EXHIBIT 10.16
LEASE AGREEMENT
Healthcare Realty Trust Incorporated
a Maryland corporation
Lessor
AND
Cardinal Development Co., Inc., a Kentucky corporation,
Lessee
Property: Fenton Extended Care Center
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx
June 8, 1993
TABLE OF CONTENTS
Page
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ARTICLE I
LEASED PROPERTY; TERM...................................................... 1
ARTICLE II
DEFINITIONS................................................................ 2
ARTICLE III
RENT....................................................................... 9
3.1 Base Rent and Additional Rent.................................. 9
3.2 Quarterly Calculation and Payment of Additional Rent;
Annual Reconciliation ......................................... 10
3.3 Confirmation of Gross Revenues................................. 11
3.4 Additional Charges............................................. 12
3.5 Net Lease...................................................... 12
3.6 Letter of Credit............................................... 12
ARTICLE IV
IMPOSITIONS................................................................ 13
4.1 Payment of Impositions......................................... 13
4.2 Adjustment of Impositions...................................... 14
4.3 Utility Charges................................................ 14
4.4 Insurance Premiums............................................. 14
ARTICLE V
NO TERMINATION............................................................. 14
ARTICLE VI
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY......................... 15
6.1 Ownership of the Leased Property............................... 15
6.2 Lessee's Personal Property..................................... 15
ARTICLE VII
CONDITION AND USE OF LEASED PROPERTY....................................... 15
7.1 Condition of the Leased Property............................... 15
7.2 Use of the Leased Property..................................... 16
7.3 Lessor to Grant Easements...................................... 16
ARTICLE VIII
LEGAL AND INSURANCE REQUIREMENTS........................................... 17
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8.1 Compliance with Legal and Insurance Requirements............... 17
8.2 Legal Requirement Covenants.................................... 17
ARTICLE IX
REPAIRS; RESTRICTIONS...................................................... 17
9.1 Maintenance and Repair......................................... 17
9.2 Encroachments; Restrictions.................................... 18
ARTICLE X
CAPITAL ADDITIONS.......................................................... 19
10.1 Construction of Capital Additions to the Leased Property....... 19
10.2 Capital Additions Financed by Lessee........................... 20
10.3 Capital Additions Financed by Lessor........................... 21
10.4 Remodeling and Non-Capital Additions........................... 22
10.5 Salvage........................................................ 23
ARTICLE XI
LIENS...................................................................... 23
ARTICLE XII
PERMITTED CONTESTS......................................................... 23
ARTICLE XIII
INSURANCE.................................................................. 24
13.1 General Insurance Requirements................................. 24
13.2 Replacement Cost............................................... 25
13.3 Additional Insurance........................................... 26
13.4 Waiver of Subrogation.......................................... 26
13.5 Form of Insurance.............................................. 26
13.6 Increase in Limits............................................. 26
13.7 Blanket Policy................................................. 27
13.8 No Separate Insurance.......................................... 27
ARTICLE XIV
FIRE AND CASUALTY.......................................................... 27
14.1 Insurance Proceeds............................................. 27
14.2 Reconstruction in the Event of Damage or Destruction
Covered by Insurance .......................................... 27
14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance .......................................... 29
14.4 Lessee's Property.............................................. 29
14.5 Restoration of Lessee's Property............................... 29
14.6 No Abatement of Rent........................................... 29
14.7 Damage Near end of Term........................................ 29
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14.8 Termination of Right of First Refusal.......................... 29
14.9 Waiver......................................................... 29
ARTICLE XV
CONDEMNATION............................................................... 30
15.1 Definitions.................................................... 30
15.2 Parties Rights and Obligations................................. 30
15.3 Total Taking................................................... 30
15.4 Partial Taking................................................. 30
15.5 Restoration.................................................... 31
15.6 Award Distribution............................................. 31
15.7 Temporary Taking............................................... 31
ARTICLE XVI
DEFAULT.................................................................... 31
16.1 Events of Default.............................................. 31
16.2 Rent and Charges Payable Following Default..................... 35
16.3 Additional Expenses............................................ 35
16.4 Lessee's Obligation to Purchase................................ 35
16.5 Waiver......................................................... 36
16.6 Application of Funds........................................... 36
16.7 Notices by Lessor.............................................. 36
16.8 Lessor's Contractual Security Interest......................... 36
ARTICLE XVII
LESSOR'S RIGHT TO CURE..................................................... 37
ARTICLE XVIII
PURCHASE OF THE LEASED PROPERTY............................................ 37
ARTICLE XIX
HOLDING OVER............................................................... 38
ARTICLE XX
ABANDONMENT................................................................ 38
20.1 Discontinuance of Operations on the Leased Property; Offer
to Purchase ................................................... 38
20.2 Acceptance of Offer............................................ 39
20.3 Rejection of Offer............................................. 39
20.4 No Rent after Purchase or Termination.......................... 39
ARTICLE XXI
SUBSTITUTION OF PROPERTY................................................... 39
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21.1 Substitution of Property for the Leased Property............... 39
21.2 Conditions to Substitution..................................... 42
21.3 Conveyance to Lessee........................................... 43
21.4 Expenses....................................................... 43
ARTICLE XXII
RISK OF LOSS............................................................... 43
ARTICLE XXIII
INDEMNIFICATION............................................................ 44
ARTICLE XXIV
SUBLETTING AND ASSIGNMENT.................................................. 44
24.1 Subletting and Assignment...................................... 44
24.2 Attornment..................................................... 45
24.3 Sublease Limitation............................................ 45
ARTICLE XXV
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS............................ 45
ARTICLE XXVI
INSPECTION................................................................. 46
ARTICLE XXVII
NO WAIVER.................................................................. 46
ARTICLE XXVIII
REMEDIES CUMULATIVE........................................................ 46
ARTICLE XXIX
SURRENDER.................................................................. 46
ARTICLE XXX
NO MERGER OF TITLE......................................................... 47
ARTICLE XXXI
TRANSFERS BY LESSOR........................................................ 47
ARTICLE XXXII
QUIET ENJOYMENT............................................................ 47
ARTICLE XXXIII
NOTICES.................................................................... 47
ARTICLE XXXIV
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APPRAISAL.................................................................. 48
ARTICLE XXXV
PURCHASE RIGHTS............................................................ 49
35.1 First Refusal to Purchase...................................... 50
35.2 Lessor's Option to Purchase Lessee's Personal Property......... 50
ARTICLE XXXVI
DEFAULT BY LESSOR.......................................................... 50
36.1 Default by Lessor.............................................. 50
36.2 Lessee's Right to Cure......................................... 51
ARTICLE XXXVII
ARBITRATION................................................................ 51
37.1 Controversies.................................................. 51
37.2 Appointment of Arbitrators..................................... 51
37.3 Third Arbitrator............................................... 51
37.4 Arbitration Procedure.......................................... 52
37.5 Expenses....................................................... 52
ARTICLE XXXVIII
FINANCING OF THE LEASED PARTY.............................................. 52
38.1 Financing by Lessor............................................ 52
ARTICLE XXXIX
SUBORDINATION AND NON-DISTURBANCE.......................................... 52
ARTICLE XL
MISCELLANEOUS.............................................................. 53
40.1 General........................................................ 53
40.2 Transfer of Licenses........................................... 53
ARTICLE XLI
MEMORANDUM OF LEASE........................................................ 54
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LEASE
LEASE (the "Lease") is dated as of the June 8 , 1993, and is between
Healthcare Realty Trust Incorporated ("Lessor"), a Maryland corporation, having
its principal office at 0000 Xxxx Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 and
Cardinal Development Co., Inc., a Kentucky corporation ("Lessee"), having its
principal office at 0000 Xxxxxxxxxxx Xxxxx, 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000.
ARTICLE I
LEASED PROPERTY; TERM
Upon and subject to the terms and conditions hereinafter set forth, Lessor
leases to Lessee and Lessee rents from Lessor all of Lessor's rights and
interest in and to the following real property (collectively, the "Leased
Property");
(a) the real property described on Exhibit A attached hereto (the "Land");
(b) all buildings, structures, Fixtures (as hereinafter defined) and other
improvements of every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and
off-site), parking areas and roadways appurtenant to such buildings and
structures presently or hereafter situated upon the Land, and Capital Additions
finances by Lessor (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land and the
Leased Improvements; and;
(d) all permanently affixed equipment, machinery, fixtures, and other
items of real and/or personal property, including all components thereof now and
hereafter located in, on or used in connection with, and permanently affixed to
or incorporated into the Leased Improvements, including, without limitation, all
furnaces, boilers, heaters, electrical equipment, heating plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, and built-in oxygen and vacuum
systems, all of which, to the greatest permitted by law, are hereby deemed-by
the parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding all
items included within the category of Lessee's Personal Property as defined in
Article II below (collectively the "Fixtures");
SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached hereto (the
"Permitted Exceptions); to have and to hold for (a) a fixed term (the "Fixed
Term") commencing on the Closing Date as defined in the Purchase and Sale
Agreement defined herein (the "Commencement Date") and ending at midnight on the
last day of the two hundred and fortieth (240th) month after the Commencement
Date.
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ARTICLE II
DEFINITIONS
For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles as at the time applicable, (c) 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 (d) 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:
Added Value Additional: As defined Section 10.2.
Additional Charges: As defined in Section 3.4.
Additional Rent: As defined in Section 3.1(b).
Affiliate: When used with respect to any corporation, the term "Affiliate"
shall mean any person which, directly or indirectly, controls or is controlled
by or is under common control with such corporation. For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.
Award: As defined in Section 15.1.
Base Rent: As defined in Section 3.1(a).
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which national banks in the City of Nashville, Tennessee are
authorized, or obligated, by law or executive order, to close.
Capital Additions: One or more new buildings or one or more additional
structures annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land during the Term, including the
construction of a new wing or new story, or the repair, replacement,
restoration, remodeling or rebuilding of the existing Leased Improvements or any
portion thereof which are not normal, ordinary or recurring to maintain the
Leased Property.
Capital Addition Cost: The cost of any Capital Additions proposed to be
made by Lessee whether or not paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of the Capital Additions, including site
preparation and improvement, materials, labor,
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supervision and certain related design, engineering and architectural services,
the cost of any fixtures, the cost of construction financing and miscellaneous
costs approved by Lessor, (b) if agreed to by Lessor in writing in advance, the
cost of any land contiguous to the Leased Property purchased for the purpose of
placing thereon the Capital Additions or any portion thereof or for providing
means of access thereto, or parking facilities therefor, including the cost of
surveying the same, (c) the cost of insurance, real estate taxes, water and
sewage charges and other carrying charges for such Capital Additions during
construction, (d) the cost of title insurance, (e) reasonable fees and expenses
of legal counsel, (f) filing, registration and recording taxes and fees, (the
Tennessee indebtedness tax is excluded), (g) documentary stamp taxes, if any,
and (h) all reasonable costs and expenses of Lessor and any Lending Institution
which has committed to finance the Capital Additions, including, but not limited
to, (i) the reasonable fees and expenses of their respective legal counsel, (ii)
all printing expenses, (iii) the amount of any filing, registration and
recording taxes and fees, (iv) documentary stamp taxes, if any, (v) title
insurance charges, appraisal fees, if any, (vi) rating agency fees, if any, and
(vii) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.
Cash Adjustment: As defined in Section 21.1.
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Article I.
Condemnation, Condemnor: As defined in Section 15.1.
Consolidated Financial Statements: For any fiscal year or other accounting
period for Guarantor or Lessee and their respective consolidated subsidiaries,
statements of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of the respective
Fiscal Year to the end of such period and the related balance sheet as at the
end of such period, together with the notes thereto, all in reasonable detail
and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, and prepared in accordance
with generally accepted accounting principles.
Consolidated Net Worth: At any time, the sum of the following for
Guarantor or Lessee and their respective consolidated subsidiaries on a
consolidated basis determined in accordance with generally accepted accounting
principles.
(a) the amount of capital or stated capital (after deducting the cost of
any treasury shares), plus
(b) the amount of capital surplus and retained earnings (or, in the case
of a capital surplus or retained earnings deficit, minus the amount of such
deficit), minus
(c) the sum of the following (without duplication of deductions in respect
of items already deducted in arriving at surplus and retained earnings): (i)
unamortized debt discount and expense and (ii) any write-up in book value of
assets resulting from a revaluation thereof
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subsequent to the most recent Consolidated Financial Statement prior to the date
thereof, except any net write-up in value of foreign currency in accordance with
generally accepted accounting principles: any write-up resulting from reversal
of a reserve for bad debts or depreciation; and any write-up resulting from a
change in methods of accounting for inventory.
CPI: The Consumer Price Index published by the Bureau of Labor Statistics
of the United States Department of Labor, US city Average. All Items and Major
Group Figures for Urban Wage Earners and Clerical Workers (1982-84 = 100), or if
such index is not available, a comparable index selected by Lessor which is
published by a governmental institution or a national recognized publisher of
statistical information.
CPI Increase: The amount obtained by multiplying (a) the Base Rent then
payable under the Lease, by (b) the percentage increase between the CPI last
published prior to the first day of the then applicable Fiscal Year and the CPI
last published prior to the Commencement Date. The CPI Increase for each Fiscal
Year shall be calculated on and as of the first day of such Fiscal Year.
Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, prepaid rent or other sums, deposits or interest held by
Lessee, if any, with respect to the Leased Property, the Tenant Leases or the
Tenants.
Date of Taking: As defined in Section 15.1.
Economic termination Purchase Date: As defined in Section 20.1.
Encumbrance: As defined in Article XXXVIII.
Event of Default: As defined in Section 16.1.
Facility: The licensed, long-term nursing facility known as Fenton
Extended Care Center to be operated on the Leased Property.
Facility Mortgage: As defined in Section 13.1.
Facility Mortgagee: As defined in section 13.1.
Fair Market Added Value: The Fair Market Value (as hereinafter defined) of
the Leased Property (including all Capital Additions) less the Fair Market Value
of the Leased Property determined as if no Capital Additions paid for by Lessee
had been constructed.
Fair Market Value: The Fair Market Value of the Leased Property or any
Substitute Property, including all Capital Additions, and (a) assuming the same
is unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article XXXIV or in such other manner as shall be
mutually acceptable to Lessor and Lessee, and (c) not taking into account any
reduction in value resulting from any indebtedness to which the Leased property
or such Substitute Property is subject and which encumbrance Lessee or Lessor is
otherwise
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required to remove pursuant to any provision of this Lease or agrees to remove
at or prior to the closing of the transaction as to which such Fair Market Value
determination is being made. The positive or negative effect on the value of the
Leased Property or Substitute Property attributable to the interest rate,
amortization schedule, maturity date, prepayment penalty and other terms and
conditions of any Encumbrance on the Leased Property or any Substitute Property,
as the case may be, which is not so required or agreed to be removed shall be
taken into account in determining such Fair Market Value.
Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.
Fiscal Year: The twelve (12) month period beginning January 1 and ending
December 31.
Fixed Term: As defined in Article X.
Xxxxx Revenues: The term "Gross Revenues" shall mean all revenues received
or receivable from or by reason of the operation of the Facility, or any other
use of the Leased Property, 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 Property, including without
limitation, and except as provided below, any consideration received under any
subletting, licensing, or other arrangements with third parties relating to the
possession or use of any portion of the Leased Property; provided, however, that
Gross Revenues shall not include professional fees or charges by physicians or
providers of ancillary services, or are accompanied by separate charges for use
of the Facility or any portion thereof, and non-operating revenues such as
interest income or gain from the sale of assets; and provided, further, that
there shall be deducted from such revenues:
(a) contractual allowances (relating to any period during the Term of this
Lease) for xxxxxxxx not paid by or received from the appropriate governmental
agencies or third party providers,
(b) allowances according to generally accepted accounting principles for
uncollectible accounts,
(c) all proper billing credits and adjustments according to generally
accepted accounting principles relating to health care accounting,
(d) federal, state or local excise taxes and any tax based upon or
measured by said Gross Revenues which is added to or made a part of the amount
billed to the patient or other recipient of such services or goods, whether
included in the billing or stated separately,
(e) provider discounts for hospital or other medical facility utilization
contracts, and
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(f) the cost of any federal, state or local governmental program imposed
specially to provide or finance indigent patient care.
To the extent that the Leased Property is subleased by Lessee, Gross Revenues
shall be calculated for all purposes of this Lease by including the Gross
Revenues of such sublessee with respect to the subleased property, i.e., the
Gross Revenues generated from the operations conducted on such subleased portion
of the Leased Property shall be included directly in the Gross Revenues for the
purpose of determining percentage rent payable under this Lease and the rent
received or receivable by Lessee from or under such subleases shall be excluded
from Gross Revenues for such purpose.
Guarantor: Cardinal Group Corporation, a Kentucky corporation.
