MASTER LEASE
BETWEEN
MONARCH PROPERTIES, LP
AND
[THI LESSEE SUBSIDIARY]
DATED AS OF __________, 1998
TABLE OF CONTENTS
PAGE
ARTICLE 1
LEASE; TERM; RENEWALS..........................................................2
1.1 Lease...........................................................2
1.2 Term............................................................2
1.3 Allocation of Base Rent.........................................2
1.4 First Option to Renew...........................................3
1.5 Second Option to Renew. .......................................3
1.6 Other Conditions of Renewal.....................................3
ARTICLE 2
DEFINITIONS....................................................................3
2.1 Certain Definitions.............................................3
2.2 Other Definitions..............................................18
ARTICLE 3
RENT; RELATED MATTERS.........................................................18
3.1 Rent...........................................................18
3.2 Additional Charges.............................................18
3.3 Late Charge; Interest..........................................18
3.4 Method of Payment of Rent......................................19
3.5 Net Lease; No Offset...........................................19
ARTICLE 4
IMPOSITIONS; RELATED MATTERS..................................................19
4.1 Payment of Impositions.........................................19
4.2 Adjustment of Impositions......................................20
4.3 Utility Charges................................................20
4.4 Insurance Premiums.............................................20
ARTICLE 5
NO TERMINATION, ABATEMENT, ETC................................................20
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ARTICLE 6
OWNERSHIP OF LEASED PROPERTY; PERSONAL PROPERTY...............................21
6.1 Ownership of the Leased Property...............................21
6.2 Landlord's Personal Property...................................21
6.3 Tenant's Personal Property.....................................22
6.4 Grant of Security Interest in Tenant's Personal Property.......22
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTIES........................................22
7.1 Condition of the Leased Properties.............................22
7.2 Use of the Leased Property.....................................23
ARTICLE 8
LEGAL AND INSURANCE REQUIREMENTS..............................................24
8.1 Compliance with Legal and Insurance Requirements...............24
8.2 Legal Requirement Covenants....................................24
8.3 Certain Financial and Other Covenants..........................24
8.4 Other Businesses. ............................................25
ARTICLE 9
MAINTENANCE AND REPAIR; ENCROACHMENTS.........................................25
9.1 Maintenance and Repair.........................................25
9.2 Encroachments, Restrictions, etc...............................27
ARTICLE 10
ALTERATIONS AND ADDITIONS.....................................................28
10.1 Construction of Alterations and Additions to Leased Property...28
10.2 Asbestos Removal for Alterations and Additions.................29
ARTICLE 11
REMOVAL OF LIENS..............................................................29
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ARTICLE 12
CONTEST OF LEGAL REQUIREMENTS, ETC............................................30
12.1 Permitted Contests.............................................30
12.2 Landlord's Requirement for Deposits............................31
ARTICLE 13
INSURANCE.....................................................................31
13.1 General Insurance Requirements.................................31
13.2 Replacement Cost...............................................33
13.3 Worker's Compensation Insurance................................33
13.4 Waiver of Liability; Waiver of Subrogation.....................33
13.5 Other Requirements.............................................33
13.6 Increase in Limits.............................................34
13.7 Blanket Policy.................................................34
13.8 No Separate Insurance..........................................34
ARTICLE 14
CASUALTY LOSS.................................................................35
14.1 Insurance Proceeds.............................................35
14.2 Restoration in the Event of Damage or Destruction..............35
14.3 Intentionally Omitted..........................................36
14.4 Tenant's Personal Property.....................................36
14.5 Restoration of Tenant's Property...............................36
14.6 No Abatement of Rent...........................................36
14.7 Consequences of Purchase of Damaged Leased Property............36
14.8 Damage Near End of Term........................................37
14.9 Waiver.........................................................37
14.10 Procedure for Disbursement of Insurance Proceeds Greater
Than The Approval Threshold....................................37
ARTICLE 15
TAKINGS.......................................................................39
15.1 Total Taking...................................................39
15.2 Allocation of Portion of Award.................................39
15.3 Partial Taking.................................................39
15.4 Temporary Taking...............................................40
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ARTICLE 16
CONSEQUENCES OF EVENTS OF DEFAULT.............................................40
16.1 Events of Default..............................................40
16.3 Liability for Costs and Expenses...............................40
16.4 Certain Remedies...............................................41
16.5 Damages........................................................41
16.6 Waiver.........................................................41
16.7 Application of Funds...........................................42
ARTICLE 17
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT.....................................42
ARTICLE 18
CERTAIN ENVIRONMENTAL MATTERS ...............................................42
18.1 Prohibition Against Use of Hazardous Substances................42
18.2 Notice of Environmental Claims, Actions or Contaminations......43
18.3 Costs of Remedial Actions with Respect to Environmental
Matters........................................................43
18.4 Delivery of Environmental Documents............................43
18.5 Environmental Audit............................................43
18.6 Entry onto Leased Property for Environmental Matters...........44
18.7 Environmental Matters Upon Termination or Expiration of Term
of This Lease..................................................44
18.8 Compliance with Environmental Laws.............................45
18.9 Environmental Related Remedies.................................45
18.10 Environmental Indemnification..................................46
18.11 Rights Cumulative and Survival.................................48
ARTICLE 19
HOLDOVER MATTERS..............................................................48
19.1 Holding Over...................................................48
19.2 Indemnity......................................................48
ARTICLE 20
SUBORDINATION; ATTORNMENT; ESTOPPELS..........................................49
20.1 Subordination..................................................49
20.2 Attornment.....................................................49
20.3 Estoppel Certificate...........................................49
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ARTICLE 21
RISK OF LOSS..................................................................50
ARTICLE 22
INDEMNIFICATION...............................................................50
22.1 Indemnification................................................50
22.2 Survival of Indemnification; Tenant Right to Defend Landlord...52
ARTICLE 23
LIMITATIONS ON TRANSFERS......................................................52
23.1 General Prohibition against Transfer...........................52
23.2 Corporate or Partnership Transactions..........................52
23.3 Permitted Subleases............................................53
23.4 Transfers to a Controlled Entity...............................53
23.5 Subordination and Attornment...................................53
23.6 Sublease Limitation............................................53
ARTICLE 24
CERTAIN FINANCIAL MATTERS.....................................................54
24.1 Officer's Certificates and Financial Statements................54
24.2 Public Offering Information....................................55
ARTICLE 25
LANDLORD INSPECTION...........................................................56
ARTICLE 26
[INTENTIONALLY OMITTED].......................................................56
ARTICLE 27
[INTENTIONALLY OMITTED].......................................................57
ARTICLE 28
ACCEPTANCE OF SURRENDER.......................................................57
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ARTICLE 29
MERGER OF TITLE; PARTNERSHIP..................................................57
29.1 No Merger of Title.............................................57
29.2 No Partnership.................................................57
ARTICLE 30
CONVEYANCE BY LANDLORD........................................................57
ARTICLE 31
QUIET ENJOYMENT...............................................................58
ARTICLE 32
[INTENTIONALLY OMITTED].......................................................58
ARTICLE 33
APPRAISERS....................................................................58
ARTICLE 34
BREACH OF LEASE BY LANDLORD...................................................59
ARTICLE 35
PERSONAL PROPERTY OPTION; TRANSFER OF FACILITY CONTROL........................60
35.1 Landlord's Option to Purchase Tenant's Personal Property.......60
35.2 Facility Trade Names...........................................60
35.3 Transfer of Operational Control of the Facilities..............60
35.4 Intangibles and Personal Property..............................62
ARTICLE 36
[INTENTIONALLY OMITTED].......................................................62
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ARTICLE 37
MISCELLANEOUS.................................................................62
37.1 Notices........................................................62
37.2 Survival, Choice of law........................................63
37.3 Limitation on Recovery.........................................63
37.4 Waivers........................................................64
37.5 Consents.......................................................64
37.6 Counterparts...................................................64
37.7 Options Follow Lease...........................................64
37.8 Rights Cumulative..............................................64
37.9 Entire Agreement...............................................64
37.10 Amendments in Writing..........................................64
37.11 Severability...................................................64
37.12 Successors.....................................................65
37.13 Time of the Essence............................................65
37.14 Late Charges...................................................65
37.15 Binding Effect.................................................65
37.16 Exhibits and Schedules.........................................65
37.17 Waiver of Jury Trial...........................................65
37.18 Memorandum of Lease............................................65
ARTICLE 38
SECURITY DEPOSIT..............................................................65
38.1 Security Deposit...............................................65
38.2 Application of Security Deposit................................66
38.3 Transfer of Security Deposit...................................66
38.4 Reduction of Security Deposit..................................66
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MASTER LEASE
THIS MASTER LEASE (this "Lease") is made and entered into as of the ___ day
of __________, 1998 between MONARCH PROPERTIES, LP, a Delaware limited
partnership, with principal offices at 0000 Xxxxxxx Xxx Xxxxxxxxx, Xxxxxx,
Xxxxxxx 00000 ("Landlord") and [INSERT THI LESSEE SUBSIDIARY], a [Insert State]
corporation, with principal offices at 0000 Xxxxxxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxxxx 00000 ("Tenant").
W I T N E S S E T H:
WHEREAS, pursuant to a Facilities Purchase Agreement, dated as of June ___,
1998 (the "Facilities Purchase Agreement"), among Landlord, Xxxxxx Management
Corporation, the entities listed on attached Exhibit A thereto, Trans
Healthcare, Inc. and Tenant, Landlord acquired and is the present owner of the
real property, improvements fixtures, and personal property constituting the
health care facilities described on Exhibit A hereto (each a "Facility" or a
"Leased Property"); and
WHEREAS, Landlord wishes to lease to Tenant, and Tenant wishes to lease
from Landlord, all of the Facilities;
NOW, THEREFORE, in consideration of the rents, mutual covenants, and
agreements set forth in this Lease, the parties agree that the use and occupancy
of the Facilities demised herein shall be subject to, and be in accordance with,
the terms, conditions and provisions of this Lease, as follows:
ARTICLE 1
LEASE; TERM; RENEWALS
1.1 LEASE. Upon and subject to the terms and conditions set forth in this
Lease, Landlord leases to Tenant, and Tenant hires and takes from Landlord, all
of the Leased Properties.
1.2 TERM. The Term shall commence for all Facilities on the Commencement
Date and end for each Facility on the Expiration Date, subject to the renewals
described in Sections 1.4 through 1.6 hereof. [LEASE TERM WILL BE ELEVEN YEARS]
1.3 ALLOCATION OF BASE RENT. The allocation of Base Rent among the Leased
Properties (as of the Commencement Date as agreed by Landlord and Tenant solely
for purposes of this Lease), is set forth on Exhibit B hereto.
2
1.4 FIRST OPTION TO RENEW. Tenant is hereby granted the option to renew
this Lease for a First Renewal Term for each Facility, which option shall be
exercised by Notice to Landlord at least one hundred eighty (180) days, but not
more than three hundred sixty (360) days, before the Expiration Date for such
Facility specified in Exhibit B hereto; provided, however, that no Event of
Default exists either on the date on which Tenant gives such Notice to Landlord
or on the applicable Expiration Date. During the First Renewal Term, all of the
terms and conditions of this Lease shall remain in full force and effect.
1.5 SECOND OPTION TO RENEW. If the Term of this Lease has been renewed as
provided above, Tenant is hereby granted the option to renew this Lease for the
Second Renewal Term for each Facility, which option shall be exercised by Notice
to Landlord at least one hundred eighty (180) days, but not more than three
hundred sixty (360) days, prior to the expiration of the First Renewal Term for
such Facility; provided, however, that no Event of Default exists either on the
date on which Tenant gives such Notice to Landlord or on the date on which the
First Renewal Term expires. During the Second Renewal Term, all of the terms and
conditions of this Lease shall remain in full force and effect.
1.6 OTHER CONDITIONS OF RENEWAL. The options to renew granted pursuant to
Sections 1.4 and 1.5 hereof may be exercised only with respect to all of the
Leased Properties specified in Exhibit A hereto and the Base Rent will be
computed as if the respective Renewal Term were merely an automatic extension of
the preceding Term (as specified in the definition of Base Rent).
ARTICLE 2
DEFINITIONS
2.1 CERTAIN DEFINITIONS. For all purposes of this Lease, except as
otherwise expressly provided or unless the context otherwise requires, (a) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP, (b) all references to designated "Articles," "Sections"
and other subdivisions are to the designated Articles, Sections and other
subdivisions of this Lease, and (c) 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. In addition, the following
terms shall have the following meanings:
Accounts: With respect to Tenant, all accounts, accounts receivable,
deposits, prepaid items, documents, chattel paper, instruments, contract
rights, general intangibles, choses in action and rights to any refund of
taxes previously or subsequently paid to any governmental authority, in
each case arising from or in connection with Tenant's operation and use of
the Leased Property.
3
Additional Charges: All Impositions and all amounts, liabilities and
obligations other than Rent that Tenant assumes and agrees to pay under
this Lease.
Affiliate: Any Person who, directly or indirectly, Controls or is
Controlled by or is under Common Control with another Person.
Approval Threshold: One Hundred Thousand Dollars ($100,000).
Assessment: With respect to any Leased Property, any assessment for
public improvements or benefits commenced or completed after the date
hereof and whether or not to be completed within the Term.
Award: All compensation, sums or anything of value awarded, paid or
received in connection with a Taking or Partial Taking.
Base Rent: (a) For the first Lease Year, the sum of $[Insert Dollar
Amount], and (b) for each Lease Year thereafter (including each Lease Year
in any Renewal Term), the sum of (i) the Base Rent for the preceding Lease
Year plus (ii) the percentage increase in the Cost of Living Index from the
last month of the preceding Lease Year to the last month of the Lease Year
in question; provided, however, that in no event shall the annual Base Rent
increase be less than two percent (2%) or more than five percent (5%).
[BASE RENT FORMULA = 400 BASIS POINTS OVER U.S. TREASURY RATE WITH 9.56%
MINIMUM]
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks in the City of New York, New
York are authorized, or obligated, by law or executive order, to close.
Capital Lease: Any lease (other then this Lease) for which tenant is
required, under GAAP, to account on its balance sheet as a capital lease.
Capitalized Lease Obligation: Any obligation of Tenant, as tenant or
guarantor, under a Capital Lease.
Cash Flow from the Facilities: The sum of (a) Net Income for the
applicable period; (b) the amount deducted by Tenant in computing Net
Income for the applicable period for (i) depreciation on any leasehold
improvements to the Facilities constructed by Tenant, (ii) amortization and
(iii) Rent; (c) interest; and (d) Fees.
Cash Flow to Debt Service Requirement: As of the relevant fiscal
period, the ratio of Tenant's Cash Flow from all the Facilities to its Debt
Service equal to or greater than the ratio of 1.25:1, from the Commencement
Date and for the remainder
4
of the Term of this Lease, including renewals of this Lease under Sections
1.4 and 1.5 hereof.
Claim(s): Any lien, attachment, levy, encumbrance, charge or claim, or
any encroachment or restriction burdening any Leased Property.
Clean-Up: The investigation, removal, restoration, remediation and/or
elimination of, or other response to, Contamination, in each case to the
satisfaction of all governmental agencies having jurisdiction over the
applicable Leased Property and in compliance with or as may be required by
Environmental Laws.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Commencement Date: The Closing Date, as defined in the Facilities
Purchase Agreement.
Condemnor: Any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.
Construction Funds: The Net Proceeds available for restoration or
repair work pursuant to Article 14 of this Lease.
Contamination: The presence, Release or threatened Release of any
Hazardous Substance at a Leased Property in violation of any Environmental
Law, or in a quantity that would give rise to any affirmative Clean-Up
obligation under an Environmental Law, including, but not limited to, the
existence of any injury or potential injury to public health, safety,
natural resources or the environment associated therewith.
Control (and Controlled by and under Common Control with): possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, through the ownership of voting
securities, partnership interests or other equity interests.
Cost of Living Index: The United States Department of Labor, Bureau of
Labor Statistics Revised Consumer Price Index for All Urban Consumers
(1982-84=100), U.S. City Average, All Items (which shall be the non-medical
index), or, if such Index is not available for the United States, an index
(non-medical only) available for the geographical area in the United States
which most closely corresponds to the entire United States, published by
such bureau or its successor, or, if none, by any other instrumentality of
the United States.
5
Date of Taking: The date on which the Condemnor has the right to
possession of the Leased Property that is the subject of the Taking or
Partial Taking.
Debt: As of any date, all (a) obligations of a Person, whether current
or long-term, that in accordance with GAAP would be included as
liabilities on such Person's balance sheet; (b) Capitalized Lease
Obligations of such Person; (c) obligations of others for which that Person
is liable directly or indirectly, by way of guaranty (whether by direct
guaranty, suretyship, discount, endorsement of guaranty, take-or- pay
agreement, agreement to purchase or advance or keep in funds or other
agreement having the effect of a guaranty) or otherwise; (d) liabilities
and obligations secured by liens on any assets of that Person, whether or
not those liabilities or obligations are recourse to that Person; and (e)
liabilities and obligations of that Person, direct or contingent, with
respect to letters of credit issued for the account of that Person or
others or with respect to bankers acceptances created for that Person.
However, Additional Charges shall not be deemed Debt.
Debt Service: With respect to any fiscal period of a Person, the sum
of (a) all interest due on Debt during the period (other than interest
imputed, pursuant to GAAP, on any Capitalized Lease Obligations and
interest on Debt that comprises Purchase Money Financing), all payments of
principal of Debt required to be made during the period and (c) all Base
Rent due during the period.
Encumbrance: With respect to a Leased Property, any mortgage, deed of
trust, lien, encumbrance or other matter affecting title to the Leased
Property, or any portion thereof or interest therein.
Environmental Audit: A written report, in form and substance
satisfactory to Landlord, from an environmental firm acceptable to
Landlord, which states that there is no evidence of Contamination on the
applicable Leased Property and that the applicable Leased Property is
otherwise in compliance with Environmental Laws.
Environmental Documents: Documents received by Tenant or any Affiliate
from, or submitted by Tenant or any Affiliate to, the United States
Environmental Protection Agency and/or any other federal, state, county or
municipal agency responsible for enforcing or implementing Environmental
Laws with respect to the condition of the Leased Property leased by Tenant
or Tenant's operations at the Leased Property; and written reviews, audits,
reports or other documents pertaining to environmental conditions,
including, but not limited to, the presence or absence of Contamination,
at, in or under or with respect to the Leased Property leased by Tenant
that have been prepared by, for or on behalf of Tenant.
