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EXHIBIT 10.32
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") entered into this ______
day of __________________________________, 199______ by and between Tri Point
Communities, L.P., ("Owner"), a ________________________________________
organized under the laws of the state of Texas, and CAPITAL SENIOR LIVING,
INC., ("Capital"), a corporation organized under the laws of the state of
Texas.
PREAMBLE
OWNER by this Agreement is engaging Capital to provide management
services relating to the operation of _________________________ ("Facility"),
a senior living community located in _____________________________________,
________________________________.
This Agreement is founded on the following assumptions:
Owner retains primary responsibility to:
a. Establish the policies of the Facility and to plan
for its short-range and long-range goals.
b. Review and evaluate the performance of Capital in
carrying out the established policies and in
attaining the goals established by Owner.
c. Annually review and approve the budget.
d. Annually review the policies and goals which have
been established.
Capital assumes primary responsibility to:
a. Implement the policies established by Owner.
b. Supervise the day-to-day management of the Facility,
including all resident activities.
c. Provide to Owner full, timely and accurate
information as to past operations.
d. Provide to Owner projections and recommendations
relating to the future operations of the Facility.
The parties therefore agree as follows:
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I. RESPONSIBILITIES OF CAPITAL
A. RECOMMENDED POLICIES. Capital shall recommend policies and
goals to be established by Owner and shall evaluate such
policies and goals on an ongoing basis.
B. MANAGEMENT DUTIES. Capital shall supervise the operation of
the Facility, provide management services, install operating
procedures and oversee day-to-day operations, all subject to
and in accordance with the budgets approved by and policies
established by Owner.
C. MARKETING DUTIES. Capital shall manage and supervise the
marketing program. Capital shall establish and periodically
review the residency agreement and if required, recommend
changes thereof.
D. EMPLOYEES. All Facility-based Employees, including the
administrative employees, shall be employees of Capital.
Capital shall have sole authority over Facility-based
Employees and Non-Facility-based Employees who are directly
responsible for the Facility and all matters pertaining
thereto and shall be responsible for all actions and omissions
of such employees occurring pursuant to Capital's employee
policy manual. All costs of hiring, equipping and providing
the services of Facility-based Employees, including, but not
limited to, compensation, health insurance, employer liability
insurance, payroll taxes, bonding, workers compensation
insurance, benefits and vacations shall be an expense of
Capital. To the extent the above-stated expenses are incurred
in accordance with the Facility Budget or approved by Owner,
they shall be reimbursed from the Facility operations or Owner
as the case may be.
E. OPERATING PROCEDURES. Capital shall develop, install and
maintain operating procedures, systems and controls.
F. FACILITY EXPANSION. Capital shall make recommendations
regarding remodeling or expansion of the Facility.
G. BUDGETS. Capital shall prepare for review and approval by
Owner based on reasonable standards annual operating budgets
for revenue, expense and cash flow of the Facility and a
capital expenditures budget. Budgets shall be prepared in
advance of each fiscal year. Cash flow projections shall
accompany each operating budget. It is to be understood that
budgets are only estimates and guidelines of future results
and that budget overruns may occur from time to time.
H. FINANCIAL CONTROLS. Capital shall establish and maintain a
system of financial controls for the Facility.
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I. MONTHLY FINANCIAL STATEMENTS. Capital shall provide to Owner,
on a monthly basis, financial statements and related financial
reports. Such statements and reports shall be provided by the
20th day after the end of the month. These reports shall be
in the form attached as Exhibit "A."
J. MARKETING REPORTS. Capital shall, on a weekly and monthly
basis, provide sales and occupancy reports to Owner, as well
as the results of the annual resident satisfaction survey.
K. LEGAL COUNSEL. Capital, at Facility expense, shall coordinate
with Owner the utilization of legal counsel relating to
Facility operations.
L. RENTAL COLLECTIONS AND DISBURSEMENTS. Capital shall collect
the revenues from the residents and, on behalf of Owner,
deposit all such funds in a residential depository account at
a FDIC insured bank approved by Owner. The style of the
account shall be in the name of the Facility with designated
representatives from Owner and Capital being the only parties
authorized to draw from said account.
On an as needed basis, Capital shall transfer the funds from
the above stated account into an Operating Expense Account in
the name of the Facility. The account shall be in a FDIC
insured bank approved by Owner. The style of the account
shall be in the name of the Facility with designated
representatives from Owner and Capital being the only parties
authorized to draw from said account. Capital shall pay out
of such Operating Expense Account all operating expenses for
which payment has been approved in accordance with the budget
or approved by Owner (including Capital's Management Fee and
any other sums due to Capital from Owner), and all other sums
properly payable pursuant to any of the provisions of this
Agreement. Capital shall hold, remit or expend the balance of
such funds, if any, as Owner may direct. These funds shall
not be co-mingled with funds from any other projects and/or
facilities managed and/or operated by Capital.
M. ACCOUNTING SYSTEMS AND SOFTWARE. Capital shall provide to
Owner, during the term of this Agreement, appropriate on-site
accounting systems and software, which shall include complete
accounting, bookkeeping and record keeping services for the
Facility, specifically including, but not limited to, resident
xxxxxxxx, accounts payable, accounts receivable, general
ledger and inventory records and maintain demographic
information on the residents. Acquisition of software for
Facility based operations, software maintenance and update
charges will be budgeted expenses of the Facility. Payroll
processing may be delegated to a third party, the cost of
which will be the responsibility of the Facility.
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II. OWNER'S RESPONSIBILITIES
A. POLICIES. Owner shall establish the policies for the
Facility.
B. GOALS. Owner shall establish the short range and long range
goals of the Facility.
C. BUDGETS. Owner shall review and approve budgets for the
operation of the Facility.
D. CAPITAL'S PERFORMANCE. Owner shall review and evaluate the
performance of Capital in carrying out the policies for the
Facility.
E. LEGAL COUNSEL. Owner shall obtain legal counsel to perform
all necessary legal services relating to Owner's ownership of
the Facility.
F. AUDITS. Owner, at its discretion, may engage certified public
accountants to perform annual audits of the Facility as well
as prepare any other reports required for federal or state
regulatory agencies which require licensure and/or
certification. Every quarter, upon receipt of reasonable
notice to Capital, all financial records pertaining to the
Facility will be open for inspection and review by Owner's
representatives. All labor and expense associated with such
review shall be borne by Owner.
G. DIRECTIVES. In order to assure proper coordination, Owner
shall issue any directions concerning the operations of the
Facility only through the President or Vice President of
Capital.
H. OPERATING REPORTS. During the term of this Agreement, Owner
shall, within fourteen (14) days of issuance, furnish to
Capital copies of any and all Facility-related reports,
including the annual audit (if any).
I. CHANGE OF RESIDENCY AGREEMENT. Owner shall not change the
Residency Agreement without consulting with and seeking
approval of Capital unless required to do so to comply with
any applicable law or regulation.
J. DECISIONS. Owner shall examine documents submitted by Capital
and render decisions pertaining thereto promptly to avoid
unreasonable delay.
K. UNIFORM ACCOUNTS. Facility shall use the uniform chart of
accounts recommended by Capital.
L. FURNISHING INFORMATION. Owner agrees at its expense to
install and maintain a computer terminal at the Facility
compatible with the mainframe computer currently in use by
Capital and to transmit data to Capital via telephone lines.
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M. RIGHT OF FIRST REFUSAL (SALE).
1. The Owner hereby agrees that so long as Capital is not
in default in the performance of any duty or any
obligation hereunder, Capital shall have the option
exercisable on not less than two (2) months nor more
than four (4) months notice to purchase the Facility
at a purchase price equal to the Fair Market Value as
defined in the Facility Lease Agreement attached as
Exhibit "B" (the "Lease") of the Facility. In the
event Capital purchases the Facility pursuant to this
option, the Owner shall, upon receipt from Capital of
the applicable purchase price, deliver to Capital a
deed with covenants only against acts of the Owner
conveying the entire interest of the Owner in and to
the Facility to Capital subject to all Legal
Requirements as defined in the Lease, all of the
matters described in clauses (a), (b), (e) and (g) of
Section 11.5.2 of the Lease, Impositions as defined
in the Lease, any Liens as defined in the Lease
created by Capital, any Liens as defined in the Lease
created in accordance with the terms of this
Agreement or consented to by Capital, the claims of
all persons claiming by, through or under Capital,
any other matters assented to by Capital and all
matters for which Capital has responsibility under
this Agreement, and any Encumbrance permitted under
Article 20 as defined in the Lease which Capital
elects to assume. The applicable purchase price shall
be paid in cash to the Owner, or as the Owner may
direct, in federal or other immediately available
funds except as otherwise mutually agreed by the
Owner and Capital. All expenses of such conveyance,
including, without limitation, title examination
costs, standard (and extended) coverage title
insurance premiums, attorneys, fees incurred by the
Owner in connection with such conveyance, recording
and transfer taxes and recording fees and other
similar charges shall be paid by Capital.
2. In the event that it becomes necessary to determine
the Fair Market Value as defined in the Lease of the
Facility for any purpose of this Agreement, the party
required or permitted to give notice of such required
determination shall include in the notice the name of
a person selected to act as appraiser on its behalf.
Within ten (10) days after receipt of any such
notice, the Owner (or Capital, as the case may be)
shall by notice to Capital (or the Owner, as the case
may be) appoint a second person as appraiser on its
behalf.
3. The appraisers thus appointed, each of whom must be
a member of the American Institute of Real Estate
Appraisers (or any successor organization thereto),
shall, within forty-five (45) days after the date of
the notice appointing the first appraiser, proceed to
appraise the Facility to determine the Fair Market
Value as defined in the Lease of the Facility 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 fifty (50) days after the making of Capital's
or the Owner's request, then the determination of
such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed
and shall have made their determinations within the
respective requisite periods set forth above and if
the difference between the amounts so determined
shall not exceed ten percent(10%) of the lesser of
such amounts, then the Fair Market Value as defined
in the Lease of the Facility 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 twenty (20) days to appoint a third
appraiser, but if such appraisers fail to do so, then
either party may request the American Arbitration
Association or any successor organization thereto to
appoint an appraiser within twenty (20) days of such
request, and both parties shall be bound by any
appointment so made within such twenty (20) day
period. If no such appraiser shall have been
appointed within such twenty (20) days or within
ninety (90) days of the original request for a
determination of Fair Market Value as defined in the
Lease of the Facility, whichever is earlier, either
the Owner or Capital 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 as defined in the Lease of the
Facility 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 the Owner and Capital as the Fair Market
Value of the Facility.
4. 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.
The Owner and Capital 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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5. Capital shall agree to enter into a Subordination
Agreement on reasonable terms and conditions with any
lender from whom Owner obtains a loan secured by the
Facility.
N. OPTION TO LEASE.
The Owner hereby agrees that so long as Capital is not in
default in the performance of any duty or any obligation
hereunder, the Manager shall have the option to lease the
Facility at any time during the term of this Agreement
(including any extension thereof) by providing the Owner with
at least ninety (90) days prior written notice of such
election. Within thirty (30) days after the receipt of the
Manager's notice to lease, the parties shall enter into a
lease agreement substantially in the form attached hereto as
Exhibit "B" (the "Lease"), which Lease shall include, without
limitation, a ten (10) year initial term (with three (3)
five-year renewal terms) and rental payments equal to the fair
market value (which will be a negotiated percentage of total
project costs) as determined immediately prior to the initial
term of the Lease and immediately prior to any renewal terms.
III. INSURANCE.
A. Capital shall maintain, in full force and effect, at the
Facility's expense, the following insurance protecting Owner
and Capital and their officers and employees:
1. Employee's fidelity insurance
2. Workers compensation and employers liability insurance
3. Professional liability insurance
4. Comprehensive general public liability insurance and
overlying umbrella liability coverage against loss or
liability for damages for personal injury or death
occurring on, in or about the Facility.
Such policy or policies shall be written by a responsible
insurance company or companies satisfactory to Owner and in
kind and amounts satisfactory to Owner. Certificates of
insurance showing compliance with the foregoing requirements
shall be furnished by Capital to Owner. Certificates shall
state
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that the policy or policies will not be canceled or altered
without at least 30 days prior written notice to Owner.
B. Owner shall procure and maintain, in full force and effect, at
Owner's expense the following insurance protecting Owner and
Capital and their officers and employees:
1. Property Insurance for loss or damage by fire and
other perils insurable under the broad form of
extended coverage insurance available in the area
where the Facility is located, and improvements, and
contents thereof, constituting all or any portion of
the Facility.
2. Insurance for automobiles owned or hired by Owner and
used in connection with the Facility.
Such policy or policies shall be written by a responsible
insurance company or companies satisfactory to Capital in kind
and amounts satisfactory to Capital. Certificates of
insurance showing compliance with the foregoing requirements
shall be furnished by Owner to Capital. Certificates shall
state that the policy or policies will not be canceled or
altered without at lease thirty (30) days prior written notice
to Capital.
IV. TERM AND TERMINATION OF THIS AGREEMENT.
A. TERM AND TERMINATION WITHOUT CAUSE. This Agreement shall
commence on the date set forth on the first page hereof.
Payment under Section V shall commence on the date of the
first resident move-in. The term of this Agreement shall
continue for a period of ten (10) years from the date of the
first resident move-in (the "Initial Term") and continue for
the Initial Term unless terminated by law or otherwise
according to its terms. Capital shall have the option to
extend the term of this Agreementfor an additional five (5)
year renewal option on the same terms and conditions as herein
provided (the "Extended Term").
B. If Owner terminates the Agreement prior to the expiration of
the Initial Term without cause or if Capital terminates this
Agreement during the Initial Term for cause as provided in
Paragraph IV. B. below, severance compensation in an amount
equal to the then-current monthly management fee times the
number of months remaining in the Initial Term shall be paid
to Capital upon the effective date of termination. Any such
termination shall be effective upon the expiration of the
ninety (90) day period following the giving of the notice or
on such later date as may be specified in the notice.
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C. TERMINATION FOR CAUSE.
1. This Agreement may be terminated by Owner for cause
for the following reasons:
a. In the event of material breach by Capital of
a material term hereof, which breach is not
cured within sixty (60) days after notice by
Owner.
b. In the event that a petition in bankruptcy is
filed by Capital or its permitted assignee,
or in the event Capital or its permitted
assignee makes an assignment for the benefit
of creditors or takes advantage of an
insolvency act, by notice to Capital or
assignee.
c. In the event that (i) Capital's or any
permitted assignee's corporate existence is
dissolved and the duties under this Agreement
are not assumed by Capital or an affiliate of
Capital (ii), Capital or any permitted
assignee ceases to do business for any
reason, by notice to Capital or such assignee
and the duties under this Agreement are not
assumed by Capital or Capital's Affiliate.
d. At any time after the Initial Term, with or
without cause.
2. This Agreement may be terminated for cause by Capital
in the event that Capital fails to receive
reimbursement of reimbursable expenses or any
compensation due Capital pursuant to the terms of
this Agreement or any other compensation due Capital,
and such failure continues for a period of sixty (60)
days after Capital's written notice thereof to Owner,
however, that this Agreement shall not be so
terminated if Owner pays Capital all such expenses
and compensation then due and payable on or before
the expiration of said sixty (60) day period.
3. No termination of this Agreement shall affect any
obligation owing by either party hereto to the other
which accrued prior to the effective date of such
termination.
C. COVENANTS SURVIVING TERMINATION. The termination of this
Agreement shall not terminate the right of Owner or Capital to
indemnification relating to events occurring during the term
of this Agreement under Article VI. K. and to protection of
Owner's or Capital's property rights under Article VI.B.
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V. COMPENSATION
A. OPERATIONS MANAGEMENT FEES. Owner shall pay to Capital a fee
in the amount set forth below, payable by the fifteenth day of
each month. Payment shall commence on the date of the first
resident move-in.
1. The amount to be paid monthly shall be 5% of Gross
Revenues generated during the immediately proceeding
month provided that the monthly management fee shall
not be less than Five Thousand Dollars ($5,000.00)
("Monthly Management Fee"). "Gross Revenues" shall
be defined as gross monthly revenues from the
operation of the Facility. Gross Revenues shall not
include (i) security deposits received from residents
and, if applicable, interest accrued thereon for the
benefit of the residents until such deposits or
interest are applied for rental payments; (ii)
proceeds from the sale or depositions of all or any
part of such Facility; (iii) insurance proceeds
received by Owner as a result of any insured loss
(except proceeds for rent loss insurance; (iv)
capital contributions made by any partner of Owner;
(v) loans by Owner; and (vi) proceeds from capital,
financing and any other transactions not in the
ordinary course of operation of such Facility. The
Monthly Management Fee for the Facility shall be
payable monthly in arrears following calculations
thereof upon submission of a monthly statement for
such Facility from Capital. It is agreed between
Owner and Capital that if the Gross Revenues of the
Facility are insufficient to pay all disbursements,
including the Monthly Management Fee or any portion
thereof, then Owner shall remain responsible for such
disbursements. It is further agreed between Owner
and Capital that in no event will any disbursement be
made to Owner from any Facility Account until all
accrued and unpaid fees to Capital and repayments, if
any, to Capital for Capital's advancement of funds to
cover any insufficiencies in such Facility's Rental
or Payroll Account have been paid in full.
2. In addition to the Monthly Management Fee stated
above, Owner shall also pay Capital a marketing
lease-up fee of $500.00 for each unit leased at the
time the unit is initially occupied.
B. CERTAIN EXPENSES. In accordance with the Annual Budgets, the
Facility will reimburse Capital for the cost of reasonable
transportation, lodging and meal expenses for
non-Facility-based employees of Capital or its outside
consultants when traveling in connection with the performance
of the services being performed pursuant to this Agreement,
together with any reasonable long distance telephone expenses,
copying, mailing or
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express shipments and other miscellaneous out of pocket
expenses that relate to the marketing and management of the
Facility. Relocation, education, professional memberships and
licensing expenses of the Facility-based administrative
employees shall also be an expense of the Facility subject to
Owner's prior approval.
