MASTER LEASE
MULTIPLE LESSEE
MULTIPLE FACILITIES
STERLING ACQUISITION CORP., LESSOR
AND
DIVERSICARE LEASING CORPORATION, LESSEE
DATED: November 8, 2000
(effective October 1, 2000)
TABLE OF CONTENTS
Page
RECITALS..........................................................................................................1
ARTICLE I.........................................................................................................1
1.1 Lease...........................................................................................1
1.2 Term............................................................................................2
1.3 Option to Renew.................................................................................2
ARTICLE II........................................................................................................3
2.1 Definitions.....................................................................................3
ARTICLE III......................................................................................................25
3.1 Base Rent; Monthly Installments................................................................25
3.2 Additional Charges.............................................................................26
3.3 Late Charge....................................................................................26
3.4 Net Lease......................................................................................26
3.5 Payments In The Event of a Rent Adjustment.....................................................27
ARTICLE IV.......................................................................................................27
4.1 Payment of Impositions.........................................................................27
4.2 Notice of Impositions..........................................................................28
4.3 Adjustment of Impositions......................................................................28
4.4 Utility Charges................................................................................28
4.5 Insurance Premiums.............................................................................28
ARTICLE V........................................................................................................29
5.1 No Termination, Abatement, etc.................................................................29
ARTICLE VI.......................................................................................................29
6.1 Ownership of the Leased Properties.............................................................29
6.2 Lessor's Personal Property.....................................................................30
6.3 Lessee's Personal Property.....................................................................30
6.4 Grant of Security Interest in Lessee's Personal Property and Accounts..........................31
ARTICLE VII......................................................................................................31
7.1 Condition of the Leased Properties.............................................................31
7.2 Use of the Leased Properties...................................................................32
7.3 Certain Environmental Matters..................................................................32
ARTICLE VIII.....................................................................................................37
8.1 Compliance with Legal and Insurance Requirements...............................................37
8.2 Certain Covenants..............................................................................37
8.4 Management Agreements..........................................................................40
8.5 Other Facilities...............................................................................40
8.6 Separateness...................................................................................40
ARTICLE IX.......................................................................................................41
9.1 Maintenance and Repair.........................................................................41
9.2 Encroachments, Restrictions, etc...............................................................42
ARTICLE X........................................................................................................43
10.1 Construction of Alterations and Additions to the Leased Properties.............................43
ARTICLE XI.......................................................................................................44
11.1 Liens..........................................................................................44
ARTICLE XII......................................................................................................44
12.1 Permitted Contests.............................................................................44
12.2 Lessor's Requirement for Deposits..............................................................45
ARTICLE XIII.....................................................................................................45
13.1 General Insurance Requirements.................................................................45
13.2 Risks to be Insured............................................................................46
13.3 Payment of Premiums; Copies of Policies; Certificates..........................................47
13.4 Premium Deposits...............................................................................48
13.5 Umbrella Policies..............................................................................48
13.6 Additional Insurance...........................................................................48
13.7 No Liability; Waiver of Subrogation............................................................48
13.8 Increase in Limits.............................................................................48
13.9 Blanket Policy.................................................................................48
13.10 No Separate Insurance..........................................................................49
ARTICLE XIV......................................................................................................49
14.1 Insurance Proceeds.............................................................................49
14.2 Restoration in the Event of Damage or Destruction..............................................50
14.3 Restoration of Lessee's Property...............................................................50
14.4 No Abatement of Rent...........................................................................50
14.5 Waiver.........................................................................................50
14.7 Disbursement of Insurance Proceeds Equal to or Greater Than The Approval Threshold.............50
14.8 Net Proceeds Paid to Facility Mortgagee........................................................52
ARTICLE XV.......................................................................................................53
15.1 Total Taking or Other Taking with Leased Property Rendered Unsuitable for Its
Primary Intended Use.......................................................................53
15.2 Allocation of Award............................................................................54
15.3 Partial Taking.................................................................................54
15.4 Temporary Taking...............................................................................54
15.5 Awards Paid to Facility Mortgagee..............................................................55
ARTICLE XVI......................................................................................................56
16.1 Lessor's Rights Upon an Event of Default.......................................................56
16.2 Certain Remedies...............................................................................56
16.3 Damages........................................................................................56
16.4 ...............................................................................................57
16.5 Waiver.........................................................................................57
16.6 Application of Funds...........................................................................57
16.7 Bankruptcy.....................................................................................58
ARTICLE XVII.....................................................................................................58
17.1 Lessor's Right to Cure Lessee's Default........................................................58
ARTICLE XVIII....................................................................................................59
18.1 Holding Over...................................................................................59
18.2 Indemnity......................................................................................59
ARTICLE XIX......................................................................................................59
19.1 Subordination..................................................................................59
19.2 Attornment.....................................................................................60
19.3 Lessee's Certificate...........................................................................60
ARTICLE XX.......................................................................................................60
20.1 Risk of Loss...................................................................................60
ARTICLE XXI......................................................................................................61
21.1 Indemnification................................................................................61
ARTICLE XXII.....................................................................................................62
22.1 General Prohibition against Transfers..........................................................62
22.2 Subordination and Attornment...................................................................62
22.3 Sublease Limitation............................................................................62
ARTICLE XXIII....................................................................................................63
23.1 Officer's Certificates and Financial Statements................................................63
23.2 Public Offering Information....................................................................65
ARTICLE XXIV.....................................................................................................66
24.1 Lessor's Right to Inspect......................................................................66
ARTICLE XXV......................................................................................................66
25.1 No Waiver......................................................................................66
ARTICLE XXVI.....................................................................................................66
26.1 Remedies Cumulative............................................................................66
ARTICLE XXVII....................................................................................................66
27.1 Acceptance of Surrender........................................................................66
ARTICLE XXIII....................................................................................................66
28.1 No Merger of Title.............................................................................66
28.2 No Partnership.................................................................................67
ARTICLE XXIX.....................................................................................................67
29.1 Conveyance by Lessor...........................................................................67
ARTICLE XXX......................................................................................................67
30.1 Quiet Enjoyment................................................................................67
ARTICLE XXXI.....................................................................................................67
31.1 Notices........................................................................................67
ARTICLE XXXII....................................................................................................68
32.1 Appraisers.....................................................................................68
ARTICLE XXXIII...................................................................................................70
33.1 Breach by Lessor...............................................................................70
33.2 Compliance With Facility Mortgage..............................................................70
ARTICLE XXXIV....................................................................................................70
34.1 Disposition of Personal Property on Termination; Lessor's Option to Purchase...................70
34.2 Facility Trade Names...........................................................................71
34.3 Transfer of Operational Control of the Facilities..............................................71
34.4 Intangibles and Personal Property..............................................................73
ARTICLE XXXV.....................................................................................................73
35.1 Arbitration....................................................................................73
ARTICLE XXXVI....................................................................................................74
36.1 Miscellaneous..................................................................................74
ARTICLE XXXVII...................................................................................................76
37.1 Commissions....................................................................................76
ARTICLE XXXVIII..................................................................................................76
38.1 Memorandum or Short Form of Lease..............................................................76
ARTICLE XXXIX....................................................................................................76
39.3 Application of Security Deposit................................................................77
39.4 Transfer of Security Deposit...................................................................78
EXHIBIT A.......................................................................................................A-1
DESCRIPTION OF LAND....................................................................................A-1
EXHIBIT B.......................................................................................................B-1
PERMITTED ENCUMBRANCES.................................................................................B-1
EXHIBIT C.......................................................................................................C-1
LESSEE'S CERTIFICATE...................................................................................C-1
EXHIBIT D.......................................................................................................D-1
MEMORANDUM OR SHORT FORM OF LEASE......................................................................D-1
SCHEDULE A Excluded Personal Property of Lessee.................................................................S-1
CONSOLIDATED AMENDED AND RESTATED MASTER LEASE
THIS CONSOLIDATED AMENDED AND RESTATED MASTER LEASE ("Lease") is
executed and delivered as of this 8th day of November, 2000, effective as of
October 1, 2000, and is entered into by (i) STERLING ACQUISITION CORP., a
Kentucky corporation ("Lessor"), the address of which is 000 Xxxxxxx Xxx, Xxxxx
000, Xxx Xxxxx, Xxxxxxxx 00000, and (ii) DIVERSICARE LEASING CORPORATION, a
Tennessee corporation, the address of which is 000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxxx 00000 ("Lessee").
RECITALS
The circumstances underlying the execution and delivery of this Lease
are as follows:
A. Capitalized terms used and not otherwise defined herein have the
respective meanings given them in Article II, below.
B. The parties hereto are parties to the Existing Leases. Prior hereto,
all of the lessor's interests in the Existing Leases have been consolidated into
Lessor, and all of the lessee's interests in the Existing Leases have been
consolidated into Lessee.
C. The parties hereto wish to amend, restate, and consolidate the
Existing Leases on the terms and conditions set forth herein.
NOW THEREFORE Xxxxxx and Lessee agree as follows:
ARTICLE I
1.1 Lease. Upon and subject to the terms and conditions hereinafter set
forth, Lessor leases to Lessee the Leased Properties located in Alabama,
Arkansas, Florida, Kentucky, Ohio, Tennessee, and West Virginia and comprising
the Facilities described on Exhibits A- 1 through A-28 (the "Leased
Properties").
The Existing Leases are hereby amended, restated and consolidated in
their entirety as set forth in this Lease to provide for the continued leasing
of the Leased Properties by Xxxxxx. From and after the Commencement Date, the
leasing of the Leased Properties by Xxxxxx from Lessor, and the rights and
obligations of the parties with respect thereto, shall be determined as set
forth and described in this Lease. However, the lessees and lessors pursuant to
the Existing Leases are only released from those obligations under the Existing
Leases only to the extent set forth in the Settlement and Restructuring
Agreement.
The Leased Properties are leased subject to all covenants, conditions,
restrictions, easements and other matters affecting each Leased Property,
whether or not of record, including the Permitted Encumbrances and other matters
which would be disclosed by an inspection of the Leased Properties or by an
accurate survey thereof, provided, however, that the foregoing will not
materially interfere with the Primary Intended Use of the Leased Property by
Lessee as set forth in this Lease.
This Lease constitutes one indivisible lease of the Leased Properties
to multiple tenants, and not separate leases governed by similar terms. The
Leased Properties constitute one economic unit, and the Base Rent and all other
provisions have been negotiated and agreed to based on a demise of all of the
Leased Properties as a single, composite, inseparable transaction and would have
been substantially different had separate leases or a divisible lease been
intended. Except as expressly provided herein for specific, isolated purposes
(and then only to the extent expressly otherwise stated), all provisions of this
Lease apply equally and uniformly to all the Leased Properties as one unit. An
Event of Default with respect to any Leased Property is an Event of Default as
to all of the Leased Properties. The parties intend that the provisions of this
Lease shall at all times be construed, interpreted and applied so as to carry
out their mutual objective to create an indivisible lease of all the Leased
Properties and, in particular but without limitation, that for purposes of any
assumption, rejection or assignment of this Lease under 11 U.S.C. 365, this is
one indivisible and non-severable lease and executory contract dealing with one
legal and economic unit which must be assumed, rejected or assigned as a whole
with respect to all (and only all) the Leased Properties covered hereby.
1.2 Term. The initial term of this Lease ("Initial Term") shall be ten
(10) Lease Years. The Initial Term shall commence on the Commencement Date and
end on the Initial Term Expiration Date, subject to renewal as set forth in
Section 1.3, below.
1.3 Option to Renew. Lessee is hereby granted one (1) option to renew
this Lease for an additional, successive period of ten (10) Lease Years, for a
maximum Term if such option is exercised of twenty (20) Lease Years, on the
following terms and conditions: (a) the option to renew is exercisable only by
Notice to Lessor at least three hundred sixty-five (365) days prior to the
expiration of the Initial Term; (b) the absence of any Event of Default both at
the time a renewal option is exercised and at the commencement of a Renewal Term
is a condition precedent to any renewal of the Term; and (c) during a Renewal
Term, all of the terms and conditions of this Lease shall remain in full force
and effect.
1.4 Saving Provisions. If Xxxxxx fails to notify Lessor of the exercise
of the extension option which Xxxxxx has the right to exercise hereunder within
the required time, its option to extend shall nevertheless remain full force and
effect for a period of fifteen (15) days after Notice from Lessor subsequent to
the required time setting forth the expiration date of this Lease and advising
Lessee that Notice of extension has not been received. The right to renew as
thereby extended shall expire on the close of business on the fifteenth day
after Notice, and may be thereafter not be exercised by Xxxxxx.
ARTICLE II
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
GAAP 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.
Additional Charges: All Impositions and other amounts,
liabilities and obligations which Xxxxxx assumes or agrees to pay under this
Lease, including, without limitation, the Annual Site Inspection Fee.
Adjustment Date: October 1, 2003, and each October 1
thereafter throughout the Term of this Lease.
Advocat: Advocat, Inc., a Delaware corporation.
Advocat Concentration Account: As defined in the Settlement
and Restructuring Agreement.
Affiliate: Any Person which, directly or indirectly, Controls
or is Controlled by or is under common Control with another Person.
AmSouth: AmSouth Bank.
AmSouth Loan Documents: The documents evidencing and securing
the indebtedness of Advocat and its Affiliates to AmSouth as of the date of
execution and delivery of this Lease.
Annual Site Inspection Fee: An annual fee of One Thousand
Dollars ($1,000.00) for each Facility included within the Leased Properties
actually inspected by Lessor during each Lease Year throughout the Term
beginning with the Second (2nd) Lease Year which shall be paid by Lessee within
thirty (30) days after receipt by Lessee of an invoice therefor together with a
copy of the complete site inspection report made with respect to each Facility
for which payment is requested.
Approval Threshold: One Hundred Fifty Thousand Dollars
($150,000.00).
Assessment: Any governmental assessment on the Leased
Properties or any part thereof for public or private improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term.
Assumed Indebtedness: Any indebtedness or other obligations of
third parties from whom Xxxxxx has acquired any Leased Property, expressly
assumed in writing by Xxxxxx, and existing at the time of acquisition of the
Leased Property secured by a mortgage, deed of trust or other security agreement
to which Xxxxxx's title to the Leased Properties is subject.
Award: All compensation, sums or anything of value awarded,
paid or received in connection with a total or partial Taking.
Base Rent:
(A) During the Initial Term, the Base Rent shall be:
(1) For the first (1st) Lease Year, Ten Million Eight
Hundred Seventy Five Thousand Dollars ($10,875,000.00);
(2) For the second (2nd) Lease Year, Ten Million Eight
Hundred Seventy Five Thousand Dollars ($10,875,000.00);
(3) For the third (3rd) Lease Year, Eleven Million Five
Hundred Thousand Dollars ($11,500,000.00);
(4) For each of the fourth (4th) through tenth (10th)
Lease Years, the lesser of (i) the Base Rent for the third
(3rd) Lease Year increased by a percentage equal to two (2)
times the percentage increase in the CPI (if positive) from
the commencement date of the third (3rd) Lease Year to the
Adjustment Date in each of the fourth (4th) through tenth
(10th) Lease Years, as applicable and (ii) the following
amounts for each Lease Year:
Lease Year Base Rent
---------- ---------
4 $11,845,000
5 $12,200,350
6 $12,566,360
7 $12,943,351
8 $13.331.651
9 $13,731,601
10 $14,143,549
Under no circumstances will the Base Rent in any Lease Year be less
than the Base Rent during the preceding Lease Year.
(B) During the Renewal Term, the Base Rent shall be:
(1) For the first Lease Year of the Renewal Term, the
greater of (a) the Base Rent during the tenth (10th) Lease
Year of the Initial Term and (b) the Fair Market Rent for the
Leased Properties on the first day of such Renewal Term as
agreed upon by Xxxxxx and Lessee, or, if prior to the
commencement of the Renewal Term they are unable to agree, as
determined by an appraisal pursuant to Article XXXII of this
Lease; provided, however, that the Base Rent for the first
Lease Year of the Renewal Term shall not exceed one hundred
ten percent (110%) of the Base Rent for the Lease Year
immediately preceding the commencement of the Renewal Term;
and
(2) For each of the second (2nd) through the tenth
(10th) Lease Years during the Renewal Term, the lesser of (i)
the Base Rent for the first (1st) Lease Year of the Renewal
Term, increased by a percentage equal to two (2) times the
percentage increase in the CPI (if positive) from the
commencement date of the Renewal Term to the Adjustment Date
in each of the second (2nd) through tenth (10th) Lease Years,
as applicable (the "Adjustment Date"), and (ii) the product of
the Base Rent during the first (1st) Lease Year of the Renewal
Term and the following percentage:
Lease Year During Applicable Percentage
Renewal Term ---------------------
------------
2 1.03%
3 1.061%
4 1.093%
5 1.126%
6 1.159%
7 1.194%
8 1.23%
9 1.267%
10 1.305%
Under no circumstances will the Base Rent in any Lease Year
during the Renewal Term be less than the Base Rent during the
preceding Lease Year.
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 Expenditures Reserve Account: As defined in Section
8.3.1.
Capitalization Rate: Nine percent (9%) (See Section 15.3).
Capitalized Leases: Leases that in accordance with GAAP
are required to be capitalized for financial reporting purposes.
Capitalized Lease Obligations: All obligations under
Capitalized Leases the amount of the indebtedness for which shall be the
capitalized amount of such obligations determined in accordance with GAAP.
Casualty/Condemnation Reduction Percentage: The percentage
obtained by dividing the Retained Amount by the Investment Amount.
Citation: Any operational or physical plant deficiency set
forth in writing with respect to a Facility by any governmental body or agency,
or Medicare intermediary, having regulatory oversight over a Facility, Lessee or
Manager, with respect to which the scope and severity of the penalty for such
deficiency, if not cured, is one or more of the following: loss of licensure,
decertification of a Facility from participation in the Medicare and/or Medicaid
programs, appointment of a temporary manager or denial of payment for new
admissions.
Clean-Up: The investigation, removal, restoration, remediation
and/or elimination of, or other response to, Contamination, in each case to the
satisfaction of all governmental agencies having jurisdiction, in compliance
with or as may be required by Environmental Laws.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: October 1, 2000, even though this Lease has
been executed subsequent thereto. Base Rent and other payments made by Lessee
under the Existing Leases attributable to the period on and after October 1,
2000 and prior to the date of execution of this Lease shall be applied to Base
Rent and other payments due hereunder.
Condemnor: Any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.
Consolidated Financial Statement:
(a) For each quarter during Lessee's fiscal year, on a
consolidated basis for Lessee, (i) a statement of earnings for the current
period and fiscal year to the end of such period, with a comparison to the
corresponding figures for the corresponding period in the preceding fiscal year
from the beginning of the fiscal year to the end of such period, and (ii) a
balance sheet as of the end of the period, with a comparison to the
corresponding figures for the corresponding period in the preceding fiscal year
from the beginning of the fiscal year to the end of such period.
(b) For Lessee's fiscal year, the Consolidated Financial
Statement shall be a financial report for Xxxxxx on a consolidated basis,
reviewed by a "big five" accounting firm or any other firm of independent
certified public accountants reasonably acceptable to Lessor, containing the
Lessee's balance sheet as of the end of that year, its related profit and loss,
a statement of shareholder's equity for that year, a statement of cash flows for
that year, and such comments and financial details as are customarily included
in reports of like character. Lessor shall have the right upon reasonable Notice
to Lessee to cause any such Consolidated Financial Statement to be audited at
Lessor's expense by certified public accountants selected by Lessor. Lessee
shall cooperate in any such audit and shall provide the auditors selected by
Lessor with access to and the opportunity to copy at Lessor's expense such
books, records and other materials as such auditors may reasonably request in
order to perform their audit.
(c) For Advocat's fiscal year, the Consolidated Financial
Statements shall be an audited financial report prepared by a "big five"
accounting firm or any other firm of independent certified public accountants
reasonably acceptable to Lessor, containing Advocat's balance sheet as of the
end of that year, its related profit and loss, a statement of shareholder's
equity for that year, a statement of cash flows for that year, and such comments
and financial details as are customarily included in reports of like character
and the opinion of the certified public accountants as to the fairness of the
statements therein.
Construction Funds: The Net Proceeds and such additional funds
as may be deposited with Lessor by Lessee pursuant to Section 14.6 for
restoration or repair work pursuant to this Lease.
Contamination: The presence, Release or threatened Release of
any Hazardous Substance at the Leased Properties in violation of any
Environmental Law, or in a quantity that would give rise to any affirmative
Clean-Up obligations under an Environmental Law, including, but not limited to,
the existence of any injury or potential injury to public health, safety,
natural resources or the environment associated therewith, or any other
environmental condition at, in, about, under or migrating from or to the Leased
Properties.
Control (and its corollaries "Controlled by" and "under common
Control with"): Possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, through the
ownership of voting securities, partnership interests or other equity interests,
or by any other device.
CPI or Consumer Price Index: As of any date, the United States
Department of Labor, Bureau of Labor Statistics Revised Consumer Price Index for
All Urban Consumers (1982=84=100), U.S. City Average, All Items, or, if that
index is not available at the time in question, the index designated by such
Department as the successor to such index, and if there is no index so
designated, an index for an area in the United States that most closely
corresponds to the entire United States, published by such Department, or if
none, by any other instrumentality of the United States, calculated in this
Lease as the CPI attributable to the month three months prior to the applicable
date herein (e.g., the CPI used to calculate the adjustment in Base Rent as of
October 1, 2005, shall be the CPI for the month of July, 2005, compared to the
CPI for the month of July, 2002).
Coverage Ratio: For any period, the ratio of EBITDARM divided
by Debt Service.
Current Ratio: At any period, Xxxxxx's Current Assets divided
by Xxxxxx's Current Liabilities.
Date of Taking: The date on which the Condemnor has the right
to possession of the Leased Property that is the subject of the Taking or
Partial Taking.
Debt: As of any date, all (a) obligations of a Person, whether
current or long-term, that in accordance with GAAP should be included as
liabilities on such Person's balance sheet; (b) Capitalized Lease Obligations of
such Person; (c) obligations of others for which that Person is liable directly
or indirectly, by way of guaranty (whether by direct guaranty, suretyship,
discount, endorsement, take-or-pay agreement, agreement to purchase or advance
or keep in funds or other agreement having the effect of a guaranty) or
otherwise; (d) liabilities and obligations secured by liens of any assets of
that Person, whether or not those liabilities or obligations are recourse to
that Person; and (e) liabilities of that Person, direct or contingent, with
respect to letters of credit issued for the account of that Person or others or
with respect to bankers acceptances created for that Person.
Debt Service: With respect to any fiscal period of a Person,
the sum of (a) all interest due on Debt during the period (other than interest
imputed, pursuant to GAAP, on any Capitalized Lease Obligations and interest on
Debt that comprises Purchase Money Financing), (b) all payments of principal of
Debt required to be made during the period and (c) all Rent due during the
period.
Distribution: Any payment or distribution of cash or any
assets of Lessee or a Sublessee to one or more shareholders of Lessee or to any
Affiliate of Lessee, whether in the form of a dividend, a fee for management in
excess of the fee required by the terms of a Management Agreement, a payment for
services rendered (except as provided in the next sentence), a reimbursement for
overhead incurred on behalf of Lessee, or a payment on any debt required by this
Lease to be subordinated to the rights of Lessee. Notwithstanding the foregoing,
none of the following are a Distribution: (i) payment of the fee permitted by
the terms of the Management Agreement, (ii) any payment pursuant to a contract
with an Affiliate of Lessee or Sublessee which contract is upon terms and
conditions that are fair and substantially similar to those that would be
available on an arm's length basis, and (iii) reimbursement by Lessee or
Sublessee to an Affiliate for third party expenses (but not overhead) paid by
the Affiliate on behalf of or which are fairly allocable to Lessee or Sublessee.
DLC: Diversicare Leasing Corporation, a Tennessee corporation
and a Lessee herein.
