EXHIBIT 10.6
MASTER LEASE AND SECURITY AGREEMENT
BY AND BETWEEN
THE ENTITIES LISTED AS LANDLORD ON SCHEDULE 1,
AS "LANDLORD"
AND
THE ENTITIES LISTED AS TENANT ON SCHEDULE 1,
AS "TENANT"
DATED: JULY 31, 2001
TABLE OF CONTENTS
Page
1. Term....................................................................................................2
1.1 Term....................................................................................................2
1.2 Renewal Terms...........................................................................................2
2. Rent....................................................................................................2
2.1 Initial Term Minimum Rent...............................................................................3
2.2 Renewal Term Minimum Rent...............................................................................3
2.3 Initial Term Additional Rent............................................................................4
2.4 Renewal Term Additional Rent............................................................................5
2.5 Total Rent..............................................................................................5
2.6 Proration for Partial Periods; Payment Dates............................................................6
2.7 Absolute Net Lease......................................................................................6
3. Taxes, Assessments and Other Charges....................................................................7
3.1 Tenant's Obligations....................................................................................7
3.2 Proration...............................................................................................7
3.3 Right to Protest........................................................................................7
3.4 Tax Bills...............................................................................................7
3.5 Other Charges...........................................................................................7
3.6 Impound.................................................................................................7
4. Insurance...............................................................................................8
4.1 General Insurance Requirements..........................................................................8
4.2 Fire and Other Casualty.................................................................................9
4.3 Public Liability........................................................................................9
4.4 Professional Liability Insurance........................................................................9
4.5 Workers Compensation...................................................................................10
4.6 Boiler Insurance.......................................................................................10
4.7 Business Interruption Insurance........................................................................10
4.8 Deductible Amounts.....................................................................................10
5. Use, Maintenance and Alteration of the Premises........................................................10
5.1 Tenant's Maintenance Obligations.......................................................................10
5.2 Regulatory Compliance..................................................................................11
5.3 Permitted Use..........................................................................................12
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5.4 Tenant Repurchase Obligation...........................................................................12
5.5 No Liens; Permitted Contests...........................................................................12
5.6 Alterations by Tenant..................................................................................13
5.7 Capital Improvements Funded by Landlord................................................................13
5.8 Compliance With IRS Guidelines.........................................................................13
6. Condition And Title Of Premises; Right of First Offer..................................................13
6.1 Condition and Title of Premises........................................................................13
6.2 Right of First Offer to Purchase Premises..............................................................14
7. Landlord and Tenant Personal Property..................................................................16
7.1 Tenant Personal Property...............................................................................16
7.2 Landlord's Security Interest...........................................................................17
7.3 Financing Statements...................................................................................17
7.4 Intangible Property....................................................................................18
8. Representations And Warranties.........................................................................18
8.1 Due Authorization And Execution........................................................................18
8.2 Due Organization.......................................................................................18
8.3 No Breach of Other Agreements..........................................................................18
9. Financial, Management and Regulatory Reports...........................................................18
9.1 Monthly Facility Reports...............................................................................18
9.2 Quarterly Financial Statements.........................................................................19
9.3 Annual Financial Statement.............................................................................19
9.4 Accounting Principles..................................................................................19
9.5 Regulatory Reports.....................................................................................19
9.6 Additional Information.................................................................................19
10. Events of Default and Landlord's Remedies..............................................................20
10.1 Events of Default......................................................................................20
10.2 Remedies...............................................................................................22
10.3 Receivership...........................................................................................23
10.4 Late Charges; Default Interest.........................................................................23
10.5 Remedies Cumulative; No Waiver.........................................................................23
10.6 Performance of Tenant's Obligations by Landlord........................................................24
11. Security Deposit.......................................................................................24
12. Damage by Fire or Other Casualty.......................................................................25
12.1 Reconstruction Using Insurance.........................................................................25
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12.2 Surplus Proceeds.......................................................................................25
12.3 No Rent Abatement......................................................................................25
12.4 End of Term............................................................................................25
13. Condemnation...........................................................................................25
13.1 Complete Taking........................................................................................25
13.2 Partial Taking.........................................................................................26
13.3 Lease Remains in Effect................................................................................26
14. Provisions on Termination of Term......................................................................26
14.1 Surrender of Possession................................................................................26
14.2 Removal of Personal Property...........................................................................26
14.3 Title to Personal Property Not Removed.................................................................27
14.4 Management of Premises.................................................................................27
14.5 Correction of Deficiencies.............................................................................27
15. Notices and Demands....................................................................................27
16. Right of Entry; Examination of Records.................................................................28
17. Landlord May Grant Liens...............................................................................28
18. Quiet Enjoyment........................................................................................29
19. Applicable Law.........................................................................................29
20. Preservation of Gross Revenues.........................................................................29
21. Hazardous Materials....................................................................................30
21.1 Hazardous Material Covenants...........................................................................30
21.2 Tenant Notices to Landlord.............................................................................31
21.3 Extension of Term......................................................................................31
21.4 Participation in Hazardous Materials Claims............................................................31
21.5 Environmental Activities...............................................................................31
21.6 Hazardous Materials....................................................................................31
21.7 Hazardous Materials Claims.............................................................................32
21.8 Hazardous Materials Laws...............................................................................32
22. Assignment and Subletting..............................................................................32
23. Indemnification........................................................................................33
24. Holding Over...........................................................................................34
25. Estoppel Certificates..................................................................................34
26. Conveyance by Landlord.................................................................................34
27. Waiver of Jury Trial...................................................................................34
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28. Attorneys' Fees........................................................................................35
29. Severability...........................................................................................35
30. Counterparts...........................................................................................35
31. Binding Effect.........................................................................................35
32. Waiver and Subrogation.................................................................................35
33. Memorandum of Lease....................................................................................35
34. Incorporation of Recitals and Attachments..............................................................35
35. Titles and Headings....................................................................................35
36. Nature of Relationship; Usury Savings Clause...........................................................35
37. Joint and Several......................................................................................36
38. Survival of Representations, Warranties and Covenants..................................................36
39. Interpretation.........................................................................................36
SCHEDULE 1 - LANDLORD AND TENANT ENTITIES
SCHEDULE 2 - DESCRIPTIONS OF FACILITIES
SCHEDULE 3 - LANDLORD PERSONAL PROPERTY
EXHIBIT A - LEGAL DESCRIPTIONS OF FACILITIES
EXHIBIT B - APPRAISAL PROCESS
EXHIBIT C - PERMITTED EXCEPTIONS
EXHIBIT D - EXEMPTED PROPERTIES
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MASTER LEASE AND SECURITY AGREEMENT
THIS MASTER LEASE AND SECURITY AGREEMENT ("LEASE") is made and entered
into as of the 31st day of July, 2001 by and between the entities listed as
Landlord on Schedule 1 (collectively, "LANDLORD"), and the entities listed as
Tenant on Schedule 1 (collectively, "TENANT").
WITNESSETH
WHEREAS, each entity comprising Landlord is the owner, respectively, of
those certain real properties, all improvements thereon and all appurtenances
thereto (collectively, the "FACILITIES"), as located, described and identified
on Schedule 2, the legal descriptions of which are attached as Exhibit A;
WHEREAS, each of the Facilities is presently utilized as a personal
care or memory impaired assisted living facility (as so utilized, a "PERSONAL
CARE FACILITY"), each duly licensed for a specified number of units, all as
located, described and identified on Schedule 2;
WHEREAS, each entity comprising Landlord is also the owner,
respectively, of that certain furniture, machinery, equipment, appliances,
fixtures and other personal property used in connection with the Facilities as
described on Schedule 3 (collectively, the "LANDLORD PERSONAL PROPERTY" and,
together with the Facilities, the "PREMISES");
WHEREAS, Landlord desires to lease the Premises to Tenant, and Tenant
desires to lease the Premises from Landlord; and
WHEREAS, American Retirement Corporation, a Tennessee corporation (in
such capacity, "GUARANTOR"), has agreed to guarantee Tenant's obligations under
this Lease pursuant to that certain Guaranty of Master Lease and Security
Agreement and Letter of Credit Agreement of even date herewith (the "GUARANTY").
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, Landlord hereby leases and lets unto Tenant the
Premises for the term and upon the conditions and provisions hereinafter set
forth.
RECOGNITION OF MASTER LEASE;
WAIVER OF CERTAIN RIGHTS
Tenant and Guarantor each acknowledge and agree that Landlord is
entering into this Master Lease as an accommodation to Tenant and Guarantor as
described in the Master Agreement (as defined in Section 10.1.2). Each of the
entities comprising Tenant and Guarantor, in order to induce Landlord to enter
into this Lease, to the extent permitted by law:
A. Agrees, acknowledges and is forever estopped from asserting to
the contrary that the statements set forth in the first sentence of this Section
are true, correct and complete;
B. Agrees, acknowledges and is forever estopped from asserting to
the contrary that this Lease is a new and de novo lease, separate and distinct
from any other lease between any of the entities comprising Tenant and any of
the entities comprising Landlord that may have existed prior to the date hereof.
C. Agrees, acknowledges and is forever estopped from asserting to
the contrary that this Lease is a single lease pursuant to which the collective
Premises are demised as a whole to Tenant;
D. Agrees, acknowledges and is forever estopped from asserting to
the contrary that if, notwithstanding the provisions of this Section, this Lease
were to be determined or found to be in any proceeding, action or arbitration
under state or federal bankruptcy, insolvency, debtor-relief or other applicable
laws to constitute multiple leases demising multiple properties, such multiple
leases could not, by the debtor, trustee, or any other party, be selectively or
individually assumed or rejected;
E. Forever knowingly waives and relinquishes any and all rights
under or benefits of the provisions of the Federal Bankruptcy Code Section 365
(11 U.S.C. ss. 365), or any successor or replacement thereof or any analogous
state law, to selectively or individually assume or reject the multiple leases
comprising this Lease following a determination or finding in the nature of that
described in the foregoing Section D.
1. TERM.
1.1 TERM. The term of this Lease shall commence on August
1, 2001 and shall end on July 31, 2011 (the "INITIAL TERM") unless extended
pursuant to Section 1.2 or earlier terminated in accordance with the provisions
hereof. The Initial Term and all Renewal Terms are referred to collectively as
the "TERM".
1.2 RENEWAL TERMS. The Term may be extended for four (4)
separate renewal terms (each a "RENEWAL TERM") of ten (10) years each, upon the
satisfaction of all of the following terms and conditions:
1.2.1 Not more than ten (10) business days before
or after the date which is fifteen (15) months prior to the
end of the then current Term, Tenant shall give Landlord
written notice that Tenant desires to exercise its right to
extend the then current Term for one (1) Renewal Term.
1.2.2 There shall be no Event of Default (as
defined in Section 10 below) under this Lease, either on the
date of Tenant's notice to Landlord pursuant to Section 1.2.1
above, or on the last day of the then current Term.
1.2.3 All other provisions of this Lease shall
remain in full force and effect and shall continuously apply
throughout the Renewal Term(s).
2. RENT. During the Initial Term and all Renewal Terms, minimum
rent ("MINIMUM RENT") and additional rent ("ADDITIONAL RENT") shall accrue
and/or be paid by Tenant to Landlord by wire transfer as follows:
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2.1 INITIAL TERM MINIMUM RENT. During the Initial Term,
Tenant shall pay to Landlord Minimum Rent of Eight Million Three Hundred
Twenty-Two Thousand Dollars ($8,322,000) annually. Such Minimum Rent with
respect to each month shall be paid by wire transfer in advance and in equal
monthly installments of Six Hundred Ninety-Three Thousand Five Hundred Dollars
($693,500) on the first business day of each such calendar month.
2.2 RENEWAL TERM MINIMUM RENT. The Minimum Rent for each
Renewal Term shall be expressed as an annual amount but shall be payable in
advance in equal monthly installments by wire transfer on the first business day
of each calendar month. Such annual Minimum Rent shall be equal to the product
of:
2.2.1 The lesser of (i) the Adjusted Fair Market
Value of the Premises (as such term is defined in Section
2.2.4 below) on the date of Tenant's notice of exercise
pursuant to Section 1.2.1 or (ii) Landlord's Adjusted
Investment in the Premises (as defined in Section 2.2.5
below); and
2.2.2 A percentage equal to three hundred (300)
basis points over the twenty (20) day average 10 year United
States Treasury rate in effect on the date of Tenant's notice
of exercise pursuant to Section 1.2.1. In the event that the
unavailability of United States Treasury securities causes the
foregoing calculation, or any other similar calculation
described in this Lease, to be impracticable, a substitute
therefor, reasonably acceptable to Landlord and Tenant, shall
be used for such purposes.
2.2.3 Notwithstanding the foregoing, in no event
shall the Minimum Rent for the first Renewal Term exceed one
hundred twenty-five percent (125%) of the difference obtained
by subtracting One Hundred Sixty-Four Thousand Dollars
($164,000) from the Total Rent (as such term is defined in
Section 2.5.1 below) payable during the last Lease Year of the
Initial Term, and in no event shall the Minimum Rent for any
Renewal Term other than the first Renewal Term exceed one
hundred twenty-five percent (125%) of the Total Rent in effect
for the Lease Year immediately preceding the first Lease Year
of such Renewal Term. Furthermore, in no event shall the
Minimum Rent for the first Renewal Term be less than one
hundred percent (100%) of the difference obtained by
subtracting One Hundred Sixty-Four Thousand Dollars ($164,000)
from the Total Rent payable during the last Lease Year of the
Initial Term, and in no event shall the Minimum Rent for any
Renewal Term other than the first Renewal Term be less than
one hundred percent (100%) of the Total Rent payable during
the last Lease Year of the immediately preceding Renewal Term.
2.2.4 As used herein, the "ADJUSTED FAIR MARKET
VALUE" of the Premises shall mean fair market value as
determined under this Lease with the following adjustments:
(i) excluding the enterprise value of any home health agency
operated by Tenant out of space in the Premises but including
the fair rental value of such space; and (ii) minus the value
of any capital improvements to the Premises paid for by Tenant
and not funded by Landlord under Section 5.7 below.
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2.2.5 As used herein, "LANDLORD'S ADJUSTED
INVESTMENT" in the Premises shall mean Landlord's Original h
Investment (as hereinafter defined in this Section 2.2.5)
multiplied at the end of each Lease Year by a percentage equal
to one hundred percent (100%) plus one-half (1/2) of the CPI
Increase (as defined in Section 2.2.6 below) for such Lease
Year. As used herein, "LANDLORD'S ORIGINAL INVESTMENT" shall
mean Eighty-Four Million One Hundred Fifteen Thousand Dollars
($84,115,000) as increased by (A) any amount paid by Landlord
pursuant to Section 5.7 below, and as decreased by (B) any net
award paid to Landlord pursuant to Section 13.2 below, all as
applicable.
2.2.6 As used herein, "CPI" shall be defined as
the Consumer Price Index for All Urban Wage Earners and
Clerical Workers, United States Average, Subgroup "All Items"
(1982 - 1984 = 100), as published by the United States
Department of Labor, Bureau of Labor Statistics, or similar
index if the same becomes available. The "CPI INCREASE" shall
be calculated annually by comparing the CPI in effect on the
first calendar day of the immediately preceding Lease Year to
the first calendar day of the then current Lease Year.
If within ten (10) days of the date of Tenant's notice of exercise pursuant to
Section 1.2.1, Landlord and Tenant are unable to agree on the Adjusted Fair
Market Value of the Premises for purposes of this calculation, such Adjusted
Fair Market Value shall be established by the appraisal process described on
Exhibit B attached hereto. The Minimum Rent for the applicable Renewal Term must
be finally determined by such appraisal process on or before a date ninety (90)
days after Tenant's notice of exercise pursuant to Section 1.2.1 or Tenant shall
lose its right to extend the Term. Landlord and Tenant acknowledge and agree
that this Section is designed to establish a fair market Minimum Rent for the
Premises during the applicable Renewal Terms.
2.3 INITIAL TERM ADDITIONAL RENT.
2.3.1 Commencing with the second Lease Year of the
Initial Term and continuing thereafter during the Initial
Term, Tenant agrees to pay Additional Rent to Landlord on a
quarterly basis in arrears within forty-five (45) days after
the end of each quarter of the applicable Lease Year;
provided, however, if such payment date falls on a weekend or
federal holiday, Tenant shall make such payment on the first
business day immediately preceding such payment date. Such
Additional Rent shall be equal to fifteen percent (15%) of the
amount by which the Gross Revenues for the applicable quarter
exceed one-fourth (1/4) of Gross Revenues for the Base Year.
Concurrently with each quarterly payment of Additional Rent,
Tenant shall deliver to Landlord in a form mutually agreed
upon by Landlord and Tenant, a certificate, certified by an
officer or general partner of Tenant, as applicable, setting
forth the Gross Revenues for the applicable quarter and the
final calculation of Additional Rent due with respect to such
quarter.
2.3.2 "GROSS REVENUES" shall be calculated
according to GAAP and shall be defined as all revenues
generated by the operation, sublease and/or use of the
Premises in any way, excluding (i) contractual allowances
during the Term for ▇▇▇▇▇▇▇▇ not paid by or received from the
appropriate governmental agencies or
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third party providers; (ii) all proper patient billing credits
and adjustments according to GAAP relating to health care
accounting; and (iii) federal, state or local sales or excise
taxes and any tax based upon or measured by said revenues
which is added to or made a part of the amount billed to the
patient or other recipient of such services or goods, whether
included in the billing or stated separately.
2.3.3 "LEASE YEAR" shall be defined as the twelve
(12) month periods commencing on August 1 and ending on July
31 of each year of the Term.
2.3.4 The "BASE YEAR" shall mean with respect to
the Initial Term, the twelve (12) month period commencing on
August 1, 2001 and ending on July 31, 2002, and with respect
to any Renewal Term, the first Lease Year of such Renewal
Term.
