EXHIBIT 10.51
REDDING, CA
LEASE AGREEMENT
MPT OF REDDING, LLC,
a Delaware limited liability company
Lessor
AND
NORTHERN CALIFORNIA REHABILITATION HOSPITAL, LLC,
a Delaware limited liability company
Lessee
VIBRA HEALTHCARE, LLC,
VIBRA MANAGEMENT, LLC
AND
SENIOR REAL ESTATE HOLDINGS, LLC
Guarantors
Property:
Eighty-eight (88)-Bed Hospital Facility
(Commonly referred to as the Northern California Rehabilitation Hospital)
0000 Xxxxxx Xxx
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxxxxxx
June 30, 2005
Table of Contents
Page
----
LEASE AGREEMENT............................................................. i
LEASE AGREEMENT............................................................. 1
ARTICLE I LEASED PROPERTY; TERM.......................................... 2
ARTICLE II DEFINITIONS.................................................... 3
ARTICLE III RENT........................................................... 12
3.1 Base Rent...................................................... 12
3.2 Additional Charges............................................. 12
3.3 Absolute Triple Net Lease...................................... 13
3.4 Lease Deposit.................................................. 13
3.5 Adjustments.................................................... 13
3.6 Rent and Payments under the Ground Lease....................... 13
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
5.1 Acknowledgement................................................ 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..................................... 15
7.3 Lessor to Grant Easements...................................... 16
ARTICLE VIII LEGAL AND INSURANCE REQUIREMENTS............................... 17
8.1 Compliance with Legal and Insurance Requirements............... 17
8.2 Legal Requirement Covenants.................................... 17
8.3 Hazardous Materials............................................ 17
8.4 Healthcare Laws................................................ 18
8.5 Representations and Warranties................................. 18
8.6 Single Purpose Entity.......................................... 18
8.7 Organizational Documents....................................... 18
ARTICLE IX REPAIRS; RESERVES; RESTRICTIONS................................ 19
9.1 Maintenance and Repair......................................... 19
9.2 Reserves for Extraordinary Repairs............................. 20
9.3 Encroachments; Restrictions.................................... 20
9.4 Special Reserve................................................ 20
ARTICLE X CAPITAL ADDITIONS.............................................. 21
10.1 Construction of Capital Additions to the Leased Property....... 21
i
Table of Contents
(continued)
Page
----
10.2 Capital Additions Financed by Lessee......................... 22
10.3 Capital Additions Financed by Lessor......................... 22
10.5 Salvage...................................................... 24
ARTICLE XI LIENS........................................................ 24
ARTICLE XII PERMITTED CONTESTS........................................... 25
ARTICLE XIII INSURANCE.................................................... 25
13.1 General Insurance Requirements............................... 25
13.2 Additional Insurance......................................... 27
13.3 Waiver of Subrogation........................................ 28
13.4 Form of Insurance............................................ 28
13.5 Increase in Limits........................................... 28
13.6 Blanket Policy............................................... 28
13.7 No Separate Insurance........................................ 29
ARTICLE XIV FIRE AND CASUALTY............................................ 29
14.1 Insurance Proceeds........................................... 29
14.2 Reconstruction in the Event of Damage or Destruction
Covered by Insurance......................................... 29
14.3 Reconstruction in the Event of Damage or Destruction Not
Covered by Insurance......................................... 30
14.4 Lessee's Personal Property................................... 30
14.5 Restoration of Lessee's Property............................. 30
14.6 No Abatement of Rent......................................... 30
14.7 Damage Near End of Term...................................... 31
14.8 Termination of Right to Purchase............................. 31
14.9 Waiver....................................................... 31
14.10 Purchase Option Subordinate to Facility Instrument........... 31
ARTICLE XV CONDEMNATION................................................. 31
15.1 Definitions.................................................. 31
15.2 Parties' Rights and Obligations.............................. 32
15.3 Total Taking................................................. 32
15.4 Partial Taking............................................... 32
15.5 Restoration.................................................. 32
15.6 Award Distribution........................................... 32
15.7 Temporary Taking............................................. 32
15.8 Purchase Option Subordinate to Facility Instrument........... 31
ARTICLE XVI DEFAULT...................................................... 33
16.1 Events of Default............................................ 33
16.2 Events of Default in Financial Covenants..................... 37
16.3 Additional Expenses.......................................... 38
16.4 Intentionally Omitted........................................ 38
16.5 Waiver....................................................... 38
16.6 Application of Funds......................................... 38
ii
Table of Contents
(continued)
Page
----
16.7 Notices by Lessor......................................... 38
16.8 Lessor's Contractual Security Interest.................... 38
ARTICLE XVII LESSOR'S RIGHT TO CURE.................................... 40
ARTICLE XVIII PURCHASE OF THE LEASED PROPERTY........................... 40
ARTICLE XIX HOLDING OVER.............................................. 41
ARTICLE XX INTENTIONALLY OMITTED..................................... 41
ARTICLE XXI INTENTIONALLY OMITTED..................................... 41
ARTICLE XXII RISK OF LOSS.............................................. 41
ARTICLE XXIII INDEMNIFICATION........................................... 41
ARTICLE XXIV ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION......... 42
24.1 Assignment and Subletting................................. 42
24.2 Sublease Limitations...................................... 42
24.3 Sublease Subordination and Non-Disturbance................ 43
ARTICLE XXV OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS;
NOTICES AND OTHER CERTIFICATES............................ 43
ARTICLE XXVI INSPECTION................................................ 45
ARTICLE XXVII NO WAIVER................................................. 45
ARTICLE XXVIII REMEDIES CUMULATIVE....................................... 45
ARTICLE XXIX SURRENDER................................................. 45
ARTICLE XXX NO MERGER OF TITLE........................................ 46
ARTICLE XXXI TRANSFERS BY LESSOR....................................... 46
ARTICLE XXXII QUIET ENJOYMENT........................................... 46
ARTICLE XXXIII NOTICES................................................... 47
ARTICLE XXXIV APPRAISAL................................................. 48
ARTICLE XXXV PURCHASE RIGHTS........................................... 46
35.1 INTENTIONALLY OMITTED..................................... 46
35.2 Lessor's Option to Purchase Lessee's Personal Property.... 48
ARTICLE XXXVI INTENTIONALLY OMITTED..................................... 49
ARTICLE XXXVII FINANCING OF THE LEASED PROPERTY.......................... 49
37.1 Financing by Lessor....................................... 49
ARTICLE XXXVIII SUBORDINATION AND NON-DISTURBANCE......................... 49
ARTICLE XXXIX LICENSES.................................................. 50
ARTICLE XL COMPLIANCE WITH HEALTHCARE LAWS........................... 51
ARTICLE XLI LESSOR'S RIGHT TO SELL AND LESSEE'S RIGHT OF FIRST
REFUSAL................................................... 52
41.1 Lessor's Right to Sell.................................... 52
41.2 Lessee's Right of First Refusal........................... 52
ARTICLE XLII MISCELLANEOUS............................................. 52
42.1 General................................................... 52
42.2 Lessor's Expenses......................................... 52
42.3 Entire Agreement; Modifications........................... 52
42.4 Lease Guaranty............................................ 52
iii
Table of Contents
(continued)
Page
----
42.5 Future Financing.......................................... 53
42.6 Letter of Credit.......................................... 53
42.7 Change in Ownership/Control............................... 51
42.8 Lessor Securities Offering and Filings.................... 53
42.9 Non-Recourse as to Lessor................................. 53
42.10 Management Agreements..................................... 54
42.11 Counterparts.............................................. 54
ARTICLE XLIII MEMORANDUM OF LEASE....................................... 54
iv
LEASE AGREEMENT
This LEASE AGREEMENT (the "Lease") is dated as of the 30th day of June,
2005, and is between MPT OF REDDING, LLC, a Delaware limited liability company
("Lessor"), having its principal office at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, and NORTHERN CALIFORNIA REHABILITATION HOSPITAL, LLC,
a Delaware limited liability company ("Lessee"), having its principal office at
0000 Xxxx Xxxxx, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, by that certain Grant Deed dated November 12, 1997, which was
recorded on November 17, 1997, as Instrument No. 1997-0038346, in Book 3619,
Page 785, in the Official Records of the County Recorder of Shasta County,
California, National Specialty Hospital of Redding, Inc. ("NMSHR") conveyed to
Guardian Postacute Services, Inc. ("GPS") all of its right, title and interest
in and to the buildings and improvements located on that certain real estate
which is located in Xxxxxxx, Xxxxxx County, California, which real estate is
more particularly described on EXHIBIT A attached hereto and made a part hereof
by reference and incorporation (the "Ground Leased Land");
WHEREAS, NMSHR, as Landlord, and GPS, as Tenant, entered into that certain
Ground Lease Agreement dated November 17,1994, whereby the Ground Leased Land
was leased to GPS, which Ground Lease was amended by that certain Amendment No.
1 to Ground Lease Agreement dated November 29, 2001, all as evidenced by (i)
that certain Memorandum of Lease Agreement dated as of November 12, 1997, which
was recorded on November 17, 1997, as Instrument No. 1997-0038345 (Book 3619,
Page 779) in the Official Records of the County Recorder of Shasta County,
California, and (ii) that certain Amendment No. 1 to Memorandum of Lease
Agreement dated as of November 16,2001, which will be recorded simultaneously
herewith in the Official Records of the County Recorder of Shasta County,
California (collectively, the "Ground Lease");
WHEREAS, GPS subsequently changed its name to Ocadian Care Centers, Inc.,
a California corporation, by amendment to its Articles of Incorporation, filed
with the California Secretary of State on July 3, 2000; and, Ocadian Care
Centers, Inc. subsequently converted to Ocadian Care centers, LLC, a California
limited liability company, by filing Articles of Organization-Conversion
(LLC-1A) with the California Secretary of State on January 7, 2005 ("Ocadian");
WHEREAS, by that certain Grant Deed dated July 15, 2004, to the effective
on July 16, 2004, which was recorded on July 15, 2004, as Instrument No.
2004-0040414, in the Official Records of the County Recorder of Shasta County,
California, NMSHR conveyed all of its right, title and interest in the Leased
Property to Shasta Regional Medical Center, LLC, a California limited liability
company (the "Ground Lessor"), and by that certain Asset Sale Agreement dated
April 16, 2004 (as amended), NMSHR assigned all of its right, title and interest
in and to the Ground Lease to the Ground Lessor;
WHEREAS, by that certain Grant Deed dated simultaneously herewith, Ocadian
conveyed all of its right, title and interest in and to said buildings and
improvements located on the Ground Leased Land to Northern California
Rehabilitation Hospital, LLC; and, by that certain Assignment and Assumption of
Ground Lease dated simultaneously herewith, Ocadian conveyed to Lessee all of
its right, title and interest under the Ground Lease;
WHEREAS, by that certain Grant Deed dated simultaneously herewith, Lessee
conveyed all of its right, title and interest in and to said buildings and
improvements located on the Ground Leased Land to Lessor; and, by that certain
Assignment and Assumption of Ground Lease dated simultaneously herewith, Lessee
conveyed to Lessor all of its right, title and interest under the Ground Lease;
WHEREAS, Lessor and Lessee desire to enter into this Lease on the terms
and conditions hereinafter provided.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
LEASED PROPERTY; TERM
Lessor and Lessee acknowledge and agree that this Lease is subject to all
of the terms, conditions, provisions, limitations and obligations contained in
the Ground Lease and Lessee accepts, assumes and agrees to perform and observe
all of such terms, conditions, provisions, limitations and obligations contained
therein and to be performed on the part of the Lessor as lessee therein,
including the payment of Ground Lease Rent, except as expressly modified and
limited herein. In the event of termination of the Ground Lease, by lapse of
time or for any other reason, prior to the cancellation or termination of this
Lease, this Lease shall automatically terminate on the effective date of the
termination of the Ground Lease, unless said termination shall have been caused
by an act or omission of the Lessee, in which event Lessee shall remain liable
to Lessor in accordance with the terms hereof, therefore, upon and subject to
the terms and conditions hereinafter set forth, and subject to the rights of any
tenants, subtenants, lessees or sublessees under any Existing Subleases as
described in Section 24.1 below, Lessor leases to Lessee and Lessee rents from
Lessor all of Lessor's rights and interest in and to the following property
(collectively, the "Leased Property"):
(a) the real property described on EXHIBIT A attached hereto (the
"Land");
(b) the Facility and all buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind, 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 (hereinafter defined) financed by Lessor (collectively, the
"Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land and
the Leased Improvements;
(d) all site plans, surveys, soil and substrata studies,
architectural drawings, plans and specifications, inspection reports,
engineering and environmental plans and studies, title reports, floor
plans, landscape plans and other plans relating to the Land and Leased
Improvements; and
(e) all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection
with, and permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in
oxygen and vacuum systems, all of which, to the greatest extent permitted
by law, are hereby deemed by the parties hereto to constitute real estate,
together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within the category
of 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"); Lessee shall have and hold the Leased Property for a
fixed term (the "Fixed Term") commencing on the date hereof (the "Commencement
Date") and ending at midnight on the last day of the one hundred and eightieth
(180th) month period after the Commencement Date, unless sooner terminated as
herein provided.
So long as Lessee is not in default, and no event has occurred which with
the giving of notice or the passage of time or both would constitute a default,
under any of the terms and conditions of this Lease, or under any of the terms
and conditions of the Other Leases (as hereinafter defined), Lessee shall have
the option to extend the
2
Fixed Term of this Lease on the same terms and conditions set forth herein for
three (3) additional periods of five (5) years each (each an "Extension Term").
Lessee may exercise each such option by giving written notice to the Lessor at
least three hundred sixty five (365) days prior to the expiration of the Fixed
Term or Extension Term, as applicable (the "Extension Notice"). If during the
period following the delivery of the Extension Notice to Lessor, Lessee shall
fail to comply with all of the terms and provisions of this Lease, or a default
or breach by Lessee shall occur under this Lease, or under any of the Other
Leases, and such default or breach is not cured within the applicable time
periods as provided herein, Lessee shall be deemed to have forfeited all
Extension Options. If Lessee elects not to exercise its option to extend, all
subsequent options to extend shall be deemed to have lapsed.
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 GAAP 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 in Section 10.2.
Additional Charges: As defined in Section 3.2.
Adjustment Date: January 1 of each year commencing on January 1, 2006.
Affiliate: When used with respect to any corporation, limited liability
company, or partnership, the term "Affiliate" shall mean any person,
corporation, limited liability company, partnership or other legal entity,
which, directly or indirectly, controls or is controlled by or is under common
control with such corporation, limited liability company, or partnership. 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, corporation, limited liability company, partnership or
other legal entity, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, corporation, limited liability company, partnership or other legal
entity, through the ownership of voting securities, partnership interests or
other equity interests.
