1
Exhibit 10.2
F O R M O F F A C I L I T Y L E A S E A G R E E M E N T
MEDITRUST COMPANY LLC
(A Delaware Limited Liability Company)
as
Lessor
AND
TC REALTY OF ____________, INC.
(A Delaware Corporation)
as
Lessee
Dated As Of June 30, 1998
(____________)
2
TABLE OF CONTENTS
ARTICLE 1 LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
1.1 Leased Property
1.2 Term
1.3 Extended Terms
ARTICLE 2 DEFINITIONS AND RULES OF CONSTRUCTION
2.1 Definitions
2.2 Rules of Construction
ARTICLE 3 RENT
3.1 Base Rent for Land, Leased Improvements, Related
Rights and Fixtures
3.2 Calculation and Payment of Additional Rent;
Annual Reconciliation
3.2.1 Estimates and Payments
3.2.2 Annual Statement
3.2.3 Deficits
3.2.4 Overpayments
3.2.5 Final Determination
3.2.6 Best Efforts to Maximize Gross Revenues
3.3 Confirmation and Audit of Additional Rent
3.3.1 Maintain Accounting Systems
3.3.2 Audit by Lessor
3.3.3 Deficiencies and Overpayments
3.3.4 Survival
3.4 Additional Charges
3.5 [Intentionally Deleted]
3.6 Net Lease
3.7 No Lessee Termination or Offset
3.7.1 No Termination
3.7.2 Waiver
3.7.3 Independent Covenants
3.8 Abatement of Rent Limited
ARTICLE 4 IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS
3
4.1 Payment of Impositions
4.1.1 Lessee To Pay
4.1.2 Installment Elections
4.1.3 Returns and Reports
4.1.4 Refunds
4.1.5 Protest
4.2 Notice of Impositions
4.3 Adjustment of Impositions
4.4 Utility Charges
4.5 Insurance Premiums
4.6 Deposits
4.6.1 Lessor's Option
4.6.2 Use of Deposits
4.6.3 Deficits
4.6.4 Other Properties
4.6.5 Transfers
4.6.6 Security
4.6.7 Return
4.6.8 Receipts
ARTICLE 5 OWNERSHIP OF LEASED PROPERTY AND PERSONAL
PROPERTY; INSTALLATION, REMOVAL AND REPLACEMENT
OF PERSONAL PROPERTY;
5.1 Ownership of the Leased Property
5.2 Personal Property; Removal and Replacement of
Personal Property
5.2.1 Lessee To Equip Facility
5.2.2 Sufficient Personal Property
5.2.3 Removal and Replacement; Lessor's
Option to Purchase
ARTICLE 6 SECURITY FOR LEASE OBLIGATIONS
6.1 Security for Lessee's Obligations; Permitted
Prior Security Interests
6.1.1 Security
6.1.2 Purchase-Money Security Interests and
Equipment Leases
4
6.2 Guaranties
ARTICLE 7 CONDITION AND USE OF LEASED PROPERTY; MANAGEMENT
AGREEMENTS
7.1 Condition of the Leased Property
7.2 Use of the Leased Property; Compliance;
Management
7.2.1 Obligation to Operate
7.2.2 Permitted Uses
7.2.3 Compliance with Insurance Requirements
7.2.4 No Waste
7.2.5 No Impairment
7.2.6 No Liens
7.3 Compliance with Legal Requirements
7.4 Management Agreements
ARTICLE 8 REPAIRS; RESTRICTIONS
8.1 Maintenance and Repair
8.1.1 Lessee's Responsibility
8.1.2 No Lessor Obligation
8.1.3 Lessee May Not Obligate Lessor
8.2 Encroachments; Title Restrictions
ARTICLE 9 MATERIAL STRUCTURAL WORK AND CAPITAL ADDITIONS
9.1 Lessor's Approval
9.2 General Provisions as to Capital Additions and
Certain Material Structural Work
9.2.1 No Liens
9.2.2 Lessee's Proposal Regarding Capital
Additions and Material Structural Work
9.2.3 Lessor's Options Regarding Capital
Additions and Material Structural Work
9.2.4 Lessor May Elect to Finance Capital
Additions or Material Structural Work
9.3 Capital Additions and Material Structural Work
Financed by Lessor
5
9.3.1 Lessee's Financing Request
9.3.2 Lessor's General Requirements
9.3.3 Payment of Costs
9.4 General Limitations
9.5 Non-Capital Additions
ARTICLE 10 WARRANTIES AND REPRESENTATIONS
10.1 Representations and Warranties
10.1.1 Existence; Power; Qualification
10.1.2 Valid and Binding
10.1.3 Single Purpose
10.1.4 No Violation
10.1.5 Consents and Approvals
10.1.6 No Liens or Insolvency Proceedings
10.1.7 No Burdensome Agreements
10.1.8 Commercial Acts
10.1.9 Adequate Capital, Not Insolvent
10.1.10 Not Delinquent
10.1.11 No Affiliate Debt
10.1.12 Taxes Current
10.1.13 Financials Complete and Accurate
10.1.14 Pending Actions, Notices and Reports
10.1.15 Compliance with Legal and Other
Requirements
10.1.16 No Action By Governmental Authority
10.1.17 Property Matters
10.1.18 Third Party Payor Agreements
10.1.19 Rate Limitations
10.1.20 Free Care
10.1.21 No Proposed Changes
10.1.22 ERISA
10.1.23 No Broker
10.1.24 No Improper Payments
10.1.25 Nothing Omitted
10.1.26 No Margin Security
10.1.27 No Default
10.1.28 Principal Place of Business
10.1.29 Labor Matters
10.1.30 Intellectual Property
10.1.31 Management Agreements
10.1.32 Option Purchase Documents
10.1.33 Working Capital Loan Documents
6
10.2 Continuing Effect of Representations and Warranties
ARTICLE 11 FINANCIAL AND OTHER COVENANTS
11.1 Status Certificates
11.2 Financial Statements; Reports; Notice and
Information
11.2.1 Obligation to Furnish
11.2.2 Responsible Officer
11.2.3 No Material Omission
11.2.4 Confidentiality
11.3 Financial Covenants
11.3.1 Rent Coverage Ratio of Lessee
11.3.2 [Intentionally Deleted]
11.3.3 [Intentionally Deleted]
11.3.4 No Indebtedness
11.3.5 No Guaranties
11.4 Affirmative Covenants
11.4.1 Maintenance of Existence
11.4.2 Materials
11.4.3 Compliance with Legal Requirements and
Applicable Agreements
11.4.4 Books and Records
11.4.5 Participation in Third Party Payor
Programs
11.4.6 Conduct of its Business
11.4.7 Address
11.4.8 Subordination of Certain Transactions
11.4.9 Inspection
11.4.10 Additional Property
11.4.11 Annual Facility Upgrade Expenditures
11.5 Additional Negative Covenants
11.5.1 Restrictions Relating to Lessee
11.5.2 No Liens
11.5.3 Limits on Certain Transactions
11.5.4 Non-Competition
11.5.5 No Default
11.5.6 Restrictions Relating to the Guarantor and
the Developer
11.5.7 [Intentionally Deleted]
7
11.5.8 ERISA
11.5.9 Forgiveness of Indebtedness
11.5.10 Value of Assets
11.5.11 Changes in Fiscal Year and Accounting
Procedures
11.6 Access to Records
ARTICLE 12 INSURANCE AND INDEMNITY
12.1 General Insurance Requirements
12.1.1 Types and Amounts of Insurance
12.1.2 Insurance Company Requirements
12.1.3 Policy Requirements
12.1.4 Notices; Certificates and Policies
12.1.5 Lessor's Right to Place Insurance
12.1.6 Payment of Proceeds
12.1.7 Irrevocable Power of Attorney
12.1.8 Blanket Policies
12.1.9 No Separate Insurance
12.1.10 Assignment of Unearned Premiums
12.2 Indemnity
12.2.1 Indemnification
12.2.2 Indemnified Parties
12.2.3 Limitation on Lessor Liability
12.2.4 Risk of Loss
ARTICLE 13 FIRE AND CASUALTY
13.1 Restoration Following Fire or Other Casualty
13.1.1 Following Fire or Casualty
13.1.2 Procedures
13.1.3 Disbursement of Insurance Proceeds
13.2 Disposition of Insurance Proceeds
13.2.1 Proceeds To Be Released To Pay For Work
13.2.2 Proceeds Not To Be Released
13.2.3 Lessee Responsible for Short-Fall
13.3 Tangible Personal Property
13.4 Restoration of Certain Improvements and the
Tangible Personal Property
8
13.5 No Abatement of Rent
13.6 Termination of Certain Rights
13.7 Waiver
13.8 Application of Rent Loss and/or Business
Interruption Insurance
13.9 Obligation To Account
ARTICLE 14 CONDEMNATION
14.1 Parties' Rights and Obligations
14.2 Total Taking
14.3 Partial or Temporary Taking
14.4 Restoration
14.5 Award Distribution
14.6 Control of Proceedings
ARTICLE 15 PERMITTED CONTESTS
15.1 Lessee's Right to Contest
15.2 Lessor's Cooperation
15.3 Lessee's Indemnity
ARTICLE 16 DEFAULT
16.1 Events of Default
16.2 Remedies
16.3 Damages
16.4 Lessee Waivers
16.5 Application of Funds
16.6 [Intentionally Deleted]
16.7 Lessor's Right to Cure
16.8 No Waiver by Lessor
16.9 Right of Forbearance
16.10 Cumulative Remedies
ARTICLE 17 SURRENDER OF LEASED PROPERTY OR LEASE;
HOLDING OVER
17.1 Surrender
17.2 Transfer of Permits and Contracts
17.3 No Acceptance of Surrender
17.4 Holding Over
9
ARTICLE 18 PURCHASE OF THE LEASED PROPERTY
18.1 Purchase of the Leased Property
18.2 Appraisal
18.2.1 Designation of Appraisers
18.2.2 Appraisal Process
18.2.3 Specific Enforcement and Costs
18.3 Lessee's Limited Right of First Refusal
18.4 Lessee's Option to Purchase
18.4.1 Conditions to Option
18.4.2 Exercise of Option
18.4.3 Conveyance
18.4.4 Calculation of Purchase Price
18.4.5 Payment of Purchase Price
18.4.6 Place and Time of Closing
18.4.7 Condition of Leased Property
18.4.8 Quality of Title
18.4.9 Lessor's Inability to Perform
18.4.10 Merger by Deed
18.4.11 Use of Purchase Price to Clear Title
18.4.12 Lessee's Default
ARTICLE 19 SUBLETTING AND ASSIGNMENT
19.1 Subletting and Assignment
19.2 Permitted Subleases
19.3 Attornment
19.4 Permitted Assignments
19.5 Other Permitted Transfers
ARTICLE 20 TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
20.1 No Merger of Title
20.2 Transfers by Lessor
20.3 Lessor May Grant Liens
20.4 Subordination and Non-Disturbance
ARTICLE 21 LESSOR OBLIGATIONS
21.1 Quiet Enjoyment
21.2 Memorandum of Lease
21.3 Default by Lessor
ARTICLE 22 NOTICES
10
ARTICLE 23 LIMITATION OF LIABILITY
ARTICLE 24 MISCELLANEOUS PROVISIONS
24.1 Broker's Fee Indemnification
24.2 No Joint Venture or Partnership
24.3 Amendments, Waivers and Modifications
24.4 Captions and Headings
24.5 Time is of the Essence
24.6 Counterparts
24.7 Entire Agreement
24.8 WAIVER OF JURY TRIAL
24.9 Successors and Assigns
24.10 No Third Party Beneficiaries
24.11 Governing Law
24.12 General
ARTICLE 25 SUBSTITUTION OF PROPERTY
25.1 Substitution of Property for the Leased
Property
25.2 Conditions to Substitution
25.3 Conveyance to Lessee
25.4 Expenses
EXHIBIT A LEGAL DESCRIPTION OF THE LAND
EXHIBIT B PERMITTED ENCUMBRANCES
EXHIBIT C LIST OF SHAREHOLDERS
EXHIBIT D NATIONAL ACCOUNTS AND LOCAL DISCOUNTS
EXHIBIT E [INTENTIONALLY DELETED]
EXHIBIT F RATE LIMITATIONS
EXHIBIT G FREE CARE REQUIREMENTS
EXHIBIT H WORKING CAPITAL LOAN DOCUMENTS
EXHIBIT I RENT COVERAGE RATIO CALCULATION
11
FACILITY LEASE AGREEMENT
(____________)
This FACILITY LEASE AGREEMENT ("Lease") is dated as of the 30th day of
June, 1998, and is between MEDITRUST COMPANY LLC ("Lessor"), a Delaware limited
liability company having its principal office at 000 Xxxxx Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000, and TC REALTY OF ____________, INC., a Delaware
corporation ("Lessee").
ARTICLE 1
LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
1.1 LEASED PROPERTY. Upon and subject to the terms and conditions
hereinafter set forth, Lessor leases to Lessee and Lessee rents and leases from
Lessor all of Lessor's rights and interests in and to the following real and
personal property (collectively, the "Leased Property"):
(a) the real property described in EXHIBIT A attached hereto
(the "Land");
(b) all buildings, structures, Fixtures (as hereinafter
defined) and other improvements of every kind including, but not
limited to, alleyways and connecting tunnels, sidewalks, utility pipes,
conduits and lines, and parking areas and roadways appurtenant to such
buildings and structures presently or hereafter situated upon the Land
(collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances of every nature
and description now or hereafter relating to or benefitting any or all
of the Land and the Leased Improvements; 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)
12
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 Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter defined) and
other matters of record (including, without limitation, the matters set forth in
EXHIBIT B); (iii) all applicable laws and (iv) all matters, whether or not of a
similar nature, 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 June 30, 1998 (the "Commencement Date") and end on the
date (the "Expiration Date"), that constitutes the tenth (10th) anniversary of
the first "Conversion Date" to occur under the Related Leases (as hereinafter
defined); provided, however, that this Lease may be sooner terminated as
hereinafter provided. In addition, 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, Lessee
is hereby granted the option to extend the Initial Term of this Lease for three
(3) additional periods (collectively, the "Extended Terms") as follows: three
(3) successive five (5) year periods for a maximum Term, if all such options are
exercised, which ends on the fifteenth (15th) anniversary of the Expiration
Date. Lessee's extension options shall be exercised by Lessee by giving written
notice to Lessor of each such extension at least one hundred eighty (180) days,
but not more than three hundred sixty (360) days, prior to the termination of
the Initial Term or the then current Extended Term, as the case may be. Lessee
shall have no right to rescind any such notice once given. 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(b).
Notwithstanding anything to the contrary set forth herein, 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, Lessee shall have exercised its option to extend the terms of all of
the Related Leases in accordance with the provisions of the Agreement Regarding
Related Lease Transactions and the provisions of Section 1.3 of each of the
Related Leases.
13
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.
ACCOUNTS: As defined in the UCC.
ACCREDITATION BODY: CARF, JCAHO, ________ Department of Social Services
and all other Persons having or claiming jurisdiction over the accreditation,
certification, evaluation or operation of the Facility.
ADDITIONAL CHARGES: As defined in Article 3.
ADDITIONAL LAND: As defined in Section 9.3.
ADDITIONAL RENT: As defined in Section 3.1(c).
ADDITIONAL RENT COMMENCEMENT DATE: As defined in Section 3.1(c).
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, twenty-five percent (25%) or more of the outstanding capital stock,
shares or equity interests of such Person or (iii) any officer, director,
employee, general partner or trustee of such Person, or any other Person
controlling, controlled by, or under common control with, such Person (excluding
trustees and Persons serving in a fiduciary or similar capacity who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
AFFILIATED PARTY SUBORDINATION AGREEMENT: That certain Affiliated Party
Subordination Agreement of even date herewith by and among Lessee, the other TC
Realty Parties, the Guarantor, the Current Manager and Lessor.
14
AGREEMENT REGARDING RELATED LEASE TRANSACTIONS: That certain Amended
and Restated Agreement Regarding Related Lease Transactions dated January 7,
1998, as amended by First Amendment to Amended and Restated Agreement Regarding
Related Lease Transactions of even date, by and among Lessee, Lessor and any
other Tenant Party that is a party to any Related Lease. Lessor and Lessee
anticipate that the Agreement Regarding Related Lease Transactions will be
amended from time to time in connection with future transactions in order to
include Affiliates of Lessor and/or Affiliates of Lessee as parties thereto and
to expand or otherwise modify the definition of "Related Leases" set forth
therein.
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.
ARCHITECT'S ASSIGNMENT: As defined in the Leasehold Improvement
Agreement.
ARCHITECT'S CONTRACT: As defined in the Leasehold Improvement
Agreement.
ASSIGNMENT AGREEMENT: That certain Assignment of even date herewith by
and between the Guarantor and Lessee, relating to the Option Agreement.
ASSIGNMENT OF SUBLEASES: That certain Assignment of Subleases and Rents
of even date herewith from the Lessee to the Lessor.
AWARD: All compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
BASE RENT: The Pre-Conversion Base Rent from the Commencement Date
through the day preceding the Conversion Date and the Post-Conversion Base Rent
from the Conversion Date through the remainder of the Term.
BCC GUARANTY: As defined in Section 19.4.
BCC OPTION AGREEMENT: That certain Option Agreement of even date
herewith by and among TC Realty Holding Company and the Guarantor.
BCC STOCK PLEDGE: As defined in Section 19.4.
BUSINESS DAY: Any day which is not a Saturday or Sunday or a public
holiday under the laws of the United States of America, the Commonwealth of
Massachusetts, the State or the state in which Lessor's depository bank is
located.
CARF: The Commission on Accreditation of Rehabilitation Facilities.
15
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 or bed capacity of the Facility, (ii) change the purpose for
which such units or beds are utilized and/or (iii) change the utilization of any
material portion of any of the Leased Improvements.
CAPITAL ADDITION COST: The cost of any Capital Addition made by Lessee
whether paid for by Lessee or Lessor. Such cost shall include all costs and
expenses of every nature whatsoever incurred directly or indirectly in
connection with the development, permitting, construction and financing of a
Capital Addition as reasonably determined by, or to the reasonable satisfaction
of, Lessor.
CASH ADJUSTMENT: As defined in Section 25.2.
CASH COLLATERAL: As defined in the Deposit Pledge Agreement.
CASH FLOW: The Consolidated Net Income (or Consolidated Net Loss)
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 Indebtedness which is fully subordinated to the Lease Obligations,
plus (iii) any indebtedness which is fully subordinated to the Lease Obligations
pursuant to the Affiliated Party Subordination Agreement.
CASUALTY: As defined in Section 13.1.
CHAMPUS: The Civilian Health and Medical Program of the Uniform
Service, a program of medical benefits covering retirees and dependents of
members or former members of a uniformed service provided, financed and
supervised by the United States Department of Defense and established by 10 USC
Sections 1071 et seq.
CHATTEL PAPER: As defined in the UCC.
CLOSING: As defined in Section 18.4.
CODE: The Internal Revenue Code of 1986, as amended.
COLLATERAL: All of the property in which security interests are granted
to Lessor and the other Meditrust Entities pursuant to the Lease Documents and
the Related Party
16
Agreements to secure the Lease Obligations, including, without limitation, the
Cash Collateral and the Receivables.
COMMENCEMENT DATE: As defined in Section 1.2.
COMPARABLE FACILITY: As defined in Section 25.1.
COMPLETION DATE: As defined in the Leasehold Improvement Agreement.
COMPLETION GUARANTY: That certain Guaranty of even date executed by
Guarantor in favor of Lessor, relating to completion of the Facility.
CONDEMNATION: With respect to the Leased Property or any interest
therein or right accruing thereto or use thereof (i) the exercise of any
Governmental Authority, whether by legal proceedings or otherwise, by a
Condemnor or (ii) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of Condemnation or Taking or while legal proceedings for
Condemnation or Taking are pending.
CONDEMNOR: Any public or quasi-public authority, or private corporation
or individual, having the power of condemnation.
CONSOLIDATED AND CONSOLIDATING: The consolidated and consolidating
accounts of the relevant Person and its Subsidiaries consolidated in accordance
with GAAP.
CONSOLIDATED FINANCIALS: For any fiscal year or other accounting period
for any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP, and disclosing all
liabilities of such Person and its consolidated Subsidiaries, including, without
limitation, contingent liabilities.
CONSTRUCTION ASSIGNMENT: As defined in the Leasehold Improvement
Agreement.
CONSTRUCTION CONTRACT: As defined in the Leasehold Improvement
Agreement.
CONSULTANTS: Collectively, the architects, engineers, inspectors,
surveyors and other consultants that are engaged from time to time by Lessor to
perform services for 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
17
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. City Average (1982-84=100), published by
the Bureau of Labor Statistics, U.S. Department of Labor. If the Bureau of Labor
Statistics should cease to publish such Price Index in its present form and
calculated on the present basis, then the most similar index published by the
same Bureau shall be used for the same purpose. 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 Lessor.
CONTRACTS: All agreements (including, without limitation, Provider
Agreements and Patient Admission Agreements), contracts, (including without
limitation, construction contracts, subcontracts, and architects' contracts,)
contract rights, warranties and representations, franchises, and records and
books of account benefiting, relating to or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession, or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacement
and substitutions therefor, now or hereafter issued by or entered into with any
Governmental Authority, Accreditation Body or Third Party Payor or maintained or
used by any member of the Leasing Group or entered into by any member of the
Leasing Group with any third Person.
CONVERSION DATE: The earlier to occur of (i) the Completion Date, (ii)
the completion of the Project in accordance with the Project Plans and the
Leasehold Improvement Agreement and the issuance by the appropriate Governmental
Authorities of a Certificate of Occupancy (or its equivalent) or (iii) the date
that the first resident is admitted to the Facility.
CURRENT ASSETS: All assets of any Person which would, in accordance
with GAAP, be classified as current assets of a Person conducting a business the
same as or similar to that of such Person, excluding however, any and all
advances to or Current Liabilities owed to such Person by its Subsidiaries.
CURRENT LIABILITIES: All liabilities of any Person which would, in
accordance with GAAP, be classified as current liabilities of a Person
conducting a business the same as or similar to that of such Person, including
without limitation, all rental and other payments under leases and fixed
payments of, and sinking fund payments with respect to, Indebtedness required to
be made within one (1) year from the date of determination.
CURRENT MANAGER: Balanced Care at ____________, Inc.
CURRENT MANAGEMENT AGREEMENT: That certain Management Agreement of even
date by and between Lessee and the Current Manager.
18
DATE OF TAKING: The date the Condemnor has the right to possession of
the property being condemned.
DEED: As defined in Section 18.4.
DEPARTMENT OF SOCIAL SERVICES: _________________________ Department of
Social Services.
DEPOSIT PLEDGE AGREEMENT: The pledge and security agreement so
captioned and dated as of even date herewith between Lessee and Lessor.
DEVELOPER: BCC Development and Management Co., a Delaware corporation,
and its successors and assigns.
DEVELOPER PERMITS ASSIGNMENT: That certain Collateral Assignment of
Permits, Licenses and Contracts of even date granted by the Developer to Lessor.
DOCUMENTS: As defined in the UCC.
ENCUMBRANCE: As defined in Section 20.3.
ENVIRONMENTAL INDEMNITY AGREEMENT: The Environmental Indemnity
Agreement of even date herewith by and among Lessee, the Developer and Lessor.
ENVIRONMENTAL LAWS: As defined in the Environmental Indemnity
Agreement.
ERISA: The Employment Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT: As defined in Article 16.
EXCESS GROSS REVENUES: Gross Revenues for a fiscal year less the Gross
Revenues for the immediately preceding fiscal year.
EXPIRATION DATE: As defined in Section 1.2.
EXTENSION TERM ADJUSTMENT DATES: During any Extended Terms, the tenth
(10th), fifteenth (15th) and twentieth (20th) anniversaries of the Conversion
Date.
EXTENDED TERMS: As defined in Section 1.3.
FACILITY: The adult care residence with eighty (80) licensed beds
(located in eighty (80) units) to be known as "______________________________"
to be constructed on the Land (together with related parking and other
amenities).
FAILURE TO PERFORM: As defined Article 16.
19
FAIR MARKET ADDED VALUE: The Fair Market Value of the Leased Property
(including all Capital Additions) minus the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by Lessee had been
constructed.
FAIR MARKET VALUE OF THE CAPITAL ADDITION: The amount by which the Fair
Market Value of the Leased Property upon the completion of a particular Capital
Addition exceeds the Fair Market Value of the Leased Property just prior to the
construction of the particular Capital Addition.
FAIR MARKET VALUE OF THE LEASED PROPERTY: The fair market value of the
Leased Property, including all Capital Additions, and including the Land and all
other portions of the Leased Property, and (a) assuming the same is unencumbered
by this Lease, (b) determined in accordance with the appraisal procedures set
forth in Section 18.2 or in such other manner as shall be mutually acceptable to
Lessor and 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
Lessee or Lessor is otherwise required to remove at or prior to closing of the
transaction. However, the positive or negative effect on the value of the Leased
Property attributable to the interest rate, amortization schedule, maturity
date, prepayment provisions and other terms and conditions of any Lien on the
Leased Property which is not so required or agreed to be removed shall be taken
into account in determining the Fair Market Value of the Leased Property. The
Fair Market Value shall be determined as the overall value based on due
consideration of the "income" approach, the "comparable sales" approach, and the
"replacement cost" approach.
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 Lessor
in any way in connection with the financing of any Capital Addition.
FINANCING STATEMENTS: Uniform Commercial Code financing statements
evidencing the security interests granted to Lessor in connection with the Lease
Documents.
FIRST LEASEHOLD MORTGAGE: That certain Line of Credit Leasehold Deed of
Trust and Security Agreement of even date herewith granted by the Lessee to the
Lessor, securing the Lessee's obligations under the Lessee's Guaranty.
FISCAL QUARTER: Each of the three (3) month periods commencing on July
1st, October 1st, January 1st and April 1st.
FISCAL YEAR: The twelve (12) month period from July 1st to June 30th.
20
FIXTURES: As defined in Article 1.
GAAP: Generally accepted accounting principles, consistently applied
throughout the relevant period.
GENERAL INTANGIBLES: As defined in the UCC.
GOVERNMENTAL AUTHORITIES: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures, and
offices of any nature whatsoever of any government, quasi-government unit or
political subdivision, whether with a federal, state, county, district,
municipal, city or otherwise and whether now or hereinafter in existence.
GROSS REVENUES: Collectively, all revenues generated by reason of the
operation of the Leased Property (including any Capital Additions), whether or
not directly or indirectly received or to be received by the Lessee, including,
without limitation, all patient and/or resident revenues received or receivable
for the use of, or otherwise by reason of, all rooms, beds, 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 Authorities or Third Party Payors,
(ii) allowances according to GAAP for uncollectible accounts,
(iii) all proper patient and/or resident billing credits and
adjustments according to GAAP relating to health care accounting,
(iv) federal, state or local sales, use, gross receipts and
excise taxes and any tax based upon or measured by said Gross Revenues
which is added to or made a part of the amount billed to the patient,
resident or other recipient of such services or goods, whether included
in the billing or stated separately,
(v) provider discounts for hospital or other medical facility
utilization contracts,
21
(vi) the cost of any federal, state or local governmental
program imposed specially to provide or finance indigent patient and/or
resident care (other than Medicare, Medicaid and the like), and
(vii) deposits refundable to residents of the Facility.
To the extent that the Leased Property is subleased or occupied by an Affiliate
of the Lessee, Gross Revenues calculated for all purposes of this Lease
(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 (other than the Guarantor or any Affiliate of the Guarantor), only the
rental actually received by the Lessee from such non-Affiliate shall be included
in Gross Revenues.
GUARANTIES: Collectively, the Completion Guaranty and any BCC Guaranty
hereafter executed and delivered to Lessor by the Guarantor in accordance with
the terms of Section 19.4.
GUARANTOR: Balanced Care Corporation, a Delaware corporation, and its
successors and assigns.
HAZARDOUS SUBSTANCES: As defined in the Environmental Indemnity
Agreement.
