Exhibit 10.7
AMENDED AND RESTATED
M A S T E R L E A S E A G R E E M E N T NO. 4
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DATED AS OF APRIL 20, 2001
FOR LEASE EXECUTED BY
VENTAS REALTY, LIMITED PARTNERSHIP,
AS LESSOR
AND
VENCOR, INC. AND
VENCOR OPERATING, INC.,
AS TENANT
TABLE OF CONTENTS
ARTICLE I..................................................................................... 2
Section 1.1 Leased Property; Term........................................................... 2
Section 1.2 Term............................................................................ 3
Section 1.3 Amended and Restated Lease...................................................... 3
ARTICLE II.................................................................................... 7
Section 2.1 Definitions..................................................................... 7
ARTICLE III................................................................................... 24
Section 3.1 Rent............................................................................ 24
Section 3.2 Option to Reset Base Rent, Current Rent and Accrued Rent........................ 24
Section 3.3 Additional Charges.............................................................. 26
Section 3.4 Survival........................................................................ 27
Section 3.5 Net Lease....................................................................... 28
Section 3.6 New Common Stock................................................................ 28
ARTICLE IV.................................................................................... 28
Section 4.1 Payment of Impositions.......................................................... 28
Section 4.2 Notice of Impositions........................................................... 29
Section 4.3 Adjustment of Impositions....................................................... 29
ARTICLE V..................................................................................... 29
Section 5.1 No Termination, Abatement, etc.................................................. 29
ARTICLE VI.................................................................................... 30
Section 6.1 Ownership of the Leased Properties.............................................. 30
Section 6.2 Tenant's Personal Property...................................................... 31
ARTICLE VII................................................................................... 31
Section 7.1 Condition of the Leased Property................................................ 31
Section 7.2 Use of the Leased Property...................................................... 32
Section 7.3 Granting of Easements, etc...................................................... 34
ARTICLE VIII.................................................................................. 35
Section 8.1 Compliance with Legal and Insurance Requirements, Instruments, etc.............. 35
Section 8.2 Legal Requirement Covenants..................................................... 35
Section 8.3 Permitted Encumbrances.......................................................... 36
ARTICLE IX.................................................................................... 37
Section 9.1 Maintenance and Repair.......................................................... 37
Section 9.2 Encroachments................................................................... 39
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ARTICLE X..................................................................................... 39
Section 10.1 Construction of Capital Alterations to the Leased Property(ies)................ 39
Section 10.2 Capital Alterations Financed by Tenant......................................... 40
Section 10.3 Capital Alterations Financed by Lessor......................................... 40
Section 10.4 Non-Capital Alterations........................................................ 42
Section 10.5 Salvage........................................................................ 42
Section 10.6 Additional Requirements for Capital Alterations and Non-Capital Alterations.... 42
Section 10.7 Mortgagee's Consent............................................................ 43
ARTICLE XI.................................................................................... 43
Section 11.1 Liens.......................................................................... 43
ARTICLE XII................................................................................... 44
Section 12.1 Permitted Contests............................................................. 44
ARTICLE XIII.................................................................................. 45
Section 13.1 General Insurance Requirements................................................. 45
Section 13.2 Replacement Cost............................................................... 48
Section 13.3 Additional Insurance........................................................... 48
Section 13.4 Waiver of Subrogation.......................................................... 48
Section 13.5 Form Satisfactory, etc......................................................... 49
Section 13.6 Limits; Deductibles............................................................ 49
Section 13.7 Blanket Policy................................................................. 49
Section 13.8 No Separate Insurance.......................................................... 50
Section 13.9 Survival....................................................................... 50
ARTICLE XIV................................................................................... 50
Section 14.1 Insurance Proceeds............................................................. 50
Section 14.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance...... 51
Section 14.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance.................................................................................... 52
Section 14.4 Tenant's Property.............................................................. 52
Section 14.5 Restoration of Tenant's Property............................................... 52
Section 14.6 No Abatement of Rent........................................................... 52
Section 14.7 Restoration.................................................................... 52
Section 14.8 Notice......................................................................... 53
Section 14.9 Waiver......................................................................... 53
ARTICLE XV.................................................................................... 53
Section 15.1 Definitions.................................................................... 53
Section 15.2 Parties' Rights and Obligations................................................ 54
Section 15.3 Total Taking................................................................... 54
Section 15.4 Partial Taking................................................................. 54
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Section 15.5 Restoration................................................................... 54
Section 15.6 Award-Distribution............................................................ 54
Section 15.7 Temporary Taking.............................................................. 55
ARTICLE XVI................................................................................... 55
Section 16.1 Events of Default............................................................. 55
Section 16.2 Certain Remedies.............................................................. 62
Section 16.3 Damages....................................................................... 62
Section 16.4 Certain Effects of Separate Lease............................................. 63
Section 16.5 Waiver........................................................................ 63
Section 16.6 Application of Funds.......................................................... 63
Section 16.7 Notice to Lessor.............................................................. 64
Section 16.8 Nature of Remedies............................................................ 64
Section 16.9 Allocable Rent................................................................ 64
Section 16.10 Special Remedies Provisions................................................... 64
Section 16.11 No Mediation or Arbitration................................................... 74
Section 16.12 Special Purchase Provisions................................................... 74
ARTICLE XVII.................................................................................. 80
Section 17.1 Lessor's Right to Cure Tenant's Default....................................... 80
ARTICLE XVIII................................................................................. 80
Section 18.1 Provisions Relating to Purchase of the Leased Property........................ 80
ARTICLE XIX................................................................................... 81
Section 19.1 Exercise of Renewal Options................................................... 81
Section 19.2 Renewal Terms................................................................. 82
Section 19.3 Fair Market Rental Determination.............................................. 83
Section 19.4 Extended Period New Lease..................................................... 83
Section 19.5 Revocation of Renewal Option Exercise......................................... 83
ARTICLE XX.................................................................................... 84
Section 20.1 Holding Over.................................................................. 84
ARTICLE XXI................................................................................... 84
Section 21.1 Subordination................................................................. 84
Section 21.2 Attornment.................................................................... 85
Section 21.3 Mortgagee Cure Rights......................................................... 85
Section 21.4 Modifications................................................................. 86
Section 21.5 Existing Ground Leases........................................................ 86
ARTICLE XXII.................................................................................. 87
Section 22.1 Notice to Lessor.............................................................. 87
Section 22.2 Definitions................................................................... 88
Section 22.3 Consent of Leasehold Mortgagee Required....................................... 88
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Section 22.4 Default Notice................................................................ 88
Section 22.5 Procedure for Foreclosure on Default.......................................... 89
Section 22.6 Assignment or Transfer in Lieu of Foreclosure................................. 89
Section 22.7 Separate Lease................................................................ 92
Section 22.8 Separate Lease Properties..................................................... 93
Section 22.9 Legal Proceedings............................................................. 93
Section 22.10 Future Amendments............................................................. 94
Section 22.11 Estoppel Certificate.......................................................... 94
Section 22.12 Notices....................................................................... 94
Section 22.13 Erroneous Payments............................................................ 94
Section 22.14 Exercise by Leasehold Mortgagee of Remedies Against One or More Leased
Properties................................................................................... 94
ARTICLE XXIII................................................................................. 95
Section 23.1 Risk of Loss.................................................................. 95
ARTICLE XXIV.................................................................................. 95
Section 24.1 Indemnification............................................................... 95
ARTICLE XXV................................................................................... 97
Section 25.1 Subletting and Assignment..................................................... 97
Section 25.2 Attornment.................................................................... 104
Section 25.3 Sublease Limitation........................................................... 104
Section 25.4 Leasehold Mortgagee Rights.................................................... 105
ARTICLE XXVI.................................................................................. 105
Section 26.1 Financial Statements and Reporting............................................ 105
Section 26.2 Furnishing Notice............................................................. 108
Section 26.3 Quarterly Meetings; Facility Level Meetings and Reviews....................... 108
ARTICLE XXVII................................................................................. 109
Section 27.1 Lessor's Right to Inspect..................................................... 109
ARTICLE XXVIII................................................................................ 109
Section 28.1 No Waiver..................................................................... 109
ARTICLE XXIX.................................................................................. 109
ARTICLE XXX................................................................................... 109
Section 30.1 Acceptance of Surrender....................................................... 109
ARTICLE XXXI.................................................................................. 109
Section 31.1 No Merger of Title............................................................ 109
ARTICLE XXXII................................................................................. 110
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Section 32.1 Conveyance by Lessor.......................................................... 110
ARTICLE XXXIII................................................................................ 110
Section 33.1 Quiet Enjoyment............................................................... 110
ARTICLE XXXIV................................................................................. 110
Section 34.1 Notices....................................................................... 110
ARTICLE XXXV.................................................................................. 112
Section 35.1 Appraisals.................................................................... 112
Section 35.2 Appointment of Appraisers..................................................... 112
Section 35.3 Section 35.3 Qualifications of Appraisers..................................... 113
Section 35.4 Section 35.4 Appraisal Process................................................ 113
Section 35.5 Section 35.5 Binding Nature................................................... 113
Section 35.6 Section 35.6 Costs............................................................ 113
ARTICLE XXXVI................................................................................. 114
Section 36.1 General REIT Provisions....................................................... 114
ARTICLE XXXVII................................................................................ 115
Section 37.1 Intentionally Omitted......................................................... 115
Section 37.2 Lessor's Option to Purchase the Tenant's Personal Property.................... 115
ARTICLE XXXVIII............................................................................... 115
Section 38.1 Lessor May Grant Liens........................................................ 115
ARTICLE XXXIX................................................................................. 116
Section 39.1 Environmental Indemnity....................................................... 116
ARTICLE XL.................................................................................... 116
Section 40.1 Miscellaneous................................................................. 116
Section 40.2 Non-Recourse.................................................................. 117
Section 40.3 Transition of Operations...................................................... 117
Section 40.4 Right to Enter................................................................ 120
Section 40.5 Integration................................................................... 120
Section 40.6 Severability.................................................................. 120
Section 40.7 Subject to Law................................................................ 120
Section 40.8 Waivers....................................................................... 120
Section 40.9 Binding Character............................................................. 121
Section 40.10 Modification.................................................................. 121
Section 40.11 Forbearance................................................................... 121
Section 40.12 Lease Guaranty................................................................ 121
Section 40.13 Louisiana Provisions.......................................................... 121
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Section 40.14 Confidentiality............................................................... 121
Section 40.15 New Lease..................................................................... 126
Section 40.16 Partial Expiration/Termination................................................ 130
Section 40.17 Creation of New Master Lease.................................................. 132
Section 40.18 Combination of Leases......................................................... 132
Section 40.19 Unified Commercial Operating Lease............................................ 135
Section 40.20 Intentionally Omitted......................................................... 136
Section 40.21 No Credits.................................................................... 136
ARTICLE XLI................................................................................... 136
Section 41.1 Memorandums of Lease.......................................................... 136
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Legal Descriptions of the Land
Exhibit B - Term/Commencement Date/Expiration Date
Exhibit C - Allocation Schedule-Applicable Transferred Property Percentage
Exhibit D - Renewal Groups
Exhibit E - Leases
Exhibit F - Intentionally Omitted
Exhibit G - Form of Lease Guaranty
Schedule 1.3 - Certain Breaches and Defaults
Schedule 2.1A - Base Patient Revenues
Schedule 2.1B - Example - Calculation of Base Rent, Current Rent, Accrued Rent
and Unpaid Accrued Rent
Schedule 2.1C - Existing Ground Leases
Schedule 13.7 - Insurance Summary
Schedule 16.1(m)A - Licensed Beds as of the Commencement Date
Schedule 16.1(m)B - Minimum Licensed Beds at Certain Facilities Due to
Involuntary Reduction
Schedule 25.1.7 - Certain Existing Subleases
Schedule 40.12 - Tenant - Affiliate Sublessees
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AMENDED AND RESTATED
MASTER LEASE AGREEMENT NO. 4
THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT NO. 4 (hereinafter this
"Lease") is dated as of the 20/th/ day of April, 2001, and is between VENTAS
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REALTY, LIMITED PARTNERSHIP, a Delaware limited partnership (together with its
successors and assigns, "Lessor"), and VENCOR, INC., a Delaware corporation
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formerly known as Vencor Healthcare, Inc. and to be known as Kindred Healthcare,
Inc. ("Vencor"), and VENCOR OPERATING, INC., a Delaware corporation to be known
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as Kindred Healthcare Operating, Inc. ("Operator"; Operator, jointly and
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severally with Vencor and permitted successors and assignees of Operator and
Vencor, "Tenant").
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RECITALS
A. First Healthcare Corporation, a Delaware corporation, Nationwide Care,
Inc., an Indiana corporation, Northwest Health Care, Inc., an Idaho corporation,
Hillhaven of Central Florida, Inc., a Delaware corporation, Vencor Hospitals
East, Inc., a Delaware corporation, Hahnemann Hospital, Inc., a Delaware
corporation, Hillhaven/Indiana Partnership, a Washington general partnership,
Carrollwood Care Center, a Tennessee general partnership, New Pond Village
Associates, a Massachusetts general partnership, St. Xxxxxx Nursing Home Limited
Partnership, an Oregon limited partnership, San Marcos Nursing Home Partnership,
a California general partnership, Vencor Hospitals Illinois, Inc., a Delaware
corporation, Windsor Xxxxx Nursing Home Partnership, a Wisconsin general
partnership, Health Haven Associates, L.P., a Rhode Island limited partnership,
Oak Hill Nursing Associates, L.P., a Rhode Island limited partnership
(collectively, the "Ventas Subsidiaries"), Ventas, Inc., a Delaware corporation,
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and Lessor (the Ventas Subsidiaries, Ventas, Inc. and Lessor being referred to
herein as "Original Lessor"), as lessor (or sublessor, in the case of properties
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ground leased by Original Lessor), and Vencor together with its permitted
assigns ("Original Tenant"), as tenant (or subtenant, in the case of properties
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ground leased by Original Lessor), entered into that certain Master Lease
Agreement, dated April 30, 1998, pursuant to which, inter alia, Original Lessor
leased (or subleased, in the case of properties ground leased by Original
Lessor) to Original Tenant and Original Tenant leased (or subleased, as
aforesaid) from Original Lessor the Leased Properties (as hereinafter
defined)(other than the Corydon Leased Property, as referenced below), as such
Master Lease Agreement was assigned pursuant to Assignment and Assumption of
Master Lease dated April 30, 1998 between Vencor, Inc., as assignor, and
Operator, as assignee, and as such Master Lease Agreement was amended by First
Amendment to Master Lease dated December 31, 1998 among Ventas, Inc., Lessor,
Operator and Vencor, by Second Amendment to Master Lease Agreement No. 4 dated
April 12, 1999 among Ventas, Inc., Lessor, Operator and Vencor and, as to
particular Leased Properties (hereinafter defined), by miscellaneous recorded
lease confirmations and/or supplements and recorded corrections of lease (as so
assigned and amended, the "Original Master Lease No. 4").
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X. Xxxxxx, as lessor, and Vencor Nursing Centers Limited Partnership, a
Delaware limited partnership ("VNCLP"), as tenant, entered into that certain
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Lease Agreement, dated
1
August 7, 1998, pursuant to which, inter alia, Lessor leased to VNCLP and VNCLP
leased from Lessor one of the Leased Properties (as hereinafter defined)
commonly known as the Corydon Leased Property, as such Lease Agreement was
amended by First Amendment to Corydon, Indiana Lease Agreement dated April 12,
1999 between Lessor and VNCLP and thereafter assigned to Tenant (as so amended
and assigned, the "Original Corydon Master Lease": the Original Master Lease No.
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4 and the Original Corydon Master Lease are collectively referred to herein as
the "Original Master Lease").
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C. Ventas, Inc. is the successor by merger to each of the Ventas
Subsidiaries and has conveyed (or assigned, in the case of ground leased
properties) to Lessor each of the Leased Properties formerly owned or ground
leased by Ventas, Inc. and/or the Ventas Subsidiaries other than one (1) Leased
Property (Facility No. 4614) title to which was retained by Ventas, Inc. as
described in the Joinder to this Lease.
D. Tenant is the tenant (or subtenant, in the case of ground leased
properties) under the Original Master Lease No. 4 and the Original Corydon
Master Lease and, after April 30, 1998, except for the above-referenced
assignment of the Original Corydon Master Lease to Tenant, Tenant has not
assigned the Original Master Lease No. 4 or the Original Corydon Master Lease,
wholly or in part.
E. Pursuant to the Bankruptcy Plan (as defined in Section 2.1 below),
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Lessor and Tenant desire to combine, amend and restate the Original Master Lease
No. 4 and the Original Corydon Master Lease in their entirety, as combined, in
the manner hereinafter set forth.
F. Pursuant to the Bankruptcy Plan and as further described in Section
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3.6 below, Lessor and/or its designee(s) is receiving New Common Stock (as
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defined in the Bankruptcy Plan) as additional rent under this Lease and the
other Leases (as defined in Section 2.1 below).
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G. Immediately following the execution and delivery of this Lease, Vencor
will change its name to Kindred Healthcare, Inc. and Operator will change its
name to Kindred Healthcare Operating, Inc.
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Tenant hereby combine, amend and restate the Original
Master Lease No. 4 and the Original Corydon Master Lease in their entirety, as
combined, as follows:
ARTICLE I
Section 1.1 Leased Property; Term. Effective as of the Commencement
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Date for each Leased Property, upon and subject to the terms and conditions
hereinafter set forth, Lessor leased, and hereby leases, to Tenant and Tenant
leased, and hereby leases, from Lessor all of Lessor's rights and interest in
and to each of the following:
2
(i) the tracts, pieces and parcels of land, as more particularly
described in Exhibit A attached hereto (collectively, the "Land"; each
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parcel of Land described in Exhibit A, as amended from time to time,
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excluding those parcels which have been transferred to a New Lease pursuant
to Section 40.15 (including, without limitation, a New Lease created
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pursuant to Section 22.7 hereof) or to a New Master Lease pursuant to
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Section 40.17, together with the related property described in clauses (ii)
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through (iv) below, being referred to herein as a "Leased Property" and all
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of such parcels of Land, together with all of such related property, being
referred to herein collectively as the "Leased Properties"),
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(ii) 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 (on-
site and off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land and Capital
Alterations (collectively, the "Leased Improvements"),
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(iii) all easements, rights and appurtenances relating to the Land
and the Leased Improvements, and
(iv) all permanently affixed equipment, machinery, fixtures, and other
items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including, without limitation, 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 Tenant's Personal
Property as defined in Article II below (collectively the "Fixtures"),
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SUBJECT, HOWEVER, to the Permitted Encumbrances (as defined in Section 2.1
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hereof).
Section 1.2 Term. To have and to hold for (1) a fixed term (the "Fixed
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Term") commencing on the Commencement Date set forth in Exhibit B opposite the
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applicable Leased Property and ending at midnight on the Expiration Date so set
forth in Exhibit B, and (2) the Extended Terms provided for in Article XIX,
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unless this Lease is sooner terminated as hereinafter provided.
Section 1.3 Amended and Restated Lease.
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Section 1.3.1 Tenant, pursuant to the Bankruptcy Plan (as defined in
Section 2.1 below), has assumed the Original Master Lease in its entirety, and
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Lessor and Tenant have simultaneously amended and restated the Original Master
Lease in its entirety in accordance
3
with the terms of this Lease as of the Effective Date (as defined in Section 2.1
-----------
below) by executing this Lease. This Lease shall govern and control as to all
events, acts, omissions, liabilities and obligations first occurring, arising or
accruing from and after the Effective Date (as defined in Section 2.1 below).
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Section 1.3.2 Without limitation of the other provisions of this
Section 1.3, the terms of the Original Master Lease shall continue to govern and
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control as to all events, acts, omissions, liabilities and obligations
occurring, arising and accruing prior to the Effective Date, provided that, in
the event that (1) prior to the Effective Date, (a) a default or breach of the
terms of the Original Master Lease shall have occurred, (b) any act, event or
omission to act shall have occurred, or circumstance shall have arisen, relative
to any Legal Requirement, Authorization, Permitted Encumbrance or Superior Lease
(each as defined in Section 2.1 below) affecting any of the Leased Properties
-----------
that is or is potentially adverse to Lessor or Tenant, or (c) any casualty or
condemnation shall have occurred relative to any of the Leased Properties and
(2) as of the Effective Date, such default or breach remains uncured or such
act, event, omission to act or circumstance continues to be adverse or
potentially adverse to Lessor or Tenant or such casualty or condemnation has not
been fully repaired and restored with all claims on account thereof finally
settled and paid and with the affected Leased Property re-opened for use in
accordance with its Primary Intended Use (as defined in Section 7.2.2 hereof)
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and the other provisions of this Lease, the provisions of this Lease relative to
cure periods, whether and when an Event of Default shall be deemed to have
occurred, rights and remedies on account of any breach or default or Event of
Default, contest rights, Lease enforcement rights, casualty, condemnation,
insurance and indemnification shall govern and control. Subject to the
foregoing, (x) any breach or default that occurs, arises or accrues under the
Original Master Lease prior to the Effective Date and is not cured prior to such
date is, and shall be deemed to be, a breach or default under this Lease, to
which the cure periods, rights and remedies and other provisions of this Lease
referenced in the preceding sentence shall be applicable, unless such breach or
default is specifically waived and released under the terms of Section 1.3.4
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below, and (y) with respect to any breach or default described in subsection (x)
above that is not specifically waived and released under Section 1.3.4, although
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the cure periods, rights and remedies and other provisions of this Lease
referenced in the preceding sentence shall be applicable, the portion of any
cure period under the Original Master Lease that has elapsed as of the Effective
Date shall be counted in determining whether and when the applicable cure period
under this Lease has expired (for example, if (A) a breach or default occurs
under the Original Master Lease prior to the Effective Date, (B) such breach or
default remains uncured as of the Effective Date and is not specifically waived
and released under the terms of Section 1.3.4, (C) Tenant receives from Lessor a
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written notice of default relative thereto prior to the Effective Date, and (D)
by the terms of this Lease, for a breach or default of the nature assumed in
this example a cure period of thirty (30) days following Tenant's receipt of
written notice of default is allowed prior to such breach or default becoming an
Event of Default under this Lease, then, as to such breach or default, an Event
of Default shall occur if such breach or default is not cured on or prior to the
thirtieth (30th) day following Tenant's receipt of the aforesaid notice of
default, notwithstanding that such notice was received prior to the Effective
Date).
4
Section 1.3.2.1 In the event that (1) prior to the Effective Date,
(a) a default or breach of the terms of the Original Master Lease shall have
occurred, (b) any act, event or omission to act shall have occurred, or
circumstances shall have arisen, relative to any Legal Requirements,
Authorization, Permitted Encumbrances or Superior Lease (each as defined in
Section 2.1 below) affecting any of the Leased Properties that is or is
-----------
potentially adverse to Lessor or Tenant, or (c) any casualty or condemnation
shall have occurred relative to any of the Leased Properties and (2) prior to
the Effective Date, such default or breach has been cured or such act, event,
omission to act or circumstance is no longer adverse or potentially adverse to
Lessor or Tenant or such casualty or condemnation has been fully repaired and
restored with all claims on account thereof finally settled and paid and with
the affected Leased Property re-opened for use in accordance with its Primary
Intended Use and the other provisions of this Lease, then no such default or
breach or other circumstance or matter described in the foregoing subsections
(a), (b) and (c) shall constitute an Event of Default under this Lease, and
neither party shall bring a claim against the other in respect of any such
default, breach, circumstance or matter, whether hereunder or under the Original
Master Lease. Notwithstanding the foregoing, subject to Section 1.3.2 above,
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neither party waives or releases, and neither party shall be precluded from
exercising, any rights or remedies (including, without limitation, default
rights and remedies) that it may have hereunder or under the Original Master
Lease (i) on account of any non-performance by the other party of
indemnification obligations that such other party has hereunder or under the
Original Master Lease relative to any default, breach, act, event, omission to
act, circumstance, casualty or condemnation referenced in subsection (a), (b),
or (c) above or (ii) if, and insofar as, the condition described in subsection
(2) above is not, or by reason of events occurring after the Effective Date is
shown to have not been, cured, repaired, restored, re-opened or otherwise
satisfied.
Section 1.3.3 Each party hereto represents and warrants to the other
party hereto that, as of February 23, 2001, such representing party had no
knowledge of any uncured breaches by it of, or uncured defaults by it under, the
Original Master Lease or this Lease, in each case other than the breaches and
defaults disclosed by it in the portion of subpart A of Schedule 1.3 attached
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hereto and incorporated herein by this reference that is applicable to it.
Section 1.3.3.1 Lessor represents and warrants to Tenant that, as of
February 23, 2001, Lessor's Management Group (as defined below) had no Actual
Knowledge (as defined below) of any Section 1.3.3.1 Claim (as defined below) (1)
involving any act or omission by Tenant that constituted a breach or default of
the Original Master Lease by Tenant that was continuing as of February 23, 2001,
and (2) of which Lessor had not, on or prior to February 23, 2001, given Tenant
written notice (which notice is not required to have been given in accordance
with the formalities of Section 34.1 below) or of which, on or prior to February
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23, 2001, Tenant had not obtained actual knowledge or notice (as opposed to, and
not including, constructive, imputed, assumed or other knowledge or notice). As
used in this Section 1.3.3.1, (a) the term "Lessor's Management Group" shall
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mean Xxxxx X. Xxxxxx, T. Xxxxxxx Xxxxx and Xxxx X. Xxxxxxxx, (b) the term
"Actual Knowledge" shall mean actual knowledge (as opposed to, and not
----------------
including, constructive, imputed, assumed or other
5
knowledge, and without any obligation or duty of any kind to investigate or
otherwise make inquiry) first obtained on or after September 13, 1999 and on or
prior to February 23, 2001, and (c) the term "Section 1.3.3.1 Claim" shall mean
a written claim that (x) is made to Lessor by any governmental agency or private
party that is not an Affiliate of Tenant, (y) is based upon an act or omission
of Tenant that constitutes a breach or default by Tenant of the Original Master
Lease, and (z) describes the occurrence of an event that constitutes such a
breach or default by Tenant (other than a breach or default in the performance
of Tenant's obligations relative to payment of real estate taxes and assessments
relating to any of the Leased Properties and/or payment of any amounts owed on
account of work performed at, or materials provided to, any Leased Property, it
being agreed that claims based on any such breach or default by Tenant shall in
no event be considered a "Section 1.3.3.1 Claim" and that no representation or
warranty is made in this Section 1.3.3.1 regarding any breach or default of the
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nature referenced in this parenthetical clause). Lessor and Tenant further agree
that (i) Tenant shall have no rights or remedies against Lessor on account of
any breach of the representation and warranty of Lessor contained in this
Section 1.3.3.1 other than the rights and remedies set forth in subsection (ii)
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below and (ii) any act or omission by Tenant that satisfies the terms of
subsections (1) and (2) above shall not constitute an Event of Default under the
Original Master Lease or this Lease unless and until, and shall constitute such
an Event of Default only if, an Event of Default shall occur on account of
Tenant's failure (A) to perform its indemnification obligations under the
Original Master Lease or this Lease relative to any such act or omission and (B)
to cure any such indemnification non-performance within the cure period
applicable to such indemnification non-performance. Tenant's aforesaid
indemnification obligations shall remain enforceable by Lessor, notwithstanding
any breach by Lessor of its representation and warranty contained in this
Section 1.3.3.1 and without any limitation on, or impairment of, such
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indemnification rights due to any such breach by Lessor.
Section 1.3.4 Each of the parties hereto hereby waives and releases
any and all rights and claims it may have against the other party hereto for, on
account of or in connection with any breach or default by such other party of or
under the Original Master Lease or this Lease and which occurred prior to the
Effective Date of this Lease (including those matters set forth on subpart A of
Schedule 1.3 hereto, but subject to subpart B of Schedule 1.3 and the other
------------ ------------
terms and provisions of this Section 1.3), provided, however, that,
-----------
notwithstanding anything to the contrary contained in this Section 1.3.4 or
-------------
elsewhere in this Section 1.3, (1) Tenant agrees that it has no defenses or
-----------
rights of deduction, set-off or abatement as to any of its obligations hereunder
or under the Original Master Lease, including, without limitation, payment of
Rent, and (2) without limitation of the foregoing subsection (1), the parties
are not waiving or releasing, and are expressly preserving, (a) any and all
rights and claims with respect to any breach or default that is continuing as of
the Effective Date of this Lease (other than rights and claims with respect to
any such continuing breach that is identified in subpart B of Schedule 1.3
------------
hereto as a breach or default that is waived and released, and then only to the
extent set forth in such subpart B and subject to subsection (e) below and to
the last two sentences of Section 1.3.3.1 above), and (b) any and all rights and
---------------
claims with respect to any breach or default that is identified in subpart B of
Schedule 1.3 hereto as a breach or default that is not waived or released, and
(c) any and all rights and claims with respect to any breach or default that
arises on account of actions or omissions to act occurring after February 23,
6
2001 and which continues after the Effective Date, and (d) subject to Section
-------
1.3.3.1 above, any and all rights and claims with respect to any breach or
-------
default of the representations, warranties and agreements contained in Section
-------
1.3.3 above, and (e) any and all rights and claims based upon non-performance of
-----
indemnification obligations hereunder or under the Original Master Lease
relative to any breach or default that is waived and released pursuant to this
Section 1.3 or to the acts, events, omissions to act or other circumstances on
-----------
account of which any such waived and released breach or default arose. Subject
to subsection (e) above and to the last two (2) sentences of Section 1.3.3.1
---------------
above, each party agrees that at no time in the future shall it bring a claim
based on a breach or default that has been waived or released pursuant to this
Section 1.3. Lessor further agrees that, provided Tenant pays, at the time and
-----------
in the manner required in the Rent Stipulation (as defined in Section 2.1
below), all "Monthly Payments," as defined in the Rent Stipulation, for the
period from February 24, 2001 through the Effective Date, Lessor shall waive any
"Agreement Rent Claim," as defined in the Rent Stipulation, for such period, and
the parties shall update Schedule 1.3, subpart A, item 2(e), and subpart B, item
------------
2(e), to reflect such waiver.
Section 1.3.5 Nothing contained in this Section 1.3 shall limit or
-----------
impair Lessor's or Tenant's rights, duties and obligations under the Indemnity
Agreement (as defined in Section 2.1 below).
-----------
ARTICLE II
Section 2.1 Definitions. For all purposes of this Lease, 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, (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as at the time applicable, (iii) all
references in this Lease to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease and (iv) the words "herein," hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:
"Accrued Rent": (a) For the period from the Effective Date through April
------------
30, 2004, zero (0) and (b) for a particular Rent Calculation Year thereafter, an
amount equal to (i) the Base Rent for such Rent Calculation Year, less (ii) the
Current Rent for such Rent Calculation Year. One twelfth (1/12th) of the
Accrued Rent for a particular Rent Calculation Year shall be deemed earned by
Lessor on the first (1st) day of each month during such year.
"Accrued Rent Interest": Interest, calculated in the manner hereinafter
---------------------
described, on any and all Accrued Rent under this Lease that is not paid in full
by Tenant on the date it is earned. Accrued Rent that is not paid in full by
Tenant on the date it is earned shall bear interest, until paid, at a rate equal
to the Accrued Rent Interest Rate, compounded annually on April 30 of each year,
and all such interest (including, without limitation, all additional interest
that results from compounding) is herein referred to collectively as "Accrued
Rent Interest".
7
"Accrued Rent Interest Rate": On any date, a rate equal to the LIBO Rate
--------------------------
plus 450 basis points per annum, but in no event greater than the maximum rate
then permitted under applicable law, provided, however, that, upon the
-------- -------
occurrence of any Event of Default, the Accrued Rent Interest Rate shall equal,
on any date, a rate equal to the LIBO Rate plus 700 basis points per annum
(provided, however, that such 700 basis points number shall be changed to 650
basis points, if, on or prior to June 30, 2001, the reference to "2.5%"
contained in Section 2.02(b) of the Tenant Senior Secured Credit Agreement is
amended to refer instead to "2.0%"), but in no event greater than the maximum
rate then permitted under applicable law. Interest at the aforesaid rates shall
be determined for actual days elapsed based upon a 360 day year.
"Actual Knowledge": As defined in Section 1.3.3.1.
---------------- ---------------
"Additional Charges": As defined in Article III.
------------------ -----------
"Adjusted Base Patient Revenues": Base Patient Revenues from the Leased
------------------------------
Properties, adjusted as follows. Without limitation of Section 7.2.3 hereof, if
-------------
a particular Facility or Facilities within the Leased Properties, for any period
after December 31, 1999, for any reason is closed, the Base Patient Revenues
that correspond to any such closed Facility or Facilities (and, in the case of a
partial year closure, the Base Patient Revenues that correspond to any such
closed Facility or Facilities for the days or months such Facility or Facilities
were closed) shall be excluded from Base Patient Revenues in order to arrive at
"Adjusted Base Patient Revenues."
"Affiliate": means, with respect to any Person, any other Person directly
---------
or indirectly controlling (including, but not limited to, all partners,
directors, officers and members of such Person), controlled by or under direct
or indirect common control with any such Person. A Person shall be deemed to
control a corporation, a partnership, a trust, or a limited liability company if
such Person possesses, directly or indirectly, 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.
"Ancillary Agreement": As defined in Section 25.1.7.
------------------- --------------
"Appraisal Notice": As defined in Section 35.2.
---------------- ------------
"Arbitration Question": As defined in Section 22.6(c).
-------------------- ---------------
"Authorizations": As defined in Section 40.3.
------------
"Award": As defined in Article XV.
----- ----------
"Bankruptcy Plan": That certain Fourth Amended Joint Plan Of
---------------
Reorganization of Vencor, Inc. And Affiliated Debtors Under Chapter 11 Of The
Bankruptcy Code dated as of December 14, 2000, filed on December 14, 2000 at
docket no. 4031 in the United States Bankruptcy Court for the District of
Delaware in the cases known as In re: Vencor, Inc., et
8
al., Case Nos. 99-3199 (MFW) through 99-3327 (MFW), as confirmed by such
Bankruptcy Court by Order dated March 16, 2001, filed on March 16, 2001, at
docket no. 5975.
"Base Patient Revenues": Patient Revenues from the Leased Properties
---------------------
(adjusted, in amounts agreed upon by Lessor and Tenant, relative to so-called
"Vencare programs", but which adjustment shall not otherwise be made in the
calculation of "Patient Revenues") for the twelve (12) month period ending on
December 31, 1999, as set forth on Schedule 2.1A attached hereto and
-------------
incorporated herein.
"Base Rent": (a) For the period from the Effective Date through the last
---------
day of the month containing the Effective Date, rent at an annual rate equal to
the annualized amount of the "Monthly Payment", as defined in the Rent
Stipulation, payable for the month preceding such month, (b) for the period from
the first day of the month following the month containing the Effective Date
through April 30, 2001, rent at an annual rate equal to Thirty-Four Million Nine
Hundred Forty-Six Thousand Four Hundred Six Dollars ($34,946,406.00) per annum,
(c) for the period from May 1, 2001 through April 30, 2002, if the Patient
Revenues for the calendar year 2000 equaled or exceeded seventy-five percent
(75%) of the Adjusted Base Patient Revenues, rent at an annual rate equal to
Thirty-Six Million One Hundred Sixty-Nine Thousand Five Hundred Thirty Dollars
($36,169,530.00) per annum and otherwise rent at an annual rate equal to Thirty-
Four Million Nine Hundred Forty-Six Thousand Four Hundred Six Dollars
($34,946,406.00) per annum, and (d) for a particular Rent Calculation Year
thereafter, an annual rental amount equal to the sum of (i) the Prior Period
Base Rent, plus (ii) if the Patient Revenues for the calendar year preceding the
commencement of such Rent Calculation Year equaled or exceeded seventy-five
percent (75%) of the Adjusted Base Patient Revenues, three and one-half percent
(3.5%) of the Prior Period Base Rent. (See Schedule 2.1B attached hereto and
-------------
incorporated herein for an example of the calculation of Base Rent, Current
Rent, Accrued Rent and Unpaid Accrued Rent under certain assumptions.)
Notwithstanding the foregoing, (1) in the event Lessor exercises the Reset
Option referenced in Section 3.2 hereof, then, for periods from and after the
-----------
Reset Date, "Base Rent" shall mean the Fair Market Rental applicable to such
period, as determined pursuant to Section 3.2 hereof and including any
-----------
escalations that are part of the Fair Market Rental as so determined, and (2)
exercise of the Reset Option shall not limit the applicability of Sections 19.2
-------------
and 19.3 hereof.
----
"Business Day": Each Monday, Tuesday, Wednesday, Thursday and Friday which
------------
is not a day on which national banks in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.
"Capital Alterations": With respect to any Leased Property: (i) the
-------------------
addition of one or more new buildings, or (ii) the annexation of one or more
additional structures to any portion of any of the Leased Improvements on such
Leased Property, or (iii) the material expansion or contraction of the existing
improvements on such Leased Property, or (iv) any alteration or modification
affecting the foundation, floor slab, roof or roof structure, curtain wall,
structural columns, beams or shafts or other structural components of any of the
Leased Improvements on such Leased Property (other than any alterations or
modifications affecting any of such components that do not in any material
respect adversely affect the design, efficacy and/or
9
quality of any such component), or (v) any alteration or modification affecting
any of the electrical, plumbing, life safety, heating, ventilating, air
conditioning or other operating systems serving any of the Leased Improvements
on such Leased Property (other than any alterations or modifications affecting
any of such systems that do not in any material respect adversely affect the
design, operating capacity, efficiency and/or quality of any such system), or
(vi) any alterations or modifications to a Leased Property, the cost of which
(excluding cosmetic refurbishing alterations or modifications, such as painting,
wallpapering or carpeting), when taken together with all other alterations and
modifications (excluding cosmetic refurbishing alterations or modifications)
performed on such Leased Property in the twelve (12) month period immediately
preceding the subject alterations or modifications, would exceed One Million
Dollars ($1,000,000) (in the case of alterations or modifications to hospital
facilities) or Five Hundred Thousand Dollars ($500,000) (in the case of
alterations or modifications to nursing center facilities or any other facility
not operated as a hospital). "Capital Alterations" shall include, without
limitation, (1) the construction of a new wing or new story on a Leased
Property, (2) the repair, replacement, restoration, remodeling or rebuilding of
the existing improvements on a Leased Property or any portion thereof, where the
purpose and effect of such work is to provide a functionally new facility needed
to provide services not previously offered, and (3) any expansion, construction,
renovation or conversion in order to increase the bed capacity of the Facility
located on a Leased Property, to change the purpose for which such beds are
utilized or to improve materially the quality of such Facility.
"Capital Alterations Cost": The term "Capital Alterations Cost" shall mean
------------------------
the cost of any Capital Alteration proposed to be made by Tenant at a Leased
Property, whether or not paid for by Tenant or Lessor. Such cost shall include
(a) the cost of construction of the Capital Alterations (including site
preparation and improvement, materials, labor, supervision, and certain related
design, engineering and architectural services), the cost of any fixtures, the
cost of construction financing and miscellaneous costs approved by Lessor, (b)
if agreed to by Lessor in writing, in advance, the cost of any land contiguous
to a Leased Property that is (1) to become part of such Leased Property and (2)
is purchased for the purpose of placing thereon the Capital Alterations or any
portion thereof or of providing means of access to such Capital Alterations or
any existing improvements on such Leased Property or of providing parking
facilities for such Capital Alterations or such existing improvements, including
the cost of surveying the same, (c) the cost of insurance, real estate taxes,
water and sewage charges and other carrying charges for such Capital Alterations
during construction, (d) the cost of title insurance, (e) reasonable fees and
expenses of legal counsel, (f) filing, registration and recording taxes and
fees, (g) documentary stamp taxes, if any, and (h) all reasonable costs and
expenses of Lessor and Tenant and, if agreed to in advance by Lessor, any
Lending Institution which has committed to finance the Capital Alterations,
including, but not limited to, (i) the reasonable fees and expenses of their
respective legal counsel, (ii) all printing expenses, (iii) the amount of any
filing, registration and recording taxes and fees, (iv) documentary stamp or
transfer taxes, if any, (v) title insurance charges and appraisal fees, if any,
(vi) rating agency fees, if any, and (vii) commitment fees, if any, charged by
any Lending Institution advancing or offering to advance any portion of the
financing for such Capital Alterations.
"Code": The Internal Revenue Code of 1986, as amended.
----
10
"Combined Leased Properties": The Leased Properties from time to time
--------------------------
under this Lease, together with the leased properties from time to time under
the other Combined Leases.
"Combined Leases": The following that are from time to time in existence:
---------------
this Lease, the other Leases (including, without limitation, any New Master
Lease entered into pursuant to Section 40.17 of this Lease and/or the
-------------
corresponding sections of the other Leases) and any New Lease entered into
pursuant to Section 40.15 of this Lease (including, without limitation, any
-------------
Separate Lease entered into pursuant to the terms of Section 22.7 hereof) or the
------------
corresponding sections of any of the other Leases or of any such New Lease.
"Commencement Date": As to the applicable Leased Property, the date set
-----------------
forth opposite such Leased Property in the column "Commencement Date" on Exhibit
-------
B attached hereto.
-
"Condemnation, Condemnor": As defined in Article XV.
-----------------------
"Coverage Ratio": As to any one or more of the Combined Leased Properties,
--------------
the ratio of the EBITDARM generated by such Combined Leased Property(ies) to
Base Rent allocable thereto under the applicable Combined Leases, in each case
for the four (4) full calendar quarters ending not less than sixty (60) days
prior to (a) the effective date of the New Master Lease, in the case of Section
-------
40.17 hereof, or (b) the occurrence of a Section 16.10.3.1 New Lease
-----
Transaction, in the case of Section 16.10.3.1.
-----------------
"Current Rent": (a) For the period from the Effective Date through April
------------
30, 2004, rent at an annual rate equal to the Base Rent applicable to such
period, and (b) for a particular Rent Calculation Year thereafter, an annual
rental amount equal to the sum of (i) the Prior Period Current Rent, plus (ii)
if the Patient Revenues for the calendar year preceding the commencement of such
Rent Calculation Year equaled or exceeded seventy-five percent (75%) of the
Adjusted Base Patient Revenues, two percent (2%) of the Prior Period Base Rent;
provided, however, that, from and after the Unpaid Accrued Rent Due Date, for
-------- -------
the remainder of the Rent Calculation Year during which such Unpaid Accrued Rent
Due Date occurs and for each Rent Calculation Year thereafter, subject to
satisfaction of the aforesaid 75% of Adjusted Base Patient Revenues test, the
amount referenced in this subsection (b) (ii) shall equal three and one-half
percent (3.5%), rather than two percent (2%), of the Prior Period Base Rent
(i.e. from and after the Unpaid Accrued Rent Due Date, Current Rent shall equal
Base Rent). Notwithstanding the foregoing, (x) in the event Lessor exercises
the Reset Option referenced in Section 3.2 hereof, then, for periods from and
-----------
after the Reset Date, "Current Rent" shall mean the Fair Market Rental
applicable to such period, as determined pursuant to Section 3.2 hereof and
-----------
including any escalations that are part of the Fair Market Rental as so
determined, and (y) exercise of the Reset Option shall not limit the
applicability of Sections 19.2 and 19.3 hereof.
------------- ----
"Date of Taking": As defined in Article XV.
-------------- ----------
"Disclosing Party": As defined in Section 40.14.
---------------- -------------
"Disclosure Date": As defined in Section 40.14.
--------------- -------------
11
"Disclosure Law": As defined in Section 40.14.
-------------- -------------
"Disclosure Notice": As defined in Section 40.14.
----------------- -------------
"Disclosure Notification Period": As defined in Section 40.14.
------------------------------ -------------
"EBITDAR": As to any particular Leased Property or Leased Properties, or
-------
any hospital, nursing center or other facility not covered by this Lease
(regardless of the identity of the landlord or tenant of any such other
facility) for a particular period, the earnings before interest, taxes,
depreciation, amortization and rent, attributable to such Leased Property or
Leased Properties or such other facility, as applicable, for such period, as
determined in accordance with the customary methods, procedures and accounting
principles from time to time used in the health care industry.
"EBITDARM": As to any particular Leased Property or Leased Properties, or
--------
any hospital, nursing center or other facility not covered by this Lease
(regardless of the identity of the landlord or tenant of any such other
facility) for a particular period, the earnings before interest, taxes,
depreciation, amortization, rent and management fees, attributable to such
Leased Property or Leased Properties or such other facility, as applicable, for
such period, as determined in accordance with the customary methods, procedures
and accounting principles from time to time used in the health care industry.
"Effective Date": As defined in the Bankruptcy Plan.
--------------
"Encumbrance": As defined in Article XXXVIII.
----------- ---------------
"Event of Default": As defined in Article XVI.
---------------- -----------
"Existing Ground Leases": Those ground leases listed on Schedule 2.1C
---------------------- -------------
attached hereto and made a part hereof, as the same may be amended or modified
in writing after the Effective Date with the written consent of Lessor and
Tenant, each acting in its sole discretion.
"Exit Facility Documents": The documents evidencing and securing the Exit
-----------------------
Financing (as defined in the Bankruptcy Plan), and any amendment, restatement,
modification, refinancing or replacement thereof from time to time following the
Effective Date.
"Expired/Terminated Properties": As defined in Section 40.16.
----------------------------- -------------
"Extended Term": As defined in Article XIX.
------------- -----------
"Facility": The facility being operated or proposed to be operated on the
--------
applicable Leased Property.
"Facility Default": An Event of Default that relates directly to one or
----------------
more of the Leased Properties and/or the Facilities operated thereon (such as,
for example only and without limitation, an Event of Default arising from a
failure to maintain or repair, or to operate for the Primary Intended Use, or to
maintain the required Authorizations for, one or more of the
12
Facilities), as opposed to an Event of Default that, by its nature, does not
relate directly to any of the Leased Properties or Facilities (such as, for
example only and without limitation, an Event of Default arising from a breach
of Section 3.1(a)).
--------------
"Facility Mortgage": As defined in Article XIII.
----------------- ------------
"Facility Mortgagee": As defined in Article XIII.
------------------ ------------
"Facility Termination": As defined in Section 40.3.
-------------------- ------------
"Fair Market Added Value: The Fair Market Value (as hereinafter defined)
-----------------------
of the applicable Leased Property (including all Capital Alterations), less, if
Tenant has performed and financed a Capital Alteration to add a new building(s)
to such Leased Property, the Fair Market Value of such Leased Property
determined as if any such new building(s) had not been constructed.
"Fair Market Rental": The annual amount per annum that a willing tenant
------------------
would pay, and a willing landlord would accept, at arm's length, for leasing of
the Leased Properties (or, if applicable, any one or more, but less than all, of
the Leased Properties) for the period of the Term (including, without
limitation, any Extended Terms) remaining from and after the date as of which
the Fair Market Rental is being determined (e.g. as of the Reset Date, in the
case of Section 3.2, and as of the commencement of an Extended Term, in the case
-----------
of Sections 19.2 and 19.3). The Fair Market Rental may include therein such
------------- ----
escalations of rent as would be paid by such a tenant, and accepted by such a
landlord, as part of an arm's length transaction entered into as of the
aforesaid Fair Market Rental determination date; provided, however, that, in
-------- -------
addition to such other market factors as may be applicable in determining the
Fair Market Rental, the Fair Market Rental shall be determined on the basis, and
on the assumptions, that (a) the Fair Market Rental may not include therein any
rent, or method of rent calculation, that would adversely affect any landlord by
virtue of it being a real estate investment trust or the ability of any such
landlord to satisfy the requirements for maintaining its status as a real estate
investment trust (and, without limitation of the foregoing, the Fair Market
Rental shall not include any rent that would fail to qualify as "rents from real
property" for purposes of Section 856(d) of the Code), (b) the Fair Market
Rental amount is to be paid absolutely net to the aforesaid landlord, without
any rights of deduction, set-off or abatement, (c) all of the Leased Properties
as to which the Fair Market Rental is being determined are in good condition and
repair (given their respective ages and prevailing health care industry
standards with respect to what is considered good condition and repair), without
any deferred maintenance (but allowing for ordinary wear and tear), are in
material compliance with any and all applicable laws, codes, ordinances and
regulations and have in full force and effect, for the benefit of the aforesaid
tenant, the Facilities and the Leased Properties, any and all necessary or
appropriate material Authorizations for use thereof in accordance with the
respective Primary Intended Uses applicable thereto, (d) the aforesaid tenant
has complied, and shall be required to comply, with the requirements of this
Lease, including, without limitation, Article XXXVI hereof, (e) the respective
-------------
replacement costs of the Leased Properties as to which Fair Market Rental is
being determined are not determinative of the Fair Market Rental
13
of such Leased Properties, and (f) the aforesaid tenant shall have available to
it, with respect to each Leased Property as to which the Fair Market Rental is
being determined, such remaining Term as then remains, and such number of
Extended Terms as then remain unexercised, with respect to such Leased Property
under the terms of this Lease. Notwithstanding anything to the contrary
contained in this Lease, "Fair Market Rental" shall take into account, for each
of the applicable Leased Properties, the market conditions, market levels of
EBITDARM, the ratio of market levels of EBITDARM to market levels of rent, and
the actual levels of EBITDARM at the applicable Leased Properties, in each case
that are prevailing or measured, as applicable, as of the date as of which the
Fair Market Rental is being determined, as well as historical levels of EBITDARM
at the applicable Leased Properties (including the EBITDARM of the Leased
Properties measured as of the Effective Date).
"Fair Market Value": The price that a willing buyer not compelled to buy
-----------------
would pay a willing seller not compelled to sell for the applicable Leased
Property, including all Capital Alterations, and (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article XXXV or in such other manner as shall be
------------
mutually acceptable to Lessor and Tenant, and (c) not taking into account any
reduction in value resulting from any indebtedness to which such Leased Property
is subject except as expressly provided hereinbelow. In determining such Fair
Market Value the positive or negative effect on the value of the Leased Property
attributable to the interest rate, amortization schedule, maturity date,
prepayment penalty and other terms and conditions of any encumbrance which is
not removed at or prior to the closing of the transaction as to which such Fair
Market Value determination is being made shall be taken into account.
"Fair Market Value Purchase Price": The Fair Market Value of the Leased
--------------------------------
Property less the Fair Market Added Value.
"Fiscal Year": The twelve (12) month period from January 1 to December 31.
-----------
"Final Appraiser": As defined in Section 35.2.
--------------- ------------
"Fixed Term": As defined in Article I.
---------- ---------
"Fixtures": As defined in Article I.
-------- ---------
"Guarantor": Each subtenant that is an Affiliate of Tenant to which a
---------
Leased Property or any portion thereof is subleased, including, without
limitation, as of the Effective Date, the Affiliates of Tenant that are
referenced on Schedule 40.12 attached hereto and incorporated herein.
--------------
"Impositions": Shall mean for each applicable Leased Property collectively,
-----------
all taxes (including, without limitation, all taxes imposed under the laws of
the State, as such laws may be amended from time to time, and all ad valorem,
sales and use, single business, gross receipts, transaction privilege, rent or
similar taxes as the same relate to or are imposed upon any rents from the
applicable Leased Property or upon Tenant or its business conducted upon the
applicable Leased Property, but excluding any tax based on the net income or net
profit of
14
Lessor derived from any such rents), 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 arising under any of the Existing Ground Leases, water,
sewer or other rents and charges, excises, tax levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees), and
all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the applicable Leased Property or any rents therefrom or the business
conducted thereon by Tenant (including all interest and penalties thereon due to
any failure in payment by Tenant), which at any time prior to, during or in
respect of the Term hereof may be assessed or imposed on or in respect of or be
a lien upon (a) Lessor or Lessor's interest in such Leased Property, (b) such
Leased Property or any part thereof or any rent therefrom or any estate, right,
title or interest therein, or (c) any occupancy, operation, use or possession
of, or sales from, an activity conducted on, or in connection with such Leased
Property or the leasing or use of such Leased Property or any part thereof by
Tenant; provided, however, nothing contained in this Lease shall be construed to
require Tenant 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
or (2) any transfer, or net revenue tax of Lessor or any other person or (3) any
tax imposed with respect to the sale, exchange or other disposition by Lessor of
the applicable Leased Property or the proceeds thereof, except to the extent
that any tax, assessment, tax levy or charge, which Tenant is obligated to pay
pursuant to the preceding provisions 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.
"Indemnity Agreement": That certain Agreement of Indemnity-Third Party
-------------------
Leases, dated as of April 30, 1998, from Tenant and its Affiliates to Ventas,
Inc., which Indemnity Agreement remains in full force and effect in accordance
with its terms and is hereby reaffirmed and ratified.
"Insurance Requirements": All terms of any insurance policy required by
----------------------
this Lease with respect to the applicable Leased Property and all requirements
of the issuer of any such policy.
"Land": As defined in Article I.
---- ---------
"Lease": As defined in the preamble hereof.
-----
"Lease Guaranty": A guaranty of certain obligations of Tenant under this
--------------
Lease executed and delivered by each Guarantor substantially in the form of
Exhibit G annexed hereto.
---------
"Lease Year": shall mean May 1 through April 30 of each year of the Term.
----------
"Leased Improvements"; "Leased Property"; "Leased Properties": Each as
------------------- --------------- -----------------
defined in Section 1.1.
-----------
15
"Leasehold Mortgage": As defined in Section 22.2(a).
------------------ ---------------
"Leasehold Mortgagee": As defined in Section 22.2(b).
------------------- ---------------
"Leases": Collectively, this Lease, all of those certain leases listed in
------
Exhibit E attached hereto, and any New Master Lease entered into pursuant to
---------
Section 40.17 of this Lease and the corresponding section of any of the
-------------
aforesaid other leases.
"Legal Requirements": As to the applicable Leased Property, all federal,
------------------
state, county, parish, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions affecting
such Leased Property or the maintenance, construction, use, operation or
alteration thereof, whether now or hereafter enacted and in force, including,
without limitation, (i) any licensure requirements, certification requirements
under applicable federal and/or state cost reimbursement programs, including
Medicare and Medicaid (provided the applicable Facility participates in such
reimbursement), building codes and zoning regulations, (ii) any which may (x)
require repairs, modifications or alterations in or to such Leased Property or
(y) in any way adversely affect the use and enjoyment thereof, and (iii) all
permits, licenses, certificates of need, authorizations and regulations
necessary to operate such Leased Property for its Primary Intended Use.
"Lending Institution": Any insurance company, federally insured commercial
-------------------
or savings bank, national banking association, savings and loan association,
credit union, employees' welfare, pension or retirement fund or system,
corporate profit sharing or pension trust, college or university, endowment
fund, real estate investment trust, or other institutional lender or financial
enterprise, including, without limitation, any corporation qualified to be
treated for federal tax purposes as a real estate investment trust, having a net
worth of at least $50,000,000 acting on its own behalf or as agent on behalf of
other Lending Institutions.
"Lessor": Ventas Realty, Limited Partnership, a Delaware limited
------
partnership and its successors and assigns.
"Lessor Credit Agreement": As defined in Section 22.6(b).
----------------------- ---------------
"Lessor's Management Group": As defined in Section 1.3.3.1.
------------------------- ---------------
"LIBO Rate": On any day, the offered rate per annum for Dollar deposits in
---------
the London Interbank Offered Market for contracts with a three-month term, as
reported in The Wall Street Journal on the last Business Day of the calendar
-----------------------
month immediately preceding such day. If The Wall Street Journal shall cease to
-----------------------
report such offered rate, then the LIBO Rate, on any day, shall be the aforesaid
offered rate per annum as of the last Business Day of the calendar month
immediately preceding such day, determined by Citibank, N.A., or any successor
thereof, as the aforesaid offered rate per annum as of such last Business Day.
If the aforesaid offered rate is determined by reference to The Wall Street
---------------
Journal, the same shall be based upon the effective rate per annum for the
-------
aforesaid contracts entered into such number of days prior to the day for which
the aforesaid offered rate is being reported by The Wall Street Journal as is
-----------------------
used by The Wall Street Journal. If the aforesaid offered rate is determined
-----------------------
based
16
upon the rate determined by Citibank, N.A., or any successor thereof, the same
shall be based upon the effective rate per annum for the aforesaid contracts
entered into as of approximately 11:00 a.m. (London time) two (2) Business Days
prior to the day for which the aforesaid offered rate is being determined by
Citibank, N.A., or any successor thereof.
"Litigation Costs": All costs reasonably incurred by Lessor in connection
----------------
with the enforcement of any provision of this Lease and/or in connection with
any third-party claim against Lessor or any Leased Property arising on account
of or in connection with any default or Event of Default hereunder by Tenant,
including, without limitation, costs reasonably incurred by Lessor in
investigating, settling and/or prosecuting claims and for attorney's and legal
assistant fees and expenses, court costs and fees and consultant and witness
fees and expenses.
"Master Lease Leased Properties": The Leased Properties under Amended and
------------------------------
Restated Master Lease Agreement No. 4 dated as of the Effective Date and entered
into by Ventas Realty, Limited Partnership and Tenant, exclusive of any Leased
Properties that, pursuant to Section 40.17 below, are transferred into a New
-------------
Master Lease in accordance with the requirements of such Section 40.17.
-------------
"Medicaid": A state program of medical aid established under Title XVIII
--------
of the Social Security Act of 1965, as amended, and any successor statute
thereto and any successor programs.
"Medicare": The program of medical care benefits provided under Title
--------
XVIII of the Social Security Act of 1965, as amended, and any successor statute
thereto and any successor programs thereto.
"New Lease": As defined in Section 40.15.
--------- -------------
"New Master Lease": As defined in Section 40.17.
---------------- -------------
"1998 Plan of Reorganization": As defined in Section 16.11.
--------------------------- -------------
"Non-Capital Alterations": As defined in Section 10.4.
----------------------- ------------
"Officer's Certificate": A certificate of Tenant signed by the chairman of
---------------------
the board of directors, the president, any vice president, the secretary, the
treasurer, the chief operating officer, the chief financial officer, the general
counsel or any other officer authorized to so sign by the board of directors or
by-laws of Tenant, or the general partner of Tenant or the managing member of
Tenant, as applicable, or any other person whose power and authority to act has
been authorized by delegation in writing by any person duly authorized to make
such delegation of authority.
"Operator": As defined in the preamble hereof.
--------
17
"Overdue Rate": On any date, a rate equal to 2% per annum above the Prime
------------
Rate, but in no event greater than the maximum rate then permitted under
applicable law, provided, however, that, upon the occurrence of any Event of
Default, the Overdue Rate, when applied to any Accrued Rent, Accrued Rent
Interest or Unpaid Accrued Rent, shall equal, on any date, a rate equal to the
LIBO Rate plus 700 basis points per annum (provided, however, that such 700
basis points number shall be changed to 650 basis points, if, on or prior to
June 30, 2001, the reference to "2.5%" contained in Section 2.02(b) of the
Tenant Senior Secured Credit Agreement is amended to refer to "2.0%"), but in no
event greater than the maximum rate then permitted under applicable law.
Interest at the aforesaid rates shall be determined for actual days elapsed
based upon a 360 day year.
"Paragraph Seven Notification Period": As defined in Section 40.14.
----------------------------------- -------------
"Partial Expiration/Termination Date": As defined in Section 40.16.
----------------------------------- -------------
"Partial Expiration/Termination Days": As defined in Section 40.16.