2.4 RENEWAL TERM ADDITIONAL RENT. Except for the Base
Year of any Renewal Term, Tenant shall pay Additional Rent to Landlord on a
quarterly basis in arrears within forty-five (45) days after the end of each
quarter of each Lease Year during any Renewal Term; provided, however, if such
payment date falls on a weekend or federal holiday, Tenant shall make such
payment on the first business day immediately preceding such payment date. The
Additional Rent shall be calculated as provided in Section 2.3 except that the
Base Year for the purposes of determining such Additional Rent shall be the
first Lease Year of the applicable Renewal Term.
2.5 TOTAL RENT.
2.5.1 Except to the extent provided to the
contrary in the immediately succeeding sentence, for all
purposes of calculating and paying Minimum Rent and Additional
Rent under this Lease, the total of the Minimum Rent and
Additional Rent ("TOTAL RENT") payable by Tenant in any
quarter of any Lease Year will not be less than the Total Rent
paid by Tenant for the immediately preceding quarterly period.
Notwithstanding the foregoing, Total Rent payable by Tenant
with respect to the first quarter of the first Lease Year of
the first Renewal Term will not be less than the difference
obtained by subtracting Forty-One Thousand Dollars ($41,000)
from the Total Rent paid by Tenant for the immediately
preceding quarterly period.
2.5.2 Notwithstanding any of the other terms of
this Section 2, but subject to Section 2.5.3 below, the Total
Rent due during each Lease Year shall not increase from one
Lease Year to the next by an amount in excess of (i) two and
one-half percent (2.5%), multiplied by (ii) the difference
obtained by subtracting One Hundred Sixty-Four Thousand
Dollars ($164,000) from the Total Rent due during the
immediately preceding Lease Year (the "ANNUAL RENT CAP"). For
purposes of applying the Annual Rent Cap to the quarterly
installments of Additional Rent due under Section 2.3.1, the
Total Rent due during each quarter of any Lease Year shall not
increase by an amount in excess of one-fourth (1/4) of the
Annual Rent Cap for the then applicable Lease Year.
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2.5.3 The terms of Section 2.5.2 above shall have
no applicability in determining the calculation of the Minimum
Rent due during the first Lease Year of any Renewal Term.
2.5.4 To the extent that Section 2.5.2 above
operates to limit the Total Rent due for any Lease Year, the
amount of rent which would have otherwise been paid or payable
by Tenant will be carried forward on a cumulative basis and
will be paid by Tenant to Landlord in any subsequent Lease
Year (other than the first Lease Year of a Renewal Term) to
the extent that the Total Rent due for such subsequent Lease
Year is less than one hundred two and one-half percent
(102.5%) of the Total Rent due during the Lease Year
immediately preceding such subsequent Lease Year.
2.5.5 For the purpose of comparing the Total Rent
due during each quarter of any Lease Year to the Total Rent
due in the immediately preceding quarterly period pursuant to
this Section 2.5, the increase in Minimum Rent by reason of
any disbursement by Landlord pursuant to Section 5.7 of this
Lease shall be treated as follows: (i) for the purpose of
comparing the Total Rent in the quarterly period in which such
disbursement is made against the Total Rent due in the
immediately preceding quarter, such increase in Minimum Rent
shall be ignored, and (ii) for the purpose of comparing the
Total Rent in the quarterly period in which such disbursement
is made to the Total Rent due in the following quarter, such
increase in Minimum Rent shall be deemed effective on the
first day of the quarterly period in which the disbursement is
made.
2.6 PRORATION FOR PARTIAL PERIODS; PAYMENT DATES. The
rent for any month during the Term which begins or ends on other than the first
or last calendar day of a calendar month shall be prorated based on actual days
elapsed. If any payment of Rent or other amounts hereunder falls due on a day
other than a business day, such payment shall be due on the last business day
immediately preceding such payment date.
2.7 ABSOLUTE NET LEASE.
2.7.1 GENERALLY. All rent payments shall be
absolutely net to the Landlord free of taxes (other than
federal or state income taxes calculated on the net income of
Landlord), assessments, utility charges, operating expenses,
refurnishings, insurance premiums or any other charge or
expense in connection with the Premises. All expenses and
charges, whether for upkeep, maintenance, repair,
refurnishing, refurbishing, restoration, replacement,
insurance premiums, real estate or other property taxes,
utilities, and other operating or other charges of a like
nature or otherwise, shall be paid by Tenant. This provision
is not in derogation of the specific provisions of this Lease,
but in expansion thereof and as an indication of the general
intention of the parties hereto. Tenant shall continue to
perform its obligations under this Lease even if Tenant claims
that Tenant has been damaged by any act or omission of
Landlord. Therefore, Tenant shall at all times remain
obligated under this Lease without any right of set-off,
counterclaim, abatement, deduction, reduction or defense of
any kind. Tenant's
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sole right to recover damages against Landlord by reason of a
breach or alleged breach of Landlord's obligations under this
Lease shall be to prove such damages in a separate action
against Landlord.
2.7.2 SALES TAX. Tenant hereby agrees to pay any
and all sales or use taxes (and any interest or penalties
related thereto) at any time assessed by any governmental
entity against (i) Landlord, with respect to the Landlord's
purchase of the Premises from Guarantor, or (ii) Tenant, with
respect to Tenant's operation of any Facility, including,
without limitation, any lease of personal property at any time
entered into by and between Landlord and Tenant. Tenant
further agrees to indemnify Landlord against and/or reimburse
Landlord for the amount of any such taxes actually paid by or
assessed against Landlord regardless of the reason for any
such payment or assessment. Any failure to make such
reimbursement shall constitute an Event of Default under this
Lease.
3. TAXES, ASSESSMENTS AND OTHER CHARGES:
3.1 TENANT'S OBLIGATIONS. Subject to Section 3.6, Tenant
agrees to pay and discharge (including the filing of all required returns) any
and all taxes (including but not limited to real estate and personal property
taxes, business and occupational license taxes, ad valorem sales, use, single
business, gross receipts, transaction privilege, franchise, rent or other excise
taxes, but excluding federal or state income taxes calculated on the net income
of Landlord), and other assessments levied or assessed against the Premises or
any interest therein during the Term, prior to delinquency or imposition of any
fine, penalty, interest or other cost.
3.2 PRORATION. At the end of the Term, all such taxes and
assessments under Section 3.1 shall be prorated.
3.3 RIGHT TO PROTEST. Landlord and/or Tenant shall have
the right, but not the obligation, to protest the amount or payment of any real
or personal property taxes or assessments levied against the Premises; provided
that in the event of any protest by Tenant, Landlord shall not incur any expense
because of any such protest, Tenant shall diligently and continuously prosecute
any such protest and notwithstanding such protest Tenant shall pay any tax,
assessment or other charge before the imposition of any penalty or interest.
3.4 TAX BILLS. Landlord shall promptly forward to Tenant
copies of all tax bills and payment receipts relating to the Premises received
by Landlord.
3.5 OTHER CHARGES. Tenant agrees to pay and discharge,
punctually as and when the same shall become due and payable without penalty,
all electricity, gas, garbage collection, cable television, telephone, water,
sewer, and other utilities costs and all other charges, obligations or deposits
assessed against the Premises during the Term.
3.6 IMPOUND. Subject to the final sentence of this
Section 3.6, Tenant shall deposit with Landlord at the time of each payment of
an installment of Minimum Rent, one-twelfth (1/12) of the amount sufficient to
discharge the annual amount of real property taxes and assessments secured by a
lien encumbering any portion of the Premises as and when they become due. Such
amounts shall be held by Landlord not in trust and not as an agent of Tenant,
7
and shall be applied to the payment of the obligations with respect to which the
amounts were deposited. If at any time within thirty (30) days prior to the due
date of any of the aforementioned obligations the amounts then on deposit
therefor shall be insufficient for the payment of such obligation in full,
Tenant shall within ten (10) days after demand, deposit the amount of the
deficiency with Landlord. If the amounts deposited are in excess of the actual
obligations for which they were deposited, Landlord shall hold the same in a
reserve account, not in trust, and reduce proportionately the required monthly
deposits for the ensuing Lease Year; provided that any such excess with respect
to the final Lease Year of the Term shall be refunded to Tenant within thirty
(30) days of the end of the Term. Tenant shall deliver to Landlord, or
Landlord's agent if so directed by Landlord, all tax bills, bond and assessment
statements, as soon as the same are received by Tenant. If Landlord sells or
assigns this Lease, Landlord shall transfer all amounts deposited by Tenant
pursuant to this Section 3.6 to the purchaser or assignee, and Landlord shall
thereafter be released from all responsibility related to, and shall have no
further liability for the application of, such deposits, and to the extent
Landlord transfers such amounts, Tenant shall look solely to such purchaser or
assignee for such application and for all responsibility related to such
deposits. Except during the continuance of an Event of Default, cash amounts
deposited by Tenant with Landlord pursuant to this Section 3.6 shall accrue
interest for the benefit of Tenant at the annual rate of ten percent (10%).
Provided that no Event of Default is then continuing, such interest shall be
paid by Landlord to Tenant on a quarterly basis in arrears. Notwithstanding
anything to the contrary contained in this Section 3.6, Tenant's obligation to
fund installments of property taxes and assessments hereunder shall not commence
(a) until February 1, 2002 with respect to such taxes and assessments for all of
the Facilities not located in Florida, and (b) until April 1, 2002 with respect
to such taxes and assessments for all of the Facilities located in Florida.
4. INSURANCE.
4.1 GENERAL INSURANCE REQUIREMENTS. All insurance
provided for in this Lease shall be maintained under valid and enforceable
policies issued by insurers of recognized responsibility, approved to do
business in the State in which the applicable Facility is located having a
general policyholders rating of not less than "A-" and a financial rating of not
less than "VIII" in the then most current Best's Insurance Report. Any and all
policies of insurance required under this Lease shall name the Landlord as an
additional insured and shall be on an "occurrence" basis, or on a "claims-made"
basis upon Landlord's prior written consent, which consent shall not be
unreasonably withheld at such times as the applicable insurance is not available
on an "occurrence" bases at commercially reasonable rates, as reasonably
determined by Landlord; provided, however, the proceeds of any business
interruption policy shall be payable to Tenant without relieving Tenant in any
way of its obligation to pay rent under this Lease. In addition, Landlord shall
be shown as the loss payable beneficiary under the casualty insurance policy
maintained by Tenant pursuant to Section 4.2. All policies of insurance required
herein may be in the form of "blanket" or "umbrella" type policies which shall
name the Landlord and Tenant as their interests may appear and allocate to each
Facility the full amount of insurance required hereunder. Original policies or
satisfactory certificates from the insurers evidencing the existence of all
policies of insurance required by this Lease and showing the interest of the
Landlord shall be filed with the Landlord prior to the commencement of the Term
and shall provide that the subject policy may not be canceled except upon not
less than ten (10) days prior written notice to Landlord. If Landlord is
provided with a certificate, upon Landlord's
8
request Tenant shall provide Landlord with a complete copy of the insurance
policy evidenced by such certificate within thirty (30) days of the commencement
of the Term. Originals of the renewal policies or certificates therefor from the
insurers evidencing the existence thereof shall be deposited with Landlord upon
renewal of the applicable policies. If Landlord is provided with a certificate
for a renewal policy, upon Landlord's request Tenant shall deliver a copy of the
complete renewal policy to Landlord within thirty (30) days of the expiration of
the replaced policy. Any claims under any policies of insurance described in
this Lease shall be adjudicated by and at the expense of the Tenant or of its
insurance carrier, but shall be subject to joint control of Tenant and Landlord.
4.2 FIRE AND OTHER CASUALTY. Tenant shall keep each
Facility insured against loss or damage from all causes under standard "all
risk" property insurance coverage, without exclusion for fire, lightning,
windstorm (including hurricane coverage), explosion, smoke damage, vehicle
damage, sprinkler leakage, flood, vandalism, earthquake, malicious mischief or
any other risk as is normally covered under an extended coverage endorsement, in
the amounts that are not less than the full insurable value of the applicable
Facility including all equipment and personal property (whether or not Landlord
Personal Property) used in the operation of the such Facility; provided,
however, that the amount of such insurance in respect of the required flood and
earthquake coverage may be limited, at Tenant's option, to Five Million Dollars
($5,000,000). The term "FULL INSURABLE VALUE" as used in this Lease shall mean
the actual replacement value of the applicable Facility (including all
improvements) and every portion thereof, including the cost of compliance with
changes in zoning and building codes and other laws and regulations, demolition
and debris removal and increased cost of construction. In addition, the casualty
insurance required under this Section 4.2 will include an agreed amount
endorsement such that the insurance carrier has accepted the amount of coverage
and has agreed that there will be no co-insurance penalty.
4.3 PUBLIC LIABILITY. Tenant shall maintain comprehensive
general public liability insurance coverage (including products liability
coverage) against claims for bodily injury, death or property damage occurring
on, in or about each Facility and the adjoining sidewalks and passageways, such
insurance to include a broad form endorsement and to afford protection to
Landlord and Tenant of not less than One Million Dollars ($1,000,000) with
respect to bodily injury or death to any one person, not less than Five Million
Dollars ($5,000,000) with respect to any one accident, and not less than One
Million Dollars ($1,000,000) with respect to property damage; provided, that
Landlord shall have the right at any time hereafter to require such higher
limits as may be reasonable and customary for transactions and properties that
are similar to the applicable Facility and that are located in the area thereof.
4.4 PROFESSIONAL LIABILITY INSURANCE. Tenant shall
maintain with respect to each Facility insurance against liability imposed by
law upon Tenant for damages on account of professional services rendered or
which should have been rendered by Tenant or any person for which acts Tenant is
legally liable on account of injury, sickness or disease, including death at any
time resulting therefrom, and including damages allowed for loss of service, in
a minimum amount of One Million Dollars ($1,000,000) for each claim and Five
Million Dollars ($5,000,000) in the aggregate.
9
4.5 WORKERS COMPENSATION. Tenant shall comply with all
legal requirements regarding worker's compensation, including any requirement to
maintain worker's compensation insurance against claims for injuries sustained
by Tenant's employees in the course of their employment.
4.6 BOILER INSURANCE. Tenant shall maintain with respect
to each Facility boiler and pressure vessel insurance, including an endorsement
for boiler business interruption insurance, on any fixtures or equipment which
are capable of bursting or exploding, in an amount not less than Five Million
Dollars ($5,000,000) for damage to property, bodily injury or death resulting
from such perils.
4.7 BUSINESS INTERRUPTION INSURANCE. Tenant shall
maintain with respect to each Facility, at its expense, business interruption
and extra expense insurance insuring a period of not less than six (6) months.
4.8 DEDUCTIBLE AMOUNTS. The policies of insurance which
Tenant is required to provide under this Lease will not have deductibles or
self-insured retentions in excess of One Hundred Thousand Dollars ($100,000), or
such higher amount as may be commercially reasonable under applicable
circumstances, as reasonably determined by Landlord.
5. USE, MAINTENANCE AND ALTERATION OF THE PREMISES.
5.1 TENANT'S MAINTENANCE OBLIGATIONS.
5.1.1 Tenant will keep and maintain the Premises
in good appearance, repair and condition and maintain proper
housekeeping. Tenant shall promptly make or cause to be made
all repairs, interior and exterior, structural and
nonstructural, ordinary and extraordinary, foreseen and
unforeseen, necessary to keep each Facility in good and lawful
order and condition and in substantial compliance with all
applicable requirements for the licensing of the Personal Care
Facilities in the State in which such Facility is located and
certification for participation in Medicare and Medicaid (or
any successor programs) as currently exist or as are obtained
by Tenant at a later date or as otherwise required under all
applicable local, state and federal laws.
5.1.2 As part of Tenant's obligations under this
Section 5.1, Tenant shall be responsible to maintain, repair
and replace all Landlord Personal Property and all Tenant
Personal Property (as defined in Section 7.1 below) in good
condition, ordinary wear and tear excepted, consistent with
prudent industry practice as applicable to the Personal Care
Facilities.
5.1.3 Without limiting Tenant's obligations to
maintain the Premises under this Lease, within thirty (30)
days of the end of each Lease Year starting with the end of
the fifth (5th) Lease Year, Tenant shall provide Landlord with
evidence satisfactory to Landlord in the reasonable exercise
of Landlord's discretion that Tenant has in such Lease Year
and the two (2) immediately preceding Lease Years spent on
Repair Expenditures for each Facility an annual average amount
of at least Two Hundred Dollars ($200) per unit per year as
such
10
amount is adjusted annually at the end of each Lease Year for
increases in the CPI from the date hereof. The term "REPAIR
EXPENDITURES" is defined to mean repairs or modifications to
the Facility which have the effect of maintaining the
competitive position of the Facility in its respective
marketplace. Non-exclusive examples of Repair Expenditures are
replacement wallpaper, tiles, window coverings, lighting
fixtures, painting, landscaping, carpeting, architectural
adornments, common area amenities and the like. It is
expressly understood that capital improvements or repairs
(such as but not limited to repairs or replacements to the
structural elements, equipment, fixtures, appliances, parking
area, or the roof or to the electrical, plumbing, HVAC or
other mechanical or structural systems in the Facility) and
any advances under Section 5.7 shall not be considered to be
Repair Expenditures. If Tenant fails to make at least the
above amount of Repair Expenditures, Tenant shall promptly on
demand from Landlord (but in no event more than five (5) days)
pay to Landlord the applicable shortfall in Repair
Expenditures. Such funds shall be the sole property of
Landlord and Landlord may in its sole discretion provide such
funds to Tenant to correct the shortfall in Repair
Expenditures or may simply retain such funds as supplemental
rent hereunder.