IMPOSITIONS: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of 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 Lessor (and/or any conveyance of the
Leased Property to 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
Lessee), which at any time prior to, during or in respect of the Term hereof and
thereafter until the Leased Property is surrendered to Lessor as required by the
terms of this Lease, may be assessed or imposed on or in respect of or be a Lien
upon (a) Lessor or Lessor's interest in the Leased Property, (b) the Leased
Property or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, sales from, or activity
conducted on, or in connection with, the Leased Property or the leasing or use
of the Leased Property. Notwithstanding
22
the foregoing, nothing contained in this Lease shall be construed to require
Lessee to pay (1) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on Lessor or any other Person,
except Lessee or its successors, (2) any net revenue tax of Lessor or any other
Person, except Lessee and its successors, (3) any tax imposed with respect to
the proceeds, or any portion thereof, received by Lessor as a result of the
sale, exchange or other disposition by Lessor of the Leased Property, except any
sale, transfer, exchange or other disposition of the Leased Property to Lessee,
or (4) except as expressly provided elsewhere in this Lease, any principal or
interest on any Encumbrance on the Leased Property; provided, however, the
provisos set forth in clauses (1) and (2) of this sentence shall not be
applicable to the extent that any tax, assessment, tax levy or charge which
Lessee is obligated to pay pursuant to the first sentence of this definition and
which is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or
(2) is levied, assessed or imposed expressly in lieu thereof. In computing the
amount of any franchise tax or capital stock tax which may be or become an
Imposition, the amount payable by Lessee shall be equitably apportioned based
upon all properties owned by Lessor that are located within the particular
jurisdiction subject to any such tax.
INDEBTEDNESS: The total of all obligations of a Person, whether current
or long-term, which in accordance with GAAP would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to be
determined, and shall also include (i) all capital lease obligations and (ii)
all guarantees, endorsements (other than for collection of instruments in the
ordinary course of business), or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement contingent
or otherwise to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
INDEMNIFIED PARTIES: As defined in Section 12.2.
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 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 Healthcare
Organizations.
LAND: As defined in Article 1.
23
LEASE: As defined in the preamble of this Lease.
LEASE DEFAULT: The occurrence of any default or breach of condition
continuing beyond any applicable notice and/or grace periods under this Lease
and/or any of the other Lease Documents.
LEASE DOCUMENTS: Collectively, this Lease, the Guaranties, the Security
Agreement, the Deposit Pledge Agreement, the Pledge Agreement, the Leasehold
Improvement Agreement, the Note, the Lessee's Guaranty, the First Leasehold
Mortgage, the Agreement Regarding Related Lease Transactions, the Permits
Assignments, the Financing Statements, the Affiliated Party Subordination
Agreement, the Environmental Indemnity Agreement, the Construction Assignment,
the Architect's Assignment, the Assignment of Subleases, the Assignment
Agreement, the Working Capital Assurance Documents and any and all other
instruments, documents, certificates and/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 Lessee's obligations relating to the
Leased Property, including, without limitation, Lessee's obligations hereunder
and/or under the Leasehold Improvement Agreement.
LEASEHOLD IMPROVEMENT AGREEMENT: That certain Leasehold Improvement
Agreement of even date herewith by and among Lessor, Lessee and the Developer.
LEASE OBLIGATIONS: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings (other than Lessor's
obligations) under this Lease and the other Lease Documents.
LEASE YEAR: Each twelve-month period during the Term commencing on the
Conversion Date and any anniversary of the Conversion Date.
LEASED IMPROVEMENTS: As defined in Article 1.
LEASED PROPERTY: As defined in Article 1.
LEASING GROUP: Collectively, Lessee, the Pledgor, the Guarantor, the
Developer, any Sublessee and any Manager.
LEGAL REQUIREMENTS: Collectively, all statutes, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use, health care licensing and senior
housing statutes, ordinances, by-laws, codes, rules and regulations), whether
now or hereafter enacted, promulgated or issued by any Governmental Authority,
Accreditation Body or Third Party Payor affecting Lessor, any member of the
Leasing Group or the Leased Property or the ownership, construction,
development, maintenance, management, repair, use, occupancy, possession or
operation thereof or the operation of any programs or services in connection
with the Leased Property, including, without limitation, any of the foregoing
which may (i) require
24
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.
LESSEE: As defined in the preamble of this Lease and its successors and
assigns.
LESSEE PERMITS ASSIGNMENT: That certain Collateral Assignment of
Permits, Licenses and Contracts of even date granted by Lessee to Lessor.
LESSEE'S ELECTION NOTICE: As defined in Section 14.3.
LESSEE'S GUARANTY: That certain Guaranty of even date herewith executed
by the Lessee for the benefit of Lessor, guarantying the obligations under the
Note.
LESSEE'S PURCHASE OPTION NOTICE: As defined in Section 18.4.
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,
easement, restriction, lien, pledge, collateral assignment, hypothecation,
charge, security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether or not xxxxxx, vested or perfected.
LIMITED PARTIES: As defined in Section 11.5; provided, however, in no
event shall the term Limited Parties include any Person in its capacity as a
shareholder of a public entity, unless such shareholder is a member of the
Leasing Group or an Affiliate of any member of the Leasing Group.
MANAGED CARE PLANS: All health maintenance organizations, preferred
provider organizations, individual practice associations, competitive medical
plans, and similar arrangements.
MANAGEMENT AGREEMENT: Any agreement, whether written or oral, between
Lessee or any Sublessee and any other Person pursuant to which Lessee or such
Sublessee provides any payment, fee or other consideration to any other Person
to operate or manage the Facility.
MANAGER: Any Person who has entered into a Management Agreement with
Lessee or any Sublessee.
25
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 Section 1396 et seq.) and any statute succeeding
thereto.
MEDICARE: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 USC Sections 1395 et
seq.) and any statute succeeding thereto.
MEDITRUST ENTITIES: Collectively, Lessor and any other Affiliate of
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 now or hereafter advanced under the Leasehold
Improvement Agreement, including, without limitation, the aggregate amount which
may hereafter be advanced by Lessor to Lessee in connection with the
consummation of the Stock Transfer in the event that the Lessee elects to
request that Lessor advance an amount equal to the outstanding principal,
accrued interest and any other sum due under the Note in order to satisfy the
outstanding obligations thereunder, plus (iii) the aggregate amount of all
Subsequent Investments.
MONTHLY DEPOSIT DATE: As defined in Section 4.6.
NET INCOME (OR NET LOSS): The net income (or net loss, expressed as a
negative number) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with GAAP.
NOTE: That certain Promissory Note of even date herewith made by the
Pledgor to the order of Lessor in the original principal amount of ____________
THOUSAND AND NO/100 DOLLARS ($_________.00).
OBLIGATIONS: Collectively, the Lease Obligations and the Related Party
Obligations.
OFFER: As defined in Section 18.3.
OFFICER'S CERTIFICATE: A certificate of Lessee signed on behalf of
Lessee by the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of Lessee, or another officer authorized to so sign
by the Board of Directors or By-Laws of Lessee, or any other Person whose power
and authority to act has been authorized by delegation in writing by any of the
Persons holding the foregoing offices.
OPTION AGREEMENT: That certain Option Agreement dated as of ________
_______________ by and between the Guarantor and _____________________________.
26
OPTION PURCHASE DOCUMENTS: Collectively, the Option Agreement and all
other documents and instruments now or hereafter executed and/or delivered in
connection therewith or pursuant thereto.
ORIGINAL MEDITRUST INVESTMENT: _________________________ THOUSAND
AND __/100 DOLLARS ($_______.__).
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 Lessor.
PATIENT ADMISSION AGREEMENTS: Collectively, all contracts, agreements
and consents executed by or on behalf of any patient or other Person seeking
services at the Facility, including, without limitation, assignments of benefits
and guarantees.
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 ASSIGNMENTS: Collectively, the Lessee Permits Assignment and
the Developer Permits Assignment.
PERMITTED ENCUMBRANCES: As defined in Section 10.1.
PERMITTED PRIOR SECURITY INTERESTS: As defined in Section 6.1.
PERSON: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.
PLANS AND SPECIFICATIONS: As defined in Section 13.1.
PLEDGE AGREEMENT: The Stock Pledge Agreement of even date herewith by
and among the Pledgor, Lessee and Lessor.
27
PLEDGOR: TC Realty Holding Company, a Delaware corporation.
POST-CONVERSION BASE RENT: As defined in Section 3.1.
PRE-CONVERSION BASE RENT: As defined in Section 3.1.
PRE-CONVERSION RENT ADJUSTMENT RATE: One Hundred Ninety (190) basis
points over the Prime Rate.
PRIMARY INTENDED USE: The use of the Facility as an adult care
residence with eighty (80) licensed beds (located in eighty (80) units) or such
additional number of beds or units as may hereafter be permitted under this
Lease, and such ancillary uses as are permitted by law and may be necessary in
connection therewith or incidental thereto.
PRIME RATE: The variable rate of interest per annum from time to time
announced by the Reference Bank as its prime rate of interest and in the event
that the Reference Bank no longer announces a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any other major bank or other financial institution reasonably
selected by Lessor.
PRINCIPAL PLACE OF BUSINESS: As defined in Section 10.1.
PROCEEDS: As defined in the UCC.
PROJECT: As defined under the Leasehold Improvement Agreement.
PROJECT FUNDS: As defined under the Leasehold Improvement Agreement.
PROJECT PLANS: As defined under the Leasehold Improvement Agreement.
PROPOSED FACILITY: As defined in Section 25.2.
PRORATION FACTOR: As defined in Section 3.1(c).
PROVIDER AGREEMENTS: All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the benefit of Lessee
or any Sublessee in connection with the operation of the Facility relating to
any right of payment or other claim arising out of or in connection with
Lessee's or such Sublessee's participation in any Third Party Payor Program.
PURCHASE OPTION: As defined in Section 18.4.
PURCHASE OPTION DATE: As defined in Section 18.4.
PURCHASE PRICE: As defined in Section 18.4.
1
28
PURCHASER: As defined in Section 11.5.
RECEIVABLES: Collectively, all (i) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (ii) rights to payment for
goods sold or leased or services rendered by Lessee or any other party, whether
now in existence or arising from time to time hereafter and whether or not yet
earned by performance, including, without limitation, obligations evidenced by
an account, note, contract, security agreement, chattel paper, or other evidence
of indebtedness.
REFERENCE BANK: Fleet Bank of Connecticut, N.A.
RELATED LEASES: As defined under the Agreement Regarding Related Lease
Transactions.
RELATED PARTIES: Collectively, each Person that may now or hereafter be
a party to any Related Party Agreement other than the Meditrust Entities,
including, without limitation, until such time as the Stock Transfer may be
consummated in accordance with the provisions of Section 19.4 and the
satisfaction of the conditions set forth in Section 19.4, those TC Realty
Parties that are not owned and controlled, directly or indirectly, by the
Guarantor and, after such consummation of the Stock Transfer, all TC Realty
Parties that are owned and controlled, directly or indirectly, by the Guarantor.
RELATED PARTY AGREEMENT: Any agreement, document or instrument now or
hereafter evidencing or securing any Related Party Obligation.
RELATED PARTY DEFAULT: The occurrence of a default or breach of
condition continuing beyond the expiration of any applicable notice and grace
periods, if any, under the terms of any Related Party Agreement.
RELATED PARTY OBLIGATIONS: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings due to, or made for the
benefit of, Lessor or any of the other Meditrust Entities by Lessee or any other
member of the Leasing Group (other than the Guarantor, the Developer and the
Current Manager, but only until such time as the Stock Transfer has been
consummated or the Guarantor has exercised its rights and remedies under the
Second Leasehold Mortgage in accordance with the terms of the Subordination and
Standstill Agreement) 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 under the Related Leases.
RENT: Collectively, the Base Rent, the Additional Rent, the Additional
Charges and all other sums payable under this Lease and the other Lease
Documents.
2
29
RENT ADJUSTMENT DATE: The Conversion Date and each Extension Term
Adjustment Date during the Term of the Lease, including, without limitation, any
Extended Terms.
RENT ADJUSTMENT RATE: Three hundred forty (340) basis points over the
Index.
RENT COVERAGE RATIO: The ratio of (i) Cash Flow for each applicable
period to (ii) the total of all Base Rent (or, in the case of a Comparable
Facility, all rent and other sums payable under the proposed Substitution Lease)
payable during the initial Lease Year or accrued for such period.
RENT INSURANCE PROCEEDS: As defined in Section 13.8.
RESIDENCE AGREEMENTS: Collectively, all Subleases now or hereafter
entered into by or on behalf of any Person allowing such Person to reside at the
Facility.
RETAINAGE: As defined in Section 13.1.
RIGHT OF FIRST REFUSAL: As defined in Section 18.3.
SECOND LEASEHOLD MORTGAGE: That certain Line of Credit Leasehold Deed
of Trust and Security Agreement of even date herewith granted by Lessee to
Guarantor, encumbering Lessee's interest under this Lease.
SECURITY AGREEMENT: The Security Agreement as of even date herewith
between Lessee and Lessor.
SHORTFALL AGREEMENT: That certain Shortfall Agreement of even date by
and between the Lessee and the Guarantor.
STATE: The state or commonwealth in which the Leased Property is
located.
STATE COLLEGE LEASE: That certain Amended and Restated Facility Lease
Agreement, dated as of November 1, 1996, by and between Lessor and BCC at State
College, Inc., as amended, and as the same may hereafter be further amended.
STOCK TRANSFER: As defined in Section 19.4.
SUBLEASE: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements, room rentals, rentals of
other facilities of the Leased Property and all other occupancy agreements of
every kind and nature (but excluding Patient Admission Agreements), whether oral
or in writing, now in existence or subsequently entered into by Lessee,
encumbering or affecting the Leased Property.
SUBLESSEE: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases, but, specifically excluding any resident of
the Facility under any Residence Agreement.
3
30
SUBORDINATION AND STANDSTILL AGREEMENT: That certain Subordination and
Standstill Agreement of even date herewith by and between Lessor and Guarantor,
subordinating the Working Capital Loan Obligations to the Lease Obligations.
SUBSEQUENT INVESTMENTS: The aggregate amount of all sums expended and
liabilities incurred by 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).
SUBSTITUTION CLOSING COSTS: As defined in Article 25.
SUBSTITUTION DATE: As defined in Article 25.
SUBSTITUTION DOCUMENTS: As defined in Article 25.
SUBSTITUTION LEASE: As defined in Article 25.
SUBSTITUTION NOTICE: As defined in Article 25.
SUBSTITUTION RIGHT: As defined in Article 25.
TAKING: A taking or voluntary conveyance during the Term of the Leased
Property, or any interest therein or right accruing thereto, or use thereof, as
the result of, or in settlement of, any Condemnation or other eminent domain
proceeding affecting the Leased Property whether or not the same shall have
actually been commenced.
TANGIBLE NET WORTH: An amount determined in accordance with GAAP equal
to the total assets of any Person, excluding the total intangible assets of such
Person, minus the total liabilities of such Person. Total intangible assets
shall be deemed to include, but shall not be limited to, the excess of cost over
book value of acquired businesses accounted for by the purchase method,
formulae, trademarks, trade names, patents, patent rights and deferred expenses
(including, but not limited to, unamortized debt discount and expense,
organizational expense and experimental and development expenses).
TANGIBLE PERSONAL PROPERTY: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, and other personal property owned or leased (pursuant to
equipment leases) by Lessee and used in connection with the operation of the
Leased Property.
TC REALTY PARTIES: As defined under the Agreement Regarding Related
Lease Transactions.
31
TENANT PARTIES: As defined under the Agreement Regarding Related Lease
Transactions.
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 PARTIES: Collectively, each Person that may now or hereafter be a
party to any Third Party Agreement.
THIRD PARTY AGREEMENT: Any agreement, document or instrument now or
hereafter evidencing or securing any Third Party Obligation.
THIRD PARTY DEFAULT: The occurrence of a default or breach of condition
continuing beyond the expiration of any applicable notice and grace periods, if
any, under the terms of any Third Party Agreement.
THIRD PARTY OBLIGATIONS: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings due to, or made for the
benefit of, Lessor or any of the other Meditrust Entities by any entity (other
than Lessee, the other TC Realty Parties and any other wholly-owned subsidiaries
of the Pledgor) with respect to which the Guarantor holds an option to purchase
the issued and outstanding capital stock of such entity or other applicable
ownership interests in such entity; 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.
THIRD PARTY PAYOR PROGRAMS: Collectively, all third party payor
programs in which Lessee or any Sublessee presently or in the future may
participate, including without limitation, Medicare, Medicaid, Champus, Blue
Cross and/or Blue Shield, Managed Care Plans, other private insurance plans and
employee assistance programs.
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.
TIME OF CLOSING: As defined in Section 18.4.
TITLE COMPANY: As defined in Section 25.2.
UCC: The Uniform Commercial Code as in effect from time to time in the
Commonwealth of Virginia.
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
32
performing an obligation hereunder, provided that lack of funds shall not be
deemed a cause beyond the control of either party hereto.
UNITED STATES TREASURY SECURITIES: The uninsured treasury securities
issued by the United States Federal Reserve Bank.
UNSUITABLE FOR ITS PRIMARY INTENDED USE: As used anywhere in this
Lease, the term "Unsuitable For Its Primary Intended Use" shall mean that, by
reason of Casualty, or a partial or temporary Taking by Condemnation, in the
good faith judgment of Lessor, the Facility cannot be operated on a commercially
practicable basis for the Primary Intended Use, taking into account, among other
relevant factors, the number of usable beds affected by such Casualty or partial
or temporary Taking.
UPGRADE RENOVATIONS: Collectively, repairs and refurbishing made to the
Leased Property, other than normal janitorial, cleaning and maintenance
activities.
WORK: As defined in Section 13.1.
WORK CERTIFICATES: As defined in Section 13.1.
WORKING CAPITAL ASSURANCE AGREEMENT: That certain Working Capital
Assurance Agreement of even date by and among the Guarantor, the Lessee and the
Lessor.
WORKING CAPITAL ASSURANCE DOCUMENTS: Collectively, the Working Capital
Assurance Agreement, the Subordination and Standstill Agreement, and all other
documents and instruments now or hereafter executed and/or delivered in
connection therewith or pursuant thereto.
WORKING CAPITAL LOAN DOCUMENTS: Collectively, the Shortfall Agreement,
the Second Leasehold Mortgage, the BCC Option Agreement, the Current Management
Agreement and all other documents and instruments now or hereafter evidencing
and/or securing the Working Capital Loans.
WORKING CAPITAL LOAN OBLIGATIONS: Collectively, all indebtedness,
covenants, liabilities, obligations, agreements and undertakings (other than the
Guarantor's obligations) under the Working Capital Loan Documents.
WORKING CAPITAL LOANS: As defined in the Working Capital Loan
Agreement.
WORKING CAPITAL PAYOFF: As defined in Section 19.4.
WORKING CAPITAL RESERVE: An amount equal to _______________________
____________________ AND /100 DOLLARS ($_________.00) which shall equal the
original principal amount under the Note.
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"
33
and "hereunder" shall be deemed to refer to this Lease or the other applicable
Lease Document, and shall not be limited to the particular text or section or
subsection in which such words appear; (b) the use of any gender shall include
all genders and the singular number shall include the plural and vice versa as
the context may require; (c) references to Lessor's attorneys shall be deemed to
include, without limitation, special counsel and local counsel for Lessor; (d)
reference to attorneys' fees and expenses shall be deemed to include all costs
for administrative, paralegal and other support staff; (e) references to 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 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 BASE RENT FOR LAND, LEASED IMPROVEMENTS, RELATED RIGHTS AND
FIXTURES. Lessee will pay to Lessor, in lawful money of the United States of
America, at Lessor's address set forth herein or at such other place or to such
other Person as Lessor from time to time may designate in writing, rent for the
Leased Property, as follows.
(a) PRE-CONVERSION BASE RENT: From and after the Commencement
Date and until the Conversion Date, Lessee shall pay, commencing on
September 1, 1998, and on the first day of each calendar month
thereafter, as well as on the Conversion Date, a base rent (the
"Pre-Conversion Base Rent") in arrears that is equal to the product of
(i) the Meditrust Investment from time to time outstanding multiplied
by (ii) the Pre-Conversion Rent Adjustment Rate in effect from time to
time, calculated on a daily basis.
(b) POST-CONVERSION BASE RENT: From and after the Conversion
Date, Lessee shall pay a base rent (the "Post-Conversion Base Rent")
per annum that is equal to the product of (i) the Meditrust Investment
multiplied by (ii) the Rent Adjustment Rate in effect on the Conversion
Date, payable in advance in equal, consecutive monthly installments due
on the first day of each calendar month;
34
provided, however, that on each Rent Adjustment Date, the Base Rent
shall be adjusted to equal the greater of (A) the then current
Post-Conversion Base Rent multiplied by 1.02 or (B) an amount equal to
the Meditrust Investment multiplied by the Rent Adjustment Rate then in
effect on such subsequent Rent Adjustment Date and further, provided,
however, that on the Conversion Date, Lessee shall pay to Lessor the
proportionate share of the Post-Conversion Base Rent due for the period
from (and including) the Conversion Date through the end of the
calendar month during which the Conversion Date occurred.
(c) ADDITIONAL RENT: In addition to the Base Rent, commencing
on the first anniversary of the Conversion Date (the "Additional Rent
Commencement Date") the Lessee shall pay to the Lessor additional rent
(the "Additional Rent") which shall equal, in each fiscal year, the sum
of (i) the Additional Rent payable with respect to the immediately
preceding fiscal year plus (ii) an amount equal to twenty percent (20%)
of Excess Gross Revenues for the then current fiscal year. Additional
Rent shall accrue commencing on the Additional Rent Commencement Date
and shall be payable during the Term, quarterly in arrears, commencing
on the first day of the first fiscal quarter commencing after the
Additional Rent Commencement Date occurs 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 fiscal year exceed two percent (2%) of the total of Base Rent and
Additional Rent payable with respect to the immediately preceding
fiscal year.
Additional Rent payable hereunder for any fractional fiscal
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 fiscal year plus an amount equal to twenty
percent (20%) of the annualized Excess Gross Revenues for the
applicable fractional fiscal year multiplied by (y) a fraction (the
"Proration Factor"), the numerator of which is the number of days in
the applicable fractional fiscal year and the denominator of which is
365; provided, however, that, in no event shall the Additional Rent
payable during (A) the fiscal year in which the Additional Rent
Commencement Date occurs exceed the product of two percent (2%) of the
total of Base Rent payable with respect to the immediately preceding
fiscal year multiplied by the applicable Proration Factor and (B) any
other fractional fiscal year increase by more than the product of two
percent (2%) of the total of Base Rent and Additional Rent payable with
respect to the immediately preceding fiscal year multiplied by the
applicable Proration Factor.
(d) Except as otherwise expressly provided in Section 3.1(a)
and (b) above, the Base Rent (as it may be adjusted) shall be paid
monthly in advance in equal, consecutive monthly installments on the
first day of each calendar month.
(e) Without limiting any of the other terms and conditions of
the Lease, Base Rent may be adjusted pursuant to Section 19.4 hereof.
35
3.2 CALCULATION AND PAYMENT OF ADDITIONAL RENT; ANNUAL
RECONCILIATION.
3.2.1 ESTIMATES AND PAYMENTS. Commencing on the Additional
Rent Commencement Date, Additional Rent to be paid during each fiscal
year during the Term shall be estimated by the Lessee at the beginning
of each fiscal year for which it is payable (and in no event shall such
estimate be less than the Additional Rent payable for the prior fiscal
year, except with respect to the estimate to be made on the Additional
Rent Commencement Date), and shall be paid quarterly in arrears (in
equal installments on the first day of July, October, January and
April) based on such estimate, to be adjusted at the end of each such
year based on the actual Excess Gross Revenues during that fiscal year.
In addition, on the Additional Rent Commencement Date, the Lessee shall
estimate the Additional Rent to be paid for the period from (and
including) the Additional Rent Commencement Date through (and
including) the end of the fiscal quarter during which the Additional
Rent Commencement Date occurs. Notwithstanding the foregoing, on a
quarterly basis, with the prior consent of the Lessor, the Lessee may
also adjust the quarterly payments of Additional Rent to be made
hereunder based upon a comparison of (a) the actual Gross Revenues
generated by the Leased Property during the applicable fiscal quarter
and (b) the original estimate of Additional Rent for the applicable
fiscal year prepared by the Lessee and the amount of Additional Rent
already paid by the Lessee pertaining to the applicable fiscal year.
3.2.2 ANNUAL STATEMENT. In addition, within sixty (60) days
following any fiscal 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 fiscal year.
3.2.3 DEFICITS. If the Additional Rent, as finally determined
for any fiscal year (or portion thereof), exceeds the sum of the
quarterly payments of Additional Rent previously paid by the Lessee
with respect to said fiscal 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 fiscal 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 fiscal 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.
36
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 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 GROSS REVENUES. 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 in the geographic region in
which the Facility is located. Subject to any applicable Legal
Requirements, the members of the Leasing Group shall use their best
efforts to maximize the Facility's Gross Revenues, and to that end, but
without limiting the foregoing, (a) an adequate staff of employees
shall be maintained at the Facility and (b) a maximum amount of space
in the Facility shall be devoted to revenue producing activities and
only such part thereof shall be devoted for office, storage and
non-revenue producing purposes as shall be reasonably necessary.
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 fiscal 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 fiscal 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 and
upon reasonable notice to the Lessee, to have the Lessor's 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
37
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 fiscal year are reported by the Lessee to the Lessor,
the deficiency, if 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 fiscal 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, (a) 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 Lessee assumes or
agrees to pay under this Lease, and (b) in the event of any failure on the part
of Lessee to pay any of those items referred to in clause (a) above, Lessee will
also promptly pay and discharge every fine, penalty, interest and cost which may
be added for non-payment or late payment of such items (the items referred to in
clauses (a) and (b) above being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease, by statute or
otherwise, in the case of non-payment of the Additional Charges, as well as the
Base Rent. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to any other Person to which such
Additional Charges would otherwise be due.
38
3.5 [INTENTIONALLY DELETED].
3.6 NET LEASE. The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the installments of Base
Rent, and the payments of Additional Charges throughout the Term.
3.7 NO LESSEE TERMINATION OR OFFSET.
3.7.1 NO TERMINATION. Except as may be otherwise specifically
and expressly provided in Article 13 or Article 14 in this Lease,
Lessee, to the extent not prohibited by applicable law, shall remain
bound by this Lease in accordance with its terms and shall neither take
any action without the consent of Lessor to modify, surrender or
terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent,
nor shall the respective obligations of Lessor and Lessee be otherwise
affected by reason of (a) any Casualty or any Taking of the Leased
Property, (b) the lawful or unlawful prohibition of, or restriction
upon, Lessee's use of the Leased Property or the interference with such
use by any Person (other than Lessor, except to the extent permitted
hereunder) or by reason of eviction by paramount title; (c) any claim
that Lessee has or might have against Lessor, (d) any default or breach
of any warranty by Lessor or any of the other Meditrust Entities under
this Lease, any other Lease Document or any Related Party Agreement,
(e) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Lessor or any assignee or transferee of Lessor or (f) any
other cause whether similar or dissimilar to any of the foregoing,
other than a discharge of Lessee from any of the Lease Obligations as a
matter of law. Notwithstanding the foregoing, any amounts collected by
Lessor under any title insurance policies insuring Lessor's interest in
the Leased Property (less any costs and expenses incurred by Lessor in
collecting the same) shall be credited against the Lease Obligations.
3.7.2 WAIVER. 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 Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by
Lessee hereunder, except as otherwise specifically and expressly
provided in this Lease.
3.7.3 INDEPENDENT COVENANTS. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and
agreements and the Rent and all other sums payable by Lessee hereunder
shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of
this Lease or (except in those instances where the obligation to pay
expressly survives the termination of this Lease) by termination of
this Lease other than by reason of an Event of Default.
