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EXHIBIT 10.37
FACILITY LEASE AGREEMENT
MEDITRUST OF OHIO, INC.
(A Delaware Corporation)
as
Lessor
AND
ASSISTED LIVING PROPERTIES, INC.
(A Kansas Corporation)
as
Lessee
Dated As Of February 20, 1998
For Premises Known as and Located At:
Sterling House of Englewood
000 Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxx
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TABLE OF CONTENTS
Page
ARTICLE 1 - LEASED PROPERTY; TERM; EXTENSIONS 1
1.1 Leased Property 1
1.2 Term 2
1.3 Extended Terms 2
ARTICLE 2 - DEFINITIONS AND RULES OF CONSTRUCTION 3
2.1 Definitions 3
2.2 Rules of Construction 19
ARTICLE 3 - RENT 19
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures 19
3.1.1 Base 19
3.1.2 Increase to Base Rent 20
3.1.3 Base Rent for Extended Terms 21
3.2 Best Efforts To Maximize 21
3.3 [Intentionally Omitted] 21
3.4 Additional Charges 21
3.5 Leasing Commitment Fee 21
3.6 Net Lease 22
3.7 No Lessee Termination or Offset 22
3.7.1 No Termination 22
3.7.2 Waiver 22
3.7.3 Independent Covenants 22
3.8 Abatement of Rent Limited 22
ARTICLE 4 - IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS 23
4.1 Payment of Impositions 23
4.1.1 Lessee To Pay 23
4.1.2 Installment Elections 23
4.1.3 Returns and Reports 23
4.1.4 Refunds 24
4.1.5 Protest 24
4.2 Notice of Impositions 24
4.3 Adjustment of Impositions 24
4.4 Utility Charges 24
4.5 Insurance Premiums 24
4.6 Deposits 25
4.6.1 Lessor's Option 25
4.6.2 Use of Deposits 25
4.6.3 Deficits 26
4.6.4 Other Properties 26
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4.6.5 Transfers 26
4.6.6 Security 26
4.6.7 Return 26
4.6.8 Receipts 27
ARTICLE 5 - OWNERSHIP OF LEASED PROPERTY AND PERSONAL
PROPERTY; INSTALLATION, REMOVAL AND REPLACEMENT
OF PERSONAL PROPERTY 27
5.1 Ownership of the Leased Property 27
5.2 Personal Property; Removal and Replacement of Personal Property 27
5.2.1 Lessee To Equip Facility 27
5.2.2 Sufficient Personal Property 27
5.2.3 Removal and Replacement; Lessor's Option to Purchase 27
ARTICLE 6 - SECURITY FOR LEASE OBLIGATIONS 28
6.1 Security for Lessee's Obligations; Permitted Prior Security Interests 28
6.1.1 Security 28
6.1.2 Purchase-Money Security Interests and Equipment Leases 29
6.2 [Intentionally Omitted] 29
6.2.1 [Intentionally Omitted] 29
6.2.2 [Intentionally Omitted] 30
6.2.3 [Intentionally Omitted] 31
6.3 Guaranty 31
ARTICLE 7 - CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS 31
7.1 Condition of the Leased Property 31
7.2 Use of the Leased Property; Compliance; Management 32
7.2.1 Obligation to Operate 32
7.2.2 Permitted Uses 32
7.2.3 Compliance With Insurance Requirements 32
7.2.4 No Waste 32
7.2.5 No Impairment 32
7.2.6 No Liens 32
7.3 Compliance with Legal Requirements 33
7.4 Management Agreements 33
ARTICLE 8 - REPAIRS; RESTRICTIONS 33
8.1 Maintenance and Repair 33
8.1.1 Lessee's Responsibility 33
8.1.2 No Lessor Obligation 34
8.1.3 Lessee May Not Obligate Lessor 34
8.1.4 Lessee's Obligation to Perform Upgrade Expenditures 35
8.2 Encroachments; Title Restrictions 35
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ARTICLE 9 - MATERIAL STRUCTURAL WORK AND CAPITAL ADDITIONS 36
9.1 Lessor's Approval 36
9.2 General Provisions as to Capital Additions and Certain Material Structural
Work 36
9.2.1 No Liens 36
9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work 37
9.2.3 Lessor's Options Regarding Capital Additions and Material
Structural 37
9.2.4 Lessor May Elect to Finance Capital Additions 37
9.2.5 Legal Requirements; Quality of Work 37
9.3 Capital Additions Financed by Lessor 37
9.3.1 Lessee's Financing Request 37
9.3.2 Lessor's General Requirements 38
9.3.3 Payment of Costs 39
9.4 General Limitations 40
9.5 Non-Capital Additions 40
9.6 Permitted Work 40
ARTICLE 10 - WARRANTIES AND REPRESENTATIONS 41
10.1 Representations and Warranties 41
10.1.1 Existence; Power; Qualification 41
10.1.2 Valid and Binding 41
10.1.3 Single Purpose 41
10.1.4 No Violation 41
10.1.5 Consents and Approvals 42
10.1.6 No Liens or Insolvency Proceedings 42
10.1.7 No Burdensome Agreements 42
10.1.8 Commercial Acts 42
10.1.9 Adequate Capital, Not Insolvent 42
10.1.10 Not Delinquent 43
10.1.11 No Affiliate Debt 43
10.1.12 Taxes Current 43
10.1.13 Financials Complete and Accurate 43
10.1.14 Pending Actions, Notices and Reports 44
10.1.15 Compliance with Legal and Other Requirements 44
10.1.16 No Action By Governmental Authority or
Accreditation Body 45
10.1.17 Property Matters 45
10.1.18 Rate Limitations 46
10.1.19 Free Care 46
10.1.20 No Proposed Changes 46
10.1.21 ERISA 47
10.1.22 No Broker 47
10.1.23 No Improper Payments 47
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10.1.24 Nothing Omitted 47
10.1.25 No Margin Security 48
10.1.26 No Default 48
10.1.27 Principal Place of Business 48
10.1.28 Third Party Payor Agreements 48
10.1.29 Rates 49
10.1.30 Labor Matters 49
10.1.31 Intellectual Property 49
10.1.32 Management Agreements 49
10.1.33 Fiscal Year 49
10.2 Continuing Effect of Representations and Warranties 49
ARTICLE 11 - FINANCIAL AND OTHER COVENANTS 50
11.1 Status Certificates 50
11.2 Financial Statements; Reports; Notice and Information 50
11.2.1 Obligation To Furnish 50
11.2.2 Responsible Officer 53
11.2.3 No Material Omission 53
11.2.4 Confidentiality 54
11.3 Financial Covenants 54
11.3.1 Rent Coverage Ratio of Lessee 54
11.3.2 [Intentionally Omitted] 54
11.3.3 [Intentionally Omitted] 54
11.3.4 [Intentionally Omitted] 54
11.3.5 Current Ratio - Guarantor 54
11.3.6 [Intentionally Omitted] 54
11.3.7 Tangible Net Worth - Guarantor 54
11.3.8 [Intentionally Omitted] 55
11.3.9 [Intentionally Omitted] 55
11.3.10 No Indebtedness 55
11.3.11 No Guaranties 55
11.3.12 [Intentionally Omitted] 55
11.4 Affirmative Covenants 55
11.4.1 Maintenance of Existence 55
11.4.2 Materials 55
11.4.3 Compliance With Legal Requirements And Applicable
Agreements 56
11.4.4 Books And Records 56
11.4.5 Participation in Third Party Payor Programs 56
11.4.6 Conduct of its Business 56
11.4.7 Address 56
11.4.8 Subordination of Affiliate Transactions 57
11.4.9 Inspection 57
11.5 Additional Negative Covenants 57
11.5.1 Restrictions Relating to Lessee 57
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11.5.2 No Liens 58
11.5.3 Limits on Affiliate Transactions 58
11.5.4 Non-Competition 58
11.5.5 No Default 60
11.5.6 Restrictions Relating to the Guarantor 60
11.5.7 [Intentionally Omitted] 60
11.5.8 ERISA 60
11.5.9 Forgiveness of Indebtedness 60
11.5.10 Value of Assets 60
11.5.11 Changes in Fiscal Year and Accounting Procedures 60
11.5.12 Changes in Executive Officers 61
ARTICLE 12 - INSURANCE AND INDEMNITY 61
12.1 General Insurance Requirements 61
12.1.1 Types and Amounts of Insurance 61
12.1.2 Insurance Company Requirements 63
12.1.3 Policy Requirements 63
12.1.4 Notices; Certificates and Policies 63
12.1.5 Lessor's Right to Place Insurance 64
12.1.6 Payment of Proceeds 64
12.1.7 Irrevocable Power of Attorney 64
12.1.8 Blanket Policies 64
12.1.9 No Separate Insurance 65
12.1.10 Assignment of Unearned Premiums 65
12.2 Indemnity 65
12.2.1 Indemnification 65
12.2.2 Indemnified Parties 66
12.2.3 Limitation on Lessor Liability 66
12.2.4 Risk of Loss 67
ARTICLE 13 - FIRE AND CASUALTY 67
13.1 Restoration Following Fire or Other Casualty 67
13.1.1 Following Fire or Casualty 67
13.1.2 Procedures 67
13.1.3 Disbursement of Insurance Proceeds Less Than
50,000.00 68
13.1.4 Disbursement of Insurance Proceeds $50,000.00 or More 68
13.2 Disposition of Insurance Proceeds 72
13.2.1 Proceeds To Be Released to Pay For Work 72
13.2.2 Proceeds Not To Be Released 72
13.2.3 Lessee Responsible for Short-Fall 73
13.3 Tangible Personal Property 73
13.4 Restoration of Certain Improvements and the Tangible Personal Property 73
13.5 No Abatement of Rent 73
13.6 Termination of Certain Rights 74
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13.7 Waiver 74
13.8 Application of Business Interruption Insurance 74
13.9 Obligation To Account 74
ARTICLE 14 - CONDEMNATION 75
14.1 Parties' Rights and Obligations 75
14.2 Total Taking 75
14.3 Partial or Temporary Taking 75
14.4 Restoration 76
14.5 Award Distribution 76
14.6 Control of Proceedings 76
ARTICLE 15 - PERMITTED CONTESTS 76
15.1 Lessee's Right to Contest 76
15.2 Lessor's Cooperation 77
15.3 Lessee's Indemnity 77
ARTICLE 16 - DEFAULT 77
16.1 Events of Default 77
16.2 Remedies 81
16.3 Damages 82
16.4 Lessee Waivers 83
16.5 Application of Funds 84
16.6 [Intentionally Omitted] 84
16.7 [Intentionally Omitted] 84
16.8 Lessor's Right to Cure 84
16.9 No Waiver By Lessor 84
16.10 Right of Forbearance 85
16.11 Cumulative Remedies 85
ARTICLE 17 - SURRENDER OF LEASED PROPERTY OR LEASE;
HOLDING OVER 86
17.1 Surrender 86
17.2 Transfer of Contracts and Permits 86
17.3 Management of Leased Property 86
17.4 Correction of Deficiencies 86
17.5 No Acceptance of Surrender 86
17.6 Holding Over 86
ARTICLE 18 - PURCHASE OF THE LEASED PROPERTY 87
18.1 Purchase of the Leased Property 87
18.2 Appraisal 87
18.2.1 Designation of Appraisers 87
18.2.2 Appraisal Process 88
18.2.3 Specific Enforcement and Costs 88
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18.3 Lessee's Right of First Refusal 88
18.4 [Intentionally Omitted] 89
ARTICLE 19 - SUBLETTING AND ASSIGNMENT 89
19.1 Subletting and Assignment 89
19.2 Permitted Subleases 89
19.3 Attornment 90
19.4 [Intentionally Omitted] 90
ARTICLE 20 - TITLE TRANSFERS AND LIENS GRANTED BY LESSOR 91
20.1 No Merger of Title 91
20.2 Transfers By Lessor 91
20.3 Lessor May Grant Liens 91
20.4 Subordination and Non-Disturbance 91
ARTICLE 21 - LESSOR OBLIGATIONS 92
21.1 Quiet Enjoyment 92
21.2 Memorandum of Lease 92
21.3 Default by Lessor 92
21.4 Computer Disc 93
ARTICLE 22 - NOTICES 93
ARTICLE 23 - LIMITATION OF MEDITRUST LIABILITY 94
ARTICLE 24 - MISCELLANEOUS PROVISIONS 95
24.1 Broker's Fee Indemnification 95
24.2 No Joint Venture or Partnership 95
24.3 Amendments, Waivers and Modifications 95
24.4 Further Assurances 96
24.5 Invalidity 96
24.6 Captions and Headings 97
24.7 Time is of the Essence 97
24.8 Counterparts 97
24.9 Entire Agreement 97
24.10 WAIVER OF JURY TRIAL 97
24.11 Successors and Assigns 97
24.12 No Third Party Beneficiaries 98
24.13 Governing Law 98
24.14 General 98
24.15 Intention of Parties 99
24.16 Radon Gas 99
EXHIBIT A LEGAL DESCRIPTION OF THE LAND
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EXHIBIT B PERMITTED TITLE EXCEPTIONS
EXHIBIT C LIST OF PARTNERS AND/OR SHAREHOLDERS
EXHIBIT D RATE LIMITATIONS
EXHIBIT E FREE CARE REQUIREMENTS
EXHIBIT F PROVIDER AGREEMENTS
EXHIBIT G NATIONAL ACCOUNTS AND LOCAL DISCOUNTS
EXHIBIT H OPEN COST REPORTS
EXHIBIT I RENT COVERAGE RATIO CALCULATION
EXHIBIT J EXECUTIVE OFFICERS
SCHEDULE 4.6.2 INVESTMENT VEHICLES FOR IMPOSITION DEPOSITS
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FACILITY LEASE AGREEMENT
This FACILITY LEASE AGREEMENT ("Lease") is dated as of the 20th day of
February, 1998 and is between MEDITRUST OF OHIO, INC. ("Lessor"), a Delaware
corporation, having its principal office at 000 Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx,
Xxxxxxxxxxxxx 00000, and ASSISTED LIVING PROPERTIES, INC. ("Lessee"), a Kansas
corporation, having its principal office at 000 X. Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxx 00000.
ARTICLE 1
LEASED PROPERTY; TERM; EXTENSIONS
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Lessor leases to Lessee and Lessee rents and leases from
Lessor all of Lessor's rights and interests in and to the following real and
personal property (collectively, the "Leased Property"):
(a) the real property described in EXHIBIT A attached hereto
(the "Land");
(b) all buildings, structures, Fixtures (as hereinafter
defined) and other improvements of every kind including, but not limited to,
alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines,
and parking areas and roadways appurtenant to such buildings and structures
presently or hereafter situated upon the Land (collectively, the "Leased
Improvements");
(c) all easements, rights and appurtenances of every nature and
description now or hereafter relating to or benefitting any or all of the Land
and the Leased Improvements;
(d) all equipment, machinery, building fixtures, and other items
of property (whether realty, personalty or mixed), including all components
thereof, now or hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems 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 by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding all items included within the
category of Tangible Personal Property (as hereinafter defined) which are not
permanently affixed to or incorporated in the Leased Property (collectively, the
"Fixtures"); and
(e) Lessor's Personal Property.
The Leased Property is leased in its present condition, AS IS, without
representation or warranty of any kind, express or implied, by Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter
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defined) and other matters of record (including, without limitation, the matters
set forth in EXHIBIT B); (iii) all applicable laws; and (iv) all matters,
whether or not of a similar nature, which would be disclosed by an inspection of
the Leased Property or by an accurate survey thereof.
1.2 Term. The term of this Lease shall consist of: the "Fixed Term",
which shall commence on February 20, 1998 (the "Fixed Term Commencement Date")
and end on September 29, 2009 (the "Fixed Term Expiration Date"); provided,
however that this Lease may be sooner terminated as hereinafter provided. In
addition, Lessee shall have the options to extend the Term (as hereinafter
defined) as provided for in Section 1.3.
1.3 Extended Terms. Provided that this Lease has not been previously
terminated, and so long as no Lease Default (as hereinafter defined) shall have
occurred and be continuing, Lessee is hereby granted the right to extend the
Fixed Term of this Lease for three (3) additional periods (collectively, the
"Extended Terms") as follows: three (3) successive five (5) year periods for a
maximum Term, if all such options are exercised, which ends on September 29,
2024. Lessee's extension rights shall be exercised by Lessee by giving written
notice to Lessor of each such extension at least one hundred eighty (180) days,
but not more than three hundred sixty (360) days, prior to the termination of
the Fixed Term or then current Extended Term. Lessee may not exercise its option
for more than one Extended Term at a time. During each effective Extended Term,
all of the terms and conditions of this Lease shall continue in full force and
effect, except that the Base Rent (as hereinafter defined) for each such
Extended Term shall be adjusted as set forth in Section 3.1.3.
Notwithstanding anything to the contrary set forth herein, Lessee's
rights to extend the Fixed Term granted in this Section 1.3 are subject to the
further condition that concurrently with the exercise of any extension option
hereunder, Lessee shall have exercised its option to extend the terms of all of
the Related Leases in accordance with the provisions of the Agreement Regarding
Related Transactions and the provisions of Section 1.3 of each of the Related
Leases. For the purposes of this Section 1.3, the Related Leases are those
leases which pertain to the Acquisition Facilities (as such term is defined in
the Agreement Regarding Related Transactions).
ARTICLE 2
DEFINITIONS AND RULES OF CONSTRUCTION
2.1 Definitions. For all purposes of this Lease and the other Lease
Documents (as hereinafter defined), except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular and (ii) all references in this Lease or any of the other
Lease Documents to designated "Articles", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease or the
other applicable Lease Document.
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Accounts: As defined in the UCC.
Accreditation Body: Department of Health and Rehabilitative Services
within the Agency for Health Care Administration, and all other Persons having
or claiming jurisdiction over the accreditation, certification, evaluation or
operation of the Facility. Lessor understands that neither Lessee nor any
Sublessee nor the Facility is currently under the jurisdiction, or is otherwise
subject to the rules, of any Accreditation Body and that, accordingly, the
provisions of this Lease relating in any way to an Accreditation Body are
presently inapplicable to this transaction; however, in the event that at any
time during the Term, any of Lessee, any Sublessee or the Facility falls under
the jurisdiction of, or otherwise becomes subject to the rules of, any
Accreditation Body, then all such provisions of this Agreement and the other
Lease Documents shall apply with full force and effect.
Additional Charges: As defined `in Article 3.
Additional Land: As defined in Section 9.3.
Affiliate: With respect to any Person (i) any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (ii) any other Person (other than a shareholder of Guarantor)
that owns, beneficially, directly or indirectly, five percent (5 %) or more of
the outstanding capital stock, shares or equity interests of such Person or
(iii) any officer, director, employee, general partner or trustee of such
Person, or any other Person controlling, controlled by, or under common control
with, such Person (excluding trustees and Persons serving in a fiduciary or
similar capacity who are not otherwise an Affiliate of such Person). For the
purposes of this definition, "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests or other
equity interests.
Affiliated Party Subordination Agreement: That certain Affiliated Party
Subordination Agreement dated as of September 30, 1997 by and among Lessee, the
Guarantor, various Affiliates of Lessee and various Affiliates of Lessor.
Agreement Regarding Related Transactions: The Agreement Regarding
Related Transactions dated as of September 30, 1997, as amended from time to
time, between Lessee, Lessor, certain Affiliates of Lessor and any Related Party
that is party to any Related Lease or any Related Party Agreement. Lessor and
Lessee anticipate that the Agreement Regarding Related Transactions will be
amended from time to time in order to (a) include Affiliates of each of Lessor
and Lessee as parties thereto in connection with future transactions and (b)
include additional facilities within the scope of such related transactions and
acknowledge and agree that for all purposes under this Lease such amendments
shall be deemed to be included in this definition.
Appurtenant Agreements: Collectively, all instruments, documents and
other agreements
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that now or hereafter create any utility, access or other right or appurtenances
benefitting or relating to the Leased Property.
Award: All compensation, sums or anything of value awarded, paid
or received on a total or partial Condemnation.
Base Rent: As set forth in Article 3.
Business Day: Any day which is not a Saturday or Sunday or a public
holiday under the laws of the United States of America, the Commonwealth of
Massachusetts, the State or the state in which Lessor's depository bank is
located.
Capital Additions: Collectively, all new buildings and additional
structures annexed to any portion of any of the Leased Improvements and material
expansions of any of the Leased Improvements which are constructed on any
portion of the Land during the Term, including, without limitation, the
construction of a new wing or new story, the renovation of any of the Leased
Improvements on the Leased Property and any expansion, construction, renovation
or conversion in connection therewith (a) in order to provide a functionally new
facility that is needed or used to provide services not previously offered or
(b) in order to (i) increase the unit capacity of a Facility, (ii) change the
purpose for which such units are utilized and/or (iii) change the utilization of
any material portion of any of the Leased Improvements.
Capital Addition Cost: The cost of any Capital Addition made by Lessee
whether paid for by Lessee or Lessor. Such cost shall include all costs and
expenses of every nature whatsoever incurred directly or indirectly in
connection with the development, permitting, construction and financing of a
Capital Addition as reasonably determined by, or to the reasonable satisfaction
of, Lessor.
Cash Collateral: None.
Cash Flow: The Consolidated Net Income (or Consolidated Net Loss)
before federal and state taxes for any period plus (i) the amount of the
provision for depreciation and amortization actually deducted on the books of
the applicable Person for the purposes of computing such Consolidated Net Income
(or Consolidated Net Loss) for the period involved, plus (ii) Rent and interest
on all other Indebtedness which is fully subordinated to the Lease Obligations,
plus (iii) management fees which are fully subordinated to the Lease Obligations
pursuant to the Affiliated Party Subordination Agreement.
Casualty: As defined in Section 13.1.
CHAMPUS: The Civilian Health and Medical Program of the Uniform
Service, a program of medical benefits covering retirees and dependents of
members or former members of a uniformed service provided, financed and
supervised by the United States Department of Defense and established by 10 USC
ss.ss.1071 et seq.
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Chattel Paper: As defined in the UCC.
Code: The Internal Revenue Code of 1986, as amended.
Collateral: All of the property in which security interests are granted
to Lessor and the other Meditrust Entities pursuant to the Lease Documents and
the Related Party Agreements to secure the Lease Obligations, including, without
limitation, the Cash Collateral and the Receivables.
Collateral Assignment of Permits and Contracts: The Collateral
Assignment of Permits, Licenses, Approvals and Contracts dated as of September
30, 1997 granted by Lessee to Lessor and certain Affiliates of Lessor.
Condemnation: With respect to the Leased Property or any interest
therein or right accruing thereto or use thereof (i) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a Condemnor or
(ii) a voluntary sale or transfer by Lessor to any Condemnor, either under
threat of Condemnation or Taking or while legal proceedings for Condemnation or
Taking are pending.
Condemnor: Any public or quasi-public authority, or private
corporation or individual, having the power of condemnation or eminent domain.
Consolidated and Consolidating: When used with reference to any term
otherwise defined herein, means such term as applied to the consolidated and
consolidating accounts of the relevant Person and its Subsidiaries consolidated
in accordance with GAAP.
Consolidated Financials: For any fiscal year or other accounting period
for any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP, and disclosing all
liabilities of such Person and its consolidated Subsidiaries, including, without
limitation, contingent liabilities.
Contracts: All agreements (including, without .limitation, Provider
Agreements and Resident Admission Agreements), contracts (including without
limitation, construction contracts, subcontracts, and architects' contracts),
contract rights, warranties and representations, franchises, and records and
books of account benefiting, relating to or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession, or operation thereof, or the operation of any programs or
services in conjunction with the Facility and all renewals, replacement and
substitutions therefor, now or hereafter issued by or entered into with any
Governmental Authority, Accreditation Body or Third Party Payor or maintained or
used by any member of the Leasing Group or entered into by any member of the
Leasing Group with any other Person.
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Consultants: Architects, engineers, inspectors, surveyors and
other consultants engaged by Lessor to perform services for Lessor in connection
with this Lease.
Current Assets: All assets of any Person which would, in accordance
with GAAP, be classified as current assets of a Person conducting a business the
same as or similar to that of such Person, excluding however, any and all
advances to or Current Liabilities owed to such Person by its Subsidiaries.
Current Liabilities: All liabilities of any Person which would, in
accordance with GAAP, be classified as current liabilities of a Person
conducting a business the same as or similar to that of such Person, including
without limitation, all rental and other payments under leases and fixed
payments of, and sinking fund payments with respect to, Indebtedness required to
be made within one (1) year from the date of determination.
Current Manager: Sterling House Corporation; a Kansas corporation.
Current Sublessee: York Development, Limited, an Ohio limited
liability company.
Date of Taking: The date the Condemnor has the right to possession of
the property being condemned.
Declaration: As defined in Article 23.
Documents: As defined in the UCC.
Earnings Before Interest and Taxes: The Consolidated Net Income (or
Consolidated Net Loss) for any period, plus (i) all federal and state income
taxes (but not taxes in the nature of an ad valorem property tax or a sales tax
or an excise tax) paid or accrued with respect to such period, plus (ii) all
interest on any Indebtedness paid or payable during such period.
Encumbrance: As defined in Section 20.3.
Environmental Indemnity Agreement: The Environmental Indemnity
Agreement dated as of September 30, 1997 by and among Lessee, the Guarantor,
Current Manager, Lessor and certain Affiliates of Lessor.
Environmental Laws: As defined in the Environmental Indemnity
Agreement.
ERISA: The Employment Retirement Income Security Act of 1974, as
amended.
Event of Default: As defined in Article 16.
Extended Terms: As defined in Section 1.3.
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Facility: The forty two (42) units, fully licensed residential care
facility located on the Land and known as "Sterling House of Englewood".
Failure to Operate: As defined in Article 16.
Failure to Perform: As defined Article 16.
Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) minus the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by Lessee and approved
by Lessor had been constructed.
Fair Market Value of a Capital Addition: The amount by which the Fair
Market Value of the Leased Property upon the completion of a particular Capital
Addition exceeds the Fair Market Value of the Leased Property just prior to the
construction of the particular Capital Addition.
Fair Market Value of the Leased Property: The fair market value of the
Leased Property, including all Capital Additions, and including the Land and all
other portions of the Leased Property, and (a) assuming the same is unencumbered
by this Lease, (b) determined in accordance with the appraisal procedures set
forth in Section 18.2 and (c) not taking into account any reduction in value
resulting from any Lien to which the Leased Property is subject and which Lien
Lessee or Lessor is otherwise required to remove at or prior to closing of the
transaction. However, the positive or negative effect on the value of the Leased
Property attributable to the interest rate, amortization schedule, maturity
date, prepayment provisions and other terms and conditions of any Lien on the
Leased Property which is not so required or agreed td be removed shall be taken
into account in determining the Fair Market Value of the Leased Property. The
Fair Market Value shall be determined as the overall value based on due
consideration of the "income" approach, the "comparable sales" approach, and the
"replacement cost" approach.
Fee Mortgage: As defined in Section 20.3.
Fee Mortgagee: As defined in Section 20.3.
Financing Party: Any Person who is or may be participating with
Lessor in any way in connection with the financing of any Capital Addition.
Financing Statements: Uniform Commercial Code financing
statements evidencing the security interests granted to Lessor in connection
with the Lease Documents.
Fiscal Quarter: Each of the three (3) month periods commencing
January, April, July and October.
Fiscal Year: The twelve (12) month period from January 1 to December
31.
Fixed Term: As defined in Section 1.2.
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Fixed Term Commencement Date: As defined in Section 1.2.
Fixed Term Expiration Date: As defined in Section 1.2.
Fixtures: As defined in Article 1.
GAAP: Generally accepted accounting principles, consistently applied
throughout the relevant period.
General Intangibles: As defined in the UCC.
Governmental Authorities: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures, and
offices of any nature whatsoever of any government, quasi-government unit or
political subdivision, whether with a federal, state, county, district,
municipal, city or otherwise and whether now or hereinafter in existence.
Gross Revenues: Collectively, all revenues generated by reason of the
operation of the Leased Property (including any Capital Additions), whether or
not directly or indirectly received or to be received by Lessor, including,
without limitation, all resident revenues received or receivable for the use of,
or otherwise by reason of, all rooms, units and other facilities provided, meals
served, services performed, space or facilities subleased or goods sold on or
from the Leased Property and further including, without limitation, except as
otherwise specifically, provided below, any consideration received under any
subletting, licensing, or other arrangements with any Person relating to the
possession or use of the Leased Property and all revenues from all ancillary
services provided at or relating to the Leased Property; provided, however, that
Gross Revenues shall not include non-operating revenues such as interest income
or gain from the sale of assets not sold in the ordinary course of business; and
provided, further, that there shall be excluded or deducted (as the case may be)
from such revenues:
(i) contractual allowances (relating to any period
during the Term of this Lease and thereafter until the Rent hereunder is paid in
full) for xxxxxxxx not paid by or received from the appropriate Governmental
Agencies or Third Party Payors,
(ii) allowances according to GAAP for uncollectible
accounts,
(iii) all proper resident billing credits and adjustments
according to GAAP relating to health care accounting,
(iv) federal, state or local sales, use, gross receipts
and excise taxes and any tax based upon or measured by said Gross Revenues which
is added to or made a part of the amount billed to the resident or other
recipient of such services or goods, whether included in the billing or stated
separately,
(v) provider discounts for hospital or other medical
facility utilization
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contracts,
(vi) the cost of any federal, state or local governmental
program imposed specially to provide or finance indigent resident care (other
than Medicare, Medicaid and the like), and
(vii) resident trust accounts which Lessee has no
beneficial interest.
To the extent that the Leased Property is subleased or occupied by an
Affiliate or Affiliates of Lessee, Gross Revenues calculated for all purposes of
this Lease shall include the Gross Revenues of such Sublessee with respect to
the premises demised under the applicable Sublease (i.e., the Gross Revenues
generated from the operations conducted on such subleased or occupied portion of
the Leased Property) and the rent received or receivable from such Sublessee
pursuant to such Subleases shall be excluded from Gross Revenues for all such
purposes. As to any Sublease between Lessee and a non-Affiliate of Lessee, only
the rental actually received by Lessee from such non-Affiliate shall be included
in Gross Revenues.
Guarantor: Sterling House Corporation and its successors and assigns.
Guaranty: The Guaranty dated as of September 30, 1997 executed by
Guarantor in favor of Lessor and certain Affiliates of Lessor.