----------------------------------- -------------
"Patient Revenues": Revenues generated from the sale of goods or services
----------------
at or through the Leased Properties, whether by Tenant or any subtenant or
licensee of Tenant, or any other party, which revenues are primarily derived
from services provided to patients (including, without limitation, revenues
received or receivable for the use of or otherwise by reason of all rooms, beds
and other facilities provided, meals served, services performed or goods sold at
the Leased Properties, but excluding revenues received by Tenant as rent or
other consideration from a permitted assignment of this Lease or any part
thereof or a permitted sublease of any Leased Property(ies) or any part
thereof), and which revenues shall be measured and computed using substantially
the same methodology as during the period between April 30, 1998 and the
Effective Date and net of contractual adjustments of governmental and other
third party payors.
"Payment Date": Any due date for the payment of the installments of any
------------
component of Rent payable under this Lease.
"Permissible Reduction Percentage": As defined in Section 16.1.
-------------------------------- ------------
"Permitted Alteration": Any Capital Alteration or Non-Capital Alteration
--------------------
to a Facility or Leased Property that is permitted pursuant to the terms of this
Lease.
"Permitted Encumbrances": (a) all easements, covenants, conditions,
----------------------
restrictions, agreements and other matters with respect to the Leased Properties
that are of record as of the Commencement Date; (b) all easements, covenants,
conditions, restrictions, agreements and other matters with respect to the
Leased Properties, whether or not of record, that are executed by Tenant or
approved or consented to in writing by Tenant; (c) any easement or utility
agreement entered into by Lessor with respect to a Leased Property(ies) after
the Effective Date, subject to Tenant's consent, in its sole discretion; (d) any
agreement required pursuant to any Legal Requirement entered into by Lessor with
respect to a Leased Property(ies) after the Effective Date, subject to Tenant's
consent, not to be unreasonably withheld, conditioned or
18
delayed; (e) any matter affecting title to the Leased Properties or any portion
thereof that is permitted under Section 7.3 or Section 9.2; and (f) any other
----------- -----------
matters affecting to the Leased Properties or any portion thereof caused by
Tenant or its assignees or sublessees or their respective agents or employees,
provided, however, that, for purposes of Section 24.1 below, "Permitted
-------- ------- ------------
Encumbrances" shall not include any Superior Lease (other than the Existing
Ground Leases), any Facility Mortgage or other lien created by Lessor or its
agents or employees or any Leasehold Mortgage and, for purposes of Section 8.3
-----------
below, "Permitted Encumbrances" shall not include any Superior Lease, any
Facility Mortgage or other lien created by Lessor or its agents or employees or
any Leasehold Mortgage.
"Person": Any individual, sole proprietorship, corporation, general
------
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county, or municipal government
(or agency or political subdivision thereof), endowment fund or other form of
entity.
"Plans and Specifications": As defined in Section 10.1.
------------------------ ------------
"Previous Period Unreported Claims": As defined in Section 13.1.4.
--------------------------------- --------------
"Primary Intended Use": As defined in Section 7.2.2.
-------------------- -------------
"Prime Rate": On any date, a rate equal to the annual rate on such date
----------
announced by Citibank, N.A., or any successor thereof, to be its prime rate.
"Prior Period Base Rent": As of any date after April 30, 2002, the Base
----------------------
Rent that was in effect immediately prior to the commencement of the Rent
Calculation Year containing such date.
"Prior Period Current Rent": As of any date after April 30, 2003, the
-------------------------
Current Rent that was in effect immediately prior to the commencement of the
Rent Calculation Year containing such date.
"Property Transfer Date": As defined in Section 40.15.
---------------------- -------------
"Purchase Option EBITDAR": As defined in Section 16.12.5.
----------------------- ---------------
"Qualified Arbitrator": As defined in Section 22.6(c).
-------------------- ---------------
"Qualified Successor": As defined in Section 40.3.
------------------- ------------
"Recipient": As defined in Section 40.14.
--------- -------------
"Refinancing Transaction": The occurrence of any of the following:(i) any
-----------------------
transaction pursuant to which all or substantially all of the indebtedness of
Tenant under the Tenant Senior Secured Credit Agreement or Tenant Senior Secured
Notes is purchased by Tenant or any Affiliate thereof, or by anyone else at the
direction of Tenant or any such Affiliate, or is
19
repaid; (ii) any amendment of the Tenant Senior Secured Credit Agreement or
Tenant Senior Secured Notes pursuant to which either (x) the principal amount of
Tenant's indebtedness thereunder (as such indebtedness is in effect immediately
prior to such amendment) is increased (excepting therefrom increases
attributable to the capitalization of accrued interest or protective advances by
the Senior Lender), or (y) the loan amount, maturity or other material terms and
conditions thereof (as such terms and conditions are in effect immediately prior
to such amendment) are modified to match, better or otherwise respond to the
terms and conditions of alternative financing which has been offered to Tenant;
(iii) any bona fide, binding offer is made to Tenant to provide financing on
terms better than those of the Tenant Senior Secured Credit Agreement and Tenant
Senior Secured Notes, sufficient to (x) pay in full, or purchase at or above
par, all of the indebtedness of Tenant under the Tenant Senior Secured Credit
Agreement or Tenant Senior Secured Notes and (y) pay in full all Unpaid Accrued
Rent owing as of such date, whether or not such offer is accepted or
consummated; and (iv) the termination or expiration of this Lease; provided,
--------
however, if such termination occurs in connection with the creation of a
-------
Separate Lease under Section 22.7 hereof, such termination shall not constitute
------------
a "Refinancing Transaction" and provided, further, that, if such termination or
expiration occurs prior to the occurrence of one of the events described in
clauses (i) through (iii) above, then, notwithstanding that a Refinancing
Transaction shall have occurred and the Unpaid Accrued Rent Due Date shall
thereby be triggered, until one of the events described in clauses (i) through
(iii) above shall have occurred, Lessor's right to receive, and receipt of,
payment of Accrued Rent and Unpaid Accrued Rent only, but not any other
component of Rent or other amount due to Lessor hereunder, shall be subordinate
to the Senior Lender's right to receive, and receipt of, payment of the
indebtedness of Tenant under the Tenant Senior Secured Credit Agreement and
Tenant Senior Secured Notes and, upon the occurrence of one of the events
described in clauses (i) through (iii) above, such subordination shall
automatically terminate; and provided further that all amounts received by
Lessor from or for the account of Tenant with respect to amounts due under this
Lease shall, notwithstanding any characterization thereof by Tenant, be first
applied against Current Rent, Additional Charges and other amounts then due from
Tenant under this Lease (excluding Accrued Rent and Unpaid Accrued Rent), until
each of the foregoing is paid in full, before any such amount is applied against
Accrued Rent or Unpaid Accrued Rent. Notwithstanding anything to the contrary
contained herein, the term "Refinancing Transaction" shall not include any
forbearance, standstill agreement, extension of maturity or other amendment of
the Tenant Senior Secured Credit Agreement or Tenant Senior Secured Notes
entered into in order to facilitate a workout of defaults or imminent defaults
by Tenant.
"Registration Rights Agreement": As defined in Section 40.14.
----------------------------- -------------
"Reimbursement Period": As defined in Section 40.3.
-------------------- ------------
"REIT": As defined in Section 36.1.1.
---- --------------
"REIT Requirements": As defined in Section 36.1.1.
----------------- --------------
"Renewal Group": As defined in Section 19.1 hereof.
------------- ------------
20
"Rent": Collectively, Current Rent, Unpaid Accrued Rent and Additional
----
Charges (as defined in Section 3.3 hereof).
-----------
"Rent Calculation Year": A period from May 1 of any year through April 30
---------------------
of the following year.
"Rent Stipulation": That certain Stipulation and Order Pursuant to Section
----------------
365 of the Bankruptcy Code regarding Vencor, Inc., Vencor Operating, Inc. and
Vencor Nursing Centers Limited Partnership's Performance of Obligations under,
and Extending the Time within which Vencor, Inc., Vencor Operating, Inc. and
Vencor Nursing Centers Limited Partnership May Accept or Reject, Certain
Agreements between Vencor, Inc., Vencor Operating, Inc., Vencor Nursing Centers
Limited Partnership, Ventas, Inc. and Ventas Realty, Limited Partnership dated
September 13, 1999 and entered by the Bankruptcy Court in the bankruptcy
proceedings of Tenant on September 13, 1999, at docket no. 43, as the same may
heretofore have been, or hereafter may be, amended by Lessor and Tenant, each
acting in its sole discretion.
"Reset Date": As defined in Section 3.2.
---------- -----------
"Reset Exercise and Payment Date": As defined in Section 3.2.
------------------------------- -----------
"Reset Fee": As defined in Section 3.2.
--------- -----------
"Reset Option": As defined in Section 3.2.
------------ -----------
"Second Lease": As defined in Section 40.18.
------------ -------------
"Section 1.3.3.1 Claim": As defined in Section 1.3.3.1.
--------------------- ---------------
"Section 16.10.3.1 New Lease Transaction": As defined in Section 16.10.3.1.
--------------------------------------- -----------------
"Section 16.10.1 Number": As defined in Section 16.10.1.
---------------------- ---------------
"Section 16.10.2.3 Proviso": As defined in Section 16.10.2.3.
------------------------- -----------------
"Section 16.10.3.2 Number": As defined in Section 16.10.3.2.
------------------------ -----------------
"Section 16.10.3.3 Lease": As defined in Section 16.10.3.3.
----------------------- -----------------
"Section 16.12 Notice": As defined in Section 16.12.2.
-------------------- ---------------
"Section 40.3 Notice": As defined in Section 40.3.
------------------- ------------
"Section 40.18 Date": As defined in Section 40.18.
------------------ -------------
"Section 40.18 Lease": As defined in Section 40.18.
------------------- -------------
"Senior Lender": The lender(s) under the Tenant Senior Secured Credit
-------------
Agreement and Tenant Senior Secured Notes, from time to time.
21
"Senior Officer's Certificate": An Officer's Certificate of Tenant signed
----------------------------
by the chairman of the board of directors, the president, the chief operating
officer or the general counsel of Tenant, or a Person having such title or the
equivalent thereof in the general partner or the managing member of Tenant.
"Separate Lease": As defined in Section 22.7.
-------------- ------------
"State": The State or Commonwealth in which the applicable Leased Property
-----
is located.
"Sublease Rent Payments": As defined in Section 25.1.7.
---------------------- --------------
"Sub-Portfolio Properties": As defined in Section 40.17.
------------------------ -------------
"Subsidiaries": The corporations or other entities of which securities or
------------
similar ownership interests representing (i) ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
or (ii) a majority of the economic interest therein, are at the time directly or
indirectly owned by Tenant or any Guarantor (individually, a "Subsidiary").
"Superior Lease": Any ground lease or other lease to which the applicable
--------------
Leased Property is subject.
"Superior Lessor": The lessor under any ground lease or other lease to
---------------
which the applicable Leased Property is subject.
"Superior Mortgage": As defined in Section 21.1.
----------------- ------------
"Superior Mortgagee": As defined in Section 21.1.
------------------ ------------
"Suspension Period": As defined in Section 40.14.
----------------- -------------
"Taking": A taking or voluntary conveyance during the Term of all or part
------
of the applicable 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 such Leased Property whether or not
the same shall have actually been commenced.
"Tax Refund Escrow Agreement": The Tax Refund Escrow Agreement referenced
---------------------------
in the Bankruptcy Plan, as the same is hereafter amended, modified or
supplemented, in each case with the written consent of Lessor, in its sole
discretion.
"Tenant": As defined in the preamble hereof.
------
"Tenant Senior Secured Credit Agreement": That certain Credit Agreement
--------------------------------------
Providing for the Issuance of $300,000,000 Senior Secured Notes Due 2008 dated
as of the Effective Date between Tenant and the lenders party thereto and Xxxxxx
Guaranty Trust Company of
22
New York, as Collateral Agent and Administrative Agent, and any amendment
thereof following the Effective Date that does not constitute a Refinancing
Transaction.
"Tenant Senior Secured Notes": The "Notes" (as defined in the Tenant
---------------------------
Secured Credit Agreement) dated as of the Effective Date made by Vencor
Operating, Inc. payable to the order of the Lenders that are parties to the
Tenant Senior Secured Credit Agreement and any amendment thereof following the
Effective Date that does not constitute a Refinancing Transaction.
"Tenant Shares": As defined in Section 40.14.
------------- -------------
"Tenant's Personal Property": All motor vehicles, machinery, equipment,
--------------------------
furniture, furnishings, movable walls or partitions, computers or trade fixtures
or all other personal property, and consumable inventory and supplies, now owned
or hereafter acquired by Tenant and located on the applicable Leased Property or
used or useful in Tenant's business on such Leased Property, including without
limitation all modifications, replacements, alterations and additions to such
personal property installed at the expense of Tenant, except items, if any,
included within the definition of Fixtures.
"Term": Collectively for each applicable Leased Property, the Fixed Term
----
and any Extended Terms, to the extent properly exercised pursuant to the
provisions of Article XIX, unless earlier terminated pursuant to the provisions
-----------
of this Lease.
"Transferred Property(ies)": As defined in Section 40.15.
------------------------- -------------
"Transferred Property Percentage(s)": As defined in Section 40.15.
---------------------------------- -------------
"Unaffiliated Buyer": As defined in Section 40.17.
------------------ -------------
"Unavoidable Delays": Delays due to strikes, lockouts, inability to procure
------------------
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto to perform any obligations of such party, under this Lease, or any
guaranty of this Lease, including any obligation to provide financing undertaken
by Lessor pursuant to Article X below.
"Unpaid Accrued Rent": As of any date, the amount equal to (a) the sum of
-------------------
(i) the aggregate amount of all Accrued Rent earned hereunder from the Effective
Date through such date, plus (ii) the aggregate amount of all Accrued Rent
Interest from the Effective Date through such date, less (b) the aggregate
amount of all payments made by Tenant or any other party from and after the
Effective Date on account of Accrued Rent or Accrued Rent Interest.
"Unpaid Accrued Rent Due Date": The date that a Refinancing Transaction
----------------------------
occurs.
23
"Unsuitable For Its Primary Intended Use": A state or condition of the
---------------------------------------
Facility located at the applicable Leased Property such that, by reason of
damage or destruction, or a partial taking by condemnation, in the good faith
judgment of Tenant, the Facility cannot be operated on a commercially
practicable basis for its Primary Intended Use taking into account, among other
relevant factors, the number of usable beds affected by such damage or
destruction or partial taking; provided, however that such Facility shall not be
-------- -------
deemed to be "Unsuitable For Its Primary Intended Use" if such Leased Property
can, within one (1) year after the occurrence of such damage, destruction or
taking, be restored to substantially the same state and condition as existed
immediately prior to such damage, destruction or taking.
"Vencor": As defined in the preamble hereof.
------
"Ventas Lessor": A lessor that is Ventas, Inc. and/or Ventas Realty,
-------------
Limited Partnership and/or any successor to either of them (by merger or
otherwise) and/or any Affiliate of Ventas, Inc. or Ventas Realty, Limited
Partnership or any such successor.
ARTICLE III
Section 3.1 Rent. Tenant shall pay to Lessor, in lawful money of the
----
United States of America which shall be legal tender for the payment of public
and private debts, at Lessor's address set forth in Section 34.1 below or at
------------
such other place or to such other person(s), firm(s) or corporation(s) as Lessor
from time to time may designate in writing, Current Rent, Unpaid Accrued Rent
and Additional Charges during the Term, including, without limitation, any
Extended Terms, as hereinafter provided. Lessor may, by written notice to
Tenant at any time and from time to time, elect to require that Rent (or
portions thereof designated by Lessor) that is payable to Lessor hereunder be
paid by wire transfer of immediately available funds to such wire transfer
account(s) as Lessor may specify in writing.
(a) Current Rent. Current Rent shall be payable, in the manner provided in
------------
Section 3.1 above, in advance in equal, consecutive monthly installments, on the
-----------
first day of each calendar month of the Term, including, without limitation, any
Extended Terms; provided, however, that, if the Effective Date occurs other than
-------- -------
on the first day of a calendar month, the first monthly payment of Current Rent
shall be payable on the Effective Date and that the first and last monthly
payments of Current Rent shall be prorated as to any partial month (subject to
adjustment as provided in Section 10.3(b)(iv) below).
-------------------
(b) Unpaid Accrued Rent. On or before the Unpaid Accrued Rent Due Date,
-------------------
Tenant shall pay to Lessor, in the manner provided in Section 3.1 above, all
-----------
Unpaid Accrued Rent. Tenant shall have the right to prepay all or any portion
of the Unpaid Accrued Rent at any time, provided, however, that any such
-------- -------
prepayment shall be applied first to any past due amounts owing under this Lease
(including, without limitation, any amounts due and owing as the result of an
Event of Default) and the balance to Unpaid Accrued Rent in the reverse order of
accrual (i.e. payments shall be applied first to the most recently accrued
Unpaid Accrued Rent).
Section 3.2 Option to Reset Base Rent, Current Rent and Accrued Rent.
--------------------------------------------------------
24
(a) Reset Option. Lessor shall have the unilateral, one-time right and
------------
option (the "Reset Option") to reset the Base Rent, Current Rent and Accrued
Rent for the balance of the Term (including, without limitation, any Extended
Terms) from and after the Reset Date (as hereinafter defined), on the terms and
conditions described in this Section 3.2.
-----------
(b) Reset Proposal Notice. If Lessor desires to reset the aforesaid
---------------------
components of Rent, subject to subsection (c) below, Lessor shall give Tenant
notice (a "Reset Proposal Notice"), on any date that is not prior to the date
---------------------
which is ninety (90) days before the fifth anniversary of the Effective Date but
not later than the date which is ninety (90) days after the sixth anniversary of
the Effective Date, that, subject to a determination of the Fair Market Rental
in accordance with the provisions of this Section 3.2, Lessor may be interested
-----------
in resetting the aforesaid components of Rent for the aforesaid balance of the
Term. The Reset Proposal Notice shall set forth Lessor's proposal of Fair
Market Rental, for the aforesaid balance of the Term, including any escalations
proposed by Lessor, and shall further include Lessor's proposal for an amended
Exhibit C containing Lessor's proposed allocations of Base Rent and Current
---------
Rent, and Transferred Property Percentages, for each of the Leased Properties.
Provided that Lessor exercises the Reset Option pursuant to subsection (e)
below, the date of delivery of the Reset Proposal Notice is referred to herein
as the "Reset Date", provided, however, that, if the Reset Proposal Notice is
-------- -------
sent prior to the date which is ninety (90) days after the fifth anniversary of
the Effective Date, the "Reset Date" shall be the date which is ninety (90) days
after the fifth anniversary of the Effective Date.
(c) No Periodic Reset Proposal Notice Option. Notwithstanding the
----------------------------------------
provisions of subsection (b) above, but subject to Section 40.15(a)(xiv) and
---------------------
Section 40.17 hereof, Lessor may not send a Reset Proposal Notice under this
-------------
Lease if Lessor, as lessor under this Lease, has previously sent a Reset
Proposal Notice hereunder.
(d) Determination of Fair Market Rental and Amended Exhibit X. Xxxxxx and
---------------------------------------------------------
Tenant shall attempt to agree on the Fair Market Rental, and upon an amended
Exhibit C, promptly following the delivery of a Reset Proposal Notice. If
Lessor and Tenant are not able to agree upon such Fair Market Rental, and upon
an amended Exhibit C, within thirty (30) days after the delivery of the Reset
---------
Proposal Notice, an appraisal for the determination thereof under Article XXXV
------------
hereof shall be conducted. Within thirty (30) days after the expiration of the
first 30-day period referenced above, each party shall give notice to the other
party specifying the name and address of the person meeting the qualifications
set forth in Section 35.3 below designated to act as an appraiser on its behalf.
------------
Thereafter, the Fair Market Rental for the balance of the Term (including,
without limitation, any Extended Terms) from and after the Reset Date, and an
amended Exhibit C, shall be determined in accordance with Article XXXV hereof.
------------
(e) Exercise of Reset Option. If the Fair Market Rental and amended
------------------------
Exhibit C, as determined pursuant to subsection (d) above, are acceptable to
Lessor, Lessor may exercise the Reset Option by delivering to Tenant a written
notice to such effect within thirty (30) days following the determination of the
Fair Market Rental, and an amended Exhibit C, as set forth in such subsection
(d), together with payment to Tenant of $1,000,741.00 as the Reset Fee and
25
interest on the aforesaid $1,000,741.00 at the annual rate of six percent (6%)
for the period from the applicable Reset Date through the date the aforesaid
$1,000,741.00 is paid to Tenant. In such event, subject to and without
limitation of Sections 19.2 and 19.3 hereof, (i) the Base Rent, Current Rent and
------------- ----
Accrued Rent shall, for the balance of the Term from and after the Reset Date
(including, without limitation, any Extended Terms), be reset and adjusted, as
set forth in the definitions of Base Rent, Current Rent and Accrued Rent
contained in Section 2.1 hereof, using the Fair Market Rental, as so determined
-----------
(including any escalations of rent), in making such resettings and adjustments
(e.g. per such definitions, for the period following the Reset Date, without
limitation of the right of the Final Appraiser to include within the Fair Market
Rental such rent escalations and accruals, and other rent features, as he or she
deems appropriate in connection with his or her Fair Market Rental appraisals,
Accrued Rent shall equal zero), (ii) effective as of the Reset Date, the
aforesaid amended Exhibit C shall replace the existing Exhibit C hereto, (iii)
--------- ---------
Lessor shall have no further right or option under this Section 3.2 to reset the
-----------
aforesaid components of Rent, and (iv) with respect to the period from and after
Lessor's issuance of a Reset Proposal Notice through and including the day
preceding the date (the "Reset Exercise and Payment Date") Lessor exercises the
Reset Option, and pays the Reset Fee and interest thereon, as aforesaid, Tenant
shall continue to pay Base Rent, Current Rent and Accrued Rent at the times, in
the manner and with any scheduled adjustments therein, in each case as set forth
in Section 3.1 hereof, and, upon Lessor's exercise of the Reset Option, and
-----------
payment of the Reset Fee and interest thereon, as aforesaid, there shall
immediately be due and payable from Tenant to Lessor such additional amount of
Rent as is owing from Tenant to Lessor, or from Lessor to Tenant such amount as
is owing from Lessor to Tenant on account of any Rent overpayment, for the
period from the Reset Date through the Reset Exercise and Payment Date, after
taking into account the resettings and adjustments referenced in subsection (i)
above and the amounts paid by Tenant with respect to such period on account of
Rent owing hereunder as set forth in this subsection (iv). If Lessor fails to
notify Tenant of its exercise of the Reset Option, and to pay to Tenant the
Reset Fee and any interest due and owing thereon, on or prior to such 30th day,
Lessor shall be deemed to have declined to exercise the Reset Option based upon
the Reset Proposal Notice and Fair Market Rental and amended Exhibit C
determinations relating thereto. Subject to Section 40.15(a)(xiv) and Section
--------------------- -------
40.17 hereof, such declination by Lessor shall prevent Lessor from thereafter
-----
issuing a Reset Proposal Notice under this Lease in accordance with subsection
(b) above.
(f) Effect of Reset. Tenant acknowledges and agrees that, in the event
---------------
Lessor exercises the Reset Option, Tenant shall thereafter remain obligated to
pay Unpaid Accrued Rent and Additional Charges as provided in Sections 3.1 and
------------
3.3 hereof, notwithstanding any resetting of Base Rent, Current Rent and Accrued
---
Rent pursuant to this Section 3.2.
-----------
Section 3.3 Additional Charges. In addition to Current Rent and Unpaid
------------------
Accrued Rent payable with respect to the Leased Properties, Tenant shall pay and
discharge as and when due and payable the following (collectively "Additional
----------
Charges"):
-------
(1) Impositions. Tenant shall pay all Impositions before any fine,
-----------
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible or, if otherwise required by
law, to Lessor, and shall promptly upon
26
request, furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), subject to the terms of any
applicable Facility Mortgage, Tenant may exercise the option to pay 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 as the same may
become due and before any fine, penalty, premium, further interest or cost may
be added thereto.
(2) Utility Charges. Tenant shall pay all charges for electricity, power,
---------------
gas, oil, water, sanitary and storm sewer, refuse collection, medical waste
disposal and other utilities used or consumed in connection with each Leased
Property during the Term.
(3) Insurance Premiums. Tenant shall pay all premiums for the insurance
------------------
coverage required to be maintained pursuant to Article XIII hereof.
------------
(4) Other Charges. Tenant shall pay all other amounts, liabilities and
-------------
obligations that Tenant assumes or agrees to pay under this Lease, including,
without limitation, all agreements to indemnify Lessor under Sections 12.1 and
-------------
24.1 and any and all fees, costs and expenses incurred by Tenant in the
----
operation of its business at the Facility.
(5) Late Payment of Rent. If any installment of Current Rent, Unpaid
--------------------
Accrued Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Lessor or Lessor's agent or assignee) shall not be
paid within five (5) Business Days after its due date, Tenant will pay to Lessor
on demand a late charge (to the extent permitted by law) computed at the Overdue
Rate (or at the maximum rate permitted by law, whichever is the lesser) on the
amount of such installment, from the due date of such installment to the date of
payment thereof.
To the extent that Tenant pays any Additional Charges to Lessor pursuant to
any requirement of this Lease, Tenant shall be relieved of its obligation to pay
such Additional Charges to the entity to which they would otherwise be due. If
any Facility Mortgagee shall so require, or if any Additional Charges shall not
be paid to a third party payee within five (5) Business Days after its due date,
Lessor may at any time thereafter, at Lessor's option, require Tenant to deposit
into an escrow account under the sole dominion and control of Lessor (or the
applicable Facility Mortgagee), on the first day of each and every month, an
amount sufficient to insure that such escrow account shall contain an amount
sufficient to make such payment on its next due date, in which event Lessor
shall make all future payments for such expense from the escrow account. In the
event of any failure by Tenant to pay any Additional Charges when due, Tenant
shall promptly pay and discharge, as Additional Charges, every fine, penalty,
interest and cost that may be added for non-payment or late payment of such
items. Lessor shall have all legal, equitable and contractual rights, powers
and remedies provided either in this Lease or by statute or otherwise in the
case of non-payment of Rent.
Section 3.4 Survival. Tenant's obligation to pay any Rent owing hereunder
--------
with respect to any period on or prior to the expiration or termination of this
Lease (including, without limitation, any Extended Terms), as this Lease applies
to any or all of the Leased Properties, shall survive any such expiration or
termination. Without limitation of the foregoing, Tenant's obligation to pay
Unpaid Accrued Rent that is owing as of the expiration or termination of this
Lease as to any or all of the Leased
27
Properties shall survive any such expiration or termination, and, following any
such expiration or termination until all Unpaid Accrued Rent is paid in full,
Accrued Rent Interest shall continue to accrue on Unpaid Accrued Rent, and be
owing from Tenant to Lessor, with interest at the Accrued Rent Interest Rate,
compounded annually on April 30 of each year (including, without limitation,
years after any such expiration or termination of this Lease). For example, (a)
if this Lease terminates for any reason on January 1, 2006, (b) as of such date,
$100.00 of Unpaid Accrued Rent is owing, but not yet due because the Unpaid
Accrued Rent Due date has not yet occurred, and (c) the Unpaid Accrued Rent Due
Date occurs on January 1, 2007, then, notwithstanding such termination, Tenant
shall remain obligated to pay to Lessor on January 1, 2007 such $100.00 plus
Accrued Rent Interest thereon from January 1, 2006 through January 1, 2007 at
the Accrued Rent Interest Rate and with compounding on April 30, 2006.
Section 3.5 Net Lease. The Rent shall be paid absolutely net to Lessor,
---------
without any rights of deduction, set-off or abatement, so that this Lease shall
yield to Lessor the full amount of the installments of Current Rent, Unpaid
Accrued Rent and Additional Charges, throughout the Term, including, without
limitation, any Extended Terms. This Lease is intended to be and shall be
construed as an absolutely net lease pursuant to which Lessor shall not, under
any circumstances or conditions, whether presently existing or hereafter
arising, and whether foreseen or unforeseen by the parties, be required to make
any payment or expenditure of any kind whatsoever or be under any other
obligation or liability whatsoever, except as expressly set forth herein.
Section 3.6 New Common Stock. Lessor and Tenant acknowledge that, pursuant
----------------
to the Bankruptcy Plan, on or about the Effective Date Lessor and/or its
designee(s) is receiving certain New Common Stock (as defined in the Bankruptcy
Plan). Lessor and Tenant acknowledge and agree that (a) such New Common Stock is
being received by Lessor and/or its designee(s) as additional rent in
consideration of the agreement of Lessor, and the lessors under the other
Leases, to enter into the Leases and thereby agree to charge Base Rent as
provided in this Lease and the other Leases, (b) such additional rent is being
paid on or about the Effective Date by the delivery of such New Common Stock to
Lessor or its designee(s), (c) such additional rent is non-refundable by Lessor,
and (d) the delivery of such New Common Stock to Lessor or its designee(s) does
not reduce the amount of Base Rent due and payable hereunder and under the other
Leases.
ARTICLE IV
Section 4.1 Payment of Impositions. Subject to Article XII relating to
----------------------
permitted contests, Tenant shall pay all Impositions as set forth in Section
-------
3.3. Tenant'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. Lessor, at its expense, shall, to the extent permitted by
applicable law, prepare and file all tax returns and reports as may be required
by governmental authorities in respect of Lessor's net income, gross receipts,
28
franchise taxes and taxes on its capital stock, and Tenant, 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. If any refund shall be due from any
taxing authority in respect of any Imposition paid by Tenant, the same shall be
paid over to or retained by Tenant if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XVI. Lessor and Tenant
-----------
shall, upon request of the other, provide such data as is maintained by the
party to whom the request is made with respect to the Leased Property as may be
necessary to prepare any required returns and reports. In the event
governmental authorities classify any property covered by this Lease as personal
property, Tenant 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 Tenant, 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 property so classified as personal property. Where
Lessor is legally required to file personal property tax returns, Tenant will be
provided with copies of assessment notices indicating a value in excess of the
reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Lessor, at Tenant's option and at Tenant's sole cost and expense,
protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Lessor, at Tenant's expense as aforesaid, shall fully cooperate
with Tenant in such protest, appeal, or other action (including, without
limitation, signing all required forms and documents reasonably necessary for
Tenant to file and prosecute such appeal, protest or other action), provided
that Tenant shall indemnify Lessor from and against all losses, claims, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees)
arising after the Effective Date suffered or incurred by Lessor and caused by
such cooperation, including, without limitation, signing or providing any such
forms and documents). Xxxxxxxx for reimbursement by Tenant to Lessor of
personal property taxes shall be accompanied by copies of a xxxx therefor and
payments thereof which identify the personal property with respect to which such
payments are made.
Section 4.2 Notice of Impositions. Lessor shall give prompt notice to
---------------------
Tenant of all Impositions payable by Tenant hereunder of which Lessor at any
time has knowledge, but Lessor's failure to give any such notice shall in no way
diminish Tenant's obligations hereunder to pay such Impositions.
Section 4.3 Adjustment of Impositions. Impositions imposed in respect of
-------------------------
the tax-fiscal period during which the Term terminates or expires shall be
adjusted and prorated between Lessor and Tenant, whether or not such Imposition
is imposed before or after such termination or expiration, and Tenant's
obligation to pay its prorated share thereof shall survive such termination or
expiration.
ARTICLE V
Section 5.1 No Termination, Abatement, etc. Except as otherwise
-------------------------------
specifically provided in this Lease, Tenant, to the extent permitted by law,
shall remain bound by this
29
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 Tenant be
otherwise affected by reason of (a) any damage to, or destruction of, any Leased
Property or any portion thereof from whatever cause or any Taking of any Leased
Property or any portion thereof, (b) the interruption or discontinuance of any
service or utility servicing any Leased Property, (c) the lawful or unlawful
prohibition of, or restriction upon, Tenant's use of any Leased Property, or any
portion thereof, the interference with such use by any person, corporation,
partnership or other entity, or by reason of eviction by paramount title, (d)
any claim which Tenant has or might have against Lessor or by reason of any
default or breach of any warranty by Lessor under this Lease or any other
agreement between Lessor and Tenant, or to which Lessor and Tenant are parties,
(e) any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution, winding up or other proceedings affecting Lessor or
any assignee or transferee of Lessor, (f) any revocation, suspension or non-
renewal of any license, permit, approval or other Authorization necessary to
operate any Facility, (g) any withholding, non-payment, reduction or other
adverse change respecting any Medicare, Medicaid or other reimbursements due or
available to Tenant with respect to any Facility, or (h) for any other cause
whether similar or dissimilar to any of the foregoing other than a discharge of
Tenant from any such obligations as a matter of law. Tenant hereby specifically
waives all rights, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law to (i) modify, surrender or terminate this
Lease or quit or surrender the Leased Property or any portion thereof, or (ii)
entitle Tenant to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Tenant hereunder. The obligations of Lessor and Tenant
hereunder shall be separate and independent covenants and agreements and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated by
termination of this Lease as to any Leased Property other than by reason of an
Event of Default.
ARTICLE VI
Section 6.1 Ownership of the Leased Properties. Tenant acknowledges that
----------------------------------
the Leased Properties are the property of Lessor and that Tenant has only the
right to the exclusive possession and use of the Leased Properties upon and
subject to the terms and conditions of this Lease. Notwithstanding anything to
the contrary contained in this Lease or the Joinder hereto by Ventas, Inc., in
the case of any easement or other rights that are appurtenant to any property
owned by Lessor, Tenant agrees that neither Lessor nor Ventas, Inc. makes any
representation or warranty relative to Lessor's title thereto or whether such
appurtenances are encumbered, and neither Lessor nor Ventas, Inc. shall be
obligated to discharge any liens or encumbrances with respect to, or otherwise
to defend, Lessor's right, title and interest, if any, in any such
appurtenances. Tenant agrees that such appurtenances shall constitute Permitted
Encumbrances, as to which Tenant shall have the obligations set forth in Section
-------
8.3 and Section 24.1 of this Lease, provided that Tenant shall not be obligated
--- ------------
to defend or preserve any such appurtenances against any mortgages or other
liens created by the owner of the
30
property burdened by the aforesaid appurtenances that are senior in priority to
Lessor's aforesaid appurtenant rights.
Section 6.2 Tenant's Personal Property. Tenant may (and shall as provided
--------------------------
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of Tenant's Personal
Property and Tenant shall, subject to the conditions set forth below and except
for any Tenant's Personal Property that is purchased by Lessor pursuant to
Section 37.2 below, remove the same upon the expiration or any prior termination
------------
of the Term. Tenant shall provide and maintain during the entire Term all such
Tenant's Personal Property as shall be necessary in order to operate each
Facility in compliance with all licensure and certification requirements, in
compliance with all applicable Legal Requirements and Insurance Requirements and
otherwise in accordance with customary practice in the industry for the Primary
Intended Use. Lessor acknowledges that Leasehold Mortgagee has a security
interest in Tenant's Personal Property and, upon the expiration or earlier
termination of this Lease as it relates to a Leased Property, Lessor agrees to
permit Leasehold Mortgagee to enter on such Leased Property in order to remove
such Tenant's Personal Property, so long as Leasehold Mortgagee, at no expense
to Lessor, repairs or causes to be repaired, any damage to such Leased Property
caused by any such removal, and further agrees to subordinate, and hereby
subordinates, to the lien of Leasehold Mortgagee on such Tenant's Personal
Property any xxxx Xxxxxx has thereon. All of Tenant's Personal Property not
removed by Tenant or Leasehold Mortgagee within twenty-one days following the
expiration or earlier termination of this Lease with respect to the applicable
Leased Property where such Tenant's Personal Property is located or sold to
Lessor pursuant to Section 37.2 below shall be considered abandoned by Tenant
------------
and Leasehold Mortgagee and may be appropriated, sold, destroyed or otherwise
disposed of by Lessor without first giving notice thereof to Tenant or Leasehold
Mortgagee and without any payment to Tenant or Leasehold Mortgagee and without
any obligation to account therefor or otherwise disposed of in accordance with
applicable law. Tenant will, at its expense, restore such Leased Property to the
condition required by Section 9.1(d), including repair of all damage to the
--------------
Leased Property caused by the removal of Tenant's Personal Property, whether
effected by Tenant, Leasehold Mortgagee or Lessor.
ARTICLE VII
Section 7.1 Condition of the Leased Property. Tenant acknowledges receipt
--------------------------------
and delivery of possession of each Leased Property and that Tenant has examined
and otherwise has 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. Tenant is leasing the
Leased Property "as is" in its present condition. Tenant 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, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE AS TO THE QUALITY OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL
SUCH RISKS ARE TO BE BORNE BY TENANT. TENANT
31
ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS
SATISFACTORY TO IT.
Section 7.2 Use of the Leased Property.
--------------------------
Section 7.2.1 Tenant shall maintain or cause to be maintained all
licenses, permits, approvals and other Authorizations needed to use and operate
for its Primary Intended Use (or any other use permitted under the terms of this
Lease) each Leased Property and the Facility located at each such Leased
Property under and in accordance with all applicable local, state and federal
laws and all applicable state and federal programs including but not limited to
appropriate certifications for reimbursement and licensure. All of such
Authorizations shall, to the maximum extent permitted by law, relate and apply
exclusively to one or more of the Leased Properties and/or the Facilities
operated thereon. Tenant acknowledges and agrees that, subject to applicable
law, the certificates of need issued for the Facilities are appurtenant to such
Facilities, both during and following the termination or expiration of the Term.
In jurisdictions where the certificate of need is issued to Tenant or its
subtenant, as the Facility operator, Tenant agrees that it shall cooperate with
Lessor, in accordance with Section 40.3 hereof, to turn over all of Tenant's
------------
rights in connection with such certificate of need to Lessor or its designee.
Section 7.2.2 After the Commencement Date and during the entire Term,
Tenant shall use each Leased Property and the Leased Improvements thereof as a
hospital or a nursing center and each Facility that is being used as a hospital
on the Commencement Date shall continue to be used as a hospital during the
entire Term and each Facility being used as a nursing center on the Commencement
Date shall continue to be used as a nursing center during the entire Term (such
use being the applicable Leased Property's "Primary Intended Use"). Tenant
--------------------
shall not use the applicable Leased Property or any portion thereof for any
other use without the prior written consent of Lessor, which consent shall not
be unreasonably withheld, delayed or conditioned. No use shall be made or
permitted to be made of the applicable Leased Property, and no acts shall be
done, that will cause the cancellation of any insurance policy covering such
Leased Property or any part thereof, nor shall Tenant sell or otherwise provide
to occupants or patients therein, or permit to be kept, used or sold in or about
such Leased Property any article which may be prohibited by law or by the
standard form of fire insurance policies, or any other insurance policies
required to be carried hereunder, or fire underwriters regulations. Tenant
shall, at its sole cost, comply with all of the requirements pertaining to the
applicable Leased Property or other improvements of any insurance board,
association, organization or company necessary for the maintenance of insurance,
as herein provided, covering such Leased Property and Tenant's Personal
Property.
Section 7.2.3 Tenant shall during the Term operate continuously each
Leased Property in accordance with all applicable federal, state and local laws
as a provider of health care services in accordance with its Primary Intended
Use and maintain its certifications for reimbursement and licensure and its
accreditation, if compliance with accreditation standards is required to
maintain the operations of the Facility and if a failure to comply would
adversely affect operations of the Facility.
32
Section 7.2.4 Tenant shall not commit or suffer to be committed any
waste on any Leased Property, or in any Facility, nor shall Tenant cause or
permit any nuisance thereon. Tenant shall not take or omit to take any action,
the taking or omission of which may materially impair the value or the
usefulness of such Leased Property or any part thereof for its Primary Intended
Use.
Section 7.2.5 Tenant shall neither suffer nor permit any Leased
Property or any portion thereof, including any Capital Alteration whether or not
financed by Lessor, or Tenant's Personal Property, to be used in such a manner
as (i) might reasonably tend to impair Lessor's (or Tenant's, as the case may
be) title thereto or to any portion thereof, or (ii) may reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the applicable Leased Property or any
portion thereof.
Section 7.2.6 Nothing contained in this Section 7.2 shall be deemed
-----------
to prevent Tenant from (i) voluntarily withdrawing from the Medicaid program,
and voluntarily de-activating its certification for participation therein, as
the same apply to a Facility(ies), or (ii) voluntarily reducing the number of
beds at a Facility(ies) as to which a certification for reimbursement under the
Medicaid program is applicable (but without affecting Tenant's certification for
participation in the Medicaid program as to any such Facility(ies) and without
reducing the number of beds at any Facility(ies) as to which a certification for
participation in the Medicaid program is applicable below any legally required
minimum number of beds), or (iii) voluntarily reducing the number of beds at a
Facility(ies) as to which a certification for reimbursement under the Medicare
program is applicable (but without affecting Tenant's certification for
participation in the Medicare program as to any such Facility(ies) and without
reducing the number of beds at any Facility(ies) as to which a certification for
participation in the Medicare program is applicable below any legally required
minimum number of beds), in each case if and so long as, in accordance with any
and all laws, statutes, rules, regulations and orders applicable to the Medicaid
and Medicare programs and certifications for participation therein and to any
such Facility(ies), Tenant or any successor operator of such Facility(ies) may
at any time at its election, without the necessity of any governmental approval
or additional Authorization (other than routine governmental re-inspections of
such Facility(ies) and any ministerial approvals and other Authorizations), as
applicable depending upon whether subsection (i), (ii) and/or (iii) above is
applicable, (a) promptly rejoin the Medicaid program, and re-activate its
certification for participation in the Medicaid program, at any such
Facility(ies) and/or (b) promptly re-activate its certification for
participation in the Medicaid program and/or Medicare program, as applicable, as
to any beds as to which a voluntary reduction under subsection (ii) and/or (iii)
above is applicable. At the time, and as a condition, of any such voluntary
withdrawal and de-activation, or voluntary reduction, by Tenant and thereafter
within twenty (20) days after receipt of a written request therefor from Lessor
from time to time (but not more often than twice in any calendar year, unless,
after Lessor has made two (2) such requests in a calendar year, a change(s) in
Legal Requirements becomes effective, or Lessor obtains knowledge of other facts
or circumstances, suggesting a possible violation of this Section 7.2.6), Tenant
-------------
shall deliver to Lessor a Senior Officer's Certificate, in form and substance
reasonably satisfactory to Lessor, certifying that Tenant has made diligent
inquiry
33
relative to the applicable Legal Requirements and has consulted with its legal
counsel and, based on the foregoing, certifies that Tenant has complied, and
continues to comply, with the provisions of this Section 7.2.6 in connection
-------------
with such voluntary withdrawal and de-activation and/or voluntary reduction.
Section 7.3 Granting of Easements, etc.
---------------------------
Section 7.3.1 Lessor and Tenant will, from time to time so long as no
Event of Default has occurred and is continuing, at the request of the other
party and at such requesting party's cost and expense (but subject to the
approval of the non-requesting party, which approval shall not be unreasonably
withheld, delayed or conditioned, and provided, however, that if the non-
-------- -------
requesting party has not responded to any such request of the requesting party
within 30 days after receipt thereof, such request shall be deemed approved),
(i) grant easements and other rights in the nature of easements, (ii) release
existing easements or other rights in the nature of easements which are for the
benefit of the applicable Leased Property, (iii) dedicate or transfer unimproved
portions of the applicable Leased Property for road, highway or other public
purposes, (iv) execute petitions to have the applicable Leased Property annexed
to any municipal corporation or utility district, (v) execute amendments to any
covenants and restrictions affecting the applicable Leased Property and (vi)
execute and deliver to any person any instrument appropriate to confirm or
effect such grants, releases, dedications and transfers (to the extent of its
interests in the applicable Leased Property), but only upon delivery of all
documentation the non-requesting party reasonably shall deem necessary and, if
Lessor is the requesting party, only if such grant, release, dedication,
transfer, petition or amendment (a) is not detrimental to the proper conduct of
the business of Tenant on the applicable Leased Property and (b) does not
materially reduce the value of the Leased Property, as reasonably determined by
Tenant, and, if Tenant is the requesting party, only if such grant, release,
dedication, transfer, petition or amendment does not materially reduce the value
of the Leased Property, as reasonably determined by Lessor.
Section 7.3.2 Notwithstanding anything to the contrary contained in
Section 7.3.1, Section 8.3, Section 24.1 or elsewhere in this Lease, in the case
------------- ----------- ------------
of any easement or license for a cell tower, antenna, satellite dish or other
telecommunications equipment, a parking lot or a billboard or other signage (a)
that is entered into pursuant to Section 7.3.1 hereof at the written request of
-------------
Lessor and (b) from which profit is generated and all of such profit, and any
reimbursements of out of pocket costs and expenses incurred by Lessor in
connection therewith, are payable to Lessor, without any obligation of Lessor to
pay, or credit, any of the same to Tenant, (i) Tenant shall be obligated under
this Section 7.3, Section 8.3, Section 24.1 and the other provisions of this
----------- ----------- ------------
Lease only to refrain from taking, and to prevent its assignees and sublessees,
and the agents, employees, contractors, invitees, licensees and concessionaires
of Tenant and its assignees and sublessees, from taking, any action that would
cause or result in a breach, default, violation or termination of any such
easement or license and (ii) Lessor shall protect, indemnify, save harmless and
defend Tenant from and against all out of pocket costs and expenses (including,
without limitation, Litigation Costs), to the maximum extent permitted by law,
incurred by Tenant due to any liabilities, obligations, claims, damages,
penalties or causes of action asserted against Tenant primarily by reason of
34
any such easement or license and not arising due to any breach by Tenant of its
obligations under subsection (i) above.
ARTICLE VIII
Section 8.1 Compliance with Legal and Insurance Requirements,
-------------------------------------------------
Instruments, etc. Subject to Article XII relating to permitted contests,
----------------- -----------
Tenant, at its expense, will promptly (a) comply with all material Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the applicable Leased Property, whether
or not compliance therewith shall require structural changes in any of the
Leased Improvements or interfere with the use and enjoyment of such Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need and other Authorizations required for any use of the applicable Leased
Property and Tenant's Personal Property then being made, and for the proper
erection, installation, operation and maintenance of the applicable Leased
Property or any part thereof, including without limitation any Capital
Alterations. In addition, Tenant shall promptly send to Lessor any material
deficiency report Tenant receives from any federal, state or local licensure
board or certification agency or authority with respect to any Facility if
Tenant has not cured such deficiency within the applicable cure period.
Section 8.1.1 Authorization Non-Compliance. In the event that Tenant
----------------------------
shall receive notice from any federal, state or local agency or authority that
Tenant is not in compliance with any material Legal Requirement, license,
permit, approval, certificate of need, certification for reimbursement under
Medicare or Medicaid (with respect to any Facility that participates in such
programs) or other Authorization, Tenant shall promptly send notice to Lessor
and Tenant shall either (a) remedy any condition causing such noncompliance
within any cure period allowed therefor by the applicable agency or authority
(or, if no such cure period shall be allowed or specified by the applicable
agency or authority, promptly and diligently following Tenant's receipt of such
notice and, in any event, prior to the final unappealable revocation of any
license, permit, approval, certificate of need, certification for reimbursement
or other Authorization) or (b) prior to the expiration of such cure period (or
if no such cure period shall be allowed or specified by the applicable agency or
authority, promptly following receipt of such notice and, in any event, prior to
the final unappealable revocation of any license, permit, approval, certificate
of need, certification for reimbursement or other Authorization), commence
appropriate proceedings to contest such notice, and, thereafter, diligently
pursue such contest until there is a final unappealable determination, all in
accordance with the provisions of Sections 8.2 and 12.1 hereof.
------------ ----
Section 8.2 Legal Requirement Covenants. Subject to the provisions of
---------------------------
Article XII relating to permitted contests, Tenant covenants and agrees that
-----------
none of the Leased Properties nor any of Tenant's Personal Property shall be
used for any unlawful purpose, and Tenant shall acquire and maintain, or cause
to be acquired and maintained, all licenses, certificates, permits, provider
agreements, approvals and other Authorizations needed to operate the applicable
Leased Property in its customary manner for the Primary Intended Use, and any
other use conducted on such Leased Property as may be permitted from time to
time hereunder. Subject to Article XII, Tenant further covenants and agrees
-----------
that Tenant's use of
35
each Leased Property and maintenance, alteration, and operation of the same, and
all parts thereof, shall at all times conform to all applicable local, state,
and federal laws, ordinances, rules and regulations unless the same are held by
a court of competent jurisdiction to be unlawful. Tenant may, however, upon
prior written notice to Lessor, contest the legality or applicability of any
law, ordinance, rule or regulation, or any other Legal Requirement or any
licensure, certification or other Authorization decision (including, without
limitation, any notice of non-compliance referred to in Section 8.1.1 hereof) or
-------------
other Authorization if Tenant, at Tenant's own expense, maintains such action in
good faith, by appropriate proceedings and with due diligence, and on a regular
basis fully informs Lessor of the status of, and material developments in, any
such contest and furnishes Lessor with such additional documents and information
concerning such contest as Lessor may reasonably request from time to time. If,
by the terms of any such law, ordinance, rule or regulation or any Legal
Requirement or any such licensure, certification or other Authorization decision
or any applicable court order or stay, compliance therewith pending the
prosecution of any such proceeding may legally be delayed (a) without the
incurrence of any lien, charge or liability of any kind against the applicable
Facility or Lessor's interest therein, (b) without any loss of licensure,
certification or other Authorization that would materially and adversely impair
Tenant's ability to continue to operate the affected Facility in accordance with
its Primary Intended Use during Tenant's contest, and (c) without subjecting
Lessor to any liability, civil or criminal, for failure so to comply therewith,
Tenant may delay compliance therewith until the final unappealable determination
of such proceeding, provided, however, if any such lien, charge or civil or
-------- -------
criminal liability would be incurred by reason of any such delay, Tenant may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Lessor to criminal liability and Tenant (i) furnishes to
Lessor security reasonably satisfactory to Lessor against any loss or injury by
reason of such contest or delay, (ii) prosecutes the contest with due diligence
and in good faith, and (iii) keeps Lessor informed, and provides additional
documentation and information, relative to such contest as described above.
Following the final unappealable determination of any such proceeding adversely
to Lessor or Tenant, Tenant shall comply with all requirements of such
determination in accordance with Section 12.1(g).
---------------
Section 8.3 Permitted Encumbrances.
----------------------
Section 8.3.1 Subject to Section 7.3.2 hereof, Tenant shall, at its
-------------
own cost and expense, fully observe, perform and comply with all Permitted
Encumbrances as the same apply to or bind Lessor or any of the Leased
Properties. Subject to Section 7.3.2 hereof, Tenant shall not cause, or permit
-------------
its respective agents, employees, contractors, invitees, subtenants, licensees,
concessionaires or assigns (whether or not permitted hereunder) to cause,
whether by act or omission, any breach of, default under or termination of any
Permitted Encumbrance applicable to or binding upon Lessor or any of the Leased
Properties. Notwithstanding anything to the contrary contained in Section 16.1
------------
or elsewhere in this Lease but subject to Section 7.3.2 hereof, an Event of
-------------
Default shall be deemed to have occurred under this Lease on account of Tenant's
breach of this Section 8.3.1, when, but only if, (a) Tenant's breach of this
-------------
Section 8.3.1 also results in a breach or default of an obligation under a
-------------
Permitted Encumbrance, (b) such Permitted Encumbrance breach or default is not
cured by Tenant on or prior to the expiration of the cure period, if any,
applicable to such breach or
36
default by the terms of the instrument creating such Permitted Encumbrance (or
such longer cure period as may be expressly authorized by an order of a court of
competent jurisdiction), and (c) on account of such Permitted Encumbrance breach
or default, a real property interest, or a covenant, condition, restriction,
license or other beneficial right, created under such Permitted Encumbrance and
benefiting Lessor or a Leased Property is terminated or otherwise lost or at
material risk of being terminated or otherwise lost. Lessor agrees that, in the
event Lessor receives any written notice of default from a party to a Permitted
Encumbrance, Lessor shall promptly forward a copy thereof to Tenant. Tenant
agrees that, if Lessor, at its option, elects to cure an Event of Default by
Tenant under this Section 8.3.1, such cure shall not excuse Tenant from, or be
-------------
deemed a cure of, such Event of Default, nor shall Tenant's reimbursement to
Lessor of any costs and expenses incurred by Lessor in effecting any such cure
be deemed a cure of any such Event of Default, provided, however, that,
-------- -------
notwithstanding the foregoing, even after the occurrence of such an Event of
Default by Tenant and/or Lessor's cure thereof, Lessor agrees to accept Tenant's
cure thereof, or reimbursement of Lessor's costs and expenses to effect such
cure, provided, and on the condition, that Lessor has not, prior thereto,
terminated this Lease as it affects the Leased Property to which such Permitted
Encumbrance relates or dispossessed Tenant from such Leased Property. Nothing
contained in this Section 8.3 shall limit or impair Lessor's indemnification
-----------
rights under Section 24.1 below.
------------
Section 8.3.2 If (a) a Permitted Encumbrance breach or default of the
nature described in Section 8.3.1(a) above occurs, and (b) on account thereof,
----------------
if the same is not cured, the condition referenced in Section 8.3.1(c) above
----------------
would, or is likely to, be satisfied, Tenant agrees that, notwithstanding
anything to the contrary contained in Section 17.1 below or elsewhere in this
------------
Lease, Lessor may, but shall not be obligated to, in its discretion and
regardless of whether Tenant is proceeding to cure, or attempting to cure, the
Permitted Encumbrance breach or default referenced in Section 8.3.1(a) above or
----------------
whether the cure period referenced in Section 8.3.1(b) above has expired or is
----------------
likely to expire before completion of necessary cure efforts, take such actions
as it deems necessary or appropriate to attempt to cure such Permitted
Encumbrance breach or default, provided, however, that, if the breach or default
-------- -------
referenced in subsection (a) above has applicable thereto, by the express terms
of the applicable Permitted Encumbrance, a stated period to cure the same,
Lessor agrees not to commence to cure such breach or default unless and until
one-half (1/2) of the aforesaid stated cure period has elapsed. If Lessor so
proceeds to attempt to cure any such Permitted Encumbrance breach or default,
Tenant agrees, within fifteen (15) days following receipt of a written demand
therefor and reasonable supporting documentation, to reimburse Lessor for the
reasonable amount of all costs and expenses incurred by Lessor in curing, or
attempting to cure, any such Permitted Encumbrance breach or default.
ARTICLE IX
Section 9.1 Maintenance and Repair.
----------------------
(a) Tenant, at its expense, shall keep each Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto and which are under Tenant's
control (and Tenant's Personal Property) in good order and repair, reasonable
wear and tear excepted
37
(whether or not the need for such repairs occurs as a result of Tenant's use,
any prior use, the elements or the age of such Leased Property, Tenant's
Personal Property, or any portion thereof), and, except as otherwise provided in
Article XIV, shall promptly make all necessary and appropriate repairs and
-----------
replacements thereto, of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition existing prior to the commencement of the
Term (concealed or otherwise). All repairs shall, to the extent reasonably
achievable, be made in good, workmanlike and first-class manner, in accordance
with all applicable federal, state and local statutes, ordinances, by-laws,
codes, rules and regulations relating to such work. Tenant will not take or omit
to take any action the taking or omission of which might materially impair the
value or usefulness of the applicable Leased Property or any part thereof for
its Primary Intended Use.
(b) Lessor shall not under any circumstances be required to build or
rebuild any improvements on any Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or description
to the applicable Leased Property, 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 any Leased
Property in any way, except as expressly provided herein. Tenant hereby waives,
to the extent permitted by law, the right to make repairs at the expense of
Lessor pursuant to any law in effect at the time of the execution of this Lease
or thereafter enacted.
(c) Except as expressly set forth in this Lease, nothing contained in this
Lease and no action or inaction by Lessor shall be construed as (i) 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 or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to any Leased
Property or any part thereof, or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Lessor in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in any
Leased Property, or any portion thereof.
(d) Tenant will, upon the expiration or prior termination of the Term,
vacate and surrender the applicable Leased Property to Lessor in the condition
in which such Leased Property was originally received from Lessor, except as
repaired, rebuilt, restored, altered or added to as permitted or required by the
provisions of this Lease and except for ordinary wear and tear (subject to the
obligation of Tenant to maintain the Leased Property in good order and repair
during the entire Term).
(e) Tenant shall establish and maintain any reserve accounts reasonably
required by a Superior Mortgagee for deferred maintenance conditions and for
capital expenditures at the Leased Property.
38
Section 9.2 Encroachments. If any of the Leased Improvements on any
-------------
Leased Property shall, at any time, encroach upon any property, street or right-
of-way adjacent to such Leased Property, then, promptly upon the request of
Lessor or at the behest of any person affected by any such encroachment, Tenant
shall, at its expense, subject to its right to contest the existence of any
encroachment and, in such case, in the event of any adverse final determination,
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, whether the same
shall affect Lessor or Tenant, or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant, in good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment,
including, if necessary, the alteration of any of the Leased Improvements, and
in any event take all such actions as may be necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent the Leased Improvements were
operated prior to the assertion of such encroachment. Any such alteration shall
be made in conformity with the applicable requirements of Article X. Tenant's
---------
obligations under this Section 9.2 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 and Tenant shall not be entitled to a credit for any sums
recovered by Lessor under any such policy of title or other insurance.
ARTICLE X
Section 10.1 Construction of Capital Alterations to the Leased
-------------------------------------------------
Property(ies). Tenant shall not, without the prior written consent of Lessor,
-------------
which consent, except as expressly set forth below relative to tie in/connecting
Capital Alterations of the nature described below, shall not be unreasonably
withheld, delayed or conditioned, construct or install Capital Alterations on
any Leased Property. In the event that Tenant wishes to construct or install any
Capital Alteration, Tenant shall submit to Lessor in writing a proposal setting
forth in reasonable detail such Capital Alteration and shall provide to Lessor
for approval such plans and specifications, permits, licenses, contracts,
construction schedules, construction budgets and other information concerning
the proposed Capital Alteration as Lessor may reasonably request showing in
reasonable detail the scope and nature of the Capital Alteration that Tenant
desires to construct (collectively the "Plans and Specifications"). It is the
------------------------
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Without limiting the
generality of the foregoing, such proposal shall indicate the approximate
projected cost of constructing such Capital Alteration and the use or uses to
which it will be put. In the event that Lessor consents in writing to any
Capital Alteration, prior to commencing construction of any Capital Alteration,
Tenant shall first request Lessor to provide funds to pay for such Capital
Alteration in accordance with the provisions of Section 10.3. If Lessor declines
------------
or is unable to provide such financing on terms acceptable to Tenant, Tenant
shall provide to Lessor, prior to commencement of any construction, proof
reasonably acceptable to Lessor that Tenant has sufficient capital to complete
the construction. Furthermore, no Capital Alteration shall be made which would
tie in or connect any Leased Improvements on a Leased Property with any other
improvements on property adjacent to such Leased Property (and not part of the
Land covered by this Lease) including, without limitation, tie-ins of buildings
or
39
other structures or utilities, unless Tenant shall have obtained the prior
written approval of Lessor, which approval in Lessor's sole discretion may be
granted, withheld, delayed or conditioned. Tenant shall reimburse Lessor for all
reasonable costs and expenses incurred by Lessor in reviewing the proposal and
the Plans and Specifications for a Capital Alteration and for inspecting the
applicable Leased Property and otherwise monitoring the construction of the
Capital Alteration, including, without limitation, the reasonable cost of
engaging consultants to assist Lessor in connection with any or all of the
foregoing.
Section 10.2 Capital Alterations Financed by Tenant. If Tenant provides
--------------------------------------
or arranges such financing, there shall be no adjustment in Base Rent, Current
Rent or Unpaid Accrued Rent by reason of any such Capital Alteration.
