (unless another adequate policy is available), nor
shall Tenant sell or otherwise provide to residents or clients therein, or
permit to be kept, used or sold in or about the Leased Property any article
which may be prohibited by law or by fire underwriter's regulations. Tenant
shall, at its sole cost, comply with all of the requirements pertaining to the
Leased Property or other improvements of any insurance board, association,
organization or company necessary for the maintenance of insurance, as herein
provided, covering the Leased Property and Tenant's Personal Property,
including, without limitation, the Insurance Requirements.
7.1.2 Necessary Approvals.
Tenant hereby represents that, on or prior to the Commencement
Date, Tenant shall have obtained all approvals necessary to use and operate, for
the Primary Intended Use, the Leased Property and the Facility located at the
Leased Property under applicable local, state and federal law. From and after
the Commencement Date, Tenant shall maintain all approvals necessary to use and
operate, for its Primary Intended Use, the Leased Property and the Facility
located at the Leased Property under applicable local, state and federal law,
and without limiting the foregoing, shall maintain appropriate certifications
for reimbursement and licensure.
22
7.1.3 Continuous Operation.
Tenant shall continuously operate the Leased Property as a
provider of health care services in accordance with its Primary Intended Use.
Tenant will not take or omit to take any action, the taking or omission of which
may materially impair the value or the usefulness of the Leased Property or any
part thereof for its Primary Intended Use; notwithstanding the foregoing, Tenant
may cease operation of the Facility for a period not to exceed six (6) months.
During any such period of cessation, Tenant shall pay to
Landlord each month as Rent hereunder, an amount equal to the average monthly
Rent paid by Tenant during the six (6) months immediately prior to such
cessation of operation (the "Minimum Rent"). In addition thereto, following the
conclusion of any such period of cessation, for a period of six (6) months,
Tenant shall pay to Landlord as Rent hereunder, the greater of (i) monthly
Minimum Rent as provided in this Section 7.1.3 or (ii) Percentage Rent as
provided in Section 3.2; following the conclusion of said six (6) month period,
Rent shall be payable only in accordance with Section 3.2 hereof.
7.1.4 Lawful Use.
Tenant shall not use or suffer or permit the use of the Leased
Property and Tenant's Personal Property for any unlawful purpose. Tenant shall
not commit or suffer to be committed any waste on the Leased Property, or in the
Facility, nor shall Tenant cause or permit any nuisance thereon or therein.
Tenant shall neither suffer nor permit the Leased Property or any portion
thereof, including any Tenant Improvement, or Tenant's Personal Property, to be
used in a such a manner as (i) would impair materially Landlord's (or Tenant's,
as the case may be) title thereto or to any portion thereof, or (ii) may
reasonably make possible a claim or claims for adverse usage or adverse
possession by the public, as such, or of implied dedication of the Leased
Property or any portion thereof.
7.1.5 Determination of Facility Revenues During Breach.
Facility Revenues for any period during which Tenant is in
breach or violation of any of the covenants set forth in this Section 7.1 shall
be deemed to be the greater of (i) the Facility Revenues for such period or (ii)
the average Facility Revenues for the corresponding period for the prior three
years, as determined by Landlord as adjusted by the Cumulative CPI Adjustment
over such three year period; provided, however, that during the first three
years of the Term, the average Facility Revenues for a period shall be
determined by reference to the corresponding period for each prior year during
23
the Term, as adjusted by the Cumulative CPI over such period.
7.2 Compliance with Applicable Medicaid and Medicare Requirements.
Tenant shall, at its sole cost and expense, make whatever
improvements (capital or ordinary) as are required to conform the Leased
Property to such standards as may, from time to time, be required by federal
Medicare (Title 18) or Medicaid (Title 19) assisted living programs, if
applicable, or any other applicable programs or legislation, or capital
improvements required by any applicable programs or legislation, or capital
improvements required by any other governmental agency having jurisdiction over
the Leased Property as a condition of the continued operation of the Leased
Property for its Primary Intended Use.
7.3 Environmental Matters.
Tenant shall not store, spill upon, dispose of or transfer to
or from the Leased Property any Hazardous Materials, except that Tenant may
store, transfer and dispose of Hazardous Materials in compliance with all
Environmental Laws. Tenant shall maintain the Leased Property at all times free
of any Hazardous Materials (except in compliance with all statues, laws,
ordinances, rules and regulations). Tenant shall, as to the Leased Property,
promptly: (a) notify Landlord in writing of any material change in the nature or
extent of such Hazardous Materials maintained, (b) transmit to Landlord copies
of any citations, orders, notices or other material governmental communications
received with respect thereto, (c) observe and comply with any and all
Environmental Laws and all orders or directions from any official, court or
agency of competent jurisdiction relating to the use or maintenance or requiring
the removal, treatment, containment or other disposition of Hazardous Materials,
and (d) pay or otherwise dispose of any fine, charge or Imposition related
thereto, unless Tenant shall contest the same and the right to use and the value
of the Leased Property is not materially and adversely affected thereby. Tenant
shall, upon demand, pay to Landlord, as Additional Rent, any cost, expense, loss
or damage incurred by Landlord and growing out of the failure of Tenant strictly
to observe and perform the foregoing requirements (including, without
limitation, reasonable attorneys' fees and expenses), which amounts will bear
interest from the date incurred until paid at the Overdue Rate.
Tenant shall protect, release, defend, indemnify and hold
harmless Landlord and each Facility Mortgagee from and against any and all
liabilities, obligations, claims, damages, penalties, costs and expenses
(including without limitation, reasonable attorneys' fees and expenses) imposed
upon, incurred by or asserted against any of them by reason of any failure by
Tenant or any Person claiming under Tenant to perform or comply with any of the
24
terms of this Section 7.3. The provisions of this Section 7.3 shall survive the
expiration or sooner termination of this Lease.
7.4 Landlord to Grant Easements.
Landlord shall, from time to time so long as no Event of
Default has occurred and is continuing, at the request of Tenant and at Tenant's
cost and expense (which cost and expense shall include, without limitation,
Landlord's reasonable attorneys' fees and expenses relating to any action by
Landlord pursuant to this Section 7.4), subject to the approval of Landlord,
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 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 Landlord of an Officer's Certificate, which Officer's
Certificate shall be accompanied by all documents necessary to enable Landlord
to verify the accuracy of such Officer's Certificate and shall state that such
grant, release, dedication, transfer, petition or amendment (i) is not
detrimental to the proper conduct of the business of Tenant on the Leased
Property, (ii) does not reduce its value or usefulness for the Primary Intended
Use and (iii) is necessary for the operation of the Facility in accordance with
the Primary Intended Use (and which Certificate, if contested by Landlord,
shall not be binding on Landlord); provided, however, that any withholding of
approval by Landlord to any action pursuant to this Section 7.4 shall be deemed
to be reasonable if Landlord reasonably believes that any such action is not
required in order to operate or continue to operate the Leased Property and
Facility in accordance with its Primary Intended Use. Landlord shall not grant,
release, dedicate or execute any of the foregoing items in this Section 7.4
without obtaining Tenant's approval, which approval shall not be unreasonably
withheld or delayed.
7.5 Management Agreements.
Throughout the Term, Tenant shall not enter into any
Management Agreement except with a Manager that satisfies the definition of
"Manager" herein. Tenant shall provide Landlord with a copy of each Management
Agreement and any other documents relating thereto which Landlord may reasonably
request. Each Management Agreement shall provide that (i) Landlord shall receive
notice of any defaults thereunder and, at Landlord's option, an opportunity to
cure any such defaults, (ii) Landlord shall have the right to terminate the
Management Agreement upon the occurrence of an Event of Default hereunder and
(iii) Manager shall be obligated to perform and be bound by the covenants of
25
Tenant contained herein. If Landlord shall cure any of Tenant's defaults under
any Management Agreement, the cost of any such cure shall be payable upon demand
by Landlord to Tenant as Additional Rent. Tenant shall deliver to Landlord any
instrument requested by Landlord to implement the intent of the foregoing
provision. In addition to any other rights and remedies available to Landlord
hereunder, in the event of the occurrence of an Event of Default hereunder,
Landlord shall have the right to terminate any Management Agreement then in
effect and to appoint a manager for the Facility acceptable to Landlord in its
sole discretion.
ARTICLE VIII
------------
SECURITY FOR LEASE OBLIGATIONS
------------------------------
8.1 Security Deposit.
On or prior to the Commencement Date, Tenant shall deposit
with Landlord the sum of $__________________________ in cash representing a
security deposit against the faithful performance of the terms and conditions
contained in this Lease (the "Security Deposit"). As long as no Event of Default
has occurred and is then continuing, and as long as no fact or circumstance
currently exists which, with the giving of notice or the passage of time, would
constitute an Event of Default, then interest on any such Security Deposit shall
be paid by Landlord to Tenant on a quarterly basis in arrears at a rate of
interest per annum equal to the 90 day Treasury ▇▇▇▇ rate. Upon the expiration
or earlier termination of this Lease, provided that Tenant shall have met all of
its obligations under this Lease, the Security Deposit shall be refunded to
Tenant within thirty (30) days of such expiration or termination.
8.2 Guarantee.
All obligations of Tenant under this Lease shall be
unconditionally and irrevocably guaranteed by Guarantor pursuant to the
Guarantee.
26
ARTICLE IX
----------
HAZARDOUS MATERIALS
-------------------
9.1 Remediation.
If Tenant becomes aware of the presence of any Hazardous
Material in a quantity sufficient to require remediation or reporting under any
Environmental Law, or if necessary to prevent the value of the Leased Property
from being materially and adversely affected, in, on or under the Leased
Property or if Tenant, Landlord, or the Leased Property becomes subject to any
order of any court or federal, state or local agency to investigate, remove,
remediate, repair, close, detoxify, decontaminate or otherwise clean up the
Leased Property, Tenant shall, at its sole expense, carry out and complete any
required response, action, investigation, removal, remediation, repair, closure,
detoxification, decontamination or other cleanup of the Leased Property. If
Tenant fails to implement and diligently pursue any such repair, closure,
detoxification, decontamination, response, action or other cleanup of the Leased
Property in a timely manner, Landlord shall have the right (in addition to any
other rights of Landlord under this Lease), but not the obligation, to carry out
such action and to recover all of the reasonable costs and expenses from Tenant
as Additional Rent.
9.2 Tenant's Indemnification of Landlord.
Tenant shall pay, protect, indemnify, save, release, hold
harmless and defend Landlord and any Facility Mortgagee from and against all
liabilities, obligations, claims, damages (including punitive and consequential
damages), penalties, causes of action, demands, judgments, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), to the
extent permitted by law, imposed upon or incurred by or asserted against
Landlord or the Leased Property by reason of any Environmental Law (irrespective
of whether there has occurred any violation of any Environmental Law) in respect
of the Leased Property howsoever arising, without regard to fault on the part of
Tenant, including (a) liability for response costs and for costs of removal and
remedial action incurred by the United States Government, any state or local
governmental unit or any other Person, or damages from injury to or destruction
or loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to any Environmental Law, (b)
liability for costs and expenses of abatement, investigation, removal, closure,
remediation, correction or clean-up, fines, damages, response costs or penalties
which arise under the provisions of any Environmental Law, or (c) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity.
27
9.3 Survival of Indemnification Obligations.
Tenant's obligations or liability under this Article IX
arising during the Term hereof shall survive any termination of this Lease for a
period of two (2) years following termination.
9.4 Environmental Violations at Expiration or Termination of
Lease.
9.4.1 Breach.
Notwithstanding any other provisions of this Lease, if, at a
time when the Term would otherwise terminate or expire, a violation of any
Environmental Law has been asserted by Landlord and has not been resolved in a
manner reasonably satisfactory to Landlord, or has been acknowledged by Tenant
to exist or has been found to exist at the Leased Property or has been asserted
by any governmental authority and failure to have completed all action required
to correct, ▇▇▇▇▇ or remediate such a violation of any Environmental Law
materially impairs the leasability of the Leased Property upon the expiration of
the Term, then, at the option of Landlord, the Term shall be automatically
extended with respect to the Leased Property beyond the date of termination or
expiration and this Lease shall remain in full force and effect under the same
terms and conditions until the completion of all remedial action in accordance
with applicable Environmental Laws; provided, however, that Tenant may, upon any
such extension of the Term, terminate the Term by paying to the Landlord such
amount as is necessary in the reasonable judgment of Landlord to complete or
perform such remedial action, which amount shall be held in escrow for
remediation on terms and conditions reasonably acceptable to Landlord and
Tenant; any amount not required for remediation shall be remitted to Tenant.