5.2 REGULATORY COMPLIANCE.
5.2.1 Tenant and each Facility shall comply in all
material respects with all federal, state and local licensing
and other laws and regulations applicable to the Personal Care
Facilities as well as with the certification requirements of
Medicare and Medicaid (or any successor program) that are
obtained by Tenant. Further, Tenant shall ensure that each
Facility continues to be licensed and operated as a Personal
Care Facility with a licensed and operating capacity as set
forth on Schedule 2, fully certified for participation in
Medicare and Medicaid (or any successor program) that are
obtained by Tenant throughout the Term and at the time the
Premises are returned to Landlord at the termination thereof,
all without any suspension, revocation, decertification,
material penalty or material limitation. Further, Tenant shall
not commit any act or omission that would in any way violate
any certificate of occupancy affecting any Facility. Without
limiting the generality of the foregoing, Tenant shall be
responsible to obtain all licenses and certificates of
occupancy for each Facility upon completion of any
construction thereto in order to operate such Facility for its
intended use in compliance with applicable legal and
regulatory requirements.
5.2.2 During the Term, all inspection fees, costs
and charges associated with a change of any licensure or
certification shall be borne solely by Tenant. Tenant shall at
its sole cost make any additions or alterations to any
Facility necessitated by, or imposed in connection with, a
change of ownership inspection survey for the transfer of
operation of such Facility from Tenant or Tenant's assignee or
subtenant to Landlord or Landlord's designee at the expiration
or earlier termination of the Term in accordance herewith.
11
5.2.3 If Tenant elects to participate in Medicare
or Medicaid (or any successor program), Tenant shall comply in
all material respects with the requirements to participate in
such programs. However, it shall not be a default under this
Lease if Tenant voluntarily for its own business reasons
elects to discontinue its participation in such programs so
long as at the time of such discontinuance there is no ongoing
proceeding by the applicable regulatory authority to decertify
Tenant and so long as Tenant at the time of such
discontinuance is not in material default of any material
requirement of any such program.
5.3 PERMITTED USE. Tenant shall continuously use and
occupy each Facility during the Term solely as a Personal Care Facility licensed
and operated as set forth in the Lease, with the number of beds or units set
forth on Schedule 2.
5.4 TENANT REPURCHASE OBLIGATION. In the event of an
Event of Default arising from Tenant's failure to comply with Section 5.3 and
during the pendency thereof, or if an Event of Default occurs and is continuing
because the license of any Facility is revoked, suspended or materially limited
for any of the uses included in the definition of Personal Care Facilities, then
in addition to Landlord's other rights and remedies under this Lease, Landlord
shall have the right to put the applicable Facility to Tenant. If Landlord
exercises such right, Tenant shall purchase the applicable Facility from
Landlord for a cash price equal to the greater of the Adjusted Fair Market Value
of the applicable Facility or the portion of the Landlord's Original Investment
applicable to such Facility on the date of Landlord's notice of exercise. Such
Adjusted Fair Market Value shall be as agreed between Landlord and Tenant.
However, failing such agreement within ten (10) days of Landlord's notice of
exercise under this Section, such Adjusted Fair Market Value shall be determined
by the appraisal process set forth in Exhibit B attached hereto. Within ninety
(90) days of Landlord's exercise of its put under this Section 5.4, such
purchase shall be consummated utilizing an escrow at a national title company
selected by Landlord. Such escrow shall be documented on such title company's
standard sale escrow instructions without representations or warranties and
without any due diligence or other contingencies in favor of the buyer. Tenant
shall pay all costs of such sale transaction. At the close of such sale,
Landlord shall deliver to Tenant title to the applicable Facility subject only
to the applicable title exceptions shown on Exhibit C attached hereto. Upon the
consummation of the sale of any Facility pursuant to this Section 5.4,
Landlord's Original Investment and Minimum Rent shall be reduced by the
respective amount thereof attributable to such Facility.
5.5 NO LIENS; PERMITTED CONTESTS. Tenant shall not cause
or permit any liens, levies or attachments to be placed or assessed against any
portion of the Premises or the operation thereof for any reason. However, Tenant
shall be permitted in good faith and at its expense to contest the existence,
amount or validity of any lien upon any portion of the Premises by appropriate
proceedings sufficient to prevent the collection or other realization of the
lien or claim so contested, as well as the sale, forfeiture or loss of any of
the Premises or any rent to satisfy the same. Tenant shall provide Landlord with
security satisfactory to Landlord in Landlord's reasonable judgment to assure
the foregoing. Each contest permitted by this Section 5.5 shall be promptly and
diligently prosecuted to a final conclusion by Tenant.
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5.6 ALTERATIONS BY TENANT. Subject to Section 5.8, Tenant
shall have the right of altering, improving, replacing, modifying or expanding
the facilities, equipment or appliances in each Facility from time to time as it
may determine is desirable for the continuing and proper use and maintenance of
the Premises under this Lease; provided, however, that any alterations,
improvements, replacements, expansions or modifications to any single Facility
in excess of Two Hundred Thousand Dollars ($200,000) in any rolling twelve (12)
month period shall require the prior written consent of the Landlord; provided,
further, that the aggregate cost of tenant-funded improvements for any single
Facility cannot exceed ten percent (10%) of Landlord's Original Investment
therefor without securing the prior written consent of Landlord. Any amounts
funded by Tenant as necessitated by damage to the Premises by casualty or
condemnation shall not count towards the foregoing calculation. The cost of all
alterations, improvements, replacements, modifications, expansions or other
purchases, covered by this Section 5.6, whether undertaken as an on-going
licensing, Medicare or Medicaid (or any successor program) requirement (if
applicable) or other regulatory requirement or otherwise shall be borne solely
and exclusively by Tenant (unless funded by Landlord under Section 5.7) and
shall immediately become a part of the Premises and the property of the Landlord
subject to the terms and conditions of this Lease. All work done in connection
therewith shall be done in a good and workmanlike manner and in compliance with
all existing codes and regulations pertaining to the applicable Facility and
shall comply with the requirements of insurance policies required under this
Lease. In the event any items of any Facility have become inadequate, obsolete
or worn out or require replacement (by direction of any regulatory body or
otherwise), Tenant shall remove such items and exchange or replace the same at
Tenant's sole cost and the same shall become part of the Premises and property
of the Landlord.
5.7 CAPITAL IMPROVEMENTS FUNDED BY LANDLORD. In the event
Tenant desires to make a capital improvement or a related series of capital
improvements to any Facility and if Tenant desires that Landlord fund the same,
Landlord shall, in its discretion and without obligation, within thirty (30)
days of Tenants' written request therefor, consider Tenant's request to fund
such capital improvements. Each and every capital improvement funded by Landlord
under this Section shall immediately become a part of the Premises and shall
belong to Landlord subject to the terms and conditions of this Lease. If
Landlord funds any capital improvements, Landlord's Original Investment shall be
increased for all purposes under this Lease by the amount of the funds provided
by Landlord for capital improvements.
5.8 COMPLIANCE WITH IRS GUIDELINES. Any improvement or
modification to the Premises shall satisfy the requirements set forth in
Sections 4(4).02 and .03 of Revenue Procedure 75-21, 1975-1 C.B. 715, as
modified by Revenue Procedure 79-48, 1979-2 C.B. 529. Landlord reserves the
right to refuse to consent to any improvement or modification to the Premises
if, in its judgment, such improvement or modification does not meet the
foregoing requirements.
6. CONDITION AND TITLE OF PREMISES; RIGHT OF FIRST OFFER.
6.1 CONDITION AND TITLE OF PREMISES. Tenant acknowledges
that it is presently engaged (or has hired a consultant or manager that is
presently engaged) in the operation of Personal Care Facilities in the States in
which the Facilities are located and has expertise (or has hired a consultant or
manager that has expertise) in senior housing, independent
13
living, personal care, skilled and intermediate nursing, subacute care and
dementia care. Tenant has thoroughly investigated the Premises and has selected
the Premises to its own specifications. Tenant accepts the Premises for use as
Personal Care Facilities under this Lease on an "AS IS, WHERE IS, WITH ALL
FAULTS" basis and will assume all responsibility and cost for the correction of
any observed or unobserved deficiencies or violations. In making its decision to
enter into this Lease, Tenant has not relied on any representations or
warranties, express or implied, of any kind from Landlord. Notwithstanding any
other provision of this Lease to the contrary, Tenant accepts the Premises in
their present condition, AS IS, WHERE IS, WITH ALL FAULTS, and without any
representations or warranties whatsoever, express or implied, including, without
limitation, any express or implied representations or warranties as to the
fitness, use, suitability, or condition of the Premises. Tenant hereby
represents and warrants to Landlord that Tenant is thoroughly familiar with the
Premises and the condition thereof, that Tenant is relying on Tenant's own
personal knowledge of the condition of the Premises, that neither Landlord nor
any person or entity acting or allegedly acting for or on behalf of Landlord or
any other person or entity having or claiming any interest in the Premises has
made any representations, warranties, agreements, statements, or expressions of
opinions in any way or manner whatsoever related to, connected with, or
concerning the Premises, the condition of the Premises, or any other fact or
circumstance whatsoever on which Tenant is relying, and, to the maximum extent
not prohibited by applicable law, Tenant hereby releases and discharges Landlord
and all other persons and entities having or claiming any interest in the
Premises from all liability, damages, costs, and expenses of every kind and
nature whatsoever in any way or manner arising out of, connected with, related
to, or emanating from the condition of the Premises at any time during the Term
of this Lease. Tenant has examined the condition of title to the Premises prior
to the execution and delivery of this Lease and has found the same to be
satisfactory.
6.2 RIGHT OF FIRST OFFER TO PURCHASE PREMISES.
6.2.1 Tenant shall have the right of first offer
to purchase the Premises upon the terms and conditions set
forth in this Section 6.2; provided, however, Tenant shall not
have the right to exercise its rights under this Section 6.2
if any Event of Default has occurred and is continuing as of
any of the following dates: (i) the date on which Landlord
delivers an Offering Notice to Tenant pursuant to Section
6.2.2(i), or (ii) the date of Tenant's delivery of an Exercise
Notice pursuant to Section 6.2.2(ii), or (iii) or the closing
date established to consummate the purchase of the Premises
pursuant to Section 6.2.2(iii).
6.2.2 If during the Term Landlord receives a bona
fide offer to purchase the Premises, or any portion thereof
(the "OFFERED PROPERTY"), from any person or entity other than
an Affiliate of Landlord (as such term is defined in Section
10.1.4 below), Landlord and Tenant shall take the following
steps if Landlord has determined to accept such offer:
(i) Landlord shall give written notice
to Tenant of its intention to accept such offer, which notice
shall set forth the price, terms and conditions contained in
the offer to purchase the Offered Property which Landlord
intends to accept ("OFFERING NOTICE");
14
(ii) Within fifteen (15) days after
receipt of an Offering Notice, Tenant shall either (A) deliver
to Landlord written notice that Tenant does not desire to
purchase the Offered Property on the terms set forth in the
Offering Notice, or (B) deliver to Landlord written notice of
Tenant's desire to exercise its right to purchase the Offered
Property on the terms set forth in the Offering Notice
pursuant to this Section 6.2 ("EXERCISE NOTICE");
(iii) If Tenant delivers an Exercise
Notice within such fifteen (15) day period, Landlord as seller
and Tenant as buyer shall immediately open an escrow to
consummate such purchase at a national title company selected
by Landlord in its reasonable discretion on the following
terms: (A) the form of such instructions to be then signed by
Landlord and Tenant shall be such title company's standard
sale escrow instructions and, notwithstanding anything set
forth in the Offering Notice to the contrary, shall not
provide for any representations or warranties by Landlord as
seller or for any due diligence or other contingencies in
favor of Tenant as buyer, (B) the purchase price shall be
payable in cash by Tenant or on such other terms as are set
forth in the Offering Notice with escrow to close on or before
the date set forth in the Offering Notice, (C) transaction
costs shall be paid as set forth in the Offering Notice, (D)
at close, Landlord shall deliver title to the Offered Property
subject only to the applicable title exceptions shown on
Exhibit C attached hereto, (E) the sale escrow instructions
shall provide for an ▇▇▇▇▇▇▇ money deposit in the amount set
forth in the Offering Notice and shall provide that such
deposit may be retained by Landlord as liquidated damages in
the event of any breach by Tenant of the terms of the escrow
instructions (provided, however, such liquidated damages shall
relate only to Landlord's damages by reason of a breach of the
escrow instructions and shall in no way liquidate or limit
Landlord's damages by reason of a breach of this Lease), and
(F) the escrow instructions shall otherwise be in form and
substance reasonably satisfactory to Landlord. If Tenant fails
to close the escrow for any reason other than a breach by
Landlord, then Landlord shall have the right at its option (to
be exercised in Landlord's sole discretion) to either declare
such breach to be a default under this Lease (as to which the
cure period shall, notwithstanding anything else in this
Lease, be ten (10) calendar days after notice by Landlord,
after which an Event of Default shall exist), or Landlord may
elect to pursue all remedies available to Landlord against
Tenant under the escrow instructions or under applicable law.
(iv) If within the fifteen (15) day
period following Landlord's delivery of an Offering Notice,
Tenant either delivers to Landlord the notice set forth in
Section 6.2.2 (ii)(A) or fails to deliver either of the
notices set forth in Section 6.2.2(ii), then for a period of
nine (9) months following the expiration of such fifteen (15)
day period Landlord shall be free to sell the Offered Property
on the terms set forth in the Offering Notice or on any other
revised terms deemed appropriate by Landlord in its sole
discretion; provided, however, if such other revised terms
include a price that is more than ten percent (10%) below the
price set forth in the Offering Notice, then prior to
completing any sale on such revised terms Landlord shall
notify Tenant of such revised offering terms. During
15
the five (5) business day period after receipt by Tenant of
such notice, Tenant shall have the right (to be exercised if
at all by Tenant's execution of escrow instructions and
deposit of ▇▇▇▇▇▇▇ money under Section 6.2.2 (iii) within such
five (5) business day period) to require that Landlord sell
the Offered Property to Tenant on such revised offering terms.
If Tenant fails to timely exercise its right as required by
the preceding proviso, Landlord shall be free to sell the
Offered Property to a third party on the revised offering
terms.
(v) If at the end of the nine (9) month
period described in Section 6.2.1(iv), Landlord has not sold
the Offered Property, then Landlord shall again be required to
comply with the provisions of this Section 6.2 if Landlord
desires to accept a third party offer to purchase the Offered
Property.
(vi) If an escrow is opened pursuant to
Section 6.2.2(iii) and such escrow fails to close by reason of
Tenant's default, in addition to all of the other rights and
remedies of Landlord with respect to such breach, Landlord
shall thereafter be free to sell the Premises or any portion
thereof to any Person on any terms whatsoever without being
required to comply with this Section 6.2.
(vii) If Landlord has hypothecated its
interest in the Premises, this Section 6.2 shall not apply to
any judicial or non-judicial sale of the Premises in
connection with any foreclosure action or proceeding by the
lender, or to any deed in lieu of such foreclosure.
(viii) Upon the consummation of the sale of
any Offered Property pursuant to this Section 6.2, Landlord's
Original Investment and Minimum Rent shall be reduced by the
respective amount thereof attributable to such Offered
Property.
7. LANDLORD AND TENANT PERSONAL PROPERTY.
7.1 TENANT PERSONAL PROPERTY. Tenant shall install, affix
or assemble or place on each Facility all items of furniture, fixtures,
equipment and supplies not included as Landlord Personal Property as Tenant
reasonably considers to be appropriate for Tenant's use of the Premises as
contemplated by this Lease (the "TENANT PERSONAL PROPERTY"). Tenant shall
provide and maintain during the entire Term all Tenant Personal Property as
shall be necessary in order to operate each Facility in compliance with all
requirements set forth in this Lease. All Tenant Personal Property shall be and
shall remain the property of Tenant and may be removed by Tenant upon the
expiration of the Term. However, if there is any Event of Default which is
continuing, Tenant will not remove the Tenant Personal Property from the
Premises and will on demand from Landlord, convey (subject to any existing
security interest thereon) the Tenant Personal Property to Landlord by executing
a ▇▇▇▇ of sale in a form reasonably required by Landlord. Upon any such
conveyance of Tenant Personal Property to Landlord, the amount owing by Tenant
to Landlord by reason of the applicable Event of Default shall be reduced by the
fair market value of such Tenant Personal Property, net of any associated debt
assumed by Landlord. Such fair market value shall be established by agreement of
the parties, but failing such agreement, within ten (10) days of request by any
party, such fair market value shall be
16
established by the appraisal process set forth in Exhibit B. In any event,
Tenant will repair all damage to the Premises caused by any removal of the
Tenant Personal Property.
7.2 LANDLORD'S SECURITY INTEREST.
7.2.1 The parties intend that if Tenant defaults
under this Lease, Landlord will control the Tenant Personal
Property and the Intangible Property (as defined in Section
7.4 below) so that Landlord or its designee can operate or
re-let each Facility intact for use as a Personal Care
Facility.
7.2.2 Therefore, to implement the intention of the
parties, and for the purpose of securing the payment and
performance of Tenant's obligations under this Lease, Tenant,
as debtor, hereby grants to Landlord, as secured party, a
security interest in and an express contractual lien upon, all
of Tenant's right, title and interest in and to the Tenant
Personal Property and in and to the Intangible Property and
any and all products and proceeds thereof, in which Tenant now
owns or hereafter acquires an interest or right, including any
leased Tenant Personal Property. This Lease constitutes a
security agreement covering all such Tenant Personal Property
and the Intangible Property. The security interest granted to
Landlord in this Section 7.2.2 is intended by Landlord and
Tenant to be subordinate to any security interest granted in
connection with the financing or leasing of all or any portion
of the Tenant Personal Property so long as the lessor or
financier of such Tenant Personal Property agrees to give
Landlord written notice of any default by Tenant under the
terms of such lease or financing arrangement, to give Landlord
a reasonable time following such notice to cure any such
default and to consent to Landlord's written assumption of
such lease or financing arrangement upon Landlord's curing of
any defaults thereunder. This security agreement and the
security interest created herein shall survive the termination
of this Lease if such termination results from the occurrence
of an Event of Default.