39
3.8 ABATEMENT OF RENT LIMITED. There shall be no abatement of Rent on
account of any Casualty, Taking or other event, except that in the event of a
partial Taking or a temporary Taking as described in Section 14.3, the Base Rent
shall be abated as follows: (a) in the case of such a partial Taking, the
Meditrust Investment shall be reduced for the purposes of calculating Base Rent
pursuant to Section 3.1 by subtracting therefrom, as applicable, the net amount
of the Award received by Lessor, and (b) in the case of such a temporary Taking,
by reducing the Base Rent for the period of such a temporary Taking, by the net
amount of the Award received by Lessor.
For the purposes of this Section 3.8, the "net amount of the Award
received by Lessor" shall mean the Award paid to Lessor on account of such
Taking, minus all costs and expenses incurred by Lessor in connection therewith,
and minus any amounts paid to or for the account of Lessee to reimburse for the
costs and expenses of reconstructing the Facility following such Taking in order
to create a viable and functional Facility under all of the circumstances.
ARTICLE 4
IMPOSITIONS; TAXES; UTILITIES;
INSURANCE PAYMENTS
4.1 PAYMENT OF IMPOSITIONS.
4.1.1 LESSEE TO PAY. Subject to the provisions of Article 15,
Lessee will pay or cause to be paid all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments
to be made directly to the taxing authority where feasible, and Lessee
will promptly furnish Lessor copies of official receipts or other
satisfactory proof evidencing payment not later than the last day on
which the same may be paid without penalty or interest. Subject to the
provisions of Article 15 and Section 4.1.2, Lessee's obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such
Impositions become a lien upon the Leased Property or any part thereof.
4.1.2 INSTALLMENT ELECTIONS. If any such Imposition may, at
the option of the taxpayer, lawfully be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Lessee may exercise the option to pay the same (and any accrued
interest on the unpaid balance of such Imposition) in installments and,
in such event, shall pay such installments during the Term hereof
(subject to Lessee's right to contest pursuant to the provisions of
Section 4.1.5 below) as the same respectively become due and before any
fine, penalty, premium, further interest or cost may be added thereto.
4.1.3 RETURNS AND REPORTS. Lessor, at its expense, shall, to
the extent permitted by applicable law, prepare and file all tax
returns and reports as may be required by Governmental Authorities in
respect of Lessor's net income, gross
40
receipts, franchise taxes and taxes on its capital stock, and Lessee,
at its expense, shall, to the extent permitted by applicable laws and
regulations, prepare and file all other tax returns and reports in
respect of any Imposition as may be required by Governmental
Authorities. Lessor and Lessee shall, upon request of the other,
provide such data as is maintained by the party to whom the request is
made 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, Lessee shall file all personal property tax returns in such
jurisdictions where it may legally so file. Lessor, to the extent it
possesses the same, and Lessee, to the extent it possesses the same,
will provide the other party, upon request, with cost and depreciation
records necessary for filing returns for any portion of Leased Property
so classified as personal property. Where Lessor is legally required to
file personal property tax returns, if Lessee notifies Lessor of the
obligation to do so in each year at least thirty (30) days prior to the
date any protest must be filed, Lessee will be provided with copies of
assessment notices so as to enable Lessee to file a protest.
4.1.4 REFUNDS. If no Lease Default shall have occurred and be
continuing, any refund due from any taxing authority in respect of any
Imposition paid by Lessee shall be paid over to or retained by Lessee.
If a Lease Default shall have occurred and be continuing, at Lessor's
option, such funds shall be paid over to Lessor and/or retained by
Lessor and applied toward the Obligations in accordance with the Lease
Documents and/or the Related Party Agreements.
4.1.5 PROTEST. Upon giving notice to Lessor, at Lessee's
option and sole cost and expense, and subject to compliance with the
provisions of Article 15, Lessee may contest, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to
effect a reduction of any Imposition and Lessor, at Lessee's cost and
expense as aforesaid, shall fully cooperate in a reasonable manner with
Lessee in connection with such protest, appeal or other action.
4.2 NOTICE OF IMPOSITIONS. Lessor shall give prompt notice to Lessee of
all Impositions payable by Lessee hereunder of which Lessor at any time has
knowledge, but Lessor's failure to give any such notice shall in no way diminish
Lessee's obligations hereunder to pay such Impositions.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
period during which the expiration or earlier termination of the Term occurs
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Impositions are imposed before or after such expiration or termination, and
Lessee's obligation to pay its prorated share thereof shall survive such
expiration or termination.
4.4 UTILITY CHARGES. Lessee will pay or cause to be paid all charges
for electricity, power, gas, oil, water, telephone and other utilities used in
the Leased Property during the Term and thereafter until Lessee surrenders the
Leased Property in the manner required by this Lease.
41
4.5 INSURANCE PREMIUMS. Lessee will pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article 12 during the Term, and thereafter until Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and Lessee shall furnish Lessor with evidence satisfactory
to Lessor that all such premiums have been so paid prior to the commencement of
the Term and thereafter at least thirty (30) days prior to the due date of each
premium which thereafter becomes due. Notwithstanding the foregoing, Lessee may
pay such insurance premiums to the insurer in monthly installments so long as
the applicable insurer is contractually obligated to give Lessor not less than a
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 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 Lessor at
the times required hereunder, Lessor shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, which
premiums shall be a demand obligation of Lessee to Lessor.
4.6 DEPOSITS.
4.6.1 LESSOR'S OPTION. Upon a Lease Default, or an event
which, with the giving of notice or passage of time, and/or both, would
constitute a Lease Default, at the option of Lessor, which may be
exercised at any time thereafter, Lessee shall, upon written request of
Lessor, on the first day of the calendar month immediately following
such request, and on the first day of each calendar month thereafter
during the Term (each of which dates is referred to as a "Monthly
Deposit Date"), pay to and deposit with Lessor a sum equal to
one-twelfth (1/12th) of 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
Lessee hereunder shall be estimated by Lessor with an appropriate
adjustment to be promptly made between Lessor and Lessee as soon as
such amount becomes determinable. In addition, Lessor may, at its
option, from time to time require that any particular deposit be
greater than one-twelfth (1/12th) of the estimated amount payable
within one (1) year after said Monthly Deposit Date, if such additional
deposit is required in order to provide to 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 Lessee under this
Section 4.6 shall be held by Lessor and shall be applied in payment of
the Impositions or insurance premiums, as the case may be, when due.
Any such deposits may be commingled with other assets of Lessor, and
shall be deposited by Lessor at such bank as Lessor may, from time to
time select. Lessor may, at its election from
42
time to time exercised, invest all or part of such deposits in one or
more of the investment vehicles described on EXHIBIT A to the Deposit
Pledge Agreement. Lessor shall not be liable to Lessee or any other
Person (a) based on Lessor's (or such bank's) choice of investment
vehicles, (b) for any consequent loss of principal or interest or (c)
for any unavailability of funds based on such choice of investment.
Furthermore, Lessor shall bear no responsibility for the financial
condition of, nor any act or omission by, Lessor's depository bank. The
income from such investment or interest on such deposit shall be paid
to Lessee on a semi-annual basis as long as no Lease Default has
occurred 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. Lessee shall give not less than ten
(10) days prior written notice to Lessor in each instance when an
Imposition or insurance premium is due, specifying the Imposition or
premium to be paid and the amount thereof, the place of payment, and
the last day on which the same may be paid in order to comply with the
requirements of this Lease. If Lessor, in violation of its obligations
under this Lease, does not pay any Imposition or insurance premium when
due, for which a sufficient deposit exists, Lessee shall not be in
default hereunder by virtue of the failure of Lessor to pay such
Imposition or such insurance premium and Lessor shall pay any interest
or fine assessed by virtue of Lessor's failure to pay such Imposition
or insurance premium.
4.6.3 DEFICITS. If for any reason any deposit held by Lessor
under this Section 4.6 shall not be sufficient to pay an Imposition or
insurance premium within the time specified therefor in this Lease,
then, within ten (10) days after demand by Lessor, Lessee shall deposit
an additional amount with Lessor, increasing the deposit held by Lessor
so that Lessor holds sufficient funds to pay such Imposition or premium
in full (or in installments as otherwise provided for herein), together
with any penalty or interest due thereon. Lessor may change its
estimate of any Imposition or insurance premium for any period on the
basis of a change in an assessment or tax rate or on the basis of a
prior miscalculation or for any other good faith reason; in which
event, within ten (10) days after demand by Lessor, Lessee shall
deposit with Lessor the amount in excess of the sums previously
deposited with Lessor for the applicable period which would theretofore
have been payable under the revised estimate.
4.6.4 OTHER PROPERTIES. If any Imposition shall be levied,
charged, filed, assessed, or imposed upon or against the Leased
Property, and if such Imposition shall also be a levy, charge,
assessment, or imposition upon or for any other real or personal
property that does not constitute a part of the Leased Property, then
the computation of the amounts to be deposited under this Section 4.6
shall be based upon the entire amount of such Imposition and Lessee
shall not have the right to apportion any deposit with respect to such
Imposition.
4.6.5 TRANSFERS. In connection with any assignment of Lessor's
interest under this Lease, the original Lessor named herein and each
successor in interest shall have the right to transfer all amounts
deposited pursuant to the provisions of this Section 4.6 and still in
its possession to such assignee (as the subsequent holder
43
of Lessor's interest in this Lease) and upon such transfer and delivery
of notice thereof to Lessee, the original Lessor named herein or the
applicable successor in interest transferring the deposits shall
thereupon be completely released from all liability with respect to
such deposits so transferred and Lessee shall look solely to said
assignee, as the subsequent holder of Lessor's interest under this
Lease, in reference thereto.
4.6.6 SECURITY. All amounts deposited with Lessor pursuant to
the provisions of this Section 4.6 shall be held by Lessor as
additional security for the payment and performance of the Obligations
and, upon the occurrence of any Lease Default, Lessor may, in its sole
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 Lessor under this
Section 4.6 shall be refunded to Lessee; unless a Related Party Default
has occurred, in which event such sums may be applied towards the
Obligations in accordance with the Related Party Agreements.
4.6.8 RECEIPTS. Lessee shall deliver to Lessor copies of all
notices, demands, claims, bills and receipts in relation to the
Impositions and insurance premiums immediately upon receipt thereof by
Lessee.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY;
5.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only the right to
the exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
5.2 PERSONAL PROPERTY; REMOVAL AND REPLACEMENT OF PERSONAL PROPERTY.
5.2.1 LESSEE TO EQUIP FACILITY. Lessee, at its sole cost and
expense, shall install, affix or assemble or place on the Leased
Property, sufficient items of Tangible Personal Property to enable the
Leased Property to be operated from and after the Conversion Date in
accordance with the requirements of this Lease for the Primary Intended
Use, and such Tangible Personal Property and replacements thereof,
shall be at all times the property of Lessee.
5.2.2 SUFFICIENT PERSONAL PROPERTY. 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,
from and after the Conversion Date, in
44
compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the
industry for the Primary Intended Use. In addition, Lessee shall, from
and after the Conversion Date, (a) furnish all necessary replacements
of obsolete items of the Tangible Personal Property during the Term,
unless Lessee provides Lessor with an explanation (reasonably
acceptable to Lessor) as to why such Tangible Personal Property is no
longer required in connection with the operation of the Leased Property
and (b) at least once a year, and more frequently if requested by
Lessor, deliver to Lessor, a detailed inventory of all such Tangible
Personal Property.
5.2.3 REMOVAL AND REPLACEMENT; LESSOR'S OPTION TO PURCHASE.
Lessee shall not remove from the Leased Property any one or more items
of Tangible Personal Property (whether now owned or hereafter
acquired), the fair market value of which exceeds THIRTY-FIVE THOUSAND
DOLLARS ($35,000), individually or ONE HUNDRED FIFTY THOUSAND DOLLARS
($150,000.00) collectively, except if such Tangible Personal Property
is simultaneously suitably replaced or Lessee provides Lessor with an
explanation (reasonably satisfactory to Lessor) as to why such Tangible
Personal Property is no longer required in connection with the
operation of the Leased Property. At its sole cost and expense, Lessee
shall restore the Leased Property to the condition required by Article
8, including repair of all damage to the Leased Property caused by the
removal of the Tangible Personal Property, whether effected by Lessee
or Lessor. Upon the expiration or earlier termination of this Lease,
Lessor shall have the option, which may be exercised prior to or within
sixty (60) days following such expiration or termination, of (a)
acquiring the Tangible Personal Property (pursuant to a xxxx of sale
and assignments of any equipment leases, all in such forms as are
reasonably satisfactory to Lessor) upon payment of its book value
(Lessee's cost, minus depreciation), but not in excess of its fair
market value or (b) requiring Lessee to remove the Tangible Personal
Property. If Lessor exercises its option to purchase the Tangible
Personal Property, the price to be paid by Lessor shall be (i) reduced
by the amount of all payments due on any equipment leases or any other
Permitted Prior Security Interests assumed by Lessor and (ii) applied
to the Lease Obligations before any payment to Lessee. If Lessor
requires the removal of the Tangible Personal Property, then all of the
Tangible Personal Property that is not removed by Lessee within ten
(10) days following such request shall be considered abandoned by
Lessee and may be appropriated, sold, destroyed or otherwise disposed
of by Lessor without first giving notice thereof to Lessee, without any
payment to Lessee and without any obligation to account therefor.
45
ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS
6.1 SECURITY FOR LESSEE'S OBLIGATIONS; PERMITTED PRIOR SECURITY
INTERESTS.
6.1.1 SECURITY. In order to secure the payment and performance
of all of the Obligations, Lessee agrees to provide or cause there to
be provided, 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;
(c) a first lien and exclusive pledge of all of the
capital stock of Lessee all as more particularly set forth in
the Pledge Agreement. If any Person other than the Lessee
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
Agreement; and
(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 Assignments.
46
6.1.2 PURCHASE-MONEY SECURITY INTERESTS AND EQUIPMENT LEASES.
Notwithstanding any other provision hereof regarding the creation of
Liens, but subject to Section 11.3.4, Lessee may (a) grant priority
purchase money security interests in items of Tangible Personal
Property and (b) lease Tangible Personal Property from equipment
lessors for the exclusive use of the Facility, as long as in each
instance: (i) the secured party or equipment lessor enters into an
intercreditor agreement with, and satisfactory to, Lessor, pursuant to
which, without limiting the foregoing, (x) Lessor shall be afforded the
option of curing defaults and the option of succeeding to the rights of
Lessee and (y) Lessor's security interest in Tangible Personal
Property, shall be subordinated to the security interest granted to
such secured party (ii) all of the terms, conditions and provisions of
the financing, security interest or lease are reasonably acceptable to
Lessor, (iii) Lessee provides a true and complete copy, as executed, of
each such purchase money security agreement, financing document and
equipment lease and all amendments thereto and (iv) no such security
interest, financing agreement or lease is cross-defaulted or
cross-collateralized with any other obligation. Notwithstanding the
foregoing, Lessee may lease, or grant purchase money security interests
in, new items of Tangible Personal Property having an aggregate cost
during the Term in an amount not to exceed TWO HUNDRED THOUSAND DOLLARS
($200,000) without complying with the foregoing requirements, provided
that Lessee shall provide Lessor with a true and complete copy, as
executed, of each purchase money security agreement, related financing
document and equipment lease, and all amendments thereto. Security
interests granted by Lessee in full compliance with the provisions of
this Section 6.1.2 are referred to as "Permitted Prior Security
Interests".
6.2 GUARANTIES. Completion of the Facility shall be unconditionally and
irrevocably guaranteed by the Guarantor pursuant to the Completion Guaranty and
the Pledgor's obligations under the Note shall be unconditionally and
irrevocably guaranteed by the Lessee pursuant to the Lessee's Guaranty.
47
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purposes hereunder. Lessee is leasing
the Leased Property "AS-IS" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LEASED PROPERTY, EITHER AS TO ITS FITNESS FOR ANY PARTICULAR PURPOSE OR USE, ITS
DESIGN OR CONDITION OR OTHERWISE, OR AS TO DEFECTS IN 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 LESSEE. LESSEE HEREBY ASSUMES ALL RISK OF THE PHYSICAL CONDITION OF
THE LEASED PROPERTY, THE SUITABILITY OF THE LEASED PROPERTY FOR LESSEE'S
PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE OF THE LEASED PROPERTY WITH ALL
APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT NOT LIMITED TO ENVIRONMENTAL LAWS
AND ZONING OR LAND USE LAWS.
Upon the request of Lessor, accompanied by an explanation reasonably
establishing a justification for such request, at any time and from time to time
during the Term, Lessee shall engage one (1) or more independent professional
consultants, engineers and inspectors, qualified to do business in the State and
acceptable to Lessor to perform any environmental and/or structural
investigations and/or other inspections of the Leased Property and the Facility
as Lessor may reasonably request in order to detect (a) any structural
deficiencies in the Leased Improvements or the utilities servicing the Leased
Property or (b) the presence of any condition that (i) may be harmful or present
a health hazard to the patients, residents and other occupants of the Leased
Property or (ii) constitutes a breach or violation of any of the Lease
Documents. In the event that Lessor reasonably determines that the results of
such testing or inspections are unsatisfactory, within thirty (30) days of
notice from Lessor, Lessee shall commence such appropriate remedial actions as
may be reasonably requested by Lessor to correct such unsatisfactory conditions
and, thereafter, shall diligently and continuously prosecute such remedial
actions to completion within the time limits prescribed in this Lease or the
other Lease Documents.
48
7.2 USE OF THE LEASED PROPERTY; COMPLIANCE; MANAGEMENT.
7.2.1 OBLIGATION TO OPERATE. From and after the Conversion
Date, Lessee shall continuously operate the Leased Property in
accordance with the Primary Intended Use and maintain its
qualifications for licensure and accreditation as required by all
applicable Legal Requirements and Insurance Requirements.
7.2.2 PERMITTED USES. From and after the Conversion Date,
Lessee shall use the Leased Property, or permit the Leased Property to
be used, only for the Primary Intended Use and, prior to the Conversion
Date, the Leased Property may only be used for the completion of the
construction of the Project in accordance with the terms of the
Leasehold Improvement Agreement. 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 Lessor, which consent may be
withheld in Lessor's sole and absolute discretion.
7.2.3 COMPLIANCE WITH INSURANCE REQUIREMENTS. No use shall be
made or permitted to be made of the Leased Property and no acts shall
be done which will cause the cancellation of any insurance policy
covering the Leased Property, nor shall Lessee, any Manager or any
other Person sell or otherwise provide to any patients, 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, Lessee shall, at its sole cost and expense, take whatever
other actions that may be necessary to comply with and to insure that
the Leased Property complies with all Insurance Requirements.
7.2.4 NO WASTE. Lessee shall not commit or suffer to be
committed any waste on, in or under the Leased Property, nor shall
Lessee cause or permit any nuisance thereon.
7.2.5 NO IMPAIRMENT. Lessee shall neither suffer nor permit
the Leased Property to be used in such a manner as (a) might reasonably
tend to impair Lessor's title thereto or (b) may reasonably make
possible a claim or claims of adverse usage or adverse possession by
the public or of implied dedication of the Leased Property.
7.2.6 NO LIENS. Except as permitted pursuant to Section 6.1.2,
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. Lessee covenants and agrees
that the Leased Property shall not be used for any unlawful purpose and that
Lessee, at its sole cost and expense, will promptly (a) comply with, and shall
cause every other member of the Leasing Group to comply with, all Legal
Requirements relating to the use, operation,
49
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 in order to operate
the Leased Property for the Primary Intended Use, and for compliance with all of
the terms and conditions of this Lease. Unless a Lease Default has occurred or
any event has occurred which, with the passage of time and/or the giving of
notice would constitute a Lease Default, Lessee may, upon prior written notice
to 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, Lessee
shall not enter into any Management Agreement without the prior written approval
of Lessor, in each instance, which approval shall not be unreasonably withheld.
Lessee shall not, without the prior written approval of Lessor, in each
instance, which approval shall not be unreasonably withheld, agree to or allow:
(a) any change in the Manager or change in the ownership or control of the
Manager, (b) any change in the Management Agreement, (c) the termination of any
Management Agreement (other than in connection with the exercise by Lessee of
any of its remedies under any Management Agreement as a result of any default by
any Manager thereunder), (d) any assignment by the Manager of its interest under
the Management Agreement or (e) any material amendment of the Management
Agreement. In addition, 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 Lessee enters into
any Management Agreement with an Affiliate of Lessee, 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 is amended so as to add as a party
thereto the applicable Affiliate of Lessee that is to be the Manager (so that
the payments to be made under such Management Agreement are fully subordinated
to the Lease Obligations).
Each Management Agreement shall provide that Lessor shall be provided
notice of any defaults thereunder and, at Lessor's option, an opportunity to
cure such default. Lessee shall furnish to Lessor, within three (3) days after
receipt thereof, or after the mailing or service thereof by Lessee, as the case
may be, a copy of each notice of default which 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 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, 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 Lessee (except in the
case of an emergency) enter upon the Leased Property and perform,
50
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 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 Lessee to Lessor
or such receiver, and, Lessor shall have the same rights and remedies for
failure to pay such costs on demand as for Lessee's failure to pay any other
sums due hereunder.
51
ARTICLE 8
REPAIRS; RESTRICTIONS
8.1 MAINTENANCE AND REPAIR.
8.1.1 LESSEE'S RESPONSIBILITY. Lessee, at its sole cost and
expense, shall keep the Leased Property and all private roadways,
sidewalks and curbs appurtenant thereto which are under Lessee's
control in good order and repair (whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements
or the age of the Leased Property or such private roadways, sidewalks
and curbs or any other cause whatsoever) and, subject to Articles 9, 13
and 14, Lessee shall promptly, with the exercise of all reasonable
efforts, undertake and diligently complete all necessary and
appropriate repairs, replacements, renovations, restorations,
alterations and modifications thereof of every kind and nature, whether
interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a
condition (concealed or otherwise) existing prior to the commencement
of, or during, the Term and thereafter until Lessee surrenders the
Leased Property in the manner required by this Lease. In addition,
Lessee, at its sole cost and expense, shall make all repairs,
modifications, replacements, renovations and alterations of the Leased
Property (and such private roadways, sidewalks and curbs) that are
necessary to comply with all applicable Legal Requirements and
Insurance Requirements so that, from and after the Conversion Date, the
Leased Property can be legally operated for the Primary Intended Use.
All repairs, replacements, renovations, alterations, and modifications
required by the terms of this Section 8.1 shall be (a) performed in a
good and workmanlike manner in compliance with all Legal Requirements,
Insurance Requirements and the requirements of Article 9 hereof, using
new materials well suited for their intended purpose and (b) consistent
with the operation of the Leased Property in a first class manner.
Lessee will not take or omit to take any action the taking or omission
of which might materially impair the value or the usefulness of the
Leased Property for the Primary Intended Use. To the extent that any of
the repairs, replacements, renovations, alterations or modifications
required by the terms of this Section 8.1 constitute Material
Structural Work, Lessee shall obtain Lessor's prior written approval
(which approval shall not be unreasonably withheld) of the specific
repairs, replacements, renovations, alterations and modifications to be
performed by or on behalf of Lessee in connection with such Material
Structural Work. Notwithstanding the foregoing, in the event of a bona
fide emergency during which Lessee is unable to contact the appropriate
representatives of Lessor, Lessee may commence such Material Structural
Work as may be necessary in order to address such emergency without
Lessor's prior approval, provided, however, that Lessee shall
immediately thereafter advise Lessor of such emergency and the nature
and scope of the Material Structural Work commenced and shall obtain
Lessor's approval of the remaining Material Structural Work to be
completed.
52
8.1.2 NO LESSOR OBLIGATION. Lessor shall not, under any
circumstances, be required to build or rebuild any improvements on the
Leased Property (or any private roadways, sidewalks or curbs
appurtenant thereto), or to make any repairs, replacements,
renovations, alterations, restorations, modifications, or renewals of
any nature or description to the Leased Property (or any private
roadways, sidewalks or curbs appurtenant thereto), whether ordinary or
extraordinary, structural or non-structural, foreseen or unforeseen, or
to make any expenditure whatsoever with respect thereto in connection
with this Lease, or to maintain the Leased Property (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 Lessor shall be construed as (a)
constituting the consent or request of Lessor, express or implied, to
any contractor, subcontractor, laborer, materialman or vendor to or for
the performance of any labor or services for any construction,
alteration, addition, repair or demolition of or to the Leased Property
or (b) giving Lessee any right, power or permission to contract for or
permit the performance of any labor or services or the furnishing of
any materials or other property in such fashion as would permit the
making of any claim against Lessor for the payment thereof or to make
any agreement that may create, or in any way be the basis for, any
right, title or interest in, or Lien or claim against, the estate of
Lessor in the Leased Property. Without limiting the generality of the
foregoing, the right title and interest of 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 Lessee or any other Person other than Lessor. Lessee shall notify
any contractor, subcontractor, laborer, materialman or vendor providing
any labor, services or materials to the Leased Property of this
provision.
8.2 ENCROACHMENTS; TITLE RESTRICTIONS. If any of the Leased
Improvements shall, at any time, encroach upon any property, street or
right-of-way adjacent to the Leased Property, or shall violate the agreements or
conditions contained in any lawful restrictive covenant or other Lien now or
hereafter affecting the Leased Property, or shall impair the rights of others
under any easement, right-of-way or other Lien to which the Leased Property is
now or hereafter subject, then promptly upon the request of Lessor, Lessee
shall, at its sole cost and expense, subject to Lessee's right to contest the
existence of any encroachment, violation or impairment as set forth in Article
15, (a) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or
impairment or (b) make such alterations to the Leased Improvements, and take
such other actions, as Lessee in the good faith exercise of its judgment deems
reasonably practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements. Notwithstanding the foregoing, Lessee shall, in any event, take
all such actions as may be reasonably necessary in order to be able to continue
the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent that the Leased Improvements were
operated prior to the assertion of such
53
encroachment, violation or impairment as contemplated by this Lease, the
Leasehold Improvement Agreement and the other Lease Documents and nothing
contained herein shall limit Lessee's obligations to operate the Leased
Property, from and after the Conversion Date, in accordance with its Primary
Intended Use. Any such alteration made pursuant to the terms of this Section 8.2
shall be completed in conformity with the applicable requirements of Section 8.1
and Article 9. Lessee's obligations under this Section 8.2 shall be in addition
to and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance.
ARTICLE 9
MATERIAL STRUCTURAL WORK AND
CAPITAL ADDITIONS
9.1 LESSOR'S APPROVAL. Without the prior written consent of Lessor,
which consent may be withheld by Lessor, in its sole and absolute discretion,
Lessee shall make no Capital Addition or Material Structural Work to the Leased
Property (including, without limitation, any change in the size or unit or bed
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 Lessor has granted its prior written
approval, the following terms and conditions shall apply unless otherwise
expressly set forth in Lessor's written approval.
9.2.1 NO LIENS. Lessee shall not be permitted to create any
Lien on the Leased Property in connection with any Capital Addition or
Material Structural Work.
9.2.2 LESSEE'S PROPOSAL REGARDING CAPITAL ADDITIONS AND
MATERIAL STRUCTURAL WORK. If Lessee desires to undertake any Capital
Addition or Material Structural Work, Lessee shall submit to Lessor in
writing a proposal setting forth in reasonable detail any proposed
Capital Addition or Material Structural Work and shall provide to
Lessor copies of, or information regarding, the applicable plans and
specifications, Permits, Contracts and any other materials concerning
the proposed Capital Addition or Material Structural Work, as the case
may be, as Lessor may reasonably request. Without limiting the
generality of the foregoing, each such proposal pertaining to any
Capital Addition shall indicate the approximate projected cost of
constructing such Capital Addition, the use or uses to which it will be
put and a good faith estimate of the change, if any, in the gross
revenues that Lessee anticipates will result from the construction of
such Capital Addition.
9.2.3 LESSOR'S OPTIONS REGARDING CAPITAL ADDITIONS AND
MATERIAL STRUCTURAL WORK. Lessor shall have the options of: (a) denying
permission for the
54
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
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 Lessor may in its discretion impose or
(d) any combination of the foregoing. Unless Lessor notifies Lessee in
writing of a contrary election within forty-five (45) days of Lessee's
request, Lessor shall be deemed to have denied the request for the
Capital Addition or Material Structural Work.
