EXHIBIT 10.5
MASTER LEASE AGREEMENT
DATED AS OF DECEMBER 27, 1996
BY AND BETWEEN
HEALTH AND RETIREMENT PROPERTIES TRUST,
AS LANDLORD,
AND
BLC PROPERTY, INC.,
AS TENANT
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS......................................................1
1.1 Additional Rent...............................................1
1.2 Additional Charges ...........................................2
1.3 Adjusted Purchase Price.......................................2
1.4 Affiliated Person ............................................2
1.5 Agreement.....................................................2
1.6 Applicable Laws...............................................2
1.7 Award.........................................................3
1.8 Base Revenues.................................................3
1.9 Brookdale.....................................................3
1.10 Business Day..................................................3
1.11 Capital Addition..............................................4
1.12 Capital Additions Cost........................................4
1.13 Change in Control.............................................4
1.14 Code..........................................................5
1.15 Collective Leased Properties..................................5
1.16 Commencement Date.............................................5
1.17 Condemnation..................................................5
1.18 Condemnor.....................................................5
1.19 Consolidated Financials.......................................5
1.20 Date of Taking................................................5
1.21 Declaration...................................................5
1.22 Default.......................................................6
1.23 Distribution..................................................6
1.24 Encumbrance...................................................6
1.25 Entity........................................................6
1.26 Environment...................................................6
1.27 Environmental Obligation......................................6
1.28 Environmental Notice..........................................6
1.29 Environmental Report..........................................6
1.30 Event of Default..............................................6
1.31 Excess Total Revenues.........................................6
1.32 Extended Terms................................................6
1.33 Facility......................................................7
1.34 Facility Mortgage.............................................7
1.35 Facility Mortgagee............................................7
1.36 Facility Trade Name...........................................7
1.37 Fair Market Added Value.......................................7
1.38 Fair Market Value.............................................7
1.39 Fair Market Value Purchase Price..............................7
1.40 Financial Officer's Certificate...............................7
1.41 Fiscal Year...................................................8
1.42 Fixed Term....................................................8
1.43 Fixtures......................................................8
1.44 GAAP..........................................................8
1.45 Government Agencies...........................................8
1.46 Guarantors....................................................8
1.47 Guaranty......................................................8
1.48 Hazardous Substances..........................................8
1.49 Immediate Family..............................................9
1.50 Impositions...................................................9
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1.51 Incidental Documents.........................................10
1.52 Indebtedness.................................................10
1.53 Independent Trustees.........................................10
1.54 Insurance Requirements.......................................10
1.55 Interest Rate................................................10
1.56 Investment...................................................10
1.57 IPO..........................................................11
1.58 Land.........................................................11
1.59 Landlord.....................................................11
1.60 Lease Year...................................................11
1.61 Leased Improvements..........................................11
1.62 Leased Personal Property.....................................11
1.63 Leased Property..............................................11
1.64 Legal Requirements...........................................11
1.65 Lending Institution..........................................12
1.66 Lien.........................................................12
1.67 Management Agreement.........................................12
1.68 Manager......................................................12
1.69 Minimum Rent.................................................12
1.70 Notice.......................................................12
1.71 Officer's Certificate........................................12
1.72 Overdue Rate.................................................12
1.73 Parent.......................................................12
1.74 Permitted Encumbrances.......................................13
1.75 Permitted Liens..............................................13
1.76 Permitted Subleases..........................................13
1.77 Permitted Subtenant..........................................13
1.78 Person.......................................................13
1.79 Pledge and Security Agreement................................13
1.80 Primary Intended Use.........................................13
1.81 Prime........................................................13
1.82 Provider Agreements..........................................13
1.83 Qualified Appraiser..........................................14
1.84 Records......................................................14
1.85 Regulated Medical Wastes.....................................14
1.86 Rent.........................................................14
1.87 Residents' Personal Property.................................14
1.88 SEC..........................................................14
1.89 State........................................................14
1.90 Stock Pledge Agreement.......................................14
1.91 Subordinated Creditor........................................14
1.92 Subordination Agreement......................................14
1.93 Subsidiary...................................................15
1.94 Tangible Net Worth...........................................15
1.95 Tenant.......................................................15
1.96 Tenant's Capital Additions...................................15
1.97 Tenant's Personal Property...................................15
1.98 Term.........................................................15
1.99 Third Party Payor Programs...................................16
1.100 Third Party Payors...........................................16
1.101 Total Revenues...............................................16
1.102 Trustees.....................................................16
1.103 Unsuitable for Its Primary Intended Use......................16
1.104 Work.........................................................17
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ARTICLE 2: COLLECTIVE LEASED PROPERTIES AND TERM...........................17
2.1 Collective Leased Properties..................................17
2.2 Condition of Collective Leased Properties.....................18
2.3 Fixed Term....................................................19
2.4 Extended Term.................................................19
ARTICLE 3: RENT............................................................20
3.1 Rent..........................................................20
3.1.1 Minimum Rent.......................................20
3.1.2 Additional Rent....................................20
3.1.3 Additional Charges.................................23
3.2 Late Payment of Rent..........................................25
3.3 Net Lease.....................................................25
3.4 No Termination, Abatement, Etc................................25
ARTICLE 4: USE OF THE COLLECTIVE LEASED PROPERTIES.........................26
4.1 Permitted Use.................................................26
4.1.1 Primary Intended Use...............................26
4.1.2 Necessary Approvals................................27
4.1.3 Lawful Use, Etc....................................27
4.2 Compliance with Legal and Insurance
Requirements, Etc.........................................27
4.3 Compliance with Medicaid and Medicare Requirements............28
4.4 Environmental Matters.........................................28
4.4.1 Restriction on Use, Etc............................28
4.4.2 Environment Report.................................29
4.4.3 Indemnification of Landlord........................30
4.4.4 Survival...........................................31
ARTICLE 5: MAINTENANCE AND REPAIRS, ETC....................................31
5.1 Maintenance and Repair........................................31
5.1.1 Tenant's Obligations...............................31
5.1.2 Landlord's Obligations.............................32
5.1.3 Nonresponsibility of Landlord; No
Mechanics Liens.................................32
5.2 Tenant's Personal Property....................................33
5.3 Yield Up......................................................33
5.4 Encroachments, Restrictions, Etc..............................35
5.5 Landlord to Grant Easements, Etc..............................35
ARTICLE 6: CAPITAL ADDITIONS, ETC..........................................36
6.2 Capital Additions Financed or Paid For by Tenant..............37
6.2.1 Financing of Capital Additions.....................37
6.2.2 Purchase by Landlord...............................37
6.3 Capital Additions Financed by Landlord........................38
6.4 Non-Capital Additions.........................................39
6.5 Improvement Advances..........................................39
6.6 Salvage.......................................................40
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ARTICLE 7: LIENS...........................................................40
7.1 Liens.........................................................40
7.2 Landlord's Lien...............................................41
ARTICLE 8: PERMITTED CONTESTS..............................................41
ARTICLE 9: INSURANCE AND INDEMNIFICATION...................................42
9.1 General Insurance Requirements................................42
9.2 Replacement Cost..............................................44
9.3 Waiver of Subrogation.........................................44
9.4 Form Satisfactory, Etc........................................44
9.5 Blanket Policy................................................45
9.6 No Separate Insurance.........................................45
9.7 Indemnification of Landlord...................................46
ARTICLE 10: CASUALTY.......................................................47
10.1 Insurance Proceeds...........................................47
10.2 Damage or Destruction........................................47
10.2.1 Damage or Destruction of Leased Property.........47
10.2.2 Partial Damage or Destruction....................48
10.2.3 Insufficient Insurance Proceeds..................48
10.2.4 Disbursement of Proceeds.........................48
10.3 Damage Near End of Term......................................49
10.4 Tenant's Property............................................49
10.5 Restoration of Tenant's Property.............................50
10.6 No Abatement of Rent.........................................50
10.7 Waiver.......................................................50
ARTICLE 11: CONDEMNATION...................................................50
11.1 Total Condemnation, Etc......................................50
11.2 Partial Condemnation.........................................50
11.3 Abatement of Rent............................................51
11.4 Temporary Condemnation.......................................52
11.5 Allocation of Award..........................................52
ARTICLE 12: DEFAULTS AND REMEDIES..........................................52
12.1 Events of Default............................................52
12.2 Remedies.....................................................56
12.3 Tenant's Waiver..............................................58
12.4 Application of Funds.........................................58
12.5 Landlord's Right to Cure Tenant's Default....................59
12.6 Trade Names..................................................59
ARTICLE 13: HOLDING OVER...................................................59
ARTICLE 14: LANDLORD'S DEFAULT.............................................60
ARTICLE 15: PURCHASE OF LEASED PROPERTY....................................60
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ARTICLE 16: SUBLETTING AND ASSIGNMENT......................................61
16.1 Subletting and Assignment....................................61
16.2 Required Sublease Provisions.................................62
16.3 Permitted Sublease...........................................63
16.4 Sublease Limitation..........................................63
ARTICLE 17: ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.................64
17.1 Estoppel Certificates........................................64
17.2 Financial Statements.........................................64
17.3 General Operations...........................................65
17.3.1 Reimbursement, Licensure, Etc....................65
17.3.2 Annual Budgets...................................66
ARTICLE 18: LANDLORD'S RIGHT TO INSPECT....................................66
ARTICLE 19: APPRAISAL......................................................67
19.1 Appraisal Procedure..........................................67
19.2 Landlord's Right to Appraisal................................68
ARTICLE 20: REPRESENTATIONS AND WARRANTIES.................................69
20.1 Representations of Tenant....................................69
20.1.1 Status and Authority of Tenant...................69
20.1.2 Action of Tenant.................................69
20.1.3 No Violations of Agreements......................69
20.1.4 Litigation.......................................70
20.1.5 Disclosure.......................................70
20.1.6 Compliance With Law..............................70
20.1.7 Hazardous Substances.............................70
20.2 Representations of Landlord..................................71
20.2.1 Status and Authority of Landlord.................71
20.2.2 Action of Landlord...............................71
20.2.3 No Violations of Agreements......................71
20.2.4 Litigation.......................................71
ARTICLE 21: FACILITY MORTGAGES.............................................72
21.1 Landlord May Grant Liens.....................................72
21.2 Subordination of Lease.......................................72
21.3 Notice to Mortgagee and Ground Landlord......................73
ARTICLE 22: ADDITIONAL COVENANTS OF TENANT.................................74
22.1 Prompt Payment of Indebtedness...............................74
22.2 Conduct of Business..........................................74
22.3 Maintenance of Accounts and Records..........................74
22.4 Notice of Change of Name, Etc................................74
22.5 Notice of Litigation, Potential Event of
Default, Etc............................................75
22.6 Indebtedness of Tenant.......................................75
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22.7 Financial Condition of Tenant................................76
22.8 Distributions, Payments to Affiliated
Persons, Etc...........................................76
22.9 Prohibited Transactions......................................76
22.10 Management of Collective Leased Properties...................76
22.11 Liens and Encumbrances.......................................77
22.12 Merger; Sale of Assets; Etc..................................77
22.13 Permitted Subleases..........................................78
ARTICLE 23: MISCELLANEOUS..................................................78
23.1 Limitation on Payment of Rent................................78
23.2 No Waiver....................................................78
23.3 Remedies Cumulative..........................................78
23.4 Severability.................................................78
23.5 Acceptance of Surrender......................................79
23.6 No Merger of Title...........................................79
23.7 Conveyance by Landlord.......................................79
23.8 Quiet Enjoyment..............................................79
23.9 NON-LIABILITY OF TRUSTEES....................................80
23.10 Landlord's Consent of Trustees...............................80
23.11 Memorandum of Lease..........................................80
23.12 Notices......................................................80
23.13 Construction.................................................82
23.14 Counterparts; Headings.......................................82
23.15 Applicable Law, Etc..........................................82
23.16 Payment of Fees..............................................83
EXHIBITS
A-1 - A-3 - Legal Descriptions
B - Allocable Purchase Prices
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT is entered into as of this 27 day of
December, 1996, by and between HEALTH AND RETIREMENT PROPERTIES TRUST, a
Maryland real estate investment trust, having its principal office at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as landlord ("Landlord"), and BLC PROPERTY,
INC., a Delaware corporation, having its principal office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as tenant ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord, on the date hereof, is acquiring at the request of
Tenant, fee simple title to the three (3) Collective Leased Properties (this and
other capitalized terms used and not otherwise defined herein having the
meanings ascribed to such terms in Article 1); and
WHEREAS, Landlord wishes to lease the Collective Leased Properties to
Tenant and Tenant wishes to lease the Collective Leased Properties from
Landlord, all subject to and upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined in this
Article shall have the meanings assigned to them in this Article and include the
plural as well as the singular, (ii) all accounting terms not otherwise defined
herein shall have the meanings assigned to them in accordance with GAAP, (iii)
all references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Additional Rent" shall have the meaning given such term in Section
3.1.2(a).
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1.2 "Additional Charges" shall have the meaning given such term in
Section 3.1.3.
1.3 "Adjusted Purchase Price" shall mean, with respect to any of the
Collective Leased Properties, the allocated purchase price of such Leased
Property as set forth in Exhibit B plus the aggregate amount of all
disbursements made by Landlord with respect to such Leased Property pursuant to
the terms of Section 6.5 of this Agreement, plus any other amount disbursed or
advanced by Landlord to finance, or to reimburse Tenant for its financing of,
any Capital Addition to such Leased Property less the amount of any Award or the
proceeds of any insurance received by Landlord in connection with a partial
Condemnation or a partial casualty involving such Leased Property as described
in Section 11.2 or 10.2.2, and not applied by Landlord to the restoration of
such Leased Property as provided therein.
1.4 "Affiliated Person" shall mean, with respect to any Person, (a) in
the case of any such Person which is a partnership, any general partner in such
partnership or any limited partner holding, directly or indirectly, fifty
percent (50%) or more of the partnership interests in such partnership; (b) in
the case of any such Person which is a limited liability company, any member of
such company holding, directly or indirectly, fifty percent (50%) or more of the
membership interests in such company; (c) any other Person which is a Parent, a
Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or
more of the Persons referred to in the preceding clauses (a) and (b); (d) any
other Person who is an officer, director or trustee of, or partner holding,
directly or indirectly, fifty percent (50%) or more of the partnership interests
in, such Person or any Person referred to in the preceding clauses (a), (b) and
(c); and (e) any other Person who is a member of the Immediate Family of such
Person or of any Person referred to in the preceding clauses (a) through (d).
1.5 "Agreement" shall mean this Master Lease Agreement, including
Exhibits A-1 to A-3 and B hereto, as it and they may be amended from time to
time as herein provided.
1.6 "Applicable Laws" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders (whether now
existing or hereafter enacted or promulgated irrespective of whether its
enactment is foreseeable or contemplated), of all courts of competent
jurisdiction and Government Agencies, and all applicable judicial and
administrative and regulatory decrees, judgments and orders, including common
law rulings and determinations, relating to injury to, or the protection of,
real or personal property or human health (except those requirements which, by
definition, are solely the responsibility of employers) or the Environment,
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including, without limitation, all valid and lawful requirements of courts and
other Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements (including,
without limitation, treatment or storage tanks, or water, gas or oil ▇▇▇▇▇), or
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pesticides, petroleum or petroleum products, pollutants,
contaminants or hazardous or toxic substances, materials or wastes whether
solid, liquid or gaseous in nature, into the Environment, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances or Regulated Medical Wastes,
underground improvements (including, without limitation, treatment or storage
tanks, or water, gas or oil ▇▇▇▇▇), or pollutants, contaminants or hazardous or
toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature.
1.7 "Award" shall mean all compensation, sums or other value awarded,
paid or received by virtue of a total or partial Condemnation of any of the
Collective Leased Properties (after deduction of all reasonable legal fees and
other reasonable costs and expenses, including, without limitation, expert
witness fees, incurred by Landlord, in connection with obtaining any such
award).
1.8 "Base Revenues" shall mean, with respect to each Leased Property,
Total Revenues for such Leased Property for the 1998 calendar year; provided,
however, that in the event that, with respect to any Lease Year, or portion
thereof, for any reason (including, without limitation, a taking or casualty
with respect to such Leased Property) there shall be a change in the number of
units available at the applicable Facility or in the services provided at such
Facility from the number of such units or the services provided during the 1998
calendar year, in determining Additional Rent payable with respect to such Lease
Year, Base Revenues shall be adjusted on a proportional basis, based on the
number of units and services remaining after such change; it being understood
and agreed that Base Revenues shall be calculated separately for each Leased
Property and shall not be determined on an aggregate basis for the Collective
Leased Properties.
1.9 "Brookdale" shall mean Brookdale Living Communities, Inc., a
Delaware corporation.
1.10 "Business Day" shall mean any day other than Saturday, Sunday, or
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of Illinois are authorized by law or executive action to close.
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1.11 "Capital Addition" shall mean one or more new buildings, or one or
more additional structures annexed to any portion of any of the Leased
Improvements with respect to any of the Collective Leased Properties, or the
material expansion of existing improvements, which are constructed on any parcel
or portion of the Land during the Term, including the construction of a new wing
or new story, the renovation of existing improvements on any of the Collective
Leased Properties in order to provide a functionally new facility needed to
provide services not previously offered, or any expansion, construction,
renovation or conversion in order to increase the number of units of any
Facility to change the purpose for which such units are utilized or to improve
materially the quality of any Facility.
1.12 "Capital Additions Cost" shall mean the cost of any Capital
Addition proposed to be made by Tenant at any of the Collective Leased
Properties, whether paid for by Tenant or Landlord. Such cost shall include, but
not be limited to, the following: (a) the cost of construction of the Capital
Addition, including site preparation and improvement, materials, labor,
supervision, developer and administrative fees, legal fees, and related design,
engineering and architectural services, the cost of any fixtures, the cost of
equipment and other personalty, the cost of construction financing (including,
but not limited to, capitalized interest) and other miscellaneous costs approved
by Landlord, which approval shall not be unreasonably withheld or delayed (b) if
agreed to by Landlord in writing, in advance, the cost of any land (including
all related acquisition costs incurred by Tenant) contiguous to the applicable
Leased Property which is to become a part of such Leased Property purchased for
the purpose of placing thereon a Capital Addition or any portion thereof or for
providing means of access thereto, or parking facilities therefor, including the
cost of surveying the same, (c) the cost of insurance, real estate taxes, water
and sewage charges and other carrying charges for such Capital Addition during
construction, (d) title insurance charges, (e) reasonable attorneys' fees and
expenses, (f) filing, registration and recording taxes and fees, (g) documentary
stamp or transfer taxes, and (h) all actual and reasonable costs and expenses of
Landlord and Tenant and, if agreed to by Landlord in writing, in advance, any
Lending Institution committed to finance the Capital Addition.
1.13 "Change in Control" shall mean the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the SEC) of 50% or more, or rights, options or warrants
to acquire 50% or more, of the outstanding shares of voting stock of Tenant or
any Guarantor, as the case may be, or the merger or consolidation of Tenant or
any Guarantor, as the case may be with or into any other Person or any one or
more sales or conveyances to any
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Person of all or substantially all of the assets of Tenant or any Guarantor, as
the case may be.
1.14 "Code" shall mean the Internal Revenue Code of 1986 and, to the
extent applicable, the Treasury Regulations promulgated thereunder, each as from
time to time amended.
1.15 "Collective Leased Properties" shall have the meaning given such
term in Section 2.1.
1.16 "Commencement Date" shall mean the date of this Agreement.
1.17 "Condemnation" shall mean, with respect to any of the Collective
Leased Properties, (a) the exercise of any governmental power with respect to
such Leased Property, whether by legal proceedings or otherwise, by a Condemnor
of its power of condemnation; (b) a voluntary sale or transfer of such Leased
Property by Landlord to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending; and (c) a taking or
voluntary conveyance of all or part of such Leased Property, or any interest
therein, or right accruing thereto or use thereof, as the result or in
settlement of any condemnation or other eminent domain proceeding affecting such
Leased Property, whether or not the same shall have actually been commenced.
1.18 "Condemnor" shall mean any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
1.19 "Consolidated Financials" shall mean, for any Fiscal Year or other
accounting period of Prime and its consolidated subsidiaries prior to the IPO
and of Brookdale and its consolidated subsidiaries subsequent to the IPO, annual
audited and quarterly unaudited financial statements prepared on a consolidated
basis, including Prime's or Brookdale's, as the case may be, consolidated
balance sheet and the related statements of income and cash flows, all in
reasonable detail, and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding Fiscal Year, and prepared
in accordance with GAAP throughout the periods reflected.
1.20 "Date of Taking" shall mean, as to any of the Collective Leased
Properties, the date the Condemnor has the right to possession of such Leased
Property, or any portion thereof, in connection with a Condemnation.
1.21 "Declaration" shall mean the Declaration of Trust establishing
Landlord, dated October 9, 1986, as amended and restated from time to time.
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1.22 "Default" shall mean any event or condition which with the giving
of notice and/or lapse of time may ripen into an Event of Default.
1.23 "Distribution" shall mean (a) any declaration or payment of any
dividend (except dividends payable in common stock of Tenant) on or in respect
of any shares of any class of capital stock of Tenant, (b) any purchase,
redemption, retirement or other acquisition of any shares of any class of
capital stock of a corporation, (c) any other distribution on or in respect of
any shares of any class of capital stock of a corporation, or (d) any return of
capital to shareholders.
1.24 "Encumbrance" shall have the meaning given such term in Section
21.1.
1.25 "Entity" shall mean any general partnership, limited partnership,
limited liability company or partnership, corporation, joint venture, trust,
business trust, cooperative or association.