Hazardous Substances: As defined in the Environmental Indemnity
Agreement.
Impositions: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of Lessor (but excluding franchise taxes
relating to the restructuring of Lessor's liabilities as opposed, for example,
to franchise taxes derived as a result of an appreciation of the fair market
value of the Leased Property or to a change in the method of calculating
franchise taxes), all ad valorem, sales and use, single business, gross
receipts, transaction privilege, rent or similar taxes) relating in any way to
any one or more of the Lease, the Leased Property or the Rent, assessments
(including, without limitation, all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date hereof and
whether or not to be completed within the Term), ground rents, water and sewer
rents, water charges or other rents and charges, excises, tax levies, fees
(including, without limitation, license, permit, inspection, authorization and
similar fees), transfer taxes and recordation taxes imposed as a result of this
Lease or any extensions hereof, 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 either or both of the Leased
Property and the Rent (including all interest and penalties thereon due to any
failure in payment by Lessee), which at any time prior to, during or in respect
of the Term hereof and thereafter until the Leased Property is surrendered to
Lessor as required by the terms of this Lease, may be assessed or imposed on or
in respect of or be a Lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any rent therefrom or any estate, right,
title or interest therein, or (c) any occupancy, operation, use or possession
of, sales from, or activity conducted on, or in connection with, the Leased
Property or the leasing or use of the Leased Property. Notwithstanding the
foregoing, nothing contained in this Lease shall be
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construed to require Lessee to pay (1) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Lessor or
any other Person, except Lessee ,or its successors, (2) any transfer or net
revenue tax of Lessor or any other Person, except Lessee and its successors, (3)
any tax imposed with respect to the sale, exchange or other disposition by
Lessor of the Leased Property or the proceeds thereof, or (4) except as
expressly provided elsewhere in this Lease, any principal or interest on any
Encumbrance on the Leased Property; provided, however, the provisos set forth in
clauses (1) and (2) of this sentence shall not be applicable to the extent that
any tax, assessment, tax levy or charge which Lessee is obligated to pay
pursuant to the first sentence of this definition and which is in effect at any
time during the Term hereof is totally or partially repealed, and a tax,
assessment, tax levy or charge set forth in clause (1) or (2) is levied,
assessed or imposed expressly in lieu thereof. In computing the amount of any
franchise tax or capital stock tax which may be or become an Imposition, the
amount payable by Lessee shall be equitably apportioned based upon all
properties owned by Lessor that are located within the particular jurisdiction
subject to any such tax..
Indebtedness: The total of all obligations of a Person, whether current
or long-term, which in accordance with GAAP would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to be
determined, and shall also include (i) all capital lease obligations and (ii)
all guarantees, endorsements (other than for collection of instruments in the
ordinary course of business), or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement contingent
or otherwise to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
Indemnified Parties: As defined in Section 12.2.2.
Index: The rate of interest of actively traded marketable United States
Treasury Securities bearing a fixed rate of interest adjusted for a constant
maturity of ten (10) years as calculated by the Federal Reserve Board.
Institutional Lender: Any insurance company, federally insured
commercial or savings bank, national banking association, savings and loan
association, employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, having a net worth of at least
ONE HUNDRED MILLION and NO/100 DOLLARS ($100,000,000.00).
Instruments: As defined in the UCC.
Insurance Requirements: All terms of any insurance policy required by
this Lease, all requirements of the issuer of any such policy with respect to
the Leased Property and the activities conducted thereon and the requirements of
any insurance board, association or organization or underwriters' regulations
pertaining to the Leased Property.
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Land: As defined in Article 1.
Lease: As defined in the preamble of this Lease.
Lease Default: The occurrence of any default or breach of condition
continuing beyond any applicable notice and/or grace periods under this Lease
and/or any of the other Lease Documents.
Lease Documents: Collectively, this Lease, the Leases with respect to
each of the other facilities listed on Exhibit, A to the Agreement Regarding
Related Transactions (as such Exhibit may be amended from time to time to
include additional facilities or to eliminate one or more facilities), the
Guaranty, the Agreement Regarding Related Transactions, the Security Agreement,
the Deposit Pledge Agreement, the Pledge Agreement, the Collateral Assignment of
Permits and Contracts, the Financing Statements, the Affiliated Party
Subordination Agreement, the Environmental Indemnity Agreement, the Memoranda of
Lease and any and all other instruments, documents, certificates or agreements
executed or furnished by any member of the Leasing Group in connection with the
transactions evidenced by the Lease and/or any of the foregoing documents.
Lease Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings (other than Lessor's
obligations) under this Lease and the other Lease Documents.
Lease Year: A twelve month period ending on June 30 of each year;
provided, that the first Lease Year shall begin on the Fixed Term Commencement
Date and shall end on June 30, 1999.
Leased Improvements: As defined in Article 1.
Leased Property: As defined in Article 1.
Leasing Commitment Fee: None.
Leasing Group: Collectively, Lessee, the Guarantor, any Sublessee
which is an Affiliate of Lessee or the Guarantor and any Manager which is an
Affiliate of Lessee or the Guarantor.
Legal Requirements: Collectively, all statutes, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use and health-care licensing
statutes, ordinances, by-laws, codes, rules and regulations), whether now or
hereafter enacted, promulgated or issued by any Governmental Authority,
Accreditation Body or Third Party Payor affecting Lessor, any member of the
Leasing Group or the Leased Property or the ownership, construction,
development, maintenance, management, repair, use, occupancy, possession or
operation thereof or the operation of any programs or services in connection
with the Leased Property, including, without limitation, any of the foregoing
which may (i) require
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repairs, modifications or alterations in or to the Leased Property, (ii) in any
way affect (adversely or otherwise) the use and enjoyment of the Leased Property
or (iii) require the assessment, monitoring, cleanup, containment, removal,
remediation or other treatment of any Hazardous Substances on, under or from the
Leased Property. Without limiting the foregoing, the term Legal Requirements
includes all Environmental laws and shall also include all Permits and Contracts
issued or entered into by any Governmental Authority, any Accreditation Body
and/or any Third Party Payor and all Permitted Encumbrances.
Lessee: As defined in the preamble of this Lease and its successors and
assigns.
Lessee's Election Notice: As defined in Section 14.3.
Lessor: As defined in the preamble of this Lease and its successors and
assigns.
Lessor's Personal Property: The personal property conveyed to Lessor by
the Seller in accordance with a xxxx of sale.
Letter of Credit: As defined in Section 6.2.1.
Lien: With respect to any real or personal property, any mortgage, deed
of trust, easement, restriction, lien, pledge, collateral assignment,
hypothecation, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not xxxxxx, vested or perfected.
Managed Care Plans: All health maintenance organizations, preferred
provider organizations, individual practice associations, competitive medical
plans, and similar arrangements.
Management Agreement: Any agreement, whether written or oral, between
Lessee or any Sublessee and any other Person pursuant to which Lessee or such
Sublessee provides any payment, fee or other consideration to any other Person
to operate or manage the Facility.
Manager: Any Person who has entered into a Management Agreement with
Lessee or any Sublessee.
Material Structural Work: Any material (i) structural alteration, (ii)
structural repair or (iii) structural renovation to the Leased Property.
Medicaid: The medical assistance program established by Title XIX of
the Social Security Act (42 USC ss.ss.1396 et seq.) and any statute succeeding
thereto.
Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 USC ss.ss.1395 et
seq.) and any statute succeeding thereto.
Meditrust: As defined in Article 23.
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Meditrust/ALP Transaction Affiliate: An Affiliate of Lessee who is a
party to one or more of the Meditrust/ALP Transaction Documents (other than the
Affiliated Party Subordination Agreement, the Agreement Regarding Related
Transactions and comparable agreement now or hereafter in effect among
Affiliates of each of Lessee and Lessor).
Meditrust/ALP Transaction Documents: As defined in the Agreement
Regarding Related Transactions.
Meditrust Investment: The sum of (i) the Original Meditrust Investment
plus (ii) the aggregate amount of all Subsequent Investments less (iii) the sum
of any net amount of the Award received by Lessor (as defined in Section 3.7
below).
Meditrust Entities: Collectively, Meditrust, Lessor and any other
Affiliate of Lessor which may now or hereafter be a party to any Related Party
Agreement.
Monthly Deposit Date: As defined in Section 4.6.
Net Income for Net Loss): The net income (or net loss, expressed as a
negative number) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with GAAP.
Obligations: Collectively, the Lease Obligations and the Related Party
Obligations.
Officer's Certificate: A certificate of Lessee signed on behalf of
Lessee by the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of Lessee, or another officer authorized to so sign
by the Board of Directors or By-Laws of Lessee, or any other Person whose power
and authority to act has been authorized by delegation in writing by any of the
Persons holding the foregoing offices.
Original Meditrust Investment: The sum of TWO MILLION THREE HUNDRED
FORTY THOUSAND and 00/100 DOLLARS ($2,340,000.00).
Other Permitted Uses: To the extent permitted under Legal Requirements
and under Insurance Requirements, and so long as the same do not detract in any
material manner from the Primary Intended Use: (i) medical or dental offices,
(ii) medical or dental laboratories, (iii) day care center, (iv) pharmacy, (v)
medical services, (vi) florists and card shops which do not have a separate
entrance, (vii) ancillary parking, and (viii) beauty salons.
Overdue Rate: On any date, a rate of interest per annum equal no the
greater of: (i) a variable rate of interest per annum equal to one hundred
twenty percent (120 %) of the Prime Rate, or (ii) eighteen percent (18%) per
annum; provided, however, in no event shall the Overdue Rate be greater than the
maximum rate then permitted under applicable law to be charged by Lessor.
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PBGC: Pension Benefit Guaranty Corporation.
Permits: Collectively, all permits, licenses, approvals, variances,
permissive uses, accreditations, certificates, certifications, consents,
agreements, contracts, contract rights, franchises, interim licenses, permits
and other authorizations of every nature whatsoever required by, or issued
under, applicable Legal Requirements benefiting, relating or affecting the
Leased Property or the construction, development, maintenance, management, use
or operation thereof, or the operation of any programs or services in
conjunction with the Facility and all renewals, replacements and substitutions
therefor, now or hereafter required or issued by any Governmental Authority,
Accreditation Body or Third Party Payor, or maintained or used by any member of
the Leasing Group, or entered into by any member of the Leasing Group with any
Person.
Permitted Encumbrances: As defined in Section 10.1.17.
Permitted Prior Security Interests: As defined in Section 6.1.2.
Person: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.
Pledge Agreement: The Stock Pledge Agreement dated as of September 30,
1997 between Guarantor, Lessee, Lessor and certain Affiliates of Lessor, as
amended from time to time.
Primary Intended Use: The use of the Facility as an assisted living
facility or residential care facility with the number of licensed (if
applicable) units as defined herein and such ancillary uses as are permitted by
law and may be necessary in connection therewith or incidental thereto.
Prime Rate: The variable rate of interest per annum from time to time
announced by the Reference Bank as its prime rate of interest and in the event
that the Reference Bank no longer announces a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any other major bank or other financial institution reasonably
selected by Lessor.
Principal Place of Business: As defined in Section 10.1.27.
Proceeds: As defined in the UCC.
Provider Agreements: All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the benefit of Lessee
or any Sublessee in connection with the operation of the Facility relating to
any right of payment or other claim arising out of or in connection with
Lessee's or such Sublessee's participation in any Third Party Payor Program.
Lessor understands that no Provider Agreements presently exist with respect to
any activities of
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Lessee or any Sublessee and that, accordingly, the provisions of this Lease
relating in any way to Provider Agreements are presently inapplicable to this
transaction; however, in the event that at any time during the Term, any of
Lessee, any Sublessee or the Facility enter into, or otherwise become involved
in, any Provider Agreements, then all such provision of this Lease and the other
Lease Documents shall apply with full force and effect.
Purchaser: As defined in Section 11.5.4.
Receivables: Collectively, all (i) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (ii) rights to payment for
goods sold or leased or services rendered by Lessee or any other party, whether
now in existence or arising from time to time hereafter and whether or not yet
earned by performance, including, without limitation, obligation evidenced by an
account, note, contract, security agreement, chattel paper, or other evidence of
indebtedness.
Reference Bank: Fleet Bank of Connecticut, N.A.
Related Leases: Acquisition Facility Leases (as defined in the
Agreement Regarding Related Transactions), together with such other new leases
identified from time to time in the Agreement Regarding Related Transactions.
Related Parties: Collectively, each Person that may now or hereafter be
a party to any Related Party Agreement other than the Meditrust Entities.
Related Party Agreement: Any agreement, document or instrument now or
hereafter evidencing or securing any Related Party Obligation, including without
limitation, the Meditrust/ALP Transaction Documents (as defined in the Agreement
Regarding Related Transactions) and those agreements listed in Schedule 2.6 of
the Security Agreement.
Related Party Default: The occurrence of a default or breach of
condition continuing beyond the expiration of any applicable notice and grace
periods, if any, under the terms of any Related Party Agreement.
Related Party Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings due to, or made for the
benefit of, Lessor or any of the other Meditrust Entities by Lessee or any other
member of the Leasing Group or any of their respective Affiliates; whether such
indebtedness, covenants, liabilities, obligations, agreements and/or
undertakings are direct or indirect, absolute or contingent, liquidated or
unliquidated, due or to become due, joint, several or joint and several, primary
or secondary, now existing or hereafter arising.
Rent: Collectively, the Base Rent, the Additional Charges and all other
sums payable under this Lease and the other Lease Documents.
Rent Adjustment Date: Each yearly anniversary of the Fixed Term
Commencement Date
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during the Term of the Lease including any exercised extension
thereof.
Rent Adjustment Rate: 320 basis points over the Index.
Rent Coverage Ratio: The ratio of (i) Cash Flow for each applicable
period to (ii) the total of all Rent paid or payable during such period or
accrued for such period.
Rent Insurance Proceeds: As defined in Section 13.8.
Resident Agreements: All contracts, agreements and consents executed by
or on behalf of any resident or other Person seeking services at the Facility,
including, without limitation, assignments of benefits and guarantees.
Retainage: As defined in Section 13.1.4.
Security Agreement: The Security Agreement dated as of September 30,
1997 between Lessee, Lessor and certain Affiliates of Lessor.
Seller: York Development, Limited, an Ohio limited liability company.
State: The state(s) or commonwealth(s) in which the Leased Property is
located.
Stated Amount: None.
Sublease: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements and other occupancy agreements
of every kind and nature (but excluding resident occupancy agreements), whether
oral or in writing, now in existence or subsequently entered into by Lessee in
accordance with the applicable provisions hereof, encumbering or affecting the
Leased Property.
Sublessee: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases.
Subsequent Investments: The aggregate amount of all sums expended and
liabilities incurred by Lessor in connection with each Capital Addition.
Subsidiary or Subsidiaries: With respect to any Person, any corporation
or other entity of which such Person, directly, or indirectly, through another
entity or otherwise, owns, or has the right to control or direct the voting of,
fifty percent (50 %) or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances).
Taking: A taking or voluntary conveyance during the Term of the Leased
Property, or any interest therein or right accruing thereto, or use thereof, as
the result of, or in settlement of, any Condemnation or other eminent domain
proceeding affecting the Leased Property whether or not the same shall have
actually been commenced.
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Tangible Net Worth: An amount determined in accordance with GAAP equal
to the total assets of any Person, excluding the total intangible assets of such
Person, minus the total liabilities of such Person. Total intangible assets
shall be deemed to include, but shall not be limited to, the excess of cost over
book value of acquired businesses accounted for by the purchase method,
formulae, trademarks, trade names, patents, patent rights and deferred expenses
(including, but not limited to, unamortized debt discount and expense,
organizational expense and experimental and development expenses).
Tangible Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, and other personal property owned or leased (pursuant to
equipment leases) by Lessee and used or useful in the operation of the Leased
Property or arising in connection therewith or relating thereto.
Term: Collectively, the Fixed Term and each Extended Term which has
become effective pursuant to Section 1.3, as the context may require, unless
earlier terminated pursuant to the provisions hereof.
Third Party Payor Programs: Collectively, all third party payor
programs in which Lessee or any Sublessee presently or in the future may
participate, including without limitation, Medicare, Medicaid, CHAMPUS, Blue
Cross and/or Blue Shield, Managed Care Plans, other private insurance plans and
employee assistance programs. Lessor understands that neither Lessee nor any
Sublessee nor the Facility presently participates in, or otherwise receives
reimbursement from, any Third Party Payor Program and, accordingly, the
provisions of this Lease relating to Third Party Payor Programs are currently
inapplicable; however, in the event that at any time during the Term, any of
Lessee, any Sublessee or the Facility elect to participate in, or otherwise
receive reimbursement from, any Third Party Payor Program, or in the event that
it becomes reasonably prudent business practice for any assisted living facility
to participate in, or otherwise receive reimbursement from a Third Party Payor
Program, then all provisions in this Lease and the other Lease Documents
relating to Third Party Payor Programs shall apply with full force and effect.
Third Party Payors: Collectively, Medicare, Medicaid, CHAMPUS, Blue
Cross and/or Blue Shield, private insurers and any other Person which presently
or in the future maintains Third Party Payor Programs.
Time of Closing: [Intentionally Omitted]
UCC: The Uniform Commercial Code as in effect from time to time in the
State.
United States Treasury Securities: The uninsured treasury securities
issued by the United States Federal Reserve Bank.
Unsuitable For Its Primary Intended Use: As used anywhere in this
Lease, the term "Unsuitable For Its Primary Intended Use" shall mean that, by
reason of Casualty, or a partial or
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temporary Taking by Condemnation, in the good faith judgment of Lessor, the
Facility cannot be operated on a commercially practicable basis for the Primary
Intended Use, taking into account, among other relevant factors, the number of
usable units affected by such Casualty or partial or temporary Taking.
Unavoidable Delays: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto. .
Upgrade Expenditures: As defined in Section 8.1.4.
Work: As defined in Section 13.1.1.
Work Certificates: As defined in Section 13.1.3.
2.2 Rules of Construction. The following rules of construction shall
apply to the Lease and each of the other Lease Documents: (a) references to
"herein", "hereof" and "hereunder" shall be deemed to refer to this Lease or the
other applicable Lease Document, and shall not be limited to the particular text
or section or subsection in which such words appear; (b) the use of any gender
shall include all genders and the singular number shall include the plural and
vice versa as the context may require; (c) references to Lessor's attorneys
shall be deemed to include, without limitation, special counsel and local
counsel for Lessor; (d) reference to attorneys' fees and expenses shall be
deemed to include all costs for administrative, paralegal and other support
staff; (e) references to the Land, Leased Improvements, Fixtures, Lessor's
Personal Property, Facility, and Leased Property shall be deemed to include
references to all of the Land, Leased Improvements, Fixtures, Lessor's Personal
Property, Facility, and Leased Property, respectfully, and references to any
portion thereof; (f) references to the Lease Obligations shall be deemed to
include references to all of the Lease Obligations and references to any portion
thereof; (g) references to the Obligations shall be deemed to include references
to all of the Obligations and references to any portion thereof; (h) the term
"including", when following any general statement, will not be construed to
limit such statement to the specific items or matters as provided immediately
following the term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar import are also
used), but rather will be deemed to refer to all of the items or matters that
could reasonably fall within the broadest scope of the general statement; (i)
any requirement that financial statements be Consolidated in form shall apply
only to such financial statements as relate to a period during any portion of
which the relevant Person has one or more Subsidiaries; (j) all accounting terms
not specifically defined in the Lease Documents shall be construed in accordance
with GAAP and (k) all exhibits annexed to any of the Lease Documents as
referenced therein shall be deemed incorporated in such Lease Document by such
annexation and/or reference.
ARTICLE 3
RENT
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3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures.
Lessee will pay to Lessor, in lawful money of the United States of America, at
Lessor's address set forth herein or at such other place or to such other Person
as Lessor from time to time may designate in writing, rent for the Leased
Property, as follows.
3.1.1 Base Rent. Lessee shall pay to Lessor a base rent (the
"Base Rent") per annum which is equal to TWO HUNDRED TWO THOUSAND NINE HUNDRED
NINETY FIVE DOLLARS AND 00/100 ($202,995.00), subject to adjustment as provided
herein, and which is payable in advance in equal, consecutive monthly
installments due on the first day of each calendar month, commencing on the
Fixed Term Commencement Date. Notwithstanding the foregoing, if the Fixed Term
Commencement Date is a date other than the first of the month, Base Rent for the
month in which the Fixed Term Commencement Date occurs shall be prorated and due
on such Date.
3.1.2 Increase to Base Rent. Commencing on March 1, 1999 and on
each March 1 during the Term (each such date shall be referred to herein as a
"Rent Adjustment Date"), Base Rent per annum shall be increased so as to equal
the lesser of (a) the Maximum Rent Adjustment (defined below), or (b) an amount
determined by multiplying the Base Rent then in effect times a fraction, the
numerator of which shall be the CPI Index on the applicable Rent Adjustment Date
and the denominator of which shall be the CPI Index on the preceding Rent
Adjustment Date (or on the Fixed Term Commencement Date in the case of the first
Rent Adjustment Date). Monthly payments of Base Rent shall be adjusted so as to
reflect the increase in Base Rent.
If, for any Lease Year or any portion thereof, the Base Rent is
adjusted in accordance with clause (b) above, then the difference between the
Base Rent for such Lease Year and the Base Rent for such Lease Year if adjusted
in accordance with clause (a) above shall be referred to herein as the "Rent
Shortfall." If, for any Lease Year, the Base Rent is` adjusted in accordance
with clause (a), then the difference between the Base Rent for such Lease Year
and the Base Rent for such Lease Year if adjusted in accordance with clause (b),
shall be referred to herein as the "Rent Surplus".
In the event there is a Rent Shortfall for any Lease Year, Lessee shall
also pay to Lessor, as part of the Base Rent due hereunder, ark amount equal to
such Rent Shortfall, plus any Rent Shortfall in any previous Lease Years, up to
an amount equal to the Rent Surplus, if any, for the then current Lease Year,
less any prior payments on account of a Rent Shortfall.
As used herein, the "Maximum Rent Adjustment" shall be the Base Rent in
any applicable year, which would result solely by multiplying, in each year, on
the relevant Rent Adjustment Date, the Base Rent then in effect (i.e., the Base
Rent for the twelve month period immediately preceding such Rent Adjustment
Date) by one hundred two percent (102%).
As used herein, the "CPI Index" shall mean and refer to the Consumer
Price Index for Urban Wage Earners and Clerical Workers, U.S. Cities Average,
All Items (1982-84=100)
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published by the Bureau of Labor Statistics of the U.S. Department of Labor;
provided that if compilation of the CPI Index in its present form and calculated
on its present basis is discontinued or transferred to any other governmental
department or bureau, then the index most nearly the same as the CPI Index
published by the Bureau of Labor Statistics shall be used. If there is no such
similar index, a substitute index which is then generally recognized as being
similar to the CPI Index shall be used, such substitute index to be reasonably
selected by Lessor. Until the CPI Index is established, Lessee shall pay the
Base Rent calculated in accordance with clause (a)'above, and once the CPI Index
for the Rent Adjustment Date of such Lease Year is published, the new Base Rent
(as increased) shall be effective retroactively as of the Rent Adjustment Date
with the remaining payments to be adjusted ratably.
3.1.3 Base Rent for Extended Terms. Notwithstanding any
provisions of this Section 3.1 to the contrary, commencing on the first day of
each Extended 'Term, the Base Rent for the first year of such Extended Term
shall be an amount equal to the product of (x) the greater of (a) the
then-current Base Rent (before any adjustment for such year pursuant to Section
3.1.2) or (b) an amount equal to the product of the then Meditrust Investment
multiplied by the Rent Adjustment Rate then in effect on the first day of the
applicable Extended Term times (y) one hundred two percent (102%). With respect
to each year of an Extended Term other than the first year of the same, Base
Rent shall be subject to adjustment as set forth above in Section 3.1.2.
3.2 Best Efforts To Maximize. Lessee further covenants that the
operation of the Facility shall be conducted in a manner consistent with the
prevailing standards and practices recognized in the health care industry as
those customarily utilized by first class business operations.
3.3 [Intentionally Omitted]
3.4 Additional Charges. Subject to the rights to contest as set forth
in Article 15, in addition to the Base Rent, (a) Lessee will also pay and
discharge as and when due and payable all Impositions, all amounts, liabilities
and obligations under the Appurtenant Agreements and other amounts, liabilities
and obligations which Lessee assumes or agrees to pay under this Lease, and (b)
in the event of any failure on the part of Lessee to pay any of those items
referred to in clause (a) above, Lessee will also promptly pay and discharge
every fine, penalty, interest and cost which may be added for non-payment or
late payment of such items (the items referred to in clauses (a) and (b) above
being referred to herein collectively as the "Additional Charges"), and Lessor
shall have all legal, equitable and contractual rights, powers and remedies
provided in this Lease, by statute or otherwise, in the case of non-payment of
the Additional Charges, as well as the Base Rent. To the extent that Lessee pays
any Additional Charges to Lessor pursuant to any requirement of this Lease,
Lessee shall be relieved of its obligation to pay such Additional Charges to any
other Person to which such Additional Charges would otherwise be due.
3.5 Leasing Commitment Fee: The Lessee shall pay to the Lessor the
Leasing Commitment Fee simultaneously with the execution of this Lease;
provided, however, that, at the Lessor's option, the Leasing Commitment Fee
shall be held in an escrow account established with a Person designated by the
Lessor pursuant to an escrow arrangement satisfactory to the
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Lessor, with interest thereon benefiting the Lessor. If the Lessor exercises its
option to require that the Leasing Commitment Fee be held in such an escrow
account (a) the Leasing Commitment Fee shall be disbursed from said escrow
account only upon the joint instructions of the Lessee and the Lessor (which
instructions from the Lessee shall be immediately given upon the request of the
Lessor) and in no event shall the Leasing Commitment Fee be disbursed therefrom,
in whole or in part, unless and until so requested by the Lessor and (b) the
Lessor shall bear the risk of loss of or misappropriation of the Leasing
Commitment Fee by such escrow agent.
3.6 Net Lease. The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the installments of Base
Rent, and the payments of Additional Charges throughout the Term.
3.7 No Lessee Termination or Offset.
3.7.1 No Termination. Except as may be otherwise specifically
and expressly provided in this Lease, Lessee, to the extent not prohibited by
applicable law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent, nor
shall the respective obligations of Lessor and Lessee be otherwise affected by
reason of (a) any Casualty or any Taking of the Leased Property, (b) the lawful
or unlawful prohibition of, or restriction upon, Lessee's use of the Leased
Property or the interference with such use by any Person or by reason of
eviction by paramount title, (c) any claim that Lessee has or might have against
Lessor, (d) any default or breach of any warranty by Lessor or any of the other
Meditrust Entities under this Lease, any other Lease Document or any Related
Party Agreement, (e) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee or transferee of Lessor or (f) for any other
cause whether similar or dissimilar to any of the foregoing, other than a
discharge of Lessee from any of the Lease Obligations as a matter of law.
3.7.2 Waiver. To the fullest extent not prohibited by
applicable law, Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or (b) entitle Lessee to any abatement,, reduction, suspension or
deferment of the Rent or other sums payable by Lessee hereunder, except as
otherwise specifically and expressly provided in this Lease.
3.7.3 Independent Covenants. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or (except in those instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of a Lease Default.
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3.8 Abatement of Rent Limited. There shall be absolutely no abatement
of Rent on account of any Casualty, Taking or other event, except that in the
event of a partial Taking or a temporary Taking as described in Section 14.3,
the Base Rent shall be abated as follows: (a) in the case of such a partial
Taking, the Meditrust Investment shall be reduced for the purposes of
calculating Base Rent pursuant to Section 3.1 by subtracting therefrom, as
applicable, the net amount of the Award received by Lessor, and (b) in the case
of such a temporary Taking, by reducing the Base Rent for the period of such a
temporary Taking, by the net amount of the Award received by Lessor.
For the purposes of this Section 3.8, the "net amount of the Award
received by Lessor" shall mean the Award paid to Lessor on account at such
Taking, minus all costs and expenses incurred by Lessor in connection therewith,
and minus any amounts paid to or for the account of Lessee to reimburse for the
costs and expenses of reconstructing the Facility following such Taking in order
to create a viable and functional Facility under all of the circumstances.
ARTICLE 4
IMPOSITIONS; TAXES; UTILITIES:
INSURANCE PAYMENTS
4.1 Payment of Impositions.
4.1.1 Lessee To Pay. Lessee will pay or cause to be Paid all
Impositions before any fine, penalty, interest or cost may be added for
non-payment, such payments to be made directly to the taxing authority where
feasible, and Lessee will promptly furnish Lessor copies of official receipts or
other satisfactory proof evidencing payment not later than the last day on which
the same may be paid without penalty or interest. Subject to Section 4.1.2,
Lessee's obligation to pay such Impositions shall be deemed absolutely fixed
upon the date such Impositions become a lien upon the Leased Property or any
part thereof.
4.1.2 Installment Elections. 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), Lessee may
exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and, in such event, shall pay such
installments during the Term hereof (subject to Lessee's right to contest
pursuant to the provisions of Section 4.1.5 below) as the same respectively
become due and before any fine, penalty, premium, further interest or cost may
be added thereto.
4.1.3 Returns and Reports. Lessor, at its expense, shall, to
the extent permitted by applicable law, prepare and file all tax returns and
reports as may be required by Governmental Authorities in respect of Lessor's
net income, gross receipts, franchise taxes and taxes on its capital stock, and
Lessee, at its expense, shall, to the extent permitted by applicable laws and
regulations, prepare and file all other tax returns and reports in respect of
any Imposition as may be required by Governmental Authorities. Lessor and Lessee
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made
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with respect to the Leased Property as may be necessary to prepare any required
returns arid reports. In the event that any Governmental Authority classifies
any property covered by this Lease as personal property, Lessee shall file all
personal property tax returns in such jurisdictions where it may legally so
file. Lessor, to the extent it possesses the same, and Lessee, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any portion of Leased
Property so classified as personal property. Where Lessor is legally required to
file personal property tax returns, if Lessee notifies Lessor of the obligation
to do so in each year at least thirty (30) days prior to the date any protest
must be filed, Lessee will be provided with copies of assessment notices so as
to enable Lessee to file a protest.