9.2.4 LESSOR MAY ELECT TO FINANCE CAPITAL ADDITIONS OR
MATERIAL STRUCTURAL WORK. If Lessor elects to offer financing for the
proposed Capital Addition or Material Structural Work, the provisions
of Section 9.3 shall apply.
9.3 CAPITAL ADDITIONS AND MATERIAL STRUCTURAL WORK FINANCED BY LESSOR.
9.3.1 LESSEE'S FINANCING REQUEST. Lessee may request that
Lessor provide or arrange financing for a Capital Addition or Material
Structural Work by providing to Lessor such information about the
Capital Addition or Material Structural Work as Lessor may reasonably
request, including, without limitation, all information referred to in
Section 9.2 above. Lessee understands, however, that Lessor shall be
under no obligation to agree to such request. Nevertheless, Lessor
shall use reasonable efforts to notify Lessee, within forty-five (45)
days of receipt of such information, as to whether Lessor will finance
the proposed Capital Addition or Material Structural Work and, if so,
the terms and conditions upon which it would do so, including the terms
of any amendment to this Lease (including, without limitation, an
increase in Base Rent based on Lessor's then existing terms and
prevailing conditions to compensate Lessor for the additional funds
advanced by it). Lessee may withdraw its request by notice to Lessor at
any time before such time as Lessee accepts Lessor's terms and
conditions. All advances of funds for any such financing shall be made
in accordance with Lessor's then standard construction loan
requirements and procedures, which may include, without limitation, the
requirements and procedures applicable to Work under Section 13.1.
9.3.2 LESSOR'S GENERAL REQUIREMENTS. If Lessor agrees to
finance the proposed Capital Addition or Material Structural Work and
Lessee accepts Lessor's proposal therefor, in addition to all other
items which Lessor or any applicable Financing Party may reasonably
require, Lessee shall provide to Lessor the following:
(a) prior to any advance of funds, (i) any
information, opinions, certificates, Permits or documents
reasonably requested by Lessor or any applicable Financing
Party which are necessary to confirm that Lessee will be able
to use the Capital Addition upon the completion thereof or the
55
applicable portion of the Facility upon the completion of the
Material Structural Work in accordance with the Primary
Intended Use and (ii) evidence satisfactory to 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 Lessor and any applicable Financing Party are
furnished with reasonable evidence that the same will be
available in the normal course of business without unusual
condition;
(b) prior to any advance of funds, an Officer's
Certificate and, if requested, a certificate from Lessee's
architect, setting forth in reasonable detail the projected
(or actual, if available) Capital Addition Cost or the cost of
the Material Structural Work;
(c) bills of sale, instruments of transfer and other
documents required by Lessor so as to vest title to the
Capital Addition or the applicable Material Structural Work in
Lessor free and clear of all Liens, and amendments to this
Lease and any recorded notice or memorandum thereof, duly
executed and acknowledged, in form and substance reasonably
satisfactory to Lessor, providing for any changes required by
Lessor including, without limitation, changes in the Base Rent
and the legal description of the Land;
(d) upon payment therefor, a deed conveying to Lessor
title to any land acquired for the purpose of constructing the
Capital Addition or the applicable Material Structural Work
("Additional Land") free and clear of any Liens except those
approved by Lessor;
(e) upon completion of the Capital Addition or the
Material Structural Work, a final as-built survey thereof
reasonably satisfactory to Lessor, if required by Lessor;
(f) during and following the advance of funds and the
completion of 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 Lessor and any Financing Party (i) updating
the same without any additional exception except as may be
reasonably permitted by Lessor, (ii) if 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 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);
56
(g) simultaneous with the initial advance of funds,
if appropriate, (i) an owner's policy of title insurance
insuring fee simple title to any Additional Land conveyed to
Lessor pursuant to subparagraph (d) free and clear of all
Liens except those approved by 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 Lessor, an appraisal of the Leased Property by an
M.A.I. appraiser acceptable to Lessor, which states that the
Fair Market Value of the Leased Property upon completion of
the Capital Addition or the Material Structural Work exceeds
the Fair Market Value of the Leased Property prior to the
commencement of the construction of such Capital Addition or
Material Structural Work by an amount not less than one
hundred five percent (105%) 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 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 Lessee authorizing
the execution and delivery of the lease amendment and any
other documents and instruments as may be reasonably required
by Lessor and any applicable Financing Party.
9.3.3 PAYMENT OF COSTS. By virtue of making a request to
finance a Capital Addition or any Material Structural Work, whether or
not such financing is actually consummated, Lessee shall be deemed to
have agreed to pay, upon demand, all costs and expenses reasonably
incurred by Lessor and any Person participating with Lessor in any way
in the financing of the Capital Addition 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 Lessor's options
with respect to proposed Capital Additions or Material Structural Work: (a) no
Capital Addition or Material Structural Work shall be completed that could, upon
completion, significantly alter the character or purpose or detract from the
value or operating efficiency of the Leased Property, or significantly impair
the revenue-producing capability of the Leased Property, or adversely affect the
ability of 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
57
other improvements on property adjacent to the Leased Property (and not part of
the Land covered by this Lease) including, without limitation, tie-ins of
buildings or other structures or utilities, unless Lessee shall have obtained
the prior written approval of Lessor, which approval may be withheld in Lessor's
sole and absolute discretion and (c) all proposed Capital Additions and Material
Structural Work shall be architecturally integrated and consistent with the
Leased Property.
9.5 NON-CAPITAL ADDITIONS. Lessee shall have the obligation and 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, Lessee shall
always comply with and satisfy the conditions of Section 9.4, mutatis, mutandis.
Lessee shall have the right, from time to time, to make additions, modifications
or improvements to the Leased Property which do not constitute Capital Additions
or Material Structural Work as it may deem to be desirable or necessary for its
uses and purposes, subject to the same limits and conditions imposed under
Section 9.4. The cost of any such repair, replacement, alteration, addition,
modification or improvement shall be paid by Lessee and the results thereof
shall be included under the terms of this Lease and become a part of the Leased
Property, without payment therefor by Lessor at any time. Notwithstanding the
foregoing, all such additions, modifications and improvements which affect the
structure of any of the Leased Improvements, or which involve the expenditure of
more than TWENTY-FIVE THOUSAND DOLLARS ($25,000.00), shall be undertaken only
upon compliance with the provisions of Section 13.1, all Legal Requirements and
all other applicable requirements of this Lease; provided, however, that in the
event of a bona fide emergency during which Lessee is unable to contact the
appropriate representatives of Lessor, Lessee may commence such additions,
modifications and improvements as may be necessary in order to address such
emergency without Lessor's prior approval, as long as Lessee immediately
thereafter advises Lessor of such emergency and the nature and scope of the
additions, modifications and improvements performed and obtains Lessor's
approval of the remaining work to be completed.
ARTICLE 10
WARRANTIES AND REPRESENTATIONS
10.1 REPRESENTATIONS AND WARRANTIES. Lessee hereby represents and
warrants to, and covenants and agrees with, Lessor that:
58
10.1.1 EXISTENCE; POWER; QUALIFICATION.
Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. 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 Agreement, Lessee does not have
any Subsidiaries and Lessee is not a member of any partnership or joint
venture. Attached hereto as EXHIBIT C is a true and correct list of all
of the shareholders of Lessee and their respective ownership interests
in Lessee.
10.1.2 VALID AND BINDING. Lessee is duly authorized to make
and enter into all of the Lease Documents to which Lessee is a party
and to carry out the transactions contemplated therein. All of the
Lease Documents to which Lessee is a party have been duly executed and
delivered by Lessee, and each is a legal, valid and binding obligation
of Lessee, enforceable in accordance with its terms.
10.1.3 SINGLE PURPOSE. Lessee is, and during the entire time
that this Lease remains in force and effect shall be, engaged in no
business, trade or activity other than the construction of the Project
in accordance with the terms of the Leasehold Improvement Agreement
and, from and after the Conversion Date, operation of the Leased
Property for the Primary Intended Use. The fiscal year of Lessee and
the Guarantor is the Fiscal Year.
10.1.4 NO VIOLATION. The execution, delivery and performance
of the Lease Documents and the consummation of the transactions thereby
contemplated shall not result in any breach of, or constitute a default
under, or result in the acceleration of, or constitute an event which,
with the giving of notice or the passage of time, or both, could result
in default or acceleration of any obligation of any member of the
Leasing Group under any of the Permits or Contracts or any other
contract, mortgage, lien, lease, agreement, instrument, franchise,
arbitration award, judgment, decree, bank loan or credit agreement,
trust indenture or other instrument to which any member of the Leasing
Group is a party or by which any member of the Leasing Group or the
Leased Property may be bound or affected and do not violate or
contravene any Legal Requirement.
10.1.5 CONSENTS AND APPROVALS. Except as already obtained or
filed, as the case may be, no consent or approval or other
authorization of, or exemption by, or declaration or filing with, any
Person and no waiver of any right by any Person is required to
authorize or permit, or is otherwise required as a condition of the
execution and delivery of any of the Lease Documents, the Construction
Contract or the Architect's Agreement 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 Lessor of the
59
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 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 on the operation
of the Leased Property.
10.1.8 COMMERCIAL ACTS. Lessee's performance of and compliance
with the obligations and conditions set forth herein and in the other
Lease Documents will constitute commercial acts done and performed for
commercial purposes.
10.1.9 ADEQUATE CAPITAL, NOT INSOLVENT. After giving effect to
the consummation of the transactions contemplated by the Lease
Documents, each member of the Leasing Group:
(a) will be able to pay its debts as they become due;
(b) will have sufficient funds and capital to carry
on its business as now conducted or as contemplated to be
conducted (in accordance with the terms of the Lease
Documents);
(c) will own property having a value both at fair
valuation and at present fair saleable value greater than the
amount required to pay its debts as they become due; and
(d) will not be rendered insolvent as determined by
applicable law.
60
10.1.10 NOT DELINQUENT. No member of the Leasing Group is
delinquent or claimed to be delinquent under any obligation for the
payment of borrowed money.
10.1.11 NO AFFILIATE DEBT. Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability
(whether direct or contingent) for borrowed money from the Guarantor
(or any of its Affiliates) or any Affiliate of Lessee that is not fully
subordinated to the Lease Obligations pursuant to the Affiliated Party
Subordination Agreement or the Subordination and Standstill Agreement.
10.1.12 TAXES CURRENT. Each member of the Leasing Group has
filed all federal, state and local tax returns which are required to be
filed as to which extensions are not currently in effect and have paid
all taxes, assessments, impositions, fees and other governmental
charges (including interest and penalties) which have become due
pursuant to such returns or pursuant to any assessment or notice of tax
claim or deficiency received by each such member of the Leasing Group.
No tax liability has been asserted by the Internal Revenue Service
against any member of the Leasing Group or any other federal, state or
local taxing authority for taxes, assessments, impositions, fees or
other governmental charges (including interest or penalties thereon) in
excess of those already paid.
10.1.13 FINANCIALS COMPLETE AND ACCURATE. The financial
statements of each member of the Leasing Group given to Lessor in
connection with the 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 liabilities, including, without limitation,
contingent liabilities, of each such member of the Leasing Group. There
has been no material adverse change since such date with respect to the
Tangible Net Worth of any member of the Leasing Group or with respect
to any other matters contained in such financial statements, nor have
any additional material liabilities, including, without limitation,
contingent liabilities, of any member of the Leasing Group arisen or
been incurred or asserted since such date. The projections heretofore
delivered to Lessor continue to be reasonable (with respect to the
material assumptions upon which such projections are based) and Lessee
reasonably anticipates the results projected therein will be achieved,
there having been (a) no material adverse change in the business,
assets or condition, financial or otherwise of any member of the
Leasing Group or the Leased Property and (b) no material depletion of
the cash or decrease in working capital of any member of the Leasing
Group.
61
10.1.14 PENDING ACTIONS, NOTICES AND REPORTS.
(a) There is no action or investigation pending or, to the
best knowledge and belief of Lessee, threatened, anticipated or
contemplated (nor, to the knowledge of Lessee, is there any reasonable
basis therefor) against or affecting the Leased Property or any member
of the Leasing Group (or any Affiliate thereof) before any Governmental
Authority, Accreditation Body or Third Party Payor which could prevent
or hinder the consummation of the transactions contemplated hereby or
call into question the validity of any of the Lease Documents or any
action taken or to be taken in connection with the transactions
contemplated thereunder or which in any single case or in the aggregate
might result in any material adverse change in the business, prospects,
condition, affairs or operations of any member of the Leasing Group or
the Leased Property (including, without limitation, any action to
revoke, withdraw or suspend any Permit necessary or desirable for the
operation of the Leased Property in accordance with its Primary
Intended Use and any action to transfer or relocate any such Permit to
a location other than the Leased Property) or any material impairment
of the right or ability of any member of the Leasing Group to carry on
its operations as presently conducted or proposed to be conducted or
which may materially adversely impact reimbursement to any member of
the Leasing Group for services rendered to beneficiaries of Third Party
Payor Programs.
(b) Neither the Facility nor any member of the Leasing Group
has received any notice of any claim, requirement or demand of any
Governmental Authority, Accreditation Body, Third Party Payor or any
insurance body having or claiming any licensing, certifying,
supervising, evaluating or accrediting authority over the Leased
Property to rework or redesign the Leased Property, its professional
staff or its professional services, procedures or practices in any
material respect or to provide additional furniture, fixtures,
equipment or inventory or to otherwise take action so as to make the
Leased Property conform to or comply with any Legal Requirement;
(c) [Intentionally deleted]; and
(d) Lessee has delivered or caused to be delivered to 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.
62
10.1.15 COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS.
(a) Lessee and the Leased Property and the ownership,
construction, development, maintenance, management, repair, use,
occupancy, possession and operation thereof comply with all applicable
Legal Requirements and there is no claim of any violation thereof known
to Lessee. Without limiting the foregoing, Lessee has obtained all
Permits that are necessary or desirable to operate the Leased Property
in accordance with its Primary Intended Use and all such Permits are in
full force and effect.
(b) Except as previously delivered to Lessor pursuant to
Section 10.1.14(d) hereof, there are no outstanding notices of
deficiencies, notices of proposed action or orders of any kind relating
to the Leased Property issued by any Governmental Authority,
Accreditation Body or Third Party Payor requiring conformity to any of
the Legal Requirements.
(c) Lessee knows of no impediments to Lessee and the Facility
becoming licensed by the Department of Social Services (and/or any
appropriate Governmental Authority with jurisdiction over the operation
of the Facility), on or before the Conversion Date to operate eighty
(80) licensed beds (located in eighty (80) units) at the Facility.
10.1.16 NO ACTION BY GOVERNMENTAL AUTHORITY. There is no
action pending or, to the best knowledge and belief of Lessee,
recommended, by any Governmental Authority or Accreditation Body to
revoke, repeal, cancel, modify, withdraw or suspend any Permit or
Contract or to take any other action of any other type which could have
a material adverse effect on the Leased Property.
10.1.17 PROPERTY MATTERS.
(a) The Leased Property is free and clear of agreements,
covenants and Liens, except those agreements, covenants and Liens to
which this Lease is expressly subject, whether presently existing, as
are listed on EXHIBIT B or were listed on the UCC lien search results
delivered to 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, including, without
limitation, the First Leasehold Mortgage and the Second Leasehold
Mortgage (collectively referred to herein as the "Permitted
Encumbrances"); and Lessee shall warrant and defend Lessor's title to
the Leased Property against any and all claims and demands of every
kind and nature whatsoever;
(b) There is no Condemnation or similar proceeding pending
with respect to or affecting the Leased Property, and Lessee is not
aware, to the best of Lessee's knowledge and belief, that any such
proceeding is contemplated;
63
(c) To the actual knowledge of Lessee, no part of the
Collateral or the Leased Property has been damaged by any fire or other
casualty;
(d) None of the Permitted Encumbrances has or is likely to
have a material adverse impact upon, nor interfere with or impede, in
any material respect, the operation of the Leased Property in
accordance with the Primary Intended Use;
(e) Upon the completion of construction of the Project, 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 Lessee is included within the definition
of the Leased Property or the Collateral;
(f) The Leased Property abuts on and has direct vehicular
access to a public road or access to a public road via permanent,
irrevocable, appurtenant easements;
(g) The Leased Property constitutes a separate parcel for real
estate tax purposes and no portion of any real property that does not
constitute a portion of the Leased Property is part of the same tax
parcel as any part of the Leased Property; and
(h) Prior to the completion of construction of the Project,
all utilities necessary for the use and operation of the Facility will
be 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 construction
of the Project or 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 Lessor to
be readily obtainable.
10.1.18 THIRD PARTY PAYOR AGREEMENTS.
(a) [Intentionally Deleted].
(b) Attached hereto as EXHIBIT D is a list of national
accounts and local discount agreements, which constitute all of the
agreements between Lessee or the Facility, on the one hand, and Third
Party Payors on the other hand, pursuant to which Lessee or the
Facility agrees to provide services based on a discount factor from the
rates regularly charged for services rendered by Lessee or the
Facility.
64
(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.
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, upon
completion of construction of the Project, a percentage of beds or
slots in any program at the Facility be reserved for Medicaid or
Medicare eligible patients (or residents) or that the Facility provide
a certain amount of welfare, free or charity care or discounted or
government assisted patient (or resident) care.
10.1.21 NO PROPOSED CHANGES. 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 may result in the
likelihood of increased competition at the Facility or the imposition
of Medicaid, Medicare, charity, free care, welfare or other discounted
or government assisted patients (or residents) at the Facility or
require that Lessee or the Facility obtain a certificate of need,
Section 1122 approval or the equivalent, which Lessee or the Facility
does not currently possess.
10.1.22 ERISA. No employee pension benefit plan maintained by
any member of the Leasing Group has any accumulated funding deficiency
within the meaning of the ERISA, nor does any member of the Leasing
Group have any material liability to the PBGC established under ERISA
(or any successor thereto) in connection with any employee pension
benefit plan (or other class of benefit which the PBGC has elected to
insure), and there have been no "reportable events" (not waived) or
"prohibited transactions" with respect to any such plan, as those terms
are defined in Section 4043 of ERISA and Section 4975 of the Internal
Revenue Code of 1986, as now or hereafter amended, respectively.
10.1.23 NO BROKER. No member of the Leasing Group nor any of
their respective Affiliates has dealt with any broker or agent in
connection with the transactions contemplated by the Lease Documents.
10.1.24 NO IMPROPER PAYMENTS. No member of the Leasing Group
nor any of their respective Affiliates has:
65
(a) made any contributions, payments or gifts of its
funds or property to or for the private use of any government
official, employee, agent or other Person where either the
payment or the purpose of such contribution, payment or gifts
is illegal under the laws of the United States, any state
thereof or any other jurisdiction (foreign or domestic);
(b) established or maintained any unrecorded fund or
asset for any purpose or has made any false or artificial
entries on any of its books or records for any reason;
(c) made any payments to any Person with the
intention or understanding that any part of such payment was to
be used for any other purpose other than that described in the
documents supporting the payment; or
(d) made any contribution, or has reimbursed any
political gift or contribution made by any other Person, to
candidates for public office, whether federal, state or local,
where such contribution would be in violation of applicable
law.
10.1.25 NOTHING OMITTED. Neither this Lease, nor any of the
other Lease Documents, nor any certificate, agreement, statement or
other document, including, without limitation, any financial statements
concerning the financial condition of any member of the Leasing Group,
furnished to or to be furnished to 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. There is no fact within the special knowledge of Lessee
which has not been disclosed herein or in writing to Lessor that
materially adversely affects, or in the future, insofar as Lessee 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. 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. Lessee is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
66
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 Lessee is located at 0000 XXX
Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000 (the
"Principal Place of Business").
10.1.29 LABOR MATTERS. There are no proceedings now pending,
nor, to the best of Lessee's knowledge, threatened with respect to the
operation of the Facility before the National Labor Relations Board,
State Commission on Human Rights and Opportunities, State Department of
Labor, U.S. Department of Labor or any other Governmental Authority
having jurisdiction of employee rights with respect to hiring, tenure
and conditions of employment, and no member of the Leasing Group has
experienced any material controversy with any Facility administrator or
other employee of similar stature or with any labor organization.
10.1.30 INTELLECTUAL PROPERTY. 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, a true and correct copy of which has been
furnished to Lessor.
10.1.32 OPTION PURCHASE DOCUMENTS. True and correct copies of
the Option Agreement and other Option Purchase Documents have been
delivered to Lessor and the transactions related to the Land
contemplated by the Option Purchase Documents have closed in accordance
with the terms thereof and in compliance with all applicable Legal
Requirements.
10.1.33 WORKING CAPITAL LOAN DOCUMENTS. True and correct
copies of the Shortfall Agreement and the other Working Capital Loan
Documents have been delivered to Lessor and the transaction
contemplated by the Working Capital Loan Documents has closed in
accordance with the terms thereof and in compliance with all applicable
Legal Requirements. Attached hereto as EXHIBIT H is a true and correct
list of all of the Working Capital Loan Documents. There are no
agreements in force and effect between Lessee and the Guarantor or any
Affiliate of the Guarantor, other than (i) the Leasehold Improvement
Agreement, (ii) the Affiliated Party Subordination Agreement, (iii) the
Current Management
67
Agreement and (iv) the Working Capital Loan Documents. The Lessee shall
not terminate, amend, abridge, modify or otherwise limit any of the
Working Capital Loan 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. Notwithstanding anything to the contrary
set forth herein, from and after the date hereof, the Lessee shall not
enter into any contractual arrangement with the Guarantor, the
Developer, the Current Manager or any of their Affiliates without the
prior written consent of the Lessor, in each instance, which consent
may be withheld in the Lessor's sole and absolute discretion.
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 Lessee, the representations and warranties contained in Sections
10.1.6, 10.1.7, 10.1.10, 10.1.14, 10.1.15, 10.1.17(b), 10.1.17(c), 10.1.18(b),
10.1.18(c), 10.1.19, 10.1.20, 10.1.21, 10.1.22, 10.1.28, 10.1.29, in the second
sentence of Section 10.1.12, and in the second and third sentences of Section
10.1.13 shall not constitute continuing representations and warranties
throughout the Term.
ARTICLE 11
FINANCIAL AND OTHER COVENANTS
11.1 STATUS CERTIFICATES. At any time, and from time to time, upon
request from Lessor, Lessee shall furnish to Lessor, within ten (10) Business
Days' after receipt of such request, an Officer's Certificate certifying that
this Lease is unmodified and in full force and effect (or that this Lease is in
full force and effect as modified and setting forth the modifications) and the
dates to which the Rent has been paid. Any Officer's Certificate furnished
pursuant to this Section shall be addressed to any prospective purchaser or
mortgagee of the Leased Property as Lessor may request and may be relied upon by
Lessor and any such prospective purchaser or mortgagee of the Leased Property.
11.2 FINANCIAL STATEMENTS; REPORTS; NOTICE AND INFORMATION.
11.2.1 OBLIGATION TO FURNISH. Lessee will furnish and shall
cause to be furnished to Lessor the following statements, information
and other materials:
(a) ANNUAL STATEMENTS. Within one hundred (100) days
after the end of each of their respective fiscal years, (i) a
copy of the Consolidated Financials for each of (x) the Lessee
and the Guarantor and (y) any Sublessee for the preceding
fiscal year, certified and audited by, and with the unqualified
opinion of, independent certified public accountants acceptable
to Lessor and certified as true and correct by Lessee and the
68
Guarantor or the applicable Sublessee, as the case may be (and,
without limiting anything else contained herein, the
Consolidated Financials for Lessee and for each Sublessee shall
include a detailed balance sheet for Leased Property as of the
last day of such fiscal year and a statement of earnings from
the Leased Property for such fiscal year showing, among other
things, all rents and other income therefrom and all expenses
paid or incurred in connection with the operation of the Leased
Property); (ii) separate statements, certified as true and
correct by Lessee, the Guarantor and each Sublessee, stating
whether, to the best of the signer's knowledge and belief after
making due inquiry, Lessee, the Guarantor or such Sublessee, as
the case may be, is in default in the performance or observance
of any of the terms of this Lease or any of the other Lease
Documents and, if so, specifying all such defaults, the nature
thereof and the steps being taken to immediately remedy the
same; (iii) a copy of all letters from the independent
certified accountants engaged to perform the annual audits
referred to above, directed to the management of Lessee, the
Guarantor or the applicable Sublessee, as the case may be,
regarding the existence of any reportable conditions or
material weaknesses, (iv) a statement certified as true and
correct by Lessee setting forth all Subleases (excluding
Residence 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 the Subleases as may be
reasonably requested by Lessor and (v) evidence satisfactory to
Lessor that Lessee has fulfilled its obligation to make the
Annual Facility Upgrade Expenditure in accordance with the
provisions of Section 11.4.11.
(b) MONTHLY STATEMENTS OF LESSEE. Within thirty (30)
days after the end of each calendar month during the pendency
of this Lease, from and after the Conversion Date, 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 patients and
residents and the number of units and beds available] and
patient/resident mix breakdowns (for each patient or resident
day during such month classifying patients and residents by the
type of care required and source of payment).
(c) QUARTERLY STATEMENTS. (i) Within thirty (30) days
after the end of each of their respective fiscal quarters,
unaudited Consolidated Financials for each of (i) Lessee and
(ii) each Sublessee certified as true and correct by Lessee or
the applicable Sublessee, as the case may be and (ii) within
thirty (30) days after the end of each Fiscal Quarter, an
express written calculation showing the compliance or
non-compliance, as the case may be, with the specific financial
covenants set forth in Section 11.3 for the applicable period,
including, with respect to the calculation of Lessee's Rent
69
Coverage Ratio, a schedule substantially in the form attached
hereto as EXHIBIT I.
(d) QUARTERLY STATEMENTS OF THE GUARANTOR. Within
fifty (50) days after the end of each Fiscal Quarter, unaudited
Consolidated Financials 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 health care or senior housing 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 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 Lessee or
any Sublessee by any Governmental Authority, Accreditation Body
or any Third Party Payor, including, without limitation, any
notices pertaining to any delinquency in, or proposed revision
of, Lessee's or any Sublessee's obligations under the terms and
conditions of any Permits or Contracts now or hereafter issued
by or entered into with any Governmental Authority,
Accreditation Body or Third Party Payor and the response(s)
thereto made by or on behalf of Lessee or any Sublessee.
(h) OFFICIAL REPORTS. Upon completion or filing
thereof, complete copies of all applications (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
Lessee or any Sublessee to any Governmental Authority,
Accreditation Body or any Third Party Payor with respect to the
Leased Property.
(i) OTHER INFORMATION. With reasonable promptness,
such other information as Lessor may from time to time
reasonably request respecting (i) the financial condition and
affairs of each member of the Leasing Group
70
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) 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 Lessee
setting forth the details of such Lease Default, event or
circumstance and the action which Lessee proposes to take with
respect thereto.
(k) OFFICIAL ACTIONS. Promptly after the commencement
thereof, notice of all actions, suits and proceedings before
any Governmental Authority or Accreditation Body which could
have a material adverse effect on (i) any member of the Leasing
Group to perform any of its obligations under any of the Lease
Documents or (ii) the Leased Property.
(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 Lessor, any
letter of comments directed by such accountant to the
management of any such member of the Leasing Group.
(m) ADVERSE DEVELOPMENTS. Within five (5) days after
Lessee acquires knowledge thereof, written notice of:
(i) the potential termination of any
Permit or Provider Agreement necessary
for the construction of the Project
and/or operation of the Leased
Property;
(ii) any loss, damage or destruction to or
of the Leased Property in excess of
TWENTY-FIVE THOUSAND DOLLARS ($25,000)
(regardless of whether the same is
covered by insurance);
(iii) any material controversy involving
Lessee or any Sublessee and (x)
Facility administrator or Facility
employee of similar stature or (y) any
labor organization;
(iv) any controversy that calls into
question the eligibility of Lessee or
the Facility for the participation in
any Medicaid, Medicare or other Third
Party Payor Program;
71
(v) any refusal of reimbursement by any
Third Party Payor which, singularly or
together with all other such refusals
by any Third Party Payors, could have
a material adverse effect on the
financial condition of Lessee or any
Sublessee; and
(vi) any 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) LINE OF CREDIT DEFAULT. Within ten (10) days
after becoming aware of a claim by any Person that Lessee is
in default of any agreement in connection with the borrowing
of money which is not prohibited hereunder, notice of any such
claim or default.