6
Environmental Laws: All federal, state and local laws (including,
without limitation, common law), statutes, codes, ordinances, regulations,
rules, orders, permits or decrees from time to time in effect and relating
to (a) the introduction, emission, discharge or release of Hazardous
Substances into the indoor or outdoor environment (including, without
limitation, air, surface water, groundwater, land or soil); or (b) the
manufacture, processing, distribution, use, treatment, storage,
transportation or disposal of Hazardous Substances; or (c) the Cleanup of
Contamination.
Escrow Agreement: The Escrow Agreement of even date herewith between
Landlord and Tenant.
Estoppel Certificate: A statement in writing in substantially the same
form as Exhibit D hereto, with such changes thereto as reasonably may be
requested by the person relying on such certificate.
Event of Default: The occurrence of any of the following:
(a) If Tenant fails to pay Base Rent under this Lease within two
(2) days after the same becomes due and payable; or if Tenant fails to
restore the Security Deposit if and as required by Section 38.2 hereof
within two (2) Business Days after such amount is due and owed; or if
Tenant fails to pay any Additional Charges within five (5) Business Days
after such amount is due and owed;
(b) If Tenant (i) admits in writing its inability to pay its
debts generally as they become due, (ii) files a petition in bankruptcy or
a petition to take advantage of any insolvency law, (iii) makes a general
assignment for the benefit of its creditors, (iv) consents to the
appointment of a receiver of itself or of the whole or any substantial part
of its property, or (v) files 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; or
(c) If Tenant, on a petition in bankruptcy filed against it, is
adjudicated a bankrupt or has an order for relief thereunder entered
against it, or a court of competent jurisdiction enters an order or decree
appointing a receiver of such Tenant or of the whole or substantially all
of Tenant's property, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the Federal Bankruptcy Laws
or any other applicable law or statute of the United States of America or
any state thereof, and such judgment, order or decree is not vacated or set
aside or stayed within ninety (90) days from the date of the entry thereof;
or
7
(d) If Tenant is liquidated or dissolved, or begins proceedings
toward liquidation or dissolution, or has filed against it a petition or
other proceeding to cause it to be liquidated or dissolved, and the
proceeding is not dismissed within sixty (60) days thereafter, or in any
manner permits the sale or divestiture of substantially all of its assets
except in connection with a dissolution or liquidation following or related
to a merger or transfer of all or substantially all of the assets and
liabilities of Tenant with or to an Affiliate; or
(e) If the estate or interest of Tenant in the Leased Property or
any part thereof is levied upon or attached in any proceeding and the same
is not vacated or discharged within sixty (60) days after commencement
thereof (unless Tenant is in the process of contesting such lien or
attachment in good faith in accordance with Section 12.1 hereof); or
(f) If Tenant ceases operation of a Facility for a period in
excess of five (5) Business Days except upon prior written Notice to, and
with the express prior written consent of Landlord (which consent Landlord
may withhold in its absolute discretion), or as the unavoidable consequence
of damage or destruction as a result of a casualty, or a Taking or Partial
Taking, or as a result of an event described in subparagraph (g) below (as
to which the provisions of subparagraph (g) shall govern); or
(g) If the license to operate any Facility as a provider of
health care services in accordance with its Primary Intended Use is
revoked, or allowed to lapse, or, without Landlord's prior written consent,
transferred to a facility that is not one of the Leased Properties, or an
order is imposed with respect to a Facility suspending the right to operate
or accept patients, and Tenant does not promptly take reasonable steps to
cure the condition or conditions leading to such revocation or order and
cause such license and right to operate and accept patients to be
reinstated within sixty (60) days; or
(h) If any obligation of Tenant or of Guarantor to repay borrowed
money in excess of Five Million Dollars ($5,000,000) is accelerated by a
creditor after default, unless (i) Notice of a dispute between Tenant or
Guarantor and such creditor is given to Landlord prior to such
acceleration, (ii) Tenant or Guarantor have provided Landlord with
assurance, satisfactory to Landlord in its sole discretion, that such
acceleration will not materially affect Tenant, any of the Leased
Properties or the ability of Tenant and Guarantor to perform their
obligations under this Lease and the applicable Guaranty, and (iii)
Landlord has given Notice of such satisfaction to Tenant or Guarantor;
provided, however, this provision shall not apply so long as Guarantor's
Tangible Net Worth is in excess of Thirty Million Dollars ($30,000,000); or
8
(i) If Tenant fails to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured within a
period of thirty (30) days after Notice thereof from Landlord, unless the
failure cannot with due diligence be cured within a period of thirty (30)
days, in which case the failure shall not be deemed to continue if (i)
Tenant proceeds promptly and with due diligence to cure the failure, (ii)
Tenant diligently completes the cure thereof and (iii) such failure is
cured prior to the time that the same results in civil penalties in excess
of Five Thousand Dollars ($5,000) or criminal penalties to Landlord, Tenant
or any Affiliates of either; or
(j) If any representation or warranty made by Tenant in the
Facilities Purchase Agreement or in the certificates delivered in
connection therewith proves to be untrue when made in any material respect,
and Landlord is materially and adversely affected thereby, and Tenant
fails, within twenty (20) days after Notice from Landlord thereof, to cure
such condition by terminating such adverse effect and making Landlord whole
for any damage suffered therefrom, or if with due diligence such cure
cannot be effected within twenty (20) days, if Tenant has failed to
commence to cure the same within the twenty (20) days or failed thereafter
to proceed promptly and with due diligence to cure such conditions and
prior to the time that the same results in civil penalties in excess of
Five Thousand Dollars ($5,000) or criminal penalties to Landlord, Tenant,
any Affiliates of either, or any of the Leased Properties; or
(k) If a default occurs under any Guaranty of this Lease given to
Landlord to secure performance of any term or provision of this Lease and
is not cured within any applicable grace or cure period set forth therein;
or
(l) Subject to Article 23, if Tenant transfers the operational
control or management of any of the Facilities without Landlord's prior
written consent; or
(m) If (i) a default occurs on the part of Tenant under a
Facility Management Agreement and is not cured within any applicable grace
or cure period set forth therein, or (ii) a default occurs on the part of
Tenant under any other material contract affecting any of the Facilities,
Tenant or any Affiliate of Tenant, and the default is not cured within any
applicable grace or cure period contained therein, provided, as to any such
default under such other contract, such default materially and adversely
affects, or has the reasonable potential of materially and adversely
affecting, the operation or value of the applicable Facility; or
(n) If a default occurs under the Security Agreement and is not
cured within any applicable grace or cure period set forth therein; or
(o) If Tenant breaches the financial covenants set forth in
Section 8.3 hereof, [or Guarantor breaches the financial covenants set
forth in its Guaranty,] and
9
such failure is not cured within twenty (20) days of the earlier of (i) the
date on which Tenant or Guarantor has actual knowledge of such breach or
(ii) Notice from Landlord; or
(p) Tenant fails to repay Landlord for insurance premiums paid by
Landlord, as required and provided for in Section 13.1 hereof.
Executive Officer: The Chairman of the Board of Directors, the
President, any Vice President and the Secretary of a corporation.
Expiration Date: The "Expiration Date" for each particular Facility
shall be [Insert Date], 2009. [LEASE TERM WILL BE ELEVEN YEARS]
Facilities: The Leased Properties.
Facility: Any one of the Leased Properties.
Facility Management Agreement: The facility management agreement among
Manager and Tenant relating to the management of Tenant's operations at the
Facilities.
Facility Purchase Price: The Purchase Price allocated to each Facility
on the Commencement Date, as set forth on Exhibit F hereto; provided,
however, that after the date that is twelve (12) months from the
Commencement Date, such Facility Purchase Price shall be determined based
upon each Facility's fair market value, determined in accordance with the
provisions of Article 33 hereof.
Facility Rental Value: The Base Rent (determined at the time in
question) allocable to a Facility.
Facility Trade Names: The names under which the Facilities do or have
done business during the Term.
Fair Rental Value: The amount determined to be the Fair Rental Value
of the applicable Leased Property pursuant to the appraisal procedure set
forth in Article 33.
FDIC: Federal Deposit Insurance Corporation.
Fees: The fees payable by Tenant to Manager pursuant to the Facility
Management Agreement.
Financial Statement: For a fiscal year or other accounting period,
statements of earnings and retained earnings and of changes in financial
position and profit and loss
10
for such period (for an interim period, from the beginning of the
respective fiscal year to the end of such period) and the related balance
sheet as at the end of such period, together with the notes thereto, all in
reasonable detail and setting forth in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year, and
prepared in accordance with GAAP and reported on by (a) a "Big Six"
certified public accounting firm or another certified public accounting
firm approved by Landlord, which approval will not be unreasonably withheld
or delayed.
First Renewal Term: The period of five (5) years.
Fiscal Year: The calendar year.
Fixtures: 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, without limitation, any and 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 (other
than individual units), sprinkler systems and fire and theft protection
equipment, and built-in oxygen and vacuum systems, all of which to the
greatest extent permitted by law, are hereby deemed to constitute real
estate, together with all replacements, modifications, alterations and
additions thereto but specifically excluding all items included within the
definition of the "Personal Property".
GAAP: Generally accepted accounting principles in effect from time to
time as customarily and consistently applied.
Guarantor: Trans Healthcare, Inc. ("THI"), a Delaware corporation
Guaranty: The THI Guaranty.
Hazardous Substances: Any and all toxic or hazardous material,
substance, pollutant, contaminant, chemical, waste (including medical
waste) or substance, including petroleum products, asbestos and PCBs,
regulated, restricted or prohibited under any Environmental Law.
Impartial Appraiser: An appraiser selected by Landlord and reasonably
acceptable to Tenant.
Impositions: Collectively, all taxes (including, without limitation,
all real property taxes, ad valorem, sales and use, single business, gross
receipts, transaction
11
privilege, rent or similar taxes), assessments, ground rents, water, sewer
or other rents and charges, excises, tax levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees),
and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of any Leased Property or the business conducted
thereon by Tenant and/or the Rent (including all interest and penalties
thereon due to any failure of payment by Tenant) applicable to periods of
time within the Term hereof which at any time may be assessed or imposed on
or in respect of or be a lien upon (a) the Facilities or any part thereof
or (b) any rent therefrom or (c) any estate, right, title or interest
therein, or (d) any occupancy, operation, use or possession of, or (e)
sales from, or activity conducted on, the applicable Leased Property or the
leasing or use of the Facilities or any part thereof or (f) the Rent.
"Imposition" shall not include: (a) any federal, state or local tax based
on gross or net income (whether denominated as an income, capital stock or
other tax) imposed on Landlord generally and not exclusively in connection
with any Leased Property, or (b) any net revenue tax of Landlord or any
other person, or (c) any tax imposed with respect to the sale, financing,
exchange or other disposition by Landlord of any Leased Property or the
proceeds thereof, or (d) any principal or interest on any indebtedness of
Landlord or (e) on any ground rent or other rent payable by Landlord.
Initial Term:The period between, and inclusive of, the Commencement
Date and the earlier of the Expiration Date and the date upon which this
Lease terminates as provided herein.
Insurance Requirements: The terms, conditions and requirements of any
insurance policy required by this Lease.
Investigations: Soil and chemical tests or any other environmental
investigations, examinations or analyses.
Land: The real property described on attached Exhibit A hereto.
Landlord's Personal Property: All Personal Property, except Tenant's
Personal Property, that at the Commencement Date or thereafter during the
Term is located, or, but for a temporary relocation off-site on the
Commencement Date is normally located, on the Land or in the Leased
Improvements.
Lease Year: The period commencing on the first day of the calendar
month following the month in which the Commencement Date occurs and ending
on the last day of the twelfth (12th) full calendar month thereafter
(unless the Commencement Date is the first day of a month, in which event
the first Lease Year shall commence on such day). The period, if any,
between the Commencement Date and the first day of
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the following month shall be deemed to be part of the first Lease Year.
Thereafter, each Lease Year will be January 1 through December 31. If this
Lease is terminated before the end of any Lease Year, the final Lease Year
will be January 1 through the date of termination thereof.
Leased Improvements: All buildings, structures, Fixtures and other
improvements of every kind currently situated on the Land, including, but
not limited to, alleyways and connecting tunnels, sidewalks, utility pipes,
conduits and lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures.
Leased Properties (also "Facilities"): Collectively, the Land, Leased
Improvements, Related Rights and Landlord's Personal Property, and the
licensed nursing homes and/or other healthcare facilities being operated
thereon and therein, as identified on Exhibit A hereto.
Leased Property: Any one of the Leased Properties.
Legal Requirements: As to any Leased Property, 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 in or to the Leased Property or (b)
in any way adversely affect the use and enjoyment thereof, and all permits,
licenses and authorizations and regulations relating thereto, including,
but not limited to, those relating to existing health care licenses, those
authorizing the current number of licensed beds and the level of services
delivered from the Leased Property, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of
record or known to Tenant at any time in force affecting the Leased
Property, other than covenants, agreements, restrictions and encumbrances
created by Landlord without the consent of Tenant.
Manager: Xxxxxx Management Corporation, a [Insert State] corporation.
Management Agreement: The Facility Management Agreement.
Mechanics Liens: Liens of mechanics, laborers, materialmen, suppliers
or vendors.
Net Income: The aggregate net income of Tenant from the operation of
the Facilities, determined on an accrual basis in accordance with GAAP,
before federal, state and local income taxes, but excluding extraordinary
items.
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Net Proceeds: All proceeds, net of any costs incurred by Landlord in
obtaining such proceeds, payable under any risk policy of insurance
required by Article 13 of this Lease (including proceeds with respect to
the Personal Property that Tenant elects to restore or replace pursuant to
Section 14.2 hereof).
Notice: A written notice given pursuant to Section 37.1 hereof.
Officer's Certificate: A certificate signed by any one or more of the
Executive Officers.
Overdue Rate: On any date, a rate equal to three (3) percentage points
above the Prime Rate, but in no event greater than the maximum rate then
permitted under applicable law.
Partial Taking: A Taking of a portion of a Facility or of less than
the whole fee title to a Facility.
Payment Date: The due date for the payment of the installments of Base
Rent, Additional Charges or any other sums payable under this Lease.
Permitted Debt: Debt (other than Debt as to which an Affiliate of
Tenant is the creditor) incurred by Tenant solely to provide (a) working
capital to the respective Facilities, (b) Purchase Money Financing, or (c)
bonds to support the ordinary course of business and operations at the
Facilities, which amount of such bonds may not exceed one hundred thousand
dollars ($100,000) in the aggregate.
Permitted Encumbrances: With respect to each of the Leased Properties,
the matters identified on Exhibit E hereto.
Person: Any natural person, trust, partnership, limited liability
company, corporation, joint venture or other legal entity.
Personal Property: All equipment, furniture, fixtures, inventory
(including linens, dietary supplies and housekeeping supplies, and
including food and other consumable inventories), furnishings, movable
walls or partitions, trade fixtures, computers, software and data
pertaining to the business of a Facility (whether such data is stored in
computers or peripheral equipment that is included within the definition of
the term "Personal Property" or is otherwise in the possession of a Tenant,
or in computers and equipment that is not included within the definition of
the term "Personal Property" but is either owned by Tenant as to which
Tenant has a right of retrieval) and other tangible personal property used
in connection with the business of a Facility, together with all
replacements, modifications, alterations and additions
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thereto, except (a) items, if any, included within the definition of
Fixtures or Leased Improvements, (b) personal property leased from third
parties, (c) computers owned or leased by a Tenant that customarily are not
located on any of the Leased Properties, and (d) proprietary software owned
by parties other than a Tenant.
Primary Intended Use: With respect to any Facility, the operation of
the Facility as a licensed health care facility.
Prime Rate: On any date, a rate equal to the annual rate on such date
publicly announced by Citibank, N.A. to be its prime rate for 90-day
unsecured loans to its corporate borrowers of the highest credit standing,
but in no event greater than the maximum rate then permitted under
applicable law.
Proceeding: Any action, proposal or investigation by any agency or
entity, or any complaint to such agency or entity.
Purchase Money Financing: Any financing (whether by lease, chattel
mortgage, installment sale, or otherwise) provided by a Person to Tenant in
connection with the acquisition of Personal Property used in connection
with the operation of a Facility, whether by way of installment sale or
otherwise.
Purchase Price: The Purchase Price set forth on Exhibit F hereto.
Qualified Capital Expenditures: Expenditures capitalized on the books
of the Tenant for any of the following: replacement of furniture, fixtures
and equipment, including refrigerators, ranges, major appliances, bathroom
fixtures, doors (exterior and interior), central air conditioning and
heating systems (including cooling towers, water chilling units, furnaces,
boilers and fuel storage tanks) and major replacement of siding; major roof
replacements, including major replacements of gutters, downspouts, xxxxx
and soffits; major repairs and replacements of plumbing and sanitary
systems; overhaul of elevator systems; major repaving, resurfacing and
sealcoating of sidewalks, parking lots and driveways; repainting of entire
building exterior; but excluding major alterations, renovations and
additions.
Reconstruction Period: A period of three hundred sixty-five (365) days
following the date of any damage or destruction or the Date of Taking, as
applicable, subject to extension to the extent required by Unavoidable
Delay.
Regulatory Actions: With respect to any Leased Property, any claim,
demand, notice, action or proceeding brought or initiated by any
governmental authority in connection with any Environmental Law, including,
without limitation, civil, criminal
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and/or administrative proceedings, and whether or not seeking costs,
damages, equitable remedies, penalties or expenses.
Related Rights: All easements, rights and appurtenances relating to
the Land and the Leased Improvements.
Release: The intentional or unintentional spilling, leaking, dumping,
pouring, emptying, seeping, disposing, discharging, emitting, depositing,
injecting, leaching, escaping, abandoning or other release or threatened
release, however defined, of any Hazardous Substance.
Rent: Collectively, the Base Rent and the Additional Charges.
Rental Value: (a) With respect to any Leased Property that has been
relet during the period in question, the Rent actually received by Landlord
for the period in question from the reletting, net of all reasonable
expenses, including brokerage commissions, fees of attorneys and
consultants and the cost of any repairs and alterations required to obtain
such reletting and (b) with respect to any Leased Property that has not
been relet during the period in question, the Worth at the Time of the
Award of the Rent obtainable for the applicable Leased Property for the
period in question, under a lease of the applicable Leased Property on the
same terms and conditions as are set forth in this Lease, from a Tenant
that is unrelated to Landlord and has experience and a reputation in the
health care industry and a credit standing reasonably equivalent to that of
Tenant and Guarantor.