VI. MISCELLANEOUS
A. INSURANCE-SUBROGATION. No indemnity shall be paid to the
other party under this Agreement where the claim, damage,
liability, loss or expense incurred was required to be insured
against by such other party. Any insurance policies obtained
by the parties pursuant to this Agreement shall contain
provisions or have the effect of waiving any right of
subrogation by the insurer of one party against the other
party or its insurer.
B. PROPERTY OF CAPITAL. Trade names, including the name "Product
2000," architectural and design concepts and plans, ideas and
documents, forms, occupancy development material, specifically
for and related to Owner and/or its Facility shall be the
exclusive property of Owner. Trade names, ideas and
documents, forms and occupancy development material, not
directly related to the Facility and supplied by Capital are
to be considered proprietary and will remain the property of
Capital. Either party may only use such materials which are
the property of the other and information in the operation and
management of the Facility, and may not use such materials or
information after termination of this Agreement for the
development or expansion of the Facility or for new projects
for itself or others without the written consent of the party
owning such material or information.
C. STATUS OF PARTIES. It is expressly understood and agreed that
Capital shall act as an independent contractor in the
performance of this Agreement. No provision hereof shall be
deemed or construed to create a partnership or a joint venture
between Owner with respect to the Facility or otherwise.
D. ADDITIONAL ACTION. In order to carry out the intent and
spirit of this Agreement, Owner and Capital will do all acts
and things necessary including the execution of other
agreements.
E. ENTIRE AGREEMENT. This Agreement sets forth the entire
Agreement between Capital and Owner. Any change or
modification of this Agreement must be in writing and signed
by all parties hereto.
F. BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their
successors and assigns.
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G. ASSIGNMENT, ETC. Except for an assignment by Capital to an
affiliate, Capital shall not, without Owner's prior written
approval (which approval shall not be unreasonably withheld),
assign any of its rights or obligations under this Agreement.
H. GOVERNING LAW. This Agreement, its interpretation, validity
and performance shall be governed by the laws of the State of
Texas.
I. NON-COMPETE. Without the prior written consent of Capital,
for a period of three years following termination of this
Agreement, Owner will not employ or engage any person who was
a Capital employee assigned to the administrative staff of the
Facility at any time during the last twelve (12) months of the
term of this Agreement. This section shall not apply to Owner
upon sale of the Facility or termination of the Agreement by
Owner for cause.
J. CONDITIONS BEYOND CONTROL OF PARTIES. Neither party shall be
held liable for failure to comply with any of the terms of
this Agreement when such failure has been caused solely by
fire, labor dispute, strike, war, insurrection, government
restrictions, force majeure, or act of God beyond the control
and without fault on the part of the party involved, provided
such party uses due diligence to remedy such default.
Circumstances are likely to arise from time to time which may
require that budgets be exceeded, and Capital shall not be
liable for budget overruns.
K. INDEMNIFICATION. Owner will indemnify and hold harmless
Capital from any and all liability arising incident to Owner's
performance of its duties under this Agreement. Capital will
indemnify and hold harmless Owner from any and all liabilities
arising incident to Capital's performance of its duties under
this Agreement.
Owner shall also indemnify and hold Capital harmless against
any and all losses, costs or expenses incurred by Capital by
reason of, arising out of or in any way related to
noncompliance by the Facility with all applicable state,
federal and local laws, ordinances, rules and regulations
relating to the physical condition of the property of the
Facility, provided Capital shall promptly notify Owner of
Capital's knowledge of any such noncompliance.
L. ARBITRATION. In the event of any dispute, claim or
controversy of any kind between the parties, concerning this
Agreement or the termination of this Agreement, the matter
shall be submitted to arbitration in accordance with rules of
the American Arbitration Association. The parties jointly
shall agree on an arbitrator. If the parties are unable to
agree, in good faith within a reasonable time, on the
selection of an arbitrator, either party may request
appointment of an arbitrator chosen by the American
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Arbitration Association who shall be the Selected Arbitrator.
Such arbitrator shall be limited in his decision to a choice
between the final position as requested by each party. Said
arbitration shall be held in Dallas/Ft. Worth, Texas or such
other place as is mutually agreeable. The arbitration
decision shall be final and binding on both parties unless the
arbitration is fraudulent or so grossly erroneous as to
necessarily imply bad faith. Costs of arbitration are to be
shared by both parties equally, provided that the arbitrator
may choose to award the costs of arbitration against the
losing party if the arbitrator determined that the final
position urged by the losing party was not reasonable.
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CAPITAL SENIOR LIVING, INC.
--------------------------------------
By: By:
----------------------------- ----------------------------
Title: Title:
-------------------------- -------------------------
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EXHIBIT B
FACILITY LEASE AGREEMENT
TRI POINT COMMUNITIES, L.P.
as
Lessor
AND
CAPITAL SENIOR _________, INC.
as
Lessee
Dated as of _________________________________, 19__
For Premises Located At
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
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TABLE OF CONTENTS
Page
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ARTICLE 1 LEASED PROPERTY; TERM; CONSTRUCTION;
EXTENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Extended Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 DEFINITIONS AND RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures . . . . . . . . . . . . . . 15
3.2 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 Additional Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 No Lessee Termination or Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7.1 No Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7.3 Independent Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.8 Abatement of Rent Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4 IMPOSITIONS; TAXES; UTILITIES, INSURANCE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Payment of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.1 Lessee To Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.2 Installment Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.3 Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.4 Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.5 Protest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Notice of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Adjustment of Impositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6.1 Lessor's Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6.2 Use of Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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4.6.3 Deficits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6.4 Other Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6.5 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6.6 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6.7 Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6.8 Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 5 OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Ownership of the Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Personal Property; Removal and Replacement of Personal Property . . . . . . . . . . . . . . 21
5.2.1 Lessee To Equip Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2.2 Sufficient Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2.3 Removal and Replacement; Lessor's Option to Purchase . . . . . . . . . . . . . . . 21
ARTICLE 6 SECURITY FOR LEASE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Security for Lessee's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1.1 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1.2 Purchase-Money Security Interests, Receivables
and Equipment Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Condition of the Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Use of the Leased Property; Compliance; Management . . . . . . . . . . . . . . . . . . . . 23
7.2.1 Obligation to Operate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2.2 Permitted Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2.3 Compliance with Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . 24
7.2.4 No Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2.5 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2.6 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2.7 Compliance with Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2.8 Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8 REPAIRS; RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1.1 Lessee's Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1.2 No Lessor Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.1.3 Lessee May Not Obligate Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.2 Encroachments; Title Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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ARTICLE 9 MATERIAL STRUCTURAL WORK AND
CAPITAL ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1 Lessor's Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 General Provisions as to Capital Additions and Certain
Material Structural Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2.1 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2.2 Lessee's Proposal Regarding Capital Additions
and Material Structural Work . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2.3 Lessor's Options Regarding Capital Additions
and Material Structural Work . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2.4 Lessor May Elect to Finance Capital Additions
or Material Structural Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Capital Additions and Material Structural Work Financed by Lessor . . . . . . . . . . . . . 28
9.3.1 Lessee's Financing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3.2 Lessor's General Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3.3 Payment of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 General Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.5 Non-Capital Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 10 WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1.1 Existence; Power; Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1.2 Valid and Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1.3 Single Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1.6 No Liens or Insolvency Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1.7 No Burdensome Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.8 Commercial Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.9 Adequate Capital, Not Insolvent . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.10 Not Delinquent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.11 No Affiliate Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.12 Taxes Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.13 Financials Complete and Accurate . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1.14 Pending Actions, Notices and Reports . . . . . . . . . . . . . . . . . . . . . . . 34
10.1.15 Compliance with Legal and Other Requirements . . . . . . . . . . . . . . . . . . . 35
10.1.16 No Action By Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1.17 Property Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1.18 Third Party Payor Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.19 Rate Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.20 Free Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.21 No Proposed Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.22 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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10.1.23 No Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.24 No Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.25 Nothing Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.26 No Margin Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1.27 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1.28 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1.29 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1.30 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1.31 Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Continuing Effect of Representations and Warranties . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 11 FINANCIAL AND OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Status Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Financial Statements; Reports; Notice and Information . . . . . . . . . . . . . . . . . . . 40
11.2.1 Obligation To Furnish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2.2 Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2.3 No Material Omission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.3 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.3.1 No Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.3.2 No Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4.1 Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4.2 Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.4.3 Compliance With Legal Requirements And Applicable
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4.4 Books And Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4.5 Participation in Third Party Payor Programs . . . . . . . . . . . . . . . . . . . . 45
11.4.6 Conduct of its Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4.7 Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4.8 Subordination of Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . 46
11.4.9 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4.10 Additional Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5 Additional Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5.1 Restrictions Relating to Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5.2 No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5.3 Limits on Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5.4 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5.5 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5.6 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5.7 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.5.9 Forgiveness of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.5.10 Value of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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11.5.11 Changes in Fiscal Year and Accounting Procedures . . . . . . . . . . . . . . . . . 48
ARTICLE 12 INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1 General Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1.1 Types and Amounts of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1.2 Insurance Company Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.3 Policy Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.4 Notices; Certificates and Policies . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.5 Lessor's Right to Place Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.1.6 Payment of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.1.7 Irrevocable Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.1.8 Blanket Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.1.9 No Separate Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.1.10 Assignment of Unearned Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.2.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.2.2 Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.2.3 Limitation on Lessor Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.2.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 13 FIRE AND CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.1 Restoration Following Fire or Other Casualty . . . . . . . . . . . . . . . . . . . . . . . 54
13.1.1 Following Fire or Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.1.2 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.1.3 Disbursement of Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 55
13.2 Disposition of Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.2.1 Proceeds To Be Released to Pay For Work . . . . . . . . . . . . . . . . . . . . . . 58
13.2.2 Proceeds Not To Be Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.2.3 Lessee Responsible for Short-Fall . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.3 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.4 Restoration of Certain Improvements and the Tangible
Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.5 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.6 Termination of Certain Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.8 Application of Rent Loss and/or Business Interruption Insurance . . . . . . . . . . . . . . 60
13.9 Obligation To Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 14 CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.1 Parties' Rights and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.2 Total Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.3 Partial or Temporary Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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14.4 Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.5 Award Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.6 Control of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 15 PERMITTED CONTESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.1 Lessee's Right to Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
15.2 Lessor's Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.3 Lessee's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 16 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
16.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
16.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.3 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
16.4 Lessee Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
16.5 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
16.6 Intentionally omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
16.7 Lessors's Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
16.8 No Waiver By Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
16.9 Right of Forbearance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
16.10 Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 17 SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING
OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
17.1 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
17.2 Transfer of Permits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
17.3 No Acceptance of Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
17.4 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 18 PURCHASE OF THE LEASED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
18.1 Purchase of the Leased Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
18.2 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
18.2.1 Designation of Appraisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
18.2.2 Appraisal Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
18.2.3 Specific Enforcement and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 19 SUBLETTING AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
19.1 Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
19.2 Permitted Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
19.3 Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
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ARTICLE 20 TITLE TRANSFERS AND LIENS GRANTED BY LESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
20.1 No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
20.2 Transfers By Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
20.3 Lessor May Grant Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
20.4 Subordination and Non-Disturbance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE 21 LESSOR OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
21.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
21.2 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
21.3 Default by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE 22 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE 23 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 24 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
24.1 Broker's Fee Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
24.2 No Joint Venture or Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
24.3 Amendments, Waivers and Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
24.4 Captions and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
24.5 Time is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
24.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
24.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
24.8 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
24.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
24.10 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
24.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
24.12 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
EXHIBIT A LEGAL DESCRIPTION OF THE LAND
EXHIBIT B PERMITTED ENCUMBRANCES
EXHIBIT C NATIONAL ACCOUNTS AND LOCAL DISCOUNTS
EXHIBIT D OPEN COST REPORTS
EXHIBIT E RATE LIMITATIONS
EXHIBIT F FREE CARE REQUIREMENTS
EXHIBIT G CURRENT RATES
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FACILITY LEASE AGREEMENT
This FACILITY LEASE AGREEMENT ("Lease") is dated as of the
______________ day of _______________________________ ___, 19____ and is
between Tri Point Communities, L.P. ("Lessor"), a Texas limited partnership
having its principal office at 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000, and Capital Senior ____________________________, Inc. ("Lessee"), a
Delaware corporation, having its principal office at 00000 Xxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000.
ARTICLE 1
LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, the Lessor leases to the Lessee and the Lessee rents and
leases from the Lessor all of the 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 benefiting any or all of
the Land and the Leased Improvements; and
(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");
The Leased Property is leased in its present condition, AS IS, without
representation or warranty of any kind, express or implied, by the Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter 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,
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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 "Initial
Term" which shall commence on __________ (the "Commencement Date") and end ten
(10) years later on ___________________ (the "Expiration Date"); provided,
however, that this Lease may be sooner terminated as hereinafter provided. In
addition, the Lessee shall have the option(s) 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 as long as there exists no Lease Default (as
hereinafter defined) at the time of exercise and on the last day of the initial
Term or the then current Extended Term (as hereinafter defined), as the case
may be, the Lessee is hereby granted the option to extend the Initial 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 _________ ______________
_____, _______. The Lessee's extension options shall be exercised by the
Lessee by giving written notice to the 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 Initial Term or the then current Extended
Term, as the case may be. The Lessee shall have no right to rescind any such
notice once given. The 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.
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, Section and other subdivisions of
this Lease or the other applicable Lease Document.
Accounts: As defined in the UCC.
Accreditation Body: Persons having or claiming jurisdiction over the
accreditation, certification, evaluation or operation of the Facility.
Additional Charges: As defined in Article 3.
Additional Land: As defined in Section 9.3.
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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 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.
Appurtenant Agreements: Collectively, all instruments, documents and
other agreements that now or hereafter create any utility, access or other
rights or appurtenances benefiting or relating to the Leased Property.
Award: All compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
Bankruptcy Code: Subsection 365(h) of the United States Bankruptcy
Code, 11 U.S.C. [S]365(h), as the same may hereafter be amended and including
any successor provision thereto.
Base Rent: As defined in Section 3.1.
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 the Lessor's depository bank is
located.
Capital Additions: Collectively, all new buildings and additional
structures annexes 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 in order to provide a functionally new
facility that is needed or used to provide services not previously offered and
any expansion, construction, renovation or conversion or in order to (i)
increase the unit capacity of a Facility, (ii) change the purpose for which
such beds 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 the
Lessee whether paid for by the Lessee or the 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, the Lessor.
Casualty: As defined in Section 13.1.
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Chattel Paper: As defined in the UCC.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Section 1.2.
Condemnation: With respect to the Leased Property or any interest
therein or right accruing thereto or use thereof (i) the exercise of any
Governmental Authority, whether by legal proceedings or otherwise, by a
Condemnor or (ii) a voluntary sale or transfer by the 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.
Consolidated and Consolidating: 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.
Consultants: Collectively, the architects, engineers, inspectors,
surveyors and other consultants that are engaged from time to time by the
Lessor to perform services for the Lessor in connection with this Lease.
Contracts: All agreements (including, without limitation, Provider
Agreements and Patient 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 Leased Property 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 third Person.
Date of Taking: The date the Condemnor has the right to possession of
the property being condemned.
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26
Documents: As defined in the UCC.
Encumbrance: As defined in Section 20.3.
Environmental Laws: Collectively, all Legal Requirements applicable
to (i) environmental conditions on, under or emanating from the Leased Property
and (ii) the generation, storage, transportation, utilization, disposal,
management or release (whether or not on, under or from the Leased Property) of
Hazardous Substances by the Lessee.
ERISA: The Employment Retirement Income Security Act of 1974, as
amended.
Event of Default: As defined in Article 16.
Expiration Date: As defined in Section 1.2.
Extended Terms: As defined in Section 1.3.
Facility: The __________unit, [INSERT DESCRIPTION OF FACILITY]
facility [OPTIONAL: to be] known as [INSERT NAME] [OPTIONAL: to be
constructed] on the Land (together with related parking and other amenities)].
Failure to Operate: As defined in Article 16.
Failure to Perform: As defined in 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 the Lessee had been
constructed.
Fair Market Value of the 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 or in such other manner as shall be
mutually acceptable to the Lessor and the Lessee (including, without
limitations as a negotiated percentage of total project costs) and (c) not
taking into account any reduction in value resulting from any Lien to which the
Leased Property, the Lessee or the Lessor is otherwise required to remove 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 to be removed shall
be taken into account in determining the Fair Market Value
5
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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.
Fair Market Value of the Material Structural Work: The amount by
which the Fair Market Value of the Leased Property upon the completion of any
particular Material Structural Work exceeds the Fair Market Value of the Leased
Property just prior to the construction of the applicable Material Structural
Work.
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 the
Lessor in any way in connection with the financing of any Capital Addition.
Fiscal Quarter: Each of the three (3) month periods commencing on
January lst, April 1st, July 1st and October lst.
Fiscal Year: The twelve (12) month period from January 1st to
December 31st.
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 the Lessee, 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):
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(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 upon or measured by said Gross Revenues which is
added to or made a part of the amount billed to the patient or other recipient
of such services or goods, whether included in the billing or stated
separately,
(v) provider discounts for hospital or other medical
facility utilization contracts;
(vi) the cost of any federal, state or local governmental
program imposed specially to provide or finance indigent patient care (other
than Medicare, Medicaid and the like); and
(vii) deposits refundable to residents of the Facility.
To the extent that the Leased Property is subleased or occupied by an
Affiliate of the 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 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 the Lessee and a non- Affiliate of the Lessee, only the
rental actually received by the Lessee from such non-Affiliate shall be
included in Gross Revenues.
