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EXHIBIT 10.7
FACILITY LEASE AGREEMENT
MEDITRUST ACQUISITION CORPORATION III
(A Delaware Corporation)
as
Lessor
AND
ALS LEASING, INC.
(A Delaware Corporation)
as
Lessee
Dated As Of July 31, 1998
For Premises Located At
Xxxxxxxx House of Delta I
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
and
WovenHearts of Delta II
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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TABLE OF CONTENTS
Page No.
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ARTICLE 1
LEASED PROPERTY; TERM; EXTENSIONS.................................... 1
1.1 Leased Property.............................................. 1
1.2 Term......................................................... 2
1.3 Extended Terms............................................... 2
ARTICLE 2
DEFINITIONS AND RULES OF CONSTRUCTION................................ 2
2.1 Definitions.................................................. 2
2.2 Rules of Construction........................................ 20
ARTICLE 3
RENT................................................................. 20
3.1 Rent for Land, Leased Improvements, Related Rights
and Fixtures................................................. 20
3.1.2 Additional Rent.................................... 21
3.2 Calculation and Payment of Additional Rent; Annual
Reconciliation............................................... 21
3.2.1 Estimates and Payments............................. 22
3.2.2 Annual Statement................................... 22
3.2.3 Deficits........................................... 22
3.2.4 Overpayments....................................... 22
3.2.5 Final Determination................................ 22
3.2.6 Best Efforts To Maximize........................... 22
3.3 Confirmation and Audit of Additional Rent.................... 23
3.3.1 Maintain Accounting Systems........................ 23
3.3.2 Audit By Lessor.................................... 23
3.3.3 Deficiencies and Overpayment....................... 23
3.3.4 Survival........................................... 24
3.4 Additional Charges........................................... 24
3.5 Leasing Commitment Fee....................................... 24
3.6 Net Lease.................................................... 24
3.7 No Lessee Termination or Offset.............................. 24
3.7.1 No Termination..................................... 24
3.7.2 Waiver............................................. 25
3.7.3 Independent Covenants.............................. 25
3.8 Abatement of Rent Limited.................................... 25
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ARTICLE 4
IMPOSITIONS; TAXES; UTILITIES;
INSURANCE PAYMENTS................................................... 26
4.1 Payment of Impositions....................................... 26
4.1.1 Lessee To Pay...................................... 26
4.1.2 Installment Elections.............................. 26
4.1.3 Returns and Reports................................ 26
4.1.4 Refunds............................................ 27
4.1.5 Protest............................................ 27
4.2 Notice of Impositions........................................ 27
4.3 Adjustment of Impositions.................................... 27
4.4 Utility Charges.............................................. 27
4.5 Insurance Premiums........................................... 27
4.6 Deposits..................................................... 28
4.6.1 Lessor's Option.................................... 28
4.6.2 Use of Deposits.................................... 28
4.6.3 Deficits........................................... 29
4.6.4 Other Properties................................... 29
4.6.5 Transfers.......................................... 29
4.6.6 Security........................................... 30
4.6.7 Return............................................. 30
4.6.8 Receipts........................................... 30
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY.................................................... 30
5.1 Ownership of the Leased Property............................. 30
5.2 Personal Property; Removal and Replacement of Personal
Property..................................................... 30
5.2.1 Lessee To Equip Facility........................... 30
5.2.2 Sufficient Personal Property....................... 31
5.2.3 Removal and Replacement; Lessor's Option to
Purchase........................................... 31
ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS....................................... 32
6.1 Security for the Lessee's Obligations; Permitted Prior
Security Interests........................................... 32
6.1.1 Security........................................... 32
6.1.2 Purchase-Money Security Interests and Equipment
Leases............................................. 32
6.2 Cash Collateral.............................................. 33
6.2.1 Cash Collateral.................................... 33
6.2.2 Application of Cash Collateral..................... 33
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6.2.3 Replenishment of Cash Collateral................... 33
6.3 Guaranty..................................................... 33
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS................................................ 34
7.1 Condition of the Leased Property............................. 34
7.2 Use of the Leased Property; Compliance; Management........... 35
7.2.1 Obligation to Operate.............................. 35
7.2.2 Permitted Uses..................................... 35
7.2.3 Compliance With Insurance Requirements............. 35
7.2.4 No Waste........................................... 35
7.2.5 No Impairment...................................... 35
7.2.6 No Liens........................................... 35
7.3 Compliance with Legal Requirements........................... 35
7.4 Management Agreements........................................ 36
ARTICLE 8
REPAIRS; RESTRICTIONS................................................ 37
8.1 Maintenance and Repair....................................... 37
8.1.1 Lessee's Responsibility............................ 37
8.1.2 No Lessor Obligation............................... 38
8.1.3 Lessee May Not Obligate Lessor..................... 38
8.1.4 Lessee's Obligation to Perform Upgrade Renovations. 39
8.2 Encroachments; Title Restrictions............................ 39
ARTICLE 9
MATERIAL STRUCTURAL WORK AND
CAPITAL ADDITIONS.................................................... 40
9.1 Lessor's Approval............................................ 40
9.2 General Provisions as to Capital Additions and Certain
Material Structural Work..................................... 40
9.2.1 No Liens........................................... 40
9.2.2 Lessee's Proposal Regarding Capital Additions and
Material Structural Work........................... 41
9.2.3 Lessor's Options Regarding Capital Additions and
Material Structural Work........................... 41
9.2.4 Lessor May Elect to Finance Capital Additions or
Material Structural Work........................... 41
9.2.5 Legal Requirements; Quality of Work................ 41
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9.3 Capital Additions and Material Structural Work Financed by
Lessor....................................................... 41
9.3.1 Lessee's Financing Request......................... 41
9.3.2 Lessor's General Requirements...................... 42
9.3.3 Payment of Costs................................... 44
9.4 General Limitations.......................................... 44
9.5 Non-Capital Additions........................................ 44
9.6 Permitted Work............................................... 45
ARTICLE 10
WARRANTIES AND REPRESENTATIONS....................................... 45
10.1 Representations and Warranties............................... 45
10.1.1 Existence; Power; Qualification.................... 45
10.1.2 Valid and Binding.................................. 45
10.1.3 Single Purpose..................................... 46
10.1.4 No Violation....................................... 46
10.1.5 Consents and Approvals............................. 46
10.1.6 No Liens or Insolvency Proceedings................. 46
10.1.7 No Burdensome Agreements........................... 47
10.1.8 Commercial Acts.................................... 47
10.1.9 Adequate Capital, Not Insolvent.................... 47
10.1.10 Not Delinquent..................................... 47
10.1.11 No Affiliate Debt.................................. 47
10.1.12 Taxes Current...................................... 48
10.1.13 Financials Complete and Accurate................... 48
10.1.14 Pending Actions, Notices and Reports............... 48
10.1.15 Compliance with Legal and Other Requirements....... 49
10.1.16 No Action By Governmental Authority................ 50
10.1.17 Property Matters................................... 50
10.1.18 Third Party Payor Agreements....................... 51
10.1.19 Rate Limitations................................... 52
10.1.20 Free Care.......................................... 52
10.1.21 No Proposed Changes................................ 52
10.1.22 ERISA.............................................. 52
10.1.23 No Broker.......................................... 52
10.1.24 No Improper Payments............................... 52
10.1.25 Nothing Omitted.................................... 53
10.1.26 No Margin Security................................. 53
10.1.27 No Default......................................... 53
10.1.28 Principal Place of Business........................ 54
10.1.29 Labor Matters...................................... 54
10.1.30 Intellectual Property.............................. 54
10.1.31 Management Agreements.............................. 54
10.1.32 Fiscal Year........................................ 54
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10.1.33 Rates.............................................. 54
10.2 Continuing Effect of Representations and Warranties.......... 54
ARTICLE 11
FINANCIAL AND OTHER COVENANTS........................................ 55
11.1 Status Certificates.......................................... 55
11.2 Financial Statements; Reports; Notice and Information........ 55
11.2.1 Obligation To Furnish.............................. 55
11.2.2 Responsible Officer................................ 59
11.2.3 No Material Omission............................... 59
11.2.4 Confidentiality.................................... 59
11.3 Financial Covenants.......................................... 60
11.3.1 Rent Coverage Ratio................................ 60
11.3.2 [Intentionally Omitted]............................ 60
11.3.3 [Intentionally Omitted]............................ 60
11.3.4 [Intentionally Omitted]............................ 60
11.3.5 Current Ratio - Guarantor.......................... 60
11.3.6 Net Worth of Guarantor After a Permitted
Transaction or Permitted Merger.................... 60
11.3.7 Tangible Net Worth - Guarantor..................... 61
11.3.8 No Indebtedness.................................... 61
11.3.9 No Guaranties...................................... 61
11.4 Affirmative Covenants........................................ 61
11.4.1 Maintenance of Existence........................... 61
11.4.2 Materials.......................................... 61
11.4.3 Compliance With Legal Requirements And Applicable
Agreements............................................... 62
11.4.4 Books And Records.................................. 62
11.4.5 Participation in Third Party Payor Programs........ 62
11.4.6 Conduct of its Business............................ 62
11.4.7 Address............................................ 62
11.4.8 Subordination of Affiliate Transactions............ 63
11.4.9 Inspection......................................... 63
11.4.10 Additional Property................................ 63
11.4.11 Acceptable Licensed Operator....................... 63
11.4.12 [Intentionally Omitted]............................ 64
11.5 Additional Negative Covenants................................ 64
11.5.1 Restrictions Relating to Lessee.................... 64
11.5.2 No Liens........................................... 65
11.5.3 Limits on Affiliate Transactions................... 65
11.5.4 Non-Competition.................................... 65
11.5.5 No Default......................................... 67
11.5.6 Restrictions Relating to the Guarantor............. 67
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11.5.7 [Intentionally Omitted]............................ 67
11.5.8 ERISA.............................................. 67
11.5.9 Forgiveness of Indebtedness........................ 67
11.5.10 Value of Assets.................................... 67
11.5.11 Changes in Fiscal Year and Accounting Procedures... 68
11.5.12 [Intentionally Omitted]............................ 68
ARTICLE 12
INSURANCE AND INDEMNITY.............................................. 68
12.1 General Insurance Requirements............................... 68
12.1.1 Types and Amounts of Insurance..................... 68
12.1.2 Insurance Company Requirements..................... 70
12.1.3 Policy Requirements................................ 70
12.1.4 Notices; Certificates and Policies................. 71
12.1.5 Lessor's Right to Place Insurance.................. 71
12.1.6 Payment of Proceeds................................ 71
12.1.7 Irrevocable Power of Attorney...................... 72
12.1.8 Blanket Policies................................... 72
12.1.9 No Separate Insurance.............................. 72
12.1.10 Assignment of Unearned Premiums.................... 72
12.2 Indemnity.................................................... 73
12.2.1 Indemnification.................................... 73
12.2.2 Indemnified Parties................................ 74
12.2.3 Defense of Actions by the Lessee................... 74
12.2.4 Limitation on Lessor Liability..................... 74
12.2.5 Risk of Loss....................................... 74
ARTICLE 13
FIRE AND CASUALTY.................................................... 75
13.1 Restoration Following Fire or Other Casualty................. 75
13.1.1 Following Fire or Casualty......................... 75
13.1.2 Procedures......................................... 75
13.1.3 Disbursement of Insurance Proceeds................. 76
13.2 Disposition of Insurance Proceeds............................ 80
13.2.1 Proceeds To Be Released to Pay For Work............ 80
13.2.2 Proceeds Not To Be Released........................ 80
13.2.3 Lessee Responsible for Short-Fall.................. 81
13.3 Tangible Personal Property................................... 81
13.4 Restoration of Certain Improvements and the Tangible
Personal Property............................................ 82
13.5 No Abatement of Rent......................................... 82
13.6 Termination of Certain Rights................................ 82
13.7 Waiver....................................................... 82
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13.8 Application of Rent Loss and/or Business Interruption
Insurance.................................................... 82
13.9 Obligation To Account........................................ 83
ARTICLE 14
CONDEMNATION......................................................... 83
14.1 Parties' Rights and Obligations.............................. 83
14.2 Total Taking................................................. 83
14.3 Partial or Temporary Taking.................................. 83
14.4 Restoration.................................................. 84
14.5 Award Distribution........................................... 85
14.6 Control of Proceedings....................................... 85
ARTICLE 15
PERMITTED CONTESTS................................................... 85
15.1 Lessee's Right to Contest.................................... 85
15.2 Lessor's Cooperation......................................... 86
15.3 Lessee's Indemnity........................................... 86
ARTICLE 16
DEFAULT.............................................................. 86
16.1 Events of Default............................................ 86
16.2 Remedies..................................................... 91
16.3 Damages...................................................... 92
16.4 Lessee Waivers............................................... 93
16.5 Application of Funds......................................... 94
16.6 Intentionally Omitted........................................ 94
16.7 Lessor's Right to Cure....................................... 94
16.8 No Waiver By Lessor.......................................... 94
16.9 Right of Forbearance......................................... 95
16.10 Cumulative Remedies.......................................... 95
ARTICLE 17
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER.................. 96
17.1 Surrender.................................................... 96
17.2 Transfer of Permits and Contracts............................ 96
17.3 No Acceptance of Surrender................................... 97
17.4 Holding Over................................................. 97
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ARTICLE 18
RIGHT OF FIRST REFUSAL TO
PURCHASE THE LEASED PROPERTY......................................... 97
18.1 Right of First Refusal to Purchase the Leased Property....... 97
ARTICLE 19
SUBLETTING AND ASSIGNMENT............................................ 98
19.1 Subletting and Assignment.................................... 98
19.2 Permitted Subleases.......................................... 98
19.3 Attornment................................................... 98
ARTICLE 20
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR.......................... 99
20.1 No Merger of Title........................................... 99
20.2 Transfers By Lessor.......................................... 99
20.3 Lessor May Grant Liens....................................... 99
20.4 Subordination and Non-Disturbance............................ 99
ARTICLE 21
LESSOR OBLIGATIONS................................................... 100
21.1 Quiet Enjoyment.............................................. 100
21.2 Memorandum of Lease.......................................... 101
21.3 Default by Lessor............................................ 101
ARTICLE 22
NOTICES.............................................................. 101
ARTICLE 23
LIMITATION OF LIABILITY.............................................. 102
ARTICLE 24
MISCELLANEOUS PROVISIONS............................................. 103
24.1 Broker's Fee Indemnification................................. 103
24.2 No Joint Venture or Partnership.............................. 103
24.3 Amendments, Waivers and Modifications........................ 103
24.4 Captions and Heading......................................... 104
24.5 Time is of the Essence....................................... 104
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24.6 Counterparts................................................. 104
24.7 Entire Agreement............................................. 104
24.8 Waiver of Jury Trial......................................... 104
24.9 Successors and Assigns....................................... 105
24.10 No Third Party Beneficiaries................................. 105
24.11 Governing Law................................................ 105
24.12 General...................................................... 105
24.13 Intention of Parties......................................... 106
24.14 Appraisal.................................................... 106
24.14.1 Designation of Appraisers.......................... 106
24.14.2 Appraisal Process.................................. 106
24.14.3 Specific Enforcement and Costs..................... 107
EXHIBIT A
PROPERTY DESCRIPTION.................................................. 109
EXHIBIT B
PERMITTED ENCUMBRANCES................................................ 110
EXHIBIT C
LIST OF SHAREHOLDERS.................................................. 111
EXHIBIT D
NATIONAL ACCOUNTS AND LOCAL DISCOUNTS................................. 112
EXHIBIT E
OPEN COST REPORTS..................................................... 113
EXHIBIT F
RATE LIMITATIONS...................................................... 114
EXHIBIT G
FREE CARE REQUIREMENTS................................................ 115
EXHIBIT H
CURRENT RATES......................................................... 116
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EXHIBIT I
RENT COVERAGE RATIO CALCULATION....................................... 117
EXHIBIT J
[INTENTIONALLY OMITTED]............................................... 118
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FACILITY LEASE AGREEMENT
This FACILITY LEASE AGREEMENT ("Lease") is dated as of the 31st day of July,
1998, is between MEDITRUST ACQUISITION CORPORATION III ("Lessor"), a Delaware
corporation having its principal office at 000 Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx,
Xxxxxxxxxxxxx 00000, and ALS LEASING, INC. ("Lessee"), a Delaware corporation,
having its principal office at 000 X. Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxxx 00000, Attn: Xx. Xxxxxxx X. Xxxxx.