Replaced Property: Any Fixtures or Personal Property that from time to
time are replaced, pursuant to Section 9.1.5 hereof, after the date of this
Lease.
Replacement Property: Any Fixtures or Personal Property acquired by
Tenant in accordance with Section 9.1.5 hereof, after the date of this
Lease for use in connection with any Facility in replacement of any
Replaced Property.
SEC: Securities and Exchange Commission.
Second Renewal Term: The period of five (5) years.
Security Agreement: The security agreement of even date herewith
between Landlord and Tenant.
Security Deposit: The cash sum determined in accordance with the
schedule attached as Exhibit C hereto.
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State: With respect to each Facility, the state in which it is
located.
Taking: The exercise by a Condemnor of any governmental power, whether
by legal proceedings or otherwise, to acquire an interest in any Leased
Property, or a voluntary sale or transfer by Landlord to any Condemnor,
either under threat of condemnation or while legal proceedings for
condemnation are pending.
Tangible Net Worth: The net worth of Guarantor, plus accumulated real
estate depreciation and subordinated debt (not to exceed twenty-five
percent (25%) of net worth), less related party receivables and
intangibles.
Tenant's Personal Property: All Personal Property (a) which Tenant
owns and uses, as of the date of this Lease, in connection with the
operation of the Leased Property being leased pursuant to this Lease, but
that has not been conveyed to Landlord pursuant to the Facilities Purchase
Agreement and/or (b) which Tenant acquires after the Commencement Date for
use by it in connection with any Facility.
Term: The Initial Term and, if renewed as provided in Article 12, the
First Renewal Term and the Second Renewal Term, as applicable.
THI Guaranty: A Guaranty executed by THI in favor of Landlord.
Third Party Claims: Any legal actions or proceedings (other than
Regulatory Actions but including without limitation those based on
negligence, trespass, strict liability, nuisance or toxic tort) due to
Contamination, and whether or not seeking costs, damages, penalties or
expenses, brought by any person or entity other than a governmental agency.
Transfer: The (a) assignment, mortgaging or other encumbering of all
or any part of Tenant's interest in this Lease or Tenant's interest in the
Leased Property or (b) the entering into of any management agreement (other
than the Management Agreement) or other arrangement under which any
Facility is operated by or licensed to be operated by an entity other than
Tenant or the Manager.
Transferee: Any assignee, subtenant or other occupant of any Leased
Property pursuant to any Transfer.
Umbrella Policies: Policies of insurance that cover risks in excess of
the liability limits of policies required to be carried under this Lease.
Unavoidable Delays: Delays due to strikes, lock-outs, inability to
procure materials, power failure, acts of God, governmental restrictions,
enemy action, civil
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commotion, fire, unavoidable casualty or other causes beyond the reasonable
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 a party.
Unsuitable for Its Primary Intended Use: A state or condition of a
Facility such that, by reason of damage or destruction or a Partial Taking,
such Facility cannot reasonably be expected to be repaired and restored
within the Reconstruction Period to a condition in which it may be operated
on a commercially practicable basis for its Primary Intended Use, taking
into account, among other relevant factors, the number of useable beds, the
amount of square footage and the estimated revenue affected by such damage
or destruction or Partial Taking.
Worth at the Time of the Award: The present value of the applicable
amount, determined at the time required in Section 16.5 hereof, by
discounting the applicable amount by the Prime Rate.
2.2 OTHER DEFINITIONS. Other words and phrases are defined elsewhere in
this Lease and in the Exhibits and Schedules hereto.
ARTICLE 3
RENT; RELATED MATTERS
3.1 RENT. Tenant shall pay the Rent in lawful money of the United States of
America and legal tender for the payment of public and private debts. The first
payment of Base Rent shall be due on the Commencement Date, prorated for the
period from the Commencement Date until the last day of the first full calendar
month of the Term. After the first payment, Tenant shall pay the Base Rent in
equal, consecutive monthly installments in advance on the first day of each
calendar month of the Term. Unless otherwise agreed by the parties, Rent shall
be prorated as to any partial month at the end of the Term.
3.2 ADDITIONAL CHARGES. In addition to the Base Rent, Tenant will also pay
and discharge as and when due and payable all Additional Charges. If Tenant
fails to pay any Additional Charges as and when due, Tenant will also promptly
pay and discharge as Additional Charges every fine, penalty, interest and cost
which may be added for non-payment or late payment.
3.3 LATE CHARGE; INTEREST. If any installment of Base Rent, or any
Additional Charges payable by Tenant to Landlord hereunder is not paid within
five (5) Business Days of the due date, Tenant shall pay Landlord on demand, as
an Additional Charge, (a) a late charge of five percent (5%) of the amount due
and unpaid and (b) if such payment is not made
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within thirty (30) days of the date due, interest thereon at the Overdue Rate
from such thirtieth (30th) day until the date on which such payment plus such
late charge and interest is paid in full.
3.4 METHOD OF PAYMENT OF RENT. All Rent to be paid to Landlord shall be
paid by electronic funds transfer debit transactions through wire transfer of
immediately available funds to Landlord per the wiring instructions set forth on
Exhibit I hereto (as from time to time be changed by Landlord by Notice to
Tenant) and shall be initiated by Tenant for settlement on or before the due
date each calendar month; provided, however, if the due date is not a Business
Day, then settlement shall be made on the next succeeding day which is a
Business Day.
3.5 NET LEASE; NO OFFSET. The Rent shall be paid absolutely net to
Landlord, so that this Lease shall yield to Landlord the full amount of the
installments of Base Rent and Additional Charges payable hereunder throughout
the Term, subject to the terms and conditions hereof. This Lease is and shall be
a "pure-net" or "triple-net" lease, as such terms are commonly used in the real
estate industry, it being intended that Tenant shall pay all costs, expenses and
charges arising out of the use, occupancy and operation of the Leased
Properties, without any offset, deduction, abatement, or counterclaim
whatsoever. Landlord shall not be required to furnish any services whatsoever to
any Facilities or to make any payment of any kind whatsoever; and Landlord shall
not be responsible for any loss or damage to any property of Tenant, or any
other user or occupant of any part of any Facility, absent the gross negligence
or willful misconduct of Landlord, its employees or agents.
ARTICLE 4
IMPOSITIONS; RELATED MATTERS
4.1 PAYMENT OF IMPOSITIONS. Tenant will pay or cause to be paid all
Impositions before any fine, penalty, interest or cost may be added for
non-payment, and Tenant will promptly, upon request, furnish to Landlord copies
of official receipts or other satisfactory proof evidencing such payments. If
any such Imposition may, at the option of the taxpayer, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), Tenant may exercise the option to pay the same (and any accrued
interest on the unpaid balance of such Imposition) in installments and, in such
event, Tenant shall pay such installments during the Term hereof as the same
respectively become due and before any fine, penalty, premium, further interest
or cost may be added thereto. Refunds of Impositions paid by Tenant shall be
paid to or retained by Tenant. Landlord shall remit promptly to Tenant any
refunds of Impositions received by Landlord. Landlord and Tenant shall, upon
request of the other, provide such data as is maintained by the party to whom
the request is made with respect to each Leased Property as may be necessary to
prepare any required returns and
19
reports. Tenant will provide Landlord, upon request, with cost and depreciation
records in its possession that are reasonably necessary for filing returns for
any property classified as personal property. Tenant may, at Tenant's sole cost
and expense, protest, appeal or institute such other proceedings as Tenant may
deem appropriate to effect a reduction of Impositions, and Landlord shall
cooperate with Tenant in such protest, appeal or other action. Tenant shall
reimburse Landlord for Landlord's direct costs of cooperating with Tenant with
respect to such protest, appeal or other action and shall indemnify, defend and
hold Landlord harmless against any expense or loss as a result thereof. The
foregoing shall not be construed as indemnifying Landlord against its own
grossly negligent acts or omissions or willful misconduct.
4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term ends shall be adjusted and prorated
between Landlord and Tenant, whether or not such Imposition is imposed before or
after termination or expiration, and Tenant's obligation to pay their prorated
share thereof, if the same becomes due after such termination or expiration,
shall survive such termination or expiration.
4.3 UTILITY CHARGES. Tenant will pay or cause to be paid when due all
charges for electricity, power, gas, oil, water and other utilities used in the
respective Leased Properties during the Term.
4.4 INSURANCE PREMIUMS. Tenant will pay or cause to be paid when due all
premiums for the insurance coverage required to be maintained pursuant to
Article 13 during the Term.
ARTICLE 5
NO TERMINATION, ABATEMENT, ETC.
Except as otherwise specifically provided in this Lease, Tenant shall
remain bound by this Lease in accordance with its terms and shall not take any
action without the consent of Landlord to modify, surrender or terminate the
same, and shall not seek or be entitled to any offset, deduction abatement, or
counterclaim, or any deferral or reduction of Rent . The respective obligations
of Landlord and Tenant shall not be affected by reason of (a) any damage to, or
destruction of, any Leased Property or any portion thereof from whatever cause
or any Taking of any Leased Property or any portion thereof, except as expressly
set forth herein; (b) the lawful or unlawful prohibition of, or restriction
upon, Tenant's use of any Leased Property, or any portion thereof, or the
interference with such use by any Person (other than Landlord or its employees
or agents) or by reason of eviction by paramount title; (c) any claim which
Tenant has or might have against Landlord or by reason of any default or breach
of any warranty by Landlord under this Lease or any other agreement between
Landlord and Tenant, or to which Landlord and Tenant are parties, (d) any
bankruptcy,
20
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Landlord or any assignee or transferee
of Landlord, or (e) any other cause whether similar or dissimilar to any of the
foregoing other than a discharge of Tenant from any such obligations as a matter
of law. Unless otherwise specifically provided for in this Lease, Tenant 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 any Leased Property or any portion
thereof, or (ii) entitle Tenant to any reduction, suspension or deferral of the
Rent or other sums payable by Tenant hereunder.
ARTICLE 6
OWNERSHIP OF LEASED PROPERTY; PERSONAL PROPERTY
6.1 OWNERSHIP OF THE LEASED PROPERTY. Tenant acknowledges that the Leased
Properties are the property of Landlord and that Tenant has only the right to
the possession and use of the Leased Property leased by it upon the terms and
conditions of this Lease. Tenant will not (a) file any income tax return or
other associated documents; (b) file any other document with or submit any
document to any governmental body or authority; (c) enter into any written
contractual arrangement with any Person; or (d) release any financial statements
of Tenant, in each case that takes any position other than that, throughout the
Term, Landlord is the owner of the Leased Properties for federal, state and
local income tax purposes and that this Lease is a "true lease".
6.2 LANDLORD'S PERSONAL PROPERTY. Tenant shall, during the entire Term,
maintain all of Landlord's Personal Property in good order, condition and repair
as shall be necessary in order to operate the Facilities for the Primary
Intended Use in compliance with applicable licensure and certification
requirements, applicable Legal Requirements and Insurance Requirements, and
customary industry practice for the Primary Intended Use. If any of Landlord's
Personal Property requires replacement in order to comply with the foregoing,
Tenant shall replace it with other similar property of the same or better
quality at Tenant's sole cost and expense; the Replaced Property shall no longer
be Landlord's Personal Property; and the Replacement Property shall become part
of Landlord's Personal Property. Tenant shall not permit or suffer Landlord's
Personal Property to be subject to any lien, charge, encumbrance, financing
statement or contract of sale or the like, except for any purchase money
security interest or equipment or Landlord's interest expressly approved in
advance, in writing, by Landlord. At the expiration or earlier termination of
this Lease, all of Landlord's Personal Property shall be surrendered to Landlord
with the Leased Property in the condition required by Section 9.1.6 hereof.
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6.2.1 Motor Vehicles. Tenant acknowledges that the motor vehicles
described in the Xxxx of Sale were purchased by Landlord pursuant to
the Facilities Purchase Agreement, are the property of Landlord, and
are leased to Tenant hereunder, notwithstanding the fact that for the
convenience of the parties record title to such vehicles has not
changed and the interest of Landlord is not reflected on the
certificates of title of such vehicles. Upon demand of Landlord,
Tenant shall deliver to Landlord the certificates of title to any such
vehicles.
6.3 TENANT'S PERSONAL PROPERTY. Tenant shall provide and maintain, during
the entire Term, such Personal Property, in addition to Landlord's Personal
Property, as shall be necessary and appropriate in order to operate each
Facility for its Primary Intended Use 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. Upon the expiration or earlier
termination of this Lease, without the payment of any additional consideration
by Landlord, Tenant shall be deemed to have sold, assigned, transferred and
conveyed to Landlord all of Tenant's right, title and interest in and to any of
the respective Tenant's Personal Property that is integral to the use of the
respective Facilities for their Primary Intended Use, and shall, upon Landlord's
request, execute and deliver to Landlord a xxxx of sale with respect thereto,
and without Landlord's prior written consent Tenant shall not remove the same
from the respective Leased Properties. Any of Tenant's Personal Property that is
not integral to the use of the respective Facilities at such time may be removed
by Tenant, and, if not removed within thirty (30) days following the expiration
or earlier termination of this Lease, shall be considered abandoned by Tenant
and may be appropriated, sold, destroyed or otherwise disposed of by Landlord
without giving notice thereof to Tenant and without any payment to Tenant or any
obligation to account therefor. Tenant will, at its expense, repair all damage
to the Leased Properties that is caused by the removal of any of Tenant's
Personal Property, whether effected by Tenant or Landlord.
6.4 GRANT OF SECURITY INTEREST IN TENANT'S PERSONAL PROPERTY; RESTRICTION
ON OTHER LIENS. Tenant has concurrently granted to Landlord a security interest
in Tenant's Personal Property upon the terms set forth in the Security
Agreement. Without Landlord's consent, Tenant shall not permit or suffer
Tenant's Personal Property to be subject to any lien, charge, encumbrance,
financing statement or contract of sale other than to secure Permitted Debt.
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTIES
7.1 CONDITION OF THE LEASED PROPERTIES. Tenant acknowledges that Tenant has
examined and otherwise has knowledge of the condition of the Leased Property
leased by it
22
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 purposes hereunder. Tenant is
leasing the applicable Leased Property "as is" in its condition on the
Commencement Date. Tenant waives any claim or action against Landlord in respect
of the condition of the Leased Property being leased by it. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF ANY LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, OR OTHERWISE AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED
PROPERTY LEASED BY IT HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO
TENANT. TENANT FURTHER ACKNOWLEDGES THAT, ON AND AFTER THE COMMENCEMENT DATE AND
THROUGHOUT THE TERM, TENANT IS SOLELY RESPONSIBLE FOR THE CONDITION OF THE
LEASED PROPERTY LEASED BY IT.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 Subject to the exceptions in clause (f) of the definition of
"Event of Default" in Article 2 hereof, throughout the Term, Tenant shall
continuously use the Leased Property leased by it for the Primary Intended Use
and for such other uses as may be necessary or incidental thereto, and no Tenant
shall use any Leased Property or any portion thereof for any other use without
the prior written consent of Landlord. No use shall be made or permitted to be
made of, or allowed in, any Leased Property, and no acts shall be done, which
will cause the cancellation of, or be prohibited by, any insurance policy
covering any Leased Property or any part thereof.
7.2.2 Tenant agrees that the Leased Property and Tenant's Personal
Property shall not be used for any unlawful purpose, nor shall Tenant commit or
suffer any waste on the Leased Property or cause or permit any nuisance thereon.
7.2.3 Tenant shall not suffer or permit the Leased Property, or any
portion thereof, or Tenant's Personal Property to be used in such a manner as
(i) might reasonably tend to impair Landlord's (or Tenant's, as the case may be)
title thereto or to any portion thereof, or (ii) may reasonably make possible a
claim or claims of adverse usage or adverse possession by the public or of
implied dedication of the applicable Leased Property or any portion thereof.
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ARTICLE 8
LEGAL AND INSURANCE REQUIREMENTS
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
12, Tenant, at its expense, will promptly (i) comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property and Tenant's Personal
Property, whether or not compliance therewith requires structural changes in any
of the Leased Improvements (which structural changes shall be subject to
Landlord's prior written approval, which approval shall not be unreasonably
withheld or delayed) or interferes with or prevents the use and enjoyment of the
Leased Property, and (ii) procure, maintain and comply with all licenses,
certificates of need, provider agreements and other authorizations required for
the use of the Leased Property and Tenant's Personal Property then being made,
and for the proper erection, installation, operation and maintenance of the
Leased Property or any part thereof.
8.2 LEGAL REQUIREMENT COVENANTS. Tenant's use, maintenance, operation and
any alteration of the Leased Property shall at all times conform to all
applicable local, state, and federal laws, ordinances, rules, and regulations
(including but not limited to the Americans with Disabilities Act). The judgment
of any court or administrative body of competent jurisdiction, or the decision
of any arbitrator (final beyond any appeal) that Tenant has violated any such
Legal Requirements or Insurance Requirements, shall be conclusive of that fact
as between Landlord and Tenant.
8.3 CERTAIN FINANCIAL AND OTHER COVENANTS.
8.3.1 Certain Financial Covenants.
8.3.1.1 Minimum Capital Expenditures. During the first Lease
Year, Tenant shall make at least Two Hundred and Fifty Dollars ($250.00)
per-licensed-bed of Qualified Capital Expenditures, and thereafter throughout
the Term, Tenant shall in each Lease Year make Qualified Capital Expenditures in
an amount equal to the amount of such expenditures required for the immediately
preceding Lease Year, multiplied by the percentage increase in the Cost of
Living Index from the first day of the prior Lease Year to the first day of the
current Lease Year. The amount of Qualified Capital Expenditures
per-licensed-bed may never be less in any Lease Year than the amount established
in the prior Lease Year.
8.3.1.2 Permitted Debt. Except for Permitted Debt, Tenant shall
not incur any Debt without the prior written consent of Landlord, which Landlord
may withhold in its discretion.
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8.3.1.3 Cash Flow to Debt Service Requirement. At all times
during the Term, Tenant shall maintain a ratio of Cash Flow from the Facilities
to Debt Service from the Facilities at least equal to the Cash Flow to Debt
Service Requirement.
8.3.2 Management Agreements. Tenant shall not enter into any
management agreement other than the Management Agreement without Landlord's
consent, which consent Landlord may withhold or condition in its sole
discretion, and in no event without a satisfactory subordination by the manager
of its right to receive any management fees to the obligation of Tenant to pay
the Base Rent and Additional Charges to Landlord. In the ordinary course of
business Tenant shall have the right to amend, modify or otherwise change the
terms of the Management Agreement without the prior written consent of Landlord;
provided, however, that any such amendments, modifications or other changes that
are material shall require the prior written consent of Landlord, which consent
shall not unreasonably be withheld.
