__________ LEASE
by and between
AHP OF TEXAS, INC.
"Landlord"
and
EMERITUS CORPORATION
"Tenant"
Dated as of ____,1996
LEASE
This LEASE is executed as of ______, 1996, by and between AHP
OF TEXAS, INC., a Texas corporation, having its principal office at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as
Landlord, ("LANDLORD") and EMERITUS CORPORATION, a
Washington corporation, having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as Tenant ("TENANT")
RECITALS
A. Landlord's parent, American Health Properties, Inc., a Delaware
corporation (the "LENDER"), and Emeritus Real Estate III, L.L.C., a
Delaware limited liability company ("BORROWER") entered into a
Construction Loan Agreement, dated as of August 21, 1995 (the "LOAN
AGREEMENT"), pursuant to which Lender has agreed to advance funds
for the purpose of constructing an eighty-unit assisted living facility on a
parcel of land in ____. Landlord and Lender have entered into a Purchase
Agreement dated as of August 21, 1995 (the "PURCHASE
AGREEMENT") with Borrower, pursuant to which Landlord has agreed to
purchase the land and improvements comprising the facility which
constitutes the Property which is subject to this Lease, upon completion
of construction of the improvements.
B. As an inducement to Lender to enter into the Loan Agreement and
to Landlord to enter into the Purchase Agreement, Tenant has agreed
hereby to lease the land and improvements comprising the facility from
Landlord and to secure its obligations to Landlord under this Lease as
provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
ARTICLE I
DEFINITIONS
For the purpose of this Lease, unless otherwise expressly provided in
this Agreement or the context in which such term is used indicates a
contrary intent, (a) the terms defined in this Article shall have the meanings
ascribed to them in this Article, (b) all accounting terms not otherwise
defined in this Article shall have the meanings ascribed to them in
accordance with generally accepted accrual method accounting
principles at the time applicable, (c) all references in this Lease to
designated "Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Lease and (d)
the words "herein, " hereof" and "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 AGREEMENTS" shall mean all contracts and
agreements between Landlord and Tenant, or between any member of the
Landlord Group and Tenant or any Affiliates thereof, other than this lease
and any Additional Leases.
"ADDITIONAL CHARGES" shall have the meaning ascribed to
such term in Section 4.5.
"ADDITIONAL LEASES" shall mean all leases between any
member of the Landlord Group, as Landlord, and Tenant or any Affiliates
thereof, as Tenant, in effect on any date of determination.
"ADDITIONAL RENT" shall have the meaning ascribed to such
term in Section 4.4.
"ADDITIONAL RENT COMMENCEMENT DATE" shall mean
with respect to the Fixed Term, the first day of the first calendar month
which commences after the Base Year; and with respect to each Extended
Term, the one year anniversary of the first day of such Extended Term.
"ADDITIONAL RENT PERCENTAGE" shall mean a percentage
amount equal to the greater of (a) two and one half percent (2-1 /2 %) and
(b) the percentage increase (if any) in the Consumer Price Index for All
Urban Consumers (1982-84=100), for the region which includes the
Property, published by the U.S. Department of Labor, (the "Index")
from the Index in effect on the commencement of the preceding Base Year
or Calculation Period, as the case may be to the Index in effect on the
commencement of the current Calculation Period.
"AFFILIATE" of any person or entity (the "Subject") shall mean (a)
any person which, directly or indirectly, controls or is controlled b or is
under common control with the Subject, (b) any person owning,
beneficially, directly or indirectly, ten percent (10%) or more of the
outstanding capital stock, shares or equity interests of the Subject or
(c) any officer, director, employee, general partner or trustee of the Subject
or any person controlling, controlled by or under common control with the
Subject (excluding trustees and persons serving in similar capacities who
are not otherwise an Affiliate of the Subject). As used in this definition, the
term "person" means and includes governmental agencies and authorities,
political subdivisions, individuals, corporations, limited liability
companies, general partnerships, limited partnerships, stock companies or
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associations, joint ventures, associations, trusts, banks, trust companies,
land trusts, business trusts and any other entity of any form whatsoever, and
"control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), as used with respect to any person,
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests, or through any other means.
"AHP" shall mean American Health Properties, Inc., a Delaware
corporation.
"APPRECIATION AMOUNT" shall mean the amount, if any, by
which the Fair Market Value of the Property exceeds Landlord's Total
Investment.
"AWARD" shall have the meaning ascribed to such term in Section
16.1(c).
"BASE RENT" shall mean, with respect to the Fixed Term, an
amount, determined as of the Commencement Date, calculated by
multiplying (x) the Initial Investment Cost by (y) the Base Rent Interest
Rate.
"BASE RENT INTEREST RATE" shall mean an interest rate equal to
350 basis points in excess of the Ten Year Treasury Rate as of such date,
and, with respect to each Extended Term, the amount determined pursuant
to Section 3.2; provided, however, that in no event shall the Base Rent
Interest Rate be less than 10.5 % nor more than 11.5 %.
"BASE YEAR" shall mean, with respect to the Fixed Term, the first
period of 12 full months period following the Commencement Date and,
with respect to each Extended Term, the first 12-month period commencing
on, or immediately following, the first day of such Extended Term.
"BUSINESS DAY" shall mean any day on which banking institutions
in Denver, Colorado are open for the conduct of normal banking business.
"CALCULATION PERIOD" shall mean, with respect to the Fixed
Term and each Extended Term, a 12-month period commencing on the
Additional Rent Commencement Date or any anniversary of such date
through the Fixed Term or each Extended Term, as the case may be.
"CAPITAL ADDITIONS" shall mean (a) one or more new buildings
located on the Land or to be used, directly or indirectly, as part of the
Facility, (b) one or more additional structures annexed to any portion of any
of the Improvements, (c) the material expansion of existing Improvements,
(d) the construction of a new wing or new story on existing Improvements,
or (e) any expansion, construction, renovation or conversion of
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existing Improvements to (i) increase the bed or service capacity of the
Facility or (ii) change the purpose for which the Facility is utilized.
Notwithstanding anything to the contrary contained in Article XI, in the
event it is necessary to ▇▇▇▇▇ or otherwise take corrective action with
respect to the existence of a Hazardous Substance (as hereinafter
defined) located in, on or under the Property or in the Improvements, such
abatement or corrective action shall not be deemed to be a Capital Addition
and shall be the sole responsibility of Tenant at its sole cost and expense.
"CAPITAL ADDITIONS COST" shall mean the cost of any Capital
Additions made by Tenant, whether paid for by Tenant or Landlord. Such
cost shall include (a) the costs of constructing the Capital Additions,
including site preparation and improvement, materials, labor, supervision,
developer and administrative fees, the costs of design, engineering and
architectural services, the costs of fixtures, the costs of construction
financing (including but not limited to capitalized interest) and other similar
costs approved in writing by Landlord, (b) if agreed to by Landlord in
writing in advance, the purchase price and other acquisition costs, or
applicable ground lease rental payable for any period such ground lease is
in effect to and including the date upon which such Capital Addition is
completed and occupied or in operation, as the case may be, of any
land which is acquired or leased for the purpose of placing thereon all or
any portion of the Capital Additions or for providing means of access
thereto, or parking facilities therefor (including the costs of surveying the
same and recording, title insurance and escrow fees and charges), (c)
insurance premiums, real estate taxes, water and sewage charges and other
carrying charges for such Capital Additions during their construction, (d)
fees and expenses of legal counsel, (e) any documentary transfer or similar
taxes, (f) any applicable regulatory or administrative fees and charges, and
any costs, charges, fees or expenses paid or incurred in connection with
obtaining any applicable permits, licenses, franchises, authorizations,
certificates of need, certificates of occupancy and similar authorizations and
entitlements and (g) all other reasonable costs and expenses of
Landlord or Tenant, as applicable, and any lending institution which has
committed to finance the Capital Additions, including, but not limited to, (i)
the fees and expenses of their respective legal counsel, (ii) any printing,
duplicating and messenger expenses, (iii) any filing, registration and
recording taxes and fees, (iv) any documentary transfer or similar taxes, (v)
any title insurance charges and appraisal fees, (vi) any rating agency
fees and (vii) any commitment or similar fees charged by any lending
institution financing or offering to finance any portion of such Capital
Additions.
"CLAIMS" shall have the meaning specified in Section 22.1.
"CASH FLOW" shall mean, for any period of determination, an
amount equal to the sum of the amounts for such period of (i) net income
before income taxes, (ii) depreciation, amortization and other similar non-
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cash charges, including depreciation and interest expense related to the
Equipment, (iii) Base Rent and (iv) Additional Rent.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMENCEMENT DATE" shall have the meaning ascribed to
such term in Section 3.1.
"CONDEMNATION" shall have the meaning ascribed to such term in
Section 16.1(a).
"CONDEMNOR" shall have the meaning ascribed to such term in
Section 16.1(d).
"CONSOLIDATED FINANCIALS" shall mean, for any fiscal year
(or other accounting period) for Tenant and Affiliates thereof statements of
earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective fiscal year to
the end of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail
and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year (or period), all of which
shall be prepared in accordance with generally accepted accounting
principles.
"DATE OF TAKING" shall have the meaning ascribed to such term
in Section 16.1(b).
"DEED OF TRUST" means the Deed of Trust from Landlord for the
benefit of Tenant securing. Tenant's rights under Section 26.2.
"ENCUMBRANCE" shall have the meaning ascribed to such term in
Article XXVII.
"EVENT OF DEFAULT" shall have the meaning ascribed to such
term in Section 17.1.
"EXTENDED TERM" shall have the meaning ascribed to such term
in Section 3.2.
"FACILITY" shall mean the assisted living facility presently operated
on the Land, or with Landlord's consent, such other general health care
facility, nursing home, retirement center, congregate living facility, health
care related apartments or hotel, being operated or proposed to be operated
on the Land from time to time in accordance with
the Provisions of this Lease.
"FACILITY MORTGAGE" shall have the meaning ascribed to such
term in Section 14.1.
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"FACILITY MORTGAGEE" shall have the meaning ascribed to such
term in Section 14.1.
"FAIR MARKET RENTAL" shall mean, with respect to the Property
(including any Capital Additions or portions thereof paid for by Landlord)
the rental paid on a net basis as provided in Section 4.8 hereof which a
willing Tenant not compelled to rent would pay to a willing Landlord not
compelled to lease for the highest and best medical use and occupancy of
such Property permitted pursuant to this Lease for the term in
question, assuming that Tenant is not in default under this Lease, but
without taking into account Additional Rent. For purposes of this Lease,
Fair Market Rental shall be determined in accordance with the appraisal
procedures set forth in Article XXV.
"FAIR MARKET VALUE" shall mean, with respect to the Property,
including all Capital Additions, the price that a willing buyer not compelled
to buy would pay to a willing seller not compelled to sell for such Property
(except as otherwise provided below), assuming that (a) this Lease is not in
effect with respect to the Property, (b) such seller must pay any closing
costs and title insurance premiums with respect to such sale, and (c) the
Property is fully licensed by all governmental agencies having jurisdiction
thereof, and is and will continue to be operated for the Primary Intended
Use and is otherwise a going concern. Notwithstanding the foregoing, the
computation of Fair Market Value shall assume that this Lease is in effect
with respect to the Property in the event that Tenant elects to acquire the
Property pursuant to Section 15.2(b). For purposes of this Lease, Fair
Market Value shall be determine in accordance with the appraisal
procedures set forth in Article XXV.
"FISCAL YEAR" shall mean the 12-month period commencing
January 1 and terminating December 31.
"FIXED TERM" shall have the meaning ascribed to such term in
Section 3.1.
"FIXTURES" shall have the meaning ascribed to such term in clause
(d) of Article II.
"HAZARDOUS SUBSTANCES" shall mean those substances,
materials, and wastes listed in the United States Department of
Transportation Table (49 CFR 172 101) or by the Environmental Protection
Agency as hazardous substances (40 CFR Part 302) and amendments
thereto, or such substances, materials and wastes which are or become
regulated under any applicable local, state or federal law including, without
limitation, any material, waste or substance which is (i) hydrocarbons,
petroleum and petroleum products, (ii) asbestos, (iii) polychlorinated
biphenyls, (iv) formaldehyde, (v) radioactive substances, (vi) flammables
and explosives, (vii) described as a "hazardous substance" pursuant to
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Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33
U. S. C. Section 1321 or listed pursuant to Section 307 of the Clean Water
Act (33 U. S. C. Section 1317), (viii) defined as a "hazardous waste "
pursuant to Section 1004 of the Resource Conservation and Recovery Act,
42 U. S. C. Section 6901 et seq. (42 U. S. C. Section 6903), (ix) defined as
a " hazardous substance " pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et. seq. (42 U.S.C. Section 9601), as the same may be
amended from time to time, or (x) any other substance, waste or material
which could presently or at any time in the future cause a detriment to or
impair the value or beneficial use of the Land or other Property (which, for
purposes of this definition shall include all air, soils, ground water, surface
water and soil vapor) or constitute or cause a health, safety or
environmental hazard on, under or about the Land or other Property or to
any person who may enter on, under, or about the Land or other Property or
require remediation at the behest of any governmental agency.
"IMPACTED FACILITY" shall have the meaning specified in Section
15.2.
"IMPOSITIONS" shall mean all taxes (including without limitation all
real properly taxes imposed upon the Land, Improvements or other portions
of the Property, including, but not limited to all tangible and intangible
personal Property, ad valorem, sales, use, single business, gross receipts,
transaction privilege, documentary stamp (if any are associated with this
Lease or the transactions contemplated hereby), rent or similar taxes
relating to or imposed upon Landlord, any portion of the Property, Tenant
or its business conducted upon the Land), assessments (including without
limitation all supplemental real Property tax assessments or assessments for
public improvements or benefit, whether or not commenced or completed
prior to the date hereof and whether or not to be completed within the
Term), ground rents, water, sewer or other rents and charges, excises, tax
levy, fees (including without limitation license, permit, franchise,
inspection, authorization and similar fees) and all other governmental
charges, in each case whether general or special, ordinary or extraordinary,
foreseen or unforeseen, of every character or nature whatsoever with
respect to or connected with the Property or the business conducted thereon
by Tenant (including all interest, penalties and fines thereon due to any
failure or delay in payment thereof) which at any time prior to, during
or with respect to the Term hereof may be assessed or imposed on or with
respect to, or may be a lien upon (a) Landlord's interest in the Property, (b)
the Property, or (d) any occupancy thereof or any Rent therefrom or any
estate, right, title or interest therein, (c) Landlord's capital invested in the
State as represented by the Property, or (d) any occupancy, operation, use
or possession of, or sales from, or activity conducted on or in connection
with the Property or the leasing or use of the Property or any part thereof by
Tenant. Impositions shall not include (1) any tax based on revenue or
income (whether denominated as a franchise, capital stock or other tax)
7
imposed upon Landlord or any other person, whether imposed on "net
taxable earned surplus" or otherwise, (2) any transfer tax imposed upon
Landlord or any other person or (3) any tax imposed with respect to the
sale, exchange or other disposition by Landlord of any Property or the
proceeds thereof, nor any tax, assessment, tax levy or charge described in
the first sentence of this paragraph which is in effect at any time during the
Term hereof to the extent such tax, assessment, tax levy or charge is totally
or partially repealed, unless a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof, in
which case the substitute tax, assessment, tax levy or charge shall be
deemed to be an Imposition.
"IMPROVEMENTS" shall have the meaning ascribed to such term in
clause (b) of Article II.
"INITIAL INVESTMENT COST" shall mean, as of the date of
determination, an amount equal to the "Purchase Price" paid by Landlord to
the Seller under the terms of the Purchase Agreement.
"INITIAL RENT" shall mean the initial rent payable by Tenant to
Landlord pursuant to clause (i) of Section 4.1.
"INSURANCE REQUIREMENTS" shall mean all terms and
conditions of any insurance policy required by this Lease and all
requirements of the issuer of any such insurance policy.
"LAND" shall mean all of that certain real Property situated in the
City and County of E1 Paso, State of Texas and more particularly described
in Exhibit A attached hereto and incorporated herein by reference, and any
other parcel of land acquired or leased and made subject to this Lease in
connection with a Capital Addition.
"LANDLORD GROUP" shall mean any one or more of Landlord,
AHP, any Affiliate of Landlord or AHP and any shareholder of AHP.
"LANDLORD'S LENDER" shall have the meaning ascribed to that
term in Section 14.1.
"LANDLORD'S MINIMUM RETURN ALLOCATION" shall mean
an amount that yields an internal rate of return on Landlord's Total
Investment, for the period commencing on the Commencement Date and
ending on the closing date of the purchase provided for in Section 26.2
hereof, which internal rate of return is expressed as a percentage equal to
the sum of (y) Base Rent Interest Rate and (z) 350 basis points.
"LANDLORD'S TOTAL INVESTMENT" shall mean an amount
equal to the sum of (y) the Initial Investment Cost and (z) all Capital
Additions Costs pertaining to the Property paid for by Landlord pursuant to
Section 11.2 of the Lease.
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"LANDLORD'S TRANSACTION EXPENSES" shall mean all out-of
pocket expenses incurred by Landlord in connection with (i) the preparation
of this Lease, the Purchase Agreement and any Substitute Lease and the
instruments contemplated hereunder and thereunder, and any other
instruments required to be executed and delivered by Tenant
to Landlord in connection, herewith or therewith (whether or not the
transactions hereby or thereby contemplated shall be consummated) and (ii)
the transactions contemplated to be performed hereunder and thereunder,
including but not limited to the fees and disbursements of Landlord's legal
counsel, title insurance premiums, recording taxes and fees, survey fees,
valuation or appraisal fees, engineering fees and architects ' fees.
"LEASE" shall mean this document, as the same may be amended
from time to time in accordance herewith.
"LEGAL REQUIREMENTS" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, common law, decrees and injunctions affecting the
Properly or the maintenance, construction, use, alteration, occupancy or
operation thereof, whether now or hereafter enacted and in force (including
any of the foregoing which may require repairs, modifications or alterations
in or to the Property), all permits, licenses, certificates, franchises,
authorizations, land use entitlements, zoning and regulations relating
thereto, and all Covenants, conditions, 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 Property.
"MINIMUM REPURCHASE PRICE" shall mean the Initial
Investment Cost, plus the Capital Additions Cost of any Capital Additions
financed or paid for by Landlord, less the net amount (after deduction of all
reasonable legal fees and other costs and expenses, including without
limitation expert witness fees, incurred by Landlord in connection with
obtaining any such proceeds or awards) of any proceeds of insurance paid
to and retained by Landlord in accordance with Article XV of this Lease
and of any Awards received by Landlord and not applied to restoration of
the Property in accordance with Article XVI
"NOTICE" shall mean a notice given pursuant to Section 30.8 hereof.
"OFFICER'S CERTIFICATE" shall mean a certificate of Tenant
signed by the chief financial officer or another officer authorized so to sign
by resolutions adopted by the board of directors or the articles of
incorporation or by-laws of the general partner of the Tenant or by any
other person whose power and authority to act has been authorized by
delegation in writing by the chief financial officer of the general partner
of the Tenant.
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"OVERDUE RATE" shall mean, as of a specified date, a rate of
interest equal to the Prime Rate plus three percent, but in no event greater
than the maximum rate of interest then permitted under applicable law.
"PAYMENT DATE" shall mean any due date for the payment of any
installment of Base Rent.
"PERMITTED ENCUMBRANCES" shall mean the matters, if any,
set forth in Exhibit B attached hereto and incorporated herein by reference.
A "PERSON" shall mean any natural person, corporation, limited
liability company, business trust, association, company, partnership or
government (or any agency or political subdivision thereof) or, for purposes
of the definition of "Change of Control" herein, any group acting in concert
(within the meaning of Section 13(d) of the Securities
Exchange Act of 1934).
"PRIMARY INTENDED USE" shall mean an assisted living facility
licensed by the State, and such additional uses which are licensed or applied
for on the date hereof or are permitted by Landlord from time to time
hereunder.
"PRIME RATE" shall mean the fluctuating rate of interest most
recently announced by ▇▇▇▇▇ Fargo at its principal office in San Francisco,
California as its "Prime Rate". The "Prime Rate" is one of ▇▇▇▇▇ Fargo's
base rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto. The "Prime Rate" is
evidenced by the recording thereof after its announcement in such internal
publication or publications as ▇▇▇▇▇ Fargo may designate and may not be
the lowest of ▇▇▇▇▇ Fargo's base rates. Any change in any of the interest
rates chargeable hereunder resulting from a change in the Prime Rate shall
become effective as of the Business Day on which each change in the
"Prime Rate" is announced.
"PROPERTY" shall have the meaning ascribed to such term in Article
II.
"PURCHASE AGREEMENT" shall have the meaning given to that
term in the Recitals to this Lease.