Section 10.3 Capital Alterations Financed by Lessor.
--------------------------------------
(a) Tenant shall request that Lessor provide or arrange financing for a
Capital Alteration by providing to Lessor such information about the Capital
Alteration as Lessor may reasonably request including without limitation all
information referred to in Section 10.1 above. Lessor may, but shall be under
------------
no obligation to, obtain the funds necessary to meet the request. Within sixty
(60) days after receipt of a request, Lessor shall notify Tenant as to whether
it will finance the proposed Capital Alteration and, if so, the terms and
conditions upon which it would do so, including the terms of any amendment to
this Lease. In no event shall the portion of the projected Capital Alterations
Cost comprised of land, if any, materials, labor charges and fixtures be less
than ninety percent (90%) of the total amount of such cost. Tenant may withdraw
its request by notice to Lessor at any time before or after receipt of Lessor's
terms and conditions. If Tenant desires to accept Lessor's offer to finance the
proposed Capital Alteration, Tenant shall notify Lessor within thirty (30) days
after Tenant's receipt of Lessor's offer.
(b) If Lessor agrees to finance the proposed Capital Alteration, Tenant
shall provide Lessor with the following prior to any advance of funds:
(i) all customary or other reasonably required loan documentation;
(ii) any information, certificates, licenses, permits or documents
requested by either Lessor or any third party lender with whom Lessor has
agreed or may agree to provide financing which are necessary to confirm
that Tenant will be able to use the Capital Alteration upon completion
thereof in accordance with the Primary Intended Use, including all required
federal, state or local government licenses and approvals;
(iii) an Officer's Certificate and, if requested, a certificate from
Tenant's architect, setting forth in reasonable detail the projected (or
actual, if available) cost of the proposed Capital Alteration;
(iv) an amendment to this Lease, duly executed and acknowledged, in
form and substance reasonably satisfactory to Lessor and Tenant, providing
for (1) any change in the Rent that is set forth in Lessor's offer to
finance and accepted by Tenant,
40
any change in the legal description of the Land, and any change in Exhibit
-------
C hereof (including any and all allocations of Rent and Transferred
-
Property Percentages contained therein) that is appropriate on account of
any change in the Rent as aforesaid (specifically, Lessor's and Tenant's
agreed upon changes to the Base Rent and Current Rent allocable to the
affected Leased Property(ies), if any, shall be incorporated into an
amended Exhibit C, and the Transferred Property Percentages allocable to
---------
all of the Leased Properties shall then be recalculated and incorporated
into such amended Exhibit C) and (2) any other Lease amendments as may be
----------
necessary or appropriate;
(v) a deed (in the customary form used to convey commercial
properties within the relevant jurisdiction) conveying title to Lessor to
any land acquired for the purpose of constructing the Capital Alterations
free and clear of any liens or encumbrances except those approved by
Lessor, accompanied by a final as-built survey thereof satisfactory to
Lessor if reasonably required by Lessor;
(vi) endorsements to any outstanding policy of title insurance, if
any, covering the applicable Leased Property or commitments therefor
satisfactory in form and substance to Lessor (A) updating the same without
any additional exception except as may be permitted by Lessor; and (B)
increasing the coverage thereof by an amount equal to the Fair Market Value
of the Capital Alteration (except to the extent covered by the owner's
policy of title insurance referred to in subsection (vii) below);
(vii) if appropriate, (A) an owner's policy of title insurance
insuring fee simple title to any land conveyed to Lessor pursuant to
subsection (v) free and clear of all liens and encumbrances except those
approved by Lessor and (B) a lender's policy of title insurance
satisfactory in form and substance to Lessor and the lending institution
advancing any portion of the Capital Alterations Cost;
(viii) if deemed necessary by Lessor, an M.A.I. appraisal of the
Leased Property indicating that the value of the applicable Leased Property
upon completion of the Capital Alteration exceeds the Fair Market Value
thereof prior thereto by an amount not less than 95% of the Capital
Alterations Cost; and
(ix) such other certificates (including, but not limited to,
endorsements increasing the insurance coverage, if any, at the time
required by Section 13.1), documents, opinions of counsel, appraisals,
------------
surveys, certified copies of duly adopted resolutions of the Board of
Directors of Tenant authorizing the execution and delivery of the lease
amendment and any other instruments as may be reasonably required by Lessor
and any lending institution advancing or reimbursing Tenant for any portion
of the Capital Alterations Cost.
(c) Upon making a request to finance a Capital Alteration, if and when such
financing is actually consummated, Tenant shall pay or agree to pay all
reasonable costs and expenses of Lessor and any Lending Institution which has
committed to finance such Capital Alteration paid or incurred by them in
connection with the financing of the Capital Alterations, including, but not
limited to, (i) the reasonable fees and expenses of their respective counsel,
41
(ii) all printing expenses, (iii) the amount of any filing, registration and
recording taxes and fees, (iv) documentary stamp taxes, if any, (v) title
insurance and survey charges, appraisal fees, if any, and rating agency fees, if
any, (vi) any other applicable consulting fees (including without limitation
engineering and environmental), and (vii) commitment fees, if any.
Section 10.4 Non-Capital Alterations. Tenant shall have the right to
-----------------------
make additions, modifications or improvements to any Leased Property which are
not Capital Alterations ("Non-Capital Alterations") from time to time as it, in
-----------------------
its discretion, may deem to be desirable for its uses and purposes, provided
that such action will not alter the character or purpose or detract from the
value or operating efficiency thereof and will not impair the revenue producing
capability of the affected Leased Property or adversely affect the ability of
Tenant to comply with the provisions of this Lease. The cost of such Non-
Capital Alterations, modifications or improvements to a Leased Property shall be
paid by Tenant.
Section 10.5 Salvage. All materials which are scrapped or removed in
-------
connection with the making of either Capital Alterations permitted by Section
-------
10.1 or Non-Capital Alterations permitted by Section 10.4 or repairs required by
---- ------------
Article IX shall be or become the property of Lessor or Tenant depending on
----------
which party is paying for, or providing the financing for, such work.
Section 10.6 Additional Requirements for Capital Alterations and Non-
-------------------------------------------------------
Capital Alterations. Tenant shall comply with the following requirements in
-------------------
connection with Permitted Alterations:
(a) In the case of Capital Alterations, the Permitted Alteration shall be
made substantially in accordance with the Plans and Specifications submitted to
Lessor, to the extent applicable.
(b) The Permitted Alterations and the installation thereof shall comply
with all applicable Legal Requirements and all Insurance Requirements.
(c) The Permitted Alterations shall be performed in a good and workmanlike
manner, shall not impair the value or the structural integrity of the applicable
Leased Property, and shall be free and clear of mechanic's liens.
(d) Intentionally omitted.
(e) Tenant shall, at Tenant's expense, obtain a builder's completed value
risk policy of insurance insuring against the risks of physical loss, including
collapse and transit coverage, in a nonreporting form, covering the total value
of the work performed, and equipment, supplies and materials, and insuring
initial occupancy. Lessor and any Facility Mortgagee shall be additional named
insureds of such policy. Lessor shall have the right to approve the form and
substance of such policy, which approval shall not be unreasonably withheld,
delayed or conditioned.
42
(f) Tenant shall pay the premiums required to increase the amount of
insurance coverages required by Article XIII to reflect the increased value of
------------
the applicable Leased Property resulting from the Permitted Alterations, and
shall deliver to Lessor a certificate evidencing the increase in coverage.
(g) In the case of Capital Alterations, Tenant shall, not less than sixty
(60) days after completion of the Capital Alterations, deliver to Lessor a
revised "as-built" set of Plans and Specifications for the Capital Alterations
in form and substance reasonably satisfactory to Lessor.
(h) In the case of Capital Alterations, Tenant shall, not later than thirty
(30) days after Lessor sends an invoice, reimburse Lessor for any reasonable
costs and expenses, including attorneys' fees and architects' and engineers'
fees, incurred in connection with reviewing proposed Capital Alterations and
ensuring Tenant's compliance with the terms of this Article X.
---------
(i) All Capital Alterations and Non-Capital Alterations shall, without
payment by Lessor at any time (other than as expressly agreed by Lessor pursuant
to Section 10.3 above), be included under the terms of this Lease and upon
------------
expiration or earlier termination of this Lease shall pass to and become the
property of Lessor free and clear of all encumbrances, other than Permitted
Encumbrances.
(j) Except as expressly agreed by Lessor and Tenant pursuant to Section
-------
10.3(b)(iv) above, (1) there shall be no adjustment in Base Rent, Current Rent
-----------
or Unpaid Accrued Rent by reason of any Capital Alteration or Non-Capital
Alteration and (2) no Capital Alteration or Non-Capital Alteration shall be
treated by Lessor or Tenant as rent, or amounts in lieu of rent, paid by Tenant,
or any other kind of gross income to Lessor, for income tax purposes.
Section 10.7 Mortgagee's Consent. Tenant shall not commence construction
-------------------
of any Capital Alteration until Lessor shall have obtained the consent of any
applicable Facility Mortgagee or Superior Lessor, if such consent is required.
Lessor agrees to use commercially reasonable efforts to obtain promptly any such
consent, if such consent is necessary.
ARTICLE XI
Section 11.1 Liens. Subject to the provisions of Article XII relating to
-----
permitted contests, Tenant will not directly or indirectly create or allow to
remain and will promptly discharge at its expense any lien, encumbrance,
attachment, title retention agreement or claim upon any Leased Property or any
attachment, levy, claim or encumbrance in respect of the Rent, not including,
however, (a) Permitted Encumbrances, (b) restrictions, liens and other
encumbrances which are consented to in writing by Lessor, or any easements
granted pursuant to the provisions of this Lease, (c) liens for those taxes of
Lessor which Tenant is not required to pay hereunder, (d) subleases permitted by
Article XXV, (e) liens for Impositions or for sums resulting from noncompliance
-----------
with Legal Requirements so long as (1) the same are not yet payable or are
payable without the addition of any fine or penalty or (2) such liens are in the
process of being contested as permitted by Article XII, (f) liens of mechanics,
-----------
laborers,
43
materialmen, suppliers or vendors for sums either disputed in good faith or not
yet due, provided that (1) the payment of such sums shall not be postponed under
any related contract for more than sixty (60) days after the completion of the
action giving rise to such lien and such reserve or other appropriate provisions
as shall be required by law or generally accepted accounting principles shall
have been made therefor or (2) any such liens are in the process of being
contested as permitted by Article XII, and (g) any liens which are the
-----------
responsibility of Lessor pursuant to the provisions of Article XXXVIII.
---------------
Notwithstanding the foregoing, Tenant shall bond over any lien affecting the
applicable Leased Property if Lessor shall reasonably request, or if any
applicable Facility Mortgagee shall so require.
ARTICLE XII
Section 12.1 Permitted Contests. Tenant, on its own or on Lessor's
------------------
behalf (or in Lessor's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any Legal Requirement or any lien, attachment, levy, encumbrance, charge or
claim not otherwise permitted by Article XI, provided that (a) in the case of an
----------
unpaid Imposition, lien, attachment, levy, encumbrance, charge, or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Lessor and from the applicable Leased Property, (b) neither the
applicable Leased Property nor any Rent therefrom nor any part thereof or
interest therein would be reasonably likely to be in danger of being sold,
forfeited, attached or lost, (c) in the case of a Legal Requirement, Lessor
would not be in any immediate danger of criminal liability for failure to comply
therewith pending the outcome of such proceedings and the contest provisions of
Section 8.2 have been satisfied, (d) Tenant shall indemnify and hold harmless
-----------
Lessor from and against any cost, claim, damage, penalty or reasonable expense,
including reasonable attorneys' fees, incurred by Tenant in connection therewith
or as a result thereof, (e) in the case of a Legal Requirement and/or
Imposition, lien, encumbrance or charge, Tenant shall give such reasonable
security as may be demanded by Lessor to insure ultimate payment of or
compliance with the same and to prevent any sale or forfeiture of the affected
Leased Property or the Rent by reason of such non-payment or non-compliance,
provided, however, the provisions of this Article XII shall not be construed to
-------- ------- -----------
permit Tenant to contest the payment of Rent (except as to contests concerning
the method of computation or the basis of levy of any Imposition or the basis
for the assertion of any other claim) or any other sums payable by Tenant to
Lessor hereunder, (f) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained, and (g) if such contest is
------------
resolved against Lessor or Tenant by a final unappealable determination, Tenant
shall, as Additional Charges due hereunder, pay to the appropriate payee the
amount required to be paid, together with all interest and penalties accrued
thereon, within ten (10) days after such determination (or within such shorter
period as may be required by the terms of such determination), and comply,
within any cure period allowed therefor by the applicable agency or authority
(or if no such cure period shall be allowed or specified by the applicable
agency or authority, promptly and diligently following the effective date of
such determination and, in any event, prior to the final unappealable revocation
of any license, permit, approval, certificate of need, certificate for
reimbursement or other Authorization), with the applicable Legal Requirement,
Insurance Requirement, plan of correction or other
44
remedial requirements of the applicable agency or authority; provided, however,
-------- -------
that this subsection (g) is not intended, and shall not be construed, to afford
Tenant any cure or grace period beyond the effective date of any final
unappealable determination, unless and only to the extent that (i) such
determination specifically conditions the imposition or taking effect of the
adverse legal, regulatory or other consequences in issue upon Tenant's failure
to make a specified payment or to take specified compliance, curative or
remedial action following the effective date of such determination or (ii)
Tenant is proceeding diligently and in good faith to effect an assignment or
sublet under Section 25.1.11 hereof and the applicable agency(ies) or
---------------
authority(ies) is not enforcing such final order, pending consummation of such
assignment or sublet. Lessor, at Tenant's expense, shall execute and deliver to
Tenant such authorizations and other documents as may reasonably be required in
any such contest, and, if reasonably requested by Tenant or if Lessor so
desires, Lessor shall join as a party therein. Tenant shall indemnify and save
Lessor harmless against any liability, cost or expense of any kind that may be
imposed upon Lessor in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIII
Section 13.1 General Insurance Requirements. During the Term, Tenant
------------------------------
shall at all times keep each Leased Property, and all property located in or on
any Leased Property, including Leasehold Improvements, Fixtures and Tenant's
Personal Property, insured with the kinds and amounts of insurance described
below. This insurance shall be written by companies authorized to do insurance
business in the State in which the applicable Leased Property is located, which
companies shall have a rating at least as high as the rating required by any
applicable Facility Mortgagee. The policies must name as loss payee (i) the
holder of any mortgage, deed of trust or other security agreement ("Facility
--------
Mortgagee") securing any Encumbrance placed on the applicable Leased Property
---------
in accordance with the provisions of Article XXXVIII ("Facility Mortgage") by
--------------- -----------------
way of a standard form of mortgagee's loss payable endorsement or (ii) if no
such Facility Mortgage encumbers the applicable Leased Property, Lessor and, in
the case of any commercial general liability and/or umbrella liability insurance
coverages, must name Lessor and any Superior Mortgagee(s) as additional
insureds. Losses shall be payable to Lessor and/or Superior Mortgagee as
provided in Article XIV. Any loss adjustment shall require the written consent
-----------
of Lessor, Tenant, Leasehold Mortgagee and Facility Mortgagee whenever the loss
exceeds twenty percent (20%) of the Facility's Fair Market Value. Evidence of
insurance shall be deposited with Lessor and, if requested, with any Superior
Lessor, Leasehold Mortgagee and Facility Mortgagee(s). If any provision of any
Facility Mortgage requires deposits of insurance premiums to be made with such
Facility Mortgagee, Tenant shall either pay to Lessor monthly the amounts
required and Lessor shall transfer such amounts to each Facility Mortgagee, or,
pursuant to written direction by Lessor, Tenant shall make such deposits
directly with such Facility Mortgagee. The policies on each Leased Property,
including the Leasehold Improvements, and Fixtures and Tenant's Personal
Property, shall insure against the following risks:
Section 13.1.1 Loss or damage by fire, vandalism and malicious
mischief, extended coverage perils commonly known as "All Risk", including
flood, the backup of sewers and drains, earthquake, breakage of plate glass and
all physical loss perils
45
including but not limited to sprinkler leakage, in an amount not less than one
hundred percent (100%) of the then full replacement cost thereof (as defined
below in Section 13.2), subject to no coinsurance requirement or on an agreed
-------------
amount basis;
Section 13.1.2 Broad form comprehensive boiler and machinery
insurance, on a blanket repair and replace basis, with limits for each accident
in an amount not less than one hundred percent (100%) of the then full
replacement cost (as defined in Section 13.2) of the Leased Property;
------------
Section 13.1.3 Business Interruption insurance on a Business
Interruption, Gross Profits or Gross Rents form, including all standing charges,
with a period of indemnity of no less than twelve (12) months, resulting from
loss or damage as described in Section 13.1.1 or 13.1.2, subject to no
-------------- ------
coinsurance requirement or on an agreed amount basis;
Section 13.1.4 Claims for bodily injury, including death resulting
therefrom, personal injury and property damage on an occurrence basis, under a
policy of commercial general liability ("CGL") insurance (including, without
limitation, broad form property damage and broad form contractual liability) for
a limit of not less than Fifty Million and No/100 Dollars ($50,000,000.00) per
occurrence, combined single limit. Relative to the insurance referenced in this
Section 13.1.4, Tenant shall be permitted to use a claims made policy form
--------------
rather than an occurrence based policy form for its primary, and/or its excess
liability, CGL insurance, only if:
(a) an occurrence based form of primary or excess liability, as
applicable, CGL insurance policy cannot be obtained solely because occurrence
based forms of primary or excess liability, as applicable, CGL insurance are not
offered in the insurance market place for for-profit hospital and/or nursing
center companies or
(b) a majority of the five (5) largest (determined by revenue) companies
(exclusive of Tenant) in the for-profit hospital and/or nursing center industry
maintain claims made forms of primary or excess liability, as applicable, CGL
insurance for their primary or excess liability, as applicable, CGL insurance
policies.
(For example, relative to the foregoing conditions, if occurrence based
forms of primary CGL insurance are offered in the insurance market place for
for-profit hospital and/or nursing center companies, but Tenant is unable to
obtain an occurrence based form of excess liability CGL insurance solely because
occurrence based forms of excess liability CGL insurance are not offered in the
insurance market place for for-profit hospital and/or nursing center companies,
and a majority of the aforesaid five largest companies maintain occurrence based
forms of primary CGL insurance and claims made forms of excess liability CGL
insurance, a claims made form of excess liability CGL insurance would be
permitted subject to compliance with the other requirements of this Section
-------
13.1.4, but a claims made form of primary CGL insurance would not be permitted).
------
Prior to making any such switch to or renewing any claims made policy, Tenant
shall be obligated to provide to Lessor supporting evidence demonstrating the
existence of condition (a) or (b), and the sufficiency of such evidence shall be
subject to the advance written approval of Lessor, in its reasonable
46
discretion. If Tenant so switches to a claims made form of policy, in addition
to complying with the requirements referenced below in this Section 13.1.4,
--------------
Tenant shall be obligated to switch back to occurrence based coverage at the end
of the then current claims made policy term unless condition (a) or (b) exists
as demonstrated by supporting evidence reasonably approved in advance and in
writing by Lessor. If Tenant satisfies the above referenced tests for switching
to, or continuing to maintain, a claims made form of policy, any claims made
policy that it purchases must include therein the right to purchase a "tail"
that insures against so called "incurred but not reported claims" for a period
of at least three (3) years following the expiration of such claims made policy.
In addition, from and after any such switch to a claims made form of policy,
Tenant must, after the expiration of each claims made policy that Tenant
obtains, as to each such expiring claims made policy, either:
(i) continue to insure Lessor and all Facility Mortgagees and
Superior Lessors with the required amount of primary and/or excess
liability, as applicable depending upon the nature of such expiring claims
made policy, CGL insurance coverage, on a claims made policy form that
includes coverage against all so-called "incurred but not reported claims"
relating to any period on or prior to the expiration of the expiring policy
("Previous Period Unreported Claims"), an additional ten (10) years
following the expiration of such expiring claims made policy (which
coverage may be obtained, for example, (A) through the renewal or rolling-
over of a claims made based CGL policy providing the required amounts of
coverage and including coverage against Previous Period Unreported Claims
for consecutive 1-year periods for such ten (10) year period, or (B)
through the purchase of a three (3) year claims made based CGL "tail"
policy providing the required amounts of coverage and including coverage
against Previous Period Unreported Claims followed by purchases of claims
made based CGL policies providing the required amounts of coverage and
including coverage against all Previous Period Unreported Claims for
consecutive 1-year periods for the remaining seven (7) years of such ten
(10) year period) (in connection with the purchase of claims made CGL
insurance coverage pursuant to this subsection (i), any claims made CGL
insurance coverage that is obtained by Tenant may exclude therefrom any
claims incurred during any period that an occurrence based form of primary
or excess liability, as applicable depending on the nature of the expiring
claims made policy, CGL insurance policy providing the required amounts of
coverage and insuring Lessor and all Facility Mortgagees and Superior
Lessors was in effect), or
(ii) insure Lessor and all Facility Mortgagees and Superior Lessors by
obtaining the required amount of primary and/or excess liability, as
applicable, CGL insurance on an occurrence based policy form that includes
therein as insured claims all claims (x) incurred prior to the inception of
such occurrence based CGL insurance policy and after the latest of (1) the
Effective Date, (2) the date that is ten (10) years prior to the inception
of such occurrence based CGL insurance policy or (3) the day preceding the
date that Tenant, pursuant to the terms of this Section 13.1.4, first
--------------
switched to a claims made form of primary or excess liability, as
applicable depending on the nature of such expiring claims made policy, CGL
insurance policy (relative to the period described in this subsection
(ii)(x), any occurrence based CGL policy that is
47
obtained by Tenant pursuant to this subsection (ii) may exclude therefrom
any claims incurred during any period that an occurrence based form of
primary or excess liability, as applicable depending on the nature of the
expiring claims made policy, CGL insurance policy providing the required
amounts of coverage and insuring Lessor and all Facility Mortgagees and
Superior Lessors was in effect) and (y) not yet reported prior to such
inception;
Section 13.1.5 Claims arising out of malpractice in an amount not less
than Twenty Five Million and No/100 Dollars ($25,000,000.00) for each person and
for each claim in the aggregate;
Section 13.1.6 Intentionally Omitted;
Section 13.1.7 Intentionally Omitted;
Section 13.1.8 Loss or damage commonly covered by blanket crime
insurance including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, in commercially reasonable amounts acceptable to Lessor for
a limit of not less than Five Million and No/100 Dollars ($5,000,000.00).
Section 13.2 Replacement Cost. The term "full replacement cost," as used
----------------
herein, shall mean the actual replacement cost of the property requiring
replacement from time to time including an increased cost of construction
endorsement, without reduction or deduction for depreciation. Tenant shall have
the full replacement cost redetermined by an accredited appraiser approved by
Lessor (which approval shall not be unreasonably withheld, delayed or
conditioned), hereinafter referred to as "impartial appraiser", every five years
during the Term, and at such other times that either party believes that full
replacement cost has increased or decreased. Tenant shall forthwith, on receipt
of such determination by such impartial appraiser, give written notice thereof
to Lessor. The determination of such impartial appraiser shall be final and
binding on the parties hereto, and Tenant shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Section, as the
case may be, to the amount so determined by the impartial appraiser. Each party
shall pay one-half (1/2) of the fee, if any, of the impartial appraiser.
Section 13.3 Additional Insurance. In addition to the insurance described
--------------------
above, Tenant shall maintain such additional insurance as may reasonably be
required from time to time by any Facility Mortgagee and, further, shall at all
times maintain adequate worker's compensation insurance coverage for all persons
employed by Tenant on each Leased Property. Such worker's compensation insurance
shall be in accordance with the requirements of applicable local, state and
federal law.
Section 13.4 Waiver of Subrogation. Lessor and Tenant agree that
---------------------
(insofar as and to the extent that such agreement may be effective without
invalidating or making it impossible to secure insurance coverage from
responsible insurance companies doing business in the State) with respect to any
property loss that is covered by insurance then being carried by Lessor or
Tenant, respectively, the party carrying such insurance and suffering said loss
releases the
48
other of and from any and all claims with respect to such loss where such
insurance is valid and collectible respecting any such loss; and they further
agree that their respective insurance companies shall have no right of
subrogation against the other on account thereof, even though extra premium may
result therefrom. Nothing contained herein is intended, nor shall it be
construed, to require that Lessor maintain any insurance coverage.
Section 13.5 Form Satisfactory, etc. All of the policies of insurance
-----------------------
referred to in this Section shall be written in form satisfactory to Lessor and
any Superior Lessor and Facility Mortgagee and by insurance companies
satisfactory to Lessor and any Superior Lessor and Facility Mortgagee. Lessor
agrees that it will not unreasonably withhold, delay or condition its approval
as to the form of the policies of insurance or as to the insurance companies
selected by Tenant. Tenant shall pay all of the premiums therefor not later
than the earlier of the date which is thirty (30) days after Tenant's receipt of
an invoice therefor or the due date of the applicable premium, and shall deliver
such policies or certificates thereof to Lessor prior to their effective date
(and, with respect to any renewal policy, prior to the expiration of the
existing policy), and in the event of the failure of Tenant either to effect
such insurance in the names herein called for or to pay the premiums therefor,
or to deliver such policies or certificates thereof to Lessor and each Superior
Lessor and Facility Mortgagee at the times required, Lessor shall be entitled,
but shall have no obligation, to effect such insurance and pay the premiums
therefor, which premiums shall be repayable to Lessor upon written demand
therefor, and failure to repay the same shall constitute an Event of Default
within the meaning of Section 16.1(c). Each insurer mentioned in this Section
---------------
shall agree, by endorsement on the policy or policies issued by it, or by
independent instrument furnished to Lessor and any Superior Lessor and Facility
Mortgagee, that it will give to Lessor thirty (30) days' written notice before
the policy or policies in question shall be materially altered, allowed to
expire or canceled.
Section 13.6 Limits; Deductibles. In the event that either party shall
-------------------
at any time deem the limits of the personal injury or property damage public
liability insurance then carried to be either excessive or insufficient or in
the event that Lessor shall at any time deem the deductible amount under any
insurance then carried by Tenant pursuant to this Article XIII to be excessive,
------------
the parties shall endeavor to agree on the proper and reasonable limits or
deductible amount, as applicable, for such insurance to be carried; and such
insurance shall thereafter be carried with the limits or deductible amount, as
applicable, thus agreed on until further change pursuant to the provisions of
this Section. If the parties shall be unable to agree thereon, the proper and
reasonable limits or deductible amount, as applicable, for such insurance to be
carried shall be determined by an impartial third party selected by the parties.
Nothing herein shall permit the amount of insurance to be reduced below, or the
deductible amount under any insurance carried by Tenant pursuant to this Article
-------
XIII to be increased above, the amount or amounts required by any of the
----
Facility Mortgages or by any Superior Lessor.
Section 13.7 Blanket Policy. Notwithstanding anything to the contrary
--------------
contained in this Section but subject to any requirements of any applicable
Facility Mortgagee, Tenant's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by Tenant; provided,
--------
49
however, that the coverage afforded Lessor will not be reduced or diminished or
-------
otherwise be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the use of such
blanket policy of insurance, and provided further that the requirements of this
Article XIII are otherwise satisfied. Lessor agrees that the blanket coverage
--------
described in Schedule 13.7 attached hereto and incorporated herein satisfies the
-------------
requirements of Section 13.1 as of February 23, 2001.
------------
Section 13.8 No Separate Insurance. Tenant shall not on Tenant's own
---------------------
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Superior Lessors and Facility Mortgagees,
are included therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this Lease. Tenant
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 policy or additional policies.
Section 13.9 Survival. All of Tenant's obligations under this Article
-------- -------
XIII or otherwise relating to obtaining, and maintaining, claims made coverages,
----
and/or switching back to occurrence based coverage, shall survive the expiration
or termination of this Lease as it applies to any or all of the Leased
Properties.
ARTICLE XIV
Section 14.1 Insurance Proceeds. All proceeds payable by reason of any
------------------
loss or damage to the applicable Leased Property, or any portion thereof, and
insured under any policy of insurance required by Article XIII (excluding
------------
Business Interruption Insurance, as described in Section 13.1.3, covering
--------------
Tenant's obligations under this Lease for the payment of Rent, the disposition
of the proceeds of which is described below) shall be paid to Lessor or a third
party designated by Lessor and held by Lessor or such third party in trust and
shall be made available for reconstruction or repair, as the case may be, of any
damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor or such third party from time to time for the
reasonable costs of such reconstruction or repair. Any excess proceeds of
insurance remaining after the completion of the restoration or reconstruction
shall be paid to Tenant upon completion of any such repair and restoration,
except that, in the event neither Lessor nor Tenant is required or elects to
repair and restore as aforesaid, all such insurance proceeds shall be retained
by Lessor free and clear (except as otherwise provided in Section 14.2.4). All
--------------
salvage resulting from any risk covered by insurance shall belong to Lessor
except that any salvage relating to Tenant's Personal Property shall belong to
Tenant. All proceeds of the aforesaid Business Interruption Insurance shall be
paid to Lessor or a third party designated by Lessor and held by Lessor or such
third party in trust. Business Interruption Insurance proceeds shall be applied
first towards payment of any Rent that is due to Lessor as of the date such
proceeds are received by Lessor or such third party, and the balance of such
proceeds shall be immediately paid to Tenant, except if and to
50
the extent that the same have been paid by the insurer as a prepayment on
account of Rent to become due under this Lease in which event Lessor or such
third party shall hold any such funds in trust and apply such funds to such Rent
as the same becomes due.
Section 14.2 Reconstruction in the Event of Damage or Destruction Covered
------------------------------------------------------------
by Insurance.
------------
Section 14.2.1 If, during the Term, any Leased Property is totally or
partially destroyed from a risk covered by the insurance described in Article
-------
XIII and the Facility located thereon is rendered Unsuitable for Its Primary
----
Intended Use, Tenant shall either (A) restore the Facility to substantially the
same condition as existed immediately before the damage or destruction, or (B)
offer to acquire the applicable Leased Property from Lessor for a purchase price
equal to the Fair Market Value Purchase Price of the Leased Property immediately
prior to such damage or destruction. In the event Lessor does not accept
Tenant's aforesaid offer to purchase, Tenant may (i) withdraw its offer to
purchase the Leased Property and proceed to restore the Facility to
substantially the same condition as existed immediately before the damage or
destruction or (ii) provided and on the conditions that, at the time of such
damage or destruction, Tenant had in full force and effect the insurance
required under Section 13.1.1 and Section 13.1.2 above, there exists no defense
-------------- --------------
to, or limitation upon, the insurer's coverage of such damage or destruction
under such insurance, and Tenant pays to Lessor, on or prior to the hereinafter
described termination, the amount of any deductible or other uninsured portion
of the loss resulting from any such damage or destruction, terminate this Lease
as to such Leased Property, in which event Lessor shall be entitled to retain
the insurance proceeds.
Section 14.2.2 If, during the Term, any Leased Property is totally or
partially destroyed from a risk covered by the insurance described in Article
-------
XIII, but the Facility located thereon is not thereby rendered Unsuitable for
----
its Primary Intended Use, Tenant shall restore such Facility to substantially
the same condition as existed immediately before the damage or destruction.
Such damage or destruction shall not terminate this Lease as to such Leased
Property.
Section 14.2.3 If the cost of the repair or restoration of any Leased
Property exceeds the amount of proceeds received by Lessor from the insurance
required under Article XIII, Tenant shall be obligated to contribute any excess
------------
amounts needed to restore such Leased Property. Prior to commencement of
construction, Tenant shall either (a) provide Lessor with an irrevocable,
unconditional, freely transferable letter of credit issued by a Lending
Institution, in the full amount of such difference and in form and substance
acceptable to Lessor (and Lessor shall be entitled to draw thereon if Tenant
fails to proceed diligently with such construction or to pay its contractors for
such construction in a timely manner or to renew or extend such letter of credit
at any time the same is scheduled to expire within forty-five (45) days, and the
funds from any such draw shall be held in trust and be disbursed by Lessor as
provided in subsection (b) below and elsewhere in this Article XIV), or (b) pay
-----------
such difference to Lessor, to be held in trust by Lessor, together with any
other insurance proceeds, for application to the cost of repair and restoration.
51
Section 14.2.4 In the event Lessor accepts Tenant's offer to purchase
the applicable Leased Property as provided above, this Lease shall terminate as
to the applicable Leased Property upon payment of the purchase price and the
provisions of Section 40.16 hereof shall apply. Upon receipt of the purchase
-------------
price from Tenant, Lessor shall remit to Tenant all insurance proceeds
pertaining to such Leased Property then held in trust by Lessor or any third
party designated by Lessor and shall assign to Tenant all of Lessor's rights in
and to any insurance proceeds payable on account of such damage or destruction.
Section 14.3 Reconstruction in the Event of Damage or Destruction Not
--------------------------------------------------------
Covered by Insurance. If during the Term any Leased Property and the Facility
--------------------
located thereon is totally or partially destroyed from a risk not covered by the
insurance described in Article XIII, whether or not such damage or destruction
------------
renders the Facility Unsuitable for Its Primary Intended Use, Tenant shall
restore the Facility to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease as to such Leased Property.
Section 14.4 Tenant's Property. All insurance proceeds payable by reason
-----------------
of any loss of or damage to any of the Tenant's Personal Property or Permitted
Alterations financed by Tenant shall be paid to Tenant and Tenant shall hold
such insurance proceeds in trust to pay the cost of repairing or replacing
damaged Tenant's Personal Property or Permitted Alterations financed by Tenant.
Section 14.5 Restoration of Tenant's Property. If Tenant is required or
--------------------------------
elects to restore the applicable Leased Property as provided in Section 14.2 or
------------
14.3, Tenant shall also restore all alterations and improvements made by Tenant,
----
Tenant's Personal Property and all Capital Alterations financed by Tenant.
Section 14.6 No Abatement of Rent. This Lease shall remain in full force
--------------------
and effect and Tenant's obligation to make payments of Rent and to pay all other
charges required under this Lease shall remain unabated during the Term
notwithstanding any damage involving any Leased Property (provided that Lessor
shall credit against such payments any amounts paid to Lessor as a consequence
of such damage under any business interruption insurance obtained by Tenant);
provided, however, that, effective upon the purchase of any Leased Property or
-------- -------
termination of this Lease as to the applicable Leased Property pursuant to and
in accordance with Section 14.2, this Lease shall terminate as to such Leased
------------
Property and the provisions of Section 40.16 hereof shall apply. The provisions
-------------
of this Article XIV shall be considered an express agreement governing any cause
-----------
of damage or destruction to the applicable Leased Property and, to the maximum
extent permitted by law, no local or state statute, law, rule, regulation or
ordinance in effect during the Term which provides for such a contingency shall
have any application in such case.
Section 14.7 Restoration. If Tenant is required or elects to restore
-----------
the applicable Leased Property as provided in Section 14.2 or 14.3, Tenant shall
------------ ----
promptly repair, rebuild, or restore the applicable Leased Property, so as to
make such Leased Property at least equal in value to such Leased Property as it
existed immediately prior to such occurrence and as nearly
52
similar to it in character as is practicable and reasonable. Prior to commencing
such repairs or rebuilding, Tenant shall submit to Lessor for Lessor's approval,
which approval shall not be unreasonably withheld, delayed or conditioned, Plans
and Specifications pursuant to Section 10.1. Promptly after receiving Lessor's
------------
approval of the Plans and Specifications, Tenant shall commence repairs and
rebuilding and will prosecute the repairs and rebuilding to completion with
diligence, subject, however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other causes beyond Tenant's reasonable control.
Subject to the provisions of any applicable Facility Mortgage, Lessor shall make
available to Tenant the insurance proceeds (net of all administrative and
collection costs, including reasonable attorneys' fees) paid to Lessor for such
repair and rebuilding as it progresses. Payments shall be made against
certification of the architect approved by Lessor (which approval shall not be
unreasonably withheld. delayed or conditioned) responsible for the supervision
of the repairs and rebuilding that the work had been performed substantially in
conformance with the Plans and Specifications and the value of the work in place
is equal to not less than 110% of the aggregate amount advanced by Lessor for
the payment of such work. Prior to commencing the repairing and rebuilding,
Tenant shall deliver to Lessor for Lessor's approval a schedule setting forth
the estimated monthly draws for such work. Subject to the provisions of any
applicable Facility Mortgage, Lessor shall contribute to such payments out of
the insurance proceeds being held in trust by Lessor an amount equal to the
proportion that the total net amount so held by Lessor bears to the total
estimated cost of repairing and rebuilding, multiplied by the payment by Tenant
on account of such work. Lessor may, however, withhold ten percent (10%) from
each payment until the work has been completed and proof has been furnished to
Lessor that no lien or liability has attached or will attach to the applicable
Leased Property or to Lessor in connection with repairing and rebuilding.
Section 14.8 Notice. If during the Term any Leased Property and/or the
------
Facility located thereon is totally or partially damaged or destroyed, and the
restoration and repair of such damage or destruction is in Tenant's reasonable
estimation likely to cost in excess of $200,000.00 in the aggregate, then Tenant
shall provide Lessor with written notice of such damage or destruction within
fifteen (15) days after Tenant's discovery thereof. The notice requirement of
this Section 14.8 shall apply regardless of whether such damage or destruction
------------
is from a risk covered by the insurance described in Article XIII, and
------------
regardless of whether such damage or destruction renders the Facility Unsuitable
for Its Primary Intended Use.
Section 14.9 Waiver. Tenant hereby waives any statutory rights of
------
termination which may arise by reason of any damage or destruction of the
applicable Leased Property which Tenant is obligated to restore or may restore
under any of the provisions of this Lease.
ARTICLE XV
Section 15.1 Definitions.
-----------
Section 15.1.1 "Condemnation" means, as to any Leased Property, (a)
------------
the exercise of any governmental power, whether by legal proceedings or
otherwise, by a Condemnor, (b) a voluntary sale or transfer by Lessor to any
Condemnor, either under threat
53
of condemnation or while legal proceedings for condemnation are pending and (c)
a taking or voluntary conveyance of all or part of such Leased Property, or any
interest therein, or right accruing thereto or use thereof, as the result or in
settlement of any condemnation or other eminent domain proceeding affecting such
Leased Property.
Section 15.1.2 "Date of Taking" means, as to the applicable Leased
--------------
Property, the date the Condemnor has the right to possession of such Leased
Property, or any portion thereof, in connection with a Condemnation.
Section 15.1.3 "Award" means all compensation, sums or anything of
-----
value awarded, paid or received on a total or partial condemnation.
Section 15.1.4 "Condemnor" means any public or quasi-public authority,
---------
or private corporation or individual, having the power of condemnation.
Section 15.2 Parties' Rights and Obligations. If during the Term there
-------------------------------
is any taking of all or any part of the applicable Leased Property by
Condemnation, the rights and obligations of the parties shall be determined by
this Article XV.
----------
Section 15.3 Total Taking. If any Leased Property is totally taken by
------------
condemnation, this Lease shall terminate as to such Leased Property on the Date
of Taking, in which event the provisions of Section 40.16 hereof shall apply.
-------------
Section 15.4 Partial Taking. If a portion of any Leased Property is
--------------
taken by Condemnation, this Lease shall remain in effect as to such Leased
Property if the Facility located thereon is not thereby rendered Unsuitable for
Its Primary Intended Use, but if the Facility is thereby rendered Unsuitable for
its Primary Intended Use, this Lease shall terminate as to such Leased Property
on the Date of Taking, in which event the provisions of Section 40.16 hereof
-------------
shall apply.
If as a result of any such partial taking by Condemnation, this Lease is
not terminated as provided above, Tenant's obligation to make payments of Rent
and to pay all other charges required under this Lease shall remain unabated
during the Term notwithstanding such Condemnation (provided that Lessor shall
credit against such payments any amount of any Award attributable to Tenant's
business interruption).
Section 15.5 Restoration. If there is a partial taking of the applicable
-----------
Leased Property and this Lease remains in full force and effect pursuant to
Section 15.4, Tenant at its cost shall accomplish all necessary restoration.
------------
Section 15.6 Award-Distribution.
------------------
(a) In the event of any partial taking of any Leased Property, the entire
Award shall belong to and be paid to Lessor, except that, subject to the rights
of the Facility Mortgagees, Tenant shall be entitled to receive from the Award,
if and to the extent such Award specifically includes such item, the following:
54
(i) A sum attributable to the Capital Alterations paid for by
Tenant; and
(ii) A sum specifically attributable to Tenant's Personal
Property and any reasonable removal and relocation costs included in the
Award; and
(iii) A sum specifically attributable to the cost of restoring the
Leased Property in accordance with Section 15.5 hereof.
------------
(b) In the event of a total taking of any Leased Property, the Award shall
be divided between Lessor and Tenant in such proportions relative to the
appraised values of their relative estates determined in accordance with Section
-------
35.1, taking into account the value of improvements owned by Lessor and
----
Permitted Alterations paid for by Tenant. Tenant shall also receive a sum
specifically attributable to Tenant's Personal Property and any reasonable
removal and relocation costs included in the Award.
Section 15.7 Temporary Taking. The taking of any Leased Property, or any
----------------
part thereof, by military or other public authority shall constitute a taking by
condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and Base
Rent, Current Rent and Unpaid Accrued Rent shall not be abated or reduced during
such period of taking.
ARTICLE XVI
Section 16.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default" under this Lease:
----------------
(a) if a default by Tenant shall occur under the Indemnity Agreement and,
in the case of a monetary default, such default is not cured within a period of
five (5) days after receipt of notice from Lessor or, in the case of a non-
monetary default, such default is not cured within a period of thirty (30) days
after receipt of notice from Lessor, unless such default cannot with due
diligence be cured within a period of thirty (30) days, in which case such
period of time shall be extended to such period of time (not to exceed 180 days)
as may be necessary to cure such default with all due diligence, provided that
such cure is completed within 180 days (this subsection (a) shall not apply if
and for so long as Lessor is neither Ventas Realty, Limited Partnership, nor
Ventas, Inc. nor an Affiliate of either of such entities), or
(b) if Tenant shall fail to make payment of the Rent or any other sum
payable under or pursuant to the terms of this Lease when the same becomes due
and payable and such failure is not cured within a period of five (5) days after
receipt of notice from Lessor, or
(c) if Tenant shall fail to observe or perform any term, covenant or
condition of this Lease not specifically provided for in this Section 16.1 and
------------
such failure is not cured within a period of thirty (30) days after receipt of
notice from Lessor, unless such failure cannot with due diligence be cured
within a period of thirty (30) days, in which case such period of time
55
shall be extended to such period of time (not to exceed 180 days) as may be
necessary to cure such default with all due diligence provided that such cure is
completed within 180 days, or
(d) if Tenant shall fail to observe or perform any term, covenant or
agreement on its part to be performed or observed pursuant to Section 8.1.1,
-------------
Section 11.1, the last sentence of Section 8.2, Section 12.1(g) or Section 13.1,
------------ ----------- --------------- ------------
or
(e) any Guarantor shall fail to observe or perform any term, covenant or
agreement on its part to be performed or observed pursuant to any Lease Guaranty
and such failure shall not be cured within any applicable cure period provided
in such Lease Guaranty, or
(f) there shall occur a final unappealable determination by applicable
federal, state or local authorities of Tenant's non-compliance with Legal
Requirements applicable to a Facility located on any Leased Property, or of the
revocation of any license, permit, approval or other Authorization (including,
without limitation, any certificate of need) required for the lawful operation
of the Facility located on any Leased Property in accordance with its Primary
Intended Use, or any other circumstances under which Tenant is required by a
final unappealable determination of any such authority to cease operations of
such Facility in accordance with its Primary Intended Use as currently operated
(provided, however, that, without limitation of Section 12.1(g) hereof, before
---------------
any such determination becomes final and unappealable, Tenant shall have the
right to contest the same in accordance with Sections 8.1.1, 8.2 and 12.1(a)-(f)
-------------- --- -----------
hereof), or
(g) any material representation or warranty made by or on behalf of Tenant
or any Guarantor under or in connection with this Lease or any document,
certificate or agreement delivered in connection with this Lease shall prove to
have been false or misleading in any material respect on the day when made or
deemed made, or
(h) if any Tenant or any Guarantor shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take advantage
of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or arrangement
under the Federal bankruptcy laws or any other applicable law or statute of
the United States of America or any State thereof, or
56
(i) any petition shall be filed by or against any Tenant or any
Guarantor or any subsidiary of either under Federal bankruptcy laws, or any
other proceeding shall be instituted by or against any Tenant or any Guarantor
or such subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for any
Tenant or any Guarantor or such subsidiary, or for any substantial part of the
property of any Tenant or any Guarantor or such subsidiary, and such proceeding
is not dismissed within ninety (90) days after institution thereof, or any
Tenant or any Guarantor or such subsidiary shall take any action to authorize or
effect any of the actions set forth above in this subsection (i) (this
subsection (i) shall not apply to the appointment of a receiver, trustee,
custodian or other similar official in any proceeding(s) other than bankruptcy,
reorganization, insolvency and other creditors' rights proceedings of the nature
referenced in this subsection (i)), or
(j) if any Tenant or any Guarantor shall be liquidated or dissolved, or
shall begin proceedings toward such liquidation or dissolution, or
(k) if the estate or interest of Tenant in any Leased Property or any
part thereof shall be levied upon or attached in any proceeding and the same
shall not be vacated or discharged within the later of ninety (90) days after
commencement thereof or 30 days after receipt by Tenant of notice thereof from
Lessor, (unless Tenant shall be contesting such lien or attachment in good faith
in accordance with Article XII hereof), or
-----------
(l) if any receiver, trustee, custodian or other similar official is
appointed for any Tenant, any Guarantor or any of the Facilities and any such
appointment is not dismissed prior to the entry of a final, unappealable order
approving such appointment (provided, however, that this subsection (l) shall
not apply to any such official appointed in bankruptcy, reorganization,
insolvency or other creditors' rights proceedings of the nature referenced in
subsection (i) above), and, in the case of the appointment of any such official
as to whom this subsection (l) does apply, prior to the entry of a final
unappealable order approving the appointment of such official and denying any
requested dismissal thereof, without limitation of Section 12.1(g) hereof, no
---------------
Event of Default shall be deemed to have occurred under this subsection (l) so
long as Tenant is contesting such appointment in accordance with Sections 8.2
------------
and 12.1(a)-(f) hereof), or
-----------
(m) Subject to Section 16.10 hereof:
-------------
(i) an Event of Default shall occur hereunder if the number of
licensed beds for any Facility is reduced by more than the Permissible
Reduction Percentage (as hereinafter defined) applicable to such Facility
of the number of licensed beds in such Facility on the Commencement Date
(which number of licensed beds, as of the Commencement Date and after
adjusting for the effect of subsection (m)(i)(1) below, Tenant represents
and warrants to Lessor is as set forth in Schedule 16.1(m)A attached hereto
and made a part hereof) (provided, however, that, (1) for purposes of this
-------- -------
57
subsection (m), in the case of the Leased Property known as Vencor
Hospital-Arlington (Facility No. 4617), the number of licensed beds in the
Facility at such Leased Property on the Commencement Date shall be deemed
to equal one hundred sixty-four (164), (2) if Washington State determines
that Tenant's bankruptcy reorganization constitutes a change of control
and, as a result, Tenant loses its license with respect to all or a portion
of the 14 beds that are banked relative to Bellingham Health Care &
Rehabilitation Services, Bellingham, Washington (Facility No. 158) and
Tenant's contest thereof pursuant to subpart B of Schedule 1.3 does not
------------
result in the restoration of such licensed beds, for purposes of this
subsection (m), the number of licensed beds at such Facility on the
Commencement Date shall be deemed to equal the number of beds at such
Facility as of the Commencement Date minus the number of the aforesaid
banked beds for which licensure is lost due to Washington State's aforesaid
determination, and (3) the voluntary removal from service (so called "bed
banking") of not more than twenty-five percent (25%) of the number of
licensed beds in a particular Facility on the Commencement Date shall not
constitute a reduction of licensed beds for purposes of this subsection
(m), if and for so long as, for purposes of this subsection (3), (a) any
such beds that are voluntarily removed from service by Tenant are removed
from service with the approval of all applicable governmental authorities,
(b) such beds continue to be considered "licensed beds" by the applicable
governmental authorities, (c) after diligent inquiry relative to the
applicable Legal Requirements and after consultation with its legal
counsel, Tenant is not aware of any reason why the applicable regulatory
authorities would not authorize such reintroduction by Tenant or any
successor operator at any time, in the discretion of Tenant or such
successor operator, as applicable, and without the necessity of any
governmental approval or reapproval or additional Authorization (other than
routine governmental re-inspections of such Facility(ies) and any
ministerial approvals, re-approvals or other Authorizations), and (d) at
the time, and as a condition, of any such voluntary removal and thereafter
within twenty (20) days after receipt of a written request therefor from
Lessor from time to time (but not more often than twice in any calendar
year, unless, after Lessor has made two (2) such requests in a calendar
year, a change(s) in Legal Requirements becomes effective, or Lessor
obtains knowledge of other facts or circumstances, suggesting a possible
violation of subsection (a), (b) or (c) above or of the other provisions of
this Section 16.1(m)), Tenant shall deliver to Lessor a Senior Officer 's
---------------
Certificate, in form and substance reasonably satisfactory to Lessor,
certifying that Tenant has made diligent inquiry relative to the applicable
Legal Requirements and has consulted with its legal counsel and, based on
the foregoing, certifies that Tenant has complied, and continues to be in
compliance, with the provisions of subsections (a), (b) and (c) above and
the other provisions of this Section 16.1(m)); and
---------------
(ii) As used in this subsection (m), the "Permissible Reduction
Percentage" for a particular Facility shall equal the lesser of (1) ten
percent (10%) or (2) the difference between twenty-five percent (25%) and
the percentage of licensed beds at such Facility on the Commencement Date
that, as of the calculation date, have been voluntarily removed from
service by Tenant in accordance with subsection (m)(i)(3) above, provided,
--------
however, that (x) in the case of the Facility known as Vencor
-------
58
Hospital-Arlington (Facility No. 4617), the reference in subsection
(m)(ii)(1) above shall equal five percent (5%) (reduced from ten percent
(10%)), (y) in the case of the Facility known as Bellingham Health Care &
Rehabilitation Services, Bellingham, Washington (Facility No. 158), if, as
described in subsection (m)(i)(2) above, such Facility loses licensure of
any previously banked beds, the reference in subsection (m)(ii)(1) above
shall equal five percent (5%) (reduced from ten percent (10%)), and (z) in
the case of any Facilities listed on Schedule 16.1(m)B attached hereto and
-----------------
made a part hereof as to which any involuntary reduction in the number of
licensed beds has occurred in compliance with subsection (m)(iii) below,
the reference in subsection (m)(ii)(1) above shall equal, as of any date,
subject to subsection (m)(iii)(5) below, the greater of (A) five percent
(5%) or (B) that percentage, not greater than ten percent (10%), calculated
by subtracting from the number of licensed beds at such Facility as of such
date the number of licensed beds set forth in the "95% of Minimum" column
of Schedule 16.1(m)B as it applies to such Facility and then dividing the
-----------------
result of such subtraction by the number of licensed beds at such Facility
as of such date. (For example, if Tenant voluntarily removes from service,
in accordance with the requirements of subsection (m)(i)(3) above, fifteen
percent (15%) or less of the aforesaid licensed beds at a particular
Facility as to which neither subsection (m)(ii)(x) nor (m)(ii)(y) nor
(m)(ii)(z) above applies, the "Permissible Reduction Percentage" would
equal ten percent (10%) for such Facility, but if, for example, Tenant
voluntarily removes from service, in accordance with the requirements of
subsection (m)(i)(3) above, twenty percent (20%) of the aforesaid licensed
beds at such Facility, the "Permissible Reduction Percentage" applicable to
such Facility would equal five percent (5%) (i.e., under subsection
(m)(ii)(2) above, 25%-20%=5%). Also, for example, if a particular Facility
listed on Schedule 16.1(m)B had, as of the Commencement Date, 120 licensed
-----------------
beds, such Facility had not lost any licensed beds other than 38 licensed
beds lost through an involuntary reduction that complies with subsection
(m)(iii) below (so that, as of a particular date, such Facility has 82
licensed beds), and Schedule 16.1(m)B sets forth 80 licensed beds in the
-----------------
"Minimum Number of Licensed Beds" column as it applies to such Facility and
76 licensed beds in the "95% of Minimum" column as it applies to such
Facility, the percentage referenced in the foregoing subsection (m)(ii)(z)
would equal 7.317% (82 licensed beds minus 76 licensed beds equals 6
licensed beds and 6 licensed beds divided by 82 licensed beds equals
7.317%, which is greater than the 5.0% referenced in subsection
(m)(ii)(z)(A) above); and
(iii) The provisions of this subsection (m)(iii) shall not apply to
any of the Leased Properties other than the three (3) Leased Properties
referenced on Schedule 16.1(m)B: An involuntary reduction of the nature
-----------------
referenced in subsection (m)(iii)(1) below in the number of licensed beds
for any Facility listed on Schedule 16.1(m)B below the minimum number of
-----------------
licensed beds set forth in the "Minimum Number of Licensed Beds" column of
Schedule 16.1(m)B as it applies to such Facility shall constitute an Event
-----------------
of Default under this Section 16.1(m), but, notwithstanding any voluntary
---------------
removal from service of licensed beds, an involuntary reduction in the
number of licensed beds for any of the three (3) Facilities listed on
Schedule 16.1(m)B
59
down to, but not below, the minimum number of licensed beds set forth in
the "Minimum Number of Licensed Beds" column of Schedule 16.1(m)B as it
-----------------
applies to such Facility shall not constitute an Event of Default under
this Section 16.1(m) provided and on the conditions that (1) the
---------------
involuntary reduction is required by the applicable state regulatory
authority primarily because of physical space limitations at the applicable
Facility and any such physical space limitations are not the result of any
alterations to the Facility made after the Effective Date; (2) Tenant uses
its best efforts and due diligence to contest through all available
processes (but not including any obligation on Tenant's part to make
physical alterations to the affected Facility) the involuntary reduction
and, in regular and timely consultation with Lessor, explores other
alternatives (e.g. sale or banking of the licensed beds that are the
subject of such involuntary reduction, with any such sale of beds to be
subject to the prior written approval of Lessor, in its sole discretion,
and with all proceeds from any such sale to be paid, and belong, to
Lessor); (3) Tenant provides written notice to Lessor of such involuntary
reduction within two (2) Business Days of Tenant's receipt of notice of the
involuntary reduction and allows Lessor, if it so desires in its sole
discretion, to participate in the contest of such involuntary reduction
and, if it so desires in its sole discretion, to require that Tenant allow
Lessor, at Tenant's cost, to control such contest (including, without
limitation, prosecuting legal proceedings in Lessor's and/or Tenant's
name); (4) Tenant shall not settle any contest of any such involuntary
reduction without Lessor's prior written consent, in its sole discretion;
and (5) following any such involuntary reduction as to a particular
Facility listed on Schedule 16.1(m)B and whether or not Tenant has complied
-----------------
with the preceding conditions (1), (2), (3) and (4), Tenant shall in no
event voluntarily reduce the number of licensed beds at such Facility by
any amount, or
(n) if Tenant shall become subject to regulatory sanctions and Tenant
has failed to cure or satisfy such regulatory sanctions (including, without
limitation, through payment of any such sanctions, if the same are monetary in
nature) within its specified regulatory cure period in any material respect with
respect to any Facility (provided, however, that, without limitation of Section
-------- ------- -------
12.1(g) hereof, prior to the imposition of such sanctions on Tenant by final
-------
unappealable order of any governmental agency or authority, no Event of Default
shall be deemed to have occurred under this subsection (n) so long as Tenant is
contesting the imposition of such sanctions in accordance with Sections 8.2 and
------------
12.1(a)-(f) hereof), or
-----------
(o) if, except pursuant to the terms hereof, Tenant voluntarily ceases
operations on any Leased Property, or
(p) if Tenant shall fail to observe or perform any term, covenant or
other obligation of Tenant set forth in Article XXVI hereof and such failure is
------------
not cured within a period of ten (10) days after receipt of notice thereof from
Lessor, or
(q) subject to Section 16.10 hereof, there shall occur a revocation of
-------------
certification for reimbursement under Medicare or Medicaid with respect to any
Facility that participates in such programs and, within one hundred twenty (120)
days following such revocation, Tenant
60
fails to have its aforesaid certification fully restored (provided, however,
-------- -------
that Tenant shall be given an additional sixty (60) days beyond the aforesaid
one hundred twenty (120) day period to have its aforesaid certification fully
restored if, on or prior to the aforesaid one hundred twentieth (120th) day,
Tenant delivers to Lessor a Senior Officer's Certificate, in form and substance
reasonably satisfactory to Lessor, certifying that (i) the only requirement that
remains unsatisfied in order for Tenant to have its aforesaid certification
fully restored is a re-inspection of the applicable Facility by the applicable
regulatory authority, and (ii) Tenant has made diligent inquiry relative to the
applicable Legal Requirements and has consulted with its legal counsel and,
based on the foregoing, certifies that Tenant is not aware of any reason why
Tenant will not pass its aforesaid re-inspection, or why Tenant's aforesaid
certification will not be fully restored, in each case within the aforesaid
additional sixty (60) day period), or
(r) an Event of Default shall occur as described in Section 8.3.1 above,
-------------
or
(s) an Event of Default shall occur as described in Section 21.5.1
--------------
below, or
(t) If Tenant shall exercise a purchase option relative to a Leased
Property(ies) in accordance with Section 16.12 hereof and thereafter fail to
-------------
purchase the subject Leased Property(ies), and otherwise perform and discharge
its duties, liabilities and obligations on account of such exercise, strictly in
accordance with the terms and conditions of Section 16.12 hereof, or
-------------
(u) An Event of Default (as defined in the Tenant Senior Secured Credit
Agreement) arising from the failure to pay principal or interest with respect to
the Tenant Senior Secured Notes, or any other event of default arising from the
failure to pay principal or interest with respect to any other indebtedness for
borrowed money of Tenant with an aggregate outstanding principal amount equal to
or exceeding $50 million, shall have occurred; or
(v) the acceleration of the maturity of the Tenant Senior Secured Notes,
or the acceleration of the maturity of any other indebtedness for borrowed money
of Tenant with an aggregate outstanding principal amount equal to or exceeding
$50 million, shall have occurred.
Upon the occurrence of any Event of Default, Lessor may, at its option,
terminate this Lease (i) in the case of any Event of Default, as to all Leased
Properties and/or (ii) if such Event of Default is a Facility Default, as to any
of the Leased Property(ies) to which such Event of Default relates, by giving
not less than ten (10) days' notice of such termination and upon the expiration
of such 10-day period or other time period fixed in such notice, if any, during
which 10-day or other time period Tenant shall have no right to cure the Event
of Default in question, the Term shall terminate as to all Leased Properties or
as to the Leased Property(ies) to which such Event of Default relates, as
specified in such notice, all rights of Tenant under this Lease shall cease as
to the Leased Property(ies) so specified, and, if the Leased Property(ies) so
specified are less than all of the Leased Properties, the provisions of Section
-------
40.16 hereof shall apply. Lessor shall have all rights at law and in equity
-----
available to Lessor as a result of Tenant's breach of this Lease, subject to
Section 16.10.