4.1.4 Refunds. If no Lease Default or Related Party Default
shall have occurred and be continuing, any refund due from any taxing authority
in respect of any Imposition paid by Lessee shall be paid over to or retained by
Lessee. If a Lease Default or Related Party Default shall have occurred and be
continuing, at Lessor's option, such funds shall be paid over to Lessor and/or
retained by Lessor and applied toward the Obligations in accordance with the
Lease Documents and/or any Related Party Agreement.
4.1.5 Protest. Upon giving notice to Lessor, at Lessee's option
and at Lessee's sole cost and expense, and subject to compliance with the
provisions of Article 15, Lessee may contest, protest, appeal, or institute such
other proceedings as Lessee may deem appropriate to effect a reduction of any
Imposition and Lessor, at Lessee's cost and expense as aforesaid, shall fully
cooperate in a reasonable manner with Lessee in connection with such protest,
appeal or other action.
4.2 Notice of Impositions. Lessor shall give prompt notice to Lessee
of all Impositions payable by Lessee hereunder of which Lessor at any time has
knowledge, but Lessor's failure to give any such notice shall in no way diminish
Lessee's obligations hereunder to pay such Impositions.
4.3 Adjustment of Impositions. Impositions imposed in respect of the
period during which the expiration or earlier termination of the Term occurs
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Impositions are imposed before or after such expiration or termination, and
Lessee's obligation to pay its prorated share thereof shall survive such
expiration or termination.
4.4 Utility, Charges. Lessee will pay or cause to be paid all charges
for electricity, power, gas, oil, water, telephone and other utilities used in
the Leased Property during the Term and thereafter until Lessee surrenders the
Leased Property in the manner required by this Lease.
4.5 Insurance Premiums. Lessee will pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article 12 during the Term, and thereafter until Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and Lessee shall furnish Lessor with evidence satisfactory
to Lessor that all such premiums have been so paid prior to the commencement of
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the Term and thereafter at least thirty (30) days prior to the due date of each
premium which thereafter become due. Notwithstanding the foregoing, Lessee may
pay such insurance premiums to the insurer in monthly installments so long as
the applicable insurer is contractually obligated to give Lessor not less than a
thirty (30) days notice of non-payment and so long as no Lease Default has
occurred and is continuing. In the event of the failure of Lessee either to
comply wit the insurance requirements in Article 12, or to pay the premiums for
such insurance, r to deliver such policies or certificates thereof to Lessor at
the times required hereunder, Lessor shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, which
premiums shall be a demand obligation of Lessee to Lessor.
4.6 Deposits.
4.6.1 Lessor's Option. At the option of Lessor, which may be
exercised at any time of after a default has occurred and is continuing, Lessee
shall, upon written request of Lessor, on a first day on the calendar month
immediately following such request, and on the first day of each calendar month
thereafter during the Term (each of which dates is referred to as a "Monthly
Deposit Date"), pay to and deposit with Lessor a sum equal to one-twelfth
(1/12th) of a Impositions to be levied, charged, filed, assessed or imposed upon
or against the Leased Property within one (1) year after said Monthly Deposit
Date and a sum equal to one-twelfth (1/12th) of the premiums for the insurance
policies required pursuant to Article 12 which are payable within one (1) year
after said Monthly Deposit Date. If the amount of the Impositions o be levied,
charged, assessed or imposed or insurance premiums to be paid within the ensuing
one (1) year period shall not be fixed upon any Monthly Deposit Date, such
amount for the p se of computing the deposit to be made by Lessee hereunder
shall be estimated by Lessor with appropriate adjustment to be promptly made
between Lessor and Lessee as soon as such amount becomes determinable. In
addition, Lessor may, at its option, from time to time require that y particular
deposit be greater than one-twelfth (1/12th) of the estimated amount payable
within one (1) year after said Monthly Deposit Date, if such additional deposit
is required in order to provide to Lessor a sufficient fund from which to make
payment of all Impositions on or before the next due date of any installment
thereof, or to make payment of any require insurance premiums not later than the
due date thereof.
4.6.2 Use of Deposits. The sums deposited by Lessee under this
Section 4.6 shall be held by Lessor and shall be applied in payment of the
Impositions or insurance premiums, as the case may be, when due. Any such
deposits may be commingled with other assets of Lessor, and shall be invested by
Lessor at such bank as Lessor may, from time to time select, and Lessor shall
not be liable to Lessee or any other Person (a) based on Lessor's choice of
investment vehicles provided Lessor chooses one or more of the investment
vehicles described on SCHEDULE 4.6.2 attached hereto and incorporated by
reference, (b) for any consequent loss of principal or interest or (c) for any
unavailability of funds based on such choice of investment. Furthermore, Lessor
shall bear no responsibility for the financial condition of, nor any act or
mission by, Lessor's depository bank. The income from such investment or
interest on such deposit shall be paid to Lessee on a semi-annual basis as long
as no Lease Default has occurred d is then continuing, and as long as no fact or
circumstance exists which, with the giving of notice and/or the passage of time,
would constitute a Lease Default. Lessee shall give not less than ten
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(10) days prior written notice to Lessor in each instance when an Imposition or
insurance premium is due, specifying the Imposition or premium to be paid and
the amount thereof, the place of payment, and the last day on which the same may
be paid in order to comply with the requirements of this Lease. If Lessor, in
violation of its obligations under this Lease, doe not pay any Imposition or
insurance premium when due, for which a sufficient deposit exists, Lessee shall
not be in default hereunder by virtue of the failure of Lessor to pay such
Imposition or such insurance premium.
4.6.3 Deficits. If for any reason any deposit held by Lessor
under this Section 4.6 shall not be sufficient to pay an Imposition or insurance
premium within the time specified therefor in this Lease, then, within ten (10)
days after demand by Lessor, Lessee shall deposit an additional amount with
Lessor, increasing the deposit held by Lessor so that Lessor holds sufficient
funds to pay such Imposition or premium in full (or in installments as otherwise
provided for herein), together with any penalty or interest thereon. Lessor may
change its estimate of any Imposition or insurance premium for any period on the
basis of a change in an assessment or tax rate or on the basis of a prior
miscalculation or for any other good faith reason; in which event, within ten
(10) days after demand by Lessor, Lessee shall deposit with Lessor the amount in
excess of the sums previously deposited with Lessor for the applicable period
which would theretofore have been payable under the revised estimate.
4.6.4 Other Properties. If any Imposition shall be levied,
charged, filed, assessed, or imposed upon or against the Leased Property, and if
such Imposition shall also be a levy, charge, assessment, or imposition upon or
for any other real or personal property that does not constitute a part of the
Leased Property, then the computation of the amounts to be deposited under this
Section 4.6 shall be based upon the entire amount of such Imposition and Lessee
shall not have the right to apportion any deposit with respect to such
Imposition.
4.6.5 Transfers. In connection with any assignment of Lessor's
interest under this Lease, a original Lessor named herein and each successor in
interest shall have the right to transfer all amounts deposited pursuant to the
provisions of this Section 4.6 and still in its possession such assignee (as the
subsequent holder of Lessor's interest in this Lease) and upon such transfer,
the original Lessor named herein or the applicable successor in interest
transferring the deposits shall thereupon be completely released from all
liability with respect to such deposits so transferred and Lessee shall look
solely to said assignee, as the subsequent holder of Lessor's interest under
this Lease, in reference thereto.
4.6.6 Security. All amounts deposited with Lessor pursuant to
the provisions of this Section 4.6 shall be held by Lessor as additional
security for the payment and performance of the Obligations and, upon the
occurrence of any Lease Default, Lessor may, in its sole an absolute discretion,
apply said amounts towards payment or performance of such Obligations.
4.6.7 Return. Upon the expiration or earlier termination of
this Lease, provided, that, all of the Lease Obligations have been fully paid
and performed, any sums then held by Lessor under this Section 4.6 shall be
refunded to Lessee; unless a Related Party Default has occurred, in which event
such sums may be applied towards the Obligations.
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4.6.8 Receipts. Lessee shall deliver to Lessor copies of all
notices, demands, claims, bills and receipts in relation to the Impositions and
an annual summary invoice of insurance premiums immediately upon receipt thereof
by Lessee.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY:
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY
5.1 Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only the right to
the exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
5.2 Personal Property: Removal and Replacement of Personal Property.
5.2.1 Lessee To Equip Facility. Lessee, at its sole cost and
expense, shall install, arc or assemble or place on the Leased Property,
sufficient items of Tangible Personal Property in addition to Lessor's Personal
Property, to enable the operation of the Facility in accordance with the
requirements of this Lease for the Primary Intended Use and, to the extent
applicable, the Other Permitted Uses and such Tangible Personal Property and
replacements thereof, shall be at all times the property of Lessee.
5.2.2 Sufficient Personal Property. Lessee shall maintain,
during the entire Term, the Tangible Personal Property and Lessor's Personal
Property in good order and repair and shall provide at its expense all necessary
replacements thereof, as may be necessary in order to operate the Facility 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 and, to the extent applicable, the Other Permitted Uses. In
addition, Lessee shall (a) furnish all necessary replacements of obsolete items
of the Tangible Personal Property and Lessor's Personal Property during the
Term, unless Lessee provides Lessor with an explanation (reasonably acceptable
to Lessor) as to why such Tangible Personal Property and Lessor's Personal
Property is no longer required in connection with the operation of the Leased
Property and (b) at least once a year, and more frequently if requested by
Lessor, deliver to Lessor, a detailed inventory of all such Tangible Personal
Property and Lessor's Personal Property.
5.2.3 Removal and Replacement: Lessor's Option to Purchase.
Lessee shall not remove from the Leased Property any one or more items of
Tangible Personal Property (whether now owned or hereafter acquired), the fair
market value of which exceeds TWENTY-FIVE THOUSAND and NO/100 DOLLARS
($25,000.00), individually or ONE HUNDRED THOUSAND and NO/100 DOLLARS
($100,000.00) collectively, except if such Tangible Personal Property is
simultaneously suitably replaced or Lessee provides Lessor with an explanation
(reasonably satisfactory to Lessor) as to why such Tangible Personal Property is
no
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longer required in connection with the operation of the Leased Property. At
its sole cost and expense, Lessee shall restore the Leased Property to the
condition required by Article 8, including repair of all damage to the Leased
Property caused by the removal of the Tangible Personal Property, whether
effected by Lessee or Lessor. Upon the expiration or earlier termination of this
Lease, Lessor shall have the option, which may be exercised prior to or within
sixty (60) days following such expiration or termination, of (a) acquiring the
Tangible Personal Property (pursuant to a xxxx of sale and assignments of any
equipment leases, all in such forms as are reasonably satisfactory to Lessor)
upon payment of its book value (Lessee's cost, minus depreciation), but not in
excess of its fair market value or (b) requiring Lessee to remove the Tangible
Personal Property. If Lessor exercises its option to purchase the Tangible
Personal Property, the price to be paid by Lessor shall be (i) reduced by the
amount of all payments due on any equipment leases or any other Permitted Prior
Security Interests and (ii) applied to the Lease Obligations before any payment
to Lessee. If Lessor requires the removal of the Tangible Personal Property,
then all of the Tangible Personal Property that is not removed by Lessee within
ten (10) days following such request shall be considered abandoned by Lessee and
may be appropriated, sold, destroyed or otherwise disposed of by Lessor without
first giving notice thereof to Lessee, without any payment to Lessee and without
any obligation to account therefor.
ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS
6.1 Security for Lessee's Obligations: Permitted Prior Security
Interests.
6.1.1 Security. In order to secure the payment and performance of
all of the Obligations, Lessee agrees to provide or cause there to be provided
the following security:
(a) a first lien and exclusive security interest in the
Collateral, as more particularly provided for in the Security Agreement;
(b) the Guaranty described in Section 6.3;
(c) a first lien and exclusive pledge of all of the
capital stock of Lessee all as more particularly set forth in the Pledge
Agreement. If any Person other than the Lessee or Guarantor shall ever operate
the Facility, a pledge of all capital stock of or partnership or other ownership
interests in such Person shall also be provided pursuant to a pledge and
security agreement substantially similar to the Pledge Agreements;
(d) a first lien and exclusive pledge and assignment
of, and security interest in, all Permits and Contracts, as more particularly
provided for in the Collateral Assignment f Permits and Contracts; and
(e) in the event that at any time during the Term, Lessee
holds the fee title to or a leasehold interest in any real property and/or
personal property which is used as an integral part of the operation of the
Leased Property (but is not subject to this Lease), Lessee
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shall (i) provide Lessor with prior notice of such acquisition and (ii) shall
take such actions and enter into such agreements as Lessor shall reasonably
request in order to xxxxx Xxxxxx a first priority mortgage or other security
interest in such real property and personal property, subject only to the
Permitted Encumbrances and other Liens reasonably acceptable to Lessor.
6.1.2 Purchase-Money Security Interests and Equipment Leases.
Lessee may (a) grant priority purchase money security interests in items of
Tangible Personal Property and (b) lease Tangible Personal Property from
equipment lessors as long as in each instance: (i) the secured party or
equipment lessor enters into an intercreditor agreement with, and satisfactory
to, Lessor, pursuant to which, without limiting the foregoing, (x) Lessor shall
be afforded the option of curing defaults and the option of succeeding to the
rights of Lessee and (y) Lessor's security interest in Tangible Personal
Property shall be subordinated to the security interest granted to such secured
party, (ii) all of the terms, conditions and provisions of the financing,
security interest or lease are reasonably acceptable to Lessor, (iii) Lessee
provides a true and complete copy, as executed, of each such purchase money
security agreement, financing document and equipment lease, (iv) no such
security interest, financing agreement or lease is cross-defaulted or
cross-collateralized with any other obligation and (v) the secured party or
equipment lessor is not a member of the Leasing Group or an Affiliate of any
member of the Leasing Group. Security interests granted by Lessee in full
compliance with the provisions of this Section 6.1.2 are referred to as
"Permitted Prior Security Interests".
6.2 [Intentionally Omitted]
6.3 Guaranty. All of the Lease Obligations shall be unconditionally
and irrevocably guaranteed y the Guarantor pursuant to the Guaranty.
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
7.1 Condition of the Leased Property. Lessee acknowledges that Seller
has caused the Leased Property to be sold to Lessor and Lessee has concurrently
entered into this Lease. Lessee acknowledges receipt and delivery of possession
of the Leased Property and that Lessee has examined and otherwise has acquired
knowledge of the condition of the Leased Property prior to the execution and
delivery of this Lease and has found the same to be in good order and repair and
satisfactory for its purposes hereunder. Lessee is leasing the Leased Property
"AS-IS" in its present condition. Lessee waives any claim or action against
Lessor in respect of the condition of the Leased Property. LESSOR MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED
PROPERTY, EITHER AS TO ITS FITNESS FOR ANY PARTICULAR PURPOSE OR USE, ITS DESIGN
OR CONDITION OR OTHERWISE, OR AS TO DEFECTS IN QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL RISKS RELATING
TO THE DESIGN, CONDITION OR USE OF THE LEASED PROPERTY ARE TO BE BORNE BY
LESSEE. LESSEE HEREBY ASSUMES
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ALL RISK OF THE PHYSICAL CONDITION OF THE LEASED PROPERTY, THE SUITABILITY OF
THE LEASED PROPERTY FOR LESSEE'S PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE
OF THE LEASED PROPERTY WITH ALL APPLICABLE LEGAL REQUIREMENTS, INCLUDING BUT NOT
LIMITED TO ENVIRONMENTAL LAWS AND ZONING OR LAND US LAWS.
Upon the request of Lessor, at any time and from time to time during
the Term if Lessor has reason to believe that any of the conditions described in
(a) or (b) below may exist, Lessee shall engage one (1) or more independent
professional Consultants, qualified to do business in the State an acceptable to
Lessor to perform any environmental and/or structural investigations and/or
other inspections of the Leased Property and the Facility as Lessor may
reasonably request in order to detect (a) any structural deficiencies in the
Leased Improvements or the utilities se icing the Leased Property or (b) the
presence of any condition that (i) may be harmful or resent a health hazard to
the residents and other occupants. of the Leased Property or (ii) constitutes a
breach or violation of any of the Lease Documents. In the event that Lessor
reasonably determines that the results of such testing or inspections are
unsatisfactory, within thirty (30) days of notice from Lessor, Lessee shall
commence such appropriate remedial actions as may be reasonably requested by
Lessor to correct such unsatisfactory conditions and, thereafter, diligently and
continuously prosecute such remedial actions to completion within the time
limits prescribed in this Lease or the other Lease Documents.
7.2 Use of the Leased Property; Compliance; Management.
7.2.1 Obligation to Operate. Lessee shall continuously operate
the Leased Property in accordance with the Primary Intended Use and, to the
extend applicable, the Other Permitted Uses and maintain its qualifications for
licensure and accreditation as required by all applicable Legal Requirements and
Insurance Requirements.
7.2.2 Permitted Uses. During the entire Term, Lessee shall use
the Leased Property, or permit the Leased Property to be used, only for the
Primary Intended Use and the Other Permitted Uses. Lessee shall not use the
Leased Property or permit the Leased Property to be used or any other use
without the prior written consent of Lessor, which consent may be withheld in
Lessons sole and absolute discretion.
7.2.3 Compliance With Insurance Requirements. No use shall be
made or permitted to be made of the Leased Property and no acts shall be done
which will cause the cancellation of any insurance policy covering the Leased
Property, nor shall Lessee sell or otherwise provide to residents therein, or
permit to be kept, used or sold in or about the Leased Property, any article
which may be prohibited by any Legal Requirement or by any of the Insurance
Requirements. Furthermore, Lessee shall, at its sole cost and expense, take
whatever other actions that may be necessary to comply with and to insure that
the Leased Property complies with all Insurance Requirements.
7.2.4 No Waste. Lessee shall not commit or suffer to be committed
any waste on, in or under the Leased Property, nor shall Lessee cause or permit
any nuisance thereon.
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7.2.5 No Impairment. Lessee shall neither suffer nor permit the
Leased Property to be used in such a manner as (a) might reasonably tend to
impair Lessor's title thereto or (b) may reasonably make possible a claim or
claims of adverse usage or adverse possession by the public or of implied
dedication of the Leased Property.
7.2.6 No Liens. Except for Permitted Prior Security Interests
and any other Liens which may be specifically permitted by the express terms of
this Lease, Lessee shall not permit or suffer any Lien to exist on the
Collateral and shall in no event cause, permit or suffer any Lien to exist with
respect to the Leased Property.
7.3 Compliance with Legal Requirements. Lessee covenants and agrees
that the Leased Property shall not be used for any unlawful purpose and that
Lessee, at its sole cost and expense, will promptly (a) comply with, and shall
cause every other member of the Leasing Group to comply with, all Legal
Requirements relating to the use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural change in any of the Leased Property or interfere with the use and
enjoyment of the Leased Property and (b) procure, maintain and comply with (in
all material respects), and shall cause every other member of the Leasing Group
to procure, maintain and comply with (in all material respects), all Contracts
and Permits necessary or desirable in order to operate the Leased Property for
the Primary Intended Use and, to the extent applicable, Other Permitted Uses,
and for the proper erection, installation, operation and maintenance of the
Leased Property. Unless a Lease Default has occurred and is continuing, Lessee
may, upon prior written notice to Lessor, contest any Legal Requirement to the
extent permitted by, and in accordance with, Article 15 below.
7.4 Management Agreements. Throughout the Term, Lessee shall not enter
into any Management Agreement without the prior written approval of Lessor
(unless Guarantor is the Manager), in each instance, which approval shall not be
unreasonably withheld. Lessee shall not, without the prior written approval of
Lessor, in each instance, which approval shall not be unreasonably withheld,
agree to: (a) any change in the Manager, (b) any change in the Management
Agreement or change in the ownership or control of the Manager, (c) the
termination of any Management Agreement or (d) permit the Manager to assign the
Management Agreement. Each Management Agreement shall provide that Lessor shall
be provided notice of any defaults thereunder and, at Lessor's option, an
opportunity to cure such default; all in form and substance approved by Lessor.
If Lessor shall cure any of Lessee's defaults under the Management Agreement,
the cost of such cure shall be payable upon demand by Lessee to Lessor and
Lessor shall have the same rights and remedies for failure to pay such costs on
demand as or Lessee's failure to pay any other sums due hereunder. Lessee shall
deliver to Lessor any instrument requested by Lessor to implement the intent of
the foregoing provision, including, but not limited to, the Affiliated Party
Subordination Agreement. All management fees, payments in connection with any
extension of credit and fees for services provided in connection with the
operation of the Leased Property, and all other payments and fees, payable by
Lessee, to (i) the Guarantor or any of its Affiliates or (ii) any Affiliate of
Lessee, shall be subordinated to the Lease Obligations pursuant to the
Affiliated Party Subordination Agreement.
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ARTICLE 8
REPAIRS; RESTRICTIONS
8.1 Maintenance and Repair.
8.1.1 Lessee's Responsibility. Lessee, at its sole cost and
expense, shall keep the Leased Property and all private roadways, sidewalks and
curbs appurtenant thereto which are under Lessee's control in good order and
repair (whether or not the need for such repairs occurs as a result of Lessee's
use, any prior use, the elements or the age of the Leased Property or such
private roadways, sidewalks and curbs or any other cause whatsoever) and,
subject to Articles 9, 13 and 14, Lessee shall promptly, with the exercise of
all reasonable efforts, undertake and diligently complete all necessary and
appropriate repairs, replacements, renovations, restorations, alterations and
modifications thereof 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 (concealed or otherwise) existing prior to
the commencement of, or during, the Term and thereafter until Lessee surrenders
the Leased Property in a manner required by this Lease. In addition, Lessee, at
its sole cost and expense, shall make all repairs, modifications, replacements,
renovations and alterations of the Leased Property (a d such private roadways,
sidewalks and curbs) that are necessary to comply with all applicable Legal
Requirements and Insurance Requirements so that the Leased Property can be
legally operated for the Primary Intended Use and, to the extent applicable, the
Other Permitted Uses. All repairs, replacements, renovations, alterations, and
modifications required by the to s of this Section 8.1 shall be (a) performed in
a good and workmanlike manner in compliance with all Legal Requirements,
Insurance Requirements and the requirements of Article 9 hereof, using new
materials well suited for their intended purpose and (b) consistent with the
operation o the Facility in a first class manner. Lessee will not take or omit
to take any action the taking or omission of which might materially impair the
value or the usefulness of the Leased Property for the Primary Intended Use and,
to the extent applicable, the Other Permitted Uses. To the extent that any of
the repairs, replacements, renovations, alterations or modifications required by
the terms of this Section 8.1 constitute Material Structural Work, Lessee shall
obtain Lessor's prior written approval (which approval shall not be unreasonably
withheld) of the specific repairs, replacements, renovations, alterations and
modifications to be performed by or on behalf of Lessee in connection with such
Material Structural Work, and shall perform the same in accordance with the
provisions of Sections 9.2.1, 9.2.2, 9.4 and 13.1.3, all Legal Requirements, and
all other requirements of this Lease.
8.1.2 No Lessor Obligation. Lessor shall not, under any
circumstances, be required to build or rebuild any improvements on the Leased
Property (or any private roadways, sidewalks or curbs appurtenant thereto), or
to make any repairs, replacements, renovations, alterations, restorations,
modifications, or renewals of any nature or description to the Leased Property
(or any private roadways, sidewalks or curbs appurtenant thereto), whether
ordinary or extraordinary, structural or non-structural, foreseen or unforeseen,
or to make any expenditure whatsoever with respect thereto in connection with
this Lease, or to maintain the Leased Property
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in any way (or any private roadways, sidewalks or curbs appurtenant thereto).
8.1.3 Lessee May Not Obligate Lessor. Nothing contained herein nor
any action or inaction by Lessor shall be construed as (a) constituting the
consent or request of Lessor, express or implied, to any contractor,
subcontractor, laborer, materialman or vendor to or for the performance of any
labor or, services for any construction, alteration, addition, repair or
demolition of or to the Leased Property or (b) giving Lessee 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 Lessor for the payment thereof or to make
any agreement that may create, or in any way be the basis for, any right, title
or interest in, or Lien or claim against, the estate of Lessor in the Leased
Property.
8.1.4 Lessee's Obligation to Perform Upgrade Expenditures. Without
limiting Lessee's obligations to maintain the Leased Property under this Lease,
within thirty (30) days after the end of each Lease Year commencing with the end
of the third (3rd) Lease Year, Lessee shall provide Lessor with evidence
reasonably satisfactory to Lessor that Lessee has in such Lease Year spent an
annual amount on Upgrade Expenditures (collectively, the "Required Lease Year
Upgrade Expenditures") equal to $150.00 per living unit within the Facility (as
such per living unit amount shall be adjusted annually at the end of each Lease
Year for increases in the U. S. Department of Labor Cost of Living Index (All
Xxxxxxxxx - Xxxxxxxxx, Xxxx - 0000-0000 = 100) or similar replacement index
since the commencement of the Term). The term "Upgrade Expenditures" is defined
to mean upgrades or improvements to the Leased Property which have the effect of
maintaining or improving the competitive position of the Leased Property in its
marketplace. Non-exclusive examples of Upgrade Expenditures include new or
replacement wallpaper, tiles, window coverings, lighting fixtures, painting,
upgraded landscaping, carpeting, architectural adornments, common areas
amenities and the like. It is expressly understood that capital improvements or
repairs (such as but not limited to repairs or replacements to the structural
elements of the walls, parking area, or the roof or to the electrical, plumbing,
HVAC or other mechanical or structural systems in the Leased Property) shall not
be considered Upgrade Expenditures. In the event that during a given Lease Year
Upgrade Expenditures are not necessary (which necessity shall be determined in
Lessor's sole discretion) and/or the full amount of the respective Required
Lease Year Upgrade Expenditures are not made for the Facility for whatever-
reason, Lessee shall be required to show evidence that a reserve fund has been
established with the balance of the unexpended Required Lease Year Upgrade
Expenditures to be used solely for Upgrade Expenditures in future Lease Years or
as otherwise requested by Lessor. If Lessee fails in any given Lease Year to
make Upgrade Expenditures in an amount equal to the Required Lease Year Upgrade
Expenditures or to establish a reserve fund as aforesaid, Lessee shall promptly
on demand from Lessor (but in no event within more than five (5) days) pay to
Lessor the applicable shortfall in the Required Lease Year Upgrade Expenditures;
and Lessor may retain such funds as additional rent hereunder or, in its sole
discretion, provide such funds to Lessee to perform Upgrade Expenditures.
8.2 Encroachments; Title Restrictions. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other
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Lien now or hereafter affecting the Leased Property, or shall impair the rights
of others under any easement, right-of-way or other Lien to which the Leased
Property is now or hereafter subject, then promptly upon the request of Lessor,
Lessee shall, at its sole cost and expense, subject to Lessee's right to contest
the existence of any encroachment, violation or impairment as set forth in
Article 15, (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 alterations to the Leased Improvements, and take
such other actions, as Lessee in the good faith exercise of its judgment deems
reasonably practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements. Notwithstanding the foregoing, Lessee shall, in any event, take
all such actions as may be reasonably necessary in order to be able to continue
the operation of the Leased Improvements for the Primary Intended Use and, to
the extent applicable, the Other Permitted Uses substantially in the manner and
to the extent that the Leased Improvements were operated prior to the assertion
of such encroachment, violation or impairment and nothing contained herein shall
limit Lessee's obligations to operate the Leased Property in accordance with its
Primary Intended Use. Any such alteration made pursuant to the terms of this
Section 8.2 shall be completed in conformity with the applicable requirements of
Section 8.1 and Article 9. Lessee's obligations under this Section 8.2 shall be
in addition to and shall in no way discharge or diminish any obligation of any
insurer under any policy of title or other insurance.
ARTICLE 9
MATERIAL STRUCTURAL WORK AND
CAPITAL ADDITIONS
9.1 Lessor's Approval. Without the prior written consent of Lessor, which
consent may be withheld by Lessor, in its sole and absolute discretion, Lessee
shall make no Capital Addition or Material Structural Work to the Leased
Property (including, without limitation, any change in a size or unit capacity
of the Facility), except Material Structural Work as may be otherwise expressly
required pursuant to Article 8 and except for the Permitted Work described in
Section .6 below.
9.2 General Provisions as to Capital Additions and Certain Material
Structural Work. As to Capital Additions or Material Structural Work (other than
such Material Structural Work that s required to be performed pursuant to the
terms of Section 8.1) for which Lessor has granted its prior written approval,
the following terms and conditions shall apply unless otherwise expressly set
forth in Lessor's written approval.
9.2.1 No Liens. Subject to the provisions of Article 15, Lessee shall
not be permitted to create any Lien on the Leased Property in connection with
any Capital Addition or Material Structural Work. NOTICE IS HEREBY GIVEN THAT
LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
FURNISHED OR TO BE FURNISHED TO LESSEE OR TO ANYONE HOLDING ANY PART OF THE
LEASED PROPERTY, AND THAT NO MECHANICS' LIENS, CONSTRUCTION LIENS OR OTHER LIENS
FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
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TO OR AFFECT THE INTEREST OF LESSOR IN AND TO THE LEASED PROPERTY.
9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work. If Lessee desires to undertake any Capital Addition or Material
Structural Work, Lessee shall submit to Lessor in writing a proposal setting
forth in reasonable detail any proposed Capital Addition or Material Structural
Work and shall provide to Lessor copies of, or information regarding, the
applicable plans and specifications, Permits, Contracts and any other materials
concerning the proposed Capital Addition or Material Structural Work, as the
case may be, as Lessor may reasonably request. Without limiting the generality
of the foregoing each such proposal pertaining to a Capital Addition shall
indicate the approximate projected cost of constructing such Capital Addition,
the use or uses to which it will be put.
9.2.3 Lessor's Options Regarding Capital Additions and Material Structural
Work. Lessor shall have the options of: (a) denying permission for the
construction of the Capital Addition and/or Material Structural Work, (b)
offering to finance the construction of the Capital Addition or Material
Structural Work pursuant to Section 9.3, (c) allowing Lessee to pay for or
separately finance the construction of the Capital Addition and/or Material
Structural Work, subject to the same limits and conditions imposed under Section
9.4, Section 13.1.3, all Legal Requirements, all other applicable requirements
of this Lease and to such other terms and conditions as Lessor may in its
discretion impose or (d) any combination of the foregoing. Unless Lessor
notifies Lessee in writing of a contrary election within forty-five (45) days of
Lessee's request, Lessor shall be deemed to have denied the request for the
Capital Addition or Material Structural Work.