"REMEDIAL WORK" shall have the meaning specified in Section
8.4.
"RENT" shall mean the Base Rent, Additional Rent and Additional
Charges.
"SECURITY AGREEMENT" shall mean the Security and Pledge
Agreement of even date between Tenant, as Debtor, and Landlord, as
Secured Party.
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"SECURITY LETTER OF CREDIT" shall have the meaning ascribed
thereto in Section 29. 3.
"SHARED APPRECIATION PURCHASE PRICE" shall mean an
amount determined by subtracting from (y) the Fair Market Value, (z)
Tenant's Share of the Appreciation Amount.
"SHORTFALL" shall have the meaning specified in Section 15.2.
"STATE" shall mean the State of Texas.
"TAKING" shall mean a taking or voluntary conveyance during the
Term hereof of all or any part of the Property, or any interest therein, right
with respect thereto or use thereof, as a result of, incidental to, or in
settlement of any condemnation or other eminent domain proceedings
affecting such Properly, regardless of whether such Proceedings shall have
actually been commenced.
"TANGIBLE NET WORTH" shall mean, as of the date of
determination, the sum of the following for Tenant and its consolidated
subsidiaries, if any, on a consolidated basis, determined in accordance with
generally accepted accounting principles (a) the amount of capital or stated
capital (after deducting the cost of any shares held in the applicable entity's
treasury); (b) plus the amount of capital surplus and retained earnings;
or (c) in the case of a capital or retained earnings deficit, minus the amount
of such deficit, (d) less the amount, if any, carried on the books of the entity
and any consolidated subsidiaries of the entity for goodwill, patents,
trademarks, copyrights, licenses, and other assets which are properly
classified as intangible assets under generally accepted accounting
principles, (e) plus the amount of the Security Letter of
Credit.
"TEN-YEAR TREASURY RATE" shall mean, as of the date of
determination, the monthly average yield to maturity of actively traded
marketable United States Treasury securities bearing a fixed rate of interest,
adjusted for a constant maturity of ten years, as calculated by the Federal
Reserve Board for the four preceding calendar weeks and published in said
board's Statistical Release H. 15.
"TENANT'S PERSONAL PROPERTY" shall mean all machinery,
equipment, furniture, furnishings, movable walls or partitions, computers or
other personal Property, and consumable inventory and supplies, including,
without limiting the generality of the foregoing, mail boxes, desks, lamps,
chairs, beds, bedstands, non-affixed cabinetry, tables, and similar movable
equipment, owned by Tenant and used or useful in Tenant's business on the
Land, but in no event any items included within the definition of
Equipment or Fixtures.
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"TENANT'S SHARE OF THE APPRECIATION AMOUNT" shall
mean an amount determined by (x) subtracting the sum of Landlord's Total
Investment and the Appreciation Amount from (y)Landlord's Minimum
Return Allocation, and (z) multiplying the resultant amount by one-half.
"TERM" shall mean the Fixed Term and any Extended Terms, as the
context may require, unless earlier terminated pursuant to the Provisions of
this Lease.
"TOTAL RENT" shall mean the sum of Base Rent, Additional Rent
and Additional Charges.
"UNAVOIDABLE DELAYS" shall mean delays due to strikes,
lockouts, inability to procure materials, power failures, acts of God,
governmental restrictions, enemy action, civil commotion, unavoidable
casualty and 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.
"▇▇▇▇▇ FARGO" shall mean ▇▇▇▇▇ Fargo Bank, N.A., a national
banking association.
ARTICLE II
LEASE OF PROPERTY
Landlord hereby leases, demises and lets to Tenant, and Tenant
hereby hires, takes and leases from Landlord, upon the terms and subject to
the conditions hereinafter set forth, TO HAVE AND TO HOLD, all of
Landlord's right, title and interest in and to all of the following (the
"PROPERTY"):
(a) the Land;
(b) all buildings, structures and other improvements of every kind,
including but not limited to the Facility, all buildings and structures
hereafter constructed upon the Land and all alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on-site and off site),
parking areas, roadways and other related on-site and off- site
improvements appurtenant to such buildings and structures presently or
hereafter situated upon the Land, and any and all Capital Additions paid for
by Landlord pursuant to Section 11.2 of this Lease (the
"IMPROVEMENTS");
(c) all easements, licenses, rights-of way and appurtenances relating
to the Land and the Improvements; and
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(d) all " fixtures " as that term is defined in the State now and
hereafter located in, on or used and incorporated into the Land or
Improvements (the "FIXTURES").
ARTICLE III
TERM OF LEASE
3.1 TERM OF LEASE. The initial term of this Lease shall commence
on _____, 1996 ("COMMENCEMENT DATE"), and, unless extended or
terminated earlier in accordance with the provisions of this Lease, shall
remain in effect until October 31, 2006 (the "FIXED TERM").
Notwithstanding the foregoing, if, for any reason, through
no fault of Landlord, Landlord cannot deliver possession of the Property to
Tenant on the Commencement Date, Landlord shall not be subject to any
liability, nor shall such failure affect the validity of this Lease or the
obligations of Tenant hereunder or extend the Term hereof, but in such
case, Tenant shall not be obligated to pay Rent or to perform any
other obligation of Tenant under this Lease until possession of the Property
is tendered to Tenant.
3.2 OPTION TO EXTEND TERM OF LEASE.
(a) Landlord hereby grants to Tenant an option to extend the term
of this Lease for six additional consecutive five-year renewal terms (each,
an "EXTENDED TERM, " and collectively, the "EXTENDED TERMS").
Each of the Extended Terms shall be upon the same terms and conditions as
those set forth for the Fixed Term except that (i) Base Rent shall be the then
current Fair Market Rental which, unless otherwise mutually agreed to by
Landlord and Tenant, shall be determined by appraisal pursuant
to the provisions of Article XXV; provided that the annual Base Rent for
each Extended Term shall not be less than 102.50% of the sum of Base
Rent plus Additional Rent payable during the last year of the Initial Term or
preceding Extended Term, as the case may be, and (ii) the Base Year
utilized for calculation of Additional Rent shall change as provided in
Article I. Each such option may only be exercised by Tenant if, at the time
such option is exercised, (iii) an Event of Default shall not exist and be
continuing, and (iv) the Tenant under each Additional Lease in effect at
such time which contains an option permitting such Tenant to extend the
term thereof, is concurrently electing to extend the term of such Additional
Lease. Each such option to extend the term hereof shall be exercised by
Tenant by delivery of Notice to that effect to Landlord not less than
180 days but not more than 360 days prior to the date upon which this
Lease otherwise would terminate. Tenant's exercise of any option to extend
the term of this Lease for an extended term pursuant to this Section 3.2 shall
constitute Tenant's irrevocable and binding commitment to lease the
Property on the terms stated in this Lease for the whole of such Extended
Term. If Tenant is unable to exercise any option due to the provisions
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of this Lease, the time during which such option may be exercised shall not
be extended or enlarged. The failure of Tenant to exercise any of the
options for the Extended Terms within the respective times specified in this
Section shall thereby terminate any remaining such options.
(b) Time is strictly of the essence with respect to the requirement
that Tenant give timely Notice of its exercise of any options hereunder,
including, but not limited to, the options for the Extended Terms, and
Tenant's failure timely to exercise any option strictly in accordance with its
terms shall constitute a material, irredeemable and incurable failure to
satisfy a condition precedent to the vesting of any rights in Tenant
pursuant to such option, and Tenant hereby expressly waives any right to
claim relief from forfeiture, or any other form of equitable relief, from
consequences of an untimely exercise of any such option strictly in
accordance with its terms. The implied covenant of good faith and fair
dealing under this Lease shall not be construed to impose upon
Landlord any obligation to notify Tenant in advance of the impending
deadline for the exercise of any option hereunder, nor shall it obligate
Landlord to excuse the tardy exercise of any option however slight.
ARTICLE IV
RENT
4.1 PAYMENT OF INITIAL RENT AND LANDLORD'S
TRANSACTION EXPENSES. On the Commencement Date Tenant (i)
shall pay to Landlord, as Initial Rent, an amount equal to three fourths of
one percent (3/4 % ) of the Initial Investment Cost, without right
of offset, in the manner specified in Section 4.2 hereof, and (ii) shall pay to
Landlord all Landlord's Transaction Expenses.
4.2 PAYMENT OF BASE RENT, ADDITIONAL RENT AND
ADDITIONAL CHARGES. During the Term, Tenant shall pay to
Landlord at the times specified herein, in lawful money of the United States
of America, without right of abatement, deduction, counterclaim, defense,
reduction, recoupment or offset, by wire transfer of Federal Funds
to such account or accounts as Landlord may designate from time-to-time
in a Notice, the Base Rent, the Additional Rent and the Additional Charges.
4.3 BASE RENT. Commencing on the first Business Day of the first
full calendar month occurring coincident with or after the Commencement
Date, and thereafter on the first day of each calendar month occurring
during the Term hereof, for the period beginning on such first Business Day
and ending on the last day of the Term hereof, Tenant shall pay to Landlord
an amount calculated by dividing (x) Base Rent by (y) 12, provided that the
first payment of Base Rent shall include an additional pro rata payment for
any partial calendar month occurring between the Commencement Date and
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the date of the first payment of Base Rent. Any payment of Base Rent for a
period of less than one calendar month shall be prorated based upon the
number of days for which such Base Rent is due divided by 30.
4.4 ADDITIONAL RENT. From and after the Additional Rent
Commencement Date, during each Calculation Period, "Additional Rent"
shall accrue, in the manner and at the times set forth in this Section 4.4.
With respect to the first Calculation Period Additional Rent shall be an
amount equal to the Additional Rent Percentage of total Base Rent payable
for the Base Year. With respect to the second and subsequent
calculation Periods, Additional Rent shall be an amount equal to (a)
Additional Rent for the immediately preceding Calculation Period, plus (b)
an amount equal to the Additional Rent Percentage of the sum of Base Rent
and Additional Rent payable for the immediately preceding Calculation
Period. Notwithstanding the foregoing, in no event shall Base Rent
and Additional Rent payable in any Calculation Period be more than 104%
of Base Rent and Additional Rent payable in the preceding Calculation
Period. On the 45th day after the last day of the calendar quarter which
commences on the Additional Rent Commencement Date, and, thereafter,
on the 45th day after the last day of every calendar quarter commencing
during the Term of this Lease, Tenant shall pay Additional Rent on
a quarterly basis. The quarterly payment shall be one fourth of the
Additional Rent payable for such Calculation Period.
4.5 ADDITIONAL CHARGES. Subject to Article XIII hereof, Tenant
shall pay and discharge as and when due and payable all Impositions and
other amounts, liabilities and obligations which Tenant assumes or agrees to
pay under this Lease. If Tenant fails or refuses to pay any of the items
referred to in the immediately preceding sentence, Tenant shall promptly
pay and discharge every fine, penalty, interest and cost which may
arise or accrue for the non-payment or late payment of such items. The
aforementioned amounts, liabilities, obligations, Impositions, fines,
penalties, interest and costs are referred to herein as " ADDITIONAL
CHARGES. " The Additional Charges shall constitute Rent hereunder. If
any Rent (but as to Additional Charges, only those which are payable
directly to Landlord) shall not be paid on its due date, Tenant shall pay to
Landlord on demand, as an Additional Charge, a late charge to the extent
permitted by law, computed at the Overdue Rate on the amount of such
Rent from the due date of such Rent to the date such Rent is paid. Any
payment by Tenant of Additional Charges to Landlord pursuant to any
requirement of this Lease shall relieve Tenant of its obligation to pay
such Additional Charges to the entity to which they would otherwise be
paid.
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4.6 TRIPLE NET LEASE.
(a) TRIPLE NET LEASE. This Lease is what is commonly called a
"net net net lease ", it being understood that Landlord shall receive all Rent
as provided in this Article free and clear of any and all Impositions,
encumbrances, charges, obligations or expenses of any nature whatsoever
in connection with the ownership and operation of the Property. In addition
to the Rent reserved by this Article, except as expressly provided herein to
the contrary, Tenant shall pay to the parties respectively entitled thereto all
Impositions, insurance premiums, operating charges, maintenance charges,
construction costs and any other charges, costs and expenses which arise or
may be contemplated under any provisions of this Lease during the Term
hereof. All of such charges, costs and expenses shall constitute Rent, and
upon the failure of Tenant to pay any such costs, charges or expenses,
Landlord shall have the same rights and remedies as otherwise provided in
this Lease for the failure of Tenant to pay Rent and Landlord shall be
indemnified and saved harmless by Tenant from and against the same. It is
the intention of the parties hereto that this Lease shall not be terminable for
any reason by the Tenant and that Tenant shall in no event be entitled to
any abatement of or reduction in Rent payable under this Lease except as
herein expressly provided. Any present or future law to the contrary shall
not alter this agreement of the parties.
(b) BANKRUPTCY. Provided that there has been no rejection
hereof by Landlord or any trustee or receiver of Landlord, Tenant
covenants and agrees that it shall remain obligated under this Lease in
accordance with its terms, and that Tenant shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding the bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding-up or other proceeding affecting Landlord or any
assignee of Landlord in any such proceeding and notwithstanding any
action with respect to this Lease which may be taken by any trustee or
receiver of Landlord or any such assignee in any such proceeding or by any
court in any such proceeding.
(i) In the event that Tenant shall file a petition, or an order
for relief is entered against Tenant, under Chapter 7, 9, 11 or 13 of the
Bankruptcy Code, 11 U.S.C.S. 101 et seq. (the "BANKRUPTCY CODE")
and the trustee of Tenant shall elect to assume this Lease for the purpose of
assigning the same, such assumption or assignment may only be made if all
the conditions of subsections (ii) and (iii) of this Section 4.8(b) are
satisfied. If Tenant's trustee or debtor-in-possession, as the case may be,
shall fail to elect to assume this Lease within 60 days (or additional time
fixed by the court) after such trustee shall have been appointed, or the date of
filing of the petition, at Landlord's election (and in its sole and absolute
discretion) this Lease shall be deemed to have been rejected and, in such
event, Landlord shall thereupon immediately be entitled to possession of the
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Property without further obligation to the trustee or Tenant,
and this Lease shall be cancelled, but Landlord's right to be compensated
for damages in the bankruptcy proceedings shall survive such cancellation.
(ii) No election to assume this Lease shall be effective
unless in writing and addressed to Landlord and unless, in Landlord's
business judgment, all the following conditions, which Landlord and
Tenant acknowledge to be commercially reasonable, have been satisfied:
(A) The trustee (or Tenant, as debtor-in-possession)
has cured or has provided Landlord adequate assurance that:
(I) within ten days from the date of such
assumption, the trustee (or debtor-in-possession) will cure all monetary
defaults under this Lease; and
(II) within 30 days from the date of such
assumption, the trustee (or debtor-in-possession) will cure all non-monetary
defaults under this Lease or commence to cure within 30 days and
thereafter diligently pursue to completion.
(B) The trustee (or debtor-in-possession) has
compensated, or has provided to Landlord adequate assurance that within
ten days from the date of assumption Landlord will be compensated, for
any pecuniary loss incurred by Landlord arising from the default of the
Tenant or the trustee (or the debtor-in possession) as recited in Landlord's
written statement of pecuniary loss sent to the trustee (or debtor-
in-possession);
(C) The trustee (or debtor-in possession) has provided
Landlord with adequate assurance of the future performance of each of
Tenant's obligations under this Lease, provided that:
(I) the trustee (or debtor-in-possession) shall
also deposit with Landlord, as security for the timely payment of Rent, an
amount equal to (w) three months' Base Rent and (x) the last quarterly
payment of Percentage Rent and (y) the other monetary charges accruing
under this Lease; and
(II) the obligations imposed upon the trustee
(or debtor-in-possession) shall continue with respect to Tenant after
completion of bankruptcy proceedings.
(D) Landlord has determined that the assumption of
the Lease will not:
(I) breach any provision in any agreement by
which Landlord is bound relating to the Property; or
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(II) disrupt, in Landlord's reasonable
judgment, the reputation and profitability of the Property.
(E) For purposes of this subsection, "adequate
assurance" shall mean:
(I) Landlord shall determine that the trustee
(or debtor-in-possession) has and will continue to have sufficient
unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that the trustee (or debtor-in-
possession) will have sufficient funds to fulfill the obligations of Tenant
under this Lease; and
(II) an order shall have been entered
segregating sufficient cash payable to Landlord, or there shall have been
granted a valid and perfected first lien and security interest in Property of
the Tenant or trustee (or debtor-in-possession), acceptable as to value and
kind to Landlord, to secure to Landlord the obligation of the Trustee (or
debtor-in-possession) to cure the monetary or non-monetary defaults under
this Lease within the time periods set forth above.
(iii) If the trustee (or debtor-in-possession) has assumed the
Lease pursuant to all the provisions of subsections (i) and (ii) of this Section
4 8(b), for the purpose of assigning (or electing to assign) Tenant's interest
under this Lease or the estate created thereby to any other person, such
interest or estate may be so assigned only if Landlord shall acknowledge in
writing that the intended assignee has provided adequate assurance of future
performance of all the terms, covenants and conditions of this Lease
to be performed by Tenant. For purposes of this subsection (iii), "adequate
assurance of future performance " means that Landlord shall have
ascertained that each of the following conditions has been satisfied:
(A) the assignee has submitted a current financial
statement audited by a certified public accountant which shows tangible net
worth and working capital in amounts determined to be sufficient by
Landlord to assure the future performance by such assignee of Tenant's
obligations under this Lease;
(B) if requested by Landlord, the assignee shall have
obtained guarantees in form and substance satisfactory to Landlord from
one or more persons who satisfy Landlord's standards of creditworthiness.
(C) Landlord has obtained all consents to waivers
from any third parties required under any lease, mortgage, financing
arrangement or other agreement by which Landlord is bound to enable
Landlord to permit such assignment;
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(D) the assignee has deposited an adequate security
deposit with Landlord; and
(E) the assignee has demonstrated that its intended
use of the Property is consistent with the terms of this Lease and will not
diminish the reputation of the Facility, or violate any "exclusive" which has
been granted by Tenant to any permitted subtenant in the Property.
(iv) When, pursuant to the Bankruptcy Code, the trustee (or
debtor-in-possession) shall be obligated to pay reasonable use and
occupancy charges for the use of the Property or any portion thereof, such
charges shall not be less than the Rent.
(v) Neither Tenant's interest in the Lease, nor any lesser
interest of Tenant herein, nor any estate of Tenant hereby created, shall pass
to any trustee, receiver, assignee for the benefit of creditors or any other
person by operation of law or otherwise unless Landlord shall consent to
such transfer in writing. No acceptance by Landlord of rent or any other
payments from any such trustee, receiver, assignee or person shall be
deemed to have waived, nor shall it waive the need to obtain
Landlord's consent to, or Landlord's right to terminate this Lease for, any
transfer of Tenant's interest under this Lease without such consent.
(vi) 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 the obligations arising under this Lease on or
after the date of such assignment. Any such assignee shall, upon demand,
execute and deliver to Landlord an instrument confirming such assumption.
ARTICLE V
IMPOSITIONS
5.1 PAYMENT OF IMPOSITIONS. Tenant shall pay, or cause to
be paid, all impositions prior to delinquency and before any fine, penalty,
interest or cost may be added for non-payment (subject to Tenant's rights of
contest pursuant to the provisions of Article XIII). Such payments shall be
made directly to the authorities levying such Impositions, if possible.
Tenant shall, promptly upon request by Landlord, furnish to
Landlord original or certified copies of receipts or other reasonably
satisfactory evidence of such payments. Tenant's obligation to pay
Impositions shall be deemed absolutely fixed upon the date such
Impositions become a lien upon the Property or any part thereof.