-------------
61
Tenant shall pay, to the maximum extent permitted by law, as Additional
Charges all Litigation Costs as a result of any Event of Default hereunder.
Section 16.2 Certain Remedies. If an Event of Default shall have occurred
----------------
(and the event giving rise to such Event of Default has not been cured within
the curative period relating thereto, if any, as set forth in the applicable
subsection of Section 16.1 above or elsewhere herein), whether or not this Lease
------------
has been terminated pursuant to Section 16.1, Tenant shall, to the maximum
------------
extent permitted by law, if and to the extent required by Lessor so to do,
immediately surrender to Lessor the Leased Property(ies) as to which the Lease
has been or may be terminated pursuant to Section 16.1 and quit the same, and
------------
Lessor may enter upon and repossess the Leased Properties by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Tenant and all other
persons and any and all personal property from the Leased Properties subject to
rights of any occupants or patients and to any requirement of law.
Section 16.3 Damages. To the extent permitted by law, neither (a) the
-------
termination of this Lease pursuant to Section 16.1, (b) the repossession of any
------------
or all of the Leased Properties or any portion thereof, (c) the failure of
Lessor to relet any or all of the Leased Properties or any portion thereof, (d)
the reletting of any or all of the Leased Properties or any portion thereof, nor
(e) the failure of Lessor to collect or receive any rentals due upon any such
reletting, shall relieve Tenant of any of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting. In the event of any such termination, subject to Section 16.4 below,
------------
Tenant shall forthwith pay to Lessor, at Lessor's option, as liquidated damages
with respect to Rent for each Leased Property as to which such termination has
occurred, either:
(A) the sum of:
(i) the unpaid Rent allocable to each such Leased Property in
accordance with Section 16.9 hereof which had been earned at the time of
------------
termination, which Rent and other sums shall bear interest at the lesser of
the Overdue Rate and the maximum annual rate permitted by law from the date
when due until paid; and
(ii) whether or not Lessor previously collected any amounts
pursuant to clause (B) below, the then net present value (computed using a
discount rate equal to the Prime Rate) of the amount of unpaid Rent
allocable to each such Leased Property in accordance with Section 16.9
------------
hereof for the balance of the Term following the date of termination
(excluding, however, any period following termination on account of which
Lessor previously collected Rent pursuant to clause (B) below) without any
obligation or deemed obligation on the part of Lessor to mitigate damages,
or
(B) each installment of Rent allocable to each such Leased Property in
accordance with Section 16.9 hereof and other sums payable with respect to each
------------
such Leased Property by Tenant to Lessor under this Lease as the same becomes
due and payable, which Rent and other sums shall bear interest at the lesser of
the Overdue Rate and the maximum annual rate permitted by law from the date when
due until paid, to the extent that such Rent and other
62
sums exceed the rent and other sums actually collected by Lessor for the
corresponding period pursuant to any reletting of each such Leased Property
(without any obligation or deemed obligation on the part of Lessor to mitigate
damages).
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Lessor may, with or without terminating this
Lease, (a) relet any or all of the Leased Properties or any part or parts
thereof, either in the name of Lessor or otherwise, for a term or terms which
may, at Lessor's option, be equal to, less than or exceed the period which would
otherwise have constituted the balance of the Term and may grant concessions or
free rent to the extent that Lessor considers advisable and necessary to relet
the same, and (b) make such reasonable alterations, repairs and decorations in
the applicable Leased Property or any portion thereof as Lessor, in its sole
judgment, considers advisable and necessary for the purpose of reletting the
applicable Leased Property; and such reletting and the making of such
alterations, repairs and decorations shall not operate or be construed to
release Tenant from liability hereunder as aforesaid (subject to Section 16.3(B)
---------------
above if and to the extent the same is applicable). Lessor shall in no event be
liable in any way whatsoever for failure to relet any Leased Property, or, in
the event that any Leased Property is relet, for failure to collect the rent
under such reletting. To the fullest extent permitted by law, Tenant hereby
expressly waives any and all rights of redemption granted under any present or
future laws in the event of Tenant's being evicted or dispossessed, or in the
event of Lessor's obtaining possession of any Leased Property, by reason of the
violation by Tenant of any of the covenants and conditions of this Lease.
Section 16.4 Certain Effects of Separate Lease. Lessor agrees that, in
---------------------------------
the event this Lease is terminated as to a particular Leased Property and
immediately thereafter a Separate Lease is entered into with respect to such
Leased Property pursuant to Section 22.7 below, (a) Lessor shall not proceed
------------
against Tenant under Section 16.3(A) above relative to such Leased Property
---------------
unless and until an Event of Default shall occur under such Separate Lease and
(b) Rent collected by Lessor under any such Separate Lease relative to such
Leased Property shall be credited by Lessor against the amounts owing to Lessor
under Section 16.3(B) above relative to such Leased Property. Nothing contained
---------------
in this Section 16.4 shall affect or impair Lessor's rights under Sections
------------ --------
16.3(A) and (B) above relative to other Leased Properties.
------- ---
Section 16.5 Waiver. If this Lease is terminated pursuant to Section 16.1,
------ ------------
whether in whole or, in the case of any Facility Default, in part, Tenant
waives, to the maximum extent permitted 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
-------
XVI, and (c) the benefit of any moratorium laws or any laws now or hereafter in
---
force exempting property from liability for rent or for debt.
Section 16.6 Application of Funds. Any payments received by Lessor under
--------------------
any of the provisions of this Lease during the existence or continuance of any
Event of Default (and such payment is made to Lessor rather than Tenant due to
the existence of an Event of Default) shall be applied to Tenant's obligations
in the order which Lessor may determine or as may be prescribed by the laws of
the State where the applicable Leased Property is located.
63
Section 16.7 Notice to Lessor. If Tenant or any subtenant receives a
----------------
notice of any material regulatory deficiency from any regulatory agency, Tenant
shall deliver a copy of such notice to Lessor in accordance with Section 34.1.
------------
Section 16.8 Nature of Remedies. To the maximum extent permitted by law,
------------------
the rights and remedies of Lessor and Tenant under this Lease, at law and in
equity shall be cumulative and may be exercised concurrently or successively, on
one or more occasions, as Lessor or Tenant, as applicable, deems appropriate in
its sole discretion, as often as occasion therefor arises. To the maximum extent
permitted by law, each such right and remedy shall be in addition to all other
such rights and remedies, and the exercise by Lessor or Tenant, as applicable,
of any one or more of such rights and remedies shall not preclude the
simultaneous or subsequent exercise of any or all other such rights and
remedies. Without limiting the generality of the foregoing, liquidated damages
in respect of Rent provided for in clauses (A) and (B) of Section 16.3 hereof,
------------
and in Section 20.1 hereof, shall be payable by Tenant in addition to, and not
------------
in lieu of, any other damages suffered by Lessor in connection with any default
or Event of Default by Tenant (including, without limitation, Litigation Costs
and costs of reletting).
Section 16.9 Allocable Rent. For purposes of this Lease, without
--------------
limitation of Section 40.15 or 40.16 hereof, (a) the Additional Charges
------------- -----
allocable to a Leased Property shall be the Additional Charges with respect to
such Leased Property, and (b) the Current Rent, Accrued Rent, Unpaid Accrued
Rent and Accrued Rent Interest allocable to a Leased Property shall be, for each
such item, the product of (i) the amount of such item, multiplied by (ii) the
Transferred Property Percentage for such Leased Property as set forth in Exhibit
-------
C (as modified from time to time in accordance herewith).
-
Section 16.10 Special Remedies Provisions. The intention of this Section
--------------------------- -------
16.10 is to set forth certain special provisions applicable to Events of Default
-----
under Section 16.1(m) and/or Section 16.1(q) of this Lease and to Lessor's
--------------- ---------------
rights and remedies upon the occurrence of such Events of Default. This Section
-------
16.10 has no application to other Events of Default under this Lease and is not
-----
intended to alter or limit Lessor's rights and remedies with respect to such
other Events of Default or, except as specifically set forth in this Section
-------
16.10, for any other purpose. Subject to the foregoing, Lessor and Tenant agree
-----
that, notwithstanding anything to the contrary contained in this Lease:
Section 16.10.1 For purposes of this Lease, subject to Sections
--------
16.10.3.1 and 16.10.3.2 below, references to the "Section 16.10.1 Number" shall,
--------- --------- ----------------------
as of a particular date, mean and refer to (a) the number 1 (if the number of
Leased Properties as to which this Lease remains in full force and effect as of
such date equals twenty (20) or less), (b) the number 2 (if the number of Leased
Properties as to which this Lease remains in full force and effect as of such
date equals between twenty-one (21) and forty (40), both inclusive), or (c) the
number 3 (if the number of Leased Properties as to which this Lease remains in
full force and effect as of such date equals forty-one (41) or more).
Section 16.10.2
64
Section 16.10.2.1 If the Section 16.10.1 Number applicable to this
Lease, as determined pursuant to Section 16.10.1 above, equals one (1), the
---------------
following provisions shall apply:
If, and for so long as, one or more Events of Default of the nature
referenced in Section 16.1(m) and/or Section 16.1(q) of this Lease has
--------------- ---------------
occurred and is continuing (as described below), Lessor shall be entitled
to exercise all rights and remedies available to it under this Lease on
account of any then continuing Event of Default under Section 16.1(m)
---------------
and/or Section 16.1(q), provided that Lessor may only exercise termination
---------------
and/or dispossession rights and remedies on account of such Section 16.1(m)
and/or Section 16.1(q) Event(s) of Default against either (i) any one or
---------------
more of the Leased Properties to which such Event(s) of Default relate or
(ii) all Leased Properties covered by this Lease.
Section 16.10.2.2 If the Section 16.10.1 Number applicable to this
Lease, as determined pursuant to Section 16.10.1 above, equals two (2) or more,
---------------
the following provisions shall apply:
If, and for so long as, an Event of Default of the nature referenced in
Section 16.1(m) and/or Section 16.1(q) of this Lease has occurred and is
--------------- ---------------
continuing (as described below) with respect to fewer than the Section
16.10.1 Number (as determined pursuant to Section 16.10.1 hereof) of the
---------------
Leased Properties, then, on account of any Event of Default under Section
-------
16.1(m) and/or Section 16.1(q) of this Lease, Lessor may not exercise any
------- ---------------
termination and/or dispossession rights and remedies available to it under
this Lease on account of such Section 16.1(m) and/or Section 16.1(q)
Event(s) of Default against any Leased Property other than the Leased
Property to which the aforesaid Event of Default relates. If, however, an
Event of Default of the nature referenced in such Section 16.1(m) and/or
---------------
Section 16.1(q) of this Lease has occurred and is continuing (as described
---------------
below) with respect to the Section 16.10.1 Number or more Leased
Properties, Lessor shall be entitled to exercise all rights and remedies
available to it under this Lease on account of any then continuing Event of
Default under Section 16.1(m) and/or Section 16.1(q), provided that Lessor
--------------- ---------------
may only exercise termination and/or dispossession rights and remedies on
account of such Section 16.1(m) and/or Section 16.1(q) Event(s) of Default
--------------- ---------------
against either (i) any one or more of the Leased Properties to which such
Event(s) of Default relate or (ii) all Leased Properties covered by this
Lease.
Section 16.10.2.3 For purposes of Sections 4.1, 16.1(m), 16.1(q),
------------ ------- -------
16.10, 17.1, 19.1, 25.1.1, 25.1.2 and 25.1.3 of this Lease, if an Event of
----- ---- ---- ------ ------ ------
Default shall occur under Section 16.1(m) or Section 16.1(q) of this Lease,
--------------- ---------------
except as otherwise agreed in writing by Lessor, in its sole and absolute
discretion, the same shall be deemed to be "continuing" at all times from and
after the date that such Event of Default first arises (including, without
limitation, at all times from and after the date that Lessor terminates this
Lease as it applies to the Leased Property to which the aforesaid Event of
Default relates or dispossesses Tenant from such Leased Property), unless, prior
to the date that Lessor terminates this Lease as it
65
applies to the Leased Property to which the aforesaid Event of Default relates
or dispossesses Tenant from such Leased Property, such Event of Default is cured
"in-kind" by rectifying and reversing the particular event, circumstance or
condition that constitutes or causes such Event of Default; provided (the
"Section 16.10.2.3 Proviso"), however, that, if the applicable Section 16.10.1
-------------------------
Number, as determined pursuant to Section 16.10.1 above, equals two or more, if
---------------
(a) an Event of Default of the nature referenced in Section 16.1(m) and/or
---------------
Section 16.1(q) of this Lease has occurred and is continuing (as described
above) with respect to fewer than the Section 16.10.1 Number of the Leased
Properties and (b) Lessor has terminated this Lease as it applies to a Leased
Property to which an aforesaid Event of Default relates or has dispossessed
Tenant from such Leased Property, then, for purposes of Sections 4.1, 17.1,
------------ ----
25.1.1, 25.1.2 and 25.1.3, the aforesaid Event of Default relating to such
------ ------ -------
Leased Property shall not be deemed to be "continuing" as to Leased Properties
other than such terminated or dispossessed Leased Property; in such event, the
rights and remedies available to Lessor or the limitation of Tenant's rights
under such sections which arise in the case of a continuing Event of Default
shall apply only to the Leased Property on which the Event of Default under
Section 16.1(m) or Section 16.1(q) has occurred, as illustrated by Examples 5, 6
--------------- -------------- ---------- -
and 7 of Section 16.10.5 below.
- ---------------
Section 16.10.2.4 The limitations on Lessor's rights and remedies
set forth in this Section 16.10.2: (a) apply only to Events of Default under
---------------
Section 16.1(m) and/or Section 16.1(q) of this Lease and not to any other Events
--------------- ---------------
of Default under this Lease, (b) apply only to Lessor's termination and
dispossession rights and remedies on account of Events of Default under Section
-------
16.1(m) and/or Section 16.1(q) of this Lease and, subject to the terms of the
------- ---------------
Section 16.10.2.3 Proviso, not to any other rights and remedies available to
Lessor on account of any such Events of Default, and (c) do not change any of
the other provisions of this Lease as they may relate to Events of Default under
Section 16.1(m) and/or Section 16.1(q) of this Lease (e.g. pursuant to Section
--------------- --------------- -------
24.1(d) of this Lease, Tenant shall remain obligated to indemnify Lessor with
-------
respect to any such Section 16.1(m) and/or Section 16.1(q) Event of Default).
--------------- ---------------
Section 16.10.3 The intention of this Section 16.10.3 is to set forth
---------------
special rules regarding the calculation of the Section 16.10.1 Number and
thereby to limit the ability of Lessor and Tenant, through transactions of the
specified nature described in this Section 16.10.3, to evade certain of the
---------------
intended goals of this Section 16.10.
-------------
Section 16.10.3.1 Notwithstanding Section 16.10.1 above, if (a)(i) a
---------------
New Lease under Section 40.15 hereof (other than a New Lease that is a Separate
-------------
Lease created under Section 22.7 hereof) is created from this Lease or (ii) this
Lease constitutes a New Lease created under Section 40.15 of another lease
-------------
demising any of the Master Lease Leased Properties (other than a New Lease that
is a Separate Lease created under Section 22.7 of such other lease) and (b) as
------------
of the date immediately prior to such New Lease creation transaction (a "Section
-------
16.10.3.1 New Lease Transaction"), under this Lease (if subsection (a)(i) above
-------------------------------
is applicable) or the other lease referenced in subsection (a)(ii) above (if
subsection (a)(ii) above is applicable) one or more Events of Default of the
nature referenced in Section 16.1(m) and/or Section 16.1(q) of such lease had
--------------- ---------------
occurred and were continuing (as described
66
in Section 16.10.2.3 hereof or of such other lease, as applicable) with respect
-----------------
to any of the Master Lease Leased Properties covered hereby or thereby, as
applicable, then, the Section 16.10.1 Number that would otherwise apply to this
Lease, but for the terms of this Section 16.10.3.1, shall be increased by one
-----------------
(1) if and only if all of the following conditions are met relative to this
Lease:
(x) As of the date immediately following the aforesaid Section 16.10.3.1
New Lease Transaction, an Event of Default of the nature referenced in Section
-------
16.1(m) and/or Section 16.1(q) of this Lease (whether this Lease is the New
------- ---------------
Lease, or the lease from which a New Lease is created, involved in the aforesaid
Section 16.10.3.1 New Lease Transaction) has occurred and is continuing (as
described in Section 16.10.2.3 hereof) with respect to a number of the Leased
-----------------
Properties then covered by this Lease that equals or exceeds the Section 16.10.1
Number that would be applicable to this Lease as of such date (assuming, for
purposes of this subsection (x), that this Section 16.10.3.1 is not applicable);
-----------------
and
(y) For the four (4) full calendar quarters ending not less than sixty
(60) days prior to the aforesaid Section 16.10.3.1 New Lease Transaction, (1)
the Leased Properties, if any, that continue to be covered by this Lease
(whether this Lease is the New Lease, or the lease from which a New Lease is
created, involved in the aforesaid Section 16.10.3.1 New Lease Transaction) and
have as their Primary Intended Use use as a hospital have a Coverage Ratio that
is fifteen percent (15%) or more higher than the Coverage Ratio of all of the
Master Lease Leased Properties that are covered by this Lease and the other
lease involved in the aforesaid Section 16.10.3.1 New Lease Transaction or (2)
the Leased Properties, if any, that continue to be covered by this Lease and
have as their Primary Intended Use use as a nursing center have a Coverage Ratio
that is ten percent (10%) or more higher than the Coverage Ratio of all of the
Master Lease Leased Properties that are covered by this Lease and the other
lease involved in the aforesaid Section 16.10.3.1 New Lease Transaction; and
(z) No Event(s) of Default (other than Section 16.1(m) and/or Section
--------------- -------
16.1(q) Events of Default) have occurred and are continuing under this Lease.
-------
Example 1: Assume this Lease covers 25 Leased Properties and that no Event
---------
of Default under Section 16.1(m) and/or Section 16.1(q) or any other provision
--------------- ---------------
of this Lease has occurred or is continuing. Assume further that a New Lease
covering 10 Leased Properties and not constituting a Separate Lease under
Section 22.7 is created from this Lease pursuant to Section 40.15 hereof. This
------------ -------------
Section 16.10.3.1 would not apply, and the Section 16.10.1 Number applicable to
-----------------
this Lease would be determined pursuant to Section 16.10.1(a) hereof (because
------------------
this Lease would then cover 15 Leased Properties), without any adjustment
pursuant to this Section 16.10.3.1, because requirement (b) above is not met.
-----------------
The Section 16.10.1 Number for this Lease would equal one (1). For the
aforesaid New Lease (because such New Lease would cover 10 Leased Properties),
the Section 16.10.1 Number would also equal one (1).
Example 2: Same assumed facts as in Example 1, except that, as of the date
--------- ---------
immediately prior to the Section 16.10.3.1 New Lease Transaction referenced in
Example 1,
67
an Event of Default under Section 16.1(m) and/or Section 16.1(q) had
--------------- ---------------
occurred and was continuing with respect to one (1) Leased Property and such
Leased Property remains a part of this Lease (thus satisfying requirement (b)
above). Requirement (x) above would be met as to this Lease, because,
immediately following the assumed Section 16.10.1.1 New Lease Transaction, an
Event of Default under Section 16.1(m) and/or Section 16.1(q) would exist under
--------------- ---------------
this Lease with respect to one (1) Leased Property, and such number of Leased
Properties equals the Section 16.10.1 Number that would be applicable to this
Lease as a 15 Leased Properties lease, assuming, for purposes of requirement (x)
above, that this Section 16.10.3.1 is not applicable. Also, requirement (z)
-----------------
above would be met, as assumed in Example 1. Accordingly, in the circumstances
---------
of Example 2, a review of Coverage Ratios pursuant to subsection (y) above would
---------
be needed in order to determine whether a change in the Section 16.10.1 Number
applicable to this Lease is mandated by this Section 16.10.3.1. On the other
-----------------
hand, for the aforesaid New Lease (because such New Lease would cover 10 Leased
Properties and because requirement (x) above is not met), the Section 16.10.1
Number would equal one (1).
Example 3: Same assumed facts as in Example 2. Assume further that the
--------- ---------
Coverage Ratios of the hospitals and nursing centers that remain subject to this
Lease, determined for the four (4) full calendar quarters ending not less than
sixty (60) days prior to the assumed Section 16.10.3.1 New Lease Transaction,
equal, respectively, 1.575:1 and 1.500:1 and that the Coverage Ratios of the
hospitals and nursing centers included in the 25 Leased Properties that were
covered by this Lease immediately prior to the aforesaid transaction, for the
same period, equal, respectively, 1.500:1 and 1.450:1. In the circumstances of
this Example 3, this Section 16.10.3.1 would not apply, and the Section 16.10.1
-----------------
Number applicable to this Lease would be determined pursuant to Section
-------
16.10.1(a) hereof (because this Lease would then cover 15 Leased Properties),
----------
without any adjustment pursuant to this Section 16.10.3.1, because requirement
-----------------
(y) above is not met. The Section 16.10 Number for this Lease would equal one
(1). For the aforesaid New Lease, for the reasons stated in Example 2, the
Section 16.10.1 Number would also equal one (1).
Example 4: Same assumed facts as in Example 2. Assume further that the
--------- ---------
Coverage Ratios of the hospitals and nursing centers that remain subject to this
Lease, determined for the four (4) full calendar quarters ending not less than
sixty (60) days prior to the assumed Section 16.10.3.1 New Lease Transaction,
equal, respectively, 1.575:1 and 1.653:1 and that the Coverage Ratios of the
hospitals and nursing centers included in the 25 Leased Properties that were
covered by this Lease immediately prior to the aforesaid transaction, for the
same period, equal, respectively, 1.500:1 and 1.450:1. In the circumstances of
this Example 4, the Section 16.10.1 Number that is applicable to this Lease
---------
immediately following the assumed Section 16.10.3.1 New Lease Transaction,
would, pursuant to this Section 16.10.3.1, be increased from one (1) to two (2),
-----------------
because both requirement (a) and requirement (b) above are met, and all of
----
requirement (x) (as described in Example 2), requirement (y) (because the
---------
Coverage Ratio for nursing centers covered by this Lease is fourteen percent
(14%) higher (1.45 x. 1.14 = 1.653) than the Coverage Ratio for all nursing
centers covered by the pre-transaction 25 Leased Properties lease) and
requirement (z) (as described in Example 2) above are met. For
---------
68
the aforesaid New Lease, for the reasons stated in Example 2, the Section
---------
16.10.1 Number would equal one (1).
Section 16.10.3.2 Notwithstanding Section 16.10.1 above, if (a) this
---------------
Lease is, pursuant to Section 40.18 hereof, the Section 40.18 Lease (as defined
------------- -------------------
in Section 40.18) and (b) as a result of Section 16.1(m) and/or Section 16.1(q)
------------- --------------- ---------------
Events of Default that had occurred and were continuing under this Lease and the
other lease(s) involved in the Section 40.18 lease combination transaction
-------------
immediately prior to such transaction, immediately following the transaction
pursuant to which this Lease became a Section 40.18 Lease, an Event of Default
of the nature referenced in Section 16.1(m) and/or Section 16.1(q) of this Lease
--------------- --------------
has occurred and is continuing (as described in Section 16.10.2.3 hereof) with
-----------------
respect to a number of the Leased Properties then covered by this Lease (the
"Section 16.10.3.2 Number") that equals or exceeds the Section 16.10.1 Number
-----------------
that would be applicable to this Lease as of such date (assuming, for purposes
of this subsection (b), that this Section 16.10.3.2 is not applicable), and (c)
-----------------
immediately following the transaction pursuant to which this Lease became a
Section 40.18 Lease, no Event of Default (other than Section 16.1(m) and/or
---------------
Section 16.1(q) Events of Default) has occurred and is continuing under this
---------------
Lease, then, the Section 16.10.1 Number that would otherwise apply to this
Lease, but for the terms of this Section 16.10.3.2, shall be increased by one
-----------------
(1) (and provided further that, if requirements (a), (b) and (c) above are met
and this Lease, as the Section 40.18 Lease, (X) covers forty-one (41) or more
Leased Properties and the Section 16.10.3.2 Number for this Lease, as the
Section 40.18 Lease, exceeds three (3), then the Section 16.10.1 Number
applicable to this Lease shall be adjusted to equal the aforesaid Section
16.10.3.2 Number plus one (1) or (Y) covers twenty-one (21) to forty (40), both
inclusive, Leased Properties and the number (the "Subsection Y Number") equal to
the Section 16.10.3.2 Number for this Lease, as the Section 40.18 Lease, minus
the number of Leased Properties, if any, as to which, following such lease
combination transaction, Tenant will continue to have an available and
exercisable purchase option under Section 16.12 exceeds two (2), then the
-------------
Section 16.10.1 Number applicable to this Lease shall be adjusted to equal the
Subsection (Y) Number plus one (1) or (Z) covers twenty (20) or less Leased
Properties and the number (the "Subsection Z Number") equal to the Section
16.10.3.2 Number for this Lease, as the Section 40.18 Lease, minus the number of
Leased Properties, if any, as to which, following such lease combination
transaction, Tenant will continue to have an available and exercisable purchase
option under Section 16.12 exceeds one (1), then the Section 16.10.1 Number
-------------
applicable to this Lease shall be adjusted to equal the Subsection Z Number plus
one (1)).
Example 1: Assume that a lease covering 50 Master Lease Leased Properties
---------
is subdivided into Lease A covering 35 Master Lease Leased Properties and Lease
B covering 15 Master Lease Leased Properties and that no Event of Default under
Section 16.1(m) and/or Section 16.1(q) or any other provision has occurred or is
--------------- ---------------
continuing under either of such leases. Assume further that, pursuant to
Section 40.18, such two (2) leases are combined and that Lease A is the Section
-------------
40.18 Lease. This Section 16.10.3.2 would not apply, and the Section 16.10.1
-----------------
Number applicable to Lease A would be determined pursuant to Section 16.10.1(c)
------------------
hereof (because Lease A would then cover 50 Master Lease Leased Properties),
69
without any adjustment pursuant to this Section 16.10.3.2, because, although
-----------------
requirements (a) and (c) above are met relative to Lease A, requirement (b)
above is not met as to Lease A.
Example 2: Same assumed facts as in Example 1, except assume three (3)
--------- ---------
Master Lease Leased Properties are subject to continuing Section 16.1(m) and/or
---------------
Section 16.1(q) Events of Default immediately prior to the assumed Section 40.18
--------------- -------------
transaction, 2 of which are within the 35 Master Lease Leased Properties Lease A
and 1 of which is within the 15 Master Lease Leased Properties Lease B.
Immediately following the assumed Section 40.18 transaction, the recombined 50
-------------
Master Lease Leased Properties Lease A would have included therein 3 Master
Lease Leased Properties that are subject to continuing Section 16.1(m) and/or
---------------
Section 16.1(q) Events of Default, which number equals the Section 16.10.1
---------------
Number that would be applicable to the combined 50 Master Lease Leased
Properties Lease A pursuant to Section 16.10.1(c) above, but for this Section
------------------ -------
16.10.3.2, and therefore, pursuant to Section 16.10.3.2, the Section 16.10.1
---------- -----------------
Number that is applicable to the combined Lease A would be increased from three
(3) to four (4).
Example 3: Same assumed facts as in Example 1, except assume four (4)
--------- ---------
Master Lease Leased Properties are subject to continuing Section 16.1(m) and/or
---------------
Section 16.1(q) Events of Default immediately prior to the assumed Section 40.18
--------------- -------------
transaction, 2 of which are within the 35 Master Lease Leased Properties Lease A
and 2 of which are within the 15 Master Lease Leased Properties Lease B.
Immediately following the assumed Section 40.18 transaction, the recombined 50
-------------
Master Lease Leased Properties Lease A would have included therein 4 Master
Lease Leased Properties that are subject to continuing Section 16.1(m) and/or
---------------
Section 16.1(q) Events of Default, which number exceeds the Section 16.10.1
---------------
Number that would be applicable to the combined 50 Master Lease Leased
Properties Lease A pursuant to Section 16.10.1(c) above, but for this Section
------------------ -------
16.10.3.2. Requirements (a), (b) and (c) above are met relative to Lease A,
---------
and, in addition, Lease A meets the requirements of the proviso at the end of
Section 16.10.3.2. Therefore, pursuant to Section 16.10.3.2, the Section
----------------- -----------------
16.10.1 Number that is applicable to the combined Lease A would equal five (5)
(i.e. the Section 16.10.3.2 Number+1).
Section 16.10.3.3 If a Separate Lease is created under Section 22.7
------------
of any lease of any of the Master Lease Leased Properties and, at the time such
lease is created an Event of Default under Section 16.1(m) and/or Section
--------------- -------
16.1(q) has occurred and is continuing with respect to any Master Lease Leased
-------
Property(ies) included in such Separate Lease or, within two (2) years
thereafter, such an Event of Default arises under such Separate Lease with
respect to any Master Lease Leased Property(ies) included in such Separate
Lease, then, for all purposes of each Section 16.10.3.3 Lease (as hereinafter
defined), (a) any such Event of Default under such Separate Lease shall also be
considered an Event of Default under Section 16.1(m) and Section 16.1(q) of any
--------------- ---------------
lease (a "Section 16.10.3.3 Lease") that, or that derives from a lease that, at
-----------------------
any time during the two (2) years that preceded the creation of such Separate
Lease, included any Master Lease Leased Property included in such Separate Lease
and as to which such a Section 16.1(m) and/or Section 16.1(q) Event of Default
--------------- ---------------
has occurred and is continuing under such Separate Lease and (b) each Master
Lease Leased
70
Property as to which such a Section 16.1(m) and/or Section 16.1(q) Event of
--------------- ---------------
Default has occurred and is continuing under such Separate Lease shall, for all
purposes of Section 16.10 and Section 19.1(b) of each Section 16.10.3.3 Lease,
------------- ---------------
be counted as a leased property as to which a Section 16.1(m) and/or Section
--------------- -------
16.1(q) Event of Default had occurred and was continuing the same as if a
-------
Section 16.1(m) and/or Section 16.1(q) Event of Default had occurred and was
-------------- ---------------
continuing under such Section 16.10.3.3 Lease relative to a Master Lease Leased
Property included in such Section 16.10.3.3 Lease.
Example 1: Assume that a lease of 15 Master Lease Leased Properties
---------
includes Property A as to which a Section 16.1(m) Event of Default has occurred
---------------
and is continuing and that, on account of an Event of Default under such lease,
Lessor terminates such lease as it applies to Property A, so that the remaining
lease covers 14 Master Lease Leased Properties. Assume further that, pursuant
to Section 22.7 of such lease, a Separate Lease under Section 22.7 is entered
------------ ------------
into with a leasehold mortgagee or its designee relative to Property A. As a
result of Section 16.10.3.3, the Section 16.1(m) Event of Default relative to
----------------- ---------------
Property A will also be considered an Event of Default under Section 16.1(m) of
---------------
the aforesaid remaining lease of 14 Master Lease Leased Properties and Property
A will, for all purposes of Section 16.10 and Section 19.1(b) of such remaining
------------- ---------------
lease, be counted as a leased property as to which a Section 16.1(m) Event of
---------------
Default had occurred and was continuing the same as if a Section 16.1(m) Event
---------------
of Default had occurred and was continuing under such remaining lease relative
to a Master Lease Leased Property included in such remaining lease.
Example 2: Assume that a lease of 15 Master Lease Leased Properties
---------
includes no properties as to which a Section 16.1(m) and/or Section 16.1(q)
--------------- ---------------
Event of Default has occurred and is continuing and that, on account of an Event
of Default under such lease, Lessor terminates such lease as it applies to
Property A, so that the remaining lease covers 14 Master Lease Leased
Properties. Assume further that, pursuant to Section 22.7 of such lease, a
------------
Separate Lease under Section 22.7 is entered into with a leasehold mortgagee or
its designee relative to Property A. Assume further that several months later a
Section 16.1(m) Event of Default arises relative to Property A. As a result of
Section 16.10.3.3, the Section 16.1(m) Event of Default relative to Property A
-----------------
will also be considered an Event of Default under Section 16.1(m) of the
---------------
aforesaid remaining lease of 14 Master Lease Leased Properties and Property A
will, for all purposes of Section 16.10 and Section 19.1(b) of such remaining
------------- ---------------
lease, be counted as a leased property as to which a Section 16.1(m) Event of
Default had occurred and was continuing the same as if a Section 16.1(m) Event
---------------
of Default had occurred and was continuing under such remaining lease relative
to a Master Lease Leased Property included in such remaining lease.
Example 3: Same assumed facts as in Example 2, except assume further that
--------- ---------
the 15 Master Lease Leased Properties lease referenced in such example was
formed several months prior to the creation of the Separate Lease as the result
of the division of a 60 Master Lease Leased Properties lease into two leases,
the aforesaid 15 Master Lease Leased Properties lease and a 45 Master Lease
Leased Properties lease. As a result of Section 16.10.3.3, the Section 16.1(m)
----------------- ---------------
Event of Default relative to Property A will also be considered an Event of
Default under Section 16.1(m) of both the remaining lease of 14 Master Lease
---------------
Leased Properties and
71
the aforesaid 45 Master Lease Leased Properties lease and Property A will, for
all purposes of Section 16.10 and Section 19.1(b) of such remaining lease and
------------- --------------
such 45 Master Lease Leased Properties lease, be counted as a leased property as
to which a Section 16.1(m) Event of Default had occurred and was continuing the
---------------
same as if a Section 16.1(m) Event of Default had occurred and was continuing
---------------
under such remaining lease relative to a Master Lease Leased Property included
therein and under such 45 Master Lease Leased Properties lease relative to a
Master Lease Leased Property included therein. This is because, several months
prior to the creation of the Separate Lease, Property A was included in the
aforesaid 60 Master Lease Leased Properties lease and both the 14 Master Lease
Leased Properties lease and the 45 Master Lease Leased Properties lease derive
from such 60 Master Lease Leased Properties lease.
Section 16.10.4 Lessor shall have no obligation of any kind or nature
to accept, or to treat as a default cure, any monetary or other form of cure in
lieu of the mandated "in-kind", Facility-specific cure. For example, even if
Lessor, in its sole and absolute discretion, receives, and accepts, full
monetary compensation from Tenant on account of all damages suffered by Lessor
due to the loss of certification for reimbursement under Medicaid at a
particular Facility and whether such receipt occurs through a voluntary
arrangement or through the exercise of any remedy hereunder, the Section 16.1(q)
---------------
Event of Default arising from such loss of certification shall, unless Lessor
otherwise agrees in writing, in its sole and absolute discretion, for purposes
of Sections 4.1, 16.1(q), 16.10, 17.1, 19.1, 25.1.1, 25.1.2 and 25.1.3 of this
------------ ------- ----- ---- ---- ------ ------ ------
Lease, subject, if the Section 16.10.1 Number is 2 or greater, to the Section
16.10.2.3 Proviso, be considered to be "continuing" unless, prior to termination
of this Lease as it applies to such Facility, or dispossession of Tenant from
such Facility, as described in Section 16.10.2.3 above, such certification for
-----------------
such Facility is fully restored. Nothing contained in this Section 16.10 shall
-------------
limit or affect the provisions of this Article XVI providing that Lessor has no
obligation or deemed obligation to mitigate damages on account of any default by
Tenant.
Section 16.10.5 The following examples are intended to illustrate
further the application of this Section 16.10:
-------------
Example 1: If an Event of Default occurs under Section 16.1(m) hereof
--------- ---------------
because the number of licensed beds at a particular Facility has been reduced to
a number below the required number of licensed beds for such Facility, such
Event of Default shall be deemed to be "continuing" for purposes of Sections
--------
4.1, 16.1(m), 16.10, 17.1, 19.1, 25.1.1, 25.1.2 and 25.1.3 of this Lease,
------------ ----- ---- ---- ------ ------ ------
subject, if applicable, to the Section 16.10.2.3 Proviso, unless, prior to
termination of this Lease as it applies to such Facility, or dispossession of
Tenant from such Facility, as described in Section 16.10.2.3 above, the number
-----------------
of licensed beds at such Facility is returned to the required number.
Example 2: If an Event of Default of the type described in Example 1 has
--------- ---------
occurred and is continuing (as described above) with respect to a Leased
Property, and Lessor has terminated this Lease as it applies to the Leased
Property to which such aforesaid Event of Default relates or Lessor has
dispossessed Tenant from such Leased Property, then, if the
72
Section 16.10.1 Number applicable to this Lease equals two (2) or more and
Events of Default of the nature referenced in Section 16.1(m) and/or Section
--------------- -------
16.1(q) of this Lease have occurred and are continuing (as described above) with
-------
respect to fewer than the Section 16.10.1 Number of the Leased Properties, such
Event of Default, for purposes of Sections 4.1, 17.1, 25.1.1, 25.1.2 and 25.1.3,
------------ ---- ------ ------ ------
shall not be deemed to be "continuing" as to any other Leased Properties; in
such event, the rights and remedies available to Lessor or the limitation of
Tenant's rights under such sections which arise in the case of a continuing
Event of Default shall apply only to the Leased Property on which the Event of
Default under Section 16.1(m) has occurred (as illustrated in Examples 5, 6 and
---------------
7 below).
Example 3: If an Event of Default occurs under Section 16.1(q) hereof due
--------- ---------------
to a loss of Medicaid certification at a particular Facility, such Event of
Default shall be deemed to be "continuing" for purposes of Sections 4.1,
------------
16.1(q), 16.10, 17.1, 19.1, 25.1.1, 25.1.2 and 25.1.3 of this Lease, subject, if
------- ----- ---- ---- ------ ------ ------
applicable, to the Section 16.10.2.3 Proviso, unless, prior to termination of
this Lease as it applies to such Facility, or dispossession of Tenant from such
Facility, as described above, such Facility's certification for reimbursement
under Medicaid is fully restored.
Example 4: If an Event of Default of the type described in Example 3 has
---------
occurred and is continuing (as described above) with respect to a Leased
Property, and Lessor has terminated this Lease as it applies to the Leased
Property to which such aforesaid Event of Default relates or Lessor has
dispossessed Tenant from such Leased Property, then, if the Section 16.10.1
Number applicable to this Lease equals two (2) or more and Events of Default of
the nature referenced in Section 16.1(m) and/or Section 16.1(q) of this Lease
--------------- ---------------
have occurred and are continuing (as described above) with respect to fewer than
the Section 16.10.1 Number of the Leased Properties, such Event of Default, for
purposes of Sections 4.1, 17.1, 25.1.1, 25.1.2 and 25.1.3, shall not be deemed
------------ ---- ------ ------ ------
to be "continuing" as to any other Leased Properties; in such event, the rights
and remedies available to Lessor or the limitation of Tenant's rights under such
sections which arise in the case of a continuing Event of Default shall apply
only to the Leased Property on which the Event of Default under Section 16.1(q)
---------------
has occurred (as illustrated in Examples 5, 6 and 7 below).
Example 5: If (i) an Event of Default of the nature referenced in Section
--------- -------
16.1(m) and/or Section 16.1(q) of this Lease has occurred and is continuing (as
------- ---------------
described above) with respect to Leased Property X and no other Leased
Properties, (ii) Lessor has terminated this Lease as it applies to Leased
Property X or dispossessed Tenant from such Leased Property X, (iii) the Section
16.10.1 Number applicable to this Lease exceeds 1 (so that Section 16.10.2.2 is
-----------------
applicable and, in light of subsections (i) and (ii) of this Example,
requirements (a) and (b) of the Section 16.10.2.3 Proviso are met), and (iv)
pursuant to Section 4.1, a refund shall be due from a taxing authority in
respect of an Imposition paid by Tenant relative to Leased Property X, then
Tenant would not receive such refund and such refund would be retained by Lessor
and applied as provided in Article XVI, but Tenant would continue to be paid or
retain (as provided in Section 4.1) any Imposition refund from Leased Properties
other than Leased Property X.
73
Example 6: If (i) an Event of Default of the nature referenced in Section
---------
16.1(m) and/or Section 16.1(q) of this Lease has occurred and is continuing (as
described above) with respect to Leased Property X and no other Leased
Properties, (ii) Lessor has terminated this Lease as it applies to Leased
Property X or dispossessed Tenant from such Leased Property X, and (iii) the
Section 16.10.1 Number applicable to this Lease exceeds 1 (so that Section
-------
16.10.2.2 is applicable and, in light of subsections (i) and (ii) of this
---------
Example, requirements (a) and (b) of the Section 16.10.2.3 Proviso are met),
then, pursuant to Section 17.1, Lessor would be entitled, to the extent
------------
permitted by law, to enter on Leased Property X for the purpose of curing such
continuing Event of Default, but Lessor would not be entitled to exercise the
remedies provided in Section 17.1 with respect to any other Leased Properties.
------------
Example 7: If (i) an Event of Default of the nature referenced in Section
---------
16.1(m) and/or Section 16.1(q) of this Lease has occurred and is continuing (as
---------------
described above) with respect to Leased Property X and no other Leased
Properties, (ii) Lessor has dispossessed Tenant from Leased Property X, (iii)
the Section 16.10.1 Number applicable to this Lease exceeds 1 (so that Section
-------
16.10.2.2 is applicable and, in light of subsections (i) and (ii) of this
---------
Example, requirements (a) and (b) of the Section 16.10.2.3 Proviso are met), and
(iv) Tenant desires to sublet, pursuant to Section 25.1.2(ii), up to an
------------------
aggregate of 20% of the rentable square footage of each of Leased Properties X
and Y without obtaining the consent of Lessor, then Tenant would not be entitled
to sublet any portion of Leased Property X without the consent of Lessor, but
Tenant would be entitled to sublet such portion of Leased Property Y without
obtaining the consent of Lessor.
Example 8: Same assumed facts as in Example 7, except that the Section
--------- ---------
16.10.1 Number applicable to this Lease equals 2, and an Event of Default of the
nature referenced in Section 16.1(m) has also occurred and is continuing
---------------
relative to another of the Leased Properties. Section 16.10.2.2 would be
-----------------
applicable, but requirement (a) of the Section 16.10.2.3 Proviso would not be
met. Tenant would not be entitled to sublet any portion of Leased Property X or
Leased Property Y without the consent of Lessor.
Section 16.11 No Mediation or Arbitration. Notwithstanding anything to
---------------------------
the contrary set forth herein or in that certain Agreement and Plan of
Reorganization dated as of April 30, 1998 by and between Ventas and Vencor
Healthcare, Inc. ("1998 Plan of Reorganization"), (a) upon any Event of Default
---------------------------
by Tenant, Lessor shall be entitled to proceed immediately to enforce its rights
and remedies pursuant to this Article XVI and the other terms of this Lease, (b)
-----------
neither any Event of Default, nor the rights and obligations of Tenant and
Lessor under this Lease, shall be subject to mediation or arbitration of any
kind, and (c) the provisions of Article VI of the 1998 Plan of Reorganization
----------
shall not apply to this Lease or any of the Combined Leases.
Section 16.12 Special Purchase Provisions. It is the intention of this
---------------------------
Section 16.12 to set forth specific provisions that, in limited circumstances,
-------------
for a limited number of times and only in connection with the occurrence of
Events of Default under Section 16.1(m) and/or Section 16.1(q) of this Lease,
--------------- ---------------
allow Tenant a non-renewing right to purchase a Leased Property(ies) and thereby
to reduce the number of Leased Properties as to which Section
-------
74
16.1(m) and/or Section 16.1(q) Events of Default continue to exist to below
------- ---------------
the applicable Section 16.10.1 Number, and, by doing so strictly on the terms
and conditions provided in this Section 16.12, thereby to avoid the exercise by
-------------
Lessor of termination and/or dispossession rights and remedies against all
Leased Properties covered hereby on account of such Section 16.1(m) and/or
---------------
Section 16.1(q) Event(s) of Default. Tenant's purchase rights as set forth in
---------------
this Section 16.12 are not applicable to any other Events of Default or in any
-------------
other circumstances and are strictly limited in number and non-renewing.
Section 16.12.1
Section 16.12.1.1 If the number of Leased Properties as to which
this Lease is in full force and effect equals twenty (20) or less, subject to
Section 16.12.1.2 below, a purchase option will be exercisable by Tenant on
-----------------
account of a Section 16.1(m) and/or Section 16.1(q) Event of Default with
--------------- ---------------
respect to only two (2) Leased Properties in the aggregate during the Term,
after which no further purchase option under this Section 16.12 will be
-------------
available to, or exercisable by, Tenant.
Section 16.12.1.2 If the number of Leased Properties as to which
this Lease is in full force and effect equals twenty-one (21) to forty (40),
both inclusive, a purchase option will be exercisable by Tenant on account of a
Section 16.1(m) and/or Section 16.1(q) Event of Default with respect to only one
--------------- ---------------
(1) Leased Property in the aggregate during the Term, after which no further
purchase option under this Section 16.12 will be available to, or exercisable
-------------
by, Tenant, and provided that, if (a) this Lease at any time was in full force
and effect with respect to twenty-one (21) to forty (40), both inclusive, Leased
Properties and at such time Tenant exercised a purchase option under this
Section 16.12 and on account of a Section 16.1(m) and/or Section 16.1(q) Event
------------- --------------- ---------------
of Default with respect to a Leased Property and (b) this Lease thereafter is in
full force and effect with respect to less than twenty-one (21) Leased
Properties due to creation of a Separate Lease under Section 22.7, a casualty or
------------
condemnation termination relative to a Leased Property(ies) or for any other
reason (other than Lessor's unilateral creation of a New Lease under Section
-------
40.15 or a New Master Lease under Section 40.17), no further purchase option
----- -------------
under this Section 16.12 will be available to, or exercisable by, Tenant.
-------------
Section 16.12.1.3 If the number of Leased Properties as to which
this Lease is in full force and effect equals forty-one (41) or more, then,
notwithstanding anything to the contrary contained in this Section 16.12, this
-------------
Section 16.12 shall not apply, and no purchase option will be available to, or
-------------
exercisable by, Tenant on account of a Section 16.1(m) and/or Section 16.1(q)
--------------- ---------------
Event of Default.
Section 16.12.1.4 For all purposes of this Section 16.12, once a
purchase option is exercised relative to a Leased Property(ies), it may not be
revoked, and it shall exhaust Tenant's available purchase options, as described
in Section 16.12.1.1 and Section 16.12.1.2, as applicable, above, to the extent
----------------- -----------------
of the number of Leased Properties as to which such exercise applies.
75
Section 16.12.1.5 No purchase option will be available to, or
exercisable by, Tenant on account of any Event of Default under this Lease other
than Section 16.1(m) and/or Section 16.1(q) Events of Default.
--------------- ---------------
Section 16.12.2 If (a) an Event of Default under Section 16.1(m) and/or
---------------
Section 16.1 (q) of this Lease has occurred and is continuing (as described in
----------------
Section 16.10.2.3 hereof) with respect to a number of the Leased Properties
-----------------
covered by this Lease that equals or exceeds the Section 16.10.1 Number that is
applicable to this Lease and (b) Lessor intends to exercise termination and/or
dispossession rights and remedies against all Leased Properties covered by this
Lease on account of such Event(s) of Default and (c) no Events of Default (other
than Section 16.1(m) and/or Section 16.1(q) Events of Default) have occurred and
--------------- ---------------
are continuing under this Lease, then, unless (i) Tenant has previously
exhausted its available purchase option(s) (as described in Section 16.12.1.1 or
-----------------
Section 16.12.1.2, as applicable, above) or (ii) if Tenant has any remaining
-----------------
purchase option(s), by exercising the same Tenant would not be able to reduce
the number of Leased Properties as to which an Event of Default under Section
-------
16.1(m) and/or Section 16.1(q) of this Lease has occurred and is continuing (as
------ ---------------
described in Section 16.10.2.3 hereof) to a number fewer than the Section
-----------------
16.10.1 Number that is applicable to this Lease:
(x) Lessor will provide to Tenant a written notice (a "Section 16.12
-------------
Notice") that Lessor intends to exercise termination and/or
------
dispossession rights and remedies against all Leased Properties
covered by this Lease on account of such Section 16.1(m) and/or
---------------
Section 16.1(q) Events(s) of Default. If the number of Leased
---------------
Properties as to which an Event of Default under Section 16.1(m)
---------------
and/or Section 16.1(q) has occurred and is continuing exceeds the
---------------
number of Leased Properties as to which a purchase option remains
available to Tenant and, by exercising its available purchase
option(s), Tenant would be able to reduce the number of Leased
Properties as to which an Event of Default under Section 16.1(m)
---------------
and/or Section 16.1(q) of this Lease has occurred and is
---------------
continuing to a number fewer than the Section 16.10.1 Number that
is applicable to this Lease, the aforesaid Section 16.12 Notice
shall specify as to which Leased Property(ies) a purchase option
shall be applicable. Otherwise, the purchase option will apply
to each Leased Property as to which a Section 16.1(m) and/or
---------------
Section 16.(q) Event of Default has occurred and is continuing.
--------------
(y) If Tenant desires to exercise its purchase option, Tenant must so
notify Lessor in writing within seven (7) days of its receipt of
the aforesaid Section 16.12 Notice relating thereto and Tenant
must exercise such purchase option against all Leased Properties
as to which the purchase option is applicable as provided in
subsection (x) above. If Tenant does not so exercise its
purchase option, Tenant shall be deemed to have waived its
purchase option relative to all of the Leased Properties to which
the same is applicable.
76
(z) If Lessor provides a Section 16.12 Notice as aforesaid, all of
the references in the penultimate paragraph of Section 16.1 of
------------
this Lease to 10 days shall be revised so that any notice of
termination given by Lessor as provided in such penultimate
paragraph shall take effect no sooner than three (3) Business
Days following the later of (1) Lessor's giving of its notice of
termination or (2) the expiration of Tenant's seven (7) day
period, as provided in subsection (y) above, relative to such
Section 16.12 Notice, and not otherwise be restricted as to the
effective date thereof by such penultimate paragraph.
Section 16.12.3 If Tenant exercises a purchase option relative to a
particular Leased Property(ies), the closing with respect thereto will occur
within forty-five (45) days of Tenant's receipt of the applicable Section 16.12
Notice. At such closing, Lessor will, by special warranty deed, convey to
Tenant or its designee all of Lessor's right, title and interest in the subject
Leased Property(ies), subject to the Permitted Encumbrances, and will cause to
be released any Facility Mortgage(s) or other liens created by Lessor or its
agents or employees relative to the subject Leased Property(ies) (and, if Lessor
is unable to cause such release(s) as of the initially scheduled closing date,
the closing date shall be extended as necessary to allow Lessor additional time
to cause such release(s)), and Tenant will pay in cash, to or as directed by
Lessor, the purchase price therefor, as described in Section 16.12.5 below,
---------------
subject, if applicable as described below, to a credit against the purchase
price in favor of Tenant and in the amount, if any, described below. Such
conveyance will be on an "AS IS", "WITH ALL FAULTS" basis and without any
representation or warranty (except as set forth in the aforesaid special
warranty deed). Upon the occurrence of such closing, this Lease will terminate,
in accordance with Section 40.16, insofar as it applies to the purchased Leased
-------------
Property(ies), but all accrued obligations, or obligations that survive
termination, with respect to the purchased Leased Property(ies) shall survive
such termination. Relative to the foregoing, if Tenant closes with respect to a
particular Leased Property strictly in accordance with the terms and conditions
provided in this Section 16.12, and, prior to such closing, Lessor has sued, and
-------------
collected damages from, Tenant on account of a Section 16.1(m) and/or Section
--------------- -------
16.1(q) Event of Default relative to such Leased Property, Tenant shall be
-------
entitled to a credit against the purchase price for such Leased Property equal
to a sum, not to exceed the purchase price, equal to (a) the amount of the
damages so collected by Lessor from Tenant in the aforesaid lawsuit, less (b)
the amount of all attorneys' fees, court costs, witness fees and other costs and
expenses incurred by Lessor in connection with such lawsuit or Section 16.1(m)
---------------
and/or Section 16.1(q) Event of Default.
---------------
Section 16.12.4 If Tenant exercises a purchase option relative to a
Leased Property(ies), and closes with respect thereto strictly in accordance
with the terms and conditions provided in this Section 16.12, then, for purposes
-------------
of Sections 16.1 and 16.10 of this Lease, the Section 16.1(m) and/or Section
--------------- -------
16.1(q) Event of Default relative to the purchased Leased Property(ies) will be
-------
deemed to have been cured (but without limitation of Lessor's indemnity rights
under Section 24.1 hereof and other rights and remedies that survive the
------------
applicable termination of this Lease that results from Tenant's purchase of such
Leased Property(ies)), but, for purposes of Section 16.12.1.1 and Section
----------------- -------
16.12.1.2, Tenant will have
---------
77
exhausted that number of its available purchase options as equals the number of
Leased Properties as to which it has so exercised its purchase option. If, as a
result of such cure, the number of the Leased Properties as to which an Event of
Default under Section 16.1(m) and/or Section 16.1(q) of this Lease is reduced to
a number fewer than the Section 16.10.1 Number that is applicable to this Lease,
Lessor will, for so long as such condition continues to exist, be precluded from
exercising termination and/or dispossession rights and remedies against all
Leased Properties covered by this Lease on account of the then remaining
Event(s) of Default under Section 16.1(m) and/or Section 16.1(q) of this Lease,
--------------- ---------------
but not on account of any other Event of Default under this Lease.
Section 16.12.5 The purchase price for each Leased Property as to
which a purchase option is exercised by Tenant will be separately determined for
each Leased Property and will equal, at Lessor's separate election for each
Leased Property, either (a) the sum calculated by dividing the Base Rent per
annum applicable to such Leased Property for the year next following the
applicable closing date by nine percent (9.0%) or (b) the product of ten (10.0)
times the Purchase Option EBITDAR, as hereinafter defined, for such Leased
Property. The Purchase Option EBITDAR for a particular Leased Property will
equal the highest twelve (12) consecutive month EBITDAR for such Leased Property
occurring during the period commencing three (3) years prior to (i) the first
day of the month during which a Section 16.1(m) Event of Default first occurred
---------------
with respect to such Leased Property or (ii) the first day of the month during
which a revocation of certification for reimbursement under Medicare or Medicaid
first occurred with respect to such Leased Property, whichever is earlier, and
ending on the last day of the month preceding the month during which the closing
occurs with respect to such Leased Property. For example, if Tenant exercises a
purchase option relative to a particular Leased Property, the closing with
respect thereto occurs on April 15, 2004, a Section 16.1(m) Event of Default
---------------
arose on January 14, 2004, such Leased Property was decertified for Medicare on
July 15, 2003 and a Section 16.1(q) Event of Default arose on account thereof on
---------------
November 12, 2003, the period referenced above would commence on July 1, 2000
and end on March 31, 2004.
Section 16.12.6 If this Lease and a Second Lease are combined as
provided in Section 40.18 of this Lease, for purposes of determining whether any
-------------
further purchase option is available to Tenant in such combined lease and, if
so, as to how many Leased Properties such an option is available, all purchase
option exercises that occurred under this Lease and the Second Lease prior to
such combination shall be counted the same as if they occurred under the
combined lease.
Section 16.12.7 Notwithstanding anything to the contrary contained in
this Section 16.12, this Section 16.12 will be included in the Lease and be
------------- -------------
effective only if and for so long as inclusion thereof does not cause this Lease
to be considered a capital lease, rather than an operating lease, for all
accounting, tax and legal purposes, as determined by the independent auditors
for both Lessor and Tenant.
Section 16.12.8 The following examples are intended to illustrate
further the application of this Section 16.12:
-------------
78
Example 1: Assume that, within a lease of 25 Master Lease Leased
---------
Properties, no Events of Default exist other than Events of Default under
Section 16.1(m) and/or Section 16.1(q) that have occurred and are
--------------- ---------------
continuing relative to Property A and Property B and that Lessor provides a
Section 16.12 Notice on account thereof, which notice specifies Property A
as the property as to which Tenant's one (1) available purchase option
(pursuant to the number limitation set forth in Section 16.12.1.2) shall be
-----------------
available. Assume further that Tenant exercises its purchase option
relative to Property A and closes its purchase of Property A in strict
accordance with the terms and conditions provided in this Section 16.12.
-------------
On account of such exercise, Tenant would have exhausted its purchase
option rights under such lease, and, on account of such purchase, (a) the
Section 16.1(m) and/or Section 16.1(q) Event of Default relative to
--------------- ---------------
Property A would have been cured, leaving Property B as the only leased
property as to which a continuing Section 16.1(m) and/or Section 16.1(q)
--------------- ---------------
Event of Default continues, and (b) because the Section 16.10.1 Number
applicable to such lease would equal 2, the continuation of a Section
-------
16.1(m) and/or Section 16.1(q) Event of Default with respect to Property B
------- ---------------
and no other leased properties would not, pursuant to the terms of Section
-------
16.10.2.2, be sufficient to permit Lessor to exercise termination and/or
---------
dispossession rights and remedies against any leased property other than
Property B.
Example 2: Same assumed facts as in Example 1 and assume further that an
---------
additional Section 16.1(m) Event of Default arises under such lease with
---------------
respect to Property X. Xxxxxx would be permitted to exercise termination
and/or dispossession rights and remedies against all leased properties
under such lease, in accordance with Section 16.10.2.2, because the number
-----------------
of such Section 16.1(m) and/or Section 16.1(q) Events of Default under such
--------------- ---------------
lease would equal 2 (Property B and Property C), which number equals the
Section 16.10.1 Number applicable to such lease. Also, because Tenant has
exhausted its purchase option rights under such lease as described on
Example 1, Section 16.12 would no longer be applicable to grant Tenant any
--------- -------------
purchase option rights and Lessor would be permitted to exercise such
termination and/or dispossession rights and remedies against all leased
properties under such lease without providing any Section 16.12 Notice to
-------------
Tenant or additional purchase option to Tenant.
Example 3: Assume that, within a lease of 10 Master Lease Leased
---------
Properties, no Events of Default exist other than Events of Default under
Section 16.1(m) and/or Section 16.1(q) that have occurred and are
--------------- ---------------
continuing relative to Property X, Property Y and Property Z. Lessor would
not be obligated to provide a Section 16.12 Notice to Tenant prior to
exercise of termination and/or dispossession rights and remedies against
all leased properties under such lease. A lease of 10 leased properties is
eligible for purchase options with respect to 2 leased properties during
the Term (Section 16.12.1.1). Even if Tenant exercised such 2 purchase
-----------------
options and closed thereunder, a Section 16.1(m) and/or Section 16.1(q)
--------------- ---------------
Event of Default would continue to exist under such lease and the
precondition to an exercisable purchase option, and receipt of a Section
16.12 Notice, referenced in Section 16.12.2(ii) would therefore not be met.
-------------------
79
ARTICLE XVII
Section 17.1 Lessor's Right to Cure Tenant's Default. If an Event of
---------------------------------------
Default shall have occurred and be continuing, Lessor, 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 Tenant, and may, to the extent permitted by
law, enter upon any or each Leased Property or any portion thereof for the
purpose of curing such Event of Default and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate in connection with curing such
Event of Default. No such entry shall be deemed an eviction of Tenant. All
reasonable sums so paid by Lessor and all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses, in each
case, to the maximum extent permitted by law) so incurred, together with
interest thereon (to the maximum extent permitted by law) as Additional Charges
hereunder at the Overdue Rate from the date on which such sums or expenses are
paid or incurred by Lessor, shall be paid by Tenant to Lessor on demand. The
obligations of Tenant and rights of Lessor contained in this Article shall
survive the expiration or earlier termination of this Lease. Nothing contained
in this Section 17.1 shall limit or impair Lessor's rights and remedies under
------------
Section 8.3.2 or Section 21.5.2.