9.2.4 Lessor May Elect to Finance Capital Additions. If Lessor elects
to offer financing for the proposed Capital Addition or Material Structural
Work, the provisions of Section 9.3 shall apply.
9.2.5 Legal Requirements: Quality of Work. All work shall be performed
in full compliance with all applicable Legal Requirements and shall be performed
in a good and workmanlike manner.
9.3 Capital Additions Financed by Lessor.
9.3.1 Lessee's Financing Request. Lessee may request that Lessor
provide or arrange financing for a Capital Addition or Material Structural Work
by providing to Lessor such information about the Capital Addition or Material
Structural Work as Lessor may reasonably request, including, without limitation,
all information referred to in Section 9.2 above. Lessee understands, however,
that Lessor shall be under no obligation to agree to such request. Nevertheless,
Lessor shall use reasonable efforts to notify Lessee, within forty-five (45)
days of receipt of such information, as to whether Lessor will finance the
proposed Capital Addition or Material Structural Work and, if so, the terms and
conditions upon which it would do so, including the terms of any amendment to
this Lease (including, without limitation, an increase in Base Rent based on
Lessor's (degree) then existing terms and prevailing conditions to compensate
Lessor for its Subsequent Investment with respect to such Capital Addition or
Material Structural
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Work, as the case may be). Lessee may withdraw its request by notice to Lessor
at any time before such time as Lessee accepts Lessor's terms and conditions.
All advances of funds for any such financing shall be made in accordance with
Lessor's then standard construction loan requirements and procedures, which may
include, without limitation, the requirements and procedures applicable to Work
under Section 13.1.3.
9.3.2 Lessor's General Requirements. If Lessor agrees to finance the
proposed Capital Addition or Material Structural Work and Lessee accepts
Lessor's proposal therefor, in addition to all other items which Lessor or any
applicable Financing Party may reasonably require, Lessee shall provide to
Lessor the following:
(a) prior to any advance of funds; (i) any information, opinions,
certificates, Permits or documents reasonably requested by Lessor or any
applicable Financing Party which are necessary to confirm that Lessee will be
able to use the Capital Addition upon completion thereof or the applicable
portion of the Facility upon completion of the Material Structural Work in
accordance with the Primary Intended Use and, to the extent applicable, the
Other Permitted Uses and (ii) evidence satisfactory to Lessor and any applicable
Financing Party that all Permits required for the construction and use of the
Capital Addition or applicable portion of the Facility have been received, are
in full force and effect and are not subject to appeal, except only for those
Permits which cannot in the normal course be obtained prior to commencement or
completion of the construction; provided, that Lessor and any applicable
Financing Party are furnished with reasonable evidence that the same will be
available in the normal course of business without unusual condition;
(b) prior to any advance of funds, an Officer's Certificate and,
if requested, a certificate from Lessee's architect, setting forth in reasonable
detail the projected (or actual, if available) Capital Addition Cost or the cost
of the Material Structural Work;
(c) bills of sale, instruments of transfer and other documents
required by Lessor so as to vest title to the Capital Addition or the applicable
Material Structural Work in Lessor free and clear of all Liens, and amendments
to this Lease and any recorded notice or memorandum thereof, duly executed and
acknowledged, in form and substance reasonably satisfactory to Lessor, providing
for any changes required by Lessor including, without limitation, changes in the
Base Rent and the legal description of the Land;
(d) upon payment therefor, a deed conveying to Lessor title to any
land acquired for the purpose of constructing the Capital Addition or the
applicable Material Structural Work ("Additional Land") free and clear of any
Liens except those approved by Lessor;
(e) upon completion of the Capital Addition or applicable Material
Structural Work, a final as-built survey thereof reasonably satisfactory to
Lessor, if required by Lessor;
(f) during and following the advance of funds and the completion
of
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the Capital Addition or Material Structural Work, endorsements to any
outstanding policy of title insurance covering the Leased Property satisfactory
in form and substance to Lessor (i) updating the same without any additional
exception except as may be reasonably permitted by Lessor and (ii) increasing
the coverage thereof by an amount equal to the Fair Market Value of the Capital
Addition or the Fair Market Value of the Material Structural Work and including
the Additional Land in the premises covered by such title insurance policy
(except to the extent covered by the owner's policy of title insurance referred
to in subparagraph (g) below);
(g) simultaneous with the initial advance of funds, if
appropriate, (i) an owner's policy of title insurance insuring fee simple title
to any Additional Land conveyed to Lessor pursuant to subparagraph (d) above
free and clear of all Liens except those approved by Lessor, reasonably
satisfactory in form and substance to Lessor, and (ii) an owner's policy of
title insurance reasonably satisfactory in form and substance to Lessor and a
lender's policy of title insurance reasonably satisfactory in form and substance
to any applicable Financing Party;
(h) following the completion of the Capital Addition or the
Material Structural Work, if reasonably deemed necessary by Lessor, an appraisal
of the Leased Property by an M.A.I. appraiser acceptable to Lessor, which states
that the Fair Market Value of the Leased Property upon completion of the Capital
Addition or the Material Structural Work exceeds the Fair Market Value of the
Leased Property prior to the commencement of such Capital Addition or the
Material Structural Work by an amount not less than one hundred twenty-five
percent (125%) of the Capital Addition Cost or the cost of the Material
Structural Work; and (i) during or following the advancement of funds, prints of
architectural and engineering drawings relating to the Capital Addition or
Material Structural Work and such other materials, including, without
limitation, endorsements increasing the amount of title insurance coverage in
the title insurance policies insuring Lessor and any applicable Financing Party
with respect to the Leased Property, opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors of Lessee
authorizing the execution and delivery of the lease amendment and any other
documents and instruments as may be reasonably required by Lessor and any
applicable Financing Party.
9.3.3 Payment of Costs. By virtue of making a request to finance a
Capital Addition or any Material Structural Work, whether or not such financing
is actually consummated, Lessee shall be deemed to have agreed to pay, upon
demand, all costs and expenses reasonably incurred by Lessor and any Person
participating with Lessor in any way in the financing of the Capital Addition
Cost or Material Structural Work, including, but not limited to (a) fees and
expenses of their respective attorneys, (b) all photocopying expenses, if any,
(c) the amount of any filing, registration and recording taxes and fees, (d)
documentary stamp taxes and (e) title insurance charges and appraisal fees. To
the extent that the same are paid by Lessee on demand, the amount thereof shall
b6 excluded from the calculation of the Subsequent Investment made with respect
to such Capital Addition or Material Structural Work.
9.4 General Limitations: Without in any way limiting Lessor's options with
respect to proposed Capital Additions or Material Structural Work: (a) no
Capital Addition or Material Structural Work shall be completed that could, upon
completion, significantly alter the character
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or purpose or detract from the value or operating efficiency of the Leased
Property, or significantly impair the revenue-producing capability of the Leased
Property, or adversely affect the ability of Lessee to comply with the terms of
this Lease; (b) no Capital Addition or Material Structural Work shall be
completed which would tie in or connect any Leased Improvements on the Leased
Property with any other improvements on property adjacent to the Leased Property
(and not part of the Land covered by this Lease) including, without limitation,
tie-ins of buildings or other structures or utilities, unless Lessee shall have
obtained the prior written approval of Lessor, which approval may be withheld in
Lessor's sole and absolute discretion and (c) all proposed Capital Additions and
Material Structural Work shall be architecturally integrated and consistent with
the Leased Property.
9.5 Non-Capital Additions. Lessee shall have the obligation and sight to
make repairs, replacements and alterations which are not Capital Additions and
which are required by the other Sections of this Lease, but in so doing, Lessee
shall always comply with and satisfy the conditions of Sections 9.2.1 and 9.4.
Lessee shall have the right, from time to time, to make additions, modifications
or improvements to the Leased Property which do not constitute Capital Additions
or Material Structural Work and are not required by the other Sections of this
Lease from time to time as it may deem to be desirable or necessary for its uses
and purposes, subject to the same limits and conditions imposed under Sections
9.2.1 and 9.4. The cost of any such repair, replacement, alteration, addition,
modification or improvement shall be paid by Lessee and the results thereof
shall be included under the terms of this Lease and become a part of the Leased
Property, without payment therefor by Lessor at any time. Notwithstanding the
foregoing, all such additions, modifications and improvements which affect the
structure of the Facility, or which involve the expenditure of more than FIFTY
THOUSAND and NO/100 DOLLARS ($50,000.00), shall be undertaken only upon
compliance with the provisions of Section 13.1.3, all Legal Requirements and all
other requirements of this Lease.
9.6 Permitted Work. Notwithstanding Section 9.1 above, Lessee shall have the
right to perform Permitted Work (as defined below) without Lessor's prior
approval or consent as long as Lessee gives to Lessor prior notice that Lessee
is undertaking such Permitted Work and provides Lessor with reasonably detailed
plans and specifications describing the work to be done. "Permitted Work" shall
mean work to the Facility which will not affect any of the structural elements
of the Facility and which costs less than FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00) during any consecutive twelve (12) month period. Any work to the
Facility, regardless of cost, which (a) will affect any structural element of
the Facility and (b) is not otherwise subject to an approval of Lessor pursuant
to any other provision of this Lease, shall still require the prior written
consent of Lessor, which consent may be withheld by Lessor in its sole and
absolute discretion.
ARTICLE 10
WARRANTIES AND REPRESENTATIONS
10.1 Representations and Warranties. Lessee hereby represents and warrants
to, and covenants and agrees with, Lessor that:
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10.1.1 Existence; Power; Qualification. Lessee is a corporation. duly
organized, validly existing and in good standing under the laws of the State of
Kansas. Lessee has all requisite corporate power to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted and is duly qualified to do business and is in good standing in each
jurisdiction (including, without limitation, the State) where such qualification
is necessary or desirable in order to carry out its business as now conducted
and as proposed to be conducted. As of the date of this Lease, Lessee does not
have any Subsidiaries and Lessee is not a member of any partnership or joint
venture. Attached hereto as EXHIBIT C is a true and correct list of all the
shareholders of Lessee and their respective ownership interests in Lessee.
10.1.2 Valid and Binding. Lessee is duly authorized to make and enter
into all of the ease Documents to which Lessee is a party and to carry out the
transactions contemplate therein. All of the Lease Documents to which Lessee is
a party have been duly executed an delivered by Lessee, and each is a legal,
valid and binding obligation of Lessee, enforceable in accordance with its
terms.
10.1.3 Single Purpose. Lessee is, and during the entire time that this
Lease remains in force and effect shall be; engaged in no business, trade or
activity other than the operation of the Leased Property for the Primary
Intended Use and the Other Permitted Uses and such other activities in which
Lessee is permitted to engage by the provisions of the Meditrust/LP Transaction
Documents.
10.1.4 No Violation. The execution, delivery and performance of the
Lease Documents d the consummation of the transactions thereby contemplated
shall not result in any breach of, r constitute a default under, or result in
the acceleration of, or constitute an event which, with the giving of notice or
the passage of time, or both, could result in default or acceleration of any
obligation of any member of the Leasing Group under any of the Permits or
Contracts o any other contract, mortgage, lien, lease, agreement, instrument,
franchise, arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which any member of the Leasing Group is
a party or by which any member of the Leasing Group may be bound or affected and
do not violate or contravene any Legal Requirement.
10.1.5 Consents and Approvals. Except as already obtained or filed, as
the case may be, no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any right by any
Person is required to authorize or permit, or is otherwise required as a
condition of Lessee's execution, delivery and performance of its obligations
under the Lease Documents or as a condition to the validity (assuming the due
authorization, execution and delivery by Lessor of the Lease Documents to which
it is a party) and the first priority of any Liens granted under the Lease
Documents or, as to any Tangible Personal Property and/or Receivables, as the
case may be, as to which there are Permitted Prior Security Interests, the
agreed junior priority of any such Liens, except the filing of the Financing
Statements.
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10.1.6 No Liens or Insolvency Proceedings. Each member of the Leasing
Group is financially solvent and there are no actions, suits, investigations or
proceedings including, without limitation, outstanding federal or state tax
liens, garnishments or insolvency or bankruptcy proceedings, pending or, to the
best of Lessee's knowledge and belief, threatened:
(a) against or affecting any member of the Leasing Group, which if
adversely r solved to such member of the Leasing Group, would materially
adversely affect the ability of any of the foregoing to perform their respective
obligations under the Lease Documents;
(b) against or affecting the Leased Property or the ownership,
construction, development, maintenance, management, repair, use; occupancy,
possession or operation thereof; or
(c) which may involve or affect the validity, priority or
enforceability of any of the Lease Documents, at law or in equity, or before or
by any arbitrator .or Governmental Authority.
10.1.7 No Burdensome Agreements. Neither Lessee nor the Guarantor is a
party to any agreement the terms of which now have, or, as far as can be
reasonably foreseen, may have, a material adverse affect on its respective
financial condition or business or on the operation of the Leased Property.
10.1.8 Commercial Acts. Lessee's performance of and compliance with the
obligations and conditions set forth herein and in the other Lease Documents
will constitute commercial acts done and performed for commercial purposes.
10.1.9 Adequate Capital. Not Insolvent. After giving effect to the
consummation of the transactions contemplated by the Lease Documents, each
member of the Leasing Group:
(a) will be able to pay its debts as they become due;
(b) will have sufficient funds and capital to carry on its
business as now conducted or as contemplated to be conducted (in accordance with
the terms of the Lease Documents);
(c) will own property having a value both at fair valuation and at
present fair saleable value greater than the amount required to pay its debts as
they become due (it being understood, however, that Lessee will not own any
assets until the operating license and Resident Agreements for the Facility are
transferred to Lessee by the Guarantor); and
(d) will not be rendered insolvent as determined by applicable
law.
10.1.10 Not Delinquent. No member of the Leasing Group is delinquent or
claimed to be delinquent under any obligation for the payment of borrowed money.
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10.1.11 No Affiliate Debt. Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability (whether direct
or contingent) for borrowed money from the Guarantor (or any of its Affiliates)
or any Affiliate of Lessee.
10.1.12 Taxes Current. Each member of the Leasing Group has filed all
federal, state and local tax returns which are required to be filed as to which
extensions are not currently in effect and have paid all taxes, assessments,
impositions, fees and other governmental charges (including interest and
penalties) which have become due pursuant to such returns or pursuant to any
assessment or notice of tax claim or deficiency received by each such member of
the Leasing Group. No tax liability has been asserted by the Internal Revenue
Service against any member of the Leasing Group or any other federal, state or
local taxing authority for taxes, assessments, impositions, fees or other
governmental charges (including interest or penalties thereon) in excess of
those already paid.
10.1.13 Financials Complete and Accurate. The financial statements of
each member of the Leasing Group given to Lessor in connection with the Lease
were true, complete and accurate and fairly presented the financial condition of
each such member of the Leasing Group as of the date thereof and for the periods
covered thereby, having been prepared in accordance with GAAP and such financial
statements disclosed all liabilities, including, without limitation, contingent
liabilities, of each such member of the Leasing Group. There has been no
material adverse change since such date with respect to the Tangible Net Worth
of any member of the Leasing Group or with respect to any other matters
contained in such financial statements, nor have any additional material
liabilities, including, without limitation, contingent liabilities, of any
member of the Leasing Group arisen or been incurred or asserted since such date.
The projections heretofore delivered to Lessor continue to be reasonable (with
respect to the material assumptions upon which such projections are based) and
Lessee reasonably anticipates the results projected therein will be achieved,
there having been (a) no material adverse change in the business, assets or
condition, financial or otherwise of any member of the Leasing Group and (b) no
material depletion of the cash or decrease in working capital of any member of
the Leasing Group.
10.1.14 Pending Actions, Notices and Reports.
(a) There are no actions or investigations pending or, to the best
knowledge and belief of either Lessee or Guarantor, threatened, anticipated or
contemplated (nor, to the knowledge of either Lessee or Guarantor, is there any
reasonable basis therefor) against or affecting the Leased Property or any
member of the Leasing Group (or any Affiliate thereof) before any Governmental
Authority, Accreditation Body or Third Party Payor which could prevent or hinder
the consummation of the transactions contemplated hereby or call into question
the validity of any of the Lease Documents or any action taken or to be taken in
connection with the transactions contemplated thereunder or which in any single
case or in the aggregate might result in any material adverse change in the
business, prospects, condition, affairs or operations of any member of the
Leasing Group or the Leased Property (including, without limitation, any action
to revoke, withdraw or suspend any Permit necessary or desirable for the
operation of the
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Leased Property in accordance with its Primary Intended Use and any action to
transfer or relocate any such Permit to a location other than the Leased
Property) or any material impairment of the right or ability of any member of
the Leasing Group to carry on its operations as presently conducted upon
Completion of the Project or proposed, upon Completion of the Project, to be
conducted with respect to the Leased Property or with respect to its obligations
under the Lease Documents or which may materially adversely impact reimbursement
to any member of the Leasing Group for services rendered to beneficiaries of
Third Party Payor Programs.
(b) No member of the Leasing Group has received any notice of any
claim, requirement or demand of any Governmental Authority, Accreditation Body,
Third Party Payor or any ins ante body having or claiming any licensing,
certifying, supervising, evaluating or accrediting authority over the Facility
to rework or redesign the Facility, its professional staff or its professional
services, procedures or practices in any material respect or to provide
additional furniture, fixtures, equipment or inventory or to otherwise take
action so as to make the Facility conform t or comply with any Legal
Requirement;
(c) The most recent utilization reviews relating to the Facility by all
applicable Third Party Payors, Accreditation Bodies and Governmental Authorities
and reviews or scrutiny by any m aged care or utilization review companies have
not had a material adverse impact on the utilization of units or programs at the
Facility. No claims or assertions have been made in any utilization review that
any of the practices or procedures used at the Facility are improper or
inappropriate other than such claims or assertions which singly and in the
aggregate will not have a material adverse impact on the Facility; and
(d) Lessee and Guarantor have delivered or caused to be delivered to
Lessor true and correct copies of all licenses, inspection surveys and
accreditation reviews relating to the Facility, issued by any Governmental
Authority or Accreditation Body during the most recent licensing period,
together with all plans of correction relating thereto.
10.1.15 Compliance with Legal and Other Requirements.
(a) To the extent consistent with the stage of construction of the
Project, Lessee and the Leased Property and the ownership, construction,
development, maintenance, management, repair, use, occupancy, possession and
operation thereof comply with all applicable Legal Requirements and there is no
claim of any violation thereof known to Lessee or Guarantor. Without limiting
the foregoing, Lessee has obtained all Permits that are necessary or desirable
to operate the Leased Property in accordance with its Primary Intended Use or
reasonably expects to obtain such Permits prior to, or upon, the Completion of
the Project; and
(b) Except as previously delivered to Lessor pursuant to Section
10.1.14(d) hereof, there are no outstanding notices of deficiencies, notices of
proposed action or orders of any kind relating to the Leased Property issued by
any Governmental Authority, Accreditation Body or Third Party Payor requiring
conformity to any of the Legal Requirements.
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10.1.16 No Action By Governmental Authority or Accreditation Body.
There is no action pending or, to the best knowledge and belief of either Lessee
or Guarantor, recommended, by any Governmental Authority or Accreditation Body
or Third Party Payor to revoke, repeal, cancel, modify, withdraw or suspend any
Permit or Contract or to take any other action of any other type which could
have a material adverse effect on the Leased Property.
10.1.17 Property Matters.
(a) The Leased Property is free and clear of agreements, covenants
and Liens, except those agreements, covenants and Liens to which this Lease is
expressly subject, whether presently existing, as are listed on EXHIBIT B or
were listed on the UCC lien search results delivered to Lessor at or prior to
the execution and delivery of this Lease (and were not required to be terminated
as a condition of the execution and delivery of this Lease), or which may
hereafter be created in accordance with the terms hereof (collectively referred
to herein as the "Permitted encumbrances"); and Lessee shall warrant and defend
Lessor's title to the Leased Property against any and all claims and demands of
every kind and nature whatsoever;
(b) There is no Condemnation or similar proceeding pending with
respect to or affecting the Leased Property, and neither Lessee nor Guarantor is
aware, to the best of its knowledge and belief, that any such proceeding is
contemplated;
(c) The Leased Property has not been damaged by any Casualty. To
the extent the same halve either been constructed or are located on the Land,
the Leased Improvements, Fixtures, Lessor's Personal Property and Tangible
Personal Property are in good operating condition and repair, ordinary wear and
tear excepted, free from known defects in construction or design;
(d) None of the Permitted Encumbrances has or is likely to have a
material adverse impact upon, nor interfere with or impede, in any material
respect, the operation of the Leased Property in accordance with the Primary
Intended Use;
(e) All building facilities and other improvements necessary, both
legally and practically, for the proper and efficient operation of the Facility
will be located upon the Leased Property and all real property and personal
property currently utilized by Lessee will be included within the definition of
the Leased Property or the Collateral;
(f) The Leased Property abuts on and has direct vehicular access to a
public road or access t& a public road via permanent, irrevocable, appurtenant
easements;
(g) Each parcel comprising a portion of the Land constitutes a
separate parcel for real estate tax purposes and no portion of any real property
that does not constitute a portion of the Leased Property is part of the same
tax parcel as any part of the Leased Property;
(h) All utilities necessary for the use and operation of the
Facility are available to the lot lines of the Leased Property:
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(i) in sufficient supply and capacity;
(ii) through validly created and existing easements of record
appurtenant to or encumbering the Leased Property (which easements shall not
impede or restrict the operation o the Facility); and
(iii) without need for any Permits and/or Contracts to be issued
by or entered into with any Governmental Authority, except as already obtained
or executed, as the case may be, or as otherwise shown to the satisfaction of
Lessor to be readily obtainable; and
(i) Neither Lessee nor Guarantor has made any structural alterations or
improvements to any of the Leased Improvements that changed the foot-print of
any Leased improvement, added an additional story to any Leased Improvement,
decreased the amount of parking available at the Facility or otherwise involved
any alteration which would be regulated by applicable zoning requirements.
10.1.18 Rate Limitations. Except as disclosed on EXHIBIT D, the State
currently imposes no restrictions or limitations on rates which may be charged
to private pay residents receiving services at the Facility.
10.1.19 Free Care. Except as disclosed on EXHIBIT E, there are no
Contracts, Permits or Legal Requirements which require that a percentage of
units or slots in any program at the Facility be reserved for Medicaid or
Medicare eligible residents or that the Facility provide a certain amount of
welfare, free or charity care or discounted or government assisted resident
care.
10.1.20 No Proposed Changes. Neither Lessee nor Guarantor has any
actual knowledge of an, Legal Requirements which have been enacted, promulgated
or issued within the eighteen (18) months preceding the date of this Lease or
any proposed Legal Requirements currently pending in the State which may
materially adversely affect rates at the Facility (or any program operated in
conjunction with the Facility) or may result in the likelihood of increased
competition", at the Facility or the imposition of Medicaid, Medicare, charity,
free care, welfare or other discounted or government assisted residents at the
Facility or require that Lessee or the Facility obtain a certificate of need,
Section 1122 approval or the equivalent, which Lessee or the Facility does not
currently possess.
10.1.21 ERISA. No employee pension benefit plan maintained by any
member of the Leasing Group has any accumulated funding deficiency within the
meaning of the ERISA, nor does any member of the Leasing Group have any material
liability to the PBGC established under ERISA (or any successor thereto) in
connection with any employee pension benefit plan (or other class of benefit
which the PBGC has elected to insure), and there have been no "reportable
';events" (not waived) or "prohibited transactions" with respect to any such
plan, as those terms are defined in Section 4043 of ERISA and Section 4975 of
the Internal Revenue Code of 19$6, as now or hereafter amended, respectively.
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10.1.22 No Broker. No member of the Leasing Group nor any of their
respective Affiliates has dealt with any broker or agent in connection with the
transactions contemplated by the Lease Documents.
10.1.23 No Improper Payments. No member of the Leasing Group nor any of
their respective Affiliates has:
(a) made any contributions, payments or gifts of its funds or property
to or for the private use of any government official, employee, agent or other
Person where either the payment the purpose of such contribution, payment or
gifts is illegal under the laws of the United States any state thereof or any
other jurisdiction (foreign or domestic);
(b) established or maintained any unrecorded fund or asset for any
purpose or made any false or artificial entries on any of its books or records
for any reason;
(c) made any payments to any Person with the intention or understanding
that any part of such payment was to be used for any other purpose other than
that described in the documents supporting the payment; or
(d) made any contribution, or has reimbursed any political gift or
contribution made by any other Person, to candidates for public office, whether
federal, state or local, where !such contribution would be in violation of
applicable law.
10.1.24 Nothing Omitted. Neither this Lease, nor any of the other Lease
Documents, nor any certificate, agreement, statement or other document,
including, without limitation, any financial statements concerning the financial
condition of Lessee or the Guarantor, furnished to pr to be furnished to Lessor
or its attorneys in connection with this Lease, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to prevent all statements contained herein and therein
from being misleading. There is no fact within the special knowledge of Lessee
which has not been disclosed herein or in writing to Lessor that materially
adversely affects, or in the future, insofar as Lessee c reasonably foresee, may
materially adversely affect the business, properties, assets or condition,
financial or otherwise, of the Guarantor, Lessee or the Facility.
10.1.25 No Margin Security. Lessee is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds o f the Meditrust Investment will be used
to purchase or carry any margin security or to extend credit to others for the
purpose of purchasing or carrying any margin security or in any other manner
which would involve a violation of any of the regulations of the Board of
Governors of the Federal Reserve System. Lessee is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
10.1.26 No Default. No event or state of facts which constitutes, or
which,
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with notice or lapse of time, or both, could constitute, a Lease Default has
occurred and is continuing.
10.1.27 Principal Place of Business. The principal place of business
and chief executive office of Lessee is located at 000 X. Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxx 00000 (the "Principal Place of Business").
10.1.28 Third Party Payor Agreements.
(a) Lessee or the Facility is fully qualified as a provider of services
under and participates 'n all Third Party Payor Programs and referral programs
as is necessary, in Lessee's reasonable discretion, for the prudent operation of
the Facility in the good faith exercise of commercial y reasonable business
judgment.
(b) Attached hereto as EXHIBIT F is a list of Provider Agreements
currently in effect.
(c) Attached hereto as EXHIBIT G is a list of national accounts and
local discount agreements, which constitute all of the agreements between Lessee
or the Facility, on the one hand, and Third Party Payors on the other hand,
pursuant to which Lessee or the Facility agrees to provide services based on a
discount factor from the rates regularly charged for services rendered by Lessee
or the Facility.
(d) No member of the Leasing Group, nor the Facility has any rate
appeal currently pending before any Government Authority or any administrator of
any Third Party Payor Program or any other referral source other than such
appeals which, if determined adversely to any member of the Leasing Group or the
Facility would not have a materially adverse effect, either singly or in the
aggregate, on the financial condition of any member of the Leasing Group or the
Facility.
(e) All cost reports and financial reports submitted to any Third Party
Payor with respect to the Facility by any member of the Leasing Group have been
materially accurate and complete and have not been misleading in any material
respect. As a result of any audits by any Third Party Payor, there are no
related recoupment claims made or contests pending or threatened other than such
recoupment claims or contests which, if determined adversely to any member of
the Leasing Group or the Facility, would not have a materially adverse effect,
either singly or in the aggregate, on the financial condition of any member of
the Leasing Group or the Facility. As of the date hereof, no cost reports for
the Facility remain open or unsettled other than those listed on EXHIBIT H.
10.1.29 Rates. Lessee or the Facility shall charge rates for private
pay residents which are legal, valid and enforceable and shall provide Lessor
with a schedule of all such rates as soon as they are set;
10.1.30 Labor Matters. There are no proceedings now pending, nor, to
the
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best of Lessee's knowledge, threatened with respect to the operation of the
Facility before the National Labor Relations Board, State Commission on Human
Rights and Opportunities, State Department of Labor, U. S. Department of Labor
or any other Governmental Authority having jurisdiction of employee rights with
respect to hiring, tenure and conditions of employment, and no member of the
Leasing Group has experienced any material controversy with any Facility
administrator or other employee of similar stature or with any labor
organization.
10.1.31 Intellectual Property. Lessee is duly licensed or authorized
to use all (if any) copyrights, rights of reproduction, trademarks, trade-names,
trademark applications; service mars, patent applications, patents and patent
license rights, (all whether registered or unregistered U.S. or foreign),
inventions, franchises, discoveries, ideas, research, engineering, methods,
practices, processes, systems, formulae, designs, drawings, products, projects,
improvements, developments, know-how and trade secrets which are used in, will
be used in or necessary for the operation of the Facility in accordance with its
Primary Intended Use, without conflict with or infringement of any, and subject
to no restriction, lien, encumbrance, right, title or interest in others.
10.1.32 Management Agreements. There is no Management Agreement in
force and effect of the date hereof.
10.1.33 Fiscal Year. The fiscal year of Lessee and the (Guarantor is
the Fiscal Year.
10.2 Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute continuing representations and warranties which shall
remain true, correct and complete throughout the Term.
ARTICLE 11
FINANCIAL AND OTHER COVENANTS
11.1 Status Certificates. At any time, and from time to time, upon request
from Lessor, Lessee shall furnish to Lessor, within ten (10) Business Days after
receipt of such request, an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications) and the dates to which
the Rent has been paid. Any Officer's Certificate furnished pursuant to this
Section shall be addressed to any prospective purchaser or mortgagee of the
Leased Property as Lessor may request and may be relied upon by Lessor and any
such prospective purchaser or mortgagee of the Leased Property.