7.2.3 Notwithstanding the foregoing, in no event
will Landlord's security interest extend to any of Tenant's
motor vehicles, proprietary software or systems, operating
manuals or the tradenames "American Retirement Corporation,"
"ARC," "Homewood" or any derivation thereof.
7.3 FINANCING STATEMENTS. If required by Landlord at any
time during the Term, Tenant will execute and deliver to Landlord, in form
reasonably satisfactory to Landlord, additional security agreements, financing
statements, fixture filings and such other documents as Landlord may reasonably
require to perfect or continue the perfection of Landlord's security interest in
the Tenant Personal Property and the Intangible Property and any and all
products and proceeds thereof now owned or hereafter acquired by Tenant. Tenant
shall pay all fees and costs that Landlord may incur in filing such documents in
public offices and in obtaining such record searches as Landlord may reasonably
require. In the event Tenant fails to execute any financing statements or other
documents for the perfection or continuation of Landlord's security interest,
Tenant hereby appoints Landlord as its true and lawful attorney-in-fact to
execute any such
17
documents on its behalf, which power of attorney shall be irrevocable and is
deemed to be coupled with an interest.
7.4 INTANGIBLE PROPERTY. The term "INTANGIBLE PROPERTY"
means documents, chattel paper, contract rights, residency agreements,
management agreements, medical records, patient files, confidential patient
materials, general intangibles, choses in action, now owned or hereafter
acquired by Tenant (including any right to any refund of any taxes or other
charges heretofore or hereafter paid to any governmental authority) arising from
or in connection with Tenant's operation or use of the Premises; all licenses
and permits now owned or hereinafter acquired by Tenant, necessary or desirable
for Tenant's use of the Premises under this Lease, including without limitation,
if applicable, any certificate of need or other similar certificate; and the
right to use any trade or other name now or hereafter associated with the
operation of the Premises by Tenant, including, without limitation, the names
"Lakeway," "Naples," "Pinegate," "Pearland," "Bay Pines," "Trinity Towers" and
"Spring Shadows," but excluding any corporate names or logos used by Tenant. For
purposes of this Lease, the term "Intangible Property" shall not include
accounts receivable, negotiable instruments, rights to payment from third
parties, security deposits, utility deposits, proprietary software, training
manuals, or general corporate trademarks, service marks, logos, insignia, books
or records of Tenant, or the tradenames "American Retirement Corporation,"
"ARC," "Homewood" or any derivation thereof.
8. REPRESENTATIONS AND WARRANTIES. Landlord and Tenant do hereby
each for itself represent and warrant to each other as follows:
8.1 DUE AUTHORIZATION AND EXECUTION. This Lease and all
agreements, instruments and documents executed or to be executed in connection
herewith by either Landlord or Tenant were duly authorized and shall be binding
upon the party that executed and delivered the same.
8.2 DUE ORGANIZATION. Landlord and Tenant are duly
organized, validly existing and in good standing under the laws of the State of
their respective formations and are duly authorized and qualified to do all
things required of the applicable party under this Lease within the States in
which the Facilities are located.
8.3 NO BREACH OF OTHER AGREEMENTS. Neither this Lease nor
any agreement, document or instrument executed or to be executed in connection
herewith, violates the terms of any other agreement to which either Landlord or
Tenant is a party where such violation would have a material adverse effect.
9. FINANCIAL, MANAGEMENT AND REGULATORY REPORTS.
9.1 MONTHLY FACILITY REPORTS. Within thirty (30) days
after the end of each calendar month during the Term, Tenant shall prepare and
deliver monthly financial reports to Landlord consisting of a balance sheet and
income statement prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP"), and a summary of significant operating
statistics (including but not limited to total patient days, total number of
beds and occupancy and payor mix) concerning the business conducted at each
Facility. These
18
reports will be accompanied by a statement signed by the President, Chief
Financial Officer, Principal Accounting Officer, Controller, Executive Vice
President for Corporate Development, Executive Vice President for Development
Services, or other officer of Tenant as approved by Landlord in writing in its
sole discretion, affirming that said reports are true and correct in all
material respects and do not fail to disclose any material adverse information,
all after due inquiry ("OFFICER'S CERTIFICATE").
9.2 QUARTERLY FINANCIAL STATEMENTS. Within forty-five
(45) days of the end of each of the first three quarters of the fiscal year of
Tenant, Tenant shall deliver to Landlord the unaudited quarterly consolidated
financial statements of Guarantor and Tenant prepared in accordance with GAAP
accompanied by an Officer's Certificate.
9.3 ANNUAL FINANCIAL STATEMENT. Within ninety (90) days
of the fiscal year end of Guarantor and Tenant, Tenant shall deliver to Landlord
the annual consolidated financial statement of Tenant and Guarantor prepared in
accordance with GAAP and audited by a certified public accounting firm
reasonably acceptable to Landlord. Notwithstanding any of the other terms of
this Section 9.3, if Tenant or Guarantor becomes subject to any reporting
requirements of the Securities and Exchange Commission (the "SEC") during the
Term, Tenant shall deliver to Landlord within five (5) days of delivery to the
SEC such reports as are delivered to the SEC pursuant to applicable security
laws.
9.4 ACCOUNTING PRINCIPLES. All of the reports and
statements required hereby shall be prepared in accordance with GAAP.
9.5 REGULATORY REPORTS. In addition, Tenant shall within
five (5) business days of receipt thereof deliver to Landlord all federal, state
and local licensing and reimbursement certification surveys, inspection and
other reports received by Tenant as to the Premises or any portion thereof and
the operation of business thereon, including, without limitation, state
department of human services licensing surveys, Medicare and Medicaid (and
successor programs) certification surveys (if applicable) and life safety code
reports. Within five (5) business days of receipt thereof, Tenant shall give
Landlord written notice of any violation of any federal, state or local
licensing or reimbursement certification statute or regulation including without
limitation Medicare and Medicaid or successor programs (if applicable to the
Premises or any portion thereof), any suspension, termination or restriction
placed upon Tenant or the Premises or any portion thereof, the operation of
business thereon or the ability to admit residents, or any violation of any
other permit, approval or certification in connection with the Premises or any
portion thereof or its business, by any federal, state or local authority
including without limitation Medicare and Medicaid or successor programs if
applicable to the Premises or any portion thereof.
9.6 ADDITIONAL INFORMATION. Within ten (10) days of
Landlord's request therefor, which may be made from time to time and at any time
during the Term, Tenant shall also deliver such other information, reports or
statements as Landlord may reasonably request.
19
10. EVENTS OF DEFAULT AND LANDLORD'S REMEDIES.
10.1 EVENTS OF DEFAULT. The occurrence of any of the
following shall constitute an event of default on the part of Tenant hereunder
("EVENT OF DEFAULT"):
10.1.1 The failure to pay within ten (10) calendar
days of the date when due any Minimum Rent, Additional Rent or
other monetary amount due hereunder, including without
limitation any taxes or assessments required of Tenant (or
impounds therefor), under this Lease;
10.1.2 A material breach: (a) by Tenant of any
representation or warranty in this Lease, (b) by Guarantor of
any representation or warranty in, or other obligation under,
the Guaranty, or (c) by Tenant or Guarantor of any
representation or warranty in, or other obligation under, that
certain Agreement to Enter into Master Leases and Termination
of Leases dated as of July 31, 2001 by and among Landlord,
Tenant and Guarantor (the "MASTER AGREEMENT");
10.1.3 A material default by Tenant (or any
Affiliate of Tenant) ("AFFILIATE" being defined to mean, with
respect to any person or entity, any other person or entity
which controls, is controlled by or is under common control
with the first person or entity) under any other material
obligation other than this Lease owed by Tenant (or any
Affiliate of Tenant) to Landlord or any Affiliate of Landlord
(including without limitation any financing agreement or any
other lease), which default is not cured within any applicable
cure period provided in the documentation for such obligation;
or, a material default by Guarantor (or any Affiliate of
Guarantor ) under any material obligation other than this
Lease or the Guaranty owed by Guarantor (or any Affiliate of
Guarantor) to Landlord or any Affiliate of Landlord (including
without limitation any financing agreement or any other
lease), which default is not cured within any applicable cure
period provided in the documentation for such obligation;
10.1.4 A material default by Tenant with respect to
any material obligation under any other lease or financing
agreement with any other party, which default is not cured
within any applicable cure period provided in the
documentation for such obligation;
10.1.5 Any material misstatement or omission of any
material fact in any written report, notice or communication
from senior management of Tenant or Guarantor to Landlord with
respect to Tenant, Guarantor, or the Premises or any portion
thereof;
10.1.6 Any change (voluntary or involuntary, by
operation of law or otherwise) in the person, persons, entity
or entities which ultimately exert effective control over the
management of the affairs of Tenant or Guarantor as of the
date hereof except as permitted in Section 22.2 below;
10.1.7 An assignment by Tenant or Guarantor of all
or substantially all of its property for the benefit of
creditors;
20
10.1.8 The appointment of a receiver, trustee, or
liquidator for Tenant or Guarantor, or any of the property of
Tenant or Guarantor, if within three (3) business days of such
appointment Tenant or Guarantor does not inform Landlord in
writing that Tenant or Guarantor intends to cause such
appointment to be discharged or Tenant or Guarantor does not
thereafter diligently prosecute such discharge to completion
within sixty (60) days after the date of such appointment;
10.1.9 The filing by Tenant or Guarantor of a
voluntary petition under any federal bankruptcy law or under
the law of any state to be adjudicated as bankrupt or for any
arrangement or other debtor's relief, or in the alternative,
if any such petition is involuntarily filed against Tenant or
Guarantor by any other party and Tenant or Guarantor does not
within three (3) business days of any such filing inform
Landlord in writing of the intent by Tenant or Guarantor to
cause such petition to be dismissed, if Tenant or Guarantor
does not thereafter diligently prosecute such dismissal, or if
such filing is not dismissed within ninety (90) days after
filing thereof;
10.1.10 The failure to perform or comply in any
material respect with any other term or provision of this
Lease (other than those provisions set forth in Section
10.1.11 below), not requiring the payment of money, including,
without limitation, the failure to comply with the provisions
hereof pertaining to the use, operation and maintenance of the
Premises (or any portion thereof) or the breach of any
representation or warranty of Tenant in this Lease; provided,
however, the default described in this Section 10.1.10 is
curable and shall be deemed cured, if: (i) within five (5)
business days of Tenant's receipt of a notice of default from
Landlord, Tenant gives Landlord notice of its intent to cure
such default; and (ii) Tenant cures such default within thirty
(30) days after such notice from Landlord, unless such default
cannot with due diligence be cured within a period of thirty
(30) days because of the nature of the default or delays
beyond the control of Tenant, and cure after such thirty (30)
day period will not have a material and adverse effect upon
all or any portion of the Premises, in which case such default
shall not constitute an Event of Default if Tenant uses its
best efforts to cure such default by promptly commencing and
diligently pursuing such cure to the completion thereof,
provided, however, no such default shall continue for more
than one hundred twenty (120) days from Tenant's receipt of a
notice of default from Landlord;
10.1.11 There shall be (a) no cure period in the
event of the breach by Tenant of (i) the obligation to provide
replacement policies of insurance as required in Section 4.1
above, (ii) the provisions of Section 20 below, or (iii) the
provisions of Section 22 below with respect to assignments and
other related matters, and (b) a cure period of ten (10) days
following Landlord's notice of any breach by Tenant to provide
any financial or other information required pursuant to
Section 9 above; and
10.1.12 All notice and cure periods provided herein
shall run concurrently with any notice or cure periods
provided by applicable law.
21
10.2 REMEDIES. Upon the occurrence of an Event of Default
and during the pendency thereof, Landlord may exercise all rights and remedies
under this Lease and applicable law available to a lessor of real and personal
property in the event of a default by its lessee, and as to the Tenant Personal
Property and Intangible Property all remedies granted under the laws of any
applicable State to a secured party under its Uniform Commercial Code. Without
limiting the foregoing, Landlord shall have the right to do any of the
following:
10.2.1 ▇▇▇ for the specific performance of any
covenant of Tenant under this Lease as to which Tenant is in
breach;
10.2.2 Upon compliance with the requirements of
applicable law and to the extent allowed thereunder, Landlord
may do any of the following: enter upon the Premises,
terminate this Lease, dispossess Tenant from the Premises
and/or collect money damages by reason of Tenant's breach,
including without limitation all rent which would have accrued
after such termination and all obligations and liabilities of
Tenant under this Lease which survive the termination of the
Term;
10.2.3 Elect to leave this Lease in place and ▇▇▇
for rent and/or other money damages as the same come due;
10.2.4 Before or after repossession of the Premises
pursuant to Section 10.2.2, and whether or not this Lease has
been terminated, Landlord shall have the right (but shall be
under no obligation except to the extent required by
applicable law) to relet any portion of the Premises to such
tenant or tenants, for such term or terms (which may be
greater or less than the remaining balance of the Term), for
such rent, or such conditions (which may include concessions
or free rent) and for such uses, as Landlord, in its absolute
discretion, may determine, and Landlord may collect and
receive any rents payable by reason of such reletting.
Landlord shall have no duty to mitigate damages unless
required by applicable law and shall not be responsible or
liable for any failure to relet any of the Premises or for any
failure to collect any rent due upon any such reletting.
Tenant agrees to pay Landlord, immediately upon demand, all
expenses incurred by Landlord in obtaining possession and in
reletting any of the Premises, including fees, commissions and
costs of attorneys, architects, agents and brokers;
10.2.5 Sell the Tenant Personal Property in a
non-judicial foreclosure sale;
10.2.6 Revoke any waiver or deferral given by
Landlord of any Minimum Rent or Additional Rent or other
amount payable hereunder, and immediately thereafter all such
deferred or waived amounts shall become immediately due and
payable. The foregoing shall not be construed to mean that
Landlord is under any obligation whatsoever to consider or
grant any such deferral or waiver to Tenant.
10.2.7 For the purpose of calculating rent loss
damages payable to Landlord, Additional Rent for all periods
after an Event of Default shall be calculated based on a two
and one half percent (2.5%) annual increase of the
22
Additional Rent in effect at the end of the calendar quarter
most recently ended before the applicable Event of Default.
10.3 RECEIVERSHIP. Tenant acknowledges that one of the
rights and remedies available to Landlord under applicable law is to secure a
court-appointed receiver to take possession of the Premises or any portion
thereof, to collect the rents, issues, profits and income of the Premises or any
portion thereof, and to manage the operation of the Premises or any portion
thereof. Tenant further acknowledges that the revocation, suspension or material
limitation of the certification of the Premises or any portion thereof for
provider status under Medicare or Medicaid (or successor programs) as currently
exist or as are obtained by Tenant at a later date and/or the revocation,
suspension or material limitation of the license of the Premises or any portion
thereof as Personal Care Facilities for the number of beds and units shown in
Schedule 2 under the laws of the State in which the applicable Facility is
located will materially and irreparably impair the value of Landlord's
investment in the Premises. Therefore, in the event of any such revocation,
suspension or material limitation, and in addition to any other right or remedy
of Landlord under this Lease, Tenant hereby consents to the appointment of such
a receiver to enter upon and take possession of the Premises or any portion
thereof, to manage the operation of the Premises or any portion thereof, to
collect and disburse all rents, issues, profits and income generated thereby and
to preserve or replace to the extent possible the licenses and provider
certifications of the Premises required for the operation of the Personal Care
Facilities or to otherwise substitute the licensee or provider thereof. The
receiver shall be entitled to a reasonable fee for its services as a receiver.
All such fees and other expenses of the receivership estate shall be added to
the monthly rent due to Landlord under this Lease. Tenant hereby irrevocably
stipulates to the appointment of a receiver under such circumstances and for
such purposes and agrees not to contest such appointment.
10.4 LATE CHARGES; DEFAULT INTEREST. Tenant acknowledges
that the late payment of any Minimum Rent, Additional Rent, or any other
monetary amount due hereunder will cause Landlord to lose the use of such money
and incur costs and expenses not contemplated under this Lease, including,
without limitation, administrative and collection costs and processing and
accounting expenses, the exact amount of which is extremely difficult to
ascertain. Therefore, if any installment of Minimum Rent, Additional Rent or any
other monetary amount due hereunder (including any amount to be impounded) is
not paid within five (5) calendar days after the due date for such payment, then
Tenant shall thereafter pay to Landlord on demand (a) a late charge equal to
five percent (5%) of the amount of any installment of Minimum Rent, Additional
Rent or other amount not paid on the due date, together with (b) interest on all
such amounts (including the late charge) at the rate of the lesser of the Agreed
Rate or the highest rate that may be collected pursuant to applicable law,
accruing from the due date of such payment until receipt by Landlord of such
payment and all late charges and interest thereon then due. As used herein,
"AGREED RATE" shall mean six percent (6%) plus the "prime rate" then in effect
as published from time to time in the Wall Street Journal (the "PRIME RATE").
Landlord and Tenant agree that this late charge and default interest represents
a reasonable estimate of such costs and expenses and is fair compensation to
Landlord for the loss suffered from such nonpayment by Tenant.