Notwithstanding the foregoing, if any such Imposition may, at the option of
the payor, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), and so long as no Event
of Default shall have occurred hereunder and be continuing, Tenant may
pay the same (and shall pay any accrued interest on the unpaid balance of
such Imposition) in installments, and in such event shall pay such
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installments (subject to Tenant's right of contest pursuant to the provisions
of Article XIII) as the same become due and before any fine, penalty,
premium, further interest or cost is added thereto. Landlord shall, at its
expense and to the extent required or permitted by applicable laws and
regulations, prepare and file all returns with respect to Landlord's net
income, gross receipts, sales, use, single business, transaction privilege,
rent, ad valorem and franchise taxes, and with respect to taxes on
Landlord's capital stock. Tenant shall, at its expense, and to the extent
required or permitted by applicable laws and regulations, prepare and file
all other tax returns and reports with respect to any Imposition as may be
required of Tenant by governmental agencies or authorities. If any
refund shall be due from any taxing authority with respect to any
Imposition paid by Tenant, the same shall be paid over to and retained by
Tenant unless an Event of Default shall have occurred hereunder and be
continuing, in which case such refund shall be paid over to and retained by
Landlord. Any such funds retained by Landlord due to an Event
of Default shall be applied as provided in Article XVII. Landlord and
Tenant shall, each upon a request by the other, provide such information as
is maintained by the party to whom the request is made with respect to the
Property as may be reasonably necessary to prepare any required returns or
reports. If any governmental agency or authority classifies any Property
covered by this Lease personal Property, Tenant shall file all
personal Property tax returns in such jurisdictions where it may legally so
file. Landlord, to the extent possesses the same, and Tenant, to the extent it
possesses the same, will provide to the other party, promptly upon request,
cost and depreciation records reasonably necessary for filing returns for any
Property so classified as personal Property. If Landlord is legally required
to file any personal properly tax returns, Landlord shall provide Tenant with
copies of any assessment notices with respect thereto in sufficient
time for Tenant to file a protest with respect thereto if it so elects pursuant
to Article XIII. If no Event of Default is then continuing, Tenant may at its
option and sole cost and expense, upon written notice to Landlord, protest,
appeal or institute such other proceedings as Tenant reasonably may deem
appropriate to effect a reduction of real estate or personal Property
assessments so long as such action is conducted in good faith
and with due diligence. In such event, Landlord, at Tenant's sole cost and
expense, shall fully cooperate with Tenant in such protest, appeal, or other
action. Tenant hereby agrees to indemnify, defend, save and hold Landlord
harmless from and against any and all losses, demands, claims, obligations
and liabilities against or incurred by Landlord in connection with such
cooperation by Landlord. ▇▇▇▇▇▇▇▇ by either party to the other for
reimbursement of personal Property taxes shall be accompanied by copies
of a ▇▇▇▇ therefor and evidence of payments thereof which identify the
personal Property with respect to which such payments have been made.
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5.2 NOTICE OF IMPOSITIONS. Landlord shall give prompt Notice
to Tenant of all Impositions payable by Tenant hereunder of which
Landlord at any time has knowledge. Notwithstanding the foregoing,
however, Landlord's failure to give any such Notice shall in no way
diminish Tenant's obligations hereunder to pay such Impositions,
but Landlord shall be responsible for any fine, penalty or interest resulting
from its failure to give such notice and any default by Tenant hereunder
shall be obviated for a reasonable time after Tenant receives Notice of any
Imposition which it is obligated to pay.
5.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed with
respect to the tax period during which the Term expires or terminates shall
be adjusted and prorated between Landlord and Tenant, whether or not such
Imposition is imposed before or after such expiration or termination, so that
Tenant is only obligated to pay that portion of such Imposition(s) pertaining
to the tax period within the Term. The obligation of Tenant to pay its
prorated share of Impositions shall survive expiration or earlier termination
of this Lease.
5.4 UTILITY CHARGES. Tenant shall pay or cause to be paid all
charges for all utilities, including but not limited to electricity, power, gas,
oil and water, used in the Property during the Term.
5.5 INSURANCE PREMIUMS. Tenant shall pay or cause to be paid
all premiums for insurance coverage required to be maintained pursuant to
Article XIV.
ARTICLE VI
TERMINATION OR ABATEMENT OF LEASE
Without limiting the provisions of Section 4.6, Tenant, to the full
extent permitted by law, shall remain bound by this Lease in accordance
with its terms. Tenant shall not take any action without the prior written
consent of Landlord to modify, surrender or terminate this Lease. The
obligations of Landlord and Tenant hereunder shall be separate and
independent covenants and agreements, and Rent and all other sums
shall continue to be payable by Tenant hereunder in any event unless the
obligation of Tenant to pay the same terminates pursuant to the express
provisions of this Lease or by termination of this Lease (other than by
reason of an Event of Default). Without limiting the generality of the
immediately preceding sentence, Tenant shall not seek or be entitled
to any abatement, deduction, deferment or reduction of Rent, or set-off
against Rent, nor shall the respective obligations of Landlord and Tenant be
otherwise affected (except as set forth in this Lease) by reason of: (a) any
damage to, or destruction of, all or any portion of the Property from
whatever cause or any Taking of all or any portion of the
Property; (b) the lawful or unlawful prohibition of, or restriction upon,
21
Tenant's use of all or any portion of the Property, or the interference with
such use or with Tenant's quiet enjoyment of the Property by any person or
entity other than Landlord, or by reason of eviction by paramount title; (c)
any claim which Tenant has or may have against Landlord by reason of any
default or breach of any warranty by Landlord under this Lease or under
any other agreement between Landlord and Tenant or to which Landlord
and Tenant are parties; (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or
(e) any other cause, whether similar or dissimilar to any of the foregoing
(other than a discharge of Tenant from any such obligations as a matter of
law). Except as specifically set forth in this Lease to the contrary, Tenant
hereby specifically waives all rights, arising from any occurrence
whatsoever, which (i) may now or hereafter be conferred upon it by law to
modify, surrender or terminate this Lease or quit or surrender all or any
portion of the Property or (ii) entitle Tenant to any abatement, reduction,
suspension or deferment of Rent or other sums payable by Tenant
hereunder.
ARTICLE VII
OWNERSHIP OF PROPERTY
7.1 OWNERSHIP OF THE PROPERTY. As between Landlord and
Tenant the Properly is, and throughout the Term shall continue to be, the
Property of Landlord. Tenant has only the right to the exclusive possession
and use of the Property, upon the terms and subject to the conditions set
forth in this Lease.
7.2 TENANT'S PERSONAL PROPERTY; SECURITY INTEREST.
Tenant may, at its expense, install, affix, assemble or place on the Property
any items of Tenant's Personal Property and may, subject to the conditions
set forth below, remove Tenant's Personal Property upon the expiration or
earlier termination of this Lease or in the ordinary course of business (other
than a termination upon an Event of Default) so long as any damage
caused by such removal shall be promptly repaired by Tenant.
Notwithstanding the foregoing, in order to secure the payment and the
performance of all of Tenant's obligations under this Lease, Tenant hereby
grants to Landlord a security interest in (and hereby pledges and collaterally
assigns to Landlord) all of Tenant's rights, title and interest in and to
Tenant's Personal Property, all whether now existing or hereafter
acquired and hereby further agrees to execute and deliver to Landlord,
forthwith after demand by Landlord from time to time, any security
agreement in a reasonable form determined by Landlord and such
additional writings and instruments, including without limitation financing
statements, as may be reasonably required by Landlord for the
purpose of effectuating the intent of this sentence and Tenant agrees that
Landlord shall have with respect to all Personal Property all rights and
22
remedies of a secured party under the Uniform Commercial Code as
adopted in the State, including, but not limited to, the right after the
occurrence of an Event of Default to use or sell Tenant's Personal
Property, and Landlord shall not be required to remove any of such
Personal Property from the Property and in no event shall Landlord be
liable to Tenant for use of such Personal Property. Pending disposition of
such Personal Property by Landlord, Landlord shall be entitled to use such
Personal Property in connection with the operation (if any) of the Facility.
Tenant shall not permit the Property or Personal Property to become
subject to any liens or encumbrances of any kind without first obtaining the
prior written consent of Landlord, except for liens or encumbrances
permitted by Section 29.1 (a). This Lease and the security interest granted
Landlord hereby shall be subordinate to any purchase money security
interest or capital lease permitted under Section 29.1 (a).
Landlord further agrees that Tenant may lease Personal Property, and
Landlord shall execute and deliver such agreements as may be reasonably
required by any permitted equipment lessor or the holder of a permitted
purchase money security interest to confirm that Landlord's lien on the
Personal Property in question is subordinate to the rights of
such equipment lessor or lender and in each case Tenant shall use its best
efforts to obtain from the holder of the purchase money debt or lessor of
Personal Property, as the case may be, its agreement to (i) notify Landlord
or its successors and assigns of any default by Tenant, (ii) allow Landlord
or its successors and assigns an opportunity to cure any default, (iii)
recognize Landlord or its successors and assigns as succeeding to Tenant's
rights under the agreement in question and to the undisturbed use of the
equipment, provided that Landlord fully complies with the terms of such
agreement. Tenant shall provide and maintain on the Property during the
entire Term such Tenant's Personal Property as shall be necessary to operate
the Facility in compliance with all licensure and certification requirements,
in substantial compliance with all Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the
health care industry with respect to the Primary Intended Use or other uses
then conducted on the Property by Tenant and permitted hereunder. All
Tenant's Personal Properly not removed by Tenant within thirty days
following the expiration or earlier termination of this Lease shall be
considered abandoned by Tenant and may be appropriated, sold,
destroyed or otherwise disposed of by Landlord without first giving Notice
thereof to Tenant and without any payment or obligation to account to
Tenant. Tenant shall, at its sole cost and expense, restore the Property to
the condition required by Section 10.1(d), including repair of all damage to
the Property caused by the removal of Tenant's Personal Property, whether
effected by Tenant or Landlord, except that caused by the gross
negligence or willful misconduct of Landlord.
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ARTICLE VIII
CONDITION AND USE OF PROPERTY
8.1 CONDITION OF THE PROPERTY. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AND
SHALL BE SUBJECT TO NO LIABILITY WITH RESPECT TO, NOR
SHALL THE VALIDITY OF THIS LEASE BE AFFECTED BY ANY
CLAIM, DEMAND OR CAUSE OF ACTION REGARDING THE
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS DESIGN,
CONDITION OR FITNESS FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT.
TENANT ACKNOWLEDGES AND AGREES THAT THE PROPERTY
HAS BEEN INSPECTED BY TENANT, HAS BEEN APPROVED FOR
OCCUPANCY BY ALL GOVERNMENT AGENCIES HAVING
JURISDICTION THEREOVER AND IS SATISFACTORY TO IT IN ALL
RESPECTS, INCLUDING FOR ITS PRIMARY INTENDED USE, AND
THAT TENANT IS LEASING THE PROPERTY "AS IS" IN ITS
PRESENT CONDITION AND SUBJECT TO (A) THE EXISTING
STATE OF TITLE, INCLUDING ALL COVENANTS, CONDITIONS,
RESTRICTIONS, EASEMENTS, LICENSES, LEGAL REQUIREMENTS,
MORTGAGES, DEEDS OF TRUST, ASSIGNMENTS OF LEASES,
FIXTURE FILINGS AND OTHER FINANCING INSTRUMENTS AND
ANY AND ALL OTHER MATTERS OF RECORD AND OTHERWISE
EXCEPT TO THE EXTENT ANY OF THE FOREGOING WERE
CAUSED OR CREATED BY LANDLORD, AND (B) MATTERS
WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE
PROPERTY OR BY AN ACCURATE SURVEY OF THE LAND.
TENANT WAIVES ANY AND ALL CLAIMS, DEMANDS AND CAUSE
OR CAUSES OF ACTION HERETOFORE OR HEREAFTER ARISING
AGAINST LANDLORD WITH RESPECT TO THE CONDITION OF
THE PROPERTY.
8.2 USE OF THE PROPERTY.
(a) Tenant has obtained or duly applied for and shall maintain in
effect all permits, licenses, authorizations and approvals needed to use and
operate the Property and the Facility for Tenant's Primary Intended Use in
accordance with all Legal Requirements.
(b) Throughout the entire Term, Tenant shall use or cause to be
used the Property in accordance with its Primary Intended Use and for such
other uses as may be necessary in connection with or incidental to such use.
Tenant shall not use the Property or any portion thereof for any other
purpose whatsoever without the prior written consent of Landlord. The
parties agree that Landlord's consent will not be deemed to be unreasonably
withheld if, in the reasonable opinion of Landlord, the Tenant's proposed
24
use of the Property will significantly alter the character or purpose or
detract from the value or operating efficiency of the Property, or
significantly impair the revenue-producing capability of the Property. No
use shall be made or permitted to be made of the Property and no acts shall
be done which violate any Legal Requirements or Insurance Requirements
or which will cause the cancellation of any insurance policy covering the
Property or any part thereof, nor shall Tenant sell or otherwise provide to
patients therein, or permit to be kept, used or sold in, about or under the
Property any Hazardous Substance (except in strict compliance with all
Legal Requirements, but only as may be necessary to the operation of the
Facility, with respect to such substances other than asbestos and
hydrocarbons) or any other article which may be prohibited by the
Legal Requirements or Insurance Requirements. Tenant shall, at its sole
cost, comply with all of the requirements pertaining to the Property of any
insurance board, association, organization or company necessary for the
maintenance of the insurance required pursuant to this Lease,
(c) Tenant shall not commit or suffer to be committed any waste
nor shall Tenant cause or permit any nuisance on the Property.
(d) Tenant shall neither suffer nor permit all or any portion of
Tenant's Personal Property or the Property, including any Capital Addition
whether or not financed or paid for by Landlord, to be used in such a
manner as (i) may impair the owner's title thereto or to any portion thereof
or (ii) may make possible a claim or claims of adverse usage, adverse
possession or implied dedication of all or any portion of the Property to the
public, except as is necessary in the ordinary and prudent operation of the
Property.
8.3 LANDLORD TO GRANT EASEMENTS. Subject to the
provisions of this Section 8.3, 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 sole cost and expense (but subject to the approval of
Landlord, which approval shall not be unreasonably withheld or delayed),
(a) grant easements and other rights in the nature of easements burdening
the Property for the benefit of real Property adjacent to the Land or for the
exclusive use and enjoyment of persons or entities specified by Tenant in
such request but only as may be necessary for the operations of the Facility;
(b) dedicate or transfer unimproved portions of the Property for road,
highway or other public purposes but only as may be necessary for the
operation of the Facility; (c) execute petitions to have the Property annexed
to any municipal corporation or utility district; and (d) execute
amendments to any covenant, conditions, restrictions and equitable
servitudes affecting the Property, but only if each such grant, dedication,
transfer, petition or amendment is not detrimental to the proper conduct of
the business of Tenant on the Property and does not materially reduce the
value of the Property in Landlord's reasonable discretion.
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8. 4 HAZARDOUS SUBSTANCES.
(a) All operations or activities upon, or any use or occupancy of
the Property, or any portion thereof, by Tenant, or any agent, contractor,
employee or subtenant of Tenant shall at all times during the Term be in all
respects in strict compliance with any and all Legal Requirements and
Insurance Requirements relating to Hazardous Substances, including, but
not limited to, the discharge and removal of Hazardous Substances. Tenant
will keep the Property free and clear of all Hazardous Substances other than
those Hazardous Substances which are necessary for the operation
of the Facility for the Primary Intended Use (which Hazardous Substances
shall be handled, used and disposed of in strict compliance with the Legal
Requirements and Insurance Requirements) and Tenant shall pay all costs
required properly to use, handle and dispose of all Hazardous Substance
and shall keep the Property free and clear of any lien relating to Hazardous
Substances which may be imposed pursuant to the Legal Requirements and
Insurance Requirements. Neither Tenant, nor any agent, contractor
employee or Subtenant of Tenant shall allow the manufacture, storage,
voluntary transmission or presence of any Hazardous Substances over or
upon the Property (except in strict compliance with the Legal Requirements
and Insurance Requirements). Landlord shall have the right at any time with
notice to Tenant (but not more often than once in any calendar year) to
conduct an environmental audit of the Property and Tenant shall
cooperate in the conduct of such environmental audit Furthermore, neither
Tenant, nor any agent, contractor, employee or any subtenant of Tenant
shall install or permit to be installed in or on the Property friable asbestos
or any substance containing asbestos or similarly deemed hazardous by
governmental authorities or the Legal Requirements respecting such
materials, and with respect to any such materials currently present in the
Property, shall promptly either (x) remove any material which such Legal
Requirements deem hazardous and require be removed, at its sole cost and
expense, or (y) otherwise comply with the Legal Requirements. Tenant
shall promptly notify Landlord in writing of any order, receipt of any notice
of violation or noncompliance with any applicable law, rule, regulation,
standard or order, any threatened or pending action by any regulatory
agency or other governmental authority or any claims made by any third
party relating to Hazardous Substances on, emanations on or from, releases
on or from, or threats of releases on or from any of the Property and shall
promptly furnish Landlord with copies of any correspondence, notices or
legal pleadings in connection therewith. Landlord shall have the right, but
shall not be obligated, to notify any governmental authority of any
state of facts which may come to its attention with respect to Hazardous
Substances on, released from or emanating on or from any part of the
Property.
(b) Without limiting Section 22.1, Tenant shall, with the right to
participate in the applicable proceedings, indemnify, protect, defend (with
counsel reasonably approved by Landlord) and hold Landlord, and the
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directors, officers, shareholders, employees and agents of Landlord,
harmless from any claims (including, but not limited to, third party claims
for personal injury or real or personal Property damage), or natural
resources damage, actions, administrative proceedings (including
informal proceedings), judgments, damages, punitive damages, penalties,
fines, costs, liabilities (including sums paid in settlements of claims),
interest or losses, including reasonable attorneys' and paralegals' fees and
expenses (including any such fees and expenses incurred in enforcing the
covenants and obligations of Tenant under this Lease or collecting any
sums due hereunder), consultant fees, and expert fees, together with all
other costs and expenses of any kind or nature ( " Costs " ) that arise
directly or indirectly from or in connection with the presence, suspected
presence, release or threatened release of any Hazardous Substance in or
into or at, on, about, under or within the Property, to the extent that such
Costs are not attributable to the gross negligence or willful misconduct of
Landlord. The indemnification provided in this Section 8.4(b) shall
specifically apply to and include claims or actions brought by or on behalf
of employees or contractors of Tenant or employees or contractors of
Tenant, and Tenant hereby expressly waives any immunity to which Tenant
may otherwise be entitled under any industrial or workers' compensation
laws. In the event Landlord shall suffer or incur any such Costs, Tenant
shall pay to Landlord the total of all such Costs suffered or incurred
by Landlord upon demand therefor by Landlord. Without limiting the
generality of the foregoing, the indemnification provided by this Section
8.4(b) shall specifically cover Costs, including capital, operating and
maintenance costs, incurred in connection with any investigation or
monitoring of site conditions, any cleanup, containment, remedial,
removal or restoration work required or performed by any federal, state or
local governmental agency or political subdivision or performed by any
non-governmental entity or person because of the presence; suspected
presence, release or suspected release of any Hazardous Substance in or
into the air, soil, groundwater, surface water or soil vapor at, on, about,
under or within the Property (or any portion thereof, and any claims
of third parties for loss or damage due to such Hazardous Substance, to the
extent that such Costs are not attributable to the gross negligence or willful
misconduct of Landlord. In addition, such indemnification shall include, but
not be limited to, all loss or damage sustained by Landlord or any third
party to whom Landlord may be liable due to any Hazardous Substance (i)
that is present or suspected to be present on, about, under or within the
Property or (ii) that migrates, flows, percolates, diffuses or in any way
moves onto, into or under the air soil groundwater surface water or soil
vapor at, on, about, under or within the Property, irrespective of whether
such Hazardous Substance shall be present or suspected to be present on,
about, under or within the Property as a result of any release, discharge,
disposal, dumping, spilling or leaking (accidental or otherwise) onto the
Property or caused by any person or entity; provided, however, that the
indemnification obligation arising out of clauses (i) and (ii) above shall
27
apply solely to the extent that such loss or damage is not attributable to the
gross negligence or willful misconduct of Landlord.
(c) In the event any investigation or monitoring of site conditions
or any clean-up, containment, restoration, removal or other such work
("REMEDIAL WORK " ) is required under any applicable Legal
Requirements, including, but not limited to, any judicial order or order of
any governmental entity, or in order to comply with any agreements
affecting the Property because of, or in connection with, any occurrence or
event described in Section 8. 4(b), Tenant shall perform or cause to be
performed the Remedial Work in compliance with such law, regulation,
order or agreement and subject to the final review and approval of
Landlord, which approval shall not be unreasonably withheld or delayed;
provided, however, that Tenant may withhold such performance
pursuant to a good faith dispute regarding the application, interpretation or
validity of the law, regulation, order, or agreement, subject to the
requirements of Section 8.4(d); provided, further, however, that Landlord
shall reasonably cooperate with Tenant to the extent necessary to deliver
such authorizations as may be required in order for Tenant to
perform its obligations under this Section 8.4(c). All Remedial Work shall
be performed by one or more contractors, selected by Tenant and approved
in advance in writing by Landlord, which approval shall not be
unreasonably withheld or delayed, and under the supervision of a
consulting engineer, selected by Tenant and approved in advance in
writing by Landlord, which approval shall not be unreasonably withheld or
delayed. All costs and expenses of Remedial Work shall be paid by Tenant,
including, but not limited to, the charges of such contractors and consulting
engineer, and Landlord's reasonable attorneys' and paralegals' fees and
other costs incurred in connection with the monitoring or review of such
Remedial Work. In performing its obligations hereunder, Tenant shall
be subrogated to any rights Landlord may have under any indemnifications
or warranties from any present, future or former owners, Tenants or
occupants or users of the Property, to the extent available. In the event
Tenant shall fail timely to commence, diligently to
prosecute to completion or to complete to Landlord's reasonable satisfaction
any necessary Remedial Work, Landlord may, but shall not be required to,
cause such Remedial Work to be performed, and all costs and expenses
thereof paid or incurred by Landlord in connection therewith shall be Costs
within the meaning of Section 8.4(b). Landlord's disapproval of or
dissatisfaction with any Remedial Work shall be deemed to
be reasonable so long as Landlord's requirements for any Remedial Work
are consistent with the then current requirements and standards imposed by
prudent institutional investors in connection with their management of real
Property. All such Costs shall be due and payable upon demand therefor by
Landlord. If Tenant fails to perform its obligations hereunder, Landlord
shall be subrogated to any rights Tenant may have under any
indemnifications from any present, future or former owners, Tenants or
28
other occupants or users of the Property relating to the matters covered by
this Section 8.4.