8.4 OTHER BUSINESSES. During the Term of this Lease, Tenant shall not,
directly or indirectly, own, operate or manage any businesses other than health
care businesses.
ARTICLE 9
MAINTENANCE AND REPAIR; ENCROACHMENTS
9.1 MAINTENANCE AND REPAIR.
9.1.1 Tenant, at its expense, shall keep the Leased Property and all
fixtures thereon and all landscaping, private roadways, sidewalks and curbs
appurtenant thereto and which are under Tenant's control and Tenant's Personal
Property in good order and repair (whether or not the need for such repairs
occurs as a result of Tenant's use, any prior use, the elements or the age of
the applicable Leased Property or any portion thereof, or any cause whatever
except the failure of Landlord to make any payment or to perform any act
expressly required under the Lease or the negligence or willful misconduct of
Landlord), and, except as may be provided to the contrary in Article 14, with
reasonable promptness, make all necessary and appropriate repairs thereto of
every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term of this
Lease (concealed or otherwise).
9.1.2 Tenant shall do or cause others to do all shoring of the Leased
Property leased by it or adjoining property (whether or not owned by Landlord)
or of the foundations and walls of the Leased Improvements, and every other act
necessary or appropriate for the preservation and safety thereof and continued
operation of the Facilities, by reason of or in
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connection with any subsidence, settling or excavation or other building
operation upon the Leased Property leased by it or adjoining property, whether
or not Tenant or Landlord shall, by any Legal Requirements, be required to take
such action or be liable for the failure to do so; provided, however, that such
shoring and any other material acts shall be subject to the prior written
consent of Landlord, which shall not unreasonably be withheld or delayed. All
repairs shall, to the extent reasonably achievable, be at least equivalent in
quality to the original work, and, subject to the provisions of paragraph 9.1.6,
where, by reason of age or condition, such repairs cannot be made to the quality
of the original work, the property to be repaired shall be replaced.
9.1.3 Landlord shall not under any circumstances be required to build
or rebuild any improvements on any Leased Property or on any property
appurtenant thereto, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to any Leased Property,
whether ordinary or extraordinary, structural or non-structural, foreseen or
unforeseen, or upon any adjoining property, whether to provide lateral or other
support for any Leased Property or xxxxx a nuisance affecting any Leased
Property, or otherwise, or to make any expenditure whatsoever with respect
thereto, in connection with the Lease, or to maintain any Leased Property in any
way. Tenant hereby waives, to the extent permitted by law, any right provided by
law, but not provided by the terms of this Lease, to make repairs at the expense
of Landlord.
9.1.4 Nothing contained in this Lease shall be construed as (a)
constituting the consent or request of Landlord, expressed or implied, to any
contractor, subcontractor, laborer, materialmen or vendor to or for the
performance of any labor or services or the furnishing of any materials or other
property for the construction, alteration, addition, repair or demolition of or
to any Leased Property or any part thereof, or (b) giving Tenant any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against Landlord in respect thereof or to
make any agreement that may create, or in any way be the basis for any right,
title, interest, lien, claim or other encumbrance upon the estate of Landlord in
any Leased Property or any portion thereof. Landlord shall have the right to
give, record and post, as appropriate, notices of non-responsibility under any
mechanics' and construction lien laws now or hereafter existing.
9.1.5 Tenant shall, from time to time as and when needed, replace with
Replacement Property any of the Fixtures or Personal Property which shall have
(a) become worn out, obsolete or unusable for the purpose for which it is
intended (if such Fixtures or Personal Property continues to be necessary), (b)
been the subject of a Taking (in which event Tenant shall be entitled to that
portion of any Award made therefor), or (c) been lost, stolen or damaged or
destroyed; provided, however, that the Replacement Property shall (i) be in good
operating condition, (ii) be of a quality reasonably equivalent to that of the
Replaced Property and (iii) be suitable for a use which is the same or similar
to that of the Replaced Property.
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Tenant shall repair at its sole cost and expense all damage to the applicable
Leased Property caused by the removal of Replaced Property or other personal
property of Tenant or the installation of Replacement Property. All Replacement
Property shall become the property of Landlord and shall become Fixtures or
Landlord's Personal Property, as the case may be, to the same extent as the
Replaced Property had been. Upon Landlord's written request Tenant shall with
reasonable promptness cause to be executed and delivered to Landlord an invoice,
xxxx of sale or other appropriate instrument evidencing the transfer or
assignment to Landlord of all estate, right, title and interest (other than the
leasehold estate created hereby) of Tenant or any other Person in and to any
Replacement Property the cost of which exceeds Twenty Five Thousand Dollars
($25,000), free from all liens and other exceptions to title, and Tenant shall
pay all taxes, fees, costs and other expenses that may become payable as a
result thereof.
9.1.6 Upon the expiration or earlier termination of the Term, Tenant
shall vacate and surrender the Leased Property leased by it to Landlord as a
fully equipped, licensed health care facility, with all equipment required by
the laws of the State to maintain its then current license, and shall assign and
transfer to Landlord (or to another Person designated by Landlord) the Facility
Trade Names, local telephone numbers, local electronic mail and "Internet"
addresses, if any, under which the Facilities are then conducting business, and
all Facility-specific licenses, permits and rights to do business of every kind
(subject to such governmental approvals as may be required), patient admission
agreements and records, supplier and operator contracts, a copy of all
then-current data maintained by Tenant in writing or recorded on computer media
with respect to the business of the applicable Facility and all computer
software necessary to access and manipulate such data. Tenant shall not be
required to transfer proprietary software to Landlord, but shall cause the data
it is to transfer to Landlord to be transferred to Landlord, without charge. At
the expiration of the Term or the sooner termination of this Lease, the Leased
Properties, including all Leased Improvements, Fixtures and Landlord's Personal
Property, shall be returned to Landlord in good operating condition, ordinary
wear and tear, Taking and casualty damage that Tenant is not required by this
Lease to repair or restore, excepted, and except as repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this Lease.
Notwithstanding anything to the contrary in this Lease, not more than fifty
percent (50%) of the value of the Personal Property returned to Landlord as
required herein may at the time of such return be subject to Purchase Money
Financing, and at the time of such return Tenant shall assign to Landlord all of
its right, title and interest in and to such any and all documents evidencing
such Purchase Money Financing.
9.2 ENCROACHMENTS, RESTRICTIONS, ETC. Except in the case of Permitted
Encumbrances, if any of the Leased Improvements (other than as existing on the
Commencement Date), at any time encroaches in a material adverse manner upon any
property, street or right-of-way adjacent to any Leased Property, or materially
violates the agreements or conditions contained in any lawful restrictive
covenant or other agreement affecting any Leased Property or any part thereof,
or materially impairs the rights of others
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under any easement or right-of-way to which any Leased Property is subject, then
promptly upon the request of Landlord or at the behest of any person
legitimately affected by any such encroachment, violation or impairment, Tenant
shall, at its expense, either (a) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, or (b) make such changes to the Leased
Improvements, and take such other actions, as are reasonably practicable, to
remove such encroachment, and to end such violation or impairment, including, if
necessary, the alteration of any of the applicable Leased Improvements, and in
any event take all such actions as may be necessary in order to be able to
continue the operation of the applicable Leased Property for the Primary
Intended Use substantially in the manner and to the extent the applicable Leased
Property was operated prior to the assertion of such violation, impairment or
encroachment.
ARTICLE 10
ALTERATIONS AND ADDITIONS
10.1 CONSTRUCTION OF ALTERATIONS AND ADDITIONS TO LEASED PROPERTY. Tenant
shall not make or permit to be made any alterations, improvements or additions
of or to the Leased Property leased by it or any part thereof, other than
non-structural alterations having no material effect on the roof, foundation,
utility systems or structure, unless and until Tenant has caused plans and
specifications therefor to have been prepared, at Tenant's expense, by a
licensed architect and submitted to Landlord at least thirty (30) days (ninety
(90) days, if such alterations, improvements or additions are reasonably
estimated to cost more than the Approval Threshold) in advance of the
commencement of construction, and has obtained Landlord's written approval
thereof, which approval shall not be unreasonably withheld. Landlord shall have
the right to require that, prior to the commencement of construction of any
alterations, improvements or additions as to which its approval is required
hereunder, Tenant also provide Landlord with reasonable assurance of the payment
of the cost thereof and, if the cost thereof is in excess of the Approval
Threshold, Tenant shall comply with Landlord's requirements with respect to the
periodic delivery of lien waivers and evidence of payment for such cost. If such
approval is granted, Tenant shall cause the work described in such approved
plans and specifications to be performed, at its expense, promptly, and in a
good, workerlike, manner by licensed contractors and in compliance with
applicable governmental and Insurance Requirements and Legal Requirements and
the standards set forth in this Lease, which improvements shall in any event
constitute a complete architectural unit (if applicable) in keeping with the
character of the applicable Leased Property and the area in which the applicable
Leased Property is located and which will not diminish the value of the
applicable Leased Property or change the Primary Intended Use of the applicable
Leased Property. Tenant shall be responsible for the completion of such
improvements in accordance with the plans and specifications approved by
Landlord, and shall promptly correct any failure with respect thereto. Each and
every such improvement, alteration or addition shall immediately
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become a part of the applicable Leased Property and shall belong to Landlord
subject to the terms and conditions of this Lease. Tenant shall not have any
claim against Landlord at any time in respect of the cost or value of any such
improvement, alteration or addition. There shall be no adjustment in the Base
Rent by reason of any such improvement, alteration or addition, unless such
improvement, alteration or addition is financed by Landlord. With Landlord's
consent, which consent shall not be unreasonably withheld, expenditures made by
a Tenant pursuant to this Article 10 may be included as capital expenditures for
purposes of inclusion in the capital expenditures budget for the applicable
Facility and for measuring compliance with the obligations of Tenant set forth
in Section 8.3.1.1 hereof.
10.2 Asbestos Removal for Alterations and Additions. In connection with any
alteration other than removal pursuant to the Escrow Agreement which involves
the removal, demolition or disturbance of any asbestos-containing material,
Tenant shall cause to be prepared at its expense a full asbestos assessment
applicable to such alteration, and shall carry out such asbestos monitoring and
maintenance program as shall reasonably be required thereafter in light of the
results of such assessment.
ARTICLE 11
REMOVAL OF LIENS
Without the consent of Landlord, and except as expressly provided
elsewhere herein, Tenant shall not directly or indirectly create or allow to
remain, and within thirty (30) business days after notice thereof shall promptly
discharge at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon the Leased Property, and any attachment, levy, claim or
encumbrance in respect of the Rent, excluding (a) Permitted Encumbrances, (b)
Mechanics Liens for sums not yet due, (c) liens created by the acts or omissions
of Landlord, and (d) Mechanics Liens which Tenant is contesting (provided that
the aggregate amount of such contested liens shall not exceed one months' Base
Rent allocable to the Facility in question).
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ARTICLE 12
CONTEST OF LEGAL REQUIREMENTS, ETC.
12.1 PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's sole cost and expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity of any Imposition, Legal Requirement, Insurance
Requirement or Claim not otherwise permitted by Article 11, but this shall not
be deemed or construed in any way as relieving, modifying or extending Tenant's
covenants to pay or to cause to be paid any such charges at the time and in the
manner as provided in this Lease, nor shall any such legal proceedings operate
to relieve Tenant from its obligations hereunder and or cause the sale of any
Leased Property, or any part thereof, to satisfy the same or cause Landlord or
Tenant to be in default under any Encumbrance or in violation of any Legal
Requirements or Insurance Requirements upon any Leased Property or any interest
therein. Upon request of Landlord, if the claim exceeds the Approval Threshold,
Tenant shall either (a) provide a bond, letter of credit or other assurance
reasonably satisfactory to Landlord that all Claims, together with interest and
penalties, if any, thereon, will be paid, or (b) deposit within the time
otherwise required for payment with a bank or trust company selected by Landlord
as trustee, as security for the payment of such Claims, money in an amount
sufficient to pay the same, together with interest and penalties in connection
therewith, and all Claims which may be assessed against or become a Claim on the
applicable Leased Property, or any part thereof, in said legal proceedings.
Tenant shall furnish Landlord and any lender to Landlord and any other party
entitled to assert or enforce any Legal Requirements or Insurance Requirements
with evidence of such deposit within fifteen (15) days of the same. Landlord
agrees to join in any such proceedings if the same be required to legally
prosecute such contest of the validity of such Claims; provided, however, that
Landlord shall not thereby be subjected to any liability for the payment of any
costs or expenses in connection with any such proceedings; and Tenant covenants
to indemnify and save harmless Landlord from any such costs or expenses,
including but not limited to attorney's fees incurred in any arbitration
proceeding, trial, appeal and post-judgment enforcement proceedings. Tenant
shall be entitled to any refund of any Claims and such charges and penalties or
interest thereon which have been paid by Tenant or paid by Landlord and for
which Landlord has been fully reimbursed. If Tenant fails to pay or satisfy the
requirements or conditions of any Claims when finally determined to be due or to
provide the security therefor as provided in this paragraph and to diligently
prosecute any contest of the same, Landlord may, upon thirty (30) days advance
written Notice to Tenant, pay such charges or satisfy such claims together with
any interest and penalties and the same (or the cost thereof) shall be repayable
by Tenant to Landlord forthwith as Additional Charges. If Landlord reasonably
determines that a shorter period is necessary in order to prevent loss to the
applicable Leased Property or avoid damage to Landlord that Landlord reasonably
believes will not be reimbursed by Tenant, then Landlord shall give such written
Notice as is practical under the circumstances.
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12.2 LANDLORD'S REQUIREMENT FOR DEPOSITS. Upon and at any time after an
Event of Default, and regardless of whether or not Tenant subsequently cures
such Event of Default, Landlord, in its sole discretion, shall be entitled to
require Tenant to pay monthly a pro rata portion of the amounts required to
comply with the Insurance Requirements, any Imposition and any Legal
Requirements, and when such obligations become due, Landlord shall pay them (to
the extent of the deposit) upon Notice from Tenant requesting such payment. If
sufficient funds have not been deposited to cover the amount of the obligations
due at least thirty (30) days in advance of the due date, Tenant shall forthwith
deposit the same with Landlord upon written request from Landlord. Landlord
shall not commingle such deposited funds with its other funds, and Tenant shall
be entitled to any interest paid on any deposit so held by Landlord unless and
except to the extent that Landlord, having the right to do so by the terms of
this Lease, applies such interest to Tenant's obligations hereunder. Upon an
Event of Default under this Lease, any of the funds remaining on deposit may be
applied under this Lease, in any manner and on such priority as is determined by
Landlord and after five (5) days Notice to Tenant.
ARTICLE 13
INSURANCE
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term, Tenant shall at all
times keep the Leased Property and all property located in or on the applicable
Leased Property, including all Personal Property, insured with the kinds and
amounts of insurance described below. This insurance shall be written by
companies authorized to do insurance business in the State. All such policies
provided and maintained during the Term shall be written by companies having a
rating classification of not less than "A-" and a financial size category of
"Class X," according to the then most recent issue of Best's Key Rating Guide.
The policies (other than Workers' Compensation policies) shall name Landlord as
an additional insured. Losses shall be payable to Landlord and Tenant and
disbursed as provided in Article 14. Tenant shall pay when due all of the
premiums for the insurance required hereunder, and deliver certificates thereof
(in form and substance reasonably satisfactory to Landlord) to Landlord prior to
their effective date, or, with respect to any renewal policy, prior to the
expiration of the existing policy. In the event of the failure of Tenant either
to effect such insurance as herein called for or to pay the premiums therefor,
or to deliver such certificates thereof to Landlord at the times required,
Landlord shall be entitled, but shall have no obliga tion, to effect such
insurance and pay the premiums therefor when due, which premiums shall be
repayable to Landlord upon written demand therefor as Rent, and failure to repay
the same within thirty (30) days after Notice shall constitute an Event of
Default. The policies on each Leased Property, including the Leased Improvements
and Fixtures, and on the Personal Property, shall insure against the following
risks:
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13.1.1 Loss or damage by fire, vandalism and malicious mischief,
earthquake (if available at commercially reasonable rates) and extended coverage
perils commonly known as "Special Risk," and all physical loss perils normally
included in such Special Risk insurance, including but not limited to sprinkler
leakage, in an amount not less than ninety percent (90%) of the then full
replacement cost thereof (as defined in Section 13.2 hereof);
13.1.2 Loss or damage by explosion of steam boilers, pressure vessels
or similar apparatus, now or hereafter installed in the applicable Facility;
13.1.3 Loss of rental included in a business income or rental value
insurance policy covering risk of loss during reconstruction necessitated by the
occurrence of any of the hazards described in Sections 13.1.1 or 13.1.2 hereof
(but in no event for a period of less than twelve (12) months) in an amount
sufficient to prevent either Landlord or Tenant from becoming a co-insurer;
13.1.4 Claims for personal injury or property damage under a policy of
commercial general public liability insurance with a combined single limit per
occurrence in respect of bodily injury and death and property damage of One
Million Dollars ($1,000,000), and an aggregate limitation of Three Million
Dollars ($3,000,000), which insurance shall include contractual liability
insurance;
13.1.5 Claims arising out of professional malpractice in an amount not
less than One Million Dollars ($1,000,000) for each occurrence and an aggregate
limit of Three Million Dollars ($3,000,000);
13.1.6 Flood (when the applicable 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;
13.1.7 During such time as Tenant is constructing any improvements,
Tenant, at its sole cost and expense, shall carry or cause to be carried (a)
workers' compensation insurance and employers' liability insurance covering all
persons employed in connection with the improvements in statutory limits, (b) a
completed operations endorsement to the commercial general liability insurance
policy referred to above, and (c) builder's risk insurance, completed value
form, covering all physical loss, in an amount and subject to policy conditions
reasonably satisfactory to Landlord;
13.1.8 Tenant shall procure, and at all times during the Term of this
Lease shall maintain, a policy of primary automobile liability insurance with
limits of One Million Dollars ($1,000,000) per occurrence for owned and
non-owned and hired vehicles; and
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13.1.9 If Tenant chooses to carry umbrella liability coverage to
obtain the limits of liability required hereunder, all such policies must cover
in the same manner as the primary commercial general liability policy and must
contain no additional exclusions or limitations materially different from those
of the primary policy.