11.2 Financial Statements; Reports; Notice and Information.
11.2.1 Obligation To Furnish. Lessee will furnish and shall cause to be
furnished to Lessor the following statements, information and other materials:
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(a) Annual Statements. Within ninety (90) days after the end of each of
their respective fiscal years, (i) a copy of the Consolidated Financials for
each of (x) the Guarantor d (y) any Sublessee for the preceding fiscal year,
certified and audited by, and with the unqualified opinion of, independent
certified public accountants acceptable to Lessor and certified as true and
correct by the Guarantor or the applicable Sublessee, as the case may be (and,
without limiting anything else contained herein, the Consolidated Financials for
each Sublessee shall include, as supplemental information, a detailed balance
sheet for Leased Property and the Facility thereof as of the last day of such
fiscal year and a statement of earnings from the Leased Property and the
Facility thereof for such fiscal year showing, among other things, all Rents d
other income therefrom and all expenses paid or incurred in connection with the
operation of the Leased Property); (ii) separate statements, certified as true
and correct by Lessee, the Guarantor and each Sublessee, stating whether, to the
best of the signer's knowledge and belief after making due inquiry, Lessee, the
Guarantor or such Sublessee, as the case may be, is in default in the
performance or observance of any of the terms of this Lease or any of the other
Lease Documents and, if so, specifying all such defaults, the nature thereof and
the steps being taken to immediately remedy the same; (iii) a copy of all
letters from the independent certified accountants engaged to perform the annual
audits referred to above, directed to the management of Lessee, the Guarantor or
the applicable Sublessee, as the case may be, regarding the existence of any
reportable conditions or material weaknesses and (iv) a statement certified as
true and correct by Lessee setting forth all Subleases as of the last day of
such fiscal year, the respective areas demised thereunder, the names of the
Sublessees thereunder, the respective expiration dates of the Subleases, the
respective rentals provided for therein, and such other information pertaining
to the Subleases as may be reasonably requested by Lessor.
(b) Monthly Statements of Lessee. Within thirty-five (35) days after
the end of 'each calendar month during the pendency of this Lease, (i) an
unaudited, detailed month and year to date income and expense statement for the
Leased Property which shall include a comparison to corresponding budget
figures, occupancy statistics (including the actual number of (,residents, the
number of units available and the unit occupancy for such month), (ii) an
unaudited balance sheet for the Leased Property and (iii) an express written
calculation showing the compliance or non-compliance, as the case may be, with
the specific financial covenants set forth in Section 11.3 for the applicable
period, including, with respect to the calculation of Lessee's and the
Facility's Rent Coverage Ratio, a schedule substantially in the form attached
hereto as EXHIBIT I.
(c) [Intentionally Omitted]
(d) Quarterly Statements of the Guarantor. Within forty-five (45) days
after the end of each of the Fiscal Quarters ending March 31, June 30 and
September 30, respectively, all 10Q reports required to be filed by the Security
and Exchange Commission for the Guarantor ,certified as true and correct by the
Guarantor.
(e) Permits and Contracts. Promptly after the issuance or execution
thereof, as the case may be, true and complete copies of (i) all Permits which
constitute operating licenses
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for a Facility issued by any Governmental Authority having jurisdiction over
health care matters d (ii) Contracts (involving payments in the aggregate in
excess of $100,000 per annum), including, without limitation, all Provider
Agreements.
(f) Contract Notices. Promptly after the receipt thereof, true and
complete copies of any notices, consents, terminations or statements of any kind
or nature relating to any of the Contracts (involving payments in the aggregate
in excess of $100,000 per annum) other than those issued in the ordinary course
of business.
(g) Regulatory Surveys. Promptly after the receipt thereof, true and
complete copies of all surveys, follow-up surveys, licensing surveys, complaint
surveys, examinations compliance certificates, inspection reports, statements,
terminations and notices of any kind is used or provided to Lessee or any
Sublessee by any Governmental Authority, Accreditation Body or any Third Party
Payor, including, without limitation, any notices pertaining to any delinquency
in, or proposed revision of, Lessee's or any Sublessee's obligations under the
terms and conditions of any Permits or Contracts now or hereafter issued by or
entered into with any Governmental Authority, Accreditation Body or Third Party
Payor and the response(s) thereto made by or on behalf of Lessee or any
Sublessee.
(h) Official Reports. Upon completion or filing thereof, complete
copies of all applications, notices, statements, annual reports, cost reports
and other reports or filings of any kind provided by Lessee or any Sublessee to
any Governmental Authority, Accreditation Body or any Third Party Payor with
respect to the Leased Property.
(i) Other Information. With reasonable promptness, such other
information as Lessor may from time to time reasonably request respecting (i)
the financial condition and affairs of each member of the Leasing Group and the
Leased Property and (ii) the licensing aid operation of the Leased Property;
including, without limitation, audited financial statements, certificates and
consents from accountants and all other financial and licensing/operational
information as may be required or requested by any Governmental Authority.
(j) Default Conditions. As soon as possible, and in any event within
five (5) days after the occurrence of any Lease Default, or each event or
circumstance which, with the giving of notice or lapse of time, or both, could
constitute such a Lease Default, a written statement of Lessee setting forth the
details of such Lease Default, event or circumstance and the action which Lessee
proposes to take with respect thereto.
(k) Official Actions. Promptly after the commencement thereof, notice
of all action;, suits and proceedings before any Governmental Authority or
Accreditation Body which may have a material adverse effect on any member of the
Leasing Group or the Leased Property.
(1) Audit Reports. Promptly after receipt, a copy of all audits or
reports submitted to Lessee by any independent public accountant in connection
with any annual, special or interim audits of the books of Lessee and, if
requested by Lessor, any letter of comments directed by such accountant to the
management of Lessee.
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(m) Adverse Developments. Promptly after Lessee acquires knowledge
thereof, written notice of:
(i) the potential termination of any Permit or Provider
Agreement necessary for the operation of the Leased Property;
I
(ii) any loss, damage or destruction to or of the Leased Property
in excess of TWENTY-FIVE THOUSAND and NO/100 DOLLARS ($25,000.00) (regardless of
whether a same is covered by insurance);
(iii) any material controversy involving Lessee or any Sublessee
and (x) Facility administrator or Facility employee of similar stature or (y)
any labor organization;
(iv) any controversy that calls into question the eligibility of
Lessee or the Facility for the participation in any Medicaid, Medicare or other
Third Party Payor Program, if applicable;
(v) any refusal of reimbursement by any Third Party Payor which,
singularly or together with all other such refusals by any Third Party Payors,
could have a material adverse effect on the financial condition of Lessee or any
Sublessee; and
(vi) any other development materially and adversely affecting or
which may materially or adversely affect the condition, financial or otherwise
of any member of the Leasing Group or the Leased Property.
(n) Line of Credit Default. Within five (5) days after becoming aware
of a claim by any Person that Lessee is in default of the line of credit
arrangement referred to in Section 13.3.10 or any other agreement in connection
with the borrowing of money which is not prohibited hereunder, notice of any
such claim or default.
(o) Responses To Inspection Reports. Within thirty (30) days after
receipt of an inspection report relating to the Leased Property from Lessor, a
written response describing i detail prepared plans to address concerns raised
by the inspection report.
(p) Public Information. Upon the completion or filing, mailing or other
delivery thereof, complete copies of all financial statements, reports, notices
and proxy statements, if any, sent by any member of the -Leasing Group (which is
a publicly held corporation to its shareholders and of all reports, if any,
filed by any member of the Leasing Group (which is a publicly held corporation)
with any securities exchange or with the Securities Exchange Commission.
(q) Annual Budgets. At least thirty (30) days prior to the end of each
Fiscal Year, Lessee, any Sublessee and/or any Manager shall submit to Lessor a
proposed financial d capital expenditures budget for the Facility for the next
Fiscal Year and a report detailing the
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capital expenditures made in the then current Fiscal Year and on or before
January 31st of each year, Lessee, any Sublessee and/or any Manager shall submit
to Lessor revised finalized versions of such budgets and report.
(r) Lender Compliance Reports. Simultaneously with sending the same to
an lender of Lessee or Guarantor, copies of any reports relating to compliance
with financial covenants contained in any credit agreement involving the
extension of more than $500,000 f credit to either or both of the Lessee or
Guarantor, provided, however, that Guarantors extension of credit is related
primarily to the Leased Property.
11.2.2 Responsible Officer. Any certificate, instrument, notice, or
other document o be provided to Lessor hereunder by any member of the Leasing
Group shall be signed by executive officer of such member (in the event that any
of the foregoing is not an individual) having a position of Vice President or
higher and with respect to financial matters, any such certificate, instrument,
notice or other document shall be signed by the chief financial officer of such
member.
11.2.3 No Material Omission. No certificate, instrument, notice or
other document, including, without limitation, any financial statements
furnished or to be furnished to Lessor pursuant to the terms hereof or of any of
the other Lease Documents shall contain any untrue statement of a material fact
or shall omit to state any material fact necessary in order to prevent al
statements contained therein from being misleading.
11.2.4 Confidentiality. Lessor shall afford any information received
pursuant to the provisions of the Lease Documents the same degree of
confidentiality that Lessor affords similar information proprietary to Lessor;
provided, however, that Lessor does not in any way warrant or represent that
such information received from any member of the Leasing Group shall remain
confidential (and shall not be liable in any way for any subsequent disclosure
of such information by any Person that Lessor has provided such information in
accordance with the terms hereof) and provided, further, that Lessor shall have
the unconditional right to (a) disclose any such information as Lessor deems
necessary or appropriate in connection with any sale, transfer, conveyance,
participation or assignment of the Leased Property or any. of the Lease
Documents or any interest therein and (b) use such information in any litigation
or arbitration proceeding between Lessor and any member of the Leasing Group.
Without limiting the foregoing, Lessor may also utilize any information
furnished to it hereunder as and to the extent (i) counsel t Lessor determines
that such utilization is necessary pursuant to 15 U.S.C. 77a-77aa or 15 U.S.
78a-78jj and the rules and regulations promulgated thereunder, (ii) Lessor is
required or requested by any Governmental Authority to disclose any such
information and/or (iii) Lessor is requested to disclose any such information by
any of the Meditrust Entities' lenders or potential lenders. In connection with
any such disclosure, Lessor shall inform the recipient of any such information
of the confidential nature thereof.
11.3 Financial Covenants. Lessee covenants and agrees that, throughout
the Term and as long as Lessee is in possession of the Leased Property:
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11.3.1 Rent Coverage Ratio of Lessee. The Lessee shall comply with the
provisions o the Agreement Regarding Related Transactions pertaining to Rent
Coverage Ratio.
11.3.2 [Intentionally Omitted]
11.3.3 [Intentionally Omitted]
11.3.4 [Intentionally Omitted]
11.3.5 Current Ratio - Guarantor. The Guarantor shall maintain, at all
times, a ratio of Consolidated Current Assets to Consolidated Current
Liabilities equal to or greater than 1.0 to 1.
11.3.6 [Intentionally Omitted]
11.3.7 Tangible Net Worth - Guarantor. The Guarantor shall maintain, at
all times, a Tangible Net Worth of not less than SEVEN MILLION and NO/100
DOLLARS ($7,000,000 00).
11.3.8 [Intentionally Omitted]
11.3.9 [Intentionally Omitted]
11.3.10 No Indebtedness. Lessee shall not create, incur, assume or
suffer to exist any liability for borrowed money except (i) Indebtedness to
Lessor under the Lease Documents, (ii) Impositions allowed pursuant to the
provisions of the Lease, (iii) unsecured normal trade debt incurred upon
customary terms in the ordinary course of business, (iv) Indebtedness created in
connection with any financing of any Capital Addition, provided. that each such
financing has been approved by Lessor in accordance with the terms of Article 9
hereof, (v) other Indebtedness of Lessee in the aggregate amount not to exceed
FIVE HUNDRED THOUSAND and NO/100 DOLLARS ($500,000.00), incurred for the
exclusive use of the Leased Property, on account of purchase money indebtedness
or finance lease arrangements, each of which shall not exceed the fair market
value of the assets or property acquired or leased and shall not extend to any
assets or property other than those purchased or leased and purchase money
security interests in equipment d equipment leases which comply with the
provisions of Section 6.1.2, and (vi) Indebtedness from the shareholders of
Lessee and/or any other Affiliate which has been expressly subordinate in
writing pursuant to the Affiliated Party Subordination Agreement.
11.3.11 No Guaranties. Lessee shall not assume, guarantee, endorse,
contingently agree to purchase or otherwise become directly or contingently
liable (including, without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise to invest in any debtor or otherwise to assure any creditor against
loss) in connection with any Indebtedness of any other Person, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the
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ordinary co se of business.
11.3.12 [Intentionally Omitted]
11.4 Affirmative Covenants. Throughout the Term and such time as Lessee is
in possession f the Leased Property, Lessee covenants and agrees that:
11.4.1 Maintenance of Existence. If Lessee is a corporation, trust or
partnership, during the entire time that this Lease remains in full force and
effect, Lessee shall keep in effect its existence and rights as a corporation,
trust or partnership under the laws of the state of its corporation or formation
and its right to own property and transact business in the State.
11.4.2 Materials. Except as provided in Section 6.1.2, Lessee shall not
suffer the use in connection with any renovations or other construction relating
to the Leased Property of any materials, fixtures or equipment intended to
become part of the Leased Property which are purchased upon lease or conditional
xxxx of sale or to which Lessee does not have absolute and unencumbered title,
and Lessee covenants to cause to be paid punctually all sums becoming due for
lab r, materials, fixtures or equipment used or purchased in connection with any
such renovations or construction, subject to Lessee's right to contest to the
extent provided for in Article 15.
11.4.3 Compliance With Legal Requirements And Applicable Agreements.
Lessee and the Leased Property and all uses thereof shall comply with (i) all
Legal Requirements, (ii) all Permits and Contracts, (iii) all Insurance
Requirements, (iv) the Lease Documents, (v) the Permitted Encumbrances and (vi)
the Appurtenant Agreements.
11.4.4 Books And Records. Lessee shall cause to be kept and maintained,
and shall permit Lessor and its representatives to inspect at all reasonable
times, accurate books of accounts in which complete entries will be made in
accordance with GAAP reflecting all financial transaction of Lessee (showing,
without limitation, all materials ordered and received and all disbursements,
accounts payable and accounts receivable in connection with the operation of the
Leased Property).
11.4.5 Participation in Third Party Pa or Programs. Lessee and each
Sublessee shall participate in all Third Party Payor Programs (which would be
participated in, in Lessee's reasonable discretion, by a prudent operator in the
good faith exercise of commercially reasonable business judgment), in accordance
with all requirements thereof (including, without limitation, all applicable
Provider Agreements), and shall remain eligible to participate in such Third
Party Payor Programs, all as shall be necessary, in Lessee's reasonable
discretion, for the prudent operation of the Facility in the good faith exercise
of commercially reasonable business judgment.
11.4.6 Conduct of its Business. Lessee will maintain, anal cause any
Sublessee and any Manager to maintain, experienced and competent professional
management with respect to its business and with respect to the Leased Property.
Lessor agrees that management by the
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executive officers listed on EXHIBIT J attached hereto is satisfactory for the
purposes of this provision. a Facility shall be managed by the Current Manager,
Lessee or a Subsidiary of the Guarantor. Lessee, any Sublessee and any Manager
shall conduct, in the ordinary course, the operation o the Facility, and Lessee
and any Sublessee shall not enter into any other business or venture during the
Term or such time as Lessee or any Sublessee is in possession of the Leased
Property other than activities in which Lessee or such Sublessee are permitted
to engage by the provisions of the Meditrust/ALP Transaction Documents.
11.4.7 Address. Lessee shall provide Lessor thirty (30) days' prior
written notice of a y change of its Principal Place of Business from its current
Principal Place of Business. Lessee shall maintain the Collateral, including,
without limitation, all books and records relating to its business, solely at
its Principal Place of Business and at the Leased Property. Lessee shall not (a)
remove the Collateral, including, without limitation, any books or records
relating to Lessee's business from either the Leased Property or Lessee's
Principal Place of Business or (b) relocate its Principal Place of Business
until after receipt of a certificate from Lessor, signed by an officer thereof,
stating that Lessor has, to its satisfaction, obtained all documentation that it
deems necessary or desirable to obtain, maintain, perfect and confirm the first
priority security interests granted in the Lease Documents.
11.4.8 Subordination of Affiliate Transactions. Without limiting the
provisions of any other Section of this Lease or the Affiliated Party
Subordination Agreement, any payment is to be made by Lessee to (a) any member
of the Leasing Group (or any of its Affiliates) or (b) any Affiliate of Lessee,
in connection with any transaction between Lessee and such Person, including,
without limitation, the purchase, sale or exchange of any property, the
rendering of any service to or with any such Person (including, without
limitation, all allocations of any so-called corporate or central office costs,
expenses and charges of any kind or nature) or the making of any .loan or other
extension of credit or the making of any equity investment, shall be subordinate
to the complete payment and performance of all the Lease Obligations; provided,
however, at all such subordinated payments may be paid at any time unless: (x)
after giving effect to such payment, Lessee shall be unable to comply with any
of its obligations under any of the Leas Documents or (y) a Lease Default has
occurred and is continuing and has. not been expressly waved in writing by
Lessor or an event or state of facts exists, which, with the giving of notice or
he passage of time, or both, would constitute a Lease Default.
11.4.9 Inspection. At reasonable times and upon reasonable notice,
Lessee shall permit Lessor and its authorized representatives (including,
without limitation, the Consultants) to inspect the Leased Property as provided
in Section 7.1 above.
11.5 Additional Negative Covenants. Lessee covenants and agrees that,
throughout the Term and such time as Lessee is in possession of the Leased
Property:
11.5.1 Restrictions Relating to Lessee. Except as may otherwise be
expressly provided or in any of the other Lease Documents, Lessee shall not,
without the prior written consent of Lessor, in each instance, which consent may
be withheld in the sole and absolute discretion of Lessor:
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(a) convey, assign, hypothecate, transfer, dispose of or encumber,
or permit the conveyance, assignment, transfer, hypothecation, disposal or
encumbrance of all or any part of any legal or beneficial interest in this
Lease, its other assets or the Leased Property; provided; however, that this
restriction shall not apply to (i) the Permitted Encumbrances that may be
created after the date hereof pursuant to the Lease Documents; (ii) Liens
created in accordance with the applicable provisions of Section 6.1.2 against
Tangible Personal Property securing Indebtedness permitted under Section
11.3.10; (iii) the sale, conveyance, assignment, hypothecations, lease or other
transfer of any material asset or assets (whether now owned or hereafter
acquired), the fair market value of which equals or is less than TWENTY-FIVE
THOUSAND and NO/100 DOLLARS 19($25,000.00), individually, or ONE HUNDRED
THOUSAND and NO/100 DOLLARS ($100,000.00) collectively; (iv) without limitation
as to amount, the disposition in the ordinary course of business of any
obsolete, worn out or defective fixtures, furnishings or equipment used in the
operation of the Leased Property provided that the same are replaced with
fixtures, furnishings or equipment of equal or greater utility or value or
Lessee provides Lessor with an explanation (reasonably satisfactory to Lessor)
as to why such Tangible Personal Property is no longer required in connection
with the operation of the Leased Property; (v) without limitation as to amount;
any sale of inventory by Lessee in the ordinary course of business; and (vi)
subject to the terms of the Pledge Agreement and the Affiliated Subordination
Party Agreement, distributions to Lessee's shareholder(s);
(b) permit the use of the Facility for any purpose other than the
Primary Intended Use and the Other Permitted Uses; or
(c) liquidate, dissolve or merge or consolidate with any other
Person.
11.5.2 No Liens. Lessee will not directly or indirectly create or allow
to remain and will promptly discharge at its expense any Lien, title retention
agreement or claim upon or against the Leased Property (including Lessee's
interest therein) or Lessee's interest in this Lease or any of the other Lease
Documents, or in respect of the Rent, excluding (a) this Lease and any permitted
Subleases, (b) the matters, if any, set forth in EXHIBIT B, (c) Liens which are
consented to in writing by Lessor, (d) Liens for those taxes of Lessor which
Lessee is not required to pay hereunder, (e) Liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either not yet due or being contested
in strict compliance with the terms and conditions of Article 15, (f) any Liens
which are the responsibility of Lessor pursuant to the provisions of Article 20,
g) Liens for Impositions which are either not yet due and payable or which are
in the process f being contested in strict compliance with the terms and
conditions of Article 15 and (h) involuntary Liens caused by the actions or
omissions of Lessor.
11.5.3 Limits on Affiliate Transactions. Lessee shall not enter into
any transaction with any Affiliate, including, without limitation, the purchase,
sale or exchange of any property, the rendering of any service to or with any
Affiliate and the making of any loan or other extension of credit, except in the
ordinary course of, and pursuant to the reasonable requirements of, Lessee's
business and upon fair and reasonable terms no less favorable to Lessee than
would obtained in a comparable arms'-length transaction with any Person that is
not an
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Affiliate.
11.5.4 Non-Competition. Lessee acknowledges that upon and after any
termination of this Lease, any competition by any member of the Leasing Group
with any subsequent owner or subsequent lessee of the Leased Property
("Purchaser") would cause irreparable arm to Lessor and any such Purchaser. To
induce Lessor to enter into this Lease, Lessee agree that, from and after the
date hereof and thereafter until the third (3rd) anniversary of the termination
hereof, no member of the Leasing Group nor any Person holding or controlling,
directly or indirectly, any interest in any member of the Leasing Group (other
than stockholders of Guarantor) shall be involved in any capacity in or lend any
of their names to or engage in y capacity in any assisted living. facility,
center, unit or program (or in any partnership, firm, company, corporation or
other entity engaged in any such activity or any related activity competitive
therewith), whether such competitive activity shall be as an officer, director,
owner, employee, agent, advisor, independent contractor, developer, lender,
sponsor, venture capitalist, administrator, manager, investor, partner, joint
venturer, consultant or other participant in any capacity whatsoever within a
one (1) mile radius of the Facility. Notwithstanding any provisions of this
Section 11.5.4 to the contrary, any member of the Leasing Group shall have the
option to develop and operate other assisted living facilities within the
aforementioned radius restriction at any time prior to the last twenty-four (24)
months of ,the Term and during the last twenty-four months of the Term if Lessee
extends the Term by an Extended Term pursuant to Section 1.3 above of this
Lease, provided Lessor shall have the right of fast re to finance such Facility
on terms no less favorable than those offered by any other lender.
Lessee hereby acknowledges and agrees that none of the time span, scope
or area covered by the foregoing restrictive covenants is or are unreasonable
and that it is the specific intent of Lessee that each and all of the
restrictive covenants set forth hereinabove shall be valid and enforceable as
specifically set forth herein. Lessee further agrees that these restrictions are
special, unique, extraordinary and reasonably necessary for the protection of
Lessor and any Purchaser an that the violation of any such covenant by Lessee
would cause irreparable damage to Lessor an any Purchaser for which a legal
remedy alone would not be sufficient to fully protect such parties.
Therefore, in addition to and without limiting any other remedies
available at law or hereunder, in the event that Lessee breaches any of its
restrictive covenants hereunder or shall threaten breach of any of such
covenants, then Lessor and any Purchaser shall be entitled to obtain equitable
remedies, including specific performance and injunctive relief, to prevent or
otherwise restrain a breach of this Section 11.5.4 (without the necessity of
posting a bond) and to recover any and all costs and expenses (including,
without limitation, attorneys' fees and expenses an court costs) incurred in
enforcing the provisions of this Section 11.5.4. The existence of any claim or
cause of action of any member of the Leasing Group against Lessor or any
Purchaser, whether predicated on this Lease or otherwise, shall not, constitute
a defense to the enforcement by Lessor or any Purchaser of the foregoing
restrictive covenants and Lessee shall not defend on the basis that there is an
adequate remedy at law.
Without limiting any other provision of this Lease, the parties hereto
acknowledge
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that the for going restrictive covenants are severable and separate. If at any
time any of the foregoing restrictive covenants shall be deemed invalid or
unenforceable by a court having jurisdiction over this Lease, by reason of being
vague or unreasonable as to duration, or geographic scope or scope of activities
restricted, or for any other reason, such covenants shall be considered
divisible as to such portion and such covenants shall be immediately amended and
reformed to include only such covenants as are deemed reasonable and enforceable
by the court having jurisdiction over this Lease to the full duration,
geographic scope and scope of restrictive activities deemed reasonable and thus
enforceable by said court; and the parties agree that such covenants so amended
and reformed, shall be valid and binding as through the invalid or unenforceable
portion had not been included therein.
The provisions of this Section 11.5.4 shall survive the termination of
the Lease and any satisfaction of the Lease Obligations in connection therewith
or subsequent thereto. The parties hereto acknowledge and agree that any
Purchaser may enforce the provisions of this Section 11.5.4 as a third party
beneficiary.
11.5.5 No Default. Lessee shall not commit any default or breach under
any of the Leas Documents.
11.5.6 Restrictions Relating to the Guarantor. Except as may otherwise
be expressly provided herein or in any of the other Lease Documents, the
Guarantor shall not, without the nor written consent of Lessor, in each
instance, which consent may be withheld in the sole and absolute discretion of
Lessor, convey, assign, donate, sell, mortgage or pledge any real or personal
property or take any other action which would have a materially adverse effect
upon the Tangible Net Worth or general financial condition of the Guarantor.
11.5.7 [Intentionally Omitted
11.5.8 ERISA. Lessee shall not establish or permit any Sublessee to
establish any new pension or defined benefit plan or modify any such existing
plan for employees subject to ERISA, which plan provides any benefits based on
past service without the advance consent of Lessor to the amount of the
aggregate past service liability thereby created.
11.5.9 Forgiveness of Indebtedness. Lessee will not waive, or permit
any Sublessee o Manager which is an Affiliate to waive any debt or claim, except
in the ordinary course of its business.
11.5.10 Value of Assets. Except as disclosed in the financial
statements provided to Lessor a of the date hereof, Lessee will not write up (by
creating an appraisal surplus or otherwise) a value of any assets of Lessee
above their cost to Lessee, less the depreciation regularly all allowable
thereon.
11.5.11 Changes in Fiscal Year and Accounting Procedures. Lessee shall
not, without the nor written consent of Lessor, in each instance, which consent
may be withheld in Lessor's reasonable discretion (a) change its fiscal year or
capital structure or (b) change, alter,
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amend or in any manner modify, except in accordance with GAAP, any of its
current accounting procedures related to the method of revenue recognition,
billing procedures or determinations of doubtful accounts or bad debt expenses
nor will Lessee permit any of its Subsidiaries to change its fiscal y or suffer
or permit any circumstance to exist in which any Subsidiary is not wholly-owned,
directly or indirectly, by Lessee. Notwithstanding the foregoing, Lessor agrees
to consent to any a in Lessee's fiscal year, provided that (i) Lessee shall have
requested such consent not less than thirty (30) days prior to the proposed
effective date of such change and shall have promptly furnished to Lessor all
such financial information as Lessor may have reasonably requested in order to
determine the impact of such change on Lessee's financial statements, (ii) no
such change shall be permitted if its effect would be to enable Lessee to
satisfy any covenant contained in this Agreement which, absent such change,
would not have been satisfied and (iii) Lessee shall have entered into any
amendment to this Lease which Lessor shall have reasonably r quested in order to
maintain the intended effect of the covenants contained in this Lease.
11.5.12 Changes in Executive Officers. Lessee shall not suffer or
permit to exist any circumstance in which any of the executive officers listed
on EXHIBIT J hereto ceases for any reason o serve as an executive officer of
Lessee, unless succeeded in such position within thirty (30) days by another
individual reasonably satisfactory to Lessor, and this provision will, in turn,
become effective as to each such successive executive officer.
ARTICLE 12
INSURANCE AND INDEMNITY
12.1 General Insurance Requirements. During the Term of this Lease and
thereafter until Lessee surrenders the Leased Property in the manner required by
this Lease, Lessee shall at its sole cost and expense keep the Leased Property,
the Tangible Personal Property and Lessor's Personal Property located thereon
and the business operations conducted thereon insured as set forth below.
12.1.1 Types and Amounts of Insurance. Lessee's insurance shall include
the following:
(a) property loss and physical damage insurance on an all-risk
basis (with only such exceptions as Lessor may in its reasonable discretion
approve) covering the Leased Property (exclusive of Land) for its full
replacement cost, which cost shall be reset once a year at Lessor's option, with
an agreed-amount endorsement and a deductible not in excess of TEN THOUSAND and
NO/100 DOLLARS ($10,000.00). Such insurance shall include, without limitation,
the following coverages: (i) increased cost of construction, (ii) cost of
demolition, iii) the value of the undamaged portion of the Facility and (iv)
contingent liability from the o ration of building laws, less exclusions
provided in the normal "All Risk" insurance policy. D g any period of
construction, such insurance shall be on a builder's-risk, completed value, non-
reporting form with permission to occupy;
(b) flood insurance (if the Leased Property or any portion thereof
is
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situated in area which is considered a flood risk area by the U.S. Department of
Housing and Urban Development) in limits acceptable to Lessor;
(c) boiler and machinery insurance (including related electrical
apparatus and components) under a standard comprehensive form, providing
coverage against loss or damage caused by explosion of steam boilers, pressure
vessels or similar vessels, now or hereafter installed on the Leased Property,
in limits acceptable to Lessor;
(d) earthquake insurance (if deemed necessary by Lessor) in limits
and with deductibles acceptable to Lessor;
(e) environmental impairment liability insurance (if available) in
limits and with deductibles acceptable to Lessor;
(f) business interruption insurance in an amount equal to the
annual Base Rent due hereunder plus the aggregate sum of the Impositions
relating to the Leased Property due and payable during one year;
(g) comprehensive general public liability insurance including
coverages commonly found in the Broad Form Commercial Liability Endorsements
with amounts not less than FIVE MILLION and NO/100 DOLLARS ($5,000,000.00) per
occurrence with respect to bodily injury d death and THREE MILLION and NO/100
DOLLARS ($3,000,000.00) for property damage and with all limits based solely
upon occurrences at the Leased Property without any other impairment;
(h) professional liability insurance in an amount not less than
FIVE MILLION and NO/100 DOLLARS ($5,000,000.00) for each medical incident;
(i) physical damage insurance on an all-risk basis (with only such
exceptions s Lessor in its reasonable discretion shall approve) covering
Lessee's Tangible Personal Property for the full replacement cost thereof and
with a deductible not in excess of one percent (1% of the full replacement cost
thereof;
(j) Workers' Compensation and Employers' Liability Insurance
providing protection against all claims arising out of injuries to all employees
of Lessee or of any Sublessee (employed on the Leased Property or any portion
thereof) in amounts equal for Workers' Compensation, to the statutory benefits
payable to employees in the State and for Employers' Liability, to limits of not
less than ONE HUNDRED THOUSAND and NO/100 DOLLARS ($100,000.00) for injury by
accident, ONE HUNDRED THOUSAND and NO/100 DOLLARS ($100,000.00) per employee for
disease and FIVE HUNDRED THOUSAND and NO/100 DOLLARS ($500,000.00) disease
policy limit;
(k) subsidence insurance (if deemed necessary by Lessor) in limits
acceptable o Lessor;
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(1) contractual liability insurance; and
(m) such other insurance as Lessor from time to time may
reasonably require and also, as may from time to time be required by applicable
Legal Requirements and/or by any Fe Mortgagee.