Notwithstanding any provision of this Section 8.4 to the
contrary, but without limiting the provisions of Article XIII, Tenant shall be
permitted to contest or cause to be contested, subject to compliance with the
requirements of this Section 8.4(d) and Article XIII, by appropriate action
any Remedial Work requirement, and Landlord shall not perform such
requirement on its behalf, so long as Tenant has given Landlord written
notice that Tenant is contesting or shall contest or cause to be contested the
same, and Tenant actually contests or causes to be contested the application,
interpretation or validity of the law, regulation, order or agreement
pertaining to the Remedial Work by appropriate proceedings conducted in
good faith with due diligence, provided that such contest shall not subject
Landlord to civil liability nor jeopardize Landlord's interest in the Property
or affect in any way the payment of any sums to be paid to Landlord.
Tenant shall give such security or assurances as may be reasonably
required by Landlord to insure compliance with the Legal Requirements
pertaining to the Remedial Work (and payment of all costs, expenses,
interest and penalties in connection therewith) and to prevent any sale,
forfeiture or loss by reason of such nonpayment or noncompliance.
(e) The provisions of this Section may be enforced by Landlord
without regard to any other rights and remedies Landlord may have against
Tenant under this Lease and without regard to any limitations on Landlord's
recourse as may be otherwise provided in this Lease. Tenant agrees that,
notwithstanding any provision in this Lease to the contrary, a separate
action or actions to enforce Tenant's obligations under this Section 8.4 may
be brought and prosecuted against Tenant. Any costs and other payments
required to be paid by Tenant to Landlord under this Section 8.4 which
are not paid within fifteen days of demand therefor shall thereupon be
considered delinquent. Tenant shall pay to Landlord immediately upon
demand therefor interest on such overdue amounts, from the date when due
until paid, at the Overdue Rate.
ARTICLE IX
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS
9.1 COMPLIANCE WITH LEGAL REQUIREMENTS,
INSURANCE REQUIREMENTS AND INSTRUMENTS. Subject to the
rights of Tenant as provided in Article XIII relating to permitted contests,
Tenant, at its sole cost and expense, shall promptly (a) comply with
all applicable Legal Requirements and Insurance Requirements with respect
to the use, operation, maintenance, repair and restoration of the Property,
whether or not compliance therewith shall require structural change in any
of the Improvements or interfere with the use and enjoyment of the
Property, and (b) procure, maintain and comply with all appropriate
29
licenses, certificates of need, provider agreements and other permits,
licenses, franchises and authorizations required for any use of the Property
and Tenant's Personal Property then being made, and for the proper
erection, installation, operation and maintenance of the Property or any
part thereof, including without limitation any Capital
Additions.
9. 2 COVENANTS REGARDING LEGAL REQUIREMENTS.
Tenant Covenants and agrees that it shall not use the Property or Tenant's
Personal Property for any purpose which violates the Legal Requirements.
Tenant has obtained or duly applied for and shall maintain all appropriate
licenses, certificates, permits, provider agreements, franchises,
authorizations and approvals necessary to operate the Property in its
customary manner for the Primary Intended Use, and any other use
conducted on the Property by Tenant and permitted by Landlord hereunder
Tenant may, however, contest the legality or applicability of any such Legal
Requirement as provided in Article XIII hereof.
ARTICLE X
CONDITION OF THE PROPERTY
10.1 MAINTENANCE AND REPAIR.
(a) Tenant, at its sole cost and expense, shall keep the Property
and all private roadways, sidewalks and curbs appurtenant thereto and
which are under Tenant's control in good order, condition and repair and,
except as otherwise expressly provided to the contrary in Article XlV, XV,
or XVI with reasonable promptness, shall make all necessary and
appropriate repairs and replacements thereto of every kind and
nature, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, patent or latent, foreseen or unforeseen, or arising by reason
of a condition existing prior to the commencement of the Term of this
Lease and regardless of the cause necessitating repair. Tenant shall also be
obligated at its expense to make all repairs, modifications and renovations
necessary to comply with all licensing, safety and health and building
code, regulations applicable to the Property so that it can be legally
operated for its Primary Intended Use. All repairs by Tenant shall, to the
extent reasonably achievable, be at least equal in quality to the original
work. Tenant shall not take or omit to take any action, the taking or
omission of which might materially impair the value or the usefulness of all
or any portion of the Property for the Primary Intended Use. Tenant
shall give Landlord ten days prior written notice of any repair, replacement,
modification or renovation pursuant to this Section the cost of which
exceeds $200,000 and, prior to commencing any such repair, replacement,
modification or renovation, shall provide to Landlord either (i) a lien
payment and completion bond in form and substance and issued
by a surety reasonably acceptable to Landlord or (ii) a payment and
30
completion guaranty in form and substance and executed by a guarantor
reasonably acceptable to Landlord, as Tenant may elect.
(b) Landlord shall not under any circumstances be required to
make any repairs, replacements, alterations, restorations or renewals of any
nature or description to the Property, whether interior or exterior, structural
or non-structural, ordinary or extraordinary, patent or latent, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, nor shall Landlord under any circumstances be
required to maintain the Property in any other way, except as specifically
provided herein. Tenant hereby waives, to the fullest extent permitted by
law, the right to make repairs at the expense of Landlord pursuant to any
law or equitable principle in effect at the time of the execution of this Lease
or hereafter enacted. Landlord shall have the right to give, record and post,
as appropriate, notices of non-responsibility under any mechanic's lien laws
now or hereafter existing, and any other notices of a similar nature that
Landlord may reasonably elect to give, record or post from time to time
during the Term.
(c) Nothing contained in this Lease, and no action or inaction by
Landlord, shall be deemed or construed in any manner 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 properly for
the construction, alteration, addition, repair or demolition of or to all or any
portion of the Property 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 such a manner as would
permit the making of any claim against Landlord with respect thereto, or to
make any agreement that may create, or in any way may be the basis for the
assertion of any right, title, interest, lien, claim or other encumbrance upon
the estate of Landlord in all or any portion of the Property.
(d) Unless Landlord conveys title to any of the Property to Tenant
pursuant to the provisions of this Lease, Tenant shall, upon the expiration or
earlier termination of this Lease, vacate and surrender the Property to
Landlord in the condition in which the 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 or
ordinary wear and tear (but subject to the obligation of Tenant under this
Section to maintain the Property in good order, condition and repair during
the entire Term of this Lease) and except for damage or destruction by
casualty or condemnation which Tenant is not required to repair by the
provisions of this Lease.
31
10.2 ENCROACHMENTS AND RESTRICTIONS. If any of the
Improvements shall at any time during the Term violate any agreement or
condition contained in any lawful covenant, condition, restriction, equitable
servitude or other agreement affecting all or any portion of the Property, or
shall impair the rights of others under any easement or right-of-way
burdening the Property, provided that such agreement , covenant, condition,
restriction or easement has not been created by Landlord, then promptly
upon the request of Landlord, or at the behest of any person affected by
violation or impairment and in such case, in the event of an adverse final
determination, Tenant shall either (a) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, whether the same shall affect
Landlord or Tenant, provided that Landlord shall consent to all such
settlements or waivers or (b) make such changes in the Improvements and
take such other actions as Tenant in the reasonable and good faith exercise
of its judgment deems practicable to remove such encroachment and to end
such violation or impairment, including, if necessary, the alteration of any
of the Improvements provided that Landlord shall consent to all such
alterations and the changes are not the result of any condition created solely
by Landlord. With respect to any encroachments identified on the ALTA
surveys of the Property delivered by Tenant to Landlord pursuant to the
Purchase Agreement, Landlord agrees that it shall not require Tenant to
obtain a waiver of or otherwise correct any such encroachment unless and
until an affected third party notifies Landlord of its objection to any such
encroachment. In any event Tenant shall, subject to Landlord's consent,
take all such actions as may be necessary in order to be able to continue the
operation of the Improvements for the Primary Intended Use substantially
in the manner and to the extent the Improvements were operated prior to the
assertion of such violation or impairment. Tenant shall not be responsible
for any claims covered by Landlord's title insurance policy, and Landlord
agrees that any proceeds recovered under such title insurance policy
shall be made available to Tenant to remedy the claimed violation or
restriction.
ARTICLE XI
CAPITAL ADDITIONS
11.1 CONSTRUCTION OF CAPITAL ADDITIONS.
(a) If no Event of Default shall have occurred and be continuing,
Tenant may, subject to the terms and conditions contained in this Article,
construct or install Capital Additions on the Property with the prior written
approval of Landlord, which approval shall not be unreasonably withheld or
delayed as expressly provided herein. Tenant shall not be permitted to
create any Encumbrance on the Property in connection with any such
Capital Addition, except upon Landlord's prior written consent.
32
(b) Prior to commencing construction of any Capital Addition,
Tenant shall submit to Landlord in writing a proposal setting forth in
reasonable detail any proposed Capital Addition and shall provide to
Landlord such plans and specifications, permits, licenses, contracts and
other information concerning the proposed Capital Addition as Landlord
may reasonably request. Without limiting the generality of the foregoing,
such proposal shall indicate the approximate projected cost of constructing
such Capital Addition, the use or uses to which it will be put and a good
faith estimate of the change, if any, in the Gross Revenues that Tenant
anticipates will be caused by such Capital Addition.
(c) No Capital Addition shall be made which would tie in or
connect any Improvements with any other improvements on Property
adjacent to the Property (and not part of the Property), including without
limitation, tie-ins of buildings or other structures or utilities unless Tenant
shall have obtained the prior written consent of Landlord, which consent
Landlord may grant, withhold or delay in its sole discretion. All proposed
Capital Additions shall be architecturally integrated and consistent with the
Property.
11.2 CAPITAL ADDITIONS FINANCED OR PAID FOR BY
LANDLORD.
(a) Tenant shall be required to request that Landlord provide or
arrange financing for any Capital Addition by providing to Landlord such
information about such Capital Addition as Landlord may reasonably
request. Landlord may, but shall be under no obligation to, meet the
request, and within 60 days of receipt of such information, Landlord shall
notify Tenant as to whether it will finance the proposed Capital Addition
and, if so, the terms and conditions upon which it would do so, including
the terms of any amendment to this Lease (including, without limitation, the
increase in Base Rent described in clause (iii) of subparagraph (b), below to
compensate Landlord for the additional funds advanced by it).
Notwithstanding the foregoing, Landlord shall not finance the cost of any
proposed Capital Addition if such cost is less than $100,000. In no event
shall the portion of the material, labor charges and fixtures of the Capital
Additions Cost be less than seventy-five percent (75 %) of the total amount
of such cost. Tenant shall, within thirty (30) days of Tenant's receipt of
Landlord's affirmative notice that Landlord will finance the proposed
Capital Addition, give Landlord a notice accepting or rejecting Landlord's
proposed financing.
(b) If Landlord finances the Capital Additions Cost of the proposed
Capital Addition, Tenant shall provide Landlord with the following (unless
waived by Landlord in writing):
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(i) prior to any disbursement of funds, such information,
certificates, licenses, permits, authorizations, evidence of zoning and other
documents reasonably requested by Landlord, or by any third party lender
with whom Landlord has agreed or may agree to provide financing, as
necessary to confirm that Tenant will be able to use the Capital Addition
upon completion thereof in accordance with the Primary intended Use for
such Capital Addition, including all required federal, state or local
government licenses, permits, authorizations and approvals.
(ii) prior to any disbursement of funds, an Officer's
Certificate and, if requested, a certificate from Tenant's architect, setting
forth in reasonable detail the projected (or actual, if available) Capital
Additions Cost;
(iii) prior to or coincident with the first disbursement of
funds, an amendment to this Lease (together with a memorandum thereof in
recordable form), duly executed and acknowledged, in form and substance
reasonably satisfactory to Landlord, providing for an increase in the Base
Rent equal to the product of (x) the Capital Additions Cost of such Capital
Addition and (y) 350 basis points in excess of the Ten-Year Treasury Rate
determined as of the date of such amendment to the Lease, along
with the legal description of any land obtained in connection with such
Capital Addition and such other provisions as may be necessary or
appropriate;
(iv) prior to or coincident with the first disbursement of
funds, a construction and development agreement setting forth the terms for
Landlord's financing and Tenant's construction of such Capital Additions;
(v) prior to or coincident with payment for any land
obtained in connection with such Capital Addition, a deed conveying to
Landlord title to such land, or, if applicable, a ground lease on terms
acceptable to Landlord, which title or leasehold shall be free and clear of
any liens, encumbrances or other exceptions to or matters affecting title
except those approved by Landlord, and, upon completion of the
Capital Addition, a final as-built survey thereof reasonably satisfactory to
Landlord;
(vi) during construction and following completion of the
Capital Addition, endorsements to any outstanding policy of title insurance
covering the Property, or commitments therefor reasonably satisfactory in
form and content to Landlord (x) updating the same without any additional
exception except such as may be reasonably permitted by Landlord and (y)
adding to its coverage any land acquired or leased in connection with such
Capital Addition and increasing the coverage thereof by an amount equal to
the Fair Market Value of the Capital Addition (except to the extent covered
by the owner's policy of title insurance referred to in subparagraph (vii)
below);
34
(vii) following the advance of funds, if appropriate, (x) an
extended coverage owner's policy of title insurance insuring fee simple title
to any land conveyed to Landlord pursuant to subparagraph (v), free and
clear of all liens and encumbrances except those approved by Landlord, and
(y) a lender's policy of title insurance reasonably satisfactory in form and
substance to Landlord and to any Lender with whom Landlord has agreed
or may. agree to provide financing; and
(viii) during or following the advancement of funds, prints
or architectural and engineering drawings relating to the Capital Addition
and such other certificates (including, but not limited to, endorsements
increasing the insurance coverage, if any, at the time required by Section
14.1), documents, opinions or counsel, appraisals, surveys, certified copies
of duly adopted resolutions of the board of directors of Tenant
authorizing the execution and delivery of the lease amendment,
construction and development agreement and any other instruments as may
be reasonably required by Landlord and any lender from whom Landlord
has agreed or may agree to obtain financing.
(c) Any new mortgage or supplement to any existing mortgage
entered into by Landlord with any lending institution covering the Property
or any land referred to in subparagraph (iv) above shall be subject to the
rights of Tenant under this Lease, as this Lease may be amended from time
to time.
(d) If Landlord finances the cost of any such Capital Addition,
Tenant will reimburse Landlord for all fees, costs and expenses (including
fees and costs of in-house and outside attorneys) incurred by Landlord in
connection therewith.
11. 3 CAPITAL ADDITIONS PAID FOR BY TENANT. If Landlord
does not finance the cost of a Capital Addition under the terms of Section
11.2 and Tenant elects nevertheless to construct or cause to be constructed
such Capital Addition, (i) Tenant shall not Commence any construction
with respect to such Capital Addition without first obtaining the prior
written consent of Landlord (which Landlord shall not unreasonably
withhold so long as the proposed Capital Addition will not, in Landlord's
reasonable opinion, either (x) diminish the value of the Property or (y)
impair the Facility's ability to produce Gross Revenues and which consent
shall be delivered to Tenant within 60 days of receipt by Landlord of
Tenant's written proposal with respect to such Capital Addition), and (ii)
Tenant shall pay the cost of such Capital Addition, and there shall be
no adjustment in the Rent by reason of any such Capital Addition.
11.4 DISPOSITION OF CAPITAL ADDITIONS UPON
EXPIRATION OR TERMINATION OF LEASE. Upon the expiration or
earlier termination of this Lease, all Capital Additions shall pass to and
become the Property of Landlord, free and clear of all encumbrances.
35
11.5 NON-CAPITAL ADDITIONS. Tenant shall have the right to
make additions, modifications or improvements to the Property which are
not Capital Additions from time to time as it, in its reasonable discretion,
may deem to be desirable for the Property's uses and purposes permitted
hereunder, provided that such action does not (i) significantly and adversely
alter the character or purpose or detract in any manner from the value or
operating efficiency of the Property, (ii) significantly impair the
revenue-producing capability of the Property, (iii) materially and adversely
affect the ability of Tenant to comply with the provisions of this Lease, or
(iv) result in a violation of any of the provisions of this Lease (including,
but not limited to Articles XII or XXIX), and provided that, if the cost of
such non-capital additions, modifications or improvements exceed
$200,000 in any 12-month period, Tenant gives Landlord ten days'
prior Notice of such addition, modification or improvement. The cost of
such non-capital additions, modifications or improvements to the Property
shall be paid by Tenant, and all such non-capital additions, modifications
and improvements shall, without payment by Landlord at any time, be
included under the terms of this Lease, and upon expiration or
earlier termination of this Lease shall pass to and become the Property of
Landlord.
11.6 SALVAGE. All materials which are scrapped or removed in
connection with the construction of either Capital Additions permitted by
Section 11.1, non-capital additions permitted by Section 11. 5, or repairs
required by Article X shall be or become the Property of the party which
paid for, or provided the financing for such work.
11.7 NO LIENS ON LANDLORD'S INTEREST. In no event shall the
interest of Landlord be subject to liens for improvements made by Tenant,
whether under Article 10, this Article 11, Article 15 or otherwise, and
Tenant shall notify any and all contractors making any improvements,
repairs or additions to any portion of the Property that any lien to which
such contractor may- be entitled pursuant to the laws of the State shall not
extend to the interest of Landlord in the Property.
ARTICLE XII
LIENS
Subject to the provisions of Article XIII relating to permitted contests,
Tenant shall not directly or indirectly create or allow to remain and shall
promptly discharge at its expense any lien, encumbrance, security interest,
attachment, title retention agreement or claim upon the Property or any
attachment, levy, claim or encumbrance in respect of Rent, not including,
however, (a) this Lease, (b) Permitted Encumbrances, (c) restrictions, liens
and other encumbrances which are consented to in writing by Landlord or
expressly permitted under Section 29.1 (a) hereof, (d) liens for those taxes
of Landlord which Tenant is not required to pay hereunder, (e) subleases
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permitted by Article XXIII, (f) liens for Impositions or for sums resulting
from noncompliance with Legal Requirements so long as the same are not
yet payable or are payable without the addition of any fine or penalty and
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 or not yet due, provided that (i) the payment of such sums shall not
be postponed for more than five days after the completion of the action
giving rise to such lien and such reserve or other appropriate provisions as
shall be required by law or generally accepted accounting principles shall
have been made therefor or (ii) any such liens are in the process of being
contested as permitted by Article XIII, and (h) any liens which are the
responsibility of Landlord pursuant to the provisions of Article XXVII or
are directly created or permitted by Landlord.