(o) RESPONSES TO INSPECTION REPORTS. Within thirty
(30) days after receipt of an inspection report relating to
the Leased Property from Lessor, a written response describing
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, Lessee, any Sublessee and/or
any Manager shall submit to 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, Lessee,
any Sublessee and/or any Manager shall submit to 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 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.
72
11.2.3 NO MATERIAL OMISSION. No certificate, instrument,
notice or other document, including without limitation, any financial
statements furnished or to be furnished to Lessor pursuant to the terms
hereof or of any of the other Lease Documents shall contain any untrue
statement of a material fact or shall omit to state any material fact
necessary in order to prevent all statements contained therein from
being misleading.
11.2.4 CONFIDENTIALITY. Lessor shall afford any information
received pursuant to the provisions of the Lease Documents the same
degree of confidentiality that Lessor affords similar information
proprietary to Lessor; provided, however, that Lessor does not in any
way warrant or represent that such information received from any member
of the Leasing Group shall remain confidential (and shall not be liable
in any way for any subsequent disclosure of such information by any
Person that Lessor has provided such information in accordance with the
terms hereof) and provided, further, that Lessor shall have the
unconditional right to (a) disclose any such information as Lessor
deems necessary or appropriate in connection with any sale, transfer,
conveyance, participation or assignment of the Leased Property or any
of the Lease Documents or any interest therein and (b) use such
information in any litigation or arbitration proceeding between Lessor
and any member of the Leasing Group. Without limiting the foregoing,
Lessor may also utilize any information furnished to it hereunder as
and to the extent (i) counsel to 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)
Lessor is required or requested by any Governmental Authority to
disclose any such information and/or (iii) Lessor is requested to
disclose any such information by any of the Meditrust Entities' lenders
or potential lenders. Lessor shall not be liable in any way for any
subsequent disclosure of such information by any Person to whom Lessor
provided such information in accordance with the terms hereof.
Nevertheless, in connection with any such disclosure, Lessor shall
inform all recipients of any such information of the confidential
nature thereof. Lessor additionally 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. Lessee covenants and agrees that, throughout
the Term and as long as Lessee is in possession of the Leased Property:
11.3.1 RENT COVERAGE RATIO OF LESSEE. Commencing with the
first full Fiscal Quarter after the first day of the second Lease Year,
and for each Fiscal Quarter thereafter through the end of the Term,
Lessee shall maintain a Rent Coverage Ratio equal to or greater than
1.25 to 1.
73
11.3.2 [INTENTIONALLY DELETED].
11.3.3 [INTENTIONALLY DELETED].
11.3.4 NO INDEBTEDNESS. Lessee shall not create, incur, assume
or suffer to exist any liability for borrowed money except (i)
Indebtedness to Lessor under the Lease Documents 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 Lessor in accordance with the terms of Article 9 hereof,
(v) Indebtedness to any Affiliate, provided, that, such Indebtedness is
fully subordinated to this Lease pursuant to the Affiliated Party
Subordination Agreement, (vi) other Indebtedness of Lessee in the
aggregate amount not to exceed TWO HUNDRED THOUSAND DOLLARS ($200,000)
incurred, for the exclusive use of the Leased Property, on account of
purchase money indebtedness or finance lease arrangements, each of
which shall not exceed the fair market value of the assets or property
acquired or leased and shall not extend to any assets or property other
than those purchased or leased and purchase money security interests in
equipment and equipment leases which comply with the provisions of
Section 6.1.2, and (vii) liability arising under the Working Capital
Loan Documents.
11.3.5 NO GUARANTIES. Lessee shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become directly or
contingently liable (including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise to invest in any debtor or
otherwise to assure any creditor against loss) in connection with any
Indebtedness of any other Person, except by the endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
11.4 AFFIRMATIVE COVENANTS. Lessee covenants and agrees that throughout
the Term and any periods thereafter that Lessee remains in possession of the
Leased Property:
11.4.1 MAINTENANCE OF EXISTENCE. If Lessee is a corporation,
trust or partnership, during the entire time that this Lease remains in
full force and effect, Lessee shall keep in effect its existence and
rights as a corporation, trust or partnership under the laws of the
state of its 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, Lessee
shall not suffer the use in connection with any renovations or other
construction relating to the Leased Property of any materials, fixtures
or equipment intended to become part of the Leased Property which are
purchased upon lease or conditional xxxx of sale or to which Lessee
does not have absolute and unencumbered title, and Lessee covenants to
cause to be paid punctually all sums becoming due for labor,
74
materials, fixtures or equipment used or purchased in connection with
any such renovations or construction, subject to Lessee's right to
contest to the extent provided for in Article 15.
11.4.3 COMPLIANCE WITH LEGAL REQUIREMENTS AND APPLICABLE
AGREEMENTS. Lessee and the Leased Property and all uses thereof shall
comply with (i) all Legal Requirements, (ii) all Permits and Contracts,
(iii) all Insurance Requirements, (iv) the Lease Documents, (v) the
Permitted Encumbrances and (vi) the Appurtenant Agreements. Without
limiting the foregoing (a) Lessee shall, on or before the Conversion
Date, obtain all necessary Permits to operate the Facility for its
Primary Intended Use and shall thereafter throughout the Term maintain
such Permits in full force and effect and (b) prior to the issuance of
such license, Lessee shall obtain the Department of Social Services'
approval of all forms of Residence Agreements to be utilized by Lessee
in connection with the operation of the Facility.
11.4.4 BOOKS AND RECORDS. Lessee shall cause to be kept and
maintained, and shall permit Lessor and its representatives to inspect
at all reasonable times, accurate books of accounts in which complete
entries will be made in accordance with GAAP reflecting all financial
transactions of Lessee (showing, without limitation, all materials
ordered and received and all disbursements, accounts payable and
accounts receivable in connection with the operation of the Leased
Property).
11.4.5 PARTICIPATION IN THIRD PARTY PAYOR PROGRAMS. From and
after the Conversion Date, Lessee and each Sublessee shall participate
in all Third Party Payor Programs (which would be participated in by a
prudent operator in the good faith exercise of commercially reasonable
business judgment), in accordance with all requirements thereof
(including, without limitation, all applicable Provider Agreements),
and shall remain eligible to participate in such Third Party Payor
Programs, all as shall be necessary for the prudent operation of the
Facility in the good faith exercise of commercially reasonable business
judgment.
11.4.6 CONDUCT OF ITS BUSINESS. Lessee will maintain, and
cause any Sublessee and any Manager to maintain, experienced and
competent professional management with respect to its business and,
from and after the Conversion Date, with respect to the Leased
Property. Lessee, any Sublessee and any Manager shall conduct, in the
ordinary course, the operation of the Facility, and Lessee and any
Sublessee shall not enter into any other business or venture during the
Term or such time as Lessee or any Sublessee is in possession of the
Leased Property.
11.4.7 ADDRESS. Lessee shall provide Lessor thirty (30) days'
prior written notice of any change of its Principal Place of Business
from its current Principal Place of Business. Lessee shall maintain the
Collateral, including without limitation, all books and records
relating to its business, solely at its Principal Place of Business and
at the Leased Property. Lessee shall not (a) remove the Collateral,
including, without limitation, any books or records relating to
Lessee's
75
business from either the Leased Property or Lessee's Principal Place of
Business or (b) relocate its Principal Place of Business until after
receipt of a certificate from Lessor, signed by an officer thereof,
stating that Lessor has, to its satisfaction, obtained all
documentation that it deems necessary or desirable to obtain, maintain,
perfect and confirm the first priority security interests granted in
the Lease Documents.
11.4.8 SUBORDINATION OF CERTAIN TRANSACTIONS. Without limiting
the provisions of any other Section of this Lease or the Affiliated
Party Subordination Agreement, any payments to be made by Lessee to (a)
any member of the Leasing Group (or any Affiliate of any member of the
Leasing Group) or (b) any Affiliate of Lessee, in connection with any
transaction between Lessee and such Person, including, without
limitation, the purchase, sale or exchange of any property, the
rendering of any service to or with any such Person (including, without
limitation, all allocations of any so-called corporate or central
office costs, expenses and charges of any kind or nature) or the making
of any loan or other extension of credit or the making of any equity
investment, shall be subordinate to the complete payment and
performance of the Lease Obligations; provided, however, that all such
subordinated payments may be paid at any time unless: (x) after giving
effect to such payment, Lessee shall be unable to comply with any of
its obligations under any of the Lease Documents or (y) a Lease Default
has occurred and is continuing and has not been expressly waived in
writing by 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, Lessee shall permit Lessor and its authorized representatives
(including, without limitation, the Consultants) to inspect the Leased
Property as provided in Section 7.1 above.
11.4.10 ADDITIONAL PROPERTY. In the event that at any time
during the Term, Lessee holds the fee title to or a leasehold interest
in any real property and/or personal property which is used as an
integral part of the operation of the Leased Property (but is not
subject to this Lease), Lessee shall (i) provide Lessor with prior
notice of such acquisition and (ii) shall take such actions and enter
into such agreements as Lessor shall reasonably request in order to
xxxxx Xxxxxx a first priority mortgage or other security interest in
such real property and personal property, subject only to the Permitted
Encumbrances and other Liens reasonably acceptable to Lessor.
11.4.11 ANNUAL FACILITY UPGRADE EXPENDITURES. Commencing with
the third Lease Year to occur in the Term, Lessee shall make an Annual
Facility Upgrade Expenditure in the Facility in an amount no less than
TWO HUNDRED FIFTY DOLLARS ($250) multiplied by the number of units in
the Facility, such amount to be increased as of the first day of the
fourth Lease Year, and as of the first day of each subsequent Lease
Year, by an amount equal to the product of (i) TWO HUNDRED FIFTY
DOLLARS ($250) multiplied by (ii) the Consumer Price Adjustment Factor.
76
11.5 ADDITIONAL NEGATIVE COVENANTS. Lessee covenants and agrees that,
throughout the Term and such time as Lessee remains in possession of the Leased
Property:
11.5.1 RESTRICTIONS RELATING TO LESSEE. Except as may
otherwise be expressly provided in Section 19.4 or in any of the other
Lease Documents, Lessee shall not, without the prior written consent of
Lessor, in each instance, which consent may be withheld in the sole and
absolute discretion of Lessor:
(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 on or after the date hereof pursuant to the
Lease Documents; (ii) Liens created in accordance with Section
6.1.2 against Tangible Personal Property securing Indebtedness
permitted under Section 11.3.4(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 THIRTY-FIVE
THOUSAND DOLLARS ($35,000), individually, or ONE HUNDRED FIFTY
THOUSAND DOLLARS ($150,000) collectively; (iv) without
limitation as to amount, the disposition in the ordinary course
of business of any obsolete, worn out or defective fixtures,
furnishings or equipment used in the operation of the Leased
Property provided that the same are replaced with fixtures,
furnishings or equipment of equal or greater utility or value
or Lessee provides Lessor with an explanation (reasonably
satisfactory to 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 Lessee in the ordinary course
of business; and (vi) subject to the terms of the Pledge
Agreement and the Affiliated Party Subordination Agreement,
distributions to the shareholders of Lessee;
(b) permit the use of the Facility, from and after
the Conversion Date, for any purpose other than the Primary
Intended Use; or
(c) liquidate, dissolve or merge or consolidate with
any other Person.
11.5.2 NO LIENS. Lessee will not directly or indirectly create
or allow to remain and will promptly discharge at its expense any Lien,
title retention agreement or claim upon or against the Leased Property
(including Lessee's interest therein) or Lessee's interest in this
Lease or any of the other Lease Documents, or in respect of the Rent,
excluding (a) this Lease and any permitted
77
Subleases, (b) the Permitted Encumbrances, (c) Liens which are
consented to in writing by Lessor, (d) Liens for those taxes of Lessor
which Lessee is not required to pay hereunder, (e) Liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either not yet due
or being contested in strict compliance with the terms and conditions
of Article 15, (f) any Liens which are the responsibility of Lessor
pursuant to the provisions of Article 20, (g) Liens for Impositions
which are either not yet due and payable or which are in the process 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 Lessor.
11.5.3 LIMITS ON CERTAIN TRANSACTIONS. Lessee shall not enter
into any transaction with any Affiliate or any member of the Leasing
Group (or any Affiliate thereof), including, without limitation, the
purchase, sale or exchange of any property, the rendering of any
service to or with any Affiliate and the making of any loan or other
extension of credit, except in the ordinary course of, and pursuant to
the reasonable requirements of, Lessee's business and upon fair and
reasonable terms no less favorable to 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. 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
Lessor and any such Purchaser. To induce Lessor to enter into this
Lease, Lessee agrees that, from and after the date hereof and
thereafter until the fifth (5th) anniversary of the termination hereof,
no member of the Leasing Group nor any Person holding or controlling,
directly or indirectly, any interest in any member of the Leasing Group
(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 adult
care residence or other similar senior housing facility (or any other
facility included within the definition of Primary Intended Use),
center, unit or program (or in any Person engaged in any such activity
or any related activity competitive therewith), whether such
competitive activity shall be as an officer, director, owner, employee,
agent, advisor, independent contractor, developer, lender, sponsor,
venture capitalist, administrator, manager, investor, partner, joint
venturer, consultant or other participant in any capacity whatsoever
with respect to an adult care residence or other similar senior housing
facility (or any other facility included within the definition of
Primary Intended Use), center, unit or program located within a ten
(10) mile radius of the Leased Property.
Lessee hereby acknowledges and agrees that none of the time
span, scope or area covered by the foregoing restrictive covenants is
or are unreasonable and that it is the specific intent of Lessee that
each and all of the restrictive covenants set forth hereinabove shall
be valid and enforceable as specifically set forth herein. Lessee
further agrees that these restrictions are special, unique,
extraordinary and reasonably necessary for the protection of Lessor and
any Purchaser and that the violation of any such covenant by any of the
Limited Parties would cause irreparable damage to Lessor and any
Purchaser for which a legal remedy alone would not be sufficient to
fully protect such parties.
78
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 Lessor and any
Purchaser shall be entitled to obtain equitable remedies, including
specific performance and injunctive relief, to prevent or otherwise
restrain a breach of this Section 11.5.4 (without the necessity of
posting a bond) and to recover any and all costs and expenses
(including, without limitation, attorneys' fees and expenses 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 Lessor or
any Purchaser, whether predicated on this Lease or otherwise, shall not
constitute a defense to the enforcement by Lessor or any Purchaser of
the foregoing restrictive covenants and 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 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. Lessee shall not commit any default or
breach under any of the Lease Documents.
11.5.6 RESTRICTIONS RELATING TO THE GUARANTOR AND THE
DEVELOPER. Except as may otherwise be expressly provided herein or in
any of the other Lease Documents, neither the Guarantor nor the
Developer shall, without the prior written consent of Lessor, in each
instance, which consent may be withheld in the sole and absolute
discretion of Lessor, convey, assign, donate, sell, mortgage or pledge
any real or personal property or take any other action which would have
a materially adverse effect upon the Tangible Net Worth or general
financial condition of the Guarantor or the Developer, as the case may
be. Notwithstanding the foregoing, but subject to the provisions of
Section 11.3, the Guarantor may guaranty obligations of any of its
present or future Affiliates.
79
11.5.7 [INTENTIONALLY DELETED].
11.5.8 ERISA. Lessee shall not establish or permit any
Sublessee to establish any new pension or defined benefit plan or
modify any such existing plan for employees subject to ERISA, which
plan provides any benefits based on past service without the advance
consent of Lessor to the amount of the aggregate past service liability
thereby created, which consent shall not be unreasonably withheld.
11.5.9 FORGIVENESS OF INDEBTEDNESS. Lessee will not waive, or
permit any sublessee or Manager which is an Affiliate to waive any debt
or claim, except in the ordinary course of its business.
11.5.10 VALUE OF ASSETS. Except as disclosed in the financial
statements provided to Lessor as of the date hereof, Lessee will not
write up (by creating an appraisal surplus or otherwise) the value of
any assets of Lessee above their cost to Lessee, less the depreciation
regularly allowable thereon.
11.5.11 CHANGES IN FISCAL YEAR AND ACCOUNTING PROCEDURES.
Lessee shall not, without the prior written consent of Lessor, in each
instance, which consent may be withheld in Lessor's reasonable
discretion (a) change its fiscal year or capital structure (except as
may be otherwise permitted by Lessor in connection with any transfer
permitted under Section 19.4 and, even then, only after the complete
satisfaction of all requirements of Lessor relating to such transfers)
or (b) change, alter, amend or in any manner modify, except in
accordance with GAAP, any of its current accounting procedures related
to the method of revenue recognition, billing procedures or
determinations of doubtful accounts or bad debt expenses nor will
Lessee permit any of its Subsidiaries to change its fiscal year or
suffer or permit any circumstance to exist in which any Subsidiary is
not wholly-owned, directly or indirectly, by Lessee.
11.6 ACCESS TO RECORDS. To the extent required by applicable law, the
Lessor shall (and, if the Lessor carries out any of the duties under this Lease,
whether on the Lessor's or the Lessee's behalf, through a subcontract with a
related organization and such subcontract has a value or cost of Ten Thousand
Dollars ($10,000) or more during any twelve (12) month period, such subcontract
shall contain a clause to the effect that the subcontractor shall) until the
expiration of four (4) years after the furnishing of services pursuant to this
Lease, make available, upon request by the Secretary of Health and Human
Services or upon the request by the U.S. Comptroller General, or any duly
authorized representative of either of them, the books, documents and records of
the Lessor (or such subcontractor) that are necessary to verify the nature and
extent of such costs in connection with said services.
80
ARTICLE 12
INSURANCE AND INDEMNITY
12.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease and
thereafter until Lessee surrenders the Leased Property in the manner required by
this Lease, Lessee shall at its sole cost and expense keep the Leased Property
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. Lessee's insurance
shall include the following:
(a) property loss and physical damage insurance on an
all-risk basis (with only such exceptions as Lessor may in its
reasonable discretion approve) covering the Leased Property
(exclusive of Land) for its full replacement cost, which cost
shall be reset once a year at Lessor's option, with an
agreed-amount endorsement and a deductible not in excess of TEN
THOUSAND DOLLARS ($10,000.00). Such insurance shall include,
without limitation, the following coverages: (i) increased cost
of construction, (ii) cost of demolition, (iii) the value of
the undamaged portion of the Facility and (iv) contingent
liability from the operation of building laws, less exclusions
provided in the normal "All Risk" insurance policy. During any
period of construction, such insurance shall be on a
builder's-risk, completed value, non-reporting form with
permission to occupy and may be maintained by the Developer as
long as Lessor and Lessee are named as additional named
insureds on any insurance policy maintained by the Developer
and all other requirements set forth herein that are applicable
to such insurance are met;
(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 Lessor;
(c) boiler and machinery insurance (including related
electrical apparatus and components) under a standard
comprehensive form, providing coverage against loss or damage
caused by explosion of steam boilers, pressure vessels or
similar vessels, now or hereafter installed on the Leased
Property, in limits acceptable to Lessor;
(d) earthquake insurance (if deemed necessary by
Lessor) in limits and with deductibles acceptable to Lessor;
(e) environmental impairment liability insurance (if
available) in limits and with deductibles acceptable to Lessor;
81
(f) business interruption and/or rent loss insurance
in an amount equal to the annual Base Rent due hereunder plus
the aggregate sum of the Impositions relating to the Leased
Property due and payable during one year;
(g) comprehensive general public liability insurance
including coverages commonly found in the Broad Form Commercial
Liability Endorsements with amounts not less than FIVE MILLION
DOLLARS ($5,000,000) per occurrence with respect to bodily
injury and death and THREE MILLION DOLLARS ($3,000,000) for
property damage and with all limits based solely upon
occurrences at the Leased Property without any other
impairment;
(h) professional liability insurance in an amount not
less than TEN MILLION DOLLARS ($10,000,000) for each medical
incident;
(i) physical damage insurance on an all-risk basis
(with only such exceptions as 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;
(j) Workers' Compensation and Employers' Liability
Insurance providing protection against all claims arising out
of injuries to all employees of Lessee or of any Sublessee
(employed on the Leased Property or any portion thereof) in
amounts equal for Workers' Compensation, to the statutory
benefits payable to employees in the State and for Employers'
Liability, to limits of not less than ONE HUNDRED THOUSAND
DOLLARS ($100,000) for injury by accident, ONE HUNDRED THOUSAND
DOLLARS ($100,000) per employee for disease and FIVE HUNDRED
THOUSAND DOLLARS ($500,000) disease policy limit;
(k) subsidence insurance (if deemed necessary by
Lessor) in limits acceptable to Lessor; and
(l) such other insurance as Lessor from time to time
may reasonably require and also, as may from time to time be
required by applicable Legal Requirements and/or by any Fee
Mortgagee.
12.1.2 INSURANCE COMPANY REQUIREMENTS. All such insurance
required by this Lease or the other Lease Documents shall be issued and
underwritten by insurance companies licensed to do insurance business
by, and in good standing under the laws of, the State and which
companies have and maintain a rating of A:X or better by A.M. Best Co.
82
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 Lessor as owner, loss
payee, secured party (to the extent applicable) and additional named
insured as its interests may appear. If an insurance policy covers
properties other than the Leased Property, then 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 Lessor in its sole and absolute
discretion;
(b) include mortgagee, secured party, loss payable
and additional named insured endorsements reasonably acceptable
to each Fee Mortgagee;
(c) provide that the coverages may not be cancelled
or materially modified except upon thirty (30) days' prior
written notice to Lessor and any Fee Mortgagee;
(d) be payable to Lessor and any Fee Mortgagee
notwithstanding any defense or claim that the insurer may have
to the payment of the same against any other Person holding any
other interest in the Leased Property;
(e) be endorsed with standard noncontributory clauses
in favor of and in form reasonably acceptable to Lessor and any
Fee Mortgagee;
(f) expressly waive any right of subrogation on the
part of the insurer against Lessor, any Fee Mortgagee or the
Leasing Group; and
(g) otherwise be in such forms as shall be reasonably
acceptable to Lessor.
12.1.4 NOTICES; CERTIFICATES AND POLICIES. Lessee shall
promptly provide to Lessor copies of any and all notices (including
notice of non-renewal but excluding invoices for premiums due but not
delinquent), claims and demands which Lessee receives from insurers of
the Leased Property. At least ten (10) days prior to the expiration of
any insurance policy required hereunder, Lessee shall deliver to Lessor
certificates and evidence of insurance relating to all renewals and
replacements thereof, together with evidence, satisfactory to Lessor,
of payment of the premiums thereon. Lessee shall deliver to Lessor
original counterparts or copies certified by the insurance company to
be true and complete copies, of all insurance policies required
hereunder not later than the earlier to occur of (a) thirty (30) days
after the effective date of each such policy and (b) ten (10) days
after receipt thereof by Lessee.
12.1.5 LESSOR'S RIGHT TO PLACE INSURANCE. If Lessee shall fail
to obtain any insurance policy required hereunder by Lessor, or shall
fail to deliver the
83
certificate and evidence of insurance relating to any such policy to
Lessor, or if any insurance policy required hereunder (or any part
thereof) shall expire or be cancelled or become void or voidable by
reason of any breach of any condition thereof, or if Lessor determines
that such insurance coverage is unsatisfactory by reason of the failure
or impairment of the capital of any insurance company which wrote any
such policy, upon demand by Lessor, Lessee shall promptly obtain new or
additional insurance coverage on the Leased Property, or for those
risks required to be insured by the provisions hereof, satisfactory to
Lessor, and, at its option, Lessor may obtain such insurance and pay
the premium or premiums therefor; in which event, any amount so paid or
advanced by Lessor and all costs and expenses incurred in connection
therewith (including, without limitation, attorneys' fees and expenses
and court costs), shall be a demand obligation of Lessee to Lessor,
payable as an Additional Charge.
12.1.6 PAYMENT OF PROCEEDS. All insurance policies required
hereunder (except for general public liability, professional liability
and workers' compensation and employers liability insurance) shall
provide that in the event of loss, injury or damage, subject to the
rights of any Fee Mortgagee, all proceeds shall be paid to Lessor alone
(rather than jointly to Lessee and Lessor). Lessor is hereby authorized
to adjust and compromise any such loss with the consent of Lessee or,
following any Lease Default, whether or not cured, without the consent
of Lessee, and to collect and receive such proceeds in the name of
Lessor and Lessee, and Lessee appoints Lessor (or any agent designated
by Lessor) as Lessee's attorney-in-fact with full power of
substitution, to endorse Lessee's name upon any check in payment
thereof. Subject to the provisions of Article 13, such insurance
proceeds shall be applied first toward reimbursement of all costs and
expenses reasonably incurred by Lessor in collecting said insurance
proceeds, then toward payment of the Lease Obligations or any portion
thereof, then due and payable, in such order as Lessor determines, and
then in whole or in part toward restoration, repair or reconstruction
of the Leased Property for which such insurance proceeds shall have
been paid.
12.1.7 IRREVOCABLE POWER OF ATTORNEY. The power of attorney
conferred on Lessor pursuant to the provisions of 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 Lessee may suffer
and shall survive the same. Such power of attorney, is provided solely
to protect the interests of Lessor and shall not impose any duty on
Lessor to exercise any such power, and neither Lessor nor such
attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its
gross negligence or wilful misconduct.
12.1.8 BLANKET POLICIES. Notwithstanding anything to the
contrary contained herein, Lessee's obligations to carry the insurance
provided for herein may be brought within the coverage of a so-called
blanket policy or policies of insurance carried and maintained by
Lessee and its Affiliates; provided, however, that the coverage
afforded to Lessor shall not be reduced or diminished or
84
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. Lessee shall not, on Lessee's own
initiative or pursuant to the request or requirement of any other
Person, take out separate insurance concurrent in form or contributing
in the event of loss with the insurance required hereunder to be
furnished by Lessee, 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 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.
Lessee shall immediately notify Lessor of the taking out of any such
separate insurance or of the increasing of any of the amounts of the
then existing insurance by securing an additional insurance policy or
policies.
12.1.10 ASSIGNMENT OF UNEARNED PREMIUMS. Lessee hereby assigns
to Lessor all rights of Lessee in and to any unearned premiums on any
insurance policy required hereunder to be furnished by Lessee which may
become payable or are refundable after the occurrence of an Event of
Default hereunder, which amounts may be utilized by Lessor for any
purposes allowed hereunder or credited against the Lease Obligations.
In the event that this Lease is terminated for any reason (other than
the purchase of the Leased Property by Lessee), the insurance policies
required to be maintained hereunder, including all right, title and
interest of Lessee thereunder, shall become the absolute property of
Lessor.
85
12.2 INDEMNITY.
12.2.1 INDEMNIFICATION. Except with respect to the gross
negligence or wilful misconduct of Lessor or any of the other
Indemnified Parties, as to which no indemnity is provided, Lessee
hereby agrees to defend with counsel acceptable to Lessor, indemnify
and hold harmless Lessor and each of the other Indemnified Parties from
and against all damages, losses, claims, liabilities, obligations,
penalties, causes of action, costs and expenses (including, without
limitation, attorneys' fees, court costs and other expenses of
litigation) suffered by, or claimed or asserted against, Lessor or any
of the other Indemnified Parties, directly or indirectly, based on,
arising out of or resulting from (a) the use and occupancy 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 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
Lessee or any employee, agent, licensee, contractor or sublessee of any
of the foregoing parties, (d) any Lease Default, (e) any claim brought
or threatened against any of the Indemnified Parties by any member of
the Leasing Group or by any other Person on account of (i) 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) 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 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 Lessee under this Section 12.2.1 shall be a
demand obligation of Lessee to Lessor, payable as an Additional Charge.
The indemnity provided for in this Section 12.2.1 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 and their respective successors, assigns, employees,
servants, agents, attorneys, officers, directors, shareholders,
partners and owners.