EBITDARM: For any period, the sum of (a) Net Income of Lessee
arising solely from the operation of the Facilities during the period, and (b)
the amounts deducted in computing the Net Income of Lessee for the period for
(i) depreciation. (ii) amortization, (iii) Base Rent, (iv) interest (including
payments in the nature of interest under Capitalized Leases and interest on any
Purchase Money Financing), (v) income taxes (or, if greater, income taxes
actually paid during the period) and (vi) management fees.
Encumbrance: Any mortgage, deed of trust, lien, encumbrance or
other matter affecting title to the Leased Properties, or any portion thereof or
interest therein, securing any borrowing or other means of financing or
refinancing.
Environmental Audit: A written certificate, in form and
substance satisfactory to Lessor, from an environmental consulting or
engineering firm acceptable to Lessor, which states that there is no
Contamination on the Leased Properties and that the Leased Properties are
otherwise in strict compliance with Environmental Laws.
Environmental Documents: Each and every (i) document received
by Lessee or any Affiliate from, or submitted by Lessee or any Affiliate to, the
United States Environmental Protection Agency and/or any other federal, state,
county or municipal agency responsible for enforcing or implementing
Environmental Laws with respect to the condition of the Leased Properties, or
Lessee's operations at the Leased Properties; and (ii) review, audit, report, or
other analysis data pertaining to environmental conditions, including, but not
limited to, the presence or absence of Hazardous Substances, at, in, or under or
with respect to the Leased Properties that have been prepared by, for or on
behalf of Lessee.
Environmental Laws: All federal, state and local laws
(including, without limitation, common law), statutes, codes, ordinances,
regulations, rules, orders, permits or decrees of the United States and the
States (or any political subdivision thereof) in which any Leased Property is
located relating to the introduction, emission, discharge or Release of
Hazardous Substances into the indoor or outdoor environment (including without
limitation, air, surface water, groundwater, land or soil) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
transportation, disposal, or Release of Hazardous Substances; or the Clean-Up of
Contamination, all as are now or may hereinafter be in effect.
Event of Default: The occurrence of any of the following:
(a) Lessee fails to pay or cause to be paid the Rent when due
and payable and such failure is not cured by Lessee within a period of five (5)
days after Notice thereof from Lessor, provided that Lessee shall be entitled to
such Notice and may avail itself of such cure period no more than two (2) times
in any calendar year;
(b) Lessee, on a petition in bankruptcy filed against it, is
adjudicated a bankrupt or has an order for relief thereunder entered against it,
or a court of competent jurisdiction enters an order or decree appointing a
receiver of Lessee or any Guarantor or of the whole or substantially all of its
property, or approving a petition filed against Lessee seeking reorganization or
arrangement of Lessee under the federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state thereof, and such
judgment, order or decree is not vacated or set aside or stayed within sixty
(60) days from the date of the entry thereof, subject to the applicable
provisions of the Bankruptcy Code (11 USC ss.101 et. seq.) and to the provisions
of Section 16.7, below;
(c) Lessee: (i) Admits in writing its inability to pay its
debts generally as they become due, (ii) files a petition in bankruptcy or a
petition to take advantage of any insolvency law, (iii) makes a general
assignment for the benefit of its creditors, (iv) consents to the appointment of
a receiver of itself or of the whole or any substantial part of its property, or
(v) files 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, subject to the applicable provisions of
the Bankruptcy Code (11 USC ss.101 et. seq.) and to the provisions of Section
16.7, below;
(d) Lessee is finally liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or has filed against it a
petition or other proceeding to cause it to be liquidated or dissolved and the
proceeding is not dismissed within thirty (30) days thereafter, or Lessee in any
manner permits the sale or divestiture of substantially all of its assets
necessary or related to the use and operation of the Leased Properties;
(e) The estate or interest of Lessee in the Leased Properties
or any part thereof is levied upon or attached in any proceeding and the same is
not vacated or discharged within thirty (30) days thereafter (unless Lessee is
in the process of contesting such lien or attachment in good faith in accordance
with Article XII hereof);
(f) Lessee voluntarily ceases operation of any Facility for a
period in excess of five (5) Business Days except upon prior Notice to, and with
the express prior written consent of Lessor pursuant to the terms of the
Settlement and Restructuring Agreement or other written agreement of the Lessor
and Lessee, or as the unavoidable consequence of damage or destruction as a
result of a casualty, or a Partial or total Taking;
(g) Any representation or warranty made by Lessee in the
Settlement and Restructuring Agreement, the Stock Issuance and Subscription
Agreement, or in the certificates delivered in connection therewith proves to be
untrue when made in any material respect, Lessor is materially and adversely
affected thereby, and Lessee fails within thirty (30) days after Notice from
Lessor thereof to cure such condition by terminating such adverse effect and
making Lessor whole for any damage suffered therefrom, or, if with due diligence
such cure cannot be effected within thirty (30) days, if Lessee has failed to
commence to cure the same within the thirty (30) days or failed thereafter to
proceed promptly and with due diligence to cure such condition and complete such
cure prior to the time that such condition causes a default in any Facility
Mortgage or any other lease to which Lessee is subject and prior to the time
that the same results in civil or criminal penalties to Lessor, Lessee, any
Affiliates of either or the Leased Properties;
(h) Lessee (or, if applicable, any Sublessee or Manager):
(i) has its license to operate any Facility as a
provider of health care services in
accordance with its Primary Intended Use
suspended or revoked, or its right to so
operate a Facility suspended, and the effect
of such suspension or revocation is not
stayed or cured within three (3) Business
Days of Xxxxxx's first knowledge thereof;
(ii) has its right to accept patients suspended,
and the effect is not stayed or cured within
thirty (30) days of Xxxxxx's first knowledge
thereof;
(iii) receives a Citation with respect to a
Facility and fails to cure the condition
that is the subject of the Citation within
the period of time required for such cure by
the issuer of the Citation or, if longer,
the period of time set forth in a Plan of
Correction accepted by the issuer of the
Citation;
Notwithstanding the foregoing, the conditions described in the Subsection (h)
shall not be an Event of Default if such conditions at any time are applicable
to two (2) or fewer Facilities, and if Lessee complies with the provisions of
Section 39.2 relating to increasing the Security Deposit.
(i) Lessee defaults, or permits a default (which default was
not exclusively in Lessor's control) under any Facility Mortgage, related
documents or obligations thereunder which default is not cured within any
applicable cure period provided for therein;
(j) A default occurs under any Guaranty, which default is not
cured within the applicable cure period, if any;
(k) A Transfer occurs without the prior written consent
of Xxxxxx;
(l) A default occurs under the Security Agreement, which
default is not cured within the applicable cure period, if any;
(m) A default occurs under the Settlement and Restructuring
Agreement, which default is not cured within the applicable cure period, if any;
(n) Advocat fails to begin paying interest on the Subordinated
Note, fails to begin paying cash dividends on the Preferred Stock (as defined in
the Settlement and Restructuring Agreement) or defaults beyond any applicable
notice and cure period in its obligations under the Subordinated Note or the
instruments governing the Preferred Stock.
(o) A default occurs under the Subordinated Note, which
default is not cured within the applicable cure period, if any;
(p) A default occurs under the Stock Issuance and Subscription
Agreement, which default is not cured within the applicable cure period, if any;
(q) A default by Lessee occurs under any other contract
affecting any Facility or Lessee, which default results in a material adverse
affect on any Facility or Lessee, and which default is not cured within the
applicable time period, if any;
(r) Any "Triggering Event" occurs under the terms of the
Settlement and Restructuring Agreement;
(s) Lessee or an Affiliate of Lessee defaults beyond any
applicable grace period in the payment of any material amount or the performance
of any material act required of Lessee or such Affiliate by the terms of any
other lease or other agreement between Lessee or such Affiliate and Lessor or
any Affiliate of Lessor;
(t) Lessee fails to observe or perform any other term,
covenant or condition of this Lease and the failure is not cured by Lessee
within a period of thirty (30) days after Notice thereof from Lessor, unless the
failure cannot with due diligence be cured within a period of thirty (30) days,
in which case such failure shall not be deemed an Event of Default if and for so
long as Lessee proceeds promptly and with due diligence to cure the failure and
completes the cure prior to the time that the same causes a default in any
Facility Mortgage and prior to the time that the same results in civil or
criminal penalties to Lessor, Lessee, any Affiliates of either or to the Leased
Properties; or
(u) Lessee breaches any of the covenants set forth in Article
VIII hereof and the breach is not cured within a period of the shorter of (i)
thirty (30) days after the Notice thereof from Lessor, and (ii) fifteen (15)
days following the date of delivery of a certificate pursuant to Section 23.1
(i) or 23.1 (ii).
Xxxxxx, at Xxxxxx's sole discretion, may deliver Notice to Lessee electing to
not treat a default as an Event of Default hereunder.
Executive Officer: The Chairman of the Board of Directors, the
Chief Executive Officer, the Chief Operating Officer, the President, any Vice
President and the Secretary of any corporation, a general partner of any
partnership and a managing member of any limited liability company upon which
service of a Notice is to be made.
Existing Leases: (i) That certain Master Lease dated August
14, 1992 by and between Diversicare Corporation of America, Inc., as lessee, and
Omega Healthcare Investors, Inc., as lessor covering nineteen (19) of the
Facilities located in Tennessee, Arkansas and Alabama, as amended by Consent,
Assignment and Amendment Agreement dated May 10, 1994 and First Amendment to
Master Lease dated as of March 3,1999, the lessee's interest in which has been
assigned to and assumed by Xxxxxx and the lessor's interest in which has been
acquired by the lessor herein; and
(ii) That certain Master Lease dated December 1, 1994 by and
between Sterling Health Care Management, Inc., a Kentucky corporation, as
lessee, and the Lessor herein, as lessor, covering six (6) of the Facilities
located in Kentucky and Ohio, as amended by First Amendment to Master Lease
dated as of March 3, 1999, the lessee's interest in which has been assigned to
and assumed by Xxxxxx; and
(iii) That certain Master Sublease dated December 1, 1994 by
and between Sterling Health Care Management, Inc., a Kentucky corporation, as
sublessee, and OS Leasing Company, as sublessor and as lessee under an Xxxxxxxxx
with Sterling Acquisition Corp. II, as lessor, covering one (1) of the
Facilities located in Ohio, as amended by First Amendment to Master Sublease
dated as of March 3, 1999, the Xxxxxx's interest in which has been assigned to
and assumed by Xxxxxx and the sublessor's interest in which, as well as the
lessor's interest under the Xxxxxxxxx, has been acquired by the Lessor herein;
and
(iv) That certain Master Lease dated February 1, 1997 by and
between Sterling Health Care Management, Inc., as lessee, and Lessor here, as
lessor, covering the two (2) Facilities located in West Virginia, as amended by
First Amendment to Master Lease dated as of August 10, 2000.
Expiration Date: The Initial Term Expiration Date or the
Renewal Term Expiration Date, as applicable.
Facility(ies): Each health care facility on the Land,
including the Leased Property associated with such Facility, and together, all
such facilities on the Leased Properties.
Facility Mortgage: Any mortgage, deed of trust or other
security agreement placed upon any or all of the Leased Properties and of which
Notice together with a copy of such mortgage, deed of trust or other security
agreement has been provided to Lessee, which with the express, prior, written
consent of Lessor is a lien upon any or all of the Leased Properties, whether
such lien secures an Assumed Indebtedness or another obligation or obligations.
Facility Mortgagee: The secured party to a Facility Mortgage.
Facility Trade Names: The name(s) under which the Facilities
have done business during the Term. The Facility Trade Names in use by the
Facilities on the Commencement Date are set forth on attached Exhibit A.
Fair Market Rent: The rent that, at the relevant time, a
Facility would most probably command in the open market, under a lease on
substantially the same terms and conditions as are set forth in this Lease with
a lessee unrelated to Lessor having experience and a reputation in the health
care industry and a credit standing reasonably equivalent to that of Lessee,
and, if this Lease is guaranteed, with such lease being guaranteed by guarantors
having a net worth at least equal to that of Guarantors, with evidence of such
rent being the rent that is being asked and agreed to at such time under any
leases of facilities comparable to such Facility being entered into at such time
in which the lessees and lease guarantors meet the qualifications set forth in
this sentence. Fair Market Rent shall be determined in accordance with the
appraisal procedure set forth in Article XXXII or in such other manner as may be
mutually acceptable to Lessor and Lessee.
Fair Market Value: The fair market value of a Facility at the
relevant time (i) assuming the same is unencumbered by this Lease, and (ii)
determined in accordance with the appraisal procedure set forth in Article XXXII
or in such other manner as may be mutually acceptable to Lessor and Lessee.
Fixtures: Collectively, all permanently affixed equipment,
machinery, fixtures, and other items of real and/or personal property (excluding
Lessor's 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 (other than
individual units), sprinkler systems and fire and theft protection equipment,
built-in oxygen and vacuum systems, towers and other devices for the
transmission of radio, television and other signals, 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.
Force Majeure: An event or condition beyond the control of a
Person, including without limitation a flood, earthquake, or other Act of God; a
fire or other casualty resulting in a complete or partial destruction of the
Facility in question; a war, revolution, riot, civil insurrection or commotion,
terrorism, or vandalism; unusual governmental action, delay, restriction, or
regulation not reasonably to be expected; a contractor or supplier delay or
failure in performance (not arising from a failure to pay any undisputed amount
due), or a delay in the delivery of essential equipment or materials; bankruptcy
or other insolvency of a contractor, subcontractor, or construction manager (not
an Affiliate of the party claiming Force Majeure); a strike, slowdown, or other
similar labor action; or any other similar event or condition beyond the
reasonable control of the party claiming that Force Majeure is delaying or
preventing such party from timely and fully performing its obligations under
this Lease; provided that in any such event, the party claiming the existence of
Force Majeure shall have given the other party Notice of such claim within
fifteen (15) days after becoming aware thereof, and if the party claiming Force
Majeure shall fail to give such Notice, then the event or condition shall not be
considered Force Majeure for any period preceding the date such Notice shall be
given. No lack of funds shall be construed as Force Majeure.
GAAP: Generally accepted accounting principles in effect at
the time in question.
Gross Revenues: All revenues received or receivable from or by
reason of the operation of the Facilities, or any other use of the Leased
Properties, including without limitation all patient revenues received or
receivable for the use of or otherwise by reason of all rooms, beds, and other
facilities provided, meals served, services performed, space or facilities
subleased or goods sold on the Leased Properties and, except as provided below,
any consideration received for any sublease, license or other arrangement with
an unrelated third party in possession, or using, any portion of the Leased
Properties. Gross Revenues shall not, however, include:
(i) revenue from professional fees or charges by physicians
when and to the extent such charges are paid over to such physicians or
are accompanied by separate charges for use of a Facility or any
portion thereof,
(ii) non-operating revenues such as interest income or income
from the sale of assets not sold in the ordinary course of business,
(iii) contractual allowances and reasonable reserves (relating
to any period during the Term) for xxxxxxxx not paid by or received
from the appropriate governmental agencies, third party providers or
other payors,
(iv) all proper patient billing credits and adjustments
according to generally accepted accounting principles relating to
health care accounting, and
(v) federal, state or local sales or excise taxes and any tax
based upon or measured by said revenues which is added to or made a
part of the amount billed to the patient or other recipient of such
services or goods, whether included in the billing or stated
separately.
If any of the Leased Properties or any part thereof is subleased, or a
license permitting the use thereof is granted to an Affiliate of Lessee, Gross
Revenues shall include all revenues received or receivable by the sublessee or
licensee from its use of the Leased Properties and any rent or equivalent
payment by the sublessee or licensee received or receivable by Lessee from such
sublease or licensee shall be excluded from Gross Revenues (provided, however,
that in the case of a sublease of space for the placement or erection of
antennae or similar device, the rent or equivalent payment shall be included in
Gross Revenues).
Guarantor(s): Advocat, Diversicare Management Services Co.,
a Tennessee corporation, and Advocat Finance, Inc., a Delaware corporation.
Guaranty: The Amended and Restated Guaranty of even date
herewith executed by the Guarantors.
Hazardous Substance: Any dangerous, toxic or hazardous
material, substance, pollutant, contaminant, chemical, or waste (including,
without limitation, medical waste) defined, listed or described as such under
any Environmental Law, including, without limitation, petroleum products,
asbestos and PCBs.
Impositions: Collectively, all taxes (including, without
limitation, all capital stock and franchise taxes of Lessor, and all ad valorem,
sales and use, single business, gross receipts, transaction privilege, rent or
similar taxes to the extent the same are assessed against Lessor on the basis of
its interest in the Leased Property), assessments (including Assessments),
ground rents, 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 Leased Properties or the businesses conducted
thereon by Xxxxxx and/or the Rent (including all interest and penalties
thereon), which at any time prior to, during or in respect of the Term may be
assessed or imposed on or in respect of or be a lien upon (i) Lessor or Lessor's
interest in the Leased Properties, (ii) the Leased Properties or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
(iii) any occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Leased Properties or the leasing or use
of the Leased Properties or any part thereof, or (iv) the Rent; notwithstanding
the foregoing, Impositions shall not include: (i) except as provided above, any
tax imposed on Xxxxxx's gross and/or net income whether generally or
specifically arising in connection with the Leased Properties, or (ii) any
transfer or other tax imposed with respect to the sale, exchange or other
disposition by Lessor of the Leased Properties or any part thereof or the
proceeds thereof. If a tax is assessed against Lessor in part based on Xxxxxx's
interest in the Leased Property and in part based on Xxxxxx's gross and/or net
income, the portion of the tax which is based on Xxxxxx's interest in the Leased
Property shall be treated as an Imposition.
Initial Term: As defined in Section 1.2 hereof.
Initial Term Expiration Date: September 30, 2010
Insurance Requirements: All terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
Intercreditor Agreement: Intercreditor Agreement of even
date herewith by and between Lessor and AmSouth.
Investigation: Any soil and chemical test or any other
environmental investigation, examination or analysis.
Investment Amount: $96,635,048.00, increased by a
percentage equal to the percentage increase in the CPI from the Commencement
Date through the applicable Proceeds Date.
Judgment Date: The date on which a judgment is entered against
Lessee which establishes, without the possibility of appeal, the amount of
liquidated damages to which Xxxxxx is entitled hereunder.
Land: The real property described in Exhibits A-1 through
A-28 attached hereto.
Lease: As defined in the Preamble.
Lease Year: October 1, 2000 through September 30, 2001, and
each twelve month period thereafter.
Leased Improvements: Collectively, all buildings, structures,
Fixtures and other improvements of every kind on the Land 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.
Leased Property: The portion of the Land on which a Facility
is located, the legal description of which is set forth beneath the Facility's
name on Exhibits A-1 through A-28, the Leased Improvements on such portion of
the Land, the Related Rights with respect to such portion of the Land, and
Lessor's Personal Property with respect to such Facility.
Leased Properties: All of the Land, Leased Improvements,
Related Rights and Xxxxxx's Personal Property.
Legal Requirements: All federal, state, county, municipal and
other governmental statutes, laws, rules, orders, waivers, regulations,
ordinances, judgments, decrees and injunctions affecting the Leased Properties
or any portion thereof, Lessee's Personal Property or the construction, use or
alteration thereof, including but not limited to the Americans with Disabilities
Act, whether enacted and in force before, after or on the Commencement Date, and
including any which may (i) require repairs, modifications, alterations or
additions in or to any portion or all of the Facilities, or (ii) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses and
authorizations and regulations relating thereto including, but not limited to,
those relating to existing health care licenses, those authorizing the current
number of licensed beds and the level of services delivered from the Leased
Properties, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), in force at any
time during the Term.
Lessee: The Lessee under this Lease from time to time, subject
to Section 22.1.
Xxxxxx's Certificate: A statement in writing in substantially
the form of Exhibit C attached hereto (with such changes thereto as may
reasonably be requested by the person relying on such certificate).
Lessee's Current Assets: At any date, all assets of Lessee and
Sublessees that, on a consolidated basis in conformity with GAAP, should be
carried as current assets on the balance sheet of Lessee at such date.
Lessee's Current Liabilities: At any date, all liabilities of
Lessee and Sublessees that, on a consolidated basis in conformity with GAAP,
should be carried as current liabilities on the balance sheet of Lessee at such
date.
Lessee's Personal Property: Personal Property owned or leased
by Xxxxxx that is not included within the definition of Lessor's Personal
Property but is used by Lessee in the operation of the Facilities, including
Personal Property provided by Lessee in compliance with Section 6.3 hereof.
Lessor's Future Rent Loss: An amount equal to the Rent which
would have been payable by Xxxxxx from and after the Liquidated Damages Payment
Date through the Expiration Date had the Lease not been terminated.
Lessor's Interim Rent Loss: An amount equal to the Rent which
would have been payable by Lessee from the Termination Date through the Judgment
Date had the Lease not been terminated (including interest and late charges
determined on the basis of the date or dates on which Lessor's Interim Rent Loss
is actually paid by Xxxxxx).
Lessor's Monthly Rent Loss: For any month, an amount equal to
the installment of Rent which would have been due in such month under the Lease
if it had not been terminated, plus, if such amount is not paid on or before the
day of the month on which such installment of Rent would have been due, the
amount of interest and late charges thereon which would also have been due under
the Lease.
Lessor's Personal Property: All Personal Property and
intangibles, if any, now or hereafter owned by Lessor, together with any and all
replacements thereof, and all Personal Property that pursuant to the terms of
the Lease becomes the property of Lessor during the Term.
Liquidated Damages Payment Date: The date on which Lessee
pays Lessor all of the liquidated damages for which it is liable under Article
XVI.
Management Agreement: Any agreement pursuant to which
management of a Facility is delegated by Xxxxxx to any person not an employee of
Lessee or to any other related or unrelated party.
Manager: The Person to which management of the operation of a
Facility is delegated pursuant to a Management Agreement, which at the
Commencement Date is Diversicare Management Services Co., a Tennessee
corporation.
Minimum Qualified Capital Expenditures: As defined in Section
8.3.2.
Net Income: For any period, the net income (or loss) of Lessee
and its subsidiaries for such period, determined on a consolidated basis and in
accordance with GAAP, provided, however, that Lessee's Net Income shall not
include:
(a) any after-tax gains or losses attributable to
returned surplus assets of any pension-benefit
plan;
(b) any extraordinary gains or nonrecurring gains;
(c) any gains or losses realized upon the sale or other
disposition of property which is not sold or
otherwise disposed of in the ordinary course of
business;
(d) any gains or losses realized upon the sale or other
disposition of any capital stock of any Person;
(e) any gains from the disposal of a discontinued
business;
(f) the cumulative effect on prior years of any change in
an accounting principle;
(g) the income or loss of any Person acquired by Lessee
or an Affiliate in a pooling of interests transaction
for any period prior to the date of such acquisition;
(h) the income from any sale of assets in which the book
value of such assets had been the book value of any
Person acquired in a pooling-of-interests transaction
prior to the date such Person became an Affiliate of
Lessee;
(i) the income (or loss) of any Person (other than a
subsidiary) in which Lessee has an ownership
interest; provided, however, that (i) Lessee's Net
Income shall include amounts in respect of the income
of such Person when actually received in cash by
Lessee in the form of dividends or similar
distributions and (ii) Lessee's Net Income shall be
reduced by the aggregate amount of all investments,
regardless of the form thereof, made by Lessee in
such Person for the purpose of funding any deficit or
loss of such Person;
(j) the income of Lessee to the extent the payment of
such income is not permitted, whether on account of
any law, statute, judgment, decree or governmental
order, rule or regulation applicable to such Lessee;
(k) all amounts included in computing such net income (or
loss) in respect of the write-up of any asset or the
write-down of any Debt at less than face value after
the later of the Commencement Date or the date on
which such asset or Debt was first properly included
on Xxxxxx's balance sheet.
(l) the reduction in income tax expense resulting from an
increase in a deferred income tax asset due to the
anticipation of future income tax benefits; or
(m) the reduction in income tax expense resulting from an
increase in a deferred income tax asset or from a
decrease in a deferred income tax liability due to a
change in a statutory tax rate.