ARTICLE XIII
CONTESTS
If no Event of Default has occurred and is then continuing, Tenant, on
its own or on Landlord's behalf (or in Landlord's name ), but at Tenant's
sole cost and expense, upon ten days' prior Notice to Landlord, may contest,
by appropriate legal proceedings conducted in good faith and with due
diligence, without prejudice to Landlord's rights hereunder the amount,
validity or application, in whole or in part, of any Imposition, Legal
Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by Article XII,
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 Properly, (b) neither the Property nor any Rent therefrom nor any
part thereof or interest therein would be subject to any risk of being
sold, forfeited, attached, foreclosed, or lost, (c) in the case of a Legal
Requirement; Landlord would not be in any danger of incurring any lien,
charge, fine, penalty, or other civil or criminal liability for failure to
comply therewith pending the outcome of such proceedings, (d) in the event that
any such contest shall involve a sum of money or potential loss in excess of
$100,000 then, in any such event, Tenant shall deliver to Landlord an
Officer' s Certificate to the effect set forth in clauses (a), (b) and (c), to
the extent applicable, (e) in the case of a Legal Requirement or an Imposition,
lien, encumbrance or charge, Tenant shall give such reasonable security as
may be demanded by Landlord to insure ultimate payment of the same and
to prevent any loss or injury to Landlord, including but not limited to any
sale or forfeiture of the affected portion of the Property or the Rent by
reason of such non-payment or non-compliance; provided, however, the
provisions of this Article shall not be construed to permit Tenant to contest
the payment of Rent (except as to contests concerning the method of
computation or the basis of levy of any Imposition) or any other sums
37
payable by Tenant to Landlord hereunder, (f) in the case of an Insurance
Requirement, the coverage required by Article XIV shall be maintained,
and (g) if such contest be finally resolved against Landlord or Tenant,
Tenant shall, as Additional Charges 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. Tenant shall at all
times maintain policies of insurance insuring the Property, and all Property
located in or on the Property, against the kind of risks and in the amounts of
coverage described below. All such insurance shall be written by companies
of recognized responsibility authorized to conduct an insurance business in
the State. All such insurance (other than insurance with respect to Tenant's
Personal Property) shall name Landlord as an additional insured. Proceeds
of insurance policies payable to compensate any loss shall be payable to
Landlord or Tenant as provided in Article XV. All such insurance shall
name as an additional insured or loss payee, as appropriate, the holder (a
"FACILITY MORTGAGEE") of any mortgage, deed of trust or other
security agreement securing any Encumbrance placed on the Property
in accordance with the provisions of Article XXVII ("FACILITY
MORTGAGES") by way of a standard form of mortgagee's loss payable
endorsement. Any loss adjustment or other settlement in excess of $250,000
shall require the written consent of Landlord and each Facility Mortgagee
and any other lender of Landlord or its Affiliates ("LANDLORD
LENDER") having any contractual insurance requirements which would
impact on the insurance requirements of this Lease to the extent so required
and Landlord has given Tenant written notice thereof. Originals or certified
copies of all insurance policies obtained pursuant to this Article shall be
deposited with Landlord and, if requested, with any Facility Mortgagee(s)
or Landlord Lender(s). The policies on the Property, including
the Improvements, Fixtures and Tenant's Personal Property, shall insure
against the following risks:
(a) loss or damage by fire, vandalism and malicious mischief,
extended coverage perils, and all physical loss perils insurance including
but not limited to sprinkler leakage, in an amount not less than 100% of the
then full replacement cost thereof (as defined below in Section 14.2) or
such lesser amount as is approved by Landlord in writing;
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(b) loss or damage by explosion of steam boilers, pressure vessels
or similar apparatus, now or hereafter installed in the Facility in such
amounts with respect to any one accident as may be reasonably requested
by Landlord from time to
time;
(c) business interruption or loss of rental under a rental value
insurance policy covering risk of loss during the lesser of the first 12
months of reconstruction or the actual reconstruction period necessitated by
the occurrence of any of the hazards described in Sections 14.1(a) or
14.1(b), in an amount sufficient to prevent Landlord from becoming a
coinsurer:
(d) claims for personal injury or Property damage under a policy
of comprehensive general public liability insurance, in an amount not less
than one million dollars per occurrence with respect to bodily injury and
death and three million dollars with respect to Property damage;
(e) flood (when the Property is located in whole or in part within
an area designated by an appropriate agency or authority of the United
States as a flood plain) and such other hazards and in such amounts as may
be customary for comparable properties in the area and as may be available
from insurance companies, insurance pools, or other appropriate companies
authorized to do business in the State; and
During any period during which any Capital Addition is under
construction, course of construction insurance and all risks insurance in
such amounts as Landlord shall reasonably require.
14.2 REPLACEMENT COST. The term "full replacement cost" as
used herein shall mean the actual replacement cost of the Property requiring
replacement from time to time, less exclusions provided in a normal fire
insurance policy. If either party believes that full replacement cost (the then
replacement cost less such exclusions) has increased or decreased at any
time during the Lease Term, it may have such full replacement cost
redetermined by the insurer then providing the largest amount of fire
insurance coverage carried on the Property.
14.3 ADDITIONAL INSURANCE. In addition to the insurance
described. in Section 14.1, throughout the Term Tenant shall maintain such
additional insurance as may be required from time to time by Landlord
provided that the types and amounts of any such additional insurance
required by Landlord is then customarily maintained by the
operators of similar assisted living facilities in the region in which the
Facility is located. Tenant shall further maintain adequate workers'
compensation insurance coverage for all persons employed by Tenant on
the Property. Such workers' compensation insurance shall be in accordance
with the requirements of applicable local, state and federal law.
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14.4 WAIVER OF SUBROGATION. All insurance policies carried
by Landlord or Tenant covering the Property, the Fixtures, the Facility or
Tenant's Personal Property shall expressly waive any right of subrogation
on the part of the insurer against the other party. Landlord and Tenant agree
that the respective policies of insurance carried by them will include such
waiver clauses or endorsements so long as the same are obtainable
without extra cost. If such clauses and endorsements are only available
upon the payment of an extra charge, the other party, at its election, may
pay the same, but shall not be obligated to do so; provided that the Tenant
shall at all times be obligated to carry the policies or insurance required
under this Article regardless of whether the waiver of subrogation required
under this Section 14.4 is available.
14.5 FORM OF INSURANCE. All of the policies of insurance
referred to in this Article shall be written in a form, and issued by insurance
companies, satisfactory to Landlord. Landlord agrees that it will not
unreasonably withhold or delay its approval as to the form of the policies or
the insurance companies selected by Tenant. Tenant shall pay all of the
premiums therefor, and shall deliver an original or certified copy of
any policy, or renewal thereof, to Landlord, any Facility Mortgagee and any
Landlord Lender at least 10 days prior to the expiration of the existing
policy to which such renewal policy relates. If Tenant either fails to effect
such insurance as herein required or to pay the premiums therefor, or to
deliver such policies or certified copies thereof to Landlord at the times
required, 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 demand therefor in a Notice, and
failure by Tenant to repay the same shall constitute an Event of Default
within the meaning of Section 17.1 (d). Each insurer mentioned in this
Article 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 (and to any Facility Mortgagee and Landlord Lender of which
Tenant has notice, if required) 30 days prior written notice before such
policy or policies expire, are altered or are cancelled.
14.6 CHANGE IN LIMITS. If either party shall at any time deem the
limits of the personal injury or Property damage public liability insurance
or malpractice insurance then carried by Tenant to be insufficient or
excessive, the parties shall endeavor in good faith to agree promptly upon
the proper and reasonable limits for such insurance to be carried, and such
insurance shall thereafter be carried with the limits thus agreed upon until
further change pursuant to the provisions of this Section.
14.7 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this Article, 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 so
long as (a) the coverage afforded to Landlord is not reduced or diminished
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or otherwise altered 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 (b) the requirements of this Article are
otherwise satisfied.
14.8 NO SEPARATE INSURANCE. Tenant shall not obtain separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article XIV to be furnished by, or which may reasonably be
required to be furnished by Tenant, nor shall Tenant increase the amount of
any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Landlord and all Facility
Mortgagees, are named therein as additional insureds, and the loss is
payable under said insurance in the same manner as losses are payable
under this Lease. Tenant shall immediately notify Landlord of the obtaining
of any such separate insurance or of the increasing of any of the amounts of
the then existing insurance.
ARTICLE XV
INSURANCE PROCEEDS
15.1 HANDLING OF INSURANCE PROCEEDS. Subject to Section
15. 4 hereof, all proceeds from any policy of insurance required by Article
XIV of this Lease shall be paid to Landlord and held in trust by Landlord
(subject to the provisions of Section 15.7) and shall be made available for
reconstruction, repair or replacement, as the case may be, of any damage to
or destruction of all or any portion of the Property to which such proceeds
relate, and shall be paid out by Landlord from time to time subject to the
provisions hereof for the cost of such reconstruction, repair or replacement.
Any unused portion shall be retained by Landlord free and clear upon
completion of such repair and restoration but shall be applied by Landlord
against Tenant's obligations for Rent next coming due under this Lease. If
neither Landlord nor Tenant is required or elects to repair and restore, and
the Lease is terminated without purchase by Tenant as described in Section
15.2(a), then all such insurance proceeds shall be retained by Landlord. All
salvage resulting from any risk covered by insurance shall belong to
Landlord, except that any salvage relating to Tenant's Personal Property
shall be the properly of Tenant.
15. 2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR
DESTRUCTION COVERED BY INSURANCE.
(a) Except as provided in Section 15.7, if during the Term a
portion of the Property is totally or substantially destroyed by a risk covered
by the insurance described in Article XIV so that the Facility thereby is
rendered unsuitable for its Primary Intended Use, in Tenant's reasonable
41
opinion (taking into account all relevant factors, including but not limited to
the number of useable beds, the amount of square footage reasonably
available for use by Tenant and the type and amount of Gross
Revenues lost) (the "IMPACTED FACILITY"), Tenant shall at its option
either (i) restore the Impacted Facility to substantially the same condition as
existed immediately before the damage or destruction or (ii) acquire the
Property from Landlord for a purchase price equal to the greater of the
Minimum Repurchase Price or the Fair Market Value Purchase
Price of the Property immediately prior to such damage or destruction, or
(iii) terminate the Lease with respect to the Property effective upon
Landlord' s receipt of the insurance proceeds and any "Shortfall" (as
hereinafter defined) and in such event Landlord shall be
entitled to retain or collect for its own benefit the insurance proceeds,
provided that, in the event the amount of the insurance proceeds received
by Landlord are less than the amount which would be payable in the
aggregate under the insurance policies specified in Section 14.1(a) such
termination shall not be effective until Tenant pays Landlord the
amount of such shortfall ("SHORTFALL") in cash. If Tenant restores the
Impacted Facility, the insurance proceeds shall be paid out by Landlord to
Tenant or its designee from time to time as reasonably requested by Tenant
to pay for the reasonable costs of such restoration and any excess proceeds
remaining after such restoration shall be retained by Tenant. If Tenant
acquires the Property, all applicable insurance proceeds shall be the
property of Tenant.
(b) Except as provided in Section 15.7, if during the Term, the
Improvements or Fixtures are partially destroyed due to a risk covered by
the insurance described in Article XIV but the Impacted Facility is not
thereby rendered unsuitable for the Primary Intended Use, in Tenant's
reasonable opinion (taking into account all relevant factors, including but
not limited to the number of useable beds, the amount of square footage
reasonably available for use by Tenant and the type and amount of Gross
revenues lost), Tenant shall restore the Impacted Facility to substantially the
same condition as existed immediately before the damage or destruction.
Such damage or construction shall not terminate this Lease; provided,
however, that if Tenant cannot, with reasonable diligence and within a
reasonable time, obtain all government approvals, including building
permits, licenses, conditional use permits and any certificates of need,
necessary to perform all required repair and restoration work and to operate
the Impacted Facility in substantially the same manner and for the Primary
Intended Use, Tenant shall either (i) offer to purchase the Property for a
purchase price equal to the greater of the Minimum Repurchase Price or the
Fair Market Value Purchase Price immediately prior to such damage or
destruction or (ii) continue to operate under the Lease which shall
remain in full force and effect and Landlord shall be entitled to retain the
insurance proceeds, less the amount needed to restore the Property so that
the portion of the Facility unaffected by the casualty can be used as a
complete architectural unit. If Tenant shall make such offer and Landlord
42
does not accept the same within 120 days of Landlord's receipt of such
offer, Tenant may either (x) withdraw such offer, in which case this Lease
shall remain in full force and effect and Tenant shall proceed to restore the
Impacted Facility as soon as reasonably practicable to substantially the
same condition as existed immediately before such damage or destruction,
or (y) terminate this Lease after recovery by Landlord of all insurance
proceeds and the payment by Tenant of any Shortfall in cash. If Tenant so
restores the Impacted Facility, insurance proceeds shall be paid out
by Landlord from time to time as reasonably requested by Tenant to pay for
the reasonable costs of such restoration, and any excess proceeds remaining
after such restoration shall be retained by Tenant.
(c) If Tenant elects to repair or restore any damage or destruction
to the Property and the cost of such repair or restoration exceeds the amount
of proceeds received by Landlord from the insurance required under Article
XIV, Tenant shall contribute any and all excess amounts necessary to repair
or restore the Facility.
(d) If Landlord accepts Tenant's offer to purchase the Property this
Lease shall terminate as to the Property upon payment of the purchase price
therefor and Landlord shall thereupon remit to Tenant all insurance
proceeds pertaining to the Property less Landlord's reasonable expenses,
including attorneys' fees, and assign Landlord's rights in any uncollected
insurance proceeds to Tenant.
15. 3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR
DESTRUCTION NOT COVERED BY INSURANCE. Except as provided
in Section 15.7 below, if during the Term the Facility is totally destroyed or
materially damaged (i) from a risk not covered by insurance described in
Article XIV but that would have been covered if Tenant carried the
insurance customarily maintained by, and generally available to, the
operators of reputable facilities which are used for the Primary Intended
Use in the region in which the Facility is located, (ii) from a risk for which
insurance coverage is voided due to any act or omission by Tenant, or (iii)
as result of an earthquake, whether or not such damage or destruction
renders the Impacted Facility unsuitable for their Primary Intended Use
(taking into account all relevant factors, including but not limited to the
number of useable beds, the amount of square footage reasonably available
for use by Tenant and the type and amount of Gross Revenues lost), Tenant
shall restore the Impacted Facility to substantially the same condition as
existed immediately before such damage or destruction and not terminate
this Lease. Otherwise, if the Facility is totally destroyed or materially
damaged by a risk not covered by insurance such that the Facility shall be
unusable for its Primary Intended Use, this Lease shall terminate within 90
days of such destruction or damage, provided that the Tenant may elect to
restore the Impacted Facility, in which event, this Lease shall continue in
full force and effect. If such damage or destruction does not render the
43
Impacted Facility unusable for its Primary Intended Use, in Tenant's
reasonable opinion, Tenant shall also restore the Facility to substantially the
same condition as existed immediately before the damage or destruction.
15.4 PAYMENT OF PROCEEDS ON TENANT'S PROPERTY AND
CAPITAL ADDITIONS PAID BY TENANT. Notwithstanding any
provision herein, all insurance proceeds payable by reason of any loss of or
damage to any of Tenant's Personal Property or Capital Additions paid for
by Tenant shall be paid to Tenant and Tenant shall hold such insurance
in trust to pay the cost of repairing or replacing damaged Tenant's Personal
Property or Capital Additions paid for by Tenant; provided, however, that if
the damaged Tenant's Personal Property or Capital Additions paid for by
Tenant were no longer necessary to Tenant's operations prior to their
destruction, Tenant shall not be obligated to repair or replace them.
15.5 RESTORATION OF TENANT'S PROPERTY. Upon any
restoration of the Impacted Facility as provided in Section 15.2 or 15.3,
Tenant shall either (i) at Tenant's sole cost and expense, restore all
alterations and improvements made by Tenant, Tenant's Personal Property
and all Capital Additions paid for by Tenant, or (ii) at Tenant's sole cost
and expense, replace such alterations and improvements, Tenant's Personal
Property or Capital Additions with improvements or items of the same or
better quality and utility in the operation of the Property; provided,
however, that if the damaged Tenant's Personal Property or Capital
Additions paid for by Tenant were no longer necessary to Tenant's
operations prior to their destruction, Tenant shall not be obligated to replace
them.
15. 6 ABATEMENT OF RENT. Unless and until Tenant shall pay the
purchase price for the Property to Landlord in accordance with this Article
XV (and this Lease is thereby terminated or otherwise terminated as
provided in this Article XV), in the event of any damage or destruction of
the Properly, 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 not be abated by reason of any damage or destructions to
the Property or the subsequent loss of Landlord's entitlement to the
Property.
15. 7 DAMAGE NEAR END OF TERM. Notwithstanding any
provisions of this Article XV to the contrary, if damage to or destruction of
the Facility occurs during the last 12 months of the then applicable term
(whether Fixed or Extended), if Tenant has not elected to extend such term,
and if such damage or destruction cannot be fully repaired and restored
within six months immediately following the date of loss, then Tenant shall
have the right to terminate this Lease by giving written Notice thereof to
Landlord within 30 days after the date of such damage or destruction, in
which event, Landlord shall collect any insurance proceeds to which it is
entitled, and Tenant shall assign Tenant's rights in any additional insurance
44
proceeds. In the event that the Facility is totally destroyed or damaged (i)
from a risk not covered by insurance described in Article XIV but that
would have been covered if Tenant carried the insurance customarily
maintained by, and generally available to, the operators of reputable
facilities which are used for the Primary Intended Use in the region in
which the Facility is located, (ii) from a risk for which insurance coverage
is voided due to any act or omission by Tenant, or (iii) as a result of an
earthquake, whether or not such damage or destruction renders the Facility
unsuitable for its Primary Intended Use (taking into account all relevant
factors, including but not limited to the number of useable beds, the amount
of square footage reasonably available for use by Tenant and the type and
amount of Gross Revenues lost), then Tenant shall pay to Landlord a sum
equal to the amount reasonably necessary to repair such
damage or destruction.
15. 8 TERMINATION OF OPTION TO PURCHASE. Any
termination of this Lease pursuant to this Article shall cause any option to
purchase granted to Tenant under this Lease and the right to extend the
Term by any Extended Term to be terminated and to be without further
force or effect.
15.9 WAIVER. Tenant hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction of the
Facility which Landlord is obligated to restore or may restore under any of
the provisions of this Lease.
ARTICLE XVI
CONDEMNATION
16.1 DEFINITIONS.
For purposes of this Article XVI the following terms have the
meanings specified in this Section 16.1.
(a) " CONDEMNATION " means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a
Condemnor, or (b) a voluntary sale or transfer by Landlord with Tenant's
consent (provided no Event of Default has occurred and is continuing at
such time) to any Condemnor, either under threat of condemnation or while
legal proceedings for condemnation are pending.
(b) "DATE OF TAKING" means the first date the Condemnor has
the right to immediate possession of the Property being condemned.
(c) "AWARD" means all compensation, sums and any other value
awarded, paid or received on a total or partial condemnation.
45
(d) "CONDEMNOR" means any public or quasi-public authority,
or private corporation or individual, having the power of condemnation
16.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term
there is any Taking of all or any part of the Property or of any interest in
this Lease by Condemnation; the rights and obligations of the parties with
respect to such Condemnation shall be determined by this Article.
16. 3 TOTAL TAKING. If title to the whole of Tenant' s interest in
the Property shall be taken or condemned by any Condemnor, this Lease
shall cease and terminate as of the Date of Taking. If title to less than the
whole of the Property shall be so taken or condemned, which nevertheless
renders the Property unsuitable for its Primary Intended Use, in Tenant's
reasonable opinion (taking into account all relevant factors, including but
not limited to the number of useable beds, the amount of square footage
reasonably available for use by Tenant, and the type and amount of gross
Revenues lost), Tenant and Landlord each shall have the option by Notice
to the other, at any time prior to the taking of possession by, or the date of
vesting of title in, such Condemnor, whichever first occurs, to terminate
this Lease as of such earlier to occur date. Upon such earlier to occur date,
if such Notice has been given, this Lease shall cease and terminate. In either
of such events, all Rent paid or payable by Tenant hereunder shall be
apportioned as of the date the Lease shall have been so terminated as
aforesaid.
16.4 ALLOCATION OF PORTION OF AWARD. Subject to the
rights of any Facility Mortgagee, the total Condemnation Award made with
respect to all or any portion of the Property shall be distributed to Landlord
and Tenant ratably in accordance with the value of their respective interests
in and to such Property as hereafter set forth in this Section 16.4. All of the
Award shall be the sole and exclusive Property of Landlord and shall be
payable to Landlord, subject to the rights of any Facility Mortgagee;
provided that any portion of such Condemnation Award which is expressly
allocated by the Condemnor to the taking of Tenant's leasehold interest in
the Property, Tenant's Share of Appreciation Amount (if any), the taking of
any Capital Additions (or any portion thereof paid for by Tenant, any loss
of business by Tenant during the remaining Term of this Lease, the taking
of Tenant's Personal Property, or any removal and relocation expenses of
Tenant in any such proceedings shall be the sole Property of and payable to
Tenant. In any Condemnation proceedings Landlord and Tenant each
shall seek their own Award in conformity herewith, at their own expense.
16.5 PARTIAL TAKING. If title to less than the whole of the
Property shall be taken or condemned, and the Property is still suitable for
its then Primary Intended Use, in Tenant's reasonable opinion, or if Tenant
or Landlord shall be entitled (but shall not elect) to terminate this Lease as
provided in Section 16.3 hereof, Tenant at its own cost and expense shall
with all reasonable diligence restore the untaken portion of any
46
Improvements so that such improvements shall constitute a complete
architectural unit of the same general character and condition (as nearly as
may be possible under the circumstances) as the Improvements existing
immediately prior to such Condemnation or Taking. Landlord and Tenant
shall each contribute to the cost of restoration that part of their Award
specifically allocated to such restoration, if any (or if no such specific
allocation is made, a just, fair and reasonable portion of its Award as
reasonably determined by Landlord and Tenant or by arbitration in
accordance with Section 28.14 if Landlord and Tenant are unable to agree
within 30 days of the Award), together with any and all severance and other
damages awarded for any taken Improvements; provided, however, the
amount of such contribution shall not exceed such cost. If such amounts
are not sufficient to cover the cost of restoration Landlord and Tenant shall
contribute any additional amounts needed for restoration in proportion to
the amounts already contributed by them, provided that in no event shall
Landlord contribute any amount to such restoration in excess of its Award.