9.4.2 Determination of Facility Revenues During Breach.
Facility Revenues for the Facility and the Leased Property for
any period during which Tenant is in breach or violation of any of the covenants
set forth in this Section 9.4 shall be deemed to be the greater of the Facility
Revenues for (i) such period or (ii) the average Facility Revenues for the
corresponding period for the prior three (3) years, as adjusted by the
Cumulative CPI Adjustment over such three-year period; provided, however, that
during the first three years of the Term, the average Facility Revenues for a
period shall be determined by reference to the corresponding period for each
prior year during the Term, as adjusted by the Cumulative CPI Adjustment over
such period.
28
ARTICLE X
---------
MAINTENANCE AND REPAIR
----------------------
10.1 Tenant's Maintenance and Repair Obligation.
Tenant, at its expense, will keep the Leased Property and
Tenant's Personal Property in good order, repair and appearance (whether or not
the need for such repairs occurs as a result of Tenant's use, any prior use, the
elements or the age of the Leased Property in accordance with any applicable
Legal Requirements, and, except as otherwise provided in Article XV, with
reasonable promptness, make all necessary and appropriate repairs thereto of
every kind and nature, 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 of the Term (concealed
or otherwise).
10.2 Waiver of Statutory Obligations.
Landlord shall not under any circumstances be required to
build or rebuild any improvements on the Leased Property, or to make any
repairs, replacements, alterations, restorations or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or non-structural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto, in connection with this Lease, or to maintain
the Leased Property in any way. Tenant hereby waives, to the extent permitted by
law, the right to make repairs at the expense of Landlord pursuant to any law in
effect as of the Commencement Date or later enacted.
10.3 Mechanic's Liens.
Nothing contained in this Lease and no action or inaction by
Landlord shall be construed as (i) constituting the consent or request of
Landlord 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,
29
addition, repair or demolition of or to the Leased Property or any part thereof
or (ii) giving Tenant 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 either case, in such fashion as would permit the making of
any claim against Landlord 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 Landlord in the Leased Property, or any
portion thereof, and Tenant shall promptly remove, discharge or otherwise
satisfy any such right, title, interest, lien, claim or other encumbrance.
10.4 Surrender of Property.
Unless the Lease shall have been terminated pursuant to the
provisions of Article XV, Tenant shall, upon the expiration or prior termination
of the Term, vacate and surrender the Leased Property to Landlord in the
condition in which the Leased Property was originally received from Landlord,
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
(subject to the obligations of Tenant to maintain the Leased Property in good
order and repair during the entire term) and with due consideration being given
to the age oF the Leased Property at such time.
10.5 Required Capital Expenditures.
10.5.1 Required Years; Required Amounts; Permitted
Expenditures.
Notwithstanding anything contained in this Article X or
elsewhere in this Lease to the contrary, for the last four (4) years of the Term
(the "Required Period"), Tenant shall expend an amount at least equal to the
Required Amount for such Required Period for capital expenditures at the
Facility; provided, however, that the Required Amount shall be expended for such
repairs and refurbishments as are required to maintain or restore the applicable
Facility in accordance with the requirements of this Article X (a "Permitted
Expenditure") and in no event shall any expenditures made in respect of a Tenant
Improvement as provided in Article XI hereof be deemed to be a Permitted
Expenditure.
10.5.2 Payment Provisions.
Within thirty (30) days after the end of the Required Period,
Tenant shall deliver to Landlord an Officer's Certificate certifying the amount
expended in respect of Permitted Expenditures during such Required Period (the
"Expended Amount"), and the excess, if any, of the Required Amount for such
Required Period over the Expended Amount for such Required Period (the "Excess
Amount") shall be payable in accordance with Section 3.3 hereof. Said
certificate shall include an itemized list of each expenditure.
30
10.5.3 No Liability of Landlord.
In no event shall Landlord be liable to Tenant for the amount,
if any, by which the Expended Amount for any Required Period exceeds the
Required Amount for such Required Period.
ARTICLE XI
----------
TENANT IMPROVEMENTS
-------------------
11.1 Tenant's Right to Construct.
During the Term of this Lease, Tenant may make alterations,
additions, changes improvements to the Leased Property (individually, a "Tenant
Improvement," and collectively, "Tenant Improvements"). Except as otherwise
agreed to by Landlord in writing, any such Tenant Improvement shall be made at
Tenant's sole expense and shall become the property of the Landlord upon
termination of this Lease. All Tenant Improvements shall be subject to all of
the following conditions and restrictions:
(a) Unless made on an emergency basis to prevent injury to
person or property, Tenant may not undertake any nonstructural Tenant
Improvement involving an estimated cost in excess of Fifty Thousand Dollars
($50,000.00) (as estimated by a licensed architect approved by Landlord) without
Landlord's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed; provided, however, that Landlord may condition
its consent to any proposed Tenant Improvement on the receipt of a writing in
form and substance reasonably acceptable to Landlord evidencing Tenant's
covenant to restore the Leased Property to its condition as of the time
immediately prior to the construction of such proposed Tenant Improvement and
any such condition shall not be deemed to be unreasonable; and provided further,
however, that Tenant shall provide notice to Landlord of any Tenant Improvement
undertaken without its consent as soon as practicable and Landlord may, within
thirty (30) days after receipt of any such notice, demand from Tenant a writing
in form and substance reasonably acceptable to Landlord evidencing Tenant's
covenant to restore the Leased Property to its condition as of the time
immediately prior to the construction of any such Tenant Improvement undertaken
without Landlord's consent and Tenant shall, within ten (10) days after receipt
of any such demand from Landlord, provide such a writing to Landlord.
(b) Unless made on an emergency basis to prevent injury to
person or property, no structural alteration shall be undertaken without
Landlord's prior written consent, which consent shall not be unreasonably
31
withheld, conditioned or delayed; provided, however, that Landlord may condition
its consent to any proposed Tenant Improvement on the receipt of a writing in
form and substance reasonably acceptable to Landlord evidencing Tenant's
covenant to restore the Leased Property to its condition as of the time
immediately prior to the construction of such proposed Tenant Improvement and
any such condition shall not be deemed to be unreasonable; and provided further,
however, that Tenant shall provide notice to Landlord of any Tenant Improvement
undertaken without its consent as soon as practicable and Landlord may, within
thirty (30) days after receipt of any such notice, demand from Tenant a writing
in form and substance reasonably acceptable to Landlord evidencing Tenant's
covenant to restore the Leased Property to its condition as of the time
immediately prior to the construction of any such emergency Tenant Improvement
and Tenant shall, within ten (10) days after receipt of any such demand from
Landlord, provide such a writing to Landlord.
(c) The written consent of any Facility Mortgagee with respect
to the Facility must be obtained before the commencement of any work hereunder
whenever such consent is known by Tenant to be required by a Facility Mortgage.
(d) The reasonable cost and expense of Landlord's and a
Facility Mortgagee's review of any plans and specifications required to be
furnished to Landlord or a Facility Mortgagee pursuant to Section 11.2 hereof
shall be paid by Tenant to Landlord as Additional Rent.
(e) The provisions of Section 11.2 hereof shall apply to any
work performed by Tenant pursuant to this Article XI.
11.2 Construction
Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently prosecute any such
construction to completion in accordance with applicable
Insurance Requirements and the laws, rules and regulations of
all governmental bodies or agencies having jurisdiction over
the Leased Property;
(c) Landlord shall have the right at any time and from time to
time to post and maintain upon the Leased Property such
notices as may be necessary to protect Landlord's interest
from mechanics' liens, materialmen's liens or liens of a
similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or
any other claims or demands arising from the work of
32
construction of any Tenant Improvement to be enforced against
the Leased Property or any part thereof, and Tenant agrees to
hold Landlord and the Leased Property free and harmless from
all liability from any such liens, claims or demands, together
with all costs and expenses in connection therewith;
(e) All work shall be performed in a good and workmanlike
manner and in accordance with any plans and specifications
therefor which shall have been approved by Landlord or the
Facility Mortgagee;
(f) If the Tenant Improvement shall involve (i) more than
Fifty Thousand Dollars ($50,000.00) (as estimated by a
licensed architect approved by Landlord) or requiring Tenant
to obtain a building or other permit prior to the commencement
of any such Tenant Improvement or (ii) any structural repair,
alteration, restoration or other work, then no work on such
Tenant Improvement shall be commenced until detailed plans and
specifications (including layout, architectural, mechanical
and structural drawings), prepared by a licensed architect
reasonably satisfactory to Landlord shall have been submitted
to and approved by Landlord and the Facility Mortgagee;
(g) No Tenant Improvement costing more than Fifty Thousand
Dollars ($50,000.00) (as estimated by a licensed architect
approved by Landlord) shall be undertaken except under the
supervision of a licensed architect retained at Tenant's
expense and reasonably satisfactory to Landlord;
(h) No Tenant Improvement costing more than Fifty Thousand
Dollars ($50,000.00) (as estimated by a licensed architect
approved by Landlord) shall be commenced until Tenant shall
have obtained and delivered to Landlord, at Tenant's expense,
either (i) a performance bond and a labor and materials
payment bond (issued by a corporate surety licensed to do
business in the state in which the Leased Property is located
and reasonably satisfactory to Landlord), each in an amount
equal to the estimated cost of such Tenant Improvement (as
estimated by a licensed architect approved by Landlord) and in
form otherwise reasonably satisfactory to Landlord, or (ii)
such other security or evidence of ability to pay the
estimated cost of such Tenant Improvement as shall be
reasonably satisfactory to Landlord; and
(i) Any Tenant Improvement shall be subject to inspection at
any time and from time to time by Landlord or the applicable
Facility Mortgagee or the duly authorized representatives of
either, and if upon such inspection, Landlord or such Facility
Mortgagee shall reasonably be of the opinion that the Tenant
33
Improvement is not being constructed in accordance with the
requirements of this Article XI, then Tenant shall promptly
correct any such failure to comply with such requirements.
11.3 Scope of Tenant's Right.
Subject to Section 11.1 and Section 11.2, at Tenant's cost and
expense, Tenant shall have the right to seek any governmental approvals,
including building permits, licenses, conditional use permits and any
certificates of need that Tenant requires to construct any Tenant Improvement.
11.4 Cooperation of Landlord.
Landlord shall cooperate with Tenant and take such actions,
including the execution and delivery to Tenant of any applications or other
documents, reasonably requested by Tenant in order to obtain any governmental
approvals sought by Tenant to construct any Tenant Improvement within fifteen
(15) Business Days following the later of (a) the date Landlord receives
Tenant's request, or (b) the date of delivery of any such application or
document to Landlord, so long as the taking of such action, including the
execution of said applications or documents, shall be without cost to Landlord
(or if there is a cost to Landlord, such cost shall be reimbursed by Tenant),
and will not cause Landlord to be in violation of any law, ordinance or
regulation.
11.5 Rights in Tenant Improvements.
Notwithstanding anything to the contrary in this Lease, all
Tenant Improvements constructed pursuant to this Article XI, and any and all
subsequent additions thereto and alterations and replacements thereof, shall be
the sole and absolute property of Tenant during the Term of this Lease. Upon
the expiration or early termination of this Lease, all such Tenant Improvements
shall become the property of Landlord. Without limiting the generality of the
foregoing, Tenant shall be entitled to all federal and state income tax benefits
associated with any Tenant Improvement during the Term of this Lease.
ARTICLE XII
-----------
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS
--------------------------------------------
12.1 Liens.
Subject to the provisions of Article XIII relating to
permitted contests, Tenant will not directly or indirectly create or allow to
remain, and will promptly discharge at its expense any lien, encumbrance,
34
attachment, title retention agreement or claim upon the Leased Property or any
attachment, levy, claim or encumbrance in respect of Rent, not including,
however:
(a) this Lease;
(b) the matters, if any, that existed as of the Commencement
Date;
(c) restrictions, liens and other encumbrances which are
consented to in writing by Landlord, or any easements granted
pursuant to the provisions of Section 7.4;
(d) liens for those taxes of Landlord which Tenant is not
required to pay hereunder;
(e) subleases permitted by Article XXIII;
(f) liens for Impositions or for sums resulting from
noncompliance with Legal Requirements so long as (1) the same
are not yet payable or are payable without the addition of any
fine or penalty or (2) such liens are in the process of being
contested as permitted by Article XIII;
(g) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed (provided that such liens are
in the process of being contested as permitted by Article
XIII) or not yet due; and
(h) any liens which are the responsibility of Landlord
pursuant to the provisions of Article XV.