ARTICLE 1
LEASED PROPERTY; TERM; 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 benefitting 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
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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, 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 July 31, 1998 (the "Commencement Date") and end on April
30, 2010 (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 April 30, 2025. The Lessee's extension
options shall be exercised by the Lessee by giving written notice to the Lessor
of the Lessee's exercise 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 3.1.1.
Notwithstanding anything to the contrary set forth herein, the Lessee's
rights to exercise the options granted in this Section 1.3 are subject to the
further condition that concurrently with the exercise of any extension option
hereunder, the Lessee shall have exercised its option to extend the terms of all
of the Group Two Acquisition Facility Leases (as defined in the Agreement
Regarding Related Lease Transactions) in accordance with the provisions of the
Agreement Regarding Related Lease Transactions and the provisions of Section 1.3
of each of the Group Two Acquisition Leases.
ARTICLE 2
DEFINITIONS AND RULES OF CONSTRUCTION
2.1 DEFINITIONS. For all purposes of this Lease and the other Lease
Documents (as hereinafter defined), except as otherwise expressly provided or
unless the context otherwise requires, (I) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular and (II) all references in this Lease or any of the other
Lease Documents to designated "Articles", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease or the
other applicable Lease Document.
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ACCEPTABLE LICENSED OPERATOR: Any of (A) the Current Manager, (B) the
Lessee, (C) the Guarantor, (D) any Manager of the Facility (pursuant to a
Management Agreement approved by the Lessor) that is wholly-owned by Alternative
Living Services, Inc. and, during the Term, is engaged in no business or venture
other than the ownership and/or operation of any health care facility owned or
financed by any Meditrust Entity, or (E) any Sublessee of the Facility (pursuant
to a Sublease approved by the Lessor) that is wholly-owned or is controlled by
Alternative Living Services, Inc. and, during the Term, is engaged in no
business or venture other than the ownership and/or operation of any health care
facility owned or financed by any Meditrust Entity.
ACCOUNTS: As defined in the UCC.
ACCREDITATION BODY: All Persons having jurisdiction over the
accreditation, certification, evaluation or operation of the Facility. The
Lessor understands that neither the Lessee nor any Sublessee nor the Facility is
currently under the jurisdiction, or is otherwise subject to the rules, of any
Accreditation Body and that, accordingly, the provisions of this Lease relating
in any way to an Accreditation Body are presently inapplicable to this
transaction; however, in the event that at any time during the Term, any of the
Lessee, any Sublessee or the Facility falls under the jurisdiction of, or
otherwise becomes subject to the rules of, any Accreditation Body, then all such
provisions of this Lease and the other Lease Documents relating to an
Accreditation Body shall apply with full force and effect.
ADDITIONAL RENT: As defined in Section 3.1.2.
ADDITIONAL RENT COMMENCEMENT DATE: As defined in Section 3.1.2.
ADDITIONAL CHARGES: As defined in Section 3.4.
ADDITIONAL LAND: As defined in Section 9.3.
AFFILIATE: With respect to any Person (I) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person, (II) any other Person 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 and the definition of
Acceptable Licensed Operator, "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, partnership interests or other
equity interests.
AFFILIATED PARTY SUBORDINATION AGREEMENT: That certain Amended and
Restated Affiliated Party Subordination Agreement dated as of April 30, 1997 by
and among the Lessee, the Guarantor,
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and various Affiliates of the Lessor, as amended by that certain First Amendment
to Amended and Restated Agreement Regarding Related Lease Transactions, Amended
and Restated Environmental Indemnity Agreement and Amended and Restated
Affiliated Party Subordination Agreement dated as of June 18, 1997 by and among
the Lessee, the Guarantor and the Lessor, as further amended by that certain
Third Amendment to Amended and Restated Agreement Regarding Related Lease
Transactions, Amended and Restated Environmental Indemnity Agreement and Amended
and Restated Affiliated Party Subordination Agreement dated as of November 21,
1997, as further amended by that certain Fourth Amendment to Amended and
Restated Agreement Regarding Related Lease Transactions, Amended and Restated
Environmental Indemnity Agreement and Amended and Restated Affiliated Party
Subordination Agreement dated as of July 1, 1998, as further amended by that
certain Fifth Amendment to Amended and Restated Agreement Regarding Related
Lease Transactions, Amended and Restated Environmental Indemnity Agreement and
Amended and Restated Affiliated Party Subordination Agreement of even date
herewith, as may be amended from time to time.
AGREEMENT REGARDING RELATED LEASE TRANSACTIONS: That certain Amended and
Restated Agreement Regarding Related Lease Transactions dated as of April 30,
1997 by and among the Lessee, the Lessor and any Related Party that is a party
to any Related Lease, as amended by that certain First Amendment to Amended and
Restated Agreement Regarding Related Lease Transactions, Amended and Restated
Environmental Indemnity Agreement and Amended and Restated Affiliated Party
Subordination Agreement dated as of June 18, 1997 by and among the Lessee, the
Guarantor and the Lessor, as further amended by that certain Second Amendment to
Amended and Restated Agreement Regarding Related Lease Transactions dated as of
October 22, 1997 by and among the Lessee, the Guarantor and the Lessor, as
further amended by that certain Third Amendment to Amended and Restated
Agreement Regarding Related Lease Transactions, Amended and Restated
Environmental Indemnity Agreement and Amended and Restated Affiliated Party
Subordination Agreement dated as of November 21, 1997, as further amended by
that certain Fourth Amendment to Amended and Restated Agreement Regarding
Related Lease Transactions, Amended and Restated Environmental Indemnity
Agreement and Amended and Restated Affiliated Party Subordination Agreement
dated as of July 1, 1998, as further amended by that certain Fifth Amendment to
Amended and Restated Agreement Regarding Related Lease Transactions, Amended and
Restated Environmental Indemnity Agreement and Amended and Restated Affiliated
Party Subordination Agreement of even date herewith, and as may be amended from
time to time. The Lessor and the Lessee anticipate that the Agreement Regarding
Related Lease Transactions will be amended from time to time in order to (A)
include Affiliates of each of the Lessor and the Lessee as parties thereto in
connection with future transactions, (B) amend EXHIBITS A and B to the
Environmental Indemnity Agreement amending the list of environmental site
assessment reports and the list of state and local environmental laws,
respectively, in connection with the inclusion of
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additional facilities, (C) amend SCHEDULE A to the Affiliated Party
Subordination Agreement to include additional parties as the "Manager" thereto
in connection with the inclusion of additional facilities, and (D) include
additional facilities within the scope of such related transactions and
acknowledge and agree that for all purposes under this Lease such amendments
shall be deemed to be included in this definition.
ANNUAL FACILITY UPGRADE EXPENDITURE: The aggregate amount spent on Upgrade
Renovations during any Lease Year.
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. ss.365(h), as the same may hereafter be amended and including any
successor provision thereto.
BASE RENT: As defined in Section 3.1.1 and adjusted pursuant to Section
3.1.1.
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 annexed to any portion of any of the Leased Improvements and material
expansions of any of the Leased Improvements which are constructed on any
portion of the Land during the Term, including, without limitation, the
construction of a new wing or new story, the renovation of any of the Leased
Improvements on the Leased Property 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
units are utilized and/or (III) change the utilization of any material portion
of any of the Leased Improvements.
CAPITAL ADDITION COST: The cost of any Capital Addition made by 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.
CASH COLLATERAL: As defined in Section 6.2.1.
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CASH FLOW: The Consolidated Net Income (or Consolidated Net Loss), arising
solely from the operation of the Leased Property, before federal and state
income taxes for any period plus (I) the amount of the provision for
depreciation and amortization actually deducted on the books of the applicable
Person for the purposes of computing such Consolidated Net Income (or
Consolidated Net Loss) for the period involved, plus (II) Rent and interest on
all other payments with respect to all Indebtedness and/or other obligations
(including, without limitation, management fees) which are fully subordinated to
the Lease Obligations pursuant to the Affiliated Party Subordination Agreement.
CASUALTY: As defined in Section 13.1.1.
CHATTEL PAPER: As defined in the UCC.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL: All of the property in which security interests are granted to
the Lessor and the other Meditrust Entities pursuant to the Lease Documents and
the Related Party Agreements to secure the Lease Obligations, including, without
limitation, the Cash Collateral and the Receivables.
COMMENCEMENT DATE: As defined in Section 1.2.
COMPETITIVE ACTIVITY: As defined in Section 11.5.4.
CONDEMNATION: With respect to the Leased Property or any interest therein
or right accruing thereto or use thereof (I) the exercise by a Condemnor,
whether by legal proceedings or otherwise, resulting in a Taking 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 a Taking are pending.
CONDEMNOR: Any public or quasi-public authority, or private corporation or
Person, having the power of condemnation.
CONSOLIDATED AND CONSOLIDATING: When used with reference to any term
otherwise defined herein, means such term as applied to the consolidated and
consolidating accounts of the relevant Person and its Subsidiaries consolidated
in accordance with GAAP.
CONSOLIDATED FINANCIALS: For any fiscal year or other accounting period
for any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP.
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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.
CONSUMER PRICE ADJUSTMENT FACTOR: A fraction, the numerator of which is
the Consumer Price Index in effect as of first day of the Lease Year for which
the Annual Facility Upgrade Expenditure increase is being calculated and the
denominator of which is the Consumer Price Index in effect as of the
Commencement Date.
CONSUMER PRICE INDEX: The Consumer Price Index for Urban Wage Earners and
Clerical Workers, All Items-U.S. Cities Average (1982-84=100), published by the
Bureau of Labor Statistics, U.S. Department of Labor; provided, that, if the
compilation of the Consumer Price Index in its present form and calculated on
its present basis is discontinued or transferred to any other Governmental
Authority, then, the index most similar to the Consumer Price Index published by
the Bureau of Labor Statistics shall be used. If there is no such similar index,
a substitute index which is then generally recognized as being similar to the
Consumer Price Index shall be used, with such substitute index to be reasonably
selected by the Lessor and reasonably approved by the Lessee.
CONTRACTS: All agreements (including, without limitation, Provider
Agreements and Resident 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.
CURRENT ASSETS: All assets of any Person which would, in accordance with
GAAP, be classified as current assets of a Person.
CURRENT LIABILITIES: All liabilities of any Person which would, in
accordance with GAAP, be classified as current liabilities of a Person.
CURRENT MANAGEMENT AGREEMENT: That certain Management and Operations
Agreement of even date herewith by and between the Lessee and the Current
Manager.
CURRENT MANAGER: Alternative Living Services, Inc.
DATE OF TAKING: The date the Condemnor has the right to possession of the
property being condemned.
DECLARATION: As defined in Article 23.
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DEPOSIT PLEDGE AGREEMENT: The pledge and security agreement so captioned
and dated as of even date herewith between the Lessee and the Lessor, as may be
amended from time to time.
DOCUMENTS: As defined in the UCC.
ENCUMBRANCE: As defined in Section 20.3.
ENVIRONMENTAL INDEMNITY AGREEMENT: The Amended and Restated Environmental
Indemnity Agreement dated as of April 30, 1997 by and among the Lessee, the
Guarantor and the Lessor, as amended by that certain First Amendment to Amended
and Restated Agreement Regarding Related Lease Transactions, Amended and
Restated Environmental Indemnity Agreement and Amended and Restated Affiliated
Party Subordination Agreement dated as of June 18, 1997 by and among the Lessee,
the Guarantor and the Lessor, as further amended by that certain Third Amendment
to Amended and Restated Agreement Regarding Related Lease Transactions, Amended
and Restated Environmental Indemnity Agreement and Amended and Restated
Affiliated Party Subordination Agreement dated as of November 21, 1997, as
further amended by that certain Fourth Amendment to Amended and Restated
Agreement Regarding Related Lease Transactions, Amended and Restated
Environmental Indemnity Agreement and Amended and Restated Affiliated Party
Subordination Agreement dated as of July 1, 1998, as further amended by that
certain Fifth Amendment to Amended and Restated Agreement Regarding Related
Lease Transactions, Amended and Restated Environmental Indemnity Agreement and
Amended and Restated Affiliated Party Subordination Agreement of even date
herewith, and as may be amended from time to time.
ENVIRONMENTAL LAWS: As defined in the Environmental Indemnity Agreement.
ERISA: The Employment Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT: As defined in Section 16.1.
EXCESS GROSS REVENUES: Gross Revenues for a calendar year less the Gross
Revenues for the immediately preceding calendar year.
EXCLUDED FACILITIES: As defined in Section 11.5.4.
EXPIRATION DATE: As defined in Section 1.2.
EXTENDED TERMS: As defined in Section 1.3.
FACILITY: Collectively, the thirty-four (34) unit, thirty-eight (38) bed
fully licensed (to the extent licensing is required by the State) assisted
living and dementia care facility (known for regulatory purposes in the State as
a home for the aged) known as Xxxxxxxx House of Delta I and the
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nineteen (19) unit, twenty (20) bed, fully licensed (to the extent licensing is
required by the State) assisted living facility (known for regulatory purposes
in the State as an adult xxxxxx care facility) known as WovenHearts of Delta II,
on the Land, together with related parking and other amenities.
FAILURE TO OPERATE: As defined in Section 16.1.
FAILURE TO PERFORM: As defined in Section 16.1.
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 24.14 or in such other manner as shall be mutually acceptable
to the Lessor and the Lessee and (C) not taking into account any reduction in
value resulting from any Lien to which the Leased Property is subject and which
Lien the Lessee or the Lessor is otherwise required to remove at or prior to
closing of the transaction. However, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment provisions and other terms and conditions of
any Lien on the Leased Property which is not so required or agreed to be removed
shall be taken into account in determining the Fair Market Value of the Leased
Property. The Fair Market Value of the Leased Property 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.
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FINANCING STATEMENTS: Uniform Commercial Code financing statements
evidencing the security interests granted to the Lessor in connection with the
Lease Documents.
FISCAL QUARTER: Each of the three (3) month periods commencing on January
1st, April 1st, July 1st and October 1st.
FISCAL YEAR: The twelve (12) month period from January 1st to December
31st.
FIXTURES: As defined in Section 1.1.
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:
(I) contractual allowances (relating to any period during the Term
of this Lease and thereafter until the Rent hereunder is paid in full)
for xxxxxxxx not paid by or received from the appropriate Governmental
Agencies or Third Party Payors,
(II) allowances according to GAAP for uncollectible accounts,
(III) all proper resident billing credits and adjustments according
to GAAP relating to health care accounting,
(IV) federal, state or local sales, use, gross receipts and excise
taxes and any tax based upon or measured by said Gross Revenues which is
added to or made a part of the
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amount billed to the resident or other recipient of such services or
goods, whether included in the billing or stated separately, and
(V) 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 (including, without limitation, the determination of the Additional Rent
payable under 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.
GROUP ONE ACQUISITION TRANSACTION DOCUMENTS: As defined in the Agreement
Regarding Related Lease Transactions.
