LEASE AGREEMENT
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
("LESSOR")
AND
INTEGRATED LIVING COMMUNITIES OF ST. PETERSBURG, INC.,
a Delaware corporation
("LESSEE")
March 4, 1997
For
Integrated Communities Assisted Living Facility
of St. Petersburg
(Jaylene Retirement Center)
000 00xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx
TABLE OF CONTENTS
ARTICLE I LEASED PROPERTY; TERM.................................................................... 1
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ARTICLE II RENT..................................................................................... 2
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2.1 Minimum Rent and Adjustments to Minimum Rent............................................. 2
2.2 Calculation of Increases to Minimum Rent................................................. 3
2.3 Additional Charges....................................................................... 4
2.4 Net Lease................................................................................ 4
ARTICLE III IMPOSITIONS.............................................................................. 4
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3.1 Payment of Impositions................................................................... 4
3.2 Proration of Impositions................................................................. 5
3.3 Utility Charges.......................................................................... 5
3.4 Insurance Premiums....................................................................... 5
ARTICLE IV NO TERMINATION........................................................................... 5
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ARTICLE V OWNERSHIP OF LEASED PROPERTY ............................................................ 6
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5.1 Ownership of the Property................................................................ 6
5.2 Personal Property........................................................................ 6
ARTICLE VI CONDITION AND USE OF LEASED PROPERTY..................................................... 6
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6.1 Condition of the Leased Property......................................................... 6
6.2 Use of the Leased Property............................................................... 7
6.3 Management of Facility................................................................... 8
6.4 Lessor to Grant Easements................................................................ 8
ARTICLE VII LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS.............................................. 8
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7.1 Compliance with Legal and Insurance Requirements......................................... 8
7.2 Legal Requirement Covenants.............................................................. 9
7.3 Rent and Debt Service Coverage .......................................................... 9
7.4 Rent and Debt Service Coverage .......................................................... 10
ARTICLE VIII REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS............................................. 10
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8.1 Maintenance and Repair................................................................... 10
8.2 Encroachments; Restrictions.............................................................. 11
8.3 Inspections.............................................................................. 12
ARTICLE IX CAPITAL ADDITIONS........................................................................ 12
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9.1 Construction of Capital Additions to the Leased Property................................. 12
9.2 Capital Additions Financed by Lessee..................................................... 13
9.3 Capital Additions Financed by Lessor..................................................... 13
9.4 Remodeling and Non-Capital Additions..................................................... 15
9.5 Salvage.................................................................................. 15
ARTICLE X LIENS.................................................................................... 16
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ARTICLE XI PERMITTED CONTESTS....................................................................... 16
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ARTICLE XII INSURANCE................................................................................ 17
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12.1 General Insurance Requirements........................................................... 17
12.2 Replacement Cost......................................................................... 18
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12.3 Additional Insurance..................................................................... 18
12.4 Waiver of Subrogation.................................................................... 19
12.5 Form of Insurance........................................................................ 19
12.6 Change in Limits......................................................................... 19
12.7 Blanket Policy........................................................................... 19
12.8 No Separate Insurance.................................................................... 20
12.9 Insurance for Contractors................................................................ 20
ARTICLE XIII FIRE AND CASUALTY........................................................................ 20
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13.1 Insurance Proceeds....................................................................... 20
13.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance................ 20
13.3 Reconstruction in the Event of Damage or Destruction Not Covered by Insurance............ 22
13.4 Lessee's Property........................................................................ 23
13.5 Restoration of Lessee's Property......................................................... 23
13.6 No Abatement of the Rent................................................................. 23
13.7 Damage Near End of Term.................................................................. 23
13.8 Purchase or Substitution................................................................. 23
13.9 Waiver................................................................................... 23
ARTICLE XIV CONDEMNATION............................................................................. 24
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14.1 Parties' Rights and Obligations.......................................................... 24
14.2 Total Taking............................................................................. 24
14.3 Partial Taking........................................................................... 24
14.4 Restoration.............................................................................. 24
14.5 Award Distribution....................................................................... 25
14.6 Temporary Taking......................................................................... 25
14.7 Purchase or Substitution................................................................. 25
ARTICLE XV DEFAULT.................................................................................. 25
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15.1 Events of Default........................................................................ 25
15.2 Remedies................................................................................. 26
15.3 Additional Expenses...................................................................... 28
15.4 Application of Funds..................................................................... 28
ARTICLE XVI LESSOR'S RIGHT TO CURE................................................................... 28
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ARTICLE XVII PURCHASE OF THE LEASED PROPERTY.......................................................... 29
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ARTICLE XVIII HOLDING OVER............................................................................. 30
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ARTICLE XIX ABANDONMENT.............................................................................. 30
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19.1 Discontinuance of Operations on the Leased Property...................................... 30
19.2 Obsolescence of the Leased Property; Offer to Purchase................................... 30
19.3 Conveyance of Leased Property............................................................ 30
19.4 Option to Purchase....................................................................... 31
ARTICLE XX SUBSTITUTION OF PROPERTY................................................................. 31
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20.1 Substitution of Property for the Leased Property......................................... 31
20.2 Conditions to Substitution............................................................... 33
20.3 Conveyance to Lessee..................................................................... 34
20.4 Expenses................................................................................. 34
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ARTICLE XXI RISK OF LOSS............................................................................. 34
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ARTICLE XXII INDEMNIFICATION.......................................................................... 35
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ARTICLE XXIII SUBLETTING AND ASSIGNMENT................................................................ 35
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23.1 Subletting and Assignment................................................................ 35
23.2 Non-Disturbance, Subordination and Attornment............................................ 36
ARTICLE XXIV OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS.......................................... 36
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24.1 Estoppel Certificate..................................................................... 36
24.2 Financial Statements and Certificates.................................................... 37
ARTICLE XXV INSPECTION............................................................................... 38
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ARTICLE XXVI QUIET ENJOYMENT.......................................................................... 38
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ARTICLE XXVII NOTICES.................................................................................. 38
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ARTICLE XXVIII APPRAISAL................................................................................ 40
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ARTICLE XXIX PURCHASE................................................................................. 41
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ARTICLE XXX DEFAULT BY LESSOR........................................................................ 41
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30.1 Default by Lessor........................................................................ 41
30.2 Lessee's Right to Cure................................................................... 42
ARTICLE XXXI ARBITRATION.............................................................................. 42
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31.1 Controversies............................................................................ 42
31.2 Appointment of Arbitrators............................................................... 42
31.3 Third Arbitrator......................................................................... 43
31.4 Arbitration Procedure.................................................................... 43
31.5 Expenses................................................................................. 43
ARTICLE XXXII FINANCING OF THE LEASED PROPERTY......................................................... 43
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ARTICLE XXXIII SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE............................................ 44
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ARTICLE XXXIV EXTENDED TERMS........................................................................... 44
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ARTICLE XXXV GUARANTY................................................................................. 45
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35.1 Guarantee................................................................................ 45
35.2 Obligations of Guarantor Upon Default.................................................... 45
35.3 Guarantee of Payment..................................................................... 45
ARTICLE XXXVI MISCELLANEOUS............................................................................ 45
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36.1 No Waiver................................................................................ 45
36.2 Remedies Cumulative...................................................................... 46
36.3 Surrender................................................................................ 46
36.4 No Merger of Title....................................................................... 46
36.5 Transfers by Lessor...................................................................... 46
36.6 General.................................................................................. 46
36.7 Memorandum of Lease...................................................................... 47
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36.8 Transfer of Licenses..................................................................... 47
ARTICLE XXXVII GLOSSARY OF TERMS.................................................................... 47
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LEASE
THIS LEASE ("Lease") dated as of March 4, 1997 is entered into by and
between CAPSTONE CAPITAL CORPORATION, a Maryland corporation, having its
principal office at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000 ("Lessor") and INTEGRATED LIVING COMMUNITIES OF ST. PETERSBURG, INC., a
Delaware corporation ("Lessee"), and INTEGRATED LIVING COMMUNITIES, INC., a
Delaware corporation ("Guarantor"), each having its principal office at 00000
Xxx 00 Xxxx, Xxxxx 00, Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000.
ARTICLE I
LEASED PROPERTY; TERM
Upon and subject to the terms and conditions hereinafter set forth,
Lessor leases to Lessee and Lessee rents from Lessor all of Lessor's rights and
interest in and to the following real property (collectively, the "Leased
Property"):
(a) the real property more particularly described on Exhibit A attached
hereto together with all covenants, licenses, privileges and benefits thereto
belonging, and any easements, rights-of-way, rights of ingress and egress or
other interests of Lessor in, on or to any land, highway, street, road or
avenue, open or proposed, in, on, across, in front of, abutting or adjoining
such real property, including all strips and gores adjacent to or lying between
such real property and any adjacent real property (the "Land");
(b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind (including all alleyways and connecting
tunnels, crosswalks, sidewalks, landscaping, parking lots and structures and
roadways appurtenant to such buildings and structures presently or hereafter
situated upon the Land, and Capital Additions financed by Lessor (but
specifically excluding Capital Additions financed by Lessee), drainage and all
above-ground and underground utility structures) (collectively, the "Leased
Improvements");
(c) all permanently affixed equipment, machinery, fixtures and other
items of real and/or personal property, including all components thereof, now
and hereafter located in, on or used in connection with, and permanently affixed
to or incorporated into the Leased Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, carpet, moveable or immoveable
walls or partitions and built-in oxygen and vacuum systems, all of which 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 Personal Property
(collectively the "Fixtures");
(d) the Personal Property;
(e) to the extent permitted by law, all permits, approvals and other
intangible property or any interest therein now or hereafter owned or held by
Lessor in connection with the Leased Property or any business or businesses now
or hereafter conducted by Lessee or any Tenant or with the use thereof,
including all leases, contract rights, agreements, trade names, water rights and
reservations, zoning rights, business licenses and warranties (including those
relating to construction or fabrication) related to the Leased Property or any
part thereof, but specifically excluding the general corporate trademarks,
service marks, logos, insignia or books and records of Lessee; and
(f) all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, engineering plans and studies, floor plans,
landscape plans, and other plans and studies that relate to the Land or the
Leased Improvements and are in Lessor's possession or control.
SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached hereto (the
"Permitted Exceptions"), to have and to hold for a fixed term of fifteen years
(the "Initial Term") commencing on the date hereof (the "Commencement Date") and
ending at midnight on the last day of the ________ month
after the Commencement Date, unless sooner terminated pursuant to the terms
hereof.
ARTICLE II
RENT
II.1 Minimum Rent and Adjustments to Minimum Rent. Lessee shall pay to Lessor,
without notice, demand, set off (except as set forth in Section 30.2 or Article
XXXII hereof) or counterclaim, in advance in lawful money of the United States
of America, at Lessor's address set forth herein or at such other place or to
such other person, firms or corporations as Lessor from time to time may
designate in writing, Minimum Rent, as adjusted annually pursuant to Section
2.1(b) during the Term, as follows:
(a) Minimum Rent. Lessee will pay to Lessor as rent (as adjusted from
time to time in accordance with Sections 2.1(b) and 2.1(e), the "Minimum Rent")
for the Leased Property the annual sum equal to the product of (i) the Purchase
Amount times (ii) the greater of (X) ten percent and (Y) the Treasury Yield in
effect ten days prior to the Commencement Date with maturity periods
substantially equivalent to the Initial Term plus 3.5%. The Minimum Rent shall
be payable in advance in 12 equal, consecutive monthly installments on the first
day of each calendar month during the Term. The parties will execute an
acknowledgement of the initial Minimum Rent calculated pursuant to this Section
2.1(a) as soon as reasonably practicable after the Commencement Date. The
Minimum Rent shall be prorated for any partial month, and is subject to
adjustment as provided in Sections 2.1(b), 2.1(e) and 9.3(b)(iv) below. As used
herein, the term "Purchase Amount" means the total amount funded or to be funded
for the acquisition of the Leased Property by Lessor pursuant to the Purchase
Agreement, including legal fees and expenses, recording taxes and fees and
expenses related to or arising out of the title policy, structural and other
inspections, survey, environmental report and appraisal.
(b) Increases to Minimum Rent. On each anniversary of the Commencement
Date (each such annual date individually referred to as the "Adjustment Date")
throughout the Initial Term and any Extended Terms, the then-current Minimum
Rent shall be increased annually effective as of such Adjustment Date by the
increase in the Consumer Price Index from the Commencement Date to the first
Adjustment Date and, thereafter, from one Adjustment Date to the then-current
Adjustment Date; however, with the exception of the first year of each Extended
Term, in no event will the annual change in the Minimum Rent be less than two
percent nor more than five percent of the Minimum Rent for the prior year.
(c) Capital Replacement Account. Lessee will pay to Lessor for deposit
in a money market account in a federally insured bank in Birmingham, Alabama
acceptable to Lessor and Lessee the sums set forth on Exhibit C attached hereto,
which funds (the "Capital Replacement Account") shall be made available to
Lessee to make repairs and replacements for the Leased Property as approved by
Lessor (which approval shall not be unreasonably withheld, conditioned or
delayed), the costs of which according to generally accepted accounting
principles must be depreciated over periods greater than one year. The Capital
Replacement Account shall be in the name of Lessor, and interest earned on such
account shall be retained in the Capital Replacement Account. Lessee shall make
detailed requests for such funds in writing to Lessor in the same form as a
Request pursuant Section 9.3 hereof. Within 30 days of such Request, Lessor
shall reasonably approve the amount of requested funds and make mutually
agreeable arrangements for the disbursement of the funds, or provide Lessee with
written notice in reasonable detail specifying Lessor's objections to such
Request.
(d) Payment of Minimum Rent. All payments of Minimum Rent shall be made
in lawful money of the United States by wire transfer of same day funds to
Lessor's account #0000040999 at First Commercial Bank, Birmingham, Alabama, ABA
Routing #000000000, Attention: Xxxx Xxxxx, with advice to Xxxxx X. XxXxxxx at
(000) 000-0000 (or such other account or location specified by Lessor from time
to time in writing) on or before 2:00 p.m., Birmingham time, on any Business
Day.
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(e) Recalculation of Minimum Rent. The parties agree that the Purchase
Amount may be estimated as of the Commencement Date. As soon as reasonably
practicable after the determination of the final Purchase Amount, Lessor will
recalculate the Minimum Rent pursuant to Section 2.1(a) whereupon the parties
will execute an acknowledgement of the recalculated Minimum Rent.
II.2 Calculation of Increases to Minimum Rent. On or about each Adjustment Date,
Lessor will calculate the increase in the Minimum Rent pursuant to the
provisions of Section 2.1(b) and will provide Lessee with written notice of
same.
II.3 Additional Charges. Lessee will also pay and discharge as and when due (a)
all other amounts, liabilities, obligations and Impositions, which Lessee
assumes or agrees to pay under this Lease including, to the extent applicable,
any condominium association dues, assessments or other charges, and (b) in the
event of any failure on the part of Lessee to pay any of those items referred to
in clause (a) above, Lessee will also promptly pay and discharge every fine,
penalty, interest and cost which may be added for non-payment or late payment of
such items (the items referred to in clauses (a) and (b) above being referred to
herein collectively as the "Additional Charges"), and Lessor shall have all
legal, equitable and contractual rights, powers and remedies provided in this
Lease, by statute or otherwise, in the case of non-payment of the Additional
Charges, as well as the Minimum Rent. If any installment of Minimum Rent or
Additional Charges (but only as to those Additional Charges which are payable
directly to Lessor) shall not be paid within ten days after the date when due,
Lessee will pay Lessor on demand, as Additional Charges, interest (to the extent
permitted by law) computed at the Overdue Rate on the amount of such
installment, from the date when due to the date of payment in full thereof. In
the event Lessor provides Lessee with written notice of failure to timely pay
any installment of Minimum Rent or any Additional Charges pursuant to Section
15.1(b) more than three times within any twelve-month period, Lessee shall pay
an administrative fee to Lessor in the amount of $500.00 for each additional
written notice Lessor gives pursuant to Section 15.1(b) during the next twelve
months. To the extent that Lessee pays any Additional Charges to Lessor or the
Facility Mortgagee pursuant to any requirement of this Lease, Lessee shall be
relieved of its obligation to pay such Additional Charges to the entity to which
such Additional Charges would otherwise be due. Additional Charges shall be
deemed Rent hereunder.
II.4 Net Lease. The Rent shall be paid absolutely net to Lessor, so that this
Lease shall yield to Lessor the full amount of the installments of Minimum Rent
and the payments of Additional Charges throughout the Term but subject to any
provisions of this Lease which expressly provide for payments by Lessor or the
adjustment of the Rent or other charges.
ARTICLE III
IMPOSITIONS
III.1 Payment of Impositions. Subject to Article XI relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and Lessee will promptly,
upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. If any such Imposition may lawfully
be paid in installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Lessee 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, shall pay such installments during the Term hereof as the
same become due and before any fine, penalty, premium, further interest or cost
may be added thereto. Lessor, at its expense, shall, to the extent permitted by
applicable law, prepare and file all tax returns and reports as may be required
by governmental authorities in respect of Lessor's net income, gross receipts,
franchise taxes and taxes on its capital stock. Lessee, at its expense, shall,
to the extent 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
governmental authorities. If any refund shall be due from any taxing authority
in respect of any
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Imposition paid by Lessee, the same shall be paid over to or retained by Lessee
if no Event of Default shall have occurred hereunder and be continuing. Any such
funds retained by Lessor due to an Event of Default shall be applied as provided
in Article XV. Lessor and Lessee shall, upon request of the other, provide such
data as is maintained by the party to whom the request is made with respect to
the Leased Property as may be necessary to prepare any required returns and
reports. In the event governmental authorities classify any property covered by
this Lease as personal property, Lessee shall file all personal property tax
returns in such jurisdictions where filing is required. Lessor and Lessee will
provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Lessor is legally required to file personal property tax
returns, and Lessee is obligated for the same hereunder, Lessee will be provided
with copies of assessment notices in sufficient time for Lessee to file a
protest. Lessee may, upon giving 30 days' prior written notice to Lessor, at
Lessee's option and at Lessee's sole cost and expense, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to effect a
reduction of real estate or personal property assessments and Lessor, if
requested by Lessee and at Lessee's expense as aforesaid, shall fully cooperate
with Lessee in such protest, appeal, or other action. Xxxxxxxx for reimbursement
by Lessee to Lessor of personal property taxes shall be accompanied by copies of
an invoice therefor and payments thereof which identify the personal property
with respect to which such payments are made. Lessor will cooperate with Lessee
in order that Lessee may fulfill its obligations hereunder, including the
execution of any instruments or documents reasonably requested by Lessee.
III.2 Proration of Impositions. Impositions imposed in respect of the tax-fiscal
period during which the Term terminates shall be prorated between Lessor and
Lessee, whether or not such Imposition is imposed before or after such
termination, and Lessee's and Lessor's obligation to pay their respective
prorated shares thereof shall survive such termination.
III.3 Utility Charges. Lessee will, or will cause Tenants to, contract for, in
its own name, and will pay or cause to be paid all charges for, electricity,
power, gas, oil, water and other utilities used in the Leased Property during
the Term.
III.4 Insurance Premiums. Lessee will contract for, in its own name, and will
pay or cause to be paid all premiums for, the insurance coverage required to be
maintained by Lessee pursuant to Article XII during the Term.
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ARTICLE IV
NO TERMINATION
Except as provided in this Lease, Lessee shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, the Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, except as otherwise provided in Articles XIII
or XIV, (b) the lawful or unlawful prohibition of, or restriction upon, Lessee's
use of the Leased Property, or any portion thereof, or the interference with
such use by any person, corporation, partnership or other entity, or by reason
of eviction by paramount title, (c) any claim which Lessee has or might have
against Lessor or by reason of any default or breach of any warranty by Lessor
under this Lease or any other agreement between Lessor and Lessee or to which
Lessor and Lessee are parties, (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Lessor or any assignee or transferee of Lessor, or (e) for
any other cause whatsoever whether similar or dissimilar to any of the
foregoing. Lessee hereby specifically waives all rights arising from any
occurrence whatsoever which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease. Notwithstanding the foregoing, Lessee shall have the right by separate
and independent action to pursue any claim or seek any damages it may have
against Lessor as a result of a breach by Lessor of the terms of this Lease or
Lessor's willful misconduct.
ARTICLE V
OWNERSHIP OF LEASED PROPERTY
V.1 Ownership of the Property. Lessee acknowledges that the Leased Property is
the property of Lessor and that Lessee has only the right to the possession and
use of the Leased Property upon the terms and conditions of this Lease.