12.2 Encroachments and Other Title Matters.
Excepting any matters granted or created by Landlord or with
respect to the Leased Property and excepting matters that do not have a material
adverse effect on the use of the Leased Property for the Primary Intended Use,
if any of the Leased Improvements shall, at any time, encroach upon any
property, street or right-of-way adjacent to the Leased Property, or shall
violate the agreements or conditions contained in any lawful restrictive
covenant or other agreement affecting the Leased Property, or any easement or
right-of-way to which the Leased Property is subject, or the use of the Leased
Property is impaired, limited or interfered with by reason of the exercise of
the right of surface entry or any other rights under a lease or reservation of
any oil, gas, water or other minerals, then promptly upon the request of
Landlord or at the behest of any Person affected by any such encroachment,
violation or impairment, Tenant, at its sole cost and expense (subject to its
right to contest the existence of any such encroachment, violation or
impairment), shall protect, indemnify, save harmless and defend Landlord from
and against all losses, liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including, without limitation,
35
reasonable attorneys' fees and expenses) based on or arising by reason of any
such encroachment, violation or impairment and in such case, in the event of an
adverse final determination, 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 Landlord or
Tenant; or (ii) make such changes in the Leased Improvements, and take such
other actions, as Tenant in the good faith exercise of its judgment deems
reasonably practicable, to remove such encroachment, and to end such violation
or impairment, including, if necessary, the alteration of any of the Leased
Improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Leased Improvements for the
Primary Intended Use substantially in the manner and to the extent the Leased
Improvements were operated prior to the assertion of such violation or
encroachment. Tenant's obligations under this Section 12.2 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 Tenant shall be entitled to a credit
for any sums recovered by Landlord under any such policy of title or other
insurance.
ARTICLE XIII
------------
PERMITTED CONTESTS
------------------
Tenant, on its own or on Landlord's behalf (or in Landlord's
name) but at Tenant's expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity or
application, in whole or in part, of any Imposition or any Legal Requirement or
Insurance Requirement or any lien, attachment, levy, encumbrance, charge or
claim not otherwise permitted by Section 12.1, provided that:
(a) 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 Landlord and from the Leased Property, and
neither the Leased Property nor any Rent therefrom nor any
part thereof or interest therein would be in any danger of
being sold, forfeited, attached or lost pending the outcome of
such proceedings;
(b) in the case of a Legal Requirement, Landlord would not be
subject to criminal or civil liability for failure to comply
therewith pending the outcome of such proceedings. Nothing in
this Section 13(b), however, shall permit Tenant to delay
compliance with any requirement of an Environmental Law to the
extent such non-compliance poses an immediate threat of injury
to any Person or to the public health or safety or of material
damage to any real or personal property;
36
(c) in the case of a Legal Requirement or an Imposition, lien,
encumbrance or charge, Tenant shall give such reasonable
security, if any, as may be demanded by Landlord to insure
ultimate payment of the same and to prevent any sale or
forfeiture of the Leased Property or the Rent by reason of
such non-payment or noncompliance, provided, however, the
provisions of this Article XIII shall not be construed to
permit Tenant to contest the payment of Estimated Percentage
Rent and Additional Rent payable to Landlord or any other sums
payable by Tenant to Landlord hereunder;
(d) no such contest shall interfere in any material respect
with the use or occupancy of the Leased Property;
(e) in the case of an Insurance Requirement, the coverage
required by Article XIV shall be maintained; and
(f) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Rent due hereunder,
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.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may reasonably be required in any such
contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant shall indemnify and save Landlord
harmless against any liability, cost or expense of any kind that may be imposed
upon Landlord in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIV
-----------
INSURANCE
---------
14.1 General Insurance Requirements.
During the Term, Tenant shall at all times keep the Leased
Property, and all property located in or on the Leased Property, including all
Tenant's Personal Property and any Tenant Improvements, 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. The policies must name Landlord as an "Additional Insured."
Losses shall be payable to Landlord or Tenant as provided in Article XV. In
addition, the policies shall name as an additional insured the holder of any
mortgage, deed of trust or other security agreement securing any indebtedness or
any other Landlord's Encumbrance placed on the Leased Property in accordance
37
with the provisions of Article XXV ("Facility Mortgagee") by way of a standard
form of mortgagee's loss payable endorsement. Any loss adjustment shall require
the written consent of Landlord, Tenant, and each Facility Mortgagee. Evidence
of insurance shall be deposited with Landlord and, if requested, with any
Facility Mortgagee(s). The policies on the Leased Property, including the Leased
Improvements, Fixtures, Tenant's Personal Property and any Tenant Improvements,
shall insure against the following risks:
14.1.1 All Risk.
Loss or damage by all risks perils including but not limited
to, fire, vandalism, malicious mischief and extended coverages, including but
not limited to, sprinkler leakage, in an amount not less than one hundred
percent (100%) of the then Full Replacement Cost thereof.
14.1.2 Liability.
Claims for personal injury or property damage under a policy
of comprehensive general liability insurance with amounts not less than Ten
Million Dollars ($10,000,000.00) per occurrence and in the aggregate.
14.1.3 Flood.
Flood (when the Leased Property is located in whole or in
material part in a designated flood plain area) and such other hazards and in
such amounts as may be customary for comparable properties in the area.
14.1.4 Worker's Compensation.
Adequate worker's compensation insurance coverage for all
Persons employed by Tenant and all of Tenant's agents or contractors on the
Leased Property in accordance with the requirements of applicable federal, state
and local laws.
14.1.5 Business Interruption.
Loss due to business interruption in an amount, for any Fiscal
Year, not less than the applicable Facility Revenues for the immediately
preceding year.
14.1.6 Builder's Risk.
Loss or damage during times of construction on any portion of
the Leased Property (including, without limitation, any period of construction
pursuant to Article XI hereof) in an amount not less than .
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14.1.7 Boiler and Machinery.
Loss due to any boiler or machinery (including related
electrical apparatus and components) casualty under a standard comprehensive
form, providing coverage against loss or damage caused by explosion of steam
boilers, pressure vessels or similar vessels, now or hereafter installed at the
Facility, in limits reasonably acceptable to Landlord, but not less than .
14.1.8 Earthquake.
Loss due to earthquake (if such coverage is reasonably deemed
necessary by Landlord and reasonably available to Tenant) in limits and with
deductibles reasonably acceptable to Landlord.
14.1.9 Environmental Impairment.
Loss due to environmental impairment liability in limits and
with deductibles reasonably acceptable to Landlord, but only if such insurance
becomes more or less customarily required by prudent landlords of property
similar to the Leased Property or any site assessment report for the Leased
Property indicates that such insurance would be appropriate.
14.1.10 Subsidence.
Loss due to subsidence (if deemed necessary by Landlord) in
limits reasonably acceptable to Landlord.
14.1.11 Other Insurance.
Such other insurance on or in connection with the Leased
Property as Landlord or any Facility Mortgagee may reasonably require, which at
the time is usual and commonly obtained in connection with properties similar in
type of building size and use to the Leased Property and located in the
geographic area where the Leased Property is located.
14.2 Replacement Cost.
In the event either party believes that the Full Replacement
Cost of the insured property has increased at any time during the Term, it shall
have the right to have such Full Replacement Cost redetermined by the insurance
company which is then carrying the largest amount of hazard insurance carried on
the Leased Property (the "Impartial Appraiser"). The party desiring to have the
Full Replacement Cost so redetermined shall forthwith, on receipt of such
determination by such Impartial Appraiser, give written notice thereof to the
other party hereto. The determination of such Impartial Appraiser shall be final
and binding on the parties hereto, and Tenant shall forthwith increase the
amount of insurance carried pursuant to this Section 14.2, as the case may be,
39
to the amount so determined by the Impartial Appraiser. Each party shall pay
one-half of the fee, if any, of the Impartial Appraiser.
14.3 Waiver of Subrogation.
Landlord and Tenant waive their respective right of recovery
against the other to the extent damage or liability is insured against under a
policy or policies of insurance. All insurance policies carried by either party
covering the Leased Property including the contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party (including any Facility Mortgagee). The parties
hereto agree that their policies will include such waiver clause or endorsement
so long as the same are obtainable without extra cost, and in the event of such
an extra charge the other party, at its election, may pay the same, but shall
not be obligated to do so.
14.4 Insurance Company Satisfactory.
All of the policies of insurance referred to in Section 14.1
shall be written by an insurance company licensed and in good standing in the
state in which the Leased Property is located and rated not less than A:X by
A.M. Best Co. In addition, all insurance carried by Tenant hereunder shall have
deductible amounts which are reasonably acceptable to Landlord. Tenant shall pay
all premiums for the policies of insurance referred to in Section 14.1 and shall
deliver certificates thereof to Landlord prior to their effective date (and with
respect to any renewal policy, at least thirty (30) days prior to the expiration
of the existing policy). In the event Tenant fails to satisfy its obligations
under this Section 14.4, Landlord shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, which
premiums shall be repayable to Landlord upon written demand as Additional Rent.
Each insurer mentioned in Section 14.1 shall agree, by endorsement on the policy
or policies issued by it, or by independent instrument furnished to Landlord,
that it will give to Landlord thirty (30) days' written notice before the policy
or policies in question shall be altered, allowed to expire or canceled. Each
such policy shall also provide that any loss otherwise payable thereunder shall
be payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of such
insurance payment, (ii) the occupation or use of the Leased Property for
purposes more hazardous than those permitted by the provisions of such policy,
(iii) any foreclosure or other action or proceeding taken by any Facility
Mortgagee pursuant to any provision of a mortgage, note, assignment or other
document evidencing or securing a loan upon the happening of an event of default
therein or (iv) any change in title to or ownership of the Leased Property.
40
14.5 Change in Limits.
In the event that Landlord shall at any time reasonably
determine on the basis of prudent industry practice that the liability insurance
carried by Tenant pursuant to Section 14.1.2 is insufficient, the parties shall
endeavor to agree on the proper and reasonable limits for such insurance to be
carried; and such insurance shall thereafter be carried with the limits thus
agreed on until further changed pursuant to the provisions of this Section 14.5.
Notwithstanding the foregoing, the deductibles for such insurance or the amount
of such insurance which is self-retained by Tenant shall be as reasonably
determined by Tenant so long as Tenant can reasonably demonstrate its ability to
satisfy such deductible or amount of such self-retained insurance.
14.6 Blanket Policy.
Notwithstanding anything to the contrary contained in this
Article XIV, Tenant's obligations to carry the insurance provided for herein may
be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant; provided, however, that the coverage
afforded Landlord 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 XIV are
otherwise satisfied. The amount of the total insurance shall be specified either
(i) in each such "blanket" or umbrella policy or (ii) in a written statement,
which Tenant shall deliver to Landlord and Facility Mortgagee, from the insurer
thereunder. A certificate of each such "blanket" or umbrella policy shall
promptly be delivered to Landlord and Facility Mortgagee. If requested by
Landlord, Tenant shall provide Landlord with a certified copy of the "blanket"
or umbrella insurance policy.
ARTICLE XV
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APPLICATION OF INSURANCE PROCEEDS
---------------------------------
15.1 Insurance Proceeds.
Subject to the requirements of any Facility Mortgage, all
proceeds of insurance payable by reason of any loss or damage to the Leased
Property, or any portion thereof, and insured under any policy of insurance
required by Article XIV or under any other insurance carried by Tenant shall (i)
if greater than One Hundred Thousand Dollars ($100,000), be paid to Landlord and
held by Landlord and (ii) if less than such amount, be paid to Tenant and held
by Tenant. All such proceeds shall be held in trust and shall be made available
for reconstruction or repair, as the case may be, of any damage to or
destruction of the Leased Property, or any portion thereof.
41
15.1.1 Disbursement of Proceeds.
Any proceeds held by Landlord or Tenant shall be paid out by
Landlord or Tenant from time to time for the reasonable costs of such
reconstruction or repair; provided, however, that, subject to the requirements
of any Facility Mortgagee, Landlord shall disburse proceeds subject to the
following requirements:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the
restoration shall have been approved by Landlord, which
approval shall not be unreasonably withheld or delayed and (B)
appropriate waivers of mechanics' and materialmen's liens
shall have been filed;
(ii) at the time of any disbursement, subject to Article XIII,
no mechanics' or materialmen's liens shall have been filed
against the Leased Property and remain undischarged, unless a
satisfactory bond shall have been posted in accordance with
the laws of the state in which the Leased Property is located;
(iii) prior to completion of the restoration, Landlord shall
be authorized to holdback, as a reserve against future
disbursements, ten percent (10%) of such proceeds;
(iv) if Landlord shall reasonably determine that the proceeds
are not sufficient to cover the total cost of the restoration,
Tenant shall be obligated to deposit with Landlord the amount
of such shortfall immediately upon receiving written notice
thereof from Landlord;
(v) disbursements shall be made from time to time in an amount
not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, of
the stage of completion, the estimated total cost of
completion and performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans and
specifications, (B) waivers of liens, (C) a satisfactory
bring-down of title insurance and (D) other evidence of cost
and payment so that Landlord and Facility Mortgagee can verify
that the amounts disbursed from time to time are represented
by work that is completed, in place and free and clear of
mechanics' and materialmen's lien claims;
(vi) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is
requested, stating the cost incurred in connection therewith,
stating that Tenant has not previously received payment for
such work and, upon completion of the work, also stating that
the work has been fully completed and complies with the
applicable requirements of this Lease;
42
(vii) to the extent actually held by Landlord and not by a
Facility Mortgagee, (1) the proceeds shall be held in a
separate account and shall not be commingled with Landlord's
other funds, and (2) interest shall accrue on funds so held at
the money market rate of interest and such interest shall
constitute part of the proceeds; and
(viii) such other reasonable conditions as Landlord may
reasonably impose, or such other conditions as may be required
by a Facility Mortgagee, including, without limitation,
payment by Tenant of reasonable costs of administration
imposed by or on behalf of Facility Mortgagee should the
proceeds be held by Facility Mortgagee.