Associated Facilities: This Facility along with the facilities leased by
Lessor's Affiliates to Lessee's Affiliates in Fresno, California, Kentfield,
California, Marlton, New Jersey, Bowling Green, Kentucky, New Bedford,
Massachusetts, and Thornton, Colorado.
Award: As defined in Section 15.1.
Base Rent: As defined in Section 3.1.
Business: The operation of the Facility and the engagement in and pursuit
and conduct of any business venture or activity related thereto.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.
3
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.
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, 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, (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.
Capital Improvement Reserve: As defined in Section 9.1(e).
Code: The Internal Revenue Code of 1986, as amended.
Combined EBITDAR: The EBITDAR of the Combined Lessees as reduced for any
inter-company transactions.
Combined Fixed Charges: The sum of Combined Lease Payments and required
principal and interest payments with respect to the Total Debt as reduced for
any inter-company transactions.
Combined Lease Payments: The payments of Base Rent required pursuant to
this Lease and the payments of Coverage Rent pursuant to and as defined under
the Other Leases.
Combined Lessees: The Lessee and any Affiliates of Lessee or any of the
Guarantors which are also tenants of Lessor or any of its Affiliates.
Commencement Date: The date hereof.
Commitment Letter: The commitment letter between Lessor and Lessee (or
their Affiliates) dated May 9, 2005.
Condemnation, Condemnor: As defined in Section 15.1.
Consolidated Net Worth: At any time, the sum of the following for
Guarantors or Lessee and their respective consolidated subsidiaries on a
consolidated basis determined in accordance with GAAP.
(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)
4
any write-up in book value of assets resulting from a revaluation thereof
pursuant to generally accepted accounting principles subsequent to the
most recent Statements of Cash Flow prior to the date thereof, except any
net write-up in value of foreign currency in accordance with GAAP; 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.
Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the term of this Lease,
such other governmental index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.
Coverage Rent: Shall have the meaning set forth in the Other Leases.
CPI: The Consumer Price Index.
Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
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.
EBITDAR: Earnings before the deduction of interest, taxes, depreciation,
amortization and rent, as determined in accordance with GAAP.
Encumbrances: As defined in Article XXXVII.
Equity Investment: The Purchase Price.
Events of Default: As defined in Section 16.1 and Section 16.2.
Existing Subleases: As defined in Section 24.1.
Extension Notice: As defined in Article I.
Extension Term: As defined in Article I.
Extraordinary Repairs: All repairs to the Facility of every kind and
nature, whether interior or exterior, structural or non-structural (including,
without limitation, all parking decks and parking lots) which are considered to
be extraordinary in nature (as opposed to being ordinary or normal in nature),
as shall be necessary or appropriate from time to time during the Term.
Facility: The licensed eighty-eight (88)-bed hospital facility and all
improvements in connection therewith operated on the Land.
Facility Instrument: A note (whether secured or unsecured), loan
agreement, credit agreement, guaranty, security agreement, mortgage, deed of
trust or other security agreement pursuant to which a Facility Lender has
provided financing to Lessor in connection with the Leased Property or any part
thereof, or financing provided to Lessee, if such financing is provided by
Lessor or any Affiliate of Lessor, to Lessee, and any and all renewals,
replacements, modifications, supplements, consolidations, spreaders and
extensions thereof.
Facility Lender: A holder (which may include any Affiliate of Lessor) of
any Facility Instrument.
5
Fair Market Added Value: The Fair Market Value 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, including
all Capital Additions, (a) and shall be 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, (b) and shall not take into account
any reduction in value resulting from any indebtedness to which the Leased
Property is subject and which encumbrance Lessee or Lessor is otherwise 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 attributable to the interest rate, amortization schedule,
maturity date, prepayment penalty and other terms and conditions of any
Encumbrance on the Leased Property, which is not so required or agreed to be
removed shall be taken into account in determining such Fair Market Value.
Notwithstanding anything contained herein to the contrary, any appraisal of the
Leased Property shall assume the Lease is in place for a term of fifteen (15)
years, and based solely on the rents and other revenues generated and to be
generated pursuant to this Lease without any regard to the Lessee's operations.
Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.
Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.
Fixed Term: As defined in Article I.
Fixtures: As defined in Article I.
GAAP: Generally accepted accounting principles in the United States,
consistently applied.
Ground Lease: The Ground Lease as defined in the Recitals of this Lease.
Ground Lease Rent: All rent, additional rent and other costs and expenses
paid by Lessor or due and payable under the Ground Lease.
Ground Lessor: The Ground Lessor as defined in the Recitals of this Lease.
Governmental Entity: Any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.
Guarantors: Jointly and severally, Vibra Healthcare, LLC, a Delaware
limited liability company, Vibra Management, LLC, a Delaware limited liability
company and Senior Real Estate Holdings, LLC, a Delaware limited liability
company.
Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Laws.
Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended
6
by the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"), the
Hazardous Materials Transportation Act, the Federal Water Pollution Control Act,
the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Safe Drinking Water Act, and all similar federal, state and local environmental
statutes, ordinances and the regulations, orders, or decrees now or hereafter
promulgated thereunder.
Healthcare Laws:..All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Xxxxx Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section
1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health
Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement
(18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C.
1035), and Patient Inducement Statute, and equivalent state statutes and any and
all rules or regulations promulgated by governmental entities with respect to
any of the foregoing.
Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all Real
Estate 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, charges and costs imposed under the Permitted
Exceptions, 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 every 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), and all other fees, costs and expenses which at any time
prior to, during or in respect of the Term hereof may be charged, 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, in which case Lessee shall pay.
Initial Purchase Price: A price equal to the purchase price paid by Lessor
(and its Affiliates, including, without limitation, MPT Operating Partnership,
L.P.) contemporaneously herewith for the Leased Property pursuant to the
Purchase Agreement, plus all costs and expenses incurred in association with the
purchase and lease of such Leased Property, including, but not limited to,
legal, appraisal, title, survey, environmental, seismic, engineering and other
fees and expenses paid in connection with the inspection of the Leased Property
and site visits, and fees paid to advisors and brokers, except to the extent
such items are paid by Lessee.
Insurance Premiums: As defined in Section 4.4.
Insurance Requirements: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy, and such additional
insurance which the Lessor may reasonably require.
Land: As defined in Article I.
Lease: As defined in the Preamble.
7
Lease Assignment: That certain Assignment of Rents and Leases to be
effective the Commencement Date executed and delivered by Lessee to Lessor (as
such Lease Assignment may be amended, modified and/or restated from time to
time), 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 (as this Lease may be amended, modified and/or
restated from time to time), the obligations of Guarantors under the Lease
Guaranty and any other obligations of Lessee to Lessor, any Guarantor or any
Affiliate of Lessee or any Guarantor to Lessor or any Affiliate of Lessor.
Lease Guaranty: That certain Lease Guaranty to be effective the
Commencement Date executed and delivered by Guarantors in favor of Lessor (as
such Lease Guaranty may be amended, modified and/or restated from time to time),
pursuant to the terms of which Guarantors have unconditionally and irrevocably
guaranteed the full, faithful and complete performance of Lessee's obligations
under this Lease (as this Lease may be amended, modified and/or restated from
time to time), and all other obligations of Lessee, Guarantors and any
Affiliates of Lessee and Guarantors to Lessor.
Lease Rate: A per annum rate equal to ten and one-half percent (10.5%),
subject to the escalator as set forth in Section 3.1(b) hereof.
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 the Lessee's operation of its business on the
Leased Property, along with the Leased Property or the construction, use or
alteration thereof (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, 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.
Lender: As defined in Section 35.1.
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
Fifty Million Dollars ($50,000,000).
Lessee: Northern California Rehabilitation Hospital, LLC, a Delaware
limited liability company, and its successors and permitted assigns, which, if
required by Lessor, shall at all times during the term of this Lease be a Single
Purpose Entity created and to remain in good standing as required hereunder for
the sole purpose of leasing and operating the Facility.
Lessee's Personal Property: All machinery, equipment, medical equipment
(including all medical equipment affixed to the Leased Property), furniture,
furnishings, trailers, movable walls or partitions, computers, trade fixtures or
other personal property, and consumable inventory and supplies, currently owned
and acquired after the execution of this Lease, and used or useful in the
operation of the Facility, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory, and Lessee's operating licenses,
but excluding Lessee's accounts receivables and any items included within the
definition of Fixtures.
8
Lessor: MPT of Xxxxxxx, LLC, a Delaware limited liability company, and its
successors and assigns.
Licenses: As defined in Article XXXIX.
Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the real estate
and the Leased Improvements and the operations of the Facility.
Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property.
Market Value of Combined Lessees: An amount equal to the collective
EBITDAR of the Combined Lessees, on a trailing twelve (12) months basis,
multiplied by four (4).
Medicaid : The medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding
thereto.
Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.
Mortgage: As defined in Section 35.1.
MPT: Medical Properties Trust, Inc., an Affiliate of Lessor.
MPT Development Debt: As defined in the definition of Total Debt.
MPT Development Services: MPT Development Services, Inc., an Affiliate of
Lessor.
Non-Competition Agreements: Those certain Non-Competition Agreements
executed by Lesee and Guarantors simultaneously with the execution of this
Lease.
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 or representative authorized to so sign by the Board
of Directors or other governing body 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.
Other Leases: All other leases entered into between Lessor or any
Affiliate of Lessor, on the one hand, and Lessee, any Guarantor, or any of their
respective Affiliates, on the other hand.
Overdue Rate: On any date, a rate per annum equal to the highest rate
allowed by the laws of the State of California.
Payment Date: Any due date for the payment of the installments of Base
Rent, Additional Rent, or any other sums payable under this Lease.
Permitted Exceptions: As defined in Article I.
Person: An individual, a corporation, a limited liability company, a
general or limited partnership, an unincorporated association, a joint venture,
a Governmental Entity or another entity or group.
Primary Intended Use: As defined in Article VII.
9
Prime Rate: The annual rate announced by Citibank in New York, New York,
to be the 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 Agreement: That certain Purchase and Sale Agreement dated as of
___________, 2005, by and among Lessor, Lessee, MPT Operating Partnership, L.P.
and Vibra Healthcare, LLC.
Purchase Price: The Initial Purchase Price, plus any additional purchase
price amounts paid by Lessor pursuant to the Purchase Agreement or pursuant to
Section 9.4, plus all costs and expenses not included in the Initial Purchase
Price incurred or paid in connection with the purchase and lease of the Leased
Property, including, but not limited to, legal, appraisal, title, survey,
environmental, seismic, engineering and other fees and expenses paid in
connection with the inspection of the Leased Property, and paid to advisors and
brokers (except to the extent such items are paid by Lessee), and shall include
the costs of Capital Additions financed by Lessor (and Lessor's Affiliates) as
provided in Section 10.3 of this Lease (collectively the "Purchase Price
Adjustment").
Purchase Price Adjustment: As defined in the above definition of "Purchase
Price."
Real Estate Taxes: All real estate taxes, assessments and special
assessments and dues which are levied or imposed upon the Leased Property during
the Term.
Redding EBITDAR: The EBITDAR of Lessee.
Redding Fixed Charges: The sum of the Redding Lease Payments and required
principal and interest payments with respect to the Redding Total Debt.
Redding Lease Payments: The payment of Base Rent under this Lease.
Redding Total Debt: All indebtedness which, in accordance with GAAP, will
be included in determining total liabilities of Lessee, as shown on the
liability side of a balance sheet, including any such indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, excluding any nonrecourse
indebtedness and excluding any current liabilities.
Removal Notice: As defined in Section 16.2.
Rent: Collectively, the Base Rent (as increased in accordance with the
provisions of Section 3.1(c) hereof), Ground Lease Rent and the Additional
Charges.
Security Agreement: That certain Security Agreement to be effective the
Commencement Date executed and delivered by Lessee to Lessor (as such Security
Agreement may be amended, modified and/or restated from time to time), pursuant
to the terms of which Lessee has granted to Lessor a first lien and security
interest in all of Lessee's rights under this Lease (as this Lease may be
amended, modified and/or restated from time to time), to all of Lessee's
Personal Property (excluding accounts receivable) and to all of the Licenses.
Single Purpose Entity: An entity which (i) exists solely for the purpose
of owning and/or leasing all or any portion of the Facility and conducting the
operation of the Business, (ii) conducts business only in its own name, (iii)
does not engage in any business other than the ownership and/or leasing all or
any portion of the Facility and the operation of the Business, (iv) does not
hold, directly or indirectly, any ownership interest (legal or equitable) in any
entity or any real or personal property other than the interest in the Facility
which it owns in the Facility and the other assets incident to the operation of
the Business, (v) does not have any debt other than as permitted by this Lease
or arising in the ordinary course of the Business and does not guarantee or
otherwise obligate itself with respect to the debts of any other person or
entity, other than as approved by Lessor, (vi) has its own separate books,
records, accounts, financial statements and tax returns (with no commingling of
funds or assets), (vii) holds itself out
10
as being a company separate and apart from any other entity, and (viii)
maintains all corporate formalities independent of any other entity.
Statements of Cash Flow: For any fiscal year or other accounting period
for Lessee or Guarantors 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 GAAP.
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, pharmacy leases and other rental
agreements (written or verbal, now or hereafter in effect), if any, including,
without limitation, the Existing Subleases as described in Section 24.1 hereof,
that grant a possessory interest in and to any space in or any part of the
Leased Property, or that otherwise have rights with regard to the Leased
Property, and all Credit Enhancements, if any, held in connection therewith.
Term: The actual duration of this Lease, including the Fixed Term and the
Extension Terms (if exercised by the Lessee) and taking into account any
termination.
Total Debt: All indebtedness which, in accordance with GAAP, will be
included in determining total liabilities of Vibra Healthcare, LLC and the
Combined Lessees, as shown on the liability side of a balance sheet, including
any such indebtedness represented by obligations under a lease that is required
to be capitalized for financial reporting purposes in accordance with GAAP,
excluding any nonrecourse indebtedness and excluding any current liabilities but
including, for purposes of Section 16.2 hereof, the liability of Vibra
Healthcare LLC under that certain Promissory Note in the principal amount of
Forty-One Million Four Hundred Fifteen Thousand Nine Hundred Eighty-Six and
No/100 Dollars ($41,415,986.00) in favor of MPT Development Services (the "MPT
Development Debt").
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.
Unsuitable for Its Use or Unsuitable for Its Primary Intended Use: As used
anywhere in this Lease, the terms "Unsuitable for Its Use" or "Unsuitable for
Its Primary Intended Use" shall mean that, by reason of damage or destruction,
or a partial Taking by Condemnation, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, all relevant factors, and the effect of such damage or destruction or
partial Taking.