V.2 Personal Property. Lessee 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 the Personal Property, and may
remove, replace or substitute for the same from time to time in the Ordinary
Course of Business with like property of equal or greater value. Lessee shall
provide and maintain during the entire Term all such Personal Property as shall
be necessary in order to operate the Facility in compliance with all licensure
and certification requirements, in compliance with all applicable Legal
Requirements and Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use in the state
where the Land is located.
ARTICLE VI
CONDITION AND USE OF LEASED PROPERTY
VI.1 Condition of the Leased Property. Lessee acknowledges receipt and delivery
of possession of the Leased Property and that Lessee has examined and otherwise
acquired knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and has found the same to be in good order
and repair and satisfactory for its purpose hereunder. Lessee is leasing the
Leased Property "as is" in its condition at the time of occupancy. Lessee waives
any claim or action against
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Lessor in respect of the condition of the Leased Property. LESSOR MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, SUITABILITY,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT IN
ALL RESPECTS.
VI.2 Use of the Leased Xxxxxxxx.Xxxxxxxx
(a) After the Commencement Date and during the entire Term, Lessee
shall use or cause to be used the Leased Property and the improvements thereon
as a senior residential facility which may include congregate care services,
assisted living services, Alzheimer's care services or skilled nursing services,
or some combination of the foregoing services (at any time, the actual use or
combination of uses specified herein that is or are then being conducted at the
Leased Property, are referred to as the "Primary Intended Use"). Lessee shall
not use the Leased Property or any portion thereof for any other use without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld or delayed.
(b) Lessee covenants that it will obtain and maintain, with Lessor's
cooperation but at Lessee's sole cost and expense, all material approvals needed
to use and operate the Leased Property and the Facility for the Primary Intended
Use in compliance with all applicable Legal Requirements.
(c) Lessee covenants and agrees that during the Term it will use its
reasonable best efforts to operate continuously the Leased Property in
accordance with its Primary Intended Use and to maintain its certifications for
reimbursement, if any, and licensure and its accreditation, with Lessor's
cooperation but at Lessee's sole cost and expense, if compliance with
accreditation standards is required to maintain the operations of the Facility
and if a failure to comply would adversely affect operations of the Facility.
(d) Lessee shall not commit or suffer to be committed any waste on the
Leased Property, or in the Facility or cause or permit any nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, to be used in such a manner as (i) reasonably likely to impair Lessor's
estate therein or in any portion thereof, or (ii) is reasonably likely to result
in a claim or claims of adverse usage or adverse possession by the public, as
such, or of implied dedication of the Leased Property or any portion thereof.
(f) Lessee will not utilize any Hazardous Materials on the Leased
Property except in accordance with applicable Legal Requirements and will not
permit any contamination which may require remediation under any applicable
Hazardous Materials Law. Lessee agrees not to dispose of any Hazardous Materials
or substances within the sewerage system of the Leased Property, and that it
will handle all "red bag" wastes in accordance with applicable Hazardous
Materials Laws.
VI.3 Management of Facility. Unless otherwise agreed to in writing by Lessor (i)
Lessee shall cause the Facility to be managed and leased to Tenants at all times
by Lessee or an Affiliate of Lessee, (ii) Lessee shall not enter into any
agreement (oral or written) with respect to such management and leasing
activities unless the terms thereof and the proposed manager or leasing agent
have been approved in writing by Lessor, (iii) all such management or leasing
agreements must be in writing, and (iv) all management or leasing agreements
with an Affiliate of Lessee must contain provisions to the effect that (A) the
obligation of Lessee to pay management fees is subordinate to its obligation to
pay the Rent, and (B) the manager shall not have the right to collect any
management fees during the continuance of an
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Event of Default.
VI.4 Lessor to Grant Easements. Lessor will, from time to time, at the request
of Lessee and at Lessee's cost and expense, but subject to the approval of
Lessor (a) grant easements and other rights in the nature of easements, (b)
release existing easements or other rights in the nature of easements which are
for the benefit of the Leased Property, (c) dedicate or transfer unimproved
portions of the Leased Property for road, highway or other public purposes, (d)
execute petitions to have the Leased Property annexed to any municipal
corporation or utility district, (e) execute amendments to any covenants and
restrictions affecting the Leased Property, and (f) execute and deliver to any
person such instruments as may be necessary or appropriate to confirm or effect
such grants, releases, dedications and transfers (to the extent of its interest
in the Leased Property), but only upon delivery to Lessor of an Officer's
Certificate stating (and such other information as Lessor may reasonably require
confirming) that such grant, release, dedication, transfer, petition or
amendment is required or beneficial for and not detrimental to the proper
conduct of the business of Lessee on the Leased Property and does not reduce the
value thereof.
ARTICLE VII
LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
VII.1 Compliance with Legal and Insurance Requirements. Subject to Article XI
relating to permitted contests, Lessee, at its expense, will promptly (a) comply
with all material Legal Requirements and Insurance Requirements in respect of
the use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) directly or indirectly with the cooperation of Lessor, but at
Lessee's sole cost and expense, procure, maintain and comply with all material
licenses, certificates of need, if any, and other authorizations required for
(i) any use of the Leased Property then being made, and for (ii) the proper
erection, installation, operation and maintenance of the Leased Improvements or
any part thereof, including any Capital Additions.
VII.2 Legal Requirement Covenants. Lessee covenants and agrees that the Leased
Property shall not be used for any unlawful purpose. Lessee shall, directly or
indirectly with the cooperation of Lessor, but at Lessee's sole cost and
expense, acquire and maintain all material licenses, certificates, permits and
other authorizations and approvals needed to operate the Leased Property in its
customary manner for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder. Lessee further
covenants and agrees that Lessee's use of the Leased Property and Lessee's
maintenance, alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable Legal Requirements where the failure to
conform would have a material adverse effect on Lessee or the Leased Property.
VII.3 Rent and Debt Service Coverage - Consolidated. As used herein, the term
"Consolidated Coverage Ratio" means EBITDAR (as defined below) for Lessee and
Guarantor on a consolidated basis for the applicable period divided by the
principal (excluding any prepayments or principal at maturity), interest and
lease (capital and operating) payment obligations of Lessee and Guarantor on a
consolidated basis for the same period. As used herein, the term "EBITDAR"
means, for any period, the sum of (i) the income (or deficit) from all
operations before provision of income taxes for such period and without
deduction for actual management fees paid or incurred, plus (ii) the interest
charges paid or accrued during such period (including imputed interest on lease
(capital or operating) obligations (including this Lease), but excluding
amortization of debt discount and expense), plus (iii) all amounts in respect of
depreciation and amortization for such period, plus (iv) the rent due under all
leases (capital or operating, including this Lease) for such period. Lessee
agrees and covenants with Lessor that so long as this Lease is in effect, Lessee
will achieve and within 45 days after the end of each calendar quarter (or year)
specified below provide evidence to Lessor of the achievement of the following
Consolidated Coverage Ratio requirements:
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Required Months Included
Period Consolidated Coverage Ratio in Calculation
------ --------------------------- --------------
(i) Prior to date in (ii) No requirement No requirement
(ii) For calendar quarter 1.0 to 1.0 Three months ending
ending 12/31/97 with such date
(iii) For calendar quarter 1.0 to 1.0 Three months ending
ending 3/31/98 with such date
(iv) For calendar quarter 1.1 to 1.0 Three months ending
ending 6/30/98 with such date
(v) For calendar quarter 1.2 to 1.0 Three months ending
ending 9/30/98 with such date
(vi) For calendar year 1.2 to 1.0 Twelve months ending
ending on 12/31/98 with such date
(vii) For calendar quarter 1.25 to 1.0 Three months ending
ending 12/31/98 with such date
(viii) For calendar quarter 1.3 to 1.0 Three months ending
ending 3/31/99 and with such date
all subsequent calendar
quarters
(ix) For calendar year 1.3 to 1.0 Twelve months ending
ending 12/31/99 and with such date
all subsequent calendar
years
VII.4 Rent and Debt Service Coverage - Facility. As used herein, the term
"Facility Coverage Ratio" means EBITDAR for the Facility only for the applicable
period minus assumed management fees of five percent of the total patient
revenues (regardless of the amount of the management fees actually paid or
incurred) earned from the Facility divided by the principal (excluding any
prepayments or principal at maturity), interest and lease payment obligations of
Lessee (including the Minimum Rent) for the same period. Lessee agrees and
covenants with Lessor that so long as this Lease is in effect, Lessee will
achieve and within 45 days after the end of each March, June, September or
December during the Term, beginning with the calendar quarter ending no sooner
than three months and no later than six months after the Commencement Date,
provide evidence to Lessor of the achievement of the Facility Coverage Ratio
equal to or greater than 1.25 to 1.0.
ARTICLE VIII
REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS
VIII.1 Maintenance and Repair.
(a) Lessee, at its expense, will keep the Leased Property and all
private roadways, sidewalks and curbs appurtenant thereto in reasonably good
order and repair (whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements, the age of the Leased Property or
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any portion thereof), and except as otherwise provided in Articles XIII and XIV,
with reasonable promptness will make all necessary and appropriate repairs
thereto of every kind and nature (including remodeling to the extent necessary
to maintain the Leased Property in a condition substantially the same as exists
on the date hereof), whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to or after the commencement of the Term of this Lease
(concealed or otherwise). All repairs and remodeling shall, to the extent
reasonably achievable, be at least equivalent in quality to the original work
and shall be accomplished by Lessee or a party selected by Lessee. Lessee will
not take or omit to take any action the taking or omission of which might
materially impair the value or usefulness of the Leased Property or any part
thereof for the Primary Intended Use. If Lessee fails to perform any of its
obligations hereunder, or if Lessor reasonably determines that action is
necessary and is not being taken, Lessor may, on giving 30 days' written notice
to Lessee (other than in a case reasonably deemed by Lessor to be an emergency,
in which case no such notice shall be required), without demand on Lessee,
perform any such obligations in such manner and to such extent and take such
other action as Lessor may deem appropriate in the event Lessee has not
commenced to perform such obligation or take such action during such 30-day
period, and all costs, expenses and charges of Lessor relating to any such
action shall constitute Additional Charges and shall be payable by Lessee to
Lessor in accordance with Section 2.3.
(b) Except for the use of any insurance proceeds (to the extent
required by Sections 13.1 and 13.2) and any Award (to the extent required by
Section 14.3) Lessor shall not under any circumstances be required to build or
rebuild any improvements on the Leased Property, or to make any repairs,
replacements, alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto in connection with this Lease, or to maintain
the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as constituting the consent or request of Lessor, expressed
or implied, to any contractor, subcontractor, laborer, materialman or vendor to
or for the performance of any particular labor or services or the furnishing of
any particular materials or other property for the construction, alteration,
addition, repair or demolition of or to the Leased Property or any part thereof.
(d) Unless Lessor shall convey any of the Leased Property to Lessee
pursuant to the provisions of this Lease, Lessee will, upon the expiration or
prior termination of this Lease, vacate and surrender the Leased Property to
Lessor in the condition in which the Leased Property was originally received
from Lessor, except for ordinary wear and tear (subject to the obligation of
Lessee to maintain the Property in good order and repair during the entire
Term), damage caused by the gross negligence or willful acts of Lessor, and
damage or destruction described in Article XIII or resulting from a Taking
described in Article XIV which Lessee is not required by the terms of this Lease
to repair or restore, and except as repaired, rebuilt, restored, altered or
added to as permitted or required by the provisions of this Lease.
VIII.2 Encroachments; Restrictions. If any of the Improvements shall, at any
time, encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any
applicable Legal Requirement, lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or shall impair the rights
of others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor, Lessee shall at its expense,
subject to its right to contest the existence of any such encroachment,
violation or impairment, (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 Lessor or Lessee, or (b)
make such changes in the Improvements, and take such other actions, as Lessor in
the good faith exercise of its judgment deems reasonably practicable, to remove
such encroachment, or to end such violation or impairment, including, if
necessary, the alteration of any of the Leased
9
Improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Facility for the Primary
Intended Use substantially in the manner and to the extent the Facility was
operated prior to the assertion of such violation or encroachment. Any such
alteration shall be made in conformity with the applicable requirements of
Article IX. Lessee's obligations under this Section 8.2 shall be in addition to
and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance and Lessee shall be entitled to a credit
for any sums recovered by Lessor under any such policy of title or other
insurance.
VIII.3 Inspections. From time to time during the Term, Lessor and its agents
shall have the right, subject to any rights of confidentiality of Tenants, to
inspect the Leased Property and all systems contained therein at any reasonable
time and upon two days advance notice to Lessee to determine Lessee's compliance
with its obligations under this Lease, including those obligations set forth in
Article VII and this Article VIII. Lessee shall be responsible for the costs of
such inspections, which costs shall not exceed the sum of $2,000.00 per year for
each year of the Term for an independent, third party inspection of the
Facility.
ARTICLE IX
CAPITAL ADDITIONS
IX.1 Construction of Capital Additions to the Leased Property.
(a) If no Event of Default shall have occurred and be continuing,
Lessee shall have the right, upon and subject to the terms and conditions set
forth below, to construct or install Capital Additions on the Leased Property
with the prior written consent of Lessor which consent shall not be unreasonably
withheld; provided that Lessee shall not be permitted to create any Encumbrance
on the Leased Property in connection with such Capital Addition without first
complying with Section 9.1(b) hereof. Prior to commencing construction of any
Capital Addition, Lessee shall submit to Lessor in writing a proposal setting
forth in reasonable detail any proposed Capital Addition and shall provide to
Lessor such plans and specifications, permits, licenses, contracts and other
information concerning the proposed Capital Addition as Lessor may reasonably
request. 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.
(b) Prior to commencing construction of any Capital Addition, Lessee
shall first request Lessor to provide funds to pay for such Capital Addition in
accordance with the provisions of Section 9.3. If Lessor declines or is unable
to provide such financing on terms acceptable to Lessee and Lessee rejects
Lessor's offer of financing, Lessee may arrange or provide other financing,
subject to the provisions of Section 9.2. Lessor will reasonably cooperate with
Lessee regarding the grant of any consents or easements or the like necessary or
appropriate in connection with any Capital Addition; provided that no Capital
Addition shall be made which would tie in or connect any Leased Improvements on
the Leased Property with any other improvements on property adjacent to the
Leased Property (and not part of the Land covered by this Lease) including
tie-ins of buildings or other structures or utilities, unless Lessee shall have
obtained the prior written approval of Lessor, which approval shall not be
unreasonably withheld. All proposed Capital Additions shall be architecturally
integrated into and consistent with the Leased Property.
IX.2 Capital Additions Financed by Lessee. If Lessee finances or arranges to
finance any Capital Addition with a party other than Lessor or if Lessee pays
cash for any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:
(a) There shall be no adjustment in the Minimum Rent by reason of any
such Capital Addition.
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(b) Upon the expiration or earlier termination of this Lease, Lessor
shall compensate Lessee for all Capital Additions paid for or financed by Lessee
in any of the following ways:
(i) By purchasing all Capital Additions paid for by Lessee from
Lessee for cash in the amount of the Fair Market Added Value at the
time of purchase by Lessor of all such Capital Additions paid for or
financed by Lessee; or
(ii) Such other arrangement regarding such compensation as shall
be mutually acceptable to Lessor and Lessee.
Any amount owed by Lessee to Lessor under this Lease at such termination or
expiration may be deducted from any compensation for Capital Additions payable
by Lessor to Lessee under this Section 9.2.
IX.3 Capital Additions Financed by Lessor.
(a) Lessee shall request that Lessor provide or arrange financing for a
Capital Addition by providing to Lessor such information about the Capital
Addition as Lessor may reasonably request (a "Request"), including all
information referred to in Section 9.1 above. Lessor may, but shall be under no
obligation to provide or obtain the funds necessary to meet the Request. Within
30 days of receipt of a Request, Lessor shall notify Lessee as to whether it
will finance the proposed Capital Addition and, if so, the terms and conditions
upon which it would do so, including the terms of any amendment to this Lease.
In no event (i) shall the portion of the projected Capital Addition Cost
comprised of land (if any), materials, labor charges and fixtures be less than
100% of the total amount of such cost, or (ii) shall Lessee or any of its
Affiliates be entitled to any commission or development fee, directly or
indirectly, as a portion of the Capital Addition Cost. Any Capital Addition not
financed by Lessor must still be approved in writing by Lessor pursuant to the
terms of Section 9.1 hereof, which consent will not be unreasonably withheld.
Lessee may withdraw its Request by notice to Lessor at any time before or after
receipt of Lessor's terms and conditions.
(b) If Lessor agrees to finance the proposed Capital Addition, Lessor's
obligation to advance any funds shall be subject to receipt of all of the
following, in form and substance reasonably satisfactory to Lessor:
(i) such loan documentation as may be required by Lessor;
(ii) any information, certificates, licenses, permits or
documents requested by Lessor, or by any lender with whom Lessor has
agreed or may agree to provide financing, which are necessary or
appropriate to confirm that Lessee 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;
(iii) an Officer's Certificate and, if requested, a
certificate from Lessee's architect, setting forth in detail reasonably
satisfactory to Lessor the projected (or actual, if available) cost of
the proposed Capital Addition;
(iv) an amendment to this Lease, duly executed and
acknowledged, in form and substance satisfactory to Lessor and Lessee
(the "Lease Amendment"), containing such provisions as may be necessary
or appropriate due to the Capital Addition, including any appropriate
changes in the legal description of the Land and the Rent, all such
changes to be mutually agreed upon by Lessor and Lessee;
(v) if appropriate, a deed conveying title to Lessor to any
land and
11
improvements or other rights acquired for the purpose of
constructing the Capital Addition, free and clear of any liens or
encumbrances except those approved in writing by Lessor and, both prior
to and following completion of the Capital Addition, an as-built survey
thereof reasonably satisfactory to Lessor;
(vi) if appropriate, endorsements to any outstanding policy of
title insurance covering the Leased Property or a supplemental policy
of title insurance covering the Leased Property reasonably satisfactory
in form and substance to Lessor (A) updating the same without any
additional exceptions, except as may be permitted by Lessor; and (B)
increasing the coverage thereof by an amount equal to the Fair Market
Value of the Capital Addition (except to the extent covered by the
owner's policy of title insurance referred to in subparagraph (vii)
below);
(vii) if required by Lessor, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Lessor
pursuant to subparagraph (v), free and clear of all liens and
encumbrances except those approved by Lessor and (B) a lender's policy
of title insurance satisfactory in form and substance to Lessor and the
Lending Institution advancing any portion of the Capital Addition Cost;
(viii) if required by Lessor upon completion of the Capital
Addition, an M.A.I appraisal of the Leased Property; and
(ix) such other certificates (including endorsements
increasing the insurance coverage, if any, at the time required by
Section 12.1), documents, customary opinions of Lessee's counsel,
appraisals, surveys, certified copies of duly adopted resolutions of
the Board of Directors of Lessee authorizing the execution and delivery
of the Lease Amendment and any other instruments or documents as may be
reasonably required by Lessor.
(c) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually consummated, Lessee shall pay the reasonable costs
and expenses of Lessor and any Lending Institution which has committed to
finance such Capital Addition paid or incurred in connection with the financing
of the Capital Addition, including (i) the fees and expenses of their respective
counsel, (ii) the amount of any recording or transfer taxes and fees, (iii)
documentary stamp taxes, if any, (iv) title insurance charges, (v) appraisal
fees, if any, and (vi) commitment fees, if any.
IX.4 Remodeling and Non-Capital Additions. Lessee shall have the right and the
obligation to make additions, modifications or improvements to the Leased
Property which are not Capital Additions, including tenant improvements made in
connection with the Tenant Leases, from time to time as may reasonably be
necessary for its uses and purposes and to permit Lessee to comply fully with
its obligations set forth in this Lease; provided that such action will be
undertaken expeditiously, in a workmanlike manner and will not significantly
alter the character or purpose or detract from the value or operating efficiency
of the Leased Property and will not significantly impair the revenue producing
capability of the Leased Property or adversely affect the ability of Lessee to
comply with the provisions of this Lease. Title to all non-Capital Additions,
modifications and improvements shall, without payment by Lessor at any time, be
included under the terms of this Lease and, upon expiration or earlier
termination of this Lease, shall pass to and become the property of Lessor.
IX.5 Salvage. All materials which are scrapped or removed in connection with the
making of either Capital Additions permitted by Section 9.1 or repairs required
by Article VIII shall be or become the property of Lessor; provided that Lessor
may require Lessee to dispose of such materials and remit the net proceeds
thereof to Lessor within 15 days of such disposal.