15.1.2 Excess Proceeds.
Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Landlord nor Tenant is required or elects to repair and
restore) shall be paid to Tenant upon completion of any such repair and
restoration except as otherwise specifically provided below in this Article XV.
All salvage resulting from any risk covered by insurance shall belong to
Landlord except to the extent relating to Tenant's Personal Property.
15.2 Reconstruction Covered by Insurance.
15.2.1 Destruction Rendering Facility Unsuitable for its
Primary Intended Use.
If during the Term the Leased Property is totally or partially
destroyed and the Facility thereby is rendered Unsuitable For Its Primary
Intended Use, Tenant shall diligently restore the Facility to substantially the
same condition as existed immediately before the damage or destruction;
provided, however, if the Facility cannot be fully repaired or restored within a
nine (9) month period from the date of damage or destruction to substantially
the same condition as existed immediately before the damage or destruction, then
Tenant may terminate this Lease by giving Landlord written notice of such
termination within sixty (60) days after the date of such damage or destruction,
and the effective date of such termination shall be thirty (30) days following
such notice of termination; provided, however, that if Landlord notifies Tenant
in writing within fifteen (15) days after Landlord's receipt of Tenant's notice
of termination that Landlord intends to restore the Facility to substantially
the same condition as existed immediately before the damage and destruction and
Landlord diligently commences and prosecutes such restoration and completes such
restoration within nine (9) months after the date of damage or destruction,
43
then Tenant's election to terminate this Lease shall be deemed rescinded and
Lease shall remain in full force and effect. Upon any such termination of
this Lease by Tenant or upon Landlord's election to restore the Facility as
provided in this section, Landlord shall be entitled to retain all insurance
proceeds, grossed up by Tenant to account for the deductible or any self-insured
retention; provided, further, that Tenant shall be entitled to retain or receive
all insurance proceeds relating to Tenant's Personal Property and the Tenant
Improvements.
15.2.2 Destruction Not Rendering Facility Unsuitable for
its Primary Intended Use.
If during the Term, the Leased Property is totally or
partially destroyed but the Facility is not thereby rendered Unsuitable For Its
Primary Intended Use, Tenant shall diligently restore the Facility to
substantially the same condition as existed immediately before the damage or
destruction; provided, however, Tenant shall not be required to restore Tenant's
Personal Property or any Tenant Improvements if failure to do so does not
adversely affect the amount of Additional Rent payable hereunder. Such damage or
destruction shall not terminate this Lease; provided further, however, if Tenant
and Landlord cannot within nine (9) months after said damage obtain all
necessary governmental approvals, including building permits, licenses,
conditional use permits and any certificates of need, after diligent efforts to
do so in order to be able to perform all required repair and restoration work
and to operate the Facility for its Primary Intended Use in substantially the
same manner as immediately prior to such damage or destruction, Tenant may
terminate this Lease upon thirty (30) days prior written notice to Landlord;
provided further, however, if Landlord notifies Tenant in writing within fifteen
(15) days of Landlord's receipt of Tenant's notice of termination that Landlord
intends to restore the Facility to substantially the same condition as existed
immediately before the damage and destruction and Landlord diligently commences
and prosecutes such restoration and completes such restoration within nine (9)
months after the date of Tenant's notice of termination, then Tenant's
election to terminate the Lease shall be deemed rescinded and this Lease shall
remain in full force and effect. Upon any such termination of the Lease by
Tenant or upon Landlord's election to restore the Facility as provided in this
section, Landlord shall be entitled to retain all insurance proceeds, grossed up
by Tenant to account for the deductible or any self-insured retention; provided,
further, that Tenant shall be entitled to retain or receive all insurance
proceeds relating to Tenant's Personal Property and the Tenant Improvements.
15.2.3 Costs of Repair.
If Tenant elects to restore the Facility as provided in
Section 15.2.1 or Section 15.2.2 above and the cost of the repair or restoration
exceeds the amount of proceeds received by Landlord or Tenant from the insurance
44
required under Article XIV, Tenant shall pay for such excess cost of repair or
restoration. If Landlord elects to restore the Facility as provided in Section
15.2.1 or Section 15.2.2 above and the cost of the repair or restoration exceeds
the amount or proceeds received by Landlord as provided in those sections,
Landlord shall pay for such excess cost of repair or restoration.
15.3 No Abatement of Rent.
Except as otherwise provided in Section 15.2 above, this Lease
shall remain in full force and effect and Tenant's obligation to make rental
payments and to pay all other charges required by this Lease shall remain
unabated during the period required for repair and restoration; provided,
however, that if there is no Event of Default, Tenant shall be entitled to
retain any proceeds of rental value or business interruption insurance coverage.
15.4 Waiver.
Tenant hereby waives any statutory rights of termination which
may arise by reason of any damage or destruction of the Facility which Landlord
or Tenant is obligated to restore or may restore under any of the provisions of
this Lease.
15.5 Damage Near End of Term.
Notwithstanding any other provision to the contrary in this
Article XV, if damage to or destruction of the Leased Property occurs during the
last twelve (12) months of the Term, and if such damage or destruction cannot
reasonably be expected to be fully repaired or restored prior to the date that
is six (6) months prior to the end of the then-applicable Term, then Landlord or
Tenant shall have the right to terminate this Lease on thirty (30) days' prior
notice to the other party by giving notice thereof to Landlord within sixty (60)
days after the date of such damage or destruction. Upon any such termination,
Landlord shall be entitled to retain all insurance proceeds, grossed up by
Tenant to account for the deductible or any self-insured retention; provided
however, that Tenant shall be entitled to retain or receive all insurance
proceeds relating to Tenant's Personal Property and Tenant Improvements.
ARTICLE XVI
-----------
CONDEMNATION
------------
16.1 Total Taking.
If at any time during the Term the Leased Property is totally
and permanently taken by Condemnation, this Lease shall terminate on the Date of
45
Taking and Tenant shall promptly pay all outstanding rent and other charges
through the date of termination.
16.2 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
Unsuitable For its Primary Intended Use, but if the Facility is thereby rendered
Unsuitable For Its Primary Intended Use, this Lease shall terminate on the Date
of Taking.
16.3 Restoration.
If there is a partial taking of the Leased Property and the
Lease remains in full force and effect pursuant to Section 16.2, Landlord at its
cost shall accomplish all necessary restoration up to but not exceeding the
amount of the Award payable to Landlord, as provided herein. If Tenant receives
an Award under Section 16.4, Tenant shall repair or restore any Tenant
Improvements up to but not exceeding the amount of the Award payable to Tenant
therefor.
16.4 Award Distribution.
The entire Award attributable to the Leased Property shall
belong to and be paid to Landlord, except that, subject to the rights of the
Facility Mortgagee, Tenant shall be entitled to receive from the Award, if and
to the extent such Award specifically includes such items, a sum attributable to
the value, if any, of any of Tenant's Personal Property and any Tenant
Improvements
16.5 Temporary Taking.
The taking of the Leased Property, or any part thereof, by
military or other public authority shall constitute a taking by Condemnation
only when the use and occupancy by the taking authority has continued for longer
than six (6) months. During any such six (6) month period, which shall be a
temporary taking, all the provisions of this Lease shall remain in full force
and effect with no abatement of rent payable by Tenant hereunder. In the event
of any such temporary taking, the entire amount of any such Award made for such
temporary taking allocable to the Term of this Lease, whether paid by way of
damages, rent or otherwise, shall be paid to Tenant.
46
ARTICLE XVII
------------
EVENTS OF DEFAULT
-----------------
17.1 Events of Default.
If any one or more of the following events (individually, an
"Event of Default") shall occur:
(a) if Tenant shall fail to make payment of the Rent payable
by Tenant under this Lease when the same becomes due and
payable and such failure continues for a period of five (5)
days following the date such payment is due;
(b) if Tenant shall fail to observe or perform any material
term, covenant or condition of this Lease and such failure is
not cured by Tenant within a period of thirty (30) days after
receipt by Tenant of notice thereof from Landlord, 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 continue if Tenant proceeds promptly and with due
diligence to cure the failure and diligently completes the
curing thereof within ninety (90) days following the
expiration of said thirty (30) day period;
(c) if Tenant 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) be unable to pay its debts as they mature,
(v) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its
property, or
(vi) 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;
(d) if, on a petition in bankruptcy filed against Tenant:
47
(i) such petition shall not have been dismissed
within sixty (60) days,
(ii) a court of competent jurisdiction shall enter an
order or decree appointing, without the consent of
Tenant, a receiver of Tenant or of the whole or
substantially all of its property, 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,
(iii) a court of competent jurisdiction shall enter
an order or decree approving, without the consent of
Tenant, a petition filed against Tenant seeking
reorganization or arrangement of Tenant, under the
federal bankruptcy laws or any other 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, or
(iv) Tenant shall be adjudicated as bankrupt;
(e) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution;
(f) if the estate or interest of Tenant in the Leased Property
or any part thereof shall be levied upon or attached in any
proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement
thereof or thirty (30) days after receipt by Tenant of notice
thereof or from Landlord (unless Tenant shall be contesting
such lien or attachment in accordance with Article XIII);
provided, however, that such notice shall be in lieu of and
not in addition to any notice required under applicable law;
(g) if, except as a result of damage, destruction or a partial
or complete Condemnation or other Unavoidable Delays, Tenant
voluntarily ceases operations on the Leased Property for a
period in excess of one hundred eighty (180) consecutive days;
(h) if any representation or warranty made by Tenant herein or
in any certification, demand or request made pursuant hereto
proves to be incorrect, now or hereafter, in any material
respect and any adverse effect on Landlord of any such
misrepresentation or breach of warranty has not been corrected
to Landlord's satisfaction within twenty (20) days after
Tenant becomes aware of, or is notified by Landlord of the
fact of, such misrepresentation or breach of warranty;
48
(i) if the Occupancy Rate for the Facility shall fall below
seventy-eight percent (78%) for four consecutive Fiscal
Quarters;
(j) if the Facility's applicable license or third-party
provider reimbursement agreements material to the Facility's
operation for its Primary Intended Use shall at any time be
terminated or revoked or suspended for more than sixty (60)
days (and, in the case of a third-party provider, Tenant shall
have failed to replace said third party provider within said
sixty (60) day period or if the Facility is banned from
admitting residents for a period in excess of ninety (90)
days);
(k) if Tenant shall fail to give notice to Landlord 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;
or
(l) if the tenant under any Simultaneous Lease fails to make
any payment of Minimum Rent or Percentage Rent, as applicable,
when due thereunder or fails to pay any real estate taxes,
utility charge or insurance premium, when due and payable
thereunder, and such failure continues beyond the expiration
of any cure period provided for therein.
THEN, Landlord may terminate this Lease by giving Tenant not
less than ten (10) days' notice (or no notice for clauses (c), (d), (e), (f) and
(j)) of such termination and upon the expiration of the time fixed in such
notice, the Term shall terminate and all rights of Tenant under this Lease shall
cease. Notwithstanding anything contained in this Lease to the contrary,
Landlord shall have all rights at law and in equity available to Landlord as a
result of Tenant's breach of this Lease.
17.2 Payment of Costs.
Tenant shall, to the extent permitted by law, pay as
Additional Rent all reasonable costs and expenses incurred by or on behalf of
Landlord, including, without limitation, reasonable attorneys' fees and
expenses, as a result of any Event of Default hereunder.
17.3 Certain Remedies.
If an Event of Default shall have occurred and be continuing,
whether or not this Lease has been terminated pursuant to Section 17.1, Tenant
shall, to the extent permitted by law, if required by Landlord so to do,
immediately surrender to Landlord the Leased Property pursuant to the provisions
of Section 17.1 and quit the same and Landlord may enter upon and repossess the
Leased Property by reasonable force, summary proceedings, ejectment or
49
otherwise, and may remove Tenant and all other Persons and any and all Tenant's
Personal Property from the Leased Property subject to any requirement of law.