10.5 REMEDIES CUMULATIVE; NO WAIVER. No right or remedy
herein conferred upon or reserved to Landlord is intended to be exclusive of any
other right or remedy, and each
23
and every right and remedy shall be cumulative and in addition to any other
right or remedy given hereunder or now or hereafter existing at law or in
equity. No failure of Landlord to insist at any time upon the strict performance
of any provision of this Lease or to exercise any option, right, power or remedy
contained in this Lease shall be construed as a waiver, modification or
relinquishment thereof as to any similar or different breach (future or
otherwise) by Tenant. A receipt by Landlord of any rent or other sum due
hereunder (including any late charge) with knowledge of the breach of any
provision contained in this Lease shall not be deemed a waiver of such breach,
and no waiver by Landlord of any provision of this Lease shall be deemed to have
been made unless expressed in a writing signed by Landlord.
10.6 PERFORMANCE OF TENANT'S OBLIGATIONS BY LANDLORD. If
Tenant at any time shall fail to make any payment or perform any act on its part
required to be made or performed under this Lease, then Landlord may, without
waiving or releasing Tenant from any obligations or default of Tenant hereunder,
make any such payment or perform any such act for the account and at the expense
of Tenant, and may enter upon the Premises for the purpose of taking all such
action thereon as may be reasonably necessary therefor. No such entry shall be
deemed an eviction of Tenant. All reasonable sums so paid by Landlord and all
necessary and incidental costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred in connection with the
performance of any such act by Landlord, together with interest at the rate of
the Prime Rate plus 5% (or if said interest rate is violative of any applicable
statute or law, then the maximum interest rate allowable) from the date of the
making of such payment or the incurring of such costs and expenses by Landlord,
shall be payable by Tenant to Landlord on demand.
11. SECURITY DEPOSIT. On the date hereof, Tenant shall post with
Landlord cash or letters of credit in the face amount of, or a combination of
cash and such letters of credit, in the aggregate amount of Two Million Six
Hundred Seventy-Five Thousand Dollars ($2,675,000), representing a security
deposit against the faithful performance of the terms and conditions contained
in this Lease. If Landlord funds any additional improvements pursuant to Section
5.7 of this Lease, draws upon such cash or letters of credit pursuant to the
terms hereof or if Minimum Rent is increased pursuant to the terms hereof,
Tenant shall, at the time of such funding, drawing or increase, deposit with
Landlord additional cash or an additional letter of credit such that the total
amount of the security deposit, represented by cash and the undrawn amounts
available under letters of credit, held by Landlord shall at all times be equal
to thirty-two and 14/100 percent (32.14%) of the then due and payable annual
Minimum Rent. Landlord shall not be deemed a trustee as to any such cash deposit
and shall have the right to commingle any cash drawn from such letters of credit
or cash security deposit with its own or other funds. Except during the
continuance of any Event of Default, interest on the cash portions of the
security deposit shall be paid by Landlord to Tenant on a quarterly basis in
arrears (i) if Landlord segregates such cash portion of the deposit from its
general funds, at the average rate earned in such period on Landlord's cash and
cash equivalent investments, and (ii) if Landlord does not segregate such cash
portion of the deposit from its general funds, at the average cost of funds for
Landlord for short term borrowings for such period. In the event Tenant has
fully complied with the terms of this Lease and no Event of Default exists, any
remaining portion of the security deposit then held by Landlord shall be
returned to Tenant within thirty (30) days after the expiration of the Term;
provided, however, that Landlord shall have the right to draw on such cash or
letters of credit for cleaning and repairing the Premises if Tenant shall fail
to deliver the
24
Premises at the termination or expiration of this Lease in a neat and clean
condition and in as good a condition as existed at the date of possession and
occupancy of same, ordinary wear and tear only excepted. Landlord may draw upon
any such letter of credit pursuant to the terms of that Letter of Credit
Agreement (the "LETTER OF CREDIT AGREEMENT") of even date herewith by and
between Landlord and Tenant. From time to time at Tenant's option following
reasonable advance notice to Landlord, Tenant may replace any cash portion of
the security deposit with letters of credit and may replace any letters of
credit with a cash deposit of like amount, so long as in any such event the
total amount of cash and the undrawn face amounts of letters of credit held by
Landlord shall be equal to the amount required hereunder. Upon Tenant providing
any additional letter of credit to Landlord pursuant to this Section 11,
Landlord and Tenant shall enter into an amendment to the Letter of Credit
Agreement or a further agreement substantially in the form of the Letter of
Credit Agreement with respect to such additional letter of credit.
12. DAMAGE BY FIRE OR OTHER CASUALTY.
12.1 RECONSTRUCTION USING INSURANCE. In the event of the
damage or destruction of any portion of the Premises, Tenant shall forthwith
notify Landlord and diligently repair or reconstruct the same to a like or
better condition than existed prior to such damage or destruction. Any net
insurance proceeds payable with respect to the casualty shall be used for the
repair or reconstruction of the applicable Facility pursuant to reasonable
disbursement controls in favor of Landlord. If such proceeds are insufficient
for such purposes, Tenant shall provide the required additional funds.
12.2 SURPLUS PROCEEDS. If there remains any surplus of
insurance proceeds after the completion of the repair or reconstruction of the
applicable portion of the Premises to Landlord's reasonable satisfaction, such
surplus shall belong to and be paid to Tenant.
12.3 NO RENT ABATEMENT. The rent payable under this Lease
shall not ▇▇▇▇▇ by reason of any damage or destruction of the Premises by reason
of an insured or uninsured casualty. Tenant hereby waives all rights under
applicable law to ▇▇▇▇▇, reduce or offset rent by reason of such damage or
destruction.
12.4 END OF TERM. Notwithstanding any other provision of
this Section 12, if any Facility is more than 50% destroyed (measured by square
footage) by casualty during the last six (6) months of the Initial Term or any
Renewal Term, Tenant may terminate this Lease by written notice to Landlord
delivered within thirty (30) days after the date of such casualty, in which
event Landlord shall retain all insurance proceeds. The foregoing shall in no
way limit or otherwise affect any right or remedy available to Landlord for
Tenant's failure to maintain such insurance as may be required under this Lease.
13. CONDEMNATION.
13.1 COMPLETE TAKING. If during the Term all or
substantially all of any Facility is taken or condemned by any competent public
or quasi-public authority, then Tenant may, at Tenant's election, made within
thirty (30) days of such taking by condemnation, terminate this Lease with
respect to the affected Facility only, and the current Minimum Rent and
Additional Rent shall be equitably rated as of the date of such termination. The
award
25
payable upon such taking shall be allocated between Landlord and Tenant as so
allocated by the taking authority. In the absence of such allocation by the
taking authority, the award shall be allocated to Landlord in an amount equal to
the applicable portion of Landlord's Original Investment, and then, to the
extent of any surplus, as agreed by Landlord and Tenant. Failing such agreement
within thirty (30) days after the effective date of such taking, the award shall
be allocated between Landlord and Tenant pursuant to the appraisal procedure
described on Exhibit B attached hereto. Landlord's Original Investment will be
reduced for all purposes under this Lease by reason of any award paid to
Landlord under this Section 13.1.
13.2 PARTIAL TAKING. In the event such condemnation
proceeding or right of eminent domain results in a taking of less than all or
substantially all of any Facility, the Minimum Rent and Additional Rental
thereto shall be abated to the same extent as the diminution in the fair market
value of the Facility affected by reason of the condemnation. Such diminution in
the fair market value shall be as agreed between Landlord and Tenant, but
failing such agreement within thirty (30) days of the effective date of the
condemnation the same will be determined by appraisal pursuant to Exhibit B
attached hereto. Landlord shall be entitled to receive and retain any and all
awards for the partial taking and damage and Tenant shall not be entitled to
receive or retain any such award for any reason. Landlord's Original Investment
will be reduced for all purposes under this Lease by reason of any award paid to
Landlord under this Section 13.2.
13.3 LEASE REMAINS IN EFFECT. Except as provided above,
this Lease shall not terminate and shall remain in full force and effect in the
event of a taking or condemnation of the Premises, or any portion thereof, and
Tenant hereby waives all rights under applicable law to ▇▇▇▇▇, reduce or offset
rent by reason of such taking.
14. PROVISIONS ON TERMINATION OF TERM.
14.1 SURRENDER OF POSSESSION. Tenant shall, on or before
the last day of the Term, or upon earlier termination of this Lease (except with
respect to any portion of the Premises that Tenant has purchased pursuant to any
provision of this Lease), surrender to Landlord the Premises (including all
resident charts and records along with appropriate resident consents) in good
condition and repair, excepting only (i) ordinary wear and tear, (ii) any damage
caused by condemnation pursuant to Section 13.1 above, or (iii) any damage
caused by fire or other casualty resulting in the termination of the Lease
pursuant to Section 12.4 above.
14.2 REMOVAL OF PERSONAL PROPERTY. If Tenant is not then
in default hereunder Tenant shall have the right in connection with the
surrender of the Premises to remove from the Premises all Tenant Personal
Property but not the Landlord Personal Property (including the Landlord Personal
Property replaced by Tenant or required by any applicable state or any other
governmental entity to operate the Premises for the purpose set forth in Section
5.3 above). Any such removal shall be done in a workmanlike manner leaving the
Premises in good and presentable condition and appearance, including repair of
any damage caused by such removal. At the end of the Term or upon the earlier
termination of this Lease, (except with respect to any portion of the Premises
that Tenant has purchased pursuant to any provision of this Lease), Tenant shall
return the Premises to Landlord with the Landlord Personal Property (or
26
replacements thereof) in the same condition and utility as was delivered to
Tenant at the commencement of the Term, normal wear and tear excepted.
14.3 TITLE TO PERSONAL PROPERTY NOT REMOVED. Title to any
of Tenant Personal Property which is not removed by Tenant upon the expiration
of the Term shall, at Landlord's election, vest in Landlord; provided, however,
that Landlord may remove and dispose at Tenant's expense of any or all of such
Tenant Personal Property which is not so removed by Tenant without obligation or
accounting to the Tenant.
14.4 MANAGEMENT OF PREMISES. Upon the expiration or
earlier termination of the Term (except with respect to any portion of the
Premises that Tenant has purchased pursuant to any provision of this Lease),
Landlord or its designee, upon written notice to Tenant, may elect to assume the
responsibilities and obligations for the management and operation of the
Premises and Tenant agrees to cooperate fully with Landlord or its designee to
accomplish the transfer of such management and operation without interrupting
the operation of the Premises. Tenant shall not commit any act or be remiss in
the undertaking of any act that would jeopardize any licensure or certification
of the facility, and Tenant shall comply with all requests for an orderly
transfer of the Personal Care Facilities licenses, Medicare and Medicaid (or any
successor program) certifications and possession at the time of any such
surrender. Upon the expiration or earlier termination of the Term, Tenant shall
promptly deliver copies of all of Tenant's books and records relating to the
Premises and its operations to Landlord.
14.5 CORRECTION OF DEFICIENCIES. Upon termination or
cancellation of this Lease, Tenant shall indemnify Landlord for any loss,
damage, cost or expense incurred by Landlord to correct all deficiencies of a
physical nature identified by the governmental agency responsible for licensing
Personal Care Facilities in the state in which the applicable Facility is
located, local health, fire and safety agencies or any other government agency
or Medicare or Medicaid (or any successor program) providers in the course of
the change of ownership inspection and audit.
15. NOTICES AND DEMANDS. All notices and demands, certificates,
requests, consents, approvals, and other similar instruments under this Lease
shall be in writing and shall be deemed to have been properly given upon actual
receipt thereof or within two (2) business days of being placed in the United
States certified or registered mail, return receipt requested, postage prepaid
(a) if to Tenant, addressed to:
American Retirement Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. W. E. Sheriff
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: T. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
27
or at such other address as Tenant from time to time may have designated by
written notice to Landlord; (b) if to Landlord, addressed to:
c/o Nationwide Health Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate Department Chairman
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such address as Landlord may from time to time have designated by written
notice to Tenant. Refusal to accept delivery shall be deemed delivery. If Tenant
is not an individual, notice may be made to any senior officer, general partner
or principal thereof. Notice to any one co-Tenant shall be deemed notice to all
co-Tenants.
16. RIGHT OF ENTRY; EXAMINATION OF RECORDS. Landlord and its
representative may enter any portion of the Premises at any reasonable time
after reasonable notice to Tenant for the purpose of inspecting the Premises for
any reason including, without limitation, Tenant's default under this Lease, or
to exhibit any portion of the Premises for sale, lease or mortgage financing, or
posting notices of default, or non-responsibility under any mechanic's or
materialman's lien law or to otherwise inspect any portion of the Premises for
compliance with the terms of this Lease. Any such entry shall not unreasonably
interfere with residents, resident care, or any other of Tenant's operations.
During normal business hours, Tenant will permit Landlord and Landlord's
representatives, inspectors and consultants to examine all contracts, books and
records relating to Tenant's operations at any portion of the Premises, whether
kept at the Premises or at some other location, including, without limitation,
Tenant's financial records.
17. LANDLORD MAY GRANT LIENS. Without the consent of Tenant,
Landlord may, subject to the terms and conditions set forth below in this
Section 17, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement ("ENCUMBRANCE") upon
the Premises, or any portion thereof or interest therein (including this Lease),
whether to secure any borrowing or other means of financing or refinancing or
otherwise. Any such Encumbrance shall provide that it is subject to the rights
of Tenant under this Lease, and shall further provide that so long as no Event
of Default shall have occurred under this Lease, Tenant's occupancy hereunder,
including but without limitation Tenant's right of quiet enjoyment provided in
Section 18, shall not be disturbed in the event any such lienholder or any other
person takes possession of the Premises through foreclosure proceeding or
otherwise. Upon the request of Landlord, Tenant shall subordinate this Lease to
the lien of a new Encumbrance on the Premises, on the condition that the
proposed lender agrees not to disturb Tenant's rights under this Lease so long
as Tenant is not in default hereunder.
28
18. QUIET ENJOYMENT. So long as there is no Event of Default which
is existing and continuing by Tenant, Landlord covenants and agrees that Tenant
shall peaceably and quietly have, hold and enjoy the Premises for the Term, free
of any claim or other action not caused or created by Tenant (excepting,
however, intrusion of Tenant's quiet enjoyment occasioned by condemnation or
destruction of the property as referred to in Section 12 and 13 hereof).
19. APPLICABLE LAW. This Lease shall be governed by and construed
in accordance with the internal laws of the State of California without regard
to the conflict of laws rules of such State. Notwithstanding the foregoing, the
parties agree that:
19.1 The law of the State in which each Facility is
located (each a "SITUS STATE") shall govern procedures for enforcing, in the
respective Situs State, provisional and other remedies directly related to such
Facility and related personal property as may be required pursuant to the law of
such Situs State, including without limitation the appointment of a receiver;
and
19.2 The law of the Situs State also applies to the
extent, but only to the extent, necessary to create, perfect and foreclose the
security interests and liens created under this Lease.
20. PRESERVATION OF GROSS REVENUES.
20.1 Tenant acknowledges that a fair return to Landlord on
its investment in the Premises is dependent, in part, on the concentration on
each Facility comprising the Premises during the Term of the Personal Care
Facilities business of Tenant and its Affiliates in the geographical area of
such Facility. Tenant further acknowledges that the diversion of resident care
activities from any Facility comprising the Premises to other facilities owned
or operated by Tenant or its Affiliates will have a material adverse impact on
the value and utility of the Premises.
20.1.1 Therefore, Tenant agrees that during the
Term, and for a period of one (1) year thereafter (except with
respect to any portion of the Premises that Tenant has
purchased pursuant to any provision of this Lease), neither
Tenant nor any of its Affiliates shall, without the prior
written consent of Landlord, operate, own, participate in or
otherwise receive revenues from any other facility or
institution providing services or similar goods to those
provided on or in connection with the Facilities comprising
the Premises and the permitted use (including each use
included in the definition of Personal Care Facilities)
thereof as contemplated under this Lease, within a four (4)
mile radius of any Facility; provided, however the facilities
listed on Exhibit D attached hereto which are either in
existence or under development as of the date hereof are
exempted from the operation of this Section 20.1.1.
20.1.2 In addition, Tenant hereby covenants and
agrees that for a period of one year following the expiration
or earlier termination of this Lease (except with respect to
any portion of the Premises that Tenant has purchased pursuant
to any provision of this Lease), neither Tenant nor any of its
Affiliates shall, without prior written consent of Landlord,
hire, engage or otherwise employ any
29
management or supervisory personnel working on or in
connection with any Facility, except at facilities exempted
from the operation of Section 20.1.1. This Section 20.1.2 does
not apply to corporate managers and multi-facility employees
to the extent such managers and employees are employed at
other facilities operated by Tenant or an Affiliate of Tenant.
20.2 Notwithstanding the foregoing, Landlord acknowledges
that Tenant operates certain home health agencies out of its offices on the
Premises. Section 20.1.1 does not apply to such home health activities operated
by the Tenant or an Affiliate of Tenant out of the Premises.
20.3 Except as required for medically appropriate reasons,
prior to and after Lease termination, neither Tenant nor any of its Affiliates
will recommend or solicit the removal or transfer of any resident from any
Facility to any other facility. Tenant hereby specifically acknowledges and
agrees that the temporal, geographical and other restrictions contained in this
Section 20 are reasonable and necessary to protect the business and prospects of
Landlord, and that the enforcement of the provisions of this Section 20 will not
work an undue hardship on Tenant. Tenant further agrees that in the event either
the length of time, geographical or any other restrictions, or portion thereof,
set forth in this Section 20 is overly restrictive and unenforceable in any
court proceeding, the court may reduce or modify such restrictions, but only to
the extent necessary, to those which it deems reasonable and enforceable under
the circumstances, and the parties agree that the restrictions of this Section
20 will remain in full force and effect as reduced or modified. Tenant further
agrees and acknowledges that Landlord does not have an adequate remedy at law
for the breach or threatened breach by Tenant of the covenants contained in this
Section 20, and Tenant therefore specifically agrees that Landlord may, in
addition to other remedies which may be available to Landlord hereunder, file a
suit in equity to enjoin Tenant from such breach or threatened breach, without
the necessity of posting any bond. Tenant further agrees, in the event that any
provision of this Section 20 is held to be invalid or against public policy, the
remaining provisions of this Section 20 and the remainder of this Lease shall
not be affected thereby.