86
12.2.3 LIMITATION ON LESSOR LIABILITY. Neither Lessor nor any
Affiliate of Lessor shall be liable to any member of the Leasing Group
or any Affiliate of 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 Lessee and Lessor shall not in any manner be held
responsible therefor. Notwithstanding the foregoing, Lessor shall not
be released from liability for any injury, loss, damage or liability
suffered directly by Lessee to the extent caused directly by the gross
negligence or willful misconduct of Lessor, its servants, employees or
agents acting within the scope of their authority on or about the
Leased Property or in regards to the Lease; provided, however, that in
no event shall Lessor, its servants, employees or agents have any
liability based on any loss with respect to or interruption in the
operation of any business at the Leased Property or for any indirect or
consequential damages.
12.2.4 RISK OF LOSS. During the Term of this Lease, the risk of
loss or of decrease in the enjoyment and beneficial use of the Leased
Property in consequence of any damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in
consequence of foreclosures, levies or executions of Liens (other than
those created by Lessor in accordance with the provisions of Article
20) is assumed by Lessee and, in the absence of the gross negligence or
willful misconduct as set forth in Section 12.2.3, Lessor shall in no
event be answerable or accountable therefor (except for the obligation
to account for insurance proceeds and Awards to the extent provided for
in Articles 13 and 14) nor shall any of the events mentioned in this
Section entitle Lessee to any abatement of Rent (except for an
abatement, if any, as specifically provided for in Section 3.8).
87
ARTICLE 13
FIRE AND CASUALTY
13.1 RESTORATION FOLLOWING FIRE OR OTHER CASUALTY.
13.1.1 FOLLOWING FIRE OR CASUALTY. In the event of any damage
or destruction to the Leased Property by reason of fire or other hazard
or casualty (a "Casualty"), Lessee shall give immediate written notice
thereof to Lessor and, subject to the terms of this Article 13, Lessee
shall proceed with reasonable diligence, in full compliance with all
applicable Legal Requirements, to perform such repairs, replacement and
reconstruction work (referred to herein as the "Work") to restore the
Leased Property to the condition it was in immediately prior to such
damage or destruction and to a condition adequate to operate the
Facility for the Primary Intended Use and in compliance with Legal
Requirements. All Work shall be performed and completed in accordance
with all Legal Requirements and the other requirements of this Lease
within one hundred and 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 three-hundred and sixty-five (365) days following the
occurrence of the Casualty.
13.1.2 PROCEDURES. In the event that any Casualty results in
non-structural damage to the Leased Property in excess of TWENTY-FIVE
THOUSAND DOLLARS ($25,000) or in any structural damage to the Leased
Property, regardless of the extent of such structural damage, prior to
commencing the Work, Lessee shall comply with the following
requirements:
(a) Lessee shall furnish to Lessor complete plans and
specifications for the Work (collectively, the "Plans and
Specifications"), for Lessor's approval, in each instance,
which approval shall not be unreasonably withheld. The Plans
and Specifications shall bear the signed approval thereof by an
architect, licensed to do business in the State, reasonably
satisfactory to Lessor and shall be accompanied by a written
estimate from the architect, bearing the architect's seal, of
the entire cost of completing the Work, and to the extent
feasible, the Plans and Specifications shall provide for Work
of such nature, quality and extent, that, upon the completion
thereof, the Leased Property shall be at least equal in value
and general utility to its value and general utility prior to
the Casualty and shall be adequate to operate the Leased
Property for the Primary Intended Use;
(b) Lessee shall furnish to Lessor certified or
photostatic copies of all Permits and Contracts required by all
applicable Legal Requirements in connection with the
commencement and conduct of the Work;
88
(c) Lessee shall furnish to Lessor a cash deposit or
a payment and performance bond sufficient to pay for completion
of and payment for the Work in an amount not less than the
architect's estimate of the entire cost of completing the Work,
less the amount of property insurance proceeds, if any, then
held by Lessor and which Lessor shall be required to apply
toward restoration of the Leased Property as provided in
Section 13.2;
(d) Lessee shall furnish to Lessor such insurance
with respect to the Work (in addition to the insurance required
under Section 12.1 hereof) in such amounts and in such forms as
is reasonably required by Lessee; and
(e) Lessee shall not commence any of the Work until
Lessee shall have complied with the requirements set forth in
clauses (a) through (d) immediately above, as applicable, and,
thereafter, Lessee shall perform the Work diligently, in a good
and workmanlike fashion and in good faith in accordance with
(i) the Plans and Specifications referred to 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 Lessee is unable to contact the appropriate
representatives of Lessor, Lessee may commence such Work as may
be necessary in order to address such emergency without
Lessor's prior approval, as long as Lessee immediately
thereafter advises Lessor of such emergency and the nature and
scope of the Work performed and obtains Lessor's approval of
the remaining Work to be completed.
13.1.3 DISBURSEMENT OF INSURANCE PROCEEDS. If, as provided in
Section 13.2, 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 Lessee in accordance
with the terms and conditions of this Lease, Lessor shall disburse such
insurance proceeds from time to time during the course of the Work in
accordance with and subject to satisfaction of the following provisions
and conditions. Lessor shall not be required to make disbursements more
often than at thirty (30) day intervals. Lessee shall submit a written
request for each disbursement at least ten (10) Business Days in
advance and shall comply with the following requirements in connection
with each disbursement:
(a) Prior to the commencement of any Work, Lessee
shall have received Lessor's written approval of the Plans and
Specifications (which approval shall not be unreasonably
withheld) and the Work shall be supervised by an experienced
construction 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
89
"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 Lessee or is justly due to
contractors, subcontractors, materialmen,
engineers, architects or other Persons,
whose names and addresses shall be stated
therein, who have rendered or furnished
certain services or materials for the Work,
and the certificate shall also include a
brief description of such services and
materials and the principal subdivisions or
categories thereof and the respective
amounts so paid or due to each of said
Persons in respect thereof and stating the
progress of the Work up to the date of said
certificate;
(iii) that the sum then requested to be withdrawn,
plus all sums previously withdrawn, does not
exceed the cost of the Work insofar as
actually accomplished up to the date of such
certificate;
(iv) that the remainder of the funds held by
Lessor will be sufficient to pay for the
full completion of the Work in accordance
with the Plans and Specifications;
(v) that no part of the cost of the services and
materials described in the applicable Work
Certificate has been or is being made the
basis of the withdrawal of any funds in any
previous or then pending application; and
(vi) that, except for the amounts, if any,
specified in the applicable Work Certificate
to be due for services and materials, there
is no outstanding indebtedness known, after
due inquiry, which is then due and payable
for work, labor, services or materials in
connection with the Work which, if unpaid,
might become the basis of a vendor's,
mechanic's, laborer's or materialman's
statutory or other similar Lien upon the
Leased Property.
(c) Lessee shall deliver to Lessor satisfactory
evidence that the Leased Property and all materials and all
property described in the Work Certificates are free and clear
of Liens, except (i) Liens, if any, securing indebtedness due
to Persons (whose names and addresses and the several amounts
due them shall be stated therein) specified in an applicable
Work
90
Certificate, which Liens shall be discharged upon disbursement
of the funds then being requested, (ii) any Fee Mortgage and
(iii) the Permitted Encumbrances. Lessor shall accept as
satisfactory evidence of the foregoing lien waivers in
customary form from the general contractor and all
subcontractors performing the Work, together with an
endorsement of its title insurance policy (relating to the
Leased Property) in form acceptable to Lessor, dated as of the
date of the making of the 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, Lessee shall deliver to
Lessor, upon the request of 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) Lessee shall deliver to Lessor (i) an opinion of
counsel (satisfactory to Lessor both as to counsel and as to
the form of opinion) prior to the first advance opining that
all necessary Permits for the repair, replacement and/or
restoration of the Leased Property have been obtained and that
the Leased Property, if repaired, replaced or rebuilt in
accordance, in all material respects, with the approved Plans
and Specifications and such Permits, shall comply with all
applicable Legal Requirements and (ii) an architect's
certificate (satisfactory to 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.
Lessor, at its option, may waive any of the foregoing requirements in
whole or in part in any instance. Upon compliance by Lessee with the
foregoing requirements (except for such requirements, if any, as Lessor
may have expressly elected to waive), and to the extent of (x) the
insurance proceeds, if any, which Lessor may be required to apply to
restoration of the Leased Property pursuant to the provisions of this
Lease and (y) all other cash deposits made by Lessee, Lessor shall make
available for payment to the Persons named in the Work Certificate the
respective amounts stated in said certificate(s) to be due, subject to
a retention of ten percent (10%) as to all hard costs of the Work (the
"Retainage"). It is understood that the Retainage is intended to
provide a contingency fund to assure Lessor that the Work
91
shall be fully completed in accordance with the Plans and
Specifications and the requirements of Lessor. Upon the full and final
completion of all of the Work in accordance with the provisions hereof,
the Retainage shall be made available for payment to those Persons
entitled thereto.
Upon completion of the Work, and as a condition precedent to making any
further advance, in addition to the requirements set forth above,
Lessee shall promptly deliver to Lessor:
(i) written certificates of the architect or engineer,
bearing the architect's or engineer's seal, and the
general contractor, certifying that the Work has been
fully completed in a good and workmanlike manner in
material compliance with the Plans and Specifications
and all Legal Requirements;
(ii) an endorsement of its title insurance policy
(relating to the Leased Property) in form reasonably
acceptable to Lessor insuring the Leased Property
against all mechanic's and materialman's liens
accompanied by the final lien waivers from the
general contractor and all subcontractors;
(iii) a certificate by Lessee in form and substance
reasonably satisfactory to Lessor, listing all costs
and expenses in connection with the completion of the
Work and the amount paid by Lessee with respect to
the Work; and
(iv) a temporary certificate of occupancy (if obtainable)
and all other applicable Permits and Contracts (that
have not previously been delivered to Lessor) issued
by or entered into with any Governmental Authority
with respect to the Leased Property and the Primary
Intended Use and by the appropriate Board of Fire
Underwriters or other similar bodies acting in and
for the locality in which the Leased Property is
situated; provided, that within thirty (30) days
after completion of the Work, Lessee shall obtain
and deliver to Lessor a permanent certificate of
occupancy for the Leased Property.
Upon completion of the Work and delivery of the documents
required pursuant to the provisions of this Section 13.1, Lessor shall
pay the Retainage to Lessee or to those Persons entitled thereto and if
there shall be insurance proceeds or cash deposits, other than the
Retainage, held by Lessor in excess of the amounts disbursed pursuant
to the foregoing provisions, then provided 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, Lessor shall pay over such proceeds or cash
deposits to Lessee.
No inspections or any approvals of the Work during or after
construction shall constitute a warranty or representation by Lessor,
or any of its agents or
92
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 Lessor are performed solely for the benefit of
Lessor to assure the payment and performance of the Lease Obligations
and are not for the benefit of Lessee or the benefit of any other
Person.
13.2 DISPOSITION OF INSURANCE PROCEEDS.
13.2.1 PROCEEDS TO BE RELEASED TO PAY FOR WORK. In the event
of any Casualty, except as provided for in Section 13.2.2, Lessor shall
release proceeds of property insurance held by it to pay for the Work
in accordance with the provisions and procedures set forth in this
Article 13, only if:
(a) all of the terms, conditions and provisions of
Sections 13.1 and 13.2.1 are satisfied;
(b) there does not then exist any Lease Default or
any state of facts or circumstance which, with the giving of
notice and/or the passage of time, would constitute such a
Lease Default;
(c) Lessee demonstrates to Lessor's satisfaction that
Lessee has the financial ability to satisfy the Lease
Obligations during such repair or restoration; and
(d) no Sublease (excluding Residence Agreements)
material to the operation of the Facility immediately prior to
such damage or taking shall have been cancelled or terminated,
nor contain any still exercisable right to cancel or
terminate, due to such Casualty if and to the extent that the
income from such Sublease is necessary in order to avoid the
violation of any of the financial covenants set forth in this
Lease or otherwise to avoid the creation of an Event of
Default.
13.2.2 PROCEEDS NOT TO BE RELEASED. If, as the result of any
Casualty, the Leased Property is damaged to the extent it is rendered
Unsuitable For Its Primary Intended Use and if either: (a) Lessee,
after exercise of diligent efforts, cannot within a reasonable time
(not in excess of ninety (90) days) obtain all necessary Permits in
order to be able to perform all required Work and to again operate the
Facility for its Primary Intended Use within three hundred and
sixty-five (365) days from the occurrence of the damage or destruction
in substantially the manner as immediately prior to such damage or
destruction or (b) such Casualty occurs during the last twenty-four
(24) months of the Term and would reasonably require more than nine (9)
months to obtain all Permits and complete the Work, then Lessee may
either (i) acquire the Leased Property from Lessor for a purchase price
equal to the greater of (x) the Meditrust Investment or (y) the Fair
Market Value of the Leased Property minus the Fair Market Added Value,
with the Fair Market Value and the Fair Market Added Value to be
determined as of
93
the day immediately prior to such Casualty and prior to any other
Casualty which has not been fully repaired, restored or replaced, in
which event, Lessee shall be entitled upon payment of the full purchase
price to receive all property insurance proceeds (less any costs and
expenses incurred by Lessor in collecting the same), or (ii) terminate
this Lease, in which event (subject to the provisions of the last
sentence of this Section 13.2.2) Lessor shall be entitled to receive
and retain the insurance proceeds; provided, however, that Lessee shall
only have such right of termination effective upon payment to Lessor of
all Rent and other sums due under this Lease and the other Lease
Documents through the date of termination plus an amount, which when
added to the sum of (1) the Fair Market Value of the Leased Property as
affected by all unrepaired or unrestored damage due to any Casualty
(and giving due regard for delays, costs and expenses incident to
completing all repair or restoration required to fully repair or
restore the same) plus (2) the amount of insurance proceeds actually
received by Lessor (net of costs and expenses incurred by Lessor in
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 provisions
of Article 18, mutatis, mutandis. If such termination becomes
effective, Lessor shall assign to 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 Lessor from the
property insurance required under Article 12 (net of costs and expenses
incurred by Lessor in collecting the same), 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 Lessee to
Lessor together with any other property insurance proceeds for
application to the cost of the Work.
13.3 TANGIBLE PERSONAL PROPERTY. All insurance proceeds payable by
reason of any loss of or damage to any of the Tangible Personal Property shall
be paid to Lessor as secured party, subject to the rights of the holders of any
Permitted Prior Security Interests, and, thereafter, provided that no Lease
Default, nor any fact or circumstance which with the giving of notice and/or the
passage of time could constitute a Lease Default, has occurred and is
continuing, Lessor shall pay such insurance proceeds to Lessee to reimburse
Lessee for the cost of repairing or replacing the damaged Tangible Personal
Property, subject to the terms and conditions set forth in the other provisions
of this Article 13, mutatis mutandis.
13.4 RESTORATION OF CERTAIN IMPROVEMENTS AND THE TANGIBLE PERSONAL
PROPERTY. If Lessee is required or elects to restore the Facility, Lessee shall
either (a) restore (i) all alterations and improvements to the Leased Property
made by Lessee and (ii) the Tangible Personal Property or (b) replace such
alterations and improvements and the Tangible
94
Personal Property with improvements or items of the same or better quality and
utility in the operation of the Leased Property.
13.5 NO ABATEMENT OF RENT. In no event shall any Rent xxxxx as a result
of any Casualty.
13.6 TERMINATION OF CERTAIN RIGHTS. Any termination of this Lease
pursuant to this Article 13 shall cause any right of Lessee to extend the Term
of this Lease, granted to Lessee herein and any right of Lessee to purchase the
Leased Property contained in this Lease to be terminated and to be without
further force or effect.
13.7 WAIVER. 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 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 Lessor and dealt with as follows:
(a) if the Work has been promptly and diligently commenced by
Lessee and is in the process of being completed in accordance with this
Lease and no fact or condition exists which constitutes, or which with
the giving of notice and/or the passage of time would constitute, a
Lease Default, Lessor shall each month pay to Lessee out of the Rent
Insurance Proceeds a sum equal to that amount, if any, of the Rent
Insurance Proceeds paid by the insurer which is allocable to 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 Lessee or is not in the process of being completed in accordance
with this Lease, the Rent Insurance Proceeds shall be applied to any
Rent then due, and, to the extent sufficient therefor, an amount equal
to Base Rent, Impositions and insurance premiums payable for the next
twelve (12) months, as reasonably projected by Lessor, shall be held by
Lessor as security for the Lease Obligations and applied to the payment
of Rent as it becomes due; and
(c) if such Rent Insurance Proceeds received by Lessor (net of
costs and expenses incurred by Lessor in collecting the same) exceed
the amounts required under clauses (a) and (b) above, the excess shall
be paid to Lessee, provided no fact or circumstance exists which
constitutes, or with notice, or passage of time, or both, would
constitute, a Lease Default.
Notwithstanding the foregoing, Lessor may at its option use or release the Rent
Insurance Proceeds to pay for the Work and, if a Lease Default exists, Lessor
may apply all such
95
insurance proceeds towards the Lease Obligations or hold such proceeds as
security therefor.
13.9 OBLIGATION TO ACCOUNT. Upon Lessee's written request, which may
not be made not more than once in any three (3) month period, Lessor shall
provide Lessee with a written accounting of the application of all insurance
proceeds received by Lessor.
ARTICLE 14
CONDEMNATION
14.1 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part 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, from and after the Conversion Date, temporarily Unsuitable For
Its Primary Intended Use for a period not likely to, or which does not, exceed
three hundred and sixty-five (365) days. If, however, the Leased Property is
thereby so rendered permanently or temporarily Unsuitable For Its Primary
Intended Use: (a) 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) Lessee shall have the
right to acquire the Leased Property from Lessor (i) upon payment of all Rent
due through the date that the purchase price is paid, for a purchase price equal
to the greater of (x) the Meditrust Investment or (y) the Fair Market Value of
the Leased Property minus the Fair Market Added Value, with the Fair Market
Value of the Leased Property and the Fair Market Added Value to be determined as
of the day immediately prior to such partial or temporary Taking and (ii) in
accordance with the terms and conditions set forth in Article 18; in which
event, this Lease shall terminate upon payment of such purchase price and the
consummation of such acquisition. Notwithstanding the foregoing, Lessor may
overrule Lessee's election under clause (a) or (b) and instead either (1)
terminate this Lease as of the date when Lessee is required to surrender
possession of the portion of the Leased Property so taken or (2) compel Lessee
to keep the Lease in full force and effect and to restore the Leased Property as
provided in clause (a) above, but only if the Leased Property may be operated
for at least eighty percent (80%) of the licensed bed capacity of the Facility
if operated in accordance with its Primary Intended Use. Lessee shall exercise
its election under this Section 14.3 by giving Lessor notice thereof ("Lessee's
Election Notice") within sixty (60) days after Lessee receives notice of the
Taking. Lessor shall exercise its option to overrule
96
Lessee's election under this Section 14.3 by giving Lessee notice of Lessor's
exercise of its rights under Section 14.3 within thirty (30) days after Lessor
receives Lessee's Election Notice. If, as the result of any such partial or
temporary Taking, this Lease is not terminated as provided above, Lessee shall
be entitled to an abatement of Rent, but only to the extent, if any, provided
for in Section 3.7, effective as of the date upon which the Leased Property is
rendered Unsuitable For Its Primary Intended Use.
14.4 RESTORATION. If there is a partial or temporary Taking of the
Leased Property and this Lease remains in full force and effect pursuant to
Section 14.3, Lessee shall accomplish all necessary restoration and Lessor shall
release the net proceeds of such Award to reimburse 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), 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 Lessor and Rent shall be abated as set forth in Section 3.7.
14.5 AWARD DISTRIBUTION. In the event Lessee completes the purchase of
the Leased Property, as described in Section 14.3, the entire Award shall, upon
payment of the purchase price and all Rent and other sums due under this Lease
and the other Lease Documents, belong to Lessee and Lessor agrees to assign to
Lessee all of Lessor's rights thereto. In any other event, the entire Award
shall belong to and be paid to Lessor.
14.6 CONTROL OF PROCEEDINGS. Subject to the rights of any Fee
Mortgagee, unless and until Lessee completes the purchase of the Leased Property
as provided in Section 14.3, all proceedings involving any Taking and the
prosecution of claims arising out of any Taking against the Condemnor shall be
conducted, prosecuted and settled by Lessor; provided, however, that Lessor
shall keep Lessee apprised of the progress of all such proceedings and shall
solicit Lessee's advice with respect thereto and shall give due consideration to
any such advice. In addition, Lessee shall reimburse Lessor (as an Additional
Charge) for all costs and expenses, including reasonable attorneys' fees,
appraisal fees, fees of expert witnesses and costs of litigation or dispute
resolution, in relation to any Taking, whether or not this Lease is terminated;
provided, however, if this Lease is terminated as a result of a Taking, Lessee's
obligation to so reimburse Lessor shall be diminished by the amount of the
Award, if any, received by Lessor which is in excess of the Meditrust
Investment.
97
ARTICLE 15
PERMITTED CONTESTS
15.1 LESSEE'S RIGHT TO CONTEST. To the extent of the express references
made to this Article 15 in other Sections of this Lease, Lessee, any Sublessee
or any Manager on their own or on Lessor's behalf (or in Lessor's name), but at
their sole cost and expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence (until the resolution thereof),
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, the decision of any Governmental Authority related to the
operation of the Leased Property for its Primary Intended Use or any Lien or
claim relating to the Leased Property not otherwise permitted by this Agreement;
provided, that (a) prior written notice of such contest is given to 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
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 Lessor nor any member of the Leasing
Group would be in any immediate danger of civil or criminal liability for
failure to comply therewith pending the outcome of such proceedings, (e) in the
event that any such contest shall involve a sum of money or potential loss in
excess of TEN THOUSAND DOLLARS ($10,000), Lessee shall deliver to Lessor an
Officer's Certificate and opinion of counsel, if Lessor deems the delivery of an
opinion to be appropriate, certifying or opining, as the case may be, as to the
validity of the statements set forth to the effect set forth in clauses (b), (c)
and (d), to the extent applicable, (f) Lessee shall give such cash security (or
letter of credit) as may be demanded in good faith by Lessor to insure ultimate
payment of any fine, penalty, interest or cost and to prevent any sale or
forfeiture of the affected portion of the Leased Property by reason of such
non-payment or non-compliance, (g) if such contest is finally resolved against
Lessor or any member of the Leasing Group, 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 Lessee to contest the payment of Rent or any other sums payable by Lessee
to Lessor under any of the Lease Documents.
15.2 LESSOR'S COOPERATION. Lessor, at Lessee's sole cost and expense,
shall execute and deliver to Lessee such authorizations and other documents as
may reasonably be required in any such contest, so long as the same does not
expose Lessor to any civil or criminal liability, and, if reasonably requested
by Lessee or if Lessor so desires, Lessor shall join as a party therein.
98
15.3 LESSEE'S INDEMNITY. Lessee, as more particularly provided for in
Section 12.2, shall indemnify, defend (with counsel acceptable to Lessor) and
save Lessor harmless against any liability, cost or expense of any kind,
including, without limitation, attorneys' fees and expenses that may be imposed
upon Lessor in connection with any such contest and any loss resulting therefrom
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 Lessor to exercise its remedies
hereunder and under any of the other Lease Documents:
(a) any failure of Lessee to pay any amount due hereunder or
under any of the other Lease Documents within ten (10) days following
the date when such payment was due;
(b) any failure in the observance or performance of any other
covenant, term, condition or warranty provided in this Lease or any of
the other Lease Documents, other than the payment of any monetary
obligation and other than as specified in subsections (c) through (x)
below (a "Failure to Perform"), continuing for thirty (30) days after
the giving of notice by Lessor to Lessee specifying the nature of the
Failure to Perform; except as to matters not susceptible to cure within
thirty (30) days, provided that with respect to such matters, (i)
Lessee commences the cure thereof within thirty (30) days after the
giving of such notice by Lessor to Lessee, (ii) Lessee continuously
prosecutes such cure to completion, (iii) such cure is completed within
ninety (90) days after the giving of such notice by Lessor to Lessee
and (iv) such Failure to Perform does not impair the value of, or
Lessor's rights with respect to, the Leased Property or otherwise
impair the Collateral or Lessor's security interest therein;
(c) the occurrence of any default or breach of condition
continuing beyond the expiration of the applicable notice and grace
periods, if any, under any of the other Lease Documents;
(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, other than the representations
and warranties contained in Section 10.1.16, is a continuing
representation or warranty pursuant to Section 10.2;
(e) if any representation or warranty contained in Section
10.1.16 proves to be untrue in any material respect at any time during
the Term and remains
99
untrue for thirty (30) days after the date such representation or
warranty proved to be untrue; except as to matters not susceptible to
cure within such thirty (30) day period, provided that with respect to
such matters, (i) Lessee commences the cure thereof within such thirty
(30) day period, (ii) Lessee continuously prosecutes such cure to
completion, (iii) such cure is completed within ninety (90) days after
the date such representation or warranty proved to be untrue and (iv)
the failure of such representation or warranty to remain true does not
impair the value of, or Lessor's rights with respect to, the Leased
Property or otherwise impair the Collateral or Lessor's security
interest therein;
(f) 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;
(g) 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;
(h) 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;
(i) in the event that, without the prior written consent of
Lessor, in each instance, which consent may be withheld by Lessor in
its sole and absolute discretion:
i. except as expressly permitted under Sections 19.4 and
19.5 hereof, there shall be a change in the Person or
Persons presently in control of any member of the
Leasing Group (whether by operation of law or
otherwise);
ii. all or any portion of the interest of any partner or
member of any member of the Leasing Group shall be,
on any one or more occasions, directly or indirectly,
sold, assigned, hypothecated or otherwise transferred
(whether by operation of law or otherwise), if such
member of the Leasing Group shall be a partnership,
joint venture, syndicate or other group;
iii. except as expressly permitted under Sections 19.4 and
19.5 hereof, the shares of the issued and outstanding
capital stock of any member of the Leasing Group
shall be, on any one or more occasions, directly or
indirectly, sold, assigned, hypothecated or otherwise
transferred
100
(whether by operation of law or otherwise), if such
member of the Leasing Group shall be a corporation;
or
iv. all or any portion of the beneficial interest in any
member of the Leasing Group shall be, directly or
indirectly, sold or otherwise transferred (whether by
operation of law or otherwise), if such member of the
Leasing Group shall be a trust;
(j) the death, incapacity, liquidation, dissolution or
termination of existence of any member of the Leasing Group or, except
as expressly permitted under Section 19.5, the merger or consolidation
of any member of the Leasing Group with any other Person;
(k) except as otherwise permitted pursuant to Section 11.5.2
and/or Section 19.2 and/or Section 19.4 hereof, if, without the prior
written consent of Lessor, in each instance, which consent may be
withheld by Lessor in its sole and absolute discretion, Lessee's or any
Sublessee's interest in the Leased Property shall be, directly or
indirectly, mortgaged, encumbered (by any voluntary or involuntary Lien
other than the Permitted Encumbrances), subleased, sold, assigned,
hypothecated or otherwise transferred (whether by operation of law or
otherwise);
(l) the occurrence of a default or breach of condition
continuing beyond the expiration of the applicable notice and grace
periods, if any, in connection with the payment or performance of any
other material obligation of Lessee or any Sublessee, whether or not
the applicable creditor or obligee elects to declare the obligations of
Lessee or the applicable Sublessee under the applicable agreement due
and payable or to exercise any other right or remedy available to such
creditor or obligee, if such creditor's or obligee's rights and
remedies may involve or result in (i) the taking of possession of the
Leased Property or (ii) the assertion of any other right or remedy
that, in Lessor's reasonable opinion, may impair Lessee's ability
punctually to perform all of its obligations under this Lease and the
other Lease Documents, may impair such Sublessee's ability punctually
to perform all of its obligations under its Sublease or may materially
impair Lessor's security for the Lease Obligations; provided, however,
that in any event, the election by the applicable creditor or obligee
to declare the obligations of Lessee 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 DOLLARS ($500,000);
(m) the occurrence of a Related Party Default or a Third Party
Default;
(n) without limiting the provisions of 16.1(m), the occurrence
of a Lease Default under any of the Related Leases, notwithstanding the
consummation of the Stock Transfer as defined herein or as defined
under any of the Related Leases;
(o) 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
101
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
mean and include any line of credit established in an amount equal to
or greater than ONE MILLION DOLLARS ($1,000,000);
(o) except as a result of Casualty or a partial or complete
Condemnation, if Lessee or any Sublessee ceases operation of the
Facility, from and after the Conversion Date, for a period in excess of
thirty (30) days;
(p) if one or more judgments against Lessee or any Sublessee or
attachments against Lessee's interest or any Sublessee's interest in
the Leased Property, which in the aggregate exceed ONE HUNDRED THOUSAND
DOLLARS ($100,000) or which may materially and adversely interfere with
the operation of the Facility, remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of thirty (30) days;
(q) if, from and after the Conversion Date, any malpractice
award or judgment exceeding any applicable professional liability
insurance coverage by more than FIVE HUNDRED THOUSAND DOLLARS
($500,000) shall be rendered against any member of the Leasing Group
and either (i) enforcement proceedings shall have been commenced by any
creditor upon such award or judgment or (ii) such award or judgment
shall continue unsatisfied and in effect for a period of ten (10)
consecutive days without an insurance company satisfactory to Lessor
(in its sole and absolute discretion) having agreed to fund such award
or judgment in a manner satisfactory to Lessor (in its sole and
absolute discretion) and in either case such award or judgment shall,
in the reasonable opinion of Lessor, have a material adverse affect on
the ability of any member of the Leasing Group to operate the Facility;
(r) if, from and after the Conversion Date, any Provider
Agreement material to the operation or financial condition of any
member of the Leasing Group shall be terminated prior to the expiration
of the term thereof or, without the prior written consent of Lessor, in
each instance, which consent may be withheld in Lessor's reasonable
discretion, shall not be renewed or extended upon the expiration of the
stated term thereof;
(s) if, after Lessee or any Sublessee has obtained approval for
participation in the Medicare and/or Medicaid programs with regard to
the operation of the Facility, a final unappealable determination is
made by the applicable Governmental Authority that Lessee or any
Sublessee shall have failed to comply with applicable Medicare and/or
Medicaid regulations in the operation of the Facility, as a result of
which failure Lessee or such Sublessee is declared ineligible to
continue its participation in the Medicare and/or Medicaid programs;
102
(t) if any member of the Leasing Group receives notice of a
final unappealable determination by applicable Governmental Authorities
of the revocation of any Permit required for the lawful construction or
operation of the Facility in accordance with the Primary Intended Use
or the loss of any Permit under any other circumstances under which any
member of the Leasing Group is required to cease (i) the construction
of the Project in excess of ten (10) days or (ii) after the Conversion
Date, the operation of the Facility in accordance with the Primary
Intended Use; and
(u) 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;
(v) the appointment of a temporary manager (or operator) for
the Leased Property by any Governmental Authority;
(w) the entry of an order by a court with jurisdiction over the
Leased Property to close the Facility, to transfer one or more patients
(or residents) from the Facility as a result of a finding or
determination of abuse or neglect or to take any action to eliminate an
emergency situation then existing at the Facility; or
(x) any failure to deliver the Cash Collateral to Lessor when
required under Section 1 of the Deposit Pledge Agreement.