Hazardous Substances: Collectively, (i) any "hazardous material,"
"hazardous substance," "hazardous waste," "oil," "regulated substance," "toxic
substance," "restricted hazardous waste", "special waste" or words of similar
import as defined under any of the Environmental Laws; (ii) asbestos in any
form; (iii) urea formaldehyde foam insulation; (iv) polychlorinated biphenyl
(v) radon gas; (vi) flammable explosives; (vii) radioactive materials; (viii)
any chemical, containment, solvent, material, pollutant or substance that may
be dangerous or detrimental to the Leased Property, the environment, or the
health and safety of the residents and other occupants of the Leased Property
or of the owners or occupants of any other real property nearby the Leased
Property and (iv) any substance, the generation, storage, transportation,
utilization, disposal, management, release or location of which, on, under or
from the Leased Property is prohibited or otherwise regulated pursuant to any
of the Environmental Laws.
Impositions: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of the Lessor, all ad valorem, property,
sales, use, single business, gross receipts,
7
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transaction privilege, rent or similar taxes), 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 the Lessee), which at any time prior to during or in respect of the
Term hereof and thereafter until the Leased Property is surrendered to the
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) the Lessor or the 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 construed to require
the Lessee to pay (1) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on the Lessor or any other
Person, except the Lessee or its successors, (2) any net revenue tax of the
Lessor or any other Person, except the Lessee and its successors, (3) any tax
imposed with respect to the sale, exchange or other disposition by the 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 the 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 the Lessee shall be equitably apportioned based upon all
properties owned by the 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.
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 five (5) years as calculated by the Federal Reserve Board.
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Initial Term: As defined in Section 1.2.
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.
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, and any and all other
instruments, documents, certificates or agreements now or hereafter (i)
executed or furnished by any member of the Leasing Group in connection with the
transactions evidenced by this Lease and/or any of the foregoing documents
and/or (ii) evidencing or securing any of the Lessee's obligations relating to
the Leased Property, including, without limitation, the Lessee's obligations
hereunder.
Lease Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings (other than the Lessor's
obligations) under this Lease and the other Lease Documents.
Leased Improvements: As defined in Article 1.
Leased Property: As defined in Article 1.
Leasing Group: Collectively, the Lessee, any Sublessee and any
Manager.
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 the 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 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, clean-up,
containment, removal, remediation or other treatment of any Hazardous
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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 Investment: The sum of (i) _____ plus (ii) the aggregate
amount of all Subsequent Investments.
Lien: With respect to any real or personal property, any mortgage,
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.
Limited Parties: As defined in Section 11.5; provided, however, in no
event shall the term Limited Parties include any Person in its capacity as a
shareholder of a public entity, unless such shareholder is a member of the
Leasing Group or an Affiliate of any member of the Leasing Group.
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
the Lessee or any Sublessee and any other Person pursuant to which the 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
the Lessee or any Sublessee.
Material Structural Work: Any (i) structural alteration, (ii)
structural repair or (iii) structural renovation to the Leased Property that
would, require (a) the design and/or involvement of a structural engineer
and/or architect and/or (b) the issuance of a Permit.
Medicaid: The medical assistance program established by Title XIX of
the Social Security Act (42 USC [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] 1395 et
seq.) and any statute succeeding thereto.
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Monthly Deposit Date: As defined in Section 4.6.
Net Income (or 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 the Lessee signed on behalf
of the Lessee by the Chairman of the Board of Directors, the President, any
Vice President or the Treasurer of the Lessee, or another officer authorized to
so sign by the Board of Directors or By-Laws of the 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.
Overdue Rate: On any date, a rate of interest per annum equal to 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 the
Lessor.
PBGC: Pension Benefit Guaranty Corporation,
Permits: Collectively, all permits, licenses, approvals,
qualifications, rights, 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 Leased Property
and all renewals, replacements and substitutions therefor, now or hereafter
required or issued by any Governmental Authority, Accreditation Body or Third
Party Payor to any member of the Leasing Group, or maintained or used by any
member of the Leasing Group, or entered into by any member of the Leasing Group
with any third Person.
Permitted Encumbrances: As defined in Section 10.1.
Permitted Prior Security Interests: As defined in Section 6.1.
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.
Plans and Specifications: As defined in Section 13.1.
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Primary Intended Use: The use of the Facility as a [ ] facility
with _________ ( ) units or such additional number of units as may hereafter
be permitted under this Lease, 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 the Lessor.
Principal Place of Business: As defined in Section 10.1.
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 the
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 the Lessee's or such Sublessee's participation in any Third Party Payor
Program.
Purchaser: As defined in Section 11.5.
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 the 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, obligations
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness.
Reference Bank: [________________________]
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 ______ anniversary of the Commencement
Date during the Term of the Lease, including, without limitation, any Extended
Terms.
Rent Insurance Proceeds: As defined in Section 13.8.
Residence 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.
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Retainage: As defined in Section 13.1.
State: The state or commonwealth in which the Leased Property is
located.
Sublease: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements, room rentals, rentals of
other facilities of the Leased Property and all other occupancy agreements of
every kind and nature, whether oral or in writing, now in existence or
subsequently entered into by the Lessee, encumbering or affecting the Leased
Property.
Sublessee: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases, but, excluding any resident of the
Facility under any Resident Agreement.
Subsequent Investments: The aggregate amount of all sums expended and
liabilities incurred by the Lessor in connection with Capital Additions.
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.
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 the Lessee and used in connection with the operation of
the Leased Property.
Term: Collectively, the Initial 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 the Lessee or any Sublessee presently or in the future may
participate, including without limitation,
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Medicare, Medicaid, Champus, Blue Cross and/or Blue Shield, Managed Care Plans,
other private insurance plans and employee assistance programs.
Third Party Payors: Collectively, Medicare, Medicaid, Blue Cross
and/or Blue Shield, private insurers and any other Person which presently or in
the future maintains Third Party Payor Programs.
UCC: The Uniform Commercial Code as in effect from time to time in
the (INSERT STATE].
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.
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 temporary Taking by Condemnation, in the
good faith judgment of the 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.
Work: As defined in Section 13.1.
Work Certificates: As defined in Section 13.1.
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 the
Lessor's attorneys shall be deemed to include, without limitation, special
counsel and local counsel for the 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 Leased Property shall be deemed to
include references to all of the Leased Property 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
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"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
3.1 Rent for Land, Leased Improvements, Related Rights and
Fixtures. The Lessee will pay to the Lessor, in lawful money of the United
States of America, at the Lessor's address set forth herein or at such other
place or to such other Person as the Lessor from time to time may designate in
writing, rent for the Leased Property, as follows: The Lessee shall pay to the
Lessor a base rent (the "Base Rent") per annum that is equal to [INSERT AMOUNT
DOLLARS ($ ) equal to a negotiated percentage of total project costs determined
immediately prior to the Initial Term and immediately prior to any Extended
Terms] and that is payable in advance in equal, consecutive monthly
installments due on the first day of each calendar month, commencing on
__________________________; provided, however, that on each Rent Adjustment
Date, the Base Rent shall be adjusted to equal the Base Rent then in effect
multiplied by _____________________.
3.2 Intentionally Omitted.
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) the Lessee will also pay
and discharge as and when due and payable all Impositions, all amounts,
liabilities and obligations under the Appurtenant Agreements due from or
payable by the owner of the Leased Property, all amounts, liabilities and
obligations under the Permitted Encumbrances due from or payable by the owner
of the Leased Property and all other amounts, liabilities and obligations which
the Lessee assumes or agrees to pay under this Lease, and (b) in the event of
any failure on the part of the Lessee to pay any of those items referred to in
clause (a) above, the 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 the 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 the
Lessee pays any Additional Charges to the Lessor pursuant to any requirement of
this Lease, the 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.
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3.5 Intentionally Omitted.
3.6 Net Lease. The Rent shall be paid absolutely net to the
Lessor, so that this Lease shall yield to the Lessor the full amount of the
installments of Base Rent and 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, the 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 the 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 the Lessor and the 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, the Lessee's
use of the Leased Property or the interference with such use by any Person
(other than the Lessor, except to the extent permitted hereunder) or by reason
of eviction by paramount title; (c) any claim that the Lessee has or might have
against the Lessor, (d) any default or breach of any warranty by the Lessor
under this Lease or any other Lease Document, (e) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting the Lessor or any assignee or transferee of the
Lessor or (f) any other cause whether similar or dissimilar to any of the
foregoing, other than a discharge of the Lessee from any of the Lease
Obligations as a matter of law.
3.7.2 Waiver. The Lessee to the fullest extent not prohibited by
applicable law, 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 the Lessee to any abatement, reduction,
suspension or deferment of the Rent or other sums payable by the Lessee
hereunder, except as otherwise specifically and expressly provided in this
Lease.
3.7.3 Independent Covenants. The obligations of the Lessor and the
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by the 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 an Event of
Default.
3.8 Abatement of Rent Limited. There shall be 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,
Base Rent then due during the Lease Year in which such Taking occurs shall be
reduced to equal the product of (i) the then current Base Rent multiplied by
(ii) the difference between one minus a fraction the numerator of which is the
Award, the denominator of which is the fair Market Value of the Leased
Property, and (b) in the case of such a temporary
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Taking, by reducing the Base Rent for the period of such a temporary Taking, by
the net amount of the Award received by the Lessor.
For the purposes of this Section 3.8, the "net amount of the Award
received by the Lessor" shall mean the Award paid to the Lessor on account of
such Taking, minus all costs and expenses incurred by the Lessor in connection
therewith, and minus any amounts paid to or for the account of the 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. Subject to the provisions of Section 4.1.2 and
Article 15, the 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 the Lessee will
promptly furnish the 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.
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), the 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 the 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. The 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 the
Lessor's net income, gross receipts, franchise taxes and taxes on its capital
stock, and the 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. The Lessor and the Lessee shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to the Leased Property as may be necessary to prepare any required
returns and reports. In the event that any Governmental Authority classifies
any property covered by this Lease as personal property, the Lessee shall file
all personal property tax returns in such jurisdictions where it may legally so
file. The Lessor, to the extent it possesses the same, and the 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.
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Where the Lessor is legally required to file personal property tax returns, if
the Lessee notifies the Lessor of the obligation to do so in each year at least
thirty (30) days prior to the date any protest must be filed, the Lessee will
be provided with copies of assessment notices so as to enable the Lessee to
file a protest.
4.1.4 Refunds. If no Lease Default shall have occurred and be
continuing, any refund due from any taxing authority in respect of any
Imposition paid by the Lessee shall be paid over to or retained by the Lessee.
If a Lease Default shall have occurred and be continuing, at the Lessor's
option, such funds shall be paid over to the Lessor and/or retained by the
Lessor and applied toward the Obligations in accordance with the Lease
Documents and/or the Related Party Agreements.
4.1.5 Protest. Upon giving notice to the Lessor, at the Lessee's
option and sole cost and expense, and subject to compliance with the provisions
of Article 15, the Lessee may contest, protest, appeal, or institute such other
proceedings as the Lessee may deem appropriate to effect a reduction of any
Imposition and the Lessor, at the Lessee's cost and expense as aforesaid, shall
fully cooperate in a reasonable manner with the Lessee in connection with such
protest, appeal or other action.
4.2 Notice of Impositions. The Lessor shall give prompt notice to
the Lessee of all Impositions payable by the Lessee hereunder of which the
Lessor at any time has knowledge, but the Lessor's failure to give any such
notice shall in no way diminish the 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 the Lessor and the Lessee,
whether or not such Impositions are imposed before or after such expiration or
termination, and the Lessee's obligation to pay its prorated share thereof
shall survive such expiration or termination.
4.4 Utility Charges. The 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 the Lessee
surrenders the Leased Property in the manner required by this Lease.
4.5 Insurance Premiums. The 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 the Lessee yields up the
Leased Property in the manner required by this Lease. All such premiums shall
be paid annually in advance and the Lessee shall furnish the Lessor with
evidence satisfactory to the Lessor that all such premiums have been so paid
prior to the commencement of the Term and thereafter at least thirty (30) days
prior to the due date of each premium which thereafter becomes due.
Notwithstanding the foregoing, the Lessee may pay such insurance premiums to
the insurer in monthly installments so long as the applicable insurer is
contractually obligated to give the Lessor not less than a sixty (60) days
notice of non-payment and so long as no Lease Default has occurred and is
continuing. In the event of the failure of the
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Lessee either to comply with the insurance requirements in Article 12, or to
pay the premiums for such insurance, or to deliver such policies or
certificates thereof to the Lessor at the times required hereunder, the 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 the
Lessee to the Lessor.
4.6 Deposits.
4.6.1 Lessor's Option. At the option of the Lessor, which may be
exercised at any time, the Lessee shall, upon written request of the Lessor, on
the 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 the
Lessor a sum equal to one-twelfth (1/12th) of the 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 to 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 purpose
of computing the deposit to be made by the Lessee hereunder shall be estimated
by the Lessor with an appropriate adjustment to be promptly made between the
Lessor and the Lessee as soon as such amount becomes determinable. In
addition, the Lessor may, at its option, from time to time require that any
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 the 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 required insurance premiums not
later than the due date thereof.
4.6.2 Use of Deposits. The sums deposited by the Lessee under this
Section 4.6 shall be held by the 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 the Lessor, and shall be
deposited by the Lessor at such bank as the Lessor may, from time to time
select, and the Lessor shall not be liable to the Lessee or any other Person
(a) based on the Lessor's (or such bank's) choice of investment vehicles, (b)
for any consequent loss of principal or interest or (c) for any unavailability
of funds based on such choice of investment. Furthermore, the Lessor shall
bear no responsibility for the financial condition of, nor any act or omission
by, the Lessor's depository bank. The income from such investment or interest
on such deposit shall be paid to the Lessee on a semi-annual basis as long as
no Lease Default has occurred and 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. The Lessee shall give not less than
ten (10) days prior written notice to the 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 the Lessor, in violation of its obligations under this Lease, does not pay
any imposition or insurance premium when due, for which a sufficient deposit
exists, the
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Lessee shall not be in default hereunder by virtue of the failure of the Lessor
to pay such Imposition or such insurance premium and the Lessor shall pay any
interest or fine assessed by virtue of the Lessor's failure to pay such
Imposition or insurance premium.
4.6.3 Deficits. If for any reason any deposit held by the 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 the Lessor, the Lessee shall deposit an
additional amount with the Lessor, increasing the deposit held by the Lessor so
that the 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 due thereon. The 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
the Lessor, the Lessee shall deposit with the Lessor the amount in excess of
the sums previously deposited with the 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 the
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 the Lessor's
interest under this Lease, the original the 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 then in its possession to such
assignee (as the subsequent holder of the Lessor's interest in this Lease) and
upon such transfer, the original the 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
the Lessee shall look solely to said assignee, as the subsequent holder of the
Lessor's interest under this Lease, in reference thereto. The original the
Lessor named herein or the applicable successor in interest transferring the
deposits shall provide written notice to the Lessee of such transfer.
4.6.6 Security. All amounts deposited with the Lessor pursuant to
the provisions of this Section 4.6 shall be held by the Lessor as additional
security for the payment and performance of the Obligations and, upon the
occurrence of any Lease Default, the Lessor may, in its sole and 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, are sums then held by the Lessor under this Section 4.6 shall be
refunded to the Lessee.
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4.6.8 Receipts. The Lessee shall deliver to the Lessor copies of
all notices, demands, claims, bills and receipts in relation to the Impositions
and insurance premiums immediately upon receipt thereof by the Lessee.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY
5.1 Ownership of the Leased Property. The Lessee acknowledges
that the Leased Property is the property of the Lessor and that the 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. The Lessee, at its sole cost and
expense shall install, affix or assemble or place on the Leased Property,
sufficient items of Tangible Personal Property, to enable the Leased Property
to be operated, in accordance with the requirements of this Lease for the
Primary Intended Use, and such Tangible Personal Property and replacements
thereof, shall be at all times the property of the Lessee.
5.2.2 Sufficient Personal Property. The Lessee shall maintain,
during the entire Term, the Tangible 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 Leased Property in compliance with all
applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended
Use. In addition, the Lessee shall (a) furnish all necessary replacements of
obsolete items of the Tangible Personal Property during the Term, unless the
Lessee provides the Lessor with an explanation (reasonably acceptable to the
Lessor) as to why such Tangible 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 the Lessor, deliver to the Lessor, a
detailed inventory of all such Tangible Personal Property.
5.2.3 Removal and Replacement; Lessor's Option to Purchase. The
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 DOLLARS ($25,000),
individually or ONE HUNDRED THOUSAND DOLLARS ($100,000) collectively, except if
such Tangible Personal Property is simultaneously suitably replaced or the
Lessee provides the Lessor with an explanation (reasonably satisfactory to the
Lessor) as to why such Tangible Personal Property is no longer required in
connection with the operation of the Leased Property. At its sole cost and
expense, the 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 the Lessee
or the Lessor. Upon the expiration or earlier termination of this Lease, the
Lessor shall have the
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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 the Lessor) upon payment of its
book value (the Lessee's cost, minus depreciation), but not in excess of its
fair market value or (b) requiring the Lessee to remove the Tangible Personal
Property. If the Lessor exercises its option to purchase the Tangible Personal
Property, the price to be paid by the Lessor shall be (i) reduced by the amount
of all payments due on any equipment leases or any other Permitted Prior
Security Interests assumed by the Lessor and (ii) applied to the Lease
Obligations before any payment to the Lessee. If the Lessor requires the
removal of the Tangible Personal Property, then all of the Tangible Personal
Property that is not removed by the Lessee within ten (10) days following such
request shall be considered abandoned by the Lessee and may be appropriated,
sold, destroyed or otherwise disposed of by the Lessor without first giving
notice thereof to the Lessee, without any payment to the Lessee and without any
obligation to account therefor.
ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS
6.1 Security for Lessee's Obligations.
6.1.1 Security. Notwithstanding anything to the contrary set forth
herein, in no event shall the Lessee be required to grant to the Lessor any
security interest in Receivables; provided, however, upon any Lease Default or
the expiration or earlier termination of this Lease, the Lessee shall provide
the Lessor with copies of its books and records relating to Receivables, even
if excluded from the security granted to the Lessor, so as to facilitate
continuity of patient care and billing.
6.1.2 Purchase-Money Security Interests, Receivables and Equipment
Leases. Notwithstanding any other provision hereof regarding the creation of
Liens, but subject to section 11.3.1, the Lessee may (a) grant priority
purchase money security interests in items of Tangible Personal Property, (b)
lease Tangible Personal Property from equipment Lessors and (c) grant a prior
security interest in Receivables to an institutional lender which is providing
a working capital line of credit to the Lessee for the exclusive use of the
Facility. Security interests granted by the Lessee in full compliance with the
provisions of this Section 6.1.2 are referred to as "Permitted Prior Security
Interests."
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
7.1 Condition of the Leased Property. The Lessee acknowledges
receipt and delivery of possession of the Leased Property and that the Lessee
has examined and otherwise has acquired
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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. The Lessee is leasing the Leased
Property "AS-IS" in its present condition. The Lessee waives any claim or
action against the Lessor in respect to the condition of the Leased Property.
THE 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 THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT; IT BEING
AGREED THAT ALL RISKS RELATING TO THE DESIGN, CONDITION AND/OR USE OF THE
LEASED PROPERTY ARE TO BE BORNE BY THE LESSEE. THE LESSEE HEREBY ASSUMES ALL
RISK OF THE PHYSICAL CONDITION OF THE LEASED PROPERTY, THE SUITABILITY OF THE
LEASED PROPERTY FOR THE LESSEE'S PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE
OF THE LEASED PROPERTY WITH ALL APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT
NOT LIMITED TO ENVIRONMENTAL LAWS AND ZONING OR LAND USE LAWS.
Upon the request of the Lessor, at any time and from time to time
during the Term, the Lessee shall engage one (1) or more independent
professional consultants, engineers and inspectors, qualified to do business in
the State and acceptable to the Lessor to perform any environmental and/or
structural investigations and/or other inspections of the Leased Property and
the Facility as the Lessor may reasonably request in order to detect (a) any
structural deficiencies in the Leased Improvements or the utilities servicing
the Leased Property or (b) the presence of any condition that (i) may be
harmful or present 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 the Lessor reasonably determines that the results
of such testing or inspections are unsatisfactory, within thirty (30) days of
notice from the Lessor, the Lessee shall commence such appropriate remedial
actions as may be reasonably requested by the Lessor to correct such
unsatisfactory conditions and, thereafter, shall 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. The Lessee shall continuously operate
the Leased Property in accordance with the Primary Intended Use 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, the Lessee shall use
the Leased Property, or permit the Leased Property to be used, only for the
Primary Intended Use. The Lessee shall not use the Leased Property or permit
the Leased Property to be used for any other use without the prior written
consent of the Lessor, which consent may be withheld in the Lessor's sole and
absolute discretion.
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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 the Lessee, any Manager or any other Person sell or
otherwise provide to any residents, other occupants or invitees therein, or
permit to be kept, used or sold in or about the Leased Property, any article
which may he prohibited by any Legal Requirement or by any of the Insurance
Requirements. Furthermore, the 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. The Lessee shall not commit or suffer to be
committed any waste on, in or under the Leased Property, nor shall the Lessee
cause or permit any nuisance thereon.
7.2.5 No Impairment. The lessee shall neither suffer nor permit the
Leased Property to be used in such a manner as (a) might reasonably tend to
impair the Lessor's title thereto or (b) may reasonably make possible a claim
or claims of adverse usage or adverse possession by the public or if implied
dedication of the Leased Property.
7.2.6 No Liens. Except as permitted pursuant to Section 6.1.2, the
Lessee shall not permit or suffer any Lien to exist on the Tangible Personal
Property and shall in no event cause, permit or suffer any Lien to exist with
respect to the Leased Property other than as set forth in Section 11.5.2.
7.2.7 Compliance with Legal Requirements. The Lessee covenants and
agrees that the Leased Property shall not be used for any unlawful purpose and
that the 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 for compliance with all of the terms
and conditions of this Lease. Unless a Lease Default has occurred or any event
has occurred which, with the passage of time and/or the giving of notice would
constitute a Lease Default, the Lessee may, upon prior written notice to the
Lessor, contest any Legal Requirement to the extent permitted by, and in
accordance with, Article 15.
7.2.8 Management Agreements. From and after the Commencement Date,
the Lessee shall not enter into any Management Agreement without the prior
written approval of the Lessor, in each instance, which approval shall not be
unreasonably withheld. The Lessee shall not, without the prior written
approval of the Lessor, in each instance, which approval shall not be
unreasonably withheld, agree to or allow: (a) any change in the Manager or
change in the ownership or control of the Manager, (b) any change in the
Management Agreement, (c) the termination of any Management Agreement (other
than in connection with the exercise by the Lessee of any of its remedies under
the Management Agreement as a result of any default by the
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Manager thereunder), (d) any assignment by the Manager of its interest under
the Management Agreement or (e) any material amendment of the Management
Agreement. In addition, the Lessee shall, at its sole cost and expense,
promptly and fully perform or cause to be performed every covenant, condition,
promise and obligation of the licensed operator of the Leased Property under
any Management Agreement.
Each Management Agreement shall provide that the Lessor shall be
provided notice of any defaults thereunder and, at the Lessor's option, an
opportunity to cure such default. The Lessee shall furnish to the Lessor,
within three (3) days after receipt thereof, or after the mailing or service
thereof by the Lessee, as the case may be, a copy of each notice of default
which the Lessee shall give to, or receive from any Person, based upon the
occurrence, or alleged occurrence, of any default in the performance of any
covenant, condition, promise or obligation under any management Agreement.
Whenever and as often as the Lessee shall fail to perform, promptly
and fully, at its sole cost and expense, any covenant, condition, promise or
obligation on the part of the licensed operator of the Leased Property under
and pursuant to any Management Agreement, the Lessor, or a lawfully appointed
receiver of the Leased Property, may, at their respective options (and without
any obligation to do so), after five (5) days, prior notice to the Lessee
(except in the case of an emergency) enter upon the Leased Property and
perform, or cause to be performed, such work, labor, services, acts or things,
and take such other steps and do such other acts as they may deem advisable, to
cure such defaulted covenant, condition, promise or obligation, and any amount
so paid or advanced by the Lessor or such receiver and all costs and expenses
reasonably incurred in connection therewith (including, without limitation,
attorneys, fees and expenses and court costs), shall be a demand obligation of
the Lessee to the Lessor or such receiver, and, the Lessor shall have the same
rights and remedies for failure to pay such costs on demand as for the Lessee's
failure to pay any other sums due hereunder.
ARTICLE 8
REPAIRS; RESTRICTIONS
8.1 Maintenance and Repair.
8.1.1 Lessee's Responsibility. The Lessee, at its sole cost and
expense, shall keep the Leased Property and all private roadways, sidewalks and
curbs appurtenant thereto which are under the Lessee's control in good order
and repair (whether or not the need for such repairs occurs as a result of the
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, the 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
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of, or during, the Term and thereafter until the Lessee surrenders the Leased
Property in the manner required by this Lease. In addition, the Lessee, at its
sole cost and expense, shall make all repairs, modifications, replacements,
renovations and alterations of the Leased Property (and 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. All repairs, replacements,
renovations, alterations, and modifications required by the terms 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 of the Leased Property
in a first class manner. The 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. 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, the Lessee shall obtain the 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 the Lessee in connection with such Material Structural Work.
Notwithstanding the foregoing, in the event of a bona fide emergency during
which the Lessee is unable to contact the appropriate representatives of the
Lessor, the Lessee may commence such Material Structural Work as may be
necessary in order to address such emergency without the Lessor's prior
approval, provided, however, that the Lessee shall immediately thereafter
advise the Lessor of such emergency and the nature and scope of the Material
Structural Work commenced and shall obtain the Lessor's approval of the
remaining Material Structural Work to be completed.
8.1.2 No Lessor Obligation. The 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 (or any private
roadways, sidewalks or curbs appurtenant thereto) in any way.
8.1.3 Lessee May Not Obligate Lessor. Nothing contained herein nor
any action or inaction by the Lessor shall be construed as (a) constituting the
consent or request of the 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 the 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 the 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
the Lessor in the Leased Property. Without limiting the generality of the
foregoing, the right title and interest of the Lessor in and to the Leased
Property shall not be subject to liens or encumbrances for the performance of
any labor or services or the furnishing of any materials or other property
furnished
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to the Leased Property at or by the request of the Lessee or any other Person
other than the Lessor. The Lessee shall notify any contractor, subcontractor,
laborer, materialman or vendor, providing any labor, services or materials to
the Leased Property of this provision.
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 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 the Lessor, the
Lessee shall, at its sole cost and expense, subject to the 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 the 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, the 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 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 the 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. The 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 the
Lessor, which consent may be withheld by the Lessor, in its sole and absolute
discretion, the Lessee shall make no Capital Addition or Material Structural
Work to the Leased Property (including, without limitation, any change in the
size or unit capacity of the Facility), except as may be otherwise expressly
required pursuant to Article 8.
9.2 General Provisions as to Capital Additions and Certain
Material Structural Work. As to any Capital Addition or Material Structural
Work (other than such Material Structural Work that is required to be performed
pursuant to the terms of Section 8.1) for which the Lessor has granted its
prior written approval, the following terms and conditions shall apply unless
otherwise expressly set forth in the Lessor's written approval.
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9.2.1 No Liens. The Lessee shall not be permitted to create any
Lien on the Leased Property in connection with any Capital Addition or material
Structural Work.
9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work. If the Lessee desires to undertake any Capital Addition or
material Structural Work, the Lessee shall submit to the Lessor in writing a
proposal setting forth in reasonable detail any proposed Capital Addition or
Material Structural Work and shall provide to the 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 the Lessor may reasonably
request. Without limiting the generality of the foregoing, each such proposal
pertaining to any Capital Addition shall indicate the approximate projected
cost of constructing such Capital Addition, the use or uses to which it will be
out and a good faith estimate of the change, if any, in the Gross Revenues that
the Lessee anticipates will result from the construction of such Capital
Addition.
9.2.3 Lessor's Options Regarding Capital Additions and Material
Structural Work. The Lessor shall have the options of: (a) denying permission
for the construction of the applicable Capital Addition 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 the Lessee to
pay for or separately finance the construction of the Capital Addition or
Material Structural work, subject to compliance with the terms and conditions
of Section 9.2.1, Section 9.4, Section 13.1, all Legal Requirements and all
other requirements of this Lease and to such other terms and conditions as the
Lessor may in its discretion impose or (d) any combination of the foregoing.
Unless the Lessor notifies the Lessee in writing of a contrary election within
forty-five (45) days of the Lessee's request, the 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 or Material
Structural Work. If the Lessor elects to offer financing for the proposed
Capital Addition or material Structural Work, the provisions of Section 9.3
shall apply.
9.3 Capital Additions and Material Structural Work Financed by
Lessor.
9.3.1 Lessee's Financing Request. The Lessee may request that the
Lessor provide or arrange financing for a Capital Addition or Material
Structural Work by providing to the Lessor such information about the Capital
Addition or Material Structural Work as the Lessor may reasonably request,
including, without limitation, all information referred to in Section 9.2
above. The Lessee understands, however, that the Lessor shall be under no
obligation to agree to such request. Nevertheless, the Lessor shall use
reasonable efforts to notify the Lessee, within forty-five (45) days of receipt
of such information, as to whether the 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 the Lessor's
then existing terms and prevailing conditions to compensate the Lessor for the
additional funds advanced by it). The Lessee may withdraw its request by
notice to the Lessor at any time before such time as the Lessee accepts the
Lessor's
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terms and conditions. All advances of funds for any such financing shall be
made in accordance with the 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.
9.3.2 Lessor's General Requirements. If the Lessor agrees to
finance the proposed Capital Addition or Material Structural Work and the
Lessee accepts the Lessor's proposal therefor, in addition to all other items
which the Lessor or any applicable Financing Party may reasonably require, the
Lessee shall provide to the Lessor the following:
(a) prior to any advance of funds, (i) any information,
opinions, certificates, Permits or documents reasonably requested by the Lessor
or an applicable Financing Party which are necessary to confirm that the Lessee
will be able to use the Capital Addition upon the completion thereof or the
applicable portion of the Facility upon the completion of the Material
Structural Work in accordance with the Primary intended Use and (ii) evidence
satisfactory to the Lessor and any applicable Financing Party that all Permits
required for the construction and use of the Capital Addition or the applicable
portion of the Facility have been obtained, 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 the 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 the 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 the Lessor so as to vest title to the Capital Addition or
the applicable Material Structural Work in the 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 the Lessor, providing for any changes required by the Lessor
including, without limitation, changes in the Base Rent and the legal
description of the Land;
(d) upon payment therefor, a deed conveying to the 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 the Lessor;
(e) upon completion of the Capital Addition or the
Material Structural Work, a final as-built survey thereof reasonably
satisfactory to the Lessor, if required by the Lessor;
(f) during and following the advance of funds and the
completion of the Capital Addition or the Material Structural Work,
endorsements to any outstanding policy of title insurance covering the Leased
Property satisfactory in form and substance to the Lessor and any Financing
Party (i) updating the same without any additional exception except as may be
reasonably permitted by the Lessor, (ii) if applicable, including the
Additional Land in the
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premises covered by such title insurance policy and (iii) increasing the
coverage thereof by an amount equal to any amount paid by the Lessor for the
Additional Land plus the Fair Market Value of the Capital Addition or the Fair
Market Value of the Material Structural Work (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
in any Additional Land conveyed to the Lessor pursuant to subparagraph (d) free
and clear of all Liens except those approved by the Lessor and (ii) 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 the Lessor, an
appraisal of the Leased Property by an M.A.I. appraiser acceptable to the
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 the
construction of such Capital Addition or 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
the Material Structural Work and such other materials, including, without
limitation, endorsements to the title insurance policies (insuring the Lessor
and any applicable Financing Party with respect to the Leased Property)
contemplated by subsection (f) above opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors of the
Lessee authorizing the execution and delivery of the lease amendment and any
other documents and instruments as may be reasonably required by the 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, the Lessee shall be deemed to have agreed to pay, upon
demand, all costs and expenses reasonably incurred by the Lessor and any Person
participating with the Lessor in any way in the financing of the Capital
Addition 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 intangible taxes and (e) title insurance
charges and appraisal fees.
9.4 General Limitations. Without in any way limiting the
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 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 the 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
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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 the Lessee shall have obtained the prior written approval
of the Lessor, which approval may be withheld in the 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. The Lessee shall have the obligation
and right to make repairs, replacements and alterations which are not Capital
Additions as required by the other Sections of this Lease, but in so doing, the
Lessee shall always comply with and satisfy the conditions of Section 9.4,
mutatis, mutandis. The 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 as it may deem to be
desirable or necessary for its uses and purposes, subject to the same limits
and conditions imposed under Section 9.4. The cost of any such repair,
replacement, alteration, addition, modification or improvement shall he paid by
the 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 the
Lessor at any time. Notwithstanding the foregoing, all such additions,
modifications and improvements which affect the structure of any of the Leased
Improvements, or which involve the expenditure of more than TWENTY-FIVE
THOUSAND DOLLARS ($25,000.00), shall be undertaken only upon compliance with
the provisions of Section 13.1, all Legal Requirements and all other
applicable requirements of this Lease; provided, however, that in the event of
a bona fide emergency during which the Lessee is unable to contact the
appropriate representatives of the Lessor, the Lessee may commence such
additions, modifications and improvements as may be necessary in order to
address such emergency without the Lessor's prior approval, as long as the
Lessee immediately thereafter advises the Lessor of such emergency and the
nature and scope of the additions, modifications and improvements performed and
obtains the Lessor's approval of the remaining work to be completed.
ARTICLE 10
WARRANTIES AND REPRESENTATIONS
10.1 Representations and Warranties. The Lessee hereby represents
and warrants to, and covenants and agrees with, the Lessor that:
10.1.1 Existence; Power; Qualification. The Lessee is a corporation
duly organized, validly existing and in good standing under the laws of
___________. The 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 transact business and is in good standing
in each jurisdiction where such qualification is necessary or desirable in
order to carry out its business as presently conducted and as proposed to be
conducted;
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10.1.2 Valid and Binding. The Lessee is duly authorized to make and
enter into all of the Lease Documents to which the Lessee is a party and to
carry out the transactions contemplated therein. All of the Lease Documents to
which the Lessee is a party have been duly executed and delivered by the
Lessee, and each is a legal, valid and binding obligation of the Lessee,
enforceable in accordance with its terms.
10.1.3 Single Purpose. The 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.
10.1.4 No Violation. The execution, delivery and performance of the
Lease Documents and the consummation of the transactions thereby contemplated
shall not result in any breach of, or 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 or 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 or the Leased Property 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 the execution and delivery of any of the Lease
Documents by any member of the Leasing Group and the performance of such
member's obligations thereunder or as a condition to the validity (assuming the
due authorization, execution and delivery by the Lessor of the Lease Documents
to which it is a party).
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 the Lessee's knowledge and belief,
threatened:
(a) against or affecting any member of the Leasing Group,
which if adversely resolved 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.
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10.1.7 No Burdensome Agreements. The Lessee 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. The 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; 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.