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ARTICLE X
LIENS
Subject to the provisions of Article XI relating to permitted contests,
Lessee will not directly or indirectly create or suffer to exist and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in Exhibit B attached hereto, (c)
restrictions, liens and other encumbrances which are consented to in writing by
Lessor, or any easements granted pursuant to the provisions of Section 6.4 of
this Lease, (d) liens for those taxes of Lessor which Lessee is not required to
pay hereunder, (e) subleases permitted by Article XXIII, (f) liens for
Impositions or for sums resulting from noncompliance with Legal Requirements so
long as (1) the same are not yet payable or are payable without the addition of
any fine or penalty or (2) such liens are in the process of being contested in
accordance with the provisions of Article XI, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
60 days after the completion of the action (including any appeal from any
judgment rendered therein) giving rise to such lien and such reserve or other
appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor or (2) any such liens are in
the process of being contested in accordance with the provisions of Article XI,
and (h) any Encumbrance placed on the Leased Property by Lessor.
ARTICLE XI
PERMITTED CONTESTS
Lessee, after ten days' prior written notice to Lessor, on its own or
on Lessor's behalf (or in Lessor's name), but at Lessee's expense, may contest,
by appropriate legal proceedings conducted in good faith and with due diligence,
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance,
charge or claim (collectively "Charge") not otherwise permitted by Article X,
which is required to be paid or discharged by Lessee or any Tenant; provided
that (a) in the case of an unpaid Charge, the commencement and continuation of
such proceedings, or the posting of a bond or certificate of deposit as may be
permitted by applicable law, shall suspend the collection thereof from Lessor
and from the Leased Property; (b) neither the Leased Property nor any Rent
therefrom nor any part thereof or interest therein would be in any immediate
danger of being sold, forfeited, attached or lost; (c) Lessor would not be in
any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings; (d) in the event that any
such contest shall involve a sum of money or potential loss in excess of
$50,000.00, then Lessee shall deliver to Lessor and its counsel an Officer's
Certificate as to the matters set forth in clauses (a), (b) and (c) and such
opinions of legal counsel as Lessor may reasonably request; (e) in the case of
an Insurance Requirement, the coverage required by Article XII shall be
maintained; and (f) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or otherwise comply with the applicable Charge; provided further that
nothing contained herein shall be construed to permit Lessee to contest the
payment of the Rent, or any other sums payable by Lessee to Lessor hereunder.
Lessor, at Lessee's expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in any such
contest and, if reasonably requested by Lessee or if Lessor so desires and then
at its own expense, Lessor shall join as a party therein. Lessor shall do all
things reasonably requested by Lessee in connection with such action. Lessee
shall indemnify and save Lessor harmless against any liability, cost or expense
of any kind that may be imposed upon Lessor in connection with any such contest
and any loss resulting therefrom.
13
ARTICLE XII
INSURANCE
XII.1 General Insurance Requirements. During the Term of this Lease, Lessee
shall at all times keep the Leased Property, and all property located in or on
the Leased Property insured with the kinds and amounts of insurance described
below and written by companies reasonably acceptable to Lessor authorized to do
insurance business in the state in which the Leased Property is located. The
policies must name Lessor as an additional insured and losses shall be payable
to Lessor and/or Lessee as provided in Article XIII. In addition, the policies
shall name as an additional insured the holder ("Facility Mortgagee") of any
mortgage, deed of trust or other security agreement securing any Encumbrance
placed on the Leased Property or any part thereof in accordance with the
provisions of Article XXXII ("Facility Mortgage"), if any, by way of a standard
form of mortgagee's loss payable endorsement. Any loss adjustment in excess of
$100,000.00 shall require the written consent of Lessor and each affected
Facility Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
requested, with any Facility Mortgagee(s). If any provision of any Facility
Mortgage which constitutes a first lien on the Leased Property requires deposits
of insurance to be made with such Facility Mortgagee, Lessee shall pay to Lessor
monthly the amounts required and Lessor shall transfer such amounts to such
Facility Mortgagee. The policies on the Leased Property, including the Leased
Improvements, the Fixtures and the Personal Property, shall insure against the
following risks:
(a) Loss or damage by fire, vandalism and malicious mischief, extended
coverage perils commonly known as "All Risk" and all physical loss perils,
including sprinkler leakage and business interruption, in an amount not less
than the then Full Replacement Cost thereof (as defined below in Section 12.2)
after deductible with a replacement cost endorsement sufficient to prevent
Lessee from becoming a co-insurer together with an agreed value endorsement;
(b) Loss or damage by explosion of steam boilers, pressure vessels or
similar apparatus now or hereafter installed in the Facility, in such limits
with respect to any one accident as may be reasonably requested by Lessor from
time to time;
(c) Loss or damage by hurricane and earthquake in the amount of the
Full Replacement Cost, after deductible;
(d) Loss of rental under a business interruption insurance policy
covering risk of loss during the first 12 months of reconstruction necessitated
by the occurrence of any of the hazards described in Sections 12.1(a), 12.1(b)
or 12.1 (c), in an amount sufficient to prevent Lessee from becoming a
co-insurer; provided that in the event that Lessee shall not be in default
hereunder and Lessor shall receive any proceeds from such rental insurance
which, when added to rental amounts received with respect to the applicable time
period, exceed the amount of rental owed by Lessee hereunder, Lessor shall
immediately pay such excess to Lessee;
(e) Claims for personal injury or property damage under a policy of
comprehensive general public liability insurance including insurance against
assumed or contractual liability including indemnities under this Lease, with
amounts not less than $1,000,000.00 per occurrence in respect of bodily injury
and death, $5,000,000.00 in the aggregate and $1,000,000.00 for property damage;
provided that if it becomes customary for tenants occupying similar buildings in
the same City where the Leased Property is located to be required to provide
liability coverage with higher limits than the foregoing, then Lessee shall
provide Lessor with an insurance policy with coverage limits that are not less
than such customary limits; and
(f) Flood (when the Leased Property is located in whole or in part
within a designated flood plain area) and such other hazards and in such amounts
as may be customary for comparable properties in the area and if available from
insurance companies authorized to do business in the state in which the Leased
Property is located.
14
XII.2 Replacement Cost. The term "Full Replacement Cost" as used herein shall
mean the actual replacement cost of the Facility from time to time, including
increased cost of construction endorsement, less exclusions provided in the
normal fire insurance policy. In the event Lessor or Lessee believes that the
Full Replacement Cost has increased or decreased at any time during the Term, it
shall have the right at its own expense to have such Full Replacement Cost
redetermined by an impartial insurance company reasonably acceptable to both
parties, hereinafter referred to as the "impartial appraiser"; provided that
such redetermination shall not occur more often than once every three years. The
party desiring to have the Full Replacement Cost so redetermined shall
forthwith, on receipt of such determination by the impartial appraiser, give
written notice thereof to the other party hereto. The determination of such
impartial appraiser shall be final and binding on the parties hereto, and Lessee
shall forthwith increase, or may decrease, the amount of the insurance carried
pursuant to this Article to the amount so determined by the impartial appraiser.
XII.3 Additional Insurance. In addition to the insurance described above, Lessee
shall maintain such additional insurance as may be reasonably required from time
to time by any Facility Mortgagee which is consistent with insurance coverage
for similar properties in the city, county and state where the Leased Property
is located, or required pursuant to any applicable Legal Requirement, and shall
at all times maintain or cause to be maintained adequate worker's compensation
insurance coverage for all persons employed by Lessee on the Leased Property, in
accordance with all applicable Legal Requirements.
XII.4 Waiver of Subrogation. All insurance policies (other than liability and
worker's compensation insurance) carried by either party covering the Leased
Property, the Fixtures, the Facility and/or the Personal Property, including
contents, fire and casualty insurance, shall expressly waive any right of
subrogation on the part of the insurer against the other party. The parties
hereto agree that their policies will include such a waiver clause or
endorsement so long as the same is obtainable without extra cost, and in the
event of such an extra charge the other party, at its election, may request and
pay the same, but shall not be obligated to do so. Each party waives any claim
it has against the other party to the extent such claim is covered by insurance.
XII.5 Form of Insurance. All of the policies of insurance referred to in this
Section shall be written in form reasonably satisfactory to Lessor by insurance
companies reasonably satisfactory to Lessor; provided that the deductibles for
insurance required by Sections 12.1(a) through 12.1 (d) shall be no greater than
$50,000.00 and the deductible for coverage required by Section 12.1(e) shall be
no greater than $100,000.00. Lessee shall pay all premiums therefor, and deliver
such policies or certificates thereof to Lessor prior to their effective date
(and, with respect to any renewal policy, at least 30 days prior to the
expiration of the existing policy). In the event of the failure of Lessee to
effect such insurance in the names herein called for or to pay the premiums
therefor, or to deliver such policies or certificates thereof to Lessor at the
times required, Lessor shall be entitled, but shall have no obligation, to enact
such insurance and pay the premiums therefor, which premiums shall be repayable
by Lessee to Lessor upon written demand therefor, and failure to repay the same
shall constitute an Event of Default within the meaning of Section 15.1(c). Each
insurer mentioned in this Section shall agree, by endorsement on the policy or
policies issued by it, or by independent instrument furnished to Lessor, that it
will give to Lessor prior written notice before the policy or policies in
question shall be altered, allowed to expire or canceled.
XII.6 Change in Limits. In the event that Lessor shall at any time reasonably
and in good faith believe the limits of the personal injury, property damage or
general public liability insurance then carried to be insufficient, the parties
shall endeavor to agree on the proper and reasonable limits for such insurance
to be carried and such insurance shall thereafter be carried with the limits
thus agreed on until further change pursuant to the provisions of this Section.
If the parties shall be unable to agree thereon, the proper and reasonable
limits for such insurance shall be determined by an impartial third party
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selected by the parties the costs of which shall be divided equally between the
parties. Such redeterminations, whether made by the parties or by arbitration,
shall be made no more frequently than every year. Nothing herein shall permit
the amount of insurance to be reduced below the amount or amounts reasonably
required by any Facility Mortgagee.
XII.7 Blanket Policy. Notwithstanding anything to the contrary contained in this
Section, Lessee's obligations to carry the insurance provided for herein may be
brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee; provided that the coverage afforded
Lessor will not be reduced or diminished or otherwise be different from that
which would exist under separate policies meeting all other requirements of this
Lease; provided further that the requirements of this Article XII are otherwise
satisfied.
XII.8 No Separate Insurance. Without the prior written consent of Lessor, Lessee
shall not, on Lessee's own initiative or pursuant to the request or requirement
of any third party, take out separate insurance concurrent in form or
contributing in the event of loss with that required in this Article XII to be
furnished by, or which may reasonably be required by a Facility Mortgagee to be
furnished by, Lessee, or increase the amounts of any then-existing insurance
required under this Article XII by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases Lessor and all Facility Mortgagees, are
included therein as additional insureds and the loss is payable under said
insurance in the same manner as losses are required to be payable under this
Lease. Lessee shall immediately notify Lessor of the taking out of any such
separate insurance or of the increasing of any of the amounts of the
then-existing insurance required under this Article XII by securing an
additional policy or additional policies.
XII.9 Insurance for Contractors. If Lessee shall engage or cause to be engaged
any contractor to perform work on the Leased Property, Lessee shall require such
contractor to carry and maintain insurance coverage comparable to the foregoing
requirements, at no expense to Lessor; provided that in cases where such
coverage is excessive in relation to the work being done, Lessee may allow any
such contractor to carry or maintain alternative coverage in reasonable amounts
upon Lessor's prior written consent, which shall not be unreasonably withheld.
ARTICLE XIII
FIRE AND CASUALTY
XIII.1 Insurance Proceeds. All proceeds payable by reason of any loss or damage
to the Leased Property or any portion thereof, and insured under any policy of
insurance required by Article XII of this Lease shall be paid to Lessor and held
by Lessor in trust (subject to the provisions of Section 13.7) and shall be made
available for reconstruction or repair, as the case may be, of any damage to or
destruction of the Leased Property, or any portion thereof, and shall be paid
out by Lessor from time to time for the reasonable cost of such reconstruction
or repair in accordance with this Article XIII after Lessee has expended an
amount equal to or exceeding the deductible under any applicable insurance
policy. Any excess proceeds of insurance remaining after the completion of the
restoration or reconstruction of the Leased Property shall be retained by Lessee
free and clear upon completion of any such repair and restoration except as
otherwise specifically provided below in this Article XIII; provided that in the
event neither Lessor nor Lessee is required or elects to repair or restore the
Leased Property, then all such insurance proceeds shall be retained by Lessor.
All salvage resulting from any risk covered by insurance shall belong to Lessee,
including any salvage relating to Capital Additions paid for by Lessee.
XIII.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance.
(a) Facility Rendered Unsuitable for Its Primary Intended Use. Except
as provided in Section 13.7, if during the Term, the Facility is totally or
partially destroyed from a risk covered by the
16
insurance described in Article XII and the Facility thereby is rendered
Unsuitable for its Primary Intended Use, such damage or destruction shall not
terminate this Lease and all of Lessee's obligations with respect to payment of
the Rent shall continue in full force and effect and shall not be affected
thereby and Lessee shall either:
(i) apply all proceeds payable with respect thereto to restore
the Facility to substantially the same condition as existed immediately
prior to such damage or destruction, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Amount of the
Leased Property immediately prior to such damage or destruction or (B)
to substitute a new property or properties for the Leased Property
pursuant to and in accordance with the provisions of Article XX (which
offers Lessor may in its sole discretion refuse).
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen, such notice shall be accompanied by the offer referred to
therein. In the event Lessee fails to give such notice or does not make an offer
under option (ii), Lessee shall promptly proceed to restore the Facility to
substantially the same condition as existed immediately prior to the damage or
destruction. If Lessor does not accept Lessee's offer to substitute for or
purchase the Leased Property within 30 days after the date of such offer,
Lessee's offer shall be deemed withdrawn on such 30th day and Lessee shall
promptly proceed to restore the Facility to substantially the same condition as
existed immediately prior to such damage for destruction.
(b) Facility Not Rendered Unsuitable for Its Primary Intended Use.
Except as provided in Section 13.7, if during the Term, the Facility is
partially destroyed from a risk covered by the insurance described in Article
XII, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall restore the Facility to substantially the same
condition as existed immediately prior to the damage or destruction and such
damage or destruction shall not terminate this Lease and all of Lessee's
obligations hereunder, including Lessee's obligations with respect to the
payment of the Rent, shall continue in full force and effect and shall not be
affected thereby; provided that if Lessee cannot within a reasonable time obtain
all necessary governmental approvals, including building permits, licenses,
conditional use permits and any certificates of need, after diligent efforts to
do so, in order to be able to perform all required repair and restoration work
and to operate the Facility for its Primary Intended Use in substantially the
same manner as immediately prior to such damage or destruction, then Lessee
shall either:
(i) offer either (A) to acquire that Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Amount
immediately prior to such damage or destruction, or (B) to substitute a
new property or properties for the Leased Property pursuant to and in
accordance with the provisions of Article XX (which offers Lessor in
its sole discretion may refuse), or
(ii) after the fourth anniversary of the Commencement Date,
offer to purchase the Leased Property from Lessor for a purchase price
equal to the Minimum Purchase Amount of the Leased Property immediately
prior to such damage or destruction.
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i)(A) or option (i)(B), and
if option (i)(B) or option (ii) is chosen, such notice shall be accompanied by
the offer referred to therein. In the event Lessee fails to give such notice or
does not make an offer under option (i) or option (ii), Lessee shall promptly
proceed to restore the
17
Facility to substantially the same condition as existed immediately prior to the
damage or destruction. If Lessor does not accept Lessee's offer to substitute
for or purchase the Leased Property within 30 days after the date of such offer,
Lessee's offer shall be deemed withdrawn on such 30th day and Lessee shall
promptly proceed to restore the Facility to substantially the same condition as
existed immediately prior to such damage for destruction.
XIII.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance. Except as provided in Section 13.7, if during the Term the Facility
is totally or materially destroyed from a risk (including earthquake) not
covered by the insurance described in Article XII, whether or not such damage or
destruction renders the Facility Unsuitable for Its Primary Intended Use, Lessee
shall:
(i) restore the Facility to substantially the same condition
it was in immediately prior to such damage or destruction and such
damage or destruction shall not terminate this Lease, and all of
Lessee's obligations hereunder, including Lessee's obligations with
respect to the payment of the Rent, shall continue in full force and
effect and not be affected thereby, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Amount
immediately prior to such damage or destruction, or (B) to substitute a
new property or properties for the Leased Property pursuant to and in
accordance with the provisions of Article XX (which offers Lessor in
its sole discretion may refuse); provided that if such damage or
destruction is not material in the reasonable opinion of Lessor, Lessee
shall restore the Facility to substantially the same condition as
existed immediately prior to any such damage or destruction.
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen such notice shall be accompanied by the offer referred to
therein. If Lessor does not accept Lessee's offer to substitute for or purchase
the Leased Property within 30 days after the date of such offer, Lessee's offer
shall be deemed to be withdrawn on such 30th day. If such offer is so withdrawn,
or if Lessee fails to purchase the Leased Property or to provide a Substitute
Property in accordance with Article XX, then such damage and destruction shall
be deemed to be a total Taking of such Facility under Section 14.2, and the
provisions of said Section 14.2 shall apply to the rights of the parties and all
insurance proceeds payable in connection with such damage or destruction shall
be treated as if such proceeds constituted an "Award" under said Section 14.2.
XIII.4 Lessee's Property. Lessee shall use any insurance proceeds payable by
reason of any loss of or damage to any of the Personal Property to restore such
Personal Property to the Leased Property with items of substantially equivalent
value to the items being replaced.
XIII.5 Restoration of Lessee's Property. If Lessee is required or elects to
restore the Facility as provided in Sections 13.2 or 13.3, Lessee shall also
restore the Personal Property related thereto as required by Section 13.4 and
all Capital Additions paid for or financed by Lessor. Insurance proceeds payable
by reason of damage to Capital Additions paid for or financed by Lessor shall be
paid to Lessor and Lessor shall hold such insurance proceeds in trust to pay the
cost of repairing or replacing such Capital Additions in the event Lessee does
not purchase or substitute other property or properties for the Leased Property.
All other insurance proceeds shall be paid to Lessee to pay the cost of
replacing or restoring any Capital Additions paid for or financed by Lessee.
XIII.6 No Abatement of the Rent. This Lease shall remain in full force and
effect and Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during any period required
for repair and restoration.
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XIII.7 Damage Near End of Term. Notwithstanding any provisions of Sections 13.2
or 13.3 to the contrary, if damage to or destruction of the Facility occurs
during the last 12 months of the Term, and if such damage or destruction cannot
be fully repaired and restored within the lesser of (i) six months or (ii) the
period remaining in the Term immediately following the date of loss, then either
party shall have the right to terminate this Lease by giving notice of
termination to the other within 30 days after the date of such damage or
destruction, in which event Lessor shall be entitled to retain the insurance
proceeds and Lessee shall pay to Lessor on demand the amount of any deductible
or uninsured loss arising in connection therewith; provided that any such notice
given by Lessor shall be void and of no force and effect if Lessee exercises an
available option to extend the Term for one Extended Term, or one additional
Extended Term, as the case may be, within 30 days following receipt of such
termination notice.
XIII.8 Purchase or Substitution. In the event Lessor accepts any offer by Lessee
to purchase the Leased Property or to substitute a property or properties for
the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all documentation in accordance with Article
XVII, or execution and delivery of all documents required in connection with a
Substitute Property under Article XX. Lessor shall remit to Lessee, or in the
case of a purchase allow Lessee a credit toward the purchase price, an amount
equal to all insurance proceeds being held in trust by Lessor.
XIII.9 Waiver. Lessee hereby knowingly and expressly waives any statutory or
common law rights of termination which may arise by reason of any damage or
destruction of the Facility.
ARTICLE XIV
CONDEMNATION
XIV.1 Parties' Rights and Obligations. If during the Term there is any Taking of
all or any part of the Leased Property or any interest in this Lease by
Condemnation, the rights and obligations of the parties shall be determined by
this Article XIV.
XIV.2 Total Taking. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking, and the Minimum
Rent and all Additional Charges paid or payable hereunder shall be apportioned
and paid to the Date of Taking.