13.2 REPLACEMENT COST. The term "full replacement cost" means the actual
replacement cost of the applicable Leased Improvements, Fixtures and Landlord's
Personal Property, including an increased cost of construction endorsement, less
exclusions provided in the standard form of fire insurance policy. In all
events, full replacement cost shall be an amount sufficient that neither
Landlord nor Tenant is deemed to be a co-insurer of the applicable Leased
Property. If Landlord in good faith believes that full replacement cost (the
then replacement cost less such exclusions) of any Leased Property has increased
at any time during the Term, it shall have the right, upon Notice to Tenant, to
have such full replacement cost reasonably redetermined by an Impartial
Appraiser. The determination of the Impartial Appraiser shall be final and
binding on Landlord and Tenant, and Tenant shall forthwith adjust the amount of
the insurance carried pursuant to this Section, as the case may be, to the
amount so determined by the Impartial Appraiser. Landlord and Tenant shall pay
the fee, if any, of the Impartial Appraiser.
13.3 WORKER'S COMPENSATION INSURANCE. Tenant shall at all times maintain
workers' compensation insurance coverage for all persons employed by Tenant on
the applicable Leased Property to the extent required under and in accordance
with applicable law.
13.4 WAIVER OF LIABILITY; WAIVER OF SUBROGATION. Landlord shall have no
liability to Tenant, and, provided Tenant carries the insurance required by this
Lease, Tenant shall have no liability to Landlord, regardless of the cause, for
any loss or expense resulting from or in connection with damage to or the
destruction or other loss of any Leased Property or Tenant's Personal Property,
and no party will have any right or claim against the other for any such loss or
expense by way of subrogation. Each insurance policy carried by Landlord or
Tenant covering any Leased Property and Tenant's Personal Property, including
without limitation, contents, fire and casualty insurance, shall expressly waive
any right of subrogation on the part of the insurer, if such a waiver is
commercially available at reasonable rates. Tenant shall pay any additional
costs or charges for obtaining such waivers; provided, however, Landlord shall
pay the costs or charges for obtaining any such waivers on any insurance policy
carried by Landlord.
13.5 OTHER REQUIREMENTS. The form of all of the policies of insurance
referred to in this Article shall be the standard forms issued by the respective
insurers meeting the specific requirements of this Lease. The property loss
insurance policy shall contain a Replacement Cost Endorsement. If Tenant obtains
and maintains the professional malpractice insurance described in Section 13.1.5
hereof on a "claims-made" basis, Tenant shall provide continuous liability
coverage for claims arising during the Term either by obtaining an endorsement
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providing for an extended reporting period reasonably acceptable to Landlord in
the event such policy is canceled or not renewed for any reason whatsoever, or
by obtaining "tail" insurance coverage converting the policies to "occurrence"
basis policies providing coverage for a period of at least three (3) years
beyond the expiration of the Term. Tenant shall cause each insurer mentioned in
this Article 13 to agree, by endorsement on the policy or policies issued by it,
or by independent instrument furnished to Landlord, that it will give to
Landlord at least thirty (30) days' written notice before the policy or policies
in question shall be materially altered or canceled. If requested by Landlord,
and if available at a commercially reasonable cost, all public liability and
property damage insurance shall contain a provision that Landlord, although
named as an insured, shall nevertheless be entitled to recovery under said
policies for any loss, damage, or injury to Landlord, its servants, agents and
employees by reason of the negligence of Tenant or Landlord.
13.6 INCREASE IN LIMITS. If, from time to time after the Commencement Date,
Landlord determines in the exercise of its reasonable business judgment that the
limits of the personal injury or property damage - public liability insurance
then carried are insufficient, Landlord may give Tenant Notice of acceptable
limits for the insurance to be carried, which limits shall be reasonable in
light of the limits required by Landlord of other of its borrowers and Tenant
with respect to similar portfolios at such time; and the insurance shall
thereafter be carried with limits as prescribed by Landlord until further
increase pursuant to the provisions of this Section.
13.7 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Article 13, Tenant's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant; provided, however, that the coverage
afforded Landlord will not be reduced or diminished or otherwise be materially
different from that which would exist under a separate policy meeting all other
requirements hereof by reason of the use of the blanket policy, and provided
further that the requirements of this Article 13 are otherwise satisfied, and
provided further that Tenant maintain specific allocations acceptable to
Landlord.
13.8 NO SEPARATE INSURANCE.
13.8.1 Tenant shall not, on its 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, to be furnished by, or which may reasonably be required to be
furnished by, Tenant, or increase the amount of any then existing insurance by
securing an additional policy or additional policies, unless all parties having
an insurable interest in the subject matter of the insurance, including in all
cases Landlord, are included therein as additional insureds, and the loss is
payable under said insurance in the same manner as losses are payable under this
Lease.
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13.8.2 Nothing herein shall prohibit Tenant from (a) securing
insurance required to be carried hereby with higher limits of liability than
required in this Lease, (b) securing umbrella policies or (c) insuring against
risks not required to be insured pursuant to this Lease, and as to such
insurance, Landlord need not be included therein as an additional insured, nor
must the loss thereunder be payable in the same manner as losses are payable
under this Lease. Tenant shall immediately notify Landlord of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then existing insurance.
ARTICLE 14
CASUALTY LOSS
14.1 INSURANCE PROCEEDS. All Net Proceeds payable under any risk policy of
insurance required by Article 13 of this Lease, whether or not paid directly to
Landlord and/or Tenant, shall promptly be deposited with or paid over to an
insurance company, title insurance company or other financial institution
reasonably selected by Landlord and disbursed as provided in this Lease. If the
Net Proceeds are equal to or less than the Approval Threshold, and if no Event
of Default has occurred and is continuing, the Net Proceeds shall be paid to
Tenant promptly upon Tenant's completion of any restoration or repair, as the
case may be, of any damage to or destruction of the Leased Property or any
portion thereof. If the Net Proceeds exceed the Approval Threshold, and if no
Event of Default has occurred and is continuing, the Net Proceeds shall be made
available for restoration or repair, as the case may be, of any damage to or
destruction of the applicable Leased Property or any portion thereof as provided
in Section 14.10 hereof; provided, however, that, within fifteen (15) days of
the receipt of the Net Proceeds, Landlord and Tenant shall agree as to the
portion thereof attributable to the Personal Property (and failing such shall
submit the matter to arbitration pursuant to the provisions of this Lease) and
those Net Proceeds which the parties agree are payable by reason of any loss or
damage to any of Tenant's Personal Property shall be disbursed to Tenant.
14.2 RESTORATION IN THE EVENT OF DAMAGE OR DESTRUCTION.
14.2.1 If any Leased Improvements are totally or partially damaged or
destroyed and the Facility thereon is thereby rendered Unsuitable for its
Primary Intended Use, Tenant shall give Landlord Notice of such damage or
destruction within fifteen (15) Business Days of the occurrence thereof. Within
ninety (90) days of such occurrence, Tenant shall commence and thereafter
diligently proceed to complete the restoration of the damaged or destroyed
Leased Improvements to substantially the same (or better) condition as that
which existed immediately prior to such damage or destruction.
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14.2.2 If any Leased Improvements are totally or partially damaged or
destroyed, but the Facility thereon is not thereby rendered Unsuitable for its
Primary Intended Use, Tenant shall give Landlord Notice of such damage or
destruction within fifteen (15) Business Days of the occurrence thereof, and,
within ninety (90) days of the occurrence, Tenant shall commence and thereafter
diligently proceed to restore the Leased Improvements within the Reconstruction
Period to substantially the same (or better) condition as that which existed
immediately prior to such damage or destruction.
14.2.3 No such damage or destruction shall terminate this Lease as to
the affected Facility; provided, however, that if Tenant, after diligent effort,
cannot within a reasonable time obtain all necessary government approvals,
including building permits, licenses, conditional use permits and any
certificates of need, in order to be able to perform all required repair and
restoration work and thereafter to operate the Leased Improvements for the
Primary Intended Use thereof in substantially the same manner as that existing
immediately prior to such damage or destruction, Tenant shall purchase the
Facility or Leased Property on which the damaged or destroyed Leased
Improvements are located for the Facility Purchase Price, which shall be
determined as of the day of the damage or destruction.
14.3 INTENTIONALLY OMITTED.
14.4 TENANT'S PERSONAL PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Tenant's Personal Property shall be paid to
Tenant.
14.5 RESTORATION OF TENANT'S PROPERTY. If Tenant is required to restore the
Leased Property as provided in Section 14.2 hereof, Tenant shall also restore or
replace all alterations and improvements made by Tenant and all of the Personal
Property, to the extent required to maintain the then current license of the
applicable Leased Property.
14.6 NO ABATEMENT OF RENT. Except as to any Facility or Leased Property
purchased by Tenant pursuant to this Article 14, as to which this Lease shall
terminate upon the closing of such purchase, this Lease shall remain in full
force and effect and Tenant's obligation to pay Rent shall continue without
abatement during any period required for repair and restoration.
14.7 CONSEQUENCES OF PURCHASE OF DAMAGED LEASED PROPERTY. If Tenant
purchases a damaged Facility or Leased Property pursuant to the provisions of
this Article 14, this Lease shall terminate as to such Facility upon payment of
the price set forth herein, Landlord shall remit to Tenant any and all Net
Proceeds pertaining to the purchased Facility or Leased Property being held by
Landlord, and the Base Rent shall be reduced by the Facility Rental Value of the
purchased Facility or Leased Property, determined as of the day prior to the
date of the damage or destruction to such Facility.
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14.8 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Section
14.2 hereof, if damage to or destruction of any Leased Improvements occurs
during the last twelve (12) months of the Term of this Lease, and if, as
reasonably estimated by a qualified construction consultant selected by Tenant
and approved by Landlord (which approval shall not unreasonably be withheld),
such damage or destruction cannot be fully repaired and restored within six (6)
months immediately following the date of loss, then Tenant shall have the
option, which Tenant shall exercise by written notice to Landlord within thirty
(30) days of such damage or destruction, to (a) restore the damaged Facility or
Leased Property within the remaining twelve (12) months of the Term of this
Lease, or (b) to purchase the Facility or Leased Property on which the damaged
or destroyed Leased Improvements are located from Landlord, within sixty (60)
days following the date of the damage or destruction, for the Facility Purchase
Price, which shall be determined as of the day prior to the date of the damage
or destruction.
14.9 WAIVER. Except as specifically provided elsewhere herein, Tenant
hereby waives any statutory or common law rights of termination which may arise
by reason of any damage to or destruction of any Facility.
14.10 PROCEDURE FOR DISBURSEMENT OF INSURANCE PROCEEDS GREATER THAN THE
APPROVAL THRESHOLD. If Tenant restores or repairs the damaged Facility or Leased
Property pursuant to any Subsection of this Article 14 and if the Net Proceeds
exceed the Approval Threshold, the restoration or repair shall be performed in
accordance with the following procedures:
(a) The restoration or repair work shall be done pursuant to plans and
specifications approved by Landlord (not to be unreasonably withheld or
delayed), and Tenant shall cause to be prepared and presented to Landlord a
construction statement, certified by Tenant and reasonably acceptable to
Landlord, showing the total estimated cost of the restoration or repair.
(b) The Construction Funds shall be made available to Tenant as the
restoration and repair work progresses pursuant to certificates of an
architect selected by Tenant that in the reasonable judgment of Landlord is
qualified in the design and construction of health care facilities, or of
the type of property for which the repair work is being done.
(c) There shall be delivered to Landlord, with such certificates,
sworn statements and lien waivers from the general contractor and major
subcontractors (i.e., those having contracts of Two Hundred Thousand
Dollars ($200,000.00) or more), in the form customary for the applicable
State, in an amount at least equal to the amount of Construction Funds to
be paid out to Tenant pursuant to each architect's certificate and dated as
of the date of the disbursement to which they relate.
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(d) There shall be delivered to Landlord such other evidence as
Landlord may reasonably request, from time to time, during the restoration
and repair, as to the progress of the work, compliance with the approved
plans and specifications, the cost of restoration and repair and the total
amount needed to complete the restoration and repair.
(e) There shall be delivered to Landlord such other evidence as
Landlord may reasonably request, from time to time, showing that there are
no liens against the applicable Leased Property arising in connection with
the restoration and repair and that the cost of the restoration and repair
at least equals the total amount of Construction Funds then disbursed to
Tenant hereunder.
(f) If the Construction Funds are at any time determined by Landlord
not to be adequate for completion of the restoration and repair, Tenant
shall demonstrate to Landlord, upon request, that Tenant has sufficient
funds available to cover the difference, and shall disburse such funds pari
passu with the Construction Funds.
(g) The Construction Funds may be disbursed by the depository thereof
to Tenant or, at Tenant's direction, to the persons entitled to receive
payment thereof from Tenant, and such disbursement in either case may, at
Landlord's discretion, reasonably exercised, be made directly or through a
third party escrow agent, such as, but not limited to, a title insurance
company, or its agent. Provided no Event of Default has occurred and is
continuing, any excess Construction Funds shall be paid to Tenant upon
completion of the restoration or repair.
(h) If Tenant at any time fails to promptly and fully perform the
conditions and covenants set out in subparagraphs (a) through (f) hereof,
and the failure is not corrected within thirty (30) days of written Notice
thereof, or if during the restoration or repair an Event of Default occurs
hereunder, Landlord may, at its option, immediately cease making any
further payments to Tenant for the restoration and repair.
(i) Landlord may reimburse itself out of the Construction Fund for its
reasonable and documented expenses of consultants, attorneys and its
employee- inspectors incurred in administering the Construction Funds as
hereinbefore provided.
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ARTICLE 15
TAKINGS
15.1 TOTAL TAKING. If title to the fee of the whole of any Facility or
Leased Property shall be acquired by any Condemnor as the result of a Taking,
this Lease shall cease and terminate as to such Facility or Leased Property as
of the Date of Taking by said Condemnor, and the Base Rent payable by Tenant
hereunder shall be reduced, as of the date the Lease shall have been so
terminated as to such Facility or Leased Property, by the Facility Rental Value
of the Facility taken.
15.2 ALLOCATION OF PORTION OF AWARD. The Award made with respect to the
Taking of all or any portion of any Leased Property or for loss of rent shall be
the property of and payable to Landlord up to the sum of (a) all costs and
expenses reasonably incurred and documented by Landlord in connection with the
Taking, (b) any loss of Rent suffered by Landlord as a result of the Taking
(except for any Rent accruing after the completion of a purchase by Tenant of
the affected Facility upon a Partial Taking as hereinafter provided) and (c) in
the case of a Taking of the entire Facility, the Facility Purchase Price as of
the time possession is delivered to the Condemnor. To the extent that the laws
of the State in which the applicable Facility is located permit Tenant to make a
claim for Tenant's leasehold interest, moving expenses, loss of goodwill or
business, and Tenant's claim does not have the effect, directly or indirectly,
of reducing Landlord's claim, Tenant shall have the right to pursue such claim
in the Taking proceeding and shall be entitled to the Award therefor. In any
Taking proceedings, Landlord and Tenant shall each seek its own Award, at its
own expense.
15.3 PARTIAL TAKING. In the event of a Partial Taking of a Facility, Tenant
shall commence and diligently proceed to restore the untaken portion of the
Leased Improvements on the applicable Leased Property so that such Leased
Improvements shall constitute a complete architectural unit (if applicable) of
the same general character and condition (as nearly as may be possible under the
circumstances) as the Leased Improvements existing immediately prior to such
Partial Taking; provided, however, that if a Partial Taking renders a Facility
Unsuitable for Its Primary Intended Use, Tenant shall have the right,
exercisable by written notice to Landlord within thirty (30) days after such
Partial Taking is final without appeal permitted, and before the Condemnor takes
possession, to purchase the affected Facility for the Facility Purchase Price,
which purchase shall be completed within ninety (90) days of such notice.
Landlord shall contribute to the cost of restoration, or if Tenant elects to
purchase the affected Facility, Landlord shall pay over to Tenant, any Award
payable to Landlord for such Partial Taking; provided, however, that the amount
of such contribution shall not exceed the cost of restoration. If (a) Tenant
elects to restore the Facility, (b) no Event of Default is then continuing and
(c) the Award is equal to or less than the Approval Threshold, then Landlord's
contribution shall be made to Tenant prior to the commencement of the
restoration. If (a) Tenant elects to restore the Facility, (b) no Event of
Default is then continuing and (c)
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the Award is more than the Approval Threshold, then Landlord shall make the
Award available to Tenant in the manner provided in Section 14.10 hereof for
insurance proceeds in excess of the Approval Threshold. The Base Rent shall be
reduced by reason of such Partial Taking to an amount agreed upon by Landlord
and Tenant, and if Landlord and Tenant cannot agree upon a new Base Rent, the
new Base Rent amount shall be equal to the Base Rent prior to the Partial
Taking, reduced in proportion to the reduction in the Fair Rental Value of the
affected Facility or Leased Property resulting from the Partial Taking.
15.4 TEMPORARY TAKING. In the event of a temporary Taking of the Leased
Property or any part thereof that is for a period of less than six (6) months,
this Lease shall not terminate with respect to the affected Leased Property, and
the entire amount of any Award therefor shall be paid to Tenant. Upon the
cessation of any such Taking of less than six (6) months, Tenant shall restore
the Leased Property as nearly as may be reasonably possible to the condition
existing immediately prior to such Taking. If any such Taking continues for six
(6) months or more, such Taking shall be considered a Taking governed by Section
15.1 through 15.3 hereof, and the parties shall have the rights provided
thereunder.
ARTICLE 16
CONSEQUENCES OF EVENTS OF DEFAULT
16.1 EVENTS OF DEFAULT. Upon the occurrence of an Event of Default,
Landlord shall have the rights and remedies hereinafter provided (provided,
however, that if an Event of Default is cured prior to the exercise of any
remedies by Landlord, it shall cease to be such for purposes of this Lease).
16.2 LANDLORD'S RIGHTS UPON TENANT'S DEFAULT. If an Event of Default occurs
with respect to this Lease, Landlord may terminate this Lease by giving Tenant
Notice, whereupon as provided herein, the Term of this Lease shall terminate and
all rights of Tenant hereunder shall cease. The Notice provided for herein shall
be in lieu of, and not in addition to, any notice required by the laws of the
respective States in which the Leased Properties are located as a condition to
bringing an action for possession of any of the Leased Properties or to recover
damages under this Lease. In addition thereto, Landlord shall have all rights at
law and in equity available as a result of Tenant's breach.