10.1.11 No Affiliate Debt. The Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability (whether
direct or contingent) for borrowed money from any Affiliate of the Lessee that
is not fully subordinated to the Lease Obligations pursuant to a written
agreement in form and substance acceptable to the Lessor.
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 the Lessor in connection with the
execution and delivery of the Lease Documents were true, complete and accurate,
in all material respects, and fairly presented the financial condition of each
such member of the Leasing Group as of the date thereof
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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 the Lessor
continue to be reasonable (with respect to the material assumptions upon which
such projections are based) and the 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 or the Leased Property 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) action or investigation pending or, to the best
knowledge and belief of the Lessee, threatened, anticipated or contemplated
(nor, to the knowledge of the Lessee, 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
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 or proposed
to be conducted 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) Neither the Facility nor any 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 insurance
body having or claiming any licensing, certifying, supervising, evaluating or
accrediting authority over the Leased Property to rework or redesign the Leased
Property, 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 Leased
Property conform to or comply with any Legal Requirement;
(c) The most recent utilization reviews relating to the
Leased Property by all applicable Third Party Payors, Accreditation Bodies and
Governmental Authorities and reviews or scrutiny by any managed care or
utilization review companies have not had a material adverse impact on the
utilization of units or programs at any of the Leased Property. No claims or
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assertions have been made in any utilization review that any of the practices
or procedures used at the Leased Property 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 Leased Property; and
(d) The Lessee has delivered or caused to be delivered to
the Lessor true and correct copies of all licenses, inspection surreys and
accreditation reviews relating to the Leased Property, 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) The 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 the Lessee. Without
limiting the foregoing, the Lessee has obtained all Permits that are necessary
or desirable to operate the Leased Property in accordance with its Primary
Intended Use and all such Permits are in full force and effect.
(b) Except as previously delivered to the 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.
(c) The Facility is accredited by [INSERT ANY OTHER
APPLICABLE ORGANIZATIONS] and there are no deficiencies in either the Leased
Property or any services provided at the Facility that would prevent the
extension of the accreditation of the Facility by (INSERT ANY OTHER APPLICABLE
ORGANIZATIONS] after their next regularly scheduled inspections.
10.1.16 No Action By Governmental Authority. There is no action
pending or, to the best knowledge and belief of the Lessee, recommended, by any
Governmental Authority or Accreditation Body 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 the 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 the
Lessee shall warrant and defend the Lessor's title to the Leased Property
against any and all claims and demands of every kind and nature whatsoever;
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(b) There is no Condemnation or similar proceeding
pending with respect ro or affecting the Leased Property, and the Lessee is not
aware, to the best of the Lessee's knowledge and belief, that any such
proceeding is contemplated;
(c) No part of the Leased Property has been damaged by
any fire or other casualty. The Leased Improvements 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 buildings, facilities and other improvements
necessary, both legally and practically, for the proper and efficient operation
of the Facility are located upon the Leased Property and all real property and
personal property currently utilized by the Lessee is included within the
definition of the Leased Property;
(f) The Leased Property abuts on and has direct vehicular
access to a public road or access to a public road via permanent, irrevocable,
appurtenant easements;
(g) The Leased Property 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:
(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 of 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 the Lessor to be readily obtainable; and
(i) The Lessee has made no structural alterations or
improvements to any of the Leased Improvements that changed the foot-print of
any of the Leased Improvements, added an additional story to any of the Leased
Improvements, decreased the amount of parking available on the Leased Property
or otherwise involved any alteration which would be regulated by applicable
zoning requirements and the Lessee has no actual knowledge of any such
structural alteration or improvement made to any of the Leased Improvements
during the last ten (10) years
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and has no knowledge of any such structural alteration or renovation made to
any of the Leased Improvements or any such decrease in parking during such
period.
10.1.18 Third Party Payor Agreements.
(a) The Lessee or the Facility is fully qualified as a
provider of services under and participates in all Third Party Payor Programs
and referral programs as is necessary for the prudent operation of the Facility
in the good faith exercise of commercially reasonable business judgment.
(b) Attached hereto as EXHIBIT C is a list of national
accounts and local discount agreements, which constitute all of the agreements
between the Lessee or the Facility, on the one hand, and Third Party Payors on
the other hand, pursuant to which the Lessee or the Facility agrees to provide
services based on a discount factor from the rates regularly charged for
services rendered by the Lessee or the Facility.
(c) No member of the Leasing Group, nor the Facility has
any rate appeal currently pending before any Governmental 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.
(d) 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 D.
10.1.19 Rate Limitations. Except as disclosed on EXHIBIT E, the State
currently imposes no restrictions or limitations on rates which may be charged
to private pay residents receiving services at the Facility.
10.1.20 Free Care. Except as disclosed on EXHIBIT F, there are no
Contracts, Permits or Legal Requirements which require that a percentage of
beds 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 patient
care.
10.1.21 No Proposed Changes. The Lessee has no actual knowledge of
any 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
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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 the Lessee or the
Facility obtain a certificate of need, Section 1122 approval or the equivalent,
which the Lessee or the Facility does not currently possess.
10.1.22 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 1986, as now or hereafter amended,
respectively.
10.1.23 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.
10.1.24 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 or 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 has 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.
10.1.25 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 any member of the Leasing Group, furnished to or to be
furnished to the Lessor or its attorneys in connection with the transactions
contemplated by the Lease Documents, 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
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prevent all statements contained herein and therein from being misleading.
There is no fact within the special knowledge of the Lessee which has not been
disclosed herein or in writing to the Lessor that materially adversely affects,
or in the future, insofar as the Lessee can reasonably foresee, may materially
adversely affect the business, properties, assets or condition, financial or
otherwise, of any member of the Leasing Group or the Leased Property.
10.1.26 No Margin Security. The 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 of the Lessor's 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. The Lessee is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
10.1.27 No Default. No event or state of facts which constitutes, or
which, with notice or lapse of time, or both, could constitute, a Lease Default
has occurred and is continuing.
10.1.28 Principal Place of Business. The principal place of business
and chief executive office of the Lessee is located at 00000 Xxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "Principal Place of Business").
10.1.29 Labor Matters. There are no proceedings now pending, nor, to
the best of the 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.
10.1.30 Intellectual Property. The Lessee is duly licensed or
authorized to use all (if any) copyrights, rights of reproduction, trademarks,
trade-names, trademark applications, service marks, 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 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.
10.1.31 Management Agreements. There is no Management Agreement in
force and effect as of the date hereof.
10.2 Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute continuing
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representations and warranties which shall remain true, correct and complete
throughout the Term. Notwithstanding the provisions of the foregoing sentence
but without derogation from any other terms and provisions of this Lease,
including, without limitation, those terms and provisions containing covenants
to be performed or conditions to be satisfied on the part of the Lessee, the
representations and warranties contained in sections 10.1.6, 10.1.7, 10.1.10,
10.1.14, 10.1.15, 10.1.17(b), 10.1.17(c), 10.1.18(b), 10.1-18(c), 10.1.19,
10.1.20, 10.1.21, 10.1.22, 10.1.28, 10.1.29, in the second sentence of Section
10.1.12, in the second and third sentences of Section 10.1.13, and in the
second and third sentences of Section 10.1.18(d) shall not constitute
continuing representations and warranties throughout the Term.
ARTICLE 11
FINANCIAL AND OTHER COVENANTS
11.1 Status Certificates. At any time, and from time to time, upon
request from the Lessor, the Lessee shall furnish to the 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 the Lessor may
request and may be relied upon by the 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. The Lessee will furnish and shall
cause to be furnished to the Lessor the following statements, information and
other materials:
(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 Lessee and (y) any Sublessee for the preceding
fiscal year, certified and audited by, and with the unqualified opinion of,
independent certified public accountants acceptable to the Lessor and certified
as true and correct by the Lessee or the applicable Sublessee, as the case may
be (and, without limiting anything else contained herein, the Consolidated
Financials for the Lessee and for each Sublessee shall include a detailed
balance sheet for Leased Property as of the last day of such fiscal year and a
statement of earnings from the Leased Property for such fiscal year showing,
among other things, all rents and 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 the Lessee and each
Sublessee, stating whether, to the best of the signer's knowledge and belief
after making due inquiry, the Lessee 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
the Lessee or the applicable Sublessee, as the case may be, regarding the
existence of any reportable conditions or
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material weaknesses and (iv) a statement certified as true and correct by the
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 such Subleases, the respective rentals
provided for therein, and such other information pertaining to such Subleases
as may be reasonably requested by the Lessor.
(b) Permits and Contracts. Promptly after the issuance
or the execution thereof, as the case may be, true and complete copies of (i)
all Permits which constitute operating licenses for the Facility issued by any
Governmental Authority having jurisdiction over assisted living matters and
(ii) Contracts (involving payments in the aggregate in excess of $100,000 per
annum), including, without limitation, all Provider Agreements.
(c) 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.
(d) Permit or Contract Defaults. 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 (other than those statements that are issued in
the ordinary course of business), terminations and notices of any kind (other
than those notices that are furnished in the ordinary course of business)
issued or provided to the 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, the 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 the Lessee or any Sublessee.
(e) Official Reports. Upon completion or filing thereof,
complete copies of all applications (other than those that are furnished in the
ordinary course of business), notices (other than those that are furnished in
the ordinary course of business), statements, annual reports, cost reports and
other reports or filings of any kind (other than those that are furnished in
the ordinary course of business) provided by the Lessee or any Sublessee to any
Governmental Authority, Accreditation Body or any Third Party Payor with
respect to the Leased Property.
(f) Other Information. with reasonable promptness, such
other information as the 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 and 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.
(g) Default Conditions. As soon as possible, and in any
event within five (5) days after the occurrence of any Lease Default, or any
event or circumstance which, with the
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giving of notice or the passage of time, or both, could constitute a Lease
Default, a written statement of the Lessee setting forth the details of such
Lease Default, event or circumstance and the action which the Lessee proposes
to take with respect thereto.
(h) Official Actions. Promptly after the commencement
thereof, notice of all actions, suits and proceedings before any Governmental
Authority or Accreditation Body which could have a material adverse effect on
(i) any member of the Leasing Group to perform any of its obligations under any
of the Lease Documents or (ii) the Leased Property.
(i) Audit Reports. Promptly after receipt, a copy of all
audits or reports submitted to any member of the Leasing Group by any
independent public accountant in connection with any annual, special or interim
audits of the books of any such member of the Leasing Group and, if requested
by the Lessor, any letter of comments directed by such accountant to the
management of any such member of the Leasing Group.
(j) Adverse Developments. Promptly after the 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;
(ii) any loss, damage or destruction to or of the Leased
Property in excess of TWENTY-FIVE THOUSAND DOLLARS ($25,000) (regardless of
whether the same is covered by insurance);
(iii) any material controversy involving the 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 the Lessee or the Facility for the participation in any
Medicaid, Medicare or other Third Party Pavor Program;
(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 the
Lessee or any Sublessee; and
(vi) any fact within the special knowledge of any member
of the Leasing Group, or any other development in the business or affairs of
any member of the Leasing Group, which may be materially adverse to the
business, properties, assets or condition, financial or otherwise, of any
member of the Leasing Group or the Leased Property.
(k) Responses To Inspection Reports. Within thirty (30)
days after receipt of an inspection report relating to the Leased Property from
the Lessor, a written response describing in detail prepared plans to address
concerns raised by the inspection report.
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(l) 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.
(m) Annual Budgets. At least thirty (30) days prior to
the end of each Fiscal Year, the Lessee, any sublessee and/or any manager shall
submit to the Lessor a preliminary annual financial budget for the Facility
for the next Fiscal Year, a preliminary capital expenditures budget for the
Facility for the next Fiscal Year and a report detailing the capital
expenditures made in the then current Fiscal Year and on or before the end of
the first month of each Fiscal Year, the Lessee any Sublessee and/or any
Manager shall submit to the Lessor revised finalized versions of such budgets
and report.
11.2.2 Responsible Officer. Any certificate, instrument, notice, or
other document to be provided to the Lessor hereunder by any member of the
Leasing Group shall be signed by an 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 the 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 all statements contained therein from being misleading.
11.2.4 Confidentiality. The Lessor shall afford any information
received pursuant to the provisions of the Lease Documents the same degree of
confidentiality that the Lessor affords similar information proprietary to the
Lessor; provided, however, that the 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 the Lessor has
provided such information in accordance with the terms hereof) and provided,
further, that the Lessor shall have the unconditional right to (a) disclose any
such information as the 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 the Lessor and
any member of the Leasing Group. Without limiting the foregoing, the Lessor
may also utilize any information furnished to it hereunder as and to the extent
(i) counsel to the Lessor determines that such utilization is necessary
pursuant to 15 U.S.C. 77a-77aa or 15 U.S.C. 78a-78jj and the rules and
regulations promulgated thereunder, (ii) the Lessor is required or requested by
any Governmental Authority to disclose any such information and/or (iii) the
Lessor is requested to disclose any such information by any of its lenders or
potential lenders. The Lessor shall not be liable in any way for any
subsequent disclosure of such
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information by any Person to whom the Lessor provided such information in
accordance with the terms hereof. Nevertheless, in connection with any such
disclosure, the Lessor shall inform the recipient of any such information of
the confidential nature thereof. The Lessor shall observe any prohibitions or
limitations on the disclosure of any such information under applicable
confidentiality law or regulations, to the extent that the same are applicable
to such information, including, without limitation, any duly enacted
"Patients', Xxxx of Rights" or similar legislation, including such limitations
as may be necessary to preserve the confidentiality of the facility-patient
relationship and the physician-patient privilege.
11.3 Financial Covenants. The Lessee covenants and agrees that,
throughout the Term and as long as the Lessee is in possession of the Leased
Property;
11.3.1 No Indebtedness. The Lessee shall not create, incur, assume
or suffer to exist any liability for borrowed money except (i) Indebtedness to
the Lessor under the Lease Documents and, (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 the Lessor in accordance with the terms of
Article 9 hereof, (v) Indebtedness to an Affiliate, provided, that, such
Indebtedness is fully subordinated to this Lease pursuant to a written
agreement in form and substance acceptable to the Lessor, and (vi) other
Indebtedness of the Lessee in the aggregate amount not to exceed ___________
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 and equipment leases which
comply with the provisions of Section 6.1.2.
11.3.2 No Guaranties. The 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 ordinary course of business.
11.4 Affirmative Covenants. The Lessee covenants and agrees that
throughout the Term and any periods thereafter that the Lessee remains in
possession of the Leased Property:
11.4.1 Maintenance of Existence. If the Lessee is a corporation,
trust or partnership, during the entire time that this Lease remains in full
force and effect, the Lessee shall keep in effect its existence and rights as a
corporation, trust or partnership under the laws of the state of its
incorporation 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, the Lessee
shall not suffer the use in connection with any renovations or other
construction relating to the Leased Property of any
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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 the
Lessee does not have absolute and unencumbered title, and the Lessee covenants
to cause to be paid punctually all sums becoming due for labor, materials,
fixtures or equipment used or purchased in connection with any such renovations
or construction, subject to the Lessee's right to contest to the extent
provided for in Article 15.
11.4.3 Compliance With Legal Requirements And Applicable Agreements.
The 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. The Lessee shall cause to be kept and
maintained, and shall permit the 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 transactions of the
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 Payor Programs. The Lessee and
each Sublessee shall participate in all Third Party Payor Programs (which would
be participated in 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 for the prudent operation of the Facility in the good
faith exercise of commercially reasonable business judgment.
11.4.6 Conduct of its Business. The Lessee will maintain, and 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. The Lessee, any Sublessee and any Manager shall conduct, in
the ordinary course, the operation of the Facility, and the Lessee and any
Sublessee shall not enter into any other business or venture during the Term,
or such time as the Lessee or any Sublessee is in possession of the Leased
Property.
11.4.7 Address. The Lessee shall provide the Lessor thirty (30)
days' prior written notice of any change of its Principal Place of Business
from its current Principal Place of Business. The Lessee shall maintain all
books and records relating to its business, solely at its Principal Place of
Business and at the Leased Property. The Lessee shall not (a) remove any books
or records relating to the Lessee's business from either the Leased Property or
the Lessee's Principal Place of Business or (b) relocate its Principal Place of
Business until after receipt of a certificate from the Lessor, signed by an
officer thereof, stating that the 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.
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11.4.8 Subordination of Affiliate Transactions. Without limiting the
provisions of any other Section of this Lease, any payments to be made by the
Lessee to (a) any member of the Leasing Group (or any Affiliate of any member
of the Leasing Group) or (b) any Affiliate of the Lessee, in connection with
any transaction between the 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 the Lease Obligations; provided, however,
that all such subordinated payments may be paid at any time unless: (x) after
giving effect to such payment, the Lessee shall be unable to comply with any of
its obligations under any of the Lease Documents or (y) a Lease Default has
occurred and is continuing and has not been expressly waived in writing by the
Lessor or an event or state of facts exists, which, with the giving of notice
or the passage of time, or both, would constitute a Lease Default.
11.4.9 Inspection. At reasonable times and upon reasonable notice,
the Lessee shall permit the Lessor and its authorized representatives
(including, without limitation, the Consultants) to inspect the Leased Property
as provided in Section 7.1 above.
11.4.10 Additional Property. In the event that at any time during the
Term, the 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), the Lessee
shall (i) provide the Lessor with prior notice of such acquisition and (ii)
shall take such actions and enter into such agreements as the Lessor shall
reasonably request in order to grant the Lessor 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 the
Lessor.