Guaranty: That certain Guaranty Agreement to be dated on or about
_____________, 1993 executed and delivered by Guarantor to Lessor, pursuant to
the terms of which Guarantor has unconditionally and irrevocably guaranteed the
full, faithful and complete performance of each of Lessee's obligations under
this Lease and each of the obligations of Lessee, Guarantor or any Affiliate of
Lessee or Guarantor to Lessor.
Impositions: Collectively, all taxes (including, without limitation, all
capital stock and franchise taxes of Lessor, all ad valorem, sales and use,
single business, gross receipts, transaction privilege, rent or similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term), ground rents,
water, 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 any character
in respect of the Leased Property and/or the Rent (including all interest and
penalties thereon due to any failure in payment by Lessee), which at any time
prior to, during or in respect of the Term hereof may be assessed or imposed on
or in respect of or be a lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, sales from, or activity conducted on, or in connection
with, the Leased Property or the leasing or use of the Leased Property or any
part thereof; provided, however, nothing contained in this Lease shall be
construed to require Lessee to pay (1) any tax based on net income (whether
denominated as a franchise or capital stock, financial institutions or other
tax) imposed on Lessor, or (2) any transfer or net revenue tax of Lessor, or (3)
any tax imposed with respect to the sale, exchange or other disposition by
Lessor of any portion of the Leased Property or the proceeds thereof, or (4)
except as expressly provided elsewhere in this Lease, any principal or interest
on any Encumbrance on the Leased Property, except to the extent that any tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (1) or (2) is levied, assessed or imposed expressly
in lieu thereof.
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Insurance Requirements. All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy.
Land: As defined in Article I.
Lease: As defined in the Preamble.
Lease Assignment: That certain Assignment of Rents and Leases to be dated
on or about _________________, 1993 executed by Lessee to Lessor, pursuant to
the terms of which Lessee has assigned to Lessor each of the Tenant Leases and
Credit Enhancements, if any, as security for the obligations of Lessee under
this Lease, the obligations of Guarantor under the Guaranty, and any other
obligations of Lessee, Guarantor or any Affiliate of Lessee or Guarantor to
Lessor.
Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.
Leased Improvements; Leased Property: Each as defined in Article I.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (a) require repairs, modification, or alterations
in or to the Leased Property, or (b) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses, authorizations and regulations
relating thereto, 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), at any time in
force affecting the Leased Property.
Lending Institution: Any insurance company, federally insured commercial
or savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, having a net worth of at least
$50,000,000.
Lessee: Cardinal Development Co., Inc., a Kentucky corporation, and its
successors and permitted assigns.
Lessee's Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers, trade fixtures or other
personal property, and consumable inventory and supplies, used or useful in
Lessee's business on the Leased Property, including without limitation, all
items of furniture, furnishings, equipment, supplies and inventory, and Lessee's
accounts receivable and operating licenses except items, if any, included within
the definition of Fixtures.
Lessor: Healthcare Realty Trust, a Maryland corporation, and its
successors and assigns.
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Letter of Credit: An unconditional, annually renewable, irrevocable
standby letter of credit in form and content acceptable to Lessor, in the amount
of $321,562, issued on account of Lessee to Lessor by a financial institution
satisfactory to Lessor and dated as of the Commencement Date.
Minimum Repurchase Price: The equity in the Leased Property at the time of
acquisition of the Leased Property by Lessor (i.e., the Fair Market Value of the
Leased Property at the time of such acquisition plus the unpaid principal
balance, at the time of repurchase of the Leased Property by Lessee, of all
Encumbrances against the Leased Property permitted in Article XXXVIII hereof,
less all excess proceeds received by Lessor from any refinancing of the Leased
Property permitted in Article XXXVIII hereof (net of any costs and expenses
incurred in connection with such refinancing, including without limitation, loan
points, commitment fees and commissions) and the net amount (after deduction of
all reasonable legal fees and other costs and expenses, including without
limitation, expert witness fees, incurred by Lessor in connection with obtaining
any such award) of all Awards received by Lessor from Condemnation of the Leased
Property.
Officer's Certificate: A certificate of Lessee signed by the Chairman of
the Board of Directors, the President, any Vice President or the Treasurer of
Lessee or another officer authorized to so sign by the Board of Directors or
By-Laws of Lessee, or any other person whose power and authority to act has been
authorized by delegation in writing by any of the persons holding the foregoing
offices.
Overdue Rate: On any date, a rate per annum equal to Six Percent (6%)
above the Prime Rate, but in no event greater than the maximum rate then
permitted under applicable law.
Payment Date: Any due date for the payment of the installments of Base
Rent, Additional Rent or any other sums payable under this Lease.
Primary Intended Use: As defined in Section 7.2(b).
Prime Rate: The annual rate announced by First National Bank of Boston to
be its prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.
Purchase and Sale Agreement: The agreement dated on or about January 25,
1993, among Lessee (or an Affiliate) and Lessor, relating to the acquisition by
Lessor from Lessee (or an Affiliate) of the Leased property and the leasing of
such property by Lessor to Lessee.
Rent: Collectively, the Base Rent, the Additional Rent and the Additional
Charges.
Security Agreement: That certain Security Agreement to be dated on or
about _______________, 1993 executed by Lessee to Lessor, pursuant to the terms
of which Lessee has granted to Lessor a first lien and security interest in and
to all of Lessee's Personal Property, including but not limited to, fixed and
movable equipment, including replacements and substitutions, as security for the
obligations of Lessee under this Lease, the obligations of Guarantor under the
8
Guaranty and any and all other obligations of Lessee, Guarantor or any Affiliate
of Lessee or Guarantor to Lessor.
Substitution Date: As defined in Section 21.1.
Substitute Properties: As defined in Section 21.1.
Taking: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.
Tenant: The lessees or tenants under the Tenant Leases, if any.
Tenant Leases: All leases, subleases and other rental agreements (written
or verbal, now or hereafter in effect), if any, that grant a possessory interest
in and to any space in the Leased Property, or that otherwise have rights with
regard to the Leased Property, and all Credit Enchantments, if any, held in
connection therewith.
Term: The Fixed Term unless earlier terminated pursuant to the provisions
hereof.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto, or Guarantor, to perform any obligations of such party, under this Lease
or any guaranty of this Lease, including any obligation to provide financing
undertaken by Lessor pursuant to Article X below.
Unsuitable for Its Primary Intended Use: As used anywhere in this Lease,
the term "Unsuitable for Its Primary Intended Use" shall mean that, by reason of
damage or destruction, or a partial Taking by Condemnation, in the good faith
judgment of Lessee, reasonably exercised, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, among other relevant factors, the number of usable beds affected by
such damage or destruction or partial Taking.
ARTICLE III
RENT
3.1 Base Rent and Additional Rent. Lessee shall pay to Lessor without
notice, demand, set off or counterclaim in advance, in lawful money of the
United States of America, at Lessor's address set forth herein or at such other
place or to such other person, firms or corporations as Lessor from time to time
may designate in writing, Base Rent (as defined below) and Additional Rent (as
defined below) during the Term, as follows:
9
(a) Base Rent: The annual sum of Four Hundred Twenty-eight Thousand, Seven
Hundred Fifty Dollars ($428,750.00) payable in advance in equal, consecutive
monthly installments of Thirty-Five Thousand Seven Hundred Twenty-Nine and
16/100 Dollars ($35,729.16) on the first day of each calendar month of the Term,
commencing , 1993 (prorated as to any partial month), subject to adjustment as
provided in Sections 10.3(b)(iv), and 21.1 below; and
(b) Additional Rent: An amount per Fiscal year (prorated for a partial
year) in addition to the Base Rent equal to the prior year's Additional Rent
plus the greater of (i) eight and one-half percent (8.5%) of the increase in
Gross Revenues over the prior year's Gross Revenues or (ii) the increase in the
Consumer Price Index for all Urban Consumers for the applicable region within
which the Facility is located over the preceding year multiplied by the prior
year's total rent (Base Rent plus Additional Rent). Additional Rent shall be
payable quarterly during the Term for the period ending March 31, June 30,
September 30 and December 31 and there shall be an annual reconciliation of the
Additional Rent as provided in Section 3.2 below. However, in no event will
Additional Rent exceed three percent (3%) of the prior year total rent.
3.2 Quarterly Calculation and Payment of Additional Rent; Annual
Reconciliation
(a) Lessee shall calculate and pay Additional Rent quarterly, computed on
a pro rata basis, for the applicable portion of the entire Fiscal Year, on a
cumulative basis, up to the end of the fiscal quarter then most recently ended,
less the Additional Rent paid for any preceding fiscal quarters within the then
current Fiscal Year. Lessee shall calculate the amount of Gross Revenues, as of
the end of each fiscal quarter, and shall deliver to lessor within fifteen (15)
days after the end of such quarter, an Officer's Certificate setting forth the
amount of Gross Revenues for such fiscal quarter. Lessor shall then determine
and notify Lessee, for that fiscal quarter, the amount of Additional Rent which
is due. Within fifteen (15) days after receipt of such notification from Lessor,
Lessee shall pay the Additional Rent for the fiscal quarter to Lessor.
(b) In addition, on or before March 31 of each year, commencing with March
31, 1994, Lessee shall deliver to Lessor an audited or other professionally
prepared Officer's Certificate reasonably acceptable to Lessor and certified by
an authorized officer of Lessee, setting forth the Gross Revenues for the Fiscal
Year ended on the immediately preceding December 31. Lessor shall then determine
and notify Lessee the amount of Additional Rent payable by Lessee for such
Fiscal Year. The first annual reconciliation and adjustment of Additional Rent
shall be made as of December 31, 1993.
(c) If the Additional Rent as finally determined for any Fiscal year,
exceeds the sum of the quarterly payments of Additional Rent previously paid by
Lessee with respect to said Fiscal Year, Lessee shall, within fifteen (15) days
after receipt of Lessor's notice thereof, pay such deficit to Lessor.
(d) If the Additional Rent for any Fiscal Year is less than the amount
previously paid with respect thereto by Lessee, Lessee shall notify Lessor
either (i) to pay to Lessee an amount
10
equal to such difference, or (ii) to grant Lessee a credit against Additional
Rent next coming due in the amount of such difference.
(e) The obligation to pay Additional Rent shall survive the expiration or
earlier termination of the Term, and a final reconciliation, taking into
account, among other relevant adjustments, any contractual allowances which
related to Gross Revenues accrued prior to such termination date but which have
been determined to be not payable after such termination date, and Lessee's good
faith best estimate of the amount of any unresolved contractual allowances,
shall be made not later than two (2) years after said expiration or termination
date. Lessee shall advise Lessor within sixty (60) days after such expiration or
termination date of Lessee's best estimate at the time of the approximate amount
of such adjustments, which estimate shall not be binding on Lessee or have any
legal effect whatsoever.
3.3 Confirmation of Gross Revenues. Lessee shall utilize, or cause to be
utilized, an accounting system for the Leased Property in accordance with its
usual and customary practices and in accordance with generally accepted
accounting principles which will accurately record all Gross Revenues and Lessee
shall retain, for at least three (3) years after the expiration of each Fiscal
Year (and in any event until the final reconciliation described in Section 3.2
above has been made), reasonably adequate records conforming to such accounting
system showing all Gross Revenues for such Fiscal Year. Lessor, at its own
expense except as provided hereinbelow, shall have the right from time to time
to have its accountants or representatives audit the information set forth in
the Officer's Certificate referred to in Section 3.2 and in connection with such
audits to examine Lessee's records with respect thereto (including supporting
data and sales tax returns), subject to any prohibitions or limitations on
disclosure of any such data under applicable law or regulations, including
without limitation, any duly enacted "Patients' Xxxx of Rights" or similar
legislation, including such limitations as may be necessary to preserve the
confidentiality of the Facility-patient relationship and the physician- patient
privilege. If any such audit discloses a deficiency in the reporting of Gross
Revenues. Lessee shall forthwith pay to Lessor the amount of the deficiency in
Additional Rent which would have been payable by it had such deficiency in
reporting Gross Revenues not occurred, as finally agreed or determined, together
with interest on the Additional Rent which should have been payable by it, at
the Overdue Rate, from the date when said payment should have been made, by
Lessee to the date of payment thereof; provided, however, that as to any audit
that is commenced more than two (2) years after the date Gross Revenues for any
Fiscal Year are reported by Lessee to Lessor, the deficiency, if any, with
respect to Additional Rent shall bear interest as permitted herein only from the
date such determination of deficiency is made, unless such deficiency is the
result of gross negligence or willful misconduct on the part of Lessee. If any
such audit discloses that the Gross Revenues actually received by Lessee for any
Fiscal Year exceed those reported by Lessee by more than 10%, Lessee shall pay
the cost of such audit and examination. Any proprietary information obtained by
Lessor pursuant to the provisions of this Section shall be treated as
confidential, except that such information may be used in any litigation or
arbitration proceedings between the parties and except, further, that Lessor may
disclose such information to prospective lenders, subject in each case to
appropriate confidentiality safeguards. The obligations of Lessor and Lessee
contained in this Section shall survive the expiration or earlier termination of
this Lease.
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3.4 Additional Charges. In addition to the Base Rent and Additional Rent,
(a) Lessee will also pay and discharge as and when due and payable all other
amount, liabilities, obligations and Impositions which Lessee assumes or agrees
to pay under this Lease, and (b) in the event of any failure on the part of
Lessee to pay any of those items referred to in clause (a) above, Lessee will
also promptly pay and discharge every fine, penalty, interest and cost which may
be added for non-payment or late payment of such items (the items referred to in
clauses (a) and (b) above being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease, by statute or
otherwise, in the case of non-payment of the Additional Charges, as well as the
Base Rent or Additional Rent. If any installment of Base Rent, Additional Rent
or Additional Charges (but only as to those Additional Charges which are payable
directly to Lessor) shall not be paid within five (5) Business Days after its
due date, Lessee will pay Lessor on demand, as Additional Charges, a late charge
(to the extent permitted by law) computed at the Overdue Rate (or at the maximum
rate permitted by law, whichever is less) on the amount of such installment,
from the due date of such installment to the date of payment thereof. To the
extent that Lessee pays any Additional Charges to Lessor pursuant to any
requirement of this Lease, Lessee shall be relieved of its obligation to pay
such Additional Charges to the entity to which they would otherwise be due.
3.5 Net Lease. The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the installments of Base
Rent, and the payments of Additional Rent and Additional Charges throughout the
Term, all as more fully set forth in Article V, but subject to any other
provisions of this Lease which expressly provide for adjustment of Rent or other
charges.
3.6 Letter of Credit. Lessee shall deposit the Letter of Credit with
Lessor upon the date of execution and delivery of this Lease by Lessee to
Lessor. Lessee shall renew and cause a new Letter of Credit to be delivered to
Lessor on or before thirty (30) days prior to the date of expiration of the
Letter of Credit which is then on deposit with Lessor. If Lessee fails to timely
deliver a renewal Letter of Credit to Lessor, Lessor shall be entitled to draw
down the entire amount of the Letter of Credit. The Letter of Credit shall be
held by Lessor as security for the performance by Lessee of Lessee's covenants
and obligations under the Lease. The Letter of Credit shall not be considered an
advance payment of rental or a measure of Lessor's damages in case of default by
Lessee. Lessor may, from time to time, without prejudice to any other remedy,
draw down upon the Letter of Credit and use the proceeds thereof to make good
any arrearages of rent, to satisfy any other covenant or obligation of Lessee
hereunder or to compensate Lessor for any other loss or damage which Lessor may
suffer by reason of any default by Lessee. Following any such draw against the
Letter of Credit, Lessee shall deliver to Lessor on demand a new letter of
credit in the amount of the original Letter of Credit or a supplemental letter
of credit in an amount sufficient to restore the aggregate letters of credit
held by Lessor to the amount of the original Letter of Credit. If Lessee is not
in default at the termination of the Lease, and has complied with all of the
provisions of this Lease to be performed by Lessee, including surrender of the
Leased Property in accordance with the provisions hereof, the Letter of Credit
shall be returned by Lessor to Lessee, subject to any draws which have
previously been made by Lessor against the Letter of Credit. Lessee will not
assign or encumber Lessee's interest in the Letter of Credit, and neither Lessor
nor Lessor's
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successors or assigns will be bound by any such attempted assignment or
encumbrance of the Letter of Credit.