17.4 Damages.
None of (a) the termination of this Lease pursuant to Section
17.1, (b) the repossession of the Leased Property, (c) the failure of Landlord
to relet the Leased Property, (d) the reletting of all or any portion thereof,
nor (e) the failure of Landlord to collect or receive any rentals due upon any
such reletting, shall relieve Tenant of its liability and obligations hereunder,
all of which shall survive any such termination, repossession or reletting. In
the event of any such termination, Tenant shall forthwith pay to Landlord all
Rent due and payable with respect to the Leased Property through, and including,
the date of such termination. Thereafter, Tenant shall forthwith pay to
Landlord, at Landlord's option, either:
(a) the sum of:
(i) the worth, at the time of the termination, of the
amount by which the unpaid Rent for the balance of
the Term after the time of such termination exceeds
the amount of such rental loss that Tenant proves
could be reasonably avoided; and
(ii) any other amount necessary to compensate
Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under
this Lease;
provided, that in making the above determination, (a) the
worth at the time of the termination shall be determined using
the ninety (90) day Treasury ▇▇▇▇ rate, (b) the monthly
Estimated Percentage Rent for the remainder of the Term shall
be deemed to be the same as for the then current Fiscal
Quarter, as determined pursuant to Section 3.2.1, and (c)
Additional Rent for the remainder of the Term shall be deemed
to be payable monthly in an amount equal to one-third (1/3) of
the aggregate amount paid by Tenant as Additional Rent during
the Fiscal Quarter immediately preceding the termination (but
excluding, for purposes of determining such aggregate amount
of Additional Rent pursuant to this Section 17.4 only, any
Additional Quarterly Percentage Rent or Additional Annual
Percentage Rent paid by Tenant during such immediately
preceding Fiscal Quarter); or
(b) with or without termination of Tenant's right to
possession of the Leased Property, each installment of said
Rent and other sums payable by Tenant to Landlord under this
Lease as the same become due and payable, which Rent and other
sums shall bear interest at the Overdue Rate from the date
when due until paid, and Landlord may enforce, by action or
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otherwise, any other term or covenant of this Lease.
17.5 Additional Remedies.
Landlord may avail itself of all other remedies that may be
available to Landlord under applicable law.
17.6 Appointment of Receiver.
Upon the occurrence of an Event of Default, and upon filing of
a suit or other commencement of judicial proceedings to enforce the rights of
Landlord hereunder, Landlord shall be entitled, as a matter of right, to the
appointment of a receiver or receivers acceptable to Landlord of the Leased
Property and the Facility and of the revenues, earnings, income, products and
profits hereof, pending such proceedings, with such powers as the court making
such appointment shall confer.
17.7 Waiver.
IF THIS LEASE IS TERMINATED PURSUANT TO SECTION 17.1 OR IF
TENANT'S RIGHT TO POSSESSION OF THE LEASED PROPERTY IS OTHERWISE TERMINATED,
TENANT WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) ANY RIGHT OF
REDEMPTION, RE-ENTRY OR REPOSSESSION AND (B) ANY RIGHT TO A TRIAL BY JURY IN THE
EVENT OF ANY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE XVII.
17.8 Application of Funds.
Any payments received by Landlord under any of the provisions
of this Lease during the existence or continuance of any Event of Default (and
such payment is made to Landlord rather than Tenant due to the existence of an
Event of Default) shall be applied to Tenant's obligations in the order which
Landlord may determine or as may be prescribed by the laws of the state in which
the Leased Property is located.
17.9 Impounds.
Landlord shall have the right during the continuance of an
Event of Default or at any time required by any Facility Mortgagee to require
Tenant to pay to Landlord an additional monthly sum (each an "Impound Payment")
sufficient to pay the Impound Charges (as hereinafter defined) as they become
due. As used herein, "Impound Charges" shall mean real estate taxes on the
Leased Property or payments in lieu thereof and premiums on any insurance
required by this Lease. Landlord shall determine the amount of the Impound
Charges and of each Impound Payment. The Impound Payments shall be held in a
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separate account and shall not be commingled with other funds of Landlord and
interest thereon shall be held for the account of Tenant. Landlord shall apply
the Impound Payments to the payment of the Impound Charges in such order or
priority as Landlord shall determine or as required by law. If at any time the
Impound Payments theretofore paid to Landlord shall be insufficient for the
payment of the Impound Charges, Tenant, within ten (10) days after the
Landlord's demand therefor, shall pay the amount of the deficiency to Landlord
plus interest thereon at the Overdue Rate from the date of such demand until
paid.
ARTICLE XVIII
-------------
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
-----------------------------------------
If Tenant shall fail to make any payment or to perform any act
required to be made or performed under this Lease, and to cure the same within
the relevant time periods provided in Section 17.1, Landlord, after notice to
and demand upon Tenant, and without waiving or releasing any obligation or
default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of Tenant.
Landlord may, to the extent permitted by law, enter upon the Leased Property for
such purpose and take all such action thereon as, in Landlord's opinion, may be
necessary or appropriate therefore. No such entry shall be deemed an eviction of
Tenant. All sums so paid by Landlord and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, to the extent
permitted by law) so incurred, together with interest thereon at the Overdue
Rate from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand. The obligations of
Tenant and rights of Landlord contained in this Article XVIII shall survive the
expiration or earlier termination of this Lease.
ARTICLE XIX
-----------
LEGAL REQUIREMENTS
------------------
Subject to Article XIII regarding permitted contests, Tenant,
at its expense, shall promptly (a) comply with all material Legal Requirements
and Insurance Requirements in respect of the use, operation, maintenance, repair
and restoration of the Leased Property, whether or not compliance therewith
shall require structural changes in any of the Leased Improvements or interfere
with the use and enjoyment of the Leased Property; and (b) procure, maintain and
comply with all licenses and other authorizations required for any use of the
Leased Property then being made, and for the proper erection, installation,
operation and maintenance of the Leased Property or any part thereof. In
addition to and without limiting the generality of the foregoing, Tenant shall
adopt and implement a compliance program adequate to assure such compliance. The
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compliance program shall include all material elements of an effective program
to prevent and detect violations of law as identified in Commentary 3(k) to
Section 8A1.2 of the federal Sentencing Guidelines.
ARTICLE XX
----------
HOLDING OVER
------------
If Tenant shall for any reason remain in possession of the
Leased Property after the expiration of the Term or earlier termination of the
Term, such possession shall be as a month-to-month tenant during which time
Tenant shall pay as rental each month, one hundred fifty percent (150%) of the
aggregate of (i) one-twelfth (1/12) of the aggregate Estimated Percentage Rent
and Additional Rent payable with respect to the Leased Property during the last
Fiscal Year of the preceding Term; (ii) all Additional Rent accruing during the
month; and (iii) all other sums, if any, payable by Tenant pursuant to the
provisions of this Lease with respect to the Leased Property. During any such
period of month-to-month tenancy, Tenant shall deliver to Landlord at the end of
each Fiscal Quarter and each Fiscal Year, as applicable, the Officer's
Certificates referred to in Section 3.2.2 and Section 3.2.3, respectively, and
(i) Tenant shall immediately pay to Landlord any Additional Quarterly Percentage
Rent or Additional Annual Percentage Rent as Additional Rent pursuant to Section
3.3. During any such period of month-to-month tenancy, Tenant 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 Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
ARTICLE XXI
-----------
RISK OF LOSS
------------
21.1 Risk of Loss.
During the Term, 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 Landlord and those claiming from, through or under
Landlord) is assumed by Tenant. In the absence of gross negligence, willful
misconduct or breach of this Lease by Landlord pursuant to Section 25.3,
Landlord shall in no event be answerable or accountable therefor nor shall any
53
of the events mentioned in this Article XXI entitle Tenant to any abatement of
Rent (except as provided in Section 21.2) or otherwise relieve Tenant of its
obligations hereunder and under each Lease.
21.2 Unavoidable Events.
If at any time during the Term, the Facility is rendered
Unsuitable For Its Primary Intended Use for a period in excess of one hundred
eighty (180) consecutive days by reason of one or more of the following events
(each, an "Unavoidable Event"):
(a) the lawful or unlawful prohibition of, or restriction
upon, Tenant's use of the Leased Property or any portion thereof, including
without limitation any such prohibition or restriction resulting from Legal
Requirements enacted after the date hereof (excepting any such prohibition or
restriction caused by the actions, negligence or intentional misconduct of
Tenant); or
(b) declared or undeclared war, sabotage, riot or other acts
of civil disobedience, or the acts or omissions by governmental agencies.
THEN Tenant shall have the right to terminate the Lease by giving Landlord
written notice of such termination. The effective date of such termination shall
be ninety (90) days after Landlord's receipt of said written notice of
termination; provided, however, if Landlord elects to remedy or remove the
restrictions or interference referenced above or otherwise correct or restore
the Facility and within said ninety (90) day period the Facility is made
suitable for its Primary Intended Use, Tenant's election to terminate the Lease
shall be deemed rescinded and the Lease shall remain in full force and effect.
This Article XXI shall not limit or restrict Tenant's rights or obligations
under Article XV of this Lease.
ARTICLE XXII
------------
INDEMNIFICATION
---------------
22.1 Tenant's Indemnification of Landlord.
Except as otherwise provided in Section 22.2 and
notwithstanding the existence of any insurance provided for in Article XIV, and
without regard to the policy limits of any such insurance, Tenant shall protect,
indemnify, save harmless and defend Landlord from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses), to the
extent permitted by law, imposed upon or incurred by or asserted against
Landlord by reason of:
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(a) 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 during the Term;
(b) any use, misuse, non-use, condition, maintenance or repair
by Tenant of the Leased Property;
(c) any Impositions (which are the obligations of the Tenant
to pay pursuant to the applicable provisions of this Lease);
(d) any failure on the part of Tenant to perform or comply
with any of the terms of this Lease;
(e) the non-performance of any of the terms and provisions of
any and all existing future subleases of the Leased Property
to be performed by Tenant thereunder; and
(f) any liability Landlord may incur or suffer as a result of
any permitted contest by Tenant pursuant to Article XIII.
22.2 Landlord's Indemnification of Tenant.
Landlord shall protect, indemnify, save harmless and defend
Tenant from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees) imposed upon or incurred by or asserted against
Tenant or the Leased Property as a result of Landlord's gross negligence or
willful misconduct.
22.3 Mechanics of Indemnification.
As soon as reasonably practicable after receipt by the
indemnified party of notice of any liability or claim incurred by or asserted
against the indemnified party that is subject to indemnification under this
Article XXII, the indemnified party shall give notice thereof to the
indemnifying party. The indemnified party may at its option demand indemnity
under this Article XXII as soon as a claim has been threatened by a third party,
regardless of whether an actual loss has been suffered, so long as the
indemnified party shall in good faith determine that the indemnified party may
be liable for, or otherwise incur, a loss as a result thereof and shall give
notice of such determination to the indemnifying party. The indemnified party
shall permit the indemnifying party, at its option and expense, to assume the
defense of any such claim by counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party, and to settle or otherwise
dispose of the same; provided, however, that the indemnified party may at all
times participate in such defense at its expense; and provided further, however,
that the indemnifying party shall not, in defense of any such claim, except with
the prior written consent of the indemnified party, consent to the entry of any
55
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff in question to the
indemnified party and its affiliates a release of all liabilities in respect of
such claims, or that does not result only in the payment of money damages by the
indemnifying party. If the indemnifying party shall fail to undertake such
defense within thirty (30) days after such notice, or within such shorter time
as may be reasonable under the circumstances, then the indemnified party shall
have the right to undertake the defense, compromise or settlement of such
liability or claim on behalf of and for the account of the indemnifying party.
22.4 Survival of Indemnification Obligations.
Tenant's or Landlord's obligation to indemnify under this
Article XXII arising during the Term shall survive any termination of this Lease
for a period of one (1) year following such termination.
ARTICLE XXIII
-------------
SUBLETTING AND ASSIGNMENT
-------------------------
23.1 Prohibition Against Subletting and Assignment.
Except as provided in Section 23.3 or Section 23.4, Tenant
shall not, without the prior written consent of Landlord (which consent Landlord
may grant or withhold in its sole and absolute discretion), assign, mortgage,
pledge, hypothecate, encumber or otherwise transfer (except to an Affiliate of
Tenant) this Lease or any interest in this Lease, all or any part of the Leased
Property or suffer or permit this Lease or the leasehold estate created hereby
or any other rights arising under this Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily, involuntarily or by operation of law. For purposes of this Section
23.1, an assignment of this Lease shall be deemed to include any Change of
Control of Tenant, as if such Change of Control were an assignment of this
Lease.
23.2 Changes of Control.
A "Change of Control" requiring the consent of Landlord shall
mean:
(a) the issuance or sale by Tenant or the sale by any
stockholder of Tenant of a Controlling interest in Tenant to a
Person other than an Affiliate of Tenant or Guarantor, other
than, in either case, (x) a distribution to the public
pursuant to an effective registration statement under the
Securities Act of 1933, as amended (a "Registered Offering")
or (y) the sale by any stockholders, either directly or
56
indirectly (whether by operation of law or otherwise) of a
controlling interest in Guarantor or its successor;
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by
operation of law or otherwise), excluding the sale of all or
substantially all of the assets of Guarantor;
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned
and Controlled by an Affiliate of Tenant), and Tenant is not
the surviving entity.