Thereafter, any excess restoration cost shall be borne solely be Tenant.
Landlord agrees that Tenant shall be entitled to an equitable abatement
of Base Rent in the event of a partial taking of the Property, but such
abatement shall be strictly limited to any amount of excess Award paid to
Landlord after the restoration cost has been paid.
16.6 TEMPORARY TAKING. If the whole or any part of the
Property or of Tenant's interest under this Lease shall be taken or
condemned by any Condemnor for its temporary use or occupancy for a
period of not more than one hundred-eighty (180) days, this Lease shall not
terminate, and Tenant shall continue to pay, in the manner and at the times
herein specified, the full amounts of Base Rent, Additional Rent, if any, and
Additional Charges, provided that during any such Temporary Taking
Tenant shall pay Additional Rent at a rate equal to the average Additional
Rent during the three immediately preceding Fiscal Years (or if three Fiscal
Years shall not have elapsed, the average during the last preceding Fiscal
Years occurring during the Term). Except to the extent Tenant may be
prevented from so doing pursuant to the terms of the order of the
Condemnor, Tenant shall continue to perform and observe all of the other
terms, covenants, conditions and obligations hereof on the part of the
Tenant to be performed and observed as though such Taking or
Condemnation had not occurred. Upon any such Taking or Condemnation
described in this Section, the entire amount of any such Award made for
such Taking or Condemnation allocable to the Term of this Lease, whether
paid by way of damages, Rent or otherwise, shall be paid to Tenant. Tenant
Covenants that upon the termination of any such Taking or Condemnation
set forth in this Section Tenant will, at its sole cost and expense (subject to
any contribution by Landlord as set forth in Section 16.5), restore the
Property as nearly as may be reasonably possible to the condition in which
the same was immediately prior to such Taking or Condemnation, unless
such period of temporary use or occupancy shall expire less than six months
prior to termination of this Lease or extend beyond the expiration of the
Term, in which case Tenant shall not be required to make such restoration.
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ARTICLE XVII
DEFAULTS AND REMEDIES
17.1 EVENTS OF DEFAULT. Any one or more of the following
events shall be deemed an "EVENT OF DEFAULT" hereunder:
(a) Tenant shall fail to pay Rent payable by Tenant under this
Lease when the same becomes due and payable and such failure continues
for three days after notice of such failure (except that Landlord shall not be
required to give more than one such notice in any 12-month period);
(b) Tenant shall violate the covenant described in Section 29.3(c)
hereof:
(c) Any representation or warranty made by the Tenant in
connection with this Lease or the Security Agreement, or in any report,
certificate, financial statement or other instrument furnished in connection
herewith or therewith, from time to time, whether under Article XXIV of
this Lease or otherwise, shall prove to be false or misleading in any material
respect and shall not be remedied within 30 days after Tenant receives
notice thereof;
(d) Tenant shall fail to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Tenant
within a period of 30 days after Notice thereof from Landlord, unless such
failure cannot with due diligence be cured within a period of 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;
(e) Tenant shall: (i) admit in writing its inability to pay its debts
generally as they mature, (ii) make a general assignment for the benefit of
its creditors; (iii) have appointed a trustee, receiver or liquidator pursuant
to an order of a court of competent jurisdiction of itself or of the whole or
any part of its Property which is not discharged in sixty (60) days, (iv)
terminate or suspend its business, (v) have any of its assets executed upon,
attached or judicially seized and such execution, attachment or seizure is not
vacated or set aside within sixty (60) days;
(f) Tenant shall: (i) file a voluntary case under any applicable
bankruptcy, insolvency, debtor relief or other similar law or statute of the
United States of America or any State thereof now or hereinafter in effect
("Bankruptcy Laws"), (ii) consent to or acquiesce in the appointment of a
receiver, liquidator, assignee, trustee, custodian or sequestrator (or similar
official of itself or of the whole or any part of its property) which is not
discharged in thirty (30) days, or (iii) fail generally to pay its debts
as they mature or become due;
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(g) Tenant shall, on a petition filed under any applicable
Bankruptcy Laws against any of them, be adjudicated a bankrupt or have an
order for relief thereunder entered against it or fail to oppose any such
proceeding or if a court of competent jurisdiction shall enter an order or
decree appointing, without its consent, a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or similar official) of itself or of the
whole or any part 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; or
(h) Tenant shall be liquidated or dissolved, or shall voluntarily
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all of its assets;
(i) an Event of Default under the terms of the Security Agreement
shall occur and be continuing;
(j) Tenant shall fail to make when due any scheduled payment
with respect to indebtedness (other than indebtedness which is subordinated
to this Lease), unless such failure is being diligently contested in
accordance with the requirements of this Lease or any lease pursuant to
which it enjoys the use of any real or personal property and such failure
shall continue for five days following its receipt of written
advice with respect thereto, if the effect of such failure is to have a material
adverse effect on the business, operations, properties or condition (financial
or otherwise) of Tenant.
(k) any Notification Event described in Section 29. 2(c) shall
occur, which is reasonably likely to result in liability to the Tenant having a
material adverse effect on the business, operations, properties or condition
(financial or otherwise) of Tenant and Tenant shall fail to cure (to
Landlord's reasonable satisfaction) the events or state of affairs constituting
such Notification Event within thirty days after notice thereof was due from
Tenant pursuant to Section 29.2(c);
(1) Tenant shall fail to maintain a Tangible Net Worth of at least
$5.0 million, as evidenced by Tenant's balance sheet included in its
financial statements furnished by Tenant pursuant to Section 24.2(a); or
(m) an Event of Default shall occur under any of the Additional
Leases or Additional Agreements.
No Event of Default (other than a failure to make a payment of
money) shall by deemed to exist under clause (d) above during any time the
curing thereof is prevented by an Unavoidable Delay, provided that upon
the cessation of such Unavoidable Delay, Tenant immediately shall remedy
such default.
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Tenant shall immediately notify Landlord of the occurrence of any
event set forth in subsections 17.1(b) through (1).
17. 2 CERTAIN REMEDIES. Upon any Event of Default, Landlord
shall have all legal, equitable and contractual rights, powers and remedies
provided either in this Lease, at Common law or in equity, or by statute or
otherwise. Tenant expressly acknowledges and agrees that the Landlord
will also have the right of injunction in accordance with applicable law.
Without limiting the foregoing, if an Event of Default occurs, is not
cured within the period, if any, for any such cure provided in Section 17.1,
and is continuing, Tenant shall, to the extent permitted by law and if
required by Landlord so to do, immediately surrender to Landlord the
Property and quit the same. Landlord may enter upon and repossess the
Property by reasonable force, summary proceedings, ejectment
or otherwise, and may remove Tenant and all other persons and any and all
personal Property from the Property subject to rights of any residents or
patients and to any requirement of law. No such entry or repossession by
Landlord shall be deemed an election by Landlord to terminate this Lease
unless specifically stated by Landlord in writing from Landlord to Tenant.
Thereafter Landlord shall use reasonable, good faith efforts to relet the
Property or otherwise mitigate Landlord's damages. Landlord may
so terminate Tenant's right of possession and may repossess the Premises
without liability for trespass or conversion, without demand or notice of any
kind to Tenant and without terminating this Lease, in which event Landlord
may, but shall be under no obligation to, relet the same for the account of
Tenant for such rent and upon such terms as shall be satisfactory to
Landlord. For the purpose of such reletting, Landlord is authorized to
decorate or to make any repairs, changes, alterations, or additions in or to
the Premises that may be necessary or convenient. If Landlord exercises the
remedies provided in this subparagraph, Tenant shall pay to Landlord, and
Landlord shall be entitled to recover from Tenant, an amount equal to the
total of the following: (A) unpaid Rent, plus interest at the Overdue Rate,
owing under the Lease for all periods of time that the Premises are
not relet (including any period prior to Landlord's repossession); plus (B)
the reasonable costs of recovering possession, and all of the reasonable
costs and expenses of such decorations, repairs, changes, alterations, and
additions, and the reasonable expense of such reletting and of the collection
of the rent accruing therefrom to satisfy the Rent provided for in the Lease
to be paid; plus (C) any deficiency in the rentals and other sums
actually received by Landlord from any such reletting from the Rent
required to be paid under this Lease with respect to the periods the Premises
are so relet, and Tenant shall satisfy and pay any such deficiency upon
demand therefor from time to time. Neither the repossession of the
Property, the failure of Landlord to relet the Properly, nor the
reletting of all or any portion of the Property, shall relieve Tenant of its
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liability and obligation hereunder, all of which shall survive any such
repossession or reletting. Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this subparagraph from
time to time; and that no delivery or recovery of any portion
due Tenant hereunder shall be a defense in any action to recover any
amount not theretofore reduced to judgment in favor of Landlord, nor shall
such reletting be construed as an election on the part of Landlord to
terminate this Lease unless specifically stated by Landlord in writing from
Landlord to Tenant. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this
Lease for such previous breach in accordance with the procedure
hereinafter provided.
Without limiting the foregoing, whether or not this Lease has been
terminated, Landlord shall have the right to offset against any Rent,
damages, or other sums of money owed by Tenant any advance Rent
applicable to any time period after the occurrence of the Event of Default.
17.3 TERMINATION. Upon the occurrence of any Event of Default,
Landlord may terminate this Lease by giving Tenant not less than ten days'
Notice of such termination during which time Tenant shall have the
opportunity to cure any such Event of Default. Upon the expiration of the
time fixed in such Notice, unless such Event of Default is cured, the Term
shall terminate and all rights of Tenant under this Lease shall cease.
Landlord shall have all rights at law and in equity available to Landlord as a
result of Tenant's breach of this Lease. If any litigation is commenced
with respect to any alleged default under this Lease whether under this
Section 17. 3 or under Section 17. 2, the prevailing party in such litigation
shall receive, in addition to its damages incurred, its reasonable attorneys'
fees, and all costs and expenses incurred in connection therewith. Neither
the termination of this Lease pursuant to this Section 17. 3, the repossession
of the Properly, the failure of Landlord to relet the Property, nor the
reletting of all or any portion of the Property, shall relieve Tenant of its
liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. Upon any such termination, Tenant
shall forthwith pay to Landlord as damages a sum of money equal to the
total of (A) the costs of recovering the Premises, (B) the unpaid Rent due
and payable at the termination, plus interest thereon at the Overdue Rate,
(C) the present value of the balance of the Rent for the remainder of the
term less the fair market rental value of the Premises for such period, and
(D) the present value of any other sum of money rental owed by Tenant to
Landlord and the amount of other damages suffered by Landlord as a result
of Tenant's default.
Additional Rent, for the purposes of Section 17.2 and this Section
17.3, shall be a sum equal to the average of the amounts of the Additional
Rent for the three Calculation Periods immediately preceding the
Calculation Period in which the termination, re-entry or repossession takes
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place, or if three Calculation Periods shall not have elapsed, the average of
the Additional Rent during the last Preceding Calculation Periods occurring
during the Term.
17.4 APPLICATION OF FUNDS. Any payments normally made to
Tenant hereunder which are made to and received by Landlord under any of
the provisions of this Lease during the continuance of any Event of Default
shall be applied to Tenant's obligations in the order which Landlord may
determine or as may be prescribed by applicable laws.
17.5 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If
an Event of Default occurs under this Lease and is not cured within the
time provided under this Lease with respect to such Event of Default,
Landlord, without waiving or releasing any obligation of Tenant, and
without waiving any such Event of Default, may (but shall be under no
obligation to) at any time thereafter cure such default for the account and at
the expense of Tenant, and may, to the extent permitted by law, enter upon
the Property for such purpose and take all such action thereon as, in
Landlord's sole judgment, may be necessary or appropriate with respect
thereto. No such entry by Landlord on the Property shall be deemed an
eviction of Tenant. All sums so paid by Landlord and all reasonable costs
and expenses (including, without limitation, reasonable attorneys' fees
and expenses) so incurred; together with a late charge thereon computed at
the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Landlord until the date reimbursed, shall be reimbursed by
Tenant to Landlord on demand. The obligations of Tenant and rights of
Landlord contained in this Article shall survive the expiration or earlier
termination of this Lease.
17.6 WAIVER. If this Lease is terminated pursuant to the provisions
of this Article, Tenant waives, to the extent permitted by applicable law, (a)
any right of redemption, re-entry or repossession, (b) any right to trial by
jury in the event of summary proceedings to enforce the remedies set forth
in this Article, and (c) the benefit of any laws now or hereafter enforced
exempting Property from liability for rent or for debt.
ARTICLE XVIII
CURE BY TENANT OF LANDLORD DEFAULTS
Landlord shall be in default of its obligations under this Lease if
Landlord shall fail to observe or perform any term, covenant or condition of
this Lease on its part to be performed, and such failure shall continue for a
period of 30 days after Notice thereof from Tenant (or such shorter time as
may be necessary in order to protect the health or welfare of any patient or
other resident of the Property), unless such failure cannot be cured with due
diligence within a period of 30 days, in which case such failure shall not be
deemed to continue if Landlord, within said 30 day period, proceeds
promptly and with due diligence to cure the failure and diligently completes
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the curing thereof. 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. If Landlord fails to commence or
complete such cure as provided herein, Tenant may cure such default, and
for so long as Tenant continues to pay Rent, Tenant shall have the right
by separate and independent action to pursue any claim it may have against
Landlord for Landlord's failure to cure such default and, in the event Tenant
acquires the Property pursuant to the option granted hereunder, offset
against the purchase price the amount of any damages owing from Landlord
to Tenant.
ARTICLE XIX
PURCHASE OF PROPERTY BY TENANT
19.1 PURCHASE OF THE PROPERTY. If Tenant purchases the
Property from Landlord pursuant to any of the terms of this Lease,
Landlord shall, except as otherwise expressly provided, upon receipt from
Tenant of the applicable purchase price, together with full payment of any
unpaid Rent due and payable with respect to any period ending
on or before the date of such purchase, deliver to Tenant an ALTA Owner
Policy of Title Insurance or such equivalent policy of title insurance as may
be available in the State, together with such endorsements, reinsurance
agreements and direct access agreements as Tenant may reasonably request,
together with an appropriate special warranty deed or other conveyance
conveying marketable fee simple title in and to the Property to Tenant
in the condition set forth in Article XXVI, except that the Property shall be
free and clear of all mortgages and encumbrances other than (a) those
Tenant has agreed hereunder to pay or discharge, (b) those mortgages
which Tenant has agreed in writing to accept and to take title subject to on
the date the Property was originally conveyed to Landlord and which are
not in default, (c) encumbrances required to be imposed on the Property
under Section 8.3, and (d) any other encumbrances permitted to be imposed
on the Property under the provisions of Article XXVII which are assumable
at no cost or expense to Tenant or to which Tenant may take subject
without cost or expense to Tenant. The difference between the applicable
purchase price and the total amount of the encumbrances assumed or taken
subject to, if a positive number, shall be paid in cash to Landlord or as
Landlord may direct, in federal or other immediately available funds,
unless otherwise mutually agreed by Landlord and Tenant; provided,
Landlord shall be obligated to pay to Tenant in cash any negative difference
between the applicable purchase price and the total amount of the
encumbrances so assumed or taken subject to by Tenant. All reasonable
expenses of conveying the Property to Tenant, including, without
limitation, the cost of the aforementioned title insurance and attorneys' fees
incurred by Landlord in connection with such conveyance and release, and
documentary transfer and similar taxes, recording fees and expenses of
Tenant's counsel, shall be paid by Tenant.
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19.2 FAILURE TO CLOSE PURCHASE. The closing of any such
sale shall be contingent upon and subject to Tenant obtaining all required
governmental consents and approvals for such transfer. If such sale shall
fail to be consummated by reason of the inability of Tenant to obtain all
such approvals and consents, then this Lease shall remain in effect on a
month-to-month basis until the consummation of the purchase or until
Tenant's inability to obtain the approvals and consents is confirmed,
whereupon this Lease will continue in effect in accordance with its terms.
ARTICLE XX
HOLDING OVER
If Tenant for any reason remains in possession of the Property after
the expiration or earlier termination of the Term, such possession shall be a
month-to-month tenancy during which time Tenant shall pay to Landlord as
rental each month the aggregate of (i) one and one half (1-1/2) times one-
twelfth of the aggregate total Base Rent and Additional Rent payable with
respect to the last 12-month period of the Term just expired or terminated,
(ii) all Additional Charges accruing during the month with respect to which
such payment relates, and (iii) all other sums, if any, payable by Tenant
pursuant to the provisions of this Lease with respect to the Property. During
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 tenancy, to continue its occupancy and use
of the 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 the Term.
ARTICLE XXI
RISK OF LOSS
During the Term of this Lease, Tenant shall bear the risk of loss or of
decrease in the enjoyment and beneficial use of the Property resulting from
the damage or destruction thereof by fire, the elements, casualties, thefts,
riots, wars or any other cause, or resulting from foreclosures, attachments,
levies or executions (other than those caused by Landlord and those
claiming from, through or under Landlord) and, in the absence of the gross
negligence, willful misconduct or breach of this Lease by Landlord,
Landlord shall in no event be responsible therefor nor shall any of the
events mentioned in this Section entitle Tenant to any abatement of Rent
except as specifically provided in this Lease.
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ARTICLE XXII
LIABILITY OF PARTIES
22.1 INDEMNIFICATION BY TENANT. Notwithstanding the
existence of any insurance provided for in Article XIV, and
notwithstanding the policy limits of any such insurance, Tenant shall
indemnify, defend, save and hold Landlord harmless from and
against any and all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses ("CLAIMS") (including, without
limitation, reasonable attorneys' fees and expenses), to the extent permitted
by law, imposed upon, incurred by or asserted against Landlord arising out
of, connected with or incidental to:
(a) any Hazardous Substance located at, in, on, under or about the
Property due to the act or omission of Tenant, including any improvements,
repairs, handling, removal or other actions taken by Landlord in order to
comply with all rules and regulations promulgated by any applicable
federal, state, or local government rule and regulation with respect to any
such Hazardous Substance or related problems that Landlord becomes
aware of;
(b) any accident, injury to or death of persons, or loss of or
damage to Property, occurring on or about the Property or adjoining
sidewalks, alleys or roadways, including without limitation any claims of
malpractice;
(c) any past, present or future use, misuse, non-use, condition,
management, maintenance or repair by Tenant of the Property or Tenant's
Personal Property and any litigation, proceeding or claim by governmental
entities or other third parties to which Landlord is made a party or other
participant related to the Property or Tenant's Personal Property or such use,
misuse, non-use, condition, management, maintenance or repair thereof,
including but not limited to any failure to perform obligations (other than
condemnation proceedings) to which Landlord is made a party;
(d) any Impositions which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease:
(e) any failure on the part of Tenant to perform or comply with
any of the terms of this Lease; and
the non-performance of any of the terms and provisions of any
and all existing and future subleases of the Property to be performed by
Tenant thereunder.
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Any amounts payable by Tenant under this Section shall be paid
within ten days after Tenant's liability therefor is determined by litigation or
otherwise. If such amounts are not timely paid, they shall bear a late charge
(to the extent permitted by law) at the Overdue Rate from the date of such
determination to the date paid. Tenant, at its expense, shall contest, resist
and defend any such claim, action or proceeding asserted or instituted
against Landlord, or may compromise or otherwise dispose of the same as
Tenant sees fit. Nothing herein shall be construed as requiring Tenant to
indemnify, defend or hold Landlord harmless against its own sole or gross
negligence or willful misconduct.
22.2 INDEMNIFICATION BY LANDLORD. Landlord shall
indemnify, defend, have and hold Tenant harmless from and against any
and all liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses (including, without limitation, reasonable attorneys '
fees and expenses) imposed upon, incurred by or asserted against Tenant
arising out of, connected with or incidental to the sole or gross negligence
or willful misconduct of Landlord; provided, however, that Tenant's right to
indemnification as provided herein, shall be subject to the limitation set
forth in Article XXVIII.
22.3 CONTINUING LIABILITY. Tenant's and Landlord's liability
under this Article shall survive any termination of this Lease and shall
continue for the term provided herein or as permitted by the laws of the
State, whichever is longer.