ARTICLE IV
IMPOSITIONS
4.1 Payment of Impositions. Subject to Article XII relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and Lessee will promptly,
upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. Lessee's obligation to pay such
Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. If any such
Imposition may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Lessee may exercise the option to pay the same (and any accrued interest on the
unpaid balance of such Imposition) in installments and, in such event, shall pay
such installments during the Term hereof (subject to Lessee's right of contest
pursuant to the provisions of Article XII) as the same respectively become due
and before any fine, penalty, premium, further interest or cost may be added
thereto. Lessor, at its expense, shall, to the extent permitted by applicable
law, prepare and file all tax returns and reports as may be required by
governmental authorities in respect of Lessor's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Lessee, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Lessee, the same shall be paid
over to or retained by Lessee if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XVI. Lessor and Lessee shall,
upon request of the other, provide such data as is maintained by the party to
whom the request is made with respect to the Leased Property as may be necessary
to prepare any required returns and reports. In the event 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. Lessor, to the extent it possesses the same, and Lessee,
to the extent it possesses the same, will provide the other party, upon request,
with cost and depreciation records necessary for filing returns for any property
so classified as personal property. Where Lessor is legally required to file
personal property tax returns, Lessee will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Lessee to file a protest. Lessee may, upon giving notice to Lessor, at
Lessee's option and at Lessee'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
Lessee's expense as aforesaid, shall fully cooperate with Lessee in such
protest, appeal, or other action. Xxxxxxxx for reimbursement by Lessee to Lessor
of personal property taxes shall be accompanied by copies of a xxxx therefor and
payments thereof which identify the personal property with respect to which such
payments are made.
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4.2 Adjustment of Impositions. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof shall survive such termination.
4.3 Utility Charges. Lessee will contract for, in its own name, and will
pay or cause to be paid all charges for electricity, power, gas, oil, water and
other utilities used in the Leased property during the Term.
4.4 Insurance Premiums. Lessee will contract for in its own name and will
pay or cause to be paid all premiums for the insurance coverage required to be
maintained pursuant to Article XIII during the Term.
ARTICLE V
NO TERMINATION
Lessee shall remain bound by this Lease in accordance with its terms and
shall neither take any action without the consent of Lessor to modify, surrender
or terminate the same, nor seek nor be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent, nor shall the
respective obligations of Lessor and Lessee be otherwise affected by reason of
(a) any damage to, or destruction of, any Leased Property or any portion thereof
from whatever cause or any Taking of the Leased Property or any portion thereof,
(b) the lawful or unlawful prohibition of, or restriction upon, Lessee's use of
the Leased Property, or any portion thereof, or the interference with such use
by any person, corporation, partnership or other entity, or by reason of
eviction by paramount title; (c) 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, (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Lessor or any assignee or transferee of Lessor, or (e) for
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. 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 Property 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. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
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ARTICLE VI
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY
6.1 Ownership of the Leased Property. Lessee acknowledges that the Leased
Property is the property of Lessor and that Lessee has only the right to the
possession and use of the Leased Property upon the terms and conditions of this
Lease.
6.2 Lessee's Personal Property. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of Lessee's Personal
Property, and Lessee may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Lessee shall
provide and maintain during the entire Term all such Lessee's Personal Property
as shall be necessary in order to operate the Facility in compliance with all
licensure and certification requirements, in compliance with all applicable
Legal Requirements and Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use. All of Lessee's
Personal Property not removed by Lessee within seven (7) 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 first giving notice thereof to Lessee, without any payment to
Lessee and without any obligation to Lessee to account therefor. Lessee will, at
its expense, restore the Leased Property at the expiration or earlier
termination of this Lease to the condition required by Section 9.1(d), including
repair of all damage to the Leased Property caused by the removal of Lessee's
Personal Property, whether effected by Lessee or Lessor.
ARTICLE VII
CONDITION AND USE OF LEASED PROPERTY
7.1 Condition of the Leased Property. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE,
AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT.
15
7.2 Use of the Leased Property.
(a) Lessee covenants that it will obtain and maintain all approvals needed
to use and operate the Leased Property and the Facility for the Primary Intended
Use, as defined below, under applicable local, state and federal law, including
but not limited to licensure requirements and Medicare and/or Medicaid
certification.
(b) After the Commencement Date and during the entire Term, Lessee shall
use or cause to be used the Leased Property and the improvements thereon as a
long term nursing facility and for such other uses as may be necessary in
connection with or incidental to such use (the "Primary Intended Use"). Lessee
shall not use the Leased Property or any portion thereof for any other use
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld or delayed. No use shall be made or permitted to be made
of the Leased Property and no acts shall be done which will cause the
cancellation of any insurance policy covering the Leased Property or any part
thereof, nor shall Lessee sell or otherwise provide to residents or patients
therein, or permit to be kept, used or sold in or about the Leased Property any
article which may be prohibited by law or by the standard form of fire insurance
policies, any other insurance policies required to be carried hereunder, or fire
underwriters regulations. Lessee shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property or other improvements of any
insurance board, association, organization or company necessary for the
maintenance of the insurance, as herein provided, covering the Leased Property
and Lessee's Personal Property.
(c) Lessee covenants and agrees that during the Term it will use its best
efforts to operate continuously the Leased Property as a provider of health care
services in accordance with its Primary Intended Use and to maintain its
certifications for reimbursement and licensure and its accreditation, if
compliance with accreditation standards is required to maintain the operations
of the Facility and if a failure to comply would adversely affect operations of
the Facility.
(d) Lessee shall not commit or suffer to be committed any waste on the
Leased Property, or in the Facility, nor shall Lessee cause or permit any
nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, 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 Property or any portion thereof.
7.3 Lessor to Grant Easements. Lessor will, from time to time so long as
no Event of Default has occurred and is continuing, at the request of Lessee and
at Lessee's cost and expense, but subject to the approval of Lessor (a) grant
easements and other rights in the nature of easements, (b) release existing
easements or other rights in the nature of easements which are for the benefit
of the Leased Property, (c) dedicate or transfer unimproved portions of the
Leased Property for road, highway or other public purposes, (d) execute
petitions to have the
16
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property, and (f) execute and deliver to any person any instrument appropriate
to confirm or effect such grants, releases, dedications and transfers (to the
extent of its interest in the Leased Property), but only upon delivery to Lessor
of an Officer's Certificate stating (and such other information as Lessor may
reasonably require confirming) that such grant, release, dedication, transfer,
petition or amendment is required for and not detrimental to the proper conduct
of the business of Lessee on the Leased Property and does not reduce its value.
ARTICLE VIII
LEGAL AND INSURANCE REQUIREMENTS
8.1 Compliance with Legal and Insurance Requirements. Subject to Article
XII relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements in respect of the
use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need, provider agreements and other authorizations required for any use of
the Leased Property and Lessee's Personal Property then being made, and for the
proper erection, installation, operation and maintenance of the Leased Property
or any part thereof, including without limitation, any Capital Additions.
8.2 Legal Requirement Covenants. Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose. Lessee shall acquire and maintain all licenses, certificates,
permits, provider agreements and other authorizations and approvals needed to
operate the Leased Property in its customary manner for the Primary Intended Use
and any other use conducted on the Leased Property as may be permitted from time
to time hereunder. Lessee further covenants and agrees that Lessee's use of the
Leased Property and maintenance, alteration, and operation of the same, and all
parts thereof, shall at all times conform to all applicable local, state and
federal laws, ordinances, rules and regulations.
ARTICLE IX
REPAIRS; RESTRICTIONS
9.1 Maintenance and Repair.
(a) Lessee, at its expense, will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto (and Lessee's Personal
Property) in good order and repair (whether or not the need for such repairs
occurs as a result of Lessee's use, any prior use, the elements, the age of the
Leased Property or any portion thereof) and, except as otherwise provided in
Articles XIV and XV, with reasonable promptness, will make all necessary and
appropriate repairs thereto of every kind and nature, whether interior or
exterior, structural or
17
non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term of this
Lease (concealed or otherwise). All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work. Lessee will
not take or omit to take any action the taking or omission of which might
materially impair the value or the usefulness of the Leased Property or any part
thereof for the Primary Intended Use.
(b) Lessor shall not under any circumstances be required to build or
rebuild any improvements on the Leased Property, or to make any repairs,
replacements, alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or non-structural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto in connection with this Lease, or to maintain
the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as (i) constituting the consent or request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any labor or services or the furnishing of
any materials or other property for the construction, alteration, addition,
repair or demolition of or to the 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 Property or any portion thereof.
(d) Unless Lessor shall convey any of the Leased Property to Lessee
pursuant to the provisions of this Lease, Lessee will, upon the expiration or
prior termination of this Term, vacate and surrender the Leased Property to
Lessor in the condition in which the Leased Property was originally received
from Lessor, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease and except for ordinary
wear and tear (subject to the obligations of Lessee to maintain the Leased
Property in good order and repair during the entire Term of the Lease), damage
caused by the gross negligence or willful acts of Lessor and damage or
destruction described in Article XIV or resulting from a Taking described in
Article XV which Lessee is not required by the terms of this Lease to repair or
restore.
9.2 Encroachments; Restrictions. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, 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 the Leased Property is
subject, then promptly upon the request of Lessor, Lessee shall, at its expense,
subject to its right to contest the existence of any encroachment, violation or
impairment, (a) 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 (b) make such
changes in the Leased Improvements, and take such other
18
actions, as Lessor in the good faith exercise of its judgment deems reasonably
practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the Leased
Improvements, and in any event take all such actions as may be necessary in
order to be able to continue the operation of the Facility for the Primary
Intended Use substantially in the manner and to the extent the Facility was
operated prior to the assertion of such violation or encroachment. Any such
alteration shall be made in conformity with the applicable requirements of
Article X. Lessee's obligations under this Section 9.2 shall be in addition to
and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance and Lessee shall be entitled to a credit
for any sums recovered by Lessor under any such policy of title or other
insurance.
ARTICLE X
CAPITAL ADDITIONS
10.1 Construction of Capital Additions to the Leased Property.
(a) If no Event of Default shall have occurred or be continuing, Lessee
shall have the right, upon and subject to the terms and conditions set forth
below, to construct or install Capital Additions on the Leased Property without
the prior written consent of Lessor, provided, however, that Lessee shall not be
permitted to create any Encumbrance on the Leased Property, as defined in
Article XXXVIII, in connection with such Capital Addition. Prior to commencing
construction of any Capital Addition, Lessee shall submit to Lessor in writing a
proposal setting forth in reasonable detail any proposed Capital Addition and
shall provide to Lessor such plans and specifications, permits, licenses,
contracts and other information concerning the proposed Capital Addition as
Lessor may reasonably request. Without limiting the generality of the foregoing,
such proposal shall indicate the approximate projected cost of constructing such
Capital Addition, the use or use to which it will be put and a good faith
estimate of the change, if any, in the Gross Revenues that Lessee anticipates
will result from the construction of such Capital Addition to the Leased
Property.
(b) Prior to commencing construction of any Capital Addition, Lessee shall
first request Lessor to provide funds to pay for such Capital Addition in
accordance with the provisions of Section 10.3. If Lessor declines or is unable
to provide such financing on terms acceptable to Lessee, the provisions of
Section 10.2 shall apply. Notwithstanding any other provision of this Article X
to the contrary, no Capital Additions made by Lessee, would exceed twenty-five
percent (25%) of the then Fair Market Value of the Leased Property or would
diminish the value of the Leased Property. Furthermore, no Capital Addition
shall be made which would tie in or connect any Leased Improvements on the
Leased Property with any other improvements on property adjacent to the Leased
Property (and not part of the Land covered by this Lease) including, without
limitation, tie-ins of buildings or other structures or utilities, unless Lessee
shall have obtained the prior written approval of Lessor, which approval in
Lessor's sole discretion may be granted or withheld. All proposed Capital
Additions shall be architecturally integrated and consistent with the Leased
Property.
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10.2 Capital Additions Financed by Lessee. If Lessee provides or arranges
to finance any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:
(a) Upon completion of any Capital Addition, Gross Revenues attributable
to any and all Capital Additions paid for by the Lessee shall be excluded from
the Gross Revenues of the Leased Property for purposes of calculating Additional
Rent. The Gross Revenues attributable to such Capital Addition and all other
Capital Additions, if any, financed or paid for by Lessee, shall be deemed to be
an amount which bears the same proportion to the total Gross Revenues from the
entire Leased Property (including all Capital Additions) as the then Fair Market
Added Value of all said Capital Additions paid for by Lessee during the Term
bears to the then Fair Market Value to the entire Leased Property (including all
Capital Additions) immediately after completion of said Capital Addition. The
above-referenced proportion of the Fair Market Added Value of Capital Additions
paid for by the Lessee to the Fair Market Value of the entire Leased Property
expressed as a percentage is referred to herein as the "Added Value Additional".
The Added Value Additional determined as provided above for each Capital
Addition financed or paid for by Lessee shall remain in effect until any
subsequent Capital Addition.
(b) There shall be no adjustment in the Base Rent by reason of any such
Capital Addition.
(c) Upon the expiration or earlier termination of this Lease, except by
reason of the default by Lessee hereunder Lessor shall compensate Lessee for all
Capital Additions paid for or financed by Lessee in any of the following ways,
determined in the sole discretion of Lessor:
(i) By purchasing all Capital Additions paid for by Lessee from
Lessee for cash in the amount of the Fair Market Added Value of all such
Capital Additions paid for or financed by Lessee; or
(ii) By purchasing such Capital Additions from Lessee by delivering
to Lessee Lessor's purchase money promissory note in the amount of said
Fair Market Added Value, due and payable not later than eighteen (18)
months after the date of expiration or other termination of this Lease,
bearing interest at the test rate applicable under Section 1272 of the
Code or any successor section thereto ("Test Rate") or, if no such Test
Rate exists, at the Prime Rate, which interest shall be payable monthly,
and which note shall be secured by a mortgage on the Leased Property,
subject to all mortgages and encumbrances on the Leased Property at the
time of such purchase; or
(iii) By Lessor assigning to Lessee under appropriate written
instruments the right to receive an amount equal to the Added Value
Additional (determined as of the expiration or earlier termination of this
Lease) of all rent and other consideration receivable by Lessor under any
re-letting or other disposition of the Leased Property and all costs and
expenses of operating and maintaining the Leased Property during any such
new lease which are not borne by the Tenant thereunder, with the
provisions of this Section 10.2 to remain in effect until the sale or
other final disposition of the Leased Property; or
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(iv) Such other arrangement regarding such compensation as shall be
mutually acceptable to Lessor and Lessee.
(d) Lessor and Lessee agree that Lessee's construction lender shall have
the right to secure its loan by a mortgage upon the Leased Property provided
such mortgage (i) shall not exceed the cost of the Capital Additions, (ii) shall
be subordinate to Lessor's acquisition cost of the Leased Property, (iii) shall
be subordinate to any mortgage or encumbrance now existing or hereinafter
created, and (iv) shall be limited solely to Lessor's interest in the Leased
Property.
10.3 Capital Additions Financed by Lessor.
(a) Lessee shall request that Lessor provide or arrange financing for a
Capital Addition by providing to Lessor such information about the Capital
Addition as Lessor may request (a "Request"), including without limitation, all
information referred to in Section 10.1 above. Lessor may, but shall be under no
obligation to, obtain the funds necessary to meet the Request. Within thirty
(30) days of receipt of a Request, Lessor shall notify Lessee as to whether it
will finance the proposed Capital Addition and, if so, the terms and conditions
upon which it would do so, including the terms of any amendment to this Lease.
In no event shall the portion of the projected Capital Addition Cost comprised
of land, if any, materials, labor charges and fixtures be less than ninety
percent (90%) of the total amount of such cost. Lessee may withdraw its Request
by notice to Lessor at any time before or after receipt of Lessor's terms and
conditions.
(b) If Lessor agrees to finance the proposed Capital Addition, Lessee
shall provide Lessor with the following prior to any advance of funds:
(i) all customary or other required loan documentation;
(ii) any information, certificates, licenses, permits or documents
requested by either Lessor or any lender with whom Lessor has agreed or
may agree to provide financing which are necessary to confirm that Lessee
will be able to use the Capital Addition upon completion thereof in
accordance with the Primary Intended Use, including all required federal,
state or local government licenses and approvals.
(iii) an Officer's Certificate and, if requested, a certificate from
Lessee's architect, setting forth in reasonable detail the projected (or
actual, if available) cost of the proposed Capital Addition;
(iv) an amendment to this Lease, duly executed and acknowledged, in
form and substance satisfactory to Lessor (the "Lease Amendment"), and
containing such provisions as may be necessary or appropriate, including
without limitation, any appropriate changes in the legal description of
the Land, the Minimum Repurchase Price and the Rent, which shall be
increased in an amount at least equal to the principal and interest on the
debt incurred by Lessor to finance the Capital Addition;
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(v) a deed conveying title to Lessor to any land acquired for the
purpose of constructing the Capital Addition, free and clear of any liens
or encumbrances except those approved by Lessor and, both prior to and
following completion of the Capital Addition, an as-built survey thereof
satisfactory to Lessor;
(vi) endorsements to any outstanding policy of title insurance
covering the Leased Property or a supplemental policy of title insurance
covering the Leased Property satisfactory in form and substance to Lessor
(A) updating the same without any additional exceptions except as may be
permitted by Lessor; and (B) increasing the coverage thereof by an amount
equal to the Fair Market Value of the Capital Addition (except to the
extent covered by the owner's policy of the title insurance referred to in
subparagraph (vii) below);
(vii) if required by Lessor, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Lessor
pursuant to subparagraph (v), free and clear of all liens and encumbrances
except those approved by Lessor and (B) a lender's policy of title
insurance satisfactory in form and substance to Lessor and the Lending
Institution advancing any portion of the Capital Addition Cost;
(viii) If required by Lessor, upon completion of the Capital
Addition, an M.A.I. appraisal of the Leased Property indicating that the
value of the Leased Property upon completion of the Capital Addition
exceeds the Fair Market Value of the Leased Property prior thereto by an
amount not less than ninety-five percent (95%) of the Capital Addition
Cost; and
(ix) such other certificates (including, but not limited to,
endorsements increasing the insurance coverage, if any, at the time
required by Section 13.1), documents, opinions of counsel, appraisals,
surveys, certified copies of duly adopted resolutions of the Board of
Directors of Lessee authorizing the execution and delivery of the Lease
Amendment and any other instruments as may be reasonably required by
Lessor and any Lending Institution advancing or reimbursing Lessee for any
portion of the Capital Addition Cost.