GROUP TWO ACQUISITION TRANSACTION DOCUMENTS: As defined in the Agreement
Regarding Related Lease Transactions.
GUARANTOR: Alternative Living Services, Inc. and its successors and
assigns.
GUARANTY: The Amended and Restated Guaranty dated as of April 30, 1997
executed by Guarantor in favor of the Lessor, relating to the Lease Obligations,
as may be amended from time to time.
HAZARDOUS SUBSTANCES: As defined in the Environmental Indemnity Agreement.
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, 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 the conveyance of the Land to the Lessor (and/or the conveyance of
the Leased Property to the Lessee pursuant to the terms of this Lease), 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
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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, (4)
any tax imposed with respect to any Fee Mortgage or any Fee Mortgagee, (5)
except as expressly provided elsewhere in this Lease, any principal or interest
on any Encumbrance on the Leased Property, or (6) any portion of assessments
which are assessed during the Term of this Lease and amortized over a period
which extends beyond the Term of this Lease provided the Lessee (and not the
Lessor) shall be responsible for that portion of the amortized assessment due
and owing during the Term and any and all finance charges and/or penalties which
accrue as a result of amortizing any such assessments, including, without
limitation, any finance charges and/or penalties (other than penalties which
accrue as a result of late payment after the expiration of the Term of this
Lease) which accrue after the expiration of the Term of this Lease; 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.
INDEMNIFIED PARTIES: As defined in Section 12.2.2.
INDEX: The rate of interest of actively traded marketable United States
Treasury Securities bearing a fixed rate of interest adjusted for a constant
maturity of ten (10) years as calculated by the Federal Reserve Board.
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
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conducted thereon and the requirements of any insurance board, association or
organization or underwriters' regulations pertaining to the Leased Property.
JCAHO: The Joint Commission on Accreditation of Health Care Organizations.
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 and/or cure periods under
this Lease and/or any of the other Lease Documents.
LEASE DOCUMENTS: Collectively, this Lease, the Guaranty, the Security
Agreement, the Deposit Pledge Agreement, the Pledge Agreement, the Agreement
Regarding Related Lease Transactions, the Permits Assignment, the Financing
Statements, the Affiliated Party Subordination Agreement, the Environmental
Indemnity Agreement, the other Facility Lease Agreements referred to in the
Agreement Regarding Related Transactions, 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.
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.
LEASE YEAR: A twelve-month period ending on December 31 of each year;
provided, that the first Lease Year shall begin on the Commencement Date and
shall end on December 31, 1998.
LEASED IMPROVEMENTS: As defined in Article 1.
LEASED PROPERTY: As defined in Article 1.
LEASING COMMITMENT FEE: $6,180.00
LEASING GROUP: Collectively, the Lessee, the Guarantor, any Sublessee
which is an Affiliate of the Lessee or the Guarantor and any Manager which is an
Affiliate of the Lessee or the Guarantor.
LEGAL REQUIREMENTS: Collectively, all statutes, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use and assisted living 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
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Payor affecting any member of the Leasing Group and relating to 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 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, but shall exclude any
non-binding or non-mandatory rules or guidelines promulgated by an Accreditation
Body or Third Party Payor.
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.
LIEN: With respect to any real or personal property, any mortgage, deed of
trust, easement, restriction, lien, pledge, collateral assignment,
hypothecation, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not xxxxxx, vested or perfected.
LIMITED PARTIES: As defined in Section 11.5.4; 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.ss.1396 et seq.) and any statute succeeding
thereto.
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MEDICARE: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 USC ss.ss.1395 et
seq.) and any statute succeeding thereto.
MEDITRUST: As defined in Article 23.
MEDITRUST/ALS TRANSACTION DOCUMENTS: As defined in the Agreement Regarding
Related Lease Transactions, including Meditrust/ALS Transaction Documents which
are by implication added to, or deleted from, such definition as EXHIBITS A, B
OR C to the Agreement Regarding Related Lease Transactions are amended or
modified from time to time in order to reflect the addition of facilities or the
removal of one or more facilities.
MEDITRUST ENTITIES: Collectively, Meditrust, the Lessor and any other
Affiliate of the Lessor which may now or hereafter be a party to any Related
Party Agreement.
MEDITRUST INVESTMENT: The sum of (I) the Original Meditrust Investment
plus (II) the aggregate amount of all Subsequent Investments.
MONTHLY DEPOSIT DATE: As defined in Section 4.6.1.
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.
OFFER: As defined in Section 18.1.
OFFERED PROPERTY: As defined in Section 18.1.
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.
ORIGINAL MEDITRUST INVESTMENT: FIVE MILLION SIX HUNDRED EIGHTEEN
THOUSAND FORTY-NINE AND 00/100 DOLLARS ($5,618,049.00).
OTHER PERMITTED USES: To the extent the Lessee elects, in its sole
discretion, to engage in same and then only if permitted under Legal
Requirements and under Insurance Requirements, and so long as the same do not
detract in any material manner from the Primary Intended Use, (I) medical or
dental offices or clinics, (II) medical or dental laboratories, (III) day care
center, (IV) hospitals, (V) pharmacy, (VI) medical services and physical
therapy, (VII) florists and card shops
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which do not have a separate entrance, (VIII) ancillary parking, (IX) beauty
salons, and (X) other similar ancillary uses currently being conducted at the
Facility.
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.
PERMITS ASSIGNMENT: The Amended and Restated Collateral Assignment of
Permits, Licenses and Contracts dated as of April 30, 1997 granted by the Lessee
to the Lessor, as may be amended from time to time.
PERMITTED ENCUMBRANCES: As defined in Section 10.1.17.
PERMITTED PRIOR SECURITY INTERESTS: As defined in Section 6.1.2.
PERSON: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.
PLANS AND SPECIFICATIONS: As defined in Section 13.1.2.
PLEDGE AGREEMENT: The Amended and Restated Stock Pledge Agreement dated as
of April 30, 1997 by and among the Guarantor, the Lessee and the Lessor, as may
be amended from time to time.
PRIMARY INTENDED USE: The use of the portion of the Facility known as
Xxxxxxxx House of Delta I as an assisted living and dementia care facility
(known for regulatory purposes in the State as a home for the aged) with
thirty-four (34) licensed assisted living units and dementia care units and
thirty-eight (38) beds, and the use of the portion of the Facility known as
WovenHearts of Delta II as an assisted living facility (known for regulatory
purposes in the State as an adult xxxxxx care facility) with nineteen (19)
licensed assisted living units and twenty (20) beds, 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 10.1.28.
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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 11.5.4.
RECEIVABLES: Collectively, all (I) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (II) rights to payment for
goods sold or leased or services rendered by the Lessee or any other party in
connection with the operation of the Facility, 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: Fleet Bank of Connecticut, N.A.
RELATED LEASES: Collectively, those Facility Leases relating to each of
the facilities listed on any of EXHIBITS A, B AND C of the Agreement Regarding
Related Lease Transactions, as such exhibits may be amended or modified from
time to time in order to reflect the addition of facilities or the removal of
one or more facilities.
RELATED PARTIES: Collectively, each Person that may now or hereafter be a
party to any Related Party Agreement other than the Meditrust Entities.
RELATED PARTY AGREEMENT: Any agreement, document or instrument now or
hereafter evidencing or securing any Related Party Obligation, including,
without limitation, the Related Leases and any agreements listed in Schedule 2.6
of the Security Agreement.
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RELATED PARTY DEFAULT: The occurrence of a default or breach of condition
continuing beyond the expiration of any applicable notice and grace and cure
periods, if any, under the terms of any Related Party Agreement.
RELATED PARTY OBLIGATIONS: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings due to, or made for the
benefit of, the Lessor or any of the other Meditrust Entities by the Lessee or
any other member of the Leasing Group or any of their respective Affiliates;
whether such indebtedness, covenants, liabilities, obligations, agreements
and/or undertakings are direct or indirect, absolute or contingent, liquidated
or unliquidated, due or to become due, joint, several or joint and several,
primary or secondary, now existing or hereafter arising, including, without
limitation, the obligations set forth under the Meditrust/ALS Transaction
Documents.
RENT: Collectively, the Base Rent, the Additional Rent, the Additional
Charges and all other sums payable under this Lease and the other Lease
Documents.
RENT ADJUSTMENT DATE: The first day of each Extended Term.
RENT ADJUSTMENT RATE: Three hundred thirty (330) basis points over the
Index.
RENT COVERAGE RATIO: The ratio of (I) Cash Flow for each applicable period
to (II) the total of all Rent paid or payable during such period or accrued for
such period.
RENT INSURANCE PROCEEDS: As defined in Section 13.8.
RESIDENT AGREEMENTS: Collectively, all Subleases now or hereafter executed
or entered into by or on behalf of any Person allowing such Person to reside at
the Facility.
RETAINAGE: As defined in Section 13.1.3.
RIGHT OF FIRST REFUSAL: As defined in Section 18.1.
SECURITY AGREEMENT: The Amended and Restated Security Agreement dated as
of April 30, 1997 herewith between the Lessee and the Lessor, as may be amended
from time to time.
STATE: The state or commonwealth in which the Leased Property is located.
STATED AMOUNT: An amount equal to three (3) months Base Rent during the
first Lease Year.
SUBLEASE: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements, rentals of other facilities
of the Leased Property and all other occupancy agreements of every kind and
nature (including all Resident Agreements), whether oral or in writing,
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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.
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 vehicles, 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, Medicare, Medicaid, 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.
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UCC: The Uniform Commercial Code as in effect from time to time in the
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, as jointly
determined by the Lessor and the Lessee in good faith, 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.
UPGRADE RENOVATIONS: As defined in Section 8.1.4.
WORK: As defined in Section 13.1.1.
WORK CERTIFICATES: As defined in Section 13.1.3.
2.2 RULES OF CONSTRUCTION. The following rules of construction shall apply
to the Lease and each of the other Lease Documents: (A) references to "herein",
"hereof" and "hereunder" shall be deemed to refer to this Lease or the other
applicable Lease Document, and shall not be limited to the particular text or
section or subsection in which such words appear; (B) the use of any gender
shall include all genders and the singular number shall include the plural and
vice versa as the context may require; (C) references to 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 only actual attorneys' fees reasonably incurred and only
actual costs reasonably incurred 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 "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
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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 not less than
five (5) Business Days in advance, rent for the Leased Property, as follows.
3.1.1 BASE RENT: The Lessee shall pay to the Lessor, commencing on
July 31, 1998, a base rent (the "Base Rent") equal to (I) FOUR HUNDRED
NINETY-FIVE THOUSAND FIVE HUNDRED TWELVE AND 00/100 DOLLARS ($495,512.00)
per annum, payable in advance in equal, consecutive monthly installments,
provided that on the date hereof, the Lessee shall pay to the Lessor a
prorated portion of the Base Rent representing one (1) day's Base Rent for
July 31, 1998; and provided further that on each Rent Adjustment Date, the
Base Rent shall be adjusted to equal the greater of (X) the then current
Base Rent or (Y) an amount equal to the Meditrust Investment multiplied by
the Rent Adjustment Rate then in effect on such Rent Adjustment Date.
3.1.2 ADDITIONAL RENT. In addition to the Base Rent, the Lessee
shall pay to the Lessor additional rent (the "Additional Rent") which
shall equal, in each calendar year during the Term, the sum of (a) the
Additional Rent payable with respect to the immediately preceding calendar
year plus (b) twelve percent (12%) of Excess Gross Revenues for the then
current calendar year. Additional Rent shall accrue commencing on August
1, 1999, and shall be payable during the Term, quarterly in arrears,
commencing on October 20, 1999 ("Additional Rent Commencement Date") and
there shall be an annual reconciliation as provided in Section 3.2 below.
Notwithstanding the foregoing, in no event shall any increase to the
Additional Rent for any calendar year exceed two and one-half percent
(2.5%) of the total of Base Rent and Additional Rent payable with respect
to the immediately preceding calendar year.
Additional Rent payable hereunder for any fractional calendar year shall
be prorated so that such Additional Rent shall equal the product of (x)
the Additional Rent payable with respect to the immediately preceding
calendar year plus an amount equal to twelve percent (12%) of the
annualized Excess Gross Revenues for the applicable fractional calendar
year multiplied by (y) a fraction (the "Proration Factor"), the numerator
of which is the number of days in the applicable fractional calendar year
and the denominator of which is 365; provided, however, that, in no event
shall the Additional Rent payable during (a) the calendar
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year in which the Additional Rent Commencement Date occurs exceed the
product of two and one-half percent (2.5%) of the total of Base Rent
payable with respect to the immediately preceding calendar year multiplied
by the applicable Proration Factor and (b) any other fractional calendar
year increase by more than the product of two and one-half percent (2.5%)
of the total of Base Rent and Additional Rent payable with respect to the
immediately preceding calendar year multiplied by the applicable Proration
Factor.
3.2 CALCULATION AND PAYMENT OF ADDITIONAL RENT; ANNUAL RECONCILIATION.
3.2.1 ESTIMATES AND PAYMENTS. Commencing on October 20, 1999,
Additional Rent to be paid during each calendar year during the Term shall
be paid quarterly in arrears (in equal installments on the 20th day of
April, July, October and January) based on the actual increase in Gross
Revenues over the comparable fiscal quarter for the immediately preceding
calendar year, to be adjusted at the end of each such year based on the
actual Excess Gross Revenues calculated for that calendar year. Additional
Rent due for any portion of any calendar year shall be prorated
accordingly.
3.2.2 ANNUAL STATEMENT. In addition, on or before the first day of
April of each year following any calendar year for which Additional Rent
is payable hereunder, the Lessee shall deliver to the Lessor an Officer's
Certificate, reasonably acceptable to the Lessor and certified by the
chief financial officer of the Lessee, setting forth the Gross Revenues
for the immediately preceding calendar year.
3.2.3 DEFICITS. If the Additional Rent, as finally determined for
any calendar year (or portion thereof), exceeds the sum of the quarterly
payments of Additional Rent previously paid by the Lessee with respect to
said calendar year, within thirty (30) days after such determination is
required to be made hereunder, the Lessee shall pay such deficit to the
Lessor and, if the deficit exceeds five percent (5%) of the Additional
Rent which was previously paid to the Lessor with respect to said calendar
year, then the Lessee shall also pay the Lessor interest on such deficit
at the Overdue Rate from the applicable quarterly date that such payment
should have originally been made by the Lessee to the date that the Lessor
receives such payment.
3.2.4 OVERPAYMENTS. If the Additional Rent, as finally determined
for any calendar year (or portion thereof), is less than the amount
previously paid with respect thereto by the Lessee, and if no Lease
Default exists, the Lessee shall notify the Lessor either (A) to pay to
the Lessee an amount equal to such difference or (B) to grant the Lessee a
credit against Additional Rent next coming due in the amount of such
difference.
3.2.5 FINAL DETERMINATION. The obligation to pay Additional Rent
shall survive the expiration or earlier termination of the Term (as to
Additional Rent payments that are due and payable with respect to periods
prior to the expiration or earlier termination of the Term and during any
periods that the Lessee remains in possession of the Leased Property), and
a final reconciliation, taking into account, among other relevant
adjustments, any contractual
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allowances which related to Gross Revenues that accrued prior to the date
of such expiration or earlier termination, but which have been determined
to be not payable. The Lessee's good faith best estimate of the amount of
any unresolved contractual allowances shall be made not later than two (2)
years after said expiration or termination date. Within sixty (60) days
after the expiration or earlier termination of the Term, the Lessee shall
advise the Lessor of the Lessee's best estimate of the approximate amount
of such adjustments, which estimate shall not be binding on the Lessee or
have any legal effect whatsoever.