16.3 LIABILITY FOR COSTS AND EXPENSES. Tenant will, to the extent permitted
by law, be liable for the payment, as Additional Charges, of reasonable and
documented costs of and expenses incurred by or on behalf of Landlord as a
consequence of an Event of Default, including, without limitation, reasonable
attorneys' fees (whether or not litigation is commenced, and if litigation is
commenced, including fees and expenses incurred in appeals and post-judgment
proceedings).
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16.4 CERTAIN REMEDIES. If an Event of Default has occurred, and whether or
not this Lease has been terminated, Tenant shall, to the extent permitted by
law, if required by Landlord so to do, immediately surrender to Landlord the
Leased Properties and quit the same, and Landlord may enter upon and repossess
the respective Leased Properties by legal process, and may remove Tenant and all
other persons and any and all Personal Property from the respective Leased
Properties, subject to rights of any residents or patients and to any
requirement of law.
16.5 DAMAGES. None of (a) the termination of this Lease pursuant to Section
16.1 hereof, (b) the repossession of any Leased Property, (c) the failure of
Landlord to relet any Leased Property, (d) the reletting of all or any portion
thereof or (e) the failure of Landlord to collect or receive any rentals due
upon any reletting shall relieve Tenant of its liability and obligations
hereunder, all of which shall survive such termination, repossession or
reletting. In the event of any termination, Tenant shall forthwith pay to
Landlord all Rent due and payable with respect to the Leased Properties to and
including the date of the termination. At Landlord's option, as and for
liquidated and agreed current damages for Tenant's default, Tenant shall also
forthwith pay to Landlord:
(i) the sum of:
(A) the Worth at the Time of the Award of the amount by which the
unpaid Rent which would have been earned after termination until the time
of the award exceeds the aggregate Rental Value of the Leased Properties
for such period, and
(B) the Worth at the Time of the Award of the amount by which the
unpaid Rent for the balance of the Term after the time of the award exceeds
the aggregate Rental Value of the Leased Properties for such period, and
(C) any other amount necessary to compensate Landlord for all the
damage proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom; or
(ii) without termination of Tenant's right to possession of the respective
Leased Properties, each installment of the Rent and other sums payable
by Tenant to Landlord under this Lease as the same becomes due and
payable, which Rent and other sums shall bear interest at the Overdue
Rate from the date when due until paid, and Landlord may enforce, by
action or otherwise, any other term or covenant of this Lease.
16.6 WAIVER. If this Lease is terminated pursuant to Section 16.2 hereof,
Tenant waives the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
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16.7 APPLICATION OF FUNDS. Any payments received by Landlord during the
existence or continuance of any Event of Default (and any payment made to
Landlord rather than Tenant due to the existence of an Event of Default) shall
be applied to Tenant's obligations in the order which Landlord may determine or
as may be prescribed by the laws of the respective States in which the Leased
Properties are located.
ARTICLE 17
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
If Tenant fails to make any payment or to perform any act required to
be made or performed under this Lease, and fails to cure the same within the
relevant time periods provided in the definition of Event of Default in Section
2.1 hereof or elsewhere in this Lease, Landlord may (but shall not be obligated
to), after five (5) days' prior Notice to Tenant (except in an emergency), and
without waiving or releasing any obligation of Tenant or any Event of Default,
at any time thereafter make such payment or perform such act for the account and
at the expense of Tenant, and may, to the extent permitted by law, enter upon
the respective Facilities for such purpose and take all such action thereon as,
in Landlord's sole opinion, may be necessary or appropriate therefor. However,
if Landlord reasonably determines that the giving of such Notice as is provided
for in this Article or elsewhere in this Lease would risk loss to any Leased
Property or cause damage to Landlord, then Landlord will give such Notice as is
practical under the circumstances. No such entry shall be deemed an eviction of
Tenant. All sums so paid by Landlord and all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) so
incurred, together with the late charge and interest provided for in Section 3.3
thereon from the date on which such sums or expenses are paid or incurred by
Landlord, shall be paid by Tenant to Landlord on demand and shall constitute
Additional Charges. The obligations of Tenant and rights of Landlord contained
in this Article shall survive the expiration or earlier termination of this
Lease for a period of three (3) years thereafter.
ARTICLE 18
CERTAIN ENVIRONMENTAL MATTERS
18.1 PROHIBITION AGAINST USE OF HAZARDOUS SUBSTANCES. Tenant shall not
permit, conduct or allow on any of the Leased Properties the generation,
introduction, presence, maintenance, use, receipt, acceptance, treatment,
manufacture, production, installation, management, storage, disposal or release
of any Hazardous Substance, except for those types and quantities of Hazardous
Substances ordinarily associated with the operation of the Leased Property as it
is being conducted on the date of this Lease and except in compliance with
42
Environmental Laws; provided, however, that the asbestos-containing materials,
the underground storage tanks and the other Hazardous Substances that currently
are located in, on, under or about the respective Leased Properties, in each
case as disclosed in the Environmental Audits delivered by Tenant to Landlord
prior to the date of this Lease, shall be permitted to remain in place, except
as required by the Facilities Purchase Agreement.
18.2 NOTICE OF ENVIRONMENTAL CLAIMS, ACTIONS OR CONTAMINATIONS. Tenant will
notify Landlord, in writing, promptly upon learning of any existing, pending or
threatened: (a) Regulatory Actions, (b) Contamination of any Leased Property,
(c) Third Party Claims or (d) violation of Environmental Law.
18.3 COSTS OF REMEDIAL ACTIONS WITH RESPECT TO ENVIRONMENTAL MATTERS. If
any investigation and/or Clean-Up of any Hazardous Substance or other
environmental condition on, under, about or with respect to any Leased Property
is required by any Environmental Law and by the terms of this Lease is within
the scope of Tenant's responsibility, then Tenant shall complete, at its own
expense, such investigation and/or Clean-Up or cause each person responsible for
any of the foregoing to conduct such investigation and/or Clean-Up.
18.4 DELIVERY OF ENVIRONMENTAL DOCUMENTS. If and to the extent not
delivered to Landlord prior to the date of this Lease, Tenant shall deliver to
Landlord complete copies of any and all Environmental Documents that may now be
in, or at any time hereafter come into, the possession of Tenant.
18.5 ENVIRONMENTAL AUDIT. At Landlord's expense, Tenant shall from time to
time, but in no case more often than annually, after Landlord's request
therefor, provide to Landlord an Environmental Audit with respect to each of the
Leased Properties. All tests and samplings in connection with an Environmental
Audit shall be conducted using generally accepted and scientifically valid
technology and methodologies. Tenant shall give the engineer or environmental
consultant conducting the Environmental Audit reasonable access to the
applicable Leased Property and to all records in the possession of Tenant that
may indicate the presence (whether current or past) or a Release or threatened
Release of any Hazardous Substances on, in, under or about the applicable Leased
Property. Tenant shall also provide the engineer or environmental consultant an
opportunity to interview such persons employed in connection with the applicable
Leased Property as the engineer or consultant deems reasonably appropriate.
However, Landlord shall not be entitled to request such Environmental Audit from
Tenant unless (a) there have been any material changes, modifications or
additions to any Environmental Laws as applied to or affecting the applicable
Leased Property; (b) a significant change in the condition of the applicable
Leased Property has occurred; or (c) Landlord has another reasonable basis for
requesting such certificate or certificates. If an Environmental Audit discloses
the presence of Contamination at, or any noncompliance with Environmental Laws
by, any Leased Property, Tenant shall immediately perform all of Tenant's
obligations hereunder with respect to such Hazardous Substances or
noncompliance.
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18.6 ENTRY ONTO LEASED PROPERTY FOR ENVIRONMENTAL MATTERS. If Tenant fails
to provide to Landlord an Environmental Audit as contemplated by Section 18.5
hereof, Tenant shall permit Landlord from time to time, by its employees,
agents, contractors or representatives, to enter upon the applicable Leased
Property for the purposes of conducting such Investigations as Landlord may
desire. Landlord and its employees, agents, contractors, consultants and/or
representatives shall conduct any such Investigation in a manner which does not
unreasonably interfere with Tenant's use of and operations on the applicable
Leased Property (however, reasonable temporary interference with such use and
operations is permissible if the Investigation cannot otherwise be reasonably
and inexpensively conducted). Other than in an emergency, Landlord shall provide
Tenant with prior notice before entering the applicable Leased Property to
conduct such Investigation, and shall provide copies of any reports or results
to Tenant, and Tenant shall cooperate fully in such Investigation.
18.7 ENVIRONMENTAL MATTERS UPON TERMINATION OR EXPIRATION OF TERM OF THIS
LEASE. Upon the termination or expiration of the Term of this Lease, Tenant
shall cause the Leased Properties to be delivered to Landlord free of all
Contamination the removal of which is recommended by the Phase I Environmental
Survey (or the equivalent at the time) completed by the engineering firm chosen
by the parties or otherwise selected as provided below, and in compliance with
all Environmental Laws with respect thereto. At any time during (a) the one
hundred and eighty (180) days prior to, or the sixty (60) days subsequent to,
the expiration of the original Term hereof, if Tenant has not given the notice
required by Section 18.1 hereof in order to renew the Term or by the terms
hereof is not entitled to renew the Term, or, if the original Term has been
renewed, at any time during (b) the one hundred and eighty (180) days prior to,
or the sixty (60) days subsequent to, the expiration of the First Renewal Term
hereof, if Tenant has not given the notice required by Section 1.5 hereof in
order to renew the Term or by the terms hereof is not entitled to renew the
Term, or, if this Lease is terminated upon the occurrence of an Event of
Default, during (c) the sixty (60) days after the effective date of such
termination, Landlord may by written notice to Tenant specify a Cleanup to be
undertaken by Tenant, and upon receipt of such notice Tenant shall forthwith
begin and with reasonable diligence complete such Cleanup; provided, however,
that if Tenant in good faith disputes the need for such Cleanup on the grounds
that it is not required by any then applicable Environmental Laws, Tenant may by
written notice to Landlord demand an Environmental Audit of the Leased Property.
The Environmental Audit demanded by Tenant shall be performed by one of the
engineering firms listed on Exhibit H hereto or, if no such firms exist at the
time, by an engineering firm succeeding to the practice of one of such firms.
The question of whether or not a Cleanup is required by an applicable
Environmental Law, and, if so, the extent of such required Cleanup, shall be
determined by the conclusions reached in the Environmental Audit conducted by
the engineering firm so selected, and such determination shall be binding upon
the parties. The cost of such Environmental Audit shall be borne by Landlord if
the determination is that no Cleanup is required, or by Tenant if the
determination is that a Cleanup is required. Tenant shall promptly at its
expense complete any Cleanup determined by such process to be necessary.
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18.8 COMPLIANCE WITH ENVIRONMENTAL LAWS. Tenant shall comply with, and
cause its agents, servants and employees to comply with Environmental Laws
applicable to the respective Leased Properties. Specifically, but without
limitation:
(a) Maintenance of Licenses and Permits. Tenant shall obtain and
maintain all permits, certificates, licenses and other consents and
approvals required by any applicable Environmental Law from time to time
with respect to Tenant and the Leased Property leased by it;
(b) Contamination. No Tenant shall cause, suffer or permit any
Contamination in, on, under or about any Leased Property;
(c) Clean-Up. If Contamination occurs in, on, under or about any
Leased Property during the Term, Tenant promptly shall cause the Clean-Up
and the removal of any Hazardous Substance, and in any such case such
Clean-Up and removal of the Hazardous Substance shall be effected in strict
compliance with and in accordance with the provisions of the applicable
Environmental Laws;
(d) Discharge of Lien. Within forty-five (45) days of the date on
which Tenant becomes aware of any lien imposed against any Leased Property
or any part thereof under any Environmental Law (or, in the event that
under the applicable Environmental Law, Tenant is unable, acting
diligently, to do so within forty-five (45) days, then within such period
as is required for Tenant, acting diligently, to do so), Tenant shall cause
such lien to be discharged by payment, bond or otherwise;
(e) Notification of Landlord. Tenant shall notify Landlord in writing
promptly upon receipt by Tenant of notice of any breach or violation of any
environmental covenant or agreement; and
(f) Requests, Orders and Notices. Promptly upon receipt of any written
request, order or other notice relating to any Declaratory Action,
Contamination, Third Party Claims or Leased Property under any
Environmental Law concerning the Leased Property, Tenant shall forward a
copy thereof to Landlord.
18.9 ENVIRONMENTAL RELATED REMEDIES. If, subject to Tenant's right of
contest as set forth in Section 12.1 hereof, Tenant fails to perform any of its
covenants with respect to environmental matters and if such breach is not cured
within any applicable notice and/or grace period or within an additional thirty
(30) days after Landlord gives Notice to Tenant, Landlord may do any one or more
of the following (the exercise of one right or remedy hereunder not precluding
the simultaneous or subsequent taking of any other right hereunder):
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(a) Cause a Clean-Up. Cause the Clean-Up of any Contamination on or
under the applicable Leased Property, or both, at Tenant's cost and
expense; or
(b) Payment of Regulatory Damages. Pay, on behalf of Tenant, any
damages, costs, fines or penalties imposed on Tenant as a result of any
Regulatory Actions; or
(c) Payments to Discharge Liens. Make any payment on behalf of Tenant
or perform any other act or cause any act to be performed which will
prevent a lien in favor of any federal, state or local governmental
authority from attaching to the applicable Leased Property or which will
cause the discharge of any lien then attached to the applicable Leased
Property; or
(d) Payment of Third Party Damages. Pay, on behalf of Tenant, any
damages, cost, fines or penalties imposed on Tenant as a result of any
Third Party Claims, unless such Third Party Claims are being contested in
good faith in accordance with procedures similar to those contained in
Article 12 hereof; or
(e) Demand of Payment. Demand that Tenant make immediate payment of
all of the costs of such Clean-Up and/or exercise of the remedies set forth
in this Section 18.9 incurred by Landlord and not theretofore paid by
Tenant as of the date of such demand, whether or not such costs exceed the
amount of Rent and Additional Charges that are otherwise to be paid
pursuant to this Lease, and whether or not any court has ordered the
Clean-Up, and payment of said costs shall become immediately due, without
notice.
18.10 ENVIRONMENTAL INDEMNIFICATION. Tenant shall and does hereby agree to
indemnify, defend and hold harmless Landlord, its principals, officers,
directors, agents and employees from and against each and every incurred and
potential claim, cause of action, demand or proceeding, obligation, fine,
laboratory fee, liability, loss, penalty, imposition, settlement, xxxx, xxxx
removal, litigation, judgment, disbursement, expense and/or cost (including,
without limitation, the cost of each and every Clean-Up and including, but not
limited to, reasonable and documented attorneys' fees, consultants' fees,
experts' fees and related expenses, capital, operating and maintenance costs,
incurred in connection with (a) any investigation or monitoring of site
conditions at any Leased Property, (b) the presence of any asbestos-containing
materials in, on, under or about any Leased Property and (c) any Clean Up
required or performed by any federal, state or local governmental entity or
performed by any other entity or person because of the presence of any Hazardous
Substance, Release, threatened Release or any Contamination on, in, under or
about any Leased Property) which may be asserted against, imposed on, or
suffered or incurred by each and every Indemnitee arising out of or in any way
related to, or allegedly arising out of or due to any environmental matter,
including, but not limited to, any one or more of the following:
46
(i) Release Damage or Liability. The presence of Contamination in, on,
at, under or near any Leased Property or migrating to any Leased Property
from another location;
(ii) Injuries. All injuries to health or safety (including wrongful
death), or to the environment, by reason of environmental matters relating
to the condition of or activities past or present on, at, in or under any
Leased Property;
(iii) Violations of Law. All violations, and alleged violations, of
any Environmental Law by Tenant relating to any Leased Property or any
activity on, in, at, under or near any Leased Property;
(iv) Misrepresentation. All material misrepresentations relating to
environmental matters in any documents or materials furnished by Tenant to
Landlord and/or its representatives in connection with this Lease;
(v) Event of Default. Each and every Event of Default hereunder
relating to environmental matters;
(vi) Lawsuits. Any and all lawsuits brought or threatened against any
one or more of the Indemnitees, settlements reached and governmental orders
relating to any Hazardous Substances at, on, in, under or near any Leased
Property, and all demands or requirements of governmental authorities, in
each case based upon or in any way related to any Hazardous Substances at,
on, in or under any Leased Property; and
(vii) Presence of Liens. All liens imposed upon any Leased Property
and charges imposed on any Indemnitee in favor of any governmental entity
or any person as a result of the presence, disposal, release or threat of
release of Hazardous Substances at, on, in, from or under any Leased
Property.
If the matter that is the subject of a claim for indemnification by any
Indemnitee pursuant to this Section 18.10 arises or is in connection with a
claim, suit or demand filed by a third party, Tenant shall be entitled to
defend against such Claim with counsel reasonably satisfactory to the
applicable Indemnitee(s). The Indemnitee(s) may continue to employ counsel
of its own, but such costs shall be borne by the Indemnitee(s) as long as
Tenant continues to so defend. With respect to such Claims arising from
third parties (A) if an Indemnitee declines to accept a bona fide offer of
settlement that is recommended by Tenant, which settlement includes a full
and complete release of such Indemnitee from the subject Claim, the maximum
liability of Tenant arising from such claim shall not exceed that amount
for which it would have been liable had such settlement been accepted, and
(B) if an Indemnitee settles the subject Claim without the consent of
Tenant, the maximum liability of Tenant under
47
this Section arising from such Claim shall not exceed the fair and
reasonable settlement value of such Claim, determined by a third-party
expert retained by Tenant and approved by Landlord, which approval shall
not be unreasonably withheld.
18.11 RIGHTS CUMULATIVE AND SURVIVAL. The rights granted Landlord under
this Article are in addition to and not in limitation of any other rights or
remedies available to Landlord hereunder or allowed at law or in equity. The
obligations of Tenant to defend, indemnify and hold the Indemnitees harmless, as
set forth in this Article, arising as a result of an act, omission, condition or
other matter occurring or existing during the Term, whether or not the act,
omission, condition or matter as to which such obligations relate is discovered
during the Term, shall survive the expiration or earlier termination of the Term
of this Lease for a period of three (3) years thereafter.
ARTICLE 19
HOLDOVER MATTERS
19.1 HOLDING OVER. If Tenant remains in possession of a Leased Property
after the expiration of the Term or earlier termination of this Lease, such
possession shall be as a month-to-month tenant during which time Tenant shall
pay as rental each month one and one-half times the aggregate of (a) one-twelfth
of the aggregate Base Rent payable with respect to the applicable Leased
Property during the last Lease Year of the preceding Term, and (b) all
Additional Charges accruing during the month with respect to the applicable
Leased Property. Any interest, however, will be payable only at the rate
provided in this Lease and shall not exceed the maximum rate allowed by law.