(c) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually consummated, Lessee shall pay or agree to pay, upon
demand, all reasonable costs and expenses of Lessor and any Lending Institution
which has committed to finance such Capital Addition which have been paid or
incurred by them in connection with the financing of the Capital Addition,
including, but not limited to, (i) the fees and expenses of their respective
counsel, (ii) all printing expenses, (iii) the amount of any filing,
registration and recording taxes and fees, (iv) documentary stamp taxes, if any,
(v) title insurance charges, appraisal fees, if any, rating agency fees, if any,
and (vi) commitment fees, if any.
10.4 Remodeling and Non-Capital Additions. Lessee shall have the right and
obligation to make additions, modifications or improvements to the Leased
Property which are not Capital Additions from time to time as it, in its
discretion, may deem to be desirable for its uses and purposes and to permit the
Lessee to comply fully with its obligations set forth in this Lease,
22
provided that such action will be undertaken expeditiously, in a workmanlike
manner and will not significantly alter the character or purpose or detract from
the value or operating efficiency of the Leased Property and will not
significantly impair the revenue producing capability of the Leased Property or
adversely affect the ability of the Lessee to comply with the provisions of this
Lease. The cost of non-Capital Additions, modifications and improvements shall,
without payment by Lessor at any time, be included under the terms of this Lease
and, upon expiration or earlier termination of this Lease, shall pass to and
become the property of Lessor.
10.5 Salvage. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 10.1 or repairs
required by Article IX shall be or become the property of Lessor.
ARTICLE XI
LIENS
Subject to the provisions of Article XII relating to permitted contests,
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 Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in Exhibit B, (c) restrictions, liens
and other encumbrances which are consented to in writing by Lessor which consent
shall not be unreasonably withheld, or any easements granted pursuant to the
provisions of Section 7.3 of this Lease, (d) liens for those taxes of Lessor
which Lessee is not required to pay hereunder, (e) subleases permitted by
Article XXIV, (f) liens for Impositions or for sums resulting from noncompliance
with Legal Requirements so long as (1) the same are not yet payable without the
addition of any fine or penalty or (2) such liens are in the process of being
contested as permitted by Article XII, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
sixty (60) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provision as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII, and (h) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXVIII of this Lease.
ARTICLE XII
PERMITTED CONTESTS
Lessee, on its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, may contest, by appropriate legal proceedings conducted in
good faith and with due diligence, validity or application, in whole or in part,
of any Imposition, Legal Requirement, Insurance Requirement, lien, attachment,
levy, encumbrance, charge or claim not otherwise permitted by Article XI,
provided that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Lessor and from the Leased
Property, (b) neither the Leased
23
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost, (c) in
the case of a Legal Requirement, Lessor would not be in any immediate danger of
civil or criminal liability for failure to comply therewith pending the outcome
of such proceedings, (d) in the event that any such contest shall involve a sum
of money or potential loss in excess of Fifty Thousand Dollars ($50,000), then,
in any such event, (i) provided the Consolidated Net Worth of Lessee and/or
Guarantor is then in excess of Fifty Million Dollars ($50,000,000), Lessee shall
deliver to Lessor an Officer's Certificate to the effect set forth in clauses
(a), (b) and (c), to the extent applicable, or (ii) in the event the
Consolidated Net Work of Lessee and/or Guarantor is not then in excess of Fifty
Million Dollars ($50,000,000), then Lessee shall deliver to Lessor and its
counsel an opinion of lessee's counsel to the effect set forth in clauses (a),
(b) and (c), to the extent applicable, (e) in the case of a Legal Requirement
and/or an Imposition, lien, encumbrance or charge, Lessee shall give such
reasonable security as may be demanded by Lessor to insure ultimate payment of
the same and prevent any sale or forfeiture of the affected portion of the
Leased Property or the Rent by reason of such non-payment or non-compliance;
provided, however, the provisions of this Article XII shall not be construed to
permit Lessee to contest the payment of Rent (except as to contests concerning
the method of computation or the basis of levy of any Imposition or the basis
for the assertion of any other claim) or any other sums payable by Lessee to
Lessor hereunder, (f) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained, and (g) if such contest be finally
resolved against Lessor or Lessee, Lessee shall, as Additional Charges due
hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or Insurance Requirement. Lessor, at Lessee's expense, shall execute
and deliver to Lessee such authorizations and other documents as may reasonably
be required in any such contest and, if reasonably requested by Lessee or if
Lessor so desires, Lessor shall join as a party therein. Lessee shall indemnify
and save Lessor harmless against any liability, cost or expense of any kind that
may be imposed upon Lessor in connection with any such contest and any loss
resulting therefrom.
ARTICLE XIII
INSURANCE
13.1 General Insurance Requirements. During the Term of this Lease, Lessee
shall at all times keep the Leased Property, and all property located in or on
the Leased Property, including Lessee's Personal Property, insured with the
kinds and amounts of insurance described below. This insurance shall be written
by companies authorized to do insurance business in the state in which the
Leased Property is located. The policies must name Lessor as an additional
insured and losses shall be payable to Lessor and/or Lessee as provided in
Article XIV. In addition, the policies shall name as an additional insured the
holder ("Facility Mortgagee") of any mortgage, deed of trust or other security
agreement securing any Encumbrance placed on the Leased Property in accordance
with the provisions of Article XXXVIII ("Facility Mortgage"), if any, by way of
a standard form of mortgagee's loss payable endorsement. Any loss adjustment
shall require the written consent of Lessor and each affected Facility
Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
requested, with any Facility Mortgagee(s). If any provision of any Facility
Mortgagee, Lessee shall either pay to Lessor
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monthly the amounts required and Lessor shall transfer such amounts to such
Facility Mortgagee or, pursuant to written direction by Lessor, Lessee shall
make such deposits directly with such Facility Mortgagee. The policies on the
Leased Property, including the Leased Improvements, the Fixtures and Lessee's
Personal Property, shall insure against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief, extended
coverage perils commonly known all "All Risk" and all physical loss perils,
including but not limited, to sprinkler leakage in an amount not less than one
hundred percent (100%) of the then Full Replacement Cost thereof (as defined
below in Section 13.2) with a replacement cost endorsement sufficient to prevent
Lessee from becoming a co-insurer together with an agreed value endorsement;
(b) Loss or damage by explosion of steam boilers, pressure vessels or
similar apparatus, now or hereafter installed in the Facility, in such limits
with respect to any one accident as may be reasonably requested by Lessor from
time to time;
(c) Loss of rental under a rental value insurance policy covering risk of
loss during the first twelve (12) months of reconstruction necessitated by the
occurrence of any of the hazards described in Sections 13.1(a) or 13.1(b), in an
amount sufficient to prevent Lessor from becoming a co-insurer;
(d) Claims for personal injury or property damage under a policy of
comprehensive general public liability insurance including but not limited to
insurance against assumed or contractual liability including any indemnities
under this Lease with amounts not less than Five Million Dollars ($5,000,000)
per occurrence in respect of bodily injury and death and Ten Million Dollars
($10,000,000) for property damage;
(e) Claims arising out of malpractice in an amount not less than Five
Million Dollars ($5,000,000) for each person and Ten Million Dollars
($10,000,000) for each occurrence; and
(f) Flood (when the Leased Property is 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 and if available from
insurance companies authorized to do business in the state in which the Leased
Property are located at rates which are economically practicable in relation to
the risks covered.
(g) If Lessee shall engage or cause to be engaged any contractor to
perform work on the Leased Property, Lessee shall require such contractor to
carry and maintain, at no expense to Lessor, non-deductible comprehensive
general liability insurance, including but not limited to contractor's liability
coverage, completed operations coverage, broad form property damage endorsement
and contractor's protection liability coverage in such amounts and with such
companies as Lessor shall approve.
13.2 Replacement Cost. The term "Full Replacement cost" as used herein,
shall mean the actual replacement cost thereof from time to time, including
increased cost of construction endorsement, less exclusions provided in the
normal fire insurance policy. In the event either
25
Lessor or Lessee believes that the Full Replacement Cost has increased or
decreased at any time during the Term, it shall have the right to have such Full
Replacement Cost redetermined by the fire insurance company which is then
providing the largest amount of fire insurance carried on the Leased Property,
hereinafter referred to as the "impartial appraiser". The party desiring to have
the Full Replacement Cost so redetermined shall forthwith, on receipt of such
determination by such impartial appraiser, give written notice thereof to the
other party hereto. The determination of such impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Article, as the
case may be, to the amount so determined by the impartial appraiser.
Lessee shall pay the fee, if any, of the impartial appraiser.
13.3 Additional Insurance. In addition to the insurance described above,
Lessee shall maintain such additional insurance as may be required from time to
time by any Facility Mortgagee and shall further at all times maintain adequate
worker's compensation insurance coverage for all persons employed by Lessee on
the Leased Property, in accordance with the requirements of applicable local,
state and federal law.
13.4 Waiver of Subrogation. All insurance policies carried by either party
covering the Leased Property, the Fixtures, the Facility and/or Lessee's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party. The parties hereto agree that their policies
will include such a waiver clause or endorsement so long as the same is
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may pay the same, but shall not be obligated to do
so.
13.5 Form of Insurance. All of the policies of insurance referred to in
this Section shall be written in form satisfactory to Lessor and by insurance
companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor,
and deliver such policies or certificates thereof to Lessor prior to their
effective date (and, with respect to any renewal policy, at least fifteen (15)
days prior to the expiration of the existing policy) and in the event of the
failure of Lessee either to effect such insurance in the names herein called for
or to pay the premiums therefor, or to deliver such policies or certificates
thereof to Lessor at the times required, Lessor shall be entitled, but shall
have no obligation, to enact such insurance and pay the premiums therefor, which
premiums shall be repayable to Lessor upon written demand therefor, and failure
to repay the same shall constitute an Event of Default within the meaning of
Section 16.1(c). Each insurer mentioned in this Section shall agree, by
endorsement on the policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor thirty (30) days' written
notice before the policy or policies in question shall be altered, allowed to
expire or canceled.
13.6 Increase in Limits. In the event that Lessor shall at any time deem
the limits of the personal injury, property damage or general public liability
insurance then carried to be insufficient, the parties shall endeavor to agree
on the proper and reasonable limits for such insurance to be carried and such
insurance shall thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section. If the parties shall
be unable to agree thereon, the proper and reasonable limits for such insurance
to be carried shall be
26
determined by an impartial third party selected by the parties. Nothing herein
shall permit the amount of insurance to be reduced below the amount or amounts
required by any of the Facility Mortgages.
13.7 Blanket Policy. Notwithstanding anything to the contrary contained in
this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee; provided, however, that the coverage
afforded Lessor will not be reduced or diminished or otherwise be different from
that which would exist under a separate policy meeting all other requirements of
this Lease by reason of the use of such blanket policy of insurance, and
provided further that the requirements of this Article XIII are otherwise
satisfied.
13.8 No Separate Insurance. Lessee shall not, on Lessee's own initiative
or pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished by, or which may reasonably be required
to be furnished by, Lessee, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Mortgagees, are included therein
as additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Lease. Lessee shall
immediately notify lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional policy or additional policies.
ARTICLE XIV
FIRE AND CASUALTY
14.1 Insurance Proceeds. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 14.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to repair and restore,
all such insurance proceeds) shall be retained by Lessor free and clear upon
completion of any such repair and restoration except as otherwise specifically
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Lessor except that any salvage relating to Capital
Additions paid for by Lessee or to Lessee's Personal Property shall belong to
Lessee.
14.2 Reconstruction in the Event of Damage or Destruction Covered by
Insurance.
(a) Except as provided in Section 14.7, if during the Term, the Leased
Property is totally or partially destroyed from a risk covered by the insurance
described in Article XIII and
27
the Facility thereby is rendered Unsuitable for Its Primary Intended Use, Lessee
shall have the option, by giving notice to Lessor within sixty (60) days
following the date of such destruction, to (i) restore the Facility to
substantially the same condition as existed immediately before the damage or
destruction, or (ii) offer (A) to acquire the Leased Property from Lessor for a
purchase price equal to the Fair Market Value Purchase Price of the Leased
Property immediately prior to such damage or destruction or (B) to substitute a
new property pursuant to and in accordance with the provisions of Article XXI.
In the event Lessor does not accept Lessee's offer to so purchase or substitute
for the Leased Property, within thirty (30) days after the date of such offer,
Lessee may, by giving notice to Lessor within thirty (30) days after receipt of
Lessor's notice, either withdraw its offer to purchase or substitute for the
Leased Property and proceed to restore the Facility to substantially the same
condition as existed immediately before the damage or destruction or, unless
Lessor is excused or otherwise not required to accept such Substitute Property
pursuant to the provisions of Article XXI below, terminate this Lease and, in
the latter event, Lessor shall be entitled to retain the insurance proceeds, and
Lessee shall pay to Lessor on demand, the amount of any deductible or uninsured
loss arising in connection therewith.
(b) Except as provided in Section 14.7, if during the Term, the Leased
Improvements and/or the Fixtures are totally or partially destroyed from a risk
covered by the insurance described from a risk covered by the insurance
described in Article XIII, but the Facility is not thereby rendered Unsuitable
for its Primary Intended Use, Lessee shall restore the Facility to substantially
the same condition as existed immediately before the damage or destruction. Such
damage or destruction shall not terminate this Lease; provided, however, if
Lessee cannot within a reasonable time obtain all necessary governmental
approvals, including building permits, licenses, conditional use permits and any
certificates of need, after diligent efforts to do so, in order to be able to
perform all required repair and restoration work and to operate the Facility for
its Primary Intended Use in substantially the same manner as immediately prior
to such damage or destruction, Lessee may either (i) offer pursuant to Article
XXII to substitute a new property, substantially equivalent to the Leased
Property immediately before such damage or destruction, or (ii) offer to
purchase the Leased Property for a purchase price equal to the greater of the
Minimum Repurchase Price or the Fair Market Value Purchase Price of the Leased
Property immediately prior to such damage or destruction.
(c) If the cost of the repair or restoration exceeds the amount of
proceeds received by Lessor from the insurance required under Article XIII,
Lessee shall be obligated to contribute any excess amount needed to restore the
Facility. Such amount shall be paid by Lessee to Lessor to be held in trust
together with any other insurance proceeds for application to the cost of repair
and restoration.
(d) In the event Lessor accepts Lessee's offer to purchase the Leased
Property or to provide a Substitute Property, this Lease shall terminate upon
payment of the purchase price or execution and delivery of all documents
required in connection with a Substitute Property under Article XXI and Lessor
shall remit to Lessee all insurance proceeds being held in trust by Lessor.
28
14.3 Reconstruction in the Event of Damage or Destruction Not Covered by
Insurance. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk (including earthquake)
not covered by the insurance described in Article XIII, whether or not such
damage or destruction shall not terminate this Lease, or (b) if all of the
criteria for such substitution are satisfied, offer to substitute a new property
substantially equivalent to the Leased Property immediately before such damage
or destruction pursuant to the provisions of Article XXII. If such damage or
destruction is not material, Lessee shall restore the Leased Property.
14.4 Lessee's Property. All insurance proceeds payable by reason of any
loss of or damage to any of Lessee's Personal Property or Capital Additions
financed by Lessee shall be paid to Lessor and Lessor shall hold such insurance
proceeds in trust to pay the cost of repairing or replacing the damage to
Lessee's Personal Property or the Capital Additions financed by Lessee.
14.5 Restoration of Lessee's Property. If Lessee is required or elects to
restore the Facility as provided in Sections 14.2 or 14.3, Lessee shall also
restore all alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions paid for by Lessee.
14.6 No Abatement of Rent. This Lease shall remain in full force and
effect and Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during any period required
for repair and restoration.