Net Proceeds: All proceeds, net of any costs incurred by
Lessor in obtaining such proceeds, payable by reason of any loss or damage to
any Leased Property under any policy of insurance required by Article XIII of
this Lease (including any proceeds with respect to Xxxxxx's Personal Property
that Lessee is required or elects to restore or replace pursuant to Section
14.3) or paid by a Condemnor for the Taking of any of all or any portion of a
Leased Property.
Net Reletting Proceeds: Proceeds of the reletting of any
portion of the Leased Property received by Lessor, net of Reletting Costs.
New Sub: As defined in the Settlement and Restructuring
Agreement.
Notice: A notice given in accordance with Article XXXI hereof.
Notice of Termination: A Notice from Lessor that it is
terminating this Lease by reason of an Event of Default.
Officer's Certificate: If for a corporation, a certificate
signed by one or more officers of the corporation authorized to do so by the
bylaws of such corporation or a resolution of the Board of Directors thereof; if
for a partnership, limited liability company or any other kind of entity, a
certificate signed by a Person having the authority to so act on behalf of such
entity.
Omega: Omega Healthcare Investors, Inc., a Maryland
corporation.
Overdue Rate: On any date, the interest rate that is equal to
three and one-half percent (3 1/2%) (three hundred fifty (350) basis points)
above the Prime Rate, but in no event greater than the maximum rate then
permitted under applicable law.
Partial Taking: A taking of less than the entire fee of a
Leased Property that either (i) does not render the Leased Property Unsuitable
for its Primary Use, or (ii) renders a Leased Property Unsuitable for its
Primary Intended Use, but neither Lessor nor Lessee elects pursuant to Section
15.1 hereof to terminate this Lease.
Payment Date: Any due date for the payment of the
installments of Base Rent or for the payment of Additional Charges or any other
amount required to be paid by Lessee hereunder.
Permitted Encumbrances: Encumbrances listed on attached
Exhibit B.
Person: Any natural person, trust, partnership, corporation,
joint venture, limited liability company or other legal entity.
Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers (and all associated
software), trade fixtures and other personal property (but excluding consumable
inventory and supplies owned by Lessee) used in connection with the Leased
Properties, together with all replacements and alterations thereof and additions
thereto, except items, if any, included within the definition of Fixtures or
Leased Improvements.
Present Value: The value of future payments, determined by
discounting each such payment at a rate equal to the yield on the specified date
on securities issued by the United States Treasury (bills, notes and bonds)
maturing on the date closest to the date such future payment would have been
due.
Primary Intended Use: Skilled nursing facilities, except as
specifically set forth on Schedule B attached hereto.
Prime Rate: On any date, an interest rate equal to the prime
rate published by the Wall Street Journal, but in no event greater than the
maximum rate then permitted under applicable law. If the Wall Street Journal
ceases to be in existence, or for any reason no longer publishes such prime
rate, the Prime Rate shall be the rate announced as its prime rate by Fleet
Bank, and if such bank no longer exists or does not announce a prime rate at
such time, the Prime Rate shall be the rate of interest announced as its prime
rate by a national bank selected by Lessor.
Proceeding: Any action, proposal or investigation by any
agency or entity, or any complaint to such agency or entity.
Proceeds Date: Any date upon which Lessor or a Facility
Mortgagee receives a Retained Amount.
Purchase Money Financing: Any financing provided by a Person
to Lessee in connection with the acquisition of Personal Property used in
connection with the operation of a Facility, whether by way of installment sale
or otherwise.
Qualified Capital Expenditures: Expenditures capitalized
on the books of Lessee for alterations, renovations, repairs and
replacements to the Facilities including without limitation any of the
following:
Replacement of furniture, fixtures and equipment, including
refrigerators, ranges, major appliances, bathroom fixtures,
doors (exterior and interior), central air conditioning and
heating systems (including cooling towers, water chilling
units, furnaces, boilers and fuel storage tanks) and major
replacement of siding; major roof replacements, including
major replacements of gutters, down spouts, xxxxx and soffits;
major repairs and replacements of plumbing and sanitary
systems; overhaul of elevator systems; major repaving,
resurfacing and sealcoating of sidewalks, parking lots and
driveways; repainting of entire building exterior; but
excluding additions, normal maintenance and repairs. For
purposes of this definition, "additions" shall mean any
expansion of a Facility, including the construction of a new
wing or a new story on an existing Facility.
Regulatory Actions: Any claim, demand, notice, action or
proceeding brought, threatened or initiated by any governmental authority in
connection with any Environmental Law, including, without limitation, civil,
criminal and administrative proceedings, whether or not the remedy sought is
costs, damages, equitable remedies, penalties or expenses.
Related Rights: All easements, rights and appurtenances
relating to the Land and the Leased Improvements.
Release: The intentional or unintentional spilling, leaking,
dumping, pouring, emptying, seeping, disposing, discharging, emitting,
depositing, injecting, leaching, escaping, abandoning, or any other release or
threatened release, however defined, of any Hazardous Substance.
Reletting Costs: Expenses incurred by Lessor in connection
with the reletting of the Leased Properties in whole or in part after an Event
of Default, including without limitation attorneys' fees and expenses, brokerage
fees and expenses, marketing expenses and the cost of repairs and renovations
reasonably required for such reletting.
Renewal Term: A period for which the Term is renewed in
accordance with Section 1.3.
Renewal Term Expiration Date: September 30, 2020.
Rent: Collectively, the Base Rent and Additional Charges.
Replacement Cost: As to each Leased Property, the actual
replacement cost of such Leased Improvements, Fixtures and Personal Property,
including an increased cost of construction endorsement, less exclusions
provided in the standard form of fire insurance policy. In all events
Replacement Cost shall be an amount sufficient that neither Lessor nor Xxxxxx is
deemed to be a co-insurer of the Leased Property in question. Lessor shall have
the right from time to time, but no more frequently than once in any period of
three (3) consecutive Lease Years, to have Replacement Cost reasonably
redetermined by the fire insurance company which is then carrying the largest
amount of fire insurance on the Leased Properties, which determination shall be
final and binding on the parties hereto, and upon such determination Lessee
shall forthwith increase, but not decrease, the amount of the insurance carried
pursuant to Section 13.2.1 to the amount so determined, subject to the approval
of any Facility Mortgagee. Lessee shall pay the fee, if any, of the insurer
making such determination.
Retained Amount: An amount equal to either (a) Net Proceeds
received by Lessor and/or a Facility Mortgagee pursuant to the terms of Article
14 of this Lease, if such Net Proceeds are not made available for the
restoration of the Leased Property or (b) an Award received by Lessor and/or a
Facility Mortgagee pursuant to Article 15 of this Lease, if such Award is not
made available to the Lessee for the restoration of the Leased Property.
SEC: Securities and Exchange Commission.
Security Agreement: The Security Agreement dated as of
the date hereof between Lessor as secured party and Lessee as debtor.
Security Deposit: Three Hundred Forty Thousand Three Hundred
Four and 35/100 Dollars ($340,304.35), delivered and held in accordance with
Article XXXIX hereof.
Settlement and Restructuring Agreement: The Settlement and
Restructuring Agreement of even date herewith by and among Lessee, the
Guarantors, Sterling Health Care Management, Inc., Lessor, and Omega.
Special Project Capital Expenditures: As defined in Section
8.3.1.
State(s): The State or States in which the Leased Properties
are located.
Stock Issuance and Subscription Agreement: The Stock
Issuance and Subscription Agreement of even date herewith by and between
Advocat and Omega.
Stressed Coverage Ratio: For any period, a fraction, (1) the
numerator of which is EBITDARM, less the sum of (a) Minimum Qualified Capital
Expenditures and (b) management fees, and (2) the denominator of which is Debt
Service.
Subordinated Note: The Subordinated Note of even date herewith
from Advocat to Omega in the original principal amount of One Million Seven
Hundred Thousand and 00/100 Dollars ($1,700,000.00).
Sublessee: A permitted sublessee of Lessee pursuant to the
conditions of Section 22.4
Taken: Conveyed pursuant to a Taking.
Taking: A taking or voluntary conveyance during the Term of
all or part of a Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
Term: Collectively, the Initial Term plus the Renewal Ter1
or Renewal Terms, if any, subject to earlier termination pursuant to the
provisions hereof.
Termination Date: The date on which a Notice of Termination
is given.
Third Party Claims: Any claims, actions, demands or
proceedings (other than Regulatory Actions) howsoever based (including without
limitation those based on negligence, trespass, strict liability, nuisance,
toxic tort or detriment to health welfare or property) due to Contamination,
whether or not the remedy sought is costs, damages, penalties or expenses,
brought by any person or entity other than a governmental agency.
Transfer: The (a) assignment, mortgaging or other encumbering
of all or any part of Lessee's interest in this Lease or in the Leased
Properties, or (b) subletting of the whole or any part of any Leased Property,
or (c) entering into of any Management Agreement or other arrangement under
which any Facility is operated by or licensed to be operated by an entity other
than Lessee, or (d) merger, consolidation or reorganization of a corporate
Lessee or Manager (except, for Manager only, to an Affiliate), or the sale,
issuance, or transfer, cumulatively or in one transaction, of any voting stock
of Lessee or Manager (except, for Manager only, to an Affiliate) by Persons who
are stockholders of record of Lessee, which results in a change of Control of
Lessee or Manager (except, for Manager only, to an Affiliate), or (e) sale,
issuance or transfer, cumulatively or in one transaction, of any interest, or
the termination of any interest, in Lessee or Manager (except, for Manager only,
to an Affiliate), if Lessee or such Manager, is a joint venture, partnership,
limited liability company or other association, which results in a change of
Control of such joint venture, partnership or other association.
Transferee: An assignee, subtenant or other occupant of
a Leased Property pursuant to a Transfer.
Triggering Event: As defined in the Settlement and
Restructuring Agreement.
Unsuitable for Its Primary Intended Use: A state or condition
of a Facility such that by reason of damage or destruction, or a Partial Taking,
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 permitted by applicable law and regulation in the Facility
after the damage or destruction or Partial Taking, the square footage damaged or
Taken and the estimated revenue impact of such damage or destruction or Partial
Taking.
ARTICLE III
3.1 Base Rent; Monthly Installments. In addition to all other payments
to be made by Lessee under this Lease, Lessee shall pay Lessor the Base Rent in
lawful money of the United States of America which is legal tender for the
payment of public and private debts, in advance, in equal, consecutive monthly
installments, each of which shall be in an amount equal to one-twelfth (1/12) of
the Base Rent payable for the Lease Year in which such installment is payable.
The first installment of Base Rent shall be payable on the Commencement Date,
together with a prorated amount of Base Rent for the period from November 1,
2000 until the fifteenth (15th) day of November, 2000. Thereafter, installments
of Base Rent shall be payable on the fifteenth (15th) day of each calendar month
during the Term. Base Rent shall be paid to Lessor, or to such other Person as
Lessor from time to time may designate by Notice to Lessee, by wire transfer of
immediately available federal funds to the bank account designated in writing by
Lessor. If Lessor directs Lessee to pay any Base Rent or Additional Charges to
any Person other than Lessor, Lessee shall send to Lessor simultaneously with
such payment a copy of the transmittal letter or invoice and check whereby such
payment is made, or such other evidence of such payment as Lessor may require.
3.2 Additional Charges. In addition to the Base Rent, Lessee will also
pay as and when due (a) the Annual Site Inspection Fee and (b) all Additional
Charges.
3.3 Late Charge. If any Rent payable to Lessor is not paid when due and
such failure is not cured by Lessee within a period of five (5) days after
Notice thereof from Lessor, provided that Lessee shall be entitled to such
Notice and may avail itself of such cure period no more than two (2) times in
any calendar year, Lessee shall pay Lessor on demand, as an Additional Charge, a
late charge equal to the greater of (i) two percent (2%) of the amount not paid
when due and (ii) any and all charges, expenses, fees or penalties imposed on
Lessor by a Facility Mortgagee for late payment, and in addition, if such Rent
(including the late charge) is not paid within thirty (30) days of the date on
which such Rent was due, interest thereon at the Overdue Rate from such
thirtieth (30th) day until such Rent (including the late charge and interest) is
paid in full.
3.4 Net Lease.
3.4.1 The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the Rent payable to Lessor
hereunder throughout the Term, subject only to any provisions of the Lease which
expressly provide for adjustment or abatement of Rent or other charges.
3.4.2 If Lessor commences any proceedings for non-payment of
Rent, Lessee will not interpose any counterclaim or cross complaint or similar
pleading of any nature or description in such proceedings unless Lessee would
lose or waive such claim by the failure to assert it, but Lessee does not waive
any rights to assert such claim in a separate action brought by Xxxxxx. The
covenants to pay Rent are independent covenants, and Lessee shall have no right
to hold back, offset or fail to pay any Rent because of any alleged default by
Lessor or for any other reason whatsoever.
3.5 Payments In The Event of a Rent Adjustment. In the event this Lease
provides for adjustment of the Base Rent on any basis that requires a
determination of Base Rent which cannot be made on or before the due date of the
first installment of Base Rent following the Adjustment Date, Lessee shall
continue to pay the Base Rent at the rate previously in effect until Lessor
gives Lessee Notice of its determination of the adjusted Base Rent. Upon such
determination, the Base Rent shall be retroactively adjusted as of the
Adjustment Date. On or before the second (2nd) Payment Date for Base Rent
following receipt by Lessee of Lessor's Notice of the adjustment, Lessee shall
make an additional payment of Base Rent in such amount as will bring the Base
Rent, as adjusted, current on or before such second (2nd) Payment Date, plus
interest on the amount of such additional payment (i.e. the difference between
the monthly installment of Base Rent before and after the increase as of the
Adjustment Date, divided by thirty (30) and multiplied by the number of days
between the Adjustment Date and the date of payment by Lessee) at the Prime Rate
from the Adjustment Date through the date of such additional payment, and
thereafter Lessee shall pay the adjusted Base Rent in correspondingly adjusted
monthly installments until the Base Rent is next adjusted as required herein.
This Section 3.5 shall survive the expiration or termination of this Lease with
respect to any adjustment which is not known or fully paid as of the date of
expiration or termination.
ARTICLE IV
4.1 Payment of Impositions. Subject to Article XII relating to
permitted contests, Lessee will pay all Impositions before any fine, penalty,
interest or cost is added for non-payment, such payments to be made directly to
the taxing authorities where feasible, and will promptly, upon request, furnish
to Lessor copies of official receipts or other satisfactory proof evidencing
such payments. If at the option of the taxpayer any Imposition may lawfully be
paid in installments, Lessee may pay the same in the required installments
provided it also pays any and all interest due thereon as and when due.
Lessor shall, to the extent required or 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, sale and use,
single business, transaction privilege, rent, ad valorem, franchise taxes and
taxes on its capital stock. Lessee shall, to the extent required or permitted by
applicable law, prepare and file as and when required all other tax returns and
reports required by governmental authorities with respect to all Impositions.
Lessor and Xxxxxx shall each, upon request, provide the other with such data,
including without limitation cost and depreciation records, as is maintained by
the party to whom the request is made as is necessary to prepare any required
returns and reports. If any provision of any Facility Mortgage requires deposits
for payment of Impositions, Lessee shall either pay the required deposits to
Lessor monthly and Lessor shall make the required deposits, or, if directed in
writing to do so by Lessor, Lessee shall make such deposits directly.
Lessee shall be entitled to receive and retain any refund from a taxing
authority in respect of an Imposition paid by Xxxxxx if at the time of the
refund no Event of Default has occurred and is continuing, but if an Event of
Default has occurred and is continuing at the time of the refund, Lessee shall
not be entitled to receive or retain such refund and if and when received by
Lessor such refund shall be applied as provided in Article XVI.
In the event governmental authorities classify any property covered by
this Lease as personal property, Lessee shall file all personal property tax
returns in such jurisdictions where it may legally so file. Where Lessor is
legally required to file personal property tax returns, Lessee will be provided
with copies of assessment notices in sufficient time for Lessee to file a
protest. Billings for reimbursement by Xxxxxx to Lessor of personal property
taxes shall be accompanied by copies of a bill therefor and payments thereof
which identify the personal property with respect to which such payments are
made.
Lessee may, upon Notice to and with the prior written consent of
Lessor, which consent shall not be unreasonably withheld, at Xxxxxx's sole cost
and expense, protest, appeal, or institute such other proceedings as Lessee may
deem appropriate to effect a reduction of real estate or personal property
assessments and Lessor, at Xxxxxx's expense as aforesaid, shall cooperate with
Lessee in such protest, appeal, or other action. In any such proceeding brought
by Lessor, Lessee shall cooperate with Lessor at Xxxxxx's sole cost and expense.
Lessee shall reimburse Lessor for Xxxxxx's direct costs of cooperating with
Xxxxxx for such protest, appeal or other action.
4.2 Notice of Impositions. Lessor shall give prompt Notice to Lessee of
all Impositions payable by Lessee hereunder of which Xxxxxx at any time has
knowledge, but Xxxxxx's failure to give any such Notice shall in no way diminish
Xxxxxx's obligations hereunder to pay such Impositions, but such failure shall
obviate any default hereunder for a reasonable time after Xxxxxx receives Notice
of any Imposition which it is obligated to pay.
4.3 Adjustment of Impositions. Impositions imposed in respect of the
tax-fiscal period during which the Term ends shall be adjusted and prorated
between Lessor and Xxxxxx, whether or not imposed before or after the expiration
of the Term or the earlier termination thereof, and Xxxxxx's obligation to pay
its prorated share thereof shall survive such expiration or earlier termination.
4.4 Utility Charges. Lessee will pay or cause to be paid when due all
charges for electricity, power, gas, oil, water and other utilities used in each
Leased Property during the Term and imposed upon the Leased Properties or upon
Lessor or Lessee with respect to the Leased Properties.
4.5 Insurance Premiums. Lessee shall pay or cause to be paid when due
all premiums for the insurance coverage required to be maintained pursuant to
Article XIII during the Term.
ARTICLE V
5.1 No Termination, Abatement, etc. Except as otherwise specifically
provided in this Lease, Lessee shall not take any action without the consent of
Lessor to modify, surrender or terminate this Lease, and shall not seek or be
entitled to any abatement, deduction, deferment or reduction of Rent, or setoff
against Rent. Except as otherwise specifically provided in this Lease, the
respective obligations of Lessor and Lessee shall not be affected by reason of
(i) any damage to, or destruction of, the Leased Properties or any portion
thereof from whatever cause or any Taking of the Leased Properties or any
portion thereof, other than any damage to or destruction of a Leased Property
that Lessee conclusively establishes was caused solely by Lessor; (ii) the
lawful or unlawful prohibition of, or restriction upon, Xxxxxx's use of the
Leased Properties, or any portion thereof, or the interference with such use by
any Person or by reason of eviction by paramount title, other than any
prohibition or restriction of use of a Leased Property that Lessee conclusively
establishes was solely caused by Lessor; (iii) any claim which Lessee 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 Lessee, or
to which Lessor and Lessee are parties, except where such claims result in a
termination of this Lease, (iv) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Lessor or any assignee or transferee of Lessor, or (v) any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Lessee from any such obligations as a matter of law. For purposes
of this Section 5.1, a matter shall be deemed to be conclusively established by
Xxxxxx if (a) Lessor agrees in writing or (b) (i) Lessee shall have given Lessor
Notice thereof and a time reasonable under the circumstances to cure any claimed
default of Lessor and (ii) Lessee thereafter establishes such contention in an
arbitration proceeding as provided for in Article XXXV of this Lease. Lessee
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 Properties or any
portion thereof, or (ii) entitle Lessee to any abatement, reduction, suspension
or deferment of the Rent or other sums payable by Lessee hereunder except as
otherwise specifically provided in this Lease.
ARTICLE VI
6.1 Ownership of the Leased Properties. Xxxxxx acknowledges that the
Leased Properties are the property of Lessor and that Xxxxxx has only the right
to the possession and use of the Leased Properties upon the terms and conditions
of this Lease. Lessee will not (i) file any income tax return or other
associated documents; (ii) file any other document with or submit any document
to any governmental body or authority; (iii) enter into any written contractual
arrangement with any Person; or (iv) release any Financial Statements or other
financial statements of Lessee, in any case that take any position other than
that throughout the Term Lessor is the owner of the Leased Properties for
federal, state and local income tax purposes and this Lease is a "true lease,"
and an "operating lease" and not a "capital lease".
6.2 Lessor's Personal Property. Lessee shall, during the entire Term,
maintain all of Lessor's Personal Property in good order, condition and repair
as shall be necessary in order to operate the Facilities for the Primary
Intended Use in compliance with all applicable licensure and certification
requirements, all applicable Legal Requirements and Insurance Requirements, and
customary industry practice for the Primary Intended Use. Lessee shall not
permit or suffer Lessor's Personal Property to be subject to any lien, charge,
encumbrance, financing statement, contract of sale, equipment lessor's interest
or the like, except for any purchase money security interest or equipment
lessor's interest expressly approved in advance, in writing, by Lessor. At the
expiration or earlier termination of this Lease, all of Xxxxxx's Personal
Property shall be surrendered to Lessor with the Leased Properties at or before
the time of the surrender of the Leased Property in at least as good a condition
as at the Commencement Date (or, as to replacements, in at least as good a
condition as when placed in service at the Facilities) except for ordinary wear
and tear.
6.3 Lessee's Personal Property. Lessee shall provide and maintain
during the Term such Personal Property, in addition to Lessor's Personal
Property, as shall be necessary and appropriate in order to operate the
Facilities for the Primary Intended Use 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 ("Lessee's Personal Property").
Except to the extent specifically allowed under Section 8.2.1.4, without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld, Lessee shall not permit or suffer Lessee's Personal Property to be
subject to any lien, charge, encumbrance, financing statement or contract of
sale or the like other than that provided for in Section 6.4 below. Except for
those items of Personal Property listed on Schedule A attached hereto, upon the
expiration of the Term or the earlier termination of this Lease, without the
payment of any additional consideration by Lessor, Lessee shall be deemed to
have sold, assigned, transferred and conveyed to Lessor all of Xxxxxx's right,
title and interest in and to any of Xxxxxx's Personal Property that, in Lessor's
reasonable judgment, is necessary or integral to the Primary Intended Use of the
Facilities (or if some other use thereof has been approved by Lessor as required
herein, such other use as is then being made by Lessee) and, as provided in
Section 34.1 hereof, Lessor shall have the option to purchase any of Lessee's
Personal Property that is not then necessary or integral to such use ("Lessee's
Incidental Personal Property"). In connection with any Personal Property sold,
assigned, transferred or conveyed to Lessor pursuant to the preceding sentence,
Lessor shall assume any lease or equipment financing obligations of Lessee
permitted under Section 8.2.1.4 hereof. Without Lessor's prior written consent,
Xxxxxx shall not remove Xxxxxx's Personal Property that is in use at the
expiration or earlier termination of the Term from the Leased Properties until
such option to purchase has expired or been sooner waived in writing by Xxxxxx.
Any of Lessee's Incidental Personal Property that is not purchased by Lessor
pursuant to Section 34.1, together with the Personal Property listed on Schedule
A attached hereto, may be removed by Lessee upon the expiration or earlier
termination of this Lease, and, if not removed within twenty (20) days following
the expiration or earlier termination of this Lease, shall be considered
abandoned by Lessee and may be appropriated, sold, destroyed or otherwise
disposed of by Lessor without giving notice thereof to Lessee and without any
payment to Lessee or any obligation to account therefor. Lessee shall reimburse
Lessor for any and all expense incurred by Xxxxxx in disposing of any of
Lessee's Personal Property that Lessee may remove but within such twenty (20)
day period fails to remove, and shall either at its own expense restore the
Leased Properties to the condition required by Section 9.1.5, including repair
of all damage to the Leased Properties caused by the removal of any of Lessee's
Personal Property, or reimburse Lessor for any and all expense incurred by
Lessor for such restoration and repair. Xxxxxx claims to own all of the Personal
Property (other than the items listed on Schedule A) now used in connection with
the operation of the Facilities. Xxxxxx claims to own certain of the Personal
Property which it has purchased as replacement of certain Personal Property
owned by Lessor at the commencement of the Existing Leases and certain
additional non-replacement Personal Property placed at the Facilities since the
commencement of the Existing Leases. Both parties agree that Xxxxxx owned all of
the Personal Property at the Facilities at the time of commencement of the
Existing Leases, and that Lessee may use all of the Personal Property during the
Term. Both parties acknowledge and agree that neither (i) the entry into this
Lease and related documents, nor (ii) their failure during the Term to insist on
resolution of their disagreement as to whether Lessee now owns certain of the
Personal Property shall prejudice their respective claims to ownership of the
Personal Property at the end of the Term and that the continuance of this
disagreement shall not be an Event of Default under this Lease.