23.3 Subleases.
23.3.1 Permitted Subleases.
(a) Tenant may, with Landlord's prior written consent, which
may not be unreasonably withheld, sublease or license portions of the Leased
Property to concessionaires or licensees to operate any portions (but not the
entirety) of the Leased Property customarily associated with or incidental to
the operation of the Facility; provided, however, that Landlord's consent to any
proposed sublease or license shall not be considered unreasonably withheld if
Landlord believes that (i) the rental or other amounts to be paid by the
proposed sublessee or licensee thereunder would be based, in whole or in part,
on the income or profits derived by such proposed sublessee or licensee from the
Facility or the Leased Property, (ii) the Landlord owns an interest, directly or
indirectly (by applying the constructive ownership rules of Section 856(d)(5) of
the Code) in the proposed sublessee or licensee or (iii) the proposed sublease
or license would cause (x) a portion of the amounts received by Landlord
pursuant to this Lease or any sublease or license to fail to qualify as "rents
from real property" within the meaning of Section 856(d) of the Code, or any
similar successor provision thereto, or (y) any other income of Landlord to fail
to qualify as income described in Section 856(c)(2) of the Code.
(b) Notwithstanding the foregoing, Tenant shall, without
Landlord's prior approval, be permitted to sublease portions of the Leased
Property to residents of the Facility; provided, however, that Tenant shall not
require or accept prepayment for more than three (3) months' use of individual
units or rooms in any Facility. Amounts charged to residents for individual
units or rooms shall not be materially less than fair market value.
23.3.2 Terms of Sublease.
Each sublease of any portion of the Leased Property shall be
subject and subordinate to the provisions of this Lease and shall provide that
Landlord, at its option and without any obligation to do so, may require any
sublessee to attorn to Landlord, in which event Landlord shall undertake the
obligations of Tenant, as sublessor under such sublease from the time of the
57
exercise of such option to the termination of such sublease, and in such case,
Landlord shall not be liable (i) for any prepaid rents or security deposit paid
by such sublessee to Tenant unless Landlord actually receives the same from
Tenant or (ii) for any other defaults of Tenant under such sublease. In the
event that Landlord 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 earlier termination by
mutual consent of Landlord and Tenant. No sublease made as permitted by Section
23.3.1 shall affect or reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and effect as if no sublease
had been made. No sublease shall impose any additional obligations on Landlord
under this Lease.
23.3.3 Copies.
Tenant shall, within ten (10) days after the execution and
delivery of any sublease permitted by Section 23.3.1, deliver a duplicate
original thereof to Landlord.
23.3.4 Assignment of Rights in Subleases.
As security for performance of its obligations under this
Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all subleases now in existence or hereinafter
entered into for any or all of the Leased Property, and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any portion of the Leased
Property; provided, however, that Landlord shall have the absolute right at any
time after the occurrence and continuance of an Event of Default upon notice to
Tenant and any subtenants to revoke said license and to collect such rents and
sums of money and to retain the same. Tenant shall not (i) after the occurrence
and continuance of an Event of Default, consent to, cause or allow any material
modification or alteration of any of the terms, conditions or covenants of any
of the subleases or the termination thereof, without the prior written approval
of Landlord nor (ii) accept any rents (other than customary security deposits)
more than ninety (90) days in advance of the accrual thereof nor permit anything
to be done, the doing of which, nor omit or refrain from doing anything, the
omission of which, will or could be a breach of or default in the terms of any
of the subleases.
23.3.5 Licenses.
For purposes of Section 23.1 and this Section 23.3, subleases
shall be deemed to include any licenses, concession arrangements, or other
arrangements relating to the possession of any part of the Leased Property.
58
23.4 Assignment.
Except as expressly provided in this Section 23.4, Tenant may
assign this Lease (including, without limitation, upon a Change of Control of
Tenant as provided in Section 23.2) only upon the written consent of Landlord,
which consent Landlord may give or withhold in its sole and absolute discretion.
If Tenant desires at any time to assign this Lease, it shall first notify
Landlord of its desire to do so and shall submit in writing to Landlord: (i) the
name of the proposed assignee; (ii) the terms and provisions of the proposed
assignment; and (iii) such financial information as Landlord reasonably may
request concerning the proposed assignee. Except as provided in Section 23.4.3
below, any assignment by Tenant of this Lease shall be solely of Tenant's entire
interest in and under this Lease. The consent by Landlord to any assignment
shall not constitute a consent to any subsequent or successive assignment by the
assignee. Any purported assignment or other transfer of all or any portion of
Tenant's interest in this Lease in contravention of this Section 23.4 shall be
void and, at the option of Landlord, shall terminate this Lease.
23.4.1 Financial Condition of Assignee.
Landlord may, as a condition to granting its consent to any
proposed assignment by Tenant, require that the obligations of any assignee
which is an Affiliate of another Person be guaranteed by its parent or
controlling Person. Furthermore, any assignment agreement entered into by Tenant
shall expressly provide that the assignee shall furnish Landlord with such
financial and operational information as Landlord may request from time to time.
23.4.2 Assignment to Affiliate.
Tenant may, upon notice to Landlord, but without Landlord's
consent, assign this Lease to an Affiliate of Tenant (including, without
limitation, pursuant to a Change of Control of Tenant as provided in Section
23.2); and provided further an assignment pursuant to this Section 23.4.2 shall
not be permitted in the event (i) the rental or other amounts to be paid by the
proposed assignee thereunder would be based, in whole or in part, on the income
or profits derived by such proposed assignee from the Facility or the Leased
Property, (ii) the Landlord owns an interest, directly or indirectly (by
applying the constructive ownership rules of Section 856(d)(5) of the Code) in
the proposed assignee or (iii) the proposed assignment would cause (x) a portion
of the amounts received by Landlord pursuant to this Lease to fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the Code, or
any similar successor provision thereto, or (y) any other income of Landlord to
fail to qualify as income described in Section 856(c)(2) of the Code.
Furthermore, any assignment agreement entered into by Tenant shall expressly
provide that the assignee shall furnish Landlord with such financial and
operational information as Landlord may request from time to time.
59
23.4.3 Assignment in Bankruptcy.
If, pursuant to the provisions of Title 11 of the United
States Code or any statute of similar purpose or nature (the "Bankruptcy Code"),
Tenant assumes this Lease and proposes to assign this Lease to any Person who
shall have made a bona fide offer to accept an assignment of this Lease on terms
acceptable to Tenant, then notice of such proposed assignment shall be given to
Landlord by Tenant no later than twenty (20) days after receipt of such offer by
Tenant, but in any event no later than ten (10) days prior to the date that
Tenant shall file any application or motion with a court of competent
jurisdiction for authority and approval to enter into such assumption and
assignment. Such notice shall set forth (a) the name and address of the
assignee, (b) all of the terms and conditions of such offer and (c) the proposal
for providing adequate assurance of future performance by such Person under this
Lease, including, without limitation, the assurance referred to in Section 365
of the Bankruptcy Code. Any Person to whom this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease from and
after the date of such assignment. Any such assignee shall execute and deliver
to Landlord upon demand an instrument confirming such assumption.
23.4.4 Adequate Assurance of Future Performance.
The term "adequate assurance of future performance" as used in
Section 23.4.3 shall mean, the assurances called for in Section 365(f) of the
Bankruptcy Code.
23.4.5 Disaffirmance or Rejection.
If, at any time after Tenant may have assigned Tenant's
interest in this Lease pursuant to this Section 23.4, this Lease shall be
disaffirmed or rejected in any proceeding, or in the event of termination of
this Lease following an Event of Default, Tenant, upon notice of Landlord given
within thirty (30) days next following any such disaffirmance, rejection or
termination (and actual notice thereof to Landlord in the event of a
disaffirmance or rejection or in the event of termination other than by act of
Landlord), shall pay to Landlord all Percentage Rent and Additional Rent due and
owing by the assignee to Landlord under this Lease to and including the date of
such disaffirmance, rejection or termination.
23.4.6 Costs.
Tenant shall reimburse Landlord for Landlord's reasonable
costs and expenses incurred in conjunction with the processing and documentation
of any assignment permitted hereunder, including, without limitation, reasonable
attorneys', architects', engineers' and other consultants' fees and expenses,
whether or not any such assignment is actually consummated.
60
23.4.7 No Release of Tenant's Obligation.
No assignment of this Lease shall relieve Tenant of its
obligation to pay Rent and to perform all of the other obligations to be
performed by Tenant hereunder. The liability of Tenant named herein and any
immediate or remote successor in interest of Tenant, and the due performance of
the obligations of this Lease on Tenant's part to be performed or observed,
shall not in any way be discharged, released or impaired by any (i) agreement
which modifies any of the rights or obligations of the parties under this Lease,
(ii) stipulation which extends the time within which an obligation under this
Lease is to be performed, (iii) waiver of the performance of an obligation
required under this Lease or (iv) failure to enforce any of the obligations set
forth in this Lease.
ARTICLE XXIV
------------
ESTOPPEL CERTIFICATES AND OTHER STATEMENTS
------------------------------------------
24.1 Estoppel Certificates.
24.1.1 Estoppel Certificate of Tenant.
At any time, and from time to time within twenty (20) days
after a written request from Landlord, Tenant will furnish to Landlord an
Officer's Certificate certifying:
(a) 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);
(b) the dates to which the Rent has been paid;
(c) whether or not to the best knowledge of Tenant, Landlord
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 Tenant may have knowledge;
(d) that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signatory,
threatened, against Tenant before or by any court or
administrative agency which, if adversely decided, would
materially and adversely affect the financial condition and
operations of Tenant;
(e) the current responses to such other questions or
statements of fact as Landlord shall reasonably request.
61
Tenant's failure to deliver such statement within such time
shall constitute an acknowledgment by Tenant that this Lease is unmodified and
in full force and effect except as may be represented to the contrary by
Landlord, Landlord is not in default in the performance of any covenant,
agreement or condition contained in this Lease and the other matters set forth
in such request, if any, are true and correct. Any such certificate furnished
pursuant to this Section 24.1.1 may be relied upon by Landlord and any Facility
Mortgagee.
24.1.2 Estoppel Certificate of Landlord.
At any time, and from time to time within twenty (20) days
after a written request from Tenant, Landlord will furnish to Tenant an
Officer's Certificate certifying:
(a) 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);
(b) the dates to which the Rent has been paid;
(c) whether or not to the best knowledge of Landlord, Tenant
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 Landlord may have knowledge;
(d) that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signatory,
threatened, against Landlord before or by any court or
administrative agency which, if adversely decided, would
materially and adversely affect the financial condition and
operations of Landlord;
(e) the current responses to such other questions or
statements of fact as Tenant shall reasonably request.
Landlord's failure to deliver such statement within such time
shall constitute an acknowledgment by Landlord that this Lease is unmodified and
in full force and effect except as may be represented to the contrary by Tenant,
Tenant is not in default in the performance of any covenant, agreement or
condition contained in this Lease and the other matters set forth in such
request, if any, are true and correct. Any such certificate furnished pursuant
to this Section 24.1.2 may be relied upon by Tenant.
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24.2 Financial Statements of Tenant.
24.2.1 Quarterly Financial Statements
Tenant will furnish to Lender, as soon as practicable, and in
any event within 60 days after the end of each Fiscal Quarter, an unaudited
consolidated balance sheet of Tenant as at the end of such Fiscal Quarter and
unaudited consolidated statement of income and expense of Tenant for each such
Fiscal Quarter, and for that part of the Fiscal Year to date.
24.2.2 Annual Financial Statements
Tenant will furnish to Landlord, within one hundred twenty
(120) days after the end of Tenant's fiscal year, an audited consolidated
balance sheet of Tenant as at the end of such fiscal year and a consolidated
statement of income and consolidated cash flow of Tenant for such fiscal year,
setting forth in each case, in comparative form, the corresponding figures for
the preceding Fiscal Year, prepared in accordance with GAAP.
24.3 Environmental Statements.
Immediately upon Tenant's learning, or having reasonable cause
to believe, that any Hazardous Material in a quantity sufficient to require
remediation or reporting under applicable law is located in, on or under the
Leased Property or any adjacent property, Tenant shall notify Landlord in
writing of (a) any enforcement, cleanup, removal, or other governmental or
regulatory action instituted, completed or threatened; (b) any claim made or
threatened by any Person against Tenant or the Leased Property relating to
damage, contribution, cost recovery, compensation, loss, or injury resulting
from or claimed to result from any Hazardous Material; and (c) any reports made
to any federal, state or local environmental agency arising out of or in
connection with any Hazardous Material in or removed from the Leased Property,
including any complaints, notices, warnings or asserted violations in connection
therewith.
24.4 Charges.
Tenant acknowledges that the failure to furnish Landlord with
any of the certificates or statements required by this Article XXIV will cause
Landlord to incur costs and expenses not contemplated hereunder, the exact
amount of which is presently anticipated to be extremely difficult to ascertain.