12.1.2 Insurance Company Requirements. All such insurance required by
this Lease or t e other Lease Documents shall be issued and underwritten by
insurance companies licensed to do insurance business by, and in good standing
under the laws of, the State and which companies have and maintain a rating of
A:IX or better by A.M. Best Co. and have been previous/ approved in writing by
Lessor.
12.1.3 Policy Requirements. Every policy of insurance from time to time
required under this Lease or any of the other Lease Documents shall name Lessor
as owner, loss payee, se d party (to the extent applicable) and additional named
insured as its interests may appear. If an insurance policy covers properties
other than the Leased Property, then Lessor shall be so named with respect only
to the Leased Property. Each such policy, where applicable or appropriate, hall:
(a) include an agreed amount endorsement and loss payee,
additional named insured and secured party endorsements, in forms acceptable to
Lessor in its sole and absolute discretion;
(b) include mortgagee, secured party, loss payable and additional
named insured endorsements reasonably acceptable to each Fee Mortgagee;
(c) provide that the coverages may not be cancelled, reduced or
materially modified in any manner which might adversely affect Lessor except
upon thirty (30) days' prior written notice to Lessor and any Fee Mortgagee;
(d) be payable to Lessor and any Fee Mortgagee notwithstanding any
defense or claim that the insurer may have to the payment of the same against
any other Person holding any other interest in the Leased Property;
(e) be endorsed with standard noncontributory clauses in favor of
and in form reasonably acceptable to Lessor and any Fee Mortgagee;
(f) expressly waive any right of subrogation on the part of the
insurer against Lessor, any Fee Mortgagee or the Leasing Group; and
(g) otherwise be in such forms as shall be reasonably acceptable
to Lessor.
12.1.4 Notices; Certificates and Policies. Lessee shall promptly provide to
Lessor copies of any and all notices (including notice of non-renewal), claims
and demands which Lessee receives from insurers of the Leased Property. At least
ten (10) days prior to the expiration of any
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insurance policy required hereunder, Lessee shall deliver to Lessor certificates
and evidence of insurance relating to all renewals and replacements thereof,
together with evidence, satisfactory to Lessor, of payment of the premiums
thereon. Lessee shall deliver to Lessor original counterparts or copies
certified by the insurance company to be true and complete copies, of al
insurance policies required hereunder not later than the earlier to occur of (a)
ninety (90) days after the effective date of each such policy and (b) ten (10)
days after receipt thereof by Lessee.
12:1.5 Lessor's Right to Place Insurance. If Lessee shall fail to
obtain any insurance policy required hereunder by Lessor, or shall fail to
deliver the certificate and evidence of insurance relating to any such policy to
Lessor, or if any insurance policy required hereunder (or any par thereof) shall
expire or be cancelled or become void or voidable by reason of any breach of y
condition thereof, or if Lessor determines that such insurance coverage is
unsatisfactory by reason of the failure or impairment of the capital of any
insurance company which wrote any such policy, upon demand by Lessor, Lessee
shall promptly obtain new or additional insurance coverage on the Leased
Property, or for those risks required to be insured by the provisions hereof,
satisfactory to Lessor, and, at its option, Lessor may obtain such insurance and
pay the premium or premiums therefor; in which event, any amount so paid or
advanced b Lessor and all costs and expenses incurred in connection therewith
(including, without limitation, attorneys' fees and expenses and court costs),
shall be a demand obligation of Lessee to Lessor, payable as an Additional
Charge.
12.1.6 Payment of Proceeds. All insurance policies required hereunder
(except for general public liability, professional liability and workers'
compensation and employers liability insurance) shall provide that in the event
of loss, injury or damage, subject to the rights of any Fee Mortgagee, all
proceeds shall be paid to Lessor alone (rather than jointly to Lessee and
Lessor) Lessor is hereby authorized to adjust and compromise any such loss with
the consent of Lessee or, following any Lease Default, whether or not cured,
without the consent of Lessee, and o collect and receive such proceeds in the
name of Lessor and Lessee, and Lessee appoints Le r (or any agent designated by
Lessor) as Lessee's attorney-in-fact with full power of substitution, to endorse
Lessee's name upon any check in payment thereof. Subject to the provisions
Article 13, such insurance proceeds shall be applied first toward reimbursement
of all costs an expenses of Lessor in collecting said insurance proceeds, then
toward payment of the Lease Obligations or any portion thereof, then due and
payable, in such order as Lessor determines, and then in whole or in part toward
restoration, repair or reconstruction of the Leased Property for which such
insurance proceeds shall have been paid.
12.1.7 Irrevocable Power of Attorney. The power of attorney conferred
on Lessor pursuant to the provisions of Section 12.1.6, being coupled with an
interest, shall be irrevocable for so long as this Lease is in effect or any
Lease Obligations are outstanding, shall not be affected by any disability or
incapacity which Lessee may suffer and shall survive the same. Such power of
attorney is provided solely to protect the interests of Lessor and shall not
impose any duty on Lessor to exercise any such power, and neither Lessor nor
such attorney-in-fact shall be liable for any act, omission, error in judgment
or mistake of law, except as the same may result from its gross negligence or
wilful misconduct.
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12.1.8 Blanket Policies. Notwithstanding anything to the contrary
contained herein, Lessee's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by Lessee and its A Hates covering
all of the Leased Property or covering some or all of the Leased Property a d
other property owned by Lessee or its Affiliates; provided, however. that the
coverage afforded to Lessor shall not be reduced or diminished or otherwise be
different from that which would exist under a separate policy for each of the
properties comprising the Facility meeting al other requirements of this Lease
by reason of the use of such blanket policy of insurance, and provided, further
that the requirements of Section 12.1 are otherwise satisfied.
12.1.9 No Separate Insurance. Lessee shall not, on Lessee's own
initiative or pursuant to the request or requirement of any other Person, take
out separate insurance concurrent in form or contributing in the event of loss
with the insurance required hereunder to be furnished by Lessee, o increase the
amounts of any then existing insurance by securing an additional policy or
additional policies, unless (a) all parties having an insurable interest in the
subject matter of the insurance, including Lessor, are included, therein as
additional insureds and (b) losses are payable under said insurance in the same
manner as losses are required to be payable under this Lease. Less a shall
immediately notify Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional insurance policy or policies.
12.1.10 Assignment of Unearned Premiums. Lessee hereby assigns to
Lessor all rights of Lessee in and to any unearned premiums allocable to the
Leased Property on any insurance policy required hereunder to be furnished by
Lessee which may become payable or are refundable after the occurrence of a
Lease Default hereunder. In the event that this Lease is terminated or any
reason (other than the purchase of the Leased Property by Lessee), the insurance
policies required to be maintained pursuant to subsections 12.1.1(a), (b), (c),
(d) and (e) hereunder with respect to the Leased Property or any portion of such
insurance policies relating to Leased Premises, including all right, title and
interest of Lessee thereunder, shall become the absolute property of Lessor.
12.2 Indemnity.
12.2.1 Indemnification. Except with respect to the gross negligence or
wilful misconduct of Lessor or any of the other Indemnified Parties and to any
loss of reputation or diminution n stock price suffered by Lessor or any of its
Affiliates, as to which no indemnity is provided Lessee hereby agrees to defend
with counsel acceptable to Lessor, indemnify and hold harmless Lessor and each
of the other Indemnified Parties from and against all direct and indirect
damages, losses, claims, liabilities, obligations, penalties, causes of action,
costs and expenses (including, without limitation, attorneys' fees, court costs
and other expenses of litigation) suffered by, or claimed or asserted against,
Lessor or any of the other Indemnified Parties directly or indirectly, based on,
arising out of or resulting from: (a) the use and occupancy f the Leased
Property or any business conducted therein, (b) any act, fault, omission to act
or misconduct by any member of the Leasing Group or any Affiliate of Lessee or
any employee, agent, licensee, business invitee, guest, customer, contractor or
sublessee of any of the foregoing
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parties, (c) any accident, injury or damage whatsoever caused to any Person,
including without limitation any claim of malpractice, or to the property of any
Person in or about the Leased Property or outside of the Leased Property where
such accident, injury or damage results or is claim to have resulted from any
act, fault, omission to act or misconduct by any member of the Leas' g Group or
any Affiliate of Lessee or any employee, agent, licensee, contractor or
sublessee o any of the foregoing parties, (d) any default or breach of condition
under any of the Lease Documents (other than a default by Lessor in the
performance of any of its obligations thereunder), (e) Lessor's relationship
with any member of the Leasing Group, (f) Lessor being named, or required to be
named, as a co-licensee on any license and/or permit required and/or desirable t
operate all or any of the Facilities, (g) Lessee's failure to renew, obtain
and/or maintain all licenses and/or permits required by all applicable Legal
Requirements to own, manage and operate the Facility, including, without
limitation, Lessee's failure to renew and/or obtain all such licenses and/or
permits required in connection with the transfer of the Facility to Lessor, (h)
y labor, services or materials furnished or to be furnished to Lessee or
Guarantor or any of heir respective Affiliates in connection with the Leased
Property and/or (i) the enforcement of this indemnity. Any amounts which become
payable by Lessee under this Section 12.2.1 shall be a demand obligation of
Lessee to Lessor, payable as an Additional Charge. The indemnity provided for in
this Section 12.2 shall survive the expiration or any termination of this Lease.
12.2.2 Indemnified Parties. As used in this Lease the term "Indemnified
Parties" shall mean Lessor, any Fee Mortgagee and their respective Affiliates,
successors, assigns, employees, servants, agents, attorneys, officers,
directors, shareholders, partners and owners.
12.2.3 Limitation on Lessor Liability. Neither Lessor nor any Affiliate
of Lessor shall be liable to any member of the Leasing Group or any Affiliate of
Lessee, or to any other Person whatsoever for any damage, injury, loss,
compensation, or claim (including, but not limited to, any claim for the
interruption of or loss to any business conducted on the Leased Property) based
on, arising out of or resulting from any cause whatsoever, including, but not
limited to, the following: (a) repairs to the Leased Property; (b) interruption
in use of the Leased Property; (c) any accident or damage resulting from the use
or operation of the Leased Property or any business conducted thereon; (d) the
termination of this Lease by reason of Casualty or Condemnation; (e) any fire,
theft or other casualty or crime; (f) the actions, omissions or misconduct of
any other Person; (g) damage to any property; or (h) any damage from the flow or
leaking f water, rain or snow. All Tangible Personal Property and the personal
property of any other Person on the Leased Property (including, without
limitation, Lessor's Personal Property) shall be at the sole risk of Lessee and
Lessor shall not in any manner be held responsible therefor. Notwithstanding the
foregoing, Lessor shall not be released from liability for any injury, loss,
damage or liability suffered directly by Lessee to the extent caused directly by
the gross negligence or willful misconduct of Lessor, its servants, employees or
agents acting within the scope of their authority on or about the Leased
Property or in regards to the Lease; provided, however, that in no event shall
Lessor, its servants, employees or agents have any liability based on any loss
with respect to or interruption in the operation of any business at the Leased
Property or for any indirect or consequential damages.
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12.2.4 Risk of Loss. During the Term of this Lease, the risk of loss or
of decrease in the enjoyment and beneficial use of the Leased Property in
consequence of any damage or destruction thereof by the elements, Casualty,
thefts, riots, wars or otherwise, or in consequence of foreclosures, levies or
executions of Liens (other than those created by Lessor in accordance with the
provisions of Article 20) is assumed by Lessee and, in the absence of the gross
negligence or willful misconduct as set forth in Section 12.2.3, Lessor shall in
no event be answerable or accountable therefor (except for the obligation to
account for insurance proceeds and Awards to the extent provided for in Articles
13 and 14) nor shall any of the events mentioned in this Section entitle Lessee
to any abatement of Rent (except for an abatement, if any, as specifically
provided for in Section 3.7).
ARTICLE 13
FIRE AND CASUALTY
13.1 Restoration Following, Fire or Other Casualty.
13.1.1 Following Fire or Casualty. In the event of any damage or
destruction to the Leased Property by reason of fire or other hazard or casualty
(a "Casualty"), Lessee shall give immediate written notice thereof to Lessor
and, subject to the terms of this Article 13, Lessee shall diligently and
continuously proceed to perform such repairs, replacement and reconstruction
work (referred to herein as the "Work") to restore the Leased Property to the
condition it was in immediately prior to such damage or destruction and to a
condition adequate to operate the Facility for the Primary Intended Use and, to
the extent applicable, the Other Permitted Uses and in compliance with Legal
Requirements. All Work shall be performed and completed in accordance with all
Legal Requirements and the other requirements of this Lease within one hundred
and twenty (120) days following the occurrence of the damage or destruction plus
a reasonable time to compensate for Unavoidable Delays (including for the
purposes of this Section, delays in obtaining Permits and in adjusting insurance
losses), but in no event beyond three hundred sixty-five (365) days following
the occurrence of the Casualty.
13.1.2 Procedures. In the event that any Casualty results in
non-structural damage to the Leased Property in excess of FIFTY THOUSAND and
NO/100 DOLLARS ($50,000.00) or in any structural damage to the Leased Property,
regardless of the extent of such structural damage, prior to commencing ,the
Work, Lessee shall comply with the following requirements:
(a) Lessee shall furnish to Lessor complete plans and
specifications for the Work (collectively, the "Plans and Specifications"), for
Lessor's approval, in each instance, which approval shall not be unreasonably
withheld. The Plans and Specifications shall bear the signed approval thereof by
an architect, licensed to do business in the State, satisfactory to Lessor and
shall be accompanied by a written estimate from the architect, bearing the
architect's seal, of the entire cost of completing the Work, and to the extent
feasible, the Plans and Specifications shall provide for Work of such nature,
quality and extent, that, upon the completion thereof, the Leased Property shall
be at least equal in value and general utility to its value and general utility
prior to the Casualty and shall be adequate to operate the Leased
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Property for the Primary Intended Use and, to the extent applicable, the Other
Permitted Uses;
(b) Lessee shall furnish to Lessor certified or photostatic copies
of all Permits and Contracts required by all applicable Legal Requirements in
connection with the commencement and conduct of the Work;
(c) Lessee shall furnish to Lessor a cash deposit or a payment and
performance bond sufficient to pay for completion of and payment for the Work in
an amount not less than the architect's estimate of the entire cost of
completing the Work, less the amount of property insurance proceeds, if any,
then held by Lessor and which Lessor shall be required to apply toward
restoration of the Leased Property as provided in Section 13.2;
(d) Lessee shall furnish to Lessor such insurance with respect to
the Work (in addition to the insurance required under Section 12.1 hereof) in
such amounts and in such forms as is reasonably required by Lessee; and
(e) Lessee shall not commence any of the Work until Lessee shall
have complied with the requirements set forth in clauses (a) through (d)
immediately above, as applicable, and thereafter Lessee shall perform the Work
diligently, in a good and workmanlike fashion and in good faith in accordance
with (i) the Plans and Specifications referred to clause (a) immediately above,
(ii) the Permits and Contracts referred to in clause (b) immediately above and
(iii) all applicable Legal Requirements and other requirements of this Lease.
13.1.3 Disbursement of Insurance Proceeds Less Than $50,000.00. In the
event of any Casualty which, in the aggregate, does not exceed $50,000.00
(determined by Lessor in its reasonable discretion), all proceeds relating
thereto shall be paid to Lessee in a lump sum to defray the cost of the repair
or restoration needed to respond to such loss or damage, provided that (a) there
does not exist an Event of Default under this Lease and (b) Lessee has received
no notice regarding an event or state of facts which, with the passage of time
and/or the giving of notice, would constitute an Event of Default if not cured
by Lessee, and Lessee has not yet effected such cure.
13.1.4 Disbursement of Insurance Proceeds $50,000.00 or More. With
respect to any Casualty equal to or in excess of $50,000.00, if Lessor is
required to apply any property insurance proceeds toward repair or restoration
of the Leased Property as provided in Section 13.2, then as long as the Work is
being diligently and continuously performed by Lessee in accordance with the
terms and conditions of this Lease, Lessor shall disburse such insurance
proceeds from time to time during the course of the Work in accordance with and
subject to satisfaction of the following provisions and conditions. Lessor shall
not be required to make disbursements more often than at thirty (30) day
intervals. Lessee shall submit a written request for each disbursement at least
ten (10) Business Days in advance and shall comply with the following
requirements in connection with each disbursement:
(a) Prior to the commencement of any Work, Lessee shall have
received Lessor's written approval of the Plans and Specifications (which
approval shall not be unreasonably withheld) and the Work shall be supervised by
an experienced construction
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manager with the consultation of an architect or engineer qualified and licensed
to do business in the State.
(b) Each request for payment shall be accompanied by (x) a
certificate of the architect or engineer, bearing the architect's or engineer's
seal, and (y) a certificate of the general contractor, qualified and licensed to
do business in the State, that is performing the Work (collectively, the "Work
Certificates"), each dated not more than ten (10) days prior to the application
for withdrawal of funds, and each stating:
(i) that all of the Work performed as of the date of the
certificates has been completed in compliance with the approved Plans and
Specifications, applicable Contract and all applicable Legal Requirements;
(ii) that the sum then requested to be withdrawn has been
paid by Lessee or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other Persons, whose names and addresses shall be
stated therein, who have rendered or furnished certain services or materials for
the Work, and the certificate shall also include a brief description of such
services and materials and the principal subdivisions or categories thereof and
the respective amounts so paid or due to each of said Persons in respect thereof
and stating the progress of the Work up to the date of said certificate;
(iii) that the sum then requested to be withdrawn, plus all
sums previously withdrawn, does not exceed the cost of the Work insofar as
actually accomplished up to the date of such certificate;
(iv) that the remainder of the funds held by Lessor will be
sufficient to pay for the full completion of the Work in accordance with the
Plans and Specifications;
(v) that no part of the cost of the services and materials
described in the applicable Work Certificate has been or is being made the basis
of the withdrawal of any funds in any previous or then pending application; and
(vi) that, except for the amounts, if any, specified in the
applicable Work Certificate to be due for services and materials, there is no
outstanding indebtedness known, after due inquiry, which is then due and payable
for work, labor, services or materials in connection with the Work which, if
unpaid, might become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon the Leased Property.
(c) Lessee shall deliver to Lessor satisfactory evidence that the
Leased Property and all materials and all property described in the Work
Certificates are free and clear of Liens, except (i) Liens, if any, securing
indebtedness due to Persons (whose names and addresses and the several amounts
due them shall be stated therein) specified in an applicable Work Certificate,
which Liens shall be discharged upon disbursement of the funds then being
requested, (ii) any Fee Mortgage, (iii) the Permitted Encumbrances and (iv) as
otherwise
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provided pursuant to the provisions of Article 15 provided however Lessor may
withhold any such property insurance proceeds which are the subject of any
contest involving the general contractor or any subcontractor. Lessor shall
accept as satisfactory evidence of the foregoing lien waivers in customary form
from the general contractor and all subcontractors performing the Work, together
with an endorsement of its title insurance policy (relating to the Leased
Property) in form acceptable to Lessor, dated as of the date of the making of
the disbursement, confirming the foregoing.
(d) If the Work involves alteration or restoration of the exterior
of any Leased Improvement, Lessee shall deliver to Lessor, upon the request of
Lessor, an "as-built" survey of the Leased Properly dated as of a date within
ten (10) days prior to the making of the first and final advances (or revised to
a date within ten (10) days prior to each such advance) showing no encroachments
other than such encroachments, if any, by the Leased Improvements upon or over
the Permitted Encumbrances as are in existence as of the date hereof.
(e) Lessee shall deliver to Lessor (i) an opinion of counsel or
licensed architect or engineer (satisfactory to Lessor both as to counsel,
architect or engineer and as to the form of opinion) prior to the first advance
opining that all necessary Permits for the repair, replacement and/or
restoration of the Work have been obtained and that the Work, if performed in
accordance, in all material respects, with the approved Plans and Specifications
and such Permits, shall comply with all applicable Legal Requirements and (ii)
an architect's certificate (satisfactory to Lessor both as to the architect and
as to the form of the certificate) prior to the final advance, certifying that
the Work was performed in accordance, in all material respects, with the
approved Plans and Specifications and complies with all applicable Legal
Requirements, including, without limitation, all Permits referenced in the
foregoing clause (i).
(f) There shall be no Lease Default or any state of facts or
circumstance existing which, with the giving of notice and/or the passage of
time, would constitute any Lease Default.
Lessor, at its option, may waive any of the foregoing requirements in
whole or in part in any instance. Upon compliance by Lessee with the foregoing
requirements (except for such requirements, if any, as Lessor may have expressly
elected to waive), and to the extent of (x) the insurance proceeds, if any,
which Lessor may be required to apply to restoration of the Leased Property
pursuant to the provisions of this Lease and (Y) all other cash deposits made by
Lessee, Lessor shall make available for payment to the Persons named in the Work
Certificate(s) the respective amounts stated in said Certificate(s) to be due,
subject to a retention of ten percent (10%) as to all hard costs of the Work
(the "Retainage"). It is understood that the Retainage is intended to provide a
contingency fund to assure Lessor that the Work shall be fully completed in
accordance with the Plans and Specifications and the requirements of Lessor.
Upon the full and final completion of all of the Work in accordance with the
provisions hereof, the Retainage shall be made available for payment to those
Persons entitled thereto.
Upon completion of the Work, and as a condition precedent to making any
further advance, in addition to the requirements set forth above, Lessee shall
promptly deliver to Lessor:
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(i) written certificates of the architect or engineer, bearing the
architect's or engineer's seal, and the general contractor, certifying that the
Work has been fully completed in a good and workmanlike manner in material
compliance with the Plans and Specifications and all Legal Requirements;
(ii) an endorsement of its title insurance policy (relating to the
Leased Property) in form reasonably acceptable to Lessor insuring the Leased
Property against all mechanic's and materialman's liens accompanied by the final
lien waivers from the general contractor d all subcontractors except as
otherwise provided pursuant to the provisions of Article 15 provided however
Lessor may withhold any such property insurance proceeds which are the subject
of any contest involving the general or any subcontractor;
(iii) a certificate by Lessee in form and substance reasonably
satisfactory to Lessor, listing all costs and expenses in connection with the
completion of the Work and a amount paid by Lessee with respect to the Work; and
(iv) a temporary certificate of occupancy (if obtainable) and all other
applicable Permits and Contracts issued by or entered into with any Governmental
Authority with respect to the Leased Property and the Primary Intended Use and,
to the extent applicable, the Other Permitted Uses and by the appropriate Board
of Fire Underwriters or other similar bodies acting in and for the locality in
which the Leased Property is situated; provided, that within thirty (30) days
after completion of the Work, Lessee shall obtain and deliver to Lessor a
permanent certificate of occupancy for the Leased Property.
Upon completion of the Work and delivery of the documents required pursuant
to the provisions of this Section 13.1, Lessor shall pay the Retainage to Lessee
or to those Persons entitled thereto and if there shall be insurance proceeds or
cash deposits, other than the Retainage, held by Lessor in excess of the
amounts' disbursed pursuant to the foregoing provisions, then provided t at no
Lease Default has occurred and is continuing, nor any state of facts or
circumstances has occurred which, with the giving of notice and/or the passage
of time could constitute Lease Default, Lessor shall pay over such proceeds or
cash deposits to Lessee.
No inspections or any approvals of the Work during or after construction
shall constitute a warranty or representation by Lessor, or any of its agents or
Consultants, as to the technical sufficiency, adequacy or safety of any
structure or any of its component parts, including, without limitation, any
fixtures, equipment or furnishings, or as to the subsoil conditions or any other
physical condition or feature pertaining to the Leased Property. All acts,
including any failure to act, relating to Lessor are performed solely for the
benefit of Lessor to assure the payment and performance of the Lease Obligations
and are not for the benefit of Lessee or the benefit of any other Person.
13.2 Disposition of Insurance Proceeds.
13.2.1 Proceeds To Be Released to Pay For Work. In the event of any
Casualty,
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except as provided for in Section 13.2.2, Lessor shall release proceeds of
property insurance held by it to pay for the Work in accordance with the
provisions and procedures set forth in this Article 13, only if:
(a) all of the terms, conditions and provisions of Sections 13.1 and
13.2.1 are satisfied;
(b) there does not then exist any Lease Default or any state of facts
or circumstance which, with the giving of notice and/or the passage of time,
would constitute such a Lease Default;
(c) Lessee demonstrates to Lessor's satisfaction that Lessee has the
financial ability to satisfy the Lease Obligations during such repair or
restoration; and
(d) no Sublease material to the operation of the Facility immediately
prior to such damage or taking shall have been cancelled or terminated, nor
contain any still exercisable right to cancel or terminate, due to such Casualty
if and to the extent that the income from such Sublease is necessary in order to
avoid the violation of any of the financial covenants set forth in this Lease or
otherwise to avoid the creation of a Lease Default.
13.2.2 Proceeds Not To Be Released. If, as the result of any Casualty,
the Leased Property or the Facility is damaged to the extent it is rendered
Unsuitable For Its Primary Intended Use and if either: (a) Lessee, after
exercise of diligent efforts, cannot within a reasonable time (not in excess of
ninety (90) days) obtain all necessary Permits in order to be able to perform
all required Work and to again operate such Facility for its Primary Intended
Use and, to the extent applicable; the Other Permitted Uses within two hundred
and seventy (270) days from the occurrence of the damage or destruction in
substantially the manner as immediately prior to such damage or destruction or
(b) such Casualty occurs during the last twenty-four (24) months of the Term and
would reasonably require more than nine (9) months to obtain all Permits and
complete the Work, then Lessee may either (i) acquire the Leased Property from
Lessor for a purchase price equal to the greater of (x) the Meditrust Investment
or (y) the Fair Market Value of the Leased Property minus the Fair Market Added
Value, with the Fair Market Value and the Fair Market Added Value to be
determined as of the day immediately prior to such Casualty and prior to any
other Casualty which has not been fully repaired, restored or replaced, in which
event, Lessee shall be entitled upon payment of the full purchase price to
receive all property insurance proceeds (less any costs and expenses incurred by
Lessor in collecting the same), or (ii) terminate this Lease, in which event
(subject to the provisions of the last sentence of this Section 13.2.2) Lessor
shall be entitled to receive and retain the insurance proceeds; provided,
however, that Lessee shall only have such right of termination effective upon
payment to Lessor of all Rent and other sums due under this Lease and the other
Lease Documents through the date of termination plus an amount, which when added
to the sum of (1) the Fair Market Value of the Leased Property as affected by
all unrepaired or unrestored damage due to any Casualty (and giving due regard
for delays, costs and expenses incident to completing all repair or restoration
required to fully repair or restore the same) plus (2) the amount of insurance
proceeds actually received by Lessor (net of costs and expenses incurred by
Lessor in
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collecting the same) equals (3) the greater of the Meditrust Investment or the
Fair Market Value of the Leased Property minus the Fair Market Added Value, with
the Fair Market Value and the Fair Market Add Value to be determined as of the
day immediately prior to such Casualty and prior to any other casualty which has
not been fully repaired. Any acquisition of the Leased Property pursuant to the
terms of this Section 13.2.2 shall be consummated in accordance with the
provisions of Article 18, mutatis, mutandis. If such termination becomes
effective, Lessor shall assign to Le see any outstanding insurance claims.
13.2.3 Lessee Responsible for Short-Fall. If the cost of the Work
exceeds the amount of proceeds received by Lessor from the property insurance
required under Article 12 (net of costs an expenses incurred by Lessor in
collecting the same), Lessee shall be obligated to contribute y excess amount
needed to repair or restore the Leased Property and pay for the Work. Such
amount shall be paid by Lessee to Lessor together with any other property
insurance proceeds for application to the cost of the Work.
13.3 Tangible Personal Property. All insurance proceeds payable by reason of
any loss of or d age to any of the Tangible Personal Property shall be paid to
Lessor as secured party, subject to the rights of the holders of any Permitted
Prior Security Interests, and, thereafter, provided that no Lease Default, nor
any fact or circumstance which with the giving of notice and/or the passage of
time could constitute a Lease Default, has occurred and is continuing, Lessor
shall pay such insurance proceeds to Lessee to reimburse Lessee for the cost of
repairing or replacing the damaged Tangible Personal Property, subject to the
terms and conditions set forth in the other provisions of this Article 13,
mutatis mutandis.
13.4 Restoration of Certain Improvements and the Tangible Personal Property.
If Lessee is required or elects to restore the Leased Property, Lessee shall
either (a) restore (i) all alterations and improvements made by Lessee, (ii) the
Tangible Personal Property and (iii) Lessor' Personal Property or (b) replace
such alterations and improvements, the Tangible Personal Property and Lessor's
Personal Property with improvements or items of the same or better quality and
utility in the operation of the Leased Property.
13.5 No Abatement of Rent. In no event shall any Rent xxxxx as a result of
any Casualty.
13. Termination of Certain Rights. Any termination of this Lease pursuant to
this Article 13 hall cause any right of Lessee to extend the Term of this Lease,
and any right of Lessee to p chase the Leased Property contained in this Lease
to be terminated and to be without further for a or .effect.
13. Waiver. Lessee hereby waives any statutory rights of termination which
may arise by reason any damage or destruction to the Leased Property due to any
Casualty which Lessee is obligate to restore or may restore under any of the
provisions of this Lease.
13.8 Application of Business Interruption Insurance. All proceeds of
business interruption insurance (collectively, "Rent Insurance Proceeds") shall
be paid to Lessor and dealt
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with as follows:
(a) if the Work has been promptly and diligently commenced by Lessee
and is in the process of being completed in accordance with this Lease and no
fact or condition exists which constitutes, or which with the giving of notice
and/or the passage of time would constitute, a Lease Default, Lessor shall each
month pay to Lessee out of the Rent Insurance Proceeds a sum equal to that
amount, if any, of the Rent Insurance Proceeds paid by the insurer which is
allocable to a rental loss and/or business interruption for the preceding month
minus an amount equal to the um of the Rent due hereunder for such month plus
any Impositions relating to the Leased Property then due and payable;
(b) if the Work has not been promptly and diligently commenced by
Lessee or is not in the process of being completed in accordance with this
Lease, such proceeds shall be applied to an Rent then due, and, to the extent
sufficient therefor, an amount equal to Base Rent, Impositions and insurance
premiums payable for the next twelve (12) months, as reasonably projected by
Lessor, shall be held by Lessor as security for the Lease Obligations and
applied to the payment of Rent as it becomes due; and
(c) if such Rent Insurance Proceeds received by Lessor (net of costs
and expenses incurred by Lessor in collecting the same) exceed the amounts
required under clauses (a) and (b) above, the excess shall be paid to Lessee,
provided no fact or circumstance exists which constitutes, r with notice, or
passage of time, or both, would constitute, a Lease Default.