6.4 Grant of Security Interest in Lessee's Personal Property and
Accounts. Lessee has concurrently granted to Lessor a security interest in the
Collateral as defined in the Security Agreement, which includes, without
limitation, Lessee's Personal Property as defined herein and Lessee's Accounts
as defined in the Security Agreement.
ARTICLE VII
7.1 Condition of the Leased Properties. Xxxxxx acknowledges that prior
to the execution of this Lease, Xxxxxx has been operating the Leased Properties
pursuant to the Existing Leases, and that as a consequence, Lessee has knowledge
of the condition of the Leased Properties and has found the same to be in good
order and repair and satisfactory for its purposes hereunder. Lessee is leasing
the Leased Properties "as is" in their condition on the Commencement Date.
Lessee waives any claim or action against Lessor in respect of the condition of
the Leased Properties. LESSOR MAKES NO WARRANTY OR REPRESENTATION EXPRESS OR
IMPLIED, IN RESPECT OF ANY 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 XXXXXX. Xxxxxx
further acknowledges that throughout the Term Lessee is solely responsible for
the condition of the Leased Properties.
7.2 Use of the Leased Properties. Throughout the Term Lessee shall,
except if otherwise agreed to in writing by Xxxxxx, continuously use the Leased
Properties for the Primary Intended Use and such other uses as may be necessary
or incidental thereto. Lessee shall not use the Leased Properties or any portion
thereof for any other use without the prior written consent of Lessor. No use
shall be made or permitted to be made of, or allowed in, the Leased Properties,
and no acts shall be done, which will cause the cancellation of, or be
prohibited by, any insurance policy covering the Leased Properties or any part
thereof, nor shall the Leased Properties or Lessee's Personal Property be used
for any unlawful purpose. Lessee shall not commit or suffer to be committed any
waste on the Leased Properties, or cause or permit any nuisance thereon, or
suffer or permit the Leased Properties or any portion thereof, or Lessee's
Personal Property, to be used in such a manner as (i) might reasonably tend to
impair Lessor's (or Lessee'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 Leased Properties or any portion thereof. Lessor covenants
that during the Term of this Lease it will cooperate with Lessee and use
commercially reasonable efforts, where necessary or required from Lessor as the
owner of the Leased Properties, to enable Lessee to obtain and maintain in force
and effect and good standing any licenses, permits, certifications, or approvals
needed by Lessee to use and operate each Leased Property for its Primary
Intended Use and will obtain and maintain in force and effect and good standing
any licenses, permits, certificates, or approvals, including certificates of
need, necessary or required to be owned and maintained by the owner of each
Leased Property in order to use and operate the Leased Property for its Primary
Intended Use.
7.3 Certain Environmental Matters.
(a) Prohibition Against Use of Hazardous Substances. Lessee
shall not permit, conduct or allow on the Leased Properties, the
generation, introduction, presence, maintenance, use, receipt,
acceptance, treatment, manufacture, production, installation,
management, storage, disposal or release of any Hazardous Substance
except for those types and quantities of Hazardous Substances necessary
for and ordinarily associated with the conduct of Lessee's business
which are used in full compliance with all Environmental Laws.
(b) Notice of Environmental Claims, Actions or Contaminations.
Lessee shall notify Lessor, in writing, immediately upon learning of
any existing, pending or threatened: (a) investigation, inquiry, claim
or action by any governmental authority in connection with any
Environmental Laws, (b) Third Party Claims, (c) Regulatory Actions,
and/or (id) Contamination of any portion of the Leased Properties
(c) Costs of Remedial Actions with Respect to Environmental
Matters. If any investigation and/or Clean-Up of Contamination or any
other violation of Environmental Law with respect to a Leased Property
is required by any Environmental Law, Lessee shall complete, at its own
expense, such investigation and/or Clean-Up or cause any other Person
that may be legally responsible therefore to complete such
investigation and/or Clean-Up.
(d) Delivery of Environmental Documents. Lessee shall deliver
to Lessor complete copies of any and all Environmental Documents that
may now be in or at any time hereafter come into the possession of
Lessee.
(e) Environmental Audit. At Lessee's expense, Lessee shall
from time to time, upon and within thirty (30) days of Xxxxxx's request
therefor, deliver an Environmental Audit to Lessor. All tests and
samplings shall be conducted using generally accepted and
scientifically valid technology and methodologies. Lessee shall give
the engineer or environmental consultant conducting the Environmental
Audit reasonable and complete access to the Leased Properties and to
all records in the possession of Lessee that may indicate the presence
(whether current or past) of a Release or threatened Release of any
Hazardous Substances on, in, under, about and adjacent to any Leased
Property. Lessee shall also provide the engineer or environmental
consultant full access to and the opportunity to interview such persons
as may be employed in connection with the Leased Properties as the
engineer or consultant deems appropriate. However, Lessor shall not be
entitled to request an Environmental Audit from Lessee unless (i) after
the Commencement Date there have been changes, modifications or
additions to Environmental Laws as applied to or affecting any of the
Leased Properties; (ii ) a significant change in the condition of any
of the Leased Properties has occurred; (iii) there are fewer than six
(6) months remaining in the Term; or (iv) Lessor has another good
reason for requesting such certificate or certificates. If the
Environmental Audit discloses the presence of Contamination or any
noncompliance with Environmental Laws, Xxxxxx shall immediately perform
all of Xxxxxx's obligations hereunder with respect to such Hazardous
Substances or noncompliance.
(f) Entry onto Leased Properties for Environmental Matters. If
Lessee fails to provide an Environmental Audit as and when required by
Subparagraph (e) hereof, in addition to Xxxxxx's other remedies Lessee
shall permit Lessor from time to time, by its employees, agents,
contractors or representatives, to enter upon the Leased Properties for
the purpose of conducting such Investigations as Lessor may desire, the
expense of which shall promptly be paid or reimbursed by Xxxxxx as an
Additional Charge. Lessor, and its employees, agents, contractors,
consultants and/or representatives, shall conduct any such
Investigation in a manner which does not unreasonably interfere with
Xxxxxx's use of and operations on the Leased Properties (however,
reasonable temporary interference with such use and operations is
permissible if the investigation cannot otherwise be reasonably and
inexpensively conducted). Other than in an emergency, Lessor shall
provide Lessee with prior notice before entering any of the Leased
Properties to conduct such Investigation, and shall provide copies of
any reports or results to Lessor, and Lessee shall cooperate fully in
such Investigation.
(g) Environmental Matters Upon Termination of the Lease or
Expiration of Term. Upon the expiration or earlier termination of the
Term of this Lease, Lessee shall cause the Leased Properties to be
delivered free of any and all Regulatory Actions and Third Party Claims
and otherwise in compliance with all Environmental Laws with respect
thereto, and in a manner and condition that is reasonably required to
ensure that the then present use, operation, leasing, development,
construction, alteration, refinancing or sale of the Leased Property
shall not be restricted by any environmental condition existing as of
the date of such expiration or earlier termination of the Term.
(h) Compliance with Environmental Laws. Lessee shall comply
with, and cause its agents, servants and employees, to comply with, and
shall use reasonable efforts to cause each occupant and user of any of
the Leased Properties, and the agents, servants and employees of such
occupants and users, to comply with each and every Environmental Law
applicable to Lessee, the Leased Properties and each such occupant or
user with respect to the Leased Properties. Specifically, but without
limitation:
(i) Maintenance of Licenses and Permits. Lessee shall
obtain and maintain (and Lessee shall use reasonable efforts
to cause each tenant, occupant and user to obtain and
maintain) all permits, certificates, licenses and other
consents and approvals required by any applicable
Environmental Law from time to time with respect to Lessee,
each and every part of the Leased Properties and/or the
conduct of any business at a Facility or related thereto;
(ii) Contamination. Lessee shall not cause,
suffer or permit any Contamination;
(iii) Clean-Up. If a Contamination occurs, the Lessee
promptly shall Clean-Up and remove any Hazardous Substance or
cause the Clean-Up and the removal of any Hazardous Substance
and in any such case such Clean-Up and removal of the
Hazardous Substance shall be effected to Lessor's reasonable
satisfaction and in any event in strict compliance with and in
accordance with the provisions of the applicable Environmental
Laws;
(iv) Discharge of Lien. Within twenty (20) days of
the date any lien is imposed against the Leased Properties or
any part thereof under any Environmental Law, Lessee shall
cause such lien to be discharged (by payment, by bond or
otherwise to Lessor's absolute satisfaction);
(v) Notification of Lessor. Within five (5) Business
Days after receipt by Xxxxxx of notice or discovery by Lessee
of any fact or circumstance which might result in a breach or
violation of any covenant or agreement, Lessee shall notify
Lessor in writing of such fact or circumstance; and
(vi) Requests, Orders and Notices. Within five (5)
Business Days after receipt of any request, order or other
notice relating to the Leased Properties under any
Environmental Law, Lessee shall forward a copy thereof to
Lessor.
(i) Environmental Related Remedies. In the event of a breach
by Lessee beyond any applicable notice and/or grace period of its
covenants with respect to environmental matters, Lessor may, in its
sole discretion, do any one or more of the following (the exercise of
one right or remedy hereunder not precluding the simultaneous or
subsequent exercise of any other right or remedy hereunder):
(i) Cause a Clean-Up. Cause the Clean-Up of
any Hazardous Substance or other environmental condition
on or under the Leased Properties, or both, at Lessee's
cost and expense; or
(ii) Payment of Regulatory Damages. Pay on behalf of
Lessee any damages, costs, fines or penalties imposed on
Lessee or Lessor as a result of any Regulatory Actions; or
(iii) Payments to Discharge Liens. On behalf of
Xxxxxx, make any payment or perform any other act or cause any
act to be performed which will prevent a lien in favor of any
federal, state or local governmental authority from attaching
to the Leased Properties or which will cause the discharge of
any lien then attached to the Leased Properties; or
(iv) Payment of Third Party Damages. Pay, on behalf
of Xxxxxx, any damages, cost, fines or penalties imposed on
Lessee as a result of any Third Party Claims; or
(v) Demand of Payment. Demand that Lessee make
immediate payment of all of the costs of such Clean-Up and/or
exercise of the remedies set forth in this Section 7.2
incurred by Xxxxxx and not theretofore paid by Xxxxxx as of
the date of such demand.
(j) Environmental Indemnification. Except to the extent caused
by Xxxxxx's gross negligence or wilful misconduct, Lessee shall and
does hereby indemnify, and shall defend and hold harmless Lessor, its
principals, officers, directors, agents and employees from each and
every incurred and potential claim, cause of action, damage, demand,
obligation, fine, laboratory fee, liability, loss, penalty, imposition
settlement, xxxx, xxxx removal, litigation, judgment, proceeding,
disbursement, expense and/or cost (including without limitation the
cost of each and every Clean-Up), however defined and of whatever kind
or nature, known or unknown, foreseeable or unforeseeable, contingent,
incidental, consequential or otherwise (including, but not limited to,
attorneys' fees, consultants' fees, experts' fees and related expenses,
capital, operating and maintenance costs, incurred in connection with
(i) any Investigation or monitoring of site conditions, and (ii) any
Clean-Up required or performed by any federal, state or local
governmental entity or performed by any other entity or person because
of the presence of any Hazardous Substance, Release, threatened Release
or any Contamination on, in, under or about any of the Leased
Properties) which may be asserted against, imposed on, suffered or
incurred by, each and every indemnitee arising out of or in any way
related to, or allegedly arising out of or due to any environmental
matter that is created or first occurs during the Term of this Lease or
which is caused by or at any time arises from Lessee's and/or Xxxxxx's
related or affiliated predecessors-in-interest use and occupancy of the
Leased Properties (whether under this Lease, the Existing Leases, or
otherwise), including, but not limited to, any one or more of the
following:
(i) Release Damage or Liability. The presence
of Contamination in, on, at, under, or near a Leased Property
or migrating to a Leased Property from another location;
(ii) Injuries. All injuries to health or safety
(including wrongful death), or to the environment, by reason
of environmental matters relating to the condition of or
activities past or present on, at, in, under a Leased
Property;
(iii) Violations of Law. All violations, and alleged
violations, of any Environmental Law relating to a Leased
Property or any activity on, in, at, under or near a Leased
Property;
(iv) Misrepresentation. All material
misrepresentations relating to environmental matters in any
documents or materials furnished by Lessee to Lessor and/or
its representatives in connection with the Lease;
(v) Event of Default. Each and every Event of Default
relating to environmental matters;
(vi) Lawsuits. Any and all lawsuits brought or
threatened, settlements reached and governmental orders
relating to any Hazardous Substances at, on, in, under or near
a Leased Property, and all demands of governmental
authorities, and all policies and requirements of Lessor's,
based upon or in any way related to any Hazardous Substances
at, on, in, under a Leased Property; and
(vii) Presence of Liens. All liens imposed upon any
of the Leased Properties in favor of any governmental entity
or any person as a result of the presence, disposal, release
or threat of release of Hazardous Substances at, on, in, from,
or under a Leased Property.
(k) Rights Cumulative and Survival. The rights granted Lessor
under this Section are in addition to and not in limitation of any
other rights or remedies available to Lessor hereunder or allowed at
law or in equity or rights of indemnification provided to Lessor in any
agreement pursuant to which Xxxxxx purchased any of the Leased
Property. The payment and indemnification obligations set forth in this
Section 7.3 shall survive the expiration or earlier termination of the
Term of this Lease.
ARTICLE VIII
8.1 Compliance with Legal and Insurance Requirements. In its use,
maintenance, operation and any alteration of the Leased Properties, Lessee, at
its expense, will, subject to the provisions of Article XII relating to
permitted contests, promptly (i) comply with all Legal Requirements and
Insurance Requirements, whether or not compliance therewith requires structural
changes in any of the Leased Improvements (which structural changes shall be
subject to Lessor's prior written approval, which approval shall not be
unreasonably withheld or delayed) or interferes with or prevents the use and
enjoyment of the Leased Properties, and (ii) procure, maintain and comply with
all licenses, certificates of need, provider agreements and other authorizations
required for the use of the Leased Properties and Lessee's Personal Property
then being made, and for the proper erection, installation, operation and
maintenance of the Leased Properties or any part thereof. The judgment of any
court of competent jurisdiction, or the admission of Lessee in any action or
proceeding against Lessee, whether or not Lessor is a party thereto, that Lessee
has violated any such Legal Requirements or Insurance Requirements shall be
conclusive of that fact as between Lessor and Lessee.
8.2 Certain Covenants.
8.2.1 Certain Financial Covenants.
8.2.1.1 Limitation of Distributions. From and after
the transfer of Xxxxxx's interest to New Sub as contemplated by the Settlement
and Restructuring Agreement, and in the absence of any Triggering Event, Event
of Default, or other event that with notice and/or the passage of time would
become an Event of Default, in or with respect to any Lease Year, Lessee shall
not make any Distributions, unless all three (3) of the following conditions
have been met for the prior four (4) calendar quarters and such conditions will
still be met following such payment or distribution: (1) Lessee's Coverage Ratio
for the preceding four (4) calendar quarters equals or exceeds 1.7; (2) Lessee's
Stressed Coverage Ratio for the preceding four (4) calendar quarters equals or
exceeds 1.25; and (3) if such Distribution had been made on the last day of the
preceding month, following such Distribution Lessee's Current Ratio would have
equaled or exceeded 1.3. From and during a Triggering Event, Event of Default,
or other event that with notice and/or the passage of time would become an Event
of Default, Lessee shall not make any Distributions. The limitations on
Distributions set forth in this Section 8.2.1.1 shall not prevent the deposit of
Lessee's funds into the Advocat Concentration Account for the purposes and to
the extent contemplated by the Settlement and Restructuring Agreement. This
Subsection is a limitation on Distributions, and Xxxxxx's failure to comply with
one or more of the three (3) conditions set forth above shall not be a default
or Event of Default hereunder, unless a Distribution is made during a period of
time when any one or more of such conditions is not satisfied.
8.2.1.2 Accounts Receivable Financing. Except as
may be expressly provided in the Settlement and Restructuring Agreement and
the Intercreditor Agreement, Lessee and/or Sublessee shall not pledge or
otherwise encumber any of the accounts receivable generated through the
operation of the Facilities to secure principal and interest on any Debt.
8.2.1.3 Guarantees Prohibited. From and after the
transfer of Xxxxxx's interest to New Sub as contemplated by the Settlement and
Restructuring Agreement, neither Lessee nor any Sublessee shall guarantee
any indebtedness of any Affiliate or other third party, except those guarantees
for the benefit of AmSouth in effect as of the date hereof or as may be required
under the AmSouth Loan Documents.
8.2.1.4 Equipment Financing. The aggregate amount
of principal, interest and lease payments due from Lessee and/or Sublessee
with respect to any equipment leases or financing secured by equipment utilized
in the operation of the Facilities shall not at any time during the Term exceed
$609,000.00 in any one Lease Year.
8.3 Required Capital Expenditures
8.3.1 Special Project Capital Expenditures. Lessee shall at
its expense before the end of the second Lease Year complete
and pay for "Special Project Capital Expenditures" (as defined
in the Settlement and Restructuring Agreement) in the
cumulative amount of not less than One Million and No/100
Dollars ($1,000,000.00). As set forth in the Settlement and
Restructuring Agreement, Lessee shall expend an amount not
less than Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) on or before June 30, 2001, and shall expend,
unless prevented from doing so by Force Majeure, not less than
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00),
on a cumulative basis, during each six-month period
thereafter, through the date Lessee satisfies the requirement
of this Section 8.3.1 to expend $1,000,000.00 for Special
Project Capital Expenditures. To the extent Lessee fails to
expend the funds within the time frames required by the
immediately preceding sentence, a reserve account ("Capital
Expenditures Reserve Account") shall be established to assure
the payment thereof, and on or before the fifteenth (15th) day
of the month following a six-month period in which the
required cumulative amount has not been expended, Lessee shall
deposit with Lessor, an amount equal to the unexpended amount,
less any funds already deposited in the Capital Expenditures
Reserve Account. Lessee hereby grants to Lessor a security
interest in such Capital Expenditure Reserve Account, as may
from time to time exist, to secure all of Lessee's obligations
under this Lease. From and after an Event of Default, Lessor
may apply the funds held in the Capital Expenditure Reserve
Account in the same manner as Lessor may apply the Security
Deposit in accordance with Section 39.2 below. To evidence its
compliance with the foregoing obligations, Lessee shall spend,
or have plans in place reasonably acceptable to Omega to
spend, for Special Project Capital Expenditures at least Five
Hundred Thousand Dollars ($500,000.00) (on a cumulative basis)
by September 30, 2001 and shall spend, or have plans in place
reasonably acceptable to Omega to spend, for Special Project
Capital Expenditures the required One Million Dollars
($1,000,000.00) (on a cumulative basis) by May 31, 2002.
8.3.2 Minimum Qualified Capital Expenditures. Each Lease Year
Lessee shall expend with respect to each Leased Facility at
least Three Hundred Twenty Five Dollars ($325.00)
per-licensed-bed for Qualified Capital Expenditures to improve
the applicable Facility, which amount shall be increased each
Lease Year, beginning with the second Lease Year, in
proportion to increases in the CPI from the Commencement Date
to the commencement of each such Lease Year ("Minimum
Qualified Capital Expenditures"). The parties acknowledge that
the amount expended by Lessee in completion of the Special
Project Capital Expenditures shall not be offset against
Lessee's obligation to fund the Minimum Qualified Capital
Expenditures set forth in this Section 8.3.2. If Lessee
expends with respect to any Facility more than the Minimum
Qualified Capital Expenditures in any Lease Year, the excess
Minimum Qualified Capital Expenditures shall be credited
against Xxxxxx's Minimum Qualified Capital Expenditures
required with respect to such Facility for the next Lease
Year, and if the amount of the credit exceeds Xxxxxx's Minimum
Qualified Capital Expenditures required with respect to such
Facility for the next Lease Year, such excess shall be
credited against Xxxxxx's Minimum Qualified Capital
Expenditures required with respect to such Facility for the
following Lease Years. At least annually, at the request of
Lessor, Lessor and Lessee shall review capital expenditures
budgets and reasonably agree on modifications, if any,
required by changed circumstances and the changed conditions
of the Leased Properties.
8.4 Management Agreements. Lessee shall not enter into, amend, modify,
renew, replace or otherwise change the terms of any Management Agreement without
the prior written consent of Lessor as to the identity of the Manager and the
terms of the agreement, which consent Lessor may withhold in its sole
discretion, and in no event without the execution by Xxxxxx, Manager and Lessor,
of an agreement, satisfactory to Lessor in form and substance, pursuant to which
Manager's right to receive its management fee is subordinated to the obligation
of Lessee to pay the Rent to Lessor. Lessor hereby consents to the continued
management of the Facilities by Diversicare Management Services Co. under its
current Management Agreement with Lessee. In addition, prior to the employment
of any Manager, such Manager must execute a Consent and Agreement of Manager in
the form attached hereto as Exhibit E. Notwithstanding any of the foregoing
terms of this Section 8.4, the annual management fee payable to any Manager
(other than an Affiliate of Lessee) during the term of this Lease shall not
exceed five percent (5%) of Gross Revenues.
8.5 Other Facilities. Neither Lessee nor any Affiliate shall own,
operate or manage any nursing home, rest home, assisted living facility,
subacute facility, retirement center or similar health care facility within a
ten (10) mile radius of any Facility, other than any Facility which is a Leased
Property under this Lease or which Lessee or any Affiliate of Lessee owns or
operates as of the Commencement Date and set forth on Schedule C attached
hereto.
8.6 Separateness. Lessee (from and after the transfer of Xxxxxx's
interest to New Sub as contemplated by the Settlement and Restructuring
Agreement) shall:
a. Maintain records and books of account separate fro
those of any Affiliate.
b. Conduct its own business in its own names and not in
the name of any Affiliate (except to the extent that
the business of the Facilities may be conducted in
the name of the Manager).
c. Maintain financial statements separate from any
Affiliate.
d. Maintain any contractual relationship with any and
all Affiliates, except upon terms and conditions that
are fair and substantially similar to those that
would be available on an arm's length basis.
e. Except for the benefit of AmSouth as set forth in the
Intercreditor Agreement or as otherwise required
under the AmSouth Loan Documents, not guarantee or
become obligated for the debts of any other entity,
including any Affiliate, or hold out its credit,
jointly or severally, as being available to satisfy
the obligations of others, except for obligations
which represent Xxxxxx's or Sublessee's trade
payables or accrued expenses incurred by Manager in
the ordinary course of owning and operating the
Facilities.
f. Except for the benefit of AmSouth as set forth in the
Intercreditor Agreement, not pledge its assets,
jointly or severally, for the benefit of any other
entity, including any Affiliate.
g. Hold itself out to the public as a legal entity
separate from any Affiliates.
h. At all times cause its Board of Directors to hold
appropriate meetings (or act by unanimous consent) to
authorize all appropriate corporate actions, and in
authorizing such actions, to observe all formalities.