11
ARTICLE III
RENT
3.1 BASE RENT. Lessee shall pay to Lessor, in advance and without notice,
demand, set off or counterclaim, 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, firm or entity as Lessor from time to time may designate in
writing, Base Rent during the Term as follows:
(a) BASE RENT: Subject to adjustment as provided herein, Lessee
shall pay Lessor base rent (the "Base Rent") in a per annum amount equal
to ten and one-half percent (10.5%) multiplied by the total Purchase Price
actually paid, which per annum rental amount as of the date hereof is an
annual amount of One Million Eight Hundred Ninety Thousand and No/100
Dollars ($1,890,000.00). Base Rent shall be payable in advance in equal,
consecutive monthly installments on or before the 10th day of each
calendar month during the Term, commencing with the month that includes
the Commencement Date (prorated as to any partial month).
(b) ADJUSTMENT OF BASE RENT: Commencing on January 1, 2006, and on
each January 1 thereafter (each an "Adjustment Date") during the term of
this Lease, the Base Rent shall be increased by an amount equal to the
greater of (A) two and one-half percent (2.5%) per annum of the prior
year's Base Rent, or (B) the percentage by which the CPI on the Adjustment
Date shall have increased over the CPI figure in effect on the immediately
preceding January 1; provided, however, that such rate of escalation
applicable to the adjustment for January 2006 shall be prorated for the
period between the Closing Date and January 1, 2006. Notwithstanding
anything contained herein to the contrary, the parties hereto acknowledge
and agree that all calculations of Base Rent as specified herein have been
made by multiplying the Initial Purchase Price by ten and one-half percent
(10.5%) per annum. In the event the Initial Purchase Price is adjusted and
increased by the Purchase Price Adjustment, then all calculations of Base
Rent shall be adjusted accordingly.
3.2 ADDITIONAL CHARGES. In addition to the Base Rent (a) Lessee will also
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease, and all other amounts, liabilities, obligations and Impositions related
to the ownership, use, possession and operation of the Leased Property,
including, without limitation, all costs of owning and operating the Facility,
all Real Estate Taxes, Insurance Premiums, maintenance and capital improvements,
all violations of and defaults under any of the Permitted Exceptions, all
licensure violations, civil monetary penalties and fines, 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 reimburse Lessor and/or its
Affiliates for all such amounts paid by Lessor and/or its Affiliates and
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 in the case
of the Base Rent. If any installment of Base 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, 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. If at any time during the Term Lessor requires Lessee to pay
into escrow or make deposits to Lessor (or to a Facility Lender, if requested by
Lessor) relating to any part of the Additional Charges (including, without
limitation, the Impositions, Real Estate Taxes and/or Insurance Premiums),
Lessee shall pay to Lessor (or directly to a Facility Lender, if requested by
Lessor), upon written request from Lessor, amounts adequate to fund Lessee's
Additional Charge obligations hereunder when due. All sums paid into escrow or
deposits made shall not bear interest and shall not be commingled with Lessor's
books, accounts and
12
funds; however, upon a default or an Event of Default under this Lease, the
escrowed funds or deposit may be applied by Lessor (or the Facility Lender) to
all sums owed by Lessee to Lessor (or to sums owed to Facility Lender).
3.3 ABSOLUTE TRIPLE NET LEASE. The Rent shall be paid absolutely net to
Lessor, so that this Lease shall yield to Lessor the full amount of the
installments of Base Rent and the payments of Additional Charges throughout the
Term, but subject to any other provisions of this Lease which expressly provide
for adjustment of Rent or other charges. Lessee further acknowledges and agrees
that all charges, assessments or payments of any kind due and payable without
notice, demand, set off or counterclaim under the Permitted Exceptions shall be
paid by Lessee as they become due and payable.
3.4 LEASE DEPOSIT. Intentionally Omitted.
3.5 ADJUSTMENTS. Lessor and Lessee acknowledge that to the extent Lessee
fails to reimburse to Lessor immediately upon demand, any costs and expenses
which otherwise would be included in the definition of Purchase Price, then the
Lessor shall recalculate the Purchase Price to include such unreimbursed costs
and expenses and deliver to Lessee a letter confirming the Base Rent to be paid
hereunder and such letter shall constitute an amendment to the provisions of
this Lease.
3.6 RENT AND PAYMENTS UNDER GROUND LEASE. Lessee shall pay all Ground
Lease Rent directly to the Ground Lessor as and when the Ground Lease Rent
becomes due and payable all as required under the Ground Lease (a copy of which
has been provided to Lessee), and Lessee shall provide Lessor written proof of
payment each month confirming that the Ground Lease Rent has been timely paid;
or, at Lessor's request, Lessee shall pay the Ground Lease Rent to Lessor at
least five (5) business days prior to its due date under the Ground Lease.
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 or assessing authorities, unless, in the case of escrows
and deposits required to be paid to Lessor or Facility Lender as provided in
Section 3.2 herein, 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 Lessor,
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
13
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.
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 connection with the Leased Property during the Term,
including, without limitation, all impact and tap fees necessary for the
operation of the Facility.
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
5.1 ACKNOWLEDGEMENT. The parties hereto understand, acknowledge and agree
that this is an absolute triple net lease. 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.
14
ARTICLE VI
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that Lessor has
a ground leasehold interest in the Ground Leased Land pursuant to the Ground
Lease, and owns the buildings and improvements located on the Ground Leased
Land, all as described in the Recitals above, and that Lessee has only the right
to the possession and use of the Leased Property upon the terms and conditions
of this Lease and subject to the terms, conditions and provisions of the Ground
Lease.
6.2 LESSEE'S PERSONAL PROPERTY. Lessee, at its expense, shall install,
affix, assemble and place on the Leased Property, the Lessee's Personal
Property, which Lessee's Personal Property shall be subject to the security
interests and liens as provided in Section 16.8 of this Lease. Lessee shall not,
without the prior written consent of Lessor (which consent may be withheld in
the event Lessee is in default hereunder) remove any of the Lessee's Personal
Property from the Leased Property. 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. If removal is authorized by Lessor as provided
herein, 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 and repair of
all damage to the Leased Property caused by the removal of Lessee's Personal
Property, whether effected by Lessee, Lessor, any Lessee lender, or any Lessor
lender.
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.
7.2 USE OF THE LEASED PROPERTY.
(a) Lessee covenants that it will obtain and maintain throughout the
entire Term 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 approvals and Medicare and/or a Medicaid certifications,
provider numbers, certificates of need, governmental approvals, and full
accreditation from all applicable governmental authorities, if any, that
are necessary for the operation of the Facility consistent with the
Primary Intended Use.
(b) Beginning on the Commencement Date and during the entire Term,
Lessee shall use the Leased Property and the improvements thereon only as
allowed or permitted under the Ground Lease and
15
for such other legal ancillary uses as may be necessary in connection with
or incidental to such uses, subject to any covenants, restrictions and
easements relating to the Facility (the "Primary Intended Use"). Lessee
shall not use the Leased Property or any portion thereof for any other
use, nor change the number or type of beds within the Facility, nor
reconfigure or rearrange any portion of the Leased Property or the
Facility without the prior written consent of Lessor, which consent Lessee
agrees may be withheld in Lessor's sole discretion, provided, however,
that Lessee may pursue the conversion of the Facility's existing skilled
nursing beds to long-term acute care beds. 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, covenants and restrictions pertaining to the Leased
Property, including, without limitation, all of the Permitted Exceptions,
and other requirements 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
continuously operate the Leased Property only as a provider of healthcare
services in accordance with the Primary Intended Use and Lessee shall
maintain its certifications for reimbursement and licensure and all
accreditations.
(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.
(f) Lessee agrees that during the entire term of this Lease, Lessor
shall have the right and option to erect a sign on the Leased Property
stating that the Leased Property is owned by the Lessor. Such sign shall
be in a size, and shall be erected in a location, reasonably acceptable to
Lessor and approved by Lessee, which approval shall not be unreasonably
withheld, conditioned or delayed.
7.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time so long as
no default, and no event has occurred which with the giving of notice or the
passage of time or both would constitute a default, has occurred and is
continuing under this Lease, the Other Leases, 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 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 Primary Intended Use on the Leased
Property and does not reduce its value.
16
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 applicable to
Lessee and its 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, accreditations 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. Upon Lessor's request, Lessee shall deliver
copies of all such licenses, certificates of need, agreements and other
authorizations. Lessee hereby agrees to indemnify and defend, at Lessee's sole
cost and expense, and hold Lessor, its successors and assigns harmless from and
against and to reimburse Lessor and its successors and assigns with respect to
any and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.1.
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 use its best efforts to have tenants acquire and
maintain all licenses, certificates, permits, provider agreements and other
authorizations and approvals needed to operate the Leased Property and all
equipment and machinery used in or in connection with 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, the use of all
equipment and machinery used in connection with the Leased Property, and the
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.
8.3 HAZARDOUS MATERIALS. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Hazardous
Materials Laws), no Hazardous Materials shall be installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or disposed
of, or otherwise present in, on or under the Leased Property. No activity shall
be undertaken on the Leased Property which would cause (i) the Leased Property
to become a treatment, storage or disposal facility of hazardous waste,
infectious waste, biomedical or medical waste, within the meaning of, or
otherwise bring the Leased Property within the ambit of RCRA or any Hazardous
Materials Laws, (ii) a release or threatened release of Hazardous Material from
the Leased Property within the meaning of, or otherwise bring the Leased
Property within the ambit of, CERCLA or XXXX or any Hazardous Materials Laws or
(iii) the discharge of Hazardous Material into any watercourse, surface or
subsurface of body of water or wetland, or the discharge into the atmosphere of
any Hazardous Material which would require a permit under any Hazardous
Materials Laws. No activity shall be undertaken with respect to the Leased
Property which would cause a violation or support a claim under RCRA, CERCLA,
XXXX or any Hazardous Materials Laws. No investigation, administrative order,
litigation or settlement with respect to any Hazardous Material is, to the best
of the Lessee's knowledge, threatened or in existence with respect to the Leased
Property. No notice has been served on Lessee from any entity, governmental body
or individual claiming any violation of any Hazardous Materials Laws, or
requiring compliance with any Hazardous Materials Laws, or demanding payment or
contribution for environmental damage or injury to natural resources. Lessee has
not obtained and Lessee has no knowledge of any reason Lessee will be required
to obtain any permits, licenses, or similar authorizations to occupy, operate or
use the Improvements or any part of the Leased Property by reason of any
Hazardous Materials Laws. Lessee hereby agrees to indemnify and defend, at its
sole cost and expense, and hold Lessor, its successors and
17
assigns, harmless from and against and to reimburse Lessor with respect to any
and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorney's fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor at any time
and from time to time by reason or arising out of any breach or violation of any
Hazardous Materials Laws. Lessee shall, at its sole cost, expense, risk and
liability, remove or cause to be removed from the Leased Property all Hazardous
Materials generated in connection with the Primary Intended Use and as found in
hospital and healthcare facilities, including, without limitation, all
infectious waste materials, syringes, needles and any materials contaminated
with bodily fluids of any type, character or description of whatsoever nature in
accordance with all Hazardous Materials Laws. Lessee shall not dispose of any
such infectious waste and Hazardous Materials in any receptacles used for the
disposal of normal refuse.
8.4 HEALTHCARE LAWS. Lessee warrants and represents that this Lease and
all subleases are, and at all times during the term of this Lease will be, in
compliance with all Healthcare Laws. Lessee agrees to add to all of its third
party agreements relating to the Leased Property, including, without limitation,
all subleases, that in the event it is determined that such agreement and/or
sublease is in violation of the Healthcare Laws, such agreement and/or sublease
shall be renegotiated so that same are in compliance with all Healthcare Laws.
Lessee agrees promptly to notify Lessor in writing of receipt of any notice of
investigation of any alleged Healthcare Law violations. Lessee hereby agrees to
indemnify and defend, at Lessee's sole cost and expense, and hold Lessor, its
successors and assigns harmless from and against and to reimburse Lessor and its
successors and assigns with respect to any and all claims, demands, actions,
causes of action, losses, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) of any and every
kind or character, known or unknown, fixed or contingent, asserted against or
incurred by Lessor, its successors and assigns, at any time and from time to
time by reason or arising out of any breach by Lessee of any of the
representations and warranties set forth in this Section 8.4 or any violation of
any Healthcare Laws.
8.5 REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants to
Lessor that as of the date hereof: (i) Lessee is a duly organized and existing
limited liability company and is duly authorized to enter into, deliver and
perform this Lease and the other documents referred to herein and such
agreements constitute the valid and binding obligations of Lessee, enforceable
in accordance with their terms, (ii) neither the entering into this Lease or the
other documents referred to herein nor the performance by Lessee of its
obligations hereunder or under the other documents referred to herein will
violate any provision of law or any agreement, indenture, note or other
instrument binding upon Lessee, (iii) no authority from or approval by any
governmental body, commission or agency or consent of any third party is
required in connection with the making or validity of and the execution,
delivery and performance of this Lease or the other documents referred to
herein, (iv) there are no actions, suits or proceedings pending against or, to
the knowledge of Lessee, threatened against or affecting Lessee or any of its
Affiliates, in any court or before or by any governmental department, agency or
instrumentality, an adverse decision in which could materially and adversely
affect the financial condition, business or operations of Lessee or the ability
of Lessee to perform its obligations under this Lease or the other documents
referred to herein, (v) Lessee and each of its Affiliates is in compliance in
all material respects with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities, and (vi) Lessee has obtained and
delivered copies thereof to Lessor on the Commencement Date all certificates of
need, Medicare billing numbers, other licenses and agreements required for the
operation of the Facility.
8.6 SINGLE PURPOSE ENTITY. Lessee represents, warrants, covenants and
agrees that Lessee has been since its formation, and shall remain at all times
during the term of this Lease, a Single Purpose Entity created and to remain in
good standing for the sole purpose of leasing and operating the Facility in
accordance with the terms of this Lease. Simultaneously with the execution of
this Lease, and as requested by Lessor at other times during the term of this
Lease, Lessee shall provide Lessor evidence that Lessee is a Single Purpose
Entity and is in good standing in the state of its organization and in the state
in which the Leased Property is located.
8.7 ORGANIZATIONAL DOCUMENTS. Lessee shall not permit or suffer, without
the prior written consent of Lessor an amendment or modification of its
Organizational Documents (as defined below), or the organizational
18
documents of any constituent entity within the Lessee, which changes Lessee's
status as a Single Purpose Entity, (ii) any dissolution or termination of its
existence, or (iii) change in its state of formation or its name. Lessee has,
simultaneously with the execution of this Lease, delivered to Lessor a true and
complete copy of its articles of organization/certificate of formation and
limited liability company operating agreement creating Lessee, and all other
documents creating and governing the Lessee (collectively, the "Organizational
Documents"). Lessee warrants and represents that the Organizational Documents
(i) were duly executed and delivered, (ii) are in full force and effect and
binding upon and enforceable in accordance with their terms, (iii) constitute
the entire understanding among the shareholders, partners and members of Lessee,
and (iv) no breach exists under the Organizational Documents and no act has
occurred and no condition exists which, with the giving of notice or the passage
of time or both would constitute a breach under the Organizational Documents.