1.26 "Environment" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
1.27 "Environmental Obligation" shall have the meaning given such term
in Section 4.4.1.
1.28 "Environmental Notice" shall have the meaning given such term in
Section 4.4.1.
1.29 "Environmental Report" shall have the meaning given such term in
Section 4.4.2.
1.30 "Event of Default" shall have the meaning given such term in
Section 12.1.
1.31 "Excess Total Revenues" shall mean, for each Leased Property, with
respect to any Lease Year, or portion thereof, the amount, if any, of Total
Revenues for such Leased Property for such Lease Year, or portion thereof, in
excess of Base Revenues for the equivalent period; it being understood and
agreed that Excess Total Revenues shall be calculated separately for each Leased
Property and shall not be calculated at an aggregate basis with respect to the
Collective Leased Properties.
1.32 "Extended Terms" shall have the meaning given such term in Section
2.4.
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1.33 "Facility" shall mean, with respect to any of the Collective
Leased Properties, the senior housing facility being operated or proposed to be
operated on such Leased Property.
1.34 "Facility Mortgage" shall mean, with respect to any of the
Collective Leased Properties, any Encumbrance placed upon such Leased Property
in accordance with Article 21.
1.35 "Facility Mortgagee" shall mean the holder of any Facility
Mortgage.
1.36 "Facility Trade Name" shall mean, with respect to any Facility,
any name under which Tenant has conducted the business of operating such
Facility at any time during the Term.
1.37 "Fair Market Added Value" shall mean, with respect to any of the
Collective Leased Properties, the Fair Market Value of such Leased Property
(including all Capital Additions) less the Fair Market Value of such Leased
Property determined as if no Tenant's Capital Additions had been constructed.
1.38 "Fair Market Value" shall mean, with respect to any of the
Collective Leased Properties, the price that a willing buyer not compelled to
buy would pay a willing seller not compelled to sell for such Leased Property,
(a) assuming the same is unencumbered by this Agreement, (b) determined by
agreement between Landlord and Tenant or, failing agreement, the appraisal
procedures set forth in Article 19, and (c) not taking into account any
reduction in value resulting from any indebtedness to which such Leased Property
is subject.
1.39 "Fair Market Value Purchase Price" shall mean, with respect to any
of the Collective Leased Properties, the Fair Market Value of such Leased
Property less the Fair Market Added Value.
1.40 "Financial Officer's Certificate" shall mean, as to any Person, a
certificate of the chief financial officer of such Person, duly authorized,
accompanying the financial statements required to be delivered by such Person
pursuant to Section 17.2, in which such officer shall certify (a) that, to such
officer's knowledge, such statements have been properly prepared in accordance
with GAAP and are true, correct and complete in all material respects and fairly
present the consolidated financial condition of such Person at and as of the
dates thereof and the results of its and their operations for the periods
covered thereby, and (b) that such officer has reviewed this Agreement and, to
such officer's knowledge, has no knowledge of any Default or Event of Default
hereunder.
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1.41 "Fiscal Year" shall mean the twelve (12) month period from January
1 to December 31.
1.42 "Fixed Term" shall have the meaning given such term in Section
2.3.
1.43 "Fixtures" shall have the meaning given such term in Section
2.1(d).
1.44 "GAAP" shall mean generally accepted accounting principles
consistently applied.
1.45 "Government Agencies" shall mean any court, agency, authority,
board (including, without limitation, environmental protection, planning and
zoning), bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit of the United States
or the State or any county or any political subdivision of any of the foregoing,
whether now or hereafter in existence, having jurisdiction over Tenant or the
Collective Leased Properties or any portion thereof or the Facilities operated
thereon.
1.46 "Guarantors" shall mean, collectively, each and every guarantor of
Tenant's obligations under this Agreement, and each such guarantor's successors
and assigns.
1.47 "Guaranty" shall mean any guaranty agreement executed by a
Guarantor in favor of Landlord, together with all modifications, amendments or
supplements thereto.
1.48 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any federal, state or
local statute, regulation, rule, ordinance, order, action or policy; or
(b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future federal, state or local
statute, regulation, rule or ordinance or amendments thereto including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. et seq.) and the Resource
Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and the
regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
and is or becomes regulated by any governmental authority, agency,
department, commission,
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board, agency or instrumentality of the United States, any state of the
United States, or any political subdivision thereof; or
(d) the presence of which on any of the Collective Leased
Properties causes or threatens to cause a violation of Applicable Laws
upon such Leased Property or to adjacent properties or poses or
threatens to pose a hazard to any of the Collective Leased Properties
or to the health or safety of persons on or about any of the Collective
Leased Properties; or
(e), without limitation, which contains gasoline, diesel fuel
or other petroleum hydrocarbons or volatile organic compounds; or
(f), without limitation, which contains polychlorinated
biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or
(g), without limitation, which contains or emits radioactive
particles, waves or material; or
(h), without limitation, constitutes Regulated Medical Wastes.
1.49 "Immediate Family" shall mean, with respect to any individual,
such individual's spouse, parents, brothers, sisters, children (natural or
adopted), stepchildren, grandchildren, grandparents, parents- in-law,
brothers-in-law, sisters-in-law, nephews and nieces.
1.50 "Impositions" shall mean, with respect to any of the Collective
Leased Properties, collectively, all taxes (including, without limitation, all
taxes imposed under the laws of the State, as such laws may be amended from time
to time, and all ad valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Landlord, Tenant or the business conducted upon such Leased
Property), assessments (including, without limitation, all assessments for
public improvements or benefit, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term), water,
sewer or other rents and charges, excises, tax levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees) and all
other governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of such
Leased Property or the business conducted thereon by Tenant (including all
interest and penalties thereon due to any failure in payment by Tenant), which
at any time prior to, during or in
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respect of the Term hereof may be assessed or imposed on or in respect of or be
a lien upon (a) Landlord's interest in such Leased Property, (b) such Leased
Property or any part thereof or any rent therefrom or any estate, right, title
or interest therein, or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with such Leased Property
or the leasing or use of such Leased Property or any part thereof by Tenant;
provided, however, that nothing contained herein shall be construed to require
Tenant to pay (i) any tax based on net income imposed on Landlord, (ii) any net
revenue tax of Landlord, (iii) any transfer fee or other tax imposed with
respect to the sale, exchange or other disposition by Landlord of the applicable
Leased Property or the proceeds thereof (other than in connection with the sale,
exchange or other disposition to, or in connection with a transaction involving,
Tenant), or (iv) any single business, gross receipts (other than a tax on any
rent received by Landlord from Tenant), transaction privilege, rent or similar
taxes as the same relate to or are imposed upon Landlord, except to the extent
that any tax, assessment, tax levy or charge, which Tenant is obligated to pay
pursuant to the first sentence of this definition and which is in effect at any
time during the Term hereof is totally or partially repealed, and a tax,
assessment, tax levy or charge set forth in clause (i) or (ii) preceding is
levied, assessed or imposed expressly in lieu thereof.
1.51 "Incidental Documents" shall mean, collectively, the Guaranty, the
Stock Pledge Agreement, the Pledge and Security Agreement and the side letter
agreement of even date.
1.52 "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the obligor's
balance sheet as liabilities.
1.53 "Independent Trustees" shall mean Trustees who, in their
individual capacity, are not Affiliated Persons as to Tenant and do not perform
any services for Landlord except as Trustees.
1.54 "Insurance Requirements" shall mean all terms of any insurance
policy required by this Agreement and all requirements of the issuer of any such
policy.
1.55 "Interest Rate" shall mean a compounded rate of interest of eleven
percent (11%) per annum.
1.56 "Investment" shall mean all loans, advances, extensions of credit
(except for accounts and notes receivable for merchandise sold or services
furnished in the ordinary course of business, and amounts paid in advance on
account of the purchase price of merchandise to be delivered to the payor within
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one year of the date of the advance), or purchases of stock, notes, bonds or
other securities or evidences of indebtedness or capital contribution to any
Person, whether in cash or other property. The amount of an Investment shall be
its cost (the amount of cash or the fair market value of other property given in
exchange therefor), whether or not written or charged off or sold or otherwise
disposed of, except to the extent such cost shall have been paid to Tenant by a
Person in which Tenant had no present or prospective financial interest at the
time of such payment.
1.57 "IPO" shall mean the initial public offering of the stock of
Brookdale as contemplated by Form S-1 Registration Statement No. 333-12259, a
true, correct and complete copy of which has heretofore been delivered by Tenant
to Landlord, as the same may be amended from time to time, with Landlord's prior
written consent with respect to any amendments affecting the Collective Leased
Properties or Total Revenues, which consent shall not be unreasonably withheld,
delayed or conditioned.
1.58 "Land" shall have the meaning given such term in Section 2.1(a).
1.59 "Landlord" shall have the meaning given such term in the preambles
to this Agreement.
1.60 "Lease Year" shall mean each calendar year, or portion thereof,
during the term, commencing with the 1997 calendar year.
1.61 "Leased Improvements" shall have the meaning given such term in
Section 2.1(b).
1.62 "Leased Personal Property" shall have the meaning given such term
in Section 2.1(e).
1.63 "Leased Property" shall mean any one of the Collective Leased
Properties.
1.64 "Legal Requirements" shall mean, with respect to any of the
Collective Leased Properties, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting such Leased Property or the maintenance,
construction, alteration or operation thereof, whether now or hereafter enacted
or in existence, including, without limitation, (a) all permits, licenses,
certificates of need, authorizations and regulations necessary to operate such
Leased Property for its Primary Intended Use, and (b) all covenants, agreements,
restrictions and encumbrances contained in any instruments at any time in force
affecting such Leased Property, including those (i) which may require material
repairs, modifications or alterations in or to
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such Leased Property or (ii) with respect to which a violation thereof would in
any way adversely affect the use and enjoyment thereof.
1.65 "Lending Institution" shall mean any insurance company, federally
insured commercial or savings bank, national banking association, savings and
loan association, employees' welfare, pension or retirement fund or system,
corporate profit sharing or pension trust, college or university, real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, such trust having a net worth of
at least $100,000,000, brokerage house or other entity in the business of making
loans.
1.66 "Lien" shall mean any mortgage, security interest, pledge,
collateral assignment, or other encumbrance, lien or charge of any kind, or any
transfer of any property or assets for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors.
1.67 "Management Agreement" shall mean any agreement whether written or
oral entered into between Tenant and any other party (including any Affiliated
Person as to Tenant) pursuant to which management services are provided to any
Facility, together with all amendments, modifications or supplements thereto.
1.68 "Manager" shall mean the management party under any Management
Agreement.
1.69 "Minimum Rent" shall mean (a) with respect to the period
commencing on the Commencement Date and expiring December 31, 1997, $692,709 per
month; (b) with respect to the 1998 Lease Year, $729,167 per month; (c) with
respect to the 1999 Lease Year, $765,625 per month; and (d) with respect to the
2000 Lease Year and each Lease Year thereafter (including each Lease Year during
any Extended Term), $802,084 per month.
1.70 "Notice" shall mean a notice given in accordance with Section
23.12.
1.71 "Officer's Certificate" shall mean a certificate signed by an
officer of Tenant duly authorized by the board of directors of Tenant.
1.72 "Overdue Rate" shall mean, on any date, a per annum rate of
interest equal to the lesser of fifteen percent (15%) and the maximum rate then
permitted under applicable law.
1.73 "Parent" shall mean, with respect to any Person, any Person which
owns directly, or indirectly through one or more
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Subsidiaries or Affiliated Persons, fifty percent (50%) or more of the voting or
beneficial interest in, or otherwise has the right or power (whether by
contract, through ownership of securities or otherwise) to control, such Person.
1.74 "Permitted Encumbrances" shall mean, with respect to any of the
Collective Leased Properties, all rights, restrictions, and easements of record
set forth on Schedule B to the applicable owner's title insurance policy issued
to Landlord on the date hereof, this Lease, the Permitted Subleases and any
other such encumbrances as may have been granted or caused by Landlord or
otherwise consented to in writing by Landlord from time to time.
1.75 "Permitted Liens" shall mean any Liens granted in accordance with
Section 22.11(a).
1.76 "Permitted Subleases" shall mean those Sublease Agreements, dated
as of the date hereof, between Tenant, as sublandlord, and the Permitted
Subtenants, as tenant.
1.77 "Permitted Subtenant" shall mean (a) Brookdale Living Communities
of Illinois, Inc., a Delaware corporation, with respect to the Leased Property
located in Chicago, Illinois; (b) Brookdale Living Communities of New York,
Inc., a Delaware corporation, with respect to the Leased Property located in
Brighton, New York; and (c) Brookdale Living Communities of Arizona, Inc., a
Delaware corporation, with respect to the Leased Property located in East Mesa,
Arizona.
1.78 "Person" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person where the context so admits.
1.79 "Pledge and Security Agreement" shall mean the Pledge and Security
Agreement, dated as of the date hereof, made by Tenant and the Permitted
Subtenants for the benefit of Landlord.
1.80 "Primary Intended Use" shall have the meaning given such term in
Section 4.1.1.
1.81 "Prime" shall mean The Prime Group, Inc., an Illinois corporation.
1.82 "Provider Agreements" shall mean all participation, provider and
reimbursement agreements or arrangements now or hereafter in effect for the
benefit of Tenant in connection with the operation of any Facility relating to
any right of payment or other claim arising out of or in connection with
Tenant's participation in any Third Party Payor Program.
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1.83 "Qualified Appraiser" shall mean an appraiser who is not in
control of, controlled by or under common control with either Landlord or Tenant
and has not been an employee of Landlord or Tenant or any Affiliated Person with
respect to either of Landlord or Tenant at any time during the ten (10) year
period preceding the relevant date, who is qualified to appraise commercial real
estate in the State and is a member of the American Institute of Real Estate
Appraisers (or any successor association or body of comparable standing if such
Institute is not then in existence) and who has held his or her certificate as
an M.A.I. or its equivalent for a period of not less than three (3) years, and
has been actively engaged in the appraisal of commercial real estate in such
area for a period of not less than five (5) years, immediately preceding his or
her appointment hereunder.
1.84 "Records" shall have the meaning given such term in Section 7.2.
1.85 "Regulated Medical Wastes" shall mean all materials generated by
Tenant, subtenants, patients, occupants or the operators of the Collective
Leased Properties which are now or may hereafter be subject to regulation
pursuant to the Material Waste Tracking Act of 1988, or any Applicable Laws
promulgated by any Governmental Agencies.
1.86 "Rent" shall mean, collectively, the Minimum Rent, Additional Rent
and Additional Charges.
1.87 "Residents' Personal Property" shall mean such items of furniture,
clothing and other personalty as are the property of any of the residents of any
of the units at any of the Collective Leased Properties.
1.88 "SEC" shall mean the Securities and Exchange Commission.
1.89 "State" shall mean the State in which the applicable Leased
Property is located.
1.90 "Stock Pledge Agreement" shall mean the Stock Pledge and Security
Agreement, dated as of the date hereof, made by Prime Group Limited Partnership,
an Illinois limited partnership, and Tenant to Landlord.
1.91 "Subordinated Creditor" shall mean any creditor of Tenant which is
a party to a Subordination Agreement in favor of Landlord.
1.92 "Subordination Agreement" shall mean any agreement executed by a
Subordinated Creditor pursuant to which the payment
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and performance of Tenant's obligations to such Subordinated Creditor are
subordinated to the payment and performance of Tenant's obligations to Landlord
under this Agreement.
1.93 "Subsidiary" shall mean, with respect to any Person, any Entity
(a) in which such Person owns directly, or indirectly through one or more
Subsidiaries, fifty percent (50%) or more of the voting or beneficial interest
or (b) which such Person otherwise has the right or power to control (whether by
contract, through ownership of securities or otherwise).
1.94 "Tangible Net Worth" shall mean the excess of total assets over
total liabilities, total assets and total liabilities each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (a) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles; (b) all
deferred charges or unamortized debt discount and expense; (c) all reserves
carried and not deducted from assets; (d) treasury stock and capital stock,
obligations or other securities of, or capital contributions to, or investments
in, any Subsidiary; (e) securities which are not readily marketable; (f) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the Commencement Date; and (g) any items not included in clauses
(a) through (g) above that are treated as intangibles in conformity with GAAP.
1.95 "Tenant" shall have the meaning given such term in the preambles
to this Agreement.
1.96 "Tenant's Capital Additions" shall have the meaning given such
term in Section 6.2.2.
1.97 "Tenant's Personal Property" shall mean all motor vehicles and
consumable inventory and supplies, furniture, furnishings, movable walls and
partitions, equipment and machinery and all other personal property of Tenant
acquired by Tenant on and after the date hereof and located at any of the
Collective Leased Properties or used in Tenant's business at any of the
Collective Leased Properties and all modifications, replacements, alterations
and additions to such personal property installed at the expense of Tenant.
1.98 "Term" shall mean, collectively, the Fixed Term and the Extended
Terms, to the extent properly exercised pursuant to the provisions of Section
2.4, unless sooner terminated pursuant to the provisions of this Agreement.
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1.99 "Third Party Payor Programs" shall mean all third party payor
programs in which Tenant presently or in the future may participate, including,
without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield,
Managed Care Plans, other private insurance programs and employees assistance
programs.
1.100 "Third Party Payors" shall mean Medicare, Medicaid, CHAMPUS, Blue
Cross and/or Blue Shield, private insurers and any other Person which presently
or in the future maintains Third Party Payor Programs.
1.101 "Total Revenues" shall mean, with respect to each Leased
Property, all revenues (determined on an accrual basis in accordance with GAAP)
received or receivable from or by reason of the operation of the Facility
located on the applicable Leased Property, or any portion thereof, or any other
use of such Leased Property, or any portion thereof, including, without
limitation, all resident rents and revenues received or receivable for the use
of or otherwise by reason of all units, beds and other facilities provided,
meals served, services performed, space or facilities subleased or goods sold on
such Leased Property, or any portion thereof, including, without limitation, and
except as provided below, any other arrangements with third parties relating to
the possession or use of any portion of such Leased Property; provided, however,
that Total Revenues shall not include: (a) allowances according to GAAP for
uncollectible accounts, including credit accounts and charity care and other
administrative discounts; (b) revenue from professional fees or charges by
physicians and unaffiliated providers of services, when and to the extent such
charges are paid over to such physicians or unaffiliated providers of services,
or are separately billed and not included in comprehensive fees; (c)
non-operating revenues such as interest income or income from the sale of assets
not sold in the ordinary course of business; (d) revenues attributable to
services actually provided off-site or otherwise away from such Facility, such
as home health care, to persons that are not residents of such Facility; and (e)
security deposits of residents of such Facility; it being understood and agreed
that Total Revenues shall be calculated separately for each Leased Property and
shall not be determined on an aggregate basis for the Collective Leased
Properties.
1.102 "Trustees" shall mean the trustees of Landlord.
1.103 "Unsuitable for Its Primary Intended Use" shall mean, with
respect to any Facility, a state or condition of such Facility, such that (a)
following any damage or destruction involving such Leased Property, such Leased
Property cannot reasonably be expected to be restored to substantially the same
condition as existed immediately before such damage or
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destruction, and as otherwise required by Section 10.2.4, within twelve (12)
months following such damage or destruction or such other period of time as to
which business interruption insurance is available to cover Rent and other costs
related to such Leased Property following such damage or destruction; or (b) as
the result of a partial taking by Condemnation, such Facility or Leased
Improvements, as the case may be, cannot be operated, in the good faith judgment
of Landlord and Tenant, on a commercially practicable basis for its Primary
Intended Use taking into account, among other relevant factors, the number of
usable units, the amount of square footage or the revenues affected by such
damage or destruction or partial taking.
1.104 "Work" shall have the meaning given such term in Section 10.2.4.
ARTICLE 2
COLLECTIVE LEASED PROPERTIES AND TERM
2.1 Collective Leased Properties. Upon and subject to the terms and
conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases
from Landlord all of the following (collectively, the "Collective Leased
Properties"):
(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibits A-1 to A-3, attached hereto
and made a part hereof (the "Land");
(b) all buildings, structures, Fixtures and other improvements of
every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and
lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently
situated upon the Land and all Capital Additions other than
Tenant's Capital Additions (collectively, the "Leased
Improvements");
(c) all easements, rights and appurtenances relating to the Land
and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of
property, now or hereafter permanently affixed to or
incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air- conditioning systems and
apparatus, sprinkler systems
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and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within
the category of Tenant's Personal Property (collectively, the
"Fixtures");
(e) all machinery, equipment, furniture, furnishings, moveable
walls or partitions, computers or trade fixtures or other
personal property of any kind or description used or useful in
Tenant's business on or in the Leased Improvements, and
located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such
personal property, except items, if any, included within the
category of Fixtures, but specifically excluding all items
included within the category of Tenant's Personal Property and
Residents' Personal Property (collectively, the "Leased
Personal Property"); and
(f) all leases of space (including any security deposits held by
Tenant pursuant thereto) in the Leased Improvements to tenants
thereof.