XIV.3 Partial Taking. If there is a Taking of a portion of the Leased Property
by Condemnation such that the Facility is not thereby rendered Unsuitable for
Its Primary Intended Use, this Lease shall not terminate and all of Lessee's
obligations hereunder, including Lessee's obligations with respect to the
payment of the Rent, shall continue in full force and effect and shall not be
affected thereby. If, however, the Facility is thereby rendered Unsuitable for
Its Primary Intended Use, Lessee shall either:
(i) at Lessee's expense, restore the Facility, to the extent
possible, to substantially the same condition as existed immediately
prior to the partial Taking, in which case the proceeds of any Award
shall be applied to such restoration to the extent necessary or
appropriate, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Amount of the
Leased Property immediately prior to such partial Taking, or (B) to
substitute a new property or properties for the Leased Property
pursuant to and in accordance with the provisions of Article XX (which
offers Lessor may in its sole discretion refuse), or
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(iii) terminate this Lease effective upon the effective date
of such Taking.
Lessee will give written notice to Lessor within 60 days after Lessee receives
notice of the Taking whether Lessee chooses option (i), option (ii)(A) or option
(ii)(B) or option (iii), and if option (ii)(B) is chosen, such notice shall be
accompanied by the offer referred to therein. In the event Lessor does not
accept Lessee's offer to so purchase the Leased Property within 30 days after
receipt of the notice described in the preceding sentence, Lessee may either (a)
withdraw its offer to purchase the Leased Property and proceed to restore the
Facility, to the extent possible, to substantially the same condition as existed
immediately prior to the partial Taking, or (b) terminate the offer and this
Lease by written notice to Lessor.
XIV.4 Restoration. If there is a partial Taking of the Leased Property and this
Lease remains in full force and effect pursuant to any provision of this Article
XIV, Lessee shall accomplish all necessary restoration in order that the Leased
Property may continue to be used for its Primary Intended Use.
XIV.5 Award Distribution. In the event Lessee purchases the Leased Property
pursuant to Section 14.3 or Lessor accepts any offer by Lessee to purchase the
Leased Property or to provide a Substitute Property therefor pursuant to this
Article XIV, then the entire Award shall belong to Lessee and Lessor agrees to
assign to Lessee all of its rights thereto. Except as otherwise expressly
provided in this Article XIV, in any other event the entire Award shall belong
to and be paid to Lessor; provided that if this Lease is terminated in
accordance with Section 14.2(b) or 14.3(a), and subject to the rights of any
Facility Mortgagees, Lessee shall be entitled to receive from the Award any sum
attributable to any Capital Additions for which Lessee would be entitled to
reimbursement at the end of the Term pursuant to the provisions of Section
9.2(b), but only if and to the extent such Award expressly includes such items
and allocates a value thereto. If Lessee is required or elects to restore the
Facility, Lessor agrees that, subject to the rights of the Facility Mortgagees,
its portion of the Award shall be used for such restoration and it shall hold
such portion of the Award in trust, for application to the costs of the
restoration.
XIV.6 Temporary Taking. The Taking of the Leased Property, or any part thereof,
by military or other public authority shall constitute a Taking by Condemnation
only when the use and occupancy by the Taking authority has continued for longer
than six months. During any such six-month period all the provisions of this
Lease shall remain in full force and effect and the Rent shall not be abated or
reduced during such period of Taking; provided that to the extent any
compensation is paid by the Taking authority as a result of such temporary
Taking, Lessee will retain such compensation.
XIV.7 Purchase or Substitution. In the event Lessor accepts any offer by Lessee
to purchase the Leased Property or to substitute a property or properties for
the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all appropriate documentation in accordance
with Article XVII, or execution and delivery of all documents required in
connection with a Substitute Property under Article XX.
ARTICLE XV
DEFAULT
XV.1 Events of Default. The occurrence of any one or more of the following
events shall constitute events of default (individually, an "Event of Default"
and, collectively, "Events of Default") hereunder:
(a) An event of default shall occur under any other lease (the "Related
Leases") between Lessor or any of its Affiliates and Lessee or any of its
Affiliates, which event of default is not cured within the applicable grace
period set forth therein;
20
(b) Lessee shall fail to make a payment of the Rent payable by Lessee
under this Lease when the same becomes due and payable and such failure
continues for a period of ten calendar days after written notice from Lessor to
Lessee;
(c) Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease or any document executed in connection herewith and such
failure is not cured by Lessee within a period of 30 days after receipt by
Lessee of notice thereof from Lessor, unless such failure cannot with due
diligence be cured within a period of 30 days, in which case such failure shall
not be deemed to continue if Lessee proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof (as soon as
reasonably possible);
(d) Lessee shall:
(i) admit in writing its inability to pay its debts
generally as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency law,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or
of the whole or any substantial part of its property,
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state thereof;
(e) Lessee shall default beyond any applicable grace period contained
in one or more major credit facilities which by their terms would permit an
outstanding balance equal to or greater than $10,000,000.00 in the aggregate and
the same shall be accelerated by the lenders or other applicable parties; or
(f) Lessee's corporate parent company, Guarantor, fails to maintain a
Consolidated Tangible Net Worth of at least $50,000,000.00.
XV.2 Remedies. If an Event of Default shall have occurred, Lessor may, at its
election, then or at any time thereafter, pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without further notice or demand, except as
hereinafter provided:
(a) Without any notice or demand whatsoever, Lessor may take any one or
more actions permissible at law to ensure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee abandons or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease. Lessor shall use reasonable efforts to relet on commercially
reasonable terms but shall have no absolute obligation to relet. If Lessor does,
at its sole discretion, elect to relet the Leased Property, such action by
Lessor shall not be deemed as an acceptance of Lessee's surrender of the Leased
Property unless Lessor expressly notifies Lessee of such acceptance in writing,
Lessee hereby acknowledging that Lessor shall otherwise be reletting as Lessee's
agent. It is further agreed in this regard that in the event of any Event of
Default described in this Article XV, Lessor shall have the right to enter upon
the Leased Property and do whatever Lessee is obligated to do under the terms of
this Lease. Lessee agrees to reimburse Lessor
21
on demand for any reasonable expenses which Lessor may incur in thus effecting
compliance with Lessee's obligations under this Lease, and further agrees that
Lessor shall not be liable for any damages resulting to Lessee from such action,
except as may result from Lessor's gross negligence or willful misconduct.
(b) Lessor may terminate this Lease by written notice to Lessee, in
which event Lessee shall immediately surrender the Leased Property to Lessor,
and if Lessee fails to do so, Lessor may, without prejudice to any other remedy
which Lessor may have for possession or arrearage in rent (including any
interest which may have accrued pursuant to Section 2.3 of this Lease or
otherwise), to the extent permitted by applicable law enter upon and take
possession of the Leased Property and expel or remove Lessee and any other
person who may be occupying said premises or any part thereof other than Tenants
pursuant to Tenant Leases. In addition, Lessee agrees to pay to Lessor on demand
the amount of all loss and damage which Lessor may suffer by reason of any
termination effected pursuant to this subsection (b), said loss and damage to be
determined, at Lessor's option, by either of the following alternative measures
of damages:
(i) Although Lessor shall be under no absolute obligation to
attempt and shall be obligated only to use reasonable efforts, to relet
the Leased Property, until the Leased Property is relet Lessee shall
pay to Lessor on or before the first day of each calendar month the
monthly rentals and other charges provided in this Lease. After the
Leased Property has been relet by Lessor, Lessee shall pay to Lessor on
the 10th day of each calendar month the difference between the monthly
rentals and other charges provided in this Lease for the preceding
calendar month and that actually collected by Lessor for such month. If
it is necessary for Lessor to bring suit in order to collect any
deficiency, Lessor shall have a right to allow such deficiencies to
accumulate and to bring an action on several or all of the accrued
deficiencies at one time. Any such suit shall not prejudice in any way
the right of Lessor to bring a similar action for any subsequent
deficiency or deficiencies. Any amount collected by Lessor from
subsequent tenants for any calendar month in excess of the monthly
rentals and other charges provided in this Lease shall be credited to
Lessee in reduction of Lessee's liability for any calendar month for
which the amount collected by Lessor will be less than the monthly
rentals and other charges provided in this Lease, but Lessee shall have
no right to such excess other than the above described credit; or
(ii) When Lessor desires, Lessor may demand a final settlement
not to exceed the Minimum Purchase Amount at the time of such final
settlement. Upon demand for a final settlement, Lessor shall have a
right to, and Lessee hereby agrees to pay, the difference between the
total of all monthly rentals and other charges provided in this Lease
for the remainder of the Term and the reasonable rental value of the
Leased Property for such period (including a reasonable time to relet
the Leased Property), as determined pursuant to the provisions of
Article XXVIII hereof, such difference to be discounted to present
value at a rate equal to the Treasury Yield then in effect with
maturity periods substantially equivalent to the balance of the Initial
Term or any Extended Term exercised by Lessee pursuant to the terms of
Article XXXIV.
The rights and remedies of Lessor hereunder are cumulative, and pursuit
of any of the above remedies shall not preclude pursuit of any other remedies
prescribed in other sections of this Lease and any other remedies provided by
law or equity. Forbearance by Lessor to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Event of Default. Exercise by Lessor of any one or
more remedies shall not constitute an acceptance of surrender of the Leased
Property by Lessee, it being understood that such surrender can be effected only
by the prior written agreement of Lessor and Lessee.
22
XV.3 Additional Expenses. In addition to payments required pursuant to
subsections (a) and (b) of Section 15.2 above, Lessee shall compensate Lessor
for all reasonable expenses incurred by Lessor in repossessing the Leased
Property (including any increase in insurance premiums caused by the vacancy of
the Leased Property), all reasonable expenses incurred by Lessor in reletting
(including repairs, remodeling, replacements, advertisements and brokerage
fees), all reasonable concessions granted to a new tenant upon reletting
(including renewal options previously granted by Lessee), all fees and expenses
incurred by Lessor as a direct or indirect result of any appropriate action by a
Facility Mortgagee, any expenses of Lessor incurred for the installation of
separate lines or meters for any public utilities not previously metered
separately from adjacent property of Lessee.
XV.4 Application of Funds. All payments otherwise payable to Lessee which are
received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.
ARTICLE XVI
LESSOR'S RIGHT TO CURE
If Lessee, without the prior written consent of Lessor, shall fail to
make any payment, or to perform any act required to be made or performed under
this Lease and to cure the same within the relevant time periods provided in
Section 15.1, Lessor, without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) make such payment or perform
such act for the account and at the expense of Lessee, and may, to the extent
permitted by law, enter upon the Leased Property for such purpose and take all
such action thereon as, in Lessor's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid
by Lessor, together with a late charge thereon (to the extent permitted by law)
at the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Lessor, and all costs and expenses (including reasonable attorneys'
fees and expenses, in each case, to the extent permitted by law) so incurred
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.
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ARTICLE XVII
PURCHASE OF THE LEASED PROPERTY
In the event Lessee purchases the Leased Property from Lessor pursuant
to any of the terms of this Lease, Lessor shall, upon receipt from Lessee of the
applicable purchase price (after credit for the balance of the Capital
Replacement Account), together with full payment of any unpaid Rent due and
payable with respect to any period ending on or before the date of the purchase
and any other amounts owing to Lessor hereunder, deliver to Lessee an
appropriate special warranty deed (in substantially the same form used to convey
the Leased Property to Lessor) and any other documents reasonably requested by
Lessee to convey the interest of Lessor in and to the Leased Property to Lessee,
and such other standard documents usually and customarily prepared in connection
with such transfers, free and clear of all encumbrances other than (a) those
that Lessee has agreed hereunder to pay or discharge, (b) those mortgage liens,
if any, which Lessee has agreed in writing to accept and to take title subject
to, (c) any other Encumbrances permitted to be imposed on the Leased Property
under the provisions of Article XXXII which are assumable at no cost to Lessee,
and (d) any matters affecting the Leased Property on or as of the Commencement
Date. The difference between the applicable purchase price and the total of the
encumbrances assigned or taken subject to shall be paid in cash to Lessor, or as
Lessor may direct, in federal or other immediately available funds except as
otherwise mutually agreed by Lessor and Lessee. The closing of any such sale
shall be contingent upon and subject to Lessee obtaining all required
governmental consents and approvals for such transfer. If such sale shall fail
to be consummated by reason of the inability of Lessee to obtain all such
approvals and consents, any options to extend the Term which otherwise would
have expired during the period from the date when Lessee elected or became
obligated to purchase the Leased Property until Lessee's inability to obtain the
approvals and consents is confirmed shall be deemed to remain in effect for 30
days after the end of such period. The closing with respect to any such sale
shall be appropriately timed to accommodate the determination of the Minimum
Purchase Amount in accordance with Article XXVIII. All expenses of such
conveyance, including the cost of title examination or standard coverage title
insurance, reasonable attorneys' fees incurred by Lessor in connection with such
conveyance, transfer taxes and recording fees shall be paid by Lessee.
Additionally, any sale to Lessee shall be subject to delivery of an opinion of
Lessor's counsel confirming that (i) the sale will not result in ordinary
recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other
Code provision, (ii) the sale will result in income, if any, to Lessor of a type
described in Code Section 856(c)(2) or 856(c)(3) and will not result in income
of the types described in Code Section 856(c)(4) or result in the tax imposed
under Code Section 857(b)(6), and (iii) the sale, together with all other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties hereto or any other transfers of the Leased Property
or the properties leased under other such operating leases, during the relevant
time period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860.
ARTICLE XVIII
HOLDING OVER
If Lessee shall for any reason remain in possession of the Leased
Property after the expiration of the Term or any earlier termination of the Term
hereof, such possession shall be as a tenancy at will during which time Lessee
shall pay as rental each month an amount equal to the sum of (a) 150% of the
aggregate of 1/12 of the aggregate Minimum Rent payable with respect to the last
complete year prior to the expiration of the Term, plus (b) all Additional
Charges accruing during such month, plus (c) all other sums, if any, payable
pursuant to the provisions of this Lease with respect to the Leased Property.
During such period of tenancy, Lessee and Lessor shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease and to
continue its occupancy and use of the Leased Property. Nothing contained herein
shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease.
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ARTICLE XIX
ABANDONMENT
XIX.1 Discontinuance of Operations on the Leased Property; Offer of
Substitution. If Lessee has discontinued use of the Leased Property for its
Primary Intended Use for 90 consecutive days without Lessor's prior written
consent for alterations or remodeling pursuant to Article IX, repairs or
restoration pursuant to Article XIII or Article XIV or otherwise, then provided
Lessor has not terminated this Lease pursuant to Section 15.2, Lessee may offer
to substitute a new property or properties for the Leased Property pursuant to
and in accordance with the provisions of Article XX (which offers Lessor may in
its sole discretion refuse).
XIX.2 Obsolescence of the Leased Property; Offer to Purchase. If the Leased
Property becomes Unsuitable for its Primary Intended Use, all as set forth in an
Officer's Certificate delivered to Lessor. Lessee may on or after the fifteenth
anniversary of the Commencement Date (provided this Lease is still in effect),
purchase the Leased Property for the Minimum Purchase Amount on the first
Payment Date occurring not less than 120 days after the date of such Officer's
Certificate.
XIX.3 Conveyance of Leased Property. In the event Lessee elects to purchase the
Leased Property pursuant to Section 19.2, then on the first Payment Date
occurring not less than 120 days after the date of the Officer's Certificate
referred to in Section 19.2, Lessor shall, upon receipt from Lessee of the
Minimum Purchase Amount as of the date of such purchase and all Rent and or
other sums then due and payable under this Lease (excluding any installment of
Minimum Rent due on such Payment Date), convey the Leased Property to Lessee on
such date in accordance with the provisions of Article XVII and this Lease shall
thereupon terminate as to the Leased Property.
XIX.4 Option to Purchase. In return for the payment by Lessee to Lessor of the
amount of $500.00 as valuable consideration and other good and valuable
consideration, the adequacy, sufficiency, payment and receipt of which are
hereby acknowledged, within 180 days prior to the end of the Initial Term and
each Extended Term exercised by Lessee pursuant to the terms of Article XXXIV,
Lessee shall have the option to purchase the Leased Property upon written notice
to Lessor for a purchase price equal to the Minimum Purchase Amount. If not
sooner exercised, the option to purchase granted hereby will expire and be of no
further force and effect upon the expiration the Term or the termination of this
Lease pursuant to the terms of Article XV.
ARTICLE XX
SUBSTITUTION OF PROPERTY
XX.1 Substitution of Property for the Leased Property.
(a) In the event Lessor accepts an offer by Lessee to substitute other
property for the Leased Property under Article XIII, Article XIV or Article XIX,
and provided that no Event of Default shall have occurred and be continuing,
Lessee shall have the right (subject to the conditions set forth below in this
Article XX, and upon notice to Lessor) to substitute one or more properties
(collectively referred to as "Substitute Properties" or individually as a
"Substitute Property") for the Leased Property on a monthly Payment Date
specified in such notice (the "Substitution Date") occurring not less than 90
days after receipt by Lessor of such notice. The notice shall be in the form of
an Officer's Certificate and shall specify the reason(s) for the proposed
substitution and the proposed Substitution Date. Notwithstanding anything
contained herein to the contrary, any other substitution for the Leased Property
shall require the prior written consent of Lessor which shall be within the sole
discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above,
Lessee shall present to Lessor one or more properties (or groups of properties)
each of which property (or groups of properties)
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shall provide Lessor with a yield (i.e., an annual return on its equity in such
property) equal to or greater than the Current Yield (and the yield reasonably
expected to be received thereafter throughout the remainder of the term) from
the Leased Property at the time of such proposed substitution (or in the case of
a proposed substitution as a result of damage, destruction or Condemnation, the
Current Yield immediately prior to such damage, destruction or Condemnation) and
as reasonably projected over the remaining Term of this Lease and shall have a
Fair Market Value substantially equivalent to the Fair Market Value of the
Leased Property. Lessor shall have a period of 90 days within which to review
such information and either to accept or to reject the Substitute Property or
Substitute Properties so presented; provided that if Lessee is required by a
court order or administrative action to divest or otherwise dispose of the
Leased Property within a shorter time period, in which case the time period
shall be shortened appropriately to meet the reasonable needs of Lessee, but in
no event shall said period be less than 15 Business Days after Lessor's receipt
of said notice (subject to further extension for any period of time in which
Lessor is not timely provided with the information provided for in Section 20.2
and Section 20.3 below); provided that if Lessor shall contend that the
Substitute Properties fail to meet all the conditions for substitution set forth
in this Article XX, including the provisions of Sections 20.1(c), (d) and (e)
below, the matter shall be submitted to arbitration in accordance with Article
XXXI and the time periods for Lessor's approval or rejection shall be tolled
during the period of such arbitration.
(c) It shall be a condition to consummation of any substitution
hereunder that all of the conditions set forth in Section 20.2 below, shall have
been satisfied with respect to such substitution, and to the delivery of an
opinion of counsel for Lessor confirming that (i) the substitution of the
Substitute Property for the Leased Property will qualify as an exchange solely
of property of a like-kind under Section 1031 of the Code, in which, generally,
except for "boot" such as cash needed to equalize exchange values or discharge
indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution or
sale will not result in ordinary recapture income to Lessor pursuant to Code
Section 1245 or 1250 or any other Code provision, (iii) the substitution or sale
will result in income, if any, to Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6), and (iv) the substitution or sale, together with all other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties hereto or any other transfers of the Leased Property
or the properties leased under other such operating leases, during the relevant
time period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or
group of Substitute Properties (i.e., the Fair Market Value of the Substitute
Property or group of Substitute Properties minus the encumbrances subject to
which Lessor will take the Substitute Property or group of Substitute
Properties) as of the Substitution Date is greater than the equity value of the
Leased Property (i.e., the Fair Market Value of the Leased Property minus the
encumbrances subject to which Lessee will take the Leased Property) as of the
Substitution Date (or in the case of damage destruction or Condemnation, the
Fair Market Value immediately prior to such damage, destruction or
Condemnation), Lessor shall pay to Lessee an amount equal to the difference,
subject to the limitation set forth below. In the event that said equity value
of the Substitute Property or group of Substitute Properties is less than said
equity value of the Leased Property, Lessee shall pay to Lessor an amount equal
to the difference, subject to the limitation set forth below. Notwithstanding
the foregoing, neither Lessor nor Lessee shall be obligated to consummate any
substitution if such party would be required to make a payment to the other in
excess of an amount equal to ten percent of said Fair Market Value of the Leased
Property (the amount of cash paid by one party to the other being hereinafter
referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide
Lessor with a yield at the time of such substitution (i.e., annual return on its
investment in such Substitute Property) not less than the Current Yield (and the
yield reasonably expected to be received thereafter throughout the remainder of
the Term) from the Leased Property prior to any damage, destruction or
Condemnation, taking into account the Cash Adjustment paid or received by Lessor
and any other relevant factors.