------------- --------------
ARTICLE XVIII
Section 18.1 Provisions Relating to Purchase of the Leased Property. In
------------------------------------------------------
the event Tenant purchases any Leased Property from Lessor pursuant to any of
the terms of Article XIV hereof, Lessor shall, upon receipt from Tenant of the
-----------
applicable purchase price, together with full payment of all Rent due and
payable or other charges due and payable with respect to any period ending on or
before the date of the purchase, deliver to Tenant an appropriate deed or other
conveyance (in the customary form used to convey commercial properties within
the relevant jurisdiction) conveying the entire interest of Lessor in and to
such Leased Property to Tenant free and clear of all encumbrances other than (i)
those that Tenant has agreed hereunder to pay or discharge, (ii) those mortgage
liens, if any, which Tenant has agreed in writing to accept and to take title
subject to and (iii) Permitted Encumbrances. The difference between the
applicable purchase price and the total of the encumbrances assumed or taken
subject to 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 Tenant other than as specifically provided above, such Leased
Property shall be conveyed to Tenant on an "as is" basis, and in its then
physical condition. Closing of any such sale shall be contingent upon and
subject to Tenant obtaining all required governmental consents and approvals for
such transfer and if such sale shall fail to be consummated by reason of the
inability of Tenant to obtain all such approvals and consents, any options to
extend the Term of this Lease which otherwise would have expired during the
escrow period to such proposed sale shall be deemed to remain in effect for 30
days after termination of the escrow or other arrangement covering the closing
of such proposed sale. All expenses of such conveyance, including, without
limitation, the cost of title examination or standard coverage title insurance,
if reasonably required under the circumstances then existing, attorneys' fees
incurred by Lessor in connection with such conveyance and release, and transfer
taxes, shall be paid by Lessor. Recording fees shall be
80
paid for by Tenant. Upon the closing of any such sale, the provisions of Section
-------
40.16 hereof shall apply.
-----
ARTICLE XIX
Section 19.1 Exercise of Renewal Options. Tenant is hereby granted the
---------------------------
right to renew this Lease, with respect to all, but not less than all, of those
Leased Properties within the applicable group as shown on Exhibit D annexed
hereto (herein, a "Renewal Group") for three (3), 5-year option renewal terms
-------------
(collectively, the "Extended Terms" and each an "Extended Term") upon giving
-------------- -------------
written notice to Lessor of each such renewal at least one (1) year but not more
than eighteen (18) months prior to the termination of the then current Term
applicable to such Renewal Group, provided and on the conditions that, at the
time Tenant gives a renewal notice as set forth above relative to a Renewal
Group and at the time of the commencement of the applicable Extended Term for
such Renewal Group, (a) an Event of Default (other than any Facility Defaults of
the nature referenced in Section 16.1(m) and/or Section 16.1(q) of this Lease)
--------------- ---------------
shall not have occurred and be continuing (as described in Section 16.10.2.3
-----------------
above) under this Lease and (b) Facility Defaults of the nature referenced in
Section 16.1(m) and/or Section 16.1(q) of this Lease shall not have occurred and
--------------- ---------------
be continuing (as described in Section 16.10.2.3 above) with respect to the
Section 16.10.1 Number or more Leased Properties. Tenant may not exercise its
option for more than one Extended Term at a time. If Tenant exercises a renewal
option as aforesaid relative to a Renewal Group, Tenant may nevertheless revoke
such exercise, if and so long as the requirements of Section 19.5 below are
------------
strictly complied with. For purposes of this Section 19.1, if an Event of
------------
Default shall occur under Section 16.1(m) or Section 16.1(q) of this Lease,
--------------- ---------------
whether the same is, or is deemed to be, "continuing" shall be determined as
provided in Section 16.10 above.
-------------
Example 1: If (i) an Event of Default of the nature referenced in Section
--------- -------
16.1(m) and/or Section 16.1(q) of this Lease has occurred and is continuing (as
------- ---------------
described in Section 16.10.2.3 above) with respect to Leased Property X and no
-----------------
other Leased Properties, (ii) Lessor has terminated this Lease as it applies to
Leased Property X or dispossessed Tenant from such Leased Property X, (iii) the
Section 16.10.1 Number applicable to this Lease exceeds 1 (so that the condition
referenced in Section 19.1(b) is met), and (iv) Tenant desires to renew this
---------------
Lease, pursuant to Section 19.1, with respect to a Renewal Group which does not
------------
include Leased Property X, then Tenant would be entitled to renew this Lease
with respect to all of the Leased Properties in such Renewal Group. See the
following examples for examples of Lessor's and Tenant's respective rights
relative to renewal of the Renewal Group that includes Lease Property X.
Example 2: Same assumed facts as in Example 1, except assume that Lessor
--------- ---------
has not terminated this Lease as it applies to Leased Property X, but Lessor has
dispossessed Tenant from Leased Property X, and that the Renewal Group that
Tenant desires to renew includes Leased Property X. Tenant would be entitled to
renew this Lease with respect to all of the Leased Properties in such Renewal
Group, but any such renewal would include renewal of Leased Property X. Section
-------
19.1 does not create any right allowing Tenant to renew less than all of a
----
Renewal Group as to which this Lease remains in effect. As to Leased Property
X,
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Tenant has been dispossessed, not terminated, and therefore any renewal would
need to include Leased Property X.
Example 3: Same assumed facts as in Example 2, except assume that Lessor
--------- ---------
has terminated this Lease as it applies to Leased Property X. Tenant would be
entitled to renew this Lease with respect to all of the Leased Properties in the
Renewal Group that formerly included Leased Property X, without being obligated
to renew this Lease as to Leased Property X. Due to the termination of this
Lease as it applies to Leased Property X, the aforesaid Renewal Group no longer
includes Leased Property X, and Tenant is entitled to renew this Lease as to all
of the Renewal Group as to which this Lease remains in effect.
Example 4: Same assumed facts as in Examples 1, 2, and 3, except that, in
--------- ---------- - -
each case, assume that the applicable Section 16.10.1 Number is 1. Tenant would
not be entitled to renew this Lease as to any Renewal Group included in this
Lease, as the condition referenced in Section 19.1(b) would not be met in each
---------------
of such Examples.
Example 5: Same assumed facts as in Example 3, except assume that the
---------
Section 16.10.1 Number applicable to this Lease is 2 and that a Section 16.1(m)
---------------
Event of Default has occurred and is continuing with respect to Master Lease
Leased Property Y included in a Separate Lease as to which this Lease is a
Section 16.10.3 Lease and as to which Sections 16.10.3(a) and (b) are
------------------- ---
applicable. Tenant would not be entitled to renew this Lease as to any Renewal
Group included in this Lease. The aforesaid Section 16.1(m) Event of Default
---------------
under such Separate Lease relative to Master Lease Leased Property Y would count
as a Section 16.1(m) Event of Default under this Lease the same as if Master
---------------
Lease Leased Property Y was included in this Lease, and, after aggregating such
Section 16.1(m) Event of Default relative to Master Lease Leased Property Y with
---------------
the Section 16.1(m) Event of Default relative to Leased Property X, the
---------------
condition referenced in Section 19.1(b) would not be met.
---------------
Section 19.2 Renewal Terms. During each Extended Term, all of the terms
-------------
and conditions of this Lease shall continue in full force and effect, subject,
however, to the following provisions. In the first Extended Term, Base Rent,
Current Rent and Accrued Rent shall be calculated using the method applicable
during the last year of the Fixed Term. In the case of each Extended Term after
the first Extended Term, if the portion of Base Rent applicable to the
applicable Renewal Group (based upon the aggregate Transfer Property Percentages
for the Leased Properties in such Renewal Group) for the first year of any such
Extended Term is less than Fair Market Rental of such Renewal Group (as
determined in accordance with this Section 19.2 and Section 19.3 hereof), then
------------ ------------
Base Rent and Current Rent for such year for such Renewal Group shall each be an
amount equal to such Fair Market Rental. If Base Rent and Current Rent for such
first year of any such Extended Term for such Renewal Group are based upon Fair
Market Rental as determined pursuant to this Section 19.2 and Section 19.3
------------ ------------
hereof, the Base Rent and Current Rent in the remaining years of such Extended
Term and any subsequent Extended Terms for such Renewal Group (subject, however,
to the re-application of this Section to the first year and subsequent years of
any subsequent Extended Term) shall be escalated as is determined and required
by the terms of the Fair Market Rental determination for such Renewal Group.
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Section 19.3 Fair Market Rental Determination. At any time within thirty
--------------------------------
(30) days after receipt from Tenant of a notice of renewal under Section 19.1
------------
hereof (other than a notice of renewal for the first Extended Term), Lessor may,
by written notice to Tenant, request that Fair Market Rental of the applicable
Renewal Group, and Fair Market Rental of each Leased Property within such
Renewal Group, be determined by appraisal under the procedures of Article XXXV
------------
hereof and in such event such Fair Market Rentals shall be so determined in
accordance with the procedures of such Article XXXV. Lessor's failure to
------------
deliver such notice to Tenant within thirty (30) days after receiving Tenant's
notice of renewal shall preclude Lessor from any claim that Base Rent for the
first year of the Extended Term to which such notice of renewal relates for the
applicable Renewal Group is less than Fair Market Rental of such Renewal Group,
and thereafter Base Rent and Current Rent for such Renewal Group for such
Extended Term (but only for that particular Extended Term) shall be determined
as set forth in the definitions of "Base Rent" and "Current Rent" set forth in
Section 2.1 hereof, without any application of Section 19.2. If Lessor has
timely delivered such notice to Tenant, and thereafter Fair Market Rental of the
applicable Renewal Group is determined under Article XXXV hereof, the
------------
determination of whether such appraised Fair Market Rental is higher than Base
Rent applicable to the applicable Renewal Group shall be made by Lessor, in its
sole and exclusive discretion, which determination shall be binding on Lessor
and Tenant and not subject to further review.
Section 19.4 Extended Period New Lease. If Base Rent and Current Rent
-------------------------
for a Renewal Group for the first year of any Extended Term after the first
Extended Term are based upon Fair Market Rental as determined pursuant to
Section 19.2 and Section 19.3 hereof, then effective as of the first day of such
------------ ------------
Extended Term, such Renewal Group shall be transferred from this Lease to a New
Lease entered into pursuant to, and otherwise in compliance with, the terms and
conditions of Section 40.15 hereof and this Lease shall be amended as set forth
-------------
in such Section 40.15. Such New Lease shall include therein an Exhibit C that
------------- ---------
allocates the aggregate Base Rent and Current Rent payable thereunder to the
individual Leased Properties covered by such New Lease, and assigns Transferred
Property Percentages to such Leased Properties, in a manner that is consistent
with the respective Fair Market Rentals of such Leased Properties as determined
pursuant to Section 19.2 and Section 19.3 hereof.
------------ ------------
Section 19.5 Revocation of Renewal Option Exercise. In the event (a)
-------------------------------------
Tenant exercises a renewal option relative to a Renewal Group in accordance with
Section 19.1 above, (b) such renewal option relates to an Extended Term for such
------------
Renewal Group other than the first Extended Term applicable to such Renewal
Group, and (c) Lessor, in accordance with Section 19.3 above, requests that Fair
------------
Market Rental of the applicable Renewal Group, and Fair Market Rental of each
Leased Property within such Renewal Group, be determined by appraisal under the
procedures of Article XXXV hereof, Tenant may revoke its aforesaid exercise,
------------
provided and on the condition that, whether or not the Fair Market Rental
determinations referenced in subsection (c) above have been completed, Tenant
must notify Lessor of its revocation of its aforesaid exercise not less than one
(1) year prior to the termination of the then current Term applicable to such
Renewal Group; provided, however, if Tenant gives its written renewal notice to
-------- -------
Lessor in accordance with Section 19.1 above on or
------------
83
before the date which is seventeen (17) months prior to the termination of the
then current Term applicable to such Renewal Group, then Tenant shall have until
the earlier of (i) nine (9) months prior to the termination of the then current
Term applicable to such Renewal Group and (ii) fifteen (15) days after the date
upon which the Fair Market Rental determinations referenced in subsection (c)
above have been completed to notify Lessor of its revocation. In the event
Tenant so revokes its aforesaid exercise relative to a Renewal Group, Tenant's
remaining renewal option(s) relative to such Renewal Group shall be deemed to
have been irrevocably waived and terminated.
ARTICLE XX
Section 20.1 Holding Over. If Tenant shall for any reason remain in
------------
possession of any Leased Property after the expiration of the Term or earlier
termination of the Term (other than solely due to Lessor's failure, on or prior
to (a) the ninetieth (90th) day preceding the expiration of the Term as to such
Leased Property or (b) if this Lease is terminated prior to such expiration due
to Lessor's default, the earlier termination of the Term as to such Leased
Property, to have notified Tenant that Lessor has procured a Qualified Successor
for such Leased Property), such possession shall, at the option of Lessor in its
sole discretion as to each such Leased Property, be as a month-to-month tenant
during which time Tenant shall pay as rental each month (which rental
constitutes liquidated damages with respect to Rent, and not a penalty for the
period to which it relates), one and one-half times the aggregate of (i) one-
twelfth of the aggregate annual amounts of Current Rent and Accrued Rent payable
as of the end of the preceding Term and, in the case of a month-to-month tenancy
as to less than all of the Leased Properties, allocable to the Leased
Property(ies) in question in accordance with Section 16.9 hereof; (ii) all
------------
Additional Charges accruing during the month and (iii) all other sums, if any,
payable by Tenant pursuant to the provisions of this Lease with respect to the
Leased Property(ies) in question. During such period of month-to-month tenancy,
Tenant shall be obligated to perform and observe all of the terms, covenants and
conditions of this Lease with respect to the Leased Property(ies) in question,
but shall have no rights hereunder other than the right, to the extent given by
law to month-to-month tenancies to continue its occupancy and use of the
applicable Leased Property. Subject to Section 40.3, nothing contained herein
------------
shall constitute the consent, express or implied, of Lessor to the holding over
of Tenant after the expiration or earlier termination of this Lease.
ARTICLE XXI
Section 21.1 Subordination. This Lease and all rights of Tenant
-------------
hereunder are subject and subordinate to all Facility Mortgages and all Superior
Leases which may now or hereafter affect Lessor's interest in the applicable
Leased Property and any interest of any Superior Lessor (all such leases and
mortgages, collectively, the "Superior Mortgages"), and to all renewals,
------------------
modifications, consolidations, replacements and extensions of the Superior
Mortgages, provided, however, that, in the case of any Superior Mortgages (other
-------- -------
than the Existing Ground Leases), Tenant's aforesaid subordination shall be
conditioned on Tenant's receipt of a so-called "non-disturbance" agreement in
favor of Tenant from any such Superior Lessor (other than the Superior Lessors
under the Existing Ground Leases) or Superior
84
Mortgagee (defined below) on such Superior Lessor's or Superior Mortgagee's
commercially reasonable standard form. This Section shall be self-operative and
no further instrument of subordination shall be required. In confirmation of
such subordination, Tenant agrees to execute and deliver promptly any
commercially reasonable form of instrument (in recordable form, if requested)
that Lessor, any Superior Lessor or the holder of any Superior Mortgage (a
"Superior Mortgagee") may request to evidence such subordination. Lessor shall
------------------
use its reasonable efforts to obtain from each currently existing Facility
Mortgagee a so-called "non-disturbance" agreement in favor of Tenant on such
Facility Mortgagee's standard form.
Section 21.2 Attornment. If the interests of Lessor under this Lease are
----------
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of any such Superior Mortgage, or if any Superior
Lease shall be terminated then Tenant shall, at the option of such purchaser,
assignee or any Superior Lessor, as the case may be, (x) attorn to such party
and perform for its benefit all the terms, covenants and conditions of this
Lease on Tenant's part to be performed with the same force and effect as if such
party were the landlord originally named in this Lease, or (y) enter into a New
Lease with such party, as landlord, pursuant to Section 40.15 hereof for the
-------------
remaining Term and otherwise on the same terms and conditions of this Lease
except that such successor landlord shall not be (i) liable for any previous
act, omission or negligence of Lessor under this Lease; (ii) subject to any
counterclaim, defense or offset which theretofore shall have accrued to Tenant
against Lessor; (iii) bound by any previous modification or amendment of this
Lease or by any previous prepayment of more than one month's rent, unless such
modification, amendment or prepayment shall have been approved in writing by the
Superior Lessor or the Superior Mortgagee through or by reason of which such
successor landlord shall have succeeded to the rights of Lessor under this Lease
or, in case of any such prepayment, such prepayment of rent has actually been
delivered to such successor landlord; or (iv) liable for any security deposited
pursuant to this Lease unless such security has actually been delivered to such
successor landlord. Nothing contained in this Section shall be construed to
impair any right otherwise exercisable by any such owner, holder or lessee.
Section 21.3 Mortgagee Cure Rights. If any act or omission by Lessor
---------------------
would give Tenant the right, immediately or after lapse of time, to cancel or
terminate this Lease or to claim a partial or total eviction, or abatement of
rent, setoff or counterclaim not otherwise expressly permitted by the terms of
this Lease, Tenant will not exercise any such right until (i) it has given
written notice of such act or omission to each Superior Mortgagee whose name and
address shall have previously been furnished to Tenant, by delivering notice of
such act or omission addressed to each such party at its last address so
furnished, (ii) Lessor shall have failed to cure the same within the time limits
set forth in this Lease, and (iii) following the giving of such notice, no
Superior Mortgagee and no Superior Lessor shall have remedied such act or
omission (x) in the case of an act or omission which is capable of being
remedied without possession of this Leased Property, within the cure period
available to Lessor under this Lease plus sixty (60) days and (y) in the case of
any act or omission which is incapable of being remedied without possession of
the applicable Leased Property, within sixty (60) days following the date on
which possession is obtained (either by such Superior Mortgagee or Superior
Lessor or by a receiver in an action commenced by such Superior Mortgagee or
85
Superior Lessor), provided a Superior Mortgagee or Superior Lessor has promptly
--------
commenced action to obtain possession and shall diligently pursue such action to
completion and provided further that such Superior Mortgagee or Superior Lessor
shall, with reasonable diligence, give Tenant notice of its intention to, and
commence and continue to, remedy such act or omission or cause the same to be
remedied.
Section 21.4 Modifications. Tenant shall execute any modification of
-------------
this Lease requested by any Superior Mortgagee or prospective Superior Mortgagee
to cause the terms of this Lease to conform with customary and reasonable
mortgage financing requirements, provided that such modifications (i) do not
materially adversely increase the obligations of Tenant hereunder or materially
diminish Tenant's rights under this Lease or materially impair the right of a
Leasehold Mortgagee, (ii) do not increase Rent payable hereunder, and (iii) are
requested by any such Superior Mortgagee or prospective Superior Mortgagee only
at the time of its initial loan advance or any subsequent extension of the
maturity date of its loan or material modification of the terms of its loan.
Tenant will not unreasonably withhold, delay or condition its consent to such
modification, provided subsections (i), (ii) and (iii) above are complied with.
Section 21.5 Existing Ground Leases.
----------------------
Section 21.5.1 Tenant shall, at its own cost and expense, fully
observe, perform and comply with all of the obligations of Lessor, as lessee,
under all Existing Ground Leases, including, without limitation, all obligations
relating to use of the Leased Properties, payment of ground rents, taxes,
assessments and utility charges, maintenance and alterations of the Leased
Properties and assignment and subletting. Tenant shall not cause, or permit its
respective agents, employees, contractors, invitees, subtenants, licensees,
concessionaires or assigns (whether or not permitted hereunder) to cause,
whether by act or omission, any breach of, default under or termination of any
Existing Ground Lease. Notwithstanding anything to the contrary contained in
Section 16.1 or elsewhere in this Lease, an Event of Default shall be deemed to
------------
have occurred under this Lease on account of Tenant's breach of this Section
-------
21.5.1, when, and only if, (i) Tenant's breach of this Section 21.5.1 also
------ --------------
results in a breach or default of an obligation under an Existing Ground Lease
and (ii) such Existing Ground Lease breach or default is not cured by Tenant on
or prior to the expiration of the cure period, if any, applicable to such breach
or default by the terms of such Existing Ground Lease (or such longer cure
period as may be expressly authorized by an order of a court of competent
jurisdiction), and (iii) if the Existing Ground Lease breach or default
referenced in subsection (i) above is a non-monetary, non-material breach or
default of the Existing Ground Lease, on account of such Existing Ground Lease
breach or default, such Existing Ground Lease is at material risk of being
terminated or has been terminated. Lessor agrees that, in the event Lessor
receives any written notice of default from the ground lessor under any Existing
Ground Lease, Lessor shall promptly forward a copy thereof to Tenant, and, in
the event Lessor's Management Group obtains actual knowledge (as opposed to, and
not including, constructive, imputed, assumed or other knowledge, and without
any obligation to investigate or otherwise make inquiry) of any breach or
default by the ground lessee under any Existing Ground Lease, then, unless
Lessor's Management Group has the aforesaid actual knowledge
86
that Tenant already has knowledge of such breach or default, Lessor shall
promptly notify Tenant in writing of such breach or default. Lessor further
agrees that Lessor shall timely exercise any options to renew or extend
contained in the Existing Ground Leases, as and to the extent necessary from
time to time so that each Existing Ground Lease shall not expire prior to the
expiration or termination of this Lease as it applies to the Leased Property
affected by such Existing Ground Lease (including any Extended Terms applicable
to such Leased Property). Tenant agrees that, if Lessor, at its option, elects
to cure an Event of Default under this Section 21.5.1, such cure shall not
--------------
excuse Tenant from, or be deemed a cure of, such Event of Default, nor shall
Tenant's reimbursement to Lessor of any costs and expenses incurred by Lessor in
affecting any such cure be deemed a cure of any such Event of Default, provided,
--------
however, that, notwithstanding the foregoing, even after the occurrence of such
-------
an Event of Default by Tenant and/or Lessor's cure thereof, Lessor agrees to
accept Tenant's cure thereof, or reimbursement of Lessor's costs and expenses to
effect such cure, provided, and on the condition, that Lessor has not, prior
thereto, terminated this Lease as it affects the Leased Property to which such
Existing Ground Lease relates or dispossessed Tenant from such Leased Property.
Nothing contained in this Section 21.5 shall limit or impair Lessor's
------------
indemnification rights under Section 24.1 below.
------------
Section 21.5.2 If (a) an Existing Ground Lease breach or default of
the nature described in Section 21.5.1(i) above occurs, and (b) in the case of a
-----------------
non-monetary, non-material Existing Ground Lease breach or default, on account
thereof, if the same is not cured, the condition referenced in Section
-------
21.5.1(iii) above would, or is likely to, be satisfied, Tenant agrees that,
-----------
notwithstanding anything to the contrary contained in Section 17.1 above or
elsewhere in this Lease, Lessor may, but shall not be obligated to, in its
discretion and regardless of whether Tenant is proceeding to cure, or attempting
to cure, the Existing Ground Lease breach or default referenced in Section
-------
21.5.1(i) above or whether the cure period referenced in Section 21.5.1(ii)
--------- ------------------
above has expired or is likely to expire before completion of necessary cure
efforts, take such actions as it deems necessary or appropriate to attempt to
cure such Existing Ground Lease breach or default, provided, however, that, if
-------- -------
the breach or default referenced in subsection (a) above has applicable thereto,
by the express terms of the applicable Existing Ground Lease, a stated period to
cure the same, Lessor agrees not to commence to cure such breach or default
unless and until one-half (1/2) of the aforesaid stated cure period has elapsed.
If Lessor so proceeds to attempt to cure any such Existing Ground Lease breach
or default, Tenant agrees, within fifteen (15) days following receipt of a
written demand therefor and reasonable supporting documentation, to reimburse
Lessor for the reasonable amount of all costs and expenses incurred by Lessor in
curing, or attempting to cure, any such Existing Ground Lease breach or default.
ARTICLE XXII
Section 22.1 Notice to Lessor. If Tenant shall mortgage Tenant's
----------------
interest in one or more Leased Properties to a Lending Institution in accordance
with the terms of this Lease, and if the holder of the Leasehold Mortgage shall
provide Lessor with a true copy of the Leasehold Mortgage and the name and
address of the Leasehold Mortgagee (as hereinafter defined) and Lessor shall
approve the Leasehold Mortgage, Lessor and Tenant agree that the
87
provisions of this Section shall apply in respect to the Leasehold Mortgage.
Lessor hereby approves of the standard Leasehold Mortgage form draft that was
forwarded to Lessor's counsel on February 28, 2001 and that is intended to be
used in connection with the Tenant Senior Secured Notes and further agrees that
it would approve the same form for use in connection with the Exit Financing;
provided, however, that such approval shall not constitute an agreement by
Lessor to be bound by the terms of any such Leasehold Mortgage. In the event of
any assignment of a Leasehold Mortgage or in the event of a change of address of
a Leasehold Mortgagee or of an assignee of a Leasehold Mortgage, notice of the
new name and address shall be provided to Lessor.
Section 22.2 Definitions.
-----------
(a) The term "Leasehold Mortgage" as used in this Section shall include a
mortgage, a deed of trust, a deed to secure debt, or other security instrument
by which Tenant's leasehold estate is mortgaged or otherwise transferred, to
secure a debt. "Leasehold Mortgage" shall be deemed to refer to all of the
Leasehold Mortgages delivered to secure a debt.
(b) The term "Leasehold Mortgagee" as used in this Section shall refer to
any and all holders of a Leasehold Mortgage approved by Lessor pursuant to the
terms hereof. Lessor hereby approves of Xxxxxx Guaranty Trust Company of New
York, as collateral agent, as the initial Leasehold Mortgagee, and any agent for
any credit facilities secured by Tenant's leasehold interest hereunder that are
entered into by Tenant as part of the Bankruptcy Plan.
Section 22.3 Consent of Leasehold Mortgagee Required. No cancellation or
---------------------------------------
surrender (other than a termination following the occurrence of an Event of
Default) and no amendment to or modification of, this Lease shall be effective
as to the Leasehold Mortgagee without the prior written consent of such
Leasehold Mortgagee, unless an amendment or modification is not reasonably
likely to result in a material adverse effect on the rights of the Leasehold
Mortgagee, the lien of the Leasehold Mortgages, or the value of the leasehold
interest demised hereunder.
Section 22.4 Default Notice. Lessor, upon providing Tenant any notice
--------------
of: (a) default under this Lease or (b) a termination of this Lease, in whole
or in part, shall at the same time provide a copy of such notice to the
Leasehold Mortgagee. From and after the time such notice has been given to a
Leasehold Mortgagee, the Leasehold Mortgagee shall have the same period, after
the giving of such notice upon it, for remedying any default or acts or
omissions which are the subject matter of such notice or causing the same to be
remedied, as is given Tenant after the giving of such notice to Tenant, plus (i)
except if subsection (ii) below is applicable, thirty (30) days to remedy,
commence to remedy or cause to be remedied the defaults or acts or omissions
which are the subject matter of such notice specified in any such notice,
provided that such defaults are capable of being cured by the Leasehold
Mortgagee or on behalf of the Leasehold Mortgagee, or (ii) fifteen (15) days to
remedy any Rent defaults which are the subject matter of such notice specified
in any such notice. Lessor shall accept such performance by or at the
instigation of the Leasehold Mortgagee as if the same had been
88
done by Tenant. Tenant authorizes each Leasehold Mortgagee to take any such
action at the Leasehold Mortgagee's option and does hereby authorize entry upon
the Leased Properties by the Leasehold Mortgagee for such purpose. If Leasehold
Mortgagee has failed to cure Tenant's default within the above-mentioned time
period, Lessor may exercise its rights and remedies specified in Sections 16.2,
-------------
16.3 and 17.1.
---- -----
Section 22.5 Procedure for Foreclosure on Default.
------------------------------------
(a) If the Leasehold Mortgagee has commenced taking steps to acquire or
sell Tenant's interest in this Lease by foreclosure of the Leasehold Mortgage or
other appropriate means, the Leasehold Mortgagee shall provide Lessor notice of
the same and shall prosecute the same to completion with due diligence.
(b) Following Lessor's receipt of such notice and so long as the Leasehold
Mortgagee continues to prosecute to completion with due diligence such
foreclosure or other means of acquiring or selling Tenant's interest in this
Lease, and provided that the Leasehold Mortgagee complies with its obligations
under subsection (c) below, this Lease shall not then terminate, and the time
for completion by such Leasehold Mortgagee of its proceedings shall continue so
long as such Leasehold Mortgagee is enjoined or stayed and thereafter for so
long as such Leasehold Mortgagee proceeds to complete steps to acquire or sell
Tenant's interest in this Lease by foreclosure of the Leasehold Mortgage or by
other appropriate means with reasonable diligence and continuity. Nothing in
this Section 22.5, however, shall be construed to extend this Lease beyond the
------------
original term thereof, as extended by any options to extend the term of this
Lease properly exercised by Tenant or a Leasehold Mortgagee in accordance with
Article XIX, nor to require a Leasehold Mortgagee to continue such foreclosure
-----------
proceedings after the default by Tenant has been cured. If the default by
Tenant shall be cured and the Leasehold Mortgagee shall discontinue such
foreclosure proceedings, this Lease shall continue in full force and effect as
if Tenant had not defaulted under the Lease.
(c) In addition, during such period, the Leasehold Mortgagee shall pay or
cause to be paid the rent, additional rent and other monetary obligations of
Tenant under this Lease as the same become due, and continue its good faith
efforts to perform, or cause to be performed, all of Tenant's other obligations
under this Lease.
Section 22.6 Assignment or Transfer in Lieu of Foreclosure.
---------------------------------------------
(a) For the purposes of this Section 22.6, the making of a Leasehold
------------
Mortgage shall not be deemed to constitute an assignment or transfer of this
Lease or of the leasehold estate hereby created, nor shall any Leasehold
Mortgagee, as such, be deemed to be an assignee or transferee of this Lease or
of the leasehold estate hereby created so as to require the Leasehold Mortgagee,
as such, to assume the performance of any of the terms, covenants or conditions
on the part of Tenant to be performed hereunder, but the purchaser at any sale
of this Lease and of the leasehold estate hereby created in any proceedings for
the foreclosure of any Leasehold Mortgage, or the assignee or transferee of this
Lease and of the leasehold estate hereby created under any instrument of
assignment or transfer in lieu of the foreclosure of any Leasehold Mortgage,
shall be deemed to be an assignee or transferee within the meaning of
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this Section 22.6, and shall be deemed to have agreed to perform all of the
------------
terms, covenants and conditions on the part of Tenant to be performed hereunder
from and after the date of such purchase and assignment.
(b) Prior to any such purchase or assignment pursuant to a foreclosure or
similar proceeding, or any transaction in lieu thereof, the Leasehold Mortgagee
shall notify Lessor of the proposed transferee and obtain Lessor's written
consent to such purchase or assignment. Subject to any state or other
governmental requirements, Lessor shall not unreasonably withhold, condition or
delay its consent to any sale or assignment, provided that (a) the purchaser or
assignee (1) shall be a creditworthy entity with sufficient financial stability
to satisfy its financial obligations under the Lease, (2) shall have not less
than four years experience in operating health care facilities for the purpose
of the applicable Facility's Primary Intended Use, (3) has a favorable business
and operational reputation and character and (4) shall assume in writing and
agree to keep and perform all of the terms of this Lease on the part of Tenant
to be performed hereunder from and after the date of such purchase and
assignment and (b) an original counterpart of each such purchase and sale
agreement or instrument of assignment or transfer in lieu of foreclosure of any
Leasehold Mortgage, duly executed by Tenant and such purchaser or assignee, as
the case may be, in the form and substance satisfactory to Lessor, shall be
delivered promptly to Lessor. Lessor's obligation to consent to a sale or
assignment is subject to any reasonable approval rights of any Facility
Mortgagee and/or the lenders under that certain Amended and Restated Credit,
Security, Guaranty and Pledge Agreement, dated as of April 29, 1998, amended and
restated as of January 31, 2000, among Lessor, as borrower, the guarantors named
therein and the lenders named therein and with Bank of America, N.A., as Issuing
Bank and as Administrative Agent, and Xxxxxx Guaranty Trust Company of New York,
as Documentation Agent, as the same may be amended, restated and/or replaced
from time to time ("Lessor Credit Agreement").
-----------------------
(c) (i) In the event of any dispute between Lessor and any Leasehold
Mortgagee or Tenant regarding whether Lessor has unreasonably withheld,
conditioned or delayed its consent to any sale or assignment in violation of
Section 22.6(b) or whether the other requirements of Section 22.6(b) have been
--------------- ---------------
satisfied (the questions of whether Lessor has so violated Section 22.6(b)
---------------
and/or whether the aforesaid other requirements of Section 22.6(b) have been
---------------
satisfied are herein referred to collectively as the "Arbitration Question"), as
--------------------
their sole remedy on account of any such dispute, Lessor may initiate an
arbitration under this Section 22.6(c) by written notice to Tenant and such
---------------
Leasehold Mortgagee, or such Leasehold Mortgagee or Tenant may initiate an
arbitration under this Section 22.6(c) by written notice to Lessor, in each case
---------------
to decide the Arbitration Question.
(ii) In such event, within ten (10) days following the issuance of any
such arbitration initiation notice, each of Lessor and such Leasehold Mortgagee
(for itself and Tenant) shall appoint a Qualified Arbitrator (as defined below),
and, within seven (7) days following the appointment of such two (2) Qualified
Arbitrators, such two (2) Qualified Arbitrators shall appoint a third Qualified
Arbitrator. If either Lessor or such Leasehold Mortgagee (for itself and
Tenant) shall fail to appoint a Qualified Arbitrator within the aforesaid ten
(10) day period, the Qualified Arbitrator appointed by the other shall alone
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proceed to determine the Arbitration Question. If the two (2) Qualified
Arbitrators appointed by Lessor and such Leasehold Mortgagee (for itself and
Tenant) are unable to agree within the aforesaid seven (7) day period upon a
third Qualified Arbitrator, then either Lessor or such Leasehold Mortgagee (for
itself and Tenant), upon written notice to the other, may apply for such
appointment to the American Arbitration Association in New York City (or any
organization successor thereto) in accordance with the rules then prevailing of
the American Arbitration Association (or such successor organization) and, if
the American Arbitration Association (or such successor organization) shall fail
to appoint said third Qualified Arbitrator within fifteen (15) days after such
request is made, then either Lessor or such Leasehold Mortgagee (for itself and
Tenant) may apply, on notice to the other to the Supreme Court, New York County
(or any other court in New York City having jurisdiction) for the appointment of
such third Qualified Arbitrator.
(iii) The three (3) Qualified Arbitrators that are so appointed (or
the single Qualified Arbitrator appointed by Lessor or such Leasehold Mortgagee
(for itself and Tenant) in the limited circumstance referenced above) shall
decide the Arbitration Question within fifteen (15) days following their or his
appointment.
(iv) Each of Lessor and such Leasehold Mortgagee (for itself and
Tenant) shall be entitled to present evidence and arguments to the
arbitrator(s). If either Lessor or such Leasehold Mortgagee (for itself and
Tenant) submits one or more affidavits as part of its submission, the submitting
party agrees, if requested by the other party, to produce such affiants for
cross-examination under oath on the record at the hearings before the
arbitrator(s). There shall be no pre-hearing discovery of any sort, unless
specifically ordered by the arbitrator(s) upon a finding that such discovery is
essential to the decision-making process. The parties to the arbitration shall
conduct the arbitration in a cooperative spirit, in good faith, and in a manner
designed to achieve expedition and economy.
(v) The determination of the Arbitration Question by the three (3)
Qualified Arbitrator(s) (or the single Qualified Arbitrator acting alone as
above provided) shall be conclusive upon Lessor, such Leasehold Mortgagee and
Tenant and a final, unappealable judgment rendered by such arbitrator(s)
relative to the Arbitration Question may be entered in any court having
appropriate jurisdiction. The arbitrator or arbitrators, as the case may be,
shall be required to give written notice to Lessor, such Leasehold Mortgagee and
Tenant stating his or their determination relative to the Arbitration Question,
and shall furnish to each of Lessor, such Leasehold Mortgagee and Tenant a
signed copy of such determination.
(vi) Each of Lessor and such Leasehold Mortgagee (for itself and
Tenant) shall pay its own counsel fees and the witness fees and similar expenses
of preparing for its presentation of evidence and arguments at the arbitration
hearing(s) and of making such presentation. Lessor and such Leasehold Mortgagee
(for itself and Tenant) shall equally share any fees payable to the
arbitrator(s), provided, however, that the three (3) Qualified Arbitrators (or
-------- -------
the single Qualified Arbitrator acting alone as above provided) shall have the
authority to award costs to the prevailing party in the arbitration if such
arbitrator(s) finds that the non-prevailing party acted in bad faith in
connection with any arbitration hereunder.
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(vii) As used in this subsection (c), the term "Qualified
Arbitrator" means a person or entity that is neither an Affiliate of Lessor,
such Leasehold Mortgagee or Tenant nor interested in any financial manner in the
outcome of the Arbitration Question or in Lessor, Tenant or any Leasehold
Mortgagee and has at least ten (10) years experience as an owner or operator of
nursing centers or hospitals or as a senior executive officer and/or director of
the American Health Care Association and/or the Federation of American Health
Systems or any successor organizations thereto or as a senior executive officer
of a publicly traded healthcare real estate investment trust.
Section 22.7 Separate Lease. In the event of any termination of this
--------------
Lease, in whole or in part, Lessor agrees to enter into a new lease ("Separate
--------
Lease") of the Leased Property(ies) in question with the Leasehold Mortgagee or
-----
its designee for the remainder of the term of this Lease, effective as of the
date of termination, at the rent and additional rent, and upon the terms,
covenants and conditions (including all options to renew but excluding
requirements which are not applicable or which have already been fulfilled)
identical to this Lease, provided:
(a) The Leasehold Mortgagee shall make written request upon Lessor for
such Separate Lease within sixty (60) days after the date the Leasehold
Mortgagee receives Lessor's notice of termination of this Lease given pursuant
to Section 22.4.
------------
(b) At the time of the execution and delivery of such Separate Lease, the
Leasehold Mortgagee or its designee shall pay or cause to be paid to Lessor any
and all sums which would at the time of execution and delivery thereof be due
pursuant to this Lease but for such termination and, in addition thereto, all
reasonable expenses, including reasonable attorneys' fees, which Lessor shall
have incurred by reason of such termination and the execution and delivery of
the Separate Lease and which have not otherwise been received by Lessor from
Tenant or other party in interest under Tenant. Upon the execution of such
Separate Lease, Lessor shall allow to the tenant named therein as an offset
against the sums otherwise due under this Section 22.7(b) or under the Separate
---------------
Lease, an amount equal to the net income derived by Lessor from the Leased
Properties during the period from the date of termination of this Lease to the
date of the beginning of the lease term of such Separate Lease. In the event of
a controversy as to the amount to be paid to Lessor pursuant to this Section
-------
22.7(b), the payment obligation shall be satisfied if Lessor shall be paid the
-------
amount not in controversy, and the Leasehold Mortgagee or its designee shall
agree to pay any additional sum ultimately determined to be due plus interest at
the Overdue Rate and such obligation shall be adequately secured.
(c) Such Separate Lease shall be deemed to be a New Lease and the
provisions of Section 40.15 shall apply.
-------------
(d) The Leasehold Mortgagee or its designee shall agree to remedy any of
Tenant's defaults of which said Leasehold Mortgagee was notified by Lessor's
notice of termination given pursuant to Section 22.4 and which are reasonably
------------
susceptible of being so cured by Leasehold Mortgagee or its designee.
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(e) The tenant under such Separate Lease shall have the same right, title
and interest in and to the Leased Properties to which such Separate Lease
relates and the buildings and improvements thereon as Tenant had under this
Lease.
(f) The tenant under any such Separate Lease shall be liable to perform
the obligations imposed on Tenant by such Separate Lease only during the period
such tenant under such Separate Lease has ownership of such leasehold estate.
(g) Notwithstanding anything to the contrary contained in this
Section 22.7, in connection with obtaining a New Lease with respect to a
------------
particular Leased Property as provided herein and in Section 40.15, (i) if,
-------------
prior to the effective date of any such New Lease, Lessor has exercised its
right to collect amounts from Tenant with respect to such Leased Property
pursuant to Section 16.3(A)(ii) hereof, in order to cure existing monetary
-------------------
defaults relative to such Leased Property, Leasehold Mortgagee or its designee
shall not be obligated to pay to Lessor any amount on account of the net present
value of any Rent allocable to such Leased Property for the period from and
after the effective date of such New Lease, but instead shall pay such Rent for
such period at the time and in the manner set forth in such New Lease and
consistent with Article III hereof; (ii) Leasehold Mortgagee or its designee
-----------
shall not be required to cure any non-monetary defaults by Tenant that are not
reasonably susceptible of being cured by Leasehold Mortgagee or its designee;
and (iii) notwithstanding clause (iv) of the definition of "Refinancing
Transaction," although Leasehold Mortgagee or its designee shall be obligated to
assume Tenant's liability for all Unpaid Accrued Rent allocable to the
applicable Leased Property as part of such New Lease, such Unpaid Accrued Rent,
including any Unpaid Accrued Rent accruing after the effective date of such New
Lease, shall not be due and payable until a Refinancing Transaction occurs under
clause (i), (ii) or (iii) of the definition of "Refinancing Transaction."
Section 22.8 Separate Lease Properties. If more than one Leasehold
-------------------------
Mortgagee shall request a Separate Lease pursuant to Section 22.7(a) as to the
---------------
same Leased Property(ies), Lessor shall enter into such Separate Lease with the
Leasehold Mortgagee whose mortgage is prior in lien, or with the designee of the
Leasehold Mortgagee. Lessor, without liability to Tenant or any Leasehold
Mortgagee with an adverse claim, may rely upon a mortgagee title insurance
policy or policies issued by a responsible title insurance company as the basis
for determining the appropriate Leasehold Mortgagee who is entitled to such
Separate Lease.
Section 22.9 Legal Proceedings. Lessor shall give each Leasehold
-----------------
Mortgagee prompt notice of any legal proceedings between Lessor and Tenant
involving obligations under this Lease. Each Leasehold Mortgagee shall have the
right to intervene in any such proceedings and be made a party to such
proceedings, and the parties hereto do hereby consent to such intervention. In
the event that any Leasehold Mortgagee shall not elect to intervene or become a
party to any such proceedings, Lessor shall give the Leasehold Mortgagee notice
of, and a copy of any decision made in, any such proceedings, which shall be
binding on all Leasehold Mortgagees not intervening after receipt of notice of
such proceedings.
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Section 22.10 Future Amendments. In the event on any occasions hereafter
-----------------
Tenant seeks to mortgage the leasehold estate created hereby, Lessor agrees to
amend this Lease from time to time to the extent reasonably requested by a
Lending Institution proposing to make Tenant a loan secured by a first lien upon
Tenant's leasehold estate, provided that such proposed amendments do not
adversely affect the rights of Lessor or its interest in the Leased Properties.
All reasonable expenses incurred by Lessor in connection with any such amendment
shall be paid by Tenant.
Section 22.11 Estoppel Certificate. Lessor and Tenant shall, without
--------------------
charge, at any time and from time to time hereafter, within ten (10) days after
written request of the other party to do so, certify by written instrument duly
executed and acknowledged to any mortgagee or purchaser, or proposed Leasehold
Mortgagee or Superior Mortgagee or proposed purchaser, or any other person, firm
or corporation specified in such request: (a) as to whether this Lease has been
supplemented or amended, and if so, the substance and manner of such supplement
or amendment; (b) as to the validity and force and effect of this Lease; (c) as
to the existence of any Event of Default hereunder; (d) as to the existence of
any offsets, counterclaims or defenses hereto on the part of either party; (e)
as to the commencement and expiration dates of the Term of this Lease; and (f)
as to any other matters as may be reasonably so requested. Any such certificate
may be relied upon by the other party and any other person, firm or corporation
to whom the same may be exhibited or delivered, and the contents of such
certificate shall be binding on the party so certifying.
Section 22.12 Notices. Notices from Lessor to the Leasehold Mortgagee
-------
shall be mailed to the address furnished Lessor pursuant to Section 22.1 and
------------
those from the Leasehold Mortgagee to Lessor shall be mailed to the address
designated pursuant to the provisions of Section 34.1 hereof. Such notices,
------------
demands and requests shall be given in the manner described in Section 34.1 and
------------
shall in all respects be governed by the provisions of that section.
Section 22.13 Erroneous Payments. No payment made to Lessor by a
------------------
Leasehold Mortgagee shall constitute agreement that such payment was, in fact,
due under the terms of this Lease; and a Leasehold Mortgagee having made any
payment to Lessor pursuant to Lessor's wrongful, improper or mistaken notice or
demand shall be entitled to the return of any such payment or portion thereof
provided such Leasehold Mortgagee shall have made demand therefor not later than
one year after the date of its payment.
Section 22.14 Exercise by Leasehold Mortgagee of Remedies Against One or
----------------------------------------------------------
More Leased Properties. Lessor acknowledges that each of the Leased Properties
----------------------
is covered, and may in the future be covered, by a separate Leasehold Mortgage
and that, due to the fact that the applicable law of each jurisdiction differs
as to the procedures (including, without limitation, the periods for notices of
sale to be published) for the exercise by a Leasehold Mortgagee of remedies
under a Leasehold Mortgage and that certain of the Leasehold Mortgages may be of
Leased Properties located in jurisdictions that are subject to anti-deficiency
judgment, election of remedies and/or one-form-of-action statutes making it
advisable for a Leasehold Mortgagee to exercise remedies with respect to such
Leased
94
Properties in a certain order, the Leasehold Mortgagee may be required under
applicable law to, or due to applicable remedial limitations including those
described above, may reasonably elect to exercise remedies against less than all
of the Leased Properties at a particular time and/or may elect, or may be
required by applicable law, to exercise remedies against the Leased Properties
in a particular order. Therefore, Lessor agrees that its obligations under this
Article XXII are applicable to each Leased Property. For example, Lessor may be
------------
asked to enter into a Separate Lease with respect to less than all of the Leased
Properties pursuant to Section 22.7 and/or Lessor may be asked to approve a
------------
proposed transferee of a particular Leased Property pursuant to Section 22.6(b).
---------------
ARTICLE XXIII
Section 23.1 Risk of Loss. During the Term of this Lease, the risk of
------------
loss or of decrease in the enjoyment and beneficial use of each Leased Property
in consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
attachments, levies or executions (other than by Lessor and those claiming from,
through or under Lessor) is assumed by Tenant, and, in the absence of gross
negligence, willful misconduct or breach of this Lease by Lessor pursuant to
Section 38.3, Lessor shall in no event be answerable or accountable therefor nor
------------
shall any of the events mentioned in this Section entitle Tenant to any
abatement of Rent.
ARTICLE XXIV
Section 24.1 Indemnification. Notwithstanding the existence of any
---------------
insurance provided for in Article XIII, and without regard to the policy limits
------------
of any such insurance, Tenant will protect, indemnify, save harmless and defend
Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and reasonable expenses (including, without
limitation, Litigation Costs), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Lessor by reason of: (a) any accident,
injury to or death of persons or loss of or damage to property occurring on or
about any Leased Property or adjoining sidewalks, including without limitation
any claims of malpractice, (b) any use, misuse, non-use, condition, maintenance
or repair by Tenant or anyone claiming under Tenant, including agents,
contractors, invitees or visitors of any Leased Property or Tenant's Personal
Property, (c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease), (d) any failure on the
part of Tenant or anyone claiming under Tenant to perform or comply with any of
the terms of this Lease, (e) subject to Section 7.3.2 hereof, any failure by
-------------
Tenant to observe, perform and comply with the terms of any Existing Ground
Lease or other Permitted Encumbrance applicable to or binding upon Lessor or any
of the Leased Properties or any breach of, default under or termination of any
such Existing Ground Lease or other Permitted Encumbrance caused, whether by act
or omission, by Tenant or its agents, employees, contractors, invitees,
subtenants, licensees, concessionaires or assigns (whether or not permitted
hereunder), and (f) the non-performance of any of the terms and provisions of
any and all existing and future subleases of any Leased Property to be performed
by the subtenant thereunder. Any amounts which become payable by Tenant under
this Section shall be paid within ten (10) days after
95
liability therefor on the part of Tenant is determined by litigation or
otherwise, and if not timely paid, shall bear interest (to the extent permitted
by law) at the Overdue Rate from the date of such determination to the date of
payment. Tenant, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against Lessor or may
compromise or otherwise dispose of the same as Tenant sees fit. Nothing herein
shall be construed as indemnifying Lessor against its own negligent acts or
omissions or willful misconduct. If at any time Lessor shall have notice of a
claim, Lessor shall give reasonably prompt written notice of such claim to
Tenant; provided that (i) Lessor shall have no liability for a failure to give
-------- ----
notice of any claim of which Tenant has otherwise been notified or has knowledge
and (ii) the failure of Lessor to give such a notice to Tenant shall not limit
the rights of Lessor or the obligations of Tenant with respect to such claim
except to the extent that Tenant incurs actual expenses or suffers actual
monetary loss as a result of such failure. Tenant shall have the right to
control the defense or settlement of any claim, provided that (A) Tenant shall
first confirm in writing to Lessor that such claim is within the scope of this
indemnity and that Tenant shall pay any and all amounts required to be paid in
respect of such claim and (B) if the compromise or settlement of any such claim
shall not result in the complete release of Lessor from the claim so compromised
or settled, the compromise or settlement shall require the prior written
approval of Lessor. Lessor shall have the right to approve counsel engaged to
defend such claim and, at its election and sole cost and expense, shall have the
right, but not the obligation, to participate in the defense of any claim.
Lessor shall indemnify, save harmless and defend Tenant from and against
all liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses imposed upon or incurred by or asserted against Tenant as a
result of the gross negligence or willful misconduct of Lessor under and in
connection with this Lease.
Tenant's and Lessor's respective duties, liabilities and obligations under
this Article shall survive the expiration or termination of this Lease as to any
or all of the Leased Properties. For example, if (x) Xxxx Xxx is injured in a
slip-and-fall accident that occurs at Leased Property A on January 1, 2002 and
of which Lessor has no notice or knowledge, (y) this Lease terminates for any
reason on March 1, 2002 with respect to Leased Property A, and (z) on July 1,
2002, Xxxx Xxx begins a lawsuit against Lessor on account of the aforesaid
accident, then, notwithstanding such termination, Tenant's indemnification and
other obligations with respect to such accident and lawsuit under subsection (a)
above and the other provisions of this Article shall survive such termination
with respect to Leased Property A.
New Mexico Limitation on Indemnification. To the extent, if at all, that
----------------------------------------
N.M. Stat. Xxx. (S) 56-7-1 is applicable to any agreement to indemnify in this
Lease, or any related documents, such an agreement to indemnify will not extend
to liability, claims, damages, losses or expenses, including fees of lawyers,
arising out of (i) the preparation or approval of maps, drawings, opinions,
reports, surveys, change orders, designs or specifications by an indemnitee or
the agents or employees of the indemnitee or (ii) the giving of or the failure
to give directions or instructions by the indemnitee, or the agents or employees
of the indemnitee, where such giving or failure to give directions or
instructions is the primary cause of bodily injury to persons or damage to the
property.
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ARTICLE XXV
Section 25.1 Subletting and Assignment.
-------------------------
Section 25.1.1 Notwithstanding anything to the contrary contained in
this Lease but subject to Sections 25.4 and 25.1.11 below, Tenant shall have no
------------- -------
right, directly or indirectly, to assign this Lease in part under any
circumstances. Subject to the foregoing, except as expressly provided herein,
Tenant shall not, without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, delayed or conditioned so long as no Event
of Default has occurred and is continuing hereunder, assign this Lease in its
entirety or mortgage, pledge, hypothecate, encumber or otherwise transfer any
interest in this Lease in whole or in part or sublease all or any part of any
Leased Property or suffer or permit this Lease or the leasehold estate created
hereby or thereby or any other rights arising under this Lease to be assigned in
its entirety or to be transferred, mortgaged, pledged, hypothecated or
encumbered, in whole or in part, whether voluntarily or involuntarily or by
operation of law, or permit the use or occupancy of any Leased Property to be
offered or advertised for assignment or subletting except as hereinafter
provided. For purposes of this Section 25.1, an assignment of this Lease shall
------------
be deemed to include any change in control of any Tenant, as if such change in
control or transaction were an assignment of this Lease. Changes in control of
any Tenant shall include, without limitation, (a) a change in the composition of
the board of directors of any Tenant or any Guarantor such that at the end of
any period of twelve (12) consecutive months the persons constituting a majority
of such board of directors are not the same as the persons constituting a
majority at the start of such period (or persons appointed by such majority),
(b) the sale or other disposition of (i) all or any part of its interest in any
Guarantor or (ii) all or substantially all of the assets of any Guarantor or any
Tenant (other than a bona fide pledge in connection with a financing approved by
Lessor), and (c) a merger or consolidation involving any Guarantor or any
Tenant, which results in the stockholders of any Guarantor or any Tenant
immediately prior to such event owning less than 50% of the capital stock of the
surviving entity or any public parent of the surviving entity. For purposes of
this Section 25.1, a sublease of all or any part of any Leased Property shall be
------------
deemed to include any concessionaire agreement, license agreement or other
agreement involving use or possession of all or any part of any Leased Property.
Section 25.1.2 Subject to the provisions of Section 25.3 below and
------------
any other express conditions or limitations set forth herein, so long as no
Event of Default has occurred and is continuing hereunder, Tenant may, without
the consent of Lessor, (i) assign this Lease in its entirety or sublet all or
any part of any Leased Property to any Affiliate of Tenant, or (ii) sublet up to
an aggregate of 20% of the rentable square footage of any Facility (x) in the
normal course of the Primary Intended Use such as but not limited to leasing of
space for major moveable equipment or functional departments such as pathology,
pharmacy and radiology, or (y) to concessionaires or other third party users or
operators of portions of the Leased Property, provided that, in the case of both
clauses (i) and (ii) above, the assignee or subtenant in question is duly
licensed and possessed of all Authorizations necessary for the conduct of its
activities and the operation of such Leased Property or portion thereof in
accordance with all applicable laws. So long as no Event of Default has occurred
and is
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continuing hereunder, Lessor shall not unreasonably withhold, delay or
condition its consent to any other subletting of the Leased Properties in whole
or in part or assignment of this Lease in its entirety, provided that (a) in the
case of a subletting, (1) the subtenant shall comply with the provisions of
Section 25.2, and (2) if the subtenant is an Affiliate of any Tenant, the
------------
subtenant shall execute and deliver to Lessor a Lease Guaranty in accordance
with Section 40.12 hereof, (b) the assignee or subtenant (1) shall be a
-------------
creditworthy entity with sufficient financial stability to satisfy its
obligations under the Lease, (2) shall have not less than four years experience
in operating health care facilities for the purpose of the applicable Facility's
Primary Intended Use, (3) has a favorable business and operational reputation
and character, (4) has all licenses, permits, approvals and other Authorizations
required to operate the Leased Property(ies) in question for the Primary
Intended Use (or any other use permitted under the terms of this Lease), and (5)
in the case of an assignment, shall assume in writing and agree to keep and
perform all of the terms of this Lease on the part of Tenant to be kept and
performed and shall be, and become, jointly and severally liable with Tenant for
the performance thereof, (c) an original counterpart of each such sublease and
assignment and assumption, duly executed by Tenant and such subtenant or
assignee, as the case may be, in the form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor, and (d) in case of either an assignment
or subletting, Tenant shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the covenants and conditions to be performed by Tenant
hereunder. Lessor's obligation to consent to a subletting or assignment is
subject to any reasonable approval rights of any Facility Mortgagee and/or the
lenders under the Lessor Credit Agreement.
Section 25.1.3 If this Lease is assigned or if any Leased Property or
any part thereof is sublet (or occupied by any entity other than Tenant and its
employees), Lessor, after an Event of Default occurs and so long as it is
continuing, may collect the rents from such assignee, subtenant or occupant, as
the case may be, and apply the net amount collected to the Rent herein reserved,
but no such collection shall be deemed a waiver of the provisions set forth in
Section 25.1.1, the acceptance by Lessor of such assignee, subtenant or
--------------
occupant, as the case may be, as a tenant or release of Tenant from the future
performance of its covenants, agreements or obligations contained in this Lease.
Section 25.1.4 No subletting or assignment shall in any way impair
the continuing primary liability of Tenant hereunder, and no consent to any
subletting or assignment in any particular instance shall be deemed a waiver of
the prohibition set forth in this Section 25.1. No assignment, subletting or
------------
occupancy shall affect the Primary Intended Use. Any subletting, assignment or
other transfer of Tenant's interest in this Lease in contravention of this
Section 25.1 shall be void at Lessor's option.
------------
Section 25.1.5 If Tenant shall desire to assign this Lease or sublet
all (but not a portion) of any Leased Property other than an assignment or
sublease to an Affiliate, it shall first submit in writing to Lessor a notice
("Tenant's Notice") indicating (a) the name of the proposed assignee or
---------------
subtenant, (b) the material terms of the proposed assignment or sublease, (c)
the nature and character of the business which the proposed assignee or
subtenant will conduct at the applicable Leased Property, (d) reasonable
financial data concerning the
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proposed assignee or subtenant, and (e) the effective date of the proposed
assignment or the commencement date and expiration date of the proposed
sublease. Tenant shall additionally submit to Lessor any other information
concerning the proposed assignment or sublease which Lessor may reasonably
request and, prior to the effective date of any assignment permitted hereunder
or the commencement date of any sublease permitted hereunder, Tenant shall
deliver to Lessor evidence reasonably satisfactory to Lessor that the assignee
or subtenant has all licenses, permits, approvals and other Authorizations
necessary to operate each Leased Property for the Primary Intended Use (or any
other use permitted under the terms of this Lease). Except to the extent such
subletting or assignment is authorized under Section 25.1.11 below, if such
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notice is given, Lessor may, at its option, terminate this Lease as to the
applicable Leased Property, in which event, the provisions of Section 40.16
-------------
hereof shall apply. Lessor shall exercise its option by notice to Tenant within
30 days after Tenant's Notice (or receipt by Lessor of all information
reasonably requested by Lessor pursuant to this Section 25.1.5), and during
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such 30-day period, Tenant shall not have the right to assign this Lease or
sublet such space.
Section 25.1.6 If Lessor exercises its option under Section 25.1.5 to
--------------
terminate this Lease, this Lease shall terminate (either as to each Leased
Property or as to the applicable Leased Property, whichever is applicable) on
the date which is 60 days following Tenant's Notice or on such later date as may
be specified in Tenant's Notice, all Rent allocable to the Leased Property(ies)
in question in accordance with Section 16.9 hereof shall be paid and apportioned
------------
to the date of such termination and the provisions of Section 40.16 hereof shall
-------------
apply in the event this Lease remains in effect as to any Leased Properties. If
Lessor shall exercise its options under Section 25.1.5, Lessor may, and shall
--------------
have no liability to Tenant if Lessor shall, lease to Tenant's prospective
subtenant or assignee.