3.2.6 BEST EFFORTS TO MAXIMIZE. The Lessee further covenants that
the operation of the Facility shall be conducted in a manner consistent
with the prevailing standards and practices recognized in the assisted
living industry as those customarily utilized by first class business
operations. Subject to any applicable Legal Requirements, the members of
the Leasing Group shall use their best efforts to maximize the Facility's
Gross Revenues.
3.3 CONFIRMATION AND AUDIT OF ADDITIONAL RENT.
3.3.1 MAINTAIN ACCOUNTING SYSTEMS. The Lessee shall utilize, or
cause to be utilized, an accounting system for the Leased Property in
accordance with usual and customary practices in the assisted living
industry and in accordance with GAAP which will accurately record all
Gross Revenues. The Lessee shall retain, for at least three (3) years
after the expiration of each calendar year (and in any event until the
final reconciliation described in Section 3.2 above has been made),
adequate records conforming to such accounting system showing all Gross
Revenues for such calendar year.
3.3.2 AUDIT BY LESSOR. The Lessor, at its own expense except as
provided hereinbelow, shall have the right from time to time to have its
accountants or representatives audit the information set forth in the
Officer's Certificate referred to in Section 3.2 and in connection with
such audits, to examine the Lessee's records with respect thereto
(including supporting data, income tax and sales tax returns), subject to
any prohibitions or limitations on disclosure of any such data under
applicable law or regulations, 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 any
Facility-patient relationship and any physician-patient privilege.
3.3.3 DEFICIENCIES AND OVERPAYMENTS. If any such audit discloses a
deficiency in the reporting of Gross Revenues and either the Lessee agrees
with the result of such audit or the matter is compromised, the Lessee
shall forthwith pay to the Lessor the amount of the deficiency in
Additional Rent which would have been payable by it had such deficiency in
reporting Gross Revenues not occurred, as finally agreed or determined,
together with interest on the Additional Rent which should have been
payable by it, calculated at the Overdue Rate, from the date when said
payment should have been made by the Lessee to the date that the Lessor
receives such payment. Notwithstanding anything to the contrary herein,
with respect to any audit that is commenced more than two (2) years after
the date Gross Revenues for any calendar year are reported by the Lessee
to the Lessor, the deficiency, if
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any, with respect to Additional Rent shall bear interest as permitted
herein only from the date such determination of deficiency is made, unless
such deficiency is the result of gross negligence or willful misconduct on
the part of the Lessee (or any Affiliate thereof). If any audit conducted
for the Lessor pursuant to the provisions hereof discloses that (A) the
Gross Revenues actually received by the Lessee for any calendar year
exceed those reported by the Lessee by more than five percent (5%), the
Lessee shall pay the reasonable cost of such audit and examination or (B)
the Lessee has overpaid Additional Rent, and if no Lease Default exists,
the Lessor shall so notify the Lessee and the Lessee shall direct the
Lessor either (I) to refund the overpayment to the Lessee or (II) grant a
credit against Additional Rent next coming due in the amount of such
difference.
3.3.4 SURVIVAL. The obligations of the Lessor and the Lessee
contained in this Section shall survive the expiration or earlier
termination of this Lease.
3.4 ADDITIONAL CHARGES. Subject to the rights to contest as set forth in
Article 15, in addition to the Base Rent and the Additional 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 and the Additional 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, and the Lessor shall be obligated to pay such Additional
Charges to any Person to whom such Additional Charges are due promptly and prior
to any additional costs or expenses being incurred.
3.5 LEASING COMMITMENT FEE: The Lessee shall pay to the Lessor the Leasing
Commitment Fee simultaneously with the execution of this Lease; provided,
however, that, at the Lessor's option, the Leasing Commitment Fee shall be held
in an escrow account established with a Person designated by the Lessor pursuant
to an escrow arrangement satisfactory to the Lessor, with interest thereon
benefiting the Lessor. If the Lessor exercises its option to require that the
Leasing Commitment Fee be held in such an escrow account (A) the Leasing
Commitment Fee shall be disbursed from said escrow account only upon the joint
instructions of the Lessee and the Lessor (which instructions from the Lessee
shall be immediately given upon the request of the Lessor) and in no event shall
the Leasing Commitment Fee be disbursed therefrom, in whole or in part, unless
and until so requested by the Lessor and (B) the Lessor shall bear the risk of
loss of or misappropriation of the Leasing Commitment Fee by such escrow agent.
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3.6 NET LEASE. The Rent shall be paid absolutely net to the Lessor, so
that this Lease shall yield to the Lessor throughout the Term the full amount of
the installments of Base Rent, the Additional Rent and the payments of
Additional Charges.
3.7 NO LESSEE TERMINATION OR OFFSET.
3.7.1 NO TERMINATION. Except as may be otherwise specifically and
expressly provided in Article 13 or Article 14 of 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 or any of the other Meditrust Entities under this Lease, any other
Lease Document or any Related Party Agreement, (E) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation,
dissolution, winding up or other proceedings affecting 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 or in the
event of a Casualty described in Section 13.1.1, the Base Rent shall be abated
as follows: (A) in the case of such a partial Taking, the Meditrust Investment
shall be reduced for the purposes of calculating Base Rent pursuant to Section
3.1 by subtracting
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therefrom, as applicable, the net amount of the Award received by the Lessor;
(B) in the case of such a temporary Taking, by reducing the Base Rent for the
period of such a temporary Taking, by the net amount of the Award received by
the Lessor; and (C) in the event of a Casualty which is not the result of the
gross negligence or willful misconduct of any member of the Leasing Group and
which the Lessee is proceeding to restore in accordance with the provisions of
this Lease, by reducing the Base Rent, during the period the Lessee is unable to
use the Leased Property for the Primary Intended Use by the net amount of rent
loss and/or business interruption insurance 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, upon request by the Lessor, 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. The Lessor shall promptly forward to the Lessee for payment
any and all bills or invoices it receives with respect to Impositions.
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
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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. 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 and the Lessor's obligation to refund their
respective 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. If the Lessee is
required to pay a deposit to any of the utility providers serving the Leased
Property,
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any and all such deposits shall become the property of the Lessee at the
expiration of the Term (as opposed to an earlier termination of this Lease) if
and when 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, at the Lessor's request, 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 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 after an Event of Default occurs, 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 reasonably 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
reasonably 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 by the Lessor
in payment of the Impositions
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or insurance premiums, as the case may be, on or before the due date
thereafter and prior to any penalty, interest, late fee or other similar
charge being imposed to the extent of available funds deposited by the
Lessee under this Section 4.6. 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; provided, however, that notwithstanding the
foregoing, the Lessor shall only invest any such deposit in any of the
investment vehicles described on EXHIBIT A of the Deposit Pledge
Agreement. 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 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; 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
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Imposition. However, the Lessor will reasonably cooperate with the Lessee
(but at no cost or expense to the Lessor) to change the manner of
assessment for such Imposition so that such Imposition will thereafter
relate only to the Leased Property.
4.6.5 TRANSFERS. In connection with any assignment of the Lessor's
interest under this Lease, the original Lessor named herein and each
successor in interest shall be obligated 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), who shall be obligated to assume the Lessor's obligations with
respect to all such deposited amounts, and upon such transfer, the
original Lessor named herein or the applicable successor in interest
transferring the deposits shall thereupon be completely released from all
liability with respect to such deposits so transferred and 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
Lessor named herein or the applicable successor in interest transferring
the deposits shall provide written notice to the Lessee of such transfer.
The original Lessor named herein or the applicable successor in interest
shall not be released from liability with respect to the deposits so
transferred unless the next successor in interest assumes liability for
such deposits.
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, any sums then held by the Lessor under this Section 4.6
shall be refunded to the Lessee; unless a Related Party Default has
occurred, in which event such sums may be applied towards the Obligations
in accordance with the Related Party Agreements.
4.6.8 RECEIPTS. The Lessee shall immediately deliver to the Lessor
copies of all notices of non-payment of any insurance premiums and/or
Impositions and, upon the Lessor's request, shall deliver to the Lessor
copies of all other notices, demands, claims, bills and receipts in
relation to the Impositions and insurance premiums immediately upon
receipt thereof by the Lessee.
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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 the Other Permitted Uses, 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 and the Other Permitted Uses, unless
the failure to comply with the same will not have any adverse effect on
either the Leased Property or the Lessee. 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) 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 AND NO/100 DOLLARS
($25,000.00), individually or ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) collectively, except if such Tangible Personal Property is
simultaneously suitably replaced or 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
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Lessee or the Lessor. Upon the expiration or earlier termination of this
Lease, the Lessor shall have the option, which may be exercised prior to
or within the relevant Decision Period (defined below), 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 fair market value or (B) requiring the
Lessee to remove the Tangible Personal Property. For purposes of the
preceding sentence, the "Decision Period" shall mean (1) the last day of
the Term with respect to the expiration thereof in accordance with the
provisions of this Lease, (2) the fifth (5th) Business Day after the date
of any earlier termination of this Lease based on either Casualty or
Condemnation or (3) the thirtieth (30th) day after the date of any earlier
termination of this Lease based on any Event of Default. 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 THE LESSEE'S OBLIGATIONS; PERMITTED PRIOR SECURITY
INTERESTS.
6.1.1 SECURITY. In order to secure the payment and performance of
all of the Obligations, the Lessee agrees to provide or cause there to be
provided, among other things, the following security:
(A) a first lien and exclusive security interest in the
Tangible Personal Property, Receivables and certain other Collateral
as more particularly provided for in the Security Agreement;
(B) the Cash Collateral described in Section 6.2;
(C) a first lien and exclusive pledge of all of the capital
stock of the Lessee all as more particularly set forth in the Pledge
Agreement(s). If any Person other than the Lessee or the Guarantor
shall ever operate the Facility, a pledge of all capital stock of,
or partnership or other ownership interests, in such Person shall
also be provided pursuant to a pledge and security agreement
substantially similar to the Pledge Agreements;
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(D) a first lien and exclusive pledge and assignment of, and
security interest in, all Permits and Contracts, as more
particularly provided for in the Permits Assignment, to the extent
permitted by law or the terms thereof; and
(E) 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.
6.1.2 PURCHASE-MONEY SECURITY INTERESTS AND EQUIPMENT LEASES.
Notwithstanding any other provision hereof regarding the creation of
Liens, but subject to Section 11.3.8, the Lessee may (A) grant priority
purchase money security interests in items of Tangible Personal Property
and (B) lease Tangible Personal Property from equipment lessors, as long
as in each instance where the aggregate amount of such purchase money
security interests and equipment leases will exceed TWO HUNDRED THOUSAND
AND NO/100 DOLLARS ($200,000.00): (I) all of the terms, conditions and
provisions of the purchase money security agreements or equipment leases
evidencing the financing arrangement are reasonably acceptable to the
Lessor; (II) promptly after the execution thereof, the Lessee provides to
the Lessor true and complete copies, as executed, of all such purchase
money security agreements and equipment leases (and all amendments
thereto); (III) no such purchase money security interest or equipment
lease shall be cross-defaulted or cross-collateralized with any other
obligation other than a purchase money security interest or equipment
lease entered into by the Lessee involving Tangible Personal Property and
the same secured party or equipment lessor, as applicable; (IV) the
secured party or equipment lessors enter into an intercreditor agreement
with, and satisfactory to, the Lessor, pursuant to which, without limiting
the foregoing: (X) the Lessor shall be afforded the option of curing
defaults and the option of succeeding to the rights of the Lessee; (Y) the
Lessor's security interest in Tangible Personal Property shall be
subordinated to the security interest granted to such secured party; and
(Z) the secured party or equipment lessor is not a member of the Leasing
Group or an Affiliate of any member of the Leasing Group. Security
interests granted by the Lessee in full compliance with the provisions of
this Section 6.1.2 are referred to as "Permitted Prior Security
Interests".
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6.2 CASH COLLATERAL.
6.2.1 CASH COLLATERAL. In order to further secure the Lessee's
performance of the Obligations, on the Commencement Date, pursuant to the terms
of the Deposit Pledge Agreement, the Lessee shall provide and pledge to the
Lessor a credit enhancement for the benefit of the Lessor in the form of cash or
other specified investments approved by the Lessor in the Lessor's name in the
total of the Stated Amount (the "Cash Collateral"). The Cash Collateral shall
serve as additional security for the Obligations and may be drawn upon by the
Lessor upon any Lease Default. The Lessee shall maintain the Cash Collateral in
the full Stated Amount throughout the Term, subject to the provisions of the
Agreement Regarding Related Lease Transactions. The Cash Collateral shall be in
form and substance and, if the Lessor elects a form of Cash Collateral other
than actual cash, from a bank continually acceptable to the Lessor in the
Lessor's reasonable discretion and shall be pledged to the Lessor pursuant to
the Deposit Pledge Agreement.
6.2.2 APPLICATION OF CASH COLLATERAL. Upon the occurrence of any
Lease Default, the Lessor shall be entitled, at its option, to use all or any
portion of the Cash Collateral, including interest thereon, then held by it to
pay any amount otherwise payable by the Lessee or the Guarantor under any of the
Lease Documents, in accordance with the terms of this Lease or the other Lease
Documents.
6.2.3 REPLENISHMENT OF CASH COLLATERAL. If the Lessor expends any of
the Cash Collateral to pay any amount payable by the Lessee, or otherwise
applies the same to or towards the Obligations, the Lessee shall, upon demand of
the Lessor, immediately augment the Cash Collateral so as to increase the amount
held by the Lessor to the full Stated Amount.
6.3 GUARANTY. All of the Lease Obligations shall be unconditionally
and irrevocably guaranteed by the Guarantor pursuant to the Guaranty.
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
7.1 CONDITION OF THE LEASED PROPERTY. The Lessee acknowledges that the
Guarantor has caused the Leased Property to be sold to the Lessor and that the
Lessee and the Lessor have concurrently entered into this Lease. The Lessee
acknowledges receipt and delivery of possession of the Leased Property and that
the Lessee has examined and otherwise has acquired knowledge of the condition of
the Leased Property prior to the execution and delivery of this Lease and has
found the same to be in good order and repair and satisfactory for its purposes
hereunder. 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
of 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
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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 following a Lease Default or if the Lessor
has a reasonable basis to believe any of the following circumstances exist, 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 and/or located on the Leased Property or (B) the
presence of any condition that (I) in the Lessor's reasonable judgment is likely
to 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 (except as otherwise provided in the
Environmental Indemnity Agreement), the Lessee shall commence such appropriate
remedial actions as may be required under this Lease and 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. Any
report produced by any aforementioned consultant, engineer or inspector in
connection with an environmental and/or structural investigation and/or other
investigation of the Leased Property shall be addressed to and provided to both
the Lessor and the Lessee.
7.2 USE OF THE LEASED PROPERTY; COMPLIANCE; MANAGEMENT.
7.2.1 OBLIGATION TO OPERATE. The Lessee or any other Acceptable
Licensed Operator shall continuously operate the Leased Property in
accordance with the Primary Intended Use and the Other Permitted Uses and
maintain its qualifications for licensure and accreditation as required by
all applicable Legal Requirements and Insurance Requirements.
7.2.2 PERMITTED USES. During the entire Term, the Lessee shall use
the Leased Property, or permit the Leased Property to be used, only for
the Primary Intended Use and the Other Permitted Uses. 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 be 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 of
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.
7.3 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 and any other Acceptable Licensed Operator, at their sole cost and
expense, shall 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/or Other
Permitted Uses, 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.
7.4 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 any Manager or any change in the
ownership or control
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of any Manager except as otherwise permitted by the provisions of Sections
16.1(h)(vi) and 16.1(i), (B) 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 Manager thereunder),
(C) any assignment by any Manager of its interest under any Management Agreement
or (D) any material amendment of any 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.
Notwithstanding the foregoing, in the event that the Lessee enters into any
Management Agreement with an Affiliate of the Lessee, the Lessor shall consent
to the execution and delivery of such Management Agreement, provided, that,
concurrently with the execution and delivery of such Management Agreement, the
Affiliated Party Subordination Agreement and the Environmental Indemnity
Agreement are amended so as to add as a party thereto the applicable Affiliate
of the Lessee that is to be the Manager (so that, among other things, the
payments to be made under such Management Agreement are fully subordinated to
the Lease Obligations).
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.
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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). 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 of, or during, the Term and thereafter until the
Lessee surrenders the Leased Property in the manner required by this
Lease. The Lessor understands that the Facility will incur reasonable,
normal wear and tear during the Term of this Lease and agrees that the
Lessee shall not be obligated to repair or replace every incidence of
reasonable and normal wear and tear. However, nothing herein shall relieve
the Lessee of its obligation to maintain the Leased Property and all
private roadways, sidewalks and curbs appurtenant thereto which are under
the Lessee's control in good order and repair. And further, in no event
shall such wear and tear present any condition which may be harmful to
residents or other occupants of the Leased Property or which prevents the
Leased Property from being operated for the Primary Intended Use in
accordance with the provisions of 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 and
the Other Permitted Uses. 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 and the
Other Permitted Uses. To the extent that any of the repairs, replacements,
renovations, alterations or modifications required by the terms of this
Section 8.1 constitute Material Structural Work, 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, and shall perform
the same in accordance with the provisions of this Lease
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upon receipt of such approval. 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 (except to the extent of any damage caused thereto as a
result of the gross negligence or wilful misconduct of the Lessor or the
Lessor's employees, agents or contractors), 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 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.
8.1.4 LESSEE'S OBLIGATION TO PERFORM UPGRADE RENOVATIONS. Without
limiting the Lessee's obligations to maintain the Leased Property under
this Lease, within thirty (30) days after the end of each Lease Year
commencing with the end of the fourth (4th) Lease Year, the Lessee shall
provide the Lessor with evidence reasonably satisfactory to the Lessor
that the Lessee has in each and every consecutive thirty-six (36) month
period commencing with such fourth (4th) Lease Year spent an average
annual amount on Upgrade Renovations (collectively, the "Annual Facility
Upgrade Expenditure") equal to $200.00 per living unit
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within the Facility (as such per living unit amount shall be adjusted
annually at the beginning of each Lease Year (commencing with the second
(2nd) Lease Year) by an amount equal to the product of (i) $200.00
multiplied by (ii) the Consumer Price Adjustment Factor). The term
"Upgrade Renovations" is defined to mean upgrades or improvements to the
Leased Property which have the effect of maintaining or improving the
competitive position of the Leased Property in its marketplace; and
Upgrade Expenditures shall not include normal janitorial, cleaning and
maintenance activities. Non-exclusive examples of Upgrade Renovations
include new or replacement wallpaper, tiles, window coverings, lighting
fixtures, painting, upgraded landscaping, carpeting, architectural
adornments, common areas amenities and the like. It is expressly
understood that capital improvements or repairs (such as but not limited
to repairs or replacements to the structural elements of the walls,
parking area, or the roof or to the electrical, plumbing, HVAC or other
mechanical or structural systems in the Leased Property) shall not be
considered Upgrade Renovations. In the event that during a given Lease
Year Upgrade Renovations are not necessary (which necessity shall be
determined in the Lessee's reasonable discretion) and/or the full amount
of the respective Annual Facility Upgrade Expenditure is not made for the
Facility for whatever reason, the Lessee shall be required to show
evidence that a reserve fund has been established with the balance of the
unexpended Annual Facility Upgrade Expenditure to be used solely for
Upgrade Renovations in future Lease Years or as otherwise requested by the
Lessor. If the Lessee fails in each and every consecutive thirty-six (36)
month period (commencing with the end of the fourth (4th) Lease Year) to
make Upgrade Renovations in an average annual amount equal to the Annual
Facility Upgrade Expenditure or to establish a reserve fund as aforesaid,
the Lessee shall promptly on demand from the Lessor (but in no event
within more than five (5) days) pay to the Lessor the applicable shortfall
in the Annual Facility Upgrade Expenditure over any aforementioned
thirty-six (36) month period, as applicable; and the Lessor may retain
such funds as additional rent hereunder or, in its sole discretion,
provide such funds to the Lessee to perform Upgrade Renovations.
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
and the Other Permitted Uses substantially in the manner and to the extent that
the Leased Improvements were operated prior to the assertion of such
encroachment, violation
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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.
9.2.1 NO LIENS. Subject to Article 15 of this Lease, the Lessee
shall not be permitted to create, nor suffer to exist, any Lien on the
Leased Property in connection with any Capital Addition or Material
Structural Work. NOTICE IS HEREBY GIVEN THAT THE LESSOR IS NOT AND SHALL
NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO THE LESSEE OR TO ANYONE HOLDING ANY PART OF THE LEASED
PROPERTY, AND THAT NO MECHANICS' LIENS, CONSTRUCTION LIENS OR OTHER LIENS
FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE
INTEREST OF THE LESSOR IN AND TO THE LEASED PROPERTY.
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
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indicate the approximate projected cost of constructing such Capital
Addition and the use or uses to which it will be put.
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 thirty (30) 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.
9.2.5 LEGAL REQUIREMENTS; QUALITY OF WORK. All Capital Additions
and/or Material Structural Work shall be performed in full compliance with
all applicable Legal Requirements and shall be performed in a good and
workmanlike manner.
9.3 CAPITAL ADDITIONS 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 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 the 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 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
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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 any 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/or the Other Permitted
Uses 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
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applicable, including the Additional Land in the 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 to 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 percent (100%) 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
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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 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 Sections 9.2.1, 9.2.5 and 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 Sections 9.2.1, 9.2.5 and 9.4. The cost of any such
repair, replacement, alteration, addition, modification or improvement shall be
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 FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00) in any consecutive twelve (12) month period, 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.
9.6 PERMITTED WORK. Notwithstanding Section 9.1 above, the Lessee shall
have the right to perform Permitted Work (as defined below) without the Lessor's
prior approval or consent as long as the Lessee gives to the Lessor prior notice
that the Lessee is undertaking such Permitted Work and provides the Lessor with
reasonably detailed plans and specifications describing the work to be done.
"Permitted Work" shall mean work to the Leased Improvements which will not
affect any of the structural elements of the Leased Improvements and which, in
the aggregate, costs less than FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00)
during any consecutive twelve (12) month period. Any work to the Facility,
regardless of cost, which (A) will affect any structural element of any of the
Leased Improvements and (B) is not otherwise subject to an approval of the
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Lessor pursuant to any other provision of this Lease, shall still require the
prior written consent of the Lessor, which consent may be withheld by the Lessor
in its sole and absolute discretion.
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 State of Delaware. 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. As of the date of this Lease,
the Lessee does not have any Subsidiaries and the Lessee is not a member
of any partnership or joint venture (except for each of the limited
partnerships which have been created with the Lessor's approval to be the
sublessees of the facilities known as Clare Bridge of Fort Xxxxx, Florida
and Clare Bridge of Tampa, Florida, and Clare Bridge of Jacksonville,
Florida, respectively). Attached hereto as EXHIBIT C is a true and correct
list of all of the shareholders of the Lessee and their respective
ownership interests in the Lessee.
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 the Lessee and any other
Acceptable Licensed Operator (other than the Guarantor or Current Manager,
if other than the Guarantor) shall be, engaged in no business, trade or
activity other than the operation of the Leased Property for the Primary
Intended Use and the Other Permitted Uses, and/or the lease and operation
of other assisted living facilities and/or Alzheimer's dementia care
facilities where the Lessor or some other Meditrust Entity is the owner,
lessor or holder of a first priority fee mortgage on such other facility.
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
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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,
or except as otherwise expressly contemplated in any of the Lease
Documents, 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) and
the first priority of any Liens granted under the Lease Documents, except
the filing of the Financing Statements.
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.
10.1.7 NO BURDENSOME AGREEMENTS. No member of the Leasing Group 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 operation of the Leased Property for
its Primary Intended Use or any Other Permitted Use.
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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
of the Lessee and the Guarantor, taken as a whole:
(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 in excess of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00).
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 the Guarantor (or any of its
Affiliates) or any Affiliate of the Lessee that is not fully subordinated
to the Lease Obligations pursuant to the Affiliated Party Subordination
Agreement.
10.1.12 TAXES CURRENT. Each member of the Leasing Group (A) has
filed all federal, state and local tax returns which are required to be
filed and as to which extensions are not currently in effect and (B) has
paid all taxes, assessments, impositions, fees and other governmental
charges (including interest and penalties) (I) 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 and
(II) for which non-payment could result in assessment of a penalty against
(1) such member of the Leasing Group other than the Guarantor in excess of
ONE THOUSAND AND NO/100 DOLLARS ($1,000.00) or (2) the Guarantor in excess
of FIVE THOUSAND AND NO/100 DOLLARS ($5,000.00). 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.
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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
and for the periods covered thereby, having been prepared in accordance
with GAAP and such financial statements disclosed all material
liabilities. 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) There is no 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 the Lessee or the Guarantor 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 the Lessee or the
Guarantor to carry on its operations as presently conducted or proposed to
be conducted or which may materially adversely impact reimbursement to the
Lessee 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
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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, if any, 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 the Leased Property. No claims or
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) If applicable, the Lessee has delivered or caused to be
delivered to the Lessor true and correct copies of all licenses,
inspection surveys 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 which could have a material adverse effect on the Leased
Property or the Lessee. Without limiting the foregoing, the Acceptable
Licensed Operator is or will become the licensed operator of the Facility,
the Acceptable Licensed Operator has or will obtain all Permits that are
necessary to operate the Leased Property in accordance with its Primary
Intended Use and the Other Permitted Uses, if any, and all such Permits
are in full force and effect to the extent issued prior to the date
hereof.
(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 requiring conformity to any
of the Legal Requirements and which could have a material adverse effect
on the Leased Property or the Lessee.
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.
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(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, subject to the Permitted Exceptions;
(B) There is no Condemnation or similar proceeding pending with
respect to 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 Collateral or the Leased Property has been
damaged by any fire or other casualty. The Leased Improvements, Fixtures
and Tangible Personal Property are in good operating condition and repair,
ordinary wear and tear excepted, free from known defects in construction
or design;
(D) 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 or the Collateral;
(E) 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;
(F) 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;
(G) 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
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(H) Except as may be shown on the survey of the Leased Property that
has been reviewed and approved by the Lessor, 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.
10.1.18 THIRD PARTY PAYOR AGREEMENTS.
(A) The Lessee, the Acceptable Licensed Operator (as applicable) 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 Lessee's good
faith exercise of commercially reasonable business judgment.
(B) Attached hereto as EXHIBIT D 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 E.
10.1.19 RATE LIMITATIONS. Except as disclosed on EXHIBIT F, 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 G, there are no
Contracts, Permits or Legal Requirements which require that a percentage
of units or slots in any program at the Facility be reserved for Medicaid
or Medicare eligible patients or that the
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Facility provide a certain amount of welfare, free or charity care or
discounted or government assisted resident 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 State which may
materially adversely affect rates at the Facility (or any program operated
in conjunction with 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. The Lessor
hereby represents and warrants to the Lessee that no Meditrust Entity 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, to
the best knowledge of the Lessee, any of their respective Affiliates
(other than individuals who are not acting on behalf of any such
non-individual 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
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(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.
(A) 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 prevent all statements contained
herein and therein from being misleading.
(B) 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
Meditrust Investment will be used to purchase or carry any margin security
or to extend credit to others for the purpose of purchasing or carrying
any margin security or in any other manner which would involve a violation
of any of the regulations of the Board of Governors of the Federal Reserve
System. 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 000 X. Xxxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxx 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
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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 other than the Current Management
Agreement.
10.1.32 FISCAL YEAR. The fiscal year of each of the Lessee and the
Guarantor is the Fiscal Year.
10.1.33 RATES. The Lessee or the Facility, as the case may be,
currently charge those rates for private pay residents set forth on EXHIBIT H,
all of which rates are legal, valid and enforceable rates.
10.2 CONTINUING EFFECT OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute continuing representations and warranties which shall
remain true, correct and complete throughout the Term. 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, 10.1.25(b), 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.
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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, (Y) the
Guarantor and (Z) any other Acceptable Licensed Operator for the
preceding fiscal year, certified and audited (only with respect to
the Guarantor) by, and with the unqualified opinion of, independent
certified public accountants from a nationally recognized public
accounting firm (it being hereby acknowledged that KPMG Peat Marwick
is acceptable for this purpose) and certified as true and correct by
the Lessee, the Guarantor or the applicable Acceptable Licensed
Operator, as the case may be (and, without limiting anything else
contained herein, the Consolidated Financials for the Lessee and for
any other Acceptable Licensed Operator shall include a detailed
income statement for Leased Property as of the last day of such
fiscal year and an unaudited 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, the
Guarantor and any other Acceptable Licensed Operator, stating
whether, to the best of the signer's knowledge and belief after
making due inquiry, the Lessee, the Guarantor or such Acceptable
Licensed Operator, 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,
the Guarantor or any other Acceptable Licensed Operator, as the case
may be, regarding the existence of any reportable conditions or
material weaknesses and (IV) a statement certified as true and
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correct by the Lessee setting forth any and all Subleases (excluding
Resident Agreements) 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 and (V) evidence satisfactory to the Lessor that the Lessee
has fulfilled its obligation to make the Annual Facility Upgrade
Expenditure in accordance with the provisions of Section 8.1.4.
Notwithstanding any provisions of this Section 11.2.1(a) to the
contrary, the Lessee may provide the Lessor with Consolidated
Financials covering each of the Lessee, the Guarantor and any other
Acceptable Licensed Operator in accordance with the aforementioned
provisions; provided, however, the Lessee shall provide the Lessor
with a separate detailed balance sheet and an unaudited statement of
earnings for the Leased Property.
(B) MONTHLY STATEMENTS OF LESSEE. Within thirty (30) days
after the end of each calendar month during the pendency of this
Lease, (I) an unaudited, detailed month and year to date income and
expense statement for the Leased Property which shall include a
comparison to corresponding budget figures, occupancy statistics
(including the actual number of residents, the number of units
available and total patient days for such month) and resident mix
breakdowns (for each resident day during such month classifying
residents by the type of care required and source of payment) and
(II) an express written calculation showing the compliance or
non-compliance, as the case may be, with the specific financial
covenants set forth in Section 11.3 for the applicable period,
including, with respect to the calculation of the Lessee's Rent
Coverage Ratio, a schedule substantially in the form attached hereto
as EXHIBIT I (which calculation with respect to the Lessee's Rent
Coverage Ratio shall be provided only within thirty (30) days after
the end of each Fiscal Year).
(C) [INTENTIONALLY OMITTED].
(D) QUARTERLY STATEMENTS OF THE GUARANTOR. Within forty-five
(45) days after the end of each Fiscal Quarter ending March 31, June
30 and September 30 respectively, all 10Q reports required to be
filed with the Securities and Exchange Commission for the Guarantor,
certified as true and correct by the Guarantor.
(E) 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.
(F) CONTRACT NOTICES. Promptly after the receipt thereof, true
and complete copies of any notices, consents, terminations or
statements of any kind or
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nature relating to any of the Contracts (involving payments in the
aggregate in excess of $100,000 per annum) other than those issued
in the ordinary course of business.
(G) 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 other Acceptable Licensed Operator 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
Acceptable Licensed Operator'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 Acceptable Licensed Operator.
(H) 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 other
Acceptable Licensed Operator to any Governmental Authority,
Accreditation Body or any Third Party Payor with respect to the
Leased Property.
(I) OTHER INFORMATION. With reasonable promptness, such other
information as 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.
(J) DEFAULT CONDITIONS. As soon as possible, and in any event
within five (5) Business Days after the occurrence of any Lease
Default, or any event or circumstance which, with the 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.
(K) 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
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the Leasing Group to perform any of its obligations under any of the
Lease Documents or (II) the Leased Property.
(L) 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.
(M) 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 FIFTY THOUSAND AND NO/100
DOLLARS ($50,000.00) occurring within any twelve
(12) month period (regardless of whether the same
is covered by insurance);
(III) any material controversy involving the Lessee or
any other Acceptable Licensed Operator;
(IV) any controversy that calls into question the
eligibility of the Lessee, any other Acceptable
Licensed Operator or the Facility for the
participation in any Medicaid, Medicare or other
Third Party Payor 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 other Acceptable
Licensed Operator; 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.
(N) INTENTIONALLY OMITTED.
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(O) 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.
(P) PUBLIC INFORMATION. Upon the completion or filing, mailing
or other delivery thereof, complete copies of all financial
statements, reports, notices and proxy statements, if any, sent by
any member of the Leasing Group (which is a publicly held
corporation) to its shareholders and of all reports, if any, filed
by any member of the Leasing Group (which is a publicly held
corporation) with any securities exchange or with the Securities
Exchange Commission.
(Q) ANNUAL BUDGETS. At least thirty (30) days prior to the end
of each Fiscal Year, 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 not disclose any
information received pursuant to the provisions of the Lease Documents to
any competitor of the Lessee and shall afford any such information 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, including, without limitation, a disclosure by such
Person to any competitor of the Lessee) and provided, further, that the
Lessor shall have the unconditional right to (A) disclose any such
information as the Lessor deems necessary or
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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 the Meditrust Entities' lenders or potential lenders. The Lessor
shall not be liable in any way for any subsequent disclosure of such
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 RENT COVERAGE RATIO. The Lessee shall comply with the
provisions of the Agreement Regarding Related Lease Transactions
pertaining to Rent Coverage Ratio.
11.3.2 [INTENTIONALLY OMITTED].
11.3.3 [INTENTIONALLY OMITTED].
11.3.4 [INTENTIONALLY OMITTED].
11.3.5 CURRENT RATIO - GUARANTOR. The Guarantor shall achieve, as of
December 31, 1998, a ratio of Consolidated Current Assets to Consolidated
Current Liabilities equal to or greater than 1.0 to 1 and, as of December
31 of each year thereafter during the Term, shall maintain a ratio of
Consolidated Current Assets to Consolidated Current Liabilities equal to
or greater than 1.0 to 1; provided however that if a Permitted Transaction
(as defined in Section 16.1(h)(vi)) occurs, or if increased ratios are
triggered by a Permitted Merger pursuant to Section 16.1(i), then such
ratios shall increase to 1.0 to 1.0 and 1.2 to 1.0, respectively.
11.3.6 NET WORTH OF GUARANTOR AFTER A PERMITTED TRANSACTION OR
PERMITTED MERGER. From and after the occurrence of a Permitted Transaction
or if triggered by a Permitted Merger pursuant to Section 16.1(i), the
Guarantor shall maintain a "Net Worth"
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(determined in accordance with GAAP) of not less than FIFTY-FIVE MILLION
DOLLARS ($55,000,000.00).
11.3.7 TANGIBLE NET WORTH - GUARANTOR. The Guarantor shall maintain,
at all times, a Tangible Net Worth of not less than FORTY MILLION AND
NO/100 DOLLARS ($40,000,000.00).
11.3.8 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 any Affiliate, provided, that, such Indebtedness is fully
subordinated to the Lease Obligations pursuant to the Affiliated Party
Subordination Agreement, (VI) other Indebtedness of the Lessee in the
aggregate amount not to exceed TWO HUNDRED THOUSAND AND NO/100 DOLLARS
($200,000.00) incurred, for the exclusive use of the Leased Property, on
account of purchase money indebtedness or finance lease arrangements, each
of which shall not exceed the fair market value of the assets or property
acquired or leased and shall not extend to any assets or property other
than those purchased or leased and (VII) purchase money security interests
in equipment and equipment leases which comply with the provisions of
Section 6.1.2.
11.3.9 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 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
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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, at a minimum, all income and expenses
of the Leased Property as a discernable component of such books of
account).
11.4.5 PARTICIPATION IN THIRD PARTY PAYOR PROGRAMS. The Lessee and
any other Acceptable Licensed Operator 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 Lessor agrees that management by the executive
officers listed on EXHIBIT J attached hereto is satisfactory for the
purposes of this provision. The Lessee, any Sublessee and any Manager
shall conduct, in the ordinary course, the operation of the Facility, and
the Lessee and any other Acceptable Licensed Operator (other than the
Guarantor, if applicable) shall not enter into any other business or
venture during the Term or such time as the Lessee or any other Acceptable
Licensed Operator is in possession of the Leased Property, other than the
development, ownership and/or operation of any other health care facility
owned or financed by any Meditrust Entity.
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 the Collateral, including without limitation, all books and
records relating to its business, solely at its Principal Place of
Business and at the Leased Property. The Lessee shall not remove the
Collateral, including, without limitation, any books or records relating
to the Lessee's business from either the Leased Property or the Lessee's
Principal Place of Business.
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11.4.8 SUBORDINATION OF AFFILIATE TRANSACTIONS. Without limiting the
provisions of any other Section of this Lease or the Affiliated Party
Subordination Agreement, any 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 (and shall cause any other Acceptable Licensed
Operator to 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 (A)
any personal property which was purchased or financed by a Meditrust
Entity or which replaces any personal property purchased or financed by a
Meditrust Entity or which is a Fixture or (B) any real property and such
real or personal property 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.
11.4.11 ACCEPTABLE LICENSED OPERATOR. In the event that the Lessee
proposes that any other Acceptable Licensed Operator become the licensed
operator of the Facility, the Lessee shall so advise the Lessor and,
subject to the Lessor's review and approval of any applicable Sublease or
Management Agreement (pursuant to which the proposed Acceptable Licensed
Operator shall operate the Facility), the Lessor shall consent to such
operation of the Facility by the proposed Acceptable Licensed Operator, as
long as, prior to or contemporaneously with the commencement of the
operation of the Facility by such proposed Acceptable Licensed Operator
and without limiting any other terms and conditions of the Lease
Documents, the Lessor receives (A) such evidence as the Lessor may request
evidencing that the proposed Acceptable Licensed Operator has received all
Permits necessary for the operation of the Facility in accordance with its
Primary Intended Use, (B) such documents executed by the proposed
Acceptable Licensed Operator as the Lessor may
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request to maintain and protect the Lessor's security for the Lease
Obligations (including, without limitation, documents in form and
substance substantially similar to the Permits Assignment and Security
Agreement), (C) a copy of the proposed Acceptable Licensed Operator's
articles of incorporation as certified by the Secretary of State of the
state of its incorporation, (D) a certificate of the Secretary of State of
the state of incorporation of the proposed Acceptable Licensed Operator to
the effect that the proposed Acceptable Licensed Operator is in legal
existence and good standing on the records of such Secretary of State as
of the date of such Certificate, (E) a copy of the by-laws of the proposed
Acceptable Licensed Operator as certified by the Secretary of the proposed
Acceptable Licensed Operator, (F) resolutions certified by the Secretary
of the proposed Acceptable Licensed Operator evidencing the execution and
delivery of the documents required under this Section 11.4.11 by the
Lessor and (G) if requested by the Lessor, a due authorization and
enforceability opinion, addressed to the Lessor, in form and substance
reasonably acceptable to the Lessor, rendered by counsel to the Lessee and
the proposed Acceptable Licensed Operator, opining as to the due
authorization, execution, delivery and enforceability of the documents
required under this Section 11.4.11 by the Lessor.
11.4.12 [INTENTIONALLY OMITTED].
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 the applicable provisions of Section 6.1.2
against Tangible Personal Property securing Indebtedness permitted
under Section 11.3.8(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 equals or is less than
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00), individually,
or ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00)
collectively; (IV) without limitation as to amount, the disposition
in the ordinary course of business of any obsolete, worn out or
defective fixtures, furnishings or equipment used in the operation
of the Leased Property provided that the same are replaced with
fixtures, furnishings or equipment of equal or greater utility or
value or the Lessee provides
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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; (VI) agreements
entered into with utility companies creating easements in favor of
such companies as are required to service the Facility, provided,
however, the term of any such agreement shall not extend beyond the
Term and shall be in form reasonably acceptable to the Lessor; and
(VII) subject to the terms of the Pledge Agreement and the
Affiliated Party Subordination Agreement, distributions to the
shareholders of the Lessee;
(B) permit the use of the Facility for any purpose other than
the Primary Intended Use and the Other Permitted Uses;
(C) subject to the terms of Section 11.4.11, permit any Person
other than the Lessee to be the Licensed Operator of the Facility;
or
(D) 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 NON-COMPETITION. The Lessee acknowledges that upon and after
any termination of this Lease, any competition by any member of the
Leasing Group with any subsequent owner or subsequent lessee of the Leased
Property (the "Purchaser") would cause irreparable harm to the Lessor and
any such Purchaser. To induce the Lessor to enter into
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this Lease, the Lessee agrees that, from and after the end of the seventh
(7th) Lease Year and thereafter until the later of (A) the expiration of
this Lease or (B) the fifth (5th) anniversary of the termination of this
Lease on account of a Lease Default, without the prior written consent of
the Lessor (which consent shall not be unreasonably withheld or delayed),
no member of the Leasing Group nor any Subsidiary of any member of the
Leasing Group (collectively, the "Limited Parties") shall be involved in
any capacity in or lend any of their names to or engage in any capacity in
any assisted living facility (or other facility operated for any use
included within the definition of the Primary Intended Use), center, unit
or program (or in any Person engaged in any such activity or any related
activity competitive therewith), excluding however any of the facilities
described on Schedule 11.5 attached hereto (collectively, the "Excluded
Facilities"), whether such competitive activity (the "Competitive
Activity") shall be as an officer, director, owner, employee, agent,
advisor, independent contractor, developer, lender, sponsor, venture
capitalist, administrator, manager, investor, partner, joint venturer,
consultant or other participant in any capacity whatsoever with respect to
an assisted living facility (or other facility operated for any use
included within the definition of Primary Intended Use), center, unit or
program located within a seven (7) mile radius of the Leased Property.
The Lessee hereby acknowledges and agrees that none of the time
span, scope or area covered by the foregoing restrictive covenants is or
are unreasonable and that it is the specific intent of the Lessee that
each and all of the restrictive covenants set forth hereinabove shall be
valid and enforceable as specifically set forth herein. The Lessee further
agrees that these restrictions are special, unique, extraordinary and
reasonably necessary for the protection of the Lessor and any Purchaser
and that the violation of any such covenant by any of the Limited Parties
would cause irreparable damage to the Lessor and any Purchaser for which a
legal remedy alone would not be sufficient to fully protect such parties.
Therefore, in addition to and without limiting any other remedies
available at law or hereunder, in the event that any of the Limited
Parties breaches any of the restrictive covenants hereunder or shall
threaten breach of any of such covenants, then the Lessor and any
Purchaser shall be entitled to obtain equitable remedies, including
specific performance and injunctive relief, to prevent or otherwise
restrain a breach of this Section 11.5.4 (without the necessity of posting
a bond) and, unless the Lessee prevails, to recover any and all costs and
expenses (including, without limitation, attorneys' fees and expenses and
court costs) reasonably incurred in enforcing the provisions of this
Section 11.5.4. The existence of any claim or cause of action of any of
the Limited Parties or any member of the Leasing Group against the Lessor
or any Purchaser, whether predicated on this Lease or otherwise, shall not
constitute a defense to the enforcement by the Lessor or any Purchaser of
the foregoing restrictive covenants and the Limited Parties shall not
defend on the basis that there is an adequate remedy at law.
Without limiting any other provision of this Lease, the parties
hereto acknowledge that the foregoing restrictive covenants are severable
and separate. If at any time any of the
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foregoing restrictive covenants shall be deemed invalid or unenforceable
by a court having jurisdiction over this Lease, by reason of being vague
or unreasonable as to duration, or geographic scope or scope of activities
restricted, or for any other reason, such covenants shall be considered
divisible as to such portion and such covenants shall be immediately
amended and reformed to include only such covenants as are deemed
reasonable and enforceable by the court having jurisdiction over this
Lease to the full duration, geographic scope and scope of restrictive
activities deemed reasonable and thus enforceable by said court; and the
parties agree that such covenants as so amended and reformed, shall be
valid and binding as through the invalid or unenforceable portion has not
been included therein.
The provisions of this Section 11.5.4 shall survive the termination
of the Lease and any satisfaction of the Lease Obligations in connection
therewith or subsequent thereto. The parties hereto acknowledge and agree
that any Purchaser may enforce the provisions of this Section 11.5.4 as a
third party beneficiary.
11.5.5 NO DEFAULT. The Lessee shall not commit any default or breach
under any of the Lease Documents.
11.5.6 RESTRICTIONS RELATING TO THE GUARANTOR. If, at any time
during the Term, the Tangible Net Worth of the Guarantor is less than
FORTY MILLION AND NO/100 ($40,000,000.00), the Guarantor 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,
convey, assign, donate, sell, mortgage or pledge any real or personal
property or take any other action which would have a materially adverse
effect upon the Tangible Net Worth or general financial condition of the
Guarantor.
11.5.7 [INTENTIONALLY OMITTED].
11.5.8 ERISA. 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,
which consent shall not be unreasonably withheld.
11.5.9 FORGIVENESS OF INDEBTEDNESS. The Lessee will not waive, or
permit any Sublessee or Manager which is an Affiliate of the Lessee or the
Guarantor 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, unless the same is allowed to be
done by GAAP in the normal course of business.
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11.5.11 CHANGES IN FISCAL YEAR AND ACCOUNTING PROCEDURES. The Lessee
may (A) change its fiscal year or capital structure or (B) change, alter,
amend or modify, but only 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 or (C) permit any of its Subsidiaries to change its fiscal year
provided that (I) the Lessee shall have notified the Lessor of any such
change not less than thirty (30) days prior to the proposed effective date
of such change and shall have promptly furnished to the Lessor all such
financial information as the Lessor may have reasonably requested in order
to determine the impact of such change on the Lessee's financial
statements, (II) no such change shall be permitted if its effect would be
to enable the Lessee to satisfy any covenant contained in this Lease
which, absent such change, would not have been satisfied and (III) the
Lessee shall have entered into any amendment to this Lease which the
Lessor shall have reasonably requested in order to maintain the intended
effect of the covenants contained in this Lease.
11.5.12 [INTENTIONALLY OMITTED]
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 FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00). 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 construction, such insurance
shall be on a builder's-risk, completed value, non-reporting form
with permission to occupy;
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(B) flood insurance (if the Leased Property or any portion
thereof is situated 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) business interruption and/or rent loss insurance in an
amount equal to the annual Base Rent and Additional Rent due
hereunder plus the aggregate sum of the Impositions relating to the
Leased Property due and payable during one year;
(F) comprehensive general public liability insurance including
coverages commonly found in the Broad Form Commercial Liability
Endorsements with amounts not less than FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00) per occurrence with respect to bodily injury
and death and THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) for
property damage and with all limits based solely upon occurrences at
the Leased Property without any other impairment;
(G) professional liability insurance in an amount not less
than TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) for each
medical incident;
(H) 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 (1%) of the full replacement cost thereof;
(I) 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 AND NO/100 DOLLARS ($100,000.00)
for injury by accident, ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) per employee for disease and FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($500,000.00) disease policy limit;
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(J) subsidence insurance (if deemed necessary by the Lessor)
in limits acceptable to the Lessor; and
(K) 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 (other
than a Meditrust Entity); provided, however, that the cost of any
additional insurance required by any Fee Mortgagee shall be borne by
the Lessor.
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- 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 an additional named insured
as its interests may appear. To the extent appropriate, the same policies
may be used to insure the Lessee's various interests in the Leased
Property and to provide liability coverage to the Lessee as long as
combining the interests of the Lessor and the Lessee in a single policy in
no way impairs or diminishes the Lessor's rights in such policies. 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; provided, however, that the cost of any additional
insurance required by any Fee Mortgagee shall be borne by the
Lessor.
(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; provided, however,
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that the cost of any additional insurance required by any Fee
Mortgagee shall be borne by the Lessor.
(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 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, if the Lessee
fails to obtain any insurance coverage required under this Lease or after
demand by the Lessor, 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, 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, if 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
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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 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 wilful 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 additional
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 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),
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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.
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, excluding Workers'
Compensation and Employers Liability Insurance, shall continue to be
maintained for a period of fifteen (15) days following such termination;
provided, however, that the Lessee shall not be obligated to maintain
commercial general liability and professional liability insurance for such
fifteen (15) day period to the extent that any such insurance is
unavailable from the then current insurer as a result of any such
termination. The provisions of this Section 12.1.10 shall survive any
termination of this Lease.
12.2 INDEMNITY.
12.2.1 INDEMNIFICATION. Except with respect to the gross negligence
or wilful 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 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 from 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 (unless such member of the Leasing Group
prevails in such claim against one of the Indemnified Parties) 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
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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 the Meditrust Entities, any Fee Mortgagee
which is an Affiliate of Meditrust and their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners and owners.
12.2.3 DEFENSE OF ACTIONS BY THE LESSEE. The Lessee's obligation to
defend, set forth in Section 12.2.1 above, may be satisfied by the defense
of such actions by counsel retained by any insurance carrier having an
obligation to defend any such action provided the counsel is acceptable to
the Lessor in its reasonable discretion. Further, if the insurance carrier
having the obligation to defend such action makes available insurance
proceeds for the payment of defense rather than retaining its own defense
counsel, then such insurance proceeds shall be made available to the
Lessee to defray the costs of such defense.
12.2.4 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, any Affiliate of the Lessor or any of their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners or owners on or about the Leased Property or in
regards to the Lease; provided, however, that in no event shall the
Lessor, any Affiliate of the Lessor or any of their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners or owners 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.
12.2.5 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
foreclosures, levies or executions of Liens (other than those
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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 12.2.4, 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 the Other Permitted Uses and in
compliance with Legal Requirements. All Work shall be performed and
completed in accordance with all Legal Requirements and the other
requirements of this Lease within one hundred eighty (180) 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 FIFTY THOUSAND
AND NO/100 DOLLARS ($50,000.00) or in any structural damage to the Leased
Property, regardless of the extent of such structural damage, prior to
commencing the Work, 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 or delayed. 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,
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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
and the Other Permitted Uses;
(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:
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(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 or
delayed) 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 (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 stating the
progress of the Work up to the date of said certificate;
(III) that the sum then requested to be withdrawn, plus all
sums previously withdrawn, does not exceed the cost of
the Work insofar as actually accomplished up to the date
of such certificate;
(IV) that the remainder of the funds held by 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
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the Work which, if unpaid, might become the basis of a
vendor's, mechanic's, laborer's or materialman's
statutory or other similar Lien upon the Leased
Property.
(C) 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 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 or licensed architect or engineer (satisfactory to the
Lessor both as to counsel, architect or engineer and as to the form
of opinion) prior to the first advance opining that all necessary
Permits for the repair, replacement and/or restoration of the 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.
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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 (except 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 certificate(s) to be due, subject to
a retention of ten percent (10%) as to all hard costs of the Work (the
"Retainage"). It is understood that the Retainage is intended to provide a
contingency fund to assure 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 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 the Other
Permitted Uses and by the appropriate Board of Fire
Underwriters or other similar bodies acting in and for the
locality in which the Leased Property is situated; provided,
that within thirty (30) days prior to the expiration of any
temporary certificate of occupancy, 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
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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 described in this paragraph,
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;
(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
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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 and the Other
Permitted Uses within two hundred and seventy (270) days from the
occurrence of the damage or destruction in substantially the manner as
immediately prior to such damage or destruction or (B) such Casualty
occurs during the last twenty-four (24) months of the Term and would
reasonably require more than nine (9) months to obtain all Permits and
complete the Work, then the Lessee may either (I) acquire the Leased
Property from the Lessor for a purchase price equal to the greater of (X)
the Meditrust Investment or (Y) the Fair Market Value of the Leased
Property minus the Fair Market Added Value, with the Fair Market Value and
the Fair Market Added Value to be determined as of the day immediately
prior to such Casualty and prior to any other Casualty which has not been
fully repaired, restored or replaced, in which event, 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 13.2.2)
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) equals (3) the
greater of the Meditrust Investment or the Fair Market Value of the Leased
Property minus the Fair Market Added Value, with the Fair Market Value and
the Fair Market 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
terms and conditions of this Lease and normal and customary practices of
the State and at a time satisfactory to the Lessor. If such termination
becomes effective, the Lessor shall assign to the Lessee any outstanding
insurance claims.
13.2.3 LESSEE RESPONSIBLE FOR SHORT-FALL. If the cost of the Work
exceeds the amount of proceeds received by 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
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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. The obligation to pay Rent shall not xxxxx as a
result of any Casualty. However, any insurance proceeds received by the Lessor
on account of rent loss insurance carried by the Lessee shall be credited
against Rent and any other amounts due hereunder or owed during the period of
restoration on account of such Casualty as provided in Section 13.8(b) below
provided no fact or circumstance exists which constitutes, or with notice, or
passage of time, or both, would constitute a Lease Default.
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, any right of first refusal 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 to the rental
loss and/or business interruption for the preceding month minus an amount
equal 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
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Proceeds shall be applied to any Rent then due, and, to the extent
sufficient therefor, an amount equal to Base Rent, Additional Rent,
Impositions and insurance premiums payable for the next twelve (12)
months, as reasonably projected 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;
(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; and
(D) if the Casualty causing such business interruption of the Lessee
is the result of the gross negligence or willful misconduct of the Lessor
or any of Lessor's employees, agents or contractors, then the proceeds of
business interruption insurance (as distinguished from proceeds of rent
loss insurance) shall be paid over 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. Within fifteen (15) Business Days of 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
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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 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
Meditrust Investment or (Y) the Fair Market Value of the Leased Property minus
the Fair Market Added Value, with the Fair Market Value of the Leased Property
and the Fair Market Added Value to be determined as of the day immediately prior
to such partial or temporary Taking and (II) in accordance with the terms and
conditions set forth in Section 24.14; in which event, this Lease shall
terminate upon payment of such purchase price and the consummation of such
acquisition. Notwithstanding the foregoing, (1) if the Taking occurs at a time
when there is less than two (2) years remaining on the Term of this Lease and
the Lessee has elected to restore the Leased Property under clause (a) above,
then, unless the Lessee extends the Term pursuant to the provisions hereof, the
Lessor may overrule the Lessee's election and terminate this Lease as of the
date when the Lessee is required to surrender possession of the portion of the
Leased Property so taken and (2) if the Taking occurs at a time when there are
two (2) years or more remaining on the Term and the Lessee elects to acquire the
Leased Property under clause (b) above, then the Lessor may overrule the
Lessee's election and 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 licensed 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 3.8, 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
14.3, 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 3.8.
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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. However, if the Lessor
has recovered the entire Meditrust Investment from such Award then the Lessee
shall be entitled to prosecute a claim against the Condemnor for the value of
the Lessee's leasehold estate under this Lease (although in no event shall the
Lessee be entitled to seek or recover any portion of the leasehold value from
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 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 Meditrust Investment.
ARTICLE 15
PERMITTED CONTESTS
15.1 LESSEE'S RIGHT TO CONTEST. To the extent of the express references
made to this Article 15 in other Sections of this Lease, 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
and/or any of the Other Permitted Uses or any Lien or claim relating to the
Leased Property not otherwise permitted by this Lease; 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
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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 AND NO/100 DOLLARS ($10,000.00), 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 (or letter of credit in form and substance acceptable to the
Lender) 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.
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;
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(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 (w) 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, (I) 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 one hundred eighty
(180) days after the giving of such notice by the Lessor to the Lessee,
and (IV) such Failure to Perform does not materially impair the value of,
or the Lessor's rights with respect to, the Leased Property or otherwise
materially impair the Collateral or the Lessor's security interest
therein;
(C) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any,
under any of the other Lease Documents;
(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 and the breach of any such representation or
warranty is not cured by the Lessee after notice from the Lessor in the
same time periods specified for a cure under Section 16.1(b) above;
(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, and except as permitted in subsection
(h)(vi) or subsection (i) below:
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I. there shall be a change in the Person or Persons presently in
control of any member of the Leasing Group (other than changes
in stock ownership of the Guarantor or changes in the officers
or directors of either the Lessee or the Guarantor) (whether
by operation of law or otherwise);
II. any member of the Leasing Group (other than changes in the
stock ownership of the Guarantor), 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 operation of law or otherwise), if
such member of the Leasing Group shall be a partnership, joint
venture, syndicate or other group;
III. any of the shares of the issued and outstanding capital stock
of any member of the Leasing Group (other than changes of
stock ownership of the Guarantor) shall be, on any one or more
occasions, directly or indirectly, sold, assigned,
hypothecated or otherwise transferred (whether by operation of
law or otherwise), if such member of the Leasing Group shall
be a corporation;
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;
V. except as otherwise expressly permitted in accordance with the
provisions of Section 11.4.11, if any Person other than the
Lessee is the licensed operator of the Facility; or
VI. more than fifty percent (50%), in the aggregate, of the shares
of the issued and outstanding capital stock of the Guarantor
are held by a single Person or two (2) or more Affiliates
(collectively, an "Acquiror"), except in a Permitted
Transaction (defined below). If immediately after the date on
which the Acquiror acquire(s) more than fifty percent (50%) of
such stock, the "Net Worth" (defined as an amount determined
in accordance with GAAP) of the Guarantor is equal to or
greater than FIFTY-FIVE MILLION DOLLARS ($55,000,000.00), then
such acquisition shall be deemed to be a "Permitted
Transaction." However, in the event that a Permitted
Transaction occurs, then the higher ratios specified in
Section 11.3.5 and the Net Worth covenant specified in Section
11.3.6 shall both become operative and effective;
(I) the death, incapacity, merger, liquidation, dissolution or
termination of existence of any member of the Leasing Group (except (A) in
the case of a merger or consolidation of some other Person with the
Guarantor, which shall be a "Permitted Merger" or (B) in the case of a
Permitted Transaction); provided however, if the Persons who were
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the shareholders of the Guarantor immediately prior to the Permitted
Merger hold in the aggregate less than 50% of the outstanding voting stock
of the surviving corporation which results from the Permitted Merger, then
(I) the higher ratios specified in Section 11.3.5 and the Net Worth
covenant specified in Section 11.3.6 shall both become operative and
effective, and (II) if Alternative Living Services, Inc. is not the
surviving corporation which results from such Permitted Merger, the new
surviving corporation will affirm in writing its obligations under the
Guaranty;
(J) except as otherwise permitted pursuant to Article 15 or Section
19.2 hereof, 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 indirectly, mortgaged, encumbered
(by any voluntary or involuntary Lien other than the Permitted
Encumbrances), subleased, sold, assigned, hypothecated or otherwise
transferred (whether by operation of law or otherwise);
(K) 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 FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00);
(L) the occurrence of a Related Party Default;
(M) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any,
under any credit agreement, loan agreement or other agreement establishing
a major line of credit (or any documents executed in connection with such
lines of credit) on behalf of any member of the Leasing Group whether or
not the applicable creditor has elected to declare the indebtedness due
and payable under such line of credit or to exercise any other right or
remedy available to it. For the purposes of this provision, a major line
of credit shall, with respect to any member of the Leasing Group other
than the Guarantor, mean and include any line of credit established in an
amount equal to or greater than ONE MILLION AND NO/100 DOLLARS
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($1,000,000.00) and, with respect to the Guarantor mean and include any
line of credit established in an amount equal to or greater than FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00);
(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, except that if it is
not possible to resume operation of the Facility within thirty (30) days
then the Lessee shall have up to ninety (90) days to reopen the Facility
subject to the terms of subparts (i) and (ii) of Section 16.1(b) above (a
"Failure to Operate");
(O) if one or more judgments against the Lessee or any other
Acceptable Licensed Operator or attachments against the Lessee's interest
or any other Acceptable Licensed Operator's interest in the Leased
Property, which in the aggregate exceed ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00) or which may materially and adversely interfere with
the operation of the Facility, remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed 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 AND NO/100 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 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 effect on the ability of any member of the Leasing Group
to operate the Facility;
(Q) any failure to comply with the Legal Requirements applicable to
any Third Party Payor Program in which the Lessee or the Applicable
Licensed Operator elects to participate, continuing for thirty (30) days
after the giving of notice by the Lessor to the Lessee specifying the
nature of any such failure (except as to matters not susceptible to cure
within thirty (30) days, provided that with respect to such matters, (I)
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 one hundred eighty (180) days after the giving of such
notice by the Lessor to the Lessee, and (IV) such failure to comply does
not materially impair the value of, or the Lessor's rights with respect
to, the Leased Property or otherwise materially impair the Collateral or
the Lessor's security interest therein), unless the Lessee elects to no
longer participate in any such Third Party Payor Program and sends written
notice of such election to the Lessor;
(R) any failure to comply with the Legal Requirements applicable to
any Accreditation Body under whose jurisdiction the Lessee or any other
Acceptable Licensed
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Operator elects to subject itself, continuing for thirty (30) days after
the giving of notice by the Lessor to the Lessee specifying the nature of
any such failure (except as to matters not susceptible to cure within
thirty (30) days, provided that with respect to such matters, (I) 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
one hundred eighty (180) days after the giving of such notice by the
Lessor to the Lessee, and (IV) such failure to comply does not materially
impair the value of, or the Lessor's rights with respect to, the Leased
Property or otherwise materially impair the Collateral or the Lessor's
security interest therein), unless the Lessee elects to no longer be
subject to the jurisdiction of any such Accreditation Body and sends
written notice of such election to the Lessor;
(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, or the failure to obtain and/or renew, 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;
(V) the entry of an order by a court with jurisdiction over the
Leased Property to close the Facility; or
(W) the entry of an order 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
where such order would have a material adverse effect in the Lessor's
reasonable judgment on the continued operation of the Facility (it being
understood, however, that if there are more than three (3) such orders at
any time during the term of this Lease, then, ipso facto, the Lessor shall
be entitled to deem there to be a material adverse effect on the operation
of 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. In the event of such termination and upon the expiration of the time
fixed in such notice, the Term shall terminate (but only if the Lessor shall
have specifically elected
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by a written notice to so terminate the Lease) and all rights of the Lessee
under this Lease shall cease as though that date was the date originally set as
the Expiration Date. 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 termination of this Lease or
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 release or reduce the
Lessee's obligations under this Lease or the other Lease Documents (which shall
expressly survive any such termination, repossession or other act), 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 patients 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 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
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Lessor, notwithstanding reasonable good faith efforts, to relet the Leased
Property, (D) the 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 by 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 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.