During such period of month-to-month tenancy, Tenant shall be obligated to
perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies, to continue its occupancy and use of the
applicable Leased Property until the month-to-month tenancy is terminated.
Nothing contained herein shall constitute the consent, express or implied, of
Landlord to the holding over by Tenant after the expiration or earlier
termination of this Lease.
19.2 INDEMNITY. If Tenant fails to surrender a Leased Property in a timely
manner and in accordance with the provisions of Section 9.1.6 hereof upon the
expiration or termination of this Lease, in addition to any other liabilities to
Landlord accruing therefrom, Tenant shall indemnify and hold Landlord, its
principals, officers, directors, agents and employees harmless from loss or
liability resulting from such failure, including, without limiting the
generality of the foregoing, loss of rental with respect to any new lease in
which the rental payable thereunder exceeds any rental paid by Tenant pursuant
to this Lease and any claims by any proposed new tenant founded on such failure.
The provisions of this
48
Section 19.2 shall survive the expiration or termination of this Lease for a
period of three (3) years thereafter.
ARTICLE 20
SUBORDINATION; ATTORNMENT; ESTOPPELS
20.1 SUBORDINATION. Upon written request of Landlord, Tenant will
subordinate its rights pursuant to this Lease in writing (a) to the lien of any
mortgage, deed of trust or the interest of any lease in which Landlord is the
tenant and to all modifications, extensions, substitutions thereof (or, at
Landlord's option, cause the lien of said mortgage, deed of trust or the
interest of any lease in which Landlord is the tenant to be subordinated to this
Lease), and (b) to all advances made or hereafter to be made thereunder. As a
condition to each such subordination, Landlord shall deliver to Tenant a
non-disturbance agreement providing inter alia that, if such mortgagee,
beneficiary or Landlord acquires any of the Leased Properties by way of
foreclosure or deed in lieu, such mortgagee, beneficiary or Landlord will not
disturb Tenant's possession under this Lease and will recognize Tenant's rights
hereunder provided this Lease has not been terminated under Section 16.2 hereof.
20.2 ATTORNMENT. If any proceedings are brought for foreclosure, or if the
power of sale is exercised under any mortgage or deed of trust made by Landlord
encumbering any Leased Property, or if a lease in which Landlord is the tenant
is terminated, Tenant shall attorn to the purchaser or Landlord under such lease
upon any foreclosure or deed in lieu thereof, sale or lease termination and
recognize the purchaser or Landlord as Landlord under this Lease, provided that
the purchaser or Landlord acquires and accepts the applicable Leased Property
subject to, and upon the terms and conditions set forth in, this Lease.
20.3 ESTOPPEL CERTIFICATE. Each of Landlord and Tenant agrees, upon not
less than ten (10) days prior Notice from the other, to execute, acknowledge and
deliver to the other an Estoppel Certificate. It is intended that any Estoppel
Certificate delivered pursuant hereto may be relied upon by Landlord, Tenant,
any prospective tenant, subtenant, assignee or purchaser of the applicable
Leased Property, any mortgagee or prospective mortgagee, or by any other party
who may reasonably rely on such statement.
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ARTICLE 21
RISK OF LOSS
During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of any of the Leased Properties 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 those caused by Landlord and those claiming from,
through or under Landlord) is assumed by Tenant, and, in the absence of gross
negligence, willful misconduct or material breach of this Lease by Landlord,
Landlord shall in no event be answerable or accountable therefor nor shall any
of the events mentioned in this Section entitle Tenant to any abatement of Rent
under this Lease.
ARTICLE 22
INDEMNIFICATION
22.1 INDEMNIFICATION. Subject to Section 13.4 hereof, notwithstanding the
existence of any insurance or self-insurance provided for in Article 13 hereof,
and without regard to the policy limits of such insurance or self-insurance,
Tenant will, subject to Section 13.4 hereof, protect, indemnify, save harmless
and defend Landlord, its principals, partners, officers, directors,
shareholders, agents, and employees from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable and documented attorneys' fees and
expenses), to the maximum extent permitted by law, whenever asserted, or
incurred by or asserted against Landlord by reason of:
(a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Leased Property or adjoining
sidewalks, including without limitation any claims of malpractice;
(b) any use, misuse, non-use, condition, maintenance or repair by
Tenant of any Leased Property;
(c) the failure to pay Impositions which are the obligations of Tenant
under this Lease;
(d) any failure by Tenant to perform or comply with any of the terms
of this Lease;
(e) the nonperformance of any contractual obligation, express or
implied, assumed or undertaken by Tenant or any party in privity with
Tenant with respect to
50
any Leased Property or any business or other activity carried on with
respect to any Leased Property during the Term or thereafter during any
time in which Tenant or any such other party is in possession of any Leased
Property or thereafter to the extent that any conduct by Tenant or any such
person (or failure of such conduct thereby if the same should have been
undertaken during such time of possession and leads to such damage or loss)
causes such loss or claim;
(f) the use, operation, possession, or management of each of the
Facilities by Tenant before or after the Commencement Date and during the
Term of this Lease until the Lease Termination Date;
(g) the breach or by Tenant of any representation, or warranty in this
Lease;
(h) any and all Claims accruing before or after the Commencement Date
relating to any current or former employee, consultant or independent
contractor of Tenant or any of the Facilities, including, but not limited
to, the termination or discharge of any current or former employee,
consultant, or independent contractor of Tenant or any of the Facilities
before or after the Commencement Date, Claims under federal, state, or
local laws, rules or regulations, accruing before or after the Commencement
Date, related to wages, hours, fair employment practices, unfair labor
practices, or other terms and conditions of employment and claims arising
under the Worker Adjustment and Retraining Notification Act or any
analogous state statute, or matters arising from any severance policy,
claim, agreement or contract;
(i) any and all Claims with respect to any qualified or non-qualified
retirement or benefit plans or arrangements established before or after the
Commencement Date involving any employee, consultant or independent
contractor of Tenant or any of the Facilities;
(j) Facilities which were decertified under applicable Medicare or
Medicaid statutes and regulations by Tenant during the Term of this Lease;
and
(k) the removal of Tenant's Personal Property from any of the
Facilities.
Any amounts which become payable by Tenant under this Section shall be paid
within thirty (30) days after liability therefor on the part of Tenant is
finally determined by litigation or otherwise, 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. Nothing herein shall be construed
as indemnifying Landlord against its own grossly negligent acts or omissions or
willful misconduct.
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22.2 SURVIVAL OF INDEMNIFICATION; TENANT RIGHT TO DEFEND LANDLORD. Tenant's
liability under this Article shall survive any termination of this Lease for a
period of three (3) years thereafter. Tenant shall have the right (at Tenant's
expense) to defend Landlord against any such claim by counsel reasonably
acceptable to Landlord (who may also act as Tenant's counsel in the particular
matter, provided Landlord's and Tenant's interests are coincident and not
adverse to one another). Tenant shall apprise Landlord regularly as to the
status of the particular matter.
ARTICLE 23
LIMITATIONS ON TRANSFERS
23.1 GENERAL PROHIBITION AGAINST TRANSFER. Tenant shall not Transfer its
interest in this Lease or any Leased Property, except as specifically permitted
by this Lease or consented to in advance by Landlord in writing. Except to the
extent otherwise specified herein, the parties agree that Landlord may
arbitrarily and unreasonably withhold its consent to any such request and no
court shall imply any agreement by Landlord to act in a reasonable fashion. Any
such attempted Transfer not specifically permitted by this Lease or otherwise
approved by Landlord shall be null and void and of no force and effect; but in
the event of any such Transfer, Landlord may collect rent and other charges from
the Transferee and apply the amounts collected to the rent and other charges
herein reserved, but no Transfer or collection of rent and other charges shall
be deemed to be a waiver of Landlord's rights to enforce Tenant's covenants or
the acceptance of the Transferee as Tenant, or a release of Tenant from the
performance of any covenants on the part of Tenant to be performed.
Notwithstanding any Transfer, Tenant and any Guarantor shall remain fully liable
for the performance of all terms, covenants and provisions of this Lease, both
before and after any such Transfer. Any violation of this Lease by any
Transferee shall be deemed to be a violation of this Lease by Tenant.
23.2 CORPORATE OR PARTNERSHIP TRANSACTIONS. If Tenant or Guarantor is a
corporation, then the merger, consolidation or reorganization of such
corporation and/or the sale, issuance or transfer, cumulatively or in one
transaction, of any voting stock by Tenant or Guarantor or the stockholders of
record of any of them as of the date of this Lease which results in a change in
the voting control of Tenant or Guarantor shall constitute a Transfer, unless
there is no change in the senior management personnel of Tenant and Guarantor
listed on Exhibit G hereto. If Tenant or Guarantor is a joint venture,
partnership, limited liability company or other association, then the transfer
of or change in, cumulatively or in one transaction, voting control of or a
twenty percent (20%) or greater interest in such Tenant or Guarantor within any
five-year period, or the termination of such joint venture, partnership, limited
liability company or other association, shall constitute a Transfer, unless
there is no
52
change in the senior management personnel of Tenant and Guarantor listed on
Exhibit G hereto.
23.3 PERMITTED SUBLEASES. Subject to Section 23.4 hereof, Tenant shall have
the right to sublease up to ten percent (10%) of the floor area of a Facility in
the ordinary course of the health care business being conducted in such Facility
without Landlord's consent, and subject to Landlord's consent, which shall not
unreasonably be withheld or delayed an additional ten percent (10%) of the floor
area of such Facility.
23.4 TRANSFERS TO A CONTROLLED ENTITY. Notwithstanding anything to the
contrary herein contained, Tenant may without the prior consent of Landlord
Transfer its interest herein to an entity Controlled by THI on the condition
that (a) such entity expressly and in writing assumes all of the obligations and
liability of the Tenant hereunder, (b) such Transfer has no effect on the THI
Guaranty and THI confirms in writing that the THI Guaranty remains unchanged and
in full force and effect, (c) the stock of such entity (if a corporation) is at
the time of the Transfer pledged to Landlord to secure performance of its
obligations under this Lease, (d) all obligations of such entity to THI or any
Affiliate of THI, and all Debt of such entity to any third party, are
subordinated to its liability and obligations as Tenant hereunder and (e)
without the consent of Landlord, no such Transfer shall release the Tenant named
herein from liability hereunder.
23.5 SUBORDINATION AND ATTORNMENT. Tenant shall insert in any sublease
permitted by Landlord provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of Landlord hereunder, (b) if this Lease terminates before the expiration
of such sublease, the subtenant thereunder will, at Landlord's option, attorn to
Landlord and waive any right the subtenant may have to terminate the sublease or
to surrender possession thereunder as a result of the termination of this Lease,
and (c) if the subtenant receives a written Notice from Landlord or Landlord's
assignee, if any, stating that an Event of Default has occurred under this
Lease, the subtenant 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 subtenant by Landlord or Landlord's
assignees, if any, as the case may be, shall be credited against the amounts
owing by Tenant under this Lease.
23.6 SUBLEASE LIMITATION. Anything contained in this Lease to the contrary
notwithstanding, even if a sublease of a Leased Property is permitted, Tenant
shall not sublet the applicable Leased Property on any basis such that the
rental to be paid by the subtenant thereunder would be based, in whole or in
part, on either (a) the income or profits derived by the business activities of
the subtenant, or (b) any other formula such that any portion of the sublease
rental received by Landlord would fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Code, or any similar or successor
provision thereto. The parties agree that this Section shall not be deemed
waived or modified by implication, but may
53
be waived or modified only by an instrument in writing explicitly referring to
this Section by number.
ARTICLE 24
CERTAIN FINANCIAL MATTERS
24.1 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS. Tenant shall furnish
to Landlord:
(a) Quarterly Financials. As soon as available and in any event within
fifty-five (55) days after the end of each calendar quarter, an unaudited
operating statement for each of the Facilities for the period commencing at
the end of the previous quarter and ending with the end of such quarter,
together with an Officer's Certificate of Tenant stating that Tenant is not
in default of any covenant set forth in Article 8 hereof, or if Tenant is
in default, specifying all such defaults, the nature thereof and the steps
being taken to remedy the same.
(b) Annual Financials. As soon as available and in any event within
one hundred twenty (120) days after the end of each Fiscal Year, a
consolidated balance sheet of the Tenant as at the end of such Fiscal Year
and a consolidated operating statement for the Facilities for such Fiscal
Year, in each case accompanied by (i) an opinion acceptable to Landlord of
KPMG Peat Marwick or other independent public accountants of recognized
standing reasonably acceptable to Landlord and (ii) an Officer's
Certificate of Tenant stating that Tenant is not in default in the
performance or observance of any of the terms of this Lease, or if Tenant
is in default, specifying all such defaults, the nature thereof and the
steps being taken to remedy the same.
(c) Cost Reports. Upon the request of Landlord and no more than once
in each calendar year, Tenant shall furnish to Landlord complete and
accurate copies of the most recent annual Medicaid and Medicare cost
reports for the Facilities and any and all amendments filed with respect to
such reports and all responses, audit reports or inquiries with respect to
each such report.
(d) Licensing Agency Reports. Upon the reasonable request of Landlord
and no more than once during any calendar year, Tenant shall furnish to
Landlord a copy of the most recent federal and state agency surveys or
report and any statement of deficiencies with respect to the Facilities,
and within the time period required by the particular agency for furnishing
a plan of correction, and without the need of any request from Landlord,
Tenant shall also furnish to Landlord a copy of the plan of
54
correction generated from such survey or report for the Facilities, and
correct or cause to be corrected a deficiency, the curing of which is a
condition of continued licensure or for full participation in Medicare and
Medicaid for existing patients or for new patients to be admitted with
Medicare or Medicaid coverage, by the date required for cure by such agency
(plus extensions granted by such agency.)
(e) Notices. Tenant shall furnish to Landlord within ten (10) days
from its receipt, any and all notices (regardless of form) from any
licensing and/or certifying agency that a Facility's license or Medicare or
Medicaid certification of a Facility is being revoked or suspended.
(f) Patient Data. Within fifty-five (55) days of the end of each
fiscal quarter and to the extent not included in the operating statements
delivered pursuant to subsection (i), above, a statement of the actual
patient days incurred for the quarter, together with quarterly census
information for the Facilities as of the end of such quarter by patient-
mix (i.e., private, Medicare, Medicaid and V.A.) of the Facilities.
(g) Capital Budget. As soon as it is prepared in each Lease Year, a
capital budget for the Facilities for that and the following Lease Year,
for Landlord's information and not for approval;
(h) Other Information. With reasonable promptness, such other
information respecting the financial condition and affairs of Tenant, and
the Facilities as Landlord may reasonably request from time to time,
including, without limitation, any such other information as may be
available to the administration of the Facilities; and
(i) At times reasonably required by Landlord, and upon request as
appropriate, audited year-end information and unaudited quarterly financial
information concerning the Leased Properties and Tenant as Landlord may
require for its on-going filings with the SEC, under both the Securities
Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended, including, but not limited to, 10-Q Quarterly Reports, 10-K Annual
Reports, and registration statements to be filed by Landlord during the
Term of this Lease.
24.2 PUBLIC OFFERING INFORMATION. Tenant specifically agrees that Landlord
may include financial information and such other information concerning the
operation of the Facilities which does not violate the confidentiality of the
facility-patient relationship and the physician-patient privilege under
applicable laws, in offering memoranda or prospectuses, or similar publications
in connection with syndications or public offerings of Landlord's securities or
interests, and any other reporting requirements under applicable federal and
State laws, including those of any successor to Landlord. Tenant agrees to
provide such other reasonable information necessary with respect to Tenant and
the applicable Leased Property to facilitate a
55
public offering or to satisfy SEC or regulatory disclosure requirements.
Landlord shall provide to Tenant a copy of any information prepared by Landlord
to be so published, and Tenant shall have a reasonable period of time (not to
exceed three (3) days) after receipt of such information to notify Landlord of
any corrections. Landlord shall protect, indemnify, save harmless and defend
Tenant, its principals, officers, directors and agents and employees from and
against all liabilities, claims, damages, penalties, causes of action, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses), to the extent permitted by law, imposed upon or incurred by or
asserted against them by a third party or parties as a result of the publication
of any such audited financial statements by or at the direction of Landlord, but
not against any such liabilities, claims, damages, penalties, causes of action,
costs or expenses as may be suffered by Tenant, its principals, officers,
directors and agents and employees in or as a result of any action or proceeding
with respect to any such audited financial statement (a) in which a judgment is
entered against THI, Tenant, any Seller (as defined in the Facilities Purchase
Agreement) or any principal, officer, director, agent or employee thereof, or
(b) is settled in whole or in part on the basis of a payment of Ten Thousand
Dollars ($10,000.00) or more to the claimant or moving party in such proceeding
by THI, Tenant, any Seller or any principal, officer, director, agent or
employee thereof alone or in combination with any payment made by THI, Tenant,
any Seller or any principal, officer, director, agent or employee thereof (and
as to expenses previously paid by Landlord pursuant to the foregoing indemnity
prior to an event described in (a) or (b), hereof, Tenant shall repay such
expenses promptly after the event specified).
ARTICLE 25
LANDLORD INSPECTION
Tenant shall permit Landlord and its authorized representatives to
inspect, during normal business hours, at least once per Lease Year (a) the
respective Leased Properties and, (b) upon one Business Day's prior Notice,
which Notice shall set forth a reasonable cause for such inspection, Tenant's
books and records pertaining thereto (provided, however, that upon any Event of
Default, such Notice need not set forth any cause for such inspection). Tenant
shall remit to Landlord the sum of Two Thousand Dollars ($2,000.00) per Leased
Property per year as and for an inspection fee for each of the Leased
Properties, such amounts to be treated as an Additional Charge under this Lease.
ARTICLE 26
[INTENTIONALLY OMITTED]
56
ARTICLE 27
[INTENTIONALLY OMITTED]
ARTICLE 28
ACCEPTANCE OF SURRENDER
No surrender to Landlord of this Lease or of the Leased Property or
any part thereof, or of any interest therein, shall be valid or effective unless
accepted in writing by Landlord, and no act by Landlord or any representative or
agent of Landlord, other than such a specific written acceptance by Landlord,
shall constitute an acceptance of any such surrender.
ARTICLE 29
MERGER OF TITLE; PARTNERSHIP
29.1 NO MERGER OF TITLE. There shall be no merger of this Lease or of the
leasehold estate created thereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) the Lease or the leasehold estate created hereby or any interest
in the Lease or such leasehold estate, and (b) the fee estate in any Leased
Property.