14.7 Damage Near end of Term. Notwithstanding any provisions of Sections
14.2 or 14.3 to the contrary, if damage to or destruction of the Facility occurs
during the last twenty-four (24) months of the Term, and if such damage or
destruction cannot be fully repaired and restored within six (6) months
immediately following the date of loss, either party shall have the right to
terminate this Lease by giving notice to the other within thirty (30) days after
the date of damage or destruction, in which event Lessor shall be entitled to
retain the insurance proceeds and Lessee shall pay to Lessor on demand the
amount of any deductible or uninsured loss arising in connection therewith;
provided, however, that any such notice given by Lessor shall be void and of no
force and effect if Lessee exercises an available option to extend the Term for
one Extended Term within thirty (30) days following receipt of such termination
notice.
14.8 Termination of Right of First Refusal. Any termination of this Lease
pursuant to this Article XIV shall cause any right of first refusal granted to
Lessee under Section 35.1 of this Lease to be terminated and to be without
further force or effect.
14.9 Waiver. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.
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ARTICLE XV
CONDEMNATION
15.1 Definitions.
(a) "Condemnation" means (i) the exercise of any governmental power,
whether by legal proceedings or otherwise, by a Condemnor or (ii) a voluntary
sale or transfer by Lessor to any Condemnor, either under threat of Condemnation
or while legal proceedings for Condemnation are pending.
(b) "Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value awarded,
paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
15.2 Parties Rights and Obligations. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 Total Taking. It there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.
15.4 Partial Taking. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for Its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for Its Primary Intended Use, Lessee
shall have the right (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or (b) to offer (i) to acquire the Leased Property
from Lessor for a purchase price equal to the Fair Market Value Purchase Price
of the Leased Property immediately prior to such partial Taking, in which event
this Lease shall terminate upon payment of the purchase price, or (ii) to
substitute a new property pursuant to and in accordance with the provisions of
Article XXI. Lessee shall exercise its option by giving Lessor notice thereof
within sixty (60) days after Lessee receives notice of the Taking. In the event
Lessor does not accept Lessee's offer to so purchase or substitute for the
Leased Property within thirty (30) days after receipt of the notice described in
the preceding sentence, Lessee may either (a) withdraw its offer to purchase or
substitute for the Leased Property and proceed to restore the Facility, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking or (b) terminate this Lease by written notice to
Lessor.
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15.5 Restoration. If there is a partial Taking of the Leased Property and
the Lease remains in full force and effect pursuant to Section 15.4, Lessee
shall accomplish all necessary restoration.
15.6 Award Distribution. In the event Lessor accepts Lessee's offer to
purchase the Leased Property, or to substitute a new property for the Leased
Property, as described in clause (b) of Section 15.4, the entire Award shall
belong to Lessee and Lessor agrees to assign to Lessee all of its rights
thereto. In any other event, the entire Award shall belong to and be paid to
Lessor, except that, if this Lease is terminated, and subject to the rights of
the Facility Mortgagee, Lessee shall be entitled to receive from the Award, if
and to the extent such Award specifically includes such items, the following:
(a) A sum attributable to the Capital Additions for which Lessee would be
entitled to reimbursement at the end of the Term pursuant to the provisions of
Section 10.2(c) and the value, if any, of the leasehold interest of Lessee under
this Lease; and
(b) A sum attributable to Lessee's Personal Property and any reasonable
removal and relocation costs included in the Award.
If Lessee is required or elects to restore the Facility, Lessor agrees that,
subject to the rights of the Facility Mortgagees, its portion of the Award shall
be used for such restoration and it shall hold such portion of the Award in
trust, for application to the cost of the restoration.
15.7 Temporary Taking. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect except
that the Base Rent and the Additional Rent shall not be abated or reduced during
such period of Taking.
ARTICLE XVI
DEFAULT
16.1 Events of Default. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
hereunder:
(a) a default or event of default shall occur under any other lease
between Lessor and Lessee or Guarantor, or any Affiliate of Lessee or Guarantor,
or
(b) if Lessee shall fail to make a payment of the Rent payable by Lessee
under this Lease when the same becomes due and payable and such failure is not
cured by Lessee or Guarantor within a period of twenty (20) days after receipt
by Lessee of notice thereof from Lessor, or
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(c) if Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease and such failure is not cured by Lessee or Guarantor
within a period of thirty (30) days after receipt by Lessee of notice thereof
from Lessor, unless such failure cannot with due diligence by cured within a
period of thirty (30) days, in which case such failure shall not be deemed to
continue if Lessee or Guarantor proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof within sixty (60) days
after receipt by Lessee of Lessor's notice of default, or
(d) if Lessee or Guarantor shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take advantage
of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or arrangement
under the Federal bankruptcy laws or any other applicable law or statute
of the United States of America or any state thereof, or
(e) if the Lessee or Guarantor shall, after a petition in bankruptcy is
filed against it, be adjudicated a bankrupt or if a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
Lessee or Guarantor, as the case may be, a receiver of Lessee or Guarantor or of
the whole or substantially all of its property, or approving a petition filed
against it seeking reorganization or arrangement of Lessee or Guarantor 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 shall
not be vacated or set aside or stayed within ninety (90) days from the date of
the entry thereof, or
(f) if Lessee or Guarantor shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all of its assets other
than in connection with a merger or consolidation of Lessee or Guarantor into,
or a sale of substantially all of Lessee's or Guarantor's assets to, another
corporation, provided that if the survivor of such merger or the purchaser of
such assets shall assume all of Lessee's obligations under this Lease by a
written instrument, in form and substance reasonably satisfactory to Lessor,
accompanied by an opinion of counsel, reasonably satisfactory to Lessor and
addressed to Lessor stating that such instrument of assumption is valid, binding
and enforceable against the parties thereto in accordance with its terms
(subject to usual bankruptcy and other creditors' rights exceptions), and
provided, further, that if, immediately after giving effect to any such merger,
consolidation or sale, Lessee or such other corporation (if not the Lessee)
surviving the same, together with Guarantor, shall have a Consolidated Net Worth
not less than the Consolidated Net Worth of Guarantor immediately
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prior to such merger, consolidation or sale, all as to be set forth in an
Officer's Certificate delivered to Lessor within thirty (30) days of such
merger, consolidation or sale, an Event of Default shall not be deemed to have
occurred, or
(g) if the estate or interest of Lessee in the Leased Property or any part
thereof shall be levied upon or attached in any proceeding and the same shall
not be vacated or discharged within the later of ninety (90) days after
commencement thereof or thirty (30) days after receipt by Lessee of notice
thereof from Lessor (unless Lessee shall be contesting such lien or attachment
in good faith in accordance with Article XII hereof), or
(h) if, except as a result of damage, destruction or a partial or complete
Condemnation, Lessee voluntarily ceases operations on the Leased Property for a
period in excess of ninety (90) days, or
(i) if any of the representations or warranties (except for
representations and warranties relating to matters of title) made by Lessee in
the Purchase and Sale Agreement or in the certificates delivered in connection
therewith are or become untrue in any material respect, and which is not cured
within twenty (20) days after receipt by Lessee of notice from Lessor thereof,
or
(j) a default shall occur under the Guaranty executed by Guarantor
concurrently herewith, or
(k) a default or event of default shall occur under the Lease Assignment,
Security Agreement or any other agreement between Lessor and Lessee or Guarantor
or any Affiliate of Lessee or Guarantor.
If an event of Default shall have occurred, Lessor shall have the right at its
election, then or at any time thereafter, to pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without notice or demand, except as
hereinafter provided:
A. Without any notice or demand whatsoever, Lessor may take any one
or more of the actions permissible at law to insure performance by Lessee
of Lessee's covenants and obligations under this Lease. In this regard, it
is agreed that if Lessee deserts or vacates the Leased Property, Lessor
may enter upon and take possession of such Leased Property in order to
protect it from deterioration and continue to demand from Lessee the
monthly rentals and other charges provided in this Lease, without any
obligation to relet; but that if Lessor does, at its sole discretion,
elect to relet the Leased Property, such action by Lessor shall not be
deemed as an acceptance of Lessee's surrender of the Leased Property
unless Lessor expressly notifies Lessee of such acceptance in writing
pursuant to subsection B of this Section 16.1., Lessee hereby
acknowledging that Lessor shall otherwise be reletting as Lessee's agent
and Lessee furthermore hereby agreeing to pay to Lessor on demand any
deficiency that may arise between the monthly rentals and other charges
provided in this Lease and that actually collected by Lessor. It is
further agreed in this regard that in the event of any default
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described in this Section 16.1., Lessor shall have the right to enter upon
the Leased Property by force, if necessary, without being liable for
prosecution or any claim for damages therefor, and do whatever Lessee is
obligated to do under the terms of this Lease; and Lessee agrees to
reimburse Lessor on demand for any expenses which Lessor may incur in thus
effecting compliance with Lessee's obligations under this Lease, and
Lessee further agrees that Lessor shall not be liable for any damages
resulting to the Lessee from such action.
X. Xxxxxx may terminate this Lease by written notice to Lessee, in
which event Lessee shall immediately surrender the Leased Property to
Lessor, and if Lessee fails to do so, Lessor may, without prejudice to any
other remedy which Lessor may have for possession or arrearages in rent
(including any interest which may have accrued pursuant to Section 3.4 of
this Lease), enter upon and take possession of the Leased Property and
expel or remove Lessee and any other person who may be occupying said
premises or any part thereof, by force, if necessary, without being liable
of prosecution or any claim for damages therefor. Lessee hereby waives any
statutory requirement of prior written notice for filing eviction or
damage suits for nonpayment of rent. In addition, Lessee agrees to pay to
Lessor on demand the amount of all loss and damage which Lessor may suffer
by reason of any termination effected pursuant to this subsection B, said
loss and damage to be determined, at Lessor's option, by either of the
following alternative measures of damages:
(i) Until Lessor is able, although Lessor shall be under no
obligation to attempt to relet the Leased Property, Lessee shall pay
to Lessor on or before the first day of each calendar month, the
monthly rentals and other charges provided in this Lease. After the
Leased Property have been relet by Lessor, Lessee shall pay to
Lessor on the 10th day of each calendar month the difference between
the monthly rentals and other charges provided in this Lease for the
preceding calendar month and that actually collected by Lessor for
such month. If it is necessary for Lessor to bring suit in order to
collect any deficiency, Lessor shall have a right to allow such
deficiencies to accumulate and to bring an action on several or all
of the accrued deficiencies at one time. Any such suit shall not
prejudice in any way the right of Lessor to bring a similar action
for any subsequent deficiency or deficiencies. Any amount collected
by Lessor from subsequent tenants for any calendar month, in excess
of the monthly rentals and other charges provided in this Lease,
shall be credited to Lessee in reduction of Lessee's liability for
any calendar month for which the amount collected by Lessor will be
less than the monthly rentals and other charges provided in this
Lease; but Lessee shall have no right to such excess other than the
above-described credit.
(ii) When Lessor desires, Lessor may demand a final
settlement. Upon demand for a final settlement, Lessor shall have a
right to, and Lessee hereby agrees to pay, the difference between
the total of all monthly rentals and other charges provided in this
Lease for the remainder of the Lease Term and the reasonable rental
value of the Leased Property for such period, such difference
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to be discounted to present value at a rate equal to the lowest rate
of capitalization (highest present worth) reasonably applicable at
the time of such determination and allowed by applicable law.
If Lessor elects to exercise the remedy prescribed in subsection A above,
this election shall in no way prejudice Lessor's right at any time thereafter to
cancel said election in favor of the remedy prescribed in subsection B above.
Similarly, if Lessor elects to compute damages in the manner prescribed by
subsection B(i) above, this election shall in no way prejudice Lessor's right at
any time thereafter to demand a final settlement in accordance with subsection
B(ii) above. Pursuit of any of the above remedies shall not preclude pursuit of
any other remedies prescribed in other sections of this Lease and any other
remedies provided by law or equity. Forbearance by Lessor to enforce one or more
of the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default.
16.2 Rent and Charges Payable Following Default. It is expressly agreed
that in determining "the monthly rentals and other charges provided in this
Lease," as that term is used throughout subsections A and B of Section 16.1.
above, there shall be added to the Base Rent a sum equal to one twenty-fourth of
the total of all Additional Rent required to be paid by Lessee because of Gross
Revenues during the two full calendar years immediately preceding the date
Lessor initiated action pursuant to said subsections (or, if two full calendar
years have not then elapsed, to the corresponding fraction of all Additional
Rent required to be paid because of Gross Sales during the period commencing
with the Commencement Date of this Lease and concluding with the date on which
Lessor initiated such action).
16.3 Additional Expenses. It is further agreed that, in addition to
payments required pursuant to subsections A and B of Section 16.1. above, Lessee
shall compensate Lessor for all expenses incurred by Lessor in repossessing the
Leased Property (including among other expenses, any increase in insurance
premiums caused by the vacancy of the Leased Property), all expenses incurred by
Lessor in reletting (including among other expenses, repairs, remodeling,
replacements, advertisements and brokerage fees), all concessions granted to a
new tenant upon reletting (including among other concessions, renewal options),
all losses incurred by Lessor as a direct or indirect result of Lessee's default
(including among other losses any adverse reaction by Lessor's mortgagee) and a
reasonable allowance for Lessor's administrative efforts, salaries and overhead
attributable directly or indirectly to Lessee's default and Lessor's pursuing
the rights and remedies provided herein and under applicable law.
16.4 Lessee's Obligation to Purchase. If any Event of Default shall have
occurred and be continuing, by so providing by separate notice given by Lessor
to Lessee at any time thereafter prior to the time such Event of Default shall
be cured, Lessor may require Lessee to purchase the Leased Property on the first
Base Rent Payment Date occurring not less than thirty (30) days after the date
of receipt of, or such later date that is specified in, said notice requiring
such purchase for an amount equal to the higher of the then current Fair Market
Value Purchase Price or the Minimum Repurchase Price of the Leased Property plus
all Rent then due and payable (excluding the installment of Base Rent due on the
purchase date) as of the date of purchase. If Lessor exercises such right,
Lessor shall convey the Leased Property to Lessee on the date fixed therefor in
accordance with the provisions of Article XVIII upon receipt of the
35
purchase price therefor and this Lease shall thereupon terminate. Any purchase
by Lessee of the Leased Property pursuant to this Section shall be in lieu of
the damages specified in Section 16.1.
16.5 Waiver. If this Lease is terminated pursuant to Section 16.1, Lessee
waives, to the extent permitted by applicable law, (a) any right of redemption
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI,and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
16.6 Application of Funds. Any payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.
16.7 Notices by Lessor. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Lessee of the nature and approximate extent of any default, it being
agreed that Lessee is in good or better position than Lessor to ascertain the
exact extent of any default by Lessee hereunder.
16.8 Lessor's Contractual Security Interest. Lessor shall have at all
times a valid security interest to secure payment of all rentals and other sums
of money becoming due hereunder from Lessee, and to secure payment of any
damages or loss which Lessor may suffer by reason of the breach by Lessee of any
covenant, agreement or condition contained herein, upon all inventory,
merchandise, goods, wares, equipment, fixtures, furniture, improvements and
other tangible personal property of Lessee presently, or which may hereafter be,
situated in or about the Leased Property, and all proceeds therefrom and
accessions thereto and, except as a result of sales made in the ordinary course
of Lessee's business, such property shall not be removed without the consent of
Lessor until all arrearages in rent as well as any and all other sums of money
then due to Lessor or to become due to lessor hereunder shall first have been
paid and discharged and all the covenants, agreements and conditions hereof have
been fully complied with and performed by Lessee. Upon the occurrence of an
event of default by Lessee, Lessor may, in addition to any other remedies
provided herein, enter upon the Leased Property and take possession of any and
all inventory, merchandise, goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Lessee situated in or about the
Leased Property, without liability for trespass or conversion, and sell the same
at public or private sale, with or without having such property at the sale,
after giving Lessee reasonable notice of the time and place of any public sale
of the time after which any private sale is to be made, at which sale the Lessor
or its assigns may purchase unless otherwise prohibited by law. Unless otherwise
provided by law, and without intending to exclude any other manner of giving
Lessee reasonable notice, the requirement of reasonable notice shall be met, if
such notice is given in the manner prescribed in this Lease at least seven days
before the time of sale. Any sale made pursuant to the provision of this
paragraph shall be deemed to have been a public sale conducted in commercially
reasonable manner if held in the above-described premises or where the
36
property is located after the time, place and method of sale and a general
description of the types of property to be sold have been advertised in a daily
newspaper published in the county in which the property is located, for five
consecutive days before the date of the sale. The proceeds from any such
disposition, less any and all expenses connected with the taking of possession,
holding and selling of the property (including reasonable attorney's fees and
legal expenses), shall be applied as a credit against the indebtedness secured
by the security interest granted in this paragraph. Any surplus shall be paid to
Lessee or as otherwise required by law; the Lessee shall pay any deficiencies
forthwith. Upon request by Lessor, Lessee agrees to execute and deliver to
Lessor a financing statement in form sufficient to perfect the security interest
of Lessor in the aforementioned property and proceeds thereof under the
provision of the Uniform Commercial Code (or corresponding state statute or
statutes) in force in the state in which the Leased Property is located, as well
as any other state the laws of which Lessor may at any time consider to be
applicable.