11.5 Additional Negative Covenants. The Lessee covenants and
agrees that, throughout the Term and such time as the Lessee remains in
possession of the Leased Property:
11.5.1 Restrictions Relating to Lessee. Except as may otherwise be
expressly provided in any of the other Lease Documents, the Lessee shall not,
without the prior written consent of the Lessor, in each instance, which
consent may be withheld in the sole and absolute discretion of the Lessor:
(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 Section 6.1.2 against Tangible Personal Property
securing Indebtedness permitted under Section 11.3.1(vi) relating to equipment
leasing or financing for the exclusive use of the Leased Property; (iii) the
sale, conveyance, assignment, hypothecation, lease or other transfer of any
material asset or assets (whether now owned or hereafter acquired), the fair
market value of which
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equals or is less than TWENTY-FIVE THOUSAND DOLLARS ($25,000), individually, or
ONE HUNDRED THOUSAND DOLLARS ($100,000) 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 the
Lessee provides the Lessor with an explanation (reasonably satisfactory to the
Lessor) as to why such fixtures, furnishings or equipment is no longer required
in connection with the operation of the Leased Property; (v) without limitation
as to amount, any sale of inventory by the Lessee in the ordinary course of
business; and (vi) subject to the terms of the [Shareholder Guarantee
Agreement], distributions to the shareholders of the Lessee;
(b) permit the use of the Facility for any purpose other
than the Primary Intended Use; or
(c) liquidate, dissolve or merge or consolidate with any
other Person.
11.5.2 No Liens. The 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 the
Lessee's interest therein) or the 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 Permitted Encumbrances, (c) Liens which are
consented to in writing by the Lessor, (d) Liens for those taxes of the Lessor
which the 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 the 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 of being contested in strict compliance
with the terms and conditions of Article 15 and (h) involuntary Liens caused by
the actions or omissions of the Lessor.
11.5.3 Limits on Affiliate Transactions. The 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, the Lessee's business and upon fair and reasonable terms no less favorable
to the Lessee than would be obtained in a comparable arms-length transaction
with any Person that is not an Affiliate.
11.5.4 Intentionally Omitted.
11.5.5 No Default. The Lessee shall not commit any default or breach
under any of the Lease Documents.
11.5.6 Intentionally Omitted.
11.5.7 Intentionally Omitted.
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11.5.8 ERISA. The 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 the Lessor to the amount
of the aggregate past service liability thereby created.
11.5.9 Forgiveness of Indebtedness. The Lessee will not waive, or
permit any sublessee or 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 the Lessor as of the date hereof, the Lessee will not
write up (by creating an appraisal surplus or otherwise) the value of any
assets of the Lessee; above their cost to the Lessee, less the depreciation
regularly allowable thereon.
11.5.11 Changes in Fiscal Year and Accounting Procedures. The Lessee
shall not, without the prior written consent of the Lessor, in each instance,
which consent may be withheld in the Lessor's reasonable discretion (a) change
its fiscal year or capital structure or (b) change, alter, 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-the Lessee
permit any of its Subsidiaries to change its fiscal year or suffer or permit
any circumstance to exist in which any Subsidiary is not wholly-owned, directly
or indirectly, by the Lessee.
ARTICLE 12
INSURANCE AND INDEMNITY
12.1 General Insurance Requirements. During the Term of this Lease
and thereafter until the Lessee surrenders the Leased Property in the manner
required by this Lease, the Lessee shall at its sole cost and expense keep the
Leased Property and the Tangible Personal Property located thereon and the
business operations conducted on the Leased Property insured as set forth
below.
12.1.1 Types and Amounts of Insurance. The Lessee's insurance shall
include the following:
(a) property loss and physical damage insurance on an
all-risk basis (with only such exceptions as the 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 the Lessor's
option, with an agreed-amount endorsement and a deductible not in excess of TEN
THOUSAND 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 operation of building laws, less
exclusions provided in the normal "All Risk" insurance policy During any period
of
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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 situates in an area which is considered a flood risk area by
the U.S. Department of Housing and Urban Development or any other Governmental
Authority that may in the future have jurisdiction over flood risk analysis) in
limits acceptable to the 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 the Lessor;
(d) earthquake insurance (if deemed necessary by the
Lessor) in limits and with deductibles acceptable to the Lessor;
(e) environmental impairment liability insurance (if
available) in limits and with deductibles acceptable to the Lessor;
(f) business interruption and/or rent loss 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 DOLLARS ($5,000,000)] per
occurrence with respect to bodily injury and death and THREE MILLION DOLLARS
($3,000,000)] 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 [TEN MILLION DOLLARS ($10,000,000)] for each medical incident;
(i) physical damage insurance on an all-risk basis (with
only such exceptions as the Lessor in its reasonable discretion shall approve)
covering the Tangible Personal Property for the full replacement cost thereof
and with a deductible not in excess of one percent (10%) 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 the 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 DOLLARS ($100,000)
for injury by accident, ONE HUNDRED THOUSAND DOLLARS ($100,000) per employee for
disease and FIVE HUNDRED THOUSAND DOLLARS ($500,000) disease policy limit;
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(k) subsidence insurance (if deemed necessary by the
Lessor) in limits acceptable to the Lessor; and
(l) such other insurance as the 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 Fee Mortgagee.
12.1.2 Insurance Company Requirements. All such insurance required
by this Lease or the 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:X or better by A.M. Best Co.
12.1.3 Policy Requirements. Every policy of insurance from time to
time required under this Lease or any of the other Lease Documents (other than
worker's compensation) shall name the Lessor as owner, loss payee, secured
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 the Lessor shall be so named with respect only to the Leased
Property. Each such policy, where applicable or appropriate shall:
(a) include an agreed amount endorsement and loss payee,
additional named insured and secured party endorsements, in forms acceptable to
the 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 canceled or
materially modified except upon thirty (30) days, prior written notice to the
Lessor and any Fee Mortgagee;
(d) be payable to the 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 the Lessor and any Fee Mortgagee;
(f) expressly waive any right of subrogation on the part
of the insurer against the Lessor, any Fee Mortgagee or the Leasing Group; and
(g) otherwise be in such forms as shall be reasonably
acceptable to the Lessor.
12.1.4 Notices; Certificates and Policies. The Lessee shall promptly
provide to the Lessor copies of any and all notices (including notice of
non-renewal), claims and demands which the Lessee receives from insurers of the
Leased Property. At least ten (10) days prior to the
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expiration of any insurance policy required hereunder, the Lessee shall deliver
to the Lessor certificates and evidence of insurance relating to all renewals
and replacements thereof, together with evidence, satisfactory to the Lessor,
of payment of the premiums thereon. The Lessee shall deliver to the Lessor
original counterparts or copies certified by the insurance company to be true
and complete copies, of all 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 the Lessee.
12.1.5 Lessor's Right to Place Insurance. If the Lessee shall fail
to obtain any insurance policy required hereunder by the Lessor, or shall fail
to deliver the certificate and evidence of insurance relating to any such
policy to the Lessor, or if any insurance policy required hereunder (or any
part thereof) shall expire or be canceled or become void or voidable by reason
of any breach of any condition thereof, or if the 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 the Lessor, the 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 the Lessor, and, at its option, the
Lessor may obtain such insurance and pay the premium or premiums therefor; in
which event any amount so paid or advanced by the 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
the Lessee to the 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 the Lessor alone (rather than jointly
to the Lessee and the Lessor). The Lessor is hereby authorized to adjust and
compromise any such loss with the consent of the Lessee or, following any Lease
Default, whether or not cured, without the consent of the Lessee, and to
collect and receive such proceeds in the name of the Lessor and the Lessee, and
the Lessee appoints the Lessor (or any agent designated by the Lessor) as the
Lessee's attorney-in-fact with full power of substitution, to endorse the
Lessee's name upon any check in payment thereof. Subject to the provisions of
Article 13, such insurance proceeds shall be applied first toward reimbursement
of all costs and expenses reasonably incurred by the 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 the 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 the Lessor pursuant to the provisions of this Section 12.1, being
coupled with an interest, shall be irrevocable for as long as this Lease is in
effect or any Lease Obligations are outstanding, shall not be affected by any
disability or incapacity which the Lessee may suffer and shall survive the
same. Such power of attorney, is provided solely to protect the interests of
the Lessor and shall not impose
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any duty on the Lessor to exercise any such power, and neither the 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
willful misconduct.
12.1.8 Blanket Policies. Notwithstanding anything to the contrary
contained herein, the 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 the Lessee and its Affiliates;
provided, however, that the coverage afforded to the Lessor shall not be
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all other requirements of this Lease by reason
of the use of such blanket policy of insurance, and provided, further that the
requirements of this Section 12.1 are otherwise satisfied.
12.1.9 No Separate Insurance. The Lessee shall not, on the 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 the Lessee, or
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 the Lessor, are
included therein as insureds and (b) losses are payable under said insurance in
the same manner as losses are required to be payable under this Lease. The
Lessee shall immediately notify the 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. The Lessee hereby assigns to
the Lessor all rights of the Lessee in and to any unearned premiums allocable
to the Leased Property on any insurance policy required hereunder to be
furnished by the Lessee which may become payable or are refundable after the
occurrence of an Event of Default hereunder. In the event that this Lease is
terminated for any reason (other than the purchase of the Leased Property by
the Lessee), the insurance policies required to be maintained hereunder,
including all right, title and interest of the Lessee thereunder, shall become
the absolute property of the Lessor.
12.2 Indemnity.
12.2.1 Indemnification. Except with respect to the gross negligence
or willful misconduct of the Lessor or any of the other indemnified Parties, as
to which no indemnity is provided, the Lessee hereby agrees to defend with
counsel acceptable to the Lessor, indemnify and hold harmless the Lessor and
each of the other indemnified Parties from and against all 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, the Lessor
or any of the other Indemnified Parties, directly or indirectly, based on,
arising out of or resulting from (a) the use and occupancy of the Leased
Property or any business conducted therein, (b) any act, fault, omission to act
or misconduct by (i) any member of the Leasing Group, (ii) any Affiliate of the
Lessee or (iii) any employee, agent, licensee, business invitee, guest,
customer, contractor or sublessee of any of the foregoing parties, relating to,
directly or indirectly, the Leased Property, (c) any accident, injury or damage
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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 claimed to have resulted '@rom any act, fault, omission to act or
misconduct by any member of the Leasing Group or any Affiliate of the Lessee or
any employee, agent, licensee, contractor or sublessee of any of the foregoing
parties, (d) any Lease Default, (e) any claim brought or threatened against any
of the indemnified Parties by any member of the Leasing Group or by any other
Person on account of (i) the Lessor's relationship with any member of the
Leasing Group pertaining in any way to the Leased Property and/or the
transaction evidenced by the Lease Documents and/or (ii) the Lessor's
negotiation of, entering into and/or performing any of its obligations and/or
exercising any of its right and remedies under any of the Lease Documents, (f)
any attempt by any member of the Leasing Group or any Affiliate of the Lessee
to transfer or relocate any of the Permits to any location other than the
Leased Property and/or (g) the enforcement of this indemnity. Any amounts
which become payable by the Lessee under this Section 12.2.1 shall be a demand
obligation of the Lessee to the Lessor, payable as an Additional Charge. The
indemnity provided for in this Section 12.2.1 shall survive 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
successors, assigns, employees, servants, agents, attorneys, officers,
directors, shareholders, partners and owners.
12.2.3 Limitation on Lessor Liability. Neither the Lessor nor any
Affiliate of the Lessor shall be liable to any member of the Leasing Group or
any Affiliate of any member of the Leasing Group, 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 of water, rain or snow.
All Tangible Personal Property and the personal property of any other Person on
the Leased Property shall be at the sole risk of the Lessee and the Lessor
shall not in any manner be held responsible therefor. Notwithstanding the
foregoing, the Lessor shall not be released from liability for any injury,
loss, damage or liability suffered directly by the Lessee to the extent caused
directly by the gross negligence or willful misconduct of the 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 the 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.
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 fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of
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foreclosures, levies or executions of Liens (other than those created by the
Lessor in accordance with the provisions of Article 20) is assumed by the
Lessee and, in the absence of the gross negligence or willful misconduct as set
forth in Section 12.2.3, the 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 the Lessee to any abatement
of Rent (except for an abatement, if any, as specifically provided for in
Section 3.8).
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"), the Lessee shall give immediate written notice thereof
to the Lessor and, subject to the terms of this Article 13, the Lessee shall
proceed with reasonable diligence, in full compliance with all applicable Legal
Requirements, 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 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 two-hundred and
seventy (270) 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 TWENTY-FIVE THOUSAND
DOLLARS ($25,000) or in any structural damage to the Leased Property,
regardless of the extent of such structural damage, prior to commencing the
work, the Lessee shall comply with the following requirements:
(a) The Lessee shall furnish to the Lessor complete plans
and specifications for the work (collectively, the "Plans and Specifications"),
for the 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,
reasonably satisfactory to the 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 Property for the Primary
Intended Use;
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(b) The Lessee shall furnish to the 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) The Lessee shall furnish to the 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 the Lessor and which the Lessor shall be
required to apply toward restoration of the Leased Property as provided in
Section 13.2;
(d) The Lessee shall furnish to the 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 the
Lessee; and
(e) The Lessee shall not commence any of the work until
the Lessee shall have complied with the requirements set forth in clauses (a)
through (d) immediately above, as applicable, and, thereafter, the 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 in 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; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such work as may be
necessary in order to address such emergency without the Lessor's prior
approval, as long as the Lessee immediately thereafter advises the Lessor of
such emergency and the nature and scope of the Work performed and obtains the
Lessor's approval of the remaining Work to be completed.
13.1.3 Disbursement of Insurance Proceeds. If, as provided in
Section 13.2, the Lessor is required to apply any property insurance proceeds
toward repair or restoration of the Leased Property, then as long as the Work
is being diligently performed by the Lessee in accordance with the terms and
conditions of this Lease, the 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. The Lessor shall
not be required to make disbursements more often than at thirty (30) day
intervals. The 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, the Lessee
shall have received the 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 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
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(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 Contracts and all applicable Legal Requirements;
(ii) that the sum then requested to be withdrawn has been
paid by the 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 staling 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 the 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 paid, 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) The Lessee shall deliver to the 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 and (iii) the Permitted
Encumbrances. The 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 the
Lessor, dated as of the date of the making of the then current disbursement,
confirming the foregoing.
(d) If the Work involves alteration or restoration of the
exterior of any Leased Improvement that changes the footprint of any Leased
Improvement, the Lessee shall deliver to
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the Lessor, upon the request of the Lessor, an "as-built" survey of the Leased
Property 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) The Lessee shall deliver to the Lessor (i) an opinion
of counsel (satisfactory to the Lessor both as to counsel 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 Leased Property have been obtained
and that the Leased Property, if repaired, replaced or rebuilt 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 the Lessor both as to the architect and
as to the form of the certificate) prior to the final advance, certifying that
the Leased Property was repaired, replaced or rebuilt 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.
The Lessor, at its option, may waive any of the foregoing requirements in whole
or in part in any instance. Upon compliance by the Lessee with the foregoing
requirements (excerpt for such requirements, if any, as the Lessor may have
expressly elected to waive), and to the extent of (x) the insurance proceeds,
if any, which the 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 the Lessee, the Lessor shall make available for payment to the
Persons named in the work Certificate the respective amounts stated in said
certificates) 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 the Lessor that the Work
shall be fully completed in accordance with the Plans and Specifications and
the requirements of the 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, the Lessee shall
promptly deliver to the Lessor:
(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 the Lessor
insuring the Leased Property against all mechanic's
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and materialman's liens accompanied by the final lien waivers from the general
contractor and all subcontractors;
(iii) a certificate by the Lessee in form and substance
reasonably satisfactory to the Lessor, listing all costs and expenses in
connection with the completion of the Work and the amount paid by the Lessee
with respect to the Work; and
(iv) a temporary certificate of occupancy (if obtainable)
and all other applicable Permits and Contracts (that have not previously been
delivered to the Lessor) issued by or entered into with any Governmental
Authority with respect to the Leased Property and the Primary Intended Use 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, the Lessee shall obtain
and deliver to the 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, the Lessor shall pay the
Retainage to the Lessee or to those Persons entitled thereto and if there shall
be insurance proceeds or cash deposits, other than the Retainage, held by the
Lessor in excess of the amounts disbursed pursuant to the foregoing provisions,
then provided that no Lease Default has occurred and is continuing, nor any
state of facts or circumstances which, with the giving of notice and/or the
passage of time would constitute a Lease Default, the Lessor shall pay over
such proceeds or cash deposits to the Lessee.
No inspections or any approvals of the work during or after
construction shall constitute a warranty or representation by the 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 the Lessor are
performed solely for the benefit of the Lessor to assure the payment and
performance of the Lease Obligations and are not for the benefit of the 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, except as provided for in Section 13.2.2, the 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;
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(c) The Lessee demonstrates to the Lessor's satisfaction
that the Lessee has the financial ability to satisfy the Lease Obligations
during such repair or restoration; and
(d) no sublease (excluding Resident Agreements) material
to the operation of the Facility immediately prior to such damage or taking
shall have been canceled 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 an Event of Default.
13.2.2 Proceeds Not To Be Released. If, as the result of any
Casualty, the Leased Property is damaged to the extent it is rendered
Unsuitable For Its Primary Intended Use and if either: (a) the 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 the Facility for its Primary Intended
Use 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 the Lessee may either (i)
acquire the Leased Property from the Lessor for a purchase price equal to the
greater of (x).the Lessor's 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, the Lessee shall be entitled
upon payment of the full purchase price to receive all property insurance
proceeds (less any costs and expenses incurred by the Lessor in collecting the
same), or (ii) terminate this Lease, in which event (subject to the provisions
of the last sentence of this Section 13.2.1.) the Lessor shall be entitled to
receive and retain the insurance proceeds; provided, however, that the Lessee
shall only have such right of termination effective upon payment to the 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 the Lessor (net of costs and expenses incurred by the
Lessor in collecting the same) accruals (3) the greater of the Lessor's
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 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. 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, the Lessor shall assign to the Lessee
any outstanding insurance claims.