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(f) The Minimum Purchase Amount of any Substitute Property or
Substitute Properties shall be an amount equal to the Minimum Purchase Amount of
the Leased Property on the Substitution Date (i) increased by any Cash
Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased
by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
XX.2 Conditions to Substitution. On the Substitution Date, the Substitute
Property will become the Leased Property hereunder upon delivery by Lessee to
Lessor of the following items in form and substance reasonably satisfactory to
Lessor:
(a) an Officer's Certificate representing, warranting and certifying
that (i) the Substitute Property has been accepted by Lessee for all purposes of
this Lease and there has been no material damage to the improvements located on
the Substitute Property nor is any condemnation or eminent domain proceeding
pending with respect thereto; (ii) all permits, licenses and certificates
(including a permanent, unconditional certificate of occupancy and, to the
extent permitted by law, all certificates of need and licenses) which are
necessary to permit the use of the Substitute Property in accordance with the
provisions of this Lease have been obtained and are in full force and effect;
(iii) under applicable zoning and use laws, ordinances, rules and regulations
the Substitute Property may be used for the purposes contemplated by Lessee and
all necessary subdivision approvals have been obtained; (iv) there are no
mechanic's or materialmen's liens outstanding or threatened to the knowledge of
Lessee against the Substitute Property arising out of or in connection with the
construction of the improvements thereon, other than those being contested by
Lessee pursuant to Article XI; (v) any mechanic's or materialmen's liens being
contested by Lessee will be promptly paid by Lessee if such contest is resolved
in favor of the mechanic or materialman; (vi) to the best knowledge of Lessee,
there exists no Event of Default under this Lease, and no defense, offset or
claim exists with respect to any sums to be paid by Lessee hereunder; and (vii)
any exceptions to Lessor's title to the Substitute Property do not materially
interfere with the intended use of the Substitute Property by Lessee;
(b) a special warranty deed with warranties against claims arising
under Lessee conveying to Lessor title to the Substitute Property free and clear
of any liens and encumbrances except those approved in writing or assumed by
Lessor;
(c) a lease duly executed, acknowledged and delivered by Lessee,
containing the same terms and conditions as are contained herein, except that
(i) the legal description of the Land shall refer to the Substitute Property,
(ii) the Minimum Purchase Amount, Rent and any Additional Charges for the
Substitute Property shall be consistent with the requirements of Section 20.1
and (iii) such other changes therein as may be necessary or appropriate under
the circumstances shall be made;
(d) a standard owner's or lessee's (as applicable) policy of title
insurance covering the Substitute Property (or a valid, binding, unconditional
commitment therefor), dated the Substitution Date, in current form and including
mechanics' and materialmen's lien coverage, issued to Lessor by a title
insurance company reasonably satisfactory to Lessor. Such policy shall (i)
insure (A) Lessor's fee title to the Substitute Property, subject to no liens or
encumbrances except those approved or assumed by Lessor, and (B) that any
restrictions affecting the Substitute Property have not been violated and that a
further violation thereof will not result in a forfeiture or reversion of title,
(ii) be in an amount at least equal to the Fair Market Value of the Substitute
Property, and (iii) contain such endorsements as may be reasonably requested by
Lessor;
(e) certificates of insurance with respect to the Substitute Property
fulfilling the requirements of Article XII;
(f) current appraisals or other evidence satisfactory to Lessor, in its
sole discretion, as to the current Fair Market Values of such Substitute
Property;
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(g) all available revenue data relating to the Substitute Property for
the period from the date of opening for business of the Substitute Property to
the date of Lessee's most recent Fiscal-Year end, or for the most recent three
years, whichever is less; and
(h) such other certificates, documents, opinions of counsel (which may
be in-house counsel), and other instruments as may be reasonably required by
Lessor.
XX.3 Conveyance to Lessee. On the Substitution Date Lessor will convey the
Leased Property to Lessee in accordance with the provisions of Article XVII
(except as to payment of any expenses in connection therewith which shall be
governed by Section 20.4 below) upon either (a) payment in cash therefor or (b)
conveyance to Lessor of the Substitute Property, as appropriate.
XX.4 Expenses. Lessee shall pay or cause to be paid, on demand, all reasonable
costs and expenses paid or incurred by Lessor in connection with the
substitution and conveyance of the Leased Property and the Substitute Property,
including (a) fees and expenses of Lessor's counsel, (b) the amount of any
recording taxes and filing fees, (c) the cost of preparing and recording, if
appropriate, a release of the Leased Property from the lien of any mortgage, (d)
broker's fees and commissions for Lessee, if any, (e) documentary stamp and
transfer taxes, if any, (f) title insurance charges, and (g) escrow fees, if
any.
ARTICLE XXI
RISK OF LOSS
Except as otherwise provided in this Lease, during the Term of this
Lease, the risk of loss or of decrease in the enjoyment and beneficial use of
the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than by Lessor and those
claiming from, through or under Lessor) is assumed by Lessee and, Lessor shall
in no event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of the Rent except as
specifically provided in this Lease.
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ARTICLE XXII
INDEMNIFICATION
Notwithstanding the existence of any insurance or self insurance
provided for in Article XII, and without regard to the policy limits of any such
insurance or self insurance, Lessee will protect, indemnify, save harmless and
defend Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable attorneys'
fees and expenses), to the extent permitted by law, imposed upon or incurred by
or asserted against Lessor by reason of: (a) any accident, injury to or death of
persons or loss to property occurring on or about the Leased Property, including
any claims of malpractice, (b) any use, misuse, no use, condition, maintenance
or repair by Lessee of the Leased Property, (c) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable provisions of this
Lease), (d) any failure on the part of Lessee to perform or comply with any of
the terms of this Lease, (e) the non-performance of any of the terms and
provisions of any and all existing and future subleases of the Leased Property
to be performed by Lessee as landlord thereunder and (f) the violation of any
Hazardous Materials Law. Any amounts which become payable by Lessee under this
Section shall be paid within ten days after liability therefor on the part of
Lessor is finally determined by litigation or otherwise (including the
expiration of any time for appeals) and, if not timely paid, shall bear interest
(to the extent permitted by law) at the Overdue Rate from the date of such
determination to the date of payment. Lessee, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against Lessor or may compromise or otherwise dispose of the same as Lessee sees
fit. Lessor shall cooperate with Lessee in a reasonable manner to permit Lessee
to satisfy Lessee's obligations hereunder, including the execution of any
instruments or documents reasonably requested by Lessee. Nothing herein shall be
construed as indemnifying Lessor or its agents for their own negligent acts or
omissions or willful misconduct. Lessee's liability for a breach of the
provisions of this Article shall survive any termination of this Lease.
ARTICLE XXIII
SUBLETTING AND ASSIGNMENT
XXIII.1 Subletting and Assignment. Subject to the rights of Tenants under
existing Tenant Leases and subject to the provisions of Section 23.3 below and
any other express conditions or limitations set forth herein, Lessee may,
without the consent of Lessor, sublet all or any part of the Leased Property
consistently with the Primary Intended Use. Lessor shall not unreasonably
withhold its consent to any other or further subletting or assignment; provided
that (a) in the case of a subletting, the sublessee shall comply with the
provisions of Section 23.2, (b) in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this Lease
on the part of Lessee to be kept and performed and shall be and become jointly
and severally liable with Lessee for the performance thereof, (c) an original
counterpart of each such sublease and assignment and assumption, duly executed
by Lessee and such sublessee or assignee, as the case may be, in form and
substance reasonably satisfactory to Lessor, shall be delivered promptly to
Lessor, and (d) in case of either an assignment or subletting, Lessee 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 Lessee hereunder. In addition to
Lessee's rights to sublet and assign as provided in this section above, Lessee
shall also have the right (upon Lessor's prior consent, which consent shall not
unreasonably be withheld) to enter into Tenant Leases which extend beyond the
Term of this Lease. To the extent that any such Tenant Leases extend beyond the
Term of this Lease, Lessor shall receive the rents from, and be responsible for
any obligations on the part of the landlord or lessor under such Tenant Leases.
Any and all such Tenant Leases shall, to the extent applicable, be subject to
the provisions of this Section and Section 23.2.
XXIII.2 Non-Disturbance, Subordination and Attornment. Except for existing
Tenant Leases, Lessee shall insert in each written sublease permitted under
Section 23.1 provisions to the effect that (a)
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such sublease is subject and subordinate to all of the terms and provisions of
this Lease and to the rights of Lessor hereunder, (b) in the event this Lease
shall terminate before the expiration of such sublease, the sublessee thereunder
will, at Lessor's option, attorn to Lessor and waive any right the sublessee may
have to terminate the sublease or to surrender possession thereunder as a result
of the termination of this Lease and (c) in the event the sublessee receives a
written notice from Lessor or Lessor's assignees, if any, stating that Lessee is
in default under this Lease, the sublessee, shall thereafter be obligated to pay
all rentals accruing under said sublease directly to the party giving such
notice, or as such party may direct. All rentals received from the sublessee by
Lessor or Lessor's assignees, if any, shall be credited against amounts owing by
Lessee under this Lease. Lessor agrees that notwithstanding any default,
termination, expiration, sale, entry or other act or omission of Lessee pursuant
to the terms of this Lease, or at law or in equity, Tenant's possession shall
not be disturbed unless such possession may otherwise be terminated pursuant to
the terms of the applicable Tenant Lease. Lessor hereby agrees, upon Lessee's
request, to execute a nondisturbance agreement in favor of any Tenant or in
favor of any sublessee under any sublease permitted under Section 23.1 above;
provided that the Tenant or any such sublessee has acknowledged all of the
foregoing provisions and executed all documents required by this Section 23.2.
ARTICLE XXIV
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
XXIV.1 Estoppel Certificate. At any time and from time to time within 20 days
following written request by Lessor, Lessee will furnish to Lessor an Officer's
Certificate certifying that this Lease is unmodified and in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications) and the dates to which the Rent has been paid. Any such
Officer's Certificate furnished pursuant to this Article may be relied upon by
Lessor, any prospective purchaser of the Leased Property and any third parties
who have an interest in the Leased Property, including any Lender or
professional advisor or Lessor.
XXIV.2 Financial Statements and Certificates. Lessee will furnish the following
statements to Lessor; provided that Lessor shall keep confidential items
furnished by Lessee which are not generally available to the public:
(i) within 120 days after the end of each Fiscal Year (A) a
copy of the Consolidated Financial Statements for such Fiscal Year; (B)
an Officer's Certificate stating (x) that no Event of Default, or event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default, has occurred and is continuing and has
not been waived, or, if there shall have occurred and be continuing
such an Event of Default, specifying the nature thereof and the steps
being taken to remedy the same, and (y) that to the best of the
signer's knowledge and belief, Lessee is not in default in the
performance or observance of any of the terms of any loans or credit
facilities, which by their terms would permit an outstanding balance
equal to or greater than $10,000,000.00 in the aggregate, which default
would permit the holder thereof to accelerate its stated maturity; (C)
a current rent or lease roll for the Leased Property setting forth
rental information in reasonable detail regarding all of the Tenants
and Tenant Leases, including any space utilized by Lessee; (D) a
statement of revenues and expenses of the Leased Property for the
twelve-month period then ended in detail reasonably satisfactory to
Lessor; (E) a certificate in form acceptable to Lessor that the
required Consolidated Coverage Ratio and Facility Coverage Ratio for
the applicable period has been achieved;
(ii) within 15 days after request by Lessor, (A) a statement
of the number of beds available and the actual patient-days for the
most recent month, quarter and year, (B) census information for the
Facility in sufficient detail to show patient-mix on a daily average
basis for the prior quarter and year, and (C) an aged accounts
receivable report in sufficient detail to show
30
amounts due from each class of patient-mix (such as private, Medicare,
Medicaid and V.A.) by the account age classifications of 30 days, 60
days, 90 days, 120 days, and over 120 days;
(iii) within 15 days after filing or receipt, as the case may
be, (A) all cost reports filed with any regulatory or licensing agency
and any amendments thereto, together with all responses, audit reports
or inquiries with respect to such cost reports, (B) copies of all
licensure and certification survey reports and statements of
deficiencies with respect to the Facility (with correction plans
attached thereto), (C) copies of the Medicaid rate calculation
worksheet (or equivalent thereof), if any, issued by the applicable
Medicaid Agency, (D) copies of all notices (regardless of form) from
any and all licensing and/or certifying agencies that the license or
applicable reimbursement certification for the Facility is being
downgraded to a substandard category, revoked or suspended or that
action is pending or being considered to downgrade to a substandard
category, revoke or suspend the Facility's license or certification,
and (E) evidence of the payment of any bed taxes or similar taxes;
(iv) within 30 days after filing, copies of the 10-Q and 10-K
Reports of Guarantor filed with the United States Securities and
Exchange Commission;
(v) within 45 days after the end of each quarter, a
certificate in form acceptable to Lessor that the required Consolidated
Coverage Ratio and Facility Coverage Ratio for the quarter then ended
has been achieved; and
(vi) with reasonable promptness, such other information
respecting the financial condition, affairs and properties of Lessee as
Lessor may reasonably request from time to time.
ARTICLE XXV
INSPECTION
Lessee shall permit Lessor and its authorized representatives to
inspect the Leased Property during usual business hours subject to any security,
health, safety or confidentiality requirements of Lessee, the rights of the
Tenants, any Insurance Requirements relating to the Leased Property, or any
other restrictions imposed by law or applicable regulations.
ARTICLE XXVI
QUIET ENJOYMENT
So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and perform its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Property for the Term hereof, free of any claim or other action by Lessor or
anyone claiming by, through or under Lessor, but subject to all liens and
encumbrances of record as of the date hereof or hereafter consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to pay any other
sum payable under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right by
separate and independent action to pursue any claim or seek any damages it may
have against Lessor as a result of a breach by Lessor of the covenant of quiet
enjoyment contained in this Article.
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ARTICLE XXVII
NOTICES
Any notices, demands, approvals and other communications provided for
herein shall be in writing and shall be delivered by telephonic facsimile,
overnight air courier, personal delivery or registered or certified U.S. Mail
with return receipt requested, postage paid, to the appropriate party at its
address as follows:
If to Lessor:
CAPSTONE CAPITAL CORPORATION
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. XxXxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Xx. Xxxxxx X. Xxxxxx
Sirote & Permutt, P.C.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessee or Guarantor:
INTEGRATED LIVING COMMUNITIES, INC.
Brentwood Centre
00000 Xxx 00 Xxxx
Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
INTEGRATED LIVING COMMUNITIES, INC.
Brentwood Centre
00000 Xxx 00 Xxxx
Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication given by mail will be effective (i) upon
the earlier of (a) five business days following deposit in a post office or
other official depository under the care and custody of the United States Postal
32
Service or (b) actual receipt, as indicated by the return receipt; (ii) if given
by telephone facsimile, when sent; and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth.
ARTICLE XXVIII
APPRAISAL
In the event that it becomes necessary to determine the Fair Market
Value, Fair Market Value Purchase Amount, the Fair Market Added Value, the
Minimum Purchase Amount or the Fair Market Rental Value of the Leased Property
or a Substitute Property for any purpose of this Lease, the party required or
permitted to give notice of such required determination shall include in the
notice the name of a person selected to act as an appraiser on its behalf.
Within ten days after receipt of any such notice, Lessor (or Lessee, as the case
may be) shall by notice to Lessee (or Lessor, as the case may be) appoint a
second person as an appraiser on its behalf. The appraisers thus appointed (each
of whom must be a member of the American Institute of Real Estate Appraisers or
any successor organization thereto) shall, within 45 days after the date of the
notice appointing the first appraiser, proceed to appraise the Leased Property
or the Substitute Property, as the case may be, to determine any of the
foregoing values as of the relevant date (giving effect to the impact, if any,
of inflation from the date of their decision to the relevant date); provided
that if only one appraiser shall have been so appointed, or if two appraisers
shall have been so appointed but only one such appraiser shall have made such
determination within 50 days after the making of Lessee's or Lessor's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed and shall have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten percent of
the lesser of such amounts, then the Fair Market Value or Fair Market Added
Value or the Fair Market Rental Value shall be an amount equal to 50% of the sum
of the amounts so determined. If the difference between the amounts so
determined shall exceed 10% of the lesser of such amounts, then such two
appraisers shall have 20 days to appoint a third appraiser, but if such
appraisers fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
20 days of such request, and both parties shall be bound by any appointment so
made within such 20-day period. If no such appraiser shall have been appointed
within such 20 days or within 90 days of the original request for a
determination of Fair Market Value or Fair Market Added Value or the Fair Market
Rental Value, whichever is earlier, either Lessor or Lessee may apply to any
court having jurisdiction to have appointment made by such court. Any appraiser
appointed, by the American Arbitration Association or by such court, shall be
instructed to determine the Fair Market Value or Fair Market Added Value or the
Fair Market Rental Value within 30 days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determinations of the other two appraisers shall be excluded, and 50% of the
sum of the remaining two determinations shall be final and binding upon Lessor
and Lessee as the Fair Market Value or Fair Market Added Value or the Fair
Market Rental Value for such interest. However, in the event that following the
appraisal performed by said third appraiser, the dollar amount of two of such
appraisals are higher and lower, respectively, than the dollar amount of the
remaining appraisal in equal degrees, the determinations of both the highest and
lowest appraisal, respectively, shall be rejected and the determination of the
remaining appraisal shall be final and binding upon Lessor and Lessee as the
Fair Market Value or Fair Market Added Value or the Fair Market Rental Value for
such interest. This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall each pay
the fees and expenses of the appraiser appointed by it and each shall pay
one-half of the fees and expenses of the third appraiser and one-half of all
other costs and expenses incurred in connection with each appraisal.
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ARTICLE XXIX
PURCHASE RIGHTS
During the Term hereof (provided that no Event of Default has occurred
and is continuing), Lessee shall have a first refusal option to purchase the
Leased Property upon the same terms and conditions as Lessor, or its successors
and assigns, shall have received an offer from a third party to purchase the
Leased Property, which Lessor intends to accept (or has accepted subject to
Lessee's right of first refusal granted herein). If, during the Term, Lessor
receives such an offer or reaches such agreement with a third party, Lessor
shall promptly notify Lessee of the purchase price for the Leased Property and
all other material terms and conditions of such agreement or proposed sale
together with a copy of such offer, and Lessee shall have 30 days after receipt
of such notice from Lessor within which time to exercise Lessee's option to
purchase. If Lessee exercises its option, then such purchase shall be
consummated within the time set forth in the third-party offer and in accordance
with the provisions of Article XVII hereof to the extent not inconsistent
herewith. If Lessee shall not exercise Lessee's option to purchase within said
30-day period after receipt of said notice from Lessor, Lessor shall be free for
a period of 90 days after the expiration of said 30-day period to sell the
Leased Property to the third party at the price and terms set forth in such
offer. Whether or not such sale is consummated, Lessee shall be entitled to
exercise its right of first refusal as provided in this Article, as to any
subsequent sale of the Leased Property during the Term of this Lease.
ARTICLE XXX
DEFAULT BY LESSOR
XXX.1 Default by Lessor. Lessor shall be in default of its obligations under
this Lease if Lessor shall fail to observe or perform any term, covenant or
condition of this Lease on its part to be performed and such failure shall
continue for a period of 30 days after written notice thereof is received by
Lessor, unless such failure cannot with due diligence be cured within a period
of 30 days, in which case such failure shall not be deemed to continue if
Lessor, within said 30-day period, proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof. The time within
which Lessor shall be obligated to cure any such failure shall also be subject
to extension of time due to the occurrence of any Unavoidable Delay. In the
event Lessor fails to cure any such default, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee hereunder or at law or in equity, may purchase the Leased
Property from Lessor for a purchase price equal to the greater of the Fair
Market Value Purchase Amount or the Minimum Purchase Amount of the Leased
Property minus an amount equal to any damage suffered by Lessee by reason of
such default. In the event Lessee elects to purchase the Leased Property, it
shall deliver a notice thereof to Lessor specifying a Payment Date occurring no
less than 90 days subsequent to the date of such notice on which it shall
purchase the Leased Property, and the same shall be thereupon conveyed in
accordance with the provisions of Article XVII. Any sums owed Lessee by Lessor
hereunder shall bear interest at the Overdue Rate from the date due and payable
until the date paid.
XXX.2 Lessee's Right to Cure. Subject to the provisions of Section 30.1, if
Lessor shall breach any covenant to be performed by it under this Lease, Lessee,
after giving notice to and demand upon Lessor in accordance with Section 30.1,
without waiving or releasing any obligation of Lessor hereunder, and in addition
to all other remedies available to Lessee hereunder and at law or in equity,
Lessee may (but shall be under no obligation at any time thereafter to) make
such payment or perform such act for the account and at the expense of Lessor.