ARTICLE XVII
LESSOR'S RIGHT TO CURE
If Lessee shall fail to make any payment, or to perform any act required
to be made or performed under this Lease and to cure the same within the
relevant time periods provided in Section 16.1, Lessor, without waiving or
releasing any obligation or Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of Lessee, and may, to the extent permitted by
law, enter upon the Leased Property for such purpose and take all such action
thereon as, in Lessor's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor and
all costs and expenses (including, without limitation, reasonable attorneys'
fees and expense, in each case, to the extent permitted by law) so incurred,
together with a late charge thereon (to the extent permitted by law) at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Lessor, 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
PURCHASE OF THE LEASED PROPERTY
In the event Lessee purchases the Leased Property from Lessor pursuant to
any of the terms of this Lease, Lessor shall, upon receipt from Lessee of the
applicable purchase price, together with full payment of any unpaid Rent due and
payable with respect to any period ending on or before the date of the purchase,
deliver to Lessee an appropriate special warranty deed or other instrument of
conveyance conveying the entire interest of Lessor in and to the Leased Property
to Lessee in the condition as received from Lessee, free and clear of all
encumbrances other than (a) those that Lessee has agreed hereunder to pay or
discharge, (b) those mortgage liens, if any, which Lessee has agreed in writing
to accept and to take title subject to, (c) any other Encumbrances permitted to
be imposed on the Leased Property under the provisions of
37
Article XXXVIII which are assumable at no cost to Lessee or to which Lessee may
take subject without cost to Lessee, and (d) any matters affecting the Leased
Property on or as of the Commencement Date. The difference between the
applicable purchase price and the total of the encumbrances assigned or taken
subject to shall be paid in cash to Lessor, or as Lessee may direct, in federal
or other immediately available funds except as otherwise mutually agreed by
Lessor and Lessee. The closing of any such sale shall be contingent upon and
subject to Lessee obtaining all required governmental consents and approvals for
such transfer and if such sale shall fail to be consummated by reason of the
inability of Lessee to obtain all such approvals and consents, any options to
extend the Term of this Lease which otherwise would have expired during the
period from the date when Lessee elected or became obligated to purchase the
Leased Property until Lessee's inability to obtain the approvals and consents is
confirmed shall be deemed to remain in effect for thirty (30) days after the end
of such period. All expenses of such conveyance, including, without limitation,
the cost of title examination or standard coverage title insurance, attorneys'
fees incurred by Lessor in connection with such conveyance, and transfer taxes,
shall be paid by Lessor, except that such charges shall be paid by Lessee in
case of a sale pursuant to Section 16.4. Recording fees and similar charges
shall be paid for by Lessee.
ARTICLE XIX
HOLDING OVER
If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time Lessee shall pay
as rental each month, one and one-half times the aggregate of (a) one-twelfth of
the aggregate Base Rent and Additional Rent payable with respect to the last
complete Lease Year prior to the expiration of the Term; (b) all Additional
Charges accruing during the month and (c) all other sums, if any, payable by
Lessee pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, Lessee shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
month-to-month tenancies, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or earlier
termination of this Lease.
ARTICLE XX
ABANDONMENT
20.1 Discontinuance of Operations on the Leased Property; Offer to
Purchase. If, in the good faith judgment of Lessee, the Leased Property becomes
uneconomic or Unsuitable for Its Primary Intended Use, or Lessee has
discontinued use of the Leased Property in its business operations or will
discontinue such use within a period of one (1) year after the date of the
Officer's Certificate hereinafter referred to and will not use the Leased
Property for any of the purposes described in Section 7.2 within one year
thereafter, all as set forth in an Officer's Certificate delivered to Lessor,
Lessee, if Lessor has not terminated this Lease as provided in
38
Section 16.1 may, at any time after the expiration of the tenth (10th) Lease
Year, give Lessor notice of termination of this Lease as to the Leased Property
accompanied by an offer to purchase the Leased Property on the first Base Rent
Payment Date (the "Economic Termination Purchase Date") occurring not less than
one hundred twenty (120) days after the date of such offer, for a purchase price
equal to the greater of (a) the Fair Market Value Purchase Price or (b) the
Minimum Repurchase Price.
20.2 Acceptance of Offer. If Lessor accepts such offer, or fails to reject
the same by written notice given not less than thirty (30) days prior to the
Economic Termination Purchase Date, Lessor shall, upon receipt from Lessee of
the purchase price provided for above and any Rent due and payable under this
Lease (excluding the installment of Base Rent due on the Economic Termination
Purchase Date), convey the Leased Property to Lessee on the Economic Termination
Purchase Date in accordance with the provisions of Article XVIII and this Lease
shall thereupon terminate as to the Leased Property.
20.3 Rejection of Offer. If Lessor rejects Lessee's offer to purchase the
Leased Property, by written notice given not less than thirty (30) days prior to
the Economic Termination Purchase Date, and Lessee does not withdraw its offer
to purchase the Leased Property within ten (10) days after Lessor so rejects
Lessee's said offer, this Lease shall terminate as to the Leased Property on the
Economic Termination Date, provided no Event of Default shall have occurred and
be continuing.
20.4 No Rent after Purchase or Termination. Except as otherwise expressly
provided herein, upon completion of the purchase of the Leased Property or the
termination of this Lease, as the case may be, no Rent shall thereafter accrue
under this Lease with respect to the Leased Property.
ARTICLE XXI
SUBSTITUTION OF PROPERTY
21.1 Substitution of Property for the Leased Property.
(a) If, in the good faith judgment of Lessee, the Leased Property becomes
uneconomic or Unsuitable for Its Primary Intended Use, or by reason of eviction
or other material interference caused by any claim of paramount title, or for
other prudent business reasons, Lessee desires to terminate this Lease, Lessee
desires to terminate this Lease, Lessee, if no Event of Default shall have
occurred and be continuing, at any time prior to the expiration of the Term,
shall have the right, subject to the conditions set forth below in this Article
XXI, upon notice to Lessor, to substitute one or more properties (collectively
referred to as "Substitute Properties" or individually as a "Substitute
Property") on a monthly Base Rent Payment Date specified in such notice (the
"Substitution Date") occurring not less than ninety (90) days after receipt by
Lessor of such notice, except if Lessee is required by court order or
administrative action to divest or otherwise dispose of the Leased Property
within a shorter time period, in which case if Lessee shall have informed Lessor
of the filing of such court order or administrative action and kept Lessor
reasonably appraised of the status thereof, the time period
39
shall be shortened appropriately to meet the reasonable needs of Lessee, but in
no event less than fifteen (15) Business Days after the receipt by Lessor of
such notice. The notice shall be in the form of an Officer's Certificate and
shall specify the reason(s) for the substitution and the proposed Substitution
Date. For purposes of this paragraph, the desire to reduce the payment of Rent
with respect to the Leased Property whose operation (considering the Rent) is
uneconomic to Lessee shall not be deemed to be a reason for substitution.
(b) If Lessee voluntarily or involuntarily, for any reason, has
discontinued use of the Leased Property in its business operations for a period
in excess of one year, and Lessor has not exercised its right to terminate this
Lease pursuant to Section 16.1(h) hereof, Lessee shall have the obligation, upon
notice given as set forth in paragraph (a) above, to substitute a Substitute
Property, or, if applicable, invoke the procedure set forth in Article XXI.
(c) If Lessee gives the notice referred to in Section 21.1(a) or (b)
above, Lessee shall present to Lessor three properties (or groups of properties)
each of which property (or groups of properties) shall provide Lessor with a
yield (i.e., an annual return on its equity in such property) substantially
equivalent to Lessor's yield from the Leased Property at the time of such
proposed substitution (or in the case of substitution because of damage or
destruction, the yield immediately prior to such damage or destruction) and as
reasonably projected over the remaining Term of this Lease. Lessor shall have a
period of ninety (90) days within which to review such information and either
accept or reject the Substitute Properties so presented unless Lessee is
required by a court order or administrative action to divest or otherwise
dispose of the Leased Property within a shorter time period, in which case the
time period shall be shortened appropriately to meet the reasonable needs of
Lessee, but in no event shall said period be less than fifteen (15) Business
Days after Lessor's receipt of said notice (subject to further extension for any
period of time in which Lessor is not timely provided with the information
provided for in Section 21.2 and Section 21.3 below) provided, however, that if
Lessor shall contend that the Substitute Properties fail to meet all the
conditions for substitution set forth in this Article XXI, including without
limitation the provisions of Sections 21.1(d), (e) and (f) below, the matter
shall be submitted to arbitration in accordance with Article XXXVII and the time
periods for Lessor's approval or rejection shall be tolled during the period of
such arbitration.
In the event that, on or before the expiration of the applicable time
period for Lessor's review, Lessor has rejected all of the Substitute Properties
so presented, then Lessee shall, for a period of sixty (60) days after the
expiration of such period, have the right to terminate this Lease as to the
Leased Property upon notice to Lessor accompanied by an offer to purchase the
Leased Property on the first Base Rent Payment Date occurring at least ninety
(90) days after the date of such notice, as specified in such notice, for a
purchase price equal to the greater of the Fair Market Value Purchase Price or
the Minimum Repurchase Price, and this Lease shall terminate on the purchase
date provided no Event of Default shall have occurred and be continuing.
If Lessor accepts such offer, or fails to reject the same by written
notification within the applicable time period for Lessor's review, Lessor
shall, upon receipt from Lessee of the purchase price provided for above and any
Rent due and payable hereunder (excluding the installment of Base Rent due on
the purchase date), convey the Leased Property to Lessee on
40
the purchase date, in accordance with the provision of Article XVIII and this
Lease shall thereupon terminate as to the Leased Property. Upon completion of
the purchase of the Leased Property, no Rent shall thereafter accrue with
respect thereto.
(d) Lessee's right (and obligation) to offer substitution as set forth in
this Article is subject to the conditions set forth in Section 21.2 below, and
to the delivery of an opinion of counsel for Lessor confirming that (i) the
substitution of the Substitute Property for the Leased Property will qualify as
an exchange solely of property of a like-kind under Section 1031 of the Code, in
which, generally, except for "boot" such as cash needed to equalize exchange
values or discharge indebtedness, no gain or loss is recognized to the Lessor,
(ii) the substitution or sale will not result in ordinary recapture income to
the Lessor pursuant to Code Section 1245 or 1250 or any other Code provision,
(iii) the substitution or sale will result in income, if any, to the Lessor of a
type described in Code Section 856(c)(2) or (3) and will not result in income of
the types described in Code Section 856(c)(4) or result in the tax imposed under
Code Section 857(b)(6), and (iv) the substitution or sale, together with all
other substitutions and sales made or requested by Lessee or any Affiliate
pursuant to any other leases with Lessor of the properties described in Exhibit
C hereto or any other transfers of the Leased Property or the properties leased
under other such operating leases, during the relevant time period, will not
jeopardize the qualification of Lessor as a real estate investment trust under
Code Sections 856-860.
(e) In the event that the equity value of the Substitute Property or group
of Substitute Properties (i.e., the Fair Market Value of the Substitute Property
or group of Substitute Properties minus the encumbrances to which the Lessor
will take the Substitute Property or group of Substitute Properties subject) as
of the Substitution Date is greater than the equity value of the Leased Property
(i.e., the Fair Market Value of the Leased Property minus the encumbrances to
which the Lessee will take the Leased Property subject) as of the Substitution
Date (or in the case of damage or destruction, the Fair Market Value immediately
prior to such damage or destruction), Lessor shall pay an amount equal to the
difference, subject to the limitation set forth below, to Lessee; in the event
that said equity value of the Substitute Property or group of Substitute
Properties is less than said equity value of the Leased Property, Lessee shall
pay an amount equal to the difference, subject to the limitation set forth
below, to Lessor; provided, however, that neither Lessor nor Lessee shall be
obligated to consummate such substitution if such party would be required to
make a payment to the other in excess of an amount equal to ten percent (10%) of
said Fair Market Value of the Leased Property (the amount of cash paid by one
party to the other being hereinafter referred to as the "Cash Adjustment").
Without limiting the generality or effect of the preceding sentence, in the
event that, on the Substitution Date, Lessor is obligated to pay a Cash
Adjustment to Lessee and Lessor does not have sufficient funds available, or
elects not to make such payment in cash. Lessor shall provide Lessee with (and
Lessee shall accrue) a purchase money note and mortgage for a term not to exceed
eighteen (18) months from the Substitution Date and bearing interest, payable
monthly, at the rate per annum described in Section 10.2 as the test rate, or if
no such test rate exists, then at the Prime Rate.
(f) The Rent for such Substitute Property in all respects shall provide
Lessor with a substantially equivalent yield at the time of such substitution
(i.e., annual return on its equity in such Substitute Property) to that received
(and reasonably expected to be received thereafter)
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from the Leased Property, taking into account the Cash Adjustment paid or
received by Lessor and any other relevant factors.
(g) The Minimum Repurchase Price of the Substitute Property shall be an
amount equal to the Minimum Repurchase Price of the Leased Property (i)
increased by any Cash Adjustment paid by Lessor pursuant to paragraph (e) above,
or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to paragraph
(e) above.
21.2 Conditions to Substitution. On the Substitution Date, the Substitute
Property will become the Leased Property hereunder upon delivery by Lessee to
Lessor of the following:
(a) an Officer's Certificate certifying that (i) the Substitute Property
has been accepted by Lessee for all purposes of this Lease and there has been no
material damage to the improvements located on the Substitute Property nor is
any condemnation or eminent domain proceeding pending with respect thereto; (ii)
all permits, licenses and certificates (including, but not limited to, a
permanent, unconditional certificate of occupancy and all certificates of need,
licenses and provider agreements) which are necessary to permit the use of the
Substitute Property in accordance with the provisions of this Lease have been
obtained and are in full force and effect; (iii) under applicable zoning and use
laws, ordinances, rules and regulations the Substitute Property may be used for
the purposes contemplated by Lessee and all necessary subdivision approvals have
been obtained; (iv) there are no mechanics' or materialmen's liens outstanding
or threatened to the knowledge of Lessee against the Substitute Property arising
out of or in connection with the construction of the improvements thereon, other
than those being contested by Lessee pursuant to Article XII; (v) any mechanics'
or materialmen's liens being contested by Lessee will be promptly paid by Lessee
if such contest is resolved in favor of the mechanic or materialman; (vi) to the
best knowledge of Lessee, there exists no Event of Default under this Lease, and
no defense, offset or claim exists with respect to any sums to be paid by Lessee
hereunder; and (vii) any exceptions to Lessor's title to the Substitute Property
do not materially interfere with the intended use of the Substitute Property by
Lessee;
(b) a deed with full warranties conveying to Lessor title to the
Substitute Property free and clear of any liens and encumbrances except those
approved or assumed by Lessor.
(c) a lease duly executed, acknowledged and delivered by Lessee,
containing the same terms and conditions as are contained herein except that (i)
the legal description of the land shall refer to the Substitute Property, (ii)
the Minimum Repurchase Price, Rent and any Additional Charges for the Substitute
Property shall be consistent with the requirements of Section 21.1 and (iii)
such other charges therein as may be necessary or appropriate under the
circumstances shall be made;
(d) counterparts of a standard owner's or lessee's (as applicable) policy
of title insurance covering the Substitute Property (or a valid, binding,
unconditional commitment therefor), dated the Substitution Date, in current form
and including mechanics' and materialmen's lien coverage, issued to Lessor by a
title insurance company satisfactory to Lessor. Such policy shall (i) insure (A)
Lessor's fee title to the Substitute Property, subject to no liens or
encumbrances except those approved or assumed by Lessor, and (B) that any
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restrictions affecting the Substitute Property have not been violated and that a
fixture violation thereof will not result in a forfeiture or reversion of title,
(ii) be in an amount at least equal to the Fair Market Value of the Substitute
Property, and (iii) contain such endorsements as may be reasonably requested by
Lessor;
(e) certificates of insurance with respect to the Substitute Property
fulfilling the requirements of Article XIII;
(f) current appraisals or other evidence satisfactory to Lessor, in its
sole discretion, as to the current Fair Market Values of such Substitute
Property and the Leased Property;
(g) all available revenue data relating to the Substitute Property for the
period from the date of opening for business of the facility on such Substitute
Property to the date of Lessee's most recent fiscal year end, or for the most
recent three (3) years, whichever is less; and
(h) such other certificates, documents, opinions of counsel, and other
instruments as may be reasonably required by Lessor.
21.3 Conveyance to Lessee. On the Substitution Date or the date specified
in the notice given pursuant to Section 21.1. Lessor will convey the Leased
Property to Lessee in accordance with the provisions of Article XVIII (except as
to payment of any expenses in connection therewith which shall be governed by
Section 21.4 below) upon either (a) payment in cash therefor or (b) conveyance
to Lessor of the Substitute Property, as appropriate.
21.4 Expenses. Lessee shall pay or cause to be paid, on demand, all
reasonable costs and expenses of Lessor paid or incurred by it in connection
with the substitution and conveyance of the Leased Property and the Substitute
Property, including but not limited to (a) fees and expenses of its counsel, (b)
all printing expenses, (c) the amount of any filing, registration and recording
taxes and fees, (d) fees and expenses, if any, incurred in qualifying and
maintaining Lessor as a foreign partnership authorized to do business in the
state of which the Substitute Property is located, (e) the cost of preparing and
recording, if appropriate, a release of the Leased Property from the lien of any
mortgage, (f) broker's fees and commissions, if any, (g) documentary stamp and
transfer taxes (excluding any Tennessee tax on indebtedness), if any, (h) title
insurance charges, and (ix) escrow fees.
ARTICLE XXII
RISK OF LOSS
During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee and, 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.
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ARTICLE XXIII
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 will protect, indemnify, save harmless and
defend Lessor 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: (a) any
accident, injury to or death of persons or loss of percentage to property
occurring on or about the Leased Property or adjoining sidewalks, including
without limitation any claims of malpractice, (b) any use, misuse, no use,
condition, maintenance or repair by Lessee of the Leased Property, (c) any
Impositions (which are the obligations of Lessee to pay pursuant to the
applicable provisions of this Lease), (d) any failure on the part of Lessee to
perform or comply with any of the terms of this Lease, and (e) the
non-performance of any of the terms and provisions of any and all existing and
future subleases of the Leased Property to be performed by the landlord (Lessee)
thereunder. Any amounts which become payable by Lessee under this Section shall
be paid within ten (10) days after liability therefor on the part of Lessor is
determined by litigation or otherwise and, if not timely paid, shall bear a late
charge (to the extent permitted by law) at the Overdue Rate from the date of
such determination to the date of payment. Lessee, at its expense, shall
contest, resist and defend any such claim, action or proceeding asserted or
instituted against Lessor or may compromise or otherwise dispose of the same as
Lessee sees fit. Nothing herein shall be construed as indemnifying Lessor
against its own negligent acts or omissions or willful misconduct. Lessee's
liability for a breach of the provisions of this Article shall survive any
termination of this Lease.
ARTICLE XXIV
SUBLETTING AND ASSIGNMENT
24.1 Subletting and Assignment. Subject to the provisions of Section 24.3
below and any other express conditions or limitations set forth herein, Lessee
may, without the consent of Lessor, (a) assign this Lease or sublet all or any
part of the Leased Property to any Affiliate of Lessee, or (b) sublet all or any
part of the Leased Property (i) in the normal course of the Primary Intended Use
such as, but not limited to, leasing of space for major moveable equipment or
functional departments such as pathology, pharmacy and radiology, or (ii) as to
less than an aggregate or twenty percent (20%) of the rentable square footage of
the Facility, to concessionaires or other third party users or operators of
portions of the Leased Property, provided that any subletting to any party other
than an Affiliate of Lessee shall not individually, as to any one such
subletting, or in the aggregate, materially diminish the actual or potential
Additional Rent payable under this Lease. Lessor shall not unreasonably withhold
its consent to any other or further subletting or assignment, provided that (a)
in the case of a subletting, the sublessee shall comply with the provisions of
Section 24.2, (b) in the case of an assignment, the assignee shall assume in
writing and agree to keep and perform all of the terms of this Lease on the part
of Lessee to be kept and performed and shall be and become jointly and severally
44
liable with Lessee for the performance thereof, (c) an original counterpart of
each such sublease and assignment and assumption, duly executed by Lessee and
such sublessee or assignee, as the case may be, in form and substance
satisfactory to Lessor, shall be delivered promptly to Lessor, and (d) in case
of either an assignment or subletting, Lessee shall remain primarily liable, as
principal rather than as surety, for the prompt payment of Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Lessee hereunder.
24.2 Attornment. Lessee shall insert in each sublease permitted under
Section 24.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder, (b) in the event this Lease shall terminate 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 (c) in the event the sublessee receives a written notice from
Lessor or Lessor'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 said sublease directly to the party giving such notice, or as
such party may direct. All rentals received from the sublessee by Lessor or
Lessor's assignees, if any, as the case may be, shall be credited against the
amounts owing by Lessee under this Lease.
24.3 Sublease Limitation. Anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet the 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 (a) the income or profits derived by the business
activities of the sublessee, or (b) 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.
ARTICLE XXV
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
(a) At any time and from time to time within twenty (20) days following
written request by Lessor, Lessee will furnish to Lessor an Officer's
Certificate certifying that this Lease is unmodified and in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications) and the dates to which the Rent has been paid. Any such
Officer's Certificate furnished pursuant to this Article may be relied upon by
Lessor and any prospective purchaser of the Leased Property.
(b) Lessee will furnish or cause Guarantor to furnish the following
statements to Lessor:
(i) within one hundred twenty (120) days after the end of each of
Lessee's fiscal years, together with the annual audit report furnished in
accordance with Section 3.2, a copy of the Consolidated Financial
Statements for the preceding fiscal year and an Officer's Certificate
stating that to the best of the signer's knowledge and belief after making
due inquiry, Lessee is not in default in the performance or observance of
any of
45
the terms of this Lease or, if Lessee shall be in default to its
knowledge, specifying all such defaults, the nature thereof and the steps
being taken to remedy the same, and
(ii) with reasonable promptness, such other information, respecting
the financial condition and affairs of Lessee as Lessor may reasonably
request from time to time.
ARTICLE XXVI
INSPECTION
Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property during usual business hours subject to any security, health,
safety or confidentiality requirements of Lessee, any governmental agency, any
Insurance Requirements relating to the Leased Property, or imposed by law or
applicable regulations.
ARTICLE XXVII
NO WAIVER
No failure by Lessor or Lessee to insist upon the strict performance of
any term hereof or to exercise any right, power or remedy consequent upon a
breach thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.
ARTICLE XXVIII
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 XXIX
SURRENDER
No surrender to Lessor of this Lease or of the Leased Property or any part
of any thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.
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ARTICLE XXX
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, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.
ARTICLE XXXI
TRANSFERS BY LESSOR
If Lessor or any successor owner of the Leased Property shall convey the
Leased Property in accordance with the terms hereof, other than security for a
debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.
ARTICLE XXXII
QUIET ENJOYMENT
So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to perform any
other sum payable under this Lease, or to fail to perform any other obligation
of Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right
by separate and independent action to pursue any claim it may have against
Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment
contained in this Article.
ARTICLE XXXIII
NOTICES
All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered or mailed (by
registered or certified mail, return receipt requested and postage prepaid
addressed to the respective parties, as follows:
47
(a) if to Lessee: Xxxxxxx X. Xxxxxxx
Cardinal Group Corporation
0000 Xxxxxxxxxxx Xxxxx,
0000 Xxxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: 0-000-000-0000 and 000-000-0000
Fax: 000-000-0000
with a copy to: C. Xxxxxx Xxxxxxxxx, Esq.
Xxxxx, Xxxx & Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
(b) if to Lessor: Healthcare Realty Trust Incorporated
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
attn: Xxxxx X. Xxxxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxx X. Xxxx, Esq.
Xxxxx, Xxxxxx & West, P.C.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Phone (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx X. Xxxx, Esq.
Heiskell, Donelson, Bearman, et al.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as either party may hereafter designate, and shall be
effective upon receipt.
ARTICLE XXXIV
APPRAISAL
In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Rental value of the Leased
Property or a Substitute Property for any purpose of this Lease, the party
required or permitted to give notice of such
48
required determination shall include in the notice the name of a person selected
to act as an appraiser on its behalf. Within ten (10) days after receipt of any
such notice, Lessor (or Lessee, as the case may be) shall by notice to Lessee
(or Lessor, as the case may be) appoint a second person as an appraiser on its
behalf. The appraisers thus appointed (each of whom must be a member of the
American Institute of Real Estate Appraisers or any successor organization
thereto) shall, within forty-five (45) days after the date of the notice
appointing the first appraiser, proceed to appraise the Leased Property or
Substitute Property, as the case may be, to determine the Fair Market Value.
Fair Market Value Purchase Price or Fair Market Rental value thereof as of the
relevant date (giving effect to the impact, if any, of inflation from the date
of their decision to the relevant date); provided, however, that if only one
appraiser shall have been so appointed, or if two appraisers shall have been so
appointed but only one such appraiser shall have made such determination within
fifty (50) days after the making of Lessee's or Lessor's request, then the
determination of such appraiser shall be final and binding upon the parties. If
two appraisers shall have been appointed and shall have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined shall not exceed ten percent
(10%) of the lesser of such amounts, then the Fair Market Value, Fair Market
Value Purchase Price or Fair Market Rental value shall be an amount equal to
fifty percent (50%) of the sum of the amounts so determined. If the difference
between the amounts so determined shall exceed ten percent (10%) of the lesser
of such amounts, then such two appraisers shall have twenty (20) days to appoint
a third appraiser, but if such appraisers fail to do so, then either party may
request the American Arbitration Association or any successor organization
thereto to appoint an appraiser within twenty (20) days of such request, and
both parties shall be bound by any appointment so made within such 20-day
period. If no such appraiser shall have been appointed within such twenty (20)
days or within ninety (90) days of the original request for a determination of
Fair Market Value, Fair Market Value Purchase Price or Fair Market Rental value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have appointment made by such court. Any appraiser appointed, by
the American Arbitrator Association or by such court shall be instructed to
determine the Fair Market Value, Fair Market Value Purchase Price or Fair Market
Rental value within thirty (30) days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determinations of the other two appraisers shall be excluded, and fifty
percent (50%) of the sum of the remaining two determinations shall be final and
binding upon Lessor and Lessee as the Fair Market Value, Fair Market Value
Purchase Price or Fair Market Rental value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.
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ARTICLE XXXV
PURCHASE RIGHTS
35.1 First Refusal to Purchase. During the Term and for ninety (90) days
after the expiration of the Term hereof, provided that Lessee is not in default
at such time or at the expiration of this Lease, Lessee shall have a first
refusal option to purchase the Leased Property upon the same terms and
conditions as Lessor, or its successors and assigns, shall propose to sell the
Leased Property, or shall have received an offer from a third party to purchase
the Leased Property, which Lessor intends to accept (or has accepted subject to
Lessee's right of first refusal herein). If, during the Term and such ninety
(90) day period after the expiration of the Term, Lessor reaches such agreement
with a third party or proposes to offer the Leased Property for sale, Lessor
shall promptly notify Lessee of the purchase price and all other material terms
and conditions of such agreement or proposed sale, and Lessee shall have thirty
(30) days after receipt of such notice from Lessor within which time to exercise
Lessee's option to purchase. If Lessee exercises its option, then such
transaction shall be consummated within sixty (60) days after the date of
receipt by Lessor of notice of such exercise in accordance with the terms and
conditions set forth therein and in accordance with the provisions of Article
XVIII hereof to the extent not inconsistent herewith, on the first day of the
first month after all permits for owning or operating the Facility on the Leased
Property have been obtained by Lessee, but in no event later than one hundred
twenty (120) days after the date of receipt by Lessor of notice of the exercise
by Lessee of this option. If Lessee shall not exercise Lessee's option to
purchase within said thirty (30) day period after receipt of said notice from
Lessor, Lessor shall be free for a period of one year after the expiration of
said thirty (30) day period to sell the Leased Property to any third party at a
price and upon terms no less favorable to Lessor than those so offered to
Lessee. Whether or not such sale is consummated, Lessee shall be entitled to
exercise its right of first refusal as provided in this section, as to any
subsequent sale of the Leased Property during the Term of this Lease or such
ninety (90) day period.
35.2 Lessor's Option to Purchase Lessee's Personal Property. Effective on
not less than ninety (90) days' prior written notice given at any time within
one hundred eighty (180) days prior to the expiration of the Term or this Lease,
but not later than ninety (90) days prior to such expiration, or such shorter
notice as shall be appropriate if this Lease is terminated prior to its
expiration date, Lessor shall have the option to purchase all (but not less than
all) of Lessee's Personal Property, if any, at the expiration or termination of
this Lease, for an amount equal to the net sound insurable value thereof
(current replacement cost less accumulated depreciation on the books of Lessee
pertaining thereto), subject to, and with appropriate price adjustments for, all
equipment leases, conditional sale contracts, security interests and other
encumbrances to which Lessee's Personal Property is subject.
ARTICLE XXXVI
DEFAULT BY LESSOR
36.1 Default by Lessor. Lessor shall be in default of its obligations
under this Lease if Lessor shall fail to observe or perform any term, covenant
or condition of this Lease on its
50
part to be performed and such failure shall continue for a period of thirty (30)
days after notice thereof from Lessee, unless such failure cannot with due
diligence be cured within a period of thirty (30) days, in which case such
failure shall not be deemed to continue if Lessor, within said thirty (30) day
period, proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof. The time within which Lessor shall be
obligated to cure any such failure shall also be subject to extension of time
due to the occurrence of any Unavoidable Delay. In the event Lessor fails to
cure any such default within the grace period described above, Lessee, without
waiving or releasing any obligations hereunder, and in addition to all other
remedies available to Lessee hereunder or at law or in equity, may purchase the
Leased Property from Lessor for a purchase price equal to the Fair Market Value
Purchase Price of the Leased Property. In the event Lessee elects to purchase
the Leased Property, it shall deliver a notice thereof to Lessor specifying a
Payment Date occurring no less than ninety (90) days subsequent to the date of
such notice on which it shall purchase the Leased Property, and the same shall
be thereupon conveyed in accordance with the provisions of Article XVIII.
36.2 Lessee's Right to Cure. Subject to the provisions of Section 36.1, if
Lessor shall breach any covenant to be performed by it under this Lease, Lessee,
after notice to and demand upon Lessor in accordance with Section 36.1, without
waiving or releasing any obligation of Lessor hereunder, and in addition to all
other remedies available hereunder and at law or in equity to Lessee, may (but
shall be under no obligation at any time thereafter to) make such payment or
perform such act for the account and at the expense of Lessor. All sums so paid
by Lessee and all costs and expenses (including without limitation, reasonable
attorneys' fees) so incurred, together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessee,
shall be paid by Lessor to Lessee on demand. The rights of Lessee hereunder to
cure and to secure payment from Lessor in accordance with this Section 36.2
shall survive the termination of this Lease.
ARTICLE XXXVII
ARBITRATION
37.1 Controversies. Except with respect to the payment of Base Rent
hereunder, in case any controversy shall arise between the parties hereto as to
any of the requirements of this Lease or the performance thereof, which the
parties shall be unable to settle by agreement or as otherwise provided herein,
such controversy shall be determined by arbitration to be initiated and
conducted as provided in this Article XXXVII.
37.2 Appointment of Arbitrators. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing, specifying
the matter to be submitted to arbitration, and nominating some competent
disinterested person to act as an arbitrator. Within twenty (20) days after
receipt of such written demand and notification, the other party shall, in
writing, nominate a competent disinterested person and the two (2) arbitrators
so designated shall, within ten (10) days thereafter, select a third arbitrator
and give immediate written notice of such selection to the parties and shall fix
in said notice a time and place for the first meeting of the arbitrators, which
meeting shall be held as soon as conveniently possible after the
51
selection of all arbitrators, at which time and place the parties to the
controversy may appear and be heard.
37.3 Third Arbitrator. In case the notified party or parties shall fail to
make a selection upon notice, as aforesaid, or in case the first two (2)
arbitrators selected shall fail to agree upon a third arbitrator within ten (10)
days after their selection, then such arbitrator or arbitrators may, upon
application made by either of the parties to the controversy, after twenty (20)
days' written notice thereof to the other party or parties, be appointed by any
judge of any United States court of record having jurisdiction in the state in
which the Leased Property is located or, if such office shall not then exist, by
a judge holding an office most nearly corresponding thereto.
37.4 Arbitration Procedure. Said arbitrators shall give each of the
parties not less than ten (10) days' written notice of the time and place of
each meeting at which the parties or any of them may appear and be heard and
after hearing the parties in regard to the matter in dispute and taking such
other testimony and making such other examinations and investigations as justice
shall require and as the arbitrators may deem necessary, they shall decide the
questions submitted to them. The decision of said arbitrators in writing signed
by a majority of them shall be final and binding upon the parties to such
controversy. In rendering such decisions and award, the arbitrators shall not
add to, subtract from or otherwise modify the provisions of this Lease.
37.5 Expenses. The expenses of such 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.
ARTICLE XXXVIII
FINANCING OF THE LEASED PARTY
38.1 Financing by Lessor. Lessor agrees that, if it grants or creates any
mortgage, lien, encumbrance or other title retention agreement ("Encumbrances")
upon the Leased Property, the holder of each such Encumbrance shall
simultaneously agree (a) to give Lessee the same notice, if any, given to Lessor
of any default or acceleration of any obligation underlying any such Encumbrance
or any sale in foreclosure of such Encumbrance, (b) to permit Lessee to cure any
such default on Lessor's behalf within any applicable cure period, in which
event Lessor agrees to reimburse Lessee for any and all out-of-pocket costs and
expenses incurred to effect any such cure (including reasonable attorneys'
fees), (c) to permit Lessee to appear with its representatives and to bid at any
foreclosure sale with respect to any such Encumbrance, (d) to enter into an
agreement with Lessee containing the provisions described in Article XXXIX of
this Lease, and (e) Lessor and Lessor's successor and assigns, further agrees
that no such Encumbrance shall in any way prohibit, derogate from, or interfere
with Lessee's right and privilege to collaterally assign its leasehold and
contract rights hereunder provided such collateral assignment and rights granted
to the assignee thereunder shall be subordinate to the rights of the holder of
an Encumbrance as provided in Article XXXIX hereof.
52
ARTICLE XXXIX
SUBORDINATION AND NON-DISTURBANCE
At the request from time to time by one or more institutional holders of a
mortgage or deed of trust that may hereafter be placed upon the Leased Property
or any part thereof, and any and all renewals, replacements, modifications,
consolidations, spreaders and extensions thereof, Lessee will subordinate this
Lease and all of Lessee's rights and estate hereunder to each such mortgage or
deed of trust and agree with each such institutional holder that Lessee will
attorn to and recognize such holder or the purchaser at any foreclosure sale or
any sale under a power of sale contained in any such mortgage or deed of trust,
as the case may be, as Lessor under this Lease for the balance of the Term then
remaining, subject to all of the terms and provisions of this Lease; provided,
however, that each such institutional holder simultaneously executes, delivers
and records a written agreement (a) consenting to this Lease and agreeing that,
notwithstanding any such other lease, mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Lessee shall not be disturbed in peaceful enjoyment of the Leased property nor
shall this Lease be teriminated or canceled at any time, except in the event
Lessor shall have the right to terminate this Lease under the terms and
provisions expressly set forth herein; (b) agreeing that for any period while it
is Lessor hereunder, it will perform, fulfill and observe all of Lessor's
representations, warranties and agreements set forth herein; and (c) agreeing
that all proceeds of the casualty insurance described in Article XIV of this
Lease and all Awards described in Article XV will be made available to Lessor
for restoration of the Leased Property as and to the extent required by this
Lease, subject only to reasonable regulation regarding the disbursement and
application thereof.
ARTICLE XL
MISCELLANEOUS
40.1 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision or this Lease or any application thereof
shall be invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any late
charges provided for in any provision of this Lease are based upon a rate in
excess of the maximum rate permitted by applicable law, the parties agree that
such charges shall be fixed at the maximum permissible rate. Neither this Lease
nor any provision hereof may be changed, waived, discharged or terminated except
by an instrument in writing and in recordable form signed by Lessor and Lessee.
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 Tennessee but not including its
conflict of laws rules.
53
40.2 Transfer of Licenses. Upon the expiration or earlier termination of
the Term, Lessee shall use its best efforts to transfer to Lessor or Lessor's
nominee all licenses (except Lessee's operating licenses), operating permits and
other governmental authorizations and all contracts, including contracts with
governmental or quasi-governmental entities which may be necessary or useful in
the operation of the Facility.
ARTICLE XLI
MEMORANDUM OF LEASE
Lessor and Lessee shall, promptly upon the request of either, enter into a
short form memorandum of this Lease, in form suitable for recording under the
laws of the state in which the Leased Property is located in which reference to
this Lease, and all options contained herein, shall be made.
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized.
LESSOR:
Healthcare Realty Trust Incorporated
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
President
LESSEE:
Cardinal Development Co., Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
Vice President
54
AMENDMENT NUMBER ONE TO LEASE AGREEMENT
THIS AGREEMENT, dated as of the 1st day of November , 1993, by and between
HEALTHCARE REALTY TRUST INC., Maryland corporation, having its principal offices
at 0000 Xxxx Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 ("Lessor") and CARDINAL
DEVELOPMENT CO., INC., a Kentucky corporation, having its principal offices at
0000 Xxxxxxxxxxx Xxxxx, 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000
("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor entered into a certain Lease Agreement with Lessee dated
June 8, 19983, for the lease of certain property known as The Fenton Extended
Care Center, located at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, more particularly
described on Exhibit A attached to the Lease Agreement (the "Lease"); and
WHEREAS, certain terms of the Lease are defined in inconsistent manners
and the parties hereto are desirous of modifying the Lease to correct such
inconsistencies.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Lessor and Lessee do hereby covenant and agree as follows:
1. Modifications. (a) In Article II of the Lease, the definitions of "CPI"
and "CPI Increase" are hereby delete in their entirety and replaced with the
following:
CPI: The Consumer Price Index published by the Bureau of Labor
Statistics of the United States Department of Labor, for all Urban
Consumers for the applicable region within which the Facility is
located (1982 - 1984 = 100), or if such Index is not available, a
comparable index selected by Lessor which is published by an
governmental institution or a nationally recognized publisher of
statistical information.
CPI Increase: The amount obtained by multiplying (a) the prior
year's total rent (Base Rent + Additional Rent), by (b) the
percentage increase between the CPI last published prior to the
first day of the then applicable Fiscal Year and the CPI last
published prior to the first day of the preceding Fiscal Year. The
CPI Increase for each Fiscal Year shall be calculated on and as of
the first day of such Fiscal Year.
(b) Article XXXIII is amended to provide that a copy of all notices,
demands, requests, consents and other communications sent to Lessee shall
also be sent to:
2. Lease in Full Force and Effort. Except as hereby modified and amended,
the parties hereto do hereby ratify and confirm the terms, covenants, provisions
and conditions of the Lease and this Agreement. The Lease is hereby incorporated
by reference into this
55
Agreement and made a part hereof as if fully repeated herein, except as
otherwise specifically provided for pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to Lease to be
executed and their respective corporate seals to be hereunto affixed and
attested by their respective officers thereunto duly authorized.
LESSOR:
HEALTHCARE REALTY TRUST INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx, President
LESSEE:
CARDINAL DEVELOPMENT CO., INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
56
LEASE ASSIGNMENT, CONSENT AND RELEASE
This is a LEASE ASSIGNMENT, CONSENT AND RELEASE (the "Assignment") dated
and effective as of March 1, 1994 (the "Effective Date"), among
CARDINAL DEVELOPMENT CO., INC.
a Kentucky corporation
0000 Xxxxxxxxxxx Xxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000 ("Assignor")
TRANSITIONAL HEALTH PARTNERS
d/b/a TRANSITIONAL HEALTH
SERVICES, a Delaware general partnership
0000 Xxxxxxxxxxx
Xxxxx 0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000 ("Assignee")
and
HEALTHCARE REALTY TRUST INCORPORATED
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000 ("Lessor")
A. On June 8, 1993, Assignor entered into a Lease (the "Lease") with
Lessor, whereby Assignor agreed to lease from Lessor certain premises suitable
for the operation of a 121-bed nursing care facility located at 000 Xxxxx
Xxxxxx, Xxxx xx Xxxxxx, Xxxxxx of Genessee, Michigan known commonly as Fenton
Extended Care Center (the "Premises"), a short form of which is recorded in
Liber 2513, Page 353-56, with the Register of Deeds of Genessee County,
Michigan.
B. Assignor wishes to vacate the Premises and assign its interest in the
Lease to Assignee, and Lessor wishes to consent to such assignment and
Assignee's assumption of the Lease, all as more particularly set forth below.
57
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereto agree to the following
terms and conditions:
1. Assignment. Assignor assigns, transfers and sets over its entire right,
title and interest in and to the Lease and the Premises to Assignee effective as
of the Effective Date, such Effective Date to be determined by Assignee but in
no event later than December 31, 1993.
2. Assumption. Assignee accepts such assignment of the entire right, title
and interest of Assignor in and to the Lease, and assumes all of the duties,
obligations and liabilities of Assignor under the Lease arising on or after the
Effective Date. Assignee covenants to and with Assignor and Lessor that
Assignee, from and after the Effective Date, will promptly comply with and
perform all obligations and duties of Assignor under the Lease, including the
payment of rental and all other sums thereunder, in accordance with the terms
and conditions of the Lease.
3. Indemnification.
(a) Assignor agrees to indemnify and hold Assignee and Lessor
harmless from any and all losses, costs, expenses, claims, damages and
liabilities, including, without limitation, attorneys fees and legal expenses,
incurred by Assignee or Lessor by reason of the Premises or Assignor's operation
and possession thereof or the breach by Assignor of or default under the Lease
arising on or before the Effective Date. (b) Assignee agrees to indemnify and
hold Assignor and Lessor harmless from any and all losses, costs, expenses,
claims, damages and liabilities, including, without limitation, attorneys fees
and legal expenses, incurred by Assignor or Lessor by reason of the breach by
Assignee of or default under the Lease arising on or after the Effective Date.
58
4. Joint Representations and Warranties. Assignor and Lessor jointly and
severally represent and warrant to Assignee that (a) attached hereto as Exhibit
A and made a part hereof is a true and complete copy of the Lease and all
amendments thereto, (b) the Lease is in full force and effect on the date
hereof, and since the date of the Lease, no amendments, changes or modifications
have occurred thereto, except for a certain Amendment to Operating Lease dated
November 1, 1993, (c) the Base Rent under the Lease has been paid through the
Effective Date, and (d) Lessor has issued no notice of default under the Lease
and to Assignor's and Lessor's knowledge, but without independent investigation,
no event has occurred and is continuing which would constitute a default under
the Lease, but for the giving of notice, the passage of time, or both.
5. Assignor's Representations and Warranties. Assignor represents and
warrants to Assignee (a) that the Lease is in full force and effect, (b) that
the Lease and this Assignment have been duly executed by the respective parties
thereto, (c) that there are no present defaults existing under the Lease, and
(d) that all rental and other sums due to Lessor under the Lease have been paid
when due.
6. Lessor's Representations and Warranties. Lessor represents, warrants,
and covenants to Assignee (a) that the Lease is in full force and effect, (b)
that the Lease and this Assignment have been duly executed by Lessor and is
binding and legally enforceable against Lessor, (c) that copies of all notices,
demands and other communications (including without limitation all notices of
default) permitted or required to be given in writing under the Lease to
Assignee shall be made with a duplicate thereof being addressed to Xx. Xxxxxx X.
Xxxx c/o Welsh, Carson, Xxxxxxxx & Xxxxx, One World Financial Center, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter referred to as "WCAS"), and (d) that
following any event of default
59
under the Lease and the delivery of such written notice to WCAS, if Assignee
fails to cure such default within the appropriate cure period, then WCAS shall
at its discretion have an additional fifteen (15) days to cure unless such
default can be cured by the payment of money, in which event WCAS shall have
only five (5) additional days to cure.
7. Consent and Release. Pursuant to Article XXIV of the Lease, Lessor
consents to this Assignment, the assignment of the Lease and the delegation by
Assignor to Assignor of all obligations and duties of Assignor under the Lease.
Assignee agrees Lessor's consent shall not constitute a consent by Lessor to any
subsequent or further assignment of the Lease or subletting thereunder. Lessor
agrees to look exclusively to Assignee for the performance of all duties,
obligations and liabilities under the Lease arising from and after the Effective
Date. In addition, Lessor fully releases Assignor from any and all duties,
obligations and liabilities of Assignor under the Lease, and any Guarantors
thereof, arising from and after the Effective Date.
IN WITNESS WHEREOF, Assignor, Assignee and Lessor have executed this Lease
Assignment, Consent and Release as of the date first set forth above, but
actually on the dates set forth below.
ASSIGNOR: CARDINAL DEVELOPMENT CO., INC.
Witness:
By: /s/ Xxxxx X. Xxxx
-------------------------------------
/s/ Xxxxx XxXxxxxx Xxxxx X. Xxxx
-------------------------- President
Xxxxx XxXxxxxx [Printed Name]
Executive Assistant [Title]
Date: 3-2-94
60
ASSIGNEE: TRANSITIONAL HEALTH PARTNERS
a Delaware general partnership
By THS PARTNERS I, INC.
General Partner
Witness:
By: /s/ Xxxxx X. xxxxxx
-------------------------------------
/s/ Xxxx X. Xxxxxxx Xxxxx X. Xxxxxx
-------------------------- President
Xxxx X. Xxxxxxx [Printed Name]
VP-Dir. of Legal Affairs [Title]
Date: 3-1-94
LESSOR: HEALTHCARE REALTY TRUST INCORPORATED
Witness:
By: /s/ Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx Xxxxx Xxxxx, President
-------------------------- -------------------------------------
Xxxxxxx X. Xxxxxx [Printed Name]
Paralegal [Title]
Date: 0-00-00
XXXXXXXXXXXX XX XXXXXXXX )
) ss
COUNTY OF JEFFERSON )
Acknowledged before me this 2nd day of March, 1994, on behalf of Cardinal
Development Co., Inc. (the "Corporation") by Xxxxx X. Xxxx, President of the
Corporation.
[SEAL] /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Notary Public, State at Large
Printed Name: Xxxxxx X. XxXxxxxx
County of Residence: Jefferson
Commission Expires: 1-3-95
61
STATE OF KENTUCKY )
) ss
COUNTY OF JEFFERSON )
Acknowledge before me this 1st day of March, 1994, by Xxxxx X. Xxxxxx
President of the THS Partners I, Inc., a Delaware corporation and general
partner of Transitional Health Partners, a Delaware general partnership (the
"Partnership"), on behalf of the Partnership.
[SEAL] /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Notary Public, State at Large
Printed Name: Xxxxxx X. XxXxxxxx
County of Residence: Jefferson
Commission Expires: 1-3-95
62
STATE OF TENNESSEE )
) ss
COUNTY OF DAVIDSON )
Acknowledge before me this 23rd day of February, 1994, on behalf of
Healthcare Realty Trust Incorporated, a Maryland corporation and real estate
investment trust (the "Corporation"), by Xxxxx Xxxxx, President of the
Corporation, on behalf of the Corporation.
[SEAL] /s/ Xxxxx Xxxxxx
-----------------------------------------
Notary Public, State at Large
Printed Name: Xxxxx Xxxxxx
County of Residence: Xxxxxxxxxx
Commission Expires: 11-26-94
This Lease Assignment and Consent
prepared by:
/s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx, Esq.
0000 Xxxxxxxxxxx Xxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
KY License No. 81520
IN License No. 15327-22
63
SCHEDULE 10.16
THP has entered or will enter into agreements with Healthcare Realty
Trust Incorporated substantially identical to Exhibit 10.16 as follows:
1. Lease Agreement dated June 8, 1993 for Wayne, Michigan facility, as
amended by that certain Amendment Number One to Lease Agreement dated
November 1, 1993, as assigned to THP pursuant to that certain Lease
Assignment, Consent and Release dated March 1, 1994. Material details in
which this agreement differs from Exhibit 10.16 are that the amount of the
required "Letter of Credit" is $91,875 and the amount of "Base Rent" per year
is $122,500.
2. Lease Agreement dated June 8, 1993 for New Harmony, Indiana
facility, as amended by that certain Amendment Number One to Lease Agreement
dated November 1, 1993, as assigned to THP pursuant to that certain Lease
Assignment, Consent and Release dated November 1, 1993. Material details in
which this agreement differs from Exhibit 10.16 are that the amount of the
required "Letter of Credit" is $330,750 and the amount of "Base Rent" per
year is $441,000.
3. Lease Agreement dated June 8, 1993 for Fremont, Michigan facility,
as amended by that certain Amendment Number One to Lease Agreement dated
November 1, 1993, as assigned to THP pursuant to that certain Lease
Assignment, Consent and Release dated March 1, 1994. Material details in
which this agreement differs from Exhibit 10.16 are that the amount of the
required "Letter of Credit" is $298,594 and the amount of "Base Rent" per
year is $398,125.
4. Lease Agreement dated June 8, 1993 for St. Louis, Michigan facility,
as amended by that certain Amendment Number One to Lease Agreement dated
November 1, 1993, as assigned to THP pursuant to that certain Lease
Assignment, Consent and Release dated March 1, 1994. Material details in
which this agreement differs from Exhibit 10.16 are that the amount of the
required "Letter of Credit" is $151,594 and the amount of "Base Rent" per
year is $202,125.
5. Lease Agreement dated June 8, 1993 for Ovid, Michigan facility, as
amended by that certain Amendment Number One to Lease Agreement dated
November 1, 1993. Material details in which this agreement differs from
Exhibit 10.16 are that the amount of the required "Letter of Credit" is
$114,844, the amount of "Base Rent" per year is $153,125, and this agreement
has not yet been assigned to THP.