ARTICLE IX
9.1 Maintenance and Repair.
9.1.1 Lessee, at its expense, will keep the Leased Properties,
and all landscaping, private roadways, sidewalks and curbs appurtenant thereto
which are under Lessee's control and Xxxxxx's Personal Property in good order
and repair, whether or not the need for such repairs arises out of Lessee's use,
any prior use, the elements or the age of the Leased Property or any portion
thereof, or any cause whatsoever except the act or negligence of Lessor, and
with reasonable promptness shall make all necessary and appropriate repairs
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 Date (concealed or
otherwise); provided, however, that Xxxxxx shall be permitted to prosecute
claims against Xxxxxx's predecessor in title for breach of any representation or
warranty made to or on behalf of Lessor, or for latent defects in any Leased
Property. Lessee shall at all times maintain, operate and otherwise manage the
Leased Properties on a quality basis and in a manner consistent with the
standards of the highest quality competing facilities in the market areas served
by the Leased Properties. All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work or, subject
to the provisions of Paragraph 9.1.4, below, the property to be repaired shall
be replaced. Lessee will not take or omit to take any action the taking or
omission of which might materially impair the value or the usefulness of the
Leased Properties or any parts thereof for the Primary Intended Use.
9.1.2 Lessor shall not under any circumstances be required to
maintain, build or rebuild any improvements on the Leased Properties (or any
private roadways, sidewalks or curbs appurtenant thereto), or to make any
repairs, replacements, alterations, restorations or renewals of any nature or
description to the Leased Properties, whether ordinary or extraordinary,
structural or non-structural, foreseen or unforeseen, or upon any adjoining
property, whether to provide lateral or other support or xxxxx a nuisance, or
otherwise, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease. Lessee 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 hereafter enacted.
9.1.3 Nothing contained in this Lease shall be construed as
(i) constituting the consent or request of Lessor, expressed or implied, to any
contractor, subcontractor, laborer, materialmen 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 Lessee any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against Lessor 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
the Leased Properties, or any portion thereof. Lessor shall have the right to
give, record and post, as appropriate, notices of non-responsibility under any
mechanics' and construction lien laws now or hereafter existing.
9.1.4 Lessee shall, from time to time, promptly replace any of
the Leased Improvements or Lessor's Personal Property which (i) become worn out,
obsolete or unusable for the purpose for which intended, (ii) have been Taken,
or (iii) have been lost, stolen, damaged or destroyed. If any of Lessor's
Personal Property requires replacement as a result of damage, theft, loss or
destruction or a Taking, then Lessee shall be entitled to that portion of any
insurance proceeds payable in respect thereof or any Award made therefore. All
replacements shall have a then value (adjusted for inflation) and utility at
least equal to the value of the items replaced as of the date hereof in the case
of clause (i) above, and immediately prior to the events specified in clauses
(ii) and (iii) above. All replacements of Lessor's Personal Property shall be
owned by Lessor and become a part of the Leased Properties immediately upon
their acquisition. Lessee shall promptly repair all damage to a Leased Property
incurred in the course of such replacement.
9.1.5 Lessee will, upon the expiration or prior termination of
the Term, vacate and surrender the Leased Properties to Lessor in the condition
in which they were originally received from Lessor, in good operating condition,
ordinary wear and tear excepted, except as repaired, rebuilt, restored, altered
or added to as permitted or required by the provisions of this Lease.
9.2 Encroachments, Restrictions, etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to the Leased Property, or shall violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Leased
Property, or any part thereof, or shall impair the rights of others under any
easement or right-of-way to which any Leased Property is subject, then promptly
upon the request of Lessor or at the behest of any person affected by any such
encroachment, violation or impairment, Lessee shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment
as provided in Article XII and in such case, in the event of an adverse final
determination, either (i) obtain valid and effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee or (ii)
make such changes in the Leased Improvements, and take such other actions, as
Lessee in the good faith exercise of its judgment deems reasonably practicable,
to remove such encroachment, and to end such violation or impairment, 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 violation, impairment or encroachment.
ARTICLE X
10.1 Construction of Alterations and Additions to the Leased
Properties. Lessee shall not (a) make or permit to be made any structural
alterations, improvements or additions of or to the Leased Properties or any
part thereof, or (b) materially alter the plumbing, HVAC or electrical systems
thereon or (c) make any other alterations, improvements or additions to any
Leased Property or any part thereof, the cost of which exceeds One Hundred
Thousand Dollars ($100,000.00), unless and until Lessee has (a) caused complete
plans and specifications therefor to have been prepared by a licensed architect
(or licensed plumbing contractor or electrical contractor in the case of
alterations to the plumbing, HVAC or electrical systems) and submitted to Lessor
at least thirty (30) Business Days before the planned start of construction
thereof, (b) obtained Lessor's written approval thereof and the approval of any
Facility Mortgagee, which approval shall not be unreasonably withheld,
conditioned or delayed, and if no response has been received by Lessee within
thirty (30) Business Days after submission of the plans and specifications for
approval then such approval shall be deemed to have been given, and (c), if
required to do so by Lessor, provide Lessor with reasonable assurance of the
payment of the cost of any such alterations, improvements or additions, in the
form of a bond, letter of credit or cash deposit. If Lessor requires a deposit,
Lessor shall retain and disburse the amount deposited in the same manner as is
provided for insurance proceeds in Section 14.6. If the deposit is reasonably
determined by Lessor at any time to be insufficient for the completion of the
alteration, improvement or addition, Lessee shall immediately increase the
deposit to the amount reasonably required by Lessor. Lessee shall be responsible
for the completion of such improvements in accordance with the plans and
specifications approved by Lessor, and shall promptly correct any failure with
respect thereto.
Alterations and improvements not falling within the categories
described in the first sentence of the preceding paragraph may be made by Lessee
without the prior approval of Lessor, but Lessee shall give Lessor at least
fifteen (15) Business Days prior written Notice of any such alterations and
improvements.
All alterations, improvements and additions shall be constructed in a
first class, workmanlike, manner, in compliance with all Insurance Requirements
and Legal Requirements, be in keeping with the character of the Leased
Properties and the area in which the Leased Property in question is located and
be designed and constructed so that the value of the Leased Properties will not
be diminished or and that the Primary Intended Use of the Leased Properties will
not be changed. All improvements, alterations and additions shall immediately
become a part of the Leased Properties.
Lessee shall have no claim against Lessor at any time in respect of the
cost or value of any such improvement, alteration or addition. There shall be no
adjustment in the Rent by reason of any such improvement, alteration or
addition. With Lessor's consent, which shall not be unreasonably withheld,
expenditures made by Lessee pursuant to this Article X, other than expenditures
for additions (as defined in the definition of Qualified Capital Expenditures),
may be included as capital expenditures for purposes of inclusion in the capital
expenditures budget for the Facilities and for measuring compliance with the
obligations of Lessee set forth in Section 8.3 of this Lease.
In connection with any alteration which involves the removal,
demolition or disturbance of any asbestos-containing material, Lessee shall
cause to be prepared at its expense a full asbestos assessment applicable to
such alteration, and shall carry out such asbestos monitoring and maintenance
program as shall reasonably be required thereafter in light of the results of
such assessment.
ARTICLE XI
11.1 Liens. Subject to the provisions of Article XII relating to
permitted contests, without the consent of Lessor or as expressly permitted
elsewhere herein, Lessee 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 the Leased Properties, and
any attachment, levy, claim or encumbrance in respect of the Rent, except for
(i) Permitted Encumbrances, (ii) restrictions, liens and other encumbrances
which are consented to in writing by Xxxxxx and any Facility Mortgagee, (iii)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(iv) any Facility Mortgage, (v) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either disputed, not yet due, or contested
pursuant to Section 12.1 below, and (vi) liens created by the wrongful acts or
negligence of Lessor.
ARTICLE XII
12.1 Permitted Contests. Lessee, on its own or on Lessor's behalf (or
in Lessor's name), but at Lessee's sole cost and expense, shall have the right
to contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount or validity of any real or personal property
assessment, Imposition, Legal Requirement or Insurance Requirement, or any lien,
attachment, levy, encumbrance, charge or claim or any encroachment or
restriction burdening the Leased Property ("Claim"), provided (a) prior Notice
of such contest is given to Lessor, (b) the Leased Properties would not be in
any danger of being sold, forfeited or attached as a result of such contest, and
there is no risk to Lessor of a loss of or interruption in the payment of, Rent,
(c) in the case of an unpaid Imposition or Claim, collection thereof is
suspended during the pendency of such contest, (d) in the case of a contest of a
Legal Requirement, compliance may legally be delayed pending such contest. Upon
request of Lessor, Lessee shall provide a bond or letter of credit, deposit
funds or assure Xxxxxx in some other manner reasonably satisfactory to Lessor
that the amount to be paid by Lessee that is the subject of a contested
Imposition, Legal Requirement, Insurance Requirement or Claim, together with
interest and penalties, if any, thereon, and any and all costs for which Xxxxxx
is responsible will be paid if and when required upon the conclusion of such
contest. Lessee shall defend, indemnify and save harmless Lessor from all costs
or expenses arising out of or in connection with any such contest, including but
not limited to attorneys' fees. If at any time Lessor reasonably determines that
payment of any Imposition or Claim, or compliance with any Legal or Insurance
Requirement being contested by Lessee is necessary in order to prevent loss of
any of the Leased Properties or Rent or civil or criminal penalties or other
damage, upon such prior Notice to Lessee as is reasonable in the circumstances
Lessor may pay such amount, require Lessee to comply with such Legal or
Insurance Requirement or take such other action as it may deem necessary to
prevent such loss or damage. If reasonably necessary or legally required, upon
Xxxxxx's written request Lessor, at Xxxxxx's expense, shall cooperate with
Xxxxxx in a permitted contest, provided Xxxxxx upon demand makes arrangements
satisfactory to Lessor to assure the reimbursement of any and all Lessor's costs
incurred in cooperating with Xxxxxx in such contest. Lessee shall be entitled to
any refunds of any claim, and such charges and penalties or interest thereon,
which have been paid by Xxxxxx or paid by Xxxxxx and for which Xxxxxx has been
fully reimbursed.
12.2 Lessor's Requirement for Deposits. Following an Event of Default,
Lessor, in its sole discretion, shall be entitled to require Lessee to deposit
with Lessor monthly, at the time of its payments of Base Rent, a pro rata
portion of the amounts required to comply with Insurance Requirements,
Impositions and Legal Requirements, and when such obligations become due, Lessor
shall pay them (to the extent of the deposit) upon Notice from Lessee requesting
such payment. In the event that sufficient funds have not been deposited to
cover the amount of the obligations due at least thirty (30) days in advance of
the due date, Lessee shall forthwith deposit the same with Lessor upon Notice
from Lessor. Lessor shall not be obligated to segregate such deposited funds
from its other funds, or to pay Lessee any interest on any deposit so held by
Lessor. Upon an Event of Default, any of the funds remaining on deposit may be
applied under this Lease in any manner and on such priority as may be determined
by Lessor.
ARTICLE XIII
13.1 General Insurance Requirements. Lessee shall keep the Leased
Properties, and all property located in or on the Leased Properties, including
Lessor's Personal Property and Xxxxxx's Personal Property, insured with
insurance meeting the following requirements: (a) all insurance shall be written
by companies authorized to do insurance business in the applicable States and
having a rating classification of not less than A- and a financial size category
of "Class VII" or larger, according to the then most recent issue of Best's Key
Rating Guide; (b) all policies must name Lessor as an additional insured, and
name as an additional insured any Facility Mortgagee by way of a standard form
of mortgagee's loss payable endorsement in use in the applicable States and in
accordance with any such other requirements as may be established by such
Facility Mortgagee; (c) casualty losses must be payable to Lessor or Lessee as
provided in Article XIV, and loss adjustments shall require the written consent
of Lessor, any Facility Mortgagee and, provided no Event of Default has occurred
and is continuing at the time, Lessee, which consent shall not be unreasonably
withheld by either Lessor or Lessee; (d) each insurer must agree that it will
give Lessor and any Facility Mortgagee at least thirty (30) days' written notice
before its policy shall be altered, allowed to expire or canceled; (e) the
amount of any deductible or retention must be approved by Lessor prior to the
issuance of any policy, which approval will not be unreasonably withheld,
conditioned or delayed; and (f) the form of all policies shall be approved by
Lessor and any Existing Facility Mortgagee, whose approval shall not
unreasonably be withheld, conditioned or delayed, provided that such policies
conform to the requirements of this article XIII. Notwithstanding the foregoing,
Lessee may obtain so-called "umbrella" policies, comprehensive liability
policies and professional liability policies of insurance from non-admitted
surplus line carriers acceptable to Lessor.
13.2 Risks to be Insured. The policies covering the Leased Properties
and Xxxxxx's Personal Property shall insure against the following risks:
13.2.1 Loss or damage by fire, vandalism and malicious
mischief, earthquake, extended coverage perils commonly known as "Special Risk,"
and all physical loss perils normally included in such Special Risk insurance,
including but not limited to sprinkler leakage, in an amount not less than one
hundred percent (100%) of Replacement Cost (provided that earthquake coverage
may have a sublimit coverage of $5,000,000.00);
13.2.2 Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus in such amounts as may be required by Lessor from
time to time;
13.2.3 Business interruption insurance or a blanket earnings
and expense coverage endorsement covering risk of loss during reconstruction
necessitated by the occurrence of any of the hazards described in Sections
13.2.1 or 13.2.2 (but in no event for a period less than twelve (12) months) in
an amount sufficient to prevent Lessor and Lessee from becoming a co-insurer;
13.2.4 Claims for personal injury or property damage under a
policy of commercial general public liability insurance with a combined single
limit per occurrence in respect of bodily injury and death and property damage
of One Million Dollars ($1,000,000.00), and an aggregate limitation of Three
Million Dollars ($3,000,000.00), with a minimum One Million Dollar
($1,000,000.00) excess policy, which insurance shall insure Lessee's contractual
liability to Lessor under the indemnity provisions of Article XXI of this Lease,
and if written on a "claims-made" basis, Lessee shall also provide continuous
liability coverage for claims arising during the Term either by obtaining an
endorsement providing for an extended reporting period reasonably acceptable to
Lessor in the event such policy is canceled or not renewed for any reason
whatsoever, or by obtaining "tail" insurance coverage providing coverage for a
period of at least three (3) years beyond the expiration of the Term;
13.2.5 Claims arising out of malpractice in an amount not less
than Two Million Dollars ($2,000,000.00) for each person and for each occurrence
and, if written on a "claims-made" basis, Lessee shall also provide continuous
liability coverage for claims arising during the Term either by obtaining an
endorsement providing for an extended reporting period reasonably acceptable to
Lessor in the event such policy is canceled or not renewed for any reason
whatsoever, or by obtaining "tail" insurance coverage providing coverage for a
period of at least three (3) years beyond the expiration of the Term;
13.2.6 Flood (with respect to any portions of the Leased
Properties located in whole or in part within a designated flood plain area) and
such other hazards and in such amounts as may be customary for comparable
properties in the area up to the maximum limit that can be obtained under the
Federal Flood Insurance Program;
13.2.7 During such time as Lessee is constructing any
improvements, (i) worker's compensation insurance and employers' liability
insurance covering all persons employed in connection with the improvements in
statutory limits, (ii) builder's risk insurance, completed value form, covering
all physical loss, in an amount satisfactory to Lessor, and (iii) such other
insurance, in such amounts, as Lessor deems necessary to protect Xxxxxx's
interest in the Leased Properties from any act or omission of Xxxxxx's
contractors or subcontractors, and certificates of insurance evidencing such
coverage, in form satisfactory to Lessor, shall be presented to Lessor prior to
the commencement of construction of such improvements;
13.2.8 Primary automobile liability insurance with limits of
One Million Dollars ($1,000,000.00) per occurrence each for owned and non-owned
and hired vehicles.
13.3 Payment of Premiums; Copies of Policies; Certificates. Lessee
shall pay when due all of the premiums for the insurance required by this Lease,
and shall deliver to Lessor and to any Facility Mortgagee requesting such
evidence, certificates of insurance in form satisfactory to Lessor and such
Facility Mortgagee. Satisfactory evidence of insurance required by this Lease or
certificates thereof shall be delivered to Lessor prior to their effective date
(and, with respect to any renewal policy, Lessee will use commercially
reasonable efforts to provide the same within twenty (20) days but in all events
not less than five (5) Business Days prior to the expiration of the existing
policy) with copies of such policies to be provided as available, and in the
event of the failure of Lessee either to carry the required insurance or pay the
premiums therefor, or to deliver copies of policies or certificates to Lessor as
required, Lessor shall be entitled, but shall have no obligation, to obtain such
insurance and pay the premiums therefor when due, which premiums shall be
repayable to Lessor upon written demand therefor as Additional Charges.
13.4 Premium Deposits. If any provision of a Facility Mortgage requires
deposits of premiums for insurance to be made with the Facility Mortgagee,
Lessee shall pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to the Facility Mortgagee, unless, pursuant to written
direction by Lessor, Lessee makes such deposits directly with the Facility
Mortgagee.
13.5 Umbrella Policies. If Lessee chooses to carry umbrella liability
coverage to obtain the limits of liability required under this Lease, the
umbrella policies must provide coverage in the same manner as the primary
commercial general liability policy and must contain no exclusions in addition
to, or limitations materially different than, those of the primary policy.
13.6 Additional Insurance. In addition to the insurance described
above, Lessee shall maintain such insurance as may be required from time to time
by any Facility Mortgagee, and shall at all times comply with all Legal
Requirements with respect to worker's compensation insurance coverage.
13.7 No Liability; Waiver of Subrogation. Lessor shall have no
liability to Lessee, and, provided Lessee provides the insurance required of it
by this Lease, Lessee shall have no liability to Lessor, regardless of the
cause, for any loss or expense resulting from or in connection with damage to or
the destruction or other loss of any Leased Property or Xxxxxx's Personal
Property, and neither party will have any right or claim against the other for
any such loss or expense by way of subrogation. Each insurance policy carried by
either party covering any of the Leased Properties and Xxxxxx's Personal
Property, including without limitation, contents, fire and casualty insurance,
shall contain an express waiver of any right of subrogation on the part of the
insurer against the other party. Lessee shall pay any additional costs or
charges for obtaining such waiver.
13.8 Increase in Limits. From time to time, but not more often than
once every two (2) years, in the event that Lessor shall reasonably determine
that the limits of the commercial general liability insurance then carried are
insufficient, Lessor shall give Lessee Notice of acceptable increased limits for
such insurance to be carried; and Lessee shall then obtain and maintain such
insurance with such increased limits unless and until further increase as
permitted under the provisions of this Section. Lessor's determination of
increased limits shall be accompanied by a description of the basis for such
determination.
13.9 Blanket Policy. Any insurance required by this Lease may be
provided by so-called blanket policies of insurance carried by Xxxxxx, provided,
however, that the coverage afforded Lessor thereby may not thereby be less than
or materially different from that which would be provided by a separate policies
meeting the requirements of this Lease, and provided further that such policies
meet the requirements of all Facility Mortgages.
13.10 No Separate Insurance.
13.10.1 Lessee shall not on its 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 by
this Lease, to be furnished by, or which may reasonably be required to be
furnished by, Lessee, or increase the amount 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 Facility Mortgagees, are named therein as additional
insureds, and losses are payable thereunder in the same manner as losses are
payable under this Lease.
13.10.2 Nothing herein shall prohibit Lessee, upon Notice to
Lessor, from (i) securing insurance required to be carried hereby with higher
limits of liability than required in this Lease, or (ii) securing insurance
against risks not required to be insured pursuant to this Lease, and as to such
insurance, Lessor and any Facility Mortgagee need not be included therein as
additional insureds, nor must losses thereunder be payable in the same manner as
losses are payable under this Lease, except to the extent required to avoid a
default under a Facility Mortgage or any other encumbrance.
ARTICLE XIV
14.1 Insurance Proceeds. Net Proceeds shall be paid to Lessor and held,
disbursed or retained by Xxxxxx as provided herein.
14.1.1 Proceeds of Special Risk Insurance. If the Net Proceeds
are less than the Approval Threshold, and no Event of Default has
occurred and is continuing, Lessor shall pay the Net Proceeds to Lessee
promptly after Lessor receives the Net Proceeds and Lessee shall apply
the Net Proceeds solely to the completion of the restoration of the
damaged or destroyed Leased Property. If the Net Proceeds equal or
exceed the Approval Threshold, and no Event of Default has occurred and
is continuing, the Net Proceeds shall be made available for restoration
or repair as provided in Section 14.6. Within fifteen (15) days of the
receipt of the Net Proceeds of Special Risk Insurance, Lessor and
Lessee shall agree as to the portion thereof, if any, attributable to
the Lessee's Personal Property that Lessee is not required and does not
elect to restore or replace, and if they cannot agree they shall submit
the matter to arbitration pursuant to Article XXXV hereof, and the
portion of the proceeds of such Special Risk Insurance agreed or
determined by arbitration to be attributable to the Lessee's Personal
Property that Lessee is not required and does not elect to restore or
replace shall be paid to Lessee.
14.2 Restoration in the Event of Damage or Destruction. If all or any
portion of a Leased Property is damaged by fire or other casualty, Lessee shall
(a) give Lessor Notice of such damage or destruction within five (5) Business
Days of the occurrence thereof, (b) within sixty (60) days of the occurrence
commence the restoration of such Leased Property and (c) thereafter diligently
proceed to complete such restoration to substantially the same (or better)
condition as such Leased Property was in immediately prior to the damage or
destruction as quickly as is reasonably possible, but subject to Force Majeure,
in any event within two hundred forty (240) days of the occurrence. Regardless
of the anticipated cost thereof, if the restoration of a Leased Property
requires any modification of structural elements, prior to commencing such
modification Lessee shall obtain Lessor's written approval of the plans and
specifications therefor. In performing such restoration or repair, and as a
condition to Xxxxxx's obligation to restore or repair the Leased Property, the
Net Proceeds payable with respect to such damage or destruction shall be paid or
disbursed to Lessee as provided in Section 14.1 or Section 14.7 hereof. If there
remains any surplus of Net Proceeds after completion of the repair or
restoration of the Leased Property, such surplus shall belong and be paid to
Lessee.
14.3 Restoration of Xxxxxx's Property. Notwithstanding the foregoing
terms of Section 14.1, all insurance proceeds payable by reason of or damage to
any of Lessee's Personal Property shall be paid to Lessee and Lessee shall hold
such insurance proceeds in trust to pay the cost of repairing or replacing
damaged Xxxxxx's Personal Property. If Lessee is required to restore a Leased
Property, Lessee shall also concurrently restore any of Lessee's Personal
Property that is integral to the Primary Intended Use of such Leased Property at
the time of the damage or destruction.
14.4 No Abatement of Rent. Absent termination of this Lease as provided
herein, there shall be no abatement of Rent by reason of any damage to or the
partial or total destruction of any Leased Property.
14.5 Waiver. Except as provided elsewhere in this Lease, Lessee hereby
waives any statutory or common law rights of termination which may arise by
reason of any damage to or destruction of a Leased Property.
14.6 Extension of Time Periods. In the event that Xxxxxx is unable to
complete any action required by this Article XIV in the time period provided,
and Xxxxxx establishes to the reasonable satisfaction of Lessor that Xxxxxx has
been acting in good faith and diligently, then Lessor shall grant to Lessee a
reasonable extension of time in which to complete the repair or reconstruction
of any damaged Facility, prior to the time that Lessee would otherwise be
required to repurchase such damaged Facility.
14.7 Disbursement of Insurance Proceeds Equal to or Greater Than The
Approval Threshold. If Lessee restores or repairs a Leased Property pursuant to
this Article XIV, and if the Net Proceeds equal or exceed the Approval
Threshold, the restoration or repair and disbursement of funds to Lessee shall
be in accordance with the following procedures:
(i) The restoration or repair work shall be done pursuant to
plans and specifications approved by Lessor and a certified
construction cost statement, to be obtained by Lessee from a contractor
reasonably acceptable to Lessor, showing the total cost of the
restoration or repair; to the extent the cost exceeds the Net Proceeds,
Lessee shall deposit with Lessor the amount of the excess cost, and
Lessor shall disburse the funds so deposited in payment of the costs of
restoration or repair before any disbursement of Net Proceeds.