Accordingly, if Tenant shall fail to furnish Landlord with any of the
certificates or statements required by this Article XXIV, Tenant shall pay to
Landlord upon demand $1,000 for each such failure as Additional Rent. The
parties agree that this charge represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of Tenant's failure to furnish Landlord
with such certificates and statements.
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ARTICLE XXV
-----------
LANDLORD MORTGAGES
------------------
25.1 Landlord May Grant Liens.
Without the consent of Tenant, Landlord may, from time to
time, directly or indirectly, create or otherwise cause to exist any lien,
encumbrance or title retention agreement ("Landlord's Encumbrance") upon the
Leased Property, or any portion thereof or interest therein, whether to secure
any borrowing or other means of financing or refinancing or other obligation of
Landlord. This Lease is and at all times shall be subject and subordinate to any
ground or underlying leases, mortgages, trust deeds or like encumbrances, which
may now or hereafter affect the Leased Property and to all renewals,
modifications, consolidations, replacements and extensions of any such lease,
mortgage, trust deed or like encumbrance. This clause shall be self-operative
and no further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee or beneficiary, affecting this Lease or
the Leased Property, provided, however, the subordination of this Lease shall be
subject to Tenant's receipt of a non-disturbance agreement reasonably acceptable
to Tenant. In confirmation of such subordination, Tenant shall execute promptly
any certificate that Landlord may request for such purposes.
25.2 Tenant's Non-Disturbance Rights; Attornment.
So long as no Event of Default by Tenant hereunder shall have
occurred and be continuing, none of Tenant's rights under this Lease shall be
disturbed by the holder of any Landlord's Encumbrance which is created or
otherwise comes into existence after the Commencement Date. Following a
foreclosure of any Facility Mortgage, the applicable Facility Mortgagee or the
purchaser at a foreclosure shall perform all obligations of lessor under this
Lease (but not obligations which accrued before such Facility Mortgagee or
purchaser at foreclosure obtained title to the Leased Property), and Tenant
shall attorn to and recognize such purchaser as its landlord.
25.3 Breach by Landlord.
It shall be a breach of this Lease if Landlord shall fail to
observe or perform any material term, covenant or condition of this Lease on its
part to be performed and such failure shall continue for a period of thirty (30)
days after notice thereof from Tenant, 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 continue if Landlord, within said thirty (30) day
period, proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof within ninety (90) days following the
64
expiration of said thirty (30) day period. The time within which Landlord shall
be obligated to cure any such failure shall also be subject to extension of time
due to the occurrence of any Unavoidable Delay.
25.4 Facility Mortgage Protection.
Tenant agrees that the holder of any Landlord Encumbrance
shall have no duty, liability or obligation to perform any of the obligations of
Landlord under this Lease, but that in the event of Landlord's default with
respect to any such obligation, Tenant will give any such holder whose name and
address have been furnished to Tenant in writing for such purpose notice of
Landlord's default and allow such holder thirty (30) days following receipt of
such notice for the cure of said default before invoking any remedies Tenant may
have by reason thereof.
ARTICLE XXVI
------------
TENANT'S RIGHT OF FIRST REFUSAL
-------------------------------
26.1 Right of First Refusal.
In the event Landlord ever determines that it desires to sell
or lease the Leased Property during the Term or on or before the date which is
one (1) year following the expiration of the Term, Landlord agrees not to market
or sell the Leased Property without first complying with the provisions of this
Section 26.1.
26.1.1 Landlord's Original Notice.
If Landlord shall desire to sell or lease the Leased Property
during the Term or on or before the date which is one (1) year following the
expiration of the Term, Landlord shall deliver a written notice to Tenant
("Landlord's Original Notice") advising Tenant that Landlord desires to sell or
lease the Leased Property and stating the price or rental rate and lease term,
as applicable, at which Landlord desires to sell the Leased Property (the
"Original Purchase Price") or lease the Leased Property (the "Original Lease
Terms"), as applicable.
26.1.2 Tenant's Original Offer and Right to Purchase.
Tenant shall have thirty (30) days from the date the
Landlord's Original Notice is delivered to Tenant (the "Original Notice Delivery
Date") in which to deliver to Landlord a written offer ("Tenant's Original
Offer") to purchase the Leased Property for cash at a purchase price equal to
the Original Purchase Price and upon the Right of First Refusal Terms (as
defined below), or to lease the Leased Property upon the Original Lease Terms
set forth in Landlord's Original Notice, as applicable. Any offer by Tenant to
purchase the Leased Property must include the following terms (the "Right of
First Refusal Terms"): (i) Tenant shall pay all costs related to obtaining any
65
environmental assessment reports (collectively, the "Environmental Reports")
related to the Leased Property; (ii) Tenant shall pay all costs of obtaining any
survey of the Leased Property; (iii) Landlord shall pay the base premium for
Form ALTA 1992 Owner Policy of Title Insurance (or local equivalent) for the
Leased Property providing coverage to Tenant comparable to the title insurance
policy (the "Title Insurance") obtained for Landlord in respect to Landlord's
purchase of the Leased Property, and in this regard, Landlord shall be entitled
to select the title insurance agency to close the sale of the Leased Property
and through which the Title Insurance is to be issued (the "Title Company");
(iv) each party shall pay for the attorneys' fees and expenses and other costs
which that party incurs; (v) Tenant and Landlord shall equally share all other
closing costs; (vi) there shall not be any unusual or non-customary
contingencies or conditions whatsoever to Tenant's obligation to purchase the
Leased Property; (vii) Tenant shall pay Landlord the amount of the Original
Purchase Price for the Leased Property in cash at closing; (viii) Tenant shall
deposit cash with the Title Company equal to ten percent (10%) of the Original
Purchase Price as an ▇▇▇▇▇▇▇ money deposit (the "▇▇▇▇▇▇▇ Money"), which ▇▇▇▇▇▇▇
Money shall be nonrefundable and shall be paid to Landlord in the event Tenant
fails to perform its obligations under Tenant's Original Offer (provided that
such ▇▇▇▇▇▇▇ Money shall be applied towards the purchase price of the Leased
Property if the purchase closes); (ix) the sale of the Leased Property shall be
on an "AS IS, WHERE IS, WITH ALL FAULTS" basis with no representations or
warranties of Landlord whatsoever; (x) the conveyance shall be by special
warranty deed; and (xi) the closing of the sale and purchase of the Leased
Property must occur within one hundred twenty (120) days after the Original
Notice Delivery Date. Any offer by Tenant to lease the Leased Property must
include the following terms: (i) Tenant shall pay rent to Landlord in the amount
and for the lease term described in the Original Lease Terms under the terms and
conditions set forth in Landlord's Original Notice; (ii) Tenant shall lease the
Leased Property on an "AS IS, WHERE IS, WITH ALL FAULTS" basis and Landlord
shall have no obligation to construct any improvements, alterations and
renovations not specifically described in Landlord's Original Notice; (iii) in
the event the proposed lease term is for a period of five (5) years or less, the
lease shall include a right of first refusal provision similar to the provisions
of this Section 26.1; and (iv) all material terms of lease not otherwise
specified in Landlord's Original Notice shall be as set forth in this Lease.
In the event Tenant does not timely deliver a Tenant's
Original Offer to Landlord within such thirty (30) day period, Tenant shall be
conclusively deemed to have forfeited any right to purchase or lease, as
applicable, the Leased Property pursuant to the Landlord's Original Notice; and
Landlord shall become entitled to market and sell or lease the Leased Property
in accordance with the provisions of Section 26.1.3 hereof. In the event Tenant
timely delivers a Tenant's Original Offer to Landlord within such thirty (30)
day period, (i) if Tenant is to purchase the Leased Property, Tenant and
Landlord shall each deliver to the Title Company duplicate signed counterparts
of the Tenant's Original Offer (executed by duly authorized representatives of
Tenant and Landlord, respectively) and Tenant shall pay the ▇▇▇▇▇▇▇ Money to the
Title Company within forty-eight (48) hours of such acceptance or (ii) if Tenant
66
is to lease the Leased Property, Tenant and Landlord shall enter into a lease
agreement on the terms and conditions set forth in Landlord's Original Notice
and as provided above.
26.1.3 Sale or Lease by Landlord.
In the event Landlord becomes entitled to market and sell or
lease the Leased Property pursuant to this Section 26.1.3, Landlord shall be
free for a period of two hundred forty (240) days from the Original Notice
Delivery Date to advertise, list for sale or lease, solicit offers, negotiate
contracts for the sale or lease of, and sell or lease (collectively, the "Sale
Activity") the Leased Property at a sale price or rental rate and lease term, as
applicable, not less than the Original Purchase Price or as set forth in the
Original Lease Terms, as applicable, and in the event the Leased Property is not
sold or leased within such two hundred forty (240) day period but is subject to
a Pending Contract (as defined below), Landlord shall continue to be free to
sell or lease the Leased Property upon the terms set forth in the Pending
Contract. For purposes of this Section 26.1.3, the term "Pending Contract" means
a bona fide written contract which (i) provides for the sale of the Leased
Property by Landlord to a Person other than a Person affiliated with Landlord at
a sale price not less than the Original Purchase Price, (ii) provides for the
lease of the Leased Property by Landlord to a Person other than a Person
affiliated with Landlord at a rental rate and for a lease term as set forth in
the Original Lease Terms and (iii) in the case of a sale, sets a date for the
closing of such sale that is scheduled to occur within ninety (90) days of the
date of such contract.
ARTICLE XXVII
-------------
MISCELLANEOUS
-------------
27.1 Landlord's Right to Inspect.
Tenant shall permit Landlord and its authorized
representatives to inspect the Leased Property during usual business hours
subject to any security, health, safety or confidentiality requirements of
Tenant or any governmental agency or insurance requirement relating to the
Leased Property, or imposed by law or applicable regulations. Landlord shall
indemnify Tenant for all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Tenant by reason of Landlord's inspection pursuant to this Section 27.1.
27.2 No Waiver.
No failure by Landlord to insist upon the strict performance
of any term of this Lease or to exercise any right, power or remedy consequent
upon a breach of this Lease, and no acceptance of full or partial payment of
67
Rent during the continuance of any such breach, shall constitute a waiver of any
such breach or of any such term. To the extent permitted by law, no waiver of
any breach shall affect or alter this Lease, each of which shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
27.3 Remedies Cumulative.
To the extent permitted by law, each legal, equitable or
contractual right, power and remedy of Landlord now or hereafter provided 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. The exercise or
beginning of the exercise by Landlord of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord of any or all of the such other rights, powers and remedies.
27.4 Acceptance of Surrender.
No surrender to Landlord 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 Landlord and no act by
Landlord or any representative or agent of Landlord, other than such a written
acceptance by Landlord, shall constitute an acceptance of any such surrender.
27.5 No Merger of Title.
There shall be no merger of this Lease or of the leasehold
estate created hereby by reason of the fact that the same Person may acquire,
own or hold, directly or indirectly, (a) this Lease or the leasehold estate
created hereby or any interest in this Lease or such leasehold estate and (b)
the fee estate in the Leased Property.
27.6 Conveyance by Landlord.
If Landlord shall convey the Leased Property in accordance
with the terms hereof other than as security for a debt, Landlord shall, upon
the written assumption by the transferee of the Leased Property of all
liabilities and obligations of this Lease be released from all future
liabilities and obligations under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property. All
such future liabilities and obligations shall thereupon be binding upon the new
owner.
27.7 Quiet Enjoyment.
So long as Tenant shall pay all Rent as the same becomes due
and shall fully comply with all of the terms of this Lease and fully perform its
68
obligations hereunder, Tenant shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Landlord or anyone claming by, through or under Landlord, but subject to all
liens and encumbrances of record as of the date hereof or any Landlord's
Encumbrances.
27.8 Notices.
All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested and postage prepaid),
addressed to the respective parties at the addresses below:
If to Landlord:
__________________________________________
c/o ElderTrust
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇.
If to Tenant:
_________________________________
c/o Genesis Health Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and Chief Operating
Officer
Attention: Law Department: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇.
Any notice under this Lease shall be deemed to have been given (a) when
personally delivered; (b) on the next business day after it is delivered to a
reputable overnight commercial carrier (charges prepaid); or (c) on the third
day after it is deposited in any depository regularly maintained by the United
States Postal Service, postage prepaid, certified or registered mail, return
receipt requested. Either Landlord or Tenant may change its address or addresses
for purposes of this Section 27.8 by giving ten (10) days' prior written notice
in accordance with this Section 27.8.
69
27.9 Survival of Claims.
Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination for a period of (1) year following termination.
27.10 Invalidity of Terms or Provisions.
If any term or provision of this Lease or any application
thereof shall be invalid or unenforceable, the remainder of this Lease and any
other application of such term or provision shall not be affected thereby.
27.11 Prohibition Against Usury.
If any late charges provided for in any provision of this
Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate.