ARTICLE IX
REPAIRS; RESERVES; 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 first class 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 (including any such repairs required to be made by
Lessor) whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen or arising by reason of
a condition existing prior to the commencement of the Term 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. Notwithstanding anything
contained herein to the contrary, Lessee shall make additions,
modifications and remodeling to the Leased Property which are not Capital
Additions from time to time which are necessary for the Primary Intended
Use and which permit the Lessee to comply fully with its obligations set
forth in this Lease, provided that any 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. Such
additions, modifications and remodeling shall, without payment by Lessor
at any time, be included under the terms of this Lease and shall be the
property of Lessor. Lessee shall notify the Lessor of any and all repairs,
improvements, additions, modifications and remodeling made to the Leased
Property in excess of Ten Thousand and 00/100 Dollars ($10,000.00) and
obtain consent from Lessor prior to making such repairs, improvements,
additions, modifications and remodeling.
(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
19
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 the Term, vacate and surrender the Leased Property
to Lessor in the condition in which the Leased Property was originally
received from Lessor, except as improved, repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this
Lease and except for ordinary wear and tear (subject to the obligation of
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 RESERVES FOR EXTRAORDINARY REPAIRS. Commencing on January 1, 2006,
Lessee shall make annual deposits to a reserve account for Extraordinary Repairs
(the "Reserve") to be held by Lessor in an interest-bearing account in an amount
equal to the sum of One Thousand Five Hundred and 00/100 Dollars ($1,500.00) per
bed per annum. For the period commencing on January 1, 2006 and ending on
December 31, 2006, the number of beds shall be assumed to be eighty-eight (88).
Beginning on January 1, 2007, and on each January 1 thereafter, the number of
beds shall be determined by the actual number of beds placed in service or
certified to be available for use in the Facility, which shall not be reduced
without the prior written consent of Lessor. The account to which such payments
are made shall require the signature of an officer of Lessee and Lessor to make
withdrawals. Beginning on January 1, 2007, and on each January 1 thereafter
during the entire Lease Term, such payment into the Reserve shall be increased
by an amount equal to the greater of (A) two and one-half percent (2.5%) per
annum of the prior year's Reserve required by this Lease, or (B) the percentage
by which the CPI on the Adjustment Date shall have increased over the CPI figure
in effect on the immediately preceding January 1. The amounts in the Reserve
shall be used to pay for Extraordinary Repairs on the Facility, or, in the event
Lessee fails to make any required non-Extraordinary Repairs hereunder, Lessor
may use funds in the Reserve for that purpose as well, without the necessity of
obtaining the signature of an officer of Lessee. Replenishment of amounts drawn
from the Reserve will be paid at the rate of one-twelfth (1/12th) of the total
amount withdrawn per month, until completely replenished. Lessee hereby grants
to Lessor a security interest in all monies deposited into the Reserve and
Lessee shall, as soon as practicable, execute all documents necessary for Lessor
to perfect its security interest in the Reserve. So long as no default has
occurred under any of the terms hereof, and no event has occurred which with the
giving of notice or the passage of time or both would constitute a default
hereunder, any amounts remaining in the Reserve, after the payment of and the
reimbursement for the Extraordinary Repairs on the Facility, at the expiration
of this Lease shall be returned to Lessee
9.3 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, 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 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 without such violation, encroachment or impairment. Any such alteration
shall be made in
20
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 paid by Lessee
and recovered by Lessor under any such policy of title or other insurance.
9.4 SPECIAL RESERVE. Contemporaneously herewith, Lessor has reserved the
sum of Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00) (the
"Special Reserve") to be held by Lessor in an interest bearing account and which
Lessor agrees will be used to defray the costs of certain renovations to the
Leased Property as shall be disclosed by Lessee to Lessor. The account to which
such payments are made shall require the signature of an officer of Lessee and
Lessor to make withdrawals and the parties agree that such disbursements shall
be made pursuant to Lessee draw requests reasonably acceptable to Lessor. The
parties shall take all necessary actions to make such renovations as soon as
practicable following the date hereof. So long as no default has occurred under
any of the terms hereof, and no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default hereunder,
any amounts remaining in the Special Reserve, shall be paid by Lessor to Lessee
upon the earliest of (i) Lessor being satisfied in its sole discretion that the
existing skilled nursing beds have been or will be converted to long-term acute
care beds, (ii) the expiration of this Lease, or (iii) such other date as the
Lessor shall determine in its sole discretion. The parties acknowledge that each
disbursement of funds hereunder shall constitute a payment of additional
purchase price for purposes of calculating the Purchase Price Adjustment and the
corresponding adjustment to Base Rent.
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
under this Lease, the Other Leases and the Tenant Leases, 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, except as
expressly provided in Section 10.2(d) hereof, Lessee shall not be
permitted to create any Encumbrance on the Leased Property, in connection
with such Capital Addition. Prior to commencing construction of any
Capital Addition, Lessee shall, at Lessee's sole cost and expense (i)
submit to Lessor in writing a proposal setting forth in reasonable detail
any proposed Capital Addition, (ii) submit to Lessor such plans and
specifications, certificates of need and other approvals, permits,
licenses, contracts and other information concerning the proposed Capital
Addition as Lessor may reasonably request, and (iii) obtain all necessary
certificates of need, state licensure surveys and all regulatory approvals
of architectural plans. Without limiting the generality of the foregoing,
such proposal shall indicate the approximate projected cost of
constructing such Capital Addition, and the use or uses to which it will
be put.
(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
shall be made without the consent of Lessor, which consent shall not be
unreasonably withheld or delayed, if the Capital Addition Cost of such
proposed Capital Addition, when aggregated with the costs of all 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 the Leased Property and/or any Leased
Improvements on the Leased Property with any other improvements on
property adjacent to the Leased
21
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.
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) The above referenced proportion of the Fair Market Added Value
of Capital Additions paid for by 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) Such other arrangement regarding such compensation as
shall be mutually acceptable to Lessor and Lessee.
(d) Lessor and Lessee agree that Lessee's lender for Capital
Additions 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 being made with the proceeds of such loan, (ii)
shall be subordinate to Lessor's acquisition cost and any Capital
Additions paid for by the Lessor of the Leased Property, (iii) shall be
subordinate to any mortgage or encumbrance now existing or hereinafter
created, including, without limitation, Facility Instruments, (iv) the
term of the loan shall not extend beyond the term of this Lease, (v) such
lender executes all subordination and other documents and certificates
reasonably required by the Lessor and any Facility Lenders, and (vi) shall
be limited solely to Lessee'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
22
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, if the
Capital Addition is to be financed through the incurrence of debt;
(ii) any information, certificates of need, regulatory
approvals of architectural plans and other 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 Fair
Market Value and the Rent, which shall be increased to take into
account an adjustment to the Purchase Price in an amount equal to
the equity contributed by Lessor to finance the Capital Addition or,
in the case of debt financing, the principal and interest on the
debt incurred by Lessor to finance the Capital Addition;
(v) a grant 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 and any additional land referred to in
10.3(b)(v) above, or a supplemental policy of title insurance
covering the Leased Property and any additional land referred to in
10.3(b)(v) above, 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 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;
23
(viii) if required by Lessor, prior to commencing 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 will exceed the Fair Market Value of the Leased Property
prior thereto by an amount not less than one hundred percent (100%)
of the Capital Addition Costs; 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, contracts, opinions of
counsel, appraisals, surveys, certified copies of duly adopted
resolutions of the governing body 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) Lessor and Lessee agree that Lessor shall have the sole right to
designate the general contractor, developer, architect, construction
company, engineer and other parties which will participate in the
development of the Capital Addition. Lessor and Lessee further agree that
Lessor shall control the preparation and negotiation of the definitive
agreements with such parties and Lessor will give Lessee an opportunity to
review such definitive agreements prior to their execution.
(d) 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, and (vii) costs of obtaining regulatory and governmental approvals,
including but not limited to any required certificates of need, for the
construction, operation, use or occupancy of the Capital Addition.
10.4 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, 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) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (f) liens of mechanics, laborers,
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 provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII, and (g) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXVII of this Lease. Unless otherwise expressly provided
herein, Lessee shall not mortgage or grant any interest or security interest in,
or otherwise assign, any part of Lessee's rights and interests in this Lease,
the Leased Property, Lessee's Personal Property, or any
24
permits, licenses, certificates of need (if any) or any other approvals required
to operate the Leased Property during the Term without the prior written consent
of Lessor, which may be withheld at Lessor's sole discretion.
ARTICLE XII
PERMITTED CONTESTS
Lessee, on its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, after two (2) business days' prior written notice to Lessor,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, 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 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 Guarantors 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 Worth of Lessee and/or
Guarantors 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 to 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 against loss
or damage from such causes as are customarily insured against, by prudent owners
of similar facilities. Without limiting the generality of the foregoing, Lessee
shall obtain and maintain in effect throughout the Lease Term, the kinds and
amounts of insurance deemed reasonably necessary by the Lessor and as described
below. This insurance shall be written by insurance companies (i) reasonably
acceptable to the Lessor, (ii) that are rated at least an "A-VIII" or better by
Best's Insurance Guide and Key Ratings and a claim payment rating by Standard &
Poor's Corporation of A or better, and (iii) authorized, licensed and qualified
to do insurance business in the state in which the Leased Property is located.
The aggregate amount of coverage by a single company must not exceed five
percent (5%) of the insurance company's policyholders' surplus. The policies
must name Lessor (and
25
any other entities as Lessor may deem necessary) as an additional insured and
losses shall be payable to Lessor and/or Lessee as provided in Article XIV. Each
insurance policy required hereunder must (i) provide primary insurance without
right of contribution from any other insurance carried by Lessor, (ii) contain,
unless the Lessee provides to Lessor written confirmation and verification from
the insurer that such insurer will not subrogate against Lessor, an express
waiver by the insurer of any right of subrogation, setoff or counterclaim
against any insured party thereunder including Lessor (provided, however, that
if such insurance does not contain such waiver, Lessee shall use its best
efforts to obtain a policy which does contain such waiver, provided the same is
obtainable at commercially reasonable rates; and provided further, however, that
Lessee, to the extent it is able to obtain such waiver, shall not be required to
replace its existing insurance coverage until three (3) months following the
Commencement Date, (iii) permit Lessor to pay premiums at Lessor's discretion,
and (iv) as respects any third party liability claim brought against Lessor,
obligate the insurer to defend Lessor as an additional insured thereunder. In
the event Lessee is unable to obtain such waiver of subrogation, Lessee shall
use its best efforts to secure from the insurance company its agreement that all
claims and disputes concerning insurance coverage for the Lessee's Personal
Property shall be deemed contractual disputes and all litigation and proceedings
in connection therewith shall be tried by jury in Jefferson County, Alabama. In
addition, the policies shall name as an additional insured all Facility Lenders,
if any, by way of a standard form of mortgagee's loss payable endorsement.
Lessee shall use its best efforts to secure from the insurance company its
agreement that any disputes regarding loss adjustment shall be deemed to be
contractual disputes and all litigation and proceedings in connection therewith
shall be tried by jury in Jefferson County, Alabama. Any loss adjustment shall
require the written consent of Lessor and each affected Facility Lender.
Evidence of insurance and/or Impositions shall be deposited with Lessor and, if
requested, with any Facility Lender. If any provision of any Facility Instrument
requires deposits of insurance to be made with such Facility Lender, Lessee
shall either pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to such Facility Lender or, pursuant to written direction
by Lessor, Lessee shall make such deposits directly with such Facility Lender.
The policies on the Leased Property, including the Leased Improvements, the
Fixtures and Lessee's Personal Property, shall insure against the following
risks:
(a) All Risks or Special Form Property insurance against loss or
damage to the building and improvements, including but not limited to,
perils of fire, lightning, water, wind, theft, vandalism and malicious
mischief, plate glass breakage, and perils typically provided under an
Extended Coverage Endorsement and other forms of broadened risk perils,
and insured on a "replacement cost" value basis to the extent of the full
replacement value of the Leased Property. The policy shall include
coverage for subsidence. The deductible amount thereunder shall be borne
by the Lessee in the event of a loss and the deductible must not exceed
Fifty Thousand and 00/100 Dollars ($50,000.00) per occurrence. Further, in
the event of a loss, Lessee shall abide by all provisions of the insurance
contract, including proper and timely notice of the loss to the insurer,
and Lessee further agrees that it will notify the Lessor of any loss in
the amount of Fifty Thousand and 00/100 Dollars ($50,000.00) or greater
and that no claim at or in excess of Fifty Thousand and 00/100 Dollars
($50,000.00) shall be settled without the prior written consent of Lessor,
which consent shall not be unreasonably withheld or delayed.
(b) Flood and earthquake insurance shall be required only in the
event that the Leased Property is located in a flood plain or earthquake
zone in amounts as may be customary for comparable properties in the
geographic area of the Leased Property.
(c) Insurance against loss of earnings in an amount sufficient to
cover not less than twelve (12) months' lost earnings and written in an
"all risks" form, either as an endorsement to the insurance required under
subparagraph 13.1(a) above, or under a separate policy.
(d) Worker's compensation insurance covering all employees in
amounts that are customary for the Lessee's industry.
(e) Commercial General Liability in a primary amount of at least One
Million and 00/100 Dollars ($1,000,000.00) per occurrence, bodily injury
for injury or death of any one person and One
26
Hundred Thousand and 00/100 Dollars ($100,000.00) for Property Damage for
damage to or loss of the property of others, subject to a Fifteen Million
and 00/100 Dollars ($15,000,000.00) annual aggregate policy limit for all
Associated Facilities for all bodily injury and property damage claims,
occurring on or about the Leased Property or in any way related to the
Leased Property, including but not limited to, any swimming pools or other
rehabilitation and recreational facilities or areas that are located on
the Leased Property otherwise related to the Leased Property. Such policy
shall include coverages of a Broad Form nature, including, but not limited
to, Explosion, Collapse and Underground (XCU), Products Liability,
Completed Operations, Broad Form Contractual Liability, Broad Form
Property Damage, Personal Injury, Incidental Malpractice Liability, and
Host Liquor Liability.
(f) Automobile and vehicle liability insurance coverage for all
owned, non-owned, leased or hired automobiles and vehicles in a primary
limit amount of One Million and 00/100 Dollars ($1,000,000.00) per
occurrence for bodily injury; One Hundred Thousand and 00/100 Dollars
($100,000.00) per occurrence for property damage; subject to an annual
aggregate policy limit of One Million and 00/100 Dollars ($1,000,000.00).