21. HAZARDOUS MATERIALS.
21.1 HAZARDOUS MATERIAL COVENANTS. Tenant's use of the
Premises shall comply in all material respects with all Hazardous Materials
Laws. In the event any Environmental Activities occur or are suspected to have
occurred in violation in any material respect of any Hazardous Materials Laws or
if Tenant has received any Hazardous Materials Claim against any portion of the
Premises, Tenant shall promptly obtain all permits and approvals necessary to
remedy any such actual or suspected problem through the removal of Hazardous
Materials or otherwise, and upon Landlord's approval of the remediation plan,
remedy any such problem to the satisfaction of Landlord, in accordance with all
Hazardous Materials Laws and good business practices.
30
21.2 TENANT NOTICES TO LANDLORD. Tenant shall immediately
advise Landlord in writing of:
21.2.1 Any Environmental Activities in violation of
any Hazardous Materials Laws,
21.2.2 Any Hazardous Materials Claims against
Tenant or any portion of the Premises,
21.2.3 Any remedial action taken by Tenant in
response to any Hazardous Materials Claims or any Hazardous
Materials on, under or about any portion of the Premises in
violation of any Hazardous Materials Laws,
21.2.4 Tenant's discovery of any occurrence or
condition on or in the vicinity of any portion of the Premises
that materially increase the risk that any portion of the
Premises will be exposed to Hazardous Materials,
21.2.5 All communications to or from Tenant, any
governmental authority or any other person relating to
Hazardous Materials Laws or Hazardous Materials Claims with
respect to any portion of the Premises, including copies
thereof.
21.3 EXTENSION OF TERM. Notwithstanding any other
provision of this Lease, in the event any Hazardous Materials are discovered on,
under or about any portion of the Premises in violation of any Hazardous
Materials Law, the Term shall be automatically extended and this Lease shall
remain in full force and effect until the earlier to occur of the completion of
all remedial action or monitoring, as approved by Landlord in its reasonable
discretion, in accordance in all material respects with all Hazardous Materials
Laws, or the date specified in a written notice from Landlord to Tenant
terminating this Lease (which date may be subsequent to the date upon which the
Term was to have expired).
21.4 PARTICIPATION IN HAZARDOUS MATERIALS CLAIMS. Landlord
shall have the right, at Tenant's sole cost and expense and with counsel chosen
by Landlord, to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated in connection with any Hazardous Materials
Claims.
21.5 ENVIRONMENTAL ACTIVITIES shall mean the use,
generation, transportation, handling, discharge, production, treatment, storage,
release or disposal of any Hazardous Materials at any time to or from any
portion of the Premises or located on or present on or under any portion of the
Premises. Nothing contained in the foregoing or elsewhere in this Section 21 is
intended to, nor shall it, limit the liability of Tenant, if any, to Landlord
with respect to any representation or warranty given by Tenant to Landlord with
respect to Hazardous Materials or environmental matters generally as set forth
in any other agreement between any entity comprising Landlord and any entity
comprising Tenant.
21.6 HAZARDOUS MATERIALS shall mean (i) any petroleum
products and/or by-products (including any fraction thereof), flammable
substances, explosives, radioactive materials, hazardous or toxic wastes,
substances or materials, known carcinogens or any other
31
materials, contaminants or pollutants which pose a hazard to any portion of the
Premises or to persons on or about any portion of the Premises or cause any
portion of the Premises to be in violation of any Hazardous Materials Laws; (ii)
asbestos in any form which is friable; (iii) urea formaldehyde in foam
insulation or any other form; (iv) transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million or any other more restrictive standard then
prevailing; (v) medical wastes and biohazards; (vi) radon gas; (vii) underground
storage tanks which pose a hazard to any portion of the Premises or to persons
on or about any portion of the Premises or cause any portion of the Premises to
be in violation of any Hazardous Materials Laws; (viii) anything that qualifies
as a "Hazardous Waste," "Hazardous Substances," "Hazardous Material" or the like
under any applicable law, and; (ix) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or may or could pose a hazard to the health and safety of the
occupants of any portion of the Premises or the owners and/or occupants of
property adjacent to or surrounding any portion of the Premises.
21.7 HAZARDOUS MATERIALS CLAIMS shall mean any and all
enforcement, clean-up, removal or other governmental or regulatory actions or
orders threatened, instituted or completed pursuant to any Hazardous Material
Laws, together with all claims made or threatened by any third party against any
portion of the Premises, Landlord or Tenant relating to damage, contribution,
cost recovery compensation, loss or injury resulting from any Hazardous
Materials.
21.8 HAZARDOUS MATERIALS LAWS shall mean any laws,
ordinances, regulations, rules, orders, guidelines or policies relating to the
environment, health and safety, Environmental Activities, Hazardous Materials,
air and water quality, waste disposal and other environmental matters, if the
failure to comply with the same does or would have a material adverse effect on
any portion of the Premises or the operation thereof.
22. ASSIGNMENT AND SUBLETTING.
22.1 Tenant shall not, without the prior written consent
of Landlord, which may be withheld at Landlord's sole discretion, voluntarily or
involuntarily assign or hypothecate this Lease or any interest herein or sublet
the Premises or any part thereof. For the purposes of this Lease, a management
or similar agreement shall be considered to be an assignment of this Lease by
Tenant. Any of the foregoing acts without such consent shall be void but shall,
at the option of Landlord in its sole discretion, constitute an Event of Default
giving rise to Landlord's right, among other things, to terminate this Lease.
Without limiting the foregoing, this Lease shall not, nor shall any interest of
Tenant herein, be assigned or encumbered by operation of law without the prior
written consent of Landlord which may be withheld at Landlord's sole discretion.
22.2 Notwithstanding the foregoing, the following may be
done without Landlord's consent:
22.2.1 Tenant may assign this Lease or sublet the
Premises or any portion thereof to Guarantor, to a Successor (as such
term is defined below) or to a wholly-owned subsidiary of Guarantor,
provided that (i) such Successor, subsidiary or Guarantor fully assumes
the obligations of Tenant under this Lease, (ii) Tenant remains fully
liable under this Lease, (iii) the use of the Premises remains
unchanged, and (iv) no such assignment
32
or sublease shall be valid and no such subsidiary, Successor or
Guarantor shall take possession of the Premises until an executed
counterpart of such assignment or sublease has been delivered to
Landlord;
22.2.2 Guarantor, a Successor or a wholly-owned
subsidiary of Guarantor may acquire all of the outstanding equity
interests of any entity comprising Tenant (or any partners,
shareholders, members or other persons owning equity interests in such
entity, directly or indirectly), provided that (i) Tenant remains fully
liable under this Lease, (ii) the use of the Premises remains
unchanged, and (iii) prior written notice of such acquisition of equity
interests has been delivered to Landlord.
22.3 Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not sublet the Premises on any basis such that the
rental to be paid by the sublessee thereunder would be based, in whole or in
part, on either the income or profits derived by the business activities of the
sublessee, or any other formula, such that any portion of the sublease rental
received by Landlord would fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the U.S. Internal Revenue Code, or any similar
or successor provision thereto.
22.4 For the purpose of this Lease, the transfer,
assignment, sale, hypothecation or other disposition of any partnership, stock
or other ownership interest in any entity comprising Tenant that results in a
change in the Person (as hereinafter defined), which ultimately exerts effective
Control (as hereinafter defined) over the management of the affairs of any
entity comprising Tenant as of the date hereof, shall be deemed to be an
assignment of the Lease. For purposes herein, "CONTROL" shall mean, as applied
to any individual, partnership, association, corporation or other entity
(collectively, "PERSON"), the possession, directly or indirectly, of the power
to direct the management and policies of that Person, whether through ownership,
voting control, by contract or otherwise.
22.5 Notwithstanding anything to the contrary contained in
Section 22.1, none of the following shall be deemed to be an assignment of the
Lease: (i) an initial public offering ("IPO") of Guarantor or any Successor
thereto, or (ii) any secondary public offering(s) of Guarantor or any Successor
thereto, or (iii) subsequent to an IPO by Guarantor or any Successor thereto,
and so long as Guarantor or its Successor is a publicly-traded entity on a
national exchange, a change in the Person or Persons exercising Control of
Guarantor or its Successor or any public trading of Guarantor stock, or (iv) a
lease of a unit or bed to a resident of the Premises in the ordinary course of
Tenant's business.
22.6 As used herein, a "SUCCESSOR" is any entity which
succeeds to materially all of the assets, operations and business of Guarantor
by merger or reorganization and which is Controlled by the same Person or
Persons as Control Guarantor prior to such merger or reorganization.
23. INDEMNIFICATION. To the fullest extent permitted by law,
Tenant agrees to protect, indemnify, defend and save harmless Landlord, its
directors, officers, shareholders, agents and employees from and against any and
all foreseeable or unforeseeable liability, expense loss, costs, deficiency,
fine, penalty, or damage (including without limitation punitive or
33
consequential damages) of any kind or nature, including reasonable attorneys'
fees, from any suits, claims or demands, on account of any matter or thing,
action or failure to act arising out of or in connection with this Lease
(including, without limitation, the breach by Tenant of any of its obligations
hereunder), any portion of the Premises, or the operations of Tenant on any
portion of the Premises, including without limitation all Environmental
Activities on any portion of the Premises, all Hazardous Materials Claims or any
violation by Tenant of a Hazardous Materials Law with respect to any portion of
the Premises. Upon receiving knowledge of any suit, claim or demand asserted by
a third party that Landlord believes is covered by this indemnity, Landlord
shall give Tenant notice of the matter. Tenant shall defend Landlord against
such matter at Tenant's sole cost and expense with legal counsel satisfactory to
Landlord. Landlord may elect to defend the matter with its own counsel at
Tenant's expense.
24. HOLDING OVER. If Tenant shall for any reason remain in
possession of any portion of the Premises after the expiration or earlier
termination of this Lease, such possession shall be a month-to-month tenancy
during which time Tenant shall pay as rental each month, 1 1/2 times the
aggregate of the monthly Minimum Rent for the entire Premises payable with
respect to the last Lease Year plus Additional Rent allocable to the month
(based on the Additional Rent in effect as of the end of the most recently ended
calendar quarter), all additional charges accruing during the month and all
other sums, if any, payable by Tenant pursuant to the provisions of this Lease
with respect to the Premises. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease, nor shall anything contained
herein be deemed to limit Landlord's remedies pursuant to this Lease or
otherwise available to Landlord at law or in equity.
25. ESTOPPEL CERTIFICATES. Tenant shall, at any time upon not less
than five (5) days prior written request by Landlord, execute, acknowledge and
deliver to Landlord or its designee a statement in writing, executed by an
officer or general partner of Tenant, certifying that this Lease is unmodified
and in full force and effect (or, if there have been any modifications, that
this Lease is in full force and effect as modified, and setting forth such
modifications), the dates to which Minimum Rent, Additional Rent and additional
charges hereunder have been paid, certifying that no default by either Landlord
or Tenant exists hereunder or specifying each such default and as to other
matters as Landlord may reasonably request.
26. CONVEYANCE BY LANDLORD. If Landlord or any successor owner of
the Premises shall convey any portion of the Premises in accordance with the
terms hereof, Landlord or such successor owner shall thereupon be released from
all future liabilities and obligations of Landlord under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to such
portion of the Premises and all such future liabilities and obligations shall
thereupon be binding upon the new owner.
27. WAIVER OF JURY TRIAL. Landlord and Tenant hereby waive any
rights to trial by jury in any action, proceedings or counterclaim brought by
either of the parties against the other in connection with any matter whatsoever
arising out of or in any way connected with this Lease, including, without
limitation, the relationship of Landlord and Tenant, Tenant's use and occupancy
of the Premises, or any claim of injury or damage relating to the foregoing or
the enforcement of any remedy hereunder.
34
28. ATTORNEYS' FEES. If Landlord or Tenant brings any action to
interpret or enforce this Lease, or for damages for any alleged breach hereof,
the prevailing party in any such action shall be entitled to reasonable
attorneys' fees and costs as awarded by the court in addition to all other
recovery, damages and costs.
29. SEVERABILITY. In the event any part or provision of the Lease
shall be determined to be invalid or enforceable, the remaining portion of this
Lease shall nevertheless continue in full force and effect.
30. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
31. BINDING EFFECT. Subject to the provisions of Section 22 above,
this Lease shall be binding upon and inure to the benefit of Landlord and Tenant
and their respective heirs, personal representatives, successors in interest and
assigns.
32. WAIVER AND SUBROGATION. Landlord and Tenant hereby waive to
each other all rights of subrogation which any insurance carrier, or either of
them, may have as to the Landlord or Tenant by reason of any provision in any
policy of insurance issued to Landlord or Tenant, provided such waiver does not
thereby invalidate the policy of insurance.
33. MEMORANDUM OF LEASE. Landlord and Tenant shall, promptly upon
the request of either, enter into short form memoranda of the Lease, in form
suitable for recording under the laws of the State in which the Facilities are
located in which reference to this Lease shall be made. The party requesting
such recordation shall pay all costs and expenses of preparing and recording
such memoranda of this Lease.
34. INCORPORATION OF RECITALS AND ATTACHMENTS. The recitals and
exhibits, schedules, addenda and other attachments to this Lease are hereby
incorporated into this Lease and made a part hereof.
35. TITLES AND HEADINGS. The titles and headings of sections of
this Lease are intended for convenience only and shall not in any way affect the
meaning or construction of any provision of this Lease.
36. NATURE OF RELATIONSHIP; USURY SAVINGS CLAUSE. The parties
intend that their relationship shall be that of lessor and lessee only. Nothing
contained in this Lease shall be deemed or construed to constitute an extension
of credit by Landlord to Tenant, nor shall this Lease be deemed to be a
partnership or venture agreement between Landlord and Tenant. Notwithstanding
the foregoing, in the event any payment made to Landlord hereunder is deemed to
violate any applicable laws regarding usury, the portion of any payment deemed
to be usurious shall be held by Landlord to pay the future obligations of Tenant
as such obligations arise and, in the event Tenant discharges and performs all
obligations hereunder, such funds will be reimbursed to Tenant upon the
expiration of the Term. No interest shall be paid on any such funds held by
Landlord.
35
37. JOINT AND SEVERAL. If more than one person or entity is the
Tenant hereunder, the liability and obligations of such persons or entities
under this Lease shall be joint and several.
38. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of
the obligations, representations, warranties and covenants of Tenant under this
Lease shall survive the expiration or earlier termination of the Term.
39. INTERPRETATION. Both Landlord and Tenant have been represented
by counsel and this Lease has been freely and fairly negotiated. Consequently,
all provisions of this Lease shall be interpreted according to their fair
meaning and shall not be strictly construed against any party.
[SIGNATURES ON NEXT PAGE]
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Executed as of the date indicated above.
TENANT:
ARC PINEGATE, L.P.,
a Tennessee limited partnership
By: AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ARC PEARLAND, L.P.,
a Tennessee limited partnership
By: AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ARC NAPLES, LLC,
a Tennessee limited liability company
By: AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation,
its managing member
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
S-1
TRINITY TOWERS LIMITED PARTNERSHIP,
a Tennessee limited partnership
By: ARC CORPUS CHRISTI, INC.,
a Tennessee corporation,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ARC LAKEWAY, L.P.,
a Tennessee limited partnership
By: AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ARC SPRING SHADOW, L.P.,
a Tennessee limited partnership
By: AMERICAN RETIREMENT CORPORATION,
a Tennessee corporation,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
LANDLORD:
NATIONWIDE HEALTH PROPERTIES, INC.,
a Maryland corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
S-2
NH TEXAS LIMITED PARTNERSHIP,
a Texas limited partnership
By: MLD TEXAS CORPORATION,
a Texas corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
S-3
SCHEDULE 1
LANDLORD AND TENANT ENTITIES
LANDLORD
1. NATIONWIDE HEALTH PROPERTIES, INC., a Maryland corporation
2. NH TEXAS PROPERTIES LIMITED PARTNERSHIP, a Texas limited partnership
TENANT
1. ARC PINEGATE, L.P., a Tennessee limited partnership
2. ARC PEARLAND, L.P., a Tennessee limited partnership
3. AMERICAN RETIREMENT CORPORATION, a Tennessee corporation
4. ARC NAPLES, LLC, a Tennessee limited liability company
5. TRINITY TOWERS LIMITED PARTNERSHIP, a Tennessee limited partnership
6. ARC LAKEWAY, L.P., a Tennessee limited partnership
7. ARC SPRING SHADOW, L.P., a Tennessee limited partnership
Schedule 1-1
SCHEDULE 2
LOCATION OF FACILITIES AND FACILITY INFORMATION
FACILITY FACILITY LOCATION NO. OF BEDS/UNITS TYPE OF PERSONAL CARE FACILITY
-----------------------------------------------------------------------------------------------------------------------------------
1. Spring Shadow ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 52 Personal Care Beds Personal Care and
Houston (▇▇▇▇▇▇ County), Texas 77080 15 Memory Impaired Beds Memory Impaired Facilities
-----------------------------------------------------------------------------------------------------------------------------------
2. Lakeway ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ 66 Personal Care Beds Personal Care and
Lakeway (▇▇▇▇▇▇ County), Texas 78734 15 Memory Impaired Beds Memory Impaired Facilities
-----------------------------------------------------------------------------------------------------------------------------------
76 Nursing Facility Beds
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 84 Personal Care Facility Unit Nursing
3. Trinity Towers Corpus Christi (Nueces County), (Type A Large) Beds Personal Care
Texas 78401 196 Independent Living Independent Living and
Facility Units Dementia Care Facilities
15 Dementia Care Units
-----------------------------------------------------------------------------------------------------------------------------------
100 Assisted Living Facility Beds Assisted Living Facility
4. Naples ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (comprised of 76 Personal Care (including Personal Care and
Naples (▇▇▇▇▇▇▇ County), Florida 34202 Beds and Memory Impaired Facilities)
24 Memory Impaired Beds)
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
5. Bay Pines St. Petersburg (Pinellas County), 60 Assisted Living Assisted Living Facility
(Carriage Inn) Florida 33708 Facility Beds
-----------------------------------------------------------------------------------------------------------------------------------
15 Independent Beds Personal Care
6. Pearland ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 52 Personal Care Beds Independent Living and
Pearland (▇▇▇▇▇▇ County), Texas 77581 15 Memory Impaired Beds Memory Impaired Facilities
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7. Pinegate ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 80 Personal Care Beds Personal Care and
Houston (▇▇▇▇▇▇ County), Texas 77008 15 Memory Impaired Beds Memory Impaired Facilities
-----------------------------------------------------------------------------------------------------------------------------------
Schedule 2-1
SCHEDULE 3
LANDLORD PERSONAL PROPERTY
(Attached)
Schedule 3-1
EXHIBIT A
LEGAL DESCRIPTIONS OF THE FACILITIES
(Attached)
Exhibit A-1
LEGAL DESCRIPTION
SPRING SHADOW
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
DESCRIPTION OF A 5,000 ACRE TRACT OF LAND
SITUATED IN THE A.T. MILES SURVEY, A-556
CITY OF HOUSTON, ▇▇▇▇▇▇ COUNTY, TEXAS
BEING a 5,000 acre tract of land situated in the A.T. Miles
Survey, Abstract No. 556 City of Houston, ▇▇▇▇▇▇ County, Texas and being part of
an 8,000 acre tract of land as described under ▇▇▇▇▇▇ County Clerk's File (H. C.