(ii) Construction Funds shall be made available to Lessee upon
request, no more frequently than monthly, as the restoration and repair
work progresses, pursuant to certificates of an architect selected by
Xxxxxx that, in the judgment of Lessor, reasonably exercised, is highly
qualified in the design and construction of the type of Facility being
repaired and is otherwise reasonably acceptable to Lessor, which
certificates must be in form and substance reasonably acceptable to
Lessor. Payment of Construction Funds shall be subject to a ten percent
(10%) holdback until the architect certifies that the work is fifty
percent (50%) complete, after which, so long as there is no Event of
Default under this Lease and so long as the architect certifies that
work is proceeding in accordance with the schedule and budget, there
shall be no further retainage.
(iii) After the first disbursement to Xxxxxx, sworn statements
and lien waivers in an amount at least equal to the amount of
Construction Funds previously paid to Lessee shall be delivered to
Lessor from all contractors, subcontractors and material suppliers
covering all labor and materials furnished through the date of the
previous disbursement.
(iv) Lessee shall deliver to Lessor such other evidence as
Lessor may reasonably request from time to time during the course of
the restoration and repair, as to the progress of the work, compliance
with the approved plans and specifications, the cost of restoration and
repair and the total amount needed to complete the restoration and
repair, and showing that there are no liens against such Leased
Property arising in connection with the restoration and repair and that
the cost of the restoration and repair at least equals the total amount
of Construction Funds then disbursed to Lessee hereunder.
(v) If the Construction Funds are at any time determined by
Lessor to be inadequate for payment in full of all labor and materials
for the restoration and repair, Lessee shall immediately pay the amount
of the deficiency to Lessor to be held and disbursed as Construction
Funds prior to the disbursement of any other Construction Funds then
held by Lessor.
(vi) The Construction Funds may be disbursed by Lessor to
Lessee or to the persons entitled to receive payment thereof from
Lessee, and such disbursement in either case may be made directly or
through a third party escrow agent, such as, but not limited to, a
title insurance company, or its agent, all as Lessor may determine in
its sole discretion. Provided Lessee is not in default hereunder, any
excess Construction Funds shall be paid to Lessee upon completion of
the restoration or repair.
(vii) If Lessee at any time fails to promptly and fully
perform the conditions and covenants set out in subparagraphs (i)
through (vi) above, and the failure is not corrected within ten (10)
days of written Notice thereof, or if during the restoration or repair
an Event of Default occurs hereunder, Lessor may, at its option,
immediately cease making any further payments to Lessee for the
restoration and repair.
(viii) Lessor may reimburse itself out of the Construction
Funds for its reasonable expenses incurred in administering the
Construction Funds and inspecting the restoration and repair work,
including without limitation attorneys' and other professional fees and
escrow fees and expenses.
(ix) If damage or destruction shall occur either (a) during
the final Lease Year of the Initial Term and Lessee has not exercised
its option to extend the Term of this Lease pursuant to Section 1.3
above or (b) during the final Lease Year of the Renewal Term, then
Lessor, at Lessor's sole option, may elect to terminate the Lease as to
the affected Facility (in which case Lessee shall surrender possession
of the affected Facility and Lessee shall transfer to Lessor all of
Xxxxxx's interest in the Facility, including, without limitation,
Lessee's interest in the licenses pursuant to which the Facility is
then operated) and receive the Net Proceeds in lieu of Lessee restoring
or repairing the damage or destruction. The election to terminate the
Lease as to the affected Facility and receive the Net Proceeds pursuant
to this Section 14.7(ix) must be exercised by Lessor by Notice to
Lessee on or prior to the tenth (10th) Business Day following Lessor's
receipt of Notice of such event of damage or destruction. If Lessor
elects to terminate the Lease as to the affected Facility and receive
the Net Proceeds in lieu of Lessee restoring or repairing the damage or
destruction, then, as of the Proceeds Date, the annual Base Rent due
under this Lease during the remainder of the Term shall be reduced by
an amount equal to the product of the annual Base Rent in effect from
time to time and the Casualty/Condemnation Reduction Percentage.
14.8 Net Proceeds Paid to Facility Mortgagee. Notwithstanding anything
herein to the contrary, if any Facility Mortgagee is entitled to any Net
Proceeds, or any portion thereof, under the terms of any Facility Mortgage, the
Net Proceeds shall be applied, held and/or disbursed in accordance with the
terms of the Facility Mortgage. Lessor shall make commercially reasonable
efforts to cause the Net Proceeds to be applied to the restoration of the Leased
Property. If the Facility Mortgagee elects to apply the insurance proceeds to
the indebtedness secured by the Facility Mortgage, Lessee shall either (i)
restore the Facility to substantially the same (or better) condition as existed
immediately before the damage or destruction, or (ii) terminate this Lease as to
such Leased Property upon Notice to Lessor, such termination to be effective as
of the first day of the calendar month following the later of (a) the date
Lessee learns of the action of the Facility Mortgagee or (b) fifteen (15) days
after the date Lessor learns of the action of the Facility Mortgagee, unless
within fifteen (15) days of the notice from the Facility Mortgagee the Lessor
agrees to make available to Lessee for restoration to or repair of the Leased
Property funds equal to the amount applied by the Facility Mortgagee. Unless the
damage or destruction is such as to entitle Lessor or Lessee to otherwise
terminate this Lease as to such Facility under this Article XIV and Lessor or
Lessee, as the case may be, shall fail to elect to terminate this Lease as to
such Facility, in the time and in the manner provided, Lessor shall disburse
such funds to Lessee as provided in Section 14.7 of this Master Lease and Lessee
shall restore the Leased Property (as nearly as possible under the
circumstances) to a complete architectural unit of the same general character
and condition as the Leased Property existing immediately prior to such damage
or destruction.
In the event this Master Lease is so terminated as to such Facility (in
which case Lessee shall surrender possession of the affected Facility and Lessee
shall transfer to Lessor all of Lessee's interest in the Facility, including,
without limitation, Lessee's interest in the licenses pursuant to which the
Facility is then operated), as of the Proceeds Date, the annual Base Rent due
under this Lease during the remainder of the Term shall be reduced by an amount
equal to the product of the annual Base Rent in effect from time to time and the
Casualty/Condemnation Reduction Percentage.
ARTICLE XV
15.1 Total Taking or Other Taking with Leased Property Rendered
Unsuitable for Its Primary Intended Use. If title to the fee of the whole of a
Leased Property is Taken, this Lease shall cease and terminate as to the Leased
Property Taken as of the Date of Taking by the Condemnor and Rent shall be
apportioned as of the termination date. If title to the fee of less than the
whole of a Leased Property is Taken, but such Leased Property is thereby
rendered Unsuitable for Its Primary Intended Use, Lessee and Lessor shall each
have the option by written Notice to the other, at any time prior to the taking
of possession by, or the date of vesting of title in, the Condemnor, whichever
first occurs, to terminate this Lease with respect to such Leased Property as of
the date so determined, in which event this Lease shall thereupon so cease and
terminate as of the earlier of the date specified in such Notice or the date on
which possession is taken by the Condemnor. If this Lease is so terminated as to
a Leased Property (in which case Lessee shall surrender possession of the
affected Facility and Lessee shall transfer to Lessor all of Lessee's interest
in the Facility, including, without limitation, Xxxxxx's interest in the
licenses pursuant to which the Facility is then operated), as of the Proceeds
Date, the annual Base Rent due under this Lease during the remainder of the Term
shall be reduced by an amount equal to the product of the annual Base Rent in
effect from time to time and the Casualty/Condemnation Reduction Percentage.
15.2 Allocation of Award. The total Award made with respect to all or
any portion of a Leased Property or for loss of Rent, or for loss of business,
shall be solely the property of and payable to Lessor. Nothing contained in this
lease will be deemed to create any additional interest in Lessee, or entitle
Lessee to any payment based on the value of the unexpired term or so-called
"bonus value" to Lessee of this Lease. Any Award made for the taking of Xxxxxx's
Personal Property, or for removal and relocation expenses of Lessee in any such
proceedings shall be payable to Lessee. In any proceedings with respect to an
Award, Lessor and Lessee shall each seek its own Award in conformity herewith,
at its own expense. Notwithstanding the foregoing, Xxxxxx may pursue a claim for
loss of its business, provided that under the laws of the State, such claim will
not diminish the Award to Lessor.
15.3 Partial Taking. In the event of a Partial Taking, Lessee, at its
own cost and expense, shall within sixty (60) days of the taking of possession
by, or the date of vesting of title in, the Condemnor, whichever first occurs,
commence the restoration of the affected Leased Property to a complete
architectural unit of the same general character and condition (as nearly as may
be possible under the circumstances) as existed immediately prior to the Partial
Taking, and complete such restoration with all reasonable dispatch, but in any
event, subject to Force Majeure, within two hundred forty (240) days of the date
on which such Notice is given. Lessor shall contribute to the cost of
restoration such portion of the Award as is made therefor, together with
severance and other damages awarded for Leased Improvements Taken; provided,
however, that the amount of such contribution shall not exceed such cost. As
long as no Event of Default has occurred and is continuing, if such portion of
the Award is in an amount less than the Approval Threshold, Lessor shall pay the
same to Lessee upon commencement of such restoration. As long as no Event of
Default has occurred and is continuing, if such portion of the Award is in an
amount equal to or greater than the Approval Threshold, Lessor shall make such
portion of the Award available to Lessee in the manner provided in Section 14.6
with respect to Net Proceeds in excess of the Approval Threshold.
Notwithstanding anything to the contrary elsewhere herein, if the Fair Market
Rent of the affected Leased Property is reduced by reason of the Partial Taking,
from and after the date on which possession is taken by the Condemnor the
annualized Base Rent shall be reduced by an amount determined by dividing the
portion of the Award made to Lessor expressly for such reduction in Fair Market
Rent by the Capitalization Rate.
15.4 Temporary Taking. If there is a Taking of possession or the use of
all or part of a Leased Property, but the fee of such Leased Property is not
Taken in whole or in part, until such Taking of possession or use continues for
more than six (6) months, all the provisions of this Lease shall remain in full
force and effect and the entire amount of any Award made for such Taking shall
be paid to Lessee provided there is then no Event of Default. Upon the
termination of any such period of temporary use or occupancy, Lessee at its sole
cost and expense shall restore the affected Leased Property, as nearly as may be
reasonably possible, to the condition existing immediately prior to such Taking.
If any temporary Taking continues for longer than six (6) months, and fifty
percent (50%) or more of the patient capacity of the affected Facility is
thereby rendered Unsuitable for Its Primary Use, such Taking shall be considered
a Total Taking governed by Section 15.1 and this Lease shall cease and terminate
as to the affected Leased Property only as of the last day of the sixth (6th)
month, but if less than fifty percent (50%) of the patient capacity of such
Facility is thereby rendered Unsuitable for Its Primary Use, Lessee and Lessor
shall each have the option by at least sixty (60) day's prior written Notice to
the other, at any time prior to the end of the temporary taking, to terminate
this Lease as to the affected Leased Property of the date set forth in such
Notice, and Lessee shall be entitled to any Award made for the period of such
temporary Taking prior to the date of termination of the Lease. Rent shall not
xxxxx during the period of any temporary Taking.
15.5 Awards Paid to Facility Mortgagee. Notwithstanding anything herein
to the contrary, if any Facility Mortgagee is entitled to any Award or any
portion thereof, under the terms of any Facility Mortgage such Award shall be
applied, held and/or disbursed in accordance with the terms of the Facility
Mortgage. If the Facility Mortgagee elects to apply the Award to the
indebtedness secured by the Facility Mortgage: (i) if the Award represents an
Award for Partial Taking as described in Section 15.3 above, Lessee shall
restore the affected Facility (as nearly as possible under the circumstances) to
a complete architectural unit of the same general character and condition as
that of the Facility existing immediately prior to such Taking; or (ii) if the
Award represents an Award for a Total Taking as described in Section 15.1 above,
Lessee shall transfer to Lessor all of Xxxxxx's interest in the Facility,
including, without limitation, Xxxxxx's interest in the licenses pursuant to
which the Facility is then operated. In any such restoration or purchase, Lessee
shall receive full credit for any portion of any Award retained by Xxxxxx and
the Facility Mortgagee, and as of the Proceeds Date, the Base Rent shall be
reduced by a percentage equal to the Casualty/Condemnation Reduction Percentage.
15.6 Extension of Time Periods. In the event that Xxxxxx is unable to
complete any action required by this Article XV in the time period provided, and
Xxxxxx establishes to the reasonable satisfaction of Lessor that Lessee has been
acting in good faith and diligently, then Lessor shall grant to Lessee a
reasonable extension of time in which to complete the repair or reconstruction
of any Facility subject to Taking, prior to the time that Lessee would otherwise
be required to repurchase such Facility subject to a Taking.
ARTICLE XVI
16.1 Lessor's Rights Upon an Event of Default. If an Event of Default
shall occur Lessor may terminate this Lease by giving Lessee a Notice of
Termination in accordance with the laws of the States in which each Facility is
located, and in such event, the Term shall end and all rights of Lessee under
this Lease shall cease on the Termination Date specified in the Notice of
Termination. In addition to Xxxxxx's right to terminate this Lease, Lessor shall
have all other rights set forth in this Lease and all remedies available at law
and in equity.
Lessee shall, to the extent permitted by law, pay as
Additional Charges all costs and expenses incurred by or on behalf of Lessor,
including, without limitation, reasonable attorneys' fees and expenses (whether
or not litigation is commenced, and if litigation is commenced, including fees
and expenses incurred in appeals and post-judgment proceedings) as a result of
any default of Lessee hereunder. Lessor shall, to the extent permitted by law,
pay Lessee all costs and expenses incurred by or on behalf of Xxxxxx, including,
without limitation, reasonable attorneys' fees and expenses (whether or not
litigation is commenced, and if litigation is commenced, including fees and
expenses incurred in appeals and post-judgment proceedings) as a result of any
default of Lessor hereunder.
No Event of Default (other than a failure to make payment of
money) shall be deemed to exist if and for so long as Lessee is unable to
prevent such Event of Default because of Force Majeure, provided that upon the
cessation of such Force Majeure, Lessee shall forthwith proceed to remedy the
action or condition giving rise to such Event of Default within the applicable
cure period as extended by such Force Majeure.
16.2 Certain Remedies. If an Event of Default shall occur, whether or
not this Lease has been terminated pursuant to Section 16.1, if required to do
so by Lessor Lessee shall immediately surrender the Leased Properties to Lessor
in the condition required by Section 9.1.5 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 Lessee and all other persons
and any and all personal properties from the Leased Properties, subject to
rights of any residents or patients and to any Legal Requirements. In addition
to all other remedies set forth or referred to in this Article XVI, Lessor shall
have the right to suspend any Management Agreement as to one or more or all
Facilities and to retain a manager of the affected Facility or all Facilities at
the expense of Lessee, such manager to serve for such term and at such
compensation as Lessor reasonably determines is necessary under the
circumstances.
16.3 Damages. Neither (i) the termination of this Lease pursuant to
Section 16.1, (ii) the repossession of the Leased Properties, (iii) the failure
of Lessor to relet the Leased Properties, (iv) the reletting of all or any
portion thereof, nor (v) the failure of Lessor to collect or receive any rentals
due upon such any reletting, shall relieve Lessee of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event this Lease is terminated by Lessor,
Lessee shall forthwith pay to Lessor all Rent due and payable with respect to
the Leased Properties to and including the Termination Date, including without
limitation all interest and late charges payable under Section 3.3 hereof with
respect to any late payment of such Rent. Lessee shall also pay to Lessor, as
liquidated damages, at Lessor's option, either:
(A) The sum of:
(i) Lessor's Interim Rent Loss, minus Net Reletting Proceeds
for such period, and minus the portion of Lessor's Interim
Rent Loss, if any, that Lessee prove could reasonably have
been mitigated by Lessor, plus
(ii) the Present Value on the Judgment Date of Lessor's Future
Rent Loss, assuming the Cost of Living Index were to increase
four (4) percentage points per Lease Year from the Judgment
Date through the Expiration Date, minus the Present Value on
the Termination Date of the portion of Lessor's Future Rent
Loss that Lessee proves could reasonably be mitigated by
Lessor;
or
(B) Each month between the Termination Date and the Expiration Date,
Lessor's Monthly Rent Loss, minus the Net Reletting Proceeds for such
month, and minus the portion, if any, of Xxxxxx's Monthly Rent Loss
that Xxxxxx proves could reasonably have been avoided. Any suit brought
to recover liquidated damages payable under this subsection "(B)" shall
not prejudice Lessor's right to collect liquidated damages for
subsequent months in a similar proceeding.
16.4 Intentionally Omitted
16.5 Waiver. If this Lease is terminated pursuant to Section 16.1,
Lessee waives, to the extent permitted by applicable law, (i) any right of
reentry, repossession or redesignation, (ii) any right to a trial by jury in the
event of summary proceedings to enforce the remedies set forth in this Article
XVI, and (iii) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt. Acceptance of Rent at any time
does not prejudice or remove any right of Lessor as to any right or remedy. No
course of conduct shall be held to bar Lessor from literal enforcement of the
terms of this Lease.
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 shall be applied to Xxxxxx's obligations in the order which Lessor may
determine or as may be prescribed by law.
16.7 Bankruptcy.
(a) Neither Lessee's interest in this Lease, nor any estate hereby
created in Xxxxxx's interest nor any interest herein or
therein, shall pass to any trustee or receiver or assignee for
the benefit of creditors or otherwise by operation of law,
except as may specifically be provided pursuant to the
Bankruptcy Code (11 USC ss.101 et. seq.), as the same may be
amended from time to time.
(b) Rights and Obligations Under the Bankruptcy Code.
(1) Upon filing of a petition by or against Lessee under the
Bankruptcy Code, Lessee, as debtor and as
debtor-in-possession, and any trustee who may be appointed
with respect to the assets of or estate in bankruptcy of
Lessee, agree to pay monthly in advance on the fifteenth
(15th) day of each month, as reasonable compensation for the
use and occupancy of the Leased Premises, an amount equal to
all Rent due pursuant to this Lease.
(2) Included within and in addition to any other conditions
or obligations imposed upon Lessee or its successor in the
event of the assumption and/or assignment of the Lease are
the following: (i) the cure of any monetary defaults and
reimbursement of pecuniary loss within not more than thirty
(30) days of assumption and/or assignment; (ii) the deposit
of an additional amount equal to not less than three (3)
months' Base Rent, which amount is agreed to be a necessary
and appropriate deposit to secure the future performance
under the Lease of Lessee or its assignee; (iii) the
continued use of the Leased Premises for the Primary
Intended Use; and (iv) the prior written consent of any
Facility Mortgagee.
ARTICLE XVII
17.1 Lessor's Right to Cure Xxxxxx's Default. If Lessee fails to make
any payment or perform any act required to be made or performed under this
Lease, and fails to cure the same within any grace or cure period applicable
thereto, upon such Notice as may be expressly required herein (or, if Lessor
reasonably determines that the giving of such Notice would risk loss to the
Leased Properties or cause damage to Lessor, upon such Notice as is practical
under the circumstances), and without waiving or releasing any obligation of
Lessee, Lessor may make such payment or perform such act for the account and at
the expense of Xxxxxx, and may, to the extent permitted by law, enter upon the
Leased Properties for such purpose and take all such action thereon as, in
Lessor's sole opinion, may be necessary or appropriate. No such entry shall be
deemed an eviction of Lessee. All amounts so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) so incurred, together with the late charge and interest provided for
in Section 3.3 thereon, shall be paid by Lessee to Lessor on demand. The
obligations of Lessee and rights of Lessor contained in this Article shall
survive the expiration or earlier termination of this Lease.
ARTICLE XVIII
18.1 Holding Over. If Lessee remains in possession of all or any of the
Leased Properties after the expiration of the Term or earlier termination of
this Lease, such possession shall be as a month-to-month tenant, and throughout
the period of such possession Lessee shall pay as Rent for each month one and
one-half (1 1/2) times the sum of:(i) one-twelfth (1/12th) of the Base Rent
payable during the Lease Year in which such expiration or termination occurs,
plus (ii) all Additional Charges accruing during the month, plus (iii) any and
all other sums payable by Lessee pursuant to this Lease. During such period of
month-to-month tenancy, Lessee shall be obligated to perform and observe all of
the terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by applicable law to
month-to-month tenancies, to continue its occupancy and use of the Leased
Properties until the month-to-month tenancy is terminated. Nothing contained
herein shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of this
Lease.
18.2 Indemnity. If Xxxxxx fails to surrender the Leased Properties in a
timely manner and in accordance with the provisions of Section 9.1.5 upon the
expiration or termination of this Lease, in addition to any other liabilities to
Lessor accruing therefrom, Lessee shall defend, indemnify and hold Lessor, its
principals, officers, directors, agents and employees harmless from loss or
liability resulting from such failure, including, without limiting the
generality of the foregoing, loss of rental with respect to any new lease in
which the rental payable thereunder exceeds the Rent paid by Lessee pursuant to
this Lease during Xxxxxx's hold-over and any claims by any proposed new tenant
founded on such failure. The provisions of this Section 18.2 shall survive the
expiration or termination of this Lease.
ARTICLE XIX
19.1 Subordination. Upon written request of Lessor, any Facility
Mortgagee, or the beneficiary of any deed of trust of Lessor, Lessee will enter
into a written agreement subordinating its rights pursuant to this Lease (i) to
the lien of any mortgage, deed of trust or the interest of any lease in which
Lessor is the lessee and to all modifications, extensions, substitutions thereof
(or, at Lessor's option, agree to the subordination to this Lease of the lien of
said mortgage, deed of trust or the interest of any lease in which Lessor is the
lessee), and (ii) to all advances made or hereafter to be made thereunder. In
connection with any such request, Lessor shall provide Lessee with a
"Non-Disturbance Agreement" reasonably acceptable to such mortgagee, beneficiary
or lessor providing that if such mortgagee, beneficiary or lessor acquires the
Leased Properties by way of foreclosure or deed in lieu of foreclosure, such
mortgagee, beneficiary or lessor will not disturb Xxxxxx's possession under this
Lease and will recognize Lessee's rights hereunder if and for so long as no
Event of Default has occurred and is continuing. Xxxxxx agrees to consent to
amend this Lease as reasonably required by any Facility Mortgagee, and shall be
deemed to have unreasonably withheld or delayed its consent if the required
changes do not materially (i) alter the economic terms of this Lease, (ii)
diminish the rights of Lessee, or (iii) increase the obligations of Lessee,
provided that Lessee shall also have received the non-disturbance agreement
provided for in this Article.
19.2 Attornment. If any proceedings are brought for foreclosure, or if
the power of sale is exercised under any mortgage or deed of trust made by
Lessor encumbering the Leased Properties, or if a lease in which Lessor is the
lessee is terminated, Lessee shall attorn to the purchaser or lessor under such
lease upon any foreclosure or deed in lieu thereof, sale or lease termination
and recognize the purchaser or lessor as Lessor under this Lease, provided the
purchaser or lessor acquires and accepts the Leased Properties subject to this
Lease.
19.3 Lessee's Certificate. Lessee shall, upon not less than ten (10)
days prior Notice from Lessor, execute, acknowledge and deliver to Lessor a
Lessee's Certificate containing then-current facts. It is intended that any
Xxxxxx's Certificate delivered pursuant hereto may be relied upon by Xxxxxx, any
prospective tenant or purchaser of the Leased Properties, any mortgagee or
prospective mortgagee, and by any other party who may reasonably rely on such
statement. Xxxxxx's failure to deliver the Lessee's Certificate within such time
shall constitute an Event of Default. In addition, Xxxxxx hereby authorizes
Lessor to execute and deliver a certificate to the effect (if true) that Lessee
represents and warrants that (i) this Lease is in full force and effect without
modification, and (ii) Lessor is not in breach or default of any of its
obligations under this Lease.
ARTICLE XX
20.1 Risk of Loss. During the Term, the risk of loss or of decrease in
the enjoyment and beneficial use of the Leased Properties 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 those caused by Lessor and those claiming from, through
or under Lessor) is assumed by Lessee, and, in the absence of gross negligence,
willful misconduct or material breach of this Lease by Lessor, Lessor shall in
no event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of Rent, except as
specifically provided in this Lease.