2.2 Condition of Collective Leased Properties. Tenant acknowledges
receipt and delivery of possession of the Collective Leased Properties and
Tenant accepts the Collective Leased Properties in their "as is" condition,
subject to the rights of parties in possession, the existing state of title,
including all covenants, conditions, restrictions, reservations, mineral leases,
easements and other matters of record or that are visible or apparent on the
Collective Leased Properties, all applicable Legal Requirements, the lien of
financing instruments, mortgages and deeds of trust, and such other matters
which would be disclosed by an inspection of the Collective Leased Properties
and the record title thereto or by an accurate survey thereof. TENANT REPRESENTS
THAT IT HAS INSPECTED THE COLLECTIVE LEASED PROPERTIES AND ALL OF THE FOREGOING
AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY
REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD'S AGENTS OR EMPLOYEES WITH
RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN
RESPECT OF THE CONDITION OF THE COLLECTIVE LEASED PROPERTIES. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE COLLECTIVE
LEASED PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN
OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY
OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT
ALL SUCH RISKS
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ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law, however,
Landlord hereby assigns to Tenant all of Landlord's rights to proceed against
any predecessor in title for breaches of warranties or representations, whether
by contract, at law or in equity, or for latent defects in the Collective Leased
Properties. Landlord shall fully cooperate with Tenant in the prosecution of any
such claims, in Landlord's or Tenant's name, all at Tenant's sole cost and
expense. Tenant shall indemnify, defend, and hold harmless Landlord from and
against any loss, cost, damage or liability (including reasonable attorneys'
fees) incurred by Landlord in connection with such cooperation.
2.3 Fixed Term. The initial term of this Agreement (the "Fixed Term")
shall commence on the Commencement Date and expire December 31, 2019.
2.4 Extended Term. Provided that no Event of Default shall have
occurred and be continuing and this Agreement shall be in full force and effect,
Tenant shall have the right to extend the Term for two consecutive twenty-five
(25) year renewal terms (collectively, the "Extended Terms").
Each Extended Term shall commence on the day succeeding the expiration
of the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement shall apply to each such
Extended Term, except that Tenant shall have no right to extend the Term beyond
the expiration of the Extended Terms. If Tenant shall elect to exercise either
of the aforesaid options, it shall do so by giving Landlord Notice thereof not
later than two (2) years prior to the scheduled expiration of the then current
Term of this Agreement (Fixed or Extended, as the case may be), it being
understood and agreed that time shall be of the essence with respect to the
giving of such Notice. Tenant may not exercise its option for more than one such
Extended Term at a time. If Tenant shall fail to give any such Notice, this
Agreement shall automatically terminate at the end of the Term then in effect
and Tenant shall have no further option to extend the Term of this Agreement. If
Tenant shall give such Notice, the extension of this Agreement shall be
automatically effected without the execution of any additional documents; it
being understood and agreed, however, that Tenant and Landlord shall execute
such documents and agreements as either party shall reasonably require to
evidence the same.
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ARTICLE 3
RENT
3.1 Rent. Tenant shall pay to Landlord, in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, without offset, abatement, demand or deduction, Minimum Rent,
Additional Rent and Additional Charges, during the Term, except as hereinafter
expressly provided. All payments to Landlord shall be made by wire transfer of
immediately available federal funds or by other means acceptable to Landlord in
its sole discretion. Rent for any partial month shall be prorated on a per diem
basis based on a 360 day year consisting of twelve (12) 30-day months.
3.1.1 Minimum Rent:
(a) During Term. Minimum Rent shall be paid in advance on the
first day of each calendar month; provided, however, that the payment
of Minimum Rent with respect to any partial month in which the
Commencement Date occurs and the first full month of the Fixed Term
shall be payable on the Commencement Date.
(b) Adjustments of Minimum Rent Following Disbursements Under
Section 6.5. Effective on the date of each disbursement to pay for the
cost of any renovations pursuant to Section 6.5, the Minimum Rent shall
be increased, effective on the date of such disbursement, to an annual
sum equal to the product of the amount advanced and the Interest Rate.
If any such disbursement is made during any calendar month on a day
other than the first day of a calendar month, Tenant shall pay to
Landlord on the first day of the immediately following calendar month
(in addition to the amount of Minimum Rent payable with respect to such
month, as adjusted pursuant to this paragraph (b)) the amount by which
Minimum Rent for the preceding month, as adjusted for such
disbursement, exceeded the amount of Minimum Rent payable by Tenant for
such preceding month without giving effect to such adjustment.
3.1.2 Additional Rent:
(a) Amount. For each Lease Year or portion thereof during the
Term, commencing with the Lease Year beginning January 1, 1999, Tenant
shall pay, with respect to each Leased Property, additional rent
("Additional Rent") with respect to such Lease Year equal to the
greatest of (x) ten percent (10%) of Excess Total Revenues for such
Leased Property for such Lease Year; (y) the Additional Rent payable in
the immediately preceding Lease Year less the
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Variable Factor Amount (as hereinafter defined); and (z) zero.
As used herein, "Variable Factor Amount" shall mean an amount equal to
twenty-five percent (25%) of the amount of Additional Rent payable for the
applicable Leased Property for the last Lease Year for which Additional Rent was
payable pursuant to clause (x) above. For calculations of Additional Rent for
periods of less than a full calendar year, the Variable Factor Amount shall be
adjusted proportionately.
(b) Monthly Installments. Installments of Additional Rent for
any each Lease Year or portion thereof shall be calculated and paid
monthly in arrears based on the amount of Additional Rent payable for
the preceding Lease Year.
(c) Date of Payment of Additional Rent. Tenant shall deliver
to Landlord an Officer's Certificate setting forth the calculation of
Additional Rent due and payable for each Leased Property for each month
of any Lease Year. Each monthly payment of Additional Rent is due and
payable and shall be delivered to Landlord, together with such
Officer's Certificate, together with the applicable installment of the
Minimum Rent and shall be payable in the manner hereinabove provided
for payment of Minimum Rent.
(d) Reconciliation of Additional Rent. In addition, on or
before March 31, of each year, commencing March 31, 1998, Tenant shall
deliver to Landlord certified audits of Tenant's financial operations
for the preceding Lease Year, together with a certificate from
certified public accountants reasonably acceptable to Landlord, in form
reasonably acceptable to Landlord, setting forth the Total Revenues for
each Leased Property for such preceding Lease Year and such other
matters as Landlord may from time to time reasonably request.
If the annual Additional Rent for the Collective Leased
Properties for such preceding Lease Year as shown in the year-end
certificate exceeds the amount previously paid with respect thereto by
Tenant, Tenant shall pay such excess to Landlord at such time as the
certificate is delivered, together with interest at the Interest Rate,
which interest shall accrue from the close of such preceding Lease Year
until the date paid. If the Annual Additional Rent for the Collective
Leased Properties for such preceding Lease Year as shown in the
year-end certificate is less than the amount previously paid with
respect thereto by Tenant, provided that no Event of Default has
occurred and is continuing, Landlord shall grant Tenant a credit equal
to the amount of such overpayment against Additional Rent next coming
due in the amount of such overpayment, as finally agreed or determined.
If such a credit cannot be made because the
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Term has expired before such credit can be effected, provided that no
Event of Default has occurred and is continuing, Landlord shall pay the
amount of such difference to Tenant. If an Event of Default has
occurred, Landlord shall apply such amounts to amounts due and owing
under this Agreement and to the costs of collection of the same and
shall pay any excess to Tenant.
(e) Confirmation of Additional Rent. Tenant shall utilize, or
cause to be utilized, an accounting system for the Collective Leased
Properties in accordance with its usual and customary practices and in
accordance with GAAP, which will accurately record all Total Revenues,
and shall employ Ernst & Young LLP or other independent accountants
reasonably acceptable to Landlord, and Tenant shall retain, for at
least five (5) years after the expiration of each Lease Year,
reasonably adequate records conforming to such accounting system
showing all Total Revenues for such Lease Year. Landlord, at its own
expense except as provided hereinbelow, shall have the right from time
to time by its accountants or representatives to audit the information
set forth in the Officer's Certificate referred to in subparagraph (c)
above or the year-end certificate referred to in subparagraph (d) above
and, in connection with such audits, to examine Tenant's books and
records (upon reasonable notice during customary business hours) with
respect thereto (including supporting data and sales and excise tax
returns) subject to any prohibitions or limitations on disclosure of
any such data under applicable law or regulations, including such
limitations as may be necessary to preserve the confidentiality of the
facility-patient relationship and the physician-patient privilege
and/or other similar privilege or confidentiality obligations. If any
such audit discloses that the Total Revenues actually received by
Tenant for any Lease Year exceed those reported by Tenant by more than
three percent (3%), Tenant shall pay the reasonable cost of such audit
and examination. If any such audit discloses that Tenant paid more
Additional Rent for any Lease Year than was due hereunder, provided no
Event of Default has occurred and is continuing, Landlord shall grant
Tenant a credit equal to the amount of such overpayment against
Additional Rent next coming due in the amount of such difference. If
such a credit cannot be made because the Term has expired before such
credit can be effected, provided that no Event of Default has occurred
and is continuing, Landlord shall pay the amount of such difference to
Tenant. If an Event of Default has occurred, Landlord shall apply such
amounts to amounts due and owing under this Agreement and to the costs
of collection of the same and shall pay any excess to Tenant.
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Any proprietary information obtained by Landlord pursuant to
the provisions of this Agreement shall be treated as confidential,
except that such information may be used, subject to appropriate
confidentiality safeguards, in any litigation between the parties and
except further that Landlord may disclose such information to its
prospective lenders. The obligations of Tenant and Landlord contained
in this Section 3.1.2 shall survive the expiration or earlier
termination of this Agreement.
3.1.3 Additional Charges. In addition to the Minimum Rent and
Additional Rent payable hereunder, Tenant shall pay and discharge as and when
due and payable the following (collectively, "Additional Charges"):
(a) Impositions. Subject to Article 8 relating to Permitted
Contests, Tenant shall pay, or cause to be paid, all Impositions before
any fine, penalty, interest or cost (other than any opportunity cost as
a result of a failure to take advantage of any discount for early
payment) may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and shall promptly,
upon request, furnish to Landlord copies of official receipts or other
satisfactory proof evidencing such payments. If any such Imposition
may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such
Imposition), Tenant may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, subject to Article 8 relating to
Permitted Contests, shall pay such installments which are due during or
with respect to periods occurring during the Term as the same become
due and before any fine, penalty, premium, further interest or cost may
be added thereto. Landlord, at its expense, shall, to the extent
required or permitted by applicable law, prepare and file all tax
returns in respect of Landlord's net income, gross receipts, sales and
use, single business, transaction privilege, rent, ad valorem,
franchise taxes and taxes on its capital stock, and Tenant, at its
expense, shall, to the extent required or permitted by applicable laws
and regulations, prepare and file all other tax returns and reports in
respect of any Imposition as may be required by Government Agencies.
Provided no Event of Default shall have occurred and be continuing, if
any refund shall be due from any taxing authority in respect of any
Imposition paid by Tenant, the same shall be paid over to or retained
by Tenant. If an Event of Default has occurred, Landlord shall apply
such amounts to amounts due and owing under this Agreement and to the
costs of collection of the same and shall pay any excess to Tenant.
Landlord and Tenant shall, upon request of the other, provide such data
as is maintained by the party to whom the request is made with
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respect to the Collective Leased Properties as may be necessary to
prepare any required returns and reports. In the event Government
Agencies classify any property covered by this Agreement as personal
property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Each party shall, to the
extent it possesses the same, provide the other, upon request, with
cost and depreciation records necessary for filing returns for any
property so classified as personal property. Where Landlord is legally
required to file personal property tax returns, Landlord shall provide
Tenant with copies of assessment notices in sufficient time for Tenant
to file a protest. All Impositions assessed against such personal
property shall be (irrespective of whether Landlord or Tenant shall
file the relevant return) paid by Tenant not later than the last date
on which the same may be made without interest or penalty, subject to
the provisions of Article 8 relating to Permitted Contests. If the
provisions of any Facility Mortgage require deposits on account of
Impositions to be made with such Facility Mortgagee, provided the
Facility Mortgagee has not elected to waive such provision, Tenant
shall either pay Landlord the monthly amounts required at the time and
place that payments of Minimum Rent are required and Landlord shall
transfer such amounts to such Facility Mortgagee or, pursuant to
written direction by Landlord, Tenant shall make such deposits directly
with such Facility Mortgagee and any interest paid to Landlord with
respect thereto shall be credited to Tenant.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has
knowledge; provided, however, that Landlord's failure to give any such
notice shall in no way diminish Tenant's obligation hereunder to pay
such Impositions, except that Tenant shall not be obligated to pay any
late charges or penalties attributable to Landlord's failure to give
such Notice promptly to Tenant.
(b) Utility Charges. Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities
used in connection with the Collective Leased Properties.
(c) Insurance Premiums. Tenant shall pay or cause to be paid
all premiums for the insurance coverage required to be maintained
pursuant to Article 9.
(d) Other Charges. Tenant shall pay or cause to be paid all
other amounts, liabilities and obligations which Tenant assumes or
agrees to pay under this Agreement, including, without limitation, all
agreements to indemnify Landlord under Sections 4.4 and 9.7.
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(e) Reimbursement for Additional Charges. If Tenant pays or
causes to be paid property taxes or similar Additional Charges
attributable to periods after the end of the Term, whether upon
expiration or sooner termination of this Agreement (other than
termination following an Event of Default) and Tenant has not exercised
its right to purchase the Collective Leased Properties as provided
herein, Tenant may, within sixty (60) days of the end of the Term,
provide Notice to Landlord of its estimate of such amounts. Landlord
shall promptly reimburse Tenant for all payments of such taxes and
other similar Additional Charges that are attributable to any period
after the Term of this Agreement (unless this Agreement shall have been
terminated following an Event of Default). If an Event of Default has
occurred, Landlord shall apply such amounts to amounts due and owing
under this Agreement and to the costs of collection of the same and
shall pay any excess to Tenant.
3.2 Late Payment of Rent. If any installment of Minimum Rent,
Additional Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Landlord) shall not be paid on its due date,
Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (to
the extent permitted by law) computed at the Overdue Rate on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Tenant pays any Additional Charges directly to
Landlord or any Facility Mortgagee pursuant to any requirement of this
Agreement, Tenant shall be relieved of its obligation to pay such Additional
Charges to the Entity to which they would otherwise be due.
In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional Charges, every
fine, penalty, interest and cost which may be added for non-payment or late
payment of such items. Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Agreement or by statute or
otherwise in the case of non-payment of the Additional Charges as in the case of
non-payment of the Minimum Rent and Additional Rent.
3.3 Net Lease. The Minimum Rent and Additional Rent shall be absolutely
net to Landlord so that this Agreement shall yield to Landlord the full amount
of the installments or amounts of Minimum Rent and Additional Rent throughout
the Term, subject to any other provisions of this Agreement which expressly
provide for adjustment or abatement of such Rent.
3.4 No Termination, Abatement, Etc. Except as otherwise specifically
provided in this Agreement, Tenant, to the maximum extent permitted by law,
shall remain bound by this Agreement in accordance with its terms and shall
neither take any action without the consent of Landlord to modify, surrender or
terminate
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this Agreement, nor seek, nor be entitled to any abatement, deduction, deferment
or reduction of the Rent, or set-off against the Rent, nor shall the respective
obligations of Landlord and Tenant be otherwise affected by reason of (a) any
damage to or destruction of any of the Collective Leased Properties or any
portion thereof from whatever cause or any Condemnation; (b) the lawful or
unlawful prohibition of, or restriction upon, Tenant's use of any of the
Collective Leased Properties, or any portion thereof, or the interference with
such use by any Person or by reason of eviction by paramount title; (c) any
claim which Tenant may have against Landlord by reason of any default or breach
of any warranty by Landlord under this Agreement; (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord; or (e) for any other cause whether similar or dissimilar to any of
the foregoing. Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law, to (a)
modify, surrender or terminate this Agreement or quit or surrender any of the
Collective Leased Properties or any portion thereof; or (b) entitle Tenant to
any abatement, reduction, suspension or deferment of the Rent or other sums
payable or other obligations to be performed by Tenant hereunder, except as
otherwise specifically provided in this Agreement. The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated,
modified or amended pursuant to the express provisions of this Agreement.
ARTICLE 4
USE OF THE COLLECTIVE LEASED PROPERTIES
4.1 Permitted Use.
4.1.1 Primary Intended Use. Tenant shall, at all times during
the Term and at any other time that Tenant shall be in possession of
any Leased Property, continuously use each of the Collective Leased
Properties as a senior housing and assisted living facility and for
such other uses as may be related, incidental or necessary thereto
(such use being hereinafter referred to as such Leased Property's
"Primary Intended Use"). Except for uses as provided and described in
Section 16.3, Tenant shall not use any of the Collective Leased
Properties or any portion thereof for any other use without the prior
written consent of Landlord. No use shall be made or permitted to be
made of any of the Collective Leased Properties and no acts shall be
done thereon which will cause the cancellation of any insurance policy
covering any of the Collective Leased Properties or
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any part thereof (unless another adequate policy is available), nor
shall Tenant sell or otherwise provide to residents or patients
therein, or permit to be kept, used or sold in or about any of the
Collective Leased Properties any article which may be prohibited by law
or by the standard form of fire insurance policies, or any other
insurance policies required to be carried hereunder, or fire
underwriter's regulations. Tenant shall, at its sole cost, comply with
all of the requirements pertaining to the Collective Leased Properties
of any insurance board, association, organization or company necessary
for the maintenance of insurance, as herein provided, covering the
Collective Leased Properties and Tenant's Personal Property, including,
without limitation, the Insurance Requirements. Tenant shall not take
or omit to take any action, the taking or omission of which may
materially impair the value or the usefulness of any of the Collective
Leased Properties or any part thereof for its Primary Intended Use.
4.1.2 Necessary Approvals. Tenant shall proceed with all due
diligence and exercise best efforts to obtain and maintain all
approvals necessary to use and operate, for its Primary Intended Use,
each of the Collective Leased Properties and each Facility located
thereon under applicable law and, without limiting the foregoing, shall
use its best efforts to maintain appropriate certifications for
reimbursement and licensure, if any.
4.1.3 Lawful Use, Etc. Tenant shall not use or suffer or
permit the use of any of the Collective Leased Properties or Tenant's
Personal Property for any unlawful purpose. Tenant shall not commit or
suffer to be committed any waste on any of the Collective Leased
Properties, or in any Facility, nor shall Tenant cause or permit any
nuisance thereon or therein. Tenant shall neither suffer nor permit any
of the Collective Leased Properties or any portion thereof, including
any Capital Addition, or Tenant's Personal Property, to be used in such
a manner as (a) might reasonably tend to impair Landlord's (or
Tenant's, as the case may be) title thereto or to any portion thereof,
or (b) may reasonably make possible a claim or claims for adverse usage
or adverse possession by the public, as such, or of implied dedication
of the applicable Leased Property or any portion thereof.
4.2 Compliance with Legal and Insurance Requirements, Etc. Subject to
the provisions of Article 8, Tenant, at its sole expense, shall (a) comply in
all material respects with Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair, alteration and restoration
of all of the Collective Leased Properties, and (b) procure, maintain
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and comply in all material respects with all appropriate licenses, certificates
of need, permits, provider agreements and other authorizations and agreements
required for any use of the Collective Leased Properties and Tenant's Personal
Property then being made, and for the proper erection, installation, operation
and maintenance of the Collective Leased Properties or any part thereof,
including, without limitation, any Capital Additions, except where the failure
to comply will not have a material adverse effect on the use or operation of any
of the Collective Leased Properties for its Primary Intended Use or adversely
effect Total Revenues.
4.3 Compliance with Medicaid and Medicare Requirements. Tenant shall,
at its sole cost and expense, make whatever improvements (capital or ordinary)
as are required to conform in all material respects each of the Collective
Leased Properties to such standards, if any, as may, from time to time, be
required by Federal Medicare (Title 18) or Medicaid (Title 19) skilled and/or
intermediate care nursing programs, to the extent Tenant is a participant in
such programs, or any other applicable programs or legislation, or capital
improvements required by any other governmental agency having jurisdiction over
such Leased Property as a condition of the continued operation of such Leased
Property for its Primary Intended Use, except where the failure to comply will
not have a material adverse effect on the use or operation of any of the
Collective Leased Properties for its Primary Intended Use or adversely effect
Total Revenues.
4.4 Environmental Matters.
4.4.1 Restriction on Use, Etc. Tenant shall not store, spill
upon, dispose of or transfer to or from the Collective Leased
Properties any Hazardous Substance, except that Tenant may store,
transfer and dispose of Hazardous Substances in material compliance
with all Applicable Laws. Tenant shall maintain the Collective Leased
Properties at all times free of any Hazardous Substance (except such
Hazardous Substances as are maintained in compliance with all
Applicable Laws). Tenant shall promptly: (a) notify Landlord in writing
of any change in the nature or extent of Hazardous Substances at any of
the Collective Leased Properties to the extent such change violates
Applicable Laws; (b) transmit to Landlord a copy of any Community Right
to Know report which is required to be filed by Tenant with respect to
any of the Collective Leased Properties pursuant to ▇▇▇▇ Title III or
any other Applicable Law; (c) transmit to Landlord copies of any
citations, orders, notices or other governmental communications
received by Tenant or its agents or representatives with respect
thereto (collectively, "Environmental Notice"), which Environmental
Notice requires a written response or any action to be taken
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and/or if such Environmental Notice gives notice of and/or could give
rise to a violation of any Applicable Law and/or could give rise to any
cost, expense, loss or damage (an "Environmental Obligation"); (d)
observe and comply in all material respects with all Applicable Laws
relating to the use, maintenance and disposal of Hazardous Substances
and all orders or directives from any official, court or agency of
competent jurisdiction relating to the use or maintenance or requiring
the removal, treatment, containment or other disposition thereof; and
(e) pay or otherwise dispose of any fine, charge or Imposition related
thereto, unless Tenant shall contest the same in good faith and by
appropriate proceedings and the right to use and the value of any of
the Collective Leased Properties is not materially and adversely
affected thereby.