(g) Umbrella liability insurance in the minimum amount of Five
Million and 00/100 Dollars ($5,000,000.00) for each occurrence and
aggregate combined single limit for all liability, with a Ten Thousand and
00/100 Dollar ($10,000.00) self-insured retention for exposure not covered
in underlying primary policies. The umbrella liability policy shall name
in its underlying schedule the policies of professional liability,
commercial general liability, garage keepers liability, automobile/vehicle
liability and employer's liability under the workers compensation policy.
(h) Professional liability insurance for any physician employed or
other employee or agent of the Lessee providing services at the Leased
Property in an amount not less than One Million and 00/100 Dollars
($1,000,000.00) per individual claim and Fifteen Million and 00/100
Dollars ($15,000,000.00) annual aggregate policy limit for all Associated
Facilities.
(i) A commercial blanket bond covering all employees of the Lessee,
including its officers and the individual owners of the insured business
entity, whether a joint-venture, partnership, proprietorship or
incorporated entity, against loss as a result of their dishonesty. Policy
limit shall be in an amount of at least One Million and 00/100 Dollars
($1,000,000.00) subject to a deductible of no more than Ten Thousand and
00/100 Dollars ($10,000.00) per occurrence.
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 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
re-determined 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 re-determined 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. The parties agree to use their good
faith efforts to explore the obtaining of insurance coverages that are
more consistent with Lessor's standard requirements.
13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain such additional insurance as may be reasonably required
from time to time by any Facility Lender and shall further at all times maintain
adequate worker's compensation insurance coverage for all persons employed by
Lessee on the
27
Leased Property, in accordance with the requirements of applicable local, state
and federal law. Notwithstanding anything contained herein to the contrary,
Lessor shall not be prohibited from purchasing and maintaining such additional
insurance as it may determine, in its sole discretion, to be necessary to
protect its interest in the Leased Property. Lessee shall reimburse Lessor for
the actual cost of this additional insurance purchased and maintained by Lessor,
but only to the extent the coverage limits and endorsements of the additional
insurance is equal to or less than the coverage limits and endorsements of the
insurance maintained by Lessee under Section 13.1 hereof. Notwithstanding
anything contained herein to the contrary, any reimbursement amounts paid by
Lessee pursuant to this Section 13.2 shall not be included in the calculations
for the financial covenants set forth in Section 16.2 herein.
13.3 WAIVER OF SUBROGATION. All insurance policies to be obtained by
Lessee as required hereunder, including, without limitation, insurance policies
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 Lessor. Lessee shall obtain insurance policies which will
include such a waiver clause or endorsement regardless of whether same is
obtainable without extra cost, and in the event of such an extra charge Lessee
shall pay the same.
13.4 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 shall deliver such original policies, or in the case of a blanket policy, a
copy of the original policy certified in writing by a duly authorized agent for
the insurance company as a "true and certified" copy of the policy, to the
Lessor effective with the Commencement Date and furnished annually thereafter
(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 obtain such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certified copies of such
policies (if allowed hereunder) to Lessor at the times required, Lessor shall be
entitled, but shall have no obligation, to obtain 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 sixty
(60) days' prior written notice (at Lessor's notice address as specified in this
Lease {the "Lessor's Notice Address")) before the policy or policies in question
shall be altered, allowed to expire or canceled. The parties hereto agree that
all insurance policies, endorsements and certificates which provide that the
insurer will "endeavor to" give notice before same may be altered, allowed to
expire or canceled will not be acceptable to Lessor. Notwithstanding anything
contained herein to the contrary, all policies of insurance required to be
obtained by the Lessee hereunder shall provide (i) that such policies will not
lapse, terminate, be canceled, or be amended or modified to reduce limits or
coverage terms unless and until Lessor has received not less than sixty (60)
days' prior written notice at the Lessor's Notice Address, with a simultaneous
copy to MPT Operating Partnership, LP, Attention: Its President, 0000 Xxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, and (ii) that in the event
of cancellation due to non-payment of premium, the insurer will provide not less
than ten (10) days' prior written notice to the Lessor at the Lessor's Notice
Address, with a simultaneous copy to MPT Operating Partnership, LP, Attention:
Its President, 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000.
13.5 INCREASE IN LIMITS. In the event that Lessor shall at any time in its
reasonable discretion 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 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 Instruments.
13.6 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 that
28
(a) Any such blanket policy or policies are reasonably acceptable to
and have been approved by the Lessor, which approval shall not be
unreasonably withheld;
(b) Any such blanket policy or policies shall not be changed,
altered or modified without the prior written consent of the Lessor; and
(c) Any such blanket policy or policies shall otherwise satisfy the
insurance requirements of this Article XIII (including the requirement of
thirty (30) days' written notice before the expiration or cancellation of
such policies as required by Section 13.4 hereof) and shall provide for
deductibles in amounts acceptable to Lessor.
13.7 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 Lenders, 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 the Facility thereby is
rendered Unsuitable for its Use, Lessee shall have the option, by giving
written 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)
so long as Lessee is not in default, and no event has occurred which with
the giving of notice or the passage of time, or both, would constitute
such a default, under this Lease, the Other Leases and the Tenant Leases,
purchase 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, so long as such right to purchase is
consistent with the terms of the Ground Lease, or (iii) so long as the
damage or destruction was not caused by the negligence of Lessee, its
agents, servants, employees or contractors, terminate this Lease and, in
this 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. In the event Lessee
purchases
29
the Leased Property pursuant to this Section 14.2(a), the terms set forth
in Article XVIII shall apply and the sale/purchase must be closed within
ninety (90) days after the date of the written notice from Lessee to
Lessor of Lessee's intent to purchase, unless a different closing date is
agreed upon in writing by Lessor and Lessee.
(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 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, so long as Lessee is
not in default, and no event has occurred which with the giving of notice
or the passage of time or both would constitute such a default, under the
terms of this Lease, the Other Leases and the Tenant Leases, Lessee shall
have the option, by giving written notice to Lessor within sixty (60) days
following the date of such damage or destruction, to purchase the Leased
Property for a purchase price equal to the Fair Market Value Purchase
Price of the Leased Property immediately prior to such damage or
destruction, so long as such right to purchase is consistent with the
terms of the Ground Lease. In the event Lessee purchases the Leased
Property pursuant to this Section 14.2(b), the terms set forth in Article
XVIII shall apply and the sale/purchase must be closed within ninety (90)
days after the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase, unless a different closing date is agreed
upon in writing by Lessor and Lessee.
(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 prior to use of the insurance proceeds. Such amount
shall be paid by Lessee to Lessor (or a Facility Lender if required) to be
held in trust together with any other insurance proceeds for application
to the cost of repair and restoration.
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 not covered by the
insurance described in Article XIII but that would have been covered if Lessee
carried the insurance customarily maintained by, and generally available to, the
operators of reputable health care facilities in the region in which the
Facility is located, then, whether or not such damage or destruction renders the
Facility Unsuitable for its Use, Lessee shall, at its sole cost and expense,
restore the Facility to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease. If such damage or destruction is not material, Lessee
shall restore the Leased Property at Lessee's expense.
14.4 LESSEE'S PERSONAL 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.
30
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 TO PURCHASE. Any termination of this Lease
pursuant to this Article XIV shall cause any right to purchase under any other
provisions of this Lease granted to Lessee under this Lease to be terminated and
to be without further force and 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.
14.10 PURCHASE OPTION SUBORDINATE TO FACILITY INSTRUMENT. Notwithstanding
any provision set forth in this Article XIV to the contrary, Lessee's purchase
rights as set forth in this Article XIV are and shall be subject to the terms,
conditions and provisions of the Ground Lease and subject, subordinate and
inferior to any Facility Instrument. This provision shall be self-operative.
However, any Facility Lender may from time to time request that such
subordination be evidenced by a separate written agreement. Within ten (10) days
following written request by Lessor or any Facility Lender, the Lessee shall
execute and deliver to Lessor or such Facility Lender a written agreement in
form and substance satisfactory to such Facility Lender and any applicable
rating agency. In the event Lessee fails or refuses to execute and deliver such
written agreement within such ten (10) day period, then, in addition to all
other remedies available at law or in equity, the Lessor shall be entitled to
terminate Lessee's purchase rights under this Article XIV upon delivery of five
(5) days' written notice to Lessee. In the event Lessee has not executed and
delivered to such Facility Lender and any applicable rating agency, if any, the
written agreement requested within such five (5) day period, then in such event,
Lessee's purchase rights under this Article XIV shall be deemed forfeited and of
no further force and effect.
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.
31
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. If 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 option (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) so long as Lessee is not in default, and no
event has occurred which with the giving of notice or the passage of time or
both would constitute such a default, under the terms of this Lease, the Other
Leases and the Tenant Leases to acquire (so long as such right is consistent
with the terms of the Ground Lease) 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. Lessee shall exercise its
option by giving Lessor notice thereof within sixty (60) days after Lessee
receives notice of the Taking. In the event Lessee exercises the option to
purchase the Leased Property pursuant to this Section 15.4, the terms set forth
in Article XVIII shall apply and the sale/purchase must be closed within thirty
(30) days after the date of the written notice from Lessee to Lessor of Lessee's
intent to purchase, unless a different closing date is agreed upon in writing by
Lessor and Lessee.
15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this 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 Lessee exercises the purchase option
as described in clause (b) of Section 15.4, the entire Award shall belong to
Lessee provided no event of default is continuing 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 Lender, 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 Lenders, 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. Notwithstanding any provision of
this Lease to the contrary, any Award retained by Lessor and not used for
restoration shall be taken into account as an amount received by Lessor for
purposes of calculating the Option Price as defined in Section 35.1.
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 and the
Base Rent shall not be abated or reduced during such period of Taking.
15.8 PURCHASE OPTION SUBORDINATE TO FACILITY INSTRUMENT. Notwithstanding
any provision set forth in this Article XV to the contrary, Lessee's purchase
rights as set forth in this Article XV are and shall be subject to
32
the terms, conditions and provisions of the Ground Lease and subject,
subordinate and inferior to any Facility Instrument. This provision shall be
self-operative. However, any Facility Lender may from time to time request that
such subordination be evidenced by a separate written agreement. Within ten (10)
days following written request by Lessor or any Facility Lender, the Lessee
shall execute and deliver to Lessor or such Facility Lender a written agreement
in form and substance satisfactory to such Facility Lender and any applicable
rating agency. In the event Lessee fails or refuses to execute and deliver such
written agreement within such ten (10) day period, then, in addition to all
other remedies available at law or in equity, the Lessor shall be entitled to
terminate Lessee's purchase rights under this Article XV upon delivery of five
(5) days' written notice to Lessee. In the event Lessee has not executed and
delivered to such Facility Lender and any applicable rating agency, if any, the
written agreement requested within such five (5) day period, then in such event,
Lessee's purchase rights under this Article XV shall be deemed forfeited and of
no further force and effect.
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
or defaults hereunder:
(a) a default or event of default shall occur under any of the Other
Leases that is not cured within the applicable cure period as provided
therein, or
(b) if Lessee shall fail to make a payment of the Rent or any other
monetary payment due and payable by Lessee under this Lease when the same
becomes due and payable and such failure is not cured by Lessee within a
period of twenty (20) days after receipt by Lessee of notice thereof from
Lessor, or
(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 within a period of thirty (30) days after receipt by Lessee of
written notice thereof from Lessor (provided, however, in no event shall
Lessor be required to give more than one (1) written notice per calendar
year for a non-monetary default), 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 Lessee 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 any Guarantor shall:
(i) admit in writing its inability to pay its debts generally
as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state thereof.
33
(e) if the Total Debt of Guarantors, determined collectively,
exceeds the greater of (i) one hundred percent (100%) of the
capitalization of the Guarantors (debt plus equity), determined
collectively, or (ii) 4.5 times the twelve (12) months' total EBITDAR of
the Guarantors, determined collectively, it being understood that the
initial test period for these covenants shall begin with the month of July
2006 and, on each testing date, these covenants shall be tested based upon
results for the previous twelve (12) months, or
(f) if the Leased Property experiences six (6) consecutive quarters
of falling average daily census, or
(g) if Lessee's license as defined in Article XXXIX or participation
or certification in Medicare, Medicaid or other governmental payor
programs is terminated, or
(h) if Lessee admits in writing that it cannot meet its obligations
as they become due; or is declared insolvent according to any law; or
assignment of Lessee's property is made for the benefit of creditors; or a
receiver or trustee is appointed for Lessee or its property; or the
interest of Lessee under this Lease is levied on under execution or other
legal process; or any petition is filed by or against Lessee to declare
Lessee bankrupt or to delay, reduce or modify Lessee's capital structure
if Lessee be a corporation or other entity (provided that no such levy,
execution, legal process or petition filed against Lessee shall constitute
a breach of this Lease if Lessee shall vigorously contest the same by
appropriate proceedings and shall remove or vacate the same within thirty
(30) days from the date of its creation, service or filing); or
(i) if Lessee abandons or vacates the Leased Property (Lessee's
absence from the Leased Property for thirty (30) consecutive days shall
constitute abandonment), or Lessee fails to continuously operate the
Facility in accordance with the terms of this Lease.
(j) if the Lessee or any 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 such Guarantor, as the case may be, a receiver of
Lessee or such 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 such 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
(k) if Lessee or any 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 such Guarantor into, or a sale of substantially all of Lessee's or such
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 Guarantors, shall have a Consolidated Net Worth
not less than the Consolidated Net Worth of Lessee or Guarantors
immediately 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
(l) 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 written notice
34
thereof from Lessor (unless Lessee shall be contesting such lien or
attachment in good faith in accordance with Article XII hereof), or
(m) 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
(n) if any of the representations or warranties made by Lessee or
any of its affiliates in the Purchase Agreement or in the certificates
delivered in connection therewith are or become untrue in any material
respect, and which is not cured within ten (10) days after notice from
Lessor, or
(o) a default shall occur under the Guaranty, or
(p) a default or event of default shall occur under the Lease
Assignment, Purchase Agreement, Assignment of Rents and Leases, Security
Agreement, Non-Competition Agreements or any other agreement between
Lessor or any Affiliate of Lessor, on the one hand, and Lessee, any
Guarantor, or any of their respective Affiliates, on the other hand, which
is not cured within the cure period as provided therein, or
(q) if Lessee defaults under the Tenant Leases or fails or refuses
to enforce the terms and conditions of the Tenant Leases.
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 are actually collected by Lessor. It is further agreed in this
regard that in the event of any default described in this Section 16.1, Lessor
shall have the right to enter upon the Leased Property 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 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 by:
35
(i) The worth at the time of award of the unpaid rent which
had been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could
be reasonably avoided; and
(iv) Any other amount necessary to compensate the Lessor for
all the detriment proximately caused by the Lessee's failure to
perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including, but
not limited to, all reasonable legal expenses and other related
costs incurred by Lessor following an event of default, all costs
incurred by Lessor in recovering the Leased Property and restoring
the Leased Property to good order and condition, and/or in
remodeling, renovating or otherwise preparing the Leased Property
for reletting, and all costs (including, without limitation, any
brokerage commissions and reasonable attorneys' fees) incurred by
Lessor in reletting the Leased Premises.