ARTICLE XXI
21.1 Indemnification. Notwithstanding the existence of any insurance or
self-insurance provided for in Article XIII, and without regard to the policy
limits of any such insurance or self-insurance, Lessee shall protect, indemnify,
save harmless and defend Lessor, its principals, officers, directors and agents
and employees from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Lessor by reason of: (i) any
accident, injury to or death of persons or loss of or damage to property
occurring on or about the Leased Properties or adjoining sidewalks during the
Term, including without limitation any claims of malpractice, (ii) any use,
misuse, non-use, condition, maintenance or repair by Lessee of the Leased
Properties, (iii) the failure to pay any Impositions as herein provided which
are the obligation of Lessee to pay pursuant to this Lease, (iv) any failure on
the part of Lessee to perform or comply with any of the terms of this Lease, and
(v) the nonperformance of any contractual obligation, express or implied,
assumed or undertaken by Lessee or any party in privity with Lessee with respect
to the Leased Properties or any business or other activity carried on with
respect to the Leased Properties during the Term or thereafter during any time
in which Lessee or any such other party is in possession of the Leased
Properties or thereafter to the extent that any conduct by Lessee or any such
party (or failure of such conduct thereby if the same should have been
undertaken during such time of possession and leads to such damage or loss)
causes such loss or claim. Any amounts which become payable by Lessee under this
Section shall be paid within ten (10) days after liability therefor on the part
of Lessee 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. Nothing herein shall be
construed as indemnifying Lessor against its own grossly negligent acts or
omissions or willful misconduct.
Lessor shall indemnify, save harmless and defend Xxxxxx from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses imposed upon or incurred by or asserted against
Xxxxxx as a result of the gross negligence or willful misconduct of Lessor.
Lessee's or Lessor's liability for a breach of the provisions of this
Article arising during the Term hereof shall survive any termination of this
Lease for three (3) years following any termination of this Lease, provided that
Xxxxxx's obligations to indemnify Lessor with respect to environmental matters
shall continue for six (6) years after such termination.
ARTICLE XXII
22.1 General Prohibition against Transfers. Lessee acknowledges that a
significant inducement to Lessor to enter into this Lease with Xxxxxx on the
terms set forth herein is the combination of financial strength, experience,
skill and reputation possessed by the Lessee named herein, the Person or Persons
in Control of Lessee, the Guarantor(s) (if any) and the Manager of the
Facilities on the Commencement Date, together with Xxxxxx's assurance that
Lessor shall have the unrestricted right to approve or disapprove any proposed
Transfer. Therefore, there shall be no Transfer except as specifically permitted
by this Lease or consented to in advance by Xxxxxx in writing. Lessor hereby
consents to the sublease of the Xxxxx and Xxxxxx facilities to Sterling Health
Care Management, Inc., a Kentucky corporation, for the purpose of continuing its
lease of those facilities under the Existing Lease applicable to those
facilities which are been consolidated, amended and restated as part of this
Lease. Xxxxxx agrees that Lessor shall have the right to withhold its consent to
any proposed Transfer on the basis of Xxxxxx's judgment as to the effect the
proposed Transfer may have on the Facilities and the future performance of the
obligations of the Lessee under this Lease, whether or not Xxxxxx agrees with
such judgment. Any attempted Transfer which is not specifically permitted by
this Lease or consented to by Xxxxxx in advance in writing shall be null and
void and of no force and effect whatsoever. In the event of a Transfer, Lessor
may collect Rent and other charges from the Transferee and apply the amounts
collected to the Rent and other charges herein reserved, but no Transfer or
collection of Rent and other charges shall be deemed to be a waiver of Lessor's
rights to enforce Xxxxxx's covenants or an acceptance of the Transferee as
Lessee, or a release of the Lessee named herein from the performance of its
covenants. Notwithstanding any Transfer, Lessee shall remain fully liable for
the performance of all terms, covenants and provisions of this Lease. Any
violation of this Lease by any Transferee shall be deemed to be a violation of
this Lease by Xxxxxx.
22.2 Subordination and Attornment. Lessee shall insert in any sublease
permitted by Lessor provisions to the effect that (i) such sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of Lessor hereunder, (ii) if this Lease terminates before the expiration
of such sublease, the sublessee thereunder will, at Lessor's option, attorn to
Lessor and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder, as a result of the termination of this
Lease, and (iii) if the sublessee receives a written Notice from Lessor or
Xxxxxx's assignee, if any, stating that Lessee is in default under this Lease,
the sublessee shall thereafter be obligated to pay all rentals accruing under
the sublease directly to the party giving such Notice, or as such party may
direct, which payments shall be credited against the amounts owing by Lessee
under this Lease.
22.3 Sublease Limitation. Anything contained in this Lease to the
contrary notwithstanding, even if a sublease of a Leased Property is permitted,
Lessee shall not sublet such Leased Property on any basis such that the rental
to be paid by the sublessee thereunder would be based, in whole or in part, on
either (i) the income or profits derived by the business activities of the
sublessee, 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. The parties agree that this paragraph shall not be deemed
waived or modified by implication, but may be waived or modified only by an
instrument in writing explicitly referring to this paragraph by number.
22.4 Permitted Sublease. Lessee shall be entitled to sublease any
Leased Property in its entirety to an Affiliate of Lessee upon Xxxxxx's written
acknowledgment, provided that (i) Lessee submits an original copy of any such
sublease to Lessor for its reasonable approval and written acknowledgment prior
to the date of commencement of same, which such sublease shall memorialize that
the sublessee shall be fully liable for the performance of all of the
obligations of Lessee under this Lease with respect to such Leased Property;
(ii) subject to the rights and priorities set forth in the Intercreditor
Agreement, each sublessee shall jointly and severally guaranty the obligations
of Lessee under the Lease; (iii) Lessor shall be provided security for the
performance by each sublessee of its obligations reasonably satisfactory to
Lessor, which security shall include, without limitation, subject to the rights
and priorities set forth in the Intercreditor Agreement, a pledge of the stock
of or other membership interest of Lessee in each sublessee, an assignment of
the sublease, and a security interest in sublessee `s Personal Property and
Accounts as required of Lessee pursuant to Section 6.4 hereof; (iv) the sole
asset of any such sublessee shall be its interest in the contemplated sublease
and Lessee's Personal Property relating to such Facility(ies); and (v) the
sublessee shall be a wholly-owned subsidiary of Lessee. Lessee shall notify
Lessor at least thirty (30) days in advance of the date on which Lessee desires
to make such sublease. Lessee shall reimburse Lessor for the actual and
reasonable legal fees actually incurred by Xxxxxx in connection with Xxxxxx's
request. Lessee shall provide Lessor with a copy of the proposed sublease and
such information as Lessor reasonably requests concerning the proposed sublessee
to allow Lessor to make an informed judgment as to whether the sublease
satisfies the provisions of this Section 22.5 and to obtain the security
provided for herein.
ARTICLE XXIII
23.1 Officer's Certificates and Financial Statements. Lessee shall
furnish (or as appropriate cause each Guarantor to furnish) to Lessor:
(i) Within ninety (90) days after the end of each of Advocat's
fiscal years: (a) Consolidated Financial Statements for the Lessee
(from and after the transfer of Xxxxxx's interest to New Sub as
contemplated by the Settlement and Restructuring Agreement) and
Advocat, (b) separate financial statements for each of the Facilities,
in each case certified by an financial officer of Lessee; and (c) an
Officer's Certificate stating that to the best knowledge and belief of
such officer after making due inquiry, Xxxxxx is not in default in the
performance or observance of any of the terms of this Lease, or if
Lessee is in default, specifying all such defaults, the nature thereof,
and the steps being taken to remedy the same.
(ii) Within forty-five (45) days after the end of each of
Advocat's quarters, quarterly consolidated financial reports of
Advocat, together with an Officer's Certificate that Lessee is not in
default of any covenant set forth in Section 8 of this Lease and
Guarantor is not in default of any covenant under the Guaranty, or if
Lessee or Guarantor is in default, specifying all such defaults, the
nature thereof, and the steps being taken to remedy the same;
(iii) Within forty-five (45) days after the end of each of
Advocat's quarters, a quarterly Financial Statement from Advocat
(provided, however, that such quarterly Financial Statements need not
be certified by a certified public accountant, but shall be certified
by Advocat to be complete and accurate);
(iv) Within thirty-five (35) days after the end of each month,
monthly financial reports for each Facility with detailed statements of
income and expense and detailed operational statistics regarding
occupancy rates, patient mix and patient rates by type for the
Facility;
(v) A copy of each cost report filed with a governmental
agency for any Facility;
(vi) Within fifteen (15) days after they are required to be
filed with the SEC, copies of any annual or quarterly report and of
information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe)
which Advocat is required to file with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934;
(vii) Within thirty (30) days of Xxxxxx's or Manager's receipt
thereof, copies of surveys performed by the appropriate governmental
agencies for licensing or certification purposes, and any plan of
correction thereto as approved by the appropriate governmental agency
for any Facility.
(viii) Immediate Notice to Lessor of any action, proposal or
investigation by any agency or entity, or complaint to such agency or
entity, known to Lessee, the result of which could be to (i) modify in
a way adverse to Lessee or revoke or suspend or terminate, or fail to
renew or fully continue in effect, any license or certificate or
operating authority pursuant to which Lessee carries on any part of the
Primary Intended Use of any Facility, or (ii) suspend, terminate,
adversely modify, or fail to renew or fully continue in effect any cost
reimbursement or cost sharing program by any state or federal
governmental agency, including but not limited to Medicaid or Medicare
or any successor or substitute therefor, or seek return of or
reimbursement for any funds previously advanced or paid pursuant to any
such program, or (iii) impose any bed hold, limitation on patient
admission or similar restriction on any Leased Property, or (iv)
prosecute any party with respect to the operation of any activity on
any Leased Property or enjoin any party or seek any civil penalty in
excess of Ten Thousand Dollars ($10,000.00) in respect thereof;
(ix) As soon as it is prepared in each Lease Year, a capital
and operating budget for the Facilities for that and the following
Lease Year;
(x) With reasonable promptness, such other information
respecting the financial condition and affairs of Xxxxxx and the
Facilities as Lessor may reasonably request from time to time
including, without limitation, any such other information as may be
available to the administration of the Leased Properties; and
(xi) At times reasonably required by Lessor, and upon request
as appropriate, such additional information and unaudited quarterly
financial information concerning the Leased Properties and Lessee as
Lessor may require for its on-going filings with the Securities and
Exchange Commission, under both the Securities Act of 1933, as amended
and the Securities Exchange Act of 1934, as amended, including, but not
limited to 10-Q Quarterly Reports, 10-K Annual Reports and registration
statements to be filed by Lessor during the Term of this Lease.
Lessor's right to the statements referred to in Subparagraph (x) shall
be subject to any prohibitions or limitations on disclosure of any such data
under applicable laws or regulations, including, without limitation, any duly
enacted "Patients' Bill of Rights" or any similar legislation, including such
limitations as may be necessary to preserve the confidentiality of the
Facility-patient relationship and the physician-patient privilege. Further,
except for statements or information which are already public, Lessor shall not
disclose the contents of any such statement, except to a Facility Mortgagee,
proposed Facility Mortgagee, lender of Lessor, proposed Lender of Lessor,
prospective investor, prospective purchaser, or Lessor's attorneys, accountants
or agents, and except as permitted in Section 23.2.
23.2 Public Offering Information. Xxxxxx specifically agrees that
Lessor may include financial information and information concerning the
operation of the Facilities that does not violate the confidentiality of the
facility-patient relationship and the physician-patient privilege under
applicable laws, in offering memoranda or prospectus, or similar publications in
connection with syndications or public offerings of Lessor's securities or
interests, and any other reporting requirements under applicable Federal and
State Laws, including those of any successor to Lessor. Lessee agrees to provide
such other reasonable information necessary with respect to Xxxxxx and the
Leased Properties to facilitate a public offering or to satisfy SEC or
regulatory disclosure requirements. Lessor shall provide to Lessee a copy of any
information prepared by Lessor to so be published and Lessee shall have a
reasonable period of time (not to exceed three (3) Business Days) after receipt
of such information to notify Lessor of any corrections. Lessor shall reimburse
Lessee for its out-of-pocket costs to its qualified public accountants for their
services in connection with such public offering information and interim or
"stub" financial information and "comfort letters" required pursuant to Section
23.1 (xi) as requested by Xxxxxx.
ARTICLE XXIV
24.1 Lessor's Right to Inspect. Lessee shall permit Lessor and its
authorized representatives to inspect the Leased Properties and the books and
records of Lessee and/or Sublessees relating to the operation of the Facilities
during normal business hours at any time without Notice subject to any security,
health, safety or confidentiality requirements any governmental agency or
insurance requirement relating to the Leased Properties, or imposed by law or
applicable regulations.
ARTICLE XXV
25.1 No Waiver. No failure by Xxxxxx to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach hereof, 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. 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 XXVI
26.1 Remedies Cumulative. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
ARTICLE XXVII
27.1 Acceptance of Surrender. No surrender to Lessor of this Lease or
of the Leased Properties or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Xxxxxx, and no
act by Lessor or any representative or agent of Lessor, other than such a
written acceptance by Xxxxxx, shall constitute an acceptance of any such
surrender.
ARTICLE XXVIII
28.1 No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (i) this Lease or the leasehold estate created hereby or any
interest in this Lease or such leasehold estate, and (ii) the fee estate in the
Leased Properties.
28.2 No Partnership. Nothing contained in this Lease will be deemed or
construed to create a partnership or joint venture between Lessor and Lessee or
to cause either party to be responsible in any way for the debts or obligations
of the other or any other party, it being the intention of the parties that the
only relationship hereunder is that of Xxxxxx and Xxxxxx.
ARTICLE XXIX
29.1 Conveyance by Xxxxxx. If Lessor or any successor owner of the
Leased Properties conveys the Leased Properties other than as security for a
debt, and the grantee or transferee of the Leased Properties shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance, 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 arising or accruing from and after the date of such
conveyance or other transfer and all such future liabilities and obligations
shall thereupon be binding upon the new owner.
ARTICLE XXX
30.1 Quiet Enjoyment. So long as Lessee pays all Rent as it becomes due
and complies with all of the terms of this Lease and performs its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Properties for the Term, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to the Permitted Encumbrances
and all liens and encumbrances hereafter provided for in this Lease or consented
to by Xxxxxx. Except as otherwise provided in this Lease, no failure by Lessor
to comply with the foregoing covenant will give Lessee 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 Lessee. Lessee shall, however, have the right, by separate
and independent action, to pursue any claim it may have against Xxxxxx as a
result of a breach by Lessor of the covenant of quiet enjoyment contained in
this Section.
ARTICLE XXXI
31.1 Notices. Any notice, request or other communication to be given by
any party hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, or by hand delivery or facsimile transmission
to the following address:
To Lessee: Diversicare Leasing Corp.
c/o Advocat, Inc.
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With copy to Xxxxxxx Xxxxxx Xxxx Xxxxxxx
& Xxxxxx, P.C.
(which shall not 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
xxxxxxxxxx xxxxxx): Xxxxxxxxx, XX 00000
Attn: X. Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
To Lessor: Omega Healthcare Investors, Inc.
000 Xxxxxxx Xxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attn.: X. Xxxxx Xxxxxxx and
Xxxxx Xxxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With copy to Xxxxxx Xxxxxxx PLLC
(which shall not 00000 Xxxxxxxx Xxx., Xxxxx 000
xxxxxxxxxx xxxxxx): Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other address as either party may hereafter designate. Notice shall
be deemed to have been given on the date of delivery if such delivery is made on
a Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery was
first attempted. Notice sent by facsimile transmission shall be deemed given
upon confirmation that such Notice was received at the number specified above or
in a Notice to the sender. If Xxxxxx has vacated the Leased Properties, Xxxxxx's
Notice may be posted on the door of a Leased Property.
ARTICLE XXXII
32.1 Appraisers. If it becomes necessary to determine Fair Market Value
or Fair Market Rent for any purpose under this Lease, the party required or
permitted to give Notice of such required determination shall include in the
Notice the name of a person selected to act as appraiser on its behalf. Within
ten (10) days after such Notice, the party receiving such Notice shall give
Notice to the other party of its selection of a person to act as appraiser on
its behalf. The appraisers thus appointed, each of whom must be a member of the
Appraisal Institute (or any successor organization thereto) and experienced in
appraising facilities used for purposes similar to the Primary Intended Use of
the Facilities, shall, within forty-five (45) days after the date of the Notice
appointing the first appraiser, proceed to appraise the Leased Property or
Leased Properties, as the case may be, to determine the Fair Market Value or
Fair Market Rent thereof as of the relevant date (giving effect to the impact,
if any, of inflation between the date of their decision and the relevant date);
provided, however, that if only one appraiser has been so appointed, or if two
appraisers have been so appointed but only one such appraiser has made such
determination within fifty (50) days after the date of the Notice appointing the
first appraiser, then the determination of such appraiser shall be final and
binding upon the parties. To the extent consistent with sound appraisal practice
at the time of any such appraisal, such appraisal shall be made on a basis
consistent with the basis on which the Leased Property or Leased Properties were
appraised for purposes of determining its Fair Market Value at the time of
Lessor's acquisition thereof. If two appraisers have been appointed and have
made their determinations within the respective requisite periods set forth
above, and if the difference between the amounts so determined does not exceed
ten percent (10%) of the lesser of such amounts, then the Fair Market Value or
Fair Market Rent shall be an amount equal to fifty percent (50%) of the sum of
the amounts so determined. If the difference between the amounts so determined
exceeds ten percent (10%) of the lesser of such amounts, then such two
appraisers shall within twenty (20) days appoint a third appraiser. If no such
appraiser is appointed within such twenty (20) days or within ninety (90) days
of the date of the Notice appointing the first appraiser, whichever is earlier,
either Lessor or Lessee may apply to any court having jurisdiction to have such
appointment made by such court. Any appraiser appointed by the original
appraisers or by such court shall be instructed to determine the Fair Market
Value or Fair Market Rent within forty-five (45) days after appointment of such
appraiser. The determination of the appraiser which differs most in terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and the average of the remaining two determinations shall be final and
binding upon Lessor and Lessee as the Fair Market Value or Fair Market Rent of
the Leased Property or Leased Properties, as the case may be. If the Fair Market
Rent is being determined for more than one year, the Fair Market Rent may
include such annual increases, if any, as the appraisers determine to be in
accordance with the terms of this Lease.
This provision for determining by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties except as
otherwise provided by applicable law, and judgment may be entered upon such
determination in a court of competent jurisdiction. Lessor and Xxxxxx shall each
pay the fees and expenses of the appraiser appointed by it and each shall pay
one-half of the fees and expenses of the third appraiser and one-half of all
other costs and expenses incurred in connection with each appraisal.
ARTICLE XXXIII
33.1 Breach by Lessor. Lessor shall not be in breach of this Lease
unless Xxxxxx fails to observe or perform any term, covenant or condition of
this Lease on its part to be performed and such failure continues for a period
of thirty (30) days after written Notice specifying such failure and the
necessary curative action is received by Lessor from Lessee. If the failure
cannot with due diligence be cured within a period of thirty (30) days, the
failure shall not be deemed to continue if Lessor, within said thirty (30) day
period, proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof. The time within which Lessor shall be
obligated to cure any such failure shall also be subject to extension of time
due to Force Majeure.
33.2 Compliance With Facility Mortgage. Except for payments due under
any Facility Mortgage (which shall be the responsibility of the Mortgagor
thereunder), Lessee covenants and agrees that it will duly and punctually
observe, perform and comply with all of the terms, covenants and conditions
(including, without limitation, covenants requiring the keeping of books and
records and delivery of financial statements and other information) of any
Facility Mortgage as to which Lessee has been given Notice and that it will not
directly or indirectly, do any act or suffer or permit any condition or thing to
occur, which would or might constitute a default under a Facility Mortgage as to
which Lessee has been given Notice. Anything in this Lease to the contrary
notwithstanding, if the time for performance of any act required of Lessee by
the terms of a Facility Mortgage as to which Lessee has been given Notice is
shorter than the time allowed by this Lease for performance of such act by
Xxxxxx, then Lessee shall perform such act within the time limits specified in
such Facility Mortgage.
ARTICLE XXXIV
34.1 Disposition of Personal Property on Termination; Lessor's Option
to Purchase. Upon the expiration or earlier termination of this Lease, Xxxxxx
shall immediately surrender, turn over and deliver to Lessor, without the
payment of any additional consideration by Lessor, all Personal Property then
located on or at or used in the operation of the Leased Properties, other than
Lessee's Incidental Personal Property and the items of Personal Property listed
on Schedule A attached hereto. Upon Xxxxxx's request, Lessee shall, without any
charge or cost to Lessor, execute and deliver to Lessor such bills of sale,
assignments or other instruments necessary, appropriate or reasonably requested
by Lessor to establish Xxxxxx's ownership of such Personal Property. In
addition, Lessor shall have the option on the terms hereinafter set forth to
purchase all (but not less than all) of Lessee's Incidental Personal Property
(specifically excluding, the items set forth on Schedule A), if any, at the
expiration or termination of this Lease, for an amount equal to the then book
value thereof (acquisition cost less accumulated depreciation on the books of
Lessee pertaining thereto), subject to, and with appropriate credits for, any
obligations owing from Lessee to Lessor and for the then outstanding balances
owing on all equipment leases, conditional sale contracts and any other
encumbrances to which such Lessee's Personal Property is subject. Lessor's
option shall be exercised by Notice to Lessee no more than one hundred eighty
(180) days, nor less than ninety (90) days, before the expiration of the Initial
Term or, if the Term is renewed as provided herein, before the expiration of the
last Renewal Term, unless this Lease is terminated prior to its expiration date
by reason of an Event of Default, in which event Xxxxxx's option shall be
exercised not more than thirty (30) days after the Termination Date. Lessor's
option shall terminate upon Xxxxxx's purchase of the Leased Properties. If
Lessee does not receive Lessor's Notice exercising its option before the
expiration of the relevant required time period, Lessee shall give Lessor Notice
thereof and Xxxxxx's option shall continue in full force and effect for a period
of thirty (30) days after such Notice from Lessee. If Lessor exercises its
option, Lessee shall, in exchange for Lessor's payment of the purchase price,
deliver the purchased Lessee's Personal Property to Lessor, together with a bill
of sale and such other documents as Lessor may reasonably request in order to
carry out the purchase, and the purchase shall be closed by such delivery and
such payment on the date set by Lessor in its Notice of exercise.
34.2 Facility Trade Names. If this Lease is terminated pursuant to
Section 16.1 or Lessor exercises its option to purchase Lessee's Personal
Property pursuant to Section 34.1, Lessee shall be deemed to have assigned to
Lessor the right to use the Facility Trade Names in the markets in which the
Facilities are located, and Lessee shall not after any such termination use the
Facility Trade Names in the same market in which any Facility is located in
connection with any business that competes with such Facility provided, however,
that nothing contained in this Section 34.2 grants Lessor any right to use the
name "Diversicare" for any Leased Property or Facility.