If, at any time prior to the termination of this Agreement,
Hazardous Substances are discovered on any of the Collective Leased
Properties in violation of Applicable Law, Tenant shall take all
actions and incur any and all expenses, as may be reasonably necessary
and as may be required by any Government Agency, (i) to clean up and
remove from and about the Collective Leased Properties all Hazardous
Substances thereon, (ii) to contain and prevent any further release or
threat of release of Hazardous Substances on or about the Collective
Leased Properties and (iii) to use good faith efforts to eliminate any
further release or threat of release of Hazardous Substances on or
about the Collective Leased Properties.
4.4.2 Environment Report. Six (6) months prior to expiration
of the Term, Tenant, at its sole cost and expense, shall designate a
qualified environmental engineer, satisfactory to Landlord in its sole
discretion, which engineer shall conduct an environmental investigation
of the Collective Leased Properties and prepare an environmental site
assessment report (the "Environmental Report") with respect thereto.
The scope of such Environmental Report shall include, without
limitation, review of relevant records, interviews with persons
knowledgeable about the Collective Leased Properties and relevant
governmental agencies, a site inspection of the Collective Leased
Properties, any buildings, the fencelines of the Collective Leased
Properties and adjoining properties (Phase I) and shall otherwise be
reasonably satisfactory in form and substance to Landlord. If such
investigation, in the opinion of the performing engineer, indicates
that any of the Collective Leased Properties are not free from oil,
asbestos, radon and other Hazardous Substances (except in compliance
with Applicable Laws), such investigation shall also include a more
detailed physical site inspection,
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appropriate testing, subsurface and otherwise, and review of historical
records (Phase II) to demonstrate the compliance of such of the
Collective Leased Properties with Applicable Laws and the absence of
Hazardous Substances.
Copies of the Environmental Report, and supplements and
amendments thereto, shall be provided to Landlord. With respect to any
recommendations contained in the Environmental Report, violations of
Applicable Laws and/or the existence of any conditions at any of the
Collective Leased Properties which could give rise to an Environmental
Obligation, Tenant shall promptly give Notice thereof to Landlord,
together with a description, setting forth in reasonable detail, all
actions Tenant proposes to take in connection therewith and Tenant
shall promptly take all actions, and incur any and all expenses, as may
be reasonably necessary and as may be required by any Government Agency
and as may be reasonably required by Landlord, to the extent required
by Applicable Law, (i) to clean up, remove or remediate from and about
the Collective Leased Properties all Hazardous Substances thereon, (ii)
to contain, prevent and eliminate any further release or threat of
release of Hazardous Substances on or about the Collective Leased
Properties, and (iii) otherwise to eliminate such violation or
condition from the Collective Leased Properties to the reasonable
satisfaction of Landlord.
4.4.3 Indemnification of Landlord. Tenant shall protect,
indemnify and hold harmless Landlord and each Facility Mortgagee, their
trustees, officers, agents, employees and beneficiaries, and any of
their respective successors or assigns (hereafter the "Indemnitees,"
and when referred to singly, an "Indemnitee") for, from and against any
and all debts, liens, claims, causes of action, administrative orders
or notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon,
incurred by or asserted against any Indemnitee resulting from, either
directly or indirectly, the presence in, upon or under the soil or
ground water of any of the Collective Leased Properties or any
properties surrounding any of the Collective Leased Properties of any
Hazardous Substances in violation of any Applicable Law or otherwise by
reason of any failure by Tenant or any Person to perform or comply with
any of the terms of this Section 4.4. Tenant's duty herein includes,
but is not limited to, costs associated with personal injury or
property damage claims as a result of the presence of Hazardous
Substances in, upon or under the soil or ground water of any of the
Collective Leased Properties in violation of any Applicable Law. Upon
Notice
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from Landlord, Tenant shall undertake the defense, at Tenant's sole
cost and expense, of any indemnification duties set forth herein.
Tenant shall, upon demand, pay to Landlord, as an Additional
Charge, any cost, expense, loss or damage (including, without
limitation, reasonable attorneys' fees) incurred by Landlord and
arising from a failure of Tenant strictly to observe and perform the
foregoing requirements, which amounts shall bear interest from the date
incurred until paid by Tenant to Landlord at the Overdue Rate.
4.4.4 Survival. The provisions of this Section 4.4 shall
survive the expiration or sooner termination of this Agreement.
ARTICLE 5
MAINTENANCE AND REPAIRS, ETC.
5.1 Maintenance and Repair.
5.1.1 Tenant's Obligations. Tenant shall, at its sole cost and
expense, keep each of the Collective Leased Properties and all private
roadways, sidewalks and curbs appurtenant thereto (and Tenant's
Personal Property) in good order and repair, reasonable wear and tear
excepted (whether or not the need for such repairs occurs as a result
of Tenant's use, any prior use, the elements or the age of the
Collective Leased Properties or Tenant's Personal Property, or any
portion thereof), and shall promptly make all necessary and appropriate
repairs and replacements thereto of every kind and nature, whether
interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term (concealed or
otherwise); provided, however, that Tenant shall be permitted to
prosecute claims against Landlord's predecessors in title for breach of
any representation or warranty made to or on behalf of Landlord,
whether in contract, at law or in equity, or for any latent defects in
the Collective Leased Properties. All repairs shall be made in good,
workmanlike and first-class manner, in accordance with all applicable
federal, state and local statutes, ordinances, by-laws, codes, rules
and regulations relating to any such work. Tenant shall not take or
omit to take any action, the taking or omission of which would
materially impair the value or the usefulness of any of the Collective
Leased Properties or any part thereof for its respective Primary
Intended Uses. Tenant's obligations under this
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Section 5.1.1 as to any of the Collective Leased Properties shall be
limited in the event of any casualty or Condemnation involving such
Leased Property as set forth in Sections 10.2 and 11.2. Notwithstanding
any provisions of this Section 5.1 to the contrary, Tenant's
obligations with respect to Hazardous Substances are as set forth in
Section 4.4.
5.1.2 Landlord's Obligations. Landlord shall not, under any
circumstances, be required to build or rebuild any improvement on the
Collective Leased Properties, or to make any repairs, replacements,
alterations, restorations or renewals of any nature or description to
the Collective Leased Properties, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any
expenditure whatsoever with respect thereto (except as provided in
Articles 10 and 11 with respect to disbursement of insurance and Award
proceeds), or to maintain the Collective Leased Properties in any way,
except as specifically provided herein. Tenant hereby waives, to the
maximum extent permitted by law, the right to make repairs at the
expense of Landlord pursuant to any law in effect on the date hereof or
hereafter enacted. Landlord shall have the right to give, record and
post, as appropriate, notices of nonresponsibility under any mechanic's
lien laws now or hereafter existing.
5.1.3 Nonresponsibility of Landlord; No Mechanics Liens.
Landlord's interest in the Collective Leased Properties shall not be
subject to liens for Capital Additions made by Tenant and Tenant shall
have no power or authority to create any lien or permit any lien to
attach to any of the Collective Leased Properties or the present
estate, reversion or other estate of Landlord in the Collective Leased
Properties or on the building or other improvements thereon as a result
of Capital Additions made by Tenant or for any other cause or reason.
All materialmen, contractors, artisans, mechanics and laborers and
other persons contracting with Tenant with respect to the Collective
Leased Properties, or any part thereof, are hereby charged with notice
that such liens are expressly prohibited and that they must look solely
to Tenant to secure payment for any work done or material furnished for
Capital Additions by Tenant or for any other purpose during the term of
this Agreement.
Nothing contained in this Agreement shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied, by inference or otherwise, to any
contractor, subcontractor, laborer or materialmen for the performance
of any labor or the furnishing of any
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materials for any alteration, addition, improvement or repair to any of
the Collective Leased Properties or any part thereof or as giving
Tenant any right, power or authority to contract for or permit the
rendering of any services or the furnishing of any materials that would
give rise to the filing of any lien against any of the Collective
Leased Properties or any part thereof nor to subject Landlord's estate
in any of the Collective Leased Properties or any part thereof to
liability under any Mechanic's Lien Law of the State in any way, it
being expressly understood Landlord's estate shall not be subject to
any such liability.
5.2 Tenant's Personal Property. Tenant may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same at any time, provided that no Event of Default has occurred and is
continuing. Tenant shall provide and maintain throughout the Term all such
Tenant's Personal Property as shall be necessary in order to operate all of the
Facilities located at the Collective Leased Properties in material compliance
with all applicable licensure and certification requirements, in compliance with
applicable Legal Requirements and Insurance Requirements. All of Tenant's
Personal Property not removed by Tenant on or prior to the expiration or earlier
termination of this Agreement shall be considered abandoned by Tenant and may be
appropriated, sold, destroyed or otherwise disposed of by Landlord without the
necessity of first giving notice thereof to Tenant, without any payment to
Tenant and without any obligation to account therefor. Tenant shall, at its
expense, restore each of the Collective Leased Properties to the condition
required by Section 5.3, including repair of all damage to the Collective Leased
Properties caused by the removal of Tenant's Personal Property, whether effected
by Tenant or Landlord.
If Tenant uses any item of tangible personal property (other than motor
vehicles) on, or in connection with, any Leased Property which belongs to anyone
other than Tenant, Tenant shall use its reasonable efforts to require the
agreement permitting such use to provide that Landlord or its designee may
assume Tenant's rights under such agreement upon management or operation of the
applicable Facility by Landlord or its designee.
5.3 Yield Up. (a) Upon the expiration or sooner termination of this
Agreement, Tenant shall vacate and surrender each of the Collective Leased
Properties to Landlord in the condition in which each of the Collective Leased
Properties was in on the Commencement Date, except as repaired, rebuilt,
restored, altered or added to as permitted or required by the
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provisions of this Agreement, reasonable wear and tear excepted (and casualty
damage and Condemnation, in the event that this Agreement is terminated with
respect to any of the Collective Leased Properties following a casualty or total
Condemnation in accordance with Article 10 or Article 11).
In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its best
efforts to transfer to and cooperate with Landlord or Landlord's nominee in
connection with the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental entities which may be
necessary for the operation of the Facilities located on the Collective Leased
Properties. If requested by Landlord, Tenant will continue to manage any such
Facility after the expiration of the Term and for as long thereafter as is
necessary to obtain all necessary licenses, operating permits and other
governmental authorizations, on such reasonable terms (which shall include an
agreement to pay Tenant a market rate management fee and reimburse Tenant for
its reasonable out-of-pocket costs and expenses, and reasonable administrative
costs) as Landlord shall request.
(b) Effective on not less than fifteen (15) days' prior Notice given at
least sixty (60) days prior to expiration of the Term (or such shorter period as
shall be appropriate if this Agreement is terminated with respect to any of the
Collective Leased Properties prior to its expiration date), Landlord shall have
the option to purchase all (but not less than all) of Tenant's Personal Property
(except motor vehicles) with respect to any of the Collective Leased Properties,
at the expiration or sooner termination of this Agreement with respect to such
Leased Property, for an amount equal to the then fair market value thereof
(determined by the agreement of Landlord and Tenant if they can agree and
otherwise in accordance with the appraisal procedures set forth in Article 19),
subject to, and with appropriate price adjustments for, all equipment leases,
conditional sale contracts, security interests and other encumbrances to which
such Tenant's Personal Property is subject. Tenant's Personal Property shall be
conveyed to Landlord on an "as-is" basis, in its then current condition and
state of repair. Tenant shall provide Landlord with warranties of title,
reflecting no encumbrances as to which adjustments to the purchase price
thereof, as required by the previous sentence, have not been made. Failure of
Landlord to notify Tenant of its election to purchase Tenant's Personal Property
at any of the Collective Leased Properties by the 75th day prior to the
expiration of this Agreement (or such shorter period as may be appropriate if
this Agreement is terminated with respect to any of the Collective Leased
Properties prior to its expiration date)
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shall be deemed to constitute a waiver of Landlord's right to purchase Tenant's
Personal Property with respect to such Leased Property.
5.4 Encroachments, Restrictions, Etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the affected Leased Property, or shall violate the agreements or conditions
contained in any lawful restrictive covenant or other agreement affecting any of
the Collective Leased Properties, or any part thereof, or shall impair the
rights of others under any easement or right-of-way to which any of the
Collective Leased Properties is subject, upon the request of Landlord (but only
as to any encroachment, violation or impairment that is not a Permitted
Encumbrance) or of any Person affected by any such encroachment, violation or
impairment, Tenant shall, at its sole cost and expense, subject to its right to
contest the existence of any encroachment, violation or impairment in accordance
with the provisions of Article 8, either (a) obtain valid and effective waivers
or settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, whether the same shall affect Landlord or
Tenant, or (b) make such changes in the Leased Improvements and take such other
actions, as are reasonably practicable to remove such encroachment and to end
such violation or impairment, including, if necessary, the alteration of any of
the Leased Improvements and, in any event, take all such actions as may be
necessary in order to ensure the continued operation of the affected Leased
Improvements for their respective Primary Intended Use substantially in the
manner and to the extent such Leased Improvements were operated prior to the
assertion of such violation, impairment or encroachment. Any such alteration
shall be made in conformity with the applicable requirements of this Article 5.
Tenant's obligations under this Section 5.4 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance.
5.5 Landlord to Grant Easements, Etc. Landlord shall from time to time,
so long as no Event of Default shall have occurred and be continuing, at the
request of Tenant and at Tenant's sole cost and expense, (a) grant easements and
other rights in the nature of easements with respect to any of the Collective
Leased Properties to third parties; (b) release existing easements or other
rights in the nature of easements which are for the benefit of any of the
Collective Leased Properties; (c) dedicate or transfer unimproved portions of
any of the Collective Leased Properties for road, highway or other public
purposes; (d) execute petitions to have any of the Collective Leased Properties
annexed to any municipal corporation or utility district; (e) execute amendments
to any covenants and restrictions affecting any of the Collective Leased
Properties; and (f) execute and
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deliver to any Person any instrument appropriate to confirm or effect such
grants, release, dedications, transfers, petitions and amendments (to the extent
of its interests in such Leased Property); provided, however, that Landlord
shall have first reasonably determined in good faith that such grant, release,
dedication, transfer, petition or amendment is not detrimental to the operation
of the applicable Leased Property for its Primary Intended Use and does not
materially reduce the value of such Leased Property, and Landlord shall have
received an Officer's Certificate certifying that such grant, release,
dedication, transfer, petition or amendment is not detrimental to the operation
of the applicable Leased Property for its Primary Intended use and does not
materially reduce the value of such Leased Property, together with such
additional information with respect thereto as Landlord may reasonably request.
ARTICLE 6
CAPITAL ADDITIONS, ETC.
6.1 Construction of Capital Additions. Tenant shall not construct or
install Capital Additions on any of the Collective Leased Properties without
obtaining Landlord's prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned, provided that no consent shall be
required for any Capital Addition so long as (a) the Capital Additions Costs for
such Capital Addition are less than $250,000 in the aggregate; (b) such
construction or installation would not adversely affect or violate any Legal
Requirement or Insurance Requirement applicable to the applicable Leased
Property; and (c) Landlord shall have received an Officer's Certificate
certifying as to the satisfaction of the conditions set out in clauses (a) and
(b) above. If Landlord's consent is required, prior to commencing construction
of any Capital Addition, Tenant shall submit to Landlord, in writing, a proposal
setting forth, in reasonable detail, any proposed Capital Addition and shall
provide to Landlord such plans and specifications, permits, licenses, contracts
and other information concerning the proposed Capital Addition as Landlord may
reasonably request. Landlord shall have ten (10) Business Days to review all
materials submitted to Landlord in connection with any such proposal. Failure of
Landlord to respond to Tenant's proposal within ten (10) Business Days after
receipt of all information and materials requested by Landlord in connection
with the proposed Capital Addition shall be deemed to constitute approval of
such proposed Capital Addition. Without limiting the generality of the
foregoing, such proposal shall indicate the approximate projected cost of
constructing such Capital Addition and the use or uses to which it will be put.
No Capital Addition shall be made which would tie in or connect any Leased
Improvement on the applicable
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Leased Property with any other improvements on property adjacent to such Leased
Property (and not part of the Land), including, without limitation, tie-ins of
buildings or other structures or utilities. Tenant shall not finance the cost of
any construction of any Capital Addition except as provided in Section 6.2.1.
Any Capital Additions (including Tenant's Capital Additions) shall, upon the
expiration or sooner termination of this Agreement, pass to and become the
property of Landlord, free and clear of all encumbrances other than Permitted
Encumbrances but subject to Landlord's obligation to compensate Tenant for
Tenant's Capital Additions as provided below.
6.2 Capital Additions Financed or Paid For by Tenant.
6.2.1 Financing of Capital Additions. Tenant may arrange for
financing for Capital Additions, provided, that (a) the terms and
conditions of any such financing shall be commercially reasonable; (b)
any lender with respect thereto shall be a Subordinated Creditor and
any security interests in any property of Tenant, including, without
limitation, the applicable Leased Property, shall be expressly and
fully subordinated to this Agreement and to the interest of Landlord in
the applicable Leased Property and to the rights of any Facility
Mortgagee; and (c) the aggregate proceeds of such financing shall be
used for improvements in or at the Collective Leased Properties.
Otherwise, the terms of Tenant's financing of any Capital Additions
shall be subject to Landlord's prior written approval, which approval
may be given or withheld by Landlord in Landlord's sole discretion.
6.2.2 Purchase by Landlord. If, pursuant to the provisions of
this Agreement, Tenant either pays for or arranges financing (to the
extent permitted in Section 6.2.1) to pay for the costs of construction
or installation of any Capital Addition ("Tenant's Capital Additions")
(but excluding, in any event, any Capital Addition financed by or
through Landlord including, without limitation, all Capital Additions
paid for or financed through disbursements under Section 6.5), upon the
expiration or earlier termination of this Agreement (but if this
Agreement is terminated by reason of an Event of Default, only after
Landlord is fully compensated for all damages resulting therefrom),
Landlord shall compensate Tenant for all Tenant's Capital Additions in
any of the following ways determined in Landlord's sole discretion:
(a) By purchasing such Tenant's Capital Additions from Tenant
for cash in the amount of the then Fair Market Added Value of such
Tenant's Capital Additions; or
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(b) By making such other arrangement regarding such
compensation as shall be mutually acceptable to Landlord and Tenant.
6.3 Capital Additions Financed by Landlord. If Landlord shall, at the
request of Tenant and in Landlord's sole discretion (except as provided in
Section 6.5), elect to finance any proposed Capital Addition, Tenant shall
provide Landlord with such information as Landlord may from time to time
request, including, without limitation, the following:
(a) Evidence that such Capital Addition will be, and, upon
completion, has been, completed in compliance with the applicable
requirements of State and federal law with respect to capital
expenditures for facilities like the Facilities;
(b) Copies of all building, zoning and land use permits and
approvals and upon completion of such Capital Addition, a copy of the
certificate of occupancy for such Capital Addition, if required;
(c) Such information, certificates, licenses, permits or other
documents necessary to confirm that Tenant will be able to use the
Capital Addition upon completion thereof in accordance with the Primary
Intended Use, including all required federal, State or local government
licenses and approvals;
(d) An Officer's Certificate and a certificate from Tenant's
architect, if available, setting forth, in reasonable detail, the
projected (or actual, if available) Capital Additions Cost and invoices
and lien waivers from Tenant's contractors for such work;
(e) A deed conveying to Landlord title to any land acquired
for the purpose of constructing the Capital Addition free and clear of
any liens or encumbrances, except those approved by Landlord, and, upon
completion of the Capital Addition, a final as-built survey thereof
reasonably satisfactory to Landlord;
(f) Endorsements to any outstanding policy of title insurance
covering the applicable Leased Property or commitments therefor,
reasonably satisfactory in form and substance to Landlord, (i) updating
the same without any additional exceptions except as reasonably
approved by Landlord, and (ii) increasing the coverage thereof by an
amount equal to the Fair Market Value of the Capital Addition (except
to the extent covered by the owner's policy of title insurance referred
to in subparagraph (g) below);
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(g) If appropriate, (i) an owner's policy of title insurance
insuring fee simple title to any land conveyed to Landlord pursuant to
subparagraph (e) above, free and clear of all liens and encumbrances,
except those reasonably approved by Landlord, and (ii) a lender's
policy of title insurance, reasonably satisfactory in form and
substance to Landlord and any Facility Mortgagee; and
(h) Prints of architectural and engineering drawings relating
to such Capital Addition and such other certificates, documents,
opinions of counsel, appraisals, surveys, certified copies of duly
adopted resolutions of the board of directors of Tenant authorizing the
execution and delivery of any lease amendment or other instruments
reasonably required by Landlord, any Facility Mortgagee and any Lending
Institution advancing or reimbursing Landlord or Tenant for any portion
of the Capital Additions Cost.
If Landlord shall finance the proposed Capital Addition, Tenant shall
pay to Landlord all reasonable costs and expenses paid or incurred by Landlord
and any Facility Mortgagee or Lending Institution which has committed to finance
such Capital Addition in connection therewith, including, but not limited to,
(a) the reasonable attorneys' fees and expenses, (b) all printing expenses, (c)
all filing, registration and recording taxes and fees, (d) documentary stamp
taxes, (e) title insurance charges, appraisal fees, and rating agency fees, and
(f) commitment fees.