Section 25.1.7 (a) Except in the case of an assignment or sublet
pursuant to Section 25.1.2(i) hereof and subject to subsections (b) and (c)
-----------------
below, Tenant shall pay to Lessor, as Additional Charges, (i) as and when
received by Tenant, 80% of any consideration (including, without limitation,
capital stock, stock options or warrants, license fees and all other forms of
remuneration) received on account of any assignment and (ii) 80% (50%, rather
than 80%, in the case of the existing subleases scheduled on Schedule 25.1.7
---------------
attached hereto and made a part hereof, as such subleases are in effect on
December 14, 2000 and only for the remaining term thereof, it being agreed that,
if any such sublease is extended (other than pursuant to the terms of sublease
extension rights in existence as of December 14, 2000), or after December 14,
2000 is materially amended, for the extension term, or after any such material
amendment, the applicable percentage in this subsection (ii) shall be 80%, not
50%) of the excess of:
(x) any rents, additional charges, or other consideration
(including, without limitation, capital stock, stock options
or warrants, license fees and all other forms of
remuneration) payable to Tenant under any sublease, after
deducting therefrom brokerage commissions and legal fees
paid by Tenant in connection with such subletting, over (y)
the sum of (1) a share of the Base Rent, real estate taxes
and assessments,
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insurance premiums and charges for utility usage that, on a
monthly basis, are owing with respect, or otherwise
allocable, to the applicable Leased Property (with such
share to be equal to (A) if the applicable sublease relates
primarily to use of areas within the Facility(ies) located
on the applicable Leased Property, the product of the total
of the aforesaid Base Rent, real estate taxes and
assessments, insurance premiums and utility usage charges
owing with respect, or allocable, to the applicable Leased
Property for a particular month times a fraction, the
numerator of which is the number of rentable square feet
under the applicable sublease and the denominator of which
is the aggregate number of rentable square feet in the
Facility(ies) located on the applicable Leased Property, and
(B) if the applicable sublease relates primarily to use of
areas outside the Facility(ies) located on the applicable
Leased Property, that portion of the aforesaid real estate
taxes, insurance premiums and charges for utility usage as
are, in the reasonable judgment of Tenant (and with
supporting documentation to be delivered to Lessor upon
written request), attributable to the areas outside the
Facility(ies) located on the applicable Leased Property),
plus (2) the amount (amortized, if applicable, as described
below) of the actual out of pocket costs, if any, incurred
by Tenant (on behalf of itself and, to the extent related to
"Sublease Rent Payments" (as defined below), on behalf of
Lessor's 80% (or 50%, if applicable as described above)
share thereof) from time to time during the applicable
sublease and directly attributable to (aa) extending
telephone service to the portion of the applicable Leased
Property that is subleased per the applicable sublease or
(bb) performing repairs to the portion of the applicable
Leased Property that is subleased per the applicable
sublease (and, for purposes of this subsection (2) and the
calculation of "Sublease Rent Payments", as hereinafter
defined, (X) in the case of any costs of the nature
referenced in this subsection (2) that, in accordance with
generally accepted accounting principles, are treated as
capital costs, such costs shall be amortized on a straight
line basis over the longer of the useful life of the
improvements or repairs to which such costs relate or the
initial term of the applicable sublease, and in each month
the amortized amount of such costs shall be deemed to have
been incurred by Tenant, and (Y) in the case of all other
costs of the nature referenced in this subsection (2), such
costs shall be treated as incurred by Tenant as and when
expended),
(such excess of (ii)(x) over (ii)(y) is referred to herein as the "Sublease Rent
-------------
Payments"). Lessor's share, as aforesaid, of any such Sublease Rent Payments
--------
shall be paid by Tenant to Lessor as and when the Sublease Rent Payments are
received by Tenant; provided, however, that:
-------- -------
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(cc) within sixty (60) days after the end of each calendar
year, Tenant shall deliver to Lessor a Senior Officer's
Certificate certifying the amount of Lessor's share of
Sublease Rent Payments for the preceding calendar year and
setting forth how such amount was calculated and containing
a detailed breakdown of the revenues and expenses used in
making such calculation, and, within thirty (30) days after
Lessor's receipt of such certificate, if the aggregate
amount paid by Tenant to Lessor during such preceding
calendar year on account of Lessor's share of Sublease Rent
Payments for such year exceeds the amount of Lessor's share
as shown in such certificate, then, subject to subsection
(dd) below, Lessor shall pay the overage to Tenant, and, if
the aggregate amount paid by Tenant to Lessor during such
preceding calendar year on account of Lessor's share of
Sublease Rent Payments for such year is less than the amount
of Lessor's share as shown in such certificate, Tenant shall
pay such deficiency to Lessor. Lessor shall be entitled,
upon three (3) Business Days prior written notice and within
normal business hours, to review, and make abstracts from
and copies of, Tenant's books, accounts and records relative
to Tenant's subleases of any Leased Property and the
calculation of Lessor's share of Sublease Rent Payments for
any period; and
(dd) for purposes of subsection (cc) above and the
other provisions of this Section 25.1.7, Lessor's share of
--------------
Sublease Rent Payments shall in no event be a negative
number and, for all purposes of subsection (cc) above and
the other provisions of this Section 25.1.7, for any
--------------
calendar year in which the amount referenced in subsection
(ii)(x) above for such year is less than the amount
referenced in subsection (ii)(y) above for such year, the
"Sublease Rent Payments" shall be deemed to equal zero for
such year. (For example, if Tenant subleases a portion of a
Leased Property, subsection (ii) above is applicable
thereto, during a particular calendar year Sublease Rent
Payments are received by Tenant in the aggregate amount of
$100.00, and during such calendar year Tenant paid to Lessor
the following monthly amounts on account of Lessor's share
of Sublease Rent Payments: for each of the months January
through July, $20.00 (i.e.: $140.00 in aggregate) and for
each of the months August through December, $0.00, then,
within thirty (30) days after Lessor's receipt of Tenant's
aforesaid Senior Officer's Certificate for such calendar
year, Lessor would be obligated to pay to Tenant $60.00,
representing the overage of the aggregate amount received by
Lessor during such calendar year ($140.00) over Lessor's
share of the Sublease Rent Payments for such calendar year
($80.00 or 80% of $100.00). Alternatively, if the preceding
facts are assumed except that, during the subject calendar
year, the amount referenced in subsection (ii)(x) above is
less than the amount referenced in subsection (ii)(y) above
by $50.00, then, pursuant to subsection (dd) above, the
Sublease Rent Payments for
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such calendar year shall be deemed to equal $0.00, and,
consequently, within thirty (30) days following receipt of
Tenant's aforesaid Senior Officer's Certificate for such calendar
year, Lessor would be obligated to pay to Tenant $140.00,
representing the overage of the aggregate amount received by
Lessor during such calendar year ($140.00) over Lessor's share of
the deemed Sublease Rent Payments for such calendar year ($0.00
or 80% of $0.00)).
In the event of a foreclosure by a Leasehold Mortgagee as to a particular Leased
Property(ies), Lessor's right to 80% (50%, in the circumstances described above
relative to the existing subleases scheduled on Schedule 25.1.7 hereof) of such
---------------
Sublease Rent Payments relating to such Leased Property(ies) shall be
subordinate to such Leasehold Mortgagee's right of payment. In the event of an
assignment or sublet pursuant to Section 25.1.2(i) hereof, the provisions of
this Section 25.1.7 shall apply to any further assignment or sublet to a person
--------------
or entity that is not an Affiliate of Tenant.
(b) Notwithstanding anything to the contrary provided in this Lease,
in the event Tenant enters into a sublease, license agreement, easement or other
agreement (an "Ancillary Agreement") pursuant to which a third party is given
-------------------
the right to access, maintain or operate on any Leased Property, any antenna,
cell tower, satellite dish, cable or wire installation, or other communication
or telecommunication equipment, any billboard or signage, or any facility or
service not within the primary scope of Tenant's business as it is conducted on
the Effective Date, Tenant shall pay Lessor, as Additional Charges as and when
payable to Tenant, 80% of any consideration (including, without limitation,
capital stock, stock options or warrants, license fees and all other forms of
remuneration) received on account of such Ancillary Agreement. At the request
of Lessor, Tenant shall direct the third party in any Ancillary Agreement to pay
Lessor's 80% share of such consideration directly to Lessor. No such Ancillary
Agreement shall be entered into by Tenant without the prior written consent of
Lessor, which consent shall not be unreasonably withheld, delayed or conditioned
so long as Tenant complies with the applicable requirements of subsections (a)
through (d) of Section 25.1.2 above.
--------------
(c) Notwithstanding anything to the contrary contained in subsection
(a)(ii) above, Lessor shall not be entitled to any Sublease Rent Payments on
account of any sublease of space within a Leased Property for a flower shop,
beauty salon, xxxxxx shop, gift shop, restaurant, cafeteria, coffee shop, snack
shop or the like or any other concessionaires (which term shall not include,
without limitation, medical offices and clinics and other providers of medical
services) typically found in nursing centers or hospitals (as applicable
depending upon the Primary Intended Use of the particular Leased Property)
(including those subleases of the nature referenced in this subsection (c)
existing at the Leased Properties as of the Effective Date), so long as the
aggregate square footage of such Leased Property that is subleased for such uses
does not exceed twenty percent (20%) of the rentable space within the
Facility(ies) located on such Leased Property.
102
Section 25.1.8 Any assignment and/or sublease must provide that (a)
it shall be subject and subordinate to all of the terms and conditions of this
Lease, (b) the use of the applicable Leased Property shall be restricted to the
applicable Primary Intended Use and shall not conflict with any Legal
Requirement, Insurance Requirement or any other provision of this Lease, (c) no
sublessee or assignee shall be permitted to further sublet all or any part of
the applicable Leased Property or assign this Lease or its sublease except as
expressly provided in this Lease and (d) in the event of cancellation or
termination of this Lease for any reason whatsoever or of the surrender of this
Lease whether voluntary, involuntary or by operation of law, prior to the
expiration date of such sublease, including extensions and renewals granted
thereunder, at Lessor's option, the subtenant shall make full and complete
attornment to Lessor for the balance of the term of the sublease, which
attornment shall be evidenced by an agreement in form and substance reasonably
satisfactory to Lessor and which the subtenant shall execute and deliver within
5 days after request by Lessor, its successors or assigns and the subtenant
shall waive the provisions of any law now or hereafter in effect which may give
the subtenant any right of election to terminate the sublease or to surrender
possession in the event any proceeding is brought by Lessor to terminate this
Lease.
Section 25.1.9 Any assignment of this Lease or sublease of the
applicable Leased Property in contravention of the express terms of this Article
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XXV shall be voidable at Lessor's option and the acceptance of rent by Lessor
---
from any such unauthorized assignee or subtenant shall not constitute a
recognition or acceptance of the tenancy of such unauthorized assignee or
subtenant.
Section 25.1.10 Tenant shall pay to Lessor, within ten (10) business
days after request therefor, all costs and expenses, including without
limitation reasonable attorneys' fees, incurred by Lessor in connection with
any request by Tenant to assign this Lease or sublet the applicable Leased
Property.
SECTION 25.1.11 Notwithstanding the other prohibitions and
restrictions on assignment and subletting contained in this Section 25.1,
------------
provided Tenant shall have complied with the notice and information requirements
of Section 25.1.5 above, Tenant shall have the right to assign or sublet to a
--------------
non-Affiliate (x) without the consent of Lessor, not more than ten percent (10%)
in the aggregate of the Master Lease Leased Properties which are nursing centers
and (y) with Lessor's consent (which consent shall not be unreasonably withheld,
delayed or conditioned), not more than two (2) Master Lease Leased Properties
which are hospitals, but only if either (i) the applicable regulatory
authorities have threatened, or commenced proceedings, to revoke Tenant's
Medicaid or Medicare certification for reimbursement or other Authorizations
necessary to operate such nursing center or hospital Leased Property, as
applicable, or (ii) Tenant cannot profitably operate such Leased Property, in
which event:
(a) such assignment and/or subletting shall comply in all respects
with clauses (a) through (d) of the second sentence of Section 25.1.2 above
--------------
(upon Tenant's request, Lessor agrees to provide an estoppel certificate
certifying that, to the best of Lessor's knowledge, such clauses (a) through (d)
have been satisfied or, if such is not the case to the
103
best of Lessor's knowledge, certifying the manner in which such clauses have not
been satisfied to the best of Lessor's knowledge);
(b) Lessor shall give such assignee or subtenant assurances of quiet
enjoyment, in accordance with a mutually satisfactory non-disturbance and
attornment agreement, such that so long as such assignee or subtenant pays Rent
allocable to such Leased Property and otherwise complies with all covenants and
obligations of the Tenant under this Lease with respect to such Leased Property,
no other default under this Lease shall affect or give rise to any right to
terminate its leasehold of such Leased Property; and
(c) any default by such assignee or subtenant in the payment of Rent
or in complying with all other covenants and obligations of the Tenant with
respect to such Leased Property shall continue to constitute a default under
this Lease, entitling Lessor to all its rights and remedies hereunder.
To the extent that any of the Master Lease Leased Properties are hereafter the
subject of a New Lease, Tenant shall continue to have the right to assign or
sublet such Master Lease Leased Properties upon compliance with this Section
-------
25.1.11, but such right to assign or sublet, whether under this Lease or
-------
comparable provisions of any and all New Leases, shall never exceed ten percent
(10%) in the aggregate of the nursing centers included within the Master Lease
Leased Properties or two (2) hospitals included within the Master Lease Leased
Properties.
Section 25.2 Attornment. Tenant shall insert in each sublease permitted
----------
under Section 25.1 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 (except to the extent such subtenant is entitled to
quiet enjoyment assurances under Section 25.1.11 above), (b) in the event this
---------------
Lease shall terminate before the expiration of such sublease, the subtenant
thereunder will, at Lessor's option, attorn to Lessor and waive any right the
subtenant may have to terminate the sublease or to surrender possession
thereunder, as a result of the termination of this Lease, and (c) in the event
the subtenant receives a written notice from Lessor or Lessor's assignees, if
any, stating that an Event of Default has occurred, the subtenant shall
thereafter be obligated to pay all rentals accruing under said sublease directly
to the party giving such notice, or as such party may direct. All rentals
received from the subtenant by Lessor or Lessor's assignees, if any, as the case
may be, shall be credited against the amounts owing by Tenant under this Lease.
Section 25.3 Sublease Limitation. Anything contained in this Lease to
-------------------
the contrary notwithstanding, Tenant shall not sublet the Leased Property on any
basis such that the rental to be paid by the subtenant thereunder would be
based, in whole or in part, on either (i) the income or profits derived by the
business activities of the subtenant, or (ii) any other formula such that any
portion of the sublease rental received by Lessor would fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the Code, or
any similar or successor provision thereto.
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Section 25.4 Leasehold Mortgagee Rights. Nothing contained in this
--------------------------
Article XXV shall limit or impair any rights of the Leasehold Mortgagee under
-----------
Article XXII, including, without limitation, any such rights to obtain a
------------
Leasehold Mortgage upon less than all of the Leased Properties and, in the
circumstances referenced in Section 22.7, to obtain a Separate Lease as to less
------------
than all of the Leased Properties.
ARTICLE XXVI
Section 26.1 Financial Statements and Reporting. Each Tenant shall
----------------------------------
maintain, for itself and its subsidiaries, a system of accounting established
and administered in accordance with generally accepted accounting principles,
and shall provide Lessor with the following information:
(a) As soon as available but in no event later than forty-five (45) days
after the close of each fiscal month and within fifty (50) days after the close
each of the first three fiscal quarters, for Tenant, an unaudited consolidated
balance sheet and statement of operations as of the close of each such period
and the related unaudited consolidated statements of income, cash flows and
stockholders equity for such period and for the year to date of Tenant and its
Subsidiaries (collectively, "Financial Statements"), setting forth in each case
--------------------
in comparative form the corresponding figures for the previous year, all
prepared in accordance with generally accepted accounting principles and all
certified in an Officer's Certificate to Lessor as being complete and accurate
to the best of Tenant's knowledge, subject to normal year end adjustments. In
the case of any Officer's Certificate and related financial statements that are
required under this subsection (a) and relate to any period on or prior to the
date which is 120 days after the Effective Date, Tenant may, to the extent
necessary, qualify the same by stating that they remain subject to any
adjustments required by "fresh-start accounting", provided and on the conditions
that (i) as soon as reasonably practicable following the completion of such
"fresh-start accounting" adjustments, but in any event within five (5) Business
Days following such completion, Tenant shall deliver to Lessor a revised
Officer's Certificate and related financial statements that comply with this
subsection (a) and omit the aforesaid "fresh-start accounting" qualifications
and (ii) Tenant shall at all times comply with all applicable securities and
other Legal Requirements relative to the reporting and disclosure of Tenant's
financial condition;
(b) Within one hundred (100) days after the close of each Fiscal Year, (i)
for Tenant, consolidated Financial Statements, in each case with accompanying
notes and schedules, prepared in accordance with generally accepted accounting
principles and audited by a firm of independent certified public accountants of
recognized standing selected by Tenant, which accountants shall have issued an
audit report thereon; and (ii) an Officer's Certificate certifying to Lessor the
amount of Patient Revenues for such Fiscal Year for each Facility, for all of
the Facilities in the aggregate under this Lease and for all of the Facilities
in the aggregate under all of the Leases, and attaching reasonably detailed
documentation thereof;
(c) Within fifty (50) days after the close of each of the first three
fiscal quarters, and within one hundred (100) days after the close of each
Fiscal Year, the following
105
information and data for each Facility, in each case in paper format or
electronic computer format: (1) income statements that include, without
limitation, a breakdown of Patient Revenues and other revenues itemized by payor
type and a breakdown of operating expenses to the extent reasonably available
under the then current facility operation reports, but including, at a minimum,
itemization of Facility rental expense, overhead charges or management fees, bad
debt expense and any material non-recurring charges; and (2) patient census by
payor type;
(d) As soon as available but in no event later than sixty (60) days
following the commencement of each Fiscal Year, annual budgets for the operation
during such Fiscal Year of each Facility, of all Facilities in the aggregate
under this Lease and of all Facilities in the aggregate under all of the Leases,
and to the extent reasonably available, a breakdown of projected Patient
Revenues and other revenues itemized by payor type and a breakdown of projected
operating expenses itemized to reflect, at a minimum, Facility rental expense,
overhead charges or management fees, bad debt expense and any non-recurring
charges;
(e) Within one hundred (100) days after the close of each Fiscal Year, or
otherwise upon request by Lessor in connection with a proposed sale or
refinancing of a Facility or Facilities by Lessor, for Tenant and each
Guarantor, as applicable, an Officer's Certificate certifying to Lessor and
Lessor's designees (which certificate may be relied upon by Lessor and any
prospective purchaser or mortgagee of any Leased Property) the following
information:
(i) this Lease is unmodified and is in full force and effect (or
that this Lease is in full force and effect as modified and setting forth
the modifications);
(ii) the dates to which Rent has been paid;
(iii) all Facilities are in good standing with respect to all
necessary federal, state and local licenses, permits and other
Authorizations;
(iv) each Facility that participates in the Medicare program is in
compliance with the terms of its Medicare Provider Agreement and in good
standing with the Medicare program;
(v) each Facility that participates in the Medicaid program is in
compliance with the terms of its Medicaid Provider Agreement and in good
standing with the Medicaid program;
(vi) the current number of licensed beds at each Facility; and
(vii) Tenant and each applicable Guarantor is not in default in the
performance of this Lease or its Guaranty, as applicable, or if an Event of
Default exists, specifying the same in reasonable detail;
106
at the request of Lessor, together with complete and accurate copies (originals
of which shall be made available for inspection upon request by Lessor) of all
licenses, permits and other Authorizations necessary to operate the Facilities
in accordance with all applicable laws;
(f) As soon as reasonably available, copies of any Forms 10K, 10Q and 8K
and any other annual, quarterly, monthly or other reports, copies of all
registration statements and any other public information which any Tenant or any
of its Subsidiaries files with the Securities Exchange Commission or any other
governmental authority;
(g) Promptly upon the furnishing thereof to the shareholders of any
Tenant, copies of all statements, reports, notices and proxy statements so
furnished;
(h) Such supplements to the foregoing documents and such other information
and reports (including, without limitation non-financial information), as any
Senior Lender, any Facility Mortgagee or any Superior Mortgagee may reasonably
request, provided such supplements, and such information and reports, are
consistent with the types of supplements, reports and information generally
utilized by such institutions within the financing industry;
(i) (i) On a weekly basis until the first anniversary of the Effective
Date, (x) a consolidated weekly cash flow report of Tenant and its Subsidiaries
and (y) a consolidated weekly patient census report (reported separately for
hospitals and nursing centers) for Tenant, with each of such reports to be in
substance (but not necessarily in form) consistent with the forms of such
reports that Lessor received during the first ten (10) months of 2000, (ii) on a
monthly basis during the Term, (x) a consolidated monthly cash flow report of
Tenant and its Subsidiaries and (y) a consolidated monthly patient census report
(reported separately for hospitals and nursing centers) for Tenant, (iii) all
other information, reports, materials and certificates that are from time to
time delivered, pursuant to the requirements of any loan documents that are from
time to time binding upon Tenant or any of its Subsidiaries or Affiliates, by
Tenant or any of its Subsidiaries or Affiliates to any of the Senior Lenders, or
any of the holders of any of the Exit Facility Documents or any other loan
documents evidencing or securing borrowed indebtedness of Tenant or its
Subsidiaries or Affiliates, or any of their respective agents, representatives
or consultants, with all such information, reports, materials and certificates
to be delivered to Lessor at the same time and in the same manner as the same
are delivered to any of the Senior Lenders, any of the aforesaid holders and/or
any of their respective agents, representatives or consultants, (iv) on a
monthly basis during the Term, a monthly consolidated survey deficiency summary
report, with such report to be in substance (but not necessarily in form)
consistent with the report dated October 2000 that was delivered to Lessor and
listing each of the Master Lease Leased Properties and indicating for each
Master Lease Leased Property whether any survey, citation or report alleging a
deficiency that is material in relation to such Master Lease Leased Property
(using the October 2000 report as a baseline) has been issued with respect
thereto during the period covered by such report and, if so, setting forth the
identity of the agency or authority that issued such citation or report, a
description of the alleged material deficiency and the timetable or deadline for
curing the same (and, promptly following receipt of a written request therefor
from Lessor to Tenant, Tenant shall further deliver to Lessor any Facility-
specific survey
107
reports requested by Lessor), and (v) promptly following receipt of a written
request therefor from Lessor to Tenant, copies of any Facility-specific
environmental, engineering or other reports or studies that are in Tenant's
possession or control and so requested by Lessor; and
(j) If Lessor is a Ventas Lessor, within fifty (50) days following the
close of each fiscal quarter, a Senior Officer's Certificate setting forth
whether any Event(s) of Default under Section 16.1(m) and/or Section 16.1(q) of
--------------- ---------------
this Lease or any other lease demising any of the Master Lease Leased Properties
has occurred and is continuing (as described in Section 16.10) and, if so,
-------------
specifying the Master Lease Leased Property(ies) at which such Event(s) of
Default has so occurred and is continuing.
Section 26.2 Furnishing Notice. Within five (5) days after Tenant
-----------------
receives notice or otherwise obtains knowledge of any of the following
occurrences, Tenant shall give written notice thereof in the form of an
Officer's Certificate to Lessor, which notice shall set forth details of the
occurrence referred to therein and shall state what action Tenant has taken, and
proposes to take, with respect thereto:
(a) any written notice of termination or suspension of any Facility from
participation in the Medicare or Medicaid program; and
(b) any written notice of non-renewal of any license or other
Authorization affecting any of the Facilities or its operation (including copies
thereof).
Section 26.3 Quarterly Meetings; Facility Level Meetings and Reviews. On
-------------------------------------------------------
a quarterly basis, Tenant shall permit, and upon request by Lessor shall make
appropriate arrangements for, Lessor and/or its representatives to discuss the
affairs, operations, finances and accounts of Tenant and its Subsidiaries and
Affiliates with, and be advised as to the same by, senior officers of Tenant
(and such of Tenant's independent accountants and other financial advisors as
would be relevant to the topic of the particular meeting), all as Lessor may
deem appropriate for the purpose of verifying any report(s) delivered by Tenant
to Lessor under this Lease or for otherwise ascertaining compliance with this
Lease by Tenant or the business, operational or financial condition of Tenant
and/or its Subsidiaries and Affiliates and/or any of their respective
Facilities. Without limitation of the foregoing, from time to time promptly
following receipt of written notice from Lessor to Tenant (and in any event
within ten (10) Business Days of such receipt), Tenant shall permit, and shall
make appropriate arrangements for, Lessor and/or its representatives or
designees to discuss the business, operational and financial condition of
specific Facility(ies) designated by Lessor with, and be advised as to the same
by, appropriate personnel of Tenant and its Subsidiaries and Affiliates having
operational and accounting responsibilities for the Facility(ies) so specified
by Lessor and to review, and make abstracts from and copies of, the books,
accounts and records of Tenant and its Subsidiaries and Affiliates relative to
any such Facility(ies), in each case provided, and on the condition, that any
such discussions or reviews, abstracting or copying shall not materially
interfere with Tenant's business operations relative to any affected
Facility(ies). Unless otherwise agreed in writing by Lessor and Tenant, all of
the discussions, reviews, abstracting and copying referenced in this Section
26.3 shall occur during normal business hours.
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ARTICLE XXVII
Section 27.1 Lessor's Right to Inspect. Tenant shall permit Lessor, any
-------------------------
then current or prospective Superior Mortgagee or other lender to Lessor, any
then current or prospective investment banker, mortgage broker or other
professional engaged by Lessor, any prospective purchaser of any Leased Property
or any interest in Lessor or any Affiliate of Lessor and/or, only during any
permitted exhibition period under Section 40.4 below, any prospective lessee,
------------
and its and their respective authorized representatives, to enter upon and
conduct a physical inspection of any Leased Property during usual business hours
and, except in an emergency, upon not less than three (3) business days prior
notice, subject to any security, health, safety or confidentiality requirements
of any governmental agency or insurance requirement relating to the Leased
Properties, or imposed by law or applicable regulations and provided that no
such entry or inspection shall materially interfere with Tenant's business
operations within the affected Leased Property(ies). Nothing contained in this
Section 27.1 shall limit or impair Lessor's right to enter upon and inspect the
------------
Leased Properties, or any of Lessor's other rights or remedies, upon the
occurrence of any Event of Default by Tenant.
ARTICLE XXVIII
Section 28.1 No Waiver. No failure by Lessor or Tenant to insist upon
---------
the strict performance of any term hereof or to exercise any right, power or
remedy consequent upon a breach thereof, and no acceptance of full or partial
payment of Rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term. To the extent permitted by law,
no waiver of any breach shall affect or alter this Lease, which shall continue
in full force and effect with respect to any other then existing or subsequent
breach.
ARTICLE XXIX
Intentionally omitted.
ARTICLE XXX
Section 30.1 Acceptance of Surrender. No surrender to Lessor of this
-----------------------
Lease or of any Leased Property or any part of any thereof, or of any interest
herein or 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.
ARTICLE XXXI
Section 31.1 No Merger of Title. There shall be no merger of this Lease
------------------
or of the leasehold estate created thereby by reason of the fact that the same
person, firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate and (b) the fee estate in any
Leased Property.
109
ARTICLE XXXII
Section 32.1 Conveyance by Lessor. Lessor may, without the consent or
--------------------
approval of Tenant, sell, transfer, assign, convey or otherwise dispose of any
or all of the Leased Properties. If Lessor or any successor owner of any Leased
Property shall sell, transfer, assign, convey or otherwise dispose of any Leased
Property in accordance with the terms hereof other than as security for a debt,
and the purchaser, grantee, assignee or transferee of the Leased Property shall
expressly assume all obligations of Lessor hereunder with respect to such Leased
Property arising or accruing from and after the date of such sale, conveyance,
transfer, assignment or other disposition and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of Lessor under this Lease with respect to such Leased Property
arising or accruing from and after the date of such sale, conveyance, transfer,
assignment or other disposition as to such Leased Property and all such future
liabilities and obligations with respect to such Leased Property shall thereupon
be binding upon such purchaser, grantee, assignee or transferee. Lessor agrees
to deliver to Tenant and any Leasehold Mortgagee, promptly following the
consummation of any such sale, conveyance, transfer, assignment or other
disposition (other than as security for a debt), written notice of such sale,
conveyance, transfer, assignment or other disposition and, if applicable, a copy
of the aforesaid assumption agreement. In the event of any such sale, transfer,
assignment, conveyance or other disposition (other than as security for a debt)
of less than all of the Leased Properties, the provisions of Section 40.15
-------------
hereof shall apply.
ARTICLE XXXIII
Section 33.1 Quiet Enjoyment. So long as Tenant shall pay all Rent as
---------------
the same becomes due and shall fully comply with all of the terms of this Lease
and fully perform its obligations hereunder and thereunder, Tenant shall
peaceably and quietly have, hold and enjoy each Leased Property for the Term
hereof, free of any claim or other action by Lessor or anyone claiming by,
through or under Lessor, but subject to all Permitted Encumbrances, including,
without limitation, liens and encumbrances of record as of the date hereof or
otherwise permitted to be created by Lessor hereunder, liens as to the
obligations of Lessor that are either not yet due or which are being contested
in good faith and by proper proceedings, and liens hereafter consented to by
Tenant. No failure by Lessor to comply with the foregoing covenant shall give
Tenant any right to cancel or terminate this Lease or xxxxx, reduce or make a
deduction from or offset against the Rent or any other sum payable under this
Lease, or to fail to perform any other obligation of Tenant hereunder.
Notwithstanding the foregoing, Tenant 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
Section.
ARTICLE XXXIV
Section 34.1 Notices. All notices, demands, requests, consents,
-------
approvals and other communications hereunder shall be in writing and delivered
or mailed (by registered or
110
certified mail, return receipt requested or reputable nationally recognized
overnight courier service and postage prepaid), addressed to the respective
parties, as follows:
(a) if to either Tenant:
Vencor, Inc. (following its name change:
Kindred Healthcare, Inc.)
Vencor Operating, Inc. (following its
name change: Kindred Healthcare Operating, Inc.)
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Chief Financial Officer
with copies to:
Vencor, Inc. (following its name change:
Kindred Healthcare, Inc.)
Vencor Operating, Inc. (following its
name change: Kindred Healthcare Operating, Inc.)
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
and
Xxxxx Xxxxxxxx
X.X. Xxxxxx
000 Xxxxxxx Xxxxxxxxxx Xxxx - 3/OPS2
Xxxxxx, XX 00000
and
Houston X. Xxxxxxxx
Xxxxxx Guaranty Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) if to Lessor:
Ventas Realty, Limited Partnership
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
Ventas, Inc.
111
Ventas Realty, Limited Partnership
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
ARTICLE XXXV
Section 35.1 Appraisals. In the event that it becomes necessary to
----------
determine the Fair Market Rental of the Leased Properties or any thereof or the
allocation of Base Rent and Current Rent among the Leased Properties or any
thereof, or the Transferred Property Percentages applicable to the Leased
Properties or any thereof, to be contained in Exhibit C hereto or the Fair
Market Value or Fair Market Value Purchase Price of any property, in each case
for any purpose of this Lease, and the parties cannot agree amongst themselves
on such values, allocations or percentages, the procedures of this Article XXXV
------------
shall apply.
Section 35.2 Appointment of Appraisers. The party required or permitted
-------------------------
to request an appraisal or other determination under this Article XXXV shall,
------------
within the applicable time period, if any, specified in this Lease, give written
notice (an "Appraisal Notice") to the other party, which Appraisal Notice shall
state the requesting party's desire for an appraisal or other determination
under this Article XXXV, and identify which matters are to be appraised or
------------
determined (e.g., Fair Market Rental of the Leased Properties, and creation of
an amended Exhibit C hereto, pursuant to Section 3.2 hereof). Within thirty
--------- -----------
(30) days after receipt of any such Appraisal Notice by the party to which such
Appraisal Notice is directed, each party shall, by written notice to the other
party, appoint an appraiser meeting the qualifications set forth below selected
by such party to act as appraiser on its behalf. If either party fails so to
appoint an appraiser within the aforesaid thirty (30) day period, the appraiser
selected by the other party shall act as the "Final Appraiser" hereinafter
described. If both parties appoint an appraiser as aforesaid in a timely
manner, within ten (10) days after such two appraisers are appointed, such two
appraisers shall meet and agree upon a third appraiser meeting the
qualifications set forth below (herein, the "Final Appraiser"). The two
---------------
appraisers selected by the parties shall, promptly following their agreement
upon a Final Appraiser, provide written notice of the identity of the aforesaid
Final Appraiser to each of Lessor and Tenant. Such appointment shall be binding
on the parties. If the two appraisers selected by the parties are unable to
agree upon a Final Appraiser within the aforesaid ten (10) day period, then
either party may request that the American Arbitration Association or any
successor organization thereto appoint a Final Appraiser meeting the
qualifications set forth below 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 Final Appraiser shall have been appointed in such manner
within such twenty (20) day period or within ninety (90) days after issuance of
the original Appraisal Notice, either Lessor or Tenant may apply to any court
having jurisdiction to have such appointment made by such court.
112
Section 35.3 Qualifications of Appraisers. Each of the two appraisers
----------------------------
selected by the parties, and the Final Appraiser, must (a) be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto) and/or a person employed by an accounting firm that, at the time of
such appointment, is one of the five (5) largest public accounting firms in the
United States and (b) have not less than five (5) years experience, and
substantial expertise, in valuing hospitals and nursing centers and/or
determining the fair market rental value of hospitals and nursing centers.
Section 35.4 Appraisal Process. The Final Appraiser appointed in
-----------------
accordance with the foregoing procedures shall complete the appraisals, and make
any other determinations, submitted to him or her in accordance with the terms
of this Lease within sixty (60) days after his or her appointment and shall
notify each of Lessor and Tenant of his or her appraisals and other
determinations. In performing such appraisals, and making such other
determinations, the Final Appraiser shall make the assumptions, and follow any
other directives or instructions, contained in this Lease relative to the
subject matter of the Final Appraiser's appointment, and, without limitation of
the foregoing, in the case of any appraisal of Fair Market Rental applicable to
the Leased Properties or any thereof or any allocation of Base Rent and Current
Rent among the Leased Properties or any thereof (and any related amendment of
Exhibit C hereto and allocation of Transferred Property Percentages among the
---------
Leased Properties or any thereof), the Final Appraiser shall not allocate an
amount of Base Rent and Current Rent to any particular Leased Property that
would result in this Lease, as it applies to such Leased Property, being treated
as a capital lease, rather than an operating lease, under generally accepted
accounting principles or under the applicable rules of the Financial Accounting
Standards Board and, in making determinations of the amount of Base Rent and
Current Rent that will be allocated to particular Leased Properties for purposes
of Exhibit C, shall consider the effect of his or her allocation of Base Rent
---------
and Current Rent to a particular Leased Property upon Tenant's ability to obtain
reimbursements at such Facility under third party payor programs, but in all
events without increasing or decreasing the aggregate amount of Base Rent and
Current Rent payable under this Lease with respect to the Leased Properties as a
whole.
Section 35.5 Binding Nature. The provisions of this Article XXXV, and
-------------- ------------
related provisions of this Lease, providing for determination of certain values,
allocations, percentages and other matters by the Final Appraiser 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.
Section 35.6 Costs. Lessor and Tenant shall each pay the fees and
-----
expenses of the appraiser appointed by it, and each shall pay one-half of the
fees and expenses of the Final Appraiser, and one-half of all other costs and
expenses, incurred in connection with each appraisal, provided, however, that,
-------- -------
notwithstanding the foregoing, Lessor, not Tenant, shall pay the fees and
expenses of the appraisers appointed by Lessor and Tenant, and of the Final
Appraiser, in the case of any appraisal initiated under Section 3.2 hereof.
-----------
113
ARTICLE XXXVI
Section 36.1 General REIT Provisions.
-----------------------
Section 36.1.1 Tenant understands that, in order for Ventas, Inc.,
Lessor's general partner, to qualify as a real estate investment trust ("REIT"),
----
the following requirements (the "REIT Requirements") must be satisfied:
-----------------
(i) Rent allocable for purposes of Section 856 of the Code to
Lessor's personal property that is leased to Tenant under a lease at the
beginning and end of a calendar year cannot exceed 15% of the total Rent
under such lease.
(ii) Tenant cannot sublet the property that is leased to it by
Lessor, or enter into any similar arrangement, on any basis such that the
rental or other amounts paid by the sublessee thereunder would be based, in
whole or in part, on either (i) the net income or profits derived by the
business activities of the sublessee or (ii) any other formula such that
any portion of the rent paid by Tenant to Lessor would fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the
Code.
(iii) Tenant cannot transfer or assign Tenant's rights under the
Lease to, or sublease the property leased to it by Lessor to, or enter into
any similar arrangement with, any person in which Lessor has provided
written notice to Tenant that it owns, directly or indirectly, a 10% or
more interest, within the meaning of Section 856(d)(2)(B) of the Code.
Section 36.1.2 Notwithstanding any other provisions of this Lease to
the contrary, Tenant agrees, and agrees to use reasonable efforts to cause its
Affiliates, to cooperate in good faith with Lessor to ensure that the REIT
Requirements are satisfied, including, but not limited to, providing Lessor with
information about the ownership of Tenant, and its Affiliates to the extent that
such information is reasonably available. Tenant agrees, and agrees to use
reasonable efforts to cause its Affiliates, upon request by Lessor to take
reasonable action necessary to ensure compliance with the REIT Requirements.
Immediately after becoming aware that the REIT Requirements are not, or will not
be, satisfied, Tenant shall notify, or use reasonable efforts to cause its
Affiliates to notify, Lessor of such noncompliance.
Lessor agrees to reimburse Tenant for the reasonable amount of any out of
pocket expenses incurred by Tenant or its Affiliates in satisfying the
requirements of this Section 36.1.2.
--------------
Section 36.1.3 Lessor and Tenant agree that, for all income tax
purposes, they shall accrue and report and maintain the Accrued Rent, Accrued
Rent Interest and Unpaid Accrued Rent for each Rent Calculation Year (or the
portion thereof falling within a taxable period) in the amounts specified in
this Lease for each Rent Calculation Year and shall not report as income or
deduct, as the case may be, amounts of income or deduction allocable to such
Rent Calculation Year in a manner inconsistent with such amounts, it being the
intent of
114
the parties that accrual of income and deductions for federal and other income
tax purposes shall be in the same amounts and at the same times as such amounts
are specified in this Lease. Lessor and Tenant acknowledge and agree that the
provisions of this Lease relative to Base Rent and the deferred payment of
portions of the Base Rent and the accrual of interest on such deferred Rent have
been negotiated at arms-length and have been included herein for the sole
purpose of improving the creditworthiness of Tenant and obtaining the necessary
approvals of the Bankruptcy Plan, including, without limitation, satisfying the
requirements relative to the feasibility of the Bankruptcy Plan. Neither Lessor
nor Tenant shall treat this Lease as subject to rent leveling (or constant
rental accrual) under the disqualified rental agreement rules of Section 467 of
the Code.
ARTICLE XXXVII
Section 37.1 Intentionally Omitted.
Section 37.2 Lessor's Option to Purchase the Tenant's Personal Property.
----------------------------------------------------------
Effective on not less than ninety (90) days prior written notice given at any
time within one hundred eighty (180) days prior to the expiration of the Term,
but not later than ninety (90) days prior to such expiration, or such shorter
notice as shall be appropriate if this Lease is terminated in whole or in part
or Tenant is dispossessed of any of the Leased Properties prior to the
expiration of the Term, subject to the rights of any Leasehold Mortgagee in
respect of Tenant's Personal Property, Lessor or its designee shall have the
option to purchase all (but not less than all) of Tenant's Personal Property
located at the Leased Property(ies) in question, if any, at any expiration or
termination of the Term, for a purchase price equal to the unamortized portion
of the original cost based upon the economic useful life, as defined by the
American Hospital Guide (or, if such guide ceases to be published by the
American Hospital Association, a substitute guide or other economic useful life
reference book mutually agreed upon by Lessor and Tenant, each acting
reasonably), subject to, and with appropriate price adjustments for, all
equipment leases, conditional sale contracts, UCC-1 financing statements
(including those financing statements filed in connection with the Leasehold
Mortgages) and other encumbrances to which such Personal Property is subject.
Promptly following demand by Lessor (but in any event within thirty (30) days
following such demand), Tenant shall deliver to Lessor a computation and
statement, in form, content and detail reasonably satisfactory to Lessor, of the
purchase price described above as of the date of such expiration, termination or
dispossession, as the case may be, for all of Tenant's Personal Property located
at the Leased Property(ies) in question.
ARTICLE XXXVIII
Section 38.1 Lessor May Grant Liens. Without the consent of Tenant,
----------------------
Lessor may, subject to the terms and conditions set forth below in this Section
-------
38.1, from time to time, directly or indirectly, create or otherwise cause to
----
exist any lien, encumbrance or title retention agreement ("Encumbrance") upon
-----------
any Leased Property or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing. Any lender,
which takes an interest in the applicable Leased Property pursuant to this
Article
-------
115
XXXVIII, (a) shall agree to give Tenant the same notice, if any, given to Lessor
-------
of any default or acceleration of any obligation underlying any such mortgage or
any sale in foreclosure under such mortgage, (b) shall agree to permit Tenant to
cure any such default on Lessor's behalf within any applicable cure period, and
Tenant shall be reimbursed by Lessor for any and all out-of-pocket costs
incurred to effect any such cure (including reasonable attorneys' fees), (c)
shall agree to permit Tenant to appear by its representative and to bid at any
sale in foreclosure made with respect to any such mortgage and (d) shall agree
not to disturb Tenant's possession so long as Tenant is not in default in
performing its obligations hereunder.
ARTICLE XXXIX
Section 39.1 Environmental Indemnity. Tenant hereby agrees to hold
-----------------------
harmless Lessor, any successors to Lessor's interest in this Lease and in any
Leased Property, and Lessor's and such successors' directors, officers,
partners, members, employees and agents from and against any losses, claims,
damages (including consequential damages), penalties, fines, liabilities
(including strict liability), costs (including cleanup and recovery costs), and
expenses (including expenses of litigation and reasonable attorneys' fees)
incurred by Lessor or any other indemnitee or assessed against the Leased
Property by virtue of any claim or lien by any governmental or quasi-
governmental unit, body, or agency, or any third party, for cleanup costs or
other costs pursuant to the Comprehensive Environmental Response Compensation
and Liability Act of 1980, the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, all as amended from time to time, and
all state laws and federal and state regulations pursuant to the foregoing
(collectively "Environmental Laws"). Tenant's indemnity shall survive the
------------------
expiration or any termination of this Lease. Provided, however, Tenant shall
-------- -------
have no indemnity obligation with respect to (i) Hazardous Materials first
introduced to the Leased Property subsequent to the date that Tenant's occupancy
of the applicable Leased Property shall have fully terminated or (ii) Hazardous
Materials first introduced to the Leased Property prior to the date hereof,
except to the extent arising from any deterioration on or after the date hereof
in any condition existing prior to the April 30, 1998. "Hazardous Materials"
means any substance the presence of which poses a hazard to the health or safety
of persons on or about the Leased Property or which requires removal or
remediation under any Environmental Law, including without limitation, any
substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous or is included within the meaning of "hazardous substance", "hazardous
waste", "toxic substance", or "pollutant" as defined in any Environmental Law.
At any time during the Term of this Lease, Lessor may require one or more
environmental audits of the Leased Properties, in such form, scope and substance
as specified by Lessor, at Tenant's expense. Tenant shall, within thirty (30)
days after receipt of an invoice from Lessor, reimburse Lessor for all costs and
expenses incurred in reviewing any environmental audit, including without
limitation, reasonable attorneys' fees and costs.
ARTICLE XL
Section 40.1 Miscellaneous. Anything contained in this Lease to the
-------------
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Lessor arising prior to any date
116
of termination or expiration of this Lease shall survive such termination or
expiration. If any term or provision of this Lease or any application hereof
shall be invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any late
charges provided for in any provision of this Lease 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. Neither this Lease
nor any provision hereof may be changed, waived, discharged or terminated except
by an instrument in writing and in recordable form signed by Lessor and Tenant.
All the terms and provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
The headings in this Lease are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
Section 40.2 Non-Recourse. Tenant specifically agrees to look solely to
------------
Lessor's and any successor owner's interest in the Leased Properties for
recovery of any judgment from Lessor, it being specifically agreed that neither
Lessor, any such successor owner, nor any officer, director, employee, lender,
agent or Affiliate of Lessor or any such successor owner shall ever be
personally liable for any such judgment or for the payment of any monetary
obligation to Tenant. Tenant shall have no recourse against any other property
or assets of Lessor or any successor owner, or against any property or assets of
any officer, director, shareholder, partner, lender, agent or Affiliate of
Lessor or any successor owner. The provision contained in the foregoing
sentence is not intended to, and shall not, limit any right that Tenant might
otherwise have to obtain injunctive relief against Lessor or Lessor's successors
in interest, or any action not involving the personal liability of Lessor
(original or successor). Furthermore, except as otherwise expressly provided
herein, in no event shall Lessor (original or successor) ever be liable to
Tenant for any special, indirect or consequential damages suffered by Tenant
from whatever cause.
Section 40.3 Transition of Operations.
------------------------
(a) Upon the expiration or earlier termination of the Term as to any
Leased Property, or any dispossession of Tenant as to any Leased Property,
Tenant shall, to the maximum extent permitted by applicable law, transfer to
Lessor or Lessor's designee and/or cooperate in all reasonable respects with
Lessor or Lessor's designee to enable Lessor or Lessor's designee to apply for
and obtain all licenses, operating permits, provider agreements, provider
status, certificates of need, certificates of exemption, approvals, waivers,
variances and other governmental, quasi-governmental and private authorizations
necessary for the operation of the Leased Property as to which the Term is
expired or terminated or as to which Tenant has been dispossessed and the
Facilities located thereon, or any of them, for their respective Primary
Intended Uses (collectively "Authorizations"); provided that the costs and
-------------- --------
expenses of any such transfer or obtaining of Authorizations shall be paid by
Lessor or Lessor's designee unless such termination or dispossession results
from an Event of Default, in which event the costs and expenses of any such
transfer or obtaining of Authorizations shall be paid by Tenant. It is the
express intention of the parties that at the expiration or earlier termination
of the Term as to any Leased Property, and upon any dispossession of Tenant in
connection with any Event of Default as to any Leased Property, any and all
Authorizations
117
needed to operate each Leased Property as to which the Term is expired or
terminated, or as to which Tenant has been dispossessed, for its Primary
Intended Use shall, to the maximum extent permitted by applicable law, remain
with such Leased Property and shall be transferred into the name of Lessor or
Lessor's designee, regardless of whether such Authorization is in the name of
Tenant at any time during the Term. Without limiting the generality of the
foregoing, Tenant shall furnish to Lessor or its designee complete and accurate
documents and information in Tenant's possession, custody or control necessary
or reasonably requested by Lessor or its designee in connection with any such
transfer or the completion and processing of any applications for
Authorizations.
(b) In anticipation of the expiration of this Lease as to any Leased
Property, upon the earlier termination of this Lease as to any Leased Property,
and/or upon any dispossession of Tenant in connection with any Event of Default
as to any Leased Property, Tenant shall cooperate with Lessor in all reasonable
respects to facilitate and effectuate the orderly transfer of operations at the
affected Facility(ies) as a going concern; provided, however, that, unless such
-------- -------
termination or dispossession results from an Event of Default by Tenant,
notwithstanding anything to the contrary contained in this subsection (b),
Tenant shall not be required to incur any out-of-pocket operating losses or
costs in so cooperating. Such cooperation shall include, without limitation:
(i) furnishing to Lessor or any prospective successor operator of a Facility
designated by Lessor complete and accurate books, records, files, documents and
information in Tenant's possession, custody or control necessary or reasonably
requested by Lessor or its designee in connection with the assessment and/or
assumption of the operations of such Facility(ies); (ii) facilitating the
evaluation and employment by Lessor or its designee of such employees of Tenant
as Lessor or its designee may elect to evaluate or employ, including, without
limitation, to the extent permitted by law, affording Lessor or its designee
access to all relevant personnel files, records, documents and information in
Tenant's possession, custody or control; and (iii) assigning to Lessor or its
designee such assignable patient, vendor, service provider and other contracts
relating to the Facility(ies) in question as Lessor or its designee may request;
provided, however, that Tenant's cooperation obligation shall not include
-------- -------
undertaking primary responsibility for such transfer of operations.
(c) Notwithstanding anything to the contrary contained in this Lease,
Tenant shall not, prior to the ninetieth (90th) day preceding the expiration of
this Lease as to any Leased Property, commence to wind up and terminate the
operations of the Facility operated thereon by relocating the patients or
occupants thereof to other health care facilities (a "Facility Termination").
--------------------
If Lessor has not notified Tenant in writing prior to the ninetieth (90th) day
preceding the expiration of this Lease as to a Leased Property and the Facility
thereon that Lessor has procured a successor operator for such Facility who has
submitted applications for the Authorizations required to assume the operations
of such Facility (a "Qualified Successor"), then Tenant may commence the
-------------------
Facility Termination and, upon the expiration of this Lease as to such Leased
Property and Facility, Tenant shall vacate such Leased Property and surrender
possession thereof to Lessor in accordance with all of the applicable
requirements of this Lease. If, prior to the ninetieth (90th) day preceding the
expiration of this Lease as to a Leased Property and the Facility thereon,
Lessor notifies Tenant in writing that Lessor has procured a Qualified Successor
for such Facility, Tenant shall not commence the
118
Facility Termination (any notice of the nature referenced in this sentence is
herein referred to as a "Section 40.3 Notice"). In such event, Tenant shall
-------------------
thereafter operate such Facility in accordance with all of the requirements of
this Lease until the earliest to occur of (i) the date (on or after the
expiration of this Lease as to such Leased Property and Facility) on which such
Qualified Successor will assume the operation of such Facility, as specified in
a written notice from Lessor to Tenant given not less than thirty (30) days
prior to the date of such assumption, (ii) the date that is ninety (90) days
after the expiration of this Lease as to such Leased Property and Facility, and
(iii) the date (on or after the expiration of this Lease as to such Leased
Property and Facility) which is ninety (90) days after Tenant receives written
notice from Lessor that, notwithstanding the foregoing, Tenant may commence the
Facility Termination, on which earliest date, Tenant shall vacate the Leased
Property in question and surrender possession thereof to Lessor in accordance
with all of the applicable requirements of this Lease. In the event Lessor sends
Tenant a Section 40.3 Notice and, as a result thereof, Tenant operates a
Facility beyond the aforesaid expiration date applicable thereto, then, from and
after the expiration of this Lease as to such Facility and until the earliest to
occur of the dates described in clauses (i), (ii) and (iii) above (the
"Reimbursement Period"), Lessor shall reimburse Tenant for any operating
--------------------
deficits of such Facility that Tenant may be required to fund out-of-pocket on
account of operating losses and expenses of such Facility incurred by Tenant
with respect to the Reimbursement Period. Any such reimbursement shall be due
from Lessor to Tenant within thirty (30) days after written request by Tenant,
provided that Tenant shall furnish such documentation of such operating
deficits, losses and expenses as Lessor may reasonably request. For purposes of
determining the amount of any operating deficits, or operating losses and
expenses, so incurred by Tenant with respect to the Reimbursement Period, Lessor
and Tenant agree that (1) there shall be included therein, without limitation,
(x) Rent, which shall continue to be due and payable or accrue, as the case may
be, at the same rates as are in effect prior to the expiration of the Term, and
(y) any increase in employee severance, and all costs and liabilities, that may
be incurred by Tenant in connection with Tenant's employees' employment by
virtue of Tenant's delayed compliance with the Worker Adjustment and Retraining
Notification Act, or any similar State law, due to Tenant's cooperation and
other obligations under this subsection (c), and (2) Tenant shall serve upon its
employees any notice required under the Worker Adjustment and Retraining
Notification Act, or any similar State law, as soon as reasonably practicable
after it becomes clear when the Reimbursement Period will end, whether due to
Tenant's receipt of a written notice under subsection (i) or (iii) above or due
to the terms of subsection (ii) above which provides that, in all events, the
Reimbursement Period shall end no later than the date referenced in such
subsection (ii). In lieu of the aforesaid reimbursement from Lessor, Tenant may
instead elect to continue to be responsible for payment of all costs and
expenses of continuing to comply with this Lease as to such Facility during the
Reimbursement Period, provided and on the condition that Tenant provides written
notice to Lessor of such election within fifteen (15) days after Tenant's
receipt of Lessor's Section 40.3 Notice. In the event Tenant so elects to forego
its aforesaid reimbursement from Lessor, during the Reimbursement Period,
Current Rent and Accrued Rent allocable to such Facility shall be payable in the
manner set forth in Section 3.1 of this Lease, but with each such component of
-----------
Rent being reduced to one-half (1/2) of the respective amounts thereof that
were allocable to such Facility as of the expiration of the Term as to such
Facility. In the event Lessor sends Tenant a Section 40.3 Notice and, as a
result
119
thereof, Tenant operates a Facility beyond the expiration date applicable
thereto, any Facility Default that occurs with respect to such Facility and
Leased Property during the Reimbursement Period shall in no event give rise to
any right in favor of Lessor to exercise any rights or remedies under Article
XVI hereof with respect to any other Facility or Leased Property.
Section 40.4 Right to Enter. Lessor and Lessor's agent shall have the
--------------
right to enter the applicable Leased Property at all reasonable times for the
purpose of exhibiting the Leased Property to others (i) if Tenant has not
exercised its right with respect to any applicable Extended Term within the time
period set forth in this Lease, or (ii) during the last eighteen (18) months of
the Term (if all available options for Extended Terms have previously been
exercised).
Section 40.5 Integration. This Lease contains the entire agreement
-----------
between Lessor and Tenant with respect to the subject matter hereof. No
representations, warranties or agreements have been made by Lessor except as set
forth in this Lease.
Section 40.6 Severability. If any term or provision of this Lease is
------------
held or deemed by Lessor to be invalid or unenforceable, such term or provision
shall be modified as slightly as possible so as to render it valid and
enforceable; if such term or provision, as modified, shall be held or deemed
invalid or unenforceable, such holding shall not affect the remainder of this
Lease and same shall remain in full force and effect, unless such holding
substantially deprives Tenant of the use of the Leased Property(ies) or Lessor
of the rents herein reserved, in which event this Lease shall forthwith
terminate as if by expiration of the Term.
Section 40.7 Subject to Law.
--------------
(a) All rights, powers and remedies provided herein may be exercised only
to the extent that the exercise thereof, including those which do not require
the giving of notice, does not violate any applicable law, and are intended to
be limited to the extent necessary so that they will not render this Lease
invalid or unenforceable under any applicable law. All waivers, consents,
confessions and releases provided for in this Lease are effective only to the
extent permitted by applicable law.
(b) This Lease was negotiated in the State of New York, which State the
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. In all respects, the law of the State
of New York shall govern the validity of and enforceability of the obligations
of the parties set forth herein, but all provisions hereof relating to the
creation of the leasehold estate and remedies set forth in Article XVI shall be
-----------
governed by the laws of the State in which each applicable Leased Property that
is the subject of dispute is located and the parties hereto will submit to
jurisdiction and the laying of venue for any suit on this Lease in the
Commonwealth of Kentucky.
Section 40.8 Waivers. No waiver of any condition or covenant herein
-------
contained, or of any breach of any such condition or covenant, shall be held or
taken to be a waiver of any subsequent breach of such covenant or condition, or
to permit or excuse its continuance or any
120
future breach thereof or of any condition or covenant herein construed as a
waiver of such default, or of Lessor's right to terminate this Lease or exercise
any other remedy granted herein on account of such existing default.
Section 40.9 Binding Character. This Lease shall be binding upon and
-----------------
shall inure to the benefit of the heirs, successors, personal representatives,
and permitted assigns of Lessor and Tenant.
Section 40.10 Modification. This Lease may be only be modified by a
------------
writing signed by both Lessor and Lessee.
Section 40.11 Forbearance. No delay or omission by either party hereto to
-----------
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
Section 40.12 Lease Guaranty. In the event of any sublease of any Leased
--------------
Property(ies) or any portion thereof to an Affiliate of any Tenant pursuant to
the terms of this Lease, regardless of whether Lessor's prior consent is
required therefor, such subtenant shall execute and deliver a Lease Guaranty
relative to the Leased Property(ies) or portion thereof subleased by it. Tenant
represents and warrants to Lessor that Schedule 40.12 attached hereto and made a
--------------
part hereof reflects the identities of all Affiliates of any Tenant from whom a
Lease Guaranty is required hereunder as of the Effective Date and the respective
Leased Properties (or parts thereof) subleased by each of such Affiliates.
Tenant agrees, from time to time within fifteen (15) days after receipt of a
written request therefor from Lessor, to deliver to Lessor an Officer's
Certificate which updates all of the information contained in Schedule 40.12.
--------------
Section 40.13 Louisiana Provisions. Notwithstanding anything to the
--------------------
contrary contained herein, with respect to any Leased Property located in
Louisiana, for all purposes of this Lease the word "servitude" shall be
substituted for the word "easement," the word "servitudes" shall be substituted
for the word "easements," the term "immovable property" shall be substituted for
the terms "real property" and "real estate" and the term "movable property"
shall be substituted for the term "personal property" wherever such terms appear
in this Lease.
Section 40.14 Confidentiality.
---------------
(a) Each of Lessor and Tenant agrees that, except as otherwise explicitly
provided in this Section 40.14, all Information (as defined below) provided by
-------------
Lessor to Tenant and by Tenant to Lessor (the party providing such Information
being referred to as "Disclosing Party" and the party receiving the Information
----------------
being referred to as "Recipient") will be kept confidential and will not,
---------
without Disclosing Party's prior written consent, be disclosed by Recipient, in
whole or in part, to any person, in any manner whatsoever.
(b) Recipient may disclose Information:
121
(i) to those of Recipient's officers, directors and employees who are
informed by Recipient of the confidential nature of the Information and who
agree, for Disclosing Party's benefit, to act in accordance with the terms
and conditions of this Section 40.14; Recipient will be responsible for any
-------------
breach of this Section 40.14 by such persons.
-------------
(ii) in the case where Lessor is the Recipient
(A) to the extent the Information is both (x) of a financial,
operating, regulatory, business or similar nature, and (y) has
been aggregated to relate to any or all of the Leases, a
jurisdiction or jurisdictions (such as a state or region), a
class or classes of asset (e.g. nursing facilities or hospitals)
or any other category, in each case so long as such disclosure is
not on a per Leased Property basis; or
(B) if Lessor is a Ventas Lessor, to the extent the Information
relates to a particular Master Lease Leased Property(ies), and
either
(w) is provided to Facility Mortgagees, prospective
Facility Mortgagees, Superior Lessors, prospective Superior
Lessors, purchasers, prospective purchasers, tenants or
prospective tenants of such Master Lease Leased Property(ies);
provided that any such party listed in this clause (w) who
receives such Information is informed by Lessor or the Ventas
Lessor(s) of the applicable Master Lease Leased Property(ies) of
the confidential nature of the Information and agrees with Lessor
or the Ventas Lessor(s) of the applicable Master Lease Leased
Property(ies) to keep such Information confidential pursuant to a
standard confidentiality agreement; and provided further that
such Information may be disclosed to tenants or prospective
tenants only if either (i) Tenant has not, at least seventeen
(17) months prior to the then current Term applicable to the
related Renewal Group, given to the Ventas Lessor of the
applicable Master Lease Leased Property written notice of
Tenant's intention to renew the applicable lease with respect to
the Master Lease Leased Properties within such Renewal Group, or
(ii) an Event of Default has occurred under the applicable lease
of such Master Lease Leased Property(ies); or
(x) is disclosed in connection with or following a sale,
closure, material casualty, default or prospective default with
respect to such Master Lease Leased Property; or
(y) relates to the location or size of, or the number of
licensed beds at, such Master Lease Leased Property or the rent
for such Master Lease Leased Property; or
122
(z) is of the type customarily disclosed by a public
healthcare real estate investment trust; or
(C) if Lessor is not a Ventas Lessor, to the extent the
Information relates to a particular Leased Property(ies), and
either
(w) is provided to Facility Mortgagees, prospective
Facility Mortgagees, Superior Lessors, prospective Superior
Lessors, purchasers, prospective purchasers, tenants or
prospective tenants of such Leased Property(ies); provided that
any such party listed in this clause (w) who receives such
Information is informed by Lessor of the confidential nature of
the Information and agrees with Lessor to keep such Information
confidential pursuant to a standard confidentiality agreement;
and provided further that such Information may be disclosed to
tenants or prospective tenants only if either (i) Tenant has not,
at least seventeen (17) months prior to the then current Term
applicable to the related Renewal Group, given to Lessor written
notice of Tenant's intention to renew this Lease with respect to
the Leased Properties within such Renewal Group, or (ii) an Event
of Default has occurred under the Lease of such Leased
Property(ies); or
(x) is disclosed in connection with or following a sale,
closure, material casualty, default or prospective default with
respect to such Leased Property; or
(y) relates to the location or size of, or the number of
licensed beds at, such Leased Property or the rent for such
Leased Property; or
(z) is of the type customarily disclosed by a public
healthcare real estate investment trust.