34.3 Transfer of Operational Control of the Facilities. Lessee shall
cooperate fully in transferring operational control of the Facilities to Lessor
or Xxxxxx's nominee if the Term expires without renewal or purchase by Lessee,
or this Lease is terminated upon the occurrence of an Event of Default or for
any other reason, and shall use its reasonable best efforts to cause the
business conducted at the Facilities to continue without interruption. To that
end, pending completion of the transfer of the operational control of the
Facilities to Lessor or its nominee:
(i) Lessee will not terminate the employment of any employees
without just cause, or change any salaries, provided, however, that
without the advance written consent of Lessor Lessee may grant
pre-announced wage increases of which Lessor has knowledge, increases
required by written employment agreements and normal raises to
non-officers at regular review dates; and Lessee will not hire any
additional employees except in good faith in the ordinary course of
business;
(ii) Lessee will provide all necessary information requested
by Lessor or its nominee for the preparation and filing of any and all
necessary applications or notifications of any federal or state
governmental authority having jurisdiction over a change in the
operational control of the Facilities, and any other information
reasonably required to effect an orderly transfer of the Facilities,
and Lessee will use its best efforts to cause all operating health care
licenses to be transferred to Lessor or to Lessor's nominee;
(iii) Lessee shall use its best efforts to keep the business
and organization of the Facilities intact and to preserve for Lessor or
its nominee the goodwill of the suppliers, distributors, residents and
others having business relations with Lessee with respect to the
Facilities;
(iv) Lessee shall engage only in transactions or other
activities with respect to the Facilities which are in the ordinary
course of its business and shall perform all maintenance and repairs
reasonably necessary to keep the Facilities in satisfactory operating
condition and repair, and shall maintain the supplies and foodstuffs at
levels which are consistent and in compliance with all health care
regulations, and shall not sell or remove any personal property except
in the ordinary course of business and in accordance with the terms and
conditions of this Lease;
(v) Lessee shall provide Lessor or its nominee with full and
complete information regarding the employees of the Facilities and
shall reimburse Lessor or its nominee for all outstanding accrued
employee benefits, including accrued vacation, sick and holiday pay
calculated on a true accrual basis, including all earned and a prorated
portion of all unearned benefits;
(vi) Lessee shall use its best efforts to obtain the
acknowledgment and the consent of any creditor, lessor or sublessor,
mortgagee, beneficiary of a deed of trust or security agreement
affecting the real and personal properties of Lessee or any other party
whose acknowledgment and/or consent would be required because of a
change in the operational control of the Facilities and transfer of
personal property. The consent must be in form, scope and substance
satisfactory to Lessor or its nominee, including, without limitation,
an acknowledgment in respect to all such contracts, leases, deeds of
trust, mortgage, security agreements, or other agreements that Lessee
and all predecessors or successors-in-interest thereto are not in
default in respect thereto, that no condition known to the consenting
party exists which with the giving of notice or lapse of time would
result in such a default, and, if requested, affirmatively consenting
to the change in the operational control of the Facilities;
(vii) Lessee shall not encourage the transfer of any patients
from the Facilities;
(viii) Lessee consents to Lessor, or its nominee, seeking to
employ any on-site employees of the Facilities, but neither Lessor nor
its nominee shall have any obligation to employ any employees of the
Facilities;
(ix) To more fully preserve and protect Xxxxxx's rights under
this Section, Lessee does hereby make, constitute and appoint Lessor
its true and lawful attorney-in-fact, for it and in its name, place and
stead to execute and deliver all such instruments and documents, and to
do all such other acts and things, as Lessor may deem to be necessary
or desirable to protect and preserve the rights granted under this
Section, including, without limitation, the preparation, execution and
filing with the Board of Health (or similar agency) of each State or
any and all required "Letters of Responsibility" or similar documents.
Lessee hereby grants to Lessor the full power and authority to appoint
one or more substitutes to perform any of the acts that Xxxxxx is
authorized to perform under this Section, with a right to revoke such
appointment of substitution at Lessor's pleasure. The power of attorney
granted pursuant to this Section is coupled with an interest and
therefore is irrevocable. Any person dealing with Lessor may rely upon
the representation of Xxxxxx relating to any authority granted by this
power of attorney, including the intended scope of the authority, and
may accept the written certificate of Lessor that this power of
attorney is in full force and effect. Photographic or other facsimile
reproductions of this executed Lease may be made and delivered by
Xxxxxx, and may be relied upon by any person to the same extent as
though the copy were an original. Anyone who acts in reliance upon any
representation or certificate of Lessor, or upon a reproduction of this
Lease, shall not be liable for permitting Lessor to perform any act
pursuant to this power of attorney. Notwithstanding the foregoing,
Lessor covenants with Lessee that Lessor shall refrain from exercising
the power of attorney granted hereby except in the case of an Event of
Default hereunder or in the event of a default, which, in Lessor's
reasonable judgment, may lead to the suspension or revocation of any
license of Lessee or of any sublessee.
34.4 Intangibles and Personal Property. Notwithstanding any other
provision of this Lease but subject to Section 6.4 relating to the security
interest in favor of Lessor, Xxxxxx's Personal Property shall not include
goodwill nor shall it include any other intangible personal property that is
severable from Lessor's "interests in real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision thereto.
ARTICLE XXXV
35.1 Arbitration. Except with respect to the payment of Rent under this
Lease and any proceedings to recover possession of one or more of the Leased
Properties, in case any controversy arises between the parties hereto as to any
of the provisions of this Lease or the performance thereof, and the parties are
unable to settle the controversy by agreement or as otherwise provided herein,
the controversy shall be decided by arbitration. The arbitration shall be
conducted by three arbitrators selected in accordance with the rules and
procedures of the American Arbitration Association. The decision of the
arbitrators shall be final and binding, and judgment may be entered thereon in
any court of competent jurisdiction. The decision shall set forth in writing the
basis for the decision. In rendering the decision and award, the arbitrators
shall not add to, subtract from, or otherwise modify the provisions of this
Lease. The expense of the arbitration shall be divided between Lessor and Lessee
unless otherwise specified in the award. Each party in interest shall pay the
fees and expenses of its own counsel. The arbitration shall be conducted in Ann
Arbor, Michigan. In any arbitration, the parties shall be entitled to conduct
discovery in the same manner as permitted under Federal Rules of Civil Procedure
26 through 37, as amended. No provision in this Article shall limit the right of
any party to this Agreement to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after, or during the pendency of any
arbitration, and the exercise of such remedies does not constitute a waiver of
the right of either party to arbitration.
ARTICLE XXXVI
36.1 Miscellaneous.
36.1.1 Survival, Choice of law. Anything contained in this
Lease to the contrary notwithstanding, all claims against, and liabilities of,
Lessee or Lessor arising prior to the date of expiration or termination of this
Lease shall survive such expiration or termination. If any term or provision of
this Lease or any application thereof is held invalid or unenforceable, the
remainder of this Lease and any other application of such term or provisions
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 Xxxxxx and Xxxxxx. 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. This Lease shall be governed by and construed in accordance with
the laws of the state of Michigan, as to all matters other than (i) those
matters relating to the enforcement or exercise of any possessory or summary
remedies of Lessor under this Lease, which shall be governed by the laws of the
applicable State or States and (ii) matters which under applicable procedural
conflicts of laws rules require the application of laws of another State.
XXXXXX CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND
FEDERAL COURTS OF THE STATES OF MICHIGAN AND EACH STATE IN WHICH A FACILITY IS
LOCATED, AND AGREES THAT ALL DISPUTES CONCERNING THIS AGREEMENT BE HEARD IN THE
STATE AND FEDERAL COURTS LOCATED IN THE STATES OF MICHIGAN OR ANY STATE IN WHICH
A FACILITY IS LOCATED. XXXXXX AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED
UPON IT UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATES OF MICHIGAN OR
ANY STATE IN WHICH A FACILITY IS LOCATED AND IRREVOCABLY WAIVES ANY OBJECTION TO
VENUE IN THE STATE AND FEDERAL COURTS OF THE STATES OF MICHIGAN OR ANY SUCH
STATE.
36.1.2 Limitation on Recovery. Xxxxxx specifically agrees to
look solely to Xxxxxx's interest in the Leased Properties for recovery of any
judgment from Lessor, it being specifically agreed that no constituent
shareholder, officer or director of Lessor shall ever be personally liable for
any such judgment or for the payment of any monetary obligation to Lessee. The
provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Lessee might otherwise have to obtain injunctive relief
against Lessor or Xxxxxx's successors in interest or any action not involving
the personal liability of Lessor (original or successor). Furthermore, except as
otherwise expressly provided herein, Lessor (original or successor) shall never
be liable to Lessee for any indirect or consequential damages suffered by Lessee
from whatever cause. Xxxxxx agrees to look solely to the assets of Xxxxxx and
not to any director, officer or shareholder (other than Guarantor pursuant to
the Guaranty) of Lessee for payment of Lessee for payment of any monetary
obligation to Lessor or for recovery of any judgment from Lessee.
36.1.3 Waivers. Lessee waives any defense by reason of any
disability of Lessee, and waives any other defense based on the termination of
Xxxxxx's (including Xxxxxx's successor's) liability from any cause. Xxxxxx
waives all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, and notices of acceptance,
and waives all notices of the existence, creation, or incurring of new or
additional obligations.
36.1.4 Consents. Whenever the consent or approval of Lessor or
Lessee is required hereunder, Lessor or Lessee may in its sole discretion and
without reason withhold that consent or approval unless otherwise specifically
provided.
36.1.5 Counterparts. This Lease may be executed in separate
counterparts, each of which shall be considered an original when each party
has executed and delivered to the other one or more copies of this Lease.
36.1.6 Options Personal. The renewal options granted to
Lessee in this Lease are granted solely to Xxxxxx and are not assignable or
transferrable except in connection with a Transfer permitted in Article XXII.
36.1.7 Rights Cumulative. Except as provided herein to the
contrary, the respective rights and remedies of the parties specified in this
Lease shall be cumulative and in addition to any rights and remedies not
specified in this Lease.
36.1.8 Entire Agreement. There are no oral or written
agreements or representations between the parties hereto affecting this Lease.
This Lease supersedes and cancels any and all previous negotiations,
arrangements, representations, brochures, agreements and understandings, if any,
between Lessor and Lessee.
36.1.9 Amendments in Writing. No provision of this Lease may
be amended except by an agreement in writing signed by Xxxxxx and Xxxxxx.
36.1.10 Severability. If any provision of this Lease or the
application of such provision to any person, entity or circumstance is found
invalid or unenforceable by a court of competent jurisdiction, such
determination shall not affect the other provisions of this Lease and all other
provisions of this Lease shall be deemed valid and enforceable.
36.1.11 Time of the Essence. Except for the delivery of
possession of the Facilities to Lessee, time is of the essence of all
provisions of this Lease of which time is an element.
ARTICLE XXXVII
37.1 Commissions. Lessor or Lessee each represent and warrant to the
other that no real estate commission, finder's fee or the like is due and owing
to any person in connection with this Lease. Lessor and Xxxxxx each agree to
save, indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations for brokerage, finder's fees or the like in
connection with this Lease or the transactions contemplated hereby, asserted by
any person on the basis of any statement or act alleged to have been made or
taken by that party.
ARTICLE XXXVIII
38.1 Memorandum or Short Form of Lease. Lessor and Lessee shall,
promptly upon the request of either, enter into a Memorandum or Short Form of
this Lease, substantially in the form of attached Exhibit D with such
modifications as may be appropriate under the laws and customs of the States and
in the customary form suitable for recording under the laws of each of the
States. Lessee shall pay all costs and expenses of recording such memorandum or
short form of this Lease.
ARTICLE XXXIX
39.1 Security Deposit. Xxxxxx acknowledges that it holds the Security
Deposit in the form of cash. Lessor shall continue to hold the Security Deposit
as security for the full and faithful performance by Xxxxxx of each and every
term, provision, covenant and condition of this Lease. The Security Deposit
shall be deposited by Lessor into an account which shall earn interest for the
benefit of Lessee, which cash shall remain on deposit as security and be
available to Lessor as provided in this Article. The Security Deposit shall not
be considered an advance payment of Rent (or of any other sum payable to Lessee
under this Lease) or a measure of Lessor's damages in case of a default by
Xxxxxx. The Security Deposit shall not be considered a trust fund, and Xxxxxx
expressly acknowledges and agrees that Xxxxxx is not acting as a trustee or in
any fiduciary capacity in controlling or using the Security Deposit.
Notwithstanding the foregoing, Lessor shall maintain the Security Deposit
separate and apart from Xxxxxx's general and/or other funds. Provided that
Lessee is not then in default, Lessor shall disburse to Lessee the earnings on
the Security Deposit on a quarterly basis. The Security Deposit, less any
portion thereof applied as provided in Section 39.2 shall be returned to Lessee
within sixty (60) days following the expiration of the Term or earlier
termination of this Lease. Lessee may satisfy the Security Deposit obligation by
providing one or more letters of credit, subject to the following conditions:
(a) Lessor shall reasonable approve the form of any proposed letter of credit;
and (b) Lessee shall execute a letter of credit agreement in a form acceptable
to Lessor, in Xxxxxx's sole discretion.
39.2 Additional Security Deposit. If a Facility is affected by any of
the conditions described in Subsection (h) under the definition of Event of
Default, and such condition continues beyond the shorter of (i) the period
during which Lessor is in good faith appealing such condition, and (ii) ninety
(90) days, then Lessee shall increase the amount of the Security Deposit. The
increase ("Increase") shall be in an amount equal to the fair market value which
the affected Facility would have if none of the conditions described in
Subsection (h) existed with respect to that Facility and if the Facility had
licensed beds equal to the number of licensed beds in the Facility as of the
Effective Date, an occupancy rate equal to the State average occupancy rate for
facilities utilized for the Primary Intended Use of the Facility, less the
actual fair market value of the Facility. If the parties cannot agree upon the
amount of the Increase, the amount of the Increase shall be determined in
accordance with the arbitration procedures set forth in Article XXXV. Lessee may
fund the Increase in equal monthly installments beginning on the first (1st) day
of the first (1st) month following the end of the time periods set forth above
and ending on the earlier of (i) three (3) years thereafter, and (ii) two (2)
years prior to the end of the Term; provided, however, that if the obligation to
fund occurs during the last two (2) years of the Term, the Increase shall be
funded immediately. If an Increase has been funded, the Facility is subsequently
no longer affected by any of the conditions described in Subsection (h), the
Facility has been reopened, and no Event of Default is continuing, the Increase
shall be returned to Lessee. Pending an agreement between Lessor and Lessee as
to the amount of the Increase, Lessee will fund the Increase based upon Xxxxxx's
good faith estimate of the amount thereof.
39.3 Application of Security Deposit. If Lessee defaults in respect of
any of the terms, provisions, covenants and conditions of this Lease, including,
but not limited to, payment of any Rent and other sums of money payable by
Lessee, Lessor may, but shall not be required to, in addition to and not in lieu
of any other rights and remedies available to Lessor use, apply all or any part
of the Security Deposit to the payment of any sum in default, or any other sum,
including but not limited to, any damages or deficiency in reletting the Leased
Properties, which Lessor may expend or be required to expend by reason of
Xxxxxx's default. Whenever, and as often as, Lessor has applied any portion of
the Security Deposit to cure Xxxxxx's default hereunder, Lessee shall, within
ten (10) days after Notice from Lessor, deposit additional money with Lessor
sufficient to restore the Security Deposit to the full amount originally
provided or paid, and Xxxxxx's failure to do so shall constitute an Event of
Default hereunder without any further Notice.
39.4 Transfer of Security Deposit. If Lessor transfers its interest
under this Lease, Lessor shall assign the Security Deposit to the new lessor and
thereafter Lessor shall have no further liability for the return of the Security
Deposit, and Xxxxxx agrees to look solely to the new lessor for the return of
the Security Deposit. The provisions of the preceding sentence shall apply to
every transfer or assignment of Xxxxxx's interest under this Lease. Xxxxxx
agrees that it will not assign or encumber or attempt to assign or encumber the
Security Deposit and that Xxxxxx, its successors and assigns, may return the
Security Deposit to the last Lessee in possession at the last address for Notice
given by such Xxxxxx and that Lessor shall thereafter be relieved of any
liability therefor, regardless of one or more assignments of this Lease or any
such actual or attempted assignment or encumbrances of the Security Deposit.
SIGNATURE PAGES FOLLOW
IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
LESSOR:
STERLING ACQUISITION CORP., a Kentucky
corporation
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
LESSEE:
DIVERSICARE LEASING CORPORATION,
a Tennessee corporation
By: /s/ Xxxxx X. Xxxxx, Xx.
-------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Senior Vice President
THE STATE OF TENNESSEE )
:ss
COUNTY OF DAVIDSON )
This instrument was acknowledged before me on the 8th day of November,
2000, by Xxxxx X. Xxxxxx, the Vice President of Sterling Acquisition Corp., a
Delaware corporation, on behalf of the corporation
Xxxxxx Xxxxxxxxxx
Notary Public
Davidson, County, Tennessee
My commission expires: March 23, 2002
THE STATE OF TENNESSEE )
:ss
COUNTY OF DAVIDSON )
This instrument was acknowledged before me on the 8th day of November,
2000, by Xxxxx X. Xxxxx, Xx., the Senior Vice President of Diversicare Leasing
Corporation, a Tennessee corporation, on behalf of the corporation
Xxxxxx Xxxxxxxxxx
Notary Public
Davidson, County, Tennessee
My commission expires: March 23, 2002
LIST OF EXHIBITS TO LEASE
Exhibit A - Description of Land
Exhibit B - Permitted Encumbrances
Exhibit C - Form of Lessee's Certificate
Exhibit D - Form of Memorandum and Short Form of Lease
Exhibit E - Form of Consent and Agreement of Manager
LIST OF SCHEDULES TO LEASE
Schedule A - Excluded Personal Property of Lessee
Schedule B - Exceptions to Permitted Use
Schedule C - Excepted Facilities to Radius Restriction
EXHIBIT A
DESCRIPTION OF LAND
EXHIBIT B
PERMITTED ENCUMBRANCES
EXHIBIT C
FORM OF LESSEE'S CERTIFICATE
The undersigned ("Lessee") under that certain Lease (the "Lease") dated 199 -
and made with , a ("Lessor"), hereby certifies:
1. That it is Lessee under the Lease; that attached hereto as Exhibit
"A" is a true and correct copy of the Lease; that the Lease is now in full force
and effect and has not been amended, modified or assigned except as disclosed or
included in Exhibit "A"; and that the Lease constitutes the entire agreement
between Lessor and Lessee.
2. That there exist no defenses or offsets to enforcement of the Lease;
that there are, as of the date hereof, no breaches or uncured defaults on the
part of Lessee or, to the best of Xxxxxx's knowledge, Lessor thereunder; and
that Lessee has no notice or knowledge of any prior assignment, hypothecation,
subletting or other transfer of Lessor's interest in the Lease.
3. That the Base Rent for the first Lease Year under this Lease is $ .
All Rent which is due has been paid, and there are no unpaid Additional Charges
owing by Lessee under the Lease as of the date hereof. No Base Rent or other
items (including without limitation security deposit and any impound account or
funds) have been paid by Lessee in advance under the Lease except for the
security deposit held by Lessor [in the form of an irrevocable letter of credit]
in the amount of $******* and the monthly installment of Base Rent that became
due on .
4. That Lessee has no claim against Lessor for any security deposit,
impound account or prepaid Rent except as provided in paragraph 3 of this
Certificate.
5. That there are no actions, whether voluntary or otherwise, pending
against the undersigned under the bankruptcy laws of the United States or any
state thereof, nor has Lessee nor, to the best of Xxxxxx's knowledge has Lessor
begun any action, or given or received any notice for the purpose of termination
of the Lease.
6. That there are, as of the date hereof, no breaches or uncured
defaults on the part of Lessee under any other agreement executed in connection
with the Lease.
7. This Certificate has been requested by Lessor pursuant to Section
19.3 of this Lease and for the benefit of ("Relying Party"). The Relying Party
is entitled to rely on the statements of Lessee contained in this certificate.
8. All capitalized terms used herein and not defined herein shall have
the meanings for such terms set forth in the Lease.
Dated: _____, 199_ LESSEE:
By:
EXHIBIT D
FORM OF MEMORANDUM OR SHORT FORM OF LEASE
MEMORANDUM OF CONSOLIDATED, AMENDED AND RESTATED LEASE
THIS MEMORANDUM OF CONSOLIDATED, AMENDED AND RESTATED LEASE, made and
entered into as of November _____, 2000 by and between Sterling Acquisition
Corp., a Kentucky corporation, having its principal office at c/o Omega
Healthcare Investors, Inc., 000 Xxxxxxx Xxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx
00000 as Lessor and Diversicare Leasing Corp., a Tennessee corporation, having
its principal office at c/o Advocat, Inc., 000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxx 00000 as Lessee with respect to the real property identified
in Exhibit "A" attached hereto and located in Phenix City, Alabama.
WITNESSETH:
1. Omega Healthcare Investors, Inc., a Maryland corporation and Diversicare
Corporation of America, a Delaware corporation, entered into a Master Lease
dated August 11, 1992 (the "Original Lease"), as evidenced by the Short Form
Lease dated August 11, 1992 and recorded on _____________ in Book ____________
at Page _________ in the Office of ___________________________.
2. Xxxxxx and Xxxxxx, as the successors-in-interest to the Original Lease, have
entered into a Consolidated, Amended and Restated Master Lease of even date
herewith (the "Amended Lease").
3. For and in consideration of the rents reserved and the other covenants
contained in the Amended Lease, Lessor has and does hereby continue to lease to
Lessee, and Lessee has and does hereby continue to take and rent from Lessor,
all of Lessor's rights and interest in and to the parcel of real property
described in Exhibit "A" and the improvements, fixtures, personal and other
property included within the definition of "Leased Properties" as set forth in
the Lease.
4. The Initial Term of the Amended Lease is approximately ten (10) years,
commencing October 1, 2000 (the "Commencement Date") and ending on September 30,
2012.
5. As more particularly provided in the Amended Lease, Lessee may elect to renew
the original term for one (1) ten (10) year optional renewal periods ("Renewal
Terms") for a maximum term, if exercised, of twenty (20) years after the
Commencement Date.
6. This instrument is executed and recorded for the purpose of giving notice of
Xxxxxx's interest in the Leased Properties and giving notice of the existence of
the Lease, to which reference is made for a full statement of the terms and
conditions thereof. The respective addresses of the parties hereto are:
Lessee:
Diversicare Leasing Corp.
c/o Advocat, Inc.
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Lessor:
Sterling Acquisition Corp.
c/o Omega Healthcare Investors, Inc.
000 Xxxxxxx Xxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attn.: X. Xxxxx Xxxxxxx and Xxxxx Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed by their duly authorized officer or officers and general partners, as
applicable, all as of the day and date first above written.
LESSOR: LESSEE:
STERLING ACQUISITION CORP., DIVERSICARE LEASING CORP.,
a Kentucky corporation a Tennessee corporation
By: By:
-------------------- --------------------------
Name: Name:
Its: Its:
STATE OF MICHIGAN )
)SS
COUNTY OF WASHTENAW )
On this _____ day of October, 2000, before me, __________________, a
Notary Public within and for the County and State aforesaid, duly qualified,
commissioned and acting, appeared in person the within named Xxxxx X. Xxxxxx, to
me personally well known, who stated that they were the Vice President, of
STERLING ACQUISITION CORP., a Kentucky corporation, and were duly authorized in
their respective capacities to execute the foregoing Memorandum of Amended and
Restated Lease for and in the name and behalf of said corporation, and further
stated and acknowledged that they had so signed, executed and delivered said
Memorandum of Amended and Restated Lease in the capacities and for the
consideration and purposed therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on
this _____ day of October, 2000.
-------------------------------
Notary Public
(NOTARY SEAL)
My commission expires:__________
STATE OF _______________ )
)SS
COUNTY OF _____________ )
On this _____ day of October, 2000, before me, __________________, a
Notary Public within and for the County and State aforesaid, duly qualified,
commissioned and acting, appeared in person the within named _________________,
to me personally well known, who stated that they were the __________________,
of DIVERSICARE LEASING CORP., a Tennessee corporation, and were duly authorized
in their respective capacities to execute the foregoing Memorandum of Amended
and Restated Lease for and in the name and behalf of said corporation, and
further stated and acknowledged that they had so signed, executed and delivered
said Memorandum of Amended and Restated Lease in the capacities and for the
consideration and purposed therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal on
this _____ day of October, 2000.
-------------------------------
Notary Public
(NOTARY SEAL)
My commission expires:__________
SCHEDULE A
Excluded Personal Property of Lessee
1. Lessee's continuous quality improvement program, manuals and materials;
management information systems; policy, procedure and educational
manuals and materials and similar proprietary property.
2. Computer hardware, and related equipment which is integrated with the
computer system maintained by Advocat, and computer software, provided,
however, that Lessee shall cause all data that is reasonably necessary
for the continuing operation of one or more of the Facilities, and
which may be accessed through such computers or software, to be made
available to Lessor in a reasonably accessible form without material
cost to Lessee.