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13.2.3 Lessee Responsible for Short-Fall. If the cost of the Work
exceeds the amount of proceeds received by the Lessor from the property
insurance required under Article 12 (net of costs and expenses incurred by the
Lessor in collecting the same), the Lessee shall be obligated to contribute any
excess amount needed to repair or restore the Leased Property and pay for the
work. Such amount shall be paid by the Lessee to the 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 damage to any of the Tangible Personal Property shall
be paid to the 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, the Lessor shall pay such insurance proceeds to the Lessee to
reimburse the 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 the Lessee is required or elects to restore the Facility, the
Lessee shall either (a) restore (i) all alterations and improvements to the
Leased Property made by the Lessee and (ii) the Tangible Personal Property or
(b) replace such alterations and improvements and the Tangible 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.
13.6 Termination of Certain Rights. Any termination of this Lease
pursuant to this Article 13 shall cause any right of the Lessee to extend the
Term of this Lease, granted to the Lessee herein and any right of the Lessee to
purchase the Leased Property contained in this Lease to be terminated and to be
without further force or effect.
13.7 Waiver. The Lessee hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction to the
Leased Property due to any Casualty which the Lessee is obligated to restore or
may restore under any of the provisions of this Lease.
13.8 Application of Rent Loss and/or Business Interruption
Insurance. All proceeds of rent loss and/or business interruption insurance
(collectively, "Rent insurance Proceeds") shall be paid to the Lessor and dealt
with as follows:
(a) if the Work has been promptly and diligently
commenced by the 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, the Lessor shall each month pay to the 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 co the rental loss and/or
business interruption for the preceding month minus an amount
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accrual to the sum 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 the Lessee or is not in the process of being completed in
accordance with this Lease, the Rent Insurance Proceeds shall be applied to any
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 protected by the Lessor, shall be held by the 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 the
Lessor (net of costs and expenses incurred by the Lessor in collecting the
same) exceed the amounts required under clauses (a) and (b) above, the excess
shall be paid to the Lessee, provided no fact or circumstance exists which
constitutes, or with notice, or passage of time, or both, would constitute, a
Lease Default.
Notwithstanding the foregoing, the Lessor may at its option use or release the
Rent Insurance Proceeds to pay for the Work and, if a Lease Default exists, the
Lessor may apply all such insurance proceeds towards the Lease Obligations or
hold such proceeds as security therefor.
13.9 Obligation To Account. Upon the Lessee's written request,
which may not be made not more than once in any three (3) month period, the
Lessor shall provide the Lessee with a written accounting of the application of
all insurance proceeds received by the Lessor.
ARTICLE 14
CONDEMNATION
14.1 Parties' Rights and Obligations. If during the Term there is
any Taking of all or any part of the Leased Property or any interest in this
Lease, 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, or if there is a temporary Taking of all
or a portion of the Leased Property, this Lease shall remain in effect so long
as the Leased Property 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 Leased Property is thereby so rendered permanently or
temporarily Unsuitable For Its Primary Intended Use: (a) the Lessee shall have
the right to restore the Leased Property, at its own expense, (subject to the
right under certain circumstances as provided for in Section 14.5 to receive
the net 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) the Lessee
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shall have the right to acquire the Leased Property from the 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 Lessor's 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 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, the Lessor may overrule the Lessee's election under clause (a) or
(b) and instead either (1) terminate this Lease as of the date when the Lessee
is required to surrender possession of the portion of the Leased Property so
taken or (2) compel the Lessee to keep the Lease in full force and effect and
to restore the Leased Property as provided in clause (a) above, but only if the
Leased Property may be operated for at least eighty percent (80%) of the unit
capacity of the Facility if operated in accordance with its Primary Intended
Use. The Lessee shall exercise its election under this Section 14.3 by giving
the Lessor notice thereof ("Lessee's Election Notice") within sixty (60) days
after the Lessee receives notice of the Taking. The Lessor shall exercise its
option to overrule the Lessee's election under this Section 14.3 by giving the
Lessee notice of the Lessor's exercise of its rights under Section 14.3 within
thirty (30) days after the Lessor receives the Lessee's Election Notice. If,
as the result of any such partial or temporary Taking, this Lease is not
terminated as provided above, the Lessee shall be entitled to an abatement of
Rent, but only to the extent, if any, provided for in Section 3.7, effective as
of the date upon which the Leased Property 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 remains in full force and effect pursuant to
Section 14.@, the Lessee shall accomplish all necessary restoration and the
Lessor shall release the net proceeds of such Award to reimburse the Lessee for
the actual reasonable costs and expenses thereof, subject to all of the
conditions and provisions set forth in Article 13 as though the Taking was a
Casualty and the Award was insurance proceeds. If the cost of the restoration
exceeds the amount of the Award (net of costs and expenses incurred in
obtaining the Award), the Lessee shall be obligated to contribute any excess
amount needed to restore the Facility or pay for such costs and expenses. To
the extent that the cost of restoration is less than the amount of the Award
(net of cost and expenses incurred in obtaining the Award), the remainder of
the Award shall be retained by the Lessor and Rent shall be abated as set forth
in Section 3.7.
14.5 Award Distribution. In the event the 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 the Lessee and the Lessor
agrees to assign to the Lessee all of the Lessor's rights thereto in any other
event, the entire Award shall belong to and be paid to the Lessor.
14.6 Control of Proceedings. Subject to the rights of any Fee
Mortgagee, unless and until the 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 shall
be conducted, prosecuted and settled by the Lessor; provided, however, that the
Lessor shall keep the Lessee apprised of the progress of all such proceedings
and shall solicit
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the Lessee's advice with respect thereto and shall give due consideration to
any such advice. In addition, the Lessee shall reimburse the 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, the Lessee's obligation to so reimburse the Lessor shall be diminished
by the amount of the Award, if any, received by the Lessor which is in excess
of the Lessor's 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, the Lessee,
any Sublessee or any Manager on their own or on the Lessor's behalf (or in the
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 or any 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 the Lessor, (b) in the case of an unpaid Imposition, Lien
or claim, the commencement and continuation of such proceedings shall suspend
the collection thereof from the Lessor and/or compliance by any applicable
member of the Leasing Group 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 any Lien, charge or liability of any kind
against the Leased Property, (c) neither the Leased Property nor any rent
therefrom would be in any immediate danger of being sold, forfeited, attached
or lost as a result of such proceeding, (d) in the case of a Legal Requirement,
neither the Lessor nor any member of the Leasing Group would be in any
immediate danger of civil or criminal liability for failure to comply therewith
pending the outcome of such proceedings, (e) in the event that any such contest
shall involve a sum of money or potential loss in excess of TEN THOUSAND
DOLLARS ($10,000), the Lessee shall deliver to the Lessor an Officer's
Certificate and opinion of counsel, if the 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 to the effect set forth in clauses (b),
(c) and (d), to the extent applicable, (f) the Lessee shall give such cash
security as may be demanded in good faith by the 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
the Lessor or any member of the Leasing Group, the Lessee shall promptly pay,
as Additional Charges due hereunder, the amount required to be paid, together
with all interest and penalties accrued thereon and/or comply (and cause any
Sublessee and any Manager to comply) with the applicable Legal Requirement, and
(h) no state of facts or circumstance 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 the Lessee to contest the payment of Rent or any other sums payable by
the Lessee to the Lessor under any of the Lease Documents.
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15.2 Lessor's Cooperation. The Lessor, at the Lessee's sole cost
and expense, shall execute and deliver to the Lessee such authorizations and
other documents as may reasonably be required in any such contest, so long as
the same does not expose the Lessor to any civil or criminal liability, and, if
reasonably requested by the Lessee or if the Lessor so desires, the Lessor
shall join as a party therein.
15.3 Lessee's Indemnity. The Lessee, as more particularly provided
for in Section 12.2, shall indemnify, defend (with counsel acceptable to the
Lessor) and save the Lessor harmless against any liability, cost or expense of
any kind, including without limitation, attorneys, fees and expenses that may
be imposed upon the Lessor in connection with any such contest and any loss
resulting therefrom and in the enforcement of this indemnification.
ARTICLE 16
DEFAULT
16.1 Events of Default. Each of the following shall constitute an
"Event of Default" hereunder and shall entitle the Lessor to exercise its
remedies hereunder and under any of the other Lease Documents:
(a) any failure of the Lessee to pay any amount due
hereunder or under any of the other Lease 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 or warranty provided in this Lease or any of
the other Lease Documents, other than the payment of any monetary obligation
and other than as specified in subsections (c) through (v) below (a "Failure to
Perform"), continuing for thirty (30) days after the giving of notice by the
Lessor to the 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, (4) the Lessee commences the cure thereof within
thirty (30) days after the giving of such notice by the Lessor to the Lessee,
(ii) the Lessee continuously prosecutes such cure to completion, (iii) such
cure is completed within ninety (90) days after the giving of such notice by
the Lessor to the Lessee and (iv) such Failure to Perform does not impair the
value of, or the Lessor's rights with respect to, the Leased Property;
(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;
(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 during the Term if
such representation or warranty is a continuing representation or warranty
pursuant to Section 10.2;
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(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 Leased 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 creditors, (v) make or offer a composition of its
debts with its creditors or (vi) be unable to pay its debts as such debts
mature;
(f) if any court shall enter an order, judgment or decree
appointing, without the consent of any member of the Leasing Group, a receiver
or trustee for such member or for any of its property 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 the Lessor, in each instance, which consent may be withheld by the Lessor in
its sole and absolute discretion:
i. there shall be a change in the Person or Persons presently in control
of any member of the Leasing Group (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 shall be, on any one or more occasions, directly or
indirectly, sold, assigned, hypothecated or otherwise transferred (whether by
if such member of the Leasing Group shall be a operation of law or otherwise),
partnership, joint venture, syndicate or other group;
iii. more than [ percent ( %)], in the aggregate, of the
shares of the issued and outstanding capital stock of any member of the Leasing
Group 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 the any member of the Leasing Group or the merger
or consolidation of any member of the Leasing Group with any other Person;
(j) if, without the prior written consent of the Lessor,
in each instance, which consent may be withheld by the Lessor in its sole and
absolute discretion, the Lessee's or any Sublessee's interest in the Leased
Property shall be, directly or indirect mortgaged, encumbered
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(by any voluntary or involuntary Lien other than Permitted Encumbrances),
subleased, sold, assigned, hypothecated or otherwise transferred (whether by
operation of law or otherwise);
(k) 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 the Lessee or any Sublessee, whether or not the applicable
creditor or obligee elects to declare the obligations of the 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 the Lessor's reasonable opinion, may impair the
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
the 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 the Lessee under the applicable agreement due and payable or to
exercise any other right or remedy available to such creditor or obligee shall
be an Event of Default hereunder only if such obligations, individually or in
the aggregate, are in excess of ONE HUNDRED THOUSAND DOLLARS ($100,000);
(l) intentionally omitted;
(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 lot 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 a map or line of credit shall mean and
include any line of credit established in an amount equal to or greater than
FIVE HUNDRED THOUSAND DOLLARS ($500,000);
(n) except as a result of Casualty or a partial or
complete Condemnation, if the 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 the Lessee or any
Sublessee or attachments against the Lessee's interest or any Sublessee's
interest in the Leased Property, which in the aggregate exceed ONE HUNDRED
THOUSAND DOLLARS ($100,000) or which may materially and adversely interfere
with the operation of the Facility, remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for 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 DOLLARS ($500,000) 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 (ii) such award or
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judgment shall continue unsatisfied and in effect for a period of ten (10)
consecutive days without an insurance company satisfactory to the Lessor (in
its sole and absolute discretion) having agreed to fund such award or judgment
in a manner satisfactory to the Lessor (in its sole and absolute discretion)
and in either case such award or judgment shall, in the reasonable opinion of
the Lessor, have a material adverse affect on the ability of any member of the
Leasing Group 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 the Lessor, in each instance, which consent may be withheld in the
Lessor's reasonable discretion, shall not be renewed or extended upon the
expiration of the stated term thereof;
(r) if, after the Lessee or any Sublessee has obtained
approval for participation in the Medicare and/or Medicaid programs with regard
to the operation of the Facility, a final unappealable determination is made by
the applicable Governmental Authority that the 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 the Lessee or such
Sublessee is declared ineligible to continue its participation in the Medicare
and/or Medicaid programs;
(s) if any member of the Leasing Group 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 or the loss of any
Permit under any other circumstances under which any member of the Leasing
Group is required to cease the operation of the Facility in accordance with the
Primary Intended Use; and
(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;
(u) the appointment of a temporary manager (or operator)
for the Leased Property by any Governmental Authority; or
(v) the entry of an 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 an allegation of abuse or neglect or
to take any action to eliminate an emergency situation then existing at the
Facility.
16.2 Remedies.
(a) if any Lease Default shall have occurred, the Lessor
may at its option terminate this Lease by giving the 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 any of 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 the Lessor shall have
specifically elected by a written
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notice to so terminate the Lease) and all rights of the Lessee under this Lease
shall cease. Notwithstanding the foregoing, in the event of the Lessee's
failure to pay Rent, if such Rent remains unpaid beyond ten (10) days from the
due date thereof, the 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 the Lessor shall be at liberty to pursue any one or, more of
such rights or remedies without further notice. No taking of possession of the
Leased Property by or on behalf of the Lessor, and no other act done by or on
behalf of the Lessor, shall constitute an acceptance of surrender of the Leased
Property by the Lessee or reduce the Lessee's obligations under this Lease or
the other Lease Documents, unless otherwise expressly agreed to in a written
document signed by an authorized officer or agent of the Lessor.
(b) To the extent permitted under applicable law, the
Lessee shall pay as Additional Charges all costs and expenses (including,
without limitation, attorneys, fee and expenses) reasonably incurred by or on
behalf of the 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,
the Lessee shall, to the extent permitted under applicable law, if required by
the Lessor so to do, upon not less than ten (10) days' prior notice from the
Lessor, immediately surrender to the Lessor the Leased Property pursuant to the
provisions of Paragraph (a) of this Section and quit the same, and the Lessor
may enter upon and repossess the Leased Property by reasonable force, summary
proceedings, ejectment or otherwise, and may remove the Lessee and all other
Persons and any and all of the Tangible Personal Property from the Leased
Property, subject to the rights of any residents or 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 the Lessor may claim ownership of
the Tangible Personal Property as set forth in Section 5.2.3 hereof or the
Lessor may exercise its rights as secured party under the Security Agreement.
The Lessor shall use reasonable, good faith efforts to relet the Leased
Property or otherwise mitigate damages suffered by the Lessor as a result of
the Lessee's breach of this Lease.
(d) In addition to all of the rights and remedies of the
Lessor set forth in this Lease and the other Lease Documents, if the Lessee
shall fail to pay any rental or other charge due hereunder (whether denominated
as Base Rent, Additional Charges or otherwise) within ten (10) days after same
shall have become due and payable, then and in such event the Lessee shall also
pay to the Lessor (i) a late payment service charge (in order to partially
defray the Lessor's administrative and other overhead expenses) equal to two
hundred-fifty ($250) 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 the Lessee hereunder or to relieve the
Lessee of its obligation to pay 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 the Lessee or the repossession of the
Leased Property, (c) the failure or inability of the Lessor, notwithstanding
reasonable good faith efforts, to relet the Leased Property, (d) the
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reletting of the Leased Property or (e) the failure of the Lessor to collect or
receive any rentals due upon any such reletting, shall relieve the Lessee of
its liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. In any such event, the Lessee shall
forthwith pay to the Lessor all Rent due and payable with respect to the Leased
Property to and including the date of such termination, repossession or
eviction. Thereafter, the Lessee shall forthwith pay to the Lessor, at the
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 the Lessor for all damage proximately caused bv the 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 the Lessee's right of possession or other rights under this
Lease had not been terminated, or if the 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 the
date paid, and the Lessor may enforce, by action or otherwise, any other term
or covenant of this Lease. There shall be credited against the Lessee's
obligation under this Clause (ii) amounts actually collected by the Lessor from
another tenant to whom the Leased Property may have actually been leased or, if
the Lessor is operating the Leased Property for its own account, the actual net
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.
16.4 Lessee Waivers. If this Lease is terminated pursuant to
Section 16.2, the 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.
16.5 Application of Funds. Any payments otherwise payable to the
Lessee which are received by the Lessor under any of the provisions of this
Lease during the existence or continuance of any Lease Default shall be applied
to the Lease obligations in the order which the Lessor may reasonably determine
or as may be required by the laws of the State.
16.6 Intentionally omitted.
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16.7 Lessors's Right to Cure. If the Lessee shall fail to make any
payment, or to perform any act required to be made or performed under this
Lease and to cure the same within the relevant time periods provided in Section
16.1, the Lessor, after five (5) Business Days' prior notice to the Lessee
(except in an emergency when such shorter notice shall be given as is
reasonable under the circumstances), and without waiving or releasing any
obligation or Event of 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 the 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 the Lessor's opinion, ma be necessary or appropriate therefore No such entry
shall be deemed an eviction of the Lessee. All sums so paid by the 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 the Lessee to the Lessor on demand as an Additional Charge.
The obligations of the Lessee and rights of the Lessor contained in this
Article shall survive the expiration or earlier termination of this Lease.
16.8 No Waiver By Lessor. The 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 waiver is in
writing and signed by the 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 periods set forth
therein for the performance of the Lease Obligations) shall be construed as a
waiver 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 or circumstance. No such
failure, delay or waiver shall be construed as creating a requirement that
failure, delay or waiver, give the Lessor does not intend to, from insisting
upon the strict representations and warranties Lessor can exercise any of its
the Lessor must thereafter, as a result of such notice to the Lessee or any
other Person that or may not, give a further waiver or to refrain performance
of the terms, conditions, covenants, set forth in the Lease Documents before
the rights or remedies under any of the Lease Documents or before any Lease
Default can occur, or as establishing a course of dealing for interpreting the
conduct of and agreements between the Lessor and the Lessee or any other
Person.