(iii) to the extent Recipient reasonably determines that disclosure
of the Information is required by any Legal Requirement applicable to
Recipient or any applicable rule, regulation, or requirement of any
securities exchange on which the Recipient's securities are listed or
admitted for trading (a "Disclosure Law") pursuant to the procedures set
--------------
forth in Section 40.14(h) below.
----------------
(iv) in connection with any proceeding in which Recipient is
attempting to protect or enforce any rights and/or remedies in connection
with this Lease or any of the other Leases, but only to the extent
necessary to protect or enforce such rights and/or remedies.
(v) to any person in a confidential relationship with the Recipient,
including Recipient's auditors, advisors, consultants, lawyers, and others
who agree with Recipient to be bound by a standard confidentiality
agreement, such as lenders, prospective lenders, purchasers, potential
purchasers, tenants and prospective tenants;
provided, however, that Recipient shall not be liable to Disclosing Party
for any breach by such persons of such confidential relationship or
confidentiality arrangements; provided further, however, that Recipient
shall assign to Disclosing Party (or enforce on Disclosing Party's behalf
and at Disclosing Party's cost) the Recipient's rights under such
confidentiality agreement or obligations.
(vi) to the extent legally compelled to disclose any of the
Information pursuant to a subpoena or other legal process having the force
of law. Recipient will provide Disclosing Party with prompt notice so that
Disclosing Party or any of its representatives may seek a protective order
or other appropriate remedy. In the event that such protective order or
other remedy is not obtained, Recipient will furnish only that portion of
the Information which Recipient has been advised is legally required and
Recipient will exercise its reasonable efforts to attempt to obtain
reliable assurance that confidential treatment will be accorded the
Information so to be furnished. In any event, Recipient will cooperate
with (and not oppose) any reasonable action by Disclosing Party to obtain
an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such Information.
(vii) in the case where Lessor is the Recipient, to the extent
Lessor reasonably determines that the Information is required under
Disclosure Law applicable to Lessor to be disclosed in connection with a
distribution (a "Ventas Stockholder Distribution") by Lessor (or any of its
-------------------------------
transferees) to Lessor's stockholders of the common stock of Tenant
received by Lessor upon consummation of Tenant's bankruptcy case (the
"Tenant Shares") pursuant to the procedures set forth in Section 40.14(h)
------------- ----------------
below; provided; however, that in connection with a Ventas Stockholder
Distribution pursuant to a registration statement prepared by Tenant under
the terms of the Registration Rights Agreement by and among Tenant, Lessor
and certain other parties thereto (the "Registration Rights Agreement"), no
-----------------------------
such disclosure shall be permitted during either (A) a Shelf Suspension
pursuant to Section 3 of the Registration Rights Agreement, or (B) a
"black-out period" applicable to "Holders" pursuant to Section 5 of the
Registration Rights Agreement.
(viii) in the case where Lessor is the Recipient, pursuant to the
procedures set forth in Section 40.14(h) below, to the extent Lessor
----------------
reasonably determines that the Information is required to be disclosed
under Disclosure Law applicable to Lessor in connection with a sale by
Lessor of Tenant Shares and notice of such proposed disclosure occurs
pursuant to a Disclosure Notice received by Tenant no later than 15
Business Days after (A) the filing by Tenant of a report on Form 8-K, 10-Q
or 10-K, (B) the termination of a Shelf Suspension pursuant to Section 3 of
the Registration Rights Agreement, (C) the termination of a "black-out
period" applicable to "Holders" pursuant to Section 5 of the Registration
Rights Agreement, or (D) Tenant shall have provided Lessor with written
notice of any "Accretive Transaction" as defined in and in accordance with
the requirements of Article Twelfth of Tenant's Amended and Restated
Certificate of Incorporation.
124
(c) Information means (i) all and any data, reports, including any survey
deficiency reports or summaries thereof, forecasts, records, agreements and
other information (whether written, magnetic, digital or in any other form)
furnished after the Effective Date by Disclosing Party or by any of its
representatives or advisors to Recipient that is both (x) material and
proprietary, and (y) in the case where Tenant is the Disclosing Party, that is
required to be furnished pursuant to Section 8.1; 8.2; 26.1(b)(ii) (but only to
----------- --- -----------
the extent furnished on a per Master Lease Leased Property basis (if Lessor is a
Ventas Lessor) or on a per Leased Property basis (if Lessor is not a Ventas
Lessor)); 26.1(c); 26.1(d); 26.1(e)(iii), (iv), (v) or (vii); 26.1(h); and
------- ------- ------------ ---- --- ----- -------
26.1(i), and (ii) EBITDAR, profitability, census and regulatory deficiency data
-------
for each Master Lease Leased Property (if Lessor is a Ventas Lessor) or for each
Leased Property (if Lessor is not a Ventas Lessor). For purposes of this
Section 40.14, information and other materials will be deemed furnished or
-------------
prepared by, or furnished to, a person if furnished or prepared by, or if
furnished to, such person or an affiliate of such person, or any employee,
agent, partner, representative or advisor of such person. As used in this
Section 40.14, person means any natural person and any corporation, partnership,
-------------
association, firm or other entity or organization of any kind whatsoever, and
all references to Recipient in this Section 40.14 shall include its affiliates,
-------------
and an affiliate of a designated person means a second person which (directly or
indirectly) controls, is controlled by, or is under common control with, such
designated person; provided, however, that Lessor and Tenant shall not be deemed
to be affiliates.
(d) The obligations under Section 40.14(a) will not apply to any
----------------
Information which (i) was known to Recipient prior to Disclosing Party's
disclosure of such Information to Recipient (unless Recipient's knowledge was
obtained confidentially or from a source which to Recipient's knowledge was not
permitted to disclose such Information to Recipient) or (ii) becomes available
to Recipient on a nonconfidential basis from a source (other than Disclosing
Party or any of its employees, agents, representatives or advisors) who to the
knowledge of the Recipient is not prohibited from disclosing such Information to
Recipient by any legal, contractual or fiduciary obligation.
(e) Recipient acknowledges that remedies at law may be inadequate to
protect against breach of the provisions of this Section 40.14, and Recipient
-------------
hereby in advance agrees that Disclosing Party shall not be obligated to
establish actual damages or the inadequacy of monetary damages in seeking an
injunction. Such injunctive relief will not be deemed to be the exclusive
remedy for a breach by Recipient of the provisions of this Section, but will be
in addition to all other remedies available at law or equity to Disclosing
Party.
(f) Lessor shall have the right to temporarily suspend Tenant's obligation
to provide it with Information pursuant to the terms of this Lease or otherwise
for a specified period of time or for a period of time terminating upon the
occurrence of a specified event, including notice from Lessor (the "Suspension
----------
Period"). During the Suspension Period, Tenant shall, if requested by Lessor,
------
deliver such Information to a third party in a confidential relationship with
Lessor. Upon expiration or termination of the Suspension Period, Tenant will
deliver to Lessor within three Business Days all Information that Tenant
otherwise would have been
125
required to deliver during the Suspension Period and shall immediately, once
again, be subject to all of the information delivery requirements set forth in
this Lease.
(g) Recipient acknowledges that no failure or delay in exercising any right
under this Section 40.14 shall operate as a waiver thereof, nor will any single
-------------
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right hereunder.
(h) In connection with any proposed disclosure pursuant to Section
-------
40.14(b)(iii), (vii) or (viii), the Recipient shall provide the Disclosing Party
------------- ----- ------
with advance written notice of the proposed disclosure shall set forth the
Information to be disclosed, the proposed date of disclosure (the "Disclosure
----------
Date"), the basis for such disclosure as well as the manner of such disclosure
----
(the "Disclosure Notice"). The Disclosure Notice shall be delivered to the
-----------------
Disclosing Party no later than the Disclosure Notification Date (as defined
below). The Recipient and the Disclosing Party shall cooperate with one another
and negotiate in good faith to seek a mutually satisfactory resolution with
respect to such proposed disclosure. In the event the Disclosing Party has not,
prior to the Disclosure Date, either (A) consented to the proposed disclosure
(or such modified disclosure as the Recipient and Disclosing Party may mutually
agree) or (B) itself made disclosure of the Information contained in such
Disclosure Notice (or such modified disclosure as the Recipient and Disclosing
Party may mutually agree) the Recipient may disclose such Information to the
extent and in the manner set forth in such Disclosure Notice.
(i) Disclosure Notification Date shall mean the latest of the dates set
forth below:
(A) five (5) Business Days prior to the Disclosure Date;
(B) in the case of Section 40.14(b)(iii), such shorter period of
---------------------
time prior to the Disclosure Date which is reasonable (in light of the nature of
the Information to be disclosed and the Disclosure Law applicable thereto);
(C) in the case of Section 40.14(b)(vii), two Business Days
---------------------
preceding any previously publicly announced date for the Ventas Stockholder
Distribution; and
(D) in the case of Section 40.14(b)(viii)(D), three (3) Business
-------------------------
Days in advance of the date Lessor is obligated to accept or reject Tenant's
offer to purchase securities in connection with the Accretive Transaction.
Section 40.15 New Lease. Lessor shall have the right, at any time and
---------
from time to time during the Term for a legitimate business purpose, by written
notice to Tenant, to require Tenant to execute an amendment to this Lease
whereby one or more Leased Properties (individually, a "Transferred Property" or
--------------------
collectively, "Transferred Properties") is separated and removed from this
----------------------
Lease, and to simultaneously execute a substitute lease with respect to such
Transferred Property(ies), in which case:
126
(a) Lessor and Tenant shall execute a new lease (the "New Lease") for such
---------
Transferred Property(ies), effective as of the date specified in subsection (c)
below (the "Property Transfer Date"), in the same form and substance as this
----------------------
Lease, but with the following changes thereto:
(i) The initial Base Rent for such Transferred Property(ies) shall
be an amount equal to the product of (x) the percentage(s) set forth
opposite the Transferred Property(ies) on Exhibit C, attached hereto and
made a part hereof (the "Transferred Property Percentage(s)"), and (y)
----------------------------------
aggregate Base Rent in effect under this Lease on the Property Transfer
Date;
(ii) The initial Current Rent for such Transferred Property(ies)
shall be an amount equal to the product of (x) the Transferred Property
Percentage(s), and (y) aggregate Current Rent in effect under this Lease on
the Property Transfer Date;
(iii) To the extent that there is any Unpaid Accrued Rent under this
Lease as of such Property Transfer Date, then an amount of such Unpaid
Accrued Rent equal to the product of (x) the Transferred Property
Percentage(s), and (y) the aggregate amount of Unpaid Accrued Rent under
this Lease as of the Property Transfer Date, shall be deemed to be
outstanding under the New Lease;
(iv) Any rental escalations required under the New Lease to be made
on the May 1 immediately following the Property Transfer Date shall be made
under the New Lease on such May 1, in the full amount required as if such
Transferred Property(ies) had been under the New Lease for a full year,
notwithstanding that the period from the Property Transfer Date to such
succeeding May 1 may be less than one full year;
(v) "Base Patient Revenues" as defined in Section 2.1 of the New
-----------
Lease shall mean the Base Patient Revenues from the Transferred
Property(ies) for the calendar year ending on December 31, 1999 as set
forth on Schedule 2.1A;
-------------
(vi) Intentionally omitted;
(vii) If and for so long as the lessor under any New Lease is not a
Ventas Lessor, Tenant (A) shall not be required under such New Lease to
provide to such new lessor Facility-specific information related to
Facilities or Leased Properties which are not included in such New Lease,
(B) shall exclude from consolidated facility information that is required
under Section 26.1 of such New Lease facility information which relates to
------------
Facilities or Leased Properties not included in such New Lease and (C)
shall continue to be required to provide information relative to Tenant, as
opposed to Leased Properties and Facilities, on the same basis as such
information is provided to Ventas Lessors;
(viii) Without limitation of subsection (xiv) below, under Section
-------
3.2 of the New Lease, the Reset Fee under such New Lease shall be an amount
---
equal to the
127
product of (x) the Transferred Property Percentage(s), and (y) the Reset
Fee applicable to this Lease on the Property Transfer Date;
(ix) Exhibit C to such New Lease shall include (A) rent only for the
---------
Transferred Property(ies) covered by such New Lease; and (B) a Transferred
Property Percentage for each such Transferred Property, equal to the
percentage that the rent for such Transferred Property comprises of the
aggregate rents for all Transferred Properties under such New Lease (and
the aggregate of all Transferred Property Percentages under such New Lease
shall equal 100%);
(x) Subject to Section 22.7(g) hereof and without limitation and
---------------
subject to the provisions of Sections 16.10, 19.1, 25.1.11 and 40.18 of
-------------- ---- ------- -----
this Lease and all other leases demising any of the Master Lease Leased
Properties, the New Lease shall provide that the tenant thereunder shall be
responsible for the payment, performance and satisfaction of all duties,
obligations and liabilities arising under this Lease, insofar as they
relate to the Transferred Property(ies) subject to the New Lease, that were
not paid, performed and satisfied in full prior to the effective date of
the New Lease (and Tenant under this Lease shall also be responsible for
the payment, performance and satisfaction of the aforesaid duties,
obligations and liabilities not paid, performed and satisfied in full prior
to the effective date of such New Lease), and shall further provide that
the tenant thereunder shall not be responsible for the payment, performance
or satisfaction of any duties, obligations and liabilities of Tenant under
this Lease arising after the Property Transfer Date;
(xi) If the New Lease relates to a single Leased Property, all
references to multiple Leased Properties in the New Lease shall be
eliminated; provided, however, the foregoing portion of this clause (xi) is
-------- -------
without limitation of and subject to the provisions of Sections 16.10,
--------------
19.1, 25.1.11 and 40.18 of this Lease and all other leases demising any of
---- ------- -----
the Master Lease Leased Properties;
(xii) The New Lease shall not include any cross-default provisions
that would make Tenant's default under this Lease or under any other New
Lease entered into in accordance with this Lease or under any of the other
Leases or under any New Lease entered into in accordance with any of such
other Leases an event of default under such New Lease; provided, however,
-------- -------
the foregoing portion of this clause (xii) is without limitation of and
subject to the provisions of Sections 16.10, 19.1, 25.1.11 and 40.18 of
-------------- ---- ------- -----
this Lease and all other leases demising any of the Master Lease Leased
Properties;
(xiii) At the election of Lessor, any one or more of the provisions
of the New Lease pertaining to Ventas, Inc.'s REIT status shall be deleted,
including, without limitation, Section 25.3 and Article XXXVI hereof; and
------------ -------------
(xiv) The New Lease (but not including any New Master Lease under
Section 40.17 hereof) shall include within Section 3.2 thereof a new
------------- -----------
subsection (g) thereof providing that (1) Lessor under this Lease shall
have the sole and exclusive power and authority to exercise the rights of
the lessor under Section 3.2 of each lease relating to
-----------
128
one or more Master Lease Leased Properties (including the rights of the
lessor under Section 3.2 of such New Lease), and to bind such lessor with
respect thereto and (2) the rights of such lessor under Section 3.2 of such
-----------
New Lease, acting through Lessor as provided in subsection (1) above, must
be exercised consistently and simultaneously with Lessor's exercise of such
rights under this Lease (for example, if a Reset Proposal Notice is to be
sent, or the Reset Option is to be exercised, or determinations by
appraisal are to be requested, the same must be done at the same time for
all of the Leased Properties under this Lease and such New Lease (including
the Transferred Properties subject to such New Lease) and, if the Reset
Option is to be exercised, the full Reset Fee applicable to this Lease as
of the Effective Date (i.e. $1,000,741.00), must be paid to Tenant in
connection with, and as a condition of, any such exercise.
(b) Upon execution of such New Lease, and effective as of the Property
Transfer Date, this Lease shall be deemed to be modified and amended as follows:
(i) The Transferred Property(ies) shall be excluded from the Leased
Properties hereunder;
(ii) Base Rent hereunder shall be reduced by the amount set forth in
Section 40.15(a)(i) above;
-------------------
(iii) Current Rent hereunder shall be reduced by the amount set forth
in Section 40.15(a)(ii) above;
--------------------
(iv) To the extent that there is any Unpaid Accrued Rent under this
Lease as of such Property Transfer Date, the amount of such Unpaid Accrued
Rent shall be reduced by the amount set forth in Section 40.15(a)(iii)
---------------------
above;
(v) "Base Patient Revenues", as defined in Section 2.1 hereof,
shall be deemed to be reduced by the amount set forth in Section
-------
40.15(a)(v) above;
-----------
(vi) Intentionally omitted;
(vii) Under Section 3.2 of this Lease, the Reset Fee shall be reduced
-----------
by the amount described in Section 40.15(a)(viii) above; and
----------------------
(viii) Exhibit C shall be modified so as to remove the allocation of
---------
rents and the Transferred Property Percentage(s) for the Transferred
Property(ies), and the Transferred Property Percentages of the Leased
Properties remaining under this Lease shall be recalculated so that each
such Leased Property shall have a Transferred Property Percentage equal to
the percentage that the rent for such Leased Property comprises of the
aggregate rents for all Leased Properties remaining under this Lease, and
so that the aggregate of all Transferred Property Percentages for Leased
Properties remaining under this Lease equals 100%.
129
(c) In the case of any New Lease that is entered into in accordance with
Section 22.7 hereof, such New Lease shall be effective as of the date of
------------
termination of this Lease with respect to the applicable Leased Property(ies).
In the case of any New Lease that is entered into in accordance with Section
-------
19.4 hereof, such New Lease shall be effective as of the effective date therefor
----
specified in such Section 19.4. In the case of all other New Leases, such New
------------
Lease shall be effective on the date which is the earlier of (i) the date the
New Lease is fully executed and delivered by the parties thereto and (ii) the
date specified in the written notice from Lessor to Tenant requiring a New Lease
as described above, which date shall be no sooner than ten (10) days, nor later
than sixty (60) days, after the date such notice is issued.
(d) Tenant shall take such actions and execute and deliver such documents,
including without limitation the New Lease and new or amended Memorandum(s) of
Lease and, if requested by Lessor, an amendment to this Lease, as are reasonably
necessary and appropriate to fully effectuate the provisions and intent of this
Section 40.15 and Lessor shall execute and deliver such new or amended
-------------
Memorandum(s) of Lease as are reasonably necessary and appropriate to fully
effectuate the provisions and intent of this Section 40.15 and an amendment of
-------------
this Lease in accordance with Section 40.15(b) above.
----------------
(e) Each Leasehold Mortgagee, Superior Lessor and Superior Mortgagee hereby
consents to the provisions of this Section 40.15 and agrees, upon request of
-------------
Lessor, to execute an instrument consenting to the execution and delivery of the
New Lease and of an amendment to this Lease, consistent with the foregoing
provisions.
(f) Each party shall bear its own costs and expenses in connection with any
New Lease entered into in accordance with Section 19.4 hereof. In all other
------------
cases, the party requesting a New Lease under this Section 40.15 (and, for such
-------------
purpose, Tenant shall be deemed to be the requesting party in the case of any
New Lease entered into in accordance with Section 22.7 hereof and Lessor shall
------------
be deemed to be the requesting party in the case of any New Lease entered into
in accordance with Section 40.17 hereof) shall, promptly following receipt of a
-------------
written demand therefor and reasonable supporting documentation, reimburse the
other party hereto for its out-of-pocket costs and expenses incurred in
connection with such New Lease, including, without limitation, reasonable
attorneys' fees and any recording fees incurred by such other party in
connection with the recording of new or amended Memorandum(s) of Lease.
Section 40.16 Partial Expiration/Termination. In the event this Lease
------------------------------
expires or terminates as to one or more, but less than all, of the Leased
Properties (herein, the "Expired/Terminated Properties"), but no Separate Lease
-----------------------------
pursuant to Section 22.7 or New Lease in accordance with the terms of Section
------------ -------
40.15 (e.g. pursuant to the terms of Section 19.4 or Section 40.15), is entered
----- ------------ -------------
into on account thereof, effective as of the date of such expiration or
termination (the "Partial Expiration/Termination Date"), the following
-----------------------------------
provisions shall be applicable:
(a) The Expired/Terminated Properties shall be excluded from the Leased
Properties hereunder (but without limitation and subject to the provisions of
Sections 16.10,
--------------
130
19.1, 25.1.11 and 40.18 of this Lease and all other leases demising any of the
---- ------- -----
Master Lease Leased Properties;
(b) All Base Rent and Current Rent attributable to the Expired/Terminated
Properties (determined based upon the aggregate of the Transferred Property
Percentages applicable to the Expired/Terminated Properties), and all Additional
Charges attributable to the Expired/Terminated Properties, shall be due and
payable as of the Partial Expiration/ Termination Date, and all Unpaid Accrued
Rent attributable to the Expired/Terminated Properties (determined in the same
manner) shall continue to be owing from Tenant to Lessor and continue to bear
Accrued Rent Interest, and shall be due and payable as of the Unpaid Accrued
Rent Due Date. The respective amounts of the Base Rent, Current Rent and Unpaid
Accrued Rent attributable to the Leased Properties other than the
Expired/Termination Properties as of the Partial Expiration/Termination Date
shall equal the respective amounts thereof immediately prior to such Partial
Expiration/Termination Date less the respective amounts thereof allocated to the
Expired/Terminated Properties as aforesaid;
(c) "Base Patient Revenues", as defined in Section 2.1 hereof, shall have
-----------
excluded therefrom all Base Patient Revenues attributable to the
Expired/Terminated Properties, as set forth on Schedule 2.1A;
(d) "Patient Revenues", as defined in Section 2.1 hereof, shall have
-----------
excluded therefrom all Patient Revenues attributable to the Expired/Terminated
Properties;
(e) Intentionally omitted;
(f) Under Section 3.2 of this Lease, the Reset Fee shall be reduced by an
-----------
amount equal to the product of (i) the aggregate of the Transferred Property
Percentages applicable to the Expired/Terminated Properties and (ii) the Reset
Fee applicable to this Lease as of the Partial Expiration/Termination Date;
(g) Exhibit C shall be modified so as to remove the allocation of rents to
---------
the Expired/Terminated Properties, and the Transferred Property Percentages of
the Leased Properties remaining under this Lease shall be recalculated so that
each such Leased Property shall have a Transferred Property Percentage equal to
the percentage that the rent for such Leased Property comprises of the aggregate
rents for all Leased Properties remaining under this Lease, and so that the
aggregate of all Transferred Property Percentages for the Leased Properties
remaining under this Lease equals 100%;
(h) Nothing in this Section 40.16 shall be deemed to limit or impair any of
-------------
Lessor's or Tenant's rights and remedies at law, in equity, under this Lease or
otherwise relative to the Expired/Terminated Properties or the Leased Properties
that remain subject to this Lease;
(i) Tenant shall take such actions and execute and deliver such documents,
including, without limitation, if requested by Lessor, an amendment to this
Lease, as are reasonably necessary and appropriate to fully effectuate the
provisions and intent of this Section 40.16.
-------------
131
(j) Each Leasehold Mortgagee, Superior Lessor and Superior Mortgagee hereby
consents to the provisions of this Section 40.16 and agrees, upon request of
-------------
Lessor, to execute an instrument consenting to the execution and delivery of an
amendment to this Lease, consistent with the foregoing provisions.
Section 40.17 Creation of New Master Lease. In the event of a sale during
----------------------------
the first twenty-four (24) full calendar months following the Effective Date to
a single purchaser that is not an Affiliate of Lessor (the "Unaffiliated Buyer")
------------------
of twenty (20) or more of the Combined Leased Properties (collectively, the
"Sub-Portfolio Properties"), Lessor, acting in concert with the other lessors of
-------------------------
Sub-Portfolio Properties, shall have the right to require that the Sub-Portfolio
Properties be excluded from the then existing Combined Leases and that Tenant
enter into an additional master lease (the "New Master Lease") of the Sub-
----------------
Portfolio Properties with the Unaffiliated Buyer, as lessor, provided that each
of the following conditions is satisfied: (i) the Coverage Ratio of the Sub-
Portfolio Properties that are operated as hospitals is not greater than fifteen
percent (15%) above or below the Coverage Ratio of the Combined Leased
Properties that are operated as hospitals other than the Sub-Portfolio
Properties (for example, if the Coverage Ratio of the Combined Leased Properties
that are operated as hospitals other than the Sub-Portfolio Properties were
1.5:1, then the Coverage Ratio of the Sub-Portfolio Properties that are operated
as hospitals must not exceed 1.72:1 or be less than 1.28:1); (ii) the Coverage
Ratio of the Sub-Portfolio Properties that are operated as nursing centers is
not greater than ten percent (10%) above or below the Coverage Ratio of the
Combined Leased Properties that are operated as nursing centers other than the
Sub-Portfolio Properties; and (iii) by the creation of the New Master Lease,
Lessor shall not cause any of the Combined Leases, as it applies to any of the
Combined Leased Properties, to be treated as a capital lease, rather than an
operating lease, under generally accepted accounting principles or under the
applicable rules of the Financial Accounting Standards Board. In the event that
Lessor wishes to exercise its rights under this Section 40.17, Lessor, together
-------------
with the other lessors of Sub-Portfolio Properties, shall give written notice
thereof to Tenant not less than thirty (30) days prior to the anticipated date
of closing of the sale of the Sub-Portfolio Properties to the Unaffiliated Buyer
(it being agreed, however, that, in the event such notice is given but the
anticipated closing for any reason fails to occur, Lessor shall retain the
right, on the terms set forth in this Section 40.17, thereafter to send a
-------------
further notice under this Section 40.17). The New Master Lease shall be deemed
-------------
to constitute a New Lease and shall be subject to Section 40.15, except that, as
-------------
set forth in subsection (a)(xiv) of Section 40.15, clauses (1) and (2) of such
-------------
subsection (a)(xiv) shall not apply to such New Master Lease. For purposes of
such New Master Lease, the Sub-Portfolio Properties shall constitute the "Master
Lease Leased Properties" thereunder. Notwithstanding anything to the contrary
contained herein, the right under Section 40.17 of each of the Combined Leases
-------------
to require Tenant to enter into the New Master Lease may only be exercised once
for all of the Combined Leases.
Section 40.18 Combination of Leases. If Lessor is the lessor under both
---------------------
this Lease and another lease demising a Master Lease Leased Property(ies) (the
"Second Lease"), Lessor shall have the right, at any time during the Term, by
------------
written notice to Tenant, to require that this Lease and the Second Lease be
combined and to require Tenant to execute an amendment to this Lease whereby (a)
if this Lease is the Section 40.18 Lease (as hereinafter defined), the
132
Master Lease Leased Properties covered by the Second Lease are added as Leased
Properties under this Lease and otherwise merged into this Lease or (b) if the
Second Lease is the Section 40.18 Lease, the Leased Properties covered by this
Lease are added as Leased Properties under the Second Lease and otherwise merged
into the Second Lease, in each case subject to the following terms and
conditions:
(i) References in this Lease to the "Section 40.18 Lease" shall mean
-------------------
and refer to whichever of this Lease or the Second Lease is chosen by
Lessor to be the Section 40.18 Lease.
(ii) If this Lease is the Section 40.18 Lease, effective as of the
date specified in subsection (iv) below (the "Section 40.18 Date"), this
------------------
Lease shall be deemed to be modified and amended as follows:
(1) The Master Lease Leased Properties included in the Second
Lease shall be included as the Leased Properties under this Lease;
(2) Base Rent under this Lease shall be the combination of the
respective amounts of the Base Rent under this Lease and the Second Lease;
(3) Current Rent under this Lease shall be the combination of
the respective amounts of the Current Rent under this Lease and the Second
Lease;
(4) The amount of the Unpaid Accrued Rent under this Lease shall
be the combination of the respective amounts of any Unpaid Accrued Rent under
this Lease and the Second Lease;
(5) Any rental escalations that would otherwise have been
required to be made under the Second Lease on the May 1 immediately following
the Section 40.18 Date shall be made under this Lease on such May 1, in the full
amount required as if the Master Lease Leased Properties referenced in
subsection (1) above had been under this Lease for a full year, notwithstanding
that the period from the Section 40.18 Date to such succeeding May 1 may be less
than one full year;
(6) "Base Patient Revenues", as defined in Section 2.1 of this
-----------
Lease, shall be increased by the amount of the Base Patient Revenues from the
Master Lease Leased Properties included in the Second Lease for the calendar
year ending on December 31, 1999 as set forth in Schedule 2.1A of the Second
-------------
Lease, and Schedule 2.1A of this Lease shall be deemed modified and amended
-------------
accordingly;
(7) If and for so long as the lessor under this Lease is not
Ventas, Inc. or Ventas Realty, Limited Partnership or any successor to either of
them (by merger or otherwise) or any Affiliate of Ventas, Inc. or Ventas Realty,
Limited Partnership or any such successor, Tenant (A) shall not be required
under this Lease to provide to such lessor Facility-specific information related
to Facilities or Leased Properties which are not included in this Lease, (B)
shall exclude from consolidated facility information that is required under
Section
-------
133
26.1 of this Lease facility information which relates to Facilities or Leased
----
Properties not included in this Lease and (C) shall continue to be required to
provide information relative to Tenant, as opposed to Leased Properties and
Facilities, on the same basis as such information is provided to Ventas-related
lessors;
(8) Under Section 3.2 of this Lease, the Reset Fee shall be the
-----------
combination of the respective amounts of the Reset Fee applicable to this Lease
and the Second Lease;
(9) Exhibit C to this Lease shall be modified and amended so as
---------
to add thereto the allocations of rents relative to the Master Lease Leased
Properties included in the Second Lease that were previously included in Exhibit
-------
C to the Second Lease, and the Transferred Properties Percentages of the Leased
-
Properties included in this Lease (including, without limitation, the additional
Master Lease Leased Properties referenced in subsection (1) above) shall be
recalculated so that each such Leased Property shall have a Transferred Property
Percentage equal to the percentage that the rent for such Leased Property
comprises of the aggregate rents for all Leased Properties included in this
Lease and so that the aggregate of all Transferred Property Percentages for
Leased Properties included in this Lease equals 100%;
(10) Tenant under this Lease shall be responsible for the
payment, performance and satisfaction of all duties, obligations and liabilities
arising under the Second Lease, insofar as they relate to the Master Lease
Leased Properties subject to the Second Lease, that were not paid, performed and
satisfied in full prior to the Section 40.18 Date, and, without limitation of
the foregoing, (x) any Event of Default that had occurred, arisen or accrued
under the Second Lease prior to the Section 40.18 Date shall be, and shall be
deemed to be, an Event of Default under this Lease, as to which the rights and
remedies and other provisions of this Lease shall be applicable, (y) any breach
or default that had occurred, arisen or accrued under the Second Lease prior to
the Section 40.18 Date but had not yet become an Event of Default under the
Second Lease as of the Section 40.18 Date shall be, and be deemed to be, a
breach or default under this Lease, as to which the cure periods, rights and
remedies and other provisions of this Lease shall be applicable, and (z) with
respect to any breach or default described in subsection (y) above, although the
cure periods, rights and remedies and other provisions of this Lease shall be
applicable, the portion of any cure period under the Second Lease that had
elapsed as of the Section 40.18 Date shall be counted in determining whether and
when the applicable cure period under this Lease has expired; and
(11) The Master Lease Leased Properties referenced in subsection
(1) above shall otherwise be incorporated into this Lease as Leased Properties
included under this Lease the same as if this Lease, from the inception of the
Second Lease, had included the aforesaid Master Lease Leased Properties as
Leased Properties hereunder on the rent, lease terms and other economic terms
described in the Second Lease.
(iii) If this Lease is not the Section 40.18 Lease, effective as of the
Section 40.18 Date, this Lease shall be modified and amended as necessary
(x) to incorporate
134
into the Second Lease as Leased Properties thereunder the Leased Properties
covered by this Lease the same as if the Leased Properties covered by this
Lease had, from the inception of this Lease, been included in the Second
Lease as Leased Properties thereunder on the rent, lease terms and other
economic terms described in this Lease and (y) otherwise to comply with the
requirements of Section 40.18 of the Second Lease, as the Section 40.18
-------------
Lease thereunder. Tenant acknowledges and agrees that, without limitation
of Section 40.18(ii)(10) above, the modification and amendment referenced
--------------------
in this subsection (iii) shall not result in Tenant being released from any
duties, liabilities or obligations that had accrued under this Lease
through the Section 40.18 Date.
(iv) In the case of any combination of leases pursuant to this
Section 40.18, such combination shall be effective on the date which is the
-------------
earlier of (x) the date the required modifications and amendments to the
Lease and Second Lease are fully executed and delivered by the parties
thereto and (y) the date specified in the written notice from Lessor to
Tenant requiring a combination of this Lease and the Second Lease as
described above, which date shall be no sooner than ten (10) days, nor
later than sixty (60) days, after the date such notice is issued.
(v) Each of Lessor and Tenant shall take such actions and execute
and deliver such documents, including, without limitation, required
modifications and amendments to this Lease and the Second Lease and new or
amended Memorandum(s) of Lease, as are reasonably necessary and appropriate
to effectuate fully the provisions and intent of this Section 40.18.
-------------
(vi) Each Leasehold Mortgagee, Superior Lessor and Superior Mortgagee
hereby consents to the provisions of this Section 40.18 and agrees, upon
-------------
request of Lessor, to execute an instrument consenting to the execution and
delivery of the required modifications and amendments to this Lease and the
Second Lease, consistent with the foregoing provisions.
(vii) Lessor shall, promptly following receipt of a written demand
therefor and reasonable supporting documentation, reimburse Tenant for its
out-of-pocket costs and expenses incurred in connection with the required
modifications and amendments to this Lease and the Second Lease, including,
without limitation, reasonable attorneys' fees and any recording fees
incurred by Tenant in connection with the recording of new or amended
Memorandum(s) of Lease.
Section 40.19 Unified Commercial Operating Lease. It is acknowledged and
----------------------------------
agreed that, except as otherwise expressly provided herein, the inclusion of
each of the Leased Properties on a continuing basis in the leasing transaction
provided for herein is an essential element of such transaction for Lessor, and
that, except as otherwise expressly provided herein, Lessor shall not be
obligated and may not be required to lease less than all of the Leased
Properties to Tenant pursuant to this Lease. It is further acknowledged and
agreed that this Lease is not a residential lease within the meaning of the U.S.
Bankruptcy Code, as
135
amended, and that this Lease is an operating lease, and not a capital lease, for
all accounting, tax and legal purposes.
Section 40.20 Intentionally omitted.
---------------------
Section 40.21 No Credits. Notwithstanding anything to the contrary set
----------
forth in this Lease or otherwise, except as otherwise expressly provided in the
Bankruptcy Plan relative to the Tax Refund Escrow Agreement, Lessor shall not be
required to pay, make or give to Tenant, and Tenant shall not be entitled to,
any credits, offsets, prorations or payments of any kind or nature whatsoever on
account of any payment, nonpayment or other event occurring prior to the
Effective Date.
ARTICLE XLI
Section 41.1 Memorandums of Lease. Lessor and Tenant shall, promptly upon
--------------------
the request of either, enter into short form memorandums of this Lease, in form
suitable for recording under the laws of the State in which each Leased Property
is located, in which reference to this Lease, and all extension options
contained herein, shall be made. Relative to the foregoing and notwithstanding
anything to the contrary contained in this Lease, any such Memorandums of Lease
shall not reference the existence of any option to purchase in favor of Tenant
under Section 16.12 of this Lease unless and until the number of Leased
-------------
Properties covered by this Lease equals forty (40) or less, at which time, upon
the request of Tenant, any existing Memorandums of Lease shall be amended by
Lessor and Tenant, or new Memorandums of Lease shall be entered into by Lessor
and Tenant (for example in the circumstance where this Lease (a) constitutes a
New Lease as to which no previous Memorandums of Lease have been entered into
and (b) covers forty (40) or less Leased Properties), referencing that, in
limited circumstances following the occurrence of certain limited types of
Events of Default by Tenant, Tenant may have an option to purchase in certain
circumstances one (1) Leased Property, and in other circumstances two (2) Leased
Properties, covered by this Lease as to which the aforesaid types of Events of
Default have occurred and are continuing. Thereafter, when and if any such
option(s) to purchase under Section 16.12 of this Lease have ceased to be
-------------
available to and exercisable by Tenant for any reason (e.g. due to Tenant's
exercise of all of its available options to purchase under Section 16.12 or on
-------------
account of this Lease being involved in a Section 40.18 lease combination
-------------
transaction where the resulting Section 40.18 Lease covers in excess of forty
(40) Leased Properties or otherwise provides to Tenant no available and
exercisable option(s) to purchase under Section 16.12), upon the request of
-------------
Lessor, any existing Memorandum(s) of Lease that reference any option to
purchase in favor of Tenant shall be amended to delete any such reference.
Without limitation of Lessor's obligations under and except as otherwise
provided in Section 40.15(f) and Section 40.18(vii), Tenant shall pay all costs
---------------- ------------------
and expenses of recording any such Memorandums of Lease or amendments thereto
and for releasing any such Memorandums of Lease that relate to a particular
Leased Property(ies) upon any expiration or termination of this Lease as it
relates to any such Leased Property(ies).
136
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137
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals to be hereunto affixed and attested by their
respective officers hereunto duly authorized.
-----------------------------------------------------------------------------------------------------------------------------------
Witness VENCOR, INC.
/s/ Xxxx Xxxxxx
---------------------------------------------- By:/s/ Xxxxxxx X. Xxxxxxxxxx
Name: Xxxx Xxxxxx -------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President, Finance,
Corporate Controller and Treasurer
/s/ Xxxxxx X Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
VENCOR OPERATING, INC.
/s/ Xxxx Xxxxxx
----------------------------------------------
Name: Xxxx Xxxxxx By:/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President, Finance,
/s/ Xxxxxx X. Xxxxxx Corporate Controller and Treasurer
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------------------------------------------------------------------------------------------------------
VENTAS REALTY, LIMITED PARTNERSHIP
/s/ Xxxxxx X. Xxxxxx By: Ventas, Inc., its general partner
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
By:/s/ T. Xxxxxxx Xxxxx
--------------------
/s/ Xxxx X. Xxxxxxxx Name: T. Xxxxxxx Xxxxx
---------------------------------------------- Title: Executive Vice President
Name: Xxxx X. Xxxxxxxx
------------------------------------------------------------------------------------------------------------------------------------
138
JOINDER
-------
The undersigned, VENTAS, INC., a Delaware corporation, hereby joins in the
foregoing Amended and Restated Master Lease Agreement No. 4 solely for the
purposes of (i) confirming to the Tenant under the aforesaid Lease that, to the
best of its knowledge, except as described in subsection (ii) below, title to
the Leased Properties is held in the name of the Lessor under the aforesaid
Lease, rather than in the name of the respective entities that were the lessor
under the "Original Master Lease" referenced in the aforesaid Lease, and that,
if it is determined that title has not properly been transferred to such Lessor,
Ventas, Inc. shall cause the conveyance of such title to Lessor, effective as of
the Effective Date referenced in the aforesaid Lease, (ii) confirming to the
aforesaid Tenant that, to the best of its knowledge, title to the Leased
Property commonly known as Vencor Hospital - Philadelphia (Facility No.4614) is
held in the name of Ventas, Inc., and (iii) subject to Section 40.2 of the
------------
aforesaid Lease, joining with Ventas Realty, Limited Partnership, on a joint and
several basis, as Lessor under the aforesaid Lease with respect to, and only
with respect to, the aforesaid Vencor Hospital - Philadelphia Leased Property,
and for no other purposes. Notwithstanding anything to the contrary contained
in the aforesaid Lease, the aforesaid Tenant acknowledges and agrees, by the
acceptance of this Joinder, that, except as provided in subsection (i) above,
Ventas, Inc. shall have no liability or obligations under the aforesaid Lease,
as lessor or otherwise, with respect to any Leased Property other than the
aforesaid Vencor Hospital - Philadelphia Leased Property.
Witness VENTAS, INC.
/s/ Xxxxxx X. Xxxxxx
------------------------------------ By: /s/ T. Xxxxxxx Xxxxx
Name: Xxxxxx X. Xxxxxx --------------------
Name: T. Xxxxxxx Xxxxx
Title: Executive Vice President
/s Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
000
XXX XXXXXXX XXXXXXXXXXXXXX
XXXXX XX XXX XXXX )
)
COUNTY OF NEW YORK )
On March 29, 2001 before me, a notary public, personally appeared Xxxxxxx X.
Xxxxxxxxxx,
__ personally known to me-OR-
__ proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.
Witness my hand and official seal.
/s/ Xxxxx Xxxxxxxx
------------------
SIGNATURE OF NOTARY
IMPRESS NOTARY SEAL:
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING
__ INDIVIDUALS(S) Vencor, Inc., a Delaware corporation
x CORPORATE OFFICER(S)
TITLE
TITLE
__ PARTNER(S)
__ ATTORNEY-IN-FACT
__ TRUSTEE(S)
__ OTHER_________________
000
XXXXX XX XXX XXXX )
)
COUNTY OF NEW YORK )
On March 29, 2001 before me, a notary public, personally appeared Xxxxxxx X.
Xxxxxxxxxx,
__ personally known to me-OR-
__ proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
Witness my hand and official seal.
/s/ Xxxxx Xxxxxxxx
------------------
SIGNATURE OF NOTARY
IMPRESS NOTARY SEAL:
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING
__ INDIVIDUALS(S) Vencor Operating, Inc., a Delaware
x CORPORATE OFFICER(S) corporation
TITLE
TITLE
__ PARTNER(S)
__ ATTORNEY-IN-FACT
__ TRUSTEE(S)
__ OTHER_____________
000
XXXXX XX XXX XXXX )
)
COUNTY OF NEW YORK )
On March 29, 2001 before me, a notary public, personally appeared T. Xxxxxxx
Xxxxx,
personally known to me-OR-
proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
Witness my hand and official seal.
/s/ Xxxxx Xxxxxxxx
-----------------
SIGNATURE OF NOTARY
IMPRESS NOTARY SEAL:
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING
__ INDIVIDUALS(S) Ventas, Inc., a Delaware
x CORPORATE OFFICER(S) corporation in its capacity
as the general partner of
TITLE - Executive Vice President Ventas Realty, Limited
Partnership, a Delaware limited
partnership
TITLE
__ PARTNER(S)
__ ATTORNEY-IN-FACT
__ TRUSTEE(S)
__ OTHER________________
000
XXXXX XX XXX XXXX )
)
COUNTY OF NEW YORK )
On March 29, 2001 before me, a notary public, personally appeared T. Xxxxxxx
Xxxxx,
personally known to me-OR-
proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
Witness my hand and official seal.
/s/ Xxxxx Xxxxxxxx
------------------
SIGNATURE OF NOTARY
IMPRESS NOTARY SEAL:
CAPACITY CLAIMED BY SIGNER: SIGNER IS REPRESENTING
__ INDIVIDUALS(S) Ventas, Inc., a Delaware corporation
x CORPORATE OFFICER(S)
TITLE - Executive Vice President
TITLE
__ PARTNER(S)
__ ATTORNEY-IN-FACT
__ TRUSTEE(S)
__ OTHER_______________
143
Exhibit A
---------
Legal Descriptions
144
EXHIBIT B
---------
Term Commencement/Expiration Dates
----------------------------------
Master Lease #4 (Bank Portfolio 3)
----------------------------------
* See the Original Master Lease for the Commencement Date of the Lease
relative to each Facility.
------------------------------------------------------------------------------------------------------------------------------------
Commencement Lease Expiration
Facility ID Name City State Date Date
------------------------------------------------------------------------------------------------------------------------------------
Hospitals
------------------------------------------------------------------------------------------------------------------------------------
1 4658 Vencor Hospital - Tuscon Tuscon AZ * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
2 0000 Xxxxxx Xxxxxxxx - Xxxx Xxxxx Xxxxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
3 0000 Xxxxxx Xxxxxxxx - Xxx Xxxxxxx Xxx Xxxxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
4 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxx Xxxxxxxxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
5 4665 Vencor Hospital - Denver Denver CO * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
6 4645 Vencor Hospital - Ft. Lauderdale Ft. Lauderdale FL * April 30, 2013
------------------------------------------------------------------------------------------------------------------------------------
7 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxxx Xxxxxxxxxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
8 0000 Xxxxxx Xxxxxxxx - Xxxxxxx Xxxxxxx XX * April 30, 2013
------------------------------------------------------------------------------------------------------------------------------------
9 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxx Xxxxxxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
Nursing Centers
------------------------------------------------------------------------------------------------------------------------------------
1 853 Kachina Point Health Care & Rehab. Sedona AZ * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
2 000 Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx XX * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
3 268 Colonial Oaks Rehab. Ctr. - Ft. Xxxxxx Ft. Xxxxxx FL * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
4 000 Xxxxxxxxx Xxxxx Health & Rehab. Spring hill FL * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
5 526 Brittany Healthcare Center Natick MA * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
6 546 Winship Green Nursing Center Bath ME * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
7 569 Chillicothe Nursing & Rehab. Center Chillecothe OH * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
8 802 Bridgepark Ctr. For Rehab. & Nsg. Sv. Akron OH * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
9 000 Xxx Xxxxx Xxxxx Xxx Xxxxxxx XX * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
10 000 Xxxxxxxxxx Health Care & Rehab. Svc. Bellingham WA * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
11 000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxx XX * April 30, 2008
------------------------------------------------------------------------------------------------------------------------------------
12 000 Xxxxx. & Xxxxxxx. Xxx. xx Xxxxxxxxxx Xxxxxxxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
13 000 Xxxxxxxxx Xxxxxxx Health Ctr., Inc. Stamford CT * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
14 000 Xxxxx Xxxxxxx Xxxxx. & Xxx. Xxx. Xxxxxxx Xxxxx XX * April 30, 2010
------------------------------------------------------------------------------------------------------------------------------------
145
-------------------------------------------------------------------------------------------------------------------
Commencement Lease Expiration
Facility ID Name City State Date Date
-------------------------------------------------------------------------------------------------------------------
15 1232 Pompano Rehab./Nursing Ctr. Pompano Beach FL * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
16 0000 Xxxxx Xxxxx. & Xxx. Xxxxxx Xx. Xxxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
17 0000 Xxxxxx Xxxxxxx Xxxxxx Xxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
18 000 Xxxxxxxx Xxxxxxxxxx Xxxxxx Xxxxxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
19 290 Bremen Health Care Center Bremen IN * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
20 000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxx Xxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
21 000 Xxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
22 000 Xxxxxxxx Xxxxxxx Health Care Fac. Elizabethtown KY * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
23 000 Xxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
24 000 Xxxxxxx Xxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
25 000 Xxxxxxx Xxxxx. & Xxxxxxx Xxxxxx Xxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
26 523 Star of Xxxxx Nsg. & Rehab/Alz. Ctr. West Roxbury MA * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
27 542 Den-Mar Rehab. & Nursing Center Rockport MA * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
28 583 Embassy House Sk. Nsg. & Rehab. Brockton MA * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
29 723 Guardian Care of Rocky Mount. Rocky Mount NC * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
30 746 Homestead Health Care & Rehab. Ctr. Lincoln NE * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
31 000 Xxxxxxxxxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
32 000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
33 0000 Xxx Xxxx Nursing & Rehab. Ctr. Pawtucket RI * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
34 000 Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
35 000 Xxxxxxxx Xxxxxxx & Xxxxx. Xxxxxx Xxxxxx XX * April 30, 2010
-------------------------------------------------------------------------------------------------------------------
36 000 Xxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxxx XX * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
37 000/000 Xxxxxxx Xxxxxx Xxx. & Xxxxx. Xxx. Xxx Xxxxxx XX * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
38 000 Xxxxxxx Xxxxx. & Xxxxxxxxxx Xxxxxx Xxxxxxx XX * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
39 000 Xxxxxx Xxxx Xxxxxx Xxxxxx XX * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
40 209 Valley View Health Care Center Elkhart IN * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
41 585 Great Barrington Rehab. & Nsg. Ctr. Great Barrington MA * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
42 000 Xxxx Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxxx XX * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
43 481 South Central Wyoming HC & Rehab. Xxxxxxx WY * April 30, 2013
-------------------------------------------------------------------------------------------------------------------
44 131 Vencor Corydon Nursing Care Center Corydon IN August 7, 1998 April 30, 2010
-------------------------------------------------------------------------------------------------------------------
146
Exhibit C
---------
Allocation Schedule - Applicable Transferred Property Percentages
Ventas, Inc.
----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT C 3.50%
Rent @
Facility ID Name City State Type Beds Lease Bundle Initial Rent % of ML May 1 2001
----------- ---- ---- ----- --- --- ----- ------ ------- ---- ------- ----------
Master Lease 4
--------------
4645 Vencor Hospital - Ft. Lauderdale Ft. Lauderdale FL LTAC 64 4 1 1,511,435 4.325% 1,564,335
0000 Xxxxxx Xxxxxxxx - Xxxxxxx Xxxxxxx XX LTAC 94 4 1 2,067,167 5.915% 2,139,518
0000 Xxxxxx Xxxxxxxx - Xxxxxx Xxxxxx XX LTAC 51 4 2 313,875 0.898% 324,861
0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxxx Xxxxxxxxxxxx XX LTAC 52 4 3 592,230 1.695% 612,958
4617 Vencor Hospital - Arlington, VA Arlington VA LTAC 164 4 3 1,067,042 3.053% 1,104,388
0000 Xxxxxx Xxxxxxxx - Xxx Xxxxxxx Xxx Xxxxxxx XX LTAC 168 4 4 387,826 1.110% 401,400
0000 Xxxxxx Xxxxxxxx - Xxxx Xxxxx Xxxxxxx XX LTAC 103 4 4 507,364 1.452% 525,122
0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxx Xxxxxxxxxxx XX LTAC 61 4 5 649,827 1.859% 672,571
4665 Vencor Hospital - Denver Denver CO LTAC 68 4 5 1,730,624 4.952% 1,791,195
000 Xxxx Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxxx XX SNF 123 4 1 461,359 1.320% 477,506
000 Xxxxxxx Xxxxxx Xxx. & Xxxxx. Xxx. Xxx Xxxxxx XX SNF 120 4 1 467,415 1.338% 483,775
209 Valley View Health Care Center Elkhart IN SNF 140 4 1 327,826 0.938% 339,300
000 Xxxxxx Xxxx Xxxxxx Xxxxxx XX SNF 94 4 1 133,550 0.382% 138,224
000 Xxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxxx XX SNF 120 4 1 496,515 1.421% 513,893
000 Xxxxx Xxxxxxx Xxxxxxx HC. & Rehab Xxxxxxx WY SNF 90 4 1 252,653 0.723% 261,496
000 Xxxxxxx Xxxxx. & Xxxxxxxxxx Xxxxxx Xxxxxxx XX SNF 120 4 1 239,825 0.686% 248,219
585 Great Barrington Rehab. & Nsg. Ctr. Great Barrington MA SNF 106 4 1 96,808 0.277% 100,196
000 Xxxxxxxxxx Health Care & Rehab Svc Bellingham WA SNF 111 4 2 383,077 1.096% 396,485
000 Xxxxxxxx Xxxx Xxxxx.Xxx-Xx. Xxxxx Xx. Xxxxxx FL SNF 120 4 2 628,885 1.800% 650,896
526 Brittany Healthcare Center Natick MA SNF 126 4 2 315,787 0.904% 326,840
000 Xxxxxxx Xxxxx Nursing Center Bath ME SNF 72 4 2 220,123 0.630% 227,827
569 Chillicothe Nursing & Rehab. Center Chillecothe OH SNF 101 4 2 518,158 1.483% 536,293
000 Xxxxxxxxx Xxxxx Xxxxxx & Xxxxx. Xxxxxxxxxx XX SNF 120 4 2 967,661 2.769% 1,001,529
000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxx XX SNF 164 4 2 330,967 0.947% 342,551
802 Bridgepark Ctr. for Rehab. & Nsg. Sv. Akron OH SNF 174 4 2 1,024,421 2.931% 1,060,276
853 Kachina Point Health Care & Rehab. Sedona AZ SNF 120 4 2 686,239 1.964% 710,257
000 Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx XX SNF 180 4 2 881,914 2.524% 912,781
147
Ventas, Inc.
----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT C 3.50%
Rent @
Facility ID Name City State Type Beds Lease Bundle Initial Rent % of ML May 1 2001
----------- ---- ---- ----- --- --- ----- ------ ------- ---- ------- ----------
0000 Xxx Xxxxx Xxxxx Xxx Xxxxxxx XX SNF 150 4 2 228,170 0.653% 236,156
000 Xxxxxxx Xxxxx Xxxxxxx & Xxxxx Xxx Xxxxxxxxxxx XX SNF 64 4 3 173,983 0.498% 180,072
517 Oakwood Rehab. & Nursing Center Webster MA SNF 81 4 3 296,886 0.850% 307,277
523 Star of Xxxxx Nsg. & Rehab/Alz Ctr. West Roxbury MA SNF 149 4 3 539,121 1.543% 557,990
542 Den-Mar Rehab. & Nursing Center Rockport MA SNF 80 4 3 471,166 1.348% 487,657
000 Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxx XX SNF 160 4 3 643,359 1.841% 665,877
583 Embassy House Sk. Nsg. & Rehab. Brockton MA SNF 123 4 3 260,961 0.747% 270,094
1221 Courtland Gardens Health Ctr., Inc. Stamford CT SNF 180 4 3 927,384 2.654% 959,842
0000 Xxx Xxxx Nursing & Rehab. Ctr. Pawtucket RI SNF 143 4 3 1,153,871 3.302% 1,194,256
000 Xxxxxxxxxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxxx XX SNF 100 4 4 370,536 1.060% 383,504
000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx XX SNF 159 4 4 766,849 2.194% 793,688
723 Guardian Care of Rocky Mount. Rocky Mount NC SNF 118 4 4 506,062 1.448% 523,774
791 Rehab. & Healthc. Ctr. of Huntsville Huntsville AL SNF 159 4 4 1,263,663 3.616% 1,307,892
0000 Xxxxx Xxxxxxx Xxxxx. & Xxx. Xxx. Xxxxxxx Xxxxx XX SNF 194 4 4 1,213,134 3.471% 1,255,594
0000 Xxxxxxx Xxxxx/Xxxxxxx Xxx. Xxxxxxx Xxxxx XX SNF 127 4 4 724,359 2.073% 749,712
0000 Xxxxx Xxxxx. & Xxx. Xxxxxx Xx. Xxxxxxxxxx XX SNF 152 4 4 255,862 0.732% 264,817
0000 Xxxxxx Xxxxxxx Xxxxxx Xxxxxx XX SNF 148 4 4 616,769 1.765% 638,356
131 Vencor-Corydon Corydon IN SNF 92 4 5 500,000 1.431% 517,500
213 Wildwood Healthcare Center Indianapolis IN SNF 173 4 5 1,526,070 4.367% 1,579,482
000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxx Xxxxx XX SNF 186 4 5 1,021,208 2.922% 1,056,950
290 Bremen Health Care Center Bremen IN SNF 97 4 5 496,753 1.421% 514,139
000 Xxxxxxxxx Xxxxxx Xxxx & Xxxxx Xxx Xxxxxxx XX SNF 167 4 5 1,375,384 3.936% 1,423,522
000 Xxxxxxxx Xxxxxxx & Xxxxx. Xxxxxx Xxxxxx XX SNF 173 4 5 521,571 1.492% 539,826
000 Xxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx XX SNF 156 4 5 794,228 2.273% 822,026
000 Xxxxxxxx Xxxxxxx Health Care Fac. Elizabethtown KY SNF 118 4 5 504,865 1.445% 522,535
000 Xxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxxx XX SNF 112 4 5 533,619 1.527% 552,296
Hospitals 825 8,827,390 25.260% 9,136,349
SNFs 5,762 26,119,016 74.740% 27,033,181
Total Master Lease 4 6,587 34,946,406 100.000% 36,169,530
148
EXHIBIT D
---------
Renewal Groups
--------------
Master Lease #4 (Bank Portfolio 3)
-----------------------------------------------------------------------------------------------------------------------------
Renewal Group
Facility ID Name City State Lease Expiration Number
Date
-----------------------------------------------------------------------------------------------------------------------------
1 4645 Vencor Hospital - Ft. Lauderdale Ft. Lauderdale FL April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
2 0000 Xxxxxx Xxxxxxxx - Xxxxxxx Xxxxxxx XX April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
3 000 Xxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxxx XX April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
4 000/000 Xxxxxxx Xxxxxx Xxx. & Rehab. Ctr. San Marcos CA April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
5 000 Xxxxxxx Xxxxx. & Xxxxxxxxxx Xxxxxx Xxxxxxx XX April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
6 000 Xxxxxx Xxxx Xxxxxx Xxxxxx XX April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
7 209 Valley View Health Care Center Elkhart IN April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
8 585 Great Barrington Rehab. & Nsg. Ctr. Great Barrington MA April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
9 000 Xxxx Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxxx XX April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
10 481 South Central Wyoming HC & Rehab. Rawlins WY April 30, 2013 #1
-----------------------------------------------------------------------------------------------------------------------------
11 4658 Vencor Hospital - Tuscon Tuscon AZ April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
12 853 Kachina Point Health Care & Rehab. Sedona AZ April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
13 000 Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx XX April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
14 268 Colonial Oaks Rehab. Ctr. - Ft. Xxxxxx Ft. Xxxxxx FL April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
15 000 Xxxxxxxxx Xxxxx Xxxxxx & Xxxxx. Xxxxxxxxxx XX April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
16 526 Brittany Healthcare Center Natick MA April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
17 000 Xxxxxxx Xxxxx Nursing Center Bath ME April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
18 569 Chillicothe Nursing & Rehab. Center Chillecothe OH April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
19 802 Bridgepark Ctr. For Rehab. & Nsg. Sv. Akron OH April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
20 0000 Xxx Xxxxx Xxxxx Xxx Xxxxxxx XX April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
21 000 Xxxxxxxxxx Health Care & Rehab. Svc. Bellingham WA April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
22 000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxx XX April 30, 2008 #2
-----------------------------------------------------------------------------------------------------------------------------
23 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxxx Xxxxxxxxxxxx XX April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
24 4617 Vencor Hospital - Arlington Arlington VA April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
25 1221 Courtland Gardens Health Ctr., Inc. Stamford CT April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
26 000 Xxxxxxx Xxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxx XX April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
27 517 Oakwood Rehab. & Nursing Center Webster MA April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
28 523 Star of Xxxxx Nsg. & Rehab/Alz. Ctr. West Roxbury MA April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
149
-----------------------------------------------------------------------------------------------------------------------------
Renewal Group
Facility ID Name City State Lease Expiration Number
Date
-----------------------------------------------------------------------------------------------------------------------------
29 542 Den-Mar Rehab. & Nursing Center Rockport MA April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
30 583 Embassy House Sk. Nsg. & Rehab. Brockton MA April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
31 0000 Xxx Xxxx Nursing & Rehab. Ctr. Pawtucket RI April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
32 000 Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxx XX April 30, 2010 #3
-----------------------------------------------------------------------------------------------------------------------------
33 0000 Xxxxxx Xxxxxxxx - Xxxx Xxxxx Xxxxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
34 0000 Xxxxxx Xxxxxxxx - Xxx Xxxxxxx Xxx Xxxxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
35 791 Rehab. & Health. Ctr. of Huntsville Huntsville AL April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
36 0000 Xxxxx Xxxxxxx Xxxxx. & Xxx. Xxx. Xxxxxxx Xxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
37 0000 Xxxxxxx Xxxxx./Xxxxxxx Xxx. Xxxxxxx Xxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
38 0000 Xxxxx Xxxxx. & Xxx. Xxxxxx Xx. Xxxxxxxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
39 0000 Xxxxxx Xxxxxxx Xxxxxx Xxxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
40 723 Guardian Care of Rocky Mount. Rocky Mount NC April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
41 000 Xxxxxxxxxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
42 000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx XX April 30, 2010 #4
-----------------------------------------------------------------------------------------------------------------------------
43 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxx Xxxxxxxxxxx XX April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
44 4665 Vencor Hospital - Denver Denver CO April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
45 000 Xxxxxxxx Xxxxxxxxxx Xxxxxx Xxxxxxxxxxxx XX April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
46 290 Bremen Health Care Center Bremen IN April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
47 000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxx Xxxxx XX April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
48 000 Xxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx XX April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
49 000 Xxxxxxxx Xxxxxxx Health Care Fac. Elizabethtown KY April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
50 000 Xxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxxx XX April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
51 746 Homestead Health Care & Rehab. Ctr. Lincoln NE April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
52 000 Xxxxxxxx Xxxxxxx & Xxxxx. Xxxxxx Xxxxxx XX April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
53 131 Vencor Corydon Nursing Care Center Corydon IN April 30, 2010 #5
-----------------------------------------------------------------------------------------------------------------------------
150
Exhibit E
---------
Leases
1. Amended and Restated Master Lease No. 1 dated as of April 17, 2001 by and
between Ventas Realty, Limited Partnership, as lessor, and Vencor, Inc. and
Vencor Operating, Inc., as tenant.