C. F.) No. P514591 and same being out of Block 14 of the Spring Shadows, Section
6 subdivision as shown in Volume 155, Page 50, of the ▇▇▇▇▇▇ County Map Records
and said 5,000 acres being more particularly described by metes and bounds as
follows:
BEGINNING at a found 1 1/2" galvanized iron pipe for a corner
in the curved south right-of-way line of Kempwood Drive (100' width), as
recorded in Volume 7047, Page 187 of the ▇▇▇▇▇▇ County Deed Records, and at the
most northerly northwest corner of the said Block 14, Section 6;
THENCE in a southeasterly direction 155.14 feet with the south
right-of-way line of said Kempwood Drive (100' width) and the northerly line of
said Block 14, Section 6 and arc of a curve to the right having a radius of
1950.00 feet, a central angle of 04(degree) 33' 30" and a chord which bears S
71(degree) 36' 47" E, 155.10 feet to a found 1 1/2" galvanized iron pipe at the
point of a reverse curve to the left;
THENCE in a southeasterly direction 232.40 feet with the south
right-of-way line of said Kempwood Drive (100' width) and the northerly line of
said Block 14, Section 6 and the arc of a curve to the left having a radius of
2050.00 feet, a central angle of 06(degree) 29' 43" and a chord which bears S
72(degree) 34' 54" E, 232.27 feet to a set 5/8" iron rod in the arc of said
curve, for the northeast corner of the herein described tract;
THENCE S 01(degree) 33' 20" E, 517.64 feet to a set 5/8" iron
rod in the south line of said Block 14, Section 6 and in the north line of ▇▇▇
▇▇, ▇▇▇▇▇ ▇ of Spring Shadows Section 4, a subdivision recorded in Volume 141,
Page 50 of the ▇▇▇▇▇▇ County Map Records;
THENCE S 88(degree) 26' 40" W, along the south line of said
Block 14, Section 6 and the north line of said Block 6 of Spring Shadows,
Section 4, at 264.51 feet pass through the northwest corner of said Spring
Shadows, Section 4 and the northeast corner of Spring Shadows Section 2,
recorded in Volume 128, Page 13 of the ▇▇▇▇▇▇ County Map Records and continuing
a total distance of 374.51 feet to a set 5/8" iron rod in the east right-of-way
line of Rosefield Drive
Exhibit A-2
(60' width) as shown on the plat of Spring Shadows, Section 2 recorded in Volume
128, Page 13 of the ▇▇▇▇▇▇ County Map Records and on the plat of Spring Shadows,
Section 6, a subdivision recorded in Volume 155, Page 50, of the ▇▇▇▇▇▇ County
Map Records and at the southwest corner of said Block 14, Section 6. From said
5/8" iron rod a found 1 3/4" galvanized iron pipe bears S 88(degree) 26' 40" W,
a distance of 0.49 feet;
THENCE N 01(degree) 33' 20" W, 638.91 feet along the east
right-of-way line of said Rosefield Drive (60' width) and the west line of said
Block 14, Section 6 to a found 1 3/4" galvanized iron pipe at the southwesterly
corner of a right-of-way line cut-back;
THENCE N 50(degree)12' 00" E, 11.54 feet with the
southeasterly line of said cut-back to the POINT OF BEGINNING and containing
5,000 acres of land.
Exhibit A-3
LEGAL DESCRIPTION
LAKEWAY
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇ SUBDIVISION IN ▇▇▇▇▇▇ COUNTY, TEXAS,
ACCORDING TO THE MAP OR PLAT OF RECORD IN VOLUME 98, PAGES 297-299, OF THE PLAT
RECORDS OF ▇▇▇▇▇▇ COUNTY, TEXAS.
Exhibit A-4
LEGAL DESCRIPTION
TRINITY TOWERS
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
Legal Description of Premises
TRACT I:
Field Notes for a 2.02 acre tract of land, comprising all of Lots 1 through ▇▇,
▇▇▇▇▇ ▇, ▇.▇. ▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ADDITION, a map of which is recorded in Volume 1,
Page 56 of the Map Records of Nueces County, Texas, SAVE AND EXCEPT that portion
of ▇▇▇ ▇▇, ▇▇▇▇▇ ▇ conveyed to the City of Corpus Christi by Deed recorded in
Volume 263, Page 605 of the Deed Records of Nueces County, Texas, and also
comprising all of Block 6 of the BLUFF PORTION OF THE CENTRAL WHARF AND
WAREHOUSE COMPANY'S SUBDIVISION as shown by a map recorded in Volume A, Page 15
of the Nueces County Map Records, and being a portion of the other land lying
North of said ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND WAREHOUSE SUBDIVISION and being shown
as ▇▇▇▇▇▇'▇ Alley on the map of said BROADWAY ADDITION; said 2.02 acre tract
being more particularly described by metes and bounds as follows:
BEGINNING at a 1" iron pipe found in concrete at the intersection of the
northerly Right-Of-Way line of present ▇▇▇▇▇▇'▇ Alley (formerly Telco Street,
formerly Kenedy Street), and the westerly line of Carancahua Street for the most
southeasterly corner of ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND WAREHOUSE SUBDIVISION; said
1" iron pipe also being the most southeasterly corner of this tract;
THENCE South 88 degrees 50 minutes 15 seconds West, along and with said
southerly line of Block 6, being the said northerly line of ▇▇▇▇▇▇'▇ Alley, a
distance of 250.16 feet to a 5/8" iron pipe found for the most southwesterly
corner of said ▇▇▇ ▇, ▇▇▇▇▇ ▇, same being a southwesterly exterior corner of
this tract;
THENCE North 00 degrees 42 minutes 29 seconds West, a distance of 43.82 feet to
drill hole set for a point in the southerly line of said ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇.▇.
▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ADDITION; said drill hole also being an interior corner of this
tract;
THENCE South 59 degrees 42 minutes 29 seconds West, along and with the southerly
line of said ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇.▇. ▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ADDITION, a distance of 13.28
feet to a 5/8" iron rod found for the most southeasterly corner of said portion
of ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, conveyed to the City of Corpus Christi and also being in the
most easterly Right-Of-Way line of present Tancahua Street for an exterior
corner of this tract;
Exhibit A-5
THENCE North 04 degrees 19 minutes 38 seconds West, along and with said easterly
line of Tancahua Street, a distance of 109.70 feet to a 5/8" iron rod found for
an angle point of this tract;
THENCE North 02 degrees 51 minutes 52 seconds West, continuing along and with
said easterly line of Tancahua Street a distance of 30.06' to 5/8" iron rod
found for the most northwesterly corner of said ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇
ADDITION, also being the most southwesterly corner of said ▇▇▇ ▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇▇ ADDITION, also being an angle point of this tract;
THENCE North 01 degrees 00 minutes 30 seconds East, continuing along and with
said easterly line of Tancahua Street, a distance of 107.29 feet to 5/8" iron
rod found at the intersection of said easterly line of Tancahua Street and the
southerly line of Blucher Street, (formerly Chatham Street) for the most
northwesterly corner of said ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ Addition, also being the
most northwesterly corner of this tract;
THENCE North 75 degrees 24 minutes 20 seconds East, along and with the southerly
line of said Blucher Street, also being the North line of Block 2, W.E. ▇▇▇▇'▇
BROADWAY ADDITION, a distance of 298.31 feet to a drill hole found in concrete
at the intersection of the said southerly line of Blucher Street and the
westerly line of said Carancahua Street for the most northeasterly corner of
this tract;
THENCE southerly, along and with the said westerly line of Carancahua Street,
the following courses;
South 01 degrees 00 minutes 30 seconds West, a distance of 107.29 feet to a
drill hole found in concrete for the southwesterly corner of ▇▇▇ ▇▇, ▇▇▇▇▇ ▇,
▇.▇. ▇▇▇▇'▇ ADDITION for an angle point of this tract;
South 00 degrees 05 minutes 32 seconds West, a distance of 105.14 feet to a
drill hole found in concrete for an angle point of this tract;
South 86 degrees 47 minutes 35 seconds West, a distance of 7.98 feet to a drill
hole found in concrete for an angle point of this tract;
South 14 degrees 49 minutes 41 seconds West, a distance of 41.75 feet to a 1"
iron rod found for an angle point of this tract;
Thence South 01 degrees 08 minutes 51 seconds East, continuing along and with
said westerly line of Carancahua Street, a distance of 100.71 feet to the POINT
OF BEGINNING and containing 2.02 acres of land more or less.
TRACT II:
Description of 2.3638 acres of land out of ▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇, 10,
11, 12, 13, 14, 15, Block 1, of W.E. ▇▇▇▇'▇ BROADWAY ADDITION, Corpus Christi,
Nueces County, Texas, as shown by map recorded in Volume 1, Page 56 of the
Nueces County Map Records; a portion of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ TRACT, as
shown in Volume 1, Page 56 of the Nueces
Exhibit A-6
County Map Records; and a portion of Block 1, of the BLUFF PORTION OF THE
CENTRAL WHARF AND WAREHOUSE COMPANY'S SUBDIVISION, as shown by map or plat of
record in Volume A, Page 15, of the Nueces County Map Records; said 2.3638 acre
tract being more particularly described by metes and bound as follows:
BEGINNING at a 5/8 inch iron rod found for the northwest corner of ▇▇▇ ▇, ▇▇▇▇▇
▇, of the W.E. ▇▇▇▇'▇ BROADWAY ADDITION, Corpus Christi, Nueces County, Texas,
as shown by map recorded in Volume 1, Page 56 of the Nueces County Map Records,
said point being the intersection of the east line of Carancahua Street
(variable width R.O.W.) and the south line of Blucher (formerly Chatham Street)
(60 foot R.O.W.);
THENCE N 75 degrees 36 minutes 04 seconds E, with the said south line of Blucher
Street, along the north line of ▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇ ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ 1, a
distance of 314.44 feet to a 5/8 inch iron rod found for the northeast corner of
said ▇▇▇ ▇, ▇▇▇▇▇ ▇ for the northeast corner of this tract;
THENCE S 01 degrees 46 minutes 04 seconds W, with the west line of Upper North
Broadway Street (variable width R.O.W.), a distance of 176.77 feet to a 5/8 inch
iron rod found at the point of curvature of a circular curve to the right, the
west line of said Broadway Street being shown on Exhibit A of a deed from Whole
Life, Inc. to the City of Corpus Christi and recorded in Volume 1868, Page 763,
of the Nueces County Deed Records;
THENCE continuing along the west line of said Broadway Street and along the arc
of a circular curve to the right having a central angle of 32 degrees 00 minutes
00 seconds and a radius of 84.84 feet, a distance of 47.38 feet to a 5/8 inch
iron rod found for the point of tangency;
THENCE S 33 degrees 46 minutes 04 seconds W, continuing along the west line of
said Broadway Street, a distance of 54.57 feet to a P.K. nail set in asphalt for
the point of curvature of a circular curve to the left;
THENCE continuing along the west line of said Broadway Street and along the arc
of a circular curve to the left with a central angle of 34 degrees 34 minutes 20
seconds and a radius of 51.50 feet, a distance of 31.08 feet to a 5/8 inch iron
rod set for the point of tangency;
THENCE S 00 degrees 48 minutes 16 seconds E, continuing along the west line of
said Broadway Street, a distance of 47.96 feet to a 5/8 inch iron rod found at
the intersection of the west line of said Broadway Street and the north line of
▇▇▇▇▇▇'▇ Alley (variable width R.O.W.) as described in a deed recorded in Volume
1570, Page 956 of the Nueces County Deed Records;
THENCE S 46 degrees 28 minutes 22 seconds W, along the north line of said
▇▇▇▇▇▇'▇ Alley, a distance of 36.00 feet to a point for a corner from which a
5/8 inch iron rod found bears S 81 degrees 45 minutes 43 seconds E, a distance
of 0.37 feet, said point being the point of curvature of a circular curve to the
right;
Exhibit A-7
THENCE continuing along the north line of said ▇▇▇▇▇▇'▇ Alley with the arc of a
circular curve to the right having a central angle of 42 degrees 43 minutes 22
seconds and a radius of 230.00 feet, a distance of 171.50 feet to a 5/8 inch
iron rod found for the point of tangency;
THENCE S 89 degrees 11 minutes 44 second W, continuing along the north line of
said ▇▇▇▇▇▇'▇ Alley, a distance of 10.54 feet to a 5/8 inch iron rod found for a
point of curvature of a circular curve to the right;
THENCE continuing along the north line of said ▇▇▇▇▇▇'▇ Alley with the arc of a
circular curve to the right having a central angle of 92 degrees 00 minutes 30
seconds and a radius of 60.00 feet, a distance of 96.35 feet to a 5/8 inch iron
rod set in the east line of Carancahua Street.
THENCE N 01 degrees 12 minutes 14 seconds E, with the east line of Carancahua
Street, a distance of 292.67 feet to the POINT OF BEGINNING and containing
2.3638 acres of land, more or less.
Legal Description of Expansion Parcel
TRACT I:
Field Notes for a 2.02 acre tract of land, comprising all of Lots 1 through ▇▇,
▇▇▇▇▇ ▇, ▇.▇. ▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ADDITION, a map of which is recorded in Volume 1,
Page 56 of the Map Records of Nueces County, Texas, SAVE AND EXCEPT that portion
of ▇▇▇ ▇▇, ▇▇▇▇▇ ▇ conveyed to the City of Corpus Christi by Deed recorded in
Volume 263, Page 605 of the Deed Records of Nueces County, Texas, and also
comprising all of Block 6 of the BLUFF PORTION OF THE CENTRAL WHARF AND
WAREHOUSE COMPANY'S SUBDIVISION as shown by a map recorded in Volume A, Page 15
of the Nueces County Map Records, and being a portion of the other land lying
North of said ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND WAREHOUSE SUBDIVISION and being shown
as ▇▇▇▇▇▇'▇ Alley on the map of said BROADWAY ADDITION; said 2.02 acre tract
being more particularly described by metes and bounds as follows:
BEGINNING at a 1" iron pipe found in concrete at the intersection of the
northerly Right-Of-Way line of present ▇▇▇▇▇▇'▇ Alley (formerly Telco Street,
formerly Kenedy Street), and the westerly line of Carancahua Street for the most
southeasterly corner of ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND WAREHOUSE SUBDIVISION; said
1" iron pipe also being the most southeasterly corner of this tract;
THENCE South 88 degrees 50 minutes 15 seconds West, along and with said
southerly line of Block 6, being the said northerly line of ▇▇▇▇▇▇'▇ Alley, a
distance of 250.16 feet to a 5/8" iron pipe found for the most southwesterly
corner of said ▇▇▇ ▇, ▇▇▇▇▇ ▇, same being a southwesterly exterior corner of
this tract;
Exhibit A-8
THENCE North 00 degrees 42 minutes 29 seconds West, a distance of 43.82 feet to
drill hole set for a point in the southerly line of said ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇.▇.
▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ADDITION; said drill hole also being an interior corner of this
tract;
THENCE South 59 degrees 42 minutes 29 seconds West, along and with the southerly
line of said ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇.▇. ▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ADDITION, a distance of 13.28
feet to a 5/8" iron rod found for the most southeasterly corner of said portion
of ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, conveyed to the City of Corpus Christi and also being in the
most easterly Right-Of-Way line of present Tancahua Street for an exterior
corner of this tract;
THENCE North 04 degrees 19 minutes 38 seconds West, along and with said easterly
line of Tancahua Street, a distance of 109.70 feet to a 5/8" iron rod found for
an angle point of this tract;
THENCE North 02 degrees 51 minutes 52 seconds West, continuing along and with
said easterly line of Tancahua Street a distance of 30.06' to 5/8" iron rod
found for the most northwesterly corner of said ▇▇▇ ▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇
ADDITION, also being the most southwesterly corner of said ▇▇▇ ▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇▇ ADDITION, also being an angle point of this tract;
THENCE North 01 degrees 00 minutes 30 seconds East, continuing along and with
said easterly line of Tancahua Street, a distance of 107.29 feet to 5/8" iron
rod found at the intersection of said easterly line of Tancahua Street and the
southerly line of Blucher Street, (formerly Chatham Street) for the most
northwesterly corner of said ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ Addition, also being the
most northwesterly corner of this tract;
THENCE North 75 degrees 24 minutes 20 seconds East, along and with the southerly
line of said Blucher Street, also being the North line of Block 2, W.E. ▇▇▇▇'▇
BROADWAY ADDITION, a distance of 298.31 feet to a drill hole found in concrete
at the intersection of the said southerly line of Blucher Street and the
westerly line of said Carancahua Street for the most northeasterly corner of
this tract;
THENCE southerly, along and with the said westerly line of Carancahua Street,
the following courses;
South 01 degrees 00 minutes 30 seconds West, a distance of 107.29 feet to a
drill hole found in concrete for the southwesterly corner of ▇▇▇ ▇▇, ▇▇▇▇▇ ▇,
▇.▇. ▇▇▇▇'▇ ADDITION for an angle point of this tract;
South 00 degrees 05 minutes 32 seconds West, a distance of 105.14 feet to a
drill hole found in concrete for an angle point of this tract;
South 86 degrees 47 minutes 35 seconds West, a distance of 7.98 feet to a drill
hole found in concrete for an angle point of this tract;
South 14 degrees 49 minutes 41 seconds West, a distance of 41.75 feet to a 1"
iron rod found for an angle point of this tract;
Exhibit A-9
Thence South 01 degrees 08 minutes 51 seconds East, continuing along and with
said westerly line of Carancahua Street, a distance of 100.71 feet to the POINT
OF BEGINNING and containing 2.02 acres of land more or less.
Exhibit A-10
LEGAL DESCRIPTION
NAPLES
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇▇▇
▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ TO THE PLAT THEREOF RECORDED IN PLAT
BOOK 23, PAGE 23, OF THE PUBLIC RECORDS OF ▇▇▇▇▇▇▇ COUNTY, FLORIDA.
Exhibit A-11
LEGAL DESCRIPTION
BAY PINES
(CARRIAGE INN)
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇▇▇ ▇▇▇▇▇
That certain real property located in Pinellas County, Florida, more
particularly described as follows:
A portion of the ▇▇▇▇▇▇▇▇▇ ▇/▇ ▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ 15 East,
Pinellas County, Florida, described as follows:
From the Southwest corner of the Northwest 1/4 of said Section 2 run South
89(Degree)25'17" East, 991.93 feet along the South line of said Northwest 1/4;
thence North 00(Degree)19'21" East, 50.00 feet to the point of beginning. Said
point also falls in the North right-of-way line of U.S. Alternate 19; thence
continue North 00(Degree)19'21" East, 71.50 feet along the east easement line of
98th Way North (a 60 foot ingress/egress easement); thence South
89(Degree)25'17" East, 20.00 feet; thence South 62(Degree)55'17" East, 61.63
feet; thence South 89(Degree)25'17" East, 84.16 feet; thence North
00(Degree)34'43" East, 5.01 feet; thence North 25(Degree)21'05" East, 71.59
feet; thence North 00(Degree)34'43" East, 181.88 feet; thence South
88(Degree)55'59" East, 185.83 feet; thence North 01(Degree)04'01" East, 135.01
feet; thence South 88(Degree)55'59" East, 233.09 feet; thence South
00(Degree)32'16" West, 427.32 feet to the North right-of-way of U.S. Alt. No.
19; thence North 89(Degree)25'17" West, 609.36 feet along said right-of-way line
to the point of beginning.
Containing 165,899.0997 square feet or 3.8085 acres more or less.
Pinellas County, Florida.
Exhibit A-12
LEGAL DESCRIPTION
PEARLAND
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
Being 4.602 acres (200,481 square feet) of land in the ▇.▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇-▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ and being out of a 38.360 acre tract of land conveyed to
Ayrshire Corporation by deed filed under ▇▇▇▇▇▇ County Clerk's File No(s).
K436255 of the Official Public Records of Real Property of ▇▇▇▇▇▇ County, Texas,
said 4.602 acres being more particularly described by metes and bounds as
follows:
BEGINNING at a point marked by a 5/8" iron rod, said point being the West corner
of Green Tee Terrace, Section 6 according to the plat thereof recorded at Film
Code No. 378073 of the Map Records of ▇▇▇▇▇▇ County, Texas;
THENCE South 44 deg. 44 min. 59 sec. East, along the Southeast line of said
Green Tee Terrace, Section 6, a distance of 637.79 feet to a point for corner
marked by a 5/8" iron rod on the Southeast line of said 38.360 acre tract, same
being a Northwest line of a 376.5 acre tract as described in deed recorded in
Volume 3209, Page 106 of the Deed Records of ▇▇▇▇▇▇ County, Texas, said point
being the South corner of said Green Tea Terrace, Section 6;
THENCE South 45 deg. 14 min. 48 sec. West, along the Southeast line of said
38.360 acre tract, same being a Northwest line of said 376.5 acre tract , a
distance of 341.58 feet to a point for corner marked by a 1-1/4 iron pipe, said
point being the South corner of said 38.360 acre tract, same being a re-entrant
corner for said 376.5 acre tract;
THENCE North 45 deg. 05 min. 43 sec. West, along the Southwest line of said
38.360 acre tract, same being a Northeast line of said 376.5 acre tract, a
distance of 539.47 feet to a point for corner marked by a 5/8" iron rod;
THENCE in a Northeasterly, direction with a curve to the left whose radius is
2379.18 feet, central angle is 8 deg. 38 min. 37 sec. and whose chord bears
North 29 deg. 19 min. 59 sec. East, a distance, measured along the arc of said
curve of 358.92 feet to the POINT OF BEGINNING and containing 4.602 acres
(200,481 square feet) of land.
Exhibit A-13
LEGAL DESCRIPTION
PINEGATE
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇
All that certain 5.63 acres of land, being that same tract
referred to as Tract 2, described in the Trustee's deed to Bangkok Bank
Limited-Los Angeles Branch, recorded under County Clerk's File No(s). M310840,
of the Official Public Records of Real Property of ▇▇▇▇▇▇ County, Texas, being
all of Unrestricted Reserve "D" and part of Unrestricted Reserve "C", Citadel,
Section 4, according the plat thereof recorded in Volume 297, Page 15 of the Map
Records of ▇▇▇▇▇▇ County, Texas, out of the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Survey, A-644,
▇▇▇▇▇▇ County, Texas, and being more particularly described by metes and bounds
as follows: (All bearings based on the record bearings of the aforesaid plat)
BEGINNING at a 5/8" iron rod found for the west corner of the
southwest right-of-way cutback line at the intersection of Pinegate Drive (60
foot R.O.W.) and ▇▇▇▇▇▇▇ Drive (60 foot R.O.W.);
THENCE South 53 deg. 00 min. 11 sec. East - 12.92 feet along
said right-of-way cutback line to a capped 5/8" iron rod set for the most
easterly northeast corner of the herein described tract in the west right-of-way
line of said ▇▇▇▇▇▇▇ Drive;
THENCE South 03 deg. 13 min. 37 sec. East - 338.68 feet along
said right-of-way line to a capped 5/8" iron rod set for the Point of Curvature
of a curve to the right having a central angle of 84 deg. 49 min. 30 sec. and a
radius of 225.00 feet;
THENCE along said curve to the right and continuing along said
west right-of-way line, in a southwest direction, an arc distance of 333.11 feet
to a capped 5/8" iron rod set for the Point of Tangency;
THENCE South 81 deg. 35 min. 53 sec. West - 50.00 feet to a
5/8" iron rod found for the Point of Curvature of a curve to the left having a
central angle of 17 deg. 16 min. 19 sec. and a radius of 330.00 feet;
THENCE along said curve to the left and continuing along said
west right-of-way line, in a southwest direction, an arc distance of 99.48 feet
to a capped 5/8" iron rod set for the south corner of the herein described
tract, common to the east corner of the 2.6841 acre tract of land described in
the deed from Houston/Chicago Jupiter Realty Partners to FRM West Loop
Associates No. 6, Ltd., recorded under County Clerk's File No(s). P573658, of
the Official Public Records of Real Property of ▇▇▇▇▇▇ County, Texas;
THENCE North 25 deg. 45 min. 06 sec. West - 41.42 feet along
the northeast line of said 2.6841 acre tract to a 5/8" iron rod found for an
angle corner;
Exhibit A-14
THENCE North 49 deg. 25 min. 59 sec. West - 124.67 feet
continuing along said northeast line to a 5/8" iron rod found for an angle
corner;
THENCE North 64 deg. 22 min. 31 sec. West - 84.31 feet
continuing along said northeast line to a 5/8" iron rod found for an angle
corner;
THENCE South 85 deg. 37 min. 29 sec. West - 118.64 feet
continuing along said northeast line to a capped 5/8" iron rod set for an angle
corner;
THENCE North 04 deg. 22 min. 31 sec. West - 122.05 feet
continuing along said northeast line of a capped 5/8" iron rod set for a point
on a curve to the right, in the southeast right-of-way line of the aforesaid
Pinegate Drive, having a central angle of 24 deg. 01 min. 17 sec., and a radius
of 355.16 feet, and from which point the center of the circle of said curve
bears South 51 deg. 44 min. 54 sec. East;
THENCE along said curve to the right and along said southeast
right-of-way line, in a northeast direction, an arc distance of 148.90 feet to a
5/8" iron rod found for the Point of Tangency;
THENCE North 62 deg. 16 min. 23 sec. East - 482.95 feet
continuing along said southeast right-of-way line to a 5/8" iron rod found for
the Point of Curvature of a curve to the right having a central angle of 14 deg.
08 min. 25 sec., and a radius of 355.00 feet;
THENCE along said curve to the right and continuing along said
southeast right-of-way line, in a northeast direction, an arc distance of 87.61
feet to the POINT OF BEGINNING and containing 5.63 acres of land.
NOTE: THE COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE OR
SQUARE FOOTAGE CALCULATIONS ARE CORRECT.
Exhibit A-15
EXHIBIT B
APPRAISAL PROCESS
If Landlord and Tenant are unable to agree upon the Adjusted
Fair Market Value of the Premises (or any applicable portion thereof or interest
therein) within any relevant period provided in this Lease, each shall within
ten (10) days after written demand by the other select one MAI Appraiser to
participate in the determination of Adjusted Fair Market Value. For all purposes
under this Lease, the Adjusted Fair Market Value of the Premises (or any
applicable portion thereof or interest therein) shall be based on the Adjusted
Fair Market Value of the Premises (or any applicable portion thereof or interest
therein) unencumbered by this Lease. Within ten (10) days of such selection, the
MAI Appraisers so selected by Landlord and Tenant shall select a third MAI
Appraiser. The three (3) selected MAI Appraisers shall each determine the
Adjusted Fair Market Value of the Premises (or any applicable portion thereof or
interest therein) within thirty (30) days of the selection of the third
appraiser. To the extent consistent with sound appraisal practices as then
existing at the time of any such appraisal, and if requested by Landlord, such
appraisal, shall be made on a basis consistent with the basis on which the
Premises (or any applicable portion thereof or interest therein) was appraised
at the time of its acquisition by Landlord. Each of Tenant and Landlord shall
pay the fees and expenses of any MAI Appraiser which such party appoints
pursuant to this Exhibit plus 50% of the cost of the third appraiser.
In the event either Landlord or Tenant fails to select a MAI
Appraiser within the time period set forth in the foregoing paragraph, the MAI
Appraiser selected by the other party shall alone determine the Adjusted Fair
Market Value of the Premises (or any applicable portion thereof or interest
therein) in accordance with the provisions of this Exhibit and the Adjusted Fair
Market Value so determined shall be binding upon Landlord and Tenant.
In the event the MAI Appraisers selected by Landlord and
Tenant are unable to agree upon a third MAI Appraiser within the time period set
forth in the first paragraph of this Exhibit, either Landlord or Tenant shall
have the right to apply at their mutual expense to the presiding judge of the
court of original trial jurisdiction in the county in which the applicable
portion of the Premises is located to name the third MAI Appraiser.
Within five (5) days after completion of the third MAI
Appraiser's appraisal, all three MAI Appraisers shall meet and a majority of the
MAI Appraisers shall attempt to determine the Adjusted Fair Market Value of the
Premises (or any applicable portion thereof or interest therein). If a majority
are unable to determine the Adjusted Fair Market Value at such meeting, the
three appraisals shall be added together and their total divided by three. The
resulting quotient shall be the Adjusted Fair Market Value of the Premises (or
any applicable portion thereof or interest therein). If, however, either or both
of the low appraisal or the high appraisal are more than ten percent (10%) lower
or higher than the middle appraisal, any such lower or higher appraisal shall be
disregarded. If only one appraisal is disregarded, the remaining two appraisals
shall be added together and their total divided by two, and the resulting
quotient shall be such Adjusted Fair Market Value. If both the lower appraisal
and higher appraisal are disregarded as provided herein, the middle appraisal
shall be such Adjusted Fair
Exhibit B-1
Market Value. In any event, the result of the foregoing appraisal process shall
be final and binding.
Landlord and Tenant will exercise their respective best
efforts to expedite the appraisal process and will cooperate fully and with all
deliberate speed with each other and with all appraisers in order to allow the
determination of Adjusted Fair Market Value to be finally completed.
Notwithstanding anything else in this Exhibit, if any appraiser appointed
hereunder fails to complete his or her report within 60 days of his or her
appointment, the Adjusted Fair Market Value of the Premises will be determined
by reference to the other report or reports completed within such period.
"MAI APPRAISER" shall mean an appraiser licensed or otherwise
qualified to do business in the State in which the applicable portion of the
Premises is located and who has substantial experience in performing appraisals
of facilities similar to the applicable Facility and is certified as a member of
the American Institute of Real Estate Appraisers or certified as a SRPA by the
Society of Real Estate Appraisers, or, if such organizations no longer exist or
certify appraisers, such successor organization or such other organization as is
approved by Landlord.
Exhibit B-2
EXHIBIT C
PERMITTED EXCEPTIONS
--------------------------------------------------------------------------------
FACILITY PERMITTED EXCEPTIONS
--------------------------------------------------------------------------------
1. Spring Shadow 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Exceptions 1, 2 (modified to read "Any
shortages in area."), 3-6, 11, 12, 14 (with
reference to "east" deleted) and 15-19, and
any exceptions created pursuant to the grant
deed from Metro National Corporation to
American Retirement Corporation, a Tennessee
corporation, on Schedule B of the Title
Commitment issued by Commonwealth Land Title
Insurance Company dated June 16, 1997 under
Order Number 9701254885.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
2. Lakeway 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Exception Nos. Exception Nos. 1 through 4, 5
(modified to add the phrase ", none of which
are due or payable" after the words "usage
or ownership"), 6, 10 through 16, and 18 on
Schedule B of the title commitment issued by
Lawyers Title Insurance Corporation dated
June 4, 1998 under Case Number 98 CO
186651-T.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
3. Trinity Towers 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Exception Nos. 1, 2 (modified to state "Any
discrepancies in area."), 3, 4, 5 (with the
year "1996" replaced by "1997"), 9 through
11, 12, 14, 16 through 25 on the preliminary
title report issued by Fidelity National
Title Insurance Company dated November 11,
1996 under Order Number 96-001054.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
4. Naples 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Exception Nos. 3, 4 and 7-16 on Schedule B,
Section 2 of the title commitment issued by
Lawyers Title Insurance Corporation dated
June 10, 1998 under Case Number 9804209,
Customer Number LOS 23690.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
Exhibit C-1
--------------------------------------------------------------------------------
FACILITY PERMITTED EXCEPTIONS
--------------------------------------------------------------------------------
5. Bay Pines
(Carriage Inn) 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Any matters shown as title exceptions in
that certain ALTA Owner's Policy of Title
Insurance (Form B-1970, Rev. 10-17-70 and
10-17-84) issued by Chicago Title Insurance
Company in favor of Landlord in connection
with Landlord's acquisition of the Premises.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
6. Pearland 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Exception Nos. 1, 2 (modified to read "Any
shortages in area."), 3, 4, 5 (modified to
read "Standby fees, taxes and assessments by
any taxing authority for the year 1997, . .
. , none of which are due and payable."),
9a, 9b and 9d on Schedule B of the Title
Commitment issued by Fidelity National Title
Insurance Company dated May 2, 1997 under
Order Number 97900375.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
7. Pinegate 1. The standard printed exceptions, conditions
and exclusions from coverage contained in
the standard coverage owner's title policy
then prevailing in use at the title company
which consummates the sale transaction.
2. Any matters which an accurate survey of the
Premises may show.
3. Exception Nos. 1, 2 (modified to read "1997"
and "Any shortages in area."), 3, 4, 5
(modified to read "Standby fees, taxes and
assessments by any taxing authority for the
year 1997, . . . , none of which are due and
payable."), 9a, 9b, 9c, 9d (modified to
reference a 13-foot rather than a 15-foot
easement) and 9e (modified to delete the
following phrase: ", the royalties, bonuses,
rentals and all other rights in connection
with same are excepted herefrom") on
Schedule B of the Title Commitment issued by
Fidelity National Title Insurance Company
dated May 2, 1997 under Order Number
97900376.
4. Such other matters burdening the Premises
which were created with the consent or
knowledge of Tenant or arising out of
Tenant's acts or omissions.
--------------------------------------------------------------------------------
Exhibit C-2
EXHIBIT D
LIST OF EXEMPTED FACILITIES
None.
Exhibit D-1