27.12 Amendments to Lease.
Neither this Lease nor any provision hereof may be changed,
waived, discharged or terminated except by an instrument in writing and in
recordable form signed by Landlord and Tenant.
27.13 Successors and Assigns.
All the terms and provisions of this Lease shall be binding
upon and inure to the benefit of the parties hereto. All permitted assignees or
sublessees shall be subject to the terms and provisions of this Lease.
27.14 Titles.
The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof or thereof.
27.15 Governing Law.
This Lease shall be governed by and construed in accordance
with the laws of the [Commonwealth of Pennsylvania] (but not including its
conflict of laws rules).
27.16 Memorandum of Lease.
Landlord and Tenant shall, promptly upon the request of
either, enter into a short form memorandum of this Lease (a "Memorandum of
Lease"), in form and substance satisfactory to Landlord and suitable for
recording in the state in which the Leased Property is located. Tenant shall pay
70
all costs and expenses of recording such Memorandum of Lease.
27.17 Attorneys' Fees.
In the event of any dispute between the parties hereto
involving the covenants or conditions contained in this Lease or arising out of
the subject matter of this Lease, the prevailing party shall be entitled to
recover against the other party reasonable attorneys' fees and expenses. Any
reference in this Lease (including, without limitation, this Section 27.17)
shall be deemed to include, without limitation, all costs for administrative,
paralegal and support staff and all travel and entertainment expenses.
27.18 Non-Recourse as to Landlord.
Anything contained herein to the contrary notwithstanding, any
claim based on or in respect of any liability of Landlord under this Lease shall
be enforced only against the Leased Property and not against any other assets,
properties or funds of (a) Landlord, (b) any trustee, director, officer, general
partner, limited partner, member, manager, employee or agent of Landlord, or
with respect to any general partner of Landlord, any of their respective general
partners or stockholders or members (or any legal representative, heir, estate,
successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or other entity) of Landlord, or any of their
respective general partners, either directly or through either Landlord or their
respective general partners or any predecessor or successor partnership, limited
liability company or corporation or their stockholders, officers, directors,
members, managers employees or agents (or other entity), or (d) any other Person
affiliated with any of the foregoing, or any trustee, director, officer,
employee, member, manager, or agent of any thereof.
27.19 No Relationship.
Landlord shall in no event be construed for any purpose to be
a partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to the Leased Property or
otherwise in the conduct of their respective businesses.
27.20 Signs; Reletting.
If Tenant exercises its option not to extend or further extend
the Term under Section 2.3 or if an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect (i) to advertise
the availability of the Leased Property for sale or reletting and to erect upon
the Leased Property signs indicating such availability and (ii) to show the
Leased Property to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may elect.
71
27.21 Facility Names.
The Leased Property shall be known by such trade name or
trademark or logo as may from time to time be determined by Tenant. Landlord
recognizes that the name "______________________" and the initials "_____,"
together with any other names, logos or designs owned by Tenant or any of its
Affiliates and used in the management and operation of the Leased Property,
together with appurtenant goodwill, are the exclusive property of Tenant or its
Affiliates (collectively, the "Tenant-Owned Names"). Accordingly, Landlord
agrees that no right or remedy of Landlord for any default on the part of Tenant
under this Lease shall, nor shall any provision of this Lease, confer upon
Landlord or its successors or assigns the right to use Tenant-Owned Names in the
operation of the Leased Property or otherwise. In the event of any breach of
this covenant by Landlord, Tenant, in addition to any remedies available to it
under this Lease or at law or in equity, shall have the right to injunctive
relief.
27.22 Further Assurances.
In addition to the obligations required to be performed under
this Lease by Tenant and Landlord, the parties shall perform, from time to time,
such other acts and shall execute, acknowledge or deliver such other
instruments, documents and other materials as the other party may reasonably
request in order to consummate the transaction contemplated by this Lease,
including, without limitation, executing and delivering any modification,
addendum or amendment required by Landlord, to restructure rent payments so that
income from this Lease will be qualified income in connection with qualification
as a real estate investment trust; provided however, that such modification,
addendum or amendment shall not materially affect either party's economic
position with respect to this Lease.
27.23 Arbitration.
Except with respect to the monthly payment of Estimated
Percentage Rent as provided herein, in case any controversy shall arise between
the parties hereto as to any of the requirements of this Lease or the
performance of any obligations under this Lease, which the parties shall be
unable to settle by agreement or as otherwise provided herein, such controversy
shall be determined by arbitration to be initiated and conducted as provided in
Exhibit E hereto.
27.24 Licenses.
Upon the expiration or earlier termination of this Lease,
Tenant shall use its best efforts to transfer to Landlord or Landlord's nominee
and shall cooperate with Landlord or Landlord's designee or nominee in
connection with the processing by Landlord or Landlord's designee or nominee of
any applications for all licenses, operating permits and other governmental
authorizations, 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
Landlord or Landlord's designee or nominee. Tenant 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 Tenant 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, Tenant shall promptly deliver copies of all
books and records relating to the Leased Property and its operation to Landlord
or Landlord's designee or nominee but Tenant shall not be required to deliver
corporate financial records or proprietary materials. Tenant shall indemnify,
defend, protect and hold harmless Landlord from and against any loss, damage,
cost or expense incurred by Landlord or Landlord'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 and
previously identified during the Term by such governmental authority.
27.25 Counterparts
To facilitate execution, this Lease may be executed in as many
counterparts as may be required. It shall not be necessary that the signature of
or on behalf of each party appears on each counterpart, but it shall be
sufficient that the signature of or on behalf of each party appears on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in any proof of this Lease to
produce or account for more than a number of counterparts containing the
respective signatures of or on behalf of all of the parties.
72
IN WITNESS WHEREOF, Landlord and Tenant have executed
this Lease as of the date first above written.
[LANDLORD]
By: ______________________________________________
Its: ______________________________________________
"Landlord"
[TENANT]
a ___________________
By: ______________________________
Its: ______________________________
"Tenant"
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SCHEDULE 1
----------
LEASED PROPERTY
---------------
[COMPLETE]
SCHEDULE 2
----------
LEGAL DESCRIPTION OF LAND
-------------------------
[COMPLETE]
SCHEDULE 3
----------
SIMULTANEOUS LEASES
-------------------
[COMPLETE]
EXHIBIT A
---------
[RESERVED]
A-1
EXHIBIT B
---------
[INTENTIONALLY DELETED]
B-1
EXHIBIT C
---------
APPRAISAL PROCESS
-----------------
If Landlord and Tenant are unable to agree upon the fair
market value of the Leased Property within any relevant period provided in this
Lease, each shall within ten (10) days after written demand by the other select
one MAI Appraiser (as defined below) to participate in the determination of fair
market value. For all purposes under this Lease, the fair market value of the
Leased Property shall be the fair market value of the Leased Property
unencumbered by this Lease. Within ten (10) days of such selection, the MAI
Appraisers so selected by Landlord and Tenant shall select a third MAI Appraiser
("Third MAI Appraiser"). The three (3) selected MAI Appraisers shall each
determine the fair market value of the Leased Property within thirty (30) days
of the selection of the third appraiser. To the extent consistent with sound
appraisal practices as then existing at the time of any such appraisal, and if
requested by Landlord, such appraisal, shall be made on a basis consistent with
the basis on which the Leased Property was appraised at the time of its
acquisition by Landlord. The fees and expenses of any MAI Appraiser retained
pursuant to this Exhibit C shall be borne by the party retaining such MAI
Appraiser, with the exception of the Third MAI Appraiser whose fees and expenses
shall be borne by the Landlord and Tenant equally.
In the event either Landlord or Tenant fails to select an MAI
Appraiser within the time period set forth in the foregoing paragraph, the MAI
Appraiser selected by the other party shall alone determine the fair market
value of the Leased Property in accordance with the provisions of this Exhibit C
and the fair market value so determined shall be binding upon Landlord and
Tenant.
In the event the MAI Appraisers selected by Landlord and
Tenant are unable to agree upon a third MAI Appraiser within the time period set
forth in the first paragraph of this Exhibit C, either Landlord or Tenant shall
have the right to apply at Tenant's expense to the presiding judge of the court
of original trial jurisdiction in the jurisdiction in which the Leased Property
is located to name the third MAI Appraiser.
Within five (5) days after completion of the third MAI
Appraiser's appraisal, all three MAI Appraisers shall meet and a majority of the
MAI Appraisers shall attempt to determine the fair market value of the Leased
Property. If a majority are unable to determine the fair market value at such
meeting, the three appraisals shall be added together and their total divided by
three. The resulting quotient shall be the fair market value of the Leased
Property. If, however, either or both of the low appraisal or the high appraisal
are more than ten percent (10%) lower or higher than the middle appraisal, any
such lower or higher appraisal shall be disregarded. If only one appraisal is
disregarded, the remaining two appraisals shall be added together and their
total divided by two, and the resulting quotient shall be such fair market
C-1
value. If both the lower appraisal and higher appraisal are disregarded as
provided herein, the middle appraisal shall be such fair market value. In any
event, the result of the foregoing appraisal process shall be final and binding.
For purposes hereof, "MAI Appraiser" shall mean an appraiser
licensed or otherwise qualified to do business in the state in which the Leased
Property is located and who has substantial experience in performing appraisals
of facilities similar to the Leased Property and is certified as a member of the
American Institute of Real Estate Appraisers or certified as a SRPA by the
Society of Real Estate Appraisers, or, if such organizations no longer exist or
certify appraisers, such successor organization or such other organization as is
approved by Landlord.
C-2
EXHIBIT D
---------
FORM OF GUARANTEE
-----------------
[COMPLETE]
D-1
EXHIBIT E
---------
ARBITRATION
-----------
Any controversy, dispute or claim arising out of or relating to this Lease, any
modification or extension hereof or thereof, or any breach hereof or thereof
(including the question whether any particular matter is subject to arbitration
hereunder) shall be settled exclusively by arbitration, in [Philadelphia,
Pennsylvania] in accordance with the rules of the [American Arbitration
Association] then in force (the "Rules"). The party requesting arbitration shall
serve upon the other party to the controversy, dispute or claim a written demand
for arbitration stating the substance of the controversy, dispute or claim and
the contention of the party requesting arbitration and the name and address of
the arbitrator appointed by it. The recipient of such demand shall within twenty
(20) days after such receipt appoint an arbitrator, and the two arbitrators
shall appoint a third. The decision or award of any two arbitrators shall be
final and binding upon the parties. In the event that the two arbitrators fail
to appoint a third arbitrator within twenty (20) days of the appointment of the
second arbitrator, either arbitrator, or either party to the arbitration, may
apply to a judge of the United States District Court for [the Eastern District
of Pennsylvania] for the appointment of the third arbitrator, and the
appointment of such arbitrator by such judge on such application shall have
precisely the same force and effect as if such arbitrator had been appointed by
the two arbitrators. If for any reason the third arbitrator cannot be appointed
in the manner prescribed by the preceding sentence, either regularly appointed
arbitrator, or either party to the arbitration, may apply to [the American
Arbitration Association] for appointment of the third arbitrator in accordance
with the Rules. Should the party upon whom the demand for arbitration has been
served fail or refuse to appoint an arbitrator within twenty (20) days, the
single arbitrator shall have the right to decide alone, and such arbitrator's
decision or award shall be final and binding upon the parties.]
Each arbitrator chosen by a party shall be a fit person, and
the third arbitrator however chosen shall be a fit and impartial person, in each
case having at least ten (10) years experience in litigating, adjudicating or
otherwise administering cases and controversies related to the subject matter of
the controversy, dispute or claim being submitted to arbitration.
The parties hereto agree to abide by all awards and decisions
rendered in an arbitration proceeding in accordance with the foregoing, and all
such awards and decisions may be filed by the prevailing party with any court
having jurisdiction over the person or property of the other party as a basis
for judgment and the issuance of execution thereon. The fees of each arbitrator
and related expenses of arbitration shall be apportioned among the parties as
determined by the arbitrators. The parties to the arbitration shall bear equally
the fees of each arbitrator and related expenses of arbitration.
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Unless otherwise agreed by the parties to the arbitration, all
hearings shall be held, and all submissions shall be made by the parties, within
ten (10) days of the date of the selection of the third arbitrator, and the
decisions of the arbitrators shall be made within thirty (30) days of the later
of the date of the closing of the hearings or the date of the final submissions
by the parties.
The parties consent to the jurisdiction of the [Supreme Court
of the Commonwealth of Pennsylvania] and of the United States District Court for
[the Eastern District of Pennsylvania], for all purposes in connection with the
arbitration. The parties consent that any process or notice of motion or other
application to either of said courts, and any paper in connection with
arbitration, may be served by certified mail, return receipt requested, or by
personal service, or in such other manner as may be permissible under the rules
of the applicable court or arbitration tribunal, provided a reasonable time for
appearance is allowed.
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