2. Amended and Restated Master Lease No. 2 dated as of April 17, 2001, 2001 by
and between Ventas Realty, Limited Partnership, as lessor, and Vencor, Inc.
and Vencor Operating, Inc., as tenant.
3. Amended and Restated Master Lease No. 3 dated as of April 17, 2001, 2001 by
and between Ventas Realty, Limited Partnership, as lessor, and Vencor, Inc.
and Vencor Operating, Inc., as tenant.
4. Amended and Restated Master Lease No. 4 dated as of April 17, 2001, 2001 by
and between Ventas Realty, Limited Partnership, as lessor, and Vencor, Inc.
and Vencor Operating, Inc., as tenant.
151
Exhibit F
---------
INTENTIONALLY OMITTED
152
Exhibit G
---------
Form of Lease Guaranty
----------------------
GUARANTY OF LEASE
-----------------
THIS GUARANTY OF LEASE, dated as of ____________________, by and from
___________________________, a __________________________ having an address at
_____________________________________________________________ ("Guarantor"),
with respect to that certain Amended and Restated Master Lease Agreement No. 4,
dated as of ____________________________ (the "Lease"), between Ventas Realty,
-----
Limited Partnership, a Delaware limited partnership ("Lessor"), and Vencor,
------
Inc., a Delaware corporation to be known as Kindred Healthcare, Inc., and Vencor
Operating, Inc., a Delaware corporation to be known as Kindred Healthcare
Operating, Inc. (collectively, "Tenant"), covering the Leased Properties (as
------
defined in the Lease) identified therein, including, without limitation, that
certain Leased Property more particularly described on Exhibit A attached hereto
(the "Premises"), all or a portion of which is subleased by Tenant to Guarantor.
--------
WHEREAS, Guarantor desires, and Lessor requires, that this agreement be
furnished so that Guarantor, being obligated to do so, can fulfill the terms and
conditions of the Lease with respect to the Premises with the same effect as if
the Lease had been entered into with Guarantor as the tenant with respect to the
Premises thereunder.
NOW, THEREFORE, in consideration and recognition of the execution of the
Lease, and other good and valuable consideration and intending to be legally
bound hereby, Guarantor hereby unconditionally guarantees, and unconditionally
becomes surety to Lessor, its successors and assigns for, the payment of all
rent, additional charges and other sums owing under the Lease with respect to,
or allocable to, the Premises (and Guarantor acknowledges and agrees that, in
the event any delinquency exists under the Lease in the payment of Base Rent,
Current Rent, Accrued Rent or Unpaid Accrued Rent, Lessor shall, for purposes of
the foregoing clause, allocate such delinquency pro rata among the Leased
Properties based upon the respective Transferred Property Percentages applicable
to the Leased Properties) and the full, faithful and punctual performance of
each and all of the covenants, agreements and conditions of the Lease to be kept
and performed by Tenant with respect to the Premises, in accordance with and
within the times prescribed by the Lease, as well as all other liabilities now
or hereafter contracted by Tenant with Lessor pursuant to the Lease with respect
to the Premises and together, to the extent the same are chargeable to Tenant
under the Lease, with all costs and expenses (including, without limitation,
reasonable attorneys fees) incurred by Lessor with respect to the Premises in
connection with any of the foregoing and/or in connection with the enforcement
of Lessor's rights against Tenant or Guarantor with respect to the Premises (all
of the foregoing being hereinafter collectively referred to as the
"Liabilities"). In the event Tenant fails to pay, perform or observe, as
-----------
applicable, any of the Liabilities, and such failure is not cured within the
cure period, if any, provided to Tenant by the terms of the Lease, an Event of
Default shall be deemed to have occurred under this Guaranty. Guarantor agrees
that it shall be obligated to keep itself informed as to the status of Tenant's
payment, performance and observance of the Liabilities and that Lessor shall not
be
153
obligated to give Guarantor, and Guarantor shall not be entitled to, notice of
any failure by Tenant to pay, perform or observe, as applicable, any of the
Liabilities, provided, however, that Lessor agrees to accept the cure of any
-------- -------
such failure, on or prior to the expiration of the cure period, if any, provided
to Tenant by the terms of the Lease, by either Tenant or Guarantor.
Guarantor further agrees as follows:
1. Lessor shall have the right from time to time, and at any time in
its sole discretion, without notice to or consent from Guarantor, and
without affecting, impairing, or discharging in whole or in part, the
Liabilities of Guarantor hereunder: to modify, change, extend, alter, amend
or supplement in any respect whatever, any agreement or transaction between
Lessor and Tenant or between Lessor and any other party liable for the
Liabilities, or any portion or provision thereof; to grant extensions of
time and other indulgences of any kind to Tenant; to compromise, release,
substitute, exercise, enforce or fail or refuse to exercise or enforce any
claims, rights or remedies of any kind which Lessor may have at any time
against Tenant or any other party liable for the Liabilities, or any
thereof, or with respect to any security of any kind held by Lessor at any
time under any agreement or otherwise. The Liabilities of Guarantor shall
not be affected, impaired or discharged, in whole or in part, by reason of
payments by Tenant of all or a portion of the Liabilities, to the extent
such payments shall be turned over as "voidable preferences" or otherwise
required to be refunded or disgorged, or by reason of any action whatsoever
taken by Lessor with respect to any security in which Lessor may at any
time have any interest or against any other party liable for all or any
part of the Liabilities.
2. Guarantor waives: (a) all notices, including but not limited to
(i) notice of acceptance of this Guaranty, (ii) notice of presentment,
demand for payment, or protest of any of the Liabilities, or the obligation
of any person, firm or corporation held by Lessor as collateral security,
and (iii) notice of any failure by Tenant to pay, perform or observe, as
applicable, any of the Liabilities or of any Event of Default (as defined
in the Lease); (b) all defenses, offsets and counterclaims which Guarantor
may at any time have to any of the Liabilities, except to the extent the
same is a valid defense, offset or counterclaim on the part of Tenant; and
(c) all notices of the financial condition or of any adverse or other
change in the financial condition of Tenant.
3. Lessor may, without notice, assign this Guaranty in whole or in
part, and no assignment or transfer of the Lease or subletting of the
Premises shall operate to extinguish or diminish the liability of Guarantor
hereunder.
4. The liability of Guarantor under this Guaranty shall be primary
with respect to any right of action which shall accrue to Lessor under the
Lease, and Lessor may, at its option, proceed against Guarantor without
having to commence any action, or having obtained any judgment, against
Tenant.
154
5. The Liabilities of Guarantor shall not be affected, impaired or
discharged, in whole or in part, by reason of: (a) the entry of an order
for relief pursuant to the United States Bankruptcy Code by or against
Tenant; (b) the proposal of or the consummation of a plan of reorganization
concerning Tenant; (c) the assignment of Tenant's obligations under the
Lease or any other or further sublease of any portion of the Premises,
whether or not any such assignment or sublease is permitted under the
Lease; or (d) except by reason of actual payment and performance of
Tenant's obligations under the Lease, the discharge of the obligations of
Tenant to Lessor, provided, however, if Tenant, in accordance with the
-------- -------
requirements of the Lease, assigns the Lease (including, without
limitation, if and to the extent permitted under Section 25.1.11 or Section
-------
25.4 of the Lease, by virtue of a partial assignment of the Lease with
----
respect to the Premises) to a Person (as defined in the Lease) that is not
an Affiliate (as defined in the Lease) of Tenant, Tenant shall not be
released from any of its duties, liabilities or obligations under the Lease
on account of any such assignment, but Guarantor shall be released from
this Guaranty insofar as it relates to any Liabilities of Tenant assumed by
the assignee and arising on account of any breach or default of the Lease
occurring after the date of such assignment.
6. The waiver of any right by Lessor or its failure to exercise
promptly any right shall not be construed as the waiver of any other right
including the right to exercise the same at any time thereafter. No waiver
or modification of any of the terms or conditions of this Guaranty shall be
binding against Lessor unless such waiver or modification is in a writing
signed by Lessor.
7. The liability of Guarantor shall bind the respective
representatives, successors and assigns of Guarantor and shall inure to the
benefit of Lessor, its successors and assigns.
8. This Guaranty shall be governed by, and construed in accordance
with, the laws of the State of New York without reference to the choice of
law principles thereof. Guarantor hereby agrees to submit to the
jurisdiction of any court of general jurisdiction sitting in the State of
New York and designates any officer or supervisory employee of Lessor
located at the Premises as its agent and attorney in fact for the purpose
of accepting service and making an appearance on its behalf in such
proceeding and taking all such acts as may be necessary or appropriate in
order to confer jurisdiction on it upon such court, provided such agent and
attorney in fact shall promptly send a true copy of all materials so served
to Guarantor at the address and in the manner specified in Section 9 below,
---------
and Guarantor stipulates that such consent and appointment is irrevocable
and coupled with an interest.
9. All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested, or reputable
nationally recognized overnight courier service and postage prepaid),
addressed to the respective parties, as follows:
155
(a) if to Guarantor:
___________________________
___________________________
___________________________
___________________________
Attention: ________________
with a copy to:
___________________________
___________________________
___________________________
___________________________
Attention: ________________
(b) if to Lessor:
Ventas Realty, Limited Partnership
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
with a copy to:
Ventas, Inc.
Ventas Realty, Limited Partnership
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either party may hereunder designate, and shall be
effective upon receipt.
156
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and
sealed as of the day and year first above written.
______________________________, a
______________________________
By: ________________________________________
Name:___________________________________
Title:__________________________________
157
Schedule 1.3
------------
Certain Breaches and Defaults
-----------------------------
A. Disclosed Breaches and Defaults
-------------------------------
1. Lessor Breaches and Defaults under the Original Master Lease and/or
this Lease Disclosed by Lessor:
None, except that the assignment of the ground lease (and related
license agreement) relative to Facility 4664 should be completed per
the 1998 Plan of Reorganization.
2. Tenant Breaches and Defaults under the Original Master Lease and/or
this Lease Disclosed by Tenant:
(a) Revocation of certification for Medicaid with respect to the
Village Square Nursing & Rehabilitation Center, San Marcos, CA
(Facility 982). Tenant plans to operate such Facility on a more
profitable basis for private pay patients without re-applying for
Medicaid certification.
(b) Reduction in the number of licensed beds in excess of the 10%
threshold established by Section 16.1(m) of the Original Master
---------------
Lease with respect to the following Facility: Vencor Hospital-
Arlington (Facility 4617) reduced to 164 licensed beds.
(c) Reduction in licensed beds in excess of the 10% threshold
established by Section 16.1(m) of the Original Master Lease upon
---------------
Tenant's emergence from bankruptcy, if Washington State
determines that Tenant's bankruptcy reorganization constitutes a
change of control and, as a result, Tenant loses its license with
respect to 14 beds currently banked relative to Bellingham Health
Care & Rehabilitation Services, Bellingham, WA (Facility 158).
(d) Minimum Rent (as defined in the Original Master Lease) required
by Section 3.1(a) of the Original Master Lease in the amount of
--------------
$3,935,967.00 (inclusive of $52, 572.00 relative to the Original
Corydon Master Lease) for periods prior to September 1, 1999 has
not been paid.
(e) The amount of the "Agreement Rent Claim", as defined in the Rent
Stipulation, for the period from September 1, 1999 through
November 30, 2000, has not been paid (it is understood that the
Escalation Amount included in Minimum Rent (as defined in the
Original Master Lease) that took effect under the Original Master
Lease as of May 1, 2000 is included in the defined term
"Agreement Rent Claim" for purposes of this subsection (e)).
158
(f) Overdue Rate charges required by Section 3.1(b)(5) of the
-----------------
Original Master Lease for the late payment of Minimum Rent (as
defined in the Original Master Lease) have not been paid.
B. Provisions Regarding Whether, And To What Extent, Breaches and Defaults
-----------------------------------------------------------------------
From Subpart A Above Are Waived And Released Or Conditionally Waived And
------------------------------------------------------------------------
Released
--------
1. Provisions regarding whether, and to what extent, Lessor breaches and
defaults disclosed in subpart A above are waived and released or
conditionally waived and released by Tenant:
The breach and default referenced in Paragraph 1 of subpart A above is
waived and released by Tenant.
2. Provisions regarding whether, and to what extent, Tenant breaches and
defaults disclosed in subpart A above are waived and released or
conditionally waived and released by Lessor:
(a) The breach and default referenced in Paragraph 2(a) of subpart A
above is waived and released by Lessor.
(b) The breaches and defaults referenced in Paragraph 2(b) of subpart
A above are waived and released by Lessor. Nothing in this
subsection (b) shall limit the terms of Section 16.1(m) of this
---------------
Lease as it applies on and after the Effective Date to the
Facility referenced in Paragraph 2(b) of subpart A above.
(c) If Washington State determines that Tenant's bankruptcy
reorganization constitutes a change of control, the breach and
default referenced in Paragraph 2(c) of subpart A above is waived
and released by Lessor, subject to Tenant's obligation to use its
best efforts and due diligence to reverse such determination
and/or otherwise re-acquire licensure for any such licensed beds
that are so lost. Without limitation of Section 16.1(m)(i)(2) or
Section 16.1(m)(ii)(y) of the Lease, with regard to the
referenced Washington Facility, Lessor does not waive or release
any rights it may have on account of any loss of bed licensure
other than the loss of bed licensure for up to 14 banked beds (as
to Bellingham Health Care & Rehabilitation Services, Bellingham,
Washington (Facility 158)). Nothing in this subsection (c) shall
limit the terms of Section 16.1(m) of this Lease as it applies on
---------------
and after the Effective Date to such Washington Facility.
(d) The breach and default referenced in Paragraph 2(d) of subpart A
above is waived and released by Lessor.
159
(e) The breach and default referenced in Paragraph 2(e) of subpart A
above is waived and released by Lessor.
(f) The breach and default referenced in Paragraph 2(f) of subpart A
above is waived and released by Lessor.
160
Schedule 2.1A
-------------
Base Patient Revenues
---------------------
Total Base Patient Revenues for 1999 for Master Lease #4
(Bank Portfolio 3) 395,415,702
161
SCHEDULE 2.1A
-------------
Base Patient Revenues
Master Lease #4 (Bank Portfolio 3)
------------------------------------------------------------------------------------------------------
Base Patient
Revenues
for
Facility ID Name City State 1999
------------------------------------------------------------------------------------------------------
Hospitals
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
1 4658 Vencor Hospital - Tuscon Tuscon AZ 5,505,104
------------------------------------------------------------------------------------------------------
2 0000 Xxxxxx Xxxxxxxx - Xxxx Xxxxx Xxxxxxx XX 12,161,811
------------------------------------------------------------------------------------------------------
3 0000 Xxxxxx Xxxxxxxx - Xxx Xxxxxxx Xxx Xxxxxxx XX 12,555,260
------------------------------------------------------------------------------------------------------
4 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxx Xxxxxxxxxxx XX 11,052,522
------------------------------------------------------------------------------------------------------
5 4665 Vencor Hospital - Denver Denver CO 16,370,770
------------------------------------------------------------------------------------------------------
6 4645 Vencor Hospital - Ft. Lauderdale Ft. Lauderdale FL 18,239,852
------------------------------------------------------------------------------------------------------
7 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxxx Xxxxxxxxxxxx XX 10,112,598
------------------------------------------------------------------------------------------------------
8 0000 Xxxxxx Xxxxxxxx - Xxxxxxx Xxxxxxx XX 17,694,274
------------------------------------------------------------------------------------------------------
9 4617 Vencor Hospital - Arlington Arlington VA 37,836,046
------------------------------------------------------------------------------------------------------
Nursing Centers
------------------------------------------------------------------------------------------------------
1 853 Kachina Point Health Care & Rehab. Sedona AZ 5,534,237
------------------------------------------------------------------------------------------------------
2 000 Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx XX 8,872,901
------------------------------------------------------------------------------------------------------
3 268 Colonial Oaks Rehab. Ctr. - Ft. Xxxxxx Ft. Xxxxxx FL 5,098,682
------------------------------------------------------------------------------------------------------
4 000 Xxxxxxxxx Xxxxx Xxxxxx & Xxxxx. Xxxxxxxxxx XX 8,897,933
------------------------------------------------------------------------------------------------------
5 526 Brittany Healthcare Center Natick MA 5,364,251
------------------------------------------------------------------------------------------------------
6 546 Winship Green Nursing Center Bath ME 4,082,370
------------------------------------------------------------------------------------------------------
7 569 Chillicothe Nursing & Rehab. Center Chillecothe OH 4,559,996
------------------------------------------------------------------------------------------------------
8 802 Bridgepark Ctr. For Rehab. & Nsg. Sv. Akron OH 8,855,608
------------------------------------------------------------------------------------------------------
9 0000 Xxx Xxxxx Xxxxx Xxx Xxxxxxx XX 4,275,650
------------------------------------------------------------------------------------------------------
10 000 Xxxxxxxxxx Health Care & Rehab. Svc. Bellingham WA 3,973,977
------------------------------------------------------------------------------------------------------
11 000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxx XX 5,834,608
------------------------------------------------------------------------------------------------------
12 000 Xxxxx. & Xxxxxxx. Xxx. xx Xxxxxxxxxx Xxxxxxxxxx XX 7,986,309
------------------------------------------------------------------------------------------------------
13 1221 Courtland Gardens Health Ctr., Inc. Stamford CT 12,865,924
------------------------------------------------------------------------------------------------------
14 0000 Xxxxx Xxxxxxx Xxxxx. & Xxx. Xxx. Xxxxxxx Xxxxx XX 11,288,779
------------------------------------------------------------------------------------------------------
15 0000 Xxxxxxx Xxxxx./Xxxxxxx Xxx. Xxxxxxx Xxxxx XX 7,137,796
------------------------------------------------------------------------------------------------------
16 0000 Xxxxx Xxxxx. & Xxx. Xxxxxx Xx. Xxxxxxxxxx XX 3,669,901
------------------------------------------------------------------------------------------------------
162
------------------------------------------------------------------------------------------------------
Base Patient
Revenues
for
Facility ID Name City State 1999
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
17 0000 Xxxxxx Xxxxxxx Xxxxxx Xxxxxx XX 4,561,694
------------------------------------------------------------------------------------------------------
18 000 Xxxxxxxx Xxxxxxxxxx Xxxxxx Xxxxxxxxxxxx XX 7,363,267
------------------------------------------------------------------------------------------------------
19 290 Bremen Health Care Center Bremen IN 3,923,260
------------------------------------------------------------------------------------------------------
20 000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxx Xxxxx XX 7,333,310
------------------------------------------------------------------------------------------------------
21 000 Xxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx XX 5,681,998
------------------------------------------------------------------------------------------------------
22 000 Xxxxxxxx Xxxxxxx Health Care Fac. Elizabethtown KY 4,492,079
------------------------------------------------------------------------------------------------------
23 000 Xxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxxx XX 3,949,284
------------------------------------------------------------------------------------------------------
24 000 Xxxxxxx Xxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxx XX 3,067,961
------------------------------------------------------------------------------------------------------
25 000 Xxxxxxx Xxxxx. & Xxxxxxx Xxxxxx Xxxxxxx XX 4,027,378
------------------------------------------------------------------------------------------------------
26 523 Star of Xxxxx Nsg. & Rehab/Alz. Ctr. West Roxbury MA 7,188,921
------------------------------------------------------------------------------------------------------
27 000 Xxx-Xxx Xxxxx. & Xxxxxxx Xxxxxx Xxxxxxxx XX 4,115,902
------------------------------------------------------------------------------------------------------
28 583 Embassy House Sk. Nsg. & Rehab. Brockton MA 4,916,095
------------------------------------------------------------------------------------------------------
29 000 Xxxxxxxx Xxxx xx Xxxxx Xxxxx. Xxxxx Xxxxx XX 4,732,691
------------------------------------------------------------------------------------------------------
30 746 Homestead Health Care & Rehab. Ctr. Lincoln NE 8,526,869
------------------------------------------------------------------------------------------------------
31 000 Xxxxxxxxxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxxx XX 4,814,479
------------------------------------------------------------------------------------------------------
32 000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx XX 6,281,038
------------------------------------------------------------------------------------------------------
33 0000 Xxx Xxxx Nursing & Rehab. Ctr. Pawtucket RI 10,061,989
------------------------------------------------------------------------------------------------------
34 000 Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxx XX 7,630,080
------------------------------------------------------------------------------------------------------
35 000 Xxxxxxxx Xxxxxxx & Xxxxx. Xxxxxx Xxxxxx XX 6,558,021
------------------------------------------------------------------------------------------------------
36 000 Xxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxxx XX 5,504,015
------------------------------------------------------------------------------------------------------
37 000 Xxxxxxx Xxxxxx Xxx. & Xxxxx. Xxx. Xxx Xxxxxx XX 2,885,503
------------------------------------------------------------------------------------------------------
38 000 Xxxxxxx Xxxxx. & Xxxxxxxxxx Xxxxxx Xxxxxxx XX 6,013,280
------------------------------------------------------------------------------------------------------
39 000 Xxxxxx Xxxx Xxxxxx Xxxxxx XX 2,240,221
------------------------------------------------------------------------------------------------------
40 209 Valley View Health Care Center Elkhart IN 5,886,702
------------------------------------------------------------------------------------------------------
41 585 Great Barrington Rehab. & Nsg. Ctr. Great Barrington MA 3,837,143
------------------------------------------------------------------------------------------------------
42 000 Xxxx Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxxx XX 4,622,687
------------------------------------------------------------------------------------------------------
43 000 Xxxxx Xxxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxx XX 2,375,724
------------------------------------------------------------------------------------------------------
44 131 Vencor Corydon Nursing Care Center Corydon IN 2,996,952
------------------------------------------------------------------------------------------------------
Total Patient Revenues for 1999 for Master Lease #4 (Bank 395,415,702
Portfolio 3)
------------------------------------------------------------------------------------------------------
163
Schedule 2.1B
-------------
Example - Calculation of Base Rent, Current Rent, Accrued Rent and Unpaid
-------------------------------------------------------------------------
Accrued Rent/1/
---------------
[FOR ILLUSTRATION PURPOSES ONLY]
-------------------------------
Assumptions
-----------
1. Base Rent and Current Rent for February, 2001 equals $14,550,223.25.
2. The Effective Date occurs on February 1, 2001.
3. The 75% Patient Revenues test for rent escalations is satisfied each year.
4. No Refinancing Transaction occurs or is deemed to have occurred.
5. No Reset Option is exercised.
6. No termination of the Lease as to any Leased Property occurs.
7. No New Lease or New Master Lease is entered into.
8. No prepayment of Accrued REnt or Accrued Rent Interest occurs.
9. the LIBO Rate at all times equals 6.75%.
10. No default or Event of Default by Tenant occurs.
Unpaid Accrued Rent,
Including Compounded
Accrued Rent
Interest and
Excluding All Other Unpaid Accrued Rent, Unpaid Accrued Rent,
Accrued Rent Including Accrued Rent Including Accrued Rent
Interest, as of Interest, as of Month Interest, as
Month Current Rent Accrued Rent Base Rent Month Commencement Commencement of Month End
02/01 14,550,223.25 0 14,550,223.25 0 0 0
03/01 14,550,223.25 0 14,550,223.25 0 0 0
04/01 14,550,223.25 0 14,550,223.25 0 0 0
_________________
/1/ The same Schedule 2.1B is being used in this Lease and the other Leases
-------------
and the assumed amounts of Base Rent and Current Rent are reflective of the
aggregate amounts of Base Rent and Current Rent owed under this Lease and the
other Leases. To obtain an illustration applicable to this Lease only, the
assumed amounts of Base Rent and Current Rent would need to be proportionally
reduced based upon the amounts of Base Rent and Current Rent assumed to be owing
under this Lease in relation to the aforesaid assumed aggregate amounts of Base
Rent and Current Rent under this Lease and the other Leases.
164
Unpaid Accrued Rent,
Including Compounded
Accrued Rent
Interest and
Excluding All Other Unpaid Accrued Rent, Unpaid Accrued Rent,
Accrued Rent Including Accrued Rent Including Accrued Rent
Interest, as of Interest, as of Month Interest, as
Month Current Rent Accrued Rent Base Rent Month Commencement Commencement of Month End
05/01 15,059,481.06 0 15,059,481.06 0 0 0
06/01 15,059,481.06 0 15,059,481.06 0 0 0
07/01 15,059,481.06 0 15,059,481.06 0 0 0
08/01 15,059,481.06 0 15,059,481.06 0 0 0
09/01 15,059,481.06 0 15,059,481.06 0 0 0
10/01 15,059,481.06 0 15,059,481.06 0 0 0
11/01 15,059,481.06 0 15,059,481.06 0 0 0
12/01 15,059,481.06 0 15,059,481.06 0 0 0
01/02 15,059,481.06 0 15,059,481.06 0 0 0
02/02 15,059,481.06 0 15,059,481.06 0 0 0
03/02 15,059,481.06 0 15,059,481.06 0 0 0
04/02 15,059,481.06 0 15,059,481.06 0 0 0
05/02 15,586,562.90 0 15,586,562.90 0 0 0
06/02 15,586,562.90 0 15,586,562.90 0 0 0
07/02 15,586,562.90 0 15,586,562.90 0 0 0
08/02 15,586,562.90 0 15,586,562.90 0 0 0
09/02 15,586,562.90 0 15,586,562.90 0 0 0
10/02 15,586,562.90 0 15,586,562.90 0 0 0
11/02 15,586,562.90 0 15,586,562.90 0 0 0
12/02 15,586,562.90 0 15,586,562.90 0 0 0
01/03 15,586,562.90 0 15,586,562.90 0 0 0
02/03 15,586,562.90 0 15,586,562.90 0 0 0
03/03 15,586,562.90 0 15,586,562.90 0 0 0
04/03 15,586,562.90 0 15,586,562.90 0 0 0
05/03 16,132,092.60 0 16,132,092.60 0 0 0
06/03 16,132,092.60 0 16,132,092.60 0 0 0
165
Unpaid Accrued Rent,
Including Compounded
Accrued Rent
Interest and
Excluding All Other Unpaid Accrued Rent, Unpaid Accrued Rent,
Accrued Rent Including Accrued Rent Including Accrued Rent
Interest, as of Interest, as of Month Interest, as
Month Current Rent Accrued Rent Base Rent Month Commencement Commencement of Month End
07/03 16,132,092.60 0 16,132,092.60 0 0 0
08/03 16,132,092.60 0 16,132,092.60 0 0 0
09/03 16,132,092.60 0 16,132,092.60 0 0 0
10/03 16,132,092.60 0 16,132,092.60 0 0 0
11/03 16,132,092.60 0 16,132,092.60 0 0 0
12/03 16,132,092.60 0 16,132,092.60 0 0 0
01/04 16,132,092.60 0 16,132,092.60 0 0 0
02/04 16,132,092.60 0 16,132,092.60 0 0 0
03/04 16,132,092.60 0 16,132,092.60 0 0 0
04/04 16,132,092.60 0 16,132,092.60 0 0 0
05/04 16,454,734.45 241,981.39 16,696,715.84 241,981.39 241,981.39 244,325.58
06/04 16,454,734.45 241,981.39 16,696,715.84 483,962.78 486,306.97 490,844.12
07/04 16,454,734.45 241,981.39 16,696,715.84 725,944.17 732,825.51 739,858.09
08/04 16,454,734.45 241,981.39 16,696,715.84 967,925.56 981,839.48 991,216.26
09/04 16,454,734.45 241,981.39 16,696,715.84 1,209,906.95 1,233,197.65 1,244,540.53
10/04 16,454,734.45 241,981.39 16,696,715.84 1,451,888.33 1,486,521.91 1,500,587.08
11/04 16,454,734.45 241,981.39 16,696,715.84 1,693,869.72 1,742,568.47 1,758,448.50
12/04 16,454,734.45 241,981.39 16,696,715.84 1,935,851.50 2,000,429.89 2,019,183.45
01/05 16,454,734.45 241,981.39 16,696,715.84 2,177,832.50 2,261,164.84 2,282,262.59
02/05 16,454,734.45 241,981.39 16,696,715.84 2,419,813.89 2,524,243.98 2,545,417.35
03/05 16,454,734.45 241,981.39 16,696,715.84 2,661,795.28 2,787,398.74 2,813,184.88
04/05 16,454,734.45 241,981.39 16,696,715.84 2,903,776.67 3,055,166.27 3,082,389.18*
-----------------------
* Includes $178,612.51 of Accrued Rent Interest for the period from 5/04 - 04/05
that is compounded as of 04/30/05.
166
Unpaid Accrued Rent,
Including Compounded
Accrued Rent
Interest and
Excluding All Other Unpaid Accrued Rent, Unpaid Accrued Rent,
Accrued Rent Including Accrued Rent Including Accrued Rent
Interest, as of Interest, as of Month Interest, as
Month Current Rent Accrued Rent Base Rent Month Commencement Commencement of Month End
05/05 16,788,668.77 492,432.13 17,281,100.90 3,574,821.31* 3,574,821.31* 3,609,452.39*
06/05 16,788,668.77 492,432.13 17,281,100.90 4,067,253.43* 4,101,884.51* 4,140,015.01*
167
Schedule 2.1C
-------------
Existing Ground Leases
----------------------
Master Lease No. 4
1. Facility 542: Lease dated August 22, 1963 between the Town of Rockport
------------
and C&S Realty Trust Notice of Lease recorded at Book 5114, page 427
in the Office of the Essex South District Registry of Deeds:
Assignment of Lease from C&S Realty Trust to First Healthcare
Corporation, as joined in, and consented to, by the Town of Rockport
and recorded on October ____, 1985 at Book 7938, Page 590 in the
aforesaid office, Assignment and Assumption of Ground Leases dated as
of September 30, 1998 Between Ventas, Inc. (successor by merger to
First Healthcare Corporation) and Ventas Realty, Limited Partnership
and recorded on October 16, 2000 at Book 16620, Page 269 in the
aforesaid office; Consent and Estoppel Certificate dated August 22,
2000 executed by the Town of Rockport and recorded on
_________________, 2000 at Book ____, Page _______ in the aforesaid
office.
2. Facility 559: Lease dated June 17, 1964 between Xxxxx X. Xxxxxxx and
------------
Xxxxxxx X. Xxxxx, as Trustees of the Will of Xxxx X. Xxxxx, and
Birchwood Development Corporation and recorded at Volume 188, Page 583
of the land records of the City of Burlington, Vermont; First
Amendment to Indenture of Lease dated October 13, 1978 and recorded in
Volume 252, Page 691 of the aforesaid land records; Second Amendment
to Lease dated December 6, 1990 and recorded in Volume 592, Page 1 of
the aforesaid land records; Lease dated June 17, 1964 between Xxxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxx, as Trustees under the Will of Xxxx X.
Xxxxx, and Birchwood Nursing Home, Inc.; Lease (Short Form for
Recording) dated June 17, 1964 and recorded in Volume 163, Page 526 of
the land records of the City of Burlington, Vermont; Lease (Short Form
for Recording) dated June 17, 1964 and recorded in Volume 188, Page
602 of the aforesaid land records; First Amendment to Indenture of
Lease dated October 13, 1978 and recorded in Volume 252, Page 681 of
the aforesaid land records; Second Amendment to Lease dated as of
April 30, 1998 and recorded in Volume 592, Page 9 of the aforesaid
land records; Assignment and Assumption of Lease dated January 25,
1990 between First Healthcare Corporation and Hillhaven, Inc. and
recorded in Volume 414, Page 72 of the aforesaid land records;
Assignment and Assumption of Lease dated October 23, 1990 between NME
Properties, Inc. (formerly known as Hillhaven, Inc.) and First
Healthcare Corporation and recorded in Volume 424, Page 168; Lessor's
Acknowledgment to Assignment and Assumption of Leases dated October
19, 1990 and recorded in Volume 424, Page 174 of the aforesaid land
records; Assignment and Assumption of Leases dated June 26, 2000
between Ventas, Inc. (successor by merger to First Healthcare
Corporation) and Ventas Realty, Limited Partnership and recorded in
Volume 657, Page 37 of the aforesaid land
168
records; Lessor's Acknowledgment to Assignment and Assumption of
Leases dated June 29, 2000 and recorded in Volume 657, Page 41 of the
aforesaid land records; Consent and Estoppel Certificate dated June
29, 2000 recorded in Volume 657, Page 59 of the aforesaid land
records.
3. Facility 723: Amended and Restated Lease Agreement dated January 8,
------------
1997 between Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx and First
Healthcare Corporation; Memorandum of Amended and Restated Lease
(Including Options) dated January 8, 1997, effective January 10, 1997,
recorded on January 10, 1997 in the Office of the Register of Deeds
for Xxxx County, North Carolina in Book 1551, Page 491; Corrected
Memorandum of Amended and Restated Lease (Including Options) dated
January 8, 1997, effective January 10, 1997 recorded on January 15,
1997 in the aforesaid office in Book 1551, Page 979; Assignment of
Lease dated December 2, 1998 between Ventas, Inc. (successor by merger
to First Healthcare Corporation) and Ventas Realty, Limited
Partnership and recorded on December 14, 1998 in the aforesaid office
in Book 1648, Page 57; Consent and Estoppel Certificate dated February
29, 2000 executed by Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx and
recorded on _____________, 2000 in the aforesaid office in Book _____,
Page _____.
4. Facility 4664: Ground Lease dated June 25, 1993 between St. Xxxxxx
-------------
Development Corporation and Transitional Hospitals Corporation;
Memorandum of Ground Lease between St. Xxxxxx Development Corporation
and Transitional Hospitals Corporation and recorded on July 1, 1993 in
Book BCR 93-17, Page 6123, as document no. 93070217 of the records of
Bernalillo County, New Mexico; Amendment to Ground Lease dated April
17, 1997 between St. Xxxxxx Development Corporation and Transitional
Hospitals Corporation; Assignment of Tenant's Interest in Ground Lease
(With Consent of Landlord Attached) dated __________, 2001, effective
as of April 30, 1998, between Transitional Hospitals Corporation and
Ventas Realty, Limited Partnership; Supplement to Ground Lease
Documents dated as of _________, 2001 by and among St. Xxxxxx
Development Corporation, Transitional Hospitals Corporation and Ventas
Realty, Limited Partnership; Consent and Estoppel Certificate dated
___________ executed by St. Xxxxxx Development Corporation.
5. Facility 4685: Lease Agreement dated December 8, 1970 between Pearl C.
-------------
Xxxxxxx and W. Xxxxxx Xxxxxx, Trustee, and recorded on July 2, 1971 in
Contract Records Volume 2388, Page 528, as County Clerk's file no.
D362007 in the public records of Xxxxxx County, Texas; Amendment to
Lease Agreement dated July 27, 1971 between Xxxxx X. Xxxxxxx and W.
Xxxxxx Xxxxxx, Trustee, and recorded on August 2, 1971 in Contract
Records Volume 2397, Page 33, as County Clerk's
169
file no. D383212 in the aforesaid public records; Amendment to Lease
Agreement dated January 4, 1973 between Xxxxx X. Xxxxxxx and W. Xxxxxx
Xxxxxx, Trustee, and recorded on January 19, 1973 as County Clerk's
file no. D784813 on the aforesaid public records; Assignment and
Assumption of Land Lease and Quit Claim Deed for Improvements dated as
of August 5, 1994 between Dr. W. Xxxxxx Xxxxxx, Trustee, and Vencor
Hospitals Texas, Ltd. and recorded on August 12 1994 as County Clerk's
file no. R008461 in the aforesaid public records; Assignment and
Assumption of Land Lease and Quit Claim Deed for Improvements dated as
of April 30, 1998 between Ventas, Inc. (successor by merger to Vencor
Hospitals Texas, Ltd.) and Ventas Realty, Limited Partnership and
recorded on August 9, 1999 as County Clerk's file no. T895645 in the
aforesaid public records.
170
Schedule 13.7
-------------
Insurance Summary
-----------------
--------------------------------------------------------------------------------
VENCOR, INC.
PROPERTY
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 12/1/00 to 12/1/01
--------------
PERILS INSURED: All Risk Property excluding Boiler & Machinery and including Flood and Earthmovement
--------------
INTEREST: All Real and Personal Property owned or used by the Insured and similar Property of Others for which
-------- they are legally liable or have assumed liability or agreed to insure.
VALUATION: Real and Personal Property Replacement Cost
--------- Time Element Actual Loss Sustained
LIMITS: $150,000,000 Loss Limit
------
COVERAGES:
---------
Property Damage Policy Limits
Business Interruption Policy Limits
Automatic Acquisition Coverage-120 Days $20,000,000
Errors and Omissions $20,000,000
Flood Zone A & B $10,000,000
Earthquake in California, Alaska, $10,000,000
Hawaii and Puerto Rico
Expediting Expense $ 5,000,000
Service Interruption - PD/TE (II) $20,000,000
Florida $15,000,000
Transit $ 2,500,000
Floater/Unnamed Location $ 2,500,000/
Per location
Leasehold Interest Policy Limits
Ordinary Payroll 180 days
Property in the Course of Construction Policy Limits
Rental Income Policy Limits
Contingent Business Interruption $ 5,000,000
Valuable Papers and Records $20,000,000
Professional Fees $ 500,000
Radioactive Contamination $ 3,000,000
Debris Removal Policy Limits
Decontamination Expense $ 100,000
Extra Expense Policy Limits
171
Accounts Receivable $ 20,000,000
Demolition & Increased Cost of Construction Policy Limits
EDP Equipment & Media Reconstruction $ 3,000,000
Extended Period of Indemnity 365 Days
Fine Arts $ 500,000
Brands and Labels Policy Limits
Earthmovement (1) $100,000,000
California $ 50,000,000
Flood (1) $100,000,000
TIV: $2,852,213,000 (III)
---
I Limits are per occurrence and in the annual aggregate
II 8 hour waiting period to apply
III Pro-rata additions and deletions
DEDUCTIBLES: Deductible - $100,000 per occurrence.
----------- 2% of affected TIV for Florida Named Wind Storm, subject to
a $250,000 minimum.
5% California Earthmovement subject to a $250,000 minimum
$250,000 per occurrence Flood - Zone A and V'
CONDITIONS: 90 Day Notice of Cancellation
---------- . Y2k Exclusions
. Omnibus Named Insured Wording
172
--------------------------------------------------------------------------------
VENCOR, INC.
BOILER AND MACHINERY
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 12/1/00 to 12/1/01
--------------
PERILS INSURED: Boiler & Machinery Breakdown
--------------
INTEREST: All Real and Personal Property owned or used by the Insured
-------- and similar Property of Others for which they are legally
liable or have assumed liability or agreed to insure
LIMITS: Equipment breakdown - $100,000,000
------ Property Damage - Included
Business Income - Included
Extra Expenses - Combined with Business Income
Service Interruption - Combined with Business Income
Perishable Goods - $100,000
Computer Equipment - $100,000
Demolition and ICC - $100,000
Expediting Expense - $100,000
Hazardous Substances - $100,000
CFC Refrigerants - $ 25,000
Newly Acquired locations - $250,000
TIV: $2,852,213,000
---
DEDUCTIBLES: $25,000 Combined, All Coverages
-----------
CONDITIONS: Extended Business Income: 365 days
---------- Newly Acquired Locations: 120 days
Absolute Seepage, pollution & Contamination Exclusions
Y2k Exclusions
173
--------------------------------------------------------------------------------
VENCOR, INC.
CRIME
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 1/1/00 to 1/1/01
--------------
LIMITS: $50,000,000
------
COVERAGE: Includes employee theft, depositor's forgery, computer
-------- theft and funds transfer fraud
DEDUCTIBLE: $50,000
----------
--------------------------------------------------------------------------------
VENCOR, INC.
AUTOMOBILE LIABILITY
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 1/1/00 to 1/1/01
--------------
LIMITS: $130,000,000
------
COVERAGE: Includes owned and non-owned vehicles
--------
DEDUCTIBLE: None
----------
174
--------------------------------------------------------------------------------
VENCOR, INC.
WORKERS COMPENSATION
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 1/1/00 to 1/1/01
--------------
LIMITS: Required statutory limits
------
175
--------------------------------------------------------------------------------
VENCOR, INC.
GENERAL LIABILITY
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 11/30/00 to date indicated below for particular layer
--------------
LIMITS: $130,000,000
------ $2,000,000 Primary (to 11/30/01); Deductible: None
$23,000,000 in excess of first $2,000,000 (to 1/1/03);
Deductible: None
$105,000,000 in excess of first $25,000,000 (to 1/1/02)
--------------------------------------------------------------------------------
VENCOR, INC.
MALPRACTICE
INSURANCE SUMMARY
--------------------------------------------------------------------------------
NAMED INSURED: Vencor, Inc.
-------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
------- Xxxxxxxxxx, XX 00000
EFFECTIVE DATE: 11/30/00 to date indicated below for particular layer
--------------
LIMITS: $130,000,000
------ $2,000,000 Primary (to 11/30/01); Deductible: None
$23,000,000 in excess of first $2,000,000 (to 1/1/03);
Deductible: None
$105,000,000 in excess of first $25,000,000 (to 1/1/02)
176
Schedule 16.1(m)A
-----------------
Licensed Beds as of the Commencement Date
-----------------------------------------
Master Lease #4
---------------
* Deemed number of licensed beds as of the Commencement Date per Section
16.1(m)(i)
-----------------------------------------------------------------------------------------------------------------------------
No. of Beds at
Facility ID Name City State Commencement Date
-----------------------------------------------------------------------------------------------------------------------------
Hospitals
-----------------------------------------------------------------------------------------------------------------------------
1 4658 Vencor Hospital - Tuscon Tuscon AZ 51
-----------------------------------------------------------------------------------------------------------------------------
2 0000 Xxxxxx Xxxxxxxx - Xxxx Xxxxx Xxxxxxx XX 103
-----------------------------------------------------------------------------------------------------------------------------
3 0000 Xxxxxx Xxxxxxxx - Xxx Xxxxxxx Xxx Xxxxxxx XX 168
-----------------------------------------------------------------------------------------------------------------------------
4 0000 Xxxxxx Xxxxxxxx - Xxxxxxxxxxx Xxxxxxxxxxx XX 61
-----------------------------------------------------------------------------------------------------------------------------
5 4665 Vencor Hospital - Denver Denver CO 68
-----------------------------------------------------------------------------------------------------------------------------
6 4645 Vencor Hospital - Ft. Lauderdale Ft. Lauderdale FL 64
-----------------------------------------------------------------------------------------------------------------------------
7 4614 Vencor Hospital - Philadelphia Philadelphia PA 52
-----------------------------------------------------------------------------------------------------------------------------
8 0000 Xxxxxx Xxxxxxxx - Xxxxxxx Xxxxxxx XX 94
-----------------------------------------------------------------------------------------------------------------------------
9 4617 Vencor Hospital - Arlington Arlington VA 206 (164)*
-----------------------------------------------------------------------------------------------------------------------------
Nursing Centers
-----------------------------------------------------------------------------------------------------------------------------
1 853 Kachina Point Health Care & Rehab. Sedona AZ 120
-----------------------------------------------------------------------------------------------------------------------------
2 000 Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx XX 180
-----------------------------------------------------------------------------------------------------------------------------
3 268 Colonial Oaks Rehab. Ctr. - Ft. Xxxxxx Ft. Xxxxxx FL 120
-----------------------------------------------------------------------------------------------------------------------------
4 000 Xxxxxxxxx Xxxxx Xxxxxx & Xxxxx. Xxxxxxxxxx XX 120
-----------------------------------------------------------------------------------------------------------------------------
5 526 Brittany Healthcare Center Natick MA 126
-----------------------------------------------------------------------------------------------------------------------------
6 546 Winship Green Nursing Center Bath ME 72
-----------------------------------------------------------------------------------------------------------------------------
7 569 Chillicothe Nursing & Rehab. Center Chillecothe OH 101
-----------------------------------------------------------------------------------------------------------------------------
8 802 Bridgepark Ctr. For Rehab. & Nsg. Sv. Akron OH 174
-----------------------------------------------------------------------------------------------------------------------------
9 0000 Xxx Xxxxx Xxxxx Xxx Xxxxxxx XX 150
-----------------------------------------------------------------------------------------------------------------------------
10 000 Xxxxxxxxxx Health Care & Rehab. Svc. Xxxxxxxxxx XX 000
-----------------------------------------------------------------------------------------------------------------------------
177
-----------------------------------------------------------------------------------------------------------------------------------
No. of Beds at
Commencement
Facility ID Name City State Date
-----------------------------------------------------------------------------------------------------------------------------------
11 000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxx XX 164
-----------------------------------------------------------------------------------------------------------------------------------
12 791 Rehab. & Healthc. Ctr. of Huntsville Huntsville AL 159
-----------------------------------------------------------------------------------------------------------------------------------
13 1221 Courtland Gardens Health Ctr., Inc. Xxxxxxxx XX 000
-----------------------------------------------------------------------------------------------------------------------------------
14 0000 Xxxxx Xxxxxxx Xxxxx. & Xxx. Xxx. Xxxxxxx Xxxxx XX 194
-----------------------------------------------------------------------------------------------------------------------------------
15 0000 Xxxxxxx Xxxxx./Xxxxxxx Xxx. Xxxxxxx Xxxxx XX 127
-----------------------------------------------------------------------------------------------------------------------------------
16 0000 Xxxxx Xxxxx. & Xxx. Xxxxxx Xx. Xxxxxxxxxx XX 152
-----------------------------------------------------------------------------------------------------------------------------------
17 0000 Xxxxxx Xxxxxxx Xxxxxx Xxxxxx XX 148
-----------------------------------------------------------------------------------------------------------------------------------
18 000 Xxxxxxxx Xxxxxxxxxx Xxxxxx Xxxxxxxxxxxx XX 173
-----------------------------------------------------------------------------------------------------------------------------------
19 290 Bremen Health Care Center Bremen IN 97
-----------------------------------------------------------------------------------------------------------------------------------
20 000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxx Xxxxx XX 186
-----------------------------------------------------------------------------------------------------------------------------------
21 000 Xxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx XX 156
-----------------------------------------------------------------------------------------------------------------------------------
22 000 Xxxxxxxx Xxxxxxx Health Care Fac. Elizabethtown KY 118
-----------------------------------------------------------------------------------------------------------------------------------
23 000 Xxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxxx XX 112
-----------------------------------------------------------------------------------------------------------------------------------
24 000 Xxxxxxx Xxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxx XX 64
-----------------------------------------------------------------------------------------------------------------------------------
25 000 Xxxxxxx Xxxxx. & Xxxxxxx Xxxxxx Xxxxxxx XX 81
-----------------------------------------------------------------------------------------------------------------------------------
26 523 Star of Xxxxx Nsg. & Rehab/Alz. Ctr. West Roxbury MA 149
-----------------------------------------------------------------------------------------------------------------------------------
27 000 Xxx-Xxx Xxxxx. & Xxxxxxx Xxxxxx Xxxxxxxx XX 80
-----------------------------------------------------------------------------------------------------------------------------------
28 583 Embassy House Sk. Nsg. & Rehab. Xxxxxxxx MA 123
-----------------------------------------------------------------------------------------------------------------------------------
29 000 Xxxxxxxx Xxxx xx Xxxxx Xxxxx. Xxxxx Xxxxx XX 118
-----------------------------------------------------------------------------------------------------------------------------------
30 746 Homestead Health Care & Rehab. Ctr. Lincoln NE 167
-----------------------------------------------------------------------------------------------------------------------------------
31 000 Xxxxxxxxxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxxx XX 100
-----------------------------------------------------------------------------------------------------------------------------------
32 000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx XX 159
-----------------------------------------------------------------------------------------------------------------------------------
33 0000 Xxx Xxxx Nursing & Rehab. Ctr. Pawtucket RI 143
-----------------------------------------------------------------------------------------------------------------------------------
34 000 Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxx XX 160
-----------------------------------------------------------------------------------------------------------------------------------
35 000 Xxxxxxxx Xxxxxxx & Xxxxx. Xxxxxx Xxxxxx XX 173
-----------------------------------------------------------------------------------------------------------------------------------
178
-----------------------------------------------------------------------------------------------------------------------------------
No. of Beds at
Commencement
Facility ID Name City State Date
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
36 000 Xxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxxx XX 120
-----------------------------------------------------------------------------------------------------------------------------------
37 000/000 Xxxxxxx Xxxxxx Xxx. & Xxxxx. Xxx. Xxx Xxxxxx XX 120
-----------------------------------------------------------------------------------------------------------------------------------
38 000 Xxxxxxx Xxxxx. & Xxxxxxxxxx Xxxxxx Xxxxxxx XX 120
-----------------------------------------------------------------------------------------------------------------------------------
39 000 Xxxxxx Xxxx Xxxxxx Xxxxxx XX 94
-----------------------------------------------------------------------------------------------------------------------------------
40 209 Valley View Health Care Center Elkhart IN 140
-----------------------------------------------------------------------------------------------------------------------------------
41 585 Great Barrington Rehab. & Nsg. Ctr. Great Barrington MA 106
-----------------------------------------------------------------------------------------------------------------------------------
42 000 Xxxx Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxxx XX 123
-----------------------------------------------------------------------------------------------------------------------------------
43 481 South Central Wyoming HC & Rehab. Xxxxxxx WY 90
-----------------------------------------------------------------------------------------------------------------------------------
44 131 Vencor Corydon Nursing Care Center Corydon IN 92
-----------------------------------------------------------------------------------------------------------------------------------
179
Schedule 16.1(m)B
-----------------
Minimum Licensed Beds at Certain Facilities Due to Involuntary Reduction
------------------------------------------------------------------------
Master Lease No. 4
---------------------
Minimum Number of
Facility No. Facility Name Licensed Beds 95% of Minimum
------------ ------------- ----------------- --------------
1. 225 Moscow Care Center 73 70
2. 481 South Central Wyoming HC & Rehab 56 54
3. 000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx Xxxxxx 132 126
The parties agree that the licensed beds number that appears in the "95% of
Minimum" column for a particular Facility shall equal 95% of the number of
licensed beds shown in the "Minimum Number of Licensed Beds" column for such
Facility, in each case rounded up to the closest whole number of licensed beds.
180
Schedule 25.1.7
---------------
Certain Existing Subleases
--------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Facility Number - Name Subtenant Date of Sublease Square Footage
-----------------------------------------------------------------------------------------------------------------------------------
0859 - Castle Garden Xxxxxxxx Medical Sales 12/6/99 50
-----------------------------------------------------------------------------------------------------------------------------------
4617 - North Virginia Apcoa, Inc. 3/30/81 Parking facilities
Community Hospital 601 & 000 X. Xxxxxx
Xxxxxxx Xxxx
-----------------------------------------------------------------------------------------------------------------------------------
181
Schedule 40.12
--------------
Tenant - Affiliate Sublessees
-----------------------------
Master Lease #4 (Bank Portfolio 3)
----------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Facility Name City State Tenant-Affiliate
ID
-----------------------------------------------------------------------------------------------------------------------------------
4645 Vencor Hospital - Ft. Lauderdale Ft. Lauderdale FL VHE
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxxxxx Xxxxxxxx - Xxxxxxx Xxxxxxx XX VHLP
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxx Xxxxxxx XX & Xxxxx. Xxxxxxxx XX VNCW
-----------------------------------------------------------------------------------------------------------------------------------
000/ Xxxxxxx Xxxxxx Xxx. & Xxxxx. Xxx. Xxx Xxxxxx XX VNCW
148
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxx Xxxxx. & Xxxxxxxxxx Xxxxxx Xxxxxxx XX VNCW
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxx Xxxx Xxxxxx Xxxxxx XX VNCW
-----------------------------------------------------------------------------------------------------------------------------------
209 Valley View Health Care Center Elkhart IN VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
585 Great Barrington Rehab. & Nsg. Ctr. Great Barrington MA VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxx Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxx Xxxxxxx Wyoming HC & Rehab. Xxxxxxx WY VNCW
-----------------------------------------------------------------------------------------------------------------------------------
4658 Vencor Hospital - Tuscon Tuscon AZ VHW
-----------------------------------------------------------------------------------------------------------------------------------
853 Kachina Point Health Care & Rehab. Sedona AZ VNCW
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxx XX VNCW
-----------------------------------------------------------------------------------------------------------------------------------
268 Colonial Oaks Rehab. Ctr. - Ft. Xxxxxx Ft. Xxxxxx FL VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxx Xxxxx Xxxxxx & Xxxxx. Xxxxxxxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
526 Brittany Healthcare Center Natick MA VNCE
-----------------------------------------------------------------------------------------------------------------------------------
546 Winship Green Nursing Center Bath ME VNCW
-----------------------------------------------------------------------------------------------------------------------------------
569 Chillicothe Nursing & Rehab. Center Chillecothe OH VNCE
-----------------------------------------------------------------------------------------------------------------------------------
802 Bridgepark Ctr. For Rehab. & Nsg. Sv. Akron OH VNCE
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxx Xxxxx Xxxxx Xxx Xxxxxxx XX PersonaCare of San Xxxxx, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxxx Health Care & Rehab. Svc. Bellingham WA VNCW
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxx Xxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxx XX VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
4614 Vencor Hospital - Philadelphia Philadelphia PA VHE
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxxxxx Xxxxxxxx - Xxxxxxxxx Xxxxxxxxx XX VHE
-----------------------------------------------------------------------------------------------------------------------------------
1221 Courtland Gardens Health Ctr., Inc. Stamford CT CGHC
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxx Xxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxx Xxxxx. & Xxxxxxx Xxxxxx Xxxxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
523 Star of Xxxxx Nsg. & Rehab/Alz. Ctr. West Roxbury MA VNCE
------------------------------------------------------------------------------------------------------------------------------------
182
-----------------------------------------------------------------------------------------------------------------------------------
Facility Name City State Tenant-Affiliate
ID
-----------------------------------------------------------------------------------------------------------------------------------
542 Den-Mar Rehab. & Nursing Center Rockport MA VNCE
-----------------------------------------------------------------------------------------------------------------------------------
583 Embassy House Sk. Nsg. & Rehab. Brockton MA VNCE
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxx Xxxx Nursing & Rehab. Ctr. Pawtucket RI VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxx Xxxxxxx Xxxxxxxxxx Xxxxxxxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxxxxx Xxxxxxxx - Xxxx Xxxxx Xxxxxxx XX THC - North Shore
-----------------------------------------------------------------------------------------------------------------------------------
4666 Vencor Hospital - New Orleans New Orleans LA THC of Louisiana
-----------------------------------------------------------------------------------------------------------------------------------
791 Rehab. & Healthc. Ctr. of Huntsville Huntsville AL VNCE
-----------------------------------------------------------------------------------------------------------------------------------
1218 North Broward Rehab. & Nsg. Ctr. Pompano Beach FL PersonaCare of Pompano East, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
1232 Pompano Rehab./Nursing Ctr. Pompano Beach FL PersonaCare of Pompano West, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxxxx Xxxxx. & Xxx. Xxxxxx Xx. Xxxxxxxxxx XX PersonaCare of St. Petersburg, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
0000 Xxxxxx Xxxxxxx Xxxxxx Xxxxxx XX Xxxxxx Nursing Center, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
723 Guardian Care of Rocky Mount. Rocky Mount NC VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxxxxx Xxxxxxx & Xxxxx. Xxx. Xxxxxxxxxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxx Xxxxxx Xxxx Xxxxxx Xxxxx XX VNCE
-----------------------------------------------------------------------------------------------------------------------------------
4664 Vencor Hospital - Albuquerque Albuquerque NM THC of New Mexico, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
4665 Vencor Hospital - Denver Denver CO VHW
-----------------------------------------------------------------------------------------------------------------------------------
213 Wildwood Healthcare Center Indianapolis IN VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
290 Bremen Health Care Center Bremen IN VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxx Xxxxx XX VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx XX VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxx Xxxxxxx Health Care Fac. Elizabethtown KY VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxxxx XX VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
746 Homestead Health Care & Rehab. Ctr. Lincoln NE VNCW
-----------------------------------------------------------------------------------------------------------------------------------
000 Xxxxxxxx Xxxxxxx & Xxxxx. Xxxxxx Xxxxxx XX VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
131 Vencor Corydon Nursing Care Center Corydon IN VNCLP
-----------------------------------------------------------------------------------------------------------------------------------
LEGEND
CGHC - Courtland Gardens Health Center, Inc.
HHC - Homestead Health Center, Inc.
LHCC - Lafayette Health Care Center, Inc.
RIMP - Recovery Inn of Menlo Park, L.P.
VHE - Vencor Hospitals East, L.L.C
183
VHW - Vencor Hospitals West, L.L.C
VNLP - Vencor Hospital Limited Partnership
VNCE - Vencor Nursing Centers East, L.L.C.
VNCLP - Vencor Nursing Centers Limited Partnership
VNCW - Vencor Nursing Centers West, L.L.C.
VO - Vencor Operating, Inc.
184