The "worth at the time of award" of the amounts referred to in paragraphs
(i) and (ii) above is computed by allowing interest 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. The worth at the
time of award of the amount referred to in paragraph (iii) above is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
C. In addition to other rights and remedies Lessor may have hereunder and
at law and in equity, if an Event of Default occurs under this Lease, (i) Lessee
is deemed to have assigned to Lessor, at Lessor's sole option, all service
agreements (including, without limitation, all medical director agreements);
(ii) to the extent permitted by law, Lessee is deemed, at Lessor's sole
discretion, to have transferred and assigned to Lessor all Licenses and
agreements, including, without limitation, all Medicare and Medicaid provider
numbers, and (iii) to the extent permitted by law, if required by Lessor,
transfer to the Lessor all of the Licenses, including, without limitation, all
Medicare and Medicaid provider numbers. In the event there are legal limitations
on any of the foregoing remedies, Lessee further hereby covenants and agrees
that it will take all actions necessary to orderly transfer the operations and
occupancy of the Leased Property to the Lessor, including cooperating with
respect to the transfer to Lessor of Licenses, provider numbers and other
agreements.
D. In addition to the above remedies, in the event of any default
hereunder by Lessee, Lessor, at its option, may have one or more of the
following remedies in addition to all other legal rights and remedies:
(i) Lessor may serve upon Lessee notice that its Lease and the
then unexpired term hereof shall terminate and become absolutely
void on a date specified in such notice, which shall be the date of
such notice or such later date as may be required by law, and the
Lease, and well as the right, title, and interest of Lessee
hereunder shall, except as to the rights and remedies of Lessor upon
termination as provided herein, terminate and become void in the
same manner and with the same force and effect as if the date filed
in such notice were the date originally specified for the expiration
of the Lease term; and Lessee shall then immediately quit and
surrender to Lessor the Leased Property, including any and all
buildings and improvements thereon, and Lessor may then or at any
time thereafter, without judicial proceedings of any kind, enter
into and repossess the Leased Property, and may remove all occupants
and any property thereon without being liable for any action or
prosecution of any kind for such entry or the manner thereof, or
loss of or damage to any property upon the Leased Property. In the
event of any such termination of this Lease, and in
36
addition to any other rights and remedies Lessor may have, Lessor
shall have all of the rights and remedies of a Lessor provided by
Section 1951.2 of the California Civil Code.
(ii) In addition, Lessor shall have all the rights and
remedies described in Section 1951.4 of the California Civil Code
(Lessor may continue the Lease in effect after Lessee's breach and
abandonment and recover rent as it becomes due, if Lessee has the
right to sublease or assign subject only to reasonable limitations).
(iii) Lessor may immediately terminate Lessee's right of
possession of the Leased Property, but not terminate the Lease, and
without notice or demand enter upon the Leased Property or any part
thereof and take absolute possession of the same, and at Lessor's
sole option may relet the Leased Property or any part thereof for
such terms and such rents as Lessor may reasonable elect. In the
event Lessor shall elect to so relet, then rent received by Lessor
from such reletting shall be applied first, to the payment of any
indebtedness other than Rent due hereunder from Lessee to Lessor,
second, to the payment of any cost of such reletting, including,
without limitation, refurbishing costs and leasing commissions, and
third, to the payment of Rent due and unpaid hereunder, and Lessee
shall satisfy and pay any deficiency upon demand therefor from time
to time. Any entry into and possession of the Leased Property by
Lessor shall be without liability or responsibility to Lessee and
shall not be in lieu of or in substitution for any other legal
rights of Lessor hereunder. Lessee further agrees that Lessor may
file suit to recover any sums due under the terms of this Lease and
that no recovery of any portion due Lessor hereunder shall be any
defense to any subsequent action brought for any amount not
therefore reduced to judgment in favor of Lessor. Reletting of the
Leased Property shall not be construed as an election on the part of
Lessor to terminate this Lease and, notwithstanding any such
reletting without termination, Lessor may at any time thereafter
elect to terminate this Lease for default.
16.2 EVENTS OF DEFAULT IN FINANCIAL COVENANTS. The occurrence of any of
the following events (it being agreed that, with respect to the failures
described in sections (a) through (c) below, such failures must continue for two
(2) consecutive calendar quarters) shall constitute a default hereunder and
shall entitle Lessor to exercise the rights and remedies provided for herein:
(a) For the twelve (12) month periods ending June 30, 2006, September
30, 2006 and December 31, 2006, (i) if Redding EBITDAR fails to
equal or exceed forty percent (40%) of Redding Fixed Charges or (ii)
if Redding EBITDAR fails to equal or exceed fifty percent (50%) of
Redding Lease Payments.
(b) For the twelve (12) month period ending March 31, 2007, (i) if
Redding EBITDAR fails to equal or exceed sixty percent (60%) of
Redding Fixed Charges or (ii) if Redding EBITDAR fails to equal or
exceed seventy-five percent (75%) of Redding Lease Payments.
(c) For the twelve (12) month period ending June 30, 2007, (i) if
Redding EBITDAR fails to equal or exceed one hundred percent (100%)
of Redding Fixed Charges, or (ii) if Redding EBITDAR fails to equal
or exceed one hundred twenty percent (120%) of Redding Lease
Payments.
(d) For the twelve (12) month period ending September 30, 2007 and for
each of the twelve (12) month periods ending on each calendar
quarter thereafter:
(i) if Combined EBITDAR fails to equal or exceed one hundred
twenty-five percent (125%) of Combined Fixed Charges, and such
failure continues for two (2) consecutive calendar quarters,
all based upon trailing twelve (12) month results; or
37
(ii) if Combined EBITDAR fails to equal or exceed one hundred fifty
percent (150%) of Combined Lease Payments, and such failure
continues for two (2) consecutive calendar quarters, all based
upon trailing twelve (12) month results.
(e) If Vibra Healthcare, LLC, Lessee or any other Guarantor causes, or
fails to take any action which causes, a payment default or other
material default with respect to any of its other leases or material
loans agreements and such default is not cured within the cure
periods provided for therein.
In the event of any such default, Lessor shall have the right to foreclose on
the interest of the Lessee and proceed with any remedy the Lessor deems
necessary, including, but not limited to, selling the Lessee's interest to a
third party. Upon the occurrence of any of the items set forth in Section 16.1
or this Section 16.2, Lessor may, in addition to any other available remedies,
at its option immediately and upon written notice to Lessee (a "Removal Notice")
require Lessee to cancel the Management Agreement and replace the Management
Company with a company of Lessor's choosing.
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 (i) all administrative expenses, (ii) 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), (iii) all expenses incurred by Lessor in reletting (including among
other expenses, repairs, remodeling, replacements, advertisements and brokerage
fees), (iv) all concessions granted to a new tenant or tenants upon reletting
(including among other concessions, renewal options), (v) Lessor's reasonable
attorneys' fees and expenses, (vi) all losses incurred by Lessor as a direct or
indirect result of Lessee's default (including among other losses any adverse
action by mortgagees), and (vii) 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 INTENTIONALLY OMITTED.
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. Subject to the Prior Lien of
Lessee's Primary Lender (as such terms are defined herein), to secure the
payment of all rent due and to become due hereunder and the faithful performance
of this Lease by Lessee and to secure all other indebtedness, obligations and
liabilities of Lessee to Lessor now existing or hereafter incurred, and all
Obligations (as defined in the Security Agreement), Lessee hereby gives to
Lessor an express first and prior contract lien and security interest in all
property which may be placed on the Leased Property (including trailers and all
equipment affixed therein, fixtures, equipment (including medical equipment
whether or not affixed to the Leased Property), chattels and merchandise) and
also upon all proceeds of any insurance which may accrue to Lessee by reason of
destruction of or damage to any such property and also upon
38
all of Lessee's interest as lessee and rights and options to purchase fixtures,
equipment and chattels placed on the Leased Property (in case of fixtures,
equipment and chattels leased to Lessee which are placed on the Leased
Property). All exemption laws are hereby waived in favor of such lien and
security interest and in favor of Lessor's statutory landlord lien. This lien
and security interest are given in addition to any statutory landlord lien and
shall be cumulative thereto. Except as limited in favor of the Primary Lender as
set forth in this Section 16.7, 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 (including medical equipment whether or not affixed to the Leased
Property), trailers, 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, trailers, 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 (7)
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 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 (5)
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 (if required by law;
provided, however, Lessor shall have the right to file a UCC-1 financing
statement (and all amendments, modifications and extensions thereto) at any time
as provided in the Security Agreement) 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.
As used herein, the term "Primary Lien of Lessee's Primary Lender" means
any first priority lien granted by Lessee in any of Lessee's machinery,
equipment (including medical equipment whether or not affixed to the Leased
Property), furniture, furnishings, tools, movable walls or partitions,
computers, signage, trade fixtures, supplies, inventory, or any other tangible
personal property placed on the Leased Property and used or useful in Lessee's
business conducted at or on the Leased Property (the "Collateral"), which may be
given in connection with Lessee's lender (the "Primary Lender") providing
financing for Lessee to purchase such items of Collateral or in connection with
the refinancing of any such items of Collateral. In the event Lessee obtains
financing from a Primary Lender or refinances such items of Collateral, Lessee
shall use commercially reasonable efforts to obtain from its Primary Lender a
consent to a secondary lien on such Collateral in favor of Lessor, in form and
content reasonably acceptable to the Primary Lender and the Lessor. Lessee
covenants and agrees not to place or allow any other liens to be placed on the
Collateral. Lessee covenants and agrees that all indebtedness (except for the
indebtedness owed to the Primary Lender) owed by Lessee under all agreements
executed in connection with the Lessee's financing of Lessee's Personal Property
to be used in connection with the operation of the Facility shall be subordinate
to all
39
monetary obligations under this Lease and Lessee shall not to place or allow any
other liens to be placed on the Lessee's Personal Property. At the request of
Lessor from time to time, Lessee shall execute and shall obtain from all parties
to such financing arrangements executed written confirmation of such
subordination (in form and content as is acceptable to Lessor), which shall be
delivered to Lessor within ten (10) days from Lessor's request.
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 expenses, 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 has a right or option to purchase the Leased Property
from Lessor pursuant to any of the terms of this Lease, so long as such right or
option to purchase is not inconsistent with the terms, provisions and conditions
of the Ground 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 Article XXXVII 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
Lessor 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, survey, attorneys' fees incurred by Lessor in
connection with such conveyance, transfer taxes, recording fees and similar
charges shall be paid for by Lessee.
40
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 Percentage 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
tenancies at will, 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
INTENTIONALLY OMITTED
ARTICLE XXI
INTENTIONALLY OMITTED
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.
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
41
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 FIFTEEN (15)
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
ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION
24.1 ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or
sublease any portion of the Leased Property without Lessor's prior written
consent. Lessor shall not unreasonably withhold its consent to any subletting or
assignment, provided that (a) in the case of a subletting, the sublease and the
sublessee shall comply with the provisions of this Article XXIV, (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 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 the Rent and for the performance and
observance of all of the obligations, covenants and conditions to be performed
by Lessee hereunder and under all of the other documents executed in connection
herewith. Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that there currently exists certain leases or subleases on
the Leased Property as described on EXHIBIT C attached hereto (collectively the
"Existing Subleases"). Any modifications, amendments and restatements of the
Existing Subleases must be approved by Lessor in accordance with this Article
XXIV. Notwithstanding anything contained herein to the contrary, any proposed
assignee of Lessee and any proposed sublessee or subtenant must each have an
equal or stronger credit rating than the Lessee on the Commencement Date.
Lessor's failure or refusal to approve an assignment to an assignee or a
subletting to a sublessee or subtenant without the required credit rating shall
be reasonable.
24.2 SUBLEASE LIMITATIONS. In addition to the sublease limitations as set
forth in Section 24.1 above, 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 or subtenant 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 subtenant, 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. Provided also, Lessee shall not
sublet any portion of the Leased Property for a term extending beyond the Fixed
Term hereof without the express consent of Lessor. In addition, all subleases
shall comply with the Healthcare Laws. Lessor and Lessee acknowledge and agree
that all subleases entered into relating to the Leased Property, whether or not
approved by Lessor, shall not, without the prior written consent of Lessor, be
deemed to be a direct lease between Lessor and any sublessee or subtenant.
Lessee agrees that all subleases submitted for Lessor approval as provided
herein must include provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease, to the rights
of Lessor hereunder, and to all financing documents relating to any Lessor
financing in connection with the Facility, (b) in the event this Lease shall
terminate or be terminated before the expiration of the sublease, the sublessee
or subtenant will, at Lessor's option, attorn to Lessor and waive any right the
sublessee or subtenant may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease, (c) at
Lessor's option, the sublease may be terminated or left in place by Lessor in
the event of a termination of this Lease, (d) the obligations and performance of
the sublessee or subtenant must be
42
guaranteed by guarantors acceptable to Lessor, (e) sublessee or subtenant shall
from time to time upon request of Lessee or Lessor furnish within ten (10) days
from request an estoppel certificate in form and content acceptable to Lessor or
its lender relating to the sublease, (f) in the event the sublessee or subtenant
receives a written notice from Lessor or Lessor's assignees, if any, stating
that Lessee is in default under this Lease, the sublessee or subtenant shall
thereafter be obligated to pay all rentals accruing under said sublease directly
to the party giving such notice, or as such party may direct (all rentals
received from the 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),
(g) and that such sublease shall at all times be subject to the obligations and
requirements as set forth in this Article XXIV, and (h) sublessee or subtenant
shall provide to Lessor upon written request such officer's certificates and
financial statements as Lessor may request from time to time. Notwithstanding
anything contained herein to the contrary, Lessor acknowledges that Lessee has
entered into that certain Interim Lease between Lessee, as landlord, and Ocadian
Care Centers, LLC, a California limited liability company, as tenant (the
"Ocadian Sublease"). In the event the Ocadian Sublease terminates before Lessee
obtains all licenses, permits and provider numbers necessary to operate the
Facility, then this Lease shall automatically terminate upon the termination of
the Ocadian Sublease. Lessor further acknowledges and agrees that in connection
with Lessee's proposed conversion of the Facility's existing skilled nursing
beds to long-term acute care beds, Lessee may enter into a sublease agreement
with Redding Specialty Hospital, LLC, which sublease shall be subject to
Lessor's approval, such approval not to be unreasonably withheld, conditioned or
delayed.
24.3 SUBLEASE SUBORDINATION AND NON-DISTURBANCE. Within ten (10) days
after request by Lessor, Lessee shall cause the subtenants or sublessees to
execute and deliver to Lessor a subordination agreement relating to the
sublease, which subordination agreement shall be in such form and content as is
acceptable to Lessor. At the request from time to time by one or more Facility
Lender, within ten (10) days from the date of request, Lessee shall cause the
subtenants or sublessees of the Leased Property to execute and deliver within
such ten (10) day period, to such Facility Lender a written agreement in a form
reasonably acceptable to such Facility Lender whereby such subtenants and
sublessees subordinate the sublease and all of their rights and estate
thereunder to each such mortgage or deed of trust that encumbers the Leased
Property or any part thereof and agree with each such Facility Lender that such
subtenants and sublessees will attorn to and recognize such Facility Lender 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 the sublease.
ARTICLE XXV
OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES
(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 to be furnished, the following
statements to Lessor, which must be in such form and detail as Lessor may
from time to time, but not unreasonably, request:
(i) within ninety (90) days after the end of each fiscal year
of Lessee, a copy of the Statements of Cash Flow for the Lessee 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 the terms of
this Lease and no condition currently exists that would,
43
but for the giving of any required notice or expiration of any applicable
cure period, constitute an Event of Default, 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) within ninety (90) days after the end of each year,
audited financial statements of Lessee, the Guarantors and the operations
performed in the Facility, prepared by a nationally recognized accounting
firm or an independent certified public accounting firm acceptable to
Lessor, which statements shall include a balance sheet and statement of
income and expenses and changes in cash flow all in accordance with
generally accepted accounting principles for the year then ended, and
(iii) within forty-five (45) days after the end of each
quarter, current financial statements of Lessee, the Guarantors and the
operations of the Facility, certified to be true and correct by an officer
of Lessee, and
(iv) within thirty (30) days after the end of each month
current operating statements of the Facility, including, but not limited
to operating statistics, certified to be true and correct by an officer of
the Lessee, and
(v) within ten (10) days of receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying agencies
that any license or certification, including, without limitation, the
Medicare and/or Medicaid certification and/or managed care contract of the
Facility is being downgraded to a substandard category, revoked, or
suspended, or that action is pending or being considered to downgrade to a
substandard category, revoke, or suspend such Facility's license or
certification, and
(vi) with reasonable promptness, such other information
respecting the financial condition and affairs of Lessee and the
Guarantors as Lessor may reasonably request from time to time.
(c) Upon Lessor's request, Lessee will furnish to Lessor a
certificate in form acceptable to Lessor certifying that no event of
default as defined herein or in any of the Other Leases, then exists and
no event has occurred (that has not been cured) and no condition currently
exists that would, but for the giving of any required notice or expiration
of any applicable cure period, constitute a default.
(d) Within two (2) business days of receipt, Lessee shall furnish to
Lessor copies of all notices and demands from any third party payor,
including, without limitation, Medicare and/or Medicaid, concerning
overpayment which will or may result in a repayment or a refund in excess
of One Million Dollars ($1,000,000). Lessee hereby agrees that in the
event of receipt of such notices or demands Lessor shall have the right,
at Lessor's option, to participate in the appeal of such notices and
demands.
(e) Lessee shall furnish to Lessor on a monthly basis ongoing status
reports (in form and content acceptable to Lessor) of any governmental
investigations of the Lessee, the Guarantors, or any of their respective
Affiliates, or the Facility, conducted by the United States Attorney,
State Attorney General, the Office of the Inspector General of the
Department of Health and Human Services, or any other Governmental Entity.
(f) Lessee shall furnish to Lessor immediately upon receipt thereof
copies of all notices of adverse events or deficiencies as defined by
regulations or standards of the applicable accrediting body relied upon by
the Lessee in the operation of the Facility or any part thereof.
(g) Lessee shall furnish to Lessor immediately upon receipt thereof
copies of all notices that the Lessee is not in compliance with the
Standards for Privacy of Individually Identifiable Health
44
Information and the Transaction and Code Set Standards which were
promulgated pursuant to the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA").
(h) Lessor reserves the right to (A) require such other financial
information from Lessee, and (B) require the Lessee to provide such other
financial information from the Guarantors and Combined Lessees, at such
other times as it shall deem reasonably necessary. All financial
statements and information must be in such form and detail as Lessor shall
from time to time, but not unreasonably, request.
ARTICLE XXVI
INSPECTION
Lessee shall permit Lessor's affiliate, MPT Development Services, 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. Lessee shall pay
to MPT Development Services on the Commencement Date and, as adjusted, on each
January 1 thereafter, an amount equal to Five Thousand and 00/100 Dollars
($5,000.00) to cover the cost of the physical inspections of the Leased
Property. Commencing on January 1, 2006, and continuing on January 1 of each
year thereafter throughout the Term of this Lease, the inspection fee to be paid
by Lessee to Lessor shall increase at a rate equal to two and one-half percent
(2.5%) per annum.
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
45
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.
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 as security for
a debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, 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 and under the Other Leases, 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 pay 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.
Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that the Existing Leases are more particularly listed on
EXHIBIT C attached hereto and made a part thereof by reference and
incorporation, copies of which Existing Leases the Lessee has received and
reviewed. Lessee agrees that it will not disturb the rights of the tenants under
the Tenant Leases and will enforce all of the obligations of the tenants under
such Tenant Leases and will pay and perform all of the obligations to be
performed under the Tenant Leases as if Lessee is the lessor or landlord
thereunder. In addition, Lessor and Lessee acknowledge that the Lessee has taken
an assignment of certain contracts relating to the operation of the facility
located on the Leased Property (the "Contracts"), which Contracts require that
certain space in the Leased Property be provided as more particularly described
in the Contracts. Lessee agrees to abide by the terms and perform the
obligations under the Contracts. Lessee hereby agrees to indemnify and hold
Lessor harmless from any liabilities and damages incurred by the Lessor as a
result of the Lessee's default under the Tenant Leases and the Contracts.
46
ARTICLE XXXIII
NOTICES
All notices, demands, consents, approvals, requests and other
communications under this Lease shall be in writing and shall be either (a)
delivered in person, (b) sent by certified mail, return receipt requested, (c)
delivered by a recognized over-night delivery service or (d) sent by facsimile
transmission and addressed as follows:
(a) if to Lessee: Northern California Rehabilitation Hospital, LLC
0000 Xxxx Xxxxx Xxxxxxxxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxx Xxxxx Xxxxx, Esq.
0000 Xxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
and a copy to: Xxxxxxx X. Xxxx, Esq.
Xxxxxx Xxxxx Xxxx & XxXxxxx, P.C.
0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
(b) if to Lessor: MPT of Xxxxxxx, LLC
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to: Xxxxxx X. Xxxx, Esq.
Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx
0000 XxxxxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the
addressee's location, such notice or communication shall be deemed to be duly
received by the recipient at 9:00 a.m. on the first Business Day thereafter.
47
ARTICLE XXXIV
APPRAISAL
In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Added Value of the Leased
Property for any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in the notice the name of a
person selected to act as an appraiser on its behalf. Lessor and Lessee agree
that any appraisal of the Leased Property shall be without regard to the
termination of this Lease or any purchase options contained herein, if any, and
shall assume the Lease is in place for a term of fifteen (15) years, and based
solely on the rents and other revenues generated and to be generated pursuant to
this Lease without any regard to Lessee's operations. 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 (1st) appraiser, proceed to appraise the Leased
Property to determine the Fair Market Value, Fair Market Value Purchase Price or
Fair Market Added 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 (1) appraiser shall have been so
appointed, or if two (2) appraisers shall have been so appointed but only one
(1) 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 (2) 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 Added 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 (2)
appraisers shall have twenty (20) days to appoint a third (3rd) 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 Added 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 Added 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 (2) appraisers shall be excluded, and fifty
percent (50%) of the sum of the remaining two (2) determinations shall be final
and binding upon Lessor and Lessee as the Fair Market Value, Fair Market Value
Purchase Price or Fair Market Added 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.
ARTICLE XXXV
PURCHASE RIGHTS
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 of 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 (which shall mean current
48
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
INTENTIONALLY OMITTED
ARTICLE XXXVII
FINANCING OF THE LEASED PROPERTY
Lessor agrees that, if it grants or creates any mortgage, lien,
encumbrance or other title retention agreement ("Encumbrances") upon the Leased
Property, Lessor will use reasonable efforts to obtain an agreement from the
holder of each such Encumbrance whereby such holder agrees (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, after twenty (20) days prior written notice,
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 reasonable
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) that, if subordination by Lessee is requested by the holder of
each such Encumbrance, to enter into an agreement with Lessee containing the
provisions described in Article XXXVIII of this Lease, and (e) Lessor 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 XXXVIII hereof.
ARTICLE XXXVIII
SUBORDINATION AND NON-DISTURBANCE
At the request from time to time by one or more Facility Lender, within
ten (10) days from the date of request, Lessee shall execute and deliver within
such ten (10) day period, to such Facility Lender a written agreement in a form
reasonably acceptable to such Facility Lender whereby Lessee subordinates this
Lease and all of its rights and estate hereunder to each Facility Instrument
that encumbers the Leased Property or any part thereof and agrees with each such
Facility Lender that Lessee will attorn to and recognize such Facility Lender or
the purchaser at any foreclosure sale or any sale under a power of sale
contained in any such Facility Instrument, 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 Facility
Lender simultaneously executes and delivers a written agreement consenting to
this Lease and agreeing that, notwithstanding any such other 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 terminated or canceled
at any time, except in the event Lessee is in default under this Lease.
49
ARTICLE XXXIX
LICENSES
Lessee shall maintain at all times during the Term hereof and any holdover
period all federal, state and local governmental licenses, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary or useful in the operation of the Facility (collectively,
the "Licenses'), and shall qualify and comply with all applicable laws as they
may from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.
Except for the proposed conversion of the Facility's existing skilled
nursing beds to long-term acute care beds as described in this Lease, Lessee
shall not, without the prior written consent of Lessor, which may be granted or
withheld in its sole discretion, effect or attempt to effect any change in the
license category or status of the Facility or any part thereof. Under no
circumstances shall Lessee have the right to transfer any of the Licenses to any
location other than the Facility or to any other person or entity (except to
Lessor as contemplated herein), whether before, during or after the Term hereof.
Following the termination of this Lease, Lessee shall retain no rights
whatsoever to the Licenses, and Lessee will not move or attempt to move the
Licenses to any other location. To the extent that Lessee has or will extend any
right, title, or claim of right whatsoever in and to the Licenses or the right
to operate the Facility, all such right, title, or claim of right shall
automatically revert to the Lessor or to Lessor's designee upon termination of
this Lease, to the extent permitted by law. Upon any termination of this Lease
or any breach or default by Lessee hereunder (which breach or default is not
cured within any applicable grace period and which results in Lessor terminating
this Lease), to the extent permitted by law, Lessor shall have the sole,
complete, unilateral, absolute and unfettered right to cause all Licenses to be
reissued in Lessor's name or in the name of Lessor's designee upon application
therefor to the issuing authority, and to further have the right to have any and
all provider and/or third party payor agreements as a provider in the Medicare
and/or Medicaid and other federal healthcare programs issued in Lessor's name or
in the name of Lessor's designee.
Upon the termination of this Lease and for reasonable periods of time
immediately before and after such termination, Lessee shall use its best
efforts, without additional consideration to Lessee, to facilitate an orderly
transfer of the operation and occupancy of the Facility to Lessor or any new
lessee or operator selected by Lessor, it being understood and agreed that such
cooperation shall include, without limitation, (a) Lessee's transfer and
assignment, if and to the extent permitted by law, to Lessor, Lessor's nominee
or Lessor's new lessee or operator of any and all Licenses, (b) Lessee's use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new Lessee or operator to operate the Facility have been
issued, and (c) the taking of such other actions as are required by applicable
law or as are reasonably requested by Lessor. Upon any termination of this Lease
or any breach or default by Lessee hereunder (which breach or default is not
cured within any applicable grace period and which results in Lessor terminating
this Lease), to the extent permitted by law, Lessor shall have the sole,
complete, unilateral, absolute and unfettered right to cause any and all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the appropriate authority, if required, and to
further have the right, to the extent permitted by law, to have any and all
Medicare and Medicaid and any other provider and/or third party payor agreements
issued in Lessor's name or in the name of Lessor's designee. The provisions of
this Section are in addition to the other provisions of this Lease.
It is an integral condition of this Lease that Lessee covenants and agrees
not to sell, move, modify, cancel, surrender, transfer, assign, sell, relocate,
pledge, secure, convey or in any other manner encumber any License or any
governmental or regulatory approval, consent or authorization of any kind to
operate the Facility. To the extent permitted by law, Lessee hereby grants to
Lessor a landlord's lien on the Licenses.
50
Lessee shall immediately (within two (2) business days) notify Lessor in
writing of any notice, action or other proceeding or inquiry of any governmental
agency, bureau or other authority whether federal, state, or local, of any kind,
nature or description, which could adversely affect any material License or
Medicare and/or Medicaid-certification status, or accreditation status of the
Facility, or the ability of Lessee to maintain its status as the licensed and
accredited operator of the Facility or which alleges noncompliance with any law.
Lessee shall immediately (within two (2) business days) upon Lessee's receipt,
furnish Lessor with a copy of any and all such notices and Lessor shall have the
right, but not the obligation, to attend and/or participate, in Lessor's sole
and absolute discretion, in any such actions or proceedings. Lessee shall act
diligently to correct any deficiency or deal effectively with any "adverse
action" or other proceedings, inquiry or other governmental action, so as to
maintain the licensure and Medicare and/or Medicaid-certification status stated
herein in good standing at all times. Lessee shall not agree to any settlement
or other action with respect to such proceedings or inquiry which affects the
use of the Leased Property or any portion thereof as provided herein without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld or delayed. Lessee agrees to sign, acknowledge, provide and deliver to
Lessor (and if Lessee fails to do so upon request of Lessor, Lessee hereby
irrevocably appoints Lessor, as agent of Lessee for such express purposes) any
and all documents, instruments or other writings which are or may become
necessary, proper and/or advisable to cause any and all hospital licenses
required for the Primary Intended Use, Department of Human Services of the State
of California ("DHS") provider agreements, and/or state or federal Title XVIII
and/or Title XIX provider agreements to be obtained (either in total or
individually) in the name of Lessor or the name of Lessor's designee in the
event that Lessor reasonably determines in good faith that (irrespective of any
claim, dispute or other contention or challenge of Lessee) there is any breach,
default or other lapse in any representation, warranty, covenant or other
delegation of duty to Lessee (beyond any applicable grace or cure period) and
the issuing government agency has threatened or asserted that such license or
provider agreement will terminate or has lapsed or that Lessee's license or
certification or accreditation status is in jeopardy. This power is coupled with
the ownership interest of Lessor in and to the Facility and all incidental
rights attendant to any and all of the foregoing rights.
ARTICLE XL
COMPLIANCE WITH HEALTHCARE LAWS
Lessee hereby covenants, warrants and represents to Lessor that as of the
Commencement Date and throughout the Term: (i) Lessee shall be, and shall
continue to be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Facility in accordance with the applicable
rules and regulations of the State of California, federal governmental
authorities and accrediting bodies, including, but not limited to, the United
States Department of Health and Human Services, DHSS, DHS and CMS; and/or (ii)
Lessee shall be, and shall continue to be, certified by and the holder of valid
provider agreements with Medicare/Medicaid issued by DHHS, DHS and/or CMS and
shall remain so certified and shall remain such a holder or such licenses and
Medicare and/or Medicaid Certifications for it to operate in accordance with the
Primary Intended Use; (iii) Lessee shall be, and shall continue to be in
substantial compliance with and shall remain in substantial compliance with all
state and federal laws, rules, regulations and procedures with regard to the
operation of the Facility, including, without limitation, substantial compliance
under HIPAA; (iv) Lessee shall operate the Facility in a manner consistent with
high quality acute care services and sound reimbursement principles under the
Medicare and/or Medicaid programs and as required under state and federal law;
and (v) Lessee shall not abandon, terminate, vacate or fail to renew any
license, certification, accreditation, certificate, approval, permit, waiver,
provider agreement or any other authorization which is required for the lawful
and proper operation of the Facility or in any way commit any act which will or
may cause any such license, certification, accreditation, certificate, approval,
permit, waiver, provider agreement or other authorization to be revoked by any
federal, state or local governmental authority or accrediting body having
jurisdiction thereof.
51
ARTICLE XLI
LESSOR'S RIGHT TO SELL
Lessee understands that Lessor may sell its interest in the Leased
Property in whole or in part at any time, subject to this Lease and the rights
of Lessee as expressly provided in this Lease. The Lessee agrees that any
purchaser may exercise any and all rights of Lessor as fully as if such had made
the purchase of the Leased Property directly from the Lessee as set out in the
Purchase Agreement. Lessor may divulge to any such purchaser all information,
reports, financial statements, certificates and documents obtained by it from
Lessee.
ARTICLE XLII
MISCELLANEOUS
42.1 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 expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of 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 California but not including its conflict of laws rules; provided,
however, the parties hereto agree that the venue for all actions in connection
with this Lease and all matters relating to the Leased Property shall be
Jefferson County, Alabama.
42.2 LESSOR'S EXPENSES. In addition to other provisions herein, Lessee
agrees and shall pay and/or reimburse Lessor's reasonable costs and expenses,
including legal fees, incurred or resulting from and relating to (a) requests by
Lessee for approval or consent under this Lease Agreement; (b) requests by
Lessor for approval or consent under this Lease and all other documents executed
between Lessor and Lessee in connection herewith, (c) any circumstances or
developments which give rise to Lessor's right of consent or approval, (d)
circumstances resulting from any action or inaction by Lessee contrary to the
lease provisions, and (e) a request for changes including, but not limited to,
(i) the permitted use of the Leased Property, (ii) alterations and improvements
to the Leased Improvements, (iii) subletting or assignment, and (iv) any other
changes in the terms, conditions or provisions of this Lease. Such expenses and
fees shall be paid by Lessee within thirty (30) days of the submission of a
statement for the same or such amount(s) shall become Additional Charges and
subject to the Overdue Rate after the 30 days.
42.3 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Lessor and Lessee.
42.4 LEASE GUARANTY. At the time of the execution and delivery of this
Lease by Lessee to Lessor, Lessee shall simultaneously herewith deliver to the
Lessor a Lease Guaranty in form and content satisfactory to Lessor, whereby the
Guarantors jointly and severally, absolutely and irrevocably, guarantee the full
payment and performance of all of Lessee's obligations under this Lease and any
other obligations of Lessee, Guarantors and any Affiliate of Lessee and any
Affiliate of Guarantors to Lessor. Such Lease Guaranty shall specifically
provide that
52
the Lease Guaranty and the obligations of the Guarantors thereunder shall remain
in full force and effect during the Term, regardless of whether this Lease has
been assigned or any portion of the Leased Property has been subleased.
42.5 FUTURE FINANCING. Lessee hereby agrees that if at any time during the
Term Lessee purchases or contemplates the purchase of a facility, or property to
be used, for the operation of a business for the Primary Intended Use, Lessee
shall notify Lessor in writing ("Lessee's Notice") of such purchase or
contemplated purchase, and Lessor shall have the first opportunity to provide
financing for such purchase, expansion or renovation upon terms mutually
agreeable to Lessor and Lessee. Lessor shall notify Lessee in writing on or
before the expiration of twenty (20) business days after receipt of Lessee's
Notice whether Lessor is interested in providing such financing. If Lessor
agrees to provide the financing, the terms and conditions of such financing will
be contingent upon, among other things, performance benchmarks acceptable to
Lessor and the Lessor's satisfaction and approval of other due diligence
requirements.
42.6 LETTER OF CREDIT. Lessee shall obtain and deliver to Lessor an
unconditional and irrevocable letter of credit from a bank acceptable to Lessor
(the "Letter of Credit") naming Lessor beneficiary thereunder, in an amount
equal to three (3) months' Base Rent (the "LOC Amount") (estimated in the first
year of the Term to be approximately Four Hundred Seventy-Two Thousand Five
Hundred and No/100 Dollars ($472,500.00)) and upon terms, conditions and
provisions acceptable to Lessor. The parties acknowledge and agree that Lessee
contemporaneously herewith has made a cash deposit with Lessor in the LOC Amount
and such deposit is accepted in lieu of the Letter of Credit. At Lessee's
option, Lessee may obtain the Letter of Credit in the LOC Amount and, in such
event, Lessor shall release said cash deposit to Lessee. The parties acknowledge
that, in the event of a Purchase Price Adjustment and a corresponding increase
in Base Rent, the LOC Amount shall immediately increase and Lessee shall
increase the amount of the cash deposit or Letter of Credit accordingly.
42.7 CHANGE IN OWNERSHIP/CONTROL. So long as this Lease remains in effect,
the aggregate ownership of the current members of Lessee shall not be reduced
without the prior written consent of Lessor. In addition, so long as this Lease
remains in effect, Xxxx X. Xxxxxxxxx'x ownership of Vibra Healthcare, LLC shall
not be reduced below the percentage he owns currently without the prior written
consent of Lessor.
42.8 LESSOR SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, in connection with a public offering or the
private placement of securities of Lessor or MPT, or their efforts to obtain
financing for the Leased Property, Lessor and MPT may disclose that Lessor has
entered into this Lease with the Lessee respecting the Facility and the Leased
property and may provide and disclose other information regarding this Lease,
the Lessee, the Guarantors, the Leased Property, the Facility, the Commitment
Letter, and such other additional information which Lessor and MPT may
reasonably deem necessary, to its proposed investors in such public offering or
private offering of securities or any prospective lenders with respect to such
financing. Lessee shall cooperate with Lessor and MPT by providing financial and
other information reasonably requested by Lessor and MPT in connection with such
offering of securities or financing. Lessor and MPT shall have the right of
access to the Facility, at reasonable business hours and upon advance notice,
and all documentation and information relating to the Facility.
42.9 NON-RECOURSE AS TO LESSOR. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Lessor
under this Lease shall be enforced only against the Leased Property and not
against any other assets, properties or funds of (i) Lessor, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of Lessor or any general partner of Lessor or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(iii) any predecessor or successor partnership or corporation (or other entity)
of Lessor or any of its general partners, shareholders, officers, directors,
employees or agents, either directly or through Lessor or its general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof.
53
42.10 MANAGEMENT AGREEMENTS. Lessee shall not engage any Management
Company or allow any tenants, subtenants or sublessees of the Facility to engage
any Management Company, without Lessor's prior written consent, which consent
shall not be unreasonably withheld; provided, however, Lessor's rights relating
to any Management Company as set forth in Section 16.2 hereof shall be at
Lessor's sole and absolute discretion. Lessee shall, if required by Lessor,
assign all of Lessee's rights under the Management Agreements to Lessor and
Lessor shall be entitled to assign same to Lessor's lender. At the request of
the Lessor from time to time, Lessee shall execute and deliver (and require the
tenants, subtenants or sublessees to execute and deliver, if applicable) an
assignment and/or subordination agreement relating to the Management Agreements,
which assignment and/or subordination agreement shall be in such form and
content as reasonably acceptable to Lessor and/or any lender providing financing
to Lessor, and shall be delivered to Lessor within ten (10) days after Lessor's
request. Lessee hereby agrees that all payments and fees payable under the
Management Agreements are and shall be subordinate to the payment of the
obligations under this Lease and all other documents executed in connection with
this Lease and the Purchase Agreement. Lessee agrees that all Management
Agreements entered into in connection with the Leased Property shall expressly
contain provisions acceptable to Lessor which (i) require an assignment of the
Management Agreements to Lessor upon request by Lessor, (ii) confirm and warrant
that all sums due and payable under the Management Agreements are subordinate to
this Lease, (iii) xxxxx Xxxxxx the right to terminate the Management Agreement
as provided at the end of Section 16.2 of this Lease, (iv) require the
Management Company to execute and deliver to Lessor within ten (10) days from
Lessor's request an estoppel certificate, assignment and/or subordination
agreement as required by Lessor and/or Lessor's lender providing financing to
Lessor, in such form and content as is acceptable to Lessor and/or its lender,
and (v) all fees due and payable under any Management Agreements, shall be
subordinate to all monetary obligations under this Lease. At the request of the
Lessor from time to time, Lessee shall execute and obtain from all parties
subject to such Management Agreements executed written confirmation of such
assignment or subordination, which shall be delivered to Lessor within ten (10)
days from Lessor's request.
42.11 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
ARTICLE XLIII
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.
[ SIGNATURES APPEAR ON FOLLOWING PAGES ]
54
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:
MPT OF REDDING, LLC
BY: MPT OPERATING PARTNERSHIP, L.P.
ITS: Sole Member
By: /s/ Xxxxxx X. XxXxxx
----------------------------------------------------
Name: Xxxxxx X. XxXxxx
Its: Executive Vice President, Chief Operating Officer
and Treasurer
LESSEE:
NORTHERN CALIFORNIA REHABILITATION
HOSPITAL, LLC
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: President
EXHIBIT A
Parcels A and B as set forth and shown on that certain Map entitled, "Parcel Map
No. LS 104-78 for Xxxxx Xxx XxXxxxxx and Xxxxxxx Xxxx XxXxxxxx, as Co-Trustees
of Xxxxx Mac., Inc. Profit Sharing Trust, being a portion of Tract E, Division 2
of the P.B. Reading Grant, in the City of Xxxxxxx, Xxxxxx County, California"
filed in the Office of the County Recorder, February 7, 1979, in Book 17 of
Parcel Maps at Page 87, Shasta County Records.
APN: 000-000-000
EXHIBIT B
1. All taxes, supplemental taxes, dues and general and special taxes and
assessments.
2. An easement for water pipelines/overland flow of water and incidental
purposes, recorded May 10, 1938, as Book 2 of Rights of Way, Page 136, in favor
of the City of Xxxxxxx, a municipal corporation.
3. An easement for right of way and incidental purposes, recorded January 30,
1957, as Book 520, Page 381, of Official Records, in favor of Northern
California Congregational Conference, a California corporation, affecting the
easterly 60 feet of Parcel B.
4. An easement for drain and sewer and incidental purposes, recorded July 22,
1975, in Book 1284, Page 460, of Official Records, in favor of the City of
Xxxxxxx, a municipal corporation, affecting a 15 foot strip of land running
North/South through Parcel A.
5. An easement shown or dedicated on the map filed or recorded June 26, 1975, as
Book 6, Page 124 of Parcel Maps, for a proposed storm drain and sewer easement
over the Easterly 10 feet of Parcel A and the Westerly 5 feet of Parcel B and
incidental purposes.
6. An easement for utility and incidental purposes, recorded July 1, 1977, as
Book 1437, Page 420, of Official Records, in favor of the City of Xxxxxxx, a
municipal corporation, affecting the most Southerly portion within Parcel A.
7. An easement shown or dedicated on the Map filed on February 7, 1979, in Book
17 of Parcel Maps at Page 87, for a proposed 15 foot utility easement (to be
dedicated); reciprocal driveway easement; pre-existing and rights of way; terms
and conditions as set forth in the notes and incidental purposes.
8. Covenants, conditions, restrictions and easements in the document recorded
March 5, 1979, as Book 1602, Page 106, of Official Records, but deleting any
covenant, condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial status,
national origin, sexual orientation, marital status, ancestry, source of income
or disability, to the extent such covenants, conditions or restrictions violate
Title 42, Section 3604(c), of the United States Code. Lawful restrictions under
state and federal law on the age of occupants in senior housing or housing for
older persons shall not be construed as restrictions based on familial status.
Said restrictions recite, among other things: "Fast food restaurants are
prohibited on the herein described property."
9. An easement for pedestrian trail and incidental purposes, recorded December
19, 1986, as Book 2278, Page 876, of Official Records, in favor of The Knolls, a
general partnership, affecting a 10 foot strip located within Parcel A.
10. The existing telephone vault and concrete pad as disclosed by off-record
information regarding an ALTA Survey under Job No. 1058.01.
11. An unrecorded lease dated November 12, 1997, executed by National Medical
Specialty Hospital of Redding, Inc., a California corporation, as lessor, and
Guardian Postacute Services, Inc., a California corporation, as lessee, as
disclosed by a Memorandum recorded November 12, 1997, as Instrument No.
1997-0038345 of Official Records.
12. A Deed of Trust to secure an original indebtedness of $37,000,000.00
recorded July 15, 2004, as Instrument # 2004-0040416 of Official Records;
Trustor: Shasta Regional Medical Center, LLC, a California limited liability
company, Trustee: Chicago Title Insurance Company, and Beneficiary: General
Electric Capital Corporation, a Delaware corporation.
13. A Deed of Trust (no amount shown) recorded July 15, 2004, as Instrument #
2004-0040417 of Official Records; Trustor: Shasta Regional Medical Center, LLC,
a California limited liability company, Trustee: Chicago Title Insurance
Company, and Beneficiary: Wellpoint Health Networks, Inc., a Delaware
corporation.
14. A Deed of Trust to secure an original indebtedness of $30,000,000.00
recorded July 15, 2004, as Instrument # 2004-0040418 of Official Records;
Trustor: Shasta Regional Medical Center, LLC, a California limited liability
company, Trustee: Chicago Title Insurance Company, and Beneficiary: General
Electric Capital Corporation, a Delaware corporation.
15. Rights of parties in possession.
16. Any facts, rights, interests or claims which would be disclosed by a current
ALTA/ACSM survey.
17. Any facts, rights, interests or claims which are not shown by the public
records but which could be ascertained by an inspection of said land or by
making inquiry of persons in possession thereof.
EXHIBIT C