ARTICLE XXIII
ASSIGNMENT AND SUBLETTING
23.1 ASSIGNMENT AND SUBLETTING. Subject to the provisions
of Section 23.3 below and any other express conditions or limitations set
forth in this Lease, Tenant may, without the consent of Landlord, (a) sublet
up to an aggregate of 25% of the rentable square footage of the Facility, to
concessionaires or other third party users or operators thereof, provided that
(i) any subletting to any party shall not individually as to any one such
subletting, or in the aggregate, materially diminish the actual or
potential Additional Rent payable under this Lease and (ii) Tenant, at the
request of Landlord, executes an Assignment of Subleases and Rents in
favor of Landlord in a form reasonably acceptable to Landlord as security
for the obligations of Tenant hereunder, or (b) transfer or assign its rights
hereunder (iii) to a joint venture, partnership or other entity in which Tenant
holds a controlling interest and, in the case of a partnership, Tenant is the
general partner, or (iv) in connection with a public offering of equity
interests in an Affiliate of Tenant, to such Affiliate, provided that Landlord
reasonably determines that such Affiliate has a Tangible Net Worth at least
equal to that of Tenant. except as otherwise permitted in the immediately
preceding sentence, an assignment or subletting of a11 or any portion of the
Property shall not be permitted unless the consent of Landlord is first
obtained. Such consent by Landlord will not be unreasonably withheld if
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(x) the assignee assumes all obligations of Lessee under the Lease in a
writing in form and content reasonably acceptable to Landlord, (y) such
assignee meets the financial covenants applicable to Tenant hereunder and
demonstrates such fact to Landlord' s reasonable satisfaction, and (z) no
Event of Default is in effect and continuing hereunder. Landlord shall not
unreasonably withhold its consent to any subletting or assignment, provided
that the assignee or sublessee has a financial condition comparable
to the greater of (i) Tenant's financial condition as of the Commencement
Date or (ii) Tenant's financial condition as of the date of the proposed
assignment or subletting and (w) in the case of a subletting the sublessee
shall comply with the provisions or Section 23.2, (x) in the case of an
assignment, (i) the assignee assumes in writing and agrees to keep and
perform all of the terms of this Lease on the part of Tenant to be kept
and performed, (ii) the assignee complies with the covenants set forth in
Section 28 hereof, (iii) the assignment causes no violation of any other
covenants under this Lease by Tenant or the assignee, and (iv) the assignee
becomes jointly and severally liable with Tenant for the performance
thereof, (y) an original counterpart of each such sublease and
assignment and assumption, duly executed by Tenant and such sublessee or
assignee, as the case may be, in form and substance satisfactory to
Landlord, is delivered promptly to Landlord, and (z) in case of either an
assignment or subletting, Tenant remains primarily liable, as principal
rather than as surety, for the prompt payment of Rent and
for the performance and observance of all covenants and agreements to be
performed by Tenant hereunder.
23. 2 ATTORNMENT. Tenant shall insert in each sublease permitted
under Section 23.1 provisions reasonably satisfactory to Landlord which
provide for the benefit of Landlord that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Landlord hereunder, (b) in the event this Lease Shall terminate before the
expiration of such sublease, the sublessee thereunder will, at Landlord's
option, either attorn to Landlord and waive any right the sublessee may
have to terminate the sublease or surrender possession under such sublease,
and (c) in the event the sublessee receives Notice from Landlord or
Landlord's assignees, if any, stating that Tenant is in default under this
Lease, the sublessee shall thereafter be obligated to pay all rentals accruing
under said sublease directly to the party giving such Notice, or as such party
may otherwise direct. All rentals received from the sublessee by Landlord
or Landlord's assignees, if any, as the case may be, shall be credited against
the amounts owed to Landlord under this Lease.
23. 3 SUBLEASE LIMITATION. Anything contained in this Lease to
the contrary notwithstanding, Tenant shall not sublet the Property on any
basis such that the rental to be paid by the sublessee thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee, or (b) any other formula such that any
portion of the sublease rental would fail to qualify as "rents from real
Property" within the meaning of Section 856(d) of the Code, or any
similar or successor provision thereto.
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ARTICLE XXIV
INFORMATION FROM TENANT
24.1 OFFICER'S CERTIFICATES. At any time and from time to
time, upon not less than 20 days Notice by Landlord, Tenant shall furnish to
Landlord an Officer's Certificate certifying 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), the date to which the Rent has
been paid, whether there exists any Event of Default or any situation which,
with the giving of notice, passage of time, or both, would constitute an
Event of Default hereunder based upon Tenant's current knowledge,
whether Tenant contends that Landlord is in default hereunder, and if
Tenant so contends, the basis for such contention, the date upon which the
Term terminates, and such other information as Landlord reasonably may
request. Any such certificate furnished pursuant to this Section 24.1 may be
relied upon by Landlord, any prospective purchaser of the Property,
and any Facility Mortgagee or Landlord Lender.
24.2 FINANCIAL INFORMATION. Tenant shall furnish, the
following statements to landlord:
(a) within 90 days after the end of each Fiscal Year, preliminary
drafts of (i) a balance sheet and statements of revenues and expenses and
changes in retained earnings and cash flows for Tenant, all certified by
independent public accountants of recognized standing acceptable to
Landlord, such statements to be prepared in accordance with generally
accepted accounting principles consistently applied, to be
for such Fiscal Year and the immediately preceding Fiscal Year and to be in
comparative columnar form and (ii) a schedule of capital expenditures or
reserves therefor for such Fiscal Year. Within 120 days after the end of
each Fiscal Year, Tenant shall furnish to Landlord final versions of the
statements referred to in (i) and (ii) hereof;
(b) within 45 days after the end of each of the first three fiscal
quarters of each Fiscal Year, financial statements similar to those referred to
in clause (a) above, but only certified by the principal financial or other
appropriate officer of Tenant as having been prepared in accordance with
generally accepted accounting principles consistently applied (but which
may exclude footnote disclosures), such financial statements to be for the
period from the beginning of such Fiscal Year (and immediately preceding
Fiscal Year) to the end of such quarter (and comparable quarter);
(c) concurrent with the statements furnished pursuant to clauses
(a) and (b) above, an Officer's Certificate stating that, after making due
inquiry, Tenant is not in default in the performance or observance of any of
the terms of this Lease, or if Tenant shall be in default to its knowledge,
specifying all such defaults, the nature of such defaults, and the steps being
taken to remedy the same;
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(d) within 30 days after the end of each month, financial
statements similar to those referred to in clause (b) together with operating
statistics; and
(e) with reasonable promptness, such other information respecting
the financial condition and affairs of Tenant as Landlord may reasonably
request from time to time.
24. 3 LICENSING INFORMATION. Tenant shall promptly furnish to
Landlord complete copies of all surveys, examinations, inspections,
compliance certificates and similar reports of any kind issued to Tenant by
any governmental agencies or authorities having jurisdiction over the
licensing of the operation of the Property which are material to the Properly
or the Facility, their ownership or operation.
ARTICLE XXV
APPRAISALS OF THE PROPERTY AND OPTIONS
25.1 APPRAISERS. If at any time it becomes necessary to determine
the Fair Market Value, Fair Market Value Purchase Price or Fair Market
Rental of the Property for any purpose under this Lease, and the parties are
unable to agree thereupon, the party required or permitted to give Notice of
such required determination shall include in the Notice the name of a
person selected to act as appraiser on its behalf. Within ten days after such
Notice, Landlord or Tenant, as the case may be, shall by Notice to Tenant
or Landlord, as the case may be, either agree to the appointment of the
appraiser identified in such initial Notice, in which case such appraiser shall
be the sole appraiser for purposes of determining the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Rental, as the case may
be, or shall appoint a second person as an appraiser on its behalf. Any
appraiser appointed pursuant to this Section must be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto). The appraiser(s) thus appointed shall, within 45 days after the date
of the Notice appointing the first appraiser, proceed to appraise the Property
to determine the Fair Market Value, Fair Market Value Purchase Price or
Fair Market Rental thereof (as the case may be) as of the relevant date
(giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date). In the case of two appraisers, except as
provided in Section 25.2, the two appraisals shall be averaged to
determine the Fair Market Value, Fair Market Value Purchase Price or Fair
Market Rental, as the case may be. In any event, the appraised value
determined in accordance with this Section shall be final and binding on
Landlord and Tenant.
25.2 METHOD OF APPRAISAL. Any appraisal required or
permitted by the terms of this Lease shall be conducted in a manner
consistent with sound appraisal practice, taking into account market and
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cost approaches and shall not include the income approach to valuation or
the going concern or business enterprise value attributable to factors other
than the highest and best use of the Property. Notwithstanding the
provisions of Section 25.1, if the difference between the appraisal amounts
determined by the appraisers appointed pursuant to Section 25.1 exceeds
ten percent of the lesser of such appraisal amounts, then the two appraisers
shall have 20 days to appoint a third appraiser. If no such appraiser is
appointed within such 20 days or within 90 days of the original request for
a determination of Fair Market Value, Fair Market Value Purchase Price or
Fair Market Rental (as the case may be), whichever is earlier, either
Landlord or Tenant may apply to any court having jurisdiction to have such
appointment made by such court. Any appraiser appointed by the original
appraisers or by such court shall be instructed to determine the Fair Market
Value, Fair Market Value Purchase Price or Fair Market Rental (as the case
may be) within 45 days after the appointment of such appraiser. The
determination of the three appraisers which differs most in the terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and 50% of the sum of the remaining two determinations shall be
the appraised value, which a[praised value shall be final and binding upon
Landlord and Tenant as the Fair Market Value, Fair Market Value Purchase
Price or Fair Market Rental of the Property, as the case may be. If the
lowest and highest appraised values are equidistant in amount from
the middle appraised value, then such middle appraised value shall be the
Fair Market Value, Fair Market Value Purchase Price or Fair Market Rental
(as the case may be). The provisions of this Article shall be specifically
enforceable to the extent such remedy is available under applicable law, and
any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Landlord and Tenant each
shall pay the fees and expenses of the appraiser appointed by it, and each
shall pay one-half of the fees and expenses of the third appraiser and one-
half of all other costs and expenses incurred in connection with each
appraisal.
ARTICLE XXVI
OPTIONS TO PURCHASE
26.1 LANDLORD'S OPTION TO PURCHASE TENANT'S
PERSONAL PROPERTY; TRANSFER OF LICENSES. Provided Tenant
has not exercised its option pursuant to Section 26.2 hereof, effective upon
not less than ninety (90) days prior notice given at any time within one
hundred eighty ( 180) days prior to the expiration of the Term of this
Lease, or upon such shorter Notice as shall be reasonable if this Lease is
terminated prior to its expiration date, Landlord shall have the option to
purchase all (but not less than all) of Tenant's Personal Property, if any, at
the expiration or termination of this Lease, for an amount equal to the then
fair market value thereof, taking into account and with appropriate price
adjustments for, all equipment leases, conditional sale contracts, UCC-1
financing statements and other encumbrances to which such Tenant's
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Personal Property is subject. Upon the expiration or termination of the
Lease and such purchase by Landlord, Tenant shall use good faith efforts, at
Landlord's sole cost and expense, to transfer and assign to Landlord or its
designee, or assist Landlord or its designee in obtaining, any contracts,
licenses, and certificates required for the then operation of the
Facility.
26.2 TENANT'S OPTION TO PURCHASE THE PROPERTY.
Provided no Event of Default specified in Sections 17.1 (a), (e), (f) or (g)
hereof has occurred and is continuing, Tenant shall have the option,
exercisable on not less than one hundred eighty (180) days nor more than
three hundred sixty (360) days' prior Notice, to purchase the
Property at the expiration of the Fixed Term, or at the expiration of any
Extended Term, at the greater of (y) the Shared Appreciation Purchase
Price as of the date of expiration of the then current Term, less the Fair
Market Value at the time of exercise of the option of any improvements to
the Property made and funded by Tenant pursuant to Sections 9.1
and 11, or (z) the Landlord's Total Investment. Tenant shall also have the
right, during any Extended Term, to exercise such option in the event that,
during any Extended Term, (a) Landlord defaults with respect to its
agreements, covenants, obligations, representations or warranties under this
Lease and such default is not cured within any applicable cure period or (b)
Landlord or its Affiliates default under one or more Additional Leases and
such default is not cured within any applicable cure period. Tenant's rights
to exercise the purchase option is further conditioned upon a concurrent
exercise by the Tenant under each Additional Lease of any Tenant's option
to purchase the leased Property provided for therein. Upon exercise by
Tenant of its option to purchase the Property, Landlord shall, at the election
of Tenant, either convey the Property as a sale of assets or as a sale of the
stock of a corporation whose sole assets consist of the Property. The
foregoing option to purchase the Property shall be secured by the Deed
of Trust.
If Tenant shall timely and properly exercise the foregoing option, the
sale of the Property shall be consummated through an escrow to be opened
with a mutually acceptable title or escrow company and shall close within
ten Business Days following the expiration of the Fixed Term or Extended
Term in connection with which Tenant exercised such purchase option. The
purchase price of the Property (net of the principal balance of any Facility
Mortgages placed on the Property by Landlord and expressly assumed by
Tenant and the amount of any damages owing by Landlord to Tenant) shall
be deposited into escrow by wire transfer of Federal Funds at least two
business days prior to close of escrow and shall be paid to Landlord at close
of escrow by wire transfer of Federal Funds to such account as Landlord
shall designate. Tenant acknowledges and agrees that it shall purchase the
Property from Landlord "AS IS" and subject to all faults, defects in title and
other matters whatsoever, including, but not limited to, all matters of
record, other than (a) Facility Mortgages not expressly assumed by Tenant
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and (b) any other liens, encumbrances, attachments, levies or claims
encumbering, at the instance of Landlord, the Property., all of which shall
be removed of record prior to purchase. Landlord shall make no warranty or
representation regarding the title, condition or other status of the Property
whatsoever, except that it has removed all liens and encumbrances
referenced in clauses (a) and (b) in the preceding sentence. All title
insurance premiums and other closing costs associated with the purchase of
the Property by Tenant pursuant to this Section shall be paid by Tenant.
ARTICLE XXVII
FACILITY MORTGAGES
Without the consent of Tenant, Landlord may, subject to the terms
and conditions set forth below in this Section, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrance, security
interest or title retention agreement ("ENCUMBRANCE") upon the
Property, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing provided that the
principal amount of such borrowing, financing or refinancing does not
exceed 80% of the then Fair Market Value of the Property. Any such
Encumbrance (I) shall contain the right to prepay (whether or not subject to
a prepayment penalty, which penalty shall be paid by Landlord), (ii) shall
provide that it is subject to the rights of Tenant under this Lease, including
the rights of Tenant to acquire the Property pursuant to the applicable
provisions of this Lease; provided, however, that Tenant agrees that it
will not unreasonably withhold its consent to any request by Landlord that
Tenant subordinate this Lease to any mortgage or deed of trust that may
hereafter from time to time be recorded on the Property, and to any and all
advances made or to be made thereunder, and to renewals, replacements
and extensions thereof and (iii) shall be paid in full and released and
reconveyed in the event Tenant purchases the Property pursuant to this
Lease, unless Tenant elects to assume such Encumbrance. Any such
subordination, however, shall be subject to the condition precedent that the
mortgagee under such mortgage or the beneficiary under such deed of trust
enter into a written non- disturbance and attornment agreement with
Tenant, in form and content satisfactory to Tenant, whereunder it is agreed
that in the event of a sale or foreclosure under such mortgage or deed of
trust, the purchaser of the Properly (including the mortgagee or beneficiary
under such mortgage or deed of trust), shall acquire or hold the Property
subject to this Lease so long as Tenant is not in default hereunder, and so
long as Tenant recognizes such purchaser as the Landlord under this Lease
and agrees, if requested to do so, to attorn to such purchaser and, if
instructed to do so by such purchaser, to make rental payments directly to
it.
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ARTICLE XXVIII
LIMITATION OF LIABILITY
Tenant specifically agrees that neither AHP nor Landlord nor any
officer, shareholder, employee or agent of AHP or Landlord (each of which
shall, for purposes of this Article XXVII, be considered an Affiliate of
Landlord) shall be held to any personal liability, jointly or severally, for any
obligation of, or claims against Landlord, Tenant agreeing to look solely to
Landlord's equity interest in the Property or to Landlord s interests or
interests of subsidiaries of Landlord in other properties leased to
Tenant or Affiliates of Tenant for recovery of any judgment from Landlord,
except that Landlord s obligations under Section 19.1 and Article XXVII,
clause (iii) shall be a general and unlimited liability of Landlord. The
provisions contained in the foregoing sentence are not intended to, and shall
not, limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or Landlord's successors in interest, or any action
not involving the personal liability of Landlord (original or successor). In
no event shall Landlord (original or successor) or any Affiliate of Landlord
be required to respond in monetary damages from Landlord's assets other
than Landlord's equity interest in the Property. Furthermore, except as
otherwise expressly provided herein, in no event shall Landlord or any
Affiliate of Landlord (original or successor) ever be liable to Tenant for any
indirect or consequential damages suffered by Tenant from whatever
cause.
ARTICLE XXIX
ADDITIONAL COVENANTS OF TENANT
29.1 ADDITIONAL NEGATIVE COVENANTS. Tenant covenants
and agrees with Landlord that, during the Term hereof, Tenant shall not,
either directly or indirectly:
(a) LIENS. Incur, create, assume or permit to exist any mortgage
pledge, lien, charge or other encumbrance of any nature whatsoever
(including conditional sales or other title retention agreements) on Tenant's
leasehold interest under this Lease and Tenant's Personal Property, other
than:
(i) deposits or pledges to secure payment of workmen's
compensation, unemployment insurance, old age pensions or other social
security;
(ii) liens for taxes or assessments or other governmental
charges or levies if not yet due and payable, or if in good faith being
contested or litigated, provided that a reserve against such taxes,
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assessments, charges and levies deemed adequate by Landlord shall be
maintained and Tenant shall furnish security reasonably satisfactory to
Landlord for the payment of such taxes, assessments, charges
and levies;
(iii) liens in favor of Landlord;
(iv) purchase money security interests securing the payment
of not more than 75% of the purchase price of any item of personal
property;
(v) security interests in accounts receivable under working
capital lines of credit securing indebtedness not exceeding 80% of the net
book value of such accounts receivable;
(vi) judgments and other similar liens, provided that the
execution or other enforcement of such liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings in accordance with the requirements of this Lease;
(vii) liens constituting renewals, extensions or replacements
of liens described in the foregoing clauses, but only, in the case of each
such renewal, extension or replacement lien, to the extent of the principal
amount of the obligation so secured at the time of the extension, renewal or
replacement, and to the extent that such renewal, extension or replacement
lien is limited to all or part of the Property that secured the lien extended,
renewed or replaced;
(viii) liens being contested in accordance with the provisions
of Article XIII; and
(ix) the Acquisition Lien and the Sanyo Lien, as such terms
are defined in the Loan Agreement.
(b) FIXED CHARGE COVERAGE RATIO. Commencing on the
first day of the month which is at least six full months after the effective
date hereof, permit the ratio of: (i) (a) Tenant's Cash Flow to (b) the sum of
Total Rent payable hereunder and principal and interest payments payable
by Tenant for any calendar quarter to be less than 2.5 to 1.0 nor (ii) (a)
Tenant's Cash Flow to (b) Base Rent payable by Tenant hereunder
for any calendar quarter to be less than 1.4 to 1.0; provided, however, that
the failure of Tenant to comply with either of the foregoing ratios shall not
constitute an Event of Default if a Security Letter of Credit in the amount of
six monthly installments of Base Rent is in effect or is obtained within ten
days after such failure.
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(c) SALE OF ASSETS. Sell, lease, transfer or otherwise dispose of
all or any substantial part of its properties or assets, except for (x)
equipment which is worn or no longer useful in its business and (y) during
any 12-month period, equipment with an aggregate market value exceeding
$1,000,000.
(d) CONSOLIDATION OR MERGER. Consolidate with or
merge into any other entity or permit any other corporation to merge into it
unless, after giving pro forma effect to the merger, based on its financial
statements and the financial statements of the other entity or entities
participating in the merger, for, in each case, its most recently completed
fiscal year or quarter; there is no violation of any of the covenants of
this Lease to be observed or performed by Tenant.
(e) GUARANTEES. Except for guaranties of obligations of
Affiliates and endorsement of negotiable instruments for deposit or
collection, guarantee or otherwise incur liability for the. obligations of
others.
(f) MINIMUM NET WORTH. Fail to maintain, as of the end of
each calendar quarter, Tangible Net Worth of at least $10 million; provided,
however, that the failure of Tenant to comply with such minimum Tangible
Net Worth Requirement shall not constitute an Event of Default if a
Security Letter of Credit in the amount of six monthly installments of Base
Rent is in effect or obtained within ten days after such failure. For purposes
of such calculation, the amount of the Security Letter of Credit
shall be considered tangible assets.