6.4 Non-Capital Additions. Tenant shall have the right, at Tenant's
sole cost and expense, without Landlord consent, to make additions,
modifications or improvements to the Collective Leased Properties which are not
Capital Additions ("Non-Capital Additions") from time to time as Tenant, in its
discretion, may deem desirable for the applicable Primary Intended Use provided
that any such Non-Capital Addition will not materially alter the character or
purpose or materially detract from the value, operating efficiency or
revenue-producing capability of the applicable Leased Property or adversely
affect the ability of Tenant to comply with the provisions of this Agreement
and, without limiting the foregoing, will not adversely affect or violate any
Legal Requirement or Insurance Requirement applicable to the applicable Leased
Property. All such Non-Capital Additions shall, upon expiration or earlier
termination of this Agreement, pass to and become the property of Landlord, free
and clear of all liens and encumbrances, other than Permitted Encumbrances.
6.5 Improvement Advances. At any time during that portion of the Term
commencing on the Commencement Date and expiring June 30, 1998, Landlord agrees
to advance to Tenant, from time to time, as hereinafter provided, an aggregate
amount of up to Two
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Million Five Hundred Thousand Dollars ($2,500,000) for the purpose of making
Capital Additions and Non-Capital Additions to the Collective Lease Properties.
The obligation of Landlord to make each advance pursuant to this Section 6.5
shall be subject to the prior or simultaneous satisfaction of the following
conditions:
(a) at the time of each disbursement, no Event of Default
shall have occurred and be continuing; and
(b) at least fifteen (15) Business Days before the date on
which Tenant desires a disbursement to be made hereunder (but in no
event subsequent to June 30, 1998), Tenant shall submit to Landlord a
written requisition and the substantiation therefor which shall include
bills and invoices with respect to the work for which reimbursement is
sought, together with such other information with respect thereto as
Landlord may reasonably require, including, without limitation, the
items identified in Section 6.3, if applicable. Any such requisition
shall be for not less than $250,000 (or such lesser amount as shall
constitute the difference between $2,500,000 and the aggregate of all
prior disbursements). Such requisitions shall be made not more
frequently than monthly.
6.6 Salvage. All materials which are scrapped or removed in connection
with the making of either Capital Additions or Non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party that paid for
such work.
ARTICLE 7
LIENS
7.1 Liens. Subject to Article 8, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge or bond over
in a manner reasonably satisfactory to Landlord, at its expense, any lien,
encumbrance, attachment, title retention agreement or claim upon the Collective
Leased Properties or Tenant's leasehold interest therein or any attachment,
levy, claim or encumbrance in respect of the Rent, other than (a) Permitted
Encumbrances; (b) restrictions, liens and other encumbrances which are consented
to in writing by Landlord; (c) liens for those taxes of Landlord which Tenant is
not required to pay hereunder; (d) subleases permitted by Article 17; (e) liens
for Impositions or for sums resulting from noncompliance with Legal Requirements
so long as
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(i) the same are not yet payable, or (ii) are being contested in accordance with
Article 8; (f) liens of mechanics, laborers, materialmen, suppliers or vendors
incurred in the ordinary course of business that are not yet due and payable or
are for sums that are being contested in accordance with Article 8; and (g) any
Facility Mortgages or other liens which are the responsibility of Landlord
pursuant to the provisions of Article 21.
7.2 Landlord's Lien. In addition to any statutory landlord's lien and
in order to secure payment of the Rent and all other sums payable hereunder by
Tenant, and to secure payment of any loss, cost or damage which Landlord may
suffer by reason of Tenant's breach of this Agreement, Tenant hereby grants unto
Landlord a security interest in and an express contractual lien upon Tenant's
Personal Property (except motor vehicles), and all ledger sheets, files,
records, documents and instruments (including, without limitation, computer
programs, tapes and related electronic data processing) relating primarily to
the operation of the Facilities (the "Records") and all proceeds therefrom,
subject to any Permitted Encumbrances; and such Tenant's Personal Property shall
not be removed from the Collective Leased Properties at any time when an Event
of Default has occurred and is continuing.
Upon Landlord's reasonable request, Tenant shall execute and deliver to
Landlord financing statements in form sufficient to perfect the security
interest of Landlord in Tenant's Personal Property and the proceeds thereof in
accordance with the provisions of the applicable laws of the State. Tenant
hereby grants Landlord an irrevocable limited power of attorney, coupled with an
interest, upon the occurrence and during the continuance of any Event of
Default, to execute all such financing statements in Tenant's name, place and
stead. The security interest herein granted is in addition to any statutory lien
for the Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim (collectively, "Claims") as to any of the
Collective Leased Properties, by appropriate legal proceedings, conducted in
good faith and with due diligence, provided that (a) the foregoing shall in no
way be construed as relieving, modifying or extending Tenant's obligation to pay
any Claims as finally determined; (b)
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such contest shall not cause Landlord or Tenant to be in default under any
mortgage or deed of trust encumbering such Leased Property or any interest
therein or result in a lien attaching to such Leased Property; (c) no part of
such Leased Property nor any Rent therefrom shall be in any immediate danger of
sale, forfeiture, attachment or loss; and (d) Tenant shall indemnify and hold
harmless Landlord from and against any cost, claim, damage, penalty or
reasonable expense, including reasonable attorneys' fees, incurred by Landlord
in connection therewith or as a result thereof. Upon Landlord's request, Tenant
shall either (i) provide a bond, title indemnity, endorsement or other assurance
reasonably satisfactory to Landlord that all Claims which may be assessed
against any of the Collective Leased Properties, together with all interest and
penalties thereon will be paid, or (ii) deposit within the time otherwise
required for payment with a bank or trust company, as trustee, as security for
the payment of such Claims, an amount sufficient to pay the same, together with
interest and penalties in connection therewith and all Claims which may be
assessed against or become a Claim on any of the Collective Leased Properties,
or any part thereof, in connection with any such contest. Tenant shall furnish
Landlord and any Facility Mortgagee with reasonable evidence of such deposit,
title indemnity, endorsement or other assurance within five (5) days after
request therefor. Landlord agrees to join in any such proceedings if required
legally to prosecute such contest, provided that Landlord shall not thereby be
subjected to any liability therefor (including, without limitation, for the
payment of any costs or expenses in connection therewith). Tenant shall be
entitled to any refund of any Claims and such charges and penalties or interest
thereon which have been paid by Tenant or paid by Landlord and for which
Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay
any Claims when finally determined, (y) to provide security therefor as provided
in this Article 8, or (z) to prosecute any such contest diligently and in good
faith, Landlord may, upon reasonable notice to Tenant which notice shall not be
required if Landlord shall reasonably determine that the same is not
practicable), pay such charges, together with interest and penalties due with
respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as
Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements. Tenant shall, at all times during
the Term and at any other time Tenant shall be in possession of any of the
Collective Leased Properties, keep each of the Collective Leased Properties and
all property located therein or thereon, including Tenant's Personal Property,
insured
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against the risks and in the amounts as follows and shall maintain the following
insurance:
(a) "All-risk" property insurance, including insurance against
loss or damage by fire, vandalism and malicious mischief, explosion of
steamboilers, pressure vessels or other similar apparatus, now or
hereafter installed in the Facility located at such Leased Property,
extended coverage perils, earthquake and all physical loss perils
insurance, including, but not limited to, sprinkler leakage, in an
amount equal to one hundred percent (100%) of the then full Replacement
Cost thereof (as defined in Section 9.2) with the usual extended
coverage endorsements, including a Replacement Cost Endorsement and
Builder's Risk Coverage during the continuance of any construction at
such Leased Property;
(b) Business interruption and blanket earnings plus extra
expense under a rental value insurance policy covering risk of loss
during the lesser of the first twelve (12) months of reconstruction or
the actual reconstruction period necessitated by the occurrence of any
of the hazards described in subparagraphs (a) and (b) above, in such
amounts as may be customary for comparable properties in the area and
in an amount sufficient to prevent Landlord or Tenant from becoming a
co-insurer;
(c) Comprehensive general liability insurance, including
bodily injury and property damage (on an occurrence basis and on a 1988
ISO CGL form or its equivalent or otherwise in the broadest form
available, including, without limitation, broad form contractual
liability, fire legal liability independent contractor's hazard and
completed operations coverage) in an amount not less than One Million
Dollars ($1,000,000) per occurrence, Two Million Dollars ($2,000,000)
in the aggregate and umbrella coverage of all such claims in an amount
not less than Twenty-Five Million Dollars ($25,000,000);
(d) Flood (when the applicable Leased Property is located in
whole or in part within an area identified as an area having special
flood hazards and in which flood insurance has been made available
under the National Flood Insurance Act of 1968, as amended, or the
Flood Disaster Protection Act of 1973, as amended (or any successor
acts thereto)) and such other hazards and in such amounts as may be
customary for comparable properties in the area;
(e) Worker's compensation insurance coverage for all persons
employed by Tenant on the applicable Leased Property with statutory
limits and otherwise with limits of and
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provisions in accordance with the requirements of applicable local,
State and federal law, and employer's liability insurance in such
amounts as Landlord and any Facility Mortgagee shall reasonably
require; and
(f) Such additional insurance as may be reasonably required,
from time to time, by Landlord or any Facility Mortgagee.
9.2 Replacement Cost. "Replacement Cost" as used herein shall mean the
actual replacement cost of the property requiring replacement from time to time,
including an increased cost of construction endorsement, less exclusions
provided in the standard form of fire insurance policy. In the event either
party believes that the then full Replacement Cost has increased or decreased at
any time during the Term, such party, at its own cost, shall have the right to
have such full Replacement Cost redetermined by an accredited appraiser approved
by the other, which approval shall not be unreasonably withheld or delayed. The
party desiring to have the full Replacement Cost so redetermined shall
forthwith, on receipt of such determination by such appraiser, give written
notice thereof to the other. The determination of such appraiser shall be final
and binding on the parties hereto, and Tenant shall forthwith conform the amount
of the insurance carried to the amount so determined by the appraiser.
9.3 Waiver of Subrogation. Landlord and Tenant agree that (insofar as
and to the extent that such agreement may be effective without invalidating or
making it impossible to secure insurance coverage from responsible insurance
companies doing business in the State) with respect to any property loss which
is covered by insurance then being carried by Landlord or Tenant, respectively,
the party carrying such insurance and suffering said loss releases the other of
and from any and all claims with respect to such loss; and they further agree
that their respective insurance companies shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra premium is payable by Tenant as a result
of this provision, Landlord shall not be liable for reimbursement to Tenant for
such extra premium.
9.4 Form Satisfactory, Etc. All insurance policies and endorsements
required pursuant to this Article 9 shall be fully paid for, nonassessable and
shall contain such provisions and expiration dates and be in such form and
amounts and issued by insurance carriers authorized to do business in the State,
having a general policy holder's rating of A or A+ in Best's latest rating
guide, and as otherwise shall be approved by Landlord. Without limiting the
foregoing, such policies shall include no deductible in excess of $25,000
(unless consistent with
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deductibles included in policies carried by entities engaged in similar
businesses and owning similar properties similarly situated and agreed to in
advance by Landlord) and, with the exception of the insurance described in
Section 9.1(e), shall name Landlord and any Facility Mortgagee as additional
insureds, as their interests may appear. All losses shall be payable to
Landlord, any Facility Mortgagee or Tenant as provided in Article 10. Any loss
adjustment shall require the prior written consent of Landlord, Tenant, and each
Facility Mortgagee, which consent shall not be unreasonably withheld, delayed or
conditioned by Landlord. Tenant shall pay all insurance premiums and deliver
policies or certificates thereof to Landlord prior to their effective date (and,
with respect to any renewal policy, thirty (30) days prior to the expiration of
the existing policy) and, in the event Tenant shall fail to effect such
insurance as herein required, to pay the premiums therefor or to deliver such
policies or certificates to Landlord or any Facility Mortgagee at the times
required, Landlord shall have the right, but not the obligation, upon the giving
of written Notice thereof to Tenant, to acquire such insurance and pay the
premiums therefor, which amounts shall be payable to Landlord, upon demand, as
Additional Charges, together with interest accrued thereon at the Overdue Rate
from the date such payment is made until the date repaid. All such policies
shall provide Landlord (and any Facility Mortgagee, if required by the same)
thirty (30) days' prior written notice of any modification, expiration or
cancellation of such policy.
9.5 Blanket Policy. Notwithstanding anything to the contrary contained
in this Article 9, Tenant's obligation to maintain the insurance herein required
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant and its Affiliated Persons, provided,
that (a) the coverage thereby afforded will not be reduced or diminished from
that which would exist under a separate policy meeting all other requirements of
this Agreement, and (b) the requirements of this Article 9 are otherwise
satisfied. Without limiting the foregoing, the amounts of insurance that are
required to be maintained pursuant to Section 9.1 shall be on a Facility by
Facility basis, and shall not be subject to an aggregate limit less than the sum
of the coverages required for each Leased Property (except in the case of the
umbrella coverage required under Section 9.1(c)).
9.6 No Separate Insurance. Tenant shall not take out separate
insurance, concurrent in form or contributing in the event of loss with that
required by this Article 9, or increase the amount of any existing insurance by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of such insurance, including
Landlord and all Facility Mortgagees, are included
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therein as additional insureds and the loss is payable under such insurance in
the same manner as losses are payable under this Agreement. In the event Tenant
shall take out any such separate insurance or increase any of the amounts of the
then existing insurance, Tenant shall give Landlord prompt Notice thereof.
9.7 Indemnification of Landlord. Notwithstanding the existence of any
insurance provided for herein and without regard to the policy limits of any
such insurance, Tenant shall protect, indemnify and hold harmless Landlord for,
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord (except to the extent that any
of the following result from Landlord's gross negligence or willful misconduct)
by reason of: (a) any accident, injury to or death of persons or loss of or
damage to property occurring on or about the Collective Leased Properties or
adjoining sidewalks or rights of way, including, without limitation, any claims
of malpractice; (b) any past, present or future use, misuse, non-use, condition,
management, maintenance or repair by Tenant or anyone claiming under Tenant of
the Collective Leased Properties or Tenant's Personal Property or any
litigation, proceeding or claim by governmental entities or other third parties
to which Landlord is made a party or participant relating to the Collective
Leased Properties or Tenant's Personal Property or such use, misuse, non-use,
condition, management, maintenance, or repair thereof including, failure to
perform obligations (other than Condemnation proceedings) to which Landlord is
made a party; (c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Agreement); and (d) any failure on
the part of Tenant or anyone claiming under Tenant to perform or comply with any
of the terms of this Agreement. Tenant shall pay all amounts payable under this
Section 9.7 within ten (10) Business Days after demand therefor, and if not
timely paid, such amounts shall bear interest at the Overdue Rate from the date
of determination to the date of payment. Tenant, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against Landlord or may compromise or otherwise dispose of the same, with
Landlord's prior written consent (which consent may not be unreasonably
withheld, delayed or conditioned). The obligations of Tenant under this Section
9.7 are in addition to the obligations set forth in Section 4.4 and shall
survive the termination of this Agreement.
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ARTICLE 10
CASUALTY
10.1 Insurance Proceeds. All proceeds payable by reason of any loss or
damage to the Collective Leased Properties, or any portion thereof, and insured
under any policy of insurance required by Article 9 (including, without
limitation, proceeds of any business interruption insurance) shall be paid
directly to Landlord (subject to the provisions of Section 10.2). If Tenant is
required to reconstruct or repair any of the Collective Leased Properties as
provided herein, such proceeds shall be paid out by Landlord from time to time
for the reasonable costs of reconstruction or repair of such Leased Property
necessitated by such damage or destruction, subject to the provisions of Section
10.2.4. Provided no Event of Default has occurred and is continuing, any excess
proceeds of insurance remaining after the completion of the restoration shall be
paid to Tenant. In the event that Section 10.2.1 below is applicable, the
insurance proceeds shall be retained by the party entitled thereto pursuant to
Section 10.2.1. All salvage resulting from any risk covered by insurance shall
belong to Landlord, except any salvage related to Tenant's Capital Additions and
Tenant's Personal Property shall belong to Tenant.
10.2 Damage or Destruction.
10.2.1 Damage or Destruction of Leased Property. If, during
the Term, any of the Collective Leased Properties shall be totally or
partially destroyed and the Facility located thereon is thereby
rendered Unsuitable for Its Primary Intended Use, Tenant shall, at its
option, exercisable by the giving of Notice thereof to Landlord within
sixty (60) days after the date of casualty, elect either (a) to
purchase such Leased Property from Landlord for a purchase price equal
to the greater of (i) the Adjusted Purchase Price of such Leased
Property and (ii) the Fair Market Value Purchase Price of such Leased
Property immediately prior to such damage or destruction, or (b)
terminate this Agreement with respect to the affected Leased Property.
Failure by Tenant to give such Notice prior to the expiration of such
60-day period shall be deemed an election by Tenant to purchase such
Leased Property in accordance with clause (a) preceding. In the event
Tenant elects to terminate this Agreement with respect to the affected
Leased Property, this Agreement shall, thereupon, terminate with
respect to the applicable Leased Property and Landlord shall be
entitled to retain the insurance proceeds payable on account of such
damage. In the event Tenant purchases such Leased Property as provided
in this Section 10.2.1, the insurance proceeds payable on account of
such damage shall be paid to Tenant. If Tenant purchases the applicable
Leased Property as provided herein, the closing
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with respect thereto shall occur on a date designated by Landlord by
Notice to Tenant (but in no event prior to 30 days after such Notice),
this Agreement shall terminate as to the applicable Leased Property
upon payment of the purchase price therefor, and Landlord shall remit
to Tenant all insurance proceeds pertaining to the applicable Leased
Property then held by Landlord. Upon termination of this Agreement with
respect to such Leased Property as hereinabove provided, the Minimum
Rent thereafter payable hereunder shall be reduced by an amount
reasonably determined by Landlord in good faith to be that portion of
the Minimum Rent allocable to such Leased Property.
10.2.2 Partial Damage or Destruction. If, during the Term, any
of the Collective Leased Properties shall be totally or partially
destroyed but the Facility located thereon is not rendered Unsuitable
for Its Primary Intended Use, Tenant shall promptly restore such
Facility as provided in Section 10.2.4.
10.2.3 Insufficient Insurance Proceeds. If the cost of the
repair or restoration of the applicable Leased Property exceeds the
amount of insurance proceeds received by Landlord pursuant to Article
9, Tenant shall contribute any excess amounts needed to restore such
Leased Property. Such difference shall be paid by Tenant to Landlord
and held by Landlord, together with any other insurance proceeds, for
application to the cost of repair and restoration.
10.2.4 Disbursement of Proceeds. In the event Tenant is
required to restore the applicable Leased Property pursuant to Section
10.2, Tenant shall, at its sole cost and expense, commence promptly and
continue diligently to perform the repair and restoration of such
Leased Property (hereinafter called the "Work"), or shall cause the
same to be done, so as to restore such Leased Property in full
compliance with all Legal Requirements and so that such Leased Property
shall be at least equal in value and general utility to its general
utility and value immediately prior to such damage or destruction.
Subject to the terms hereof, Landlord shall advance the insurance
proceeds (other than proceeds of business interruption insurance which
shall be advanced as provided below) and the amounts paid to it
pursuant to Section 10.2.3 to Tenant regularly during the repair and
restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be for not less than
$250,000 (or such lesser amount as equals the entire balance of the
repair and restoration) and Tenant shall submit to Landlord a written
requisition and substantiation therefor on AIA Forms G702 and G703 (or
on such other form or forms as may be acceptable to Landlord). Landlord
may, at its option, condition advancement of said insurance proceeds
and other
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amounts on (a) the absence of any Default or Event of Default; (b) its
reasonable approval of plans and specifications of an architect
reasonably satisfactory to Landlord; (c) general contractors'
estimates; (d) architect's certificates; (e) unconditional lien waivers
of general contractors; (f) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required; and
(g) such other certificates as Landlord may, from time to time,
reasonably require. Proceeds of business interruption insurance shall
be applied by Landlord to the payment of all Minimum Rent, Additional
Rent and Additional Charges then due and payable and to become due and
payable for the period for which such proceeds have been paid by the
insurance provider. Any excess shall, provided no Event of Default has
occurred and is continuing, be disbursed to Tenant. If an Event of
Default has occurred, Landlord shall apply such amounts to amounts due
and owing under this Agreement and to the costs of collection of the
same and shall pay any excess to Tenant.
Landlord's obligation to disburse insurance proceeds under
this Article 10 shall be subject to the release of such proceeds by the
applicable Facility Mortgagee to Landlord.
Tenant's obligation to restore the applicable Leased Property
pursuant to this Article 10 shall be subject to the release of
available insurance proceeds by the applicable Facility Mortgagee to
Landlord and by Landlord to Tenant in accordance with the terms of this
Agreement.
10.3 Damage Near End of Term. Notwithstanding any provisions of Section
10.1 or 10.2 to the contrary, if damage to or destruction of any of the
Collective Leased Properties occurs during the last twenty-four (24) months of
the Term and if such damage or destruction cannot reasonably be expected to be
fully repaired and restored prior to the date that is twelve (12) months prior
to the end of such Term, the provisions of Section 10.2.1 shall apply as if such
Leased Property had been totally or partially destroyed and the Facility located
thereon rendered Unsuitable for its Primary Intended Use.
10.4 Tenant's Property. All insurance proceeds payable by reason of any
loss of or damage to any of Tenant's Personal Property or Tenant's Capital
Additions shall be paid to Tenant and, to the extent necessary to repair or
replace Tenant's Capital Additions or Tenant's Personal Property in accordance
with Section 10.5, Tenant shall hold such proceeds in trust to pay the cost of
repairing or replacing damaged Tenant's Personal Property or Tenant's Capital
Additions.