29.2 NO PARTNERSHIP. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture between Landlord and Tenant
or to cause either party to be responsible in any way for the debts or
obligations of the other or any other party, it being the intention of the
parties that the only relationship hereunder is that of Landlord and Tenant.
ARTICLE 30
CONVEYANCE BY LANDLORD
If Landlord or any successor owner of any Leased Property conveys any
Leased Property in accordance with the terms hereof other than as security for a
debt, Landlord or such successor owner, as the case may be, shall thereupon be
released from all future liabilities and obligations of Landlord under this
Lease arising or accruing from and after the date of such conveyance, and all
such future liabilities and obligations shall thereupon be binding upon the new
owner, provided that the transferee gives Notice to Tenant that such transferee
(a) has
57
received (i) the Security Deposit and (ii) any funds in the hands of Landlord or
the then grantor at the time of the transfer in which Tenant has an interest and
(b) specifically agrees in writing to be bound by all of the terms and
conditions under this Lease, as amended from time to time.
ARTICLE 31
QUIET ENJOYMENT
So long as Tenant pays all Rent as it becomes due and complies with
all of the terms of the Lease and performs its obligations thereunder, Tenant
shall peaceably and quietly have, hold and enjoy the respective Leased
Properties hereby leased for the Term.
ARTICLE 32
[INTENTIONALLY OMITTED]
ARTICLE 33
APPRAISERS
If it becomes necessary to determine the Fair Rental Value of any of
the Leased Properties for any purpose of this Lease, Landlord and Tenant shall
attempt to agree upon a single appraiser to make such determination. If Landlord
and Tenant are unable to agree upon a single appraiser within thirty (30) days
thereafter, then the party required or permitted to give Notice of such required
determination shall include in the Notice the name of a person selected to act
as appraiser on its behalf. Within ten (10) days after such Notice, Landlord (or
Tenant, as the case may be) shall by Notice to Tenant (or Landlord, as the case
may be) appoint a second person as 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) and experienced in
appraising nursing home properties, shall, within forty-five (45) days after the
date of the Notice appointing the first appraiser, proceed to appraise the
applicable Leased Property to determine the Fair Rental Value of it 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, however, that if only one
appraiser has been so appointed, then the determination of such appraiser shall
be final and binding upon the parties. If two appraisers have been appointed and
have made their determinations within the respective requisite periods set forth
above and if the difference between the amounts so determined does not exceed
ten percent (10%) of the lesser of such amounts, then the Fair Rental Value
shall be
58
an amount equal to fifty percent (50%) of the sum of the amounts so determined.
If the difference between the amounts so determined exceeds ten percent (10%) of
the lesser of such amounts, then such two appraisers shall have twenty (20) days
to appoint a third appraiser. If no such appraiser has been appointed within
such twenty (20) day period or within ninety (90) days of the original request
for a determination of Fair Rental Value, whichever is earlier, either Landlord
or Tenant may apply to any court having jurisdiction to have such appointment
made by such court. Any appraiser appointed by the original appraisers or by
such court shall be instructed to determine the Fair Rental Value within
forty-five (45) 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 the average of
the sum of the remaining two determinations shall be final and binding upon
Landlord and Tenant as the Fair Rental Value of the applicable Leased Property.
Any such appraisal shall conform to FDIC or equivalent requirements and format.
This provision for determining the Fair Rental Value 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
and judgment may be entered upon such determination in any court having
jurisdiction of the matter. Landlord and Tenant 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.
ARTICLE 34
BREACH OF LEASE BY LANDLORD
Landlord shall not be in breach of this Lease unless Landlord fails to
observe or perform any term, covenant or condition of this Lease on its part to
be performed and such failure continues for a period of thirty (30) days after
written Notice specifying such failure and the necessary curative action is
received by Landlord from Tenant. If the failure cannot with due diligence be
cured within a period of thirty (30) days, the failure shall not be deemed to
continue if Landlord, within said thirty (30) day period, proceeds promptly and
with due diligence to cure the failure and diligently completes the curing
thereof. The time within which Landlord shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
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ARTICLE 35
PERSONAL PROPERTY OPTION; TRANSFER OF FACILITY CONTROL
35.1 LANDLORD'S OPTION TO PURCHASE TENANT'S PERSONAL PROPERTY. Landlord may
purchase Tenant's Personal Property at the expiration or termination of this
Lease for an amount equal to the then book value thereof (acquisition cost less
accumulated depreciation on the books of Tenant pertaining thereto), subject to,
and with appropriate credits for any obligations owing from Tenant to Landlord
and for all equipment leases, conditional sale contracts and any other
encumbrances to which Tenant's Personal Property is subject. Landlord's option
shall be exercised by Notice to Tenant no more than one hundred eighty (180)
days, nor less than ninety (90) days, before the expiration of the Initial Term
(or, before the expiration of the First Renewal Term or the Second Renewal Term,
as the case may be), unless this Lease is terminated prior to its expiration
date (a) by reason of an Event of Default, in which event Landlord's option
shall be exercised within ninety (90) days following the date of termination, or
(b) by reason of the exercise by a Tenant of a right to terminate provided for
herein in the event of a Taking, in which event Landlord's option shall be
exercised within forty-five (45) days following Tenant's exercise of such right.
Landlord's option shall terminate upon Tenant's purchase of the applicable
Leased Property. If Landlord exercises its option, Tenant shall, in exchange for
Landlord's payment of the purchase price, deliver Tenant's Personal Property to
Landlord, together with a xxxx of sale and such other documents as Landlord may
reasonably request in order to carry out the purchase of Tenant's Personal
Property, and such purchase shall be closed by such delivery and such payment on
the date set by Landlord in its Notice of exercise.
35.2 FACILITY TRADE NAMES. If this Lease is terminated by reason of an
Event of Default, or if Landlord purchases the Tenant's Personal Property with
respect to any Leased Property pursuant to Section 35.1 hereof, Landlord shall
be permitted to use the Facility Trade Names under which the applicable Leased
Property conducts business in the market in which the applicable Facility is
located, and Tenant shall not after any such termination use the Facility Trade
Names under which the applicable Leased Property conducts business in any
business that competes with the applicable Leased Property.
35.3 TRANSFER OF OPERATIONAL CONTROL OF THE FACILITIES. Tenant shall
cooperate in transferring operational control of the Facilities to Landlord or
Landlord's nominee if the Term expires without extension or renewal by Tenant,
or if this Lease is terminated upon the occurrence of an Event of Default or for
any other reason, and shall use its best efforts, (without incurring material
cost or liability except after an Event of Default), to accomplish such transfer
with minimal disruption of the business conducted at each Facility. To that end,
pending completion of the transfer of operational control of the Facilities to
Landlord or its nominee, Tenant agrees that:
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(a) Tenant will not terminate the employment of any employees without
just cause, or change any salaries (other than normal merit raises and the
pre-announced wage increases of which Landlord has knowledge) or employment
agreements without Landlord's consent other than customary raises to
non-officers at regular review dates, and will not hire additional
employees except in good faith in the ordinary course of business.
(b) Tenant will provide all necessary information requested by
Landlord or its nominee for the preparation and filing of any and all
necessary applications or notifications of any federal or state
governmental authority having jurisdiction over a change in the operational
control of the applicable Facility, and Tenant will use its best efforts,
(without incurring material cost or liability except after an Event of
Default), to cause the operating health care license to be transferred to
Landlord or Landlord's nominee.
(c) Tenant shall continue to operate the business in accordance with
reasonable and standard industry practices to keep the business and
organization of the applicable Facility intact and to preserve for Landlord
or its nominee the goodwill of the suppliers, distributors, residents and
others having business relations with Tenant with respect to the applicable
Facility.
(d) Tenant shall engage only in transactions or other activities with
respect to the applicable Facility which are in the ordinary course of its
business and shall perform all maintenance and repairs reasonably necessary
to keep the applicable Facility in satisfactory operating condition and
repair, and shall maintain the supplies and foodstuffs at levels which are
consistent and in compliance with all health care regulations, and shall
not sell or remove any personal property except in the ordinary course of
business.
(e) Tenant shall cooperate fully with Landlord or its nominee in
supplying any information that may be reasonably required to effect an
orderly transfer of the applicable Facility.
(f) Tenant shall provide Landlord or its nominee with full and
complete information regarding the employees of the applicable Facility and
shall reimburse Landlord or its nominee for all outstanding accrued
employee benefits, including accrued vacation, sick and holiday pay
calculated on a true accrual basis, including all earned and a prorated
portion of all unearned benefits.
(g) Tenant shall use its best efforts, (without incurring material
cost or liability except after Event of Default), to obtain the
acknowledgment and the consent of any creditor, Landlord or sublandlord,
mortgagee, beneficiary of a deed of trust or security
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agreement affecting the real and personal properties of Tenant or any other
party whose acknowledgment and/or consent would be required because of a
change in the operational control of the applicable Facility and transfer
of personal property.
35.4 INTANGIBLES AND PERSONAL PROPERTY. Notwithstanding any other provision
of this Lease, but subject to Section 6.4 hereof (relating to Landlord's
security interest), Landlord's Personal Property shall not include goodwill, or
other intangible personal property severable from Landlord's "interests in real
property" within the meaning of Section 856(d) of the Code. All of Landlord's
Personal Property is leased to Tenant pursuant to the terms hereof.
ARTICLE 36
[INTENTIONALLY OMITTED]
ARTICLE 37
MISCELLANEOUS
37.1 NOTICES. All notices, consents or other communications under this
Lease must be in writing and addressed to each party at its respective Notice
Addresses (or at any other address which the respective parties may designate by
notice given to the other party from time to time). Any notice required by this
Lease to be given or made within a specified period of time, on or before a date
certain, shall be deemed given or made if sent by hand or by registered or
certified mail (return receipt requested and postage and registry fees prepaid).
Delivery "by hand" shall include delivery by commercial express or courier
service. A notice sent by registered or certified mail shall be deemed given on
the date of receipt (or attempted delivery if refused) indicated on the return
receipt. All other notices shall be deemed given when actually received. A
notice may be given by a party or by its legal counsel. The Notice Addresses of
the parties are as follows:
If to Landlord: Monarch Properties, LP
0000 Xxxxxxx Xxx Xxxxxxxxx - Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
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With a copy to: LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
If to Tenant: [INSERT THI LESSEE SUBSIDIARY]
0000 Xxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
37.2 Survival, Choice of law. TENANT'S OBLIGATIONS UNDER THIS LEASE SHALL
SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THE TERM FOR A PERIOD OF THREE
(3) YEARS THEREAFTER. AT LANDLORD'S OPTION, THIS LEASE SHALL BE CONSTRUED AND
ENFORCED EITHER (A) UNDER THE LAW OF THE STATE OF NEW YORK OR, (B) IN ANY
PARTICULAR CASE, THE LAW OF THE STATE IN WHICH ANY OF THE FACILITIES IS LOCATED,
IN ANY SUCH CASE WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
TENANT IRREVOCABLY SUBMITS TO JURISDICTION IN ANY STATE IN WHICH ANY FACILITY IS
LOCATED (AND AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON TENANT UNDER
ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE RESPECTIVE STATE IN WHICH LANDLORD
COMMENCES A PROCEEDING AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE
STATE AND FEDERAL COURTS OF ANY SUCH STATE).
37.3 LIMITATION ON RECOVERY. Tenant specifically agrees to look solely to
Landlord's interest in the Leased Property leased by it, the net proceeds
received by Landlord from the sale or any financing or refinancing of the Leased
Property leased by it, the Security Deposit, any funds deposited by Tenant
pursuant to Section 12.2 hereof and any Net Proceeds for recovery of any
judgment against Landlord, it being specifically agreed that no partner,
manager, shareholder, officer, director, or employee of Landlord shall ever be
personally liable for any such judgment or for the payment of any monetary
obligation to Tenant.
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Furthermore, Landlord (original or successor) shall not ever be liable to Tenant
for any indirect or consequential damages suffered by Tenant from whatever
cause.
37.4 WAIVERS. Tenant waives any defense by reason of any disability of
Tenant and waives any other defense based on the termination of Tenant's
(including Tenant's successor's) liability from any cause. Tenant waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance, and waives
all notices of the existence, creation, or incurring of new or additional
obligations.
37.5 CONSENTS. Whenever the consent or approval of Landlord is required
hereunder, Landlord may in its sole discretion and without reason withhold that
consent or approval unless a provision of this Lease expressly requires that
Landlord be reasonable in not withholding or delaying consent or otherwise
provides to the contrary.
37.6 COUNTERPARTS. This Lease may be executed (a) in counterparts, a
complete set of which together shall constitute an original and (b) in
duplicates, each of which shall constitute an original. Copies of this Lease
showing the signatures of the respective parties, whether produced by
photographic, digital, computer, or other reproduction, may be used for all
purposes as originals.
37.7 OPTIONS FOLLOW LEASE. The renewal options and any other options
granted to Tenant in this Lease are not assignable or transferrable except in
connection with a permitted transfer or assignment of this Lease. Any attempt to
assign or transfer such options otherwise shall be void and of no force and
effect.
37.8 RIGHTS CUMULATIVE. Except as provided herein to the contrary, the
respective rights and remedies of the parties specified in this Lease shall be
cumulative and in addition to any rights and remedies not specified in this
Lease.
37.9 ENTIRE AGREEMENT. There are no oral or written agreements or
representations between the parties hereto affecting this Lease. This Lease
supersedes and cancels any and all previous negotiations, arrangements,
representations, brochures, agreements and understandings, if any, between
Landlord and Tenant.
37.10 AMENDMENTS IN WRITING. Neither this Lease nor any provision hereof
may be changed, waived, discharged or terminated except by an instrument in
writing signed by Landlord and Tenant
37.11 SEVERABILITY. If any provision of this Lease or the application of
such provision to any person, entity or circumstance is found invalid or
unenforceable by a court of competent jurisdiction, such determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.
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37.12 SUCCESSORS. The term "Landlord" shall mean only the owner or owners
at the time in question of fee title in the respective Leased Properties. All
rights and obligations of Landlord and Tenant under this Lease shall extend to
and bind the respective heirs, executors, administrators and the permitted
concessionaires, successors, subtenants and assignees of the parties.
37.13 TIME OF THE ESSENCE. Except for the delivery of possession of the
Facilities to Tenant, time is of the essence of all provisions of this Lease of
which time is an element.
37.14 LATE CHARGES. 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.
37.15 BINDING EFFECT. This Lease (and all terms thereof, whether so
expressed or not), shall be binding upon the respective permitted successors,
assigns and legal representatives of the parties and shall inure to the benefit
of and be enforceable by the parties and their respective permitted successors,
assigns and legal representatives.
37.16 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto
are (and shall be deemed) parts of this Lease.
37.17 WAIVER OF JURY TRIAL. In any action or proceeding in connection with
this Lease, each of Landlord and Tenant hereby waives the right to trial by
jury.
37.18 MEMORANDUM OF LEASE. Landlord and Tenant shall, promptly upon the
request of either, enter into a short form Memorandum of Lease, in form suitable
for recording under the laws of the applicable state in which reference to this
Lease, and all options contained therein, shall be made. Tenant shall pay all
costs and expenses of recording such Memorandum of Lease.
ARTICLE 38
SECURITY DEPOSIT
38.1 SECURITY DEPOSIT. Concurrent with Tenant's execution of this Lease,
Tenant shall deliver the Security Deposit to Landlord, to be held by Landlord as
security for the full and faithful performance by Tenant of each and every term,
provision, covenant and condition of this Lease. The Security Deposit shall be
deposited by Landlord in an interest-bearing account in Landlord's name,
separate and apart from Landlord's general and/or other funds, which cash and
interest shall remain on deposit as security hereunder and be available to
Landlord as provided in this Article. The Security Deposit shall not be
considered an advance
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payment of Rent (or of any other sum payable to Tenant under this Lease) or a
measure of Landlord's damages in case of a default by Tenant. The Security
Deposit shall not be considered as a trust fund, and Tenant agrees that Landlord
is not acting as a trustee or in any fiduciary capacity in controlling or using
the Security Deposit.
38.2 APPLICATION OF SECURITY DEPOSIT. Upon the occurrence and continuation
of an Event of Default, Landlord may, but shall not be required to, in addition
to any other rights and remedies available to Landlord, use, apply or retain the
whole or any part of the Security Deposit to the payment of any sum in default,
or any other sum, including, but not limited to, any damages or deficiency in
reletting the applicable Leased Property, which Landlord may expend or be
required to expend by reason of Tenant's default. Whenever, and as often as,
Landlord has used the Security Deposit to cure Tenant's default hereunder,
Tenant shall, within twenty (20) days after Notice from Landlord, deposit
additional funds with Landlord sufficient to restore the Security Deposit to the
full amount originally provided or paid. Upon expiration of this Lease for
reasons other than an Event of Default, Landlord shall promptly return the
Security Deposit to Tenant, including any accrued and unpaid interest thereon,
unless otherwise applied by Landlord.
38.3 TRANSFER OF SECURITY DEPOSIT. If Landlord transfers its interest under
this Lease, Landlord shall assign the Security Deposit to the new Landlord, and,
provided that the transferee gives Notice to Tenant that such transferee has
received the Security Deposit, thereafter Landlord shall have no further
liability for the return of the Security Deposit, and Tenant agrees to look
solely to the new Landlord for the return of the Security Deposit. The
provisions of the preceding sentence shall apply to every transfer or assignment
of Landlord's interest under this Lease. Tenant agrees that it will not assign
or encumber or attempt to assign or encumber the monies deposited as security
and that Landlord, its successors and assigns may return the Security Deposit to
the last Tenant in possession at the last address for Notice given by Tenant and
that Landlord shall thereafter be relieved of any liability therefor, regardless
of one or more assignments of this Lease or any such actual or attempted
assignment or encumbrances of the monies held as the Security Deposit.
38.4 REDUCTION OF SECURITY DEPOSIT. If Tenant purchases a Facility, the
required Security Deposit shall be reduced by an amount equal to thirty-three
percent (33%) of the annual Base Rent allocated to such Facility at the
Commencement Date, as set forth on Exhibit B hereto.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Master Lease by their
duly authorized officers as of the date first above written.
MONARCH PROPERTIES, LP
By: MP Operating Inc.,
its General Partner
By:
-----------------------------------------
Name: Xxxx X. Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
[INSERT THI LESSEE SUBSIDIARY]
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
---------------------------------------
Title: President
--------------------------------------
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