(g) DIVIDENDS. Declare or pay any dividend or make any
distribution or make any redemption with respect to any capital stock of
Tenant unless (i) Tenant is not in default under the Lease and (ii) after
giving effect thereto, Tenant shall have a Tangible Net Worth of not less
than $5.0 million and (iii) Tenant has been in compliance with the financial
ratio in Section 29.1(b)(ii) above for at least four consecutive fiscal
quarters; provided, however, that Tenant may make distributions due
and payable with respect to 1,080,000 currently outstanding shares of
Tenant's outstanding Series A Convertible Preferred Stock insofar as any
payments are due pursuant to the currently-existing terms of such stock.
(h) MANAGEMENT FEE. Agree to pay any person or entity a
management fee in connection with the management and operation of the
Facility unless payment of any such management fee is subordinated to the
Tenant's payment obligations under the Lease on terms acceptable to
Landlord.
29.2 ADDITIONAL AFFIRMATIVE COVENANTS. Tenant
covenants and agrees with Landlord that, during the Term hereof, Tenant
shall:
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(a) MAINTENANCE OF PROPERTIES AND INTANGIBLE
ASSETS.
(i) Maintain its corporate existence in good standing.
(ii) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its existence and, with such
exceptions, if any, as are not material in the aggregate, to obtain and,
having obtained, preserve, renew and keep in full force and effect all
customary accreditation, rights, licenses and permits and, with such
exceptions, if any, as are not material in the aggregate, comply with all laws
and regulations applicable to it and conduct and operate the Facility in
substantially the manner, with such changes as may from time to time be
considered by management as necessary or appropriate, in which it is
presently conducted and operated, and at all times, with such exceptions as
are not material in the aggregate, to obtain, maintain, preserve and protect
all necessary franchises, provide agreements, contract rights, trademarks
and trade names used or useful in its operations and preserve all its assets
which are used or useful in the conduct of its operations, and keep the same
in working order and condition, and, with such exceptions as are not
material in the aggregate, from time to time to make, or cause to be made,
all necessary repairs, renewals, replacements, betterments and
improvements thereto, so that the operation of the Facility may be
properly and advantageously conducted at all times. Without limiting the
generality of the foregoing, Tenant shall use or cause the Property to be
used for the Primary Intended Use and only for such other uses as may be
necessary in connection with or incidental to said use or as may be agreed
to by Landlord in its sole and absolute determination. with such exceptions
as are not material in the aggregate, no use shall be made or permitted to be
made of the Property and no acts shall be done which violate any Legal
Requirements or Insurance Requirements or which will cause the
cancellation of any insurance policy covering the Property or any part
thereof or any provider agreements. Tenant shall comply in all material
respects with all Legal Requirements and all of the requirements pertaining
to the Property of any insurance board, association, organization or
company necessary for the maintenance of the insurance required pursuant
to this Lease.
(iii) Without limiting the provisions of Section 10.1, expend
or reserve for expenditure not less than $250 per unit in capital expenditures
per Fiscal Year.
(iv) Tenant, immediately upon obtaining knowledge of facts
which are reasonably likely to result in an action by any Federal, state or
local agency (or the staff thereof) to revoke, withdraw or suspend any
permit, license, conditional use permit, variance certificate, certificate of
need, letter of nonreviewability, provider agreement or other governmental
approval, or an action of any other type, which would have a material
66
adverse effect on the Tenant or the operations of the Facility, shall notify
the Landlord thereof immediately.
(b) OBLIGATIONS AND TAXES. With such exceptions as
are not material individually or in the aggregate, none of which exceptions
results in the creation of a lien prohibited by this Lease on any Property of
Tenant, pay all indebtedness and obligations in accordance with customary
trade practices and pay and discharge promptly shall taxes, assessments and
governmental charges or levies imposed on it or upon its income and profit,
or upon any of its Property, real, personal or mixed, or upon any part
thereof, before the same shall become in default, as well as pay before they
shall become in default all lawful claims for labor, material and supplies or
otherwise which, if unpaid, might become a lien or charge upon such
Property or any part thereof.
(c) PENSION PLANS. Tenant shall notify Landlord within ten
business days of the occurrence of any of the following events
("Notification Events") with respect to Tenant's Plans (as defined in
ERISA) and within ten days of obtaining knowledge of any Notification
Event with respect to Plans of its Affiliates: (i) the termination of a Plan,
unless such Plan can be terminated without material adverse effect
on the business, properties or condition (financial or otherwise) of Tenant;
(ii) the failure to make contributions to any of Tenant's Plans (including any
Multiemployer Plans) in timely manner and in sufficient amount to comply
with the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"); (iii) the failure to comply with all material
requirements of ERISA and the Code which relate to such Plans and
Multthemployer Plans (as defined by ERISA), where such failure to comply
would have a material adverse effect on the business, properties or
condition (financial or otherwise) of Tenant; (iv) receipt by Tenant of any
notice of the institution of any proceeding or other action which may
directly result in the termination of any Plans or Multiemployer Plans; (v) a
Termination Event or Reportable Event (as defined by ERISA) with respect
to a Plan; and (vi) any event or condition which would cause the lien
provided for under Section 4068 of ERISA to attach to the assets of Tenant.
Tenant shall not fail to make any payments to any Multthemployer Plan that
Tenant may be required to make under any agreement relating to any
Multthemployer Plan, ERISA or any other law pertaining thereto, except
for any payments being contested in good faith in accordance with Article
XIII with respect to which Tenant has established adequate reserves or
which, if not made, would not have a material adverse effect on the
business, properties or condition (financial or otherwise) of Tenant.
29. 3 SECURITY FOR THE LEASE.
(a) SECURITY AGREEMENT. On or before the Commencement
Date Tenant shall execute and deliver to Landlord the Security Agreement.
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(b) ABSOLUTE ASSIGNMENT. Tenant shall, at Landlord's
request, on or before the Commencement Date, or thereafter, execute and
deliver to Landlord an absolute assignment of subleases and rents pursuant
to which Tenant shall assign to Landlord, subject to a license to Tenant to
retain so long as no Event of Default is permitted under this Lease and the
proceeds thereof.
(c) SECURITY LETTER OF CREDIT. As security for the timely
and faithful performance by Tenant of each and every one of Tenant's
obligations under this Lease, Tenant shall, on the Commencement Date and
thereafter as provided herein, deliver and maintain a letter of credit which
(A) is issued or confirmed by a bank having capital or surplus of at least $1
billion and whose senior unsecured debt securities are rated "A2" or better
by ▇▇▇▇▇'▇ or "A" or better by S&P, provided none of such securities is
subject to a "credit watch with negative implications", (B) is payable, in
whole or in part, "at sight" upon Landlord's presentation to the issuing or
confirming bank of a draft or other document in the amount therein stated
to be due and (C) is otherwise in form and substance reasonably satisfactory
to Landlord (such security letter of credit, as the same may be augmented,
increased, renewed or replaced as hereinafter provided, is referred to herein
as the "Security Letter of Credit"), and which contains the undertaking of
such bank in the amount of the sum of six monthly installments of Base
Rent. If Landlord shall draw any amount, representing an amount equal to
the obligation or obligations of Tenant hereunder, against the Security
Letter of Credit, which it shall be entitled to do if an Event of Default has
occurred and is continuing, and apply the proceeds of such drawing against
any obligation or obligations of Tenant hereunder in such amount or
amounts as Landlord, in its sole discretion, shall decide, Tenant shall
cause either (i) an additional Security Letter of Credit to be issued or (ii)
the bank's undertaking under the original Security Letter of Credit to be
increased, in either case in an amount equal to the amount of such drawing
within five Business Days following Tenant s receipt of notice of such
drawing. Tenant shall (x) renew the Security Letter of Credit at least
annually and shall deliver to Landlord such renewal Security Letter of
Credit at least 30 days prior to the expiration of the previous Security Letter
of Credit and (y) replace the Security Letter of Credit with a new Security
Letter of Credit in favor of any permitted assignee of Landlord's interest
under this Lease (provided Tenant shall have received 30 days' prior notice
of such assignment) and shall deliver to Landlord's assignee such
replacement Security Letter of Credit in time for the scheduled closing of
Landlord s assignment of its interest under this Lease. After the Security
Letter of Credit is established, Tenant may reduce the amount of the
Security Letter of Credit to three monthly installments of Base Rent if, for
the period of four consecutive calendar quarters most recently completed as
of the date of determination, Tenant is in compliance with Sections 29.1 (b)
and 29.1 (f) hereof, as reflected in financial statements prepared in
accordance with generally accepted accounting principals as set forth in an
Officer's Certificate delivered not later than sixty (60) days after the end of
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such most recent quarter. Such Officer's Certificate shall be accompanied
by an appropriate cash flow statement and a compilation report thereon,
without material qualification, of Tenant's independent public accountants.
If and after Tenant's obligation to maintain the Security Letter of Credit has
been so reduced, Tenant will be obligated to increase such letter to
six monthly installments of Base Rent within ten (10) business days after
each time it delivers financial information to Landlord pursuant to Section
24. 2 hereof which indicates that Tenant has failed to comply with any
requirement of Sections 29.1(b) or 29.1(f) for the most recent period of four
consecutive calendar quarters and such obligation will remain in effect until
Tenant has subsequently satisfied the cash flow ratio condition described
above for another period of four consecutive calendar quarters.
Tenant's failure to timely deliver or maintain any Security Letter of
Credit in accordance with this Section 29.3(b) shall constitute an immediate
Event of Default (which shall not require the giving of Notice) and, in such
event, Landlord shall have the right to draw the entire balance of the
Security Letter of Credit, as the case may be, and apply the proceeds against
any obligation or obligations of Tenant hereunder in such amount or
amounts as Landlord, in its sole discretion, shall decide and exercise any
other remedies permitted Landlord hereunder, at law or in equity. Landlord
shall not be deemed to hold any funds drawn under the Security Letter of
Credit in trust but shall not commingle such funds with other assets of
landlord. Tenant shall not be entitled to any interest with respect to any
such funds held by Landlord.
ARTICLE XXX
MISCELLANEOUS
30.1 TRANSFERS BY TENANT. Except as permitted by Article
XXIII, Tenant shall not transfer or assign its rights or obligations hereunder
without the prior written consent of Landlord, which shall not be withheld
unreasonably if (a) the transferee or assignee executes an instrument in
form reasonably acceptable to Landlord assuming and agreeing to perform
all obligations of Tenant under the Lease; (b) the transferee or assignee
demonstrates to Landlord's reasonable satisfaction that the transferee or
assignee complies with all covenants, including financial covenants,
applicable to the Tenant hereunder;. (c).such assignment or transfer will not
cause an Event of Default under this Lease; (d) no default exists by Tenant
under the Lease; and (e) Tenant meets the requirements of Section 29.1(g),
clause (ii) immediately after the proposed transfer. Unless Tenant is in
compliance with Section 29.1(g) above, and subject to the foregoing
requirements, Tenant shall not assign or transfer any interest herein to any
Affiliate of Tenant, and will not enter into any contract, agreement,
understanding, loan, advance or guaranty with, or for the benefit of, any
Affiliate of Tenant relating to Tenant's rights and obligations hereunder,
except (d) in the ordinary course of business, (e) on terms no less
favorable than those that could have been obtained by Tenant in an arms'-
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length transaction with a Person not an Affiliate of Tenant, and (f)
involving an aggregate value of interests of Tenant herein not exceeding
$1,000,000 in any twelve-month period. Any transfer, assignment or
sublease requiring Landlord's prior written consent which is attempted to
be made by Tenant without such prior written consent of Landlord shall be
void and ineffective.
30.2 LANDLORD'S RIGHT TO INSPECT. Landlord and its
authorized representatives may, at any time and from time to time, upon
reasonable notice to Tenant, inspect the Property during usual business
hours subject to any security, health, safety or patient business
confidentiality requirements of Tenant or any governmental agency, or
created by any Insurance Requirement or Legal Requirement relating to the
Property.
30.3 NO WAIVER. No failure by Landlord or Tenant to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy provided hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by applicable
law, no waiver of any breach shall affect or alter this Lease, which shall
continue in full force and effect with respect to any other then existing or
subsequent breach.
30.4 REMEDIES CUMULATIVE. To the extent permitted by law,
each legal, equitable or contractual right, power and remedy of Landlord or
Tenant now or hereafter provided either in this Lease or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to
every other right, power and remedy the exercise or beginning of the
exercise by Landlord or Tenant of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
30.5 ACCEPTANCE OF SURRENDER. No surrender to Landlord of
this Lease or of all or any portion of or interest in the Property 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 by Tenant.
30.6 NO MERGER OF TITLE. There shall be no merger of this Lease
or of the leasehold estate created hereby if the same person, firm,
corporation or other entity acquires, owns or holds, directly or indirectly,
this Lease or the leasehold estate created hereby or any interest in this Lease
or such leasehold estate, and the fee estate in the Property.
30.7 CONVEYANCE BY LANDLORD. Simultaneously with any
transfer of interest in the Property (except pursuant to Article XXVII),
Landlord shall cause to be transferred to the same transferee a similar
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interest in all properties owned by Landlord or its Affiliates and leased to
Tenant or its Affiliates. If Landlord or any successor owner of the Property
conveys the Property in accordance with the terms hereof (other than as
security for a debt), and the grantee or transferee of the Property expressly
assumes all obligations of Landlord hereunder arising or accruing from and
after the date of such conveyance or transfer, Landlord or such successor
owner, as the case may be, thereupon shall be released from all liabilities
and obligations of Landlord under this Lease.
30.8 QUIET ENJOYMENT. So long as Tenant pays all Rent as the
same becomes due and fully complies with all of the terms of this Lease
and fully performs its obligations hereunder, Landlord warrants, represents
and covenants that Tenant shall peaceably and quietly have, hold and enjoy
the Property for the Term hereof, free of any claim or other action by
landlord or anyone claiming by, through or under Landlord, but
subject to all liens and encumbrances of record as of the date hereof or
hereafter consented to by Tenant. Except as otherwise provided in this
Lease, no failure by Landlord to comply with the foregoing covenant shall
give Tenant any right to cancel or terminate this Lease or ▇▇▇▇▇, reduce or
make a deduction from or offset against the Rent or any other sum payable
under this Lease, or to fail or refuse to perform any other obligation of
Tenant hereunder. Notwithstanding the foregoing, Tenant shall have the
right, by separate and independent action, to pursue any claim it may. have
against Landlord as a result of a breach by Landlord of the covenant of
quiet enjoyment contained in this Section and, in the event Tenant acquires
the Property pursuant to the option granted hereunder, offset against the
purchase price the amount of any damages owing from Landlord to Tenant.
30.9 NOTICES. All notices, demands, requests, consents, approvals
and other Communications ("Notice" or "Notices") hereunder shall be in
writing and delivered by personal delivery, courier or messenger service,
express or overnight mail, or by registered or certified mail, return receipt
requested and postage prepaid, or by facsimile, addressed to the respective
parties as follows: .
If to Tenant: Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Landlord: AHP of Texas, Inc.
c/o American Health Properties, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Investment Officer
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
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or to such other address as either party may hereafter designate. Personally
delivered Notices sent by courier or messenger service or by express or
overnight mail or by facsimile shall be effective upon receipt, and Notices
given by mail shall be complete at the time of deposit in the U. S. mail
system, but any prescribed period of Notice and any right or duty to do any
act or make any response within any prescribed period or on a date certain
after the service of such Notice given by mail shall be extended five (5)
days.
30.10 SURVIVAL OF TERMS; APPLICABLE LAW. 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 two years,
except for third party claims based on alleged tortious actions.
and omissions of Tenant during the term of this Lease, which third party
claims shall. survive the term of this Lease. If any term or provision of this
Lease or any application thereof shall be invalid or unenforceable for any
reason whatsoever, the remainder of this Lease and any other application of
such term or provisions shall not be affected thereby. If any late charge or
any interest rate provided for in any provision of this Lease based
upon a rate in excess of the maximum rate permitted by applicable law,
such charges shall be fixed at the maximum permissible rate. Neither this
Lease nor any provision hereof may be changed, waived, discharged,
modified or terminated except by an instrument in writing and in recordable
form, signed by Landlord and Tenant. Subject to any limitations on
assignment contained in this Lease, all the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. The headings in this
Lease are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. THIS LEASE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, BUT NOT INCLUDING ITS CONFLICTS OF
LAWS RULES.
30.11 EXCULPATION OF LANDLORD'S AND TENANT'S
OFFICERS AND AGENTS. This Lease is made on behalf of Landlord and
Tenant by an officer thereof, not individually, but solely in such officer's
capacity in such office as authorized by the directors of Landlord or Tenant.
The obligations of this Lease are not binding upon, nor shall resort be had
to, the private Property of any of the directors, shareholders, members,
officers, employees or agents of Landlord or Tenant personally, but bind
only Landlord's and Tenant's property. The provision contained in the
foregoing sentence is not intended to, and shall not, limit any right that
Landlord or Tenant might otherwise have to obtain injunctive relief against
the other party or its successors in interest, or any action not involving the
personal liability of the directors, shareholders, members, officers,
employees or agents of Landlord or Tenant. Except as otherwise expressly
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provided herein, in no event shall either party ever be liable to the other
party for any indirect or consequential damages suffered by a party from
whatever cause.
30.12 TRANSFERS FOLLOWING TERMINATION. Upon the
expiration or earlier termination of the Term, Tenant shall use good faith
efforts to transfer to Landlord or Landlord's nominee, or to cooperate with
Landlord or Landlord's nominee in connection with the processing by
Landlord or Landlord's nominee of any applications for, all licenses,
operating permits and other governmental authorizations and all contracts
(including contracts with governmental or quasi-governmental entities)
which may be necessary for the operation of the Facility; provided,
however, that the costs and expenses of any such transfer or the processing
of any such application shall be paid by Landlord or Landlord's nominee.
30.13 TENANT'S WAIVERS. Tenant waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor; and notices of acceptance and waives all
notices of the existence, creation, or incurring of new or additional
obligations, except as expressly granted herein.
30.14 MEMORANDUM OF LEASE. Landlord and Tenant shall,
promptly upon the request of either party, enter into a short form
memorandum of this Lease and all options contained herein, in form
suitable for recording under the laws of the State in which the Property is
located. Tenant shall pay all costs and expenses of recording such
memorandum of this Lease,
30.15 ARBITRATION. Any controversy involving $1,000,000 or less
exclusive of interest and costs) arising out of, connected with or incidental
to this Agreement (except disputes concerning determinations of Fair
Market Value which shall be resolved exclusively as provided in Article
XXI shall be decided by binding arbitration in Seattle, Washington under
the expedited procedures of the American Arbitration Association, provided
that claim is made within the applicable period of limitation. Depositions to
obtain discovery may be taken upon good cause, upon leave
to do so granted by the arbitrator. If either party hereto alleges in a court
action that such controversy exceeds $1,000,000, such party. shall be
deemed to have waived the right to interest and costs in any award obtained
therein if such award does not exceed $1,000,000.
30.16 MODIFICATIONS. No provision of this Lease may be
amended, supplemented or otherwise modified except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
30.17 ATTORNEYS' FEES. If either party commences an action
against the other to interpret or enforce any of the terms of this Lease or
because of the breach by the other party of any of the terms hereof, the
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losing or defaulting party shall pay to the prevailing party reasonable
attorneys' fees, costs and expenses incurred in connection with the
prosecution or defense of such action.
30.18 COUNTERPARTS. This Lease may be executed in
counterparts, and when a copy hereof has been executed by Landlord and
Tenant, each such counterpart shall constitute an original copy hereof.
IN WITNESS WHEREOF, Tenant and Landlord have executed this
Lease as of the date first above written.
EMERITUS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
President
AHP OF TEXAS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this __ day of ____ ,1996, before me, a Notary Public in and
for the State of Washington duly commissioned and sworn, personally
appeared /s/ ▇▇▇▇▇▇▇ ▇. Brandstom, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who signed the
instrument; on oath stated that he was authorized to execute this instrument
as the President of EMERITUS CORPORATION, the corporation that
executed the instrument; acknowledged it as the free and voluntary act and
deed of said corporation for the uses and purposes therein
mentioned; and on oath stated that he was duly elected, qualified and acting
as said officer of Emeritus Corporation.
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IN WITNESS WHEREOF, I have hereunto set my hand and official seal
the day and year first above written.
[SEAL]
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
NOTARY PUBLIC in and for the State of
Washington, residing at Seattle
My appointment expires 3-30-99
Print Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
This instrument was acknowledged before me on this 21st day of
August , 1996, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a Vice President of AHP of Texas,
Inc., a Texas corporation.
My commission expires: Aug. 9, 1999
Witness my hand and official seal.
[SEAL]
/s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
NOTARY PUBLIC
75