Notwithstanding the foregoing, Lessor may at its option use or release such
insurance proceeds to pay for the Work and, if a Lease Default exists, Lessor
may apply all such insurance proceeds towards the Lease Obligations or hold such
proceeds as security therefor.
13.9 Obligation To Account. Upon Lessee's written request, which may not be
made not more than once in any three (3) month period, Lessor shall provide
'Lessee with a written accounting f the application of all insurance proceeds
received by Lessor.
ARTICLE 14
CONDEMNATION
14.1 Parties' Rights and Obligations. If during the Term there is any Taking
of all or any part f the Leased Property or any interest in this Lease, the
rights and obligations of the parties shall be determined by this Article 14.
14.2 Total Taking. If there is a permanent Taking of all or substantially
all of the Leased Property, this Lease shall terminate on the Date of Taking.
14.3 Partial or Temporary Taking. If there is a Permanent Taking of a
portion of the Leased Property (but not substantially all of the Leased Property
or the Facility as provided above in Section 14.2), or if there is a temporary
Taking of all or a portion of the Leased
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Property, this Lease shall remain in effect so long as the Facility is not
thereby rendered permanently unsuitable For Its Primary Intended Use or
temporarily Unsuitable For Its Primary Intended Use for a period not likely to,
or which does not, exceed two hundred and seventy (270) days. If, however, the
Facility is thereby so rendered permanently or temporarily Unsuitable For Its
Primary I tended Use: (a) Lessee shall have the right to restore any the
Facility, at its own expense (subject to the right under certain circumstances
as provided for in Section 14.5 to receive the n t proceeds of an Award for
reimbursement), to the extent possible, to substantially the same condition as
existed immediately before the partial or temporary Taking or (b) Lessee shall
have a right to acquire the entire Leased Property from Lessor (i) upon payment
of all Rent due through the date that the purchase price is paid, for a purchase
price equal to the greater of (x) the Meditrust Investment or (y) the Fair
Market Value of the Leased Property minus the Fair Market Added Value, with the
Fair Market Value of the Leased Property and the Fair Market Added Value to be
determined as of the day immediately prior to such partial or temporary Taking
and (ii) in accordance with the applicable terms and conditions set forth in
Article 18; in which event, this Lease shall terminate upon payment of such
purchase price and the consummation of such acquisition. Notwithstanding the
foregoing, Lessor may overrule Lessee's election under clause (a) or (b) and
instead either (1) terminate this Lease as of the date when Lessee is required
to surrender possession of the portion of the Leased Property so taken or (2)
compel Lessee to keep the Lease in full force and effect and to restore the
Leased Property as provide in clause (a) above, but only if the Facility may be
operated for at least eighty percent( 80(degree) ) of the licensed unit capacity
of such Facility in effect prior to the Taking. Lessee -shall exercise its
election under this Section 14.3 by giving Lessor notice thereof ("Lessee's
Election No ice") within sixty (60) days after Lessee receives notice of the
Taking. Lessor shall exercise its option to overrule Lessee's election under
this Section 14.3 by giving Lessee notice of Lessor's exercise of its rights
under Section 14.3 within thirty (30) days after Lessor receives Lessee's
Election Notice. If, as the result of any such partial or temporary Taking, this
Lease is not terminated as provided above, Lessee shall be entitled to abatement
of Rent, but only to the extent, f any, provided for in Section 3.7, effective
as of the date upon which the Facility or portion thereof is rendered Unsuitable
For Its Primary Intended Use.
14.4 Restoration. If there is a partial or temporary Taking of the Leased
Property and this Lease re mains in full force and effect pursuant to Section
14.3, Lessee shall accomplish all necessary restoration and Lessor shall release
the net proceeds of such Award to reimburse Lessee for the ac al reasonable
costs and expenses thereof, subject to all of the conditions and provisions set
forth in Article 13 relating to insurance proceeds as though the Taking was a
Casualty and the Award was insurance proceeds. If the cost of the restoration
exceeds the amount of a Award (net of costs and expenses incurred in obtaining
the Award), Lessee shall be obligated to contribute any excess amount needed to
restore the Facility or pay for such costs and expenses.
14.5 Award Distribution. In the event Lessee completes the purchase of the
Leased Property, as described in Section 14.3, the entire Award shall, upon
payment of the purchase price and all Rent and other sums due under this Lease
and the other Lease Documents, belong to Lessee an Lessor agrees to assign to
Lessee all of Lessor's rights thereto. In any other event, the entire A and
shall belong to and be paid to Lessor.
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14.6 Control of Proceedings. Subject to the rights of any Fee
.Mortgagee, unless and until Lessee completes the purchase of the Leased
Property as provided in Section 14.3, all proceedings involving any Taking and
the prosecution of claims arising out of any Taking against the Condemnor or
shall be conducted, prosecuted and settled by Lessor; provided, however, that
Lessor shall keep Lessee apprised of the progress of all such proceedings and
shall solicit Lessee's ad ice with respect thereto and shall give due
consideration to any such advice. In addition, Lessee shall reimburse Lessor (as
an Additional Charge) for all costs and expenses, including reasonable
attorneys' fees, appraisal fees, fees of expert witnesses and costs of
litigation or dispute resolution, in relation to any Taking, whether or not this
Lease is terminated; provided, however, if this Lease is terminated as a result
of a Taking, Lessee's obligation to so reimburse Lessor shall be diminished by
the amount of the Award, if any, received by Lessor which is in excess of the
Meditrust Investment.
ARTICLE 15
PERMITTED CONTESTS
15.1 Lessee's Right to Contest. To the extent of the express references
made to this Article 15 in other Sections of this Lease, Lessee, any Sublessee
or any Manager on their own or on Lessor's behalf (or in Lessor's name), but at
their sole cost and expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence (until the resolution thereof),
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, the decision of any Governmental Authority related to the
operation of the Leased Property for its Primary Intended Use and, to the extent
applicable, any of the Other Permitted Uses or a y Lien or claim relating to the
Leased Property not otherwise permitted by this Agreement; provided, that (a)
prior written notice of such contest is given to Lessor, (b) in the case of an
unpaid Imposition, Lien or claim, the commencement and continuation of such
proceeding shall suspend the collection thereof from Lessor and compliance by
Lessee, any Sublessee and/or any Manager with the contested Legal Requirement or
other matter may be legally delayed pending the prosecution of any such
proceeding without the occurrence or creation of y Lien, charge or liability of
any kind against the Leased Property, (c) neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost, (d) in the case of
a Legal Requirement or decision of Governmental Authority, Lessor would not be
in any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings, (e) in the eve t that any
such contest shall involve a sum of money or potential loss in excess of TEN
THOUSAND and NO/100 DOLLARS ($10,000.00), Lessee shall deliver to Lessor an
Officer's Certificate and opinion of counsel, if Lessor deems the delivery of an
opinion to be appropriate, certifying or opining, as the case may be, as to the
validity of the statements set forth in clauses (b) , (c) and (d), to the extent
applicable, (f) Lessee shall give such cash security as may be demanded in good
faith by Lessor to insure ultimate payment of any fine, penalty, interest or
cost and to prevent any sale or forfeiture of the affected portion of the Leased
Property by reason of such non payment or non-compliance, (g) if such contest is
finally resolved against Lessor, Lessee, any Sublessee and/or any Manager,
Lessee shall promptly pay, as Additional Charges
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due hereunder, a amount required to be paid, together with all interest and
penalties accrued thereon and/or comp y (and cause any Sublessee and any Manager
to comply) with the applicable Legal Requirement or decision, and (h) no fact or
condition exists which constitutes, or with the passage of time and/or the
giving of notice, could constitute a Lease Default; provided, however, the
provisions of this Article 15 shall not be construed to permit Lessee to contest
the payment of Rent or y other sums payable by Lessee to Lessor under any of the
Lease Documents.
15.2 Lessor's Cooperation. Lessor, at Lessee's sole cost and expense,
shall execute and deliver o Lessee such authorizations and other documents as
may reasonably be required in any such contest, so long as the same does not
expose Lessor to any civil or criminal liability, and, if reasonably requested
by Lessee or if Lessor so desires, Lessor shall join as a party therein.
15.3 Lessee's Indemnity. Lessee, as more particularly provided for in
Section 12.2, shall indemnify, defend (with counsel acceptable to Lessor) and
save Lessor harmless against any liability, cost or expense of any kind,
including, without limitation, attorneys' fees and expenses that may be imposed
upon Lessor in connection with any such contest and any loss resulting therefrom
d in the enforcement of this indemnification.
ARTICLE 16
DEFAULT
16.1 Events of Default. Each of the following shall constitute an
"Event of Default" or "Lease Default" hereunder and shall entitle Lessor to
exercise its remedies hereunder and under any of the other Lease Documents:
(a) any failure of Lessee to pay any amount due hereunder
or under any of the other Leas Documents within ten (10) days following the
date when such payment was due;
(b) any failure in the observance or performance of any
other covenant, term, condition o warranty provided in this Lease or any of the
other Lease Documents, other than the payment o any monetary obligation and
other than as specified in subsections (c) through (u) below (a "Failure to
Perform"), continuing for thirty (30) days after the giving of notice by Lessor
to Lessee specifying the nature of the Failure to Perform; except as to matters
not susceptible to cure within thirty (30) days, provided that with respect to
such matters, (i) Lessee commence the cure thereof within thirty (30) days after
the giving of such notice by Lessor to Lessee, (ii) Lessee continuously
prosecutes such cure to completion, (iii) such cure is completed within ninety
(90) days after the giving of such notice by Lessor to Lessee and (iv) such
Failure to Perform does not impair the value of, or Lessor's rights with respect
to, the Leased Property or otherwise impair the Collateral or Lessor's security
interest therein;
(c) the occurrence of any default or breach of condition
continuing beyond the expiration of the applicable notice and grace periods, if
any, under any of the other Lease Documents, including, without limitation, the
Agreement Regarding Related Transactions, provided, ho ever, that if the cure
period specified in any of the other Lease Documents is
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different than that provided herein, the grace period provided herein shall
control, or if no grace period is provided herein, then no such grace period
shall be afforded;
(d) if any representation, warranty or statement
contained herein or in any of the other Lease Documents proves to be untrue in
any material respect as of the date when made or at any time d ' g the Term if
such representation or warranty is a continuing representation or warranty
pursuant to Section 10.2;
(e) if any member of the Leasing Group shall (i)
voluntarily be adjudicated a bankrupt or insolvent; (ii) seek or consent to the
appointment of a receiver or trustee for itself or for the L d Property; (iii)
file a petition seeking relief under the bankruptcy or other similar laws of the
United States, any state or any jurisdiction; (iv) make a general assignment for
the benefit of c editors; (v) make or offer a composition of its debts with its
creditors or (vi) be, unable to pa its debts as such debts mature;
(f) if any court shall enter an order, judgment or decree
appointing, without the consent of y member of the Leasing Group, a receiver or
trustee for such member or for any of its prop and such order, judgment or
decree shall remain in force, undischarged or unstayed, sixty (60) days after it
is entered;
(g) if a petition is filed against any member of the
Leasing Group which seeks relief under the bankruptcy or other similar laws of
the United States, any state or any other jurisdiction, and such petition is not
dismissed within sixty (60) days after it is filed;
(h) in the event that, without the prior written consent
of Lessor, in each instance, which consent may be withheld by Lessor in its sole
and absolute discretion: (i) there shall be a change in the Person or Persons
presently holding management or ownership control of any member of the Leasing
Group (other than changes in stock ownership of, or the individuals managing,
Guarantor), whether by operation of law or otherwise; (ii) all or any portion of
the interest of any partner or member of any member of the Leasing Group (other
than changes in the stock ownership of Guarantor) shall be, on any one or more
occasions, directly or indirectly sold, assigned, hypothecated or otherwise
transferred (whether by operation of law or otherwise), if such member of the
Leasing Group shall be a partnership, joint venture, syndicate or other group;
(iii) more than twenty-five percent (25%), in the aggregate, of the shares of t
e issued and outstanding capital stock of any member of the Leasing Group (other
than changes of stock ownership of Guarantor) shall be, on any one or more
occasions, directly or indirectly, sold, assigned, hypothecated or otherwise
transferred (whether by operation of law or otherwise), if such member of the
Leasing Group shall be a corporation; or (iv) all or any portion of the
beneficial interest in any member of the Leasing Group shall be, directly or
indirectly, sold or otherwise transferred (whether by operation of law or
otherwise), if such member of the Leasing Group shall be a trust;
(i) the death, incapacity, liquidation, dissolution or
termination of existence of any member of the Leasing Group or the merger or
consolidation of any member of the Leasing Group with any other Person;
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(j) except as otherwise permitted pursuant to Section 11.5.1
and/or Article 15 (as this Article relates only to involuntary Liens) hereof,
if, without the prior written consent of Lessor, in each instance, which consent
may be withheld by Lessor in its sole and absolute discretion, Lessee's or any
Sublessee's interest in the Leased Property shall be, directly or indirectly,
mortgaged, encumbered (by any voluntary or involuntary Lien other than the
Permitted Encumbrances), subleased, sold, assigned, hypothecated or otherwise
transferred (whether by operation of law or otherwise);
(k) except as otherwise permitted pursuant to Article 15, the
occurrence of a default or breach of condition continuing beyond the expiration
of the applicable notice and grace periods, if any, in connection with the
payment or performance of any other material obligation of Lessee or any
Sublessee, whether or not the applicable creditor or obligee elects to declare
the obligations of Lessee or the applicable Sublessee under the applicable
agreement due and payable or to exercise any other right or remedy available to
such creditor or obligee, if such creditor's or obligee's rights and remedies
may involve or result in (i) the taking of possession of the Leased Property or
(ii) the assertion of any other right or remedy that, in Lessor's reasonable
opinion, may impair Lessee's ability punctually to perform all of its
obligations under this Lease and the other Lease Documents, may impair such
Sublessee's ability punctually to perform all of its obligations under its
Sublease or may materially impair Lessor's security for the Lease Obligations;
provided, however, that in any event, the election by the applicable creditor or
obligee to declare the obligations of Lessee or such Sublessee under the
applicable agreement due and payable or to exercise any other right or remedy
available to such creditor or obligee shall be a Lease Default hereunder only if
such obligations, individually or in the aggregate, are in excess of ONE HUNDRED
THOUSAND and NO/100 DOLLARS ($100,000.00);
(1) the occurrence of a Related Party Default;
(m) the occurrence of any default or breach of condition.
continuing beyond the expiration of the applicable notice and grace periods, if
any, under any credit agreement, loan agreement or other agreement establishing
a major line of credit (or any documents executed in connection with such lines
of credit) on behalf of any member of the Leasing Group whether or not the
applicable creditor has elected to declare the indebtedness due and payable
under such line of credit or to exercise any other right or remedy available to
it. For the purposes of this provision, (1) a major line of credit shall mean
and include any line of credit established in an amount equal to or greater than
FIVE HUNDRED THOUSAND and NO/100 DOLLARS ($500,000.00) and (2) any such major
line of credit of Guarantor shall relate primarily to the Leased Property;
(n) except as a result of Casualty or a partial or complete
Condemnation, if Lessee or any Sublessee ceases operation of the Facility for a
period in excess of thirty (30) days (a "Failure to Operate");
(o) if one or more judgments against Lessee or any Sublessee
or attachments against Lessee's interest or any Sublessee's interest in the
Leased Property, which in the
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aggregate exceed ONE HUNDRED THOUSAND and NO/100 DOLLARS ($100,000.00) or which
may materially and adversely interfere with the operation of the Facility,
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed fore a
period of thirty (30) days;
(p) if any malpractice award or judgment exceeding any
applicable professional liability insurance coverage by more than FIVE HUNDRED
THOUSAND and NO/100 DOLLARS ($500,000.00) shall be rendered against any member
of the Leasing Group and either (i) enforcement proceedings shall have been
commenced by any creditor upon such award or judgment or (u') such award or
judgment shall continue unsatisfied and in effect for a period of ten (10)
consecutive days without an insurance company satisfactory to Lessor (in its
sole and absolute discretion) having agreed to fund such award or judgment in a
.manner satisfactory to Lessor (in its sole and absolute discretion) and in
either case such award or judgment shall, in the reasonable opinion of Lessor,
have a material adverse affect on the ability of Lessee or any Sublessee to
operate the Facility;
(q) if any Provider Agreement material to the operation or
financial condition of any member of the Leasing Group shall be terminated prior
to the expiration of the term thereof or, without the prior written consent of
Lessor, in each instance, which consent may be withheld in Lessor's reasonable
discretion, shall not be renewed or extended upon the expiration of the stated
term thereof;
(r) if, after Lessee or any Sublessee has obtained approval
for Medicare and/or Medicaid funding, a final unappealable determination is made
by the applicable Governmental Authority that Lessee or any Sublessee shall have
failed to comply with applicable Medicare and/or Medicaid regulations in the
operation of the Facility, as a result of which failure Lessee or such Sublessee
is declared ineligible to receive reimbursements under the Medicare and/or
Medicaid programs and such reimbursements are material to the operation or
financial condition of any member of the Leasing Group;
(s) if Lessee or any Sublessee receives notice of a final
unappealable determination by applicable Governmental Authorities of the
revocation of any Permit required for the lawful construction or operation of
the Facility in accordance with the Primary Intended Use and, to the extent
applicable, any of the Other Permitted Uses or the loss of any Permit under any
other circumstances under which Lessee or such Sublessee is required to cease
the construction or operation of the Facility in accordance with the Primary
Intended Use;
(t) any failure to maintain the insurance required pursuant to
Section 12 of this Lease in force and effect at all times until the Lease
Obligations are fully paid and performed; or
(u) the entry of a final unappealable order by a court with
jurisdiction over the Leased Property to close the Facility, to transfer one or
more residents from the Facility as a result of a allegation of abuse or neglect
or to take any action to eliminate an emergency situation than existing at the
Facility.
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16.2 Remedies.
(a) If any Lease Default shall have occurred, Lessor may at its option
terminate this Lease by giving Lessee not less than ten (10) days' notice of
such termination, or exercise any one or more of its rights and remedies under
this Lease, or the other Lease Documents, or as available at law or in equity
and upon the expiration of the time fixed in such notice, the Term shall
terminate (but only if Lessor shall have specifically elected by a written
notice to so terminate the Lease) and all rights of Lessee under this Lease
shall cease. Notwithstanding the foregoing, in the event of Lessee's failure to
pay Rent, if such Rent remains unpaid beyond ten (10) days from the due date
thereof, Lessor shall not be obligated to give ten (10) days notice of such
termination or exercise of any of its other rights and remedies under this
Lease, or the other Lease Documents, or otherwise available at law or in equity,
and Lessor shall be at liberty to pursue by one or more of such rights or
remedies without further notice. No taking of possession of the Leased Property
by or on behalf of Lessor, and no other act done by or on behalf of Lessor,
shall constitute an acceptance of surrender of the Leased Property by Lessee or
reduce Lessee's obligations under this Lease or the other Lease Documents,
unless otherwise expressly a xxxx to in a written document signed by an
authorized officer or agent of Lessor.
(b) To the extent permitted under applicable law, Lessee shall
pay as Additional Charges al costs and expenses (including, without limitation,
attorneys' fee and expenses) reasonably incurred by or on behalf of Lessor as a
result of any Lease Default.
(c) If any Lease Default shall have occurred, whether or not
this Lease has been terminated pursuant to Paragraph (a) of this Section, Lessee
shall, to the extent permitted under applicable law, if required by Lessor so to
do, upon not less than ten (10) days' prior notice from Lessor, immediately
surrender to Lessor the Leased Property pursuant to the provisions of Paragraph
(a) of this Section and quit the same, and Lessor may enter upon and repossess
the Leased Property by reasonable force, summary proceedings, ejectment or
otherwise, and may remove Le see and all other Persons and any and all of the
Tangible Personal Property from the Leased Property, subject to the rights of
any residents of the Facility and any Sublessees who are not Affiliates of any
member of the Leasing Group and to any requirements of applicable law, or Lessor
my claim ownership of the Tangible Personal Property as set forth in Section
5.2.3 hereof or Lessor may exercise its rights as secured party under the
Security Agreement. Lessor shall use reasonable, good faith efforts to relet the
Leased Property or otherwise mitigate damages suffered by Lessor as a result of
Lessee's breach of this Lease.
(d) In addition to all of the rights and remedies of Lessor
set forth in this Lease and the other Lease Documents, if Lessee shall fail to
pay any rental or other charge due hereunder (whether denominated as Base Rent
or otherwise) within ten (10) days after same shall have become due and payable,
then and in such event Lessee shall also pay to Lessor (i) a late payment
service charge (in order to partially defray Lessor's administrative and other
overhead expenses) equal to two hundred-fifty and NO/100 ($250.00) dollars and
(ii) to the extent permitted by applicable law, interest on such unpaid sum at
the Overdue Rate; it being understood, however, that nothing herein shall be
deemed to extend the due date for payment of any sums required to be paid by
Lessee hereunder or to relieve Lessee of its obligation to pay
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such sums at the time or times required by this Lease.
16.3 Damages. None of (a) the termination of this Lease pursuant to
Section 16.2, (b) the eviction of Lessee or the repossession of the Leased
Property, (c) the failure of Lessor, notwithstanding reasonable good faith
efforts, to relet the Leased Property, (d) the reletting of the Leased Property
or (e) the failure of Lessor to collect or receive any rentals due upon any such
reletting, shall relieve Lessee of its liability and obligations hereunder, all
of which shall survive any such termination, repossession or reletting. In any
such event, Lessee shall forthwith pay to Lessor all Rent due and payable with
respect to the Leased Property to and including the date of such termination,
repossession or eviction. Thereafter, Lessee shall forthwith pay to Lessor, at
Lessor's option, either:
(i) the sum of: (x) all Rent that is due and unpaid at later
to occur of termination, repossession or eviction, together with interest
thereon at the Overdue Rate to the date of payment, plus (y) the worth
(calculated in the manner stated below) of the amount by which the unpaid Rent
for the balance of the Term after the later to occur of the termination,
repossession or eviction exceeds the fair market rental value of the Leased
Property for the balance of the Term, plus (z) any other amount necessary to
compensate Lessor for all damage proximately caused by Lessee's failure to
perform the Lease Obligations or which in the ordinary course would be likely to
result therefrom; or
(ii) each payment of Rent as the same would have become due
and payable if Lessee's right of possession or other rights under this Lease had
not been terminated, or if Lessee had not been evicted, or if the Leased
Property had not been repossessed which Rent, to the extent permitted by law,
shall bear interest at the Overdue Rate from the date when due until paid, and
Lessor may enforce, by action or otherwise, any other term or covenant of this
Lease. There shall be credited against Lessee's obligation under this Clause
(ii) amounts actually collected by Lessor from another tenant to whom the Leased
Property may have actually been leased or, if Lessor is operating the Leased
Property for its own account, the actual Cash Flow of the Leased Property.
In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such determination and allowed by
applicable law.
For the purposes of this Lease, the use of the word "termination" shall
mean either "termination" or "cancellation" as such words are defined in the
UCC.
16.4 Lessee Waivers. If this Lease is terminated pursuant to Section
16.2, Lessee waives, to the extent not prohibited by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article 16, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
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In the event Lessor may elect to regain possession of the Leased
Property by a forcible detainer proceeding, Lessee hereby specifically waives
any statutory notice which may be required prior to any such proceeding, and
agrees that Lessor's execution of this Lease is, in part, consideration for this
waiver. Except as otherwise set forth herein, Lessee further waives any demand
for Rent, notice of termination and any notice to quit required pursuant to Ohio
statutes or otherwise, and agrees that Lessor's execution of this Lease is, in
part, consideration for these waivers.
All claims for damages by reason of re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, as are all
claims for damages by reason of any distress warrant, forcible detainer
proceedings, sequestration proceedings or other legal process. Lessee agrees
that any re-entry by Lessor may be pursuant to judgment obtained in forcible
detainer proceedings or other legal proceedings or without the necessity for any
legal proceedings, as Lessor may elect, and Lessor shall not be liable in
trespass or otherwise.
Lessee shall not interpose any counterclaim of any kind in any action
or proceeding commenced by Lessor to recover possession of the Leased Property.
In the event Lessee violates this provision, the parties stipulate that .any
such counterclaim shall be severed and tried separately from the action for
eviction pursuant to Ohio Rules of Civil Procedure ss.42B or other applicable
law. The eviction action shall proceed pursuant to the summary procedures set
forth in Ohio Revised Code ss. 1923.
In any distress for rent action filed by Lessor against Lessee, Lessee
waives all constitutional, statutory or common law bonding requirements. Lessee
specifically agrees that no bond shall be required in any such action and Lessee
further waives the right under Ohio Revised Code ss. 2737, to replevin
distrained property.
16.5 Application of Funds. Any payments otherwise payable to Lessee
which are received by Lessor under any of the provisions of this Lease during
the existence or continuance of any Leas Default shall be applied to the Lease
Obligations in the order which Lessor may reasonably determine or as may be
required by the laws of the State.
16.6 [Intentionally Omitted]
16.7 [Intentionally Omitted]
16.8 Lessor's Right to Cure. If Lessee shall fail to make any payment,
or to perform any act required to be made or performed under this Lease or the
other Lease Documents and to cure the same within the relevant time periods
provided in Section 16.1, Lessor, after five (5) Business Days' prior notice to
Lessee (except in an emergency when such shorter notice shall be given a is
reasonable under the circumstances), and without waiving or releasing any
obligation r Lease Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be
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deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by Lessee to Lessor on demand as an Additional Charge. The obligations of
Lessee and rights of Lessor contained in this Article shall survive the
expiration or earlier termination of this Lease.
16.9 No Waiver By Lessor. Lessor shall not by any act, delay,, omission
or otherwise (including, without limitation, the exercise of any right or remedy
hereunder) be deemed to have waived any of its right or remedies hereunder or
under any of the other Lease Documents unless such waive is in writing and
signed by Lessor, and then, only to the extent specifically set forth therein.
No waiver at any time of any of the terms, conditions, covenants,
representations or warranties set forth in any of the Lease Documents
(including, without limitation, any of the time period set forth therein for the
performance of the Lease Obligations) shall be construed as a waive of any other
term, condition, covenant, representation or warranty of any of the Lease
Documents, nor shall such a waiver in any one instance or circumstances be
construed as a waiver of the same term, condition, covenant, representation or
warranty in any subsequent instance o circumstance. No such failure, delay or
waiver shall be construed as creating a requirement that Lessor must thereafter,
as a result of such failure, delay or waiver, give notice to Lessor o any
Guarantor, or any other Person that Lessor does not intend to, or may not, give
a further waiver or to refrain from insisting upon the strict performance of the
terms, conditions, covenants, representations and warranties set forth in the
Lease Documents before Lessor can exercise a y of. its rights or remedies under
any .of the Lease Documents or before any Lease Default ca occur, or as
establishing a course of dealing for interpreting the conduct of and agreement
between Lessor and Lessee, the Guarantor or any other Person.
The acceptance by Lessor of any payment that is less than payment in
full of all amounts then due under any of the Lease Documents at the time of the
malting of such payment shall not: (a) constitute a waiver of the right to
exercise any of Lessor's remedies at that time or at any subsequent time, (b)
constitute an accord and satisfaction or (c) nullify any prior exercise of any
remedy, without the express written consent of Lessor. Any failure by Lessor to
take any action under this Lease or any of the other Lease Documents by reason
of a default hereunder or thereunder, acceptance of a past due installment, or
indulgences granted from time to time shall not be construed as a novation of
this Lease or any of the other Lease Documents or as a waiver of such right or
of the right of Lessor thereafter to insist upon strict compliance with the
terms of this Lease or any of the other Lease Documents, or (d) to prevent the
exercise of such right of acceleration or any other right granted hereunder or
under applicable law; and to the maximum extent not prohibited by applicable
law, Lessor hereby expressly waives the benefit of any statute or rule of law or
equity now provided, or which may hereafter be provided, which would produce a
result contrary to or in conflict with the foregoing.
16.10 Right of Forbearance. Whether or not for consideration paid or
payable to Lessor and, except as may be otherwise specifically agreed to by
Lessor in writing, no forbearance on the part of Lessor, no extension of the
time for the payment of the whole or any part of the Obligations, and no other
indulgence given by Lessor to Lessee or any other Person, shall operate to
release or in any manner affect the original liability of Lessee or such other
Persons, or
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to limit, prejudice or impair any right of Lessor, including, without
limitation, the right to realize upon any Collateral, or any part thereof, for
any of the Obligations; notice of any such extension, forbearance or indulgence
being hereby waived by Lessee and all those claiming by, through or under
Lessee.
16.11 Cumulative Remedies. The rights and remedies set forth under this
Lease are in addition to all other rights and remedies afforded to Lessor under
any of the other Lease Documents or at law or in equity, all of which are hereby
reserved by Lessor, and this Lease is made and accepted without prejudice to any
such rights and remedies. All of the rights and remedies of Lessor under each of
the Lease Documents shall be separate and cumulative and may be exercised
concurrently or successively in Lessor's sole and absolute discretion.
ARTICLE 17
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
17.1 Surrender. Lessee shall, upon the expiration or prior termination
of the Term, vacate and surrender the Leased Property to Lessor in good repair
and condition, in compliance with all Legal Requirements, all Insurance
Requirements, and in compliance with the provisions of Article 8 except for: (a)
ordinary wear and tear (subject to the obligation of Lessee to maintain the
Leased Property in good order and repair during the entire Term of the Lease);
(b) damage caused by the gross negligence or willful acts of Lessor; and (c) any
damage or destruction resulting from a Casualty or Taking that Lessee is not
required by the terms of this Lease to repair or restore.
17.2 Transfer of Contracts and Permits. In connection with the
expiration or earlier termination of this Lease, Lessee shall use its best
efforts to transfer and assign to Lessor or its designee, shall assist Lessor or
its designee in obtaining, any Contracts and Permits required for the operation
of the Facility. The provisions of this Section 17.2 shall survive the
expiration or earlier termination of this Lease.