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10.5 Restoration of Tenant's Property. If Tenant is required to restore
the applicable Leased Property as hereinabove provided, Tenant shall either (a)
restore all alterations and improvements made by Tenant, Tenant's Personal
Property and all Tenant's Capital Additions, or (b) replace such alterations and
improvements, Tenant's Personal Property, and/or Tenant's Capital Additions with
improvements or items of the same or better quality and utility in the operation
of such Leased Property.
10.6 No Abatement of Rent. This Agreement shall remain in full force
and effect and Tenant's obligation to make all payments of Rent and to pay all
other charges as and when required under this Agreement shall, except as
otherwise provided in Section 10.2.1, remain unabated during the Term
notwithstanding any damage involving any of the Collective Leased Properties
(provided that Landlord shall credit against such payments any amounts paid to
Landlord as a consequence of such damage under any business interruption
insurance obtained by Tenant hereunder). The provisions of this Article 10 shall
be considered an express agreement governing any cause of damage or destruction
to the applicable Leased Property and, to the maximum extent permitted by law,
no local or State statute, law, rule, regulation or ordinance in effect during
the Term which provide for such a contingency shall have any application in such
case.
10.7 Waiver. Tenant hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction of any of the Collective
Leased Properties.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc. If either (a) the whole of any of the
Collective Leased Properties shall be taken by Condemnation or (b) a
Condemnation of less than the whole of any of the Collective Leased Properties
renders such Leased Property Unsuitable for Its Primary Intended Use, this
Agreement shall terminate with respect to such Leased Property, Tenant and
Landlord shall seek the Award for their interests in such Leased Property as
provided in Section 11.5 and the Minimum Rent thereafter payable shall be
reduced by an amount reasonably determined by Landlord in good faith to be that
portion of the Minimum Rent allocable to such Leased Property. If the Award
received by Landlord for Landlord's interest in such Leased Property is less
than the greater of (x) the Adjusted Purchase Price or (y) the Fair Market Value
Purchase Price of such Leased Property immediately prior to such Condemnation,
Tenant shall contribute and pay to Landlord the amount of such shortfall.
11.2 Partial Condemnation. In the event of a Condemnation of less than
the whole of any of the Collective Leased Properties such that such Leased
Property is still suitable for its Primary Intended Use, Tenant shall, at its
sole cost and expense,
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commence promptly and continue diligently to restore the untaken portion of the
Leased Improvements on such Leased Property so that such Leased Improvements
shall constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the Leased
Improvements existing immediately prior to such Condemnation, in full compliance
with all Legal Requirements. Subject to the terms hereof, Landlord shall
contribute to the cost of restoration that part of the Award necessary to
complete such repair or restoration, together with severance and other damages
awarded for the taken Leased Improvements, to Tenant regularly during the
restoration period so as to permit payment for the cost of such repair or
restoration. Landlord may, at its option, condition advancement of such Award
and other amounts on (a) the absence of any Event of Default; (b) its approval
of plans and specifications of an architect satisfactory to Landlord (which
approval shall not be unreasonably withheld or delayed); (c) general
contractors' estimates; (d) architect's certificates; (e) unconditional lien
waivers of general contractors; (f) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required; and (g) such
other certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation under this Section 11.2 to disburse the Award and such
other amounts shall be subject to (x) the collection thereof by Landlord and (y)
the satisfaction of any applicable requirements of any Facility Mortgage, and
the release of such Award by the applicable Facility Mortgagee. Tenant's
obligation to restore the applicable Leased Property shall be subject to the
release of the Award by the applicable Facility Mortgagee to Landlord and
Landlord's release of the Award to Tenant in accordance with the terms of this
Agreement. If the cost of the restoration of the applicable Leased Property
exceeds that part of the Award necessary to complete such restoration, together
with severance and other damages awarded for the taken Leased Improvements,
Tenant shall contribute upon the demand of Landlord any excess amounts needed to
restore such Leased Property. Such difference shall be paid by Tenant to
Landlord and held by Landlord, together with such part of the Award and such
severance and other damages, for application to the cost of restoration.
11.3 Abatement of Rent. Other than as specifically provided in this
Agreement, this Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Collective Leased Properties. The
provisions of this Article 11 shall be considered an express agreement governing
any Condemnation involving any or all of the Collective Leased Properties and,
to the maximum extent permitted bylaw, no local or State statute, law, rule,
regulation or ordinance in effect during the Term which provides for such a
contingency shall have any application in such case.
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11.4 Temporary Condemnation. In the event of any temporary Condemnation
of all or any part of the Collective Leased Properties or Tenant's interest
therein, this Agreement shall continue in full force and effect, and Tenant
shall continue to pay, in the manner and on the terms herein specified, the full
amount of the Rent. Tenant shall continue to perform and observe all of the
other terms and conditions this Agreement on the part of the Tenant to be
performed and observed. Provided no Event of Default has occurred and is
continuing, the entire amount of any Award made for such temporary Condemnation
allocable to the Term, whether paid by way of damages, rent or otherwise, shall
be paid to Tenant. Tenant shall, promptly upon the termination of any such
period of temporary Condemnation, at its sole cost and expense, restore such
Leased Property to the condition that existed immediately prior to such
Condemnation, in full compliance with all Legal Requirements, unless such period
of temporary Condemnation shall extend beyond the expiration of the Term, in
which event Tenant shall not be required to make such restoration. For purposes
of this Section 11.4, a Condemnation shall be deemed to be temporary if the
period of such Condemnation is not expected to, and does not, exceed twenty-four
(24) months.
11.5 Allocation of Award. Except as provided in the second sentence of
this Section 11.5, the total Award shall be solely the property of and payable
to Landlord. Any portion of the Award made for the taking of Tenant's leasehold
interest in the applicable Leased Property, Tenant's Capital Additions, loss of
business during the remainder of the Term, the taking of Tenant's Personal
Property, or Tenant's removal and relocation expenses shall be the sole property
of and payable to Tenant (subject to the provisions of Section 11.2). In any
Condemnation proceedings, Landlord and Tenant shall each seek its own Award in
conformity herewith, at its own expense.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) should Tenant fail to make any payment of the Rent when
due and such failure shall continue for a period of five (5) Business
Days after the due date or should Tenant fail to pay any other sum
(including, but not limited to, payment of the purchase price for any
of the Collective Leased Properties which Tenant shall be obligated to
purchase pursuant to the terms of this Agreement) payable hereunder
when due and such failure shall continue for a period of five (5)
Business Days after Notice thereof; or
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(b) should Tenant shall fail to maintain the insurance
coverages required under Article 9; or
(c) should Tenant default in the due observance or performance
of any of the terms, covenants or agreements contained herein to be
performed or observed by it (other than as specified in clauses (a) and
(b) above) or should any Guarantor or any Permitted Subtenant default
in the due observance or performance of any of the terms, covenants or
agreements contained in any Incidental Document, and, in any such case,
such default shall continue for a period of fifteen (15) days after
Notice thereof from Landlord to Tenant (provided that no such notice
shall be required if Landlord shall reasonably determine immediate
action is necessary to protect person or property); provided, however,
that if such default is susceptible of cure but such cure cannot be
accomplished with due diligence within such period of time and if, in
addition, Tenant, such Guarantor or such Permitted Subtenant commences
to cure such default within thirty (30) days after Notice thereof from
Landlord and thereafter prosecutes the curing of such default with all
due diligence, such period of time shall be extended to such period of
time (not to exceed an additional sixty (60) days in the aggregate) as
may be necessary to cure such default with all due diligence; or
(d) should any obligation of Tenant or any of the Permitted
Subtenants, in respect of any Indebtedness for money borrowed or for
the deferred purchase price of any material property or services
(excluding trade accounts payable in the ordinary course of business on
customary trade terms) or any guaranty relating thereto, be declared to
be or become due and payable prior to the stated maturity thereof and
any applicable grace or notice period with respect thereto shall have
lapsed, or should there occur and be continuing with respect to any
such Indebtedness or deferred purchase price any default under any
instrument or agreement evidencing or securing the same, the effect of
which is to permit the holder or holders of such instrument or
agreement or a trustee, agent or other representative on behalf of such
holder or holders, to cause such any such obligations to become due
prior to its stated maturity and any applicable grace or notice period
with respect thereto shall have lapsed (provided that, in any such
event, the same shall not be deemed an Event of Default if Tenant or
any Permitted Subtenant shall be contesting the same in good faith and
shall provide such security with respect thereto as Landlord may
reasonably require); or
(e) should any obligation of any Guarantor, in respect of any
Indebtedness for money borrowed or for the deferred purchase price of
any material property or services (excluding trade accounts payable in
the ordinary course of business on customary trade terms) or any
guaranty relating
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thereto, be declared to be or become due and payable prior to the
stated maturity thereof and any applicable grace or notice period with
respect thereto shall have lapsed, or should there occur and be
continuing with respect to any such Indebtedness or deferred purchase
price any default under any instrument or agreement evidencing or
securing the same, the effect of which is to permit the holder or
holders of such instrument or agreement or a trustee, agent or other
representative on behalf of such holder or holders, to cause such any
such obligations to become due prior to its stated maturity and any
applicable grace or notice period with respect thereto shall have
lapsed and Landlord shall reasonably determine such event may
materially and adversely impact such Guarantor's ability to perform its
respective obligations under the Guaranty (provided that, in any such
event, the same shall not be deemed an Event of Default if such
Guarantor shall be contesting the same in good faith and shall provide
such security with respect thereto as Landlord may reasonably require);
or
(f) should there occur a final unappealable determination by
applicable State authorities of the revocation or limitation of any
license, permit, certification or approval required for the lawful
operation of any of the Facilities in accordance with its Primary
Intended Use or the loss or limitation of any license, permit,
certification or approval under any other circumstances under which
Tenant or any of the Permitted Subtenants is required to cease its
operation of such Facility in accordance with its Primary Intended Use
at the time of such loss or limitation and such event or failure has a
material adverse effect on the use or operation of the applicable
Leased Property or an adverse effect on Total Revenues; or
(g) should any representation or warranty made by or on behalf
of Tenant, any Guarantor or any Permitted Subtenant under or in
connection with this Agreement, any Incidental Document, or in any
document, certificate or agreement delivered in connection herewith or
therewith prove to have been false or misleading in any material
respect on the day when made or deemed made; or
(h) should Tenant, any Guarantor or any Permitted Subtenant
generally not be paying its debts as they become due, or should Tenant,
any Guarantor or any Permitted Subtenant, make a general assignment for
the benefit of creditors; or
(i) should any petition be filed by or against Tenant, any
Guarantor or any Permitted Subtenant under the Federal bankruptcy laws,
or should any other proceeding be instituted by or against Tenant, any
Guarantor or any Permitted Subtenant seeking to adjudicate it a
bankrupt or
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insolvent, or seeking liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for Tenant, such
Guarantor or Permitted Subtenant, or for any substantial part of the
property of Tenant, such Guarantor or Permitted Subtenant, and any such
proceeding is not dismissed within ninety (90) days after institution
thereof, or should Tenant, such Guarantor or Permitted Subtenant take
any action to authorize or effect any of the actions set forth above in
this paragraph; or
(j) should Tenant, any Guarantor or any Permitted Subtenant
any proceeding for its dissolution or termination; or
(k) should Tenant or any of the Permitted Subtenants
voluntarily cease operation of any of the Collective Leased Properties
for its Primary Intended Use for a period in excess of thirty (30)
consecutive days, except as a result of damage, destruction or partial
or complete Condemnation; or
(l) should a default shall occur under any mortgage which is
secured by Tenant's leasehold interest hereunder or the mortgagee under
any such mortgage accelerates the indebtedness secured thereby or
commence a foreclosure action in connection with said mortgage; or
(m) should the estate or interest of Tenant or any of the
Permitted Subtenants in any of the Collective Leased Properties or any
part thereof be levied upon or attached in any proceeding and the same
shall not be vacated or discharged within the later of (x) one hundred
and twenty (120) days after commencement thereof, unless the amount in
dispute is less than $10,000, in which case Tenant shall give notice to
Landlord of the dispute but Tenant may defend in any suitable way, and
(y) thirty (30) days after receipt by Tenant of Notice thereof from
Landlord (unless Tenant shall be contesting such lien or attachment in
good faith in accordance with Article 8); or
(n) should there occur any Change in Control of the Tenant,
any Guarantor or any of the Permitted Subtenants, except for any Change
in Control of Tenant as a result of the closing of the IPO, or as
otherwise permitted by Section 16.1; or
(o) should any default occur under the Permitted Subleases and
continue beyond the expiration of any applicable notice or cure period;
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then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement with respect to any or all of the
Collective Leased Properties by giving Notice thereof to Tenant and upon the
expiration of the time, if any, fixed in such Notice, this Agreement shall
terminate and all rights of Tenant under this Agreement shall cease with respect
to such of the Collective Leased Properties as shall have been identified in
such Notice. Landlord shall have and may exercise all rights and remedies
available at law and in equity to Landlord as a result of Tenant's breach of
this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition
to any other remedies provided herein, subject to applicable law, enter upon the
Collective Leased Properties or any portion thereof and take possession of any
and all of Tenant's Personal Property and the Records (subject to any
prohibitions or limitations to disclosure of any such data as described in
Section 3.1.2(e)) on any such Leased Property, without liability for trespass or
conversion (Tenant hereby waiving any right to notice or hearing prior to such
taking of possession by Landlord) and sell the same at public or private sale,
after giving Tenant reasonable Notice of the time and place of any public or
private sale, at which sale Landlord or its assigns may purchase all or any
portion of Tenant's Personal Property unless otherwise prohibited by law. Unless
otherwise provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable Notice shall be
met if such Notice is given at least ten (10) days before the date of sale. The
proceeds from any such disposition, less all expenses incurred in connection
with the taking of possession, holding and selling of such property (including,
reasonable attorneys' fees) shall be applied as a credit against the
indebtedness which is secured by the security interest granted in Section 7.2.
Any surplus shall be paid to Tenant or as otherwise required by law and Tenant
shall pay any deficiency to Landlord, as Additional Charges, upon demand.
12.2 Remedies. None of (a) the termination of this Agreement with
respect to any or all of the Collective Leased Properties pursuant to Section
12.1; (b) the repossession of any or all of the Collective Leased Properties or
any portion thereof; (c) the failure of Landlord to re-let any or all of the
Collective Leased Properties or any portion thereof; nor (d) the reletting of
all or any of portion of the Collective Leased Properties, shall relieve Tenant
of its liability and obligations hereunder, all of which shall survive any such
termination, repossession or re-letting. In the event of any such termination,
Tenant shall forthwith pay to Landlord all Rent due and payable with respect to
the any of the Collective Leased Properties as to which this Agreement is so
terminated through and including the date of such termination and, if this
Agreement shall be terminated with respect to less than all of the Collective
Leased Properties, the allocation of the Rent with
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respect to the Collective Leased Properties as to which this Agreement shall
have been terminated shall be made in such manner as Landlord, in Landlord's
sole and absolute discretion, shall determine. Thereafter, Tenant, until the end
of what would have been the Term of this Agreement in the absence of such
termination, and whether or not any of the Collective Leased Properties as to
which this Agreement is so terminated or any portion thereof shall have been
re-let, shall be liable to Landlord for, and shall pay to Landlord, as current
damages, the Rent and other charges which would be payable hereunder for the
remainder of the Term had such termination not occurred, less the net proceeds,
if any, of any re-letting of the applicable Leased Property, after deducting all
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys' fees,
advertising, expenses of employees, alteration costs and expenses of preparation
for such reletting, and, if this Agreement shall be terminated with respect to
less than all of the Collective Leased Properties, the allocation of the Rent
with respect to the Collective Leased Properties as to which this Agreement
shall have been terminated shall be made in such manner as Landlord, in
Landlord's reasonable discretion in good faith, shall determine. Tenant shall
pay such current damages to Landlord monthly on the days on which the Minimum
Rent would have been payable hereunder if this Agreement had not been so
terminated with respect to such of the Collective Leased Properties.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord either
(a) an amount equal to the excess, if any, of the Rent and other charges which
would be payable hereunder from the date of such termination (assuming that, for
the purposes of this paragraph, annual payments by Tenant on account of
Impositions would be the same as payments required for the immediately preceding
twelve calendar months, or if less than twelve calendar months have expired
since the Commencement Date, the payments required for such lesser period
projected to an annual amount) for what would be the then unexpired term of this
Agreement if the same remained in effect, over the Fair Market Rental for the
same period, or (b) an amount equal to the lesser of (i) the Rent and other
charges that would have been payable for the balance of the Term had it not been
terminated, and (ii) the aggregate of the Rent and other charges accrued in the
twelve (12) months ended next prior to such termination (without reduction for
any free rent or other concession or abatement); provided, however, that if this
Agreement shall have been terminated with respect to less than all of the
Collective Leased Properties, the allocation of the Rent with respect to the
Collective Leased Properties as to which this Agreement shall have been
terminated shall be made in such manner as Landlord, in Landlord's sole and
absolute discretion, shall determine. In the event this Agreement is so
terminated prior to the expiration of the first full year of the Term, the
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liquidated damages which Landlord may elect to recover pursuant to clause (b)
(ii) of this paragraph shall be calculated as if such termination had occurred
on the first anniversary of the Commencement Date. Nothing contained in this
Agreement shall, however, limit or prejudice the right of Landlord to prove and
obtain in proceedings for bankruptcy or insolvency an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater than, equal to, or less than the amount of the loss or
damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession
by summary proceedings or otherwise, Landlord may (a) relet any of the
Collective Leased Properties as to which this Agreement is so terminated or any
part or parts thereof, either in the name of Landlord or otherwise, for a term
or terms which may at Landlord's option, be equal to, less than or exceed the
period which would otherwise have constituted the balance of the Term and may
grant concessions or free rent to the extent that Landlord considers advisable
and necessary to relet the same, and (b) may make such reasonable alterations,
repairs and decorations in any applicable Leased Property or any portion thereof
as Landlord, in its reasonable discretion, in good faith, considers advisable
and necessary for the purpose of reletting any such Leased Property; and the
making of such alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall in no event be liable in any way whatsoever for any failure to relet all
or any portion of the Collective Leased Properties, or, in the event that any of
the Collective Leased Properties is relet, for failure to collect the rent under
such reletting. To the maximum extent permitted by law, Tenant hereby expressly
waives any and all rights of redemption granted under any present or future laws
in the event of Tenant being evicted or dispossessed, or in the event of
Landlord obtaining possession of any of the Collective Leased Properties, by
reason of the violation by Tenant of any of the covenants and conditions of this
Agreement.
12.3 Tenant's Waiver. IF THIS AGREEMENT IS TERMINATED WITH RESPECT TO
ANY OF THE COLLECTIVE LEASED PROPERTIES PURSUANT TO SECTION 12.1 OR 12.2, TENANT
WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE
EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE
12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY
FROM LIABILITY FOR RENT OR FOR DEBT.
12.4 Application of Funds. Any payments received by Landlord under any
of the provisions of this Agreement during the existence or continuance of any
Event of Default (and any payment made to Landlord rather than Tenant due to the
existence of any Event of Default) shall be applied to Tenant's obligations
under
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this Agreement in such order as Landlord may determine or as may be required by
applicable law.
12.5 Landlord's Right to Cure Tenant's Default. If an Event of Default
shall have occurred and be continuing, Landlord, after Notice to Tenant (which
Notice shall not be required if Landlord shall reasonably determine in good
faith immediate action is necessary to protect person or property), without
waiving or releasing any obligation of Tenant and without waiving or releasing
any Event of Default, may (but shall not be obligated to), at any time
thereafter, make such payment or perform such act for the account and at the
expense of Tenant, and may, to the maximum extent permitted by law, enter upon
any of the Collective Leased Properties or any portion thereof for such purpose
and take all such action thereon as, in Landlord's reasonable discretion, in
good faith, may be necessary or appropriate therefor, including the management
of the Facility located thereon by Landlord or its designee, and Tenant hereby
irrevocably appoints, in the event of such election by Landlord, upon the
occurrence and during the continuance of any Event of Default, Landlord or its
designee as manager of any such Facility and its attorney in fact for such
purpose, irrevocably and coupled with an interest, in the name, place and stead
of Tenant. No such entry shall be deemed an eviction of Tenant. All reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection therewith, together with interest thereon (to
the extent permitted by law) at the Overdue Rate from the date such sums are
paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.
12.6 Trade Names. If this Agreement is terminated with respect to any
of the Collective Leased Properties for any reason, Tenant shall not use a
Facility Trade Name in the same market in which the Facility located thereon is
located in connection with any business that competes with such Facility.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination
of this Agreement shall be treated as a daily tenancy at sufferance at a rate
equal to two (2) times the Minimum Rent and the Additional Rent then in effect
plus Additional Charges and other charges herein provided (prorated on a daily
basis). Tenant shall also pay to Landlord all damages (direct or indirect)
sustained by reason of any such holding over. Otherwise, such holding over shall
be on the terms and conditions set forth in this Agreement, to the extent
applicable. 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 Agreement.
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ARTICLE 14
LANDLORD'S DEFAULT
If Landlord shall default in the performance or observance of any of
its covenants or obligations set forth in this Agreement and such default shall
continue for a period of thirty (30) days after Notice thereof from Tenant to
Landlord and any applicable Facility Mortgagee, or such additional period as may
be reasonably required to correct the same, Tenant may declare the occurrence of
a "Landlord Default" by a second Notice to Landlord and to such Facility
Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the
provisions of the following paragraph, invoice Landlord for costs and expenses
(including reasonable attorneys' fees and court costs) incurred by Tenant in
curing the same, together with interest thereon from the date Landlord receives
Tenant's invoice, at the Overdue Rate. Tenant shall have no right to terminate
this Agreement for any default by Landlord hereunder and no right, for any such
default, to offset or counterclaim against any Rent or other charges due
hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord
Default and Landlord, before the expiration of the applicable cure period, shall
give Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such
dispute within ten (10) days after Landlord's Notice of dispute, either may
submit the matter for resolution to a court of competent jurisdiction.
ARTICLE 15
PURCHASE OF LEASED PROPERTY
In the event Tenant shall purchase any of the Collective Leased
Properties from Landlord pursuant to the terms of this Agreement, Landlord
shall, upon receipt from Tenant of the applicable purchase price, together with
full payment of any unpaid Rent and other charges due and payable with respect
to any period ending on or before the date of the purchase, deliver to Tenant an
appropriate deed or other instruments, conveying the entire interest of Landlord
in and to such Leased Property to Tenant, free and clear of all encumbrances
created through the act or omission of Landlord other than (i) Permitted
Encumbrances and such other liens, if any, which Tenant has agreed in writing to
accept and take title subject to, and (ii) encumbrances imposed on such Leased
Property under Section 5.5. The
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difference between the applicable purchase price and the total cost of
discharging the encumbrances described in clause (i) preceding shall be paid to
Landlord or as Landlord may direct, by wire transfer of immediately available
federal funds. Such Leased Property shall be conveyed to Tenant on an "as is"
basis and in its "as-is" physical condition. The closing of any such sale shall
be subject to all terms and conditions with respect thereto set forth in this
Agreement and shall, unless waived by Tenant, be contingent upon and subject to
Tenant's obtaining all required governmental consents and approvals for such
transfer. All expenses of such conveyance, including, without limitation, all
transfer and sales taxes, documentary fees, the fees and expenses of counsel to
Landlord and the cost of any title examination or title insurance, shall be paid
by Tenant.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment. Except as provided in the last sentence
of this paragraph and Section 16.3 below, Tenant shall not, without the prior
written consent of a majority of the Independent Trustees and a majority of the
Trustees, assign, mortgage, pledge, hypothecate, encumber or otherwise transfer
this Agreement or sublease (which term shall be deemed to include the granting
of concessions, licenses and the like), all or any part of the Collective Leased
Properties or suffer or permit this Agreement or the leasehold estate created
hereby or any other rights arising under this Agreement to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law, or permit the
use or occupancy of any of the Collective Leased Properties by anyone other than
Tenant, or any of the Collective Leased Properties to be offered or advertised
for assignment or subletting. For purposes of this Section 16.1, an assignment
of this Agreement shall be deemed to include any Change in Control of Tenant
(other than any Change in Control resulting from (x) the closing of the IPO, (y)
the trading of shares by the public on a nationally recognized exchange,
including, without limitation, NASDAQ, or (z) the issuance of additional equity
interests in Tenant or any Guarantor on commercially reasonable terms) or any
transaction pursuant to which Tenant is merged or consolidated with another
entity or pursuant to which all or substantially all of Tenant's assets are
transferred to any other entity, as if such change in control or transaction
were an assignment of this Agreement. Landlord's consent shall not be required
in connection with the transfer of all of the interests in Tenant to Prime,
provided that Prime shall, simultaneously therewith, execute and deliver to
Landlord a Stock Pledge and Security Agreement in the form of the Stock Pledge
Agreement.
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If this Agreement is assigned or if any of the Collective Leased
Properties or any part thereof are sublet (or occupied by anybody other than
Tenant or residents of the units at the Facilities) Landlord may collect the
rents from such assignee, subtenant or occupant, as the case may be, and apply
the net amount collected to the Rent herein reserved, but no such collection
shall be deemed a waiver of the provisions set forth in the first paragraph of
this Section 16.1, the acceptance by Landlord of such assignee, subtenant or
occupant, as the case may be, as a tenant, or a release of Tenant from the
future performance by Tenant of its covenants, agreements or obligations
contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder, and no consent to any subletting or
assignment in a particular instance shall be deemed to be a waiver of the
prohibition set forth in this Section 16.1. No assignment, subletting or
occupancy shall affect any Primary Intended Use. Any subletting, assignment or
other transfer of Tenant's interest under this Agreement in contravention of
this Section 16.1 shall be voidable at Landlord's option.
16.2 Required Sublease Provisions. Any sublease of all or any portion
of any of the Collective Leased Properties (except to residents of the units
located at the Facilities) shall provide (a) that it is subject and subordinate
to this Agreement and to the matters to which this Agreement is or shall be
subject or subordinate; (b) that in the event of termination of this Agreement
or reentry or dispossession of Tenant by Landlord under this Agreement, Landlord
may, at its option, terminate such sublease or take over all of the right, title
and interest of Tenant, as sublessor under such sublease, and such subtenant
shall, at Landlord's option, attorn to Landlord pursuant to the then executory
provisions of such sublease, except that neither Landlord nor any Facility
Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such
mortgagee succeeds to that position, shall (i) be liable for any act or omission
of Tenant under such sublease, (ii) be subject to any credit, counterclaim,
offset or defense which theretofore accrued to such subtenant against Tenant,
(iii) be bound by any previous modification of such sublease not consented to in
writing by Landlord or by any previous prepayment of more than one (1) month's
Rent, (iv) be bound by any covenant of Tenant to undertake or complete any
construction of such Leased Property or any portion thereof, (v) be required to
account for any security deposit of the subtenant other than any security
deposit actually delivered to Landlord by Tenant, (vi) be bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease that are performed after the date
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of such attornment, (vii) be responsible for any monies owing by Tenant to the
credit of such subtenant, or (viii) be required to remove any Person occupying
any portion of the Collective Leased Properties; and (c), in the event that such
subtenant receives a written Notice from Landlord or any Facility Mortgagee
stating that an Event of Default has occurred and is continuing, such subtenant
shall thereafter be obligated to pay all rentals accruing under such sublease
directly to the party giving such Notice or as such party may direct. All
rentals received from such subtenant by Landlord or the Facility Mortgagee, as
the case may be, shall be credited against the amounts owing by Tenant under
this Agreement and such sublease shall provide that the subtenant thereunder
shall, at the request of Landlord, execute a suitable instrument in confirmation
of such agreement to attorn. An original counterpart of each such sublease and
assignment and assumption, duly executed by Tenant and such subtenant or
assignee, as the case may be, in form and substance reasonably satisfactory to
Landlord, shall be delivered promptly to Landlord and (a) in the case of an
assignment, the assignee shall assume in writing and agree to keep and perform
all of the terms of this Agreement on the part of Tenant to be kept and
performed and shall be, and become, jointly and severally liable with Tenant for
the performance thereof and (b) in case of either an assignment or subletting,
Tenant shall remain primarily liable, as principal rather than as surety, for
the prompt payment of the Rent and for the performance and observance of all of
the covenants and conditions to be performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 16.1.
16.3 Permitted Subleases. Notwithstanding the foregoing, but subject to
the provisions of Section 16.4 and any other express conditions or limitations
set forth herein, Tenant may enter into the Permitted Subleases and third party
residency agreements with respect to the units located at the Facilities and
may, in each instance after Notice to Landlord, sublease space at any of the
Collective Leased Properties for laundry, commissary or child care purposes or
other concessions in the ordinary course of business, so long as such sublease
will not reduce the number of units at the applicable Facility, will not violate
or affect any Legal Requirement or Insurance Requirement, and Tenant shall
provide such additional insurance coverage applicable to the activities to be
conducted in such subleased space as Landlord and any Facility Mortgagee may
require.
16.4 Sublease Limitation. Anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not sublet any of the Collective Leased
Properties on any basis such that the rental to be paid by any sublessee
thereunder would be
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based, in whole or in part, on either (a) the income or profits derived by the
business activities of such sublessee, or (b) any other formula such that any
portion of such sublease rental would fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the Code, or any similar or
successor provision thereto.
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates. At any time and from time to time, upon not
less than ten (10) days prior Notice by a party, the other party shall furnish
to the requesting party an Officer's Certificate certifying that this Agreement
is unmodified and in full force and effect (or that this Agreement is in full
force and effect as modified and setting forth the modifications), the date to
which the Rent has been paid, that, to such party's knowledge, no Default or an
Event of Default has occurred and is continuing or, if a Default or an Event of
Default shall exist, specifying in reasonable detail the nature thereof, and the
steps being taken to remedy the same, and such additional information as the
requesting party may reasonably request. Any such certificate furnished pursuant
to this Section 17.1 may be relied upon by the requesting party, any Facility
Mortgagee and any prospective purchaser or mortgagee of any of the Collective
Leased Properties.
17.2 Financial Statements.
Tenant shall furnish the following statements to Landlord:
(a) within forty-five (45) days after each of the first three
quarters of any Fiscal Year, the most recent Consolidated Financials
and the most recent unaudited financial statements of Tenant prepared
on a Facility by Facility basis, in each case accompanied by the
Financial Officer's Certificate;
(b) within one hundred twenty (120) days after the end of each
Fiscal Year, the most recent Consolidated Financials for such year,
including the most recent financial statements of Tenant prepared on a
Facility by Facility basis, in each case certified by Ernst & Young LLP
or another independent certified public accountant reasonably
satisfactory to Landlord and accompanied by a Financial Officer's
Certificate;
(c) within thirty (30) days after the end of each calendar
month, an unaudited statement of income prepared on
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a Facility by Facility basis, including occupancy percentages and payor
mix, accompanied by a Financial Officer's Certificate;
(d) promptly after the sending or filing thereof, copies of
all reports which Tenant and/or any Guarantor sends to its security
holders generally, and copies of all periodic reports which Tenant
and/or any Guarantor files with the SEC or any stock exchange on which
its shares are listed or traded;
(e) promptly after the delivery thereof to Tenant or any
Guarantor, or either of their management, a copy of any management
letter or written report prepared by the certified public accountants
with respect to the financial condition, operations, business or
prospects of Tenant or such Guarantor, as the case may be;
(f) at any time and from time to time upon not less than
twenty (20) days Notice from Landlord (or such additional period as may
be reasonably required to comply with such request), any Consolidated
Financials or any other financial reporting information required to be
filed by Landlord with any securities and exchange commission, the SEC
or any successor agency, or any other governmental authority, or
required pursuant to any order issued by any court, governmental
authority or arbitrator in any litigation to which Landlord is a party,
for purposes of compliance therewith; and
(g) promptly, upon Notice from Landlord, such other
information concerning the business, financial condition and affairs of
Tenant and any Guarantor as Landlord may reasonably request from time
to time.
Landlord may at any time, and from time to time, provide any Facility Mortgagee
with copies of any of the foregoing statements.
17.3 General Operations.
Tenant covenants and agrees to furnish to Landlord:
17.3.1 Reimbursement, Licensure, Etc. Within thirty
(30) days after receipt or modification thereof, copies of:
(a) all licenses authorizing Tenant to operate each Facility
for its Primary Intended Use;
(b) all Medicare and Medicaid certifications, together with
provider agreements and all material correspondence
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relating thereto with respect to each Facility (excluding, however,
correspondence which may be subject to any attorney-client privilege);
(c) all reports of surveys, statements of deficiencies, plans
of correction, and all material correspondence relating thereto,
including, without limitation, all reports and material correspondence
concerning compliance with or enforcement of licensure,
Medicare/Medicaid, and accreditation requirements, including physical
environment and Life Safety Code survey reports (excluding, however,
correspondence which may be subject to any attorney-client privilege);
and
(d) with reasonable promptness, such other confirmation as to
the licensure and Medicare and Medicaid participation of Tenant as
Landlord may reasonably request from time to time.
17.3.2 Annual Budgets. Commencing with the 1998 Fiscal Year,
not less than thirty (30) days prior to commencement of any Fiscal Year,
proposed annual income and ordinary expense and capital improvement budgets
setting forth projected income and costs and expenses projected to be incurred
by Tenant in managing, owning, maintaining and operating the Facilities during
the next succeeding Fiscal Year.
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to
inspect the Collective Leased Properties during usual business hours upon not
less than twenty-four (24) hours' notice (provided that no such notice shall be
required if Landlord shall reasonably determine immediate action is necessary to
protect person or property), and to make such repairs as Landlord is permitted
or required to make pursuant to the terms of this Agreement, provided that any
inspection or repair by Landlord or its representatives will not unreasonably
interfere with Tenant's use and operation of the applicable Leased Property and
further provided that in the event of an emergency, as determined by Landlord in
its sole discretion, prior Notice shall not be necessary.
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ARTICLE 19
APPRAISAL
19.1 Appraisal Procedure. In the event that it becomes necessary to
determine the Fair Market Value of any of the Collective Leased Properties for
any purpose of this Agreement and the parties cannot agree thereon, such Fair
Market Value shall be determined upon the written demand of either party in
accordance with the following procedure.
The party requesting an appraisal, by Notice given within thirty (30)
days after the date of the event which requires or permits such procedure, shall
propose and unilaterally approve a Qualified Appraiser. The other party, by
Notice given within fifteen (15) days after receipt of such Notice appointing
the first Qualified Appraiser, may appoint a second Qualified Appraiser. If the
other party fails to appoint the second Qualified Appraiser within such fifteen
(15) day period, such party shall have waived its right to appoint a Qualified
Appraiser, the first Qualified Appraiser shall appoint a second Qualified
Appraiser within fifteen (15) days thereafter and the Fair Market Value shall be
determined by the Qualified Appraisers as set forth below.
The two Qualified Appraisers shall thereupon endeavor to agree upon the
Fair Market Value. If the two Qualified Appraisers so named cannot agree upon
such value within thirty (30) days after the designation of the second such
appraiser, each such appraiser shall, within five (5) days after the expiration
of such thirty (30) day period, submit his appraisal of fair market value to the
other appraiser in writing, and if the fair market values set forth in such
appraisals vary by five percent (5%) or less of the greater value, the fair
market value shall be determined by calculating the average of the two fair
market values determined by the two appraisers.
If the fair market values set forth in the two appraisals vary by more
than five percent (5%) of the greater value, the two Qualified Appraisers shall
select a third Qualified Appraiser within an additional fifteen (15) days
following the expiration of the aforesaid five (5) day period. If the two
appraisers are unable to agree upon the appointment of a third appraiser within
such fifteen (15) day period, either party may, upon written notice to the
other, request that such appointment be made by the then President (or
equivalent officer) of the State's Chapter of the American Institute of Real
Estate Appraisers, or his or her designee or, if there is no such organization
or if such individual declines to make such appointment, by any state or Federal
court of competent jurisdiction for the State.
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In the event that all three of the appraisers cannot agree upon Fair
Market Value within twenty (20) days following the selection of the third
appraiser, each appraiser shall, within ten (10) days thereafter, submit his
appraisal of fair market value to the other two appraisers in writing, and the
fair market value shall be determined by calculating the average of the two
numerically closest values (or, if the values are equidistant, the average of
all three values) determined by the three appraisers.
In the event that any appraiser appointed hereunder does not or is
unable to perform his or her obligation hereunder, then the party or the
appraisers appointing such appraiser shall have the right to propose and approve
unilaterally a substitute Qualified Appraiser, but if the party or the
appraisers who have the right to appoint a substitute Qualified Appraiser fail
to do so within ten (10) days after written notice from the other party (or
either party in the event such appraiser was appointed by the other appraisers)
either party may, upon written notice to the party having the right to appoint a
substitute Qualified Appraiser, request that such appointment be made by such
officer of the American Institute of Real Estate Appraisers or court of
competent jurisdiction as described above; provided, however, that a party who
has the right to appoint an appraiser or a substitute appraiser shall have the
right to make such appointment only up until the time such appointment is made
by such officer or court.
In connection with the appraisal process, Tenant shall provide the
appraisers full access during normal business hours to examine the applicable
Leased Property, the books, records and files of Tenant and all agreements,
leases and other operating agreements relating to the applicable Leased
Property.
The costs (other than Landlord's counsel fees) of each such appraisal
shall be borne by Tenant and shall be included as part of the Additional
Charges. Upon determining such value, the appraisers shall promptly notify
Landlord and Tenant in writing of such determination. If any party shall fail to
appear at the hearings appointed by the appraisers, the appraisers may act in
the absence of such party.
The determination of the Qualified Appraisers made in accordance with
the foregoing provisions shall be final and binding upon the parties, such
determination may be entered as an award in arbitration in a court of competent
jurisdiction, and judgment thereon may be entered.
19.2 Landlord's Right to Appraisal. Landlord shall have the right,
exercisable twice at any time during the Term, to appoint a Qualified Appraiser
to perform a complete appraisal of
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any or all of the Collective Leased Properties, (each such appraisal to include
complete valuations of any such Leased Property based upon (a) the "Cost
Approach", (b) the "Market Approach" and (c) the "Income Approach"), which
appraisal shall meet all requirements of any state or Federal bank regulatory
authority that Landlord considers relevant or any Facility Mortgagee. The costs
of each such appraisal shall be borne by Tenant and shall be included as part of
the Additional Charges.
ARTICLE 20
REPRESENTATIONS AND WARRANTIES
20.1 Representations of Tenant. To induce Landlord to enter into this
Agreement, Tenant represents and warrants to Landlord as follows:
20.1.1 Status and Authority of Tenant. Tenant is a corporation
duly organized, validly existing and in corporate good standing under
the laws of its state of incorporation. Tenant has all requisite power
and authority under the laws of its state of formation and its charter
documents to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
Tenant has duly qualified to transact business in each jurisdiction in
which the nature of the business conducted by it requires such
qualification.
20.1.2 Action of Tenant. Tenant has taken all necessary action
to authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the valid and binding obligation and
agreement of Tenant, enforceable against Tenant in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors.
20.1.3 No Violations of Agreements. Neither the execution,
delivery or performance of this Agreement by Tenant, nor compliance
with the terms and provisions hereof, will result in any breach of the
terms, conditions or provisions of, or conflict with or constitute a
default under, or result in the creation of any lien, charge or
encumbrance upon any of the Collective Leased Properties pursuant to
the terms of any indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other material agreement or instrument by which
Tenant is bound.
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20.1.4 Litigation. Tenant has received no written notice of
and, to Tenant's knowledge, no action or proceeding is pending or
threatened and no investigation looking toward such an action or
proceeding has begun, which questions the validity of this Agreement or
any action taken or to be taken pursuant hereto, will result in any
material adverse change in the business, operation, affairs or
condition of any of the Collective Leased Properties, result in or
subject the Collective Leased Properties to a material liability, or
involves condemnation or eminent domain proceedings against any
material part of the Collective Leased Properties.
20.1.5 Disclosure. To Tenant's knowledge, there is no fact or
condition which materially and adversely affects the business or
condition of the Collective Leased Properties which has not been set
forth in this Agreement or in the other documents, certificates or
statements furnished to Landlord in connection with the transactions
contemplated hereby.
20.1.6 Compliance With Law. Except as disclosed in writing to
Landlord, to Tenant's knowledge, the Collective Leased Properties and
the use and operation thereof do not violate any material federal,
state, municipal and other governmental statutes, ordinances, by-laws,
rules, regulations or any other legal requirements, including, without
limitation, those relating to construction, occupancy, zoning, adequacy
of parking, environmental protection, occupational health and safety
and fire safety applicable thereto; and there are presently in effect
all material licenses, permits and other authorizations necessary for
the current use, occupancy and operation thereof. Tenant has not
received written notice of any threatened request, application,
proceeding, plan, study or effort which would materially adversely
affect the present use or zoning of any of the Collective Leased
Properties or which would modify or realign any adjacent street or
highway in a manner which would materially adversely affect the use and
operation of the Collective Leased Properties.
20.1.7 Hazardous Substances. Except as disclosed to Landlord
or as described in any environmental report delivered to Landlord, to
Tenant's knowledge, none of Tenant nor any tenant or other occupant or
user of any of the Collective Leased Properties, or any portion
thereof, has stored or disposed of (or engaged in the business of
storing or disposing of) or has released or caused the release of any
Hazardous Substances on any of the Collective Leased Properties, or any
portion thereof, the removal of which is required or the maintenance of
which is prohibited or
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penalized by any Applicable Law, and, to Tenant's knowledge, except as
disclosed to Landlord or as described in any environmental report
delivered to Landlord, the Collective Leased Properties are free from
any such Hazardous Substances, except any such materials maintained in
accordance with Applicable Law.
20.2 Representations of Landlord. To induce Tenant to enter in this
Agreement, Landlord represents and warrants to Tenant as follows:
20.2.1 Status and Authority of Landlord. Landlord is a
Maryland real estate investment trust duly organized, validly existing
and in trust good standing under the laws of the State of Maryland, and
has all requisite power and authority under the laws of such state and
under its charter documents to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated
hereby. Landlord has duly qualified and is in good standing as a trust
or unincorporated business association in each jurisdiction in which
the nature of the business conducted by it requires such qualification.
20.2.2 Action of Landlord. Landlord has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement, and upon the execution and delivery of this Agreement by
Landlord constitutes the valid and binding obligation and agreement of
Landlord, enforceable against Landlord in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
affecting the rights and remedies of creditors.
20.2.3 No Violations of Agreements. Neither the execution,
delivery or performance of this Agreement by Landlord, nor compliance
with the terms and provisions hereof, will result in any breach of the
terms, conditions or provisions of, or conflict with or constitute a
default under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of Landlord pursuant to the
terms of any indenture, mortgage, deed of trust, note, evidence of
indebtedness or any other agreement or instrument by which Landlord is
bound.
20.2.4 Litigation. No investigation, action or proceeding is
pending and, to Landlord's actual knowledge, no action or proceeding is
threatened and no investigation looking toward such an action or
proceeding has begun, which questions the validity of this Agreement or
any action taken or to be taken pursuant hereto.
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ARTICLE 21
FACILITY MORTGAGES
21.1 Landlord May Grant Liens. Without the consent of Tenant, Landlord
may, subject to the terms and conditions set forth in this Section 21.1, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon any of the
Collective Leased Properties, or any portion thereof or interest therein,
whether to secure any borrowing or other means of financing or refinancing. Any
such Encumbrance shall include the right to prepay (whether or not subject to a
prepayment penalty) and shall provide (subject to Section 21.2 below) that it is
subject to the rights of Tenant under this Agreement, including the rights of
Tenant to acquire the Collective Leased Properties pursuant to the applicable
provisions of this Agreement.
21.2 Subordination of Lease. Subject to Section 21.1, this Agreement,
any and all rights of Tenant hereunder, are and shall be subject and subordinate
to any ground or master lease, and all renewals, extensions, modifications and
replacements thereof, and to all mortgages and deeds of trust, which may now or
hereafter affect the Collective Leased Properties, or any of them, or any
improvements thereon and/or any of such leases, whether or not such mortgages or
deeds of trust shall also cover other lands and/or buildings and/or leases, to
each and every advance made or hereafter to be made under such mortgages and
deeds of trust, and to all renewals, modifications, replacements and extensions
of such leases and such mortgages and deeds of trust and all consolidations of
such mortgages and deeds of trust. This section shall be self-operative and no
further instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the holder of any
such mortgage or the trustee or beneficiary of any deed of trust or any of their
respective successors in interest may reasonably request to evidence such
subordination provided that such agreement does not amend or modify this
Agreement and includes customary non-disturbance and recognition provisions. Any
lease to which this Agreement is, at the time referred to, subject and
subordinate is herein called "Superior Lease" and the lessor of a Superior Lease
or its successor in interest at the time referred to, is herein called "Superior
Landlord" and any mortgage or deed of trust to which this Agreement is, at the
time referred to, subject and subordinate, is herein called "Superior Mortgage"
and the holder, trustee or beneficiary of a Superior Mortgage is herein called
"Superior Mortgagee".
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If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement with respect to one or more of the
Collective Leased Properties, whether through possession or foreclosure action
or delivery of a new lease or deed, or otherwise, then at the request of such
party so succeeding to Landlord's rights (herein called "Successor Landlord")
and upon such Successor Landlord's written agreement to accept Tenant's
attornment, Tenant shall attorn to and recognize such Successor Landlord as
Tenant's landlord under this Agreement with respect to one or more of the
Collective Leased Properties, and shall promptly execute and deliver any
instrument that such Successor Landlord may reasonably request to evidence such
attornment provided that such agreement does not amend or modify this Agreement
and includes customary non-disturbance and recognition provisions. Upon such
attornment, this Agreement shall continue in full force and effect as a direct
lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Agreement, except that the
Successor Landlord (unless formerly the landlord under this Agreement or its
nominee or designee) shall not be (a) liable in any way to Tenant for any act or
omission, neglect or default on the part of Landlord under this Agreement; (b)
responsible for any monies owing by or on deposit with Landlord to the credit of
Tenant; (c) subject to any counterclaim or setoff which theretofore accrued to
Tenant against Landlord; (d) bound by any modification of this Agreement
subsequent to such Superior Lease or Mortgage, or by any previous prepayment of
Minimum Rent or Additional Rent for more than one (1) month, which was not
approved in writing by the Superior Landlord or the Superior Mortgagee thereto;
(e) liable to Tenant beyond the Successor Landlord's interest in the applicable
Leased Property and the rents, income, receipts, revenues, issues and profits
issuing from such Leased Property; (f) responsible for the performance of any
work to be done by the Landlord under this Agreement to render the applicable
Leased Property ready for occupancy by Tenant; or (g) required to remove any
Person occupying the applicable Leased Property or any part thereof, except if
such person claims by, through or under the Successor Landlord. Tenant agrees at
any time and from time to time to execute a suitable instrument in confirmation
of Tenant's agreement to attorn, as aforesaid.
21.3 Notice to Mortgagee and Ground Landlord. Subsequent to the receipt
by Tenant of notice from any Person that it is a Facility Mortgagee, or that it
is the ground lessor under a lease with Landlord, as ground lessee, which
includes the applicable Leased Property as part of the demised premises, no
notice from Tenant to Landlord as to the applicable Leased Property shall be
effective unless and until a copy of the same is given to such Facility
Mortgagee or ground lessor, and the curing of any of
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Landlord's defaults by such Facility Mortgagee or ground lessor shall be treated
as performance by Landlord.
ARTICLE 22
ADDITIONAL COVENANTS OF TENANT
22.1 Prompt Payment of Indebtedness. Tenant shall, and shall cause the
Permitted Subtenants to, (a) pay or cause to be paid when due all payments of
principal of and premium and interest on Indebtedness for money borrowed and
shall not permit or suffer any such Indebtedness to become or remain in default
beyond any applicable grace or cure period; (b) pay or cause to be paid when due
all lawful claims for labor and rents; (c) pay or cause to be paid when due all
trade payables; and (d) pay or cause to be paid when due all other Indebtedness
upon which it is or becomes obligated, except, in each case, to the extent
payment is being contested in good faith by appropriate proceedings in
accordance with Article 8 and if Tenant shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP or unless and
until foreclosure, distraint sale or other similar proceedings shall have been
commenced.
22.2 Conduct of Business. Tenant shall, and shall cause the Permitted
Subtenants to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect and in good standing its corporate existence
and its rights and licenses necessary to conduct its business.
22.3 Maintenance of Accounts and Records. Tenant shall keep true
records and books of account in which full, true and correct entries will be
made of dealings and transactions in relation to the business and affairs of
Tenant in accordance with GAAP. Tenant shall apply accounting principles in the
preparation of the financial statements of Tenant which, in the judgment of and
the opinion of its independent public accountants, are in accordance with GAAP,
except for changes approved by such independent public accountants. Tenant shall
provide to Landlord either in a footnote to the financial statements delivered
under Section 17.2 which relate to the period in which such change occurs, or in
separate schedules to such financial statements, information sufficient to show
the effect of any such changes on such financial statements.
22.4 Notice of Change of Name, Etc. Tenant shall give prompt Notice to
Landlord of any change in (a) the name (operating or otherwise) of Tenant or any
Facility; (b) the individual licensed as executive director of any Facility; (c)
the number of units available for use at any Facility; and (d)
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the patient and/or child care services, if any, that are offered at any
Facility.
22.5 Notice of Litigation, Potential Event of Default, Etc. Tenant
shall give prompt Notice to Landlord of any litigation or any administrative
proceeding to which it, any Guarantor or any of the Permitted Subtenants may
hereafter become a party which involves a potential liability equal to or
greater than Two Hundred Fifty Thousand Dollars ($250,000) or which may
otherwise result in any material adverse change in the business, operations,
property, prospects, results of operation or condition, financial or other, of
Tenant, such Guarantor or Permitted Subtenant. Forthwith upon Tenant obtaining
knowledge of any Default, Event of Default or any default or event of default
under any agreement relating to Indebtedness for money borrowed in an aggregate
amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars
($250,000), or any event or condition that would be required to be disclosed in
a current report filed by Tenant, any Guarantor or any of the Permitted
Subtenants on Form 8-K or in Part II of a quarterly report on Form 10-Q if
Tenant, any Guarantor or any of their Affiliated Persons required to file such
reports under the Securities Exchange Act of 1934, as amended, Tenant shall
furnish Notice thereof to Landlord specifying the nature and period of existence
thereof and what action Tenant has taken or is taking or proposes to take with
respect thereto.
22.6 Indebtedness of Tenant. None of Tenant or the Permitted Subtenants
shall create, incur, assume or guarantee, or permit to exist, or become or
remain liable directly or indirectly upon, any Indebtedness except the
following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for taxes, assessments,
governmental charges or levies, to the extent that payment thereof
shall not at the time be required to be made in accordance with the
provisions of Article 8;
(c) Indebtedness of Tenant in respect of judgments or awards
(i) which have been in force for less than the applicable appeal period
and in respect of which execution thereof shall have been stayed
pending such appeal or review, or (ii) which are fully covered by
insurance payable to Tenant, or (iii) which are for an amount not in
excess of $10,000 in the aggregate at any one time outstanding and (x)
which have been in force for not longer than the applicable appeal
period, so long as execution is not levied thereunder or (y) in respect
of which an appeal or proceedings for review shall at the time be
prosecuted in good faith in accordance with the provisions of Article
8, and in respect
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of which execution thereof shall have been stayed pending such appeal
or review;
(d) unsecured borrowings from Affiliated Persons which are by
their terms expressly subordinate pursuant to a Subordination Agreement
to the payment and performance of Tenant's obligations under this
Agreement;
(e) Indebtedness for purchase money financing or goods and
services incurred in the ordinary course of business; or
(f) Indebtedness permitted pursuant to the terms of Section
6.2.1.
22.7 Financial Condition of Tenant. Tenant shall at all times maintain
Tangible Net Worth in an amount at least equal to one year's Minimum Rent;
provided, however, that so long as Prime or Brookdale is a Guarantor pursuant to
a Guaranty, any demand promissory note made by Prime or Brookdale to the order
of Tenant shall, to the extent of the outstanding principal amount thereof, be
counted toward satisfying such requirement.
22.8 Distributions, Payments to Affiliated Persons, Etc. Tenant shall
not declare, order, pay or make, directly or indirectly, any Distributions or
any payment to any Affiliated Person of Tenant (including payments in the
ordinary course of business and payments pursuant to management agreements with
any such Affiliated Person) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action, or immediately after giving
effect thereto, there shall exist any (a) Monetary Default, (b) Default as to
which Landlord shall have given Tenant Notice thereof or (c) Event of Default.
22.9 Prohibited Transactions. Tenant shall not permit to exist or enter
into any agreement or arrangement whereby it or any Permitted Subtenant engages
in a transaction of any kind with any Affiliated Person as to Tenant or any
Guarantor, except on terms and conditions which are not less favorable to Tenant
or the Permitted Subtenant than those on which similar transactions between
unaffiliated parties could fairly be expected to be entered into on an
arms-length basis.
22.10 Management of Collective Leased Properties. Tenant shall not
enter into or permit to exist any Management Agreement unless the terms thereof
have been previously approved in writing by Landlord, which approval may be
given or withheld in Landlord's reasonable discretion in good faith. All
management fees, payments in connection with any extension of credit and fees
for services provided in connection with the operation of the applicable Leased
Property, payable by Tenant to any Guarantor (or any Affiliated Person as to
Tenant or such
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Guarantor), shall be subordinated to all of the obligations of Tenant due under
this Agreement pursuant to a Subordination Agreement. Tenant shall not agree to
any change in the Manager of any of the Collective Leased Properties and/or any
Facility, to any change in any Management Agreement, terminate any Management
Agreement or permit any Manager to assign any Management Agreement without the
prior written approval of Landlord in each instance, which approval may be given
or withheld in Landlord's reasonable discretion in good faith. Any Management
Agreement shall provide that Landlord shall be provided notice of any defaults
thereunder and, at Landlord's option, an opportunity to cure such defaults and
shall otherwise be in form and substance satisfactory to Landlord in its
reasonable discretion in good faith. If Landlord shall cure any of Tenant's
defaults under any Management Agreement, the cost of such cure shall be payable
upon demand by Tenant to Landlord with interest accruing from the demand date at
the Overdue Rate and Landlord shall have the same rights and remedies for
failure to pay such costs on demand as for Tenant's failure to pay Minimum Rent.
Tenant shall deliver to Landlord any instrument requested by Landlord to
implement the intent of the foregoing provision.
22.11 Liens and Encumbrances. Except as permitted by Section 7.1,
subject to the provisions of Article 8 relating to Permitted Contests, Tenant
shall not create or incur or suffer to be created or incurred or to exist any
Lien on this Agreement, Tenant's Personal Property or any of its other
respective assets, properties, rights or income, or any of its interest therein,
now or at any time hereafter owned, other than:
(a) Security interests securing Indebtedness permitted
pursuant to Section 22.6; and
(b) Permitted Encumbrances.
22.12 Merger; Sale of Assets; Etc. Except as otherwise expressly
provided in this Agreement, Tenant shall not (a) sell, lease (as lessor or
sublessor), transfer or otherwise dispose of, or abandon, all or any material
portion of its assets (including capital stock) or business to any Person; (b)
merge into or with or consolidate with any other Entity; or (c) sell, lease (as
lessor or sublessor), transfer or otherwise dispose of, or abandon, any personal
property or fixtures or any real property; provided, however, that,
notwithstanding the provisions of clause (c) preceding, Tenant may dispose of
equipment or fixtures which have become inadequate, obsolete, worn-out,
unsuitable, undesirable or unnecessary, provided substitute equipment or
fixtures having equal or greater value and utility (but not necessarily having
the same function) have been provided.
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22.13 Permitted Subleases. Tenant shall not amend, modify or terminate
the Permitted Subleases without the prior written consent of Landlord.
ARTICLE 23
MISCELLANEOUS
23.1 Limitation on Payment of Rent. All agreements between Landlord and
Tenant herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the
Rent or any other amounts payable to Landlord under this Agreement exceed the
maximum permissible under applicable law, the benefit of which may be asserted
by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of
any provision of this Agreement, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law, or
if from any circumstances Landlord should ever receive as fulfillment of such
provision such an excessive amount, then, ipso facto, the amount which would be
excessive shall be applied to the reduction of the installment(s) of Minimum
Rent next due and not to the payment of such excessive amount. This provision
shall control every other provision of this Agreement and any other agreements
between Landlord and Tenant.
23.2 No Waiver. No failure by Landlord to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the maximum extent permitted by law, no
waiver of any breach shall affect or alter this Agreement, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.
23.3 Remedies Cumulative. To the maximum extent permitted by law, each
legal, equitable or contractual right, power and remedy of Landlord, now or
hereafter provided either in this Agreement or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Landlord of any one
or more of such rights, powers and remedies shall not preclude the simultaneous
or subsequent exercise by Landlord of any or all of such other rights, powers
and remedies.
23.4 Severability. Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to be
invalid, illegal or ineffective shall not impair, invalidate or nullify the
remainder of this
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Agreement, but rather the effect thereof shall be confined to the clause,
sentence, paragraph, section or provision so held to be invalid, illegal or
ineffective, and this Agreement shall be construed as if such invalid, illegal
or ineffective provisions had never been contained therein.
23.5 Acceptance of Surrender. No surrender to Landlord of this
Agreement or of any of the Collective Leased Properties or any part thereof, or
of any interest therein, shall be valid or effective unless agreed to and
accepted in writing by Landlord and no act by Landlord or any representative or
agent of Landlord, other than such a written acceptance by Landlord, shall
constitute an acceptance of any such surrender.
23.6 No Merger of Title. It is expressly acknowledged and agreed that
it is the intent of the parties that there shall be no merger of this Agreement
or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly this Agreement or the
leasehold estate created hereby and the fee estate or ground landlord's interest
in any of the Collective Leased Properties.
23.7 Conveyance by Landlord. If Landlord or any successor owner of all
or any portion of any of the Collective Leased Properties shall convey all or
any portion of the Collective Leased Properties in accordance with the terms
hereof other than as security for a debt, and the grantee or transferee of such
of the Collective Leased Properties shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of
Landlord under this Agreement with respect to such of the Collective Leased
Properties arising or accruing from and after the date of such conveyance or
other transfer and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
23.8 Quiet Enjoyment. So long as Tenant shall pay the Rent as the same
becomes due and shall comply with all of the terms of this Agreement, Tenant
shall peaceably and quietly have, hold and enjoy the Collective Leased
Properties for the Term, free of hindrance or molestation by Landlord or anyone
claiming by, through or under Landlord, but subject to (a) any Encumbrance
permitted under Article 21 or otherwise permitted to be created by Landlord
hereunder, (b) all Permitted Encumbrances, (c) liens as to obligations of
Landlord that are either not yet due or which are being contested in good faith
and by proper proceedings, and (d) liens that have been consented to in writing
by Tenant. Except as otherwise provided in this Agreement, no failure by
Landlord to comply with the foregoing covenant shall give Tenant any right to
cancel or terminate this Agreement or
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▇▇▇▇▇, reduce or make a deduction from or offset against the Rent or any other
sum payable under this Agreement, or to fail to perform any other obligation of
Tenant hereunder.
23.9 NON-LIABILITY OF TRUSTEES. THE DECLARATION, A COPY OF WHICH IS
DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT PROPERTIES TRUST" REFERS
TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF LANDLORD SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, LANDLORD. ALL PERSONS
DEALING WITH LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR
THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
23.10 Landlord's Consent of Trustees. Where provision is made in this
Agreement for Landlord's consent and Landlord shall fail or refuse to give such
consent, Tenant shall not be entitled to any damages for any withholding by
Landlord of its consent, it being intended that Tenant's sole remedy shall be an
action for specific performance or injunction, and that such remedy shall be
available only in those cases where Landlord has expressly agreed in writing not
unreasonably to withhold its consent.
23.11 Memorandum of Lease. Neither Landlord nor Tenant shall record
this Agreement. However, Landlord and Tenant shall promptly, upon the request of
the other, enter into a short form memorandum of this Agreement, in form
suitable for recording under the laws of the State in which reference to this
Agreement, and all options contained herein, shall be made. Tenant shall pay all
costs and expenses of recording such memorandum.
23.12 Notices.
(a) Any and all notices, demands, consents, approvals, offers,
elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same
shall be delivered either in hand, by telecopier with written
acknowledgment of receipt, or by mail or Federal Express or similar
expedited commercial carrier, addressed to the recipient of the notice,
postpaid and registered or certified with return receipt requested (if
by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).
(b) All notices required or permitted to be sent hereunder
shall be deemed to have been given for all purposes of this Agreement
upon the date of acknowledged receipt, in the case of a notice by
telecopier, and, in all other cases, upon the date of receipt or
refusal, except
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that whenever under this Agreement a notice is either received on a day
which is not a Business Day or is required to be delivered on or before
a specific day which is not a Business Day, the day of receipt or
required delivery shall automatically be extended to the next Business
Day.
(c) All such notices shall be addressed,
if to Landlord to:
Health and Retirement Properties Trust
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
if to Tenant to:
BLC Property, Inc.
c/o The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
with a copy to:
The Prime Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
and to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
[Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇]
(d) By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right
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from time to time and at any time during the term of this Agreement to change
their respective addresses effective upon receipt by the other parties of such
notice and each shall have the right to specify as its address any other address
within the United States of America.
23.13 Construction. Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to any of the Collective Leased Properties shall survive
such termination or expiration. In no event shall Landlord be liable for any
consequential damages suffered by Tenant as the result of a breach of this
Agreement by Landlord. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing
signed by the party to be charged. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Each term or provision of this
Agreement to be performed by Tenant shall be construed as an independent
covenant and condition. Time is of the essence with respect to the exercise of
any rights of Tenant under this Agreement. Except as otherwise set forth in this
Agreement, any obligations of Tenant (including without limitation, any
monetary, repair and indemnification obligations) shall survive the expiration
or sooner termination of this Agreement.
23.14 Counterparts; Headings. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but which, when
taken together, shall constitute but one instrument and shall become effective
as of the date hereof when copies hereof, which, when taken together, bear the
signatures of each of the parties hereto shall have been signed. Headings in
this Agreement are for purposes of reference only and shall not limit or affect
the meaning of the provisions hereof.
23.15 Applicable Law, Etc. Except as to matters regarding the internal
affairs of Landlord and issues of or limitations on any personal liability of
the shareholders and trustees of Landlord for obligations of Landlord, as to
which the laws of the State of Maryland shall govern, this Agreement shall be
interpreted, construed, applied and enforced in accordance with the laws of the
State of New York applicable to contracts between residents of New York which
are to be performed entirely within New York, regardless of (i) where this
Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any
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action or other proceeding is instituted or pending; or (v) the nationality,
citizenship, domicile, principal place of business, or jurisdiction of
organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply the laws of a jurisdiction other than
the State of New York; or (vii) any combination of the foregoing.
Notwithstanding the foregoing, the laws of the State shall apply to the
perfection and priority of liens upon and the disposition of and disposition
with respect to any of the Collective Leased Properties.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
the State of New York as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in New York and to service of
process by registered mail, return receipt requested, or by any other manner
provided by law.
23.16 Payment of Fees. Tenant shall pay to Landlord, upon demand, all
costs and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection with the preparation, execution and delivery
of this Agreement and all acts undertaken by Landlord in contemplation thereof
or in connection therewith.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date above first written.
LANDLORD:
HEALTH AND RETIREMENT PROPERTIES
TRUST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
TENANT:
BLC PROPERTY, INC.
By: /s/
Its Executive (Vice) President
EXHIBITS A-1 TO A-3
The Land
[See attached copies.]
Omitted Exhibits
The following exhibits to the Master Lease Agreement, dated as of
December 27, 1996, between Health and Retirement Properties Trust and BLC
Properties, Inc., have been omitted:
Exhibit Letter Exhibit Title
A-1 Legal Description
A-2 Legal Description
A-3 Legal Description
The registrant agrees to furnish supplementally a copy of the foregoing
omitted exhibits to the Securities and Exchange Commission upon request.
EXHIBIT B
Allocable Purchase Prices
East Mesa, Arizona $14,800,000
Rochester, New York $10,700,000
Chicago, Illinois $62,000,000