All sums so paid by Lessee and all costs and expenses (including reasonable
attorneys' fees) so incurred, together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessee,
shall be paid by Lessor to Lessee on demand or set off against the Rent. The
rights of Lessee hereunder to cure and to secure payment from Lessor in
accordance with this Section 30.2 shall survive the termination of this Lease.
34
ARTICLE XXXI
ARBITRATION
XXXI.1 Controversies. Except with respect to the payment of Minimum Rent
hereunder, in case any controversy shall arise between the parties hereto as to
any of the requirements of this Lease or the performance thereof which
controversy the parties shall be unable to settle by agreement or as otherwise
provided herein, such controversy shall be determined by arbitration to be
initiated and conducted as provided in this Article XXXI.
XXXI.2 Appointment of Arbitrators. The party or parties requesting arbitration
shall serve upon the other a written demand therefor specifying the matter to be
submitted to arbitration, and nominating an arbitrator who is a member in good
standing of the American Arbitration Association ("AAA"). Within 20 days after
receipt of such written demand and notification, the other party shall, in
writing, nominate a person who is a member in good standing with AAA and the two
arbitrators so designated shall, within ten days thereafter, select a third
arbitrator who is a person who is a member in good standing with AAA and give
immediate written notice of such selection to the parties and shall fix in said
notice a time and place for the first meeting of the arbitrators, which meeting
shall be held as soon as conveniently possible after the selection of all
arbitrators, at which time and place the parties to the controversy may appear
and be heard.
XXXI.3 Third Arbitrator. In case the notified party or parties shall fail to
make a selection upon notice, as aforesaid, or in case the first two arbitrators
selected shall fail to agree upon a third arbitrator within ten days after their
selection, then such arbitrator or arbitrators may, upon application made by
either of the parties to the controversy, after 20 days' written notice thereof
to the other party or parties, have a third arbitrator appointed by any judge of
any United States court of record having jurisdiction in the state in which the
Leased Property is located or, if such office shall not then exist, by a judge
holding an office most nearly corresponding thereto.
XXXI.4 Arbitration Procedure. Said arbitrators shall give each of the parties
not less than ten days' written notice of the time and place of each meeting at
which the parties or any of them may appear and be heard and after hearing the
parties in regard to the matter in dispute and taking such other testimony and
making such other examinations and investigations as justice shall require and
as the arbitrators may deem necessary, they shall decide the questions submitted
to them in accordance with the rules of AAA. The decision of said arbitrators in
writing signed by a majority of them shall be final and binding upon the parties
to such controversy. In rendering such decisions and award, the arbitrators
shall not add to, subtract from or otherwise modify the provisions of this
Lease.
XXXI.5 Expenses. The expenses of such arbitration shall be divided between
Lessor and Lessee unless otherwise specified in the decision of the arbitrators.
Each party in interest shall pay the fees and expenses of its own counsel.
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ARTICLE XXXII
FINANCING OF THE LEASED PROPERTY
Lessor agrees that it will not grant or create any mortgage, deed of
trust, lien, encumbrance or other title retention agreement upon the Leased
Property to secure any indebtedness of Lessor (an "Encumbrance"), unless each
holder of such an Encumbrance agrees (a) to give Lessee the same notice, if any,
given to Lessor of any default or acceleration of any obligation underlying any
such Encumbrance or any sale in foreclosure of such Encumbrance, (b) to permit
Lessee to appear with its representatives and to bid at any public foreclosure
sale with respect to any such Encumbrance, (c) agrees to release the Leased
Property from the Encumbrance upon the exercise by Lessee of a right to purchase
contained in this Lease and the payment by Lessee of the applicable purchase
price, and (d) enters into an agreement with Lessee containing the provisions
described in Article XXXIII of this Lease. Lessee agrees to execute and deliver
to Lessor or the holder of an Encumbrance any written agreement required by this
Article within ten days of written request thereof by Lessor or the holder of an
Encumbrance. Lessee hereby consents to the assignment of and grant of a security
interest and lien in this Lease together with the other documents and
instruments delivered to Lessor by Lessee and Guarantor pursuant hereto and in
connection herewith (collectively, the "Assigned Documents"), including all
rights of Lessor in, to and under each Assigned Document, by Lessor to any
Facility Mortgagee requesting same. Lessee hereby further agrees to execute a
Consent to Assignment in substantially the form attached hereto as Exhibit G.
ARTICLE XXXIII
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
At the request from time to time by one or more holders of an
Encumbrance that may hereafter be placed upon the Leased Property or any part
thereof, and any and all renewals, replacements, modifications, consolidations,
spreaders and extensions thereof, Lessee will subordinate this Lease and all of
Lessee's rights and estate hereunder to each such Encumbrance and will attorn to
and recognize such holder (or the purchaser at any foreclosure sale or any sale
under a power of sale contained in any such Encumbrance or a holder by a deed in
lieu of foreclosure, as the case may be) as Lessor under this Lease for the
balance of the Term then remaining, subject to all of the terms and provisions
of this Lease; provided that each such institutional holder simultaneously with
or prior to recording any such Encumbrance executes and delivers a written
agreement in recordable form (a) consenting to this Lease and agreeing that,
notwithstanding any such other lease, mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Lessee shall not be disturbed in peaceful enjoyment of the Leased Property nor
shall this Lease be terminated or canceled at any time, except in the event
Lessor shall have the right to terminate this Lease under the terms and
provisions expressly set forth herein; (b) agreeing that it will be bound by all
the terms of this Lease, perform and observe all of Lessor's obligations set
forth herein; and (c) agreeing that all proceeds of the casualty insurance
described in Article XIII of this Lease and all Awards described in Article XIV
will be made available to Lessor for restoration of the Leased Property as and
to the extent required by this Lease, subject only to reasonable regulation
regarding the manner of disbursement and application thereof. Lessee agrees to
execute and deliver to Lessor or the holder of an Encumbrance any written
agreement required by this Article within ten days of written request thereof by
Lessor or such holder of an Encumbrance. Lessee agrees to execute from time to
time, at the request of Lessor, an institutional investor of Lessor's or a
Facility Mortgagee, a certificate setting forth any defaults of Lessor hereunder
and the dates through which Rent has been paid and such other matters as may be
reasonably requested.
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ARTICLE XXXIV
EXTENDED TERMS
If no Event of Default shall have occurred and be continuing, Lessee is
hereby granted the right to extend the Term of this Lease for three additional,
consecutive five-year periods ("Extended Term") for a maximum possible Term of
approximately 30 years, by giving written notice to Lessor of each such
extension at least 180 days, prior to the expiration of the then-current Term;
subject, however, to the provisions of Section 13.7 hereof. Lessee may not
exercise its option for more than one Extended Term at a time and may exercise
the option to extend only if all of the Related Leases are simultaneously
extended by Lessee or its Affiliates. During each Extended Term, all of the
terms and conditions of this Lease shall continue in full force and effect,
except that the Minimum Rent for and during each of the Extended Terms shall be
the greater of (i) the Fair Market Rental Value on the first day of such
Extended Term or (ii) the Minimum Rent in effect immediately prior to the first
day of such Extended Term. In any event, the Minimum Rent shall continue to be
increased throughout the Extended Terms in accordance with the provisions of
Section 2.1(b) hereof.
ARTICLE XXXV
GUARANTY
XXXV.1 Guarantee. In consideration of Lessor's agreement to fund the Purchase
Amount for the purchase of the Leased Property pursuant to the Purchase
Agreement and in consideration of the execution of this Lease by Lessor, and
upon the terms and provisions hereof, Guarantor hereby irrevocably, absolutely
and unconditionally warrants and guarantees (the "Guaranty") to Lessor the
prompt and full payment and performance of all of Lessee's obligations under
this Lease (the "Guaranteed Obligations").
XXXV.2 Obligations of Guarantor Upon Default. Upon the occurrence of any Event
of Default under this Lease, Guarantor shall, upon demand of Lessor: (i)
immediately cure such failure to pay and/or perform the applicable part of the
Guaranteed Obligations; and (ii) pay Lessor all other costs and damages it
incurs as a result of such failure by any party to pay and/or perform the
Guaranteed Obligations, including without limitation, all reasonable attorneys'
fees and all other costs it incurs in enforcing the performance or the payment
of the Guaranteed Obligations with interest thereon at the Overdue Rate.
XXXV.3 Guarantee of Payment. The Guaranty of Guarantor is not a guarantee of
collection, but rather the Guaranty is an irrevocable, absolute and
unconditional guarantee of payment and performance. Guarantor hereby irrevocably
and unconditionally covenants and agrees that Guarantor is liable for the
Guaranteed Obligations as a primary obligor. Any Guaranteed Obligation may be
enforced by Lessor separately without enforcing compliance with any other
Guaranteed Obligation and without waiving the right to subsequently enforce any
other Guaranteed Obligation hereunder. Without notice to Guarantor or the
consent of Guarantor, and without affecting or limiting Guarantor's obligations
hereunder, Lessor may: (i) grant Lessee extensions of time for payment of the
Guaranteed Obligations or any part hereof; (ii) renew any of the Guaranteed
Obligations; (iii) grant Lessee extensions of time for performance of agreements
or other indulgences; and (iv) with Lessee's written consent, modify or amend
any obligation, covenant or agreement of Lessee set forth in this Lease.
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ARTICLE XXXVI
MISCELLANEOUS
XXXVI.1 No Waiver. No failure by Lessor or Lessee 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 the Rent during the continuance of any such breach, shall constitute a waiver
of any such breach or any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
XXXVI.2 Remedies Cumulative. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
XXXVI.3 Surrender. No surrender to Lessor of this Lease or of the Leased
Property or any part thereof, or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.
XXXVI.4 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or (b) such leasehold estate and the fee estate in the
Leased Property.
XXXVI.5 Transfers by Lessor. If Lessor or any successor owner of the Leased
Property shall convey the Leased Property in accordance with the terms hereof,
other than as security for a debt, the grantee or transferee of the Leased
Property shall expressly assume all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer, and shall be
reasonably capable of performing the obligations of Lessor hereunder and Lessor
or such successor owner, as the case may be, shall thereupon be released from
all future liabilities and obligations of Lessor under this Lease 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.
XXXVI.6 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee and Lessor
against the other arising out of or relating to this Lease and arising prior to
any date of termination of this Lease shall survive such termination. If any
term or provision of this Lease or any application thereof shall be invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any late charges provided
for in any provision of this Lease are based upon a rate in excess of the
maximum rate permitted by applicable law, the parties agree that such charges
shall be fixed at the maximum permissible rate. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated except by an
instrument in writing and in recordable form signed by Lessor and Lessee. All
the terms and provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. The
headings in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. This Lease shall be governed by and
construed in accordance with the laws of the state where the Land is located,
but not including its conflict of laws rules. This Lease may be executed in one
or more counterparts, each of which shall be an original but, when taken
together, shall constitute but one document.
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XXXVI.7 Memorandum of Lease. Lessor and Lessee shall, promptly upon the request
of either, enter into a short form memorandum of this Lease in form suitable for
recording under the laws of the state in which the Leased Property is located in
which reference to this Lease, and all options contained herein, shall be made.
XXXVI.8 Transfer of Licenses. Upon the expiration or earlier termination of the
Term, Lessee shall take all action necessary or appropriate to effect (or useful
in effecting) the transfer, to the extent permitted by any applicable Legal
Requirement, to Lessor or Lessor's nominee of all licenses, operating permits
and other governmental authorizations and all service contracts which may be
necessary or useful in the operation of the Facility and which relate
exclusively to the Facility which have not previously been transferred or
assigned to Lessor.
ARTICLE XXXVII
GLOSSARY OF TERMS
XXXVII.1 For purposes of this Lease, except as otherwise expressly
provided or unless the context otherwise requires, (a) the terms defined in this
Article XXXVII have the meanings assigned to them in this Article XXXVII and
include the plural as well as the singular, (b) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (c) all
references in this Lease to designated "Articles", "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision, (e) the word "including" shall mean
"including without limitation," and (f) all consents required of Lessor
hereunder shall be in Lessor's sole and absolute discretion, unless otherwise
specifically set forth herein. For purposes of this Lease, the following terms
shall have the meanings indicated:
"AAA" means the American Arbitration Association.
"Additional Charges" has the meaning set forth in Section 2.3 hereof
together with all other items specifically included as "Additional Charges" in
this Agreement.
"Adjustment Date" has the meaning set forth in Section 2.1(b) hereof.
"Affiliate," when used with respect to Lessee, means any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with Lessee, except for Integrated Health Services, Inc., a
Delaware corporation. For the purposes of this definition, "control", as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, through the ownership of 50% or more of the voting securities,
partnership interests or other equity interests.
"Agent" has the meaning set forth in Article XXXII hereof.
"Assigned Documents" has the meaning set forth in Article XXXII hereof.
"Award" means all compensation, sums or anything of value awarded, paid
or received on a total or partial Condemnation.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banks in the City of Birmingham,
Alabama are closed.
"Capital Additions" means one or more new buildings or one or more
additional structures annexed to any portion of any of the Leased Improvements,
which are constructed on any parcel or
39
portion of the Land during the Term, including the construction of a new wing or
new story, or the rebuilding of the existing Leased Improvements or any portion
thereof not normal, ordinary or recurring to maintain the Leased Property,
excluding, however, any construction governed by the provisions of Article XIII.
"Capital Addition Cost" means the cost of any Capital Additions
proposed to be made by Lessee whether paid for by Lessee or Lessor. Such cost
shall include and be limited to (a) the cost of construction of the Capital
Additions, including site preparation and improvement, materials, labor,
supervision and certain related design, engineering and architectural services
and the cost of any fixtures, construction financing and miscellaneous items
approved in writing by Lessor, (b) if agreed to by Lessor in writing in advance,
the cost of any land contiguous to the Leased Property purchased for the purpose
of placing thereon the Capital Additions 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 Additions during
construction, (d) the cost of title insurance, (e) reasonable fees and expenses
of legal counsel and accountants, (f) filing, registration and recording taxes
and fees, (g) documentary stamp taxes, if any, (h) environmental assessments and
boundary surveys and (i) all reasonable costs and expenses of Lessor and any
Lending Institution which has committed to finance the Capital Additions,
including, (A) the reasonable fees and expenses of their respective legal
counsel, (B) all printing expenses, (C) the amount of any filing, registration
and recording taxes and fees, (D) documentary stamp taxes, if any, (E) title
insurance charges, appraisal fees, if any, (F) rating agency fees, if any, and
(G) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.
"Capital Replacement Account" has the meaning set forth in Section
2.1(c).
"Cash Adjustment" has the meaning set forth in Section 20.1(d).
"Charge" has the meaning set forth in Article XI hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" has the meaning set forth in Article I.
"Condemnation" means the transfer of all or any part of the Leased
Property as a result of (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or
transfer by Lessor to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending.
"Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of condemnation or eminent domain.
"Consolidated Coverage Ratio" has the meaning set forth in Section 7.3.
"Consolidated Financial Statements" means for any fiscal year or other
accounting period for Lessee, Guarantor and their respective consolidated
Affiliates, audited statements of earnings and retained earnings and of changes
in financial position for such period and for the period from the beginning of
the respective fiscal year of Lessee to the end of such period and the related
balance sheet as at the end of such period, together with the notes thereto, all
in reasonable detail and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year of Lessee, and
prepared in accordance with generally accepted accounting principles
consistently applied, except as noted.
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"Consolidated Tangible Net Worth" means at any time, the sum of the
following which would appear on a balance sheet of Lessee and Guarantor, on a
consolidated basis prepared in accordance with generally accepted accounting
principles:
(a) the amount of capital or stated capital (after deducting
the cost of any treasury shares or like interests), plus
(b) the amount of capital surplus and retained earnings (or,
in the case of a capital surplus or retained earnings deficit, minus
the amount of such deficit), minus
(c) the sum of the following (without duplication of
deductions in respect of items already deducted in arriving at capital
surplus and retained earnings): (i) any write-up in book value of
assets resulting from a revaluation thereof subsequent to the most
recent financial statement of Developer or Guarantor prior to the date
thereof, except any net write-up in value of foreign currency; (ii) any
write-up resulting from a reversal of a reserve for bad debts or
depreciation; and (iii) any write-up resulting from a change in methods
of accounting for inventory, minus
(d) the aggregate book value of Intangible Assets shown on
such balance sheet.
"Consumer Price Index" or "CPI" means the Consumer Price Index for All
Urban Consumers for the U.S. City Average for all Items (1982-1984=100) as
published by the United States Department of Labor, Bureau of Labor Statistics.
If the manner in which the Consumer Price Index is determined by the Bureau of
Labor Statistics shall be substantially revised (including a change in the base
index year), an adjustment shall be made by Lessor in such revised index which
would produce results equivalent, as nearly as possible, to those which would
have been obtained if the Consumer Price Index had not been so revised. If the
Consumer Price Index shall become unavailable to the public because publication
is discontinued or otherwise, or if equivalent data is not readily available to
enable Lessor to make the adjustment referred to in the preceding sentence,
Lessor will substitute therefor a comparable index based upon changes in the
cost of living or purchasing power of the consumer dollar published by any other
governmental agency, or if no such index shall be available, then a comparable
index published by a major bank or other financial institution or by a
university or a recognized financial publication.
"Credit Enhancements" means all cash collateral, security deposits,
security interests, letters of credit, pledges, prepaid rent or other sums,
deposits or interests held by Lessee, if any, to secure obligations with respect
to the Leased Property, the Tenant Leases or the Tenants.
"Current Yield" means as of any date the annual Minimum Rent, as
adjusted from time-to-time pursuant to the terms of this Lease, divided by the
sum of (i) the Purchase Amount plus (ii) all Capital Additions Costs paid for or
financed by Lessor which have not been repaid by Lessee.
"Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
"EBITDAR" has the meaning set forth in Section 7.3.
"Encumbrance" has the meaning set forth in Article XXXII.
"Event of Default" has the meaning set forth in Section 15.1.
"Extended Term" has the meaning set forth in Section XXXIV.
"Facility" means the 13,650 square foot assisted living facility
located on the Leased Property, containing 55 licensed beds and the related
amenities.
41
"Facility Coverage Ratio" has the meaning set forth in Section 7.4.
"Facility Mortgage" has the meaning set forth in Section 12.1.
"Facility Mortgagee" has the meaning set forth in Section 12.1.
"Fair Market Added Value" means the Fair Market Value (as hereinafter
defined) of the Leased Property (including all Capital Additions) less the Fair
Market Value of the Leased Property determined as if no Capital Additions paid
for by Lessee without financing by Lessor had been constructed.
"Fair Market Rental Value" means the fair market rental value of the
Leased Property or any Substitute Property, (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article XXVIII or in such other manner as shall be
mutually acceptable to Lessor and Lessee, and (c) not taking into account any
reduction in value resulting from an indebtedness to which the Leased Property
or Substitute Property may be subject.
"Fair Market Value" means the fair market value of the Leased Property
or any Substitute Property, including all Capital Additions, (a) assuming the
same is unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Article XXVIII or in such other manner as
shall be mutually acceptable to Lessor and Lessee, and (c) not taking into
account any reduction in value resulting from any indebtedness to which the
Leased Property or such Substitute Property is subject or which encumbrance
Lessee or Lessor is otherwise required to remove pursuant to any provision of
this Lease or agrees to remove at or prior to the closing of the transaction as
to which such Fair Market Value determination is being made. The positive or
negative effect on the value of the Leased Property or Substitute Property
attributable to the interest rate, amortization schedule, maturity date,
prepayment penalty and other terms and conditions of any Encumbrance on the
Leased Property or any Substitute Property, as the case may be, which is not so
required or agreed to be removed shall be taken into account in determining such
Fair Market Value.
"Fair Market Value Purchase Amount" means the Fair Market Value less
the Fair Market Added Value.
"Fiscal Year" means the 12-month period from January 1 to December 31.
"Fixtures" has the meaning set forth in Article I.
"Full Replacement Cost" has the meaning set forth in Section 12.2.
"Guaranteed Obligations" has the meaning set forth in Section 35.1.
"Guarantor" means INTEGRATED LIVING COMMUNITIES, INC., a Delaware
corporation.
"Guaranty" has the meaning set forth in Section 35.1.