16.2 REMEDIES.
(a) If any Lease Default shall have occurred, Lessor may at its option
terminate this Lease by giving Lessee not less than ten (10) days' notice of
such termination, or exercise any one or more of its rights and remedies under
this Lease or any of the other Lease Documents, or as available at law or in
equity and upon the expiration of the time fixed in such notice, the Term shall
terminate (but only if Lessor shall have specifically elected by a written
notice to so terminate the Lease) and all rights of Lessee under this Lease
shall cease. Notwithstanding the foregoing, in the event of Lessee's failure to
pay Rent, if such Rent remains unpaid beyond ten (10) days from the due date
thereof, Lessor shall not be obligated to give ten (10) days notice of such
termination or exercise of any of its other rights and remedies under this
Lease, or the other Lease Documents, or otherwise available at law or in equity,
and Lessor shall be at liberty to pursue any one or more of such rights or
remedies without further notice. No taking of possession of the Leased Property
by or on behalf of Lessor, and no other act done by or on behalf of Lessor,
shall constitute an acceptance of surrender of the Leased Property by Lessee or
reduce Lessee's obligations under this Lease or the other Lease Documents,
unless otherwise expressly agreed to in a written document signed by an
authorized officer or agent of Lessor.
(b) To the extent permitted under applicable law, Lessee shall pay as
Additional Charges all costs and expenses (including, without limitation,
attorneys' fee and expenses) reasonably incurred by or on behalf of Lessor as a
result of any Lease Default.
103
(c) If any Lease Default shall have occurred, whether or not this Lease
has been terminated pursuant to Paragraph (a) of this Section, Lessee shall, to
the extent permitted under applicable law, if required by Lessor so to do, upon
not less than ten (10) days' prior notice from Lessor, immediately surrender to
Lessor the Leased Property pursuant to the provisions of Paragraph (a) of this
Section and quit the same, and Lessor may enter upon and repossess the Leased
Property by reasonable force, summary unlawful detainer proceedings, ejectment
or otherwise, and may remove 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 Lessor may claim ownership of the Tangible Personal Property
as set forth in Section 5.2.3 hereof or Lessor may exercise its rights as
secured party under the Security Agreement. Lessor shall use reasonable, good
faith efforts to relet the Leased Property or otherwise mitigate damages
suffered by Lessor as a result of Lessee's breach of this Lease.
(d) In addition to all of the rights and remedies of Lessor set forth
in this Lease and the other Lease Documents, if Lessee shall fail to pay any
rental or other charge due hereunder (whether denominated as Base Rent,
Additional Charges or otherwise) within ten (10) days after same shall have
become due and payable, then and in such event Lessee shall also pay to Lessor
(i) a late payment service charge (in order to partially defray Lessor's
administrative and other overhead expenses) equal to two hundred-fifty ($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 Lessee hereunder or to relieve 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 Lessee or the repossession of the Leased
Property, (c) the failure or inability of Lessor, notwithstanding reasonable
good faith efforts, to relet the Leased Property, (d) the reletting of the
Leased Property or (e) the failure of Lessor to collect or receive any rentals
due upon any such reletting, shall relieve Lessee of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In any such event, Lessee shall forthwith pay to
Lessor all Rent due and payable with respect to the Leased Property to and
including the date of such termination, repossession or eviction. Thereafter,
Lessee shall forthwith pay to Lessor, at Lessor's option, either:
(i) the sum of: (x) all Rent that is due and unpaid at the later
to occur of termination, repossession or eviction, together
with interest thereon at the Overdue Rate to the date of
payment, plus (y) the worth (calculated in the manner stated
below) of the amount by which the unpaid Rent for the balance
of the Term after the later to occur of the termination,
repossession or eviction exceeds the fair market rental value
of the Leased Property for the balance of the Term, plus (z)
any other amount necessary to compensate Lessor for all damage
proximately caused by Lessee's failure to perform
104
the Lease Obligations or which in the ordinary course would be
likely to result therefrom; or
(ii) each payment of Rent as the same would have become due and
payable if Lessee's right of possession or other rights under
this Lease had not been terminated, or if Lessee had not been
evicted, or if the Leased Property had not been repossessed;
which Rent, to the extent permitted by law, shall bear
interest at the Overdue Rate from the date when due until the
date paid, and Lessor may enforce, by action or otherwise, any
other term or covenant of this Lease. There shall be credited
against Lessee's obligation under this Clause (ii) amounts
actually collected by Lessor from another tenant to whom the
Leased Property may have actually been leased or, if Lessor is
operating the Leased Property for its own account, the actual
Cash Flow of the Leased Property.
In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such determination and allowed by
applicable law.
16.4 LESSEE WAIVERS. If this Lease is terminated pursuant to Section
16.2, Lessee waives, to the extent not prohibited by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article 16, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
16.5 APPLICATION OF FUNDS. Any payments otherwise payable to Lessee
which are received by Lessor under any of the provisions of this Lease during
the existence or continuance of any Lease Default shall be applied to the Lease
Obligations in the order which Lessor may reasonably determine or as may be
required by the laws of the State.
16.6 [INTENTIONALLY DELETED].
16.7 LESSOR'S RIGHT TO CURE. If Lessee shall fail to make any payment,
or to perform any act required to be made or performed under this Lease and to
cure the same within the relevant time periods provided in Section 16.1, Lessor,
after five (5) Business Days' prior notice to Lessee (except in an emergency
when such shorter notice shall be given 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 Lessee,
and may, to the extent permitted by law, enter upon the Leased Property for such
purpose and take all such action thereon as, in Lessor's opinion, may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
Lessee. All sums so paid by Lessor and all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, in each case, to
the extent permitted by law) so incurred shall be paid by Lessee to Lessor on
demand as an Additional Charge. The obligations of
105
Lessee and rights of Lessor contained in this Article shall survive the
expiration or earlier termination of this Lease.
16.8 NO WAIVER BY LESSOR. Lessor shall not by any act, delay, omission
or otherwise (including, without limitation, the exercise of any right or remedy
hereunder) be deemed to have waived any of its right or remedies hereunder or
under any of the other Lease Documents unless such waiver is in writing and
signed by Lessor, and then, only to the extent specifically set forth therein.
No waiver at any time of any of the terms, conditions, covenants,
representations or warranties set forth in any of the Lease Documents
(including, without limitation, any of the time periods set forth therein for
the performance of the Lease Obligations) shall be construed as a waiver of any
other term, condition, covenant, representation or warranty of any of the Lease
Documents, nor shall such a waiver in any one instance or circumstances be
construed as a waiver of the same term, condition, covenant, representation or
warranty in any subsequent instance or circumstance. No such failure, delay or
waiver shall be construed as creating a requirement that Lessor must thereafter,
as a result of such failure, delay or waiver, give notice to Lessee or the
Guarantor, the Developer or any other Person that Lessor does not intend to, or
may not, give a further waiver or to refrain from insisting upon the strict
performance of the terms, conditions, covenants, representations and warranties
set forth in the Lease Documents before Lessor can exercise 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 Lessor and Lessee, the Guarantor, the Developer or any other
Person.
The acceptance by Lessor of any payment that is less than payment in
full of all amounts then due under any of the Lease Documents at the time of the
making of such payment shall not: (a) constitute a waiver of the right to
exercise any of Lessor's remedies at that time or at any subsequent time, (b)
constitute an accord and satisfaction or (v) nullify any prior exercise of any
remedy, without the express written consent of Lessor. Any failure by Lessor to
take any action under this Lease or any of the other Lease Documents by reason
of a default hereunder or thereunder, 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 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, 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 Lessor and, except as may be otherwise specifically agreed to by
Lessor in writing, no forbearance on the part of Lessor, no extension of the
time for the payment of the whole or any part of the Obligations, and no other
indulgence given by Lessor to Lessee or any other Person, shall operate to
release or in any manner affect the original liability of Lessee or such other
Persons, or to limit, prejudice or impair any right of Lessor, including,
without limitation, the right to realize upon any collateral, or any part
thereof,
106
for any of the Obligations evidenced or secured by the Lease Documents; notice
of any such extension, forbearance or indulgence being hereby waived by Lessee
and all those claiming by, through or under 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 Lessor under
any of the other Lease Documents or at law or in equity, all of which are hereby
reserved by Lessor, and this Lease is made and accepted without prejudice to any
such rights and remedies. All of the rights and remedies of Lessor under each of
the Lease Documents shall be separate and cumulative and may be exercised
concurrently or successively in Lessor's sole and absolute discretion.
ARTICLE 17
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
17.1 SURRENDER. Lessee shall, upon the expiration or prior termination
of the Term (unless Lessee has concurrently purchased the Leased Property in
accordance with the terms hereof), vacate and surrender the Leased Property to
Lessor in good repair and condition, in compliance with all Legal Requirements,
all Insurance Requirements, and in compliance with the provisions of Article 8,
except for: (a) ordinary wear and tear (subject to the obligation of Lessee to
maintain the Leased Property in good order and repair during the entire Term of
the Lease), (b) damage caused by the gross negligence or willful acts of Lessor,
and (c) any damage or destruction resulting from a Casualty or Taking that
Lessee is not required by the terms of this Lease to repair or restore.
17.2 TRANSFER OF PERMITS AND CONTRACTS. In connection with the
expiration or any earlier termination of this Lease (unless Lessee has
concurrently purchased the Leased Property in accordance with the terms hereof),
upon any request made from time to time by Lessor, Lessee shall (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 Lease to Lessor or its designee and/or (ii)
arrange for the transfer or assignment of such Permits and Contracts to Lessor
or its designee, all to the extent the same may be transferred or assigned under
applicable law and (b) cooperate in every respect (and to the fullest extent
possible) and assist Lessor or its designee in obtaining such Permits and
Contracts (whether by transfer, assignment or otherwise). Such efforts and
cooperation on the part of 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 Lessor.
Furthermore, Lessee shall not take any action or refrain from taking any action
which would defer, delay or jeopardize the process of Lessor or its designee
obtaining said Permits and Contracts (whether by transfer, assignment or
otherwise). Without limiting the foregoing, 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.
107
Lessee hereby appoints Lessor as its attorney-in-fact, with full power
of substitution to take such actions, in the event that Lessee fails to comply
with any request made by Lessor hereunder, as 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 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 Lessee may suffer and shall survive the same.
Such power of attorney is provided solely to protect the interests of Lessor and
shall not impose any duty on Lessor to exercise any such power and neither
Lessor nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.
17.3 NO ACCEPTANCE OF SURRENDER. Except at the expiration of the Term
in the ordinary course, no surrender to Lessor of this Lease or of the Leased
Property or any interest therein shall be valid or effective unless agreed to
and accepted in writing by Lessor and no act by Lessor or any representative or
agent of Lessor, other than such a written acceptance by Lessor, shall
constitute an acceptance of any such surrender.
17.4 HOLDING OVER. If, for any reason, Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time Lessee shall pay as rental each month, one and one-half times
the aggregate of (i) one-twelfth of the aggregate Base Rent payable 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
Lessee pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, Lessee shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
tenants at sufferance, to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease.
108
ARTICLE 18
PURCHASE OF THE LEASED PROPERTY
18.1 PURCHASE OF THE LEASED PROPERTY. In the event Lessee purchases the
Leased Property from Lessor pursuant to any of the terms of this Lease, Lessor
shall, upon receipt from Lessee of the applicable purchase price, together with
full payment of any unpaid Rent due and payable with respect to any period
ending on or before the date of the purchase, deliver to Lessee a deed with
covenants only against acts of Lessor conveying the entire interest of Lessor in
and to the Leased Property to Lessee subject to all Legal Requirements, all of
the matters described in clauses (a), (b), (e) and (g) of Section 11.5.2,
Impositions, any Liens created by Lessee, any Liens created in accordance with
the terms of this Lease or consented to by Lessee, the claims of all Persons
claiming by through or under Lessee, any other matters assented to by Lessee and
all matters for which Lessee has responsibility under any of the Lease
Documents, but otherwise not subject to any other Lien created by Lessor from
and after the Commencement Date (other than an Encumbrance permitted under
Article 20 which Lessee elects to assume). The applicable purchase price shall
be paid in cash to Lessor, or as Lessor may direct, in federal or other
immediately available funds except as otherwise mutually agreed by Lessor and
Lessee. All expenses of such conveyance, including, without limitation, title
examination costs, standard (and extended) coverage title insurance premiums,
attorneys' fees incurred by Lessor in connection with such conveyance, recording
and transfer taxes and recording fees and other similar charges shall be paid by
Lessee.
18.2 APPRAISAL.
18.2.1 DESIGNATION OF APPRAISERS. In the event that it becomes
necessary to determine the Fair Market Value of the Leased Property for
any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in the notice the
name of a Person selected to act as appraiser on its behalf. Within ten
(10) days after receipt of any such notice, Lessor (or Lessee, as the
case may be) shall by notice to Lessee (or Lessor, as the case may be)
appoint a second Person as appraiser on its behalf.
18.2.2 APPRAISAL PROCESS. The appraisers thus appointed, each
of whom must be a member of the American Institute of Real Estate
Appraisers (or any successor organization thereto), shall, within
forty-five (45) days after the date of the notice appointing the first
appraiser, proceed to appraise the Leased Property to determine the
Fair Market Value of the Leased Property as of the relevant date
(giving effect to the impact, if any, of inflation from the date of
their decision to the relevant date); provided, however, that if only
one appraiser shall have been so appointed, or if two appraisers shall
have been so appointed but only one such appraiser shall have made such
determination within fifty (50) days after the making of Lessee's or
Lessor's request, then the determination of such appraiser shall be
final and binding upon the parties. If two appraisers shall have been
appointed and shall have made their determinations within the
respective requisite
109
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
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 Lessor or Lessee may apply to
any court having jurisdiction to have such appointment made by such
court. Any appraiser appointed by the original appraisers, by the
American Arbitration Association or by such court shall be instructed
to determine the Fair Market Value of 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 Lessor and Lessee as the Fair Market Value of
the Leased Property.
18.2.3 SPECIFIC ENFORCEMENT AND COSTS. This provision for
determination by appraisal shall be specifically enforceable to the
extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall
each pay the fees and expenses of the appraiser appointed by it and
each shall pay one-half of the fees and expenses of the third appraiser
and one-half of all other cost and expenses incurred in connection with
each appraisal.
18.3 LESSEE'S LIMITED RIGHT OF REFUSAL. At any time during the Term, as
long as, at the time of exercise and on the date of closing, this Lease is then
in full force and effect, and there exists no Lease Default, nor any state of
facts or circumstances which would constitute a Lease Default, or which, with
the passage of time and/or the giving of notice, would constitute a Lease
Default, Lessee shall have a "Right of First Refusal" subject to the following
terms and conditions: (a) if 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 Lessor in Lessor's sole and absolute discretion and Lessor elects,
in Lessor's sole and absolute discretion, to sell the Leased Property in
accordance with the Offer, Lessee shall have thirty (30) days following notice
of the Offer to elect to purchase the Leased Property on the same terms and
conditions as specified in the Offer; (b) unless Lessor receives notice from
Lessee within such thirty (30) day period setting forth Lessee's election to so
purchase the Leased Property and unless thereafter Lessee completes the
acquisition of the Leased Property exactly as provided for, and by the date
specified, in the Offer, Lessor shall be at liberty, and shall have the absolute
and unconditional right, to sell the Leased Property to any Person within the
next twelve (12) months substantially on the
110
terms and conditions set forth in the Offer or on any other terms and conditions
more favorable to Lessor; and (c) any such sale consummated in accordance with
the provisions of the foregoing clause (b) shall extinguish all rights granted
to Lessee under this Section 18.3. 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 Lessor; (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. Lessee's Right of First Refusal shall in all events terminate
upon the expiration or any earlier termination of this Lease.
18.4 LESSEE'S OPTION TO PURCHASE.
18.4.1 CONDITIONS TO OPTION. On the conditions (which
conditions Lessor may waive, at its sole option, by notice to Lessee at
any time) that (a) at the time of exercise of the Purchase Option and
on the applicable Purchase Option Date, there then exists no Lease
Default, nor any state of facts or circumstance which constitutes, or
with the passage of time and/or the giving of notice, would constitute
a Lease Default and (b) Lessee strictly complies with the provisions of
this Section 18.4, then Lessee shall have the option to purchase the
Leased Property, at the price and upon the terms hereinafter set forth
(the "Purchase Option").
18.4.2 EXERCISE OF OPTION. The Purchase Option shall permit
Lessee to purchase the Leased Property (a) on the last day of the
Initial Term or (b) on the last day of any Extended Term effectively
exercised by Lessee (each of such dates are referred to herein as a
"Purchase Option Date") and shall be exercised by notice given by
Lessee to Lessor (the "Lessee's Purchase Option Notice") at least one
hundred eighty (180) days (but not more than two hundred seventy (270)
days) prior to the relevant Purchase Option Date. Notwithstanding
anything to the contrary set forth in this Lease, Lessee's right to
purchase the Leased Property is subject to the further conditions that
(i) concurrently with the exercise of the option set forth under this
Section 18.4, the Lessee shall have exercised its right to purchase the
premises demised under each of the Related Leases in accordance with
the provisions of Section 18.4 of each of the Related Leases and (ii)
the conveyance of the Leased Property pursuant to the provisions of
this Section 18.4 shall occur simultaneously with the conveyance of the
premises demised under each of the Related Leases pursuant to Section
18.4 of each of the Related Leases and (iii) all of the conditions in
the Agreement Regarding Related Lease Transactions pertaining to the
Purchase Option are satisfied. Once given, Lessee shall have no right
to rescind Lessee's Purchase Option Notice.
18.4.3 CONVEYANCE. If the Purchase Option is exercised by
Lessee in accordance with the terms hereof, the Leased Property shall
be conveyed by a good and sufficient deed with covenants only against
acts of Lessor (the "Deed") running to Lessee or to such grantee as
Lessee may designate by notice to Lessor at least seven (7) days before
the Time of Closing.
111
18.4.4 CALCULATION OF PURCHASE PRICE. Subject to the terms of
the Agreement Regarding Related Lease Transactions, the price to be
paid by Lessee for the acquisition of the Leased Property pursuant to
this Purchase Option (the "Purchase Price") shall be equal to the
greater of (a) the Meditrust Investment or (b) an amount equal to the
then Fair Market Value of the Leased Property minus the Fair Market
Added Value.
18.4.5 PAYMENT OF PURCHASE PRICE. Subject to the terms of the
Agreement Regarding Related Lease Transactions, the Purchase Price
shall be paid by Lessee at the Time of Closing by certified, cashier's,
treasurer's or bank check(s) or wire transfer pursuant to instructions
received from Lessor.
18.4.6 PLACE AND TIME OF CLOSING. Subject to the terms of the
Agreement Regarding Related Lease Transactions, if the Purchase Option
is exercised, the closing shall occur and the Deed shall be delivered
(the "Closing") at the office of Lessor at 12:00 o'clock noon (local
time in Boston, Massachusetts) on the applicable Purchase Option Date
(such time, as the same may be extended by mutual written agreement of
Lessor and Lessee, being hereinafter referred to as the "Time of
Closing"). It is agreed that time is of the essence of the Purchase
Option.
18.4.7 CONDITION OF LEASED PROPERTY. The Leased Property is to
be purchased "AS IS" and "WHERE IS" as of the Time of Closing.
18.4.8 QUALITY OF TITLE. If Lessor shall be unable to give
title or to make conveyance, as stipulated in this Section 18.4, then,
at Lessor's option, Lessor shall use reasonable efforts to remove all
defects in title and the applicable Purchase Option Date and Time of
Closing shall be extended for period of thirty (30) days. Lessor shall
not be required to expend more than FIFTY THOUSAND DOLLARS ($50,000)
(inclusive of attorney's fees) in order to have used "reasonable
efforts."
18.4.9 LESSOR'S INABILITY TO PERFORM. If at the expiration of
the extended time Lessor shall have failed so to remove any such
defects in title, then all other obligations of all parties hereto
under Section 18.4 shall cease and Section 18.4 shall be void and
without recourse to the parties hereto. Notwithstanding the foregoing,
Lessee shall have the election, at either the original or extended
Purchase Option Date and Time of Closing, to accept such title as
Lessor can deliver to the Leased Property in its then condition and to
pay therefor the Purchase Price without reduction, in which case Lessor
shall convey such title; provided, that, in the event of such
conveyance, if any portion of the Leased Property shall have been taken
by Condemnation prior to the applicable Purchase Option Date and Time
of Closing, Lessor shall pay over or assign to Lessee at the Time of
Closing, all Awards recovered on account of such Taking, less any
amounts reasonably expended by Lessor in obtaining such Awards, or, to
the extent such Awards have not been recovered as of the applicable
Purchase Option Date and Time of Closing, Lessor shall assign to Lessee
all its rights with respect to any claim therefor.
112
18.4.10 MERGER BY DEED. The acceptance of the Deed by Lessee or
the grantee designated by Lessee, as the case may be, shall be deemed
to be a full performance and discharge of every agreement and
obligation to be performed by Lessor contained or expressed in this
Lease.
18.4.11 USE OF PURCHASE PRICE TO CLEAR TITLE. To enable Lessor
to make conveyance as provided in this Section, Lessor may, at the Time
of Closing, use the Purchase Price or any portion thereof to clear the
title of any Lien, provided that all instruments so procured are
recorded contemporaneously with the Closing or reasonable arrangements
are made for a recording subsequent to the Time of Closing in
accordance with customary conveyancing practices.
18.4.12 LESSEE'S DEFAULT. If Lessee delivers Lessee's Purchase
Option Notice and fails to consummate the purchase of the Leased
Property in accordance with the terms hereof for any reason other than
Lessor's willful and unexcused refusal to deliver the Deed, (a) Lessee
shall thereafter have no further right to purchase the Leased Property
pursuant to this Section, although this Lease shall otherwise continue
in full force and effect and (b) Lessor shall have the right to xxx for
specific performance of Lessee's obligations to purchase the Leased
Property provided such suit for specific performance is commenced
within one (1) year after the applicable Purchase Option Date on which
such sale was supposed to occur.
ARTICLE 19
SUBLETTING AND ASSIGNMENT
19.1 SUBLETTING AND ASSIGNMENT. Except as specifically set forth in
Section 19.2 and Section 19.4 below, Lessee may not, without the prior written
consent of Lessor, which consent may be withheld in Lessor's sole and absolute
discretion, assign or pledge all or any portion of its interest in this Lease or
any of the other Lease Documents (whether by operation of law or otherwise) or
sublet all or any part of the Leased Property. For purposes of this Section
19.1, the term "assign" shall be deemed to include, but not be limited to, any
one or more sales, pledges, hypothecations or other transfers (including,
without limitation, any transfer by operation of law) of any of the capital
stock of or partnership interest in Lessee or sales, pledges, hypothecations or
other transfers (including, without limitation, any transfer by operation of
law) of the capital or the assets of Lessee. Any such assignment, pledge, sale,
hypothecation or other transfer made without Lessor's consent shall be void and
of no force and effect.
19.2 PERMITTED SUBLEASES. Notwithstanding the foregoing, Lessee shall
have the right to enter into Residence Agreements without the prior consent of
Lessor.
19.3 ATTORNMENT. Lessee shall insert in each Sublease approved by
Lessor provisions to the effect that (a) such Sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder, (b) in the event this Lease shall terminate before the
expiration of such Sublease, the Sublessee thereunder
113
will, at Lessor's option, attorn to Lessor and waive any right the Sublessee may
have to terminate the Sublease or to surrender possession thereunder, as a
result of the termination of this Lease and (c) in the event the Sublessee
receives a written notice from Lessor stating that Lessee is in default under
this Lease, the Sublessee shall thereafter be obligated to pay all rentals
accruing under said Sublease directly to Lessor or as Lessor may direct. All
rentals received from the Sublessee by Lessor shall be credited against the
amounts owing by Lessee under this Lease.