In the event the Lessor elects to regain possession of the Leased Property
by a forcible detainer proceeding, the Lessee hereby specifically waives any
statutory notice which may be required prior to any such proceeding, and agrees
that the Lessor's execution of this Lease is, in part, consideration for this
waiver. Except as otherwise set forth herein, the Lessee further waives any
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demand for Rent, notice of termination and any notice to quit required pursuant
to statutes of the State or otherwise and agrees that the Lessor's execution of
this Lease is, in part, consideration for these waivers.
All claims for damages by reason of re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, as are all
claims for damages by reason of any distress warrant, forcible detainer
proceedings, sequestration proceedings or other legal process. The Lessee agrees
that any re-entry by the Lessor may be pursuant to judgment obtained in forcible
detainer proceedings or other legal proceedings or without the necessity for any
legal proceedings, as the Lessor may elect, and the Lessor shall not be liable
in trespass or otherwise.
The Lessee shall not interpose any counterclaim of any kind in any action
or proceeding commenced by the Lessor to recover possession of the Leased
Property.
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.
16.7 LESSOR'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,
may be necessary or appropriate therefor. 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,
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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 the Lessor must thereafter, as a result
of such failure, delay or waiver, give notice to the Lessee, any guarantor of
the Lease Obligations, or any other Person that the Lessor does not intend to,
or may not, give a further waiver or to refrain from insisting upon the strict
performance of the terms, conditions, covenants, representations and warranties
set forth in the Lease Documents before the Lessor can exercise any of its
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, any guarantor of the Lease
Obligations 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 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.
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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, any Affiliate of the Lessor and any of their
respective successors, assigns, employees, servants, agents, attorneys,
officers, directors, shareholders, partners or owners, 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 (at no
out-of-pocket costs to the Lessee in connection with the expiration or
termination of this Lease for reasons other than a Lease Default) (A) promptly
and diligently use its best efforts 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 Use 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 the terms thereof, and (B) cooperate in every
respect (and to the 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
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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 and Additional
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.
ARTICLE 18
RIGHT OF FIRST REFUSAL TO
PURCHASE THE LEASED PROPERTY
18.1 RIGHT OF FIRST REFUSAL TO PURCHASE THE LEASED PROPERTY. At any time
during the Term, as long as there exists no Lease Default at the time of
exercise and the Closing Date (as hereinafter defined), and this Lease is then
in full force and effect and there exists no event or state of facts which
constitutes, or with the passage of time and/or the giving of notice would
constitute, a Lease Default, the Lessee shall have a "Right of First Refusal"
subject to the following terms and conditions: (A) if the Lessor receives a bona
fide written offer to purchase the Leased Property from a Person which is not a
member of the Leasing Group or an Affiliate of any member of the Leasing Group
(the "Offer"), acceptable to the Lessor in the Lessor's sole and absolute
discretion and the Lessor elects, in the Lessor's sole and absolute discretion,
to sell the Leased Property in accordance with the Offer, the Lessee shall have
thirty (30) days following delivery of the notice of the Offer to the Lessee to
elect to purchase the Leased Property and any and all other property subject to
the Offer (collectively, the "Offered Property") on the same terms and
conditions as specified therein; (B) unless the Lessor receives notice from the
Lessee within such thirty (30) day period setting forth the Lessee's election to
so purchase the Offered Property and unless thereafter the Lessee completes the
acquisition of the Offered Property exactly as provided for, and by the date
specified (the
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"Closing Date"), in the Offer, the Lessor shall be at liberty, and shall have
the absolute and unconditional right, to sell the Leased Property to any Person
within the next twelve (12) months on the same terms and conditions set forth in
the Offer or on any other terms and conditions more favorable to the Lessor and
(C) any such sale consummated in accordance with the provisions of the foregoing
clause (b) shall extinguish all rights granted to the Lessee under this Section
18.1. If the Lessor does not sell the Leased Property within the next twelve
(12) months as aforesaid, the Lessee's Right of First Refusal to purchase the
Leased Property in accordance with the provisions of this Section 18.1 shall
remain in full force and effect. The Lessee's Right of First Refusal shall not
apply to and shall survive: (A) any sale or transfer of the Leased Property to
any Affiliate of the Lessor or of Meditrust; (B) any sale or transfer of the
Leased Property occasioned by the exercise of any rights or remedies of any Fee
Mortgagee or (C) a deed or transfer in lieu of foreclosure to any Fee Mortgagee
or any Affiliate thereof. The Lessee's Right of First Refusal shall in all
events terminate upon the expiration or any earlier termination of this Lease.
ARTICLE 19
SUBLETTING AND ASSIGNMENT
19.1 SUBLETTING AND ASSIGNMENT. Except as specifically set forth in
Section 19.2 below, 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.
19.2 PERMITTED SUBLEASES. 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 or permitted under Section 19.2, 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.
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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 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 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 other 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 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 be 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 rights under this Lease shall not be diminished or adversely effected
in any way provided no Event of Default exists hereunder, (III) all insurance
proceeds received in
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connection with any loss, injury or damage relating to the Leased Property shall
be paid to the Lessor in accordance with the provisions of this Lease and the
Fee Mortgagee shall have no rights with respect to any such proceeds unless the
Lessee elects to terminate this Lease pursuant to the provisions of Section
13.2.2, (IV) the Lessee's Right of First Refusal to purchase the Leased Property
shall remain in force and effect pursuant to the terms hereof and (V) in the
event that the Lessee elects to exercise the Right of First Refusal 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, (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 and (C) enter
into a new lease with the Fee Mortgagee or the purchaser at any such sale on the
same terms and conditions of 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 from 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 perform 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 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 pay 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.
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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: ALS Leasing, Inc.
c/o Alternative Living Services, Inc.
000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxx, Esq.
[The Lessee's counsel] Xxxxxx & Hardin
000 Xxxxxxxxx Xxxxxx, X.X., 0000 International
Tower
Atlanta, Georgia 30303
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If to the Guarantor: Alternative Living Services, Inc.
000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxx, Esq.
[Guarantor's Counsel] Xxxxxx & Hardin
000 Xxxxxxxxx Xxxxxx, N.E., 0000 Xxxxxxxxxxxxx
Xxxxx
Xxxxxxx, Xxxxxxx 00000
If to the Lessor: Meditrust of Acquisition Corporation III
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President
With copies to: Meditrust Corporation
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
and Xxxxx Xxxx III, Esq.
Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or such other address as the Lessor, the Lessee or the Guarantor shall
hereinafter from time to time designate by a written notice to the others given
in such manner. Any notice given to the Lessee or the Guarantor by the Lessor at
any time shall not imply that such notice or any further or similar notice was
or is required.
ARTICLE 23
LIMITATION OF LIABILITY
All Persons dealing with the Lessor, in any way, shall look only to the
assets of the Lessor for the payment of any sum or the performance of any
obligation. Furthermore, in no event shall the Lessor ever be liable to the
Lessee or any other Person for any indirect or consequential damages incurred by
the Lessee or such other Person resulting from any cause whatsoever.
Notwithstanding the foregoing, the Lessee hereby acknowledges and agrees that
the Lessee shall look only to the assets of the Lessor for the payment of any
sum or performance of any obligation due by or from the Lessor pursuant to the
terms and provisions of the Lease Documents.
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ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 BROKER'S FEE INDEMNIFICATION. Each of the Lessor and the Lessee
hereby represents and warrants to the other that it has not dealt with any
broker or any other similar agent in connection with any of the transactions
contemplated by the Lease Documents. Each of the Lessor and the Lessee shall and
hereby agrees to indemnify, defend (with counsel acceptable to the other) and
hold the other 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 and all other costs and expenses, including, without
limitation, reasonable attorneys' fees, due in connection with or otherwise
incurred as a result of the indemnifying party's breach of the representation
and warranty set forth in the preceding sentence. Notwithstanding the foregoing,
each of the Lessor and the Lessee shall have the option of conducting its own
defense against any such claims with counsel of its own choice, but at the
expense of the other, 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 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
Related Party Agreements, the Permits and/or the Contracts. References herein
and in the other Lease Documents to any of the Lease Documents, the Management
Agreements, the Related Party Agreements, the Permits and/or the Contracts shall
be deemed to include any renewals, replacements, amendments, extensions,
substitutions, revisions, consolidations or modifications thereof.
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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, Related Party 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 Facility and the other
Leased Property and shall, with respect to the Facility and the other Leased
Property, supersede in all respects the letter of intent dated July 22, 1996
(and all prior iterations thereof) from Meditrust to the Guarantor; provided,
however, said letter of intent is not superseded with respect to the subject
matter not contemplated by the Lease Documents.
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 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
waiving in this
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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, except as may be permitted pursuant to Article
19, 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 Meditrust Entities, the Indemnified Parties, the
Lessee, the Guarantor, the other members of the Leasing Group and their
respective permitted successors and assigns, and, except as otherwise expressly
set forth in any of the Lease Documents, nothing contained therein shall confer
upon any Person other than such 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.
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 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.
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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.
24.13 INTENTION OF PARTIES. The Lessor and the Lessee acknowledge and
agree that this Lease is intended to be a lease of the Leased Property and is in
no way intended to be a mortgage encumbering the Leased Property.
24.14 APPRAISAL.
24.14.1 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.
24.14.2 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 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 per cent (10%) of the lesser of such amounts, then the Fair
Market Value of the Leased Property shall be an
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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.
24.14.3 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Facility Lease Agreement
to be executed and attested by their respective officers thereunto duly
authorized.
WITNESSES: LESSEE:
ALS LEASING, INC., a Delaware
corporation
By:
/s/ Xxxxxx Xxxxx /s/ Xxxxx X. Xxxxxxx
------------------------------ ----------------------------------
Name: Xxxxx X. Xxxxxxx, Vice President
/s/ Xxxxxx Xxxxxx
------------------------------
Name:
WITNESSES: LESSOR:
MEDITRUST ACQUISITION
CORPORATION III, a Delaware
corporation
/s/ Xxxx Areiy Xxxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
------------------------------ ----------------------------------
Name: Name:
Title:
/s/ Xxxxxxxxx Xxxxxx
------------------------------
Name:
/s/ [Illegible signatory]
------------------------------
Name:
[signature page for Xxxxxxxx House of Delta I and WovenHearts of Delta II,
Michigan]
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EXHIBIT A
PROPERTY DESCRIPTION
XXXXXXXX HOUSE OF DELTA I
0000 XXXXX XXXXXXXX XXXXX
XXXXXXX, XXXXX XXXXXX, XX 00000
WOVENHEARTS OF DELTA II
0000 XXXXX XXXXXXXX XXXXX
XXXXXXX, XXXXX XXXXXX, XX 00000
The land which is situated in the County of Xxxxx, Township of Delta, State of
Michigan, is described as follows:
PARCEL A (Xxxxxxxx House of Delta I):
A part of Xxx 0 xx XXXXX XXXXXXXX XXXX SUBDIVISION, a Subdivision located in the
Southwest 1/4 of Section 10, Town 4 North, Range 3 West, Delta Township, Xxxxx
County, Michigan, as recorded in Liber 11, pages 72 through 75 of Plats, Xxxxx
County Records, being more particularly described as: Beginning at the Southeast
corner of said Lot 6; thence South 89 degrees 30 minutes 33 seconds West 518.96
feet along the South line of said Lot 6; thence North 00 degrees 29 minutes 27
seconds West, 60.81 feet; thence North 23 degrees 53 minutes 44 seconds East,
334.86 feet to a point on the South right-of-way line of Delta Commerce Drive,
the following two courses being along said South right-of-way: (1) South 64
degrees 45 minutes 27 seconds East, 111.36 feet and (2) along a curve to the
right 434.94 feet; said curve having a radius of 546.15 feet, central angle of
45 degrees 37 minutes 41 seconds and a long chord bearing of South 41 degrees 56
minutes 36 seconds East 423.53 feet to the point of beginning.
PARCEL B (WovenHearts of Delta II):
A part of Xxx 0 xx XXXXX XXXXXXXX XXXX SUBDIVISION, a Subdivision located in the
Southwest 1/4 of Section 10, Town 4 North, Range 3 West, Delta Township, Xxxxx
County, Michigan, as recorded in Liber 11, pages 72 through 75 of Plats, Xxxxx
County Records, being more particularly described as: Commencing at the
Southeast corner of said Lot 6; thence South 89 degrees 30 minutes 33 seconds
West, 518.96 feet along the South line of said Lot 6 to the point of beginning;
thence continuing along said line South 89 degrees 30 minutes 33 seconds West,
153.46 feet; thence North 00 degrees 29 minutes 27 seconds West, 471.32 feet to
a point on the South line of Delta Commerce Drive; thence the following two
courses being along said South right-of-way: (1) along a curve to the right
187.10 feet, said curve having a radius of 548.49 feet, central angle of 19
degrees 32 minutes 43 seconds and a long chord bearing of South 74 degrees 31
minutes 48 seconds East, 186.20 feet, and (2) South 64 degrees 45 minutes 27
seconds East, 125.11 feet; thence South 23 degrees 53 minutes 44 seconds West,
334.86 feet; thence South 00 degrees 29 minutes 27 seconds East, 60.81 feet to
the point of beginning.
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EXHIBIT B
PERMITTED ENCUMBRANCES
1. All matters pertaining to the Leased Property and enumerated on Schedule B
(Part I and Part II) of the Lessor's Owner's Title Insurance Policy issued
by Lawyers Title Insurance Corporation and effective as of the date
hereof.
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EXHIBIT C
LIST OF SHAREHOLDERS
1. Alternative Living Services, Inc. - sole shareholder of the Lessee
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124
EXHIBIT D
NATIONAL ACCOUNTS AND LOCAL DISCOUNTS
None
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125
EXHIBIT E
OPEN COST REPORTS
None
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126
EXHIBIT F
RATE LIMITATIONS
None
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127
EXHIBIT G
FREE CARE REQUIREMENTS
None
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128
EXHIBIT H
CURRENT RATES
Xxxxxxxx House of Delta I
Admission Fee: $3,000
Companion Suite: $2,850
Private Suite: $3,525
WovenHearts of Delta II
Admission Fee: $ 500
Companion Suite: $1,800
Private Single: $2,395
Private Deluxe: $3,200
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EXHIBIT I
RENT COVERAGE RATIO CALCULATION
See Exhibit D to Agreement Regarding Related Lease Transactions.
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130
EXHIBIT J
[INTENTIONALLY OMITTED]
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131
SCHEDULE 11.5
1. Any assisted living facility (or other facility operated for any use
included within the definition of the Primary Intended Use), center, unit or
program (or any such activity or any related activity competitive therewith)
which is in whole or in part, owned, operated, leased, managed or under
construction by Lessee, Guarantor or any Affiliate thereof or which Lessee,
Guarantor or any Affiliate thereof has a right to acquire within a two (2) year
period, which is either in existence or under construction as of the end of the
seventh (7th) Lease Year.
132
EXHIBIT 10.8
SCHEDULE OF FACILITY LEASES
WHICH ARE SUBSTANTIALLY IN THE FORM OF LEASE
ATTACHED AS EXHIBIT 10.7
ORIGINAL
LEASING MEDITRUST NO. OF UNITS
FACILITY NAME LOCATION COMMITMENT FEE INVESTMENT BASE RENT IN FACILITY
------------- -------- -------------- ---------- --------- ------------
Xxxxxxxx House of Grand Blanc (I) Grand Blanc $31,867.00 Total $5,583,530.00 * 46
Township, for both Grand
Genesee County, Blanc facilities
Michigan
Wynwood of Grand Blanc (II) Grand Blanc $7,603,158.00 * 66
Township,
Genesee County,
Michigan
Xxxxxxxx House of Troy (I) Troy, $33,891.00 Total $5,694,528.00 * 46
Oakland County, for both Troy
Michigan facilities
Wynwood of Troy (II) Troy, $7,694,620.00 * 66
Oakland County,
Michigan
* Confidential portions omitted and filed separately with the Commission.