"Hazardous Materials" means any substance, including asbestos or any
substance containing asbestos, the group of organic compounds known as
polychlorinated biphenyls, flammable explosives, radioactive materials, medical
waste, chemicals, pollutants, effluents, contaminants, emissions or any other
related materials and items included in the definition of hazardous or toxic
wastes, materials or substances under any Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or ordinance
relating to environmental conditions, medical waste and industrial hygiene,
including the Resource Conservation and Recovery Act
42
of 1976 ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Atomic
Energy Act and all similar federal, state and local environmental statutes and
ordinances, whether heretofore or hereafter enacted or effective and all
regulations, orders, or decrees heretofore or hereafter promulgated thereunder.
"Impositions" means, collectively, all taxes relating to the Leased
Property, including all ad valorem, sales and use, gross receipts, action,
privilege, rent (with respect to the Tenant Leases) or similar taxes,
assessments (including all assessments for public improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term), water, sewer or other rents and charges,
excises, tax levies, fees (including license, permit, inspection, authorization
and similar fees), and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of the Leased Property and/or the Rent (including all
interest and penalties thereon due to any failure in payment by Lessee), which
at any time prior to, during or in respect of the Term hereof may be assessed or
imposed on or in respect of or be a lien upon (a) Lessor or Lessor's interest in
the Leased Property, (b) the Rent, the 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, sales from, or activity conducted
on, or in connection with, the Leased Property or the Tenant Leases or use of
the Leased Property or any part thereof; provided that nothing contained in this
Lease shall be construed to require Lessee to pay (1) any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Lessor, (2) any transfer or net revenue tax of Lessor, (3) any tax
imposed with respect to the sale, exchange or other disposition by Lessor of any
portion of the Leased Property or the proceeds thereof, or (4) except as
expressly provided elsewhere in this Lease, any principal or interest on any
Encumbrance on the Leased Property, except to the extent that any tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to 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 (1), (2) or (3) is levied, assessed or imposed expressly in lieu thereof.
"Intangible Assets" means those assets which are (i) deferred assets,
other than prepaid insurance and prepaid taxes, (ii) patents, copyrights,
trademarks, trade names, franchises, good will, experimental expenses and other
similar assets which would be classified as intangible assets on a balance sheet
prepared in accordance with generally accepted accounting principles, (iii)
unamortized debt discount and expense, and (iv) assets located, and notes and
receivables due from obligors domiciled outside of the United States.
"Initial Term" has the meaning set forth in Article I.
"Insurance Requirements" means all terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
"Land" has the meaning set forth in Article I.
"Lease" means this Lease.
"Lease Amendment" has the meaning set forth in Section 9.3(b)(iv).
"Lease Assignment" means that certain Assignment of Rents and Leases,
substantially in the form attached hereto as Exhibit D, to be dated on or about
the date hereof executed by Lessee to Lessor, pursuant to the terms of which
Lessee assigns to Lessor each of the Tenant Leases and Credit Enhancements, if
any, as security for the obligations of Lessee under this Lease, and any other
43
obligations of Lessee, or any Affiliate of Lessee to Lessor.
"Leased Improvements" and "Leased Property" have the meanings set forth
in Article I.
"Legal Requirements" means all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (a) require repairs, modifications or alterations
of or to the Leased Property, or (b) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, actions and encumbrances
contained in any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), at any time in
force affecting the Leased Property.
"Lending Institution" means 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 plan, college or university, or real estate investment
company including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust having a net worth of at least
$50,000,000.
"Lessee" means INTEGRATED LIVING COMMUNITIES OF ST. PETERSBURG, INC., a
Delaware corporation, its successors and assigns.
"Lessor" means CAPSTONE CAPITAL CORPORATION, a Maryland corporation,
and its successors and assigns.
"Minimum Rent" has the meaning set forth in Section 2.1(a).
"Minimum Purchase Amount" means the greater of (i) the Fair Market
Value of the Leased Property at the time of purchase hereunder by Lessee or (ii)
the Purchase Amount (and in the case of a substitution pursuant to Article XX,
as adjusted pursuant to Section 20.1(f)) as such amount is increased at the rate
of three percent compounded annually for each year (to be prorated for partial
years) between the Commencement Date and the date of repurchase by Lessee, plus
the sum of all Capital Addition Costs relating to the Leased Property paid for
or financed by Lessor which as of the date of repurchase of the Leased Property
have not been repaid by Lessee, less the net amount (after deduction of all
reasonable legal fees and other costs and expenses, including expert witness
fees, incurred by Lessor in connection with obtaining any such award or
proceeds) of all Awards received by Lessor from Condemnation of the Leased
Property.
"Officer's Certificate" means a certificate of Lessee signed by the
Chairman of the Board of Directors, the President, any Vice President or another
officer authorized to so sign by the Board of Directors or By-Laws of Lessee, or
any other person whose power and authority to act has been authorized by
delegation in writing by any of the persons holding the foregoing offices.
"Optional Renewal Term" has the meaning set forth in Article I.
"Ordinary Course of Business" means the ordinary course of business for
Lessee consistent with past custom and practice (including quantity and
frequency).
"Overdue Rate" means as of any date, a rate per annum equal to the
Prime Rate as of such date, plus two percent, but in no event greater than the
maximum rate then permitted under applicable law.
"Payment Date" means any due date for the payment of the installments
of Minimum Rent under this Lease.
44
"Permitted Exceptions" has the meaning set forth in Article I hereof.
"Permitted Liens" means (i) liens described on Exhibit E attached
hereto and the Permitted Exceptions, (ii) pledges or deposits made to secure
payments of worker's compensation insurance (or to participate in any fund in
connection with worker's compensation insurance), unemployment insurance,
pensions or social security programs, (iii) liens imposed by mandatory
provisions of law such as for materialmen, mechanics, warehousemen and other
like liens arising in the Ordinary Course of Business, securing indebtedness
whose payment is not yet due and payable, (iv) liens for taxes, assessments and
governmental charges or levies if the same are not yet due and payable or if the
same are being contested in good faith and as to which adequate cash reserves
have been provided, (v) liens arising from good faith deposits in connection
with tenders, leases, real estate bids or contracts (other than contracts
involving the borrowing of money), pledges or deposits to secure public or
statutory obligations and deposits to secure (or in lieu of) surety, stay,
appeal or customs bonds and deposits to secure the payment of taxes,
assessments, duties or other similar charges, (vi) liens to secure purchase
money indebtedness, so long as the indebtedness incurred to purchase the new
asset is secured only by such asset, or (vii) encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real property;
provided that such items do not impair the use of such property for the purposes
intended, none of which is violated by existing or proposed structures or land
use.
"Person" means a natural person, corporation, partnership, trust,
association, limited liability company or other entity.
"Personal Property" means all machinery, equipment, furniture,
furnishings, computers, signage, trade fixtures or other personal property and
consumable inventory and supplies used in the operation of the Leased Property
for its Primary Intended Use, together with all replacements and substitutions
therefor, except for any portion of the Leased Property, all as more
specifically set forth on Exhibit F attached hereto or to be attached once the
complete list is available.
"Primary Intended Use" has the meaning set forth in Section 6.2(a).
"Prime Rate" means the annual rate reported by The Wall Street Journal,
Eastern Edition (or, if The Wall Street Journal shall no longer be published or
shall cease to report such rates, then a publication or journal generally
acceptable in the financial industry as authoritative evidence of prevailing
commercial lending rates) from time to time as being the prevailing prime rate
(or, if more than one such rate shall be published in any given edition, the
arithmetic mean of such rates). The prime rate is an index rate used by The Wall
Street Journal to report prevailing lending rates and may not necessarily be the
most favorable lending rate available. Any change in the Prime Rate hereunder
shall take effect on the effective date of such change in the prime rate as
reported by The Wall Street Journal, without notice to Lessee or any other
action by Lessor. Interest shall be computed on the basis that each year
contains 360 days, by multiplying the principal amount by the per annum rate set
forth above, dividing the product so obtained by 360, and multiplying the
quotient thereof by the actual number of days elapsed.
"Purchase Agreement" means the Asset Purchase Agreement dated on or
about _____________ __, 1997, between Jaylene Retirement Center, Inc. and Xxxxx
Xxxxxx Xxxxxx, as "Seller," and Lessee as "Purchaser" relating to the
acquisition by Lessee of the Leased Property, which Asset Purchase Agreement was
assigned by Lessee to Lessor pursuant to that certain Assignment, Assumption and
Amendment Agreement for Asset Purchase Agreement of even date herewith among the
foregoing Seller, Lessee and Lessor.
"Purchase Amount" has the meaning set forth in Section 2.1(a).
"Related Leases" has the meaning set forth in Section 15.1(a).
45
"Rent" means, collectively, the Minimum Rent and the Additional
Charges.
"Request" has the meaning set forth in Section 9.3(a).
"Security Agreement" means that certain Security Agreement of even date
herewith executed by Lessee to Lessor, pursuant to the terms of which Lessee has
granted to Lessor a first lien and security interest in and to all of the
Personal Property, including but not limited to, fixed and movable equipment,
including replacements and substitutions, as security for the obligations of
Lessee under this Lease, and any and all other obligations of Lessee.
"Substitution Date" has the meaning set forth in Section 20.1.
"Substitute Properties" has the meaning set forth in Section 20.1.
"Taking" means a taking or voluntary conveyance during the Term hereof
of all or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any Condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" means all leases, subleases, assignments and other
rental agreements (written or verbal, now or hereafter in effect), if any, that
grant a possessory interest in and to any space in the Improvements, or that
otherwise grant possessory or occupancy rights with regard to the Leased
Property, and all Credit Enhancements, if any, held in connection therewith.
"Term" means the Initial Term and any Extended Term as to which Lessee
has exercised its options to extend contained in Article XXXIV hereof unless
earlier terminated pursuant to the provisions hereof.
"Treasury Yield" means as of any date the weekly average yield on
United States Treasury Securities Constant Maturity Series issued by the United
States Government, as most recently published by the Federal Reserve Board in
Federal Reserve Statistical Release H.15(519). If, with respect to the Treasury
Yield, Lessor determines that the sale of Treasury Securities by the United
States Government has been suspended, or Treasury Securities are not being
offered for sale, or the weekly average yield is no longer printed by the
Federal Reserve Board in Federal Reserve Statistical Release H.15(519) or for
any other reason Lessor is not able to obtain a quotation from the Federal
Reserve for the sale of such Treasury Securities, then Lessor will promptly give
notice to Lessee and advise Lessee of a new index for determining the interest
rate to be used in connection with this Lease, which rate, in the good faith
judgment of Lessor, will be substantially equivalent to the Treasury Yield.
"Unavoidable Delays" means delays due to strikes, lockouts, inability
to procure materials after the exercise of reasonable efforts, power failure,
acts of God, governmental restrictions, enemy action, civil commotion, fire,
unavoidable casualty or other causes beyond the control of the party responsible
for performing an obligation hereunder, provided that lack of funds shall not be
deemed a cause beyond the control of either party hereto unless such lack of
funds is caused by the failure of the other party hereto to perform any
obligations of such other party under this Lease.
"Unsuitable for Its Primary Intended Use" as used anywhere in this
Lease, shall mean that, by reason of damage or destruction, or a partial Taking,
in the good faith judgment of Lessee, reasonably exercised, the Facility cannot
be profitably operated for its Primary Intended Use in the manner used prior to
such damage or destruction or Taking, taking into account, among other relevant
factors, the
46
number of usable suites and number and diversity of Tenants affected by such
damage or destruction or partial Taking.
End of Page 47
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and their respective corporate seals to be hereunto affixed and attested by
their respective officers thereunto duly authorized as of the date first written
above.
LESSOR:
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
By
Xxxxx X. XxXxxxx
Assistant Vice President
LESSEE:
INTEGRATED LIVING COMMUNITIES
OF ST. PETERSBURG, INC.
a Delaware corporation
By
Xxxx X. Xxxxx
Vice President
GUARANTOR:
INTEGRATED LIVING COMMUNITIES, INC.
a Delaware corporation
By
Xxxx X. Xxxxx
Vice President and
Chief Financial Officer
48
EXHIBIT A
PROPERTY DESCRIPTION
Schedule A
PARCEL I
Xxxx 0 xxx 0, Xxxxx 0, Xxxxxxxx Subdivision, according to the Plat thereof on
file in the Office of the Clerk of the Circuit Court in and for Pinellas County,
Florida recorded in Plat Book 46, Page 55.
PARCEL II
Xxx 0, Xxxxx 0, Xxxxxxxx Subdivision, according to the plat thereof as recorded
in Plat Book 46, Page 55, Public Records of Pinellas County, Florida.
EXHIBIT B
LIST OF PERMITTED EXCEPTIONS
1. Taxes and assessments which are not yet due and payable.
2. Subject to any and all matters as recited on the Plat of Glenside
Subdivision recorded in Plat Book 476, Page(s) 55, PINELLAS County Records.
3. Easement granted to City of St. Petersburg, Florida, from Flamingo Park
Village Incorporated, dated July 21, 1960, recorded October 6, 1960 in O.R.
Book 1008, Page 151, PINELLAS County Records.
EXHIBIT C
SCHEDULE OF CONTRIBUTIONS BY LESSEE
TO CAPITAL REPLACEMENT ACCOUNT
Lessee shall fund the Capital Replacement Account annually in the
following amount:
(1) $50 per room per month,
commencing with the first payment on the first anniversary of the Commencement
Date and continuing on each anniversary of the Commencement Date thereafter.
EXHIBIT D
ASSIGNMENT OF RENTS AND LEASES
STATE OF FLORIDA )
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF PINELLAS)
THIS ASSIGNMENT OF RENTS AND LEASES (this "Assignment") is entered into
as of March ____, 1997, by and between INTEGRATED LIVING COMMUNITIES OF ST.
PETERSBURG, INC., a Delaware corporation ("Assignor" or "Lessee") whose address
for notice hereunder is 00000 Xxx 00 Xxxx, Xxxxx 00, Xxxxxx Xxxxxxx, Xxxxxxx
00000-0000 and CAPSTONE CAPITAL CORPORATION, a Maryland corporation ("Assignee"
or "Lessor"), whose address for notice hereunder is 0000 Xxxxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000.
WITNESSETH
ARTICLE 1.
DEFINITIONS
As used herein, the following capitalized terms used herein shall have
the following meanings:
"Credit Enhancements" means all security deposits, security interests,
letters of credit, pledges, prepaid rent or other sums, deposits or interests,
if any, held by Lessee with respect to the Property, the Tenant Leases or the
tenants under the Tenant Leases.
"Engineering Documents" means all site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications, engineering
plans and studies, floor plans, landscape plans, and other plans and studies
that relate to the Land, the Improvements or the Fixtures and are in Lessee's
possession or control.
"Fixtures" means all permanently affixed equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection with,
and permanently affixed to or incorporated into the 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 and fire and theft protection
equipment, and built-in vacuum, cable transmission, oxygen and similar systems,
all of which, to the greatest extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding any
of Tenant's trade fixtures or other fixtures that a Tenant is permitted to
remove pursuant to the applicable Tenant Lease.
"Improvements" means all buildings, improvements, structures and
Fixtures now or on the Closing Date located on the Land, including, without
limitation, landscaping, parking lots and structures, roads, drainage and all
above ground and underground utility structures, equipment systems and other
so-called "infrastructure" improvements.
"Land" means the real property more particularly described on Exhibit A
attached hereto and made a part hereof, together with all covenants, licenses,
privileges and benefits thereto belonging, and any easements, rights-of-way,
rights of ingress or egress or other interests of Lessee in, on, or to any land,
highway, street, road or avenue, open or proposed, in, on, across, in front of,
abutting or adjoining such real property including, without limitation, any
strips and gores adjacent to or lying between such real property and any
adjacent real property.
"Lease" means that certain lease agreement of even date herewith
between Lessor and Lessee.
"License" has the meaning set forth in Section 3.1 hereof.
"Obligations" means any and all of the indebtedness, liabilities, and
other obligations made or undertaken by Lessee to Lessor or others as set forth
in the Security Documents (hereinafter defined), the Lease and any lease,
sublease or other form of conveyance or any other agreement pursuant to which
Lessee is granted a possessory interest in the Property.
"Obligation Documents" means any and all agreements, assignments and
instruments (including any renewals, extensions, modifications or amendments
thereof) evidencing, securing or pertaining to the Lease.
"Property" means, collectively, the Improvements, the Credit
Enhancements, the Engineering Documents and the Warranties.
"Rents" means the immediate, absolute and continuing right to collect
and receive all of the rents, income, receipts, revenues, proceeds, security and
other types of deposits, issues and profits now due or which may become due or
to which Lessee may now or shall hereafter (whether upon any applicable
redemption period or otherwise) become entitled or may demand or claim, arising
or issuing from or out of the Tenant Leases, or from or out of the Property or
any part thereof (subject only to the limited license granted herein by Lessor
to Lessee to so collect and receive the Rents), including, without limiting the
generality of the foregoing, minimum rents, additional rents, parking
maintenance charges or fees, tax and insurance contributions, proceeds of sale
of electricity, gas, chilled and heated water and other utilities and services,
deficiency rents and liquidated damages following default, premiums payable by
any Tenant upon the exercise of a cancellation privilege provided for in a
Tenant Lease and all proceeds payable under any policy of insurance covering
loss of rents resulting from untenantability caused by destruction or damage to
the Property.
"Security Documents" means this Assignment, and any and all other
documents now or hereafter executed by Lessee, or any other person or party, to
evidence or secure the payment or performance and discharge of the Obligations,
including, without limitation, the Lease.
"Tenant Leases" means all leases, subleases and other rental agreements
and guaranties thereof (written or verbal, now or hereafter in effect) that
grant a possessory interest in and to occupy and enjoy all or any portion of the
Property (save and except any and all leases, subleases or other agreements
pursuant to which Lessor or Lessee is granted a possessory interest in the
Land), together with all the rights, power and authority of Lessee to execute,
deliver, perform, enforce, alter, modify or supplement the terms of such leases
and agreements or to surrender, cancel or terminate such leases and agreements
without the prior written consent of Lessor, and together with any and all
guarantees of any of the tenant's obligations under any of such leases. Any of
the Tenant Leases are hereinafter referred to individually as a "Tenant Lease"
and collectively as the "Tenant Leases".
"Warranties" means all transferrable warranties, representations and
guaranties with respect to the Property, whether express or implied, which
Lessee now holds or under which Lessee is the beneficiary, including, without
limitation, all of the representations, warranties and guaranties given and/or
assigned to Lessee under the Tenant Leases.
ARTICLE 2.
ASSIGNMENT
Lessee, in consideration of the sum of $10.00, and other good and
valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, does hereby grant,
sell, convey, assign, transfer, set over and deliver the Tenant Leases and the
Rents unto this Lessor, to have and to hold the Tenant Leases and the Rents unto
Lessor, and Lessee does hereby bind itself, its successors and assigns to
warrant and defend the title to the Tenant Leases and the Rents unto Lessor
against every person whomsoever lawfully claiming or to claim the name or any
part thereof, by, through or under Lessee but not otherwise.
ARTICLE 3.
LIMITED LICENSE, CONTINUATION
AND TERMINATION OF ASSIGNMENT
3.1 Limited License. Lessee shall have the right under a limited
license (the "License") which may be revoked by Lessor pursuant to the terms of
Section 7.1, to collect upon, but not prior to accrual, all of the Rents and
Lessee shall receive the Rents and hold the same, as well as the right and
license to receive the Rents, as a trust fund to be applied, and Lessee hereby
covenants to apply the Rents, to the payment, satisfaction and discharge of the
Obligations then due, including specifically, but without limitation, to the
payment of taxes and assessments upon the Property before payment of penalty or
interest are due thereon, to the cost of such insurance then due, maintenance
and repairs as may be required by the terms of the Security Documents and in
satisfaction of all obligations under the Tenant Leases then due; all prior to
the application by Lessee of the Rents for any other purposes. The License shall
also include the right of Lessee to execute, deliver, perform, enforce, alter,
modify, change or supplement the terms of the Tenant Leases and to surrender,
cancel or terminate such Tenant Leases without the prior written consent of
Lessor except for any of the Tenant Leases executed, modified or supplemented
after the date hereof whose term (including any possible extensions on the part
of the applicable Tenant) extends beyond the Term of the Lease. Thereafter, so
long as there exists no Event of Default hereunder or under any of the Security
Documents, Lessee may use the Rents in any manner not inconsistent with the
Security Documents. Upon the sale and conveyance by Lessor or its successors or
assigns of the title to the Property, all right, title, interest and power
granted under the License granted herein shall be automatically continued
subject to the terms and conditions of the Lease and any of the other Security
Documents.