17.3 Management of Leased Property. Upon the expiration or earlier
termination of the Term, Lessor or its designee, upon written notice to Lessee,
may elect to assume the responsibilities and obligations for the management and
operation of the Leased Property and Lessee agrees to cooperate fully with
Lessor or its designee to accomplish the transfer of such management and
operation without interrupting the operation of the Leased Property. Lessee
shall not commit an act or be remiss in the undertaking of any act that would
jeopardize the licensure or certification of the Facility, and Lessee shall
comply with all requests by Lessor for possession of the Facility at the time of
any such surrender. Upon the expiration or earlier termination of the Term,
Lessee shall promptly deliver copies of all of Lessee's books and records
relating to the Leased Property and its operations to Lessor.
17.4 Correction of Deficiencies. Upon termination or cancellation of
this Lease, Lessee hereby indemnifies Lessor for any loss, damage, cost or
expense incurred by Lessor to correct all deficiencies of a physical nature
identified by any applicable Government Authorities in the course of the change
of ownership, inspection and audit, normal wear and tear excluded.
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17.5 No Acceptance of Surrender. Except at the expiration of the Term
in the ordinary course, no surrender to Lessor of this Lease or of the Leased
Property or any interest therein shall be valid or effective unless agreed to
and accepted in writing by Lessor and no act by Lessor or any representative or
agent of Lessor, other than such a written acceptance by Lessor, shall
constitute an acceptance of any such surrender.
17.6 Holding Over. If, for any reason, Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as tenant at sufferance during
which time Lessee shall pay as rental each month, one and one-half times the
aggregate of (i) one-twelfth of the aggregate Base Rent payable with respect to
he last complete Fiscal Year prior to the expiration or earlier termination of
the Term; (ii) all Additional Charges accruing during the month and (iii) all
other sums, if any, payable by Lessee pursuant to the provisions of this Lease
with respect to the Leased Property. During such period of tenancy, Lessee 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 tenants at sufferance, to continue its occupancy and use
of the Leased Property. Nothing contained herein shall constitute the consent,
express or implied, of Lessor t the holding over of Lessee after, the expiration
or earlier termination of this Lease.
ARTICLE 18
PURCHASE OF THE LEASED PROPERTY
18.1 Purchase of the Leased Property. In the event Lessee purchases all
or a portion of the Leased Property from Lessor pursuant to any of the terms of
this Lease, Lessor shall, upon receipt from Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
Lessee an appropriate special warranty deed conveying the entire interest of
Lessor in and to the Leased Property or the applicable portion thereof to Lessee
subject to the Lease, all Legal Requirements, all of the matters described in
clauses (a), (b), (e) and (g) of Section 11.5.2, Impositions, any Liens created
by Lessee, any Liens in accordance with the terms of this Lease or consented to
by Lessee, the claims of all Persons claiming by through or under Lessee, any
other matters assented to by Lessee and all matters for which Lessee has
responsibility under any of the Lease Documents, but otherwise not subject to
any other Lien created by Lessor (other than an Encumbrance permitted under
Article 20 which Lessee elects to assume). The applicable purchase price shall
be paid in cash to Lessor, or as Lessor may direct, in federal or other
immediately available funds except as otherwise mutually agreed by Lessor and
see. All expenses of such conveyance, including, without limitation, the cost of
title examination or standard coverage tide insurance, attorneys' fees incurred
by Lessor in connection with such conveyance, recording and transfer taxes and
recording fees and similar charges shall be paid by Lessee.
18.2 Appraisal.
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18.2.1 Designation of Appraisers. In the event that it becomes
necessary to determine a Fair Market Value of all or a portion of the Leased
Property for any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in a notice the name of a
Person selected to act as appraiser on its behalf. Within ten (10) days after
receipt of any such notice, Lessor (or Lessee, as the case may be) shall by
notice to Lessee ( r Lessor, as the case may be) appoint a second Person as
appraiser on its behalf.
18.2.2 Appraisal Process. The appraisers thus appointed, each of whom
must be a member of the American Institute of Real Estate Appraisers (or any
successor organization thereto), s 11, within thirty (30) days after the date of
the notice appointing the first appraiser, proceed to appraise all or a portion
of the Leased Property, as applicable, to determine the Fair Market Val a of the
Leased Property 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 shall have been so appointed, or if two
appraisers shall have been so appointed but only one such appraiser shall have
made such determination within thirty-five (35) days after the making of
Lessee's or Lessor's request, then the determination of such appraiser shall be
final and binding upon the parties. If two appraisers shall have been appointed
and shall have made the' determinations within the respective requisite periods
set forth above and if the difference between the amounts so determined shall
not exceed ten percent (10 %) of the lesser of such amounts, then the Fair
Market Value of all or a portion of the Leased Property, as applicable, shall be
an amount equal to fifty percent (50%) of the sum of the amounts so determined.
If the difference between the amounts so determined shall exceed ten percent (10
% ) of the lesser of such amounts, then such two appraisers shall have ten (10)
days to appoint a third appraiser, but if such appraisers fail to do so, then
either party may request the American Arbitration Association or any successor
organization thereto to appoint an appraiser within ten (10) days of such
request, and both parties shall be bound by any appointment so made within such
ten (10) day period. If no such appraiser shall have been appointed within such
ten (10) days or within sixty (60) days of the original request for a
determination of Fair Market Value of all or a portion of the Leased Property,
as applicable, whichever is earlier, either Lessor or Lessee may apply to any
court having jurisdiction to have such appointment made by such court. Any
appraiser appointed by the original appraisers, by the American Arbitration
Association or by such court shall be instructed to determine the Fair Market
Value of all or a portion of the Leased Property, as applicable, within thirty
(30) days after appointment of such appraiser. The determination of the
appraiser which differs most in terms of dollar amount from the determinations
of the other two appraisers shall be excluded, and. fifty percent (50 %) of the
sum of the remaining two determinations shall be final and binding upon Lessor
and Lessee as the Fair Market Value of all or a portion of the Leased Property,
as applicable.
18.2.3 Specific Enforcement and Costs. This provision for determination
by appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be final
and binding upon the parties except as otherwise provided by applicable law.
Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other cost and expenses incurred in
connection with each appraisal.
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18.3 Lessee's Right of First Refusal. During the Term of this Lease, so
long as there exists no Event of Default under this Lease at the time of
exercise and on the date of closing, and there is no event or state of facts
which, with the passage of time and/or the giving of notice, would constitute an
Event of Default if not cured by Lessee, and Lessee has not effected such cure,
Lessee shall have a "Right of First Refusal" as hereinafter described. If Lessor
receives a bona fide written offer to purchase the Facility (the "Subject
Property") from a Person unaffiliated with Lessee (the "Offer"), acceptable to
Lessor in Lessor's sole and absolute discretion and Lessor elects, in Lessor's
sole and absolute discretion, to sell, ground lease or otherwise transfer the
Subject Property other than as permitted by Article 20 below in accordance with
the Offer, Lessor shall notify Lessee and Lessee shall have thirty (30) days
following Lessee's receipt of Lessor's notice of the Offer to elect to purchase
the Subject Property on the. same terms and conditions as specified in the
Offer. Unless Lessor receives notice from Lessee within such thirty (30) day
period setting forth Lessee's election to so purchase the Subject Property and
unless thereafter Lessee completes the acquisition of the Subject Property
exactly as provided for, and by the date specified, in the Offer, Lessor shall
be at liberty, and shall have the absolute and unconditional right, to sell the
Subject Property to any Person, within the next twelve (12) months substantially
on the terms and conditions set forth in the Offer or on any other terms and
conditions more favorable to Lessor and such sale, if so completed, shall
extinguish Lessee's Right of First Refusal with respect to the Subject Property.
Lessee's Right of First Refusal shall not apply to and shall survive: (a) any
sale or transfer of the Subject Property or any portion thereof to Meditrust or
any Affiliate of Lessor or of Meditrust; or (b) any foreclosure of any Fee
Mortgage. The Right of Refusal shall in all events terminate upon any
termination of this Lease.
18.4 [Intentionally Omitted]
ARTICLE 19
SUBLETTING AND ASSIGNMENT
19.1 Subletting and Assignment. Lessee may not, without the prior
written consent of Lessor, which consent may be withheld in Lessor's sole and
absolute discretion, assign or pledge all or any portion of its interest in this
Lease or any of the other Lease Documents (whether by operation of law or
otherwise) or sublet all or any part of the Leased Property. For purposes of
this Section 19.1, the term "assign" shall be deemed to include, but not be
limited to, any one or more sales, pledges, hypothecations or other transfers
(including, without limitation, any transfer by operation of law) of any of the
capital stock of Lessee or sales, pledges, hypothecations or other transfers
(including, without limitation, any transfer by operation of law) of the capital
or the assets of Lessee. Any such assignment, pledge, sale, hypothecation or
other transfer made without Lessor's consent shall be void and of no force and
effect.
19.2 Permitted Subleases. (a) Notwithstanding the foregoing, the
Lessee shall have the right to enter into Resident Agreements without the prior
consent of the Lessor.
(b) Notwithstanding the foregoing, the Lessee may sublease the
Leased
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Property to the Current Sublessee for a term not to exceed eighteen (18)
months from the Commencement Date, provided that: (i) the Lessor is provided
with a copy of the sublease with the Current Sublessee prior to the effective
date thereof (which sublease shall be in form and substance satisfactory to the
Lessor in its reasonable discretion); (ii) the Current Sublessee agrees directly
with the Lessor, by written instrument in form reasonably satisfactory to the
Lessor, to be bound by all the obligations of the Lessee hereunder; (iii) the
Current Sublessee shall acknowledge in the sublease that a termination of this
Lease for whatever reason shall result in an automatic termination of the
sublease; (iv) the Current Sublessee, in the sublease and, if requested by the
Lessor, in any other document reasonably satisfactory to the Less or, represents
and warrants that its only right, title or interest in and to any Permits,
Contracts, Resident Agreements, Tangible Personal Property or other Collateral
relating to the Leased Property arises solely out of the sublease and upon any
termination of the sublease any and all such right, title and interest shall
automatically terminate; (v) the Current Sublessee enters into the Affiliated
Party Subordination Agreement with, among others, the Lessor; (vi) the Current
Sublessee enters into an Environmental Indemnity Agreement with the Lessor; and
(vii) the Lessee shall not be released from any of its obligations under this
Lease,, but rather the Lessee and the Current Sublessee shall be jointly and
severally liable therefor. The Lessee covenants, represents and warrants that
(x) the Lessee (or a wholly-owned, single purpose subsidiary of the Lessee or
the Guarantor) holds and shall continue to hold at least an fifty-one percent
(S1%) ownership interest in the Current Sublessee as its managing member and the
Lessee (or a wholly-owned, single purpose subsidiary of the Lessee or the
Guarantor) shall maintain complete management and control of the Current
Sublessee and (y) Elderly Living, Limited Partnership holds and shall continue
to hold not more than forty-nine percent (49%) ownership interest in the Current
Sublessee as the minority member of the Current Sublessee, and (z) the Current
Sublessee is, and shall remain for so long as Current Sublessee subleases any
portion of the Leased Property, a single purpose entity whose sole purpose is to
sublease the Leased Property or other properties owned by a Meditrust Entity. A
termination of this Lease for whatever reason shall result in an automatic
termination of the sublease.
19.3 Attornment. Lessee shall insert in each Sublease approved by
Lessor, 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 Lessor hereunder, (b) in the event this Lease shall terminate before the
expiration of such Sublease, the Sublessee thereunder will, at Lessor's option,
attorn to Lessor and waive any right the Sublessee may have to terminate the
Sublease or to surrender possession thereunder, as a result of the termination
of this Lease and (c) in the event the Sublessee receives a written notice from
Lessor stating that Lessee is in default under this Lease, the Sublessee shall
thereafter be obligated to pay all rentals accruing under said Sublease directly
to Lessor or as Lessor may direct. All rentals received from the Sublessee by
Lessor shall be credited against the amounts owing by Lessee under this Lease.
19.4 [Intentionally Omitted]
ARTICLE 20
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
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20.1 No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby with the fee estate in the Leased Property
by reason of the fact that the same Person may acquire, own or hold, directly or
indirectly (a) this :Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate: and (b) the fee estate in the
Leased Property.
20.2 Transfers By Lessor. If the original Lessor named herein or any
successor in interest shall convey the Leased Property in accordance with the
terms hereof, other than as security for a debt, and the grantee or transferee
of the Leased Property shall expressly assume all obligations of Lessor
hereunder arising or accruing from and after the date of such conveyance or
transfer, the original Lessor named herein or the applicable successor in
interest so conveying the Leased Property shall thereupon be released from all
future liabilities and obligations of Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
20.3 Lessor May Grant Liens. Without the consent of Lessee, but subject
to the terms and conditions set forth below in this Section 20.3, Lessor may,
from time to time, directly or indirectly, create or otherwise cause to exist
any lien, encumbrance or title retention agreement upon the Leased Property or
any interest therein ("Encumbrance"), whether to secure any borrowing or other
means of financing or refinancing, provided that Lessee shall have no obligation
to make payments under such Encumbrances. Lessee shall subordinate this Lease to
the lien of arty such Encumbrance, on the condition that the beneficiary or
holder of such Encumbrance executes a non-disturbance agreement in conformity
with the provisions of Section 20.4. To the extent that any such Encumbrance
consists of a mortgage or deed of trust on Lessor's interest in the Leased
Property the same shall be referred to herein as a "Fee Mortgage" and the holder
thereof shall be referred to herein as a "Fee Mortgagee".
20.4 Subordination and Non-Disturbance. Concurrently with the execution
and delivery of any Fee Mortgage entered into after the date hereof, provided
that the Lessee executes and delivers an agreement of the type described in the
following paragraph, Lessor shall obtain and deliver to Lessee an agreement by
the holder of such Fee Mortgage, pursuant to which, (a) the applicable Fee
Mortgagee consents to this Lease and (b) agrees that, notwithstanding the terms
of the applicable Fee Mortgage held by such Fee Mortgagee, or any default,
expiration, termination, foreclosure, sale, entry or other act or omission under
or pursuant to 'such Fee Mortgage or a transfer in lieu of foreclosure, (i)
Lessee shall not be disturbed in peaceful enjoyment of the Leased Property nor
shall this Lease be terminated or cancelled at any time, except in the event
that Lessor shall have the right to terminate this Lease under the terms and
provisions expressly set forth herein, (ii) Lessee's option to purchase the
Leased Property shall remain in force and effect pursuant to the terms hereof
and (iii) in the event that Lessee elects its option to purchase the Leased
Property and performs all of its obligations hereunder in connection with any
such election, the holder of the Fee Mortgage shall release its Fee Mortgage
upon payment by Lessee of the purchase price required hereunder, provided, that
(1) such purchase price is paid to the holder of the Fee Mortgage, in the event
that the Indebtedness
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secured by the applicable Fee Mortgage is equal to or greater than the purchase
price or (2) in the event that the purchase price is greater than the
Indebtedness secured by the Fee Mortgage, a portion of the purchase price equal
to the Indebtedness secured by the Fee Mortgage is paid to the Fee Mortgagee and
the remainder of the purchase price is paid to Lessor.
At the request from time to time by any Fee Mortgagee, Lessee shall (a)
subordinate this Lease and all of Lessee's rights and estate hereunder to the
Fee Mortgage held by such Fee Mortgagee and (b) agree that Lessee will attorn to
and recognize such Fee Mortgagee or the purchaser at any foreclosure sale or any
sale under a power of sale contained in any such Fee Mortgage as Lessor under
this Lease for the balance of the Term then remaining. To effect the intent and
purpose of the immediately preceding sentence, Lessee agrees to execute and
deliver such instruments in recordable from as are reasonably requested by
Lessor or the applicable Fee Mortgagee; provided, however, that such Fee
Mortgagee simultaneously executes, delivers and records a written agreement of
the type described in the preceding paragraph.
ARTICLE 21
LESSOR OBLIGATIONS
21.1 Quiet Enjoyment. As long as Lessee shall pay all Rent and all
other sums due under any of the Lease Documents as the same become due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations thereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property throughout the Term, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all the
Permitted Encumbrances and such Liens as may hereafter be consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to perform any
other sum payable under this Lease, or to fail to perform any other obligation
of Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right
by separate and independent action to pursue any claim it may have against
Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
contained in this Article 21.
21.2 Memorandum of Lease. Lessor and Lessee shall, promptly upon the
request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State, in which reference to this
Lease and all options contained herein shall be made. Lessee shall pay all
recording costs and taxes associated therewith.
21.3 Default by Lessor. Lessor shall be in default of its obligations
under this Lease only if Lessor shall fail to observe or perform any term,
covenant or condition of this Lease on its part to be performed and such failure
shall continue for a period of thirty (30) days after notice thereof from Lessee
(or such shorter time as may be necessary in order to protect the health or
welfare of any residents of the Facility), unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
failure shall not be deemed to continue if Lessor, 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 Lessor shall be
obligated to cure any such failure shall also be subject to extension of time
due to the occurrence
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of any Unavoidable Delay.
21.4 Computer Disc. In order to facilitate the electronic filing of
this Lease with the United States Securities and Exchange Commission and other
governmental agencies, Lessor shall provide or cause to be provided to Guarantor
a computer disc containing this Lease, together with all exhibits, schedules and
ancillary documents related thereto, formatted in WordPerfect 5.1, Times New
Roman Font 12, upon Lessee's one-time request for same.
ARTICLE 22
NOTICE
Any notice, request, demand, statement or consent made hereunder or
under any of the other Lease Documents shall be in writing and shall be deemed
duly given if personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight delivery
service with provision for a receipt, postage or delivery charges prepaid, and
shall be deemed given when so personally delivered or postmarked or placed in
the possession of such mail or delivery service and addressed as follows:
If to Lessee or Guarantor: c/o Sterling House Corporation
000 X. Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: President
With a copy to: Xxxxx X. Xxxxxxxx, Esq.
[Lessee's and Guarantor's Xxxxxxxx & Xxxxxxxxx
counsel] 0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
and c/o Sterling House Corporation
000 X. Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Secretary
If to Lessor: Meditrust of Ohio, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President
With copies to: Meditrust Mortgage Investments, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
and Xxxxx Xxxx III, Esq.
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Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
Boston, MA 02109
or such other address as Lessor, Lessee or the Guarantor shall hereinafter from
time to time designate by a written notice to the others given in such manner.
Any notice given to Lessee or the Guarantor by Lessor at any time shall not
imply that such notice or any further or similar notice was or is required.
ARTICLE 23
LIMITATION OF MEDITRUST LIABILITY
All Persons dealing with the Lessor, in any way, shall look only to the
assets of the Lessor for the payment of any sum or the performance of any
obligation. Furthermore, in no event shall Lessor ever be liable to Lessee or
any other Person for any indirect or consequential damages incurred by Lessee or
such other Person resulting from any cause whatsoever. Notwithstanding the
foregoing, Lessee hereby acknowledges and agrees that the Lessee shall look only
to the assets of Lessor for the payment of any sum or performance of any
obligation due by or from Lessor pursuant to the terms and provisions of the
Lease Documents.
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 Broker's Fee Indemnification. Lessee shall and hereby agrees to
indemnify, defend (with counsel acceptable to Lessor) and hold Lessor harmless
from and against any and all claims for premiums or other charges, finder's
fees, taxes, brokerage fees or commissions and other similar compensation due in
connection with any of the transactions contemplated by the Lease Documents.
Notwithstanding the foregoing, Lessor shall have the option of conducting its
own defense against any such claims with counsel of Lessor's choice, but at the
expense of Lessee, as aforesaid. This indemnification shall include all
attorneys' fees and expenses and court costs reasonably incurred by Lessor in
connection with the defense against any such claims and the enforcement of this
indemnification agreement and shall survive the termination of this Lease.
24.2 No Joint Venture or Partnership. Neither anything contained in any
of the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between Lessor and Lessee.
Lessee is not the agent or representative of Lessor and nothing contained herein
or in any of the other Lease Documents shall make, or be construed to make,
Lessor liable to any Person for goods delivered to Lessee, services performed
with respect to the Leased Property at the direction of Lessee or for debts or
claims acting against Lessee.
24.3 warrant Amendments. Waivers and Modifications. None of the terms,
covenants,
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conditions, warranties or representations contained in this Lease or in any of
the other Lease Documents ray be renewed, replaced, amended, modified, extended,
substituted, revised, waived, consolidated or terminated except by an agreement
in writing signed by the Person against who enforcement is sought or except as
otherwise expressly provided for herein or in any other a Document. The
provisions of this Lease and the other Lease Documents shall extend and b
applicable to all renewals, replacements, amendments, extensions, substitutions,
revisions, consolidations and modifications of any of the Lease Documents, the
Management Agreements, a Related Party Agreements, the Permits and/or the
Contracts. References herein and in the other Lease Documents to any of the
Lease Documents, the Management Agreements, the Related Party Agreements, the
Permits and/or the Contracts shall be deemed to include any renewals,
replacements, amendments, extensions, substitutions, revisions, consolidations
or modifications thereof.
Notwithstanding the foregoing, any reference contained in any of the
Lease Documents, whether express or implied, to any renewal, replacement,
amendment, extension, substitution, revisions, consolidation or modification of
any of the Lease Documents or any Management Agreement, elated Party Agreement,
Permit and/or the Contract is not intended to constitute an agreement or consent
by Lessor to any such renewal, replacement, amendment, substitution, revision,
consolidation or modification; but, rather as a reference only to those
instances where Lessor may give, agree or consent to any such renewal,
replacement, amendment, extension, substitution, revision, consolidation or
modification as the same may be required pursuant to the terms, cove is and
conditions of any of the Lease Documents.
24.4 Further Assurances. At any time and from time to time, upon the
written request by Lessor, Lessee (and .any of its Affiliates) and the Guarantor
(and any of its Affiliates) shall promptly make, execute and deliver, or cause
to be made, executed and delivered, to Lessor and, here appropriate, cause to be
recorded or filed (and, from time to time thereafter, to be re-recorded or
refiled) at such time and in such offices and places as shall be deemed
desirable by Lessor (in its reasonable discretion), any such agreements,
amendments, assignments, instruments of further assurance, certificates and
other documents as Lessor may, in its reason discretion, deem desirable to (a)
enable Lessor to assign the Lease or any portion of its interest; (b) enable
Lessor to enter into participation agreements with respect to all or any portion
of the Lease; or (c) effectuate, complete, perfect or continue and preserve the
rights, remedies and obligations under the Lease; provided, however that, except
as to the costs and expense of Lessor in connection with the items referred to
in the foregoing clause (c), no such additional document or other instrument
requested by Lessor hereunder shall (i) increase the obligations of Lessee (or
any of its Affiliates) or the Guarantor (or any of its Affiliates), or (ii)
require Lessee or the Guarantor to incur any cost or expense (other than the
fees and costs of any attorney(s) either Lessee or the Guarantor may choose to
retain in connection with such transaction);
Any failure by Lessee (or any of its Affiliates) or the Guarantor (or
any of its Affiliates) to comply with any request pursuant to this Section 24.4
within twenty (20) days after such written request is made by Lessor shall be an
Event of Default hereunder and upon such Event of Default, Lessor may make,
execute, record, file, re-record and refile any and all such amendments,
assignments, instruments, certificates and documents for and in the name of
Lessee
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(or any of its Affiliates) or the Guarantor (or any of its Affiliates), and
Lessee (or any of its Affiliates) or the Guarantor (or any of its Affiliates)
each hereby appoints Lessor as its attorney-in-fact, with full power of
substitution, to take such actions (on behalf of and in the name of Lessee (or
any of its Affiliates) or the Guarantor (or any of its Affiliates) as the case
may be) as Lessor, in its sole and absolute discretion, may deem necessary or
desirable to effectuate the intent of this Section 24.4.
24.5 Invalidity. If any provision of this Lease or any of the other
Lease Documents or the application thereof to any Person or circumstance, for
any reason and to any extent, shall be held to be invalid or unenforceable,
neither the remainder of this Lease or other Lease Documents nor the application
of such provision to any other Person or circumstance shall be affected thereby,
but rather the same shall be enforced to the greatest extent permitted by
applicable law.
Notwithstanding the foregoing, it is the intention of the parties
hereto that if any provision of the Lease or the other Lease Documents is
capable of two (2) constructions, one of which would render the provision void
and the other of which would render the provision valid, then such provision
shall be construed in accordance with the construction which renders such
provision valid.
24.6 Captions and Headings. the captions and headings set forth in this
Lease and each of the other Lease Documents are included for convenience and
reference only, and the words contained therein shall in no way be held or
deemed to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent of, this
Lease, any of the other Lease Documents or any parts hereof or thereof.
24.7 Time is of the Essence. Time is of essence of each and every term,
condition, covenant and warranty set forth herein and in the other Lease
Documents.
24.8 Counterparts. This Lease and the other Lease Documents may be
executed in one or more counterparts, each of which taken together shall
constitute an original and all of which shall constitute one and the same
instrument.
24.9 Entire Agreement. This Lease and the other Lease Documents set
forth the entire agreement of the parties with respect to the subject matter and
shall supersede in all respect the Letter of Intent, dated July 8, 1997 (and all
prior iterations thereof), from Meditrust to Guarantor.
24.10 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, LESSOR AND LESSEE HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY HERETO MAY NOW OR HEREAFTER HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. Lessee hereby certifies
that neither Lessor nor any of Lessor's representatives, agents or counsel has
represented expressly or otherwise at Lessor would not, in the event of any such
suit, action or proceeding seek to enforce this waiver
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to the right of trial by jury and acknowledges that Lessor has been induced by
this waiver (among other things) to enter into the transactions evidenced by
this Lease and the other Documents and further acknowledges that Lessee (a) has
read the provisions of this Lease, and in particular, the paragraph containing
this waiver, (b) has consulted legal counsel, (c) understands the rights that it
is granting in this Lease and the rights that it is waiving in is paragraph in
particular and (d) makes the waivers set forth herein knowingly, voluntarily and
intentionally.
24.11 Successors and Assigns. This Lease and the other Lease Documents
shall be binding upon and inure to the benefit of (a) upon Lessee and Lessee's
legal representatives and permitted successors and assigns and (b) Lessor and
any other Person who may now or hereafter hold the interest of Lessor under this
Lease and their respective successors and assigns. Notwithstanding the
foregoing, except as may be permitted pursuant to Article 19, Lessee shall not
assign a y of its rights or obligations hereunder or under any of the other
Lease Documents without the prior written consent of Lessor, in each instance,
which consent may be withheld in Lessor's sole and absolute discretion.
24.12 No Third Party Beneficiaries. This Lease and the other Lease
Documents are solely for the benefit of Lessor, its successors, assigns and
participants (if any), the Meditrust Entities, Lessee, the Guarantor, the other
members of the Leasing Group and their respective permitted successors and
assigns, and, except as otherwise expressly set forth in any of the Lease
Documents, nothing contained therein shall confer upon any Person other than
such patties any right to insist upon or to enforce the performance or
observance of any of the obligations contained therein. All conditions to the
obligations of Lessor to advance or make available proceeds of insurance or
Awards, or to release any deposits held for Impositions or insurance premiums re
imposed solely and exclusively for the benefit of Lessor, its successors and
assigns. o other Person shall have standing to require satisfaction of such
conditions in accordance' with their terms, and no other Person shall, under any
circumstances, be a beneficiary f such conditions, any or all of which may be
freely waived in whole or in part by Lessor at a y time, if, in Lessor's sole
and absolute discretion, Lessor deems it advisable or desirable t do so.
24.13 Governing Law. This Lease shall be construed and the rights and
obligations of Lessor and Lessee shall be determined in accordance with the laws
of the State.
Lessee hereby consents to personal jurisdiction in the courts of the
State and the United States District Court for the District in which the Leased
Property is situated as well as to the jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of any suit,
action or other proceeding arising out of or with respect to any of the other
Lease Documents and expressly waives any and all objections Lessee may have as
to venue in any of such courts.
24.14 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease or of the other Lease
Documents shall survive such termination. If any term or provision of this Lease
or any of the other Lease Documents or any application thereof shall be invalid
or unenforceable, the remainder of this Lease or the other Lease Document, as
the case may be, an
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any other application of such term or provision shall not be affected thereby.
If any late charges provided for in any provision of this Lease or any of the
other Lease Documents a 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. Lessee 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, o p incurring of new or additional obligations, except as to all of
the foregoing as expressly provided for herein.
24.11 Intention of Parties. Lessor and Lessee acknowledge and agree
that this Lease is intended to be a lease of the Leased Property and is in no
way intended to be a mortgage or any other security instrument encumbering the
Leased Property.
24.11 Radon Gas. Radon is naturally occurring radioactive gas that,
when it has accumulate in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Ohio.
Additional information regarding radon and radon testing may be obtained from
the county public health unit.
IN WITNESS WHEREOF, the parties have caused this Facility Lease
Agreement to be executed and attested by their respective officers thereunto
duly authorized.
WITNESSES: LESSEE:
ASSISTED LIVING PROPERTIES, INC.,
a Kansas corporation
By: /s/ R. Xxxx Xxxxx
Name Name: R. Xxxx Xxxxx
Title: Secretary/Treasurer
Name
WITNESSES: LESSEE:
MEDITRUST OF OHIO, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
Name Name: Xxxxx X. Xxxxxx
Title: President
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XXXXXXXXXXXX XX XXXXXXXXXXXXX
XXXXXXX, ss. February 17, 1998
Then personally appeared the above-named Xxxxx X. Xxxxxx,
President of MEDITRUST OF OHIO, INC., a Delaware corporation, and acknowledged
the foregoing instrument to be his free act and deed and the free act and deed
of said corporation before me.
/s/
NOTARY PUBLIC
My commission expires:
(SEAL)
STATE OF )
) SS:
COUNTY OF )
BEFORE ME, the undersigned, a notary public in and for said County and
State, on this day of February, 1998, personally appeared R. Xxxx Xxxxx, to
me known to be the identical person who signed the name of the maker thereof to
the within and foregoing instrument as its president and acknowledged to me that
he/she executed the same as his/her free and voluntary act and deed and as the
free and voluntary act and deed of said corporation for the uses and purposes
therein set forth
/s/
NOTARY PUBLIC
My Commission Expires:
(SEAL)
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