The acceptance by the 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 making of such payment shall not: (a) constitute a waiver of the right to
exercise any of the 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 the Lessor. Any failure by
the Lessor to take any action under this Lease or any of the other Lease
Documents by reason of a default hereunder or thereunder, any acceptance of a
past due installment, or any indulgence granted from time to time shall not be
construed (i) as a novation of this Lease or any of the other Lease Documents,
(ii) as a waiver of any right of the Lessor thereafter to insist upon strict
compliance with the terms of this Lease or any of the other Lease Documents or
(iii) to prevent the exercise of any right of acceleration or any other right
granted hereunder or under applicable law; and to
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the maximum extent not prohibited by applicable law, the 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.
16.9 Right of Forbearance. Whether or not for consideration paid or
payable to the Lessor and, except as may be otherwise specifically agreed to by
the Lessor in writing, no forbearance on the part of the Lessor, no extension of
the time for the payment of the whole or any part of the Obligations, and no
other indulgence given by the Lessor to the Lessee or any other Person, shall
operate to release or in any manner affect the original liability of the Lessee
or such other Persons, or to limit, prejudice or impair any right of the Lessor,
including, without limitation, the right to realize upon any collateral, or any
part thereof, for any of the Obligations evidenced or secured by the Lease
Documents; notice of any such extension, forbearance or indulgence being hereby
waived by the Lessee and all those claiming by, through or under the Lessee.
16.10 Cumulative Remedies. The rights and remedies set forth under
this Lease are in addition to all other rights and remedies afforded to the
Lessor under any of the other Lease Documents or at law or in equity, all of
which are hereby reserved by the Lessor, and this Lease is made and accepted
without prejudice to any such rights and remedies. All of the rights and
remedies of the Lessor under each of the Lease Documents shall be separate and
cumulative and may be exercised concurrently or successively in the Lessor's
sole and absolute discretion.
ARTICLE 17
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
17.1 Surrender. The Lessee shall, upon the expiration or prior
termination of the Term (unless the Lessee has concurrently purchased the
Leased Property in accordance with the terms hereof), vacate and surrender the
Leased Property to the 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 the 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 the Lessor, and (c) any damage or destruction
resulting from a Casualty or Taking that the Lessee is not required by the
terms of this Lease to repair or restore.
17.2 Transfer of Permits and Contracts. In connection with the
expiration or any earlier termination of this Lease (unless the Lessee has
concurrently purchased the Leased Property in accordance with the terms
hereof), upon any request made from time to time by the Lessor, the Lessee
shall (a) promptly and diligently use its best effort s to (i) transfer and
assign all Permits and Contracts necessary or desirable for the operation of
the Leased Property in accordance with its Primary Intended Lease to the Lessor
or its designee and/or (ii) arrange for the transfer or assignment of such
Permits and Contracts to the Lessor or its designee, all to the extent the same
may be transferred or assigned under applicable law and (b) cooperate in every
respect (and to the
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fullest extent possible) and assist the Lessor or its designee in obtaining
such Permits and Contracts (whether by transfer, assignment or otherwise).
Such efforts and cooperation on the part of the Lessee shall include, without
limitation, the execution, delivery and filing with appropriate Governmental
Authorities and Third Party Payors of any applications, petitions, statements,
notices, requests, assignments and other documents or instruments requested by
the Lessor. Furthermore, the Lessee shall not take any action or refrain from
taking any action which would defer, delay or jeopardize the process of the
Lessor or its designee obtaining said Permits and Contracts (whether by
transfer, assignment or otherwise). Without limiting the foregoing, the Lessee
shall not seek to transfer or relocate any of said Permits or Contracts to any
location other than the Leased Property. The provisions of this Section 17.2
shall survive the expiration or earlier termination of this Lease.
The Lessee hereby appoints the Lessor as its attorney-in-fact, with
full power of substitution to take such actions, in the event that the Lessee
fails to comply with any request made by the Lessor hereunder, as the Lessor
(in its sole absolute discretion) may deem necessary or desirable to effectuate
the intent of this Section 17.2. The power of attorney conferred on the Lessor
by the provisions of this Section 17.2, being coupled with an interest, shall
be irrevocable until the Obligations are fully paid and performed and shall not
be affected by any disability or incapacity which the Lessee may suffer and
shall survive the same. Such power of attorney is provided solely to protect
the interests of the Lessor and shall not impose any duty on the Lessor to
exercise any such power and neither the 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 willful misconduct.
17.3 No Acceptance of Surrender. Except at the expiration of the
Term in the ordinary course, no surrender to the 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 the Lessor and no act by the Lessor or any
representative or agent of the Lessor, other than such a written acceptance by
the Lessor, shall constitute an acceptance of any such surrender.
17.4 Holding Over. If, for any reason, the Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time the Lessee shall pay as rental each month, one and one-half
times the aggregate of (i) one-twelfth of the aggregate Base Rent payable at
the time of such expiration or earlier termination of the Term; (ii) all
Additional Charges accruing during the month and (iii) all other sums, if any,
payable by the Lessee pursuant to the provisions of this Lease with respect to
the Leased Property. During such period of tenancy, the 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 the Lessor to the holding over of the Lessee after the
expiration or earlier termination of this Lease.
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ARTICLE 18
PURCHASE OF THE LEASED PROPERTY
18.1 Purchase of the Leased Property. If this Lease is in full
force and effect and there exists no Event of Default which has not been cured
within the applicable grace period, then the Lessee shall have the option
exercisable on not less than six (6) months nor more than twenty-four (24)
months notice to purchase the Leased Property beginning on the anniversary of
the Commencement Date at a purchase price equal to the Fair Market Value of the
Leased Property. In the event the Lessee purchases the Leased Property from
the Lessor pursuant to any of the terms of this Lease, the Lessor shall, upon
receipt from the 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 the Lessee a deed with covenants
only against acts of the Lessor conveying the entire interest of the Lessor in
and to the Leased Property to the Lessee subject to 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 the Lessee, any Liens created in accordance
with the terms of this Lease or consented to by the Lessee, the claims of all
Persons claiming by through or under the Lessee, any other matters assented to
by the Lessee and all matters for which the Lessee has responsibility under any
of the Lease Documents, but otherwise not subject to any other Lien created by
the Lessor from and after the Commencement Date (other than an Encumbrance
permitted under Article 20 which the Lessee elects to assume). The applicable
purchase price shall be paid in cash to the Lessor, or as the Lessor may
direct, in federal or other immediately available funds except as otherwise
mutually agreed by the Lessor and the Lessee. All expenses of such conveyance,
including, without limitation, title examination costs, standard (and extended)
coverage title insurance premiums, attorneys, fees incurred by the Lessor in
connection with such conveyance, recording and transfer taxes and recording
fees and other similar charges shall be paid by the Lessee.
18.2 Appraisal.
18.2.1 Designation of Appraisers. In the event that it becomes
necessary to determine the Fair Market Value 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 the notice the name of a Person
selected to act as appraiser on its behalf. Within ten (10) days after receipt
of any such notice, the Lessor (or the Lessee, as the case may be) shall by
notice to the Lessee (or the 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), shall, within forty-five (45) days after
the date of the notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value 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 fifty (50) days after the making of the Lessee's or the
Lessor's request, then the determination of such appraiser shall be final and
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binding upon the parties. If two appraisers shall have been appointed and
shall have made their determinations within the respective requisite periods
set forth above and if the difference between the amounts so determined shall
not exceed ten percent (10%) of the lesser of such amounts, then the Fair
Market Value of the Leased Property 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 twenty (20) days to appoint a
third appraiser, but if such appraisers fail to do so, then either party may
request the American Arbitration Association or any successor organization
thereto to appoint an appraiser within twenty (20) days of such request, and
both parties shall be bound by any appointment so made within such twenty (20)
day period. If no such appraiser shall have been appointed within such twenty
(20) days or within ninety (90) days of the original request for a
determination of Fair Market Value of the Leased Property, whichever is
earlier, either the Lessor or the 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 the
Leased Property 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 the Lessor and the Lessee as the Fair Market value of
the Leased Property.
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. The Lessor and the 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.
ARTICLE 19
SUBLETTING AND ASSIGNMENT
19.1 Subletting and Assignment. Except as set forth in Section
19.2, the Lessee may not, without the prior written consent of the Lessor,
which consent may be withheld in the 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 or
partnership interest in the Lessee or sales, pledges, hypothecations or other
transfers (including, without limitation, any transfer by operation of law) of
the capital or the assets of the Lessee. Any such assignment, pledge, sale,
hypothecation or other transfer made without the Lessor's consent shall be void
and of no force and effect.
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19.2 Permitted Sublease. Notwithstanding the foregoing, the Lessee
shall have the right to enter into Resident Agreements without the prior
consent of the Lessor.
19.3 Attornment. The Lessee shall insert in each Sublease approved
by the 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 the Lessor hereunder, (b) in the event this Lease shall terminate before the
expiration of such Sublease, the Sublessee thereunder will, at the Lessor's
option, attorn to the 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 the Lessor stating that the Lessee is in default under this
Lease, the Sublessee shall thereafter be obligated to pay all rentals accruing
under said Sublease directly to the Lessor or as the Lessor may direct. All
rentals received from the Sublessee by the Lessor shall be credited against the
amounts owing by the Lessee under this Lease.
ARTICLE 20
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
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 the 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 the
Lessor hereunder arising or accruing from and after the date of such conveyance
or transfer, the original the 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 the 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 the Lessee,
but subject to the terms and conditions set forth below in this Section 20.3,
the 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 ocher means of financing or refinancing, provided that the Lessee
shall have no obligation to make payments under such Encumbrances. The Lessee
shall subordinate this Lease to the lien of any 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
the
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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, the Lessor shall obtain and deliver to
the 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) the Lessee shall not he disturbed in peaceful
enjoyment of the Leased Property nor shall this Lease be terminated or canceled
at any time, except in the event that the Lessor shall have the right to
terminate this Lease under the terms and provisions expressly set forth herein,
(ii) the 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 the 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 the 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
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 the Lessor.
At the request from time to time by any Fee Mortgagee, the Lessee
shall (a) subordinate this Lease and all of the Lessee's rights and estate
hereunder to the Fee Mortgage held by such Fee Mortgagee and (b) agree that the
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 the Lessor under this Lease for the balance of the Term then
remaining. To effect the intent and purpose of the immediately preceding
sentence, the Lessee agrees to execute and deliver such instruments in
recordable form as are reasonably requested by the 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 the 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 the other Lease
Documents and fully per-form its obligations thereunder, the Lessee shall
peaceably and quietly have, hold and enjoy the Leased Property throughout the
Term, free of any claim or other action by the Lessor or anyone claiming by,
through or under the Lessor, but subject to the Permitted Encumbrances and such
Liens as may hereafter be
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consented to by the Lessee. No failure by the Lessor to comply with the
foregoing covenant shall give the 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 the Lessee hereunder. Notwithstanding the
foregoing, the Lessee shall have the right by separate and independent action
to pursue any claim it may have against the Lessor as a result of a breach by
the Lessor of the covenant of quiet enjoyment contained in this Article 21.
21.2 Memorandum of Lease. The Lessor and the 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. The
Lessee shall pay all recording costs and taxes associated therewith.
21.3 Default by Lessor. The Lessor shall be in default of its
obligations under this Lease only if the 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 the Lessee (or such shorter time as may be necessary
in order to protect the health or welfare of any residents of the Facility or
to insure the continuing compliance of the Facility with the applicable Legal
Requirements), 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 the 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 the Lessor shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
ARTICLE 22
NOTICES
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 the Lessee:
-------------------------------------------
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With a copy to:
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-------------------------------------------
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If to the Lessor:
-------------------------------------------
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-------------------------------------------
-------------------------------------------
With copies to:
-------------------------------------------
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-------------------------------------------
or such other address as the Lessor or the Lessee shall hereinafter from time
to time designate by a written notice to the others given in such manner. Any
notice given to the Lessee by the Lessor at any time shall not imply that such
notice or any further or similar notice was or is required.
ARTICLE 23
INTENTIONALLY OMITTED
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 Broker's Fee Indemnification. The Lessee shall and hereby
agrees to indemnify, defend (with counsel acceptable to the Lessor) and hold
the 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, the Lessor shall have the
option of conducting its own defense against any such claims with counsel of
the Lessor's choice, but at the expense of the Lessee, as aforesaid. This
indemnification shall include all attorneys' fees and expenses and court costs
reasonably incurred by the 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 the
Lessor and the Lessee. The Lessee is not the agent or representative of the
Lessor and nothing contained herein or in any of the other Lease Documents
shall make, or be construed to make, the Lessor liable to any Person for goods
delivered to the Lessee, services performed with respect to the Leased Property
at the direction of the Lessee or for debts or claims accruing against the
Lessee.
24.3 Amendments, Waivers and Modifications. Except as otherwise
expressly provided for herein or in any other Lease Document, none of the
terms, covenants, conditions, warranties
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or representations contained in this Lease or in any of the other Lease
Documents may be renewed, replaced, amended, modified, extended, substituted,
revised, waived, consolidated or terminated except by an agreement in writing
signed by (a) all parties to this Lease or the other applicable Lease Document,
as the case may be, with regard to any such renewal, replacement, amendment,
modification, extension, substitution, revision, consolidation or termination
and (b) the Person against whom enforcement is sought with regard to any
waiver. The provisions of this Lease and the other Lease Documents shall
extend and be applicable to all renewals, replacements, amendments, extensions,
substitutions, revisions, consolidations and modifications of any of the Lease
Documents, the Management 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 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, Permit and/or the
Contract is not intended to constitute an agreement or consent by the Lessor to
any such renewal, replacement, amendment, substitution, revision, consolidation
or modification; but, rather as a reference only to those instances where the
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, covenants and conditions of any of the
Lease Documents.
24.4 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.
24.5 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.
24.6 Counterparts. This Lease 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.
24.7 Entire Agreement. This Lease and the other Lease Documents
set forth the entire agreement of the parties with respect to the subject
matter.
24.8 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE LESSOR AND THE 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
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TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. The Lessee hereby certifies that
neither the Lessor nor any of the Lessor's representatives, agents or counsel
has represented expressly or otherwise that the Lessor would not, in the event
of any such suit, action or proceeding seek to enforce this waiver to the right
of trial by jury and acknowledges that the Lessor has been induced by this
waiver (among other things) to enter into the transactions evidenced by this
Lease and the other Lease Documents and further acknowledges that the 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
this paragraph in particular and (d) makes the waivers set forth herein
knowingly, voluntarily and intentionally.
24.9 Successors and Assigns. This Lease and the other Lease
Documents shall be binding and inure to the benefit of (a) upon the Lessee and
the Lessee's legal representatives and permitted successors and assigns and (b)
the Lessor and any other Person who may now or hereafter hold the interest of
the Lessor under this Lease and their respective successors and assigns.
Notwithstanding the foregoing, the Lessee shall not assign any of its rights or
obligations hereunder or under any of the other Lease Documents without the
prior written consent of the Lessor, in each instance, which consent may be
withheld in the Lessor's sole and absolute discretion.
24.10 No Third Party Beneficiaries. This Lease and the other Lease
Documents are solely for the benefit of the Lessor, its successors, assigns and
participants (if any, the Indemnified Parties, the Lessee, 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 parties 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 the Lessor
to advance or make available proceeds of insurance or Awards, or to release any
deposits held for Impositions or insurance premiums are imposed solely and
exclusively for the benefit of the Lessor, its successors and assigns. No
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 of such conditions, any or all of which may be
freely waived in whole or in part by the Lessor at any time, if, in the
Lessor's sole and absolute discretion, the Lessor deems it advisable or
desirable to do so.
24.11 Governing Law. This Lease shall be construed and the rights
and obligations of the Lessor and the Lessee shall be determined in accordance
with the laws of the State of Texas.
The 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
Lease Documents, the negotiation and/or consummation of the transactions
evidenced by the Lease Documents, the Lessor's relationship of any member of
the Leasing Group in connection with the transactions evidenced by the Lease
Documents and/or the performance of any obligation or the
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exercise of any remedy under any of the Lease Documents and expressly waives
any and all objections the Lessee may have as to venue in any of such courts.
24.12 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, the Lessee or the
Lessor arising prior to any date of termination of this Lease or any of the
other Lease Documents shall survive such termination.
If any 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 applicable Lease Document, as the case may be, and any
other application of such term or provision shall not be affected thereby.
Notwithstanding the foregoing, it is the intention of the parties hereto that
if any provision of any of this Lease 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.
If any late charges provided for in any provision of this Lease or any
of the other Lease Documents are based upon a rate in excess of the maximum
rate permitted by applicable law, the parties agree that such charges shall be
fixed at the maximum permissible rate.
The 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, or
incurring of new or additional obligations, except as to all of the foregoing
as expressly provided for herein.
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.
WITNESS: LESSEE:
-------------------------------- By:
Name: --------------------------------
Name:
Title:
WITNESS: LESSOR:
-------------------------------- By:
Name: --------------------------------
Name:
Title:
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103
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
82
104
EXHIBIT B
PERMITTED ENCUMBRANCES
83
105
EXHIBIT C
NATIONAL ACCOUNTS AND LOCAL DISCOUNTS
84
106
EXHIBIT D
OPEN COST REPORTS
85
107
EXHIBIT E
RATE LIMITATIONS
86
108
EXHIBIT F
FREE CARE REQUIREMENTS
87