3.2 Continuation and Termination of Assignment. Upon final payment,
performance and discharge in full of the Obligations, this Assignment shall
become and be void and of no force or effect. Written demand by Lessor delivered
to any Tenant for payment of the Rents by reason of the occurrence of any Event
of Default claimed by Lessor, and the then existence thereof, shall be
sufficient evidence of each such Tenant's obligation and authority to make all
future payments of the Rents to Lessor without the necessity for further consent
by Lessee.
3.3 Permitted Contests. Lessee, after ten days' prior written notice to
Lessor, on its own or on Lessor's behalf (or in Lessor's name), but at Lessee's
expense, may contest, by appropriate legal proceedings conducted in good faith
and with due diligence, the amount, validity or application, in whole or in
part, of any of the Obligations which is required to be paid or discharged by
Lessee pursuant to the terms of Section 3.1 pursuant to the terms and conditions
of Article XI of the Lease; provided that nothing contained herein shall be
construed to permit Lessee to contest the payment of the rent or any other sums
payable by Lessee to Lessor under the Lease.
ARTICLE 4.
WARRANTIES AND REPRESENTATIONS
Lessee hereby unconditionally warrants and represents to Lessor as
follows:
4.1 Ownership of Tenant Leases and the Rents. Subject to the terms of
the Lease, Lessee has good title to the Tenant Leases not previously transferred
or assigned to Lessor and the Rents and has all
requisite right, power and authority to assign such Tenant Leases and the Rents
to Lessor, and no other person, firm or corporation has any right, title or
interest therein.
4.2 No Default. Lessee has duly and punctually performed, all and
singular, the terms, covenants, conditions and warranties of the Tenant Leases
on Lessee's part to be kept, observed and performed; and, to the best of
Lessee's knowledge, the Tenants thereunder are not in material default of any of
the terms or provisions of the respective Tenant Leases.
4.3 No Modification of the Tenant Leases or Anticipation or
Hypothecation of the Rents. The Tenant Leases are valid and unmodified, except
as indicated herein, and remain in full force and effect; Lessee has not
previously sold, assigned, transferred, or pledged the Tenant Leases or the
Rents, or any part thereof, whether now due or hereafter to become due, except
for the sales, assignments, transfers, mortgages and pledges for which Lessee
has heretofore obtained a full release; the Rents now due, or to become due, for
any periods subsequent to the date hereof have not been collected and that
payment thereof has not been anticipated, waived or released, discounted, set
off or otherwise discharged or compromised; and Lessee has not received any
funds or deposits from any Tenant for which credit has not already been made on
account of the accrued Rents.
ARTICLE 5.
AFFIRMATIVE COVENANTS
Lessee hereby unconditionally covenants and agrees with Lessor as
follows:
5.1 Performance. Lessee shall observe, perform and discharge, duly and
punctually, all and singular, the obligations, terms, covenants, conditions and
warranties of the Tenant Leases to be observed, performed or discharged by
landlord thereunder; and Lessee shall promptly deliver to Lessor any notices
received with respect to the Tenant Leases alleging any failure on the part of
the Lessee to observe, perform and discharge the same.
5.2 Notification to Tenants. Upon written request by Lessor, Lessee
shall notify and direct, in writing, such and every present or future Tenant
that any Credit Enhancement delivered to Lessee by such Tenant shall be retained
by Lessee but assigned to Lessor.
5.3 Enforcement. Lessee shall enforce or secure in the name of Lessee
the performance of each and every obligation, term, covenant, condition and
agreement in the Tenant Leases by any Tenant to be performed, and Lessee shall
appear in and defend any action or proceeding arising under, occurring out of or
in any manner connected with the Tenant Leases or the obligations, duties or
liabilities of Lessee and any Tenant thereunder, and upon request by Lessor,
Lessee will do so in the name and on behalf of Lessor, but at the expense of
Lessee, and Lessee shall pay all costs and expenses of Lessor, including
reasonable attorneys' fees and disbursements, in any action or proceeding in
which Lessor may appear.
5.4 Anticipation or Hypothecation of the Rents. Lessee hereby covenants
and agrees (a) upon and after an Event of Default hereunder or under any of the
Security Documents and while the same shall continue, to give to Lessor
duplicate notice of each default by each Tenant and copies of any and all
notices and communications received from any Tenant promptly upon delivery or
receipt thereof; (b) to comply with the terms and provisions of each Tenant
Lease; (c) not to assign, transfer, pledge, mortgage or otherwise encumber any
Tenant Lease; (d) not to assign, transfer, pledge, mortgage or otherwise
encumber any Rents; (e) not to collect, accept from any Tenant, or permit any
Tenant to pay any Rents for more than one month in advance (whether in cash or
by evidence of indebtedness); (f) except in the ordinary course of business and
in accordance with past practice and custom, not to waive, excuse, condone,
discount, set-off, compromise or in any manner release or discharge any Tenant
of and from any obligations, covenants, conditions or agreements to be kept,
observed or performed by such Tenant, under and in accordance with the terms of
the respective Tenant Lease; and (g) not to enter
into any Tenant Lease or amend, modify, extend or renew any Tenant Lease for a
time period extending beyond the term of the Lease, without prior written
approval of Lessor, which approval shall not be unreasonably withheld.
5.5 Delivery of the Tenant Leases; Further Acts and Assurance. Until
the Obligations secured hereby have been paid in full, performed and discharged,
Lessee shall enter into only leases of the Property in a form approved in
writing by Lessor and shall upon the written request of Lessor deliver executed
copies of all existing and all other and future Tenant Leases when executed upon
all or any part of the Property and will transfer and assign such other and
future Tenant Leases upon the same terms and conditions as herein contained, and
Lessee hereby covenants and agrees to make, execute and deliver to Lessor, upon
demand and at any time or times, any and all assignments and other documents and
instruments which Lessor may deem advisable to carry out the true purpose and
intent of this Assignment.
ARTICLE 6.
EVENTS OF DEFAULT
The term "Event of Default", as used herein, shall mean the occurrence
or happening, at any time and from time to time, of any one or more of the
following:
6.1 Performance of Obligations. If Lessee shall fail, refuse or neglect
to perform and discharge fully and timely any of its obligations hereunder and
such failure is not cured by Lessee within a period of 30 days after receipt by
Lessee of written notice thereof from Lessor, unless such failure cannot with
due diligence be cured within a period of 30 days, in which case such failure
shall not be deemed to continue if Lessee proceeds promptly and with due
diligence to cure the failure and diligently completes the curing thereof (as
soon as reasonably possible).
6.2 Security Documents. The occurrence of any Event of Default under
and as defined in the Lease or any other of the Security Documents.
ARTICLE 7.
REMEDIES
7.1 Remedies. Upon or any time after the occurrence, and during the
continuance thereof, of an Event of Default hereunder, Lessor, at its option,
shall have the complete right, power and authority hereunder, then or thereafter
until the Event of Default is cured, to exercise and enforce any or all of the
following rights and remedies set out in this Article 7:
(a) To terminate the License and then and thereafter, without taking
possession of the Property, to the extent permitted by law, in Lessee's own
name, to demand, collect, receive, xxx for, attach and levy the Rents and give
proper receipts, releases and acquittances therefor, and after deducting all
necessary and proper costs and expenses of operation and collection, as
determined by Lessor, including reasonable attorneys' fees, and apply the net
proceeds thereof, together with any funds of Lessee deposited with Lessor, in
reduction or repayment of the Obligations in such order of priority as Lessor
may, in its sole discretion, determine in accordance with applicable law;
(b) To declare the Lease in default and, at its option, exercise all of
the rights and remedies contained in the Lease or any other of the Security
Documents;
(c) Without regard to the adequacy of the security, with or without any
action or proceeding through any person or by any agent, or by the trustee under
any deed of trust included among the Security Documents, or by a receiver to be
appointed by a court of competent jurisdiction, and irrespective of Lessee's
possession, then or thereafter to enter upon, take possession of, manage and
operate the Property or any part thereof; make, modify, enforce, cancel or
accept surrender of a Tenant Lease now in effect or
hereafter in effect on the Property or any part thereof; remove and evict any
Tenant (subject to the provisions of any non-disturbance and attornment
agreement entered into by and between Lessor and any Tenant); increase or
decrease the Rents under a Tenant Lease; decorate, clean and repair, and
otherwise do any act or incur any cost or expense which Lessor may deem
reasonably necessary to protect the status and value of the Property as fully
and to the same extent as Lessee could do if in possession thereof; and in such
event, to apply the Rents so collected to the operation and management of the
Property, but in such order or priority as Lessor shall deem proper, and
including the payment of reasonable management, brokerage and attorneys' fees
and disbursements, and payment of the Obligations and to the establishment and
maintenance, without interest, of a reserve for replacements; and
(d) Any other remedy available to Lessor at law or in equity.
7.2 Exculpation of Lessor. The acceptance by Lessor of this Assignment,
with all of the rights, powers, privileges and authority created hereby, shall
not, prior to entry upon and taking possession of the Property by Lessor, be
deemed or construed to constitute Lessor a "mortgagee in possession", nor
thereafter or at any time or in any event obligate Lessor to take any action
hereunder or to expend any money or incur any expenses or perform or discharge
any obligation, duty or liability under a Tenant Lease or to assume any
obligation or responsibility for any security deposits or other deposits
delivered to Lessee by a Tenant and not assigned and delivered to Lessor, nor
shall Lessor be liable in any way for any injury or damage to persons or
property sustained by any person, firm or corporation in or about the Property
not attributable to the negligence or fault of Lessor, its agents or affiliates.
7.3 No Waiver or Election of Remedies.
(a) Waiver. Neither the collection of the Rents and application as
provided for in this Assignment nor the entry upon and taking possession of the
Property by Lessor shall be deemed to cure or waive any Event of Default or
waive, modify or affect any notice of default under any Security Document or
invalidate any act done pursuant to any such notice. If Lessor shall thereafter
elect to discontinue the exercise of any such right or remedy hereunder, such
right or remedy may be reasserted at any time and from time to time following
any subsequent Event of Default.
(b) Election of Remedies. The failure of Lessor to assert any of the
terms, covenants or conditions of this Assignment for any period of time or at
any time or times shall not be construed or deemed to be a waiver of any such
right, and nothing herein contained nor anything done or omitted to be done by
Lessor pursuant to this Assignment shall be deemed to be an election of remedies
or a waiver by Lessor of any of its rights and remedies under any other Security
Document or under the law. The right of the Lessor to collect and enforce the
payment and performance of the Obligations and to enforce any security therefor
may be exercised by the Lessor either prior to or simultaneously with or
subsequent to any action taken hereunder.
7.4 Appointment of Attorney-in-Fact. Upon and following the occurrence
of an Event of Default remaining uncured, Lessee hereby constitutes and appoints
Lessor the true and lawful attorney-in-fact, coupled with an interest, of Lessee
and in the name, place and stead of Lessee to demand, xxx for, attach, levy,
recover and receive any premium or penalty payable upon the exercise by a Tenant
under a Tenant Lease of a privilege of cancellation originally provided in such
Tenant Lease and to give proper receipts, releases and acquittances therefor
and, after deducting expenses of collection, to apply the net proceeds as a
credit upon any portion of the Obligations selected by Lessor, notwithstanding
the fact that such portion of the Obligations may not then be due and payable or
that such portion of the Obligations is otherwise adequately secured; and Lessee
does hereby authorize and direct any such Tenant to deliver such payment to
Lessor in accordance with this Assignment, and Lessee hereby ratifies and
confirms that Lessor, as attorney-in-fact, shall do or cause to be done by
virtue of the powers granted hereby. Under the circumstances referred to in this
Section 7.4, the foregoing appointment is irrevocable and continuing, and such
rights, powers and privileges shall be exclusive in Lessor, its successors and
assigns, so long as any part of the Obligations secured hereby remain unpaid and
undischarged.
ARTICLE 8.
MISCELLANEOUS
8.1 Performance at Lessee's Expense. The cost and expense o performing
or complying with any and all of the Obligations shall be borne solely by
Lessee, and no portion of such cost and expense shall be, in any way and to any
extent credited against any installment on or portion of the Obligations.
8.2 Survival of Obligations. Each and all of the Obligations shall
survive that execution and delivery of the Security Documents and the
consummation of the transaction called for therein, and shall continue in full
force and effect until the Obligations shall have been paid and performed in
full.
8.3 Further Assurances. Lessee, upon the request of Lessor, will
execute, acknowledge, deliver and record and/or file such further instruments
and do such further acts as may be necessary, desirable or proper to carry out
more effectively the purpose of the Security Documents and to subject to the
liens and security interests thereof any property intended by the terms thereof
to be covered thereby, including specifically, but without limitation, any
renewals, substitutions, replacements, modifications or amendments to the Tenant
Leases.
8.4 Recording and Filing. Lessee will cause the Security Documents and
all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and refiled in such manner and in such places as
Lessor shall reasonably request, and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
8.5 Notices. Any notices, demands, approvals and othe communications
provided for in this Assignment shall be in writing and shall be delivered by
telephonic facsimile, overnight air courier, personal delivery or registered or
certified U.S. Mail with return receipt requested, postage paid, to the
appropriate party at its address as follows:
If to Lessor:
CAPSTONE CAPITAL CORPORATION
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. XxXxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Xx. Xxxxxx X. Xxxxxx
Sirote & Permutt, P.C.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessee or Guarantor:
INTEGRATED LIVING COMMUNITIES, INC.
Brentwood Centre
00000 Xxx 00 Xxxx
Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
INTEGRATED LIVING COMMUNITIES, INC.
Brentwood Centre
00000 Xxx 00 Xxxx
Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication given by mail will be effective (i) upon
the earlier of (a) three business days following deposit in a post office or
other official depository under the care and custody of the United States Postal
Service or (b) actual receipt, as indicated by the return receipt; (ii) if given
by telephone facsimile, when sent; and (iii) if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth.
8.6 Successors and Assigns. All of the terms of the Security Documents
shall apply to, be binding upon and inure to the benefit of the parties hereto,
their successors, assigns, heirs and legal representatives, and all other
persons claiming by, through or under them.
8.7 No Waiver; Severability. Any failure by Lessor to insist, or any
election by Lessor not to insist, upon strict performance by Lessee of any of
the terms, provisions or conditions of the Security Documents shall not be
deemed to be a waiver of same or any other terms, provisions or conditions
thereof, and Lessor shall have the right at any time or times thereafter to
insist upon strict performance by Lessee of any and all such terms, provisions
and conditions. The Security Documents are intended to be performed in
accordance with, and only to the extent permitted by, all applicable legal
requirements. If any provision of any of the Security Documents or the
application thereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, then neither the remainder of the
instrument in which such provision to other persons or circumstances nor the
other instruments referred to herein shall be affected thereby, but rather,
shall be enforced to the greatest extent permitted by law.
8.8 Entire Agreement and Modification. This Assignment contains the
entire agreement between the parties relating to the subject matter hereof and
thereof, and all prior agreements relative thereto which are not contained
herein or therein are terminated. This Assignment may not be amended, revised,
waived, discharged, released or terminated orally, but only by a written
instrument or instruments executed by the party against which enforcement of the
amendment, revision, waiver, discharge, release or termination is asserted. Any
alleged amendment, revision, waiver, discharge, release or termination which is
not so documented shall not be effective as to any party.
8.9 Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.
8.10 Applicable Law. The Security Documents shall be governed by and
construed according to the laws of the State of Alabama from time to time in
effect except to the extent preempted by United States federal law. It is
expressly stipulated and agreed to be the intent of Lessee and Lessor at all
times to comply with applicable law now or hereafter governing any interest
payable under the Lease, including any notes evidencing the Obligations or any
part thereof. If the applicable law is ever revised, repealed or judicially
interpreted so as to render usurious any amount called for under any of the
Security Documents, or if Lessor's exercise of the option to accelerate the
maturity of the Obligations or if any prepayment by Lessee results in Lessee
having paid any interest in excess of that permitted by law, then it is Lessee's
and Lessor's express intent that all excess amounts theretofore collected by
Lessor be credited on the principal balance of the Obligations (or, if the
Obligations have been paid in full, refunded to Lessee), and the provisions of
the Security Documents immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, so as to comply with the then
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder or thereunder. All sums paid or agreed to be paid to Lessor
for the use, forbearance or detention of the Obligations shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of the Obligations until payment in full so that the
rate or amount of interest on account of such Obligations does not exceed the
usury ceiling from time to time in effect and applicable to the Obligations so
long as debt is outstanding thereunder.
8.11 Headings. The Article, Paragraph and Subparagraph entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles,
Paragraphs or Subparagraphs.
EXECUTED as of the date first above written, to be effective as of the
date first above written.
LESSOR:
CAPSTONE CAPITAL CORPORATION
a Maryland corporation
By
Xxxxx X. XxXxxxx
Assistant Vice President
LESSEE:
INTEGRATED LIVING COMMUNITIES
OF ST. PETERSBURG, INC.
a Delaware corporation
By
Xxxx X. Xxxxx
Vice President
STATE OF ALABAMA )
:
JEFFERSON COUNTY )
I, the undersigned authority, a Notary Public in and for said county in
said state, hereby certify that Xxxxx X. XxXxxxx, whose name as Assistant Vice
President of CAPSTONE CAPITAL CORPORATION, a Maryland corporation, is signed to
the foregoing instrument and who is known to me, acknowledged before me on this
day that, being informed of the contents of the said instrument, he, as such
partner and with full authority, executed the same voluntarily for and as the
act of said partnership.
GIVEN under my hand and seal, this _____ day of ____________________,
1997.
[ NOTARIAL SEAL ]
Notary Public
My Commission Expires
STATE OF FLORIDA )
:
XXX COUNTY )
I, the undersigned authority, a Notary Public in and for said county in
said state, hereby certify that Xxxx X. Xxxxx, whose name as Vice President of
INTEGRATED LIVING COMMUNITIES OF ST. PETERSBURG, INC., a Delaware corporation,
is signed to the foregoing instrument and who is known to me, acknowledged
before me on this day that, being informed of the contents of the said
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
GIVEN under my hand and seal, this _____ day of ____________________,
1997.
[ NOTARIAL SEAL ]
-----------------------------------------
Notary Public
My Commission Expires
--------------------
EXHIBIT A
PROPERTY DESCRIPTION
PARCEL I
Xxxx 0 xxx 0, Xxxxx 0, Xxxxxxxx Subdivision, according to the Plat thereof on
file in the Office of the Clerk of the Circuit Court in and for Pinellas County,
Florida recorded in Plat Book 46, Page 55.
PARCEL II
Xxx 0, Xxxxx 0, Xxxxxxxx Subdivision, according to the plat thereof as recorded
in Plat Book 46, Page 55, Public Records of Pinellas County, Florida.
EXHIBIT E
PERMITTED LIENS
NONE
EXHIBIT F
PERSONAL PROPERTY
[All tangible personal property owned by Lessee and located upon and
used in connection with the Leased Improvements.]
EXHIBIT G
CONSENT TO ASSIGNMENT
TO: ____________________________________
The undersigned corporation (the "Consenting Party") delivers this
Consent as of the _____ day of ________________________ ___, 1997, in connection
with the transactions contemplated by the Construction Loan Agreement dated
_______________________________________ (the "Loan Agreement") between
____________________________________________ ("Borrower") and
________________________________ ("Lender").
The Consenting Party hereby acknowledges and consents to:
(a) the Deed of Trust, Mortgage, Open-End Mortgage, Security Agreement,
Fixture Financing Statement, Assignment of Leases and Rents, and
Financing Statement (the "Deed of Trust") executed by the Borrower for
the benefit of the Lender in connection with the Loan Agreement; and
(b) the Assignment of Lease and Management Agreement (the "Assignment")
executed by the Borrower for the benefit of the Lender in connection
with the Loan Agreement.
The Consenting Party hereby acknowledges and consents to the Deed of
Trust and the Assignment, pursuant to which the Borrower has assigned and
granted to the Agent (for itself and the Lenders) a security interest and lien
in certain lease agreements, management agreements, guaranty agreements and
other property of the Borrower, including without limitation the rights of the
Borrower in, to and under each of the agreements listed on Exhibit A attached
hereto.
IN WITNESS WHEREOF, the Consenting Party has executed this Consent as
of the date first above written.
INTEGRATED LIVING COMMUNITIES
OF ST. PETERSBURG, INC.
a Delaware corporation
By
--------------------------------
Xxxx X. Xxxxx
Vice President
EXHIBIT A
ASSIGNED AGREEMENTS
1. Lease dated as of March _____, 1997, between the Borrower and the
Consenting Party.