19.4 PERMITTED ASSIGNMENTS. Notwithstanding the provisions of Section
19.1, the current holders of all of the issued and outstanding capital stock of
the Lessee may transfer such capital stock of Lessee to the Guarantor (or, at
the option of the Guarantor, to a wholly-owned Subsidiary of the Guarantor),
subject to the Liens created by the Stock Pledge Agreement, pursuant to the
terms and conditions of the BCC Option Agreement (the "Stock Transfer");
provided that: (a) at the time of the consummation of the Stock Transfer, no
Lease Default shall have occurred (excluding any Lease Default which has been
waived, in writing, by Lessor), nor any event which, with the giving of notice
and/or the passage of time, could result in a Lease Default and (b) prior to or
simultaneously with the consummation of the Stock Transfer, the Guarantor shall
have delivered to Lessor (i) a guaranty of the Lease Obligations executed by the
Guarantor (the "BCC Guaranty"), in form and substance acceptable to Lessor (and,
without limiting the foregoing, the BCC Guaranty shall include the financial
covenants set forth in Section 10.9 of the Working Capital Assurance Agreement),
(ii) a fully-executed Stock Pledge Agreement, in a form substantially similar to
the Pledge Agreement, executed by the Guarantor (or, if applicable, the
wholly-owned Subsidiary of the Guarantor to which the issued and outstanding
stock of the Lessee is to be transferred) granting to Lessor a first priority
security interest in all of the issued and outstanding shares of capital stock
of Lessee (the "BCC Stock Pledge"), (iii) the stock certificate(s) evidencing
such pledged shares, along with stock power(s) (in a form acceptable to Lessor)
duly endorsed in blank and (iv) a legal opinion, in form and substance
satisfactory to Lessor (1) evidencing the authority of the Guarantor to execute
and deliver the BCC Stock Pledge, the BCC Guaranty and such stock powers and the
enforceability of such documents and (2) stating whether any notices to and/or
approvals from any Governmental Authority (or other Person) are required for
such transfer and, if so, that such notices and approvals have been sent and/or
obtained, as the case may be. From and after the consummation of the Stock
Transfer, in accordance with the terms hereof and the terms of the Working
Capital Loan Agreement, and the satisfaction of the conditions set forth in this
Section 19.4, the Related Party Obligations shall include all "Related Party
Obligations" as defined under the State College Lease; provided, however, that,
except as otherwise provided within the definition of the term "Related Parties"
in Article 2 hereof, the consummation of the Stock Transfer shall have no effect
whatsoever on the Related Leases, the Tenant Parties or any terms, conditions or
other provisions set forth herein or in any of the other Lease Documents
relating thereto.
In connection with the consummation the Stock Transfer, the Lessee
shall have the option, exercisable by written notice to the Lessor ten (10)
Business Days prior to the Stock Transfer, to request that the Lessor advance,
under the Leasehold Improvement Agreement, a lump sum payment (the "Working
Capital Payoff") equal to the total
114
outstanding principal amount and all accrued interest and other sums payable
under the Note. The Working Capital Payoff shall be used to pay the entire
principal balance then remaining unpaid, together with accrued and unpaid
interest thereon and any costs, charges and other amounts due under the Note
(without any penalty or premium) and, upon any such advance of the Working
Capital Payoff by Lessor, Base Rent shall be adjusted accordingly and the Cash
Collateral held under the Deposit Pledge Agreement shall also be adjusted to
reflect the adjusted Base Rent hereunder (i.e., so that the Cash Collateral then
held under the Deposit Pledge Agreement equals 3 monthly payments of Base Rent
as adjusted). The Working Capital Payoff shall be due and payable simultaneously
with the consummation of the Stock Transfer. In the event the Lessee does not
elect to request Lessor to advance the Working Capital Payoff under the
Leasehold Improvement Agreement, the Working Capital Payoff shall nevertheless
be due and payable simultaneously with the consummation of the Stock Transfer
(from other funds of Pledgor) so that the outstanding obligations under the Note
may be paid in full (without penalty or premium), it being understood and agreed
that all obligations under the Note are due and payable as of the date of the
consummation of the Stock Transfer. If Lessor does not advance the Working
Capital Payoff to satisfy the outstanding obligations under the Note, there
shall be no adjustment to Base Rent in connection with the satisfaction of the
outstanding obligations under the Note.
19.5 OTHER PERMITTED TRANSFERS. Notwithstanding anything to the
contrary set forth herein, from and after the date of the consummation of the
Guarantor's initial public offering of shares of common stock, (i) subject to
the provisions of the paragraph immediately following this paragraph, any
transfer (whether by operation of law or otherwise) of any shares of the common
stock of the Guarantor shall not constitute a Lease Default and (ii) any merger
of the Guarantor with any other Person shall not constitute a Lease Default,
provided, that, the Guarantor is the surviving entity and remains in compliance
with all of the conditions, covenants and agreements set forth in the Lease
Documents pertaining to the Guarantor (including, without limitation, any
financial covenants).
Notwithstanding anything to the contrary set forth herein, from and
after the date of the consummation of the Guarantor's initial public offering of
common stock, the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended), at any time,
by any Person and its Affiliates, either individually or as a group, of an
aggregate of fifty percent (50%) or more of the common stock of the Guarantor
shall constitute a Lease Default.
115
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 Lessor
hereunder arising or accruing from and after the date of such conveyance or
transfer, the original Lessor named herein or the applicable successor in
interest so conveying the Leased Property shall thereupon be released from all
future liabilities and obligations of Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
20.3 LESSOR MAY GRANT LIENS. Without the consent of Lessee, but subject
to the terms and conditions set forth below in this Section 20.3, Lessor may,
from time to time, directly or indirectly, create or otherwise cause to exist
any lien, encumbrance or title retention agreement upon the Leased Property or
any interest therein ("Encumbrance"), whether to secure any borrowing or other
means of financing or refinancing, provided that Lessee shall have no obligation
to make payments under such Encumbrances. Lessee shall subordinate this Lease to
the lien of 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 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".
116
20.4 SUBORDINATION AND NON-DISTURBANCE. Concurrently with the execution
and delivery of any Fee Mortgage entered into after the date hereof, provided
that the Lessee executes and delivers an agreement of the type described in the
following paragraph, Lessor shall obtain and deliver to Lessee an agreement by
the holder of such Fee Mortgage, pursuant to which, (a) the applicable Fee
Mortgagee consents to this Lease and (b) agrees that, notwithstanding the terms
of the applicable Fee Mortgage held by such Fee Mortgagee, or any default,
expiration, termination, foreclosure, sale, entry or other act or omission under
or pursuant to such Fee Mortgage or a transfer in lieu of foreclosure, (i)
Lessee's rights under this Lease shall not be disturbed nor shall this Lease be
terminated or cancelled at any time, except in the event that Lessor shall have
the right to terminate this Lease under the terms and provisions expressly set
forth herein, (ii) Lessee's option to purchase the Leased Property shall remain
in force and effect pursuant to the terms hereof and (iii) in the event that
Lessee elects its option to purchase the Leased Property and performs all of its
obligations hereunder in connection with any such election, the holder of the
Fee Mortgage shall release its Fee Mortgage upon payment by Lessee of the
purchase price required hereunder, provided, that (1) such purchase price is
paid to the holder of the Fee Mortgage, in the event that the Indebtedness
secured by the applicable Fee Mortgage is equal to or greater than the purchase
price or (2) in the event that the purchase price is greater than the
Indebtedness secured by the Fee Mortgage, a portion of the purchase price equal
to the Indebtedness secured by the Fee Mortgage is paid to the Fee Mortgagee and
the remainder of the purchase price is paid to Lessor.
At the request from time to time by any Fee Mortgagee, Lessee shall (a)
subordinate this Lease and all of Lessee's rights and estate hereunder to the
Fee Mortgage held by such Fee Mortgagee and (b) agree that Lessee will attorn to
and recognize such Fee Mortgagee or the purchaser at any foreclosure sale or any
sale under a power of sale contained in any such Fee Mortgage as Lessor under
this Lease for the balance of the Term then remaining. To effect the intent and
purpose of the immediately preceding sentence, Lessee agrees to execute and
deliver such instruments in recordable form as are reasonably requested by
Lessor or the applicable Fee Mortgagee; provided, however, that such Fee
Mortgagee simultaneously executes, delivers and records a written agreement of
the type described in the preceding paragraph.
117
ARTICLE 21
LESSOR OBLIGATIONS
21.1 QUIET ENJOYMENT. As long as Lessee shall pay all Rent and all
other sums due under any of the Lease Documents as the same become due and shall
fully comply with all of the terms of this Lease and the other Lease Documents
and fully perform its obligations thereunder, Lessee shall peaceably and quietly
have, hold and enjoy the Leased Property throughout the Term, free of any claim
or other action by Lessor or anyone claiming by, through or under Lessor, but
subject to the Permitted Encumbrances and such Liens as may hereafter be
consented to by Lessee. No failure by Lessor to comply with the foregoing
covenant shall give Lessee any right to cancel or terminate this Lease, or to
fail to perform any other sum payable under this Lease, or to fail to perform
any other obligation of Lessee hereunder. Notwithstanding the foregoing, Lessee
shall have the right by separate and independent action to pursue any claim it
may have against Lessor as a result of a breach by Lessor of the covenant of
quiet enjoyment contained in this Article 21.
21.2 MEMORANDUM OF LEASE. Lessor and Lessee shall, promptly upon the
request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State, in which reference to this
Lease and all options and the Right of First Refusal contained herein shall be
made. Lessee shall pay all recording costs and taxes associated therewith.
21.3 DEFAULT BY LESSOR. Lessor shall be in default of its obligations
under this Lease only if Lessor shall fail to observe or perform any term,
covenant or condition of this Lease on its part to be performed and such failure
shall continue for a period of thirty (30) days after notice thereof from Lessee
(or, from and after the Conversion Date, 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 Lessor, within said thirty (30) day period, proceeds promptly and
with due diligence to cure the failure and diligently completes the curing
thereof. The time within which Lessor shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
118
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 Lessee: ______________________________
0000 XXX Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
With a copy to: Xxxxxxxx X. Xxxxx, P.A.
0000 XXX Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
If to the Guarantor: Balanced Care Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
Attn: President
With copies to: Balanced Care Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
Attn: General Counsel
and
Xxxxxxxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxx, Esq.
If to Lessor: Meditrust Company LLC
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President
119
With copies to: Meditrust Company LLC
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
and
Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxxxxx Xxxxxxx, Esq.
or such other address as Lessor, Lessee or the Guarantor shall hereinafter from
time to time designate by a written notice to the others given in such manner.
Any notice given to Lessee or the Guarantor by Lessor at any time shall not
imply that such notice or any further or similar notice was or is required.
ARTICLE 23
LIMITATION OF LIABILITY
In no event shall Lessor ever be liable to Lessee or any other Person
for any indirect or consequential damages incurred by Lessee or such other
Person resulting from any cause whatsoever. Notwithstanding the foregoing,
Lessee hereby acknowledges and agrees that Lessee shall look only to the assets
of Lessor for the payment of any sum or performance of any obligation due by or
from Lessor pursuant to the terms and provisions of the Lease Documents.
120
ARTICLE 24
MISCELLANEOUS PROVISIONS
24.1 BROKER'S FEE INDEMNIFICATION. Lessee shall and hereby agrees to
indemnify, defend (with counsel acceptable to Lessor) and hold Lessor harmless
from and against any and all claims for premiums or other charges, finder's
fees, taxes, brokerage fees or commissions and other similar compensation due in
connection with any of the transactions contemplated by the Lease Documents,
except such claims by any Person with whom Lessor has dealt without Lessee's
knowledge in connection with the transactions contemplated by the Lease
Documents. Notwithstanding the foregoing, Lessor shall have the option of
conducting its own defense against any such claims with counsel of Lessor's
choice, but at the expense of Lessee, as aforesaid. This indemnification shall
include all attorneys' fees and expenses and court costs reasonably incurred by
Lessor in connection with the defense against any such claims and the
enforcement of this indemnification agreement and shall survive the termination
of this Lease.
24.2 NO JOINT VENTURE OR PARTNERSHIP. Neither anything contained in any
of the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between Lessor and Lessee.
Lessee is not the agent or representative of Lessor and nothing contained herein
or in any of the other Lease Documents shall make, or be construed to make,
Lessor liable to any Person for goods delivered to Lessee, services performed
with respect to the Leased Property at the direction of Lessee or for debts or
claims accruing against 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 Working Capital Loan Documents, 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
Working Capital Loan Documents, the Permits and/or the Contracts shall be deemed
to include any renewals, replacements, amendments, extensions, substitutions,
revisions, consolidations or modifications thereof.
121
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,
Working Capital Loan Documents, Permit and/or the Contract is not intended to
constitute an agreement or consent by Lessor to any such renewal, replacement,
amendment, substitution, revision, consolidation or modification; but, rather as
a reference only to those instances where Lessor may give, agree or consent to
any such renewal, replacement, amendment, extension, substitution, revision,
consolidation or modification as the same may be required pursuant to the terms,
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 and the other Lease Documents may be
executed in one or more counterparts, each of which taken together shall
constitute an original and all of which shall constitute one in the same
instrument.
24.7 ENTIRE AGREEMENT. This Lease and the other Lease Documents set
forth the entire agreement of the parties with respect to the subject matter and
shall supersede in all respects those provisions of the letter of intent dated
September 12, 1997 (and all prior iterations thereof), from Meditrust to the
Guarantor, accepted by the Guarantor on September 15, 1997 relating to the
Project.
24.8 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, LESSOR AND LESSEE HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY HERETO MAY NOW OR HEREAFTER HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. Lessee hereby certifies
that neither Lessor nor any of Lessor's representatives, agents or counsel has
represented expressly or otherwise that 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 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 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 paragraph in
122
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 Lessee and Lessee's legal
representatives and permitted successors and assigns and (b) Lessor and any
other Person who may now or hereafter hold the interest of Lessor under this
Lease and their respective successors and assigns. Notwithstanding the
foregoing, 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
Lessor, in each instance, which consent may be withheld in 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 Lessor, its successors, assigns and
participants (if any), the Meditrust Entities, the Indemnified Parties, 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 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 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 Lessor at any time,
if, in Lessor's sole and absolute discretion, Lessor deems it advisable or
desirable to do so.
24.11 GOVERNING LAW. This Lease shall be construed, and the rights and
obligations of Lessor and Lessee shall be determined, in accordance with the
laws of the Commonwealth of Massachusetts, except (a) that the laws of the State
shall govern this Lease to the extent necessary to obtain the benefit of and/or
enforce the rights and remedies set forth herein with respect to the Leased
Property and (b) for procedural requirements relating to the Leased Property
which must be governed by the laws of the State.
To the maximum extent permitted by applicable law, Lessee hereby
submits to the jurisdiction of the courts of the Commonwealth of Massachusetts
and the United States District Court for the District of Massachusetts, 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,
Lessor's relationship with 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
123
Documents and expressly waives any and all objections 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, Lessee or Lessor
arising prior to any date of termination of this Lease or any of the other Lease
Documents shall survive such termination.
If any provision of this Lease or any of the other Lease Documents or
any application thereof shall be invalid or unenforceable, the remainder of this
Lease or the other applicable Lease Document, as the case may be, and any other
application of such term or provision shall not be affected thereby.
Notwithstanding the foregoing, it is the intention of the parties hereto that if
any provision of any of this Lease is capable of two (2) constructions, one of
which would render the provision void and the other of which would render the
provision valid, then such provision shall be construed in accordance with the
construction which renders such provision valid.
If any late charges provided for in any provision of this Lease or any
of the other Lease Documents are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
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.
124
ARTICLE 25
SUBSTITUTION OF PROPERTY
25.1 SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY. Provided that no
default has occurred under this Lease (excluding any default which has been
cured in accordance with the terms hereof or which has been waived, in writing,
by the Lessor), nor any event which, with the giving of notice or the passage of
time or both, would constitute such a default, Lessee shall have the right from
time to time (referred to herein as the "Substitution Right"), exercisable upon
not less than ninety (90) days' prior written notice to Lessor (referred to
herein as a "Substitution Notice") to substitute, on a date specified in such
Substitution Notice (such date, as the same may be extended by express written
agreement of Lessor, shall be referred to herein as a "Substitution Date"), the
Leased Property with a Comparable Facility. As used herein, the term "Comparable
Facility" shall be defined as an adult care residence, assisted living facility
or other similar senior housing facility which Lessor determines (a) has an
appraised Fair Market Value greater than or equal to the greater of (i) the
appraised Fair Market Value of the Leased Property at the Commencement Date or
(ii) the appraised Fair Market Value of the Leased Property at the time that the
applicable Substitution Notice is furnished to Lessor (based on appraisal
criteria then in effect), (b) has a Rent Coverage Ratio greater than or equal to
the greater of (i) the Rent Coverage Ratio of the Leased Property as of the
Commencement Date or (ii) the Rent Coverage Ratio of the Leased Property at the
time that the applicable Substitution Notice is furnished to Lessor, (c)
provides a mix of services similar to the Leased Property and (d) is otherwise
reasonably acceptable, in all respects, to Lessor (based on Lessor's usual and
customary property evaluation criteria then in effect). Lessee may not exercise
its Substitution Right more than once in any calendar year.
25.2 CONDITIONS TO SUBSTITUTION. Without limiting the foregoing, as
conditions precedent to the consummation of any proposed substitution:
(a) as of the applicable Substitution Date, no Lease Default
shall have occurred (excluding any Lease Default which has been waived,
in writing, by Lessor), nor any event which with the giving of notice
and/or the passage of time would constitute such a default;
(b) Lessor shall have received engineering and inspection
reports relating to the medical office building identified by Lessee in
the applicable Substitution Notice (referred to herein as a "Proposed
Facility"), reasonably satisfactory in all respects to Lessor;
(c) Lessee shall have delivered to Lessor (i) an MAI appraisal
of the Proposed Facility (prepared by an appraiser selected by Lessee
and approved by Lessor), in form and substance reasonably satisfactory
to Lessor and (ii) an
125
instrument survey of the premises upon which the Proposed Facility is
located acceptable to Lessor and the Title Company;
(d) Lessor shall be satisfied as to compliance of Lessee, the
Proposed Facility, the owner of the Proposed Facility (to the extent
such owner is not Lessee as provided in subsection (l) below) and/or
the proposed substitution, as the case may be, with (i) all applicable
land use, zoning, subdivision and environmental laws and regulations,
(ii) all applicable health-care and/or adult care, assisted living or
other similar senior housing licensure laws and regulations and (III)
such other matters as Lessor reasonably deems relevant (including,
without limitation, whether the conveyance of the property to Lessor in
connection with the proposed substitution may be avoided under the
Bankruptcy Code);
(e) Lessee shall have delivered to Lessor a valid and binding
owner's or lessee's (as applicable) title insurance commitment issued
by a title insurer reasonably acceptable to Lessor (the "Title
Company"), in an amount equal to the Fair Market Value of the Proposed
Facility, with such endorsements and affirmative coverages, and in such
form, as Lessor may reasonably require insuring Lessor's fee title or
leasehold title to the Proposed Facility, subject to no Liens except
those approved or assumed by Lessor and arrangements satisfactory to
Lessor shall have been made for the issuance of a title insurance
policy on the Substitution Date in accordance with such title insurance
commitment;
(f) Lessee shall have delivered an environmental site
assessment report relating to the Proposed Facility, in form and
substance reasonably acceptable to Lessor and prepared by an
environmental consultant reasonably acceptable to Lessor;
(g) Lessor shall have obtained, at Lessee's cost, an opinion of
Lessor's counsel, in form and substance acceptable to Lessor,
confirming that (i) the substitution of the Proposed Facility for the
Leased Property will qualify as an exchange solely of property of a
like-kind under Section 1031 of the Code, in which, generally, except
for "boot" such as cash needed to equalize exchange values or discharge
indebtedness, no gain or loss is recognized to Lessor, (ii) the
substitution or sale will not result in ordinary recapture income to
Lessor pursuant to Code Section 1250(d)(4) or any other Code provision,
(iii) the substitution or sale will result in income, if any, to Lessor
of a type described in Code Section 856(c)(2) or (3) and will not
result in income of the types described in Code Section 856(c)(4) or
result in the tax imposed under Code Section 857(b)(6) and (iv) the
substitution or sale, together with all other substitutions and sales
made or requested by Lessee or any Affiliate of Lessee or of any
Guarantor pursuant to any other leases with Lessor (or any of its
Affiliates) or any other transfers of the Leased Property or the
properties leased under other such leases, during the relevant time
period, will not jeopardize the qualification of Lessor as a real
estate investment trust under Code Sections 856-860;
126
(h) Lessor shall have received opinions of Lessee's counsel as
to (i) the compliance of the Proposed Facility with land use, zoning,
subdivision and environmental laws and regulations, (ii) the compliance
of Lessee, the owner of the Proposed Facility (to the extent such owner
is not Lessee as provided in subsection (l) below), the proposed
substitution and the Proposed Facility with applicable health care,
adult care, assisted living and/or other similar senior housing laws
and regulations, (iii) the due authorization, execution and
enforceability of the Substitution Documents and (iv) such other
matters as are reasonably requested; in form and substance reasonably
acceptable to Lessor;
(i) Lessee and the Guarantor shall have executed and delivered,
or caused to be executed and delivered, such documents as are
reasonably required by Lessor to effectuate the substitution
(collectively, the "Substitution Documents"), including, without
limitation, (i) a deed with full warranties or assignment of a
leasehold estate with full warranties (as applicable) conveying to
Lessor title to the Proposed Facility free and clear of all Liens,
except those approved or assumed by Lessor, (ii) a facility lease (the
"Substitution Lease") duly executed, acknowledged and delivered by
Lessee, containing the same terms and conditions as are contained
herein except that (1) the legal description of the land shall refer to
the Proposed Facility, (2) the Meditrust Investment in the Proposed
Facility shall be an amount equal to the Meditrust Investment in the
Leased Property increased by any Cash Adjustment paid by Lessor, (3)
the Rent under the Substitution Lease in all respects shall provide
Lessor with a substantially equivalent yield at the time of the
substitution (i.e., annual return on its equity in such Proposed
Facility) to that received (and reasonably expected to be received
thereafter) from the Leased Property, taking into account the Cash
Adjustment, if any, paid by Lessor and any other relevant factors and
(4) such other changes therein as may be necessary or appropriate under
the circumstances shall be made; (iii) a collateral assignment of
permits, licenses, approvals and contracts relating to the Proposed
Facility, substantially in the form of the Lessee Permits Assignment;
(iv) UCC financing statements and (v) an affiliated party subordination
agreement, substantially in the form of Affiliated Party Subordination
Agreement, shall be executed by the parties to the Affiliated Party
Subordination Agreement and such other Persons as are deemed necessary
or appropriate by the Lessor. The Substitution Documents shall be based
upon and contain the same terms and conditions as are set forth in
Lessee Documents in effect prior to the substitution, except that such
changes shall be made as may be necessary or reasonably appropriate
under the circumstances to effectuate the substitution and secure the
protection and priority of the property and security interests conveyed
and/or granted to Lessor;
(j) without limiting any other provision contained herein,
Lessee shall have delivered to Lessor such other information and
materials relating to Lessee, the owner of the Proposed Facility (to
the extent that such owner is not Lessee as provided in subsection (l)
below) and the Proposed Facility as Lessor may reasonably request,
including, without limitation, leases, receipted bills, management
agreements and other Contracts, Provider Agreements, cost reports,
127
Permits, evidence of legal and actual access to the Proposed Facility,
evidence of the availability and sufficiency of utilities servicing the
Proposed Facility, historical and current operating statements,
detailed budgets and financial statements and Lessor shall have found
the same to be satisfactory in all respects;
(k) without limiting Lessee's obligations to pay the
Substitution Closing Costs in accordance with the provisions of Section
25.4, Lessee shall also pay to Lessor a fee equal to one percent (1%)
of the Meditrust Investment;
(l) the Proposed Facility shall be owned or leased by Lessee or
an Affiliate of Lessee that is acceptable to Lessor; provided, however,
that in the event that the Proposed Facility is owned by any such
Affiliate, (i) said Affiliate shall execute and deliver to Lessor such
Substitution Documents as may be reasonably required by Lessor and (ii)
Lessor shall be provided with such evidence as it may require to
determine that the conveyance of the Proposed Facility (or a leasehold
interest therein) to Lessor does not constitute a fraudulent conveyance
(under applicable federal or state law);
(m) Lessee shall have delivered to Lessor an insurance
certificate evidencing compliance with all of the insurance
requirements set forth in the Substitution Documents;
(n) Lessee shall have delivered to Lessor an Officer's
Certificate certifying as of the Substitution Date that (i) the
Proposed Facility has been accepted by Lessee for all purposes of the
Substitution Lease and there has been no material damage to the
improvements located on the Proposed Facility, nor is any condemnation
or eminent domain proceeding pending with respect thereto; (ii) all
Permits (including, but not limited to, a permanent, unconditional
certificate of occupancy) which are necessary to permit the use of the
Proposed Facility in accordance with the provisions of the Substitution
Lease have been obtained and are in full force and effect; (iii) under
applicable zoning and use laws, ordinances, rules and regulations, the
Proposed Facility may be used for the purposes contemplated by
Substitution Documents and all necessary subdivision approvals have
been obtained; (iv) to the best knowledge of Lessee, there exists no
Lease Default under this Lease, and no defense, offset or claim exists
with respect to any sums to be paid by Lessee hereunder, and (v) any
exceptions to Lessor's title to the Proposed Facility do not materially
interfere with the intended use of the Proposed Facility by Lessee;
(o) Lessor shall have determined that the Proposed Facility
constitutes a Comparable Facility; and
(P) Lessor shall have received all Rent due and payable
hereunder through the Substitution Date.
128
In the event that the equity value of the Proposed Facility (i.e., the
Fair Market Value of the Proposed Facility minus the Liens to which Lessor will
take the Proposed Facility subject) as of the Substitution Date is greater than
the equity value of the Leased Property (i.e., the Fair Market Value of the
Leased Property minus the Liens to which Lessee will take the Leased Property
subject other than those Liens which Lessee is obligated to pay or discharge
pursuant to the terms of this Lease) as of the Substitution Date, subject to the
limitation set forth below, Lessor shall pay an amount equal to the difference
to Lessee; provided, however, that Lessor shall not be obligated to consummate
such substitution if Lessor would be required to make a payment to Lessee of an
amount equal to or in excess of fifteen percent (15%) of said Fair Market Value
of the Leased Property (the amount of cash paid by Lessor to Lessee being
referred to herein as the "Cash Adjustment"). Without limiting the generality or
effect of the preceding sentence, in the event that, on the Substitution Date,
Lessor is obligated to pay a Cash Adjustment to Lessee and Lessor does not have
sufficient funds available, or elects not to make such payment in cash, Lessor
shall provide Lessee with (and Lessee shall accept) a purchase money note and
mortgage for a term not to exceed eighteen (18) months from the Substitution
Date and bearing interest, payable monthly, at a rate of interest equal to one
hundred ten percent (100%) of the applicable federal rate (determined at the
time of execution of such note pursuant to Section 1274 of the Code or any
successor section thereto), compounded semi-annually, or, if no such rate exists
or such rate is in excess of that permitted under applicable law, at the Prime
Rate, which interest shall be payable monthly in arrears.
25.3 CONVEYANCE TO LESSEE. If the Lessor shall have determined that the
Proposed Facility constitutes a Comparable Facility, on the Substitution Date,
after the consummation of a substitution in accordance with the terms hereof,
Lessor will convey the Leased Property to Lessee in accordance with the
provisions of Article 18 (except as to payment of any expenses in connection
therewith which shall be governed by Section 25.4 below) and this Lease shall
thereupon terminate as to the Leased Property. Upon completion of the purchase
of the Leased Property, no Rent shall thereafter accrue with respect thereto.
25.4 EXPENSES. Whether or not any proposed substitution is consummated,
Lessee shall pay all of the out-of-pocket expenses and other costs incurred or
expended by Lessor in connection with any proposed substitution (collectively
referred to herein as "Substitution Closing Costs"), including, without
limitation, reasonable attorneys' fees and expenses, engineering costs,
consultants' fees, appraisal costs, audit and tax review costs, out-of-pocket
travel expenses, inspection fees, title insurance premiums and other title fees,
survey expenses, mortgage taxes, transfer, documentary stamp and other taxes,
search charges of any nature, recording, registration and filing costs, broker's
fees and commissions, if any, escrow fees, fees and expenses, if any, incurred
in qualifying Lessor and maintaining its right to do business in the state where
the Proposed Facility is located, the cost of obtaining, preparing and recording
a release of the Leased Property from the lien of any Fee Mortgage (other than
the amount necessary to payoff such Fee Mortgage) and any other costs expended
or incurred by Lessor in connection with the preparation for and the
documentation and/or the closing of the proposed substitution. The
129
Substitution Closing Costs shall be a demand obligation of Lessee to Lessor and,
if not paid within ten (10) days after demand, shall thereafter (to the extent
permitted by applicable law) bear interest at the Overdue Rate until the date of
payment.
[SIGNATURES BEGIN ON NEXT PAGE]
130
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.
WITNESS: LESSEE:
___________________________________
By:
Name: Name:
Title:
WITNESS: LESSOR:
MEDITRUST COMPANY LLC, a Delaware
limited liability company
By:
Name: Name:
Title:
