MASTER LEASE AGREEMENT
BY
VENTAS AMBERLEIGH, LLC
AS LANDLORD
AND
CAPITAL SENIOR MANAGEMENT 2, INC.
AS TENANT
DATED AS OF JUNE 30, 2005
Anderleigh
TABLE OF CONTENTS
1. Leased Property; Term; Joint and Several Liability; Limitation on Rights.................................2
1.1 Leased Property.................................................................................2
1.2 Term............................................................................................2
1.3 Closing under the P&S Agreement.................................................................3
1.4 Joint and Several Liability; Limitation on Rights...............................................4
1.5 Potential Lease Combinations....................................................................4
2. Definitions..............................................................................................4
3. Rent.....................................................................................................5
3.1 Fixed Rent......................................................................................5
3.2 Additional Rent.................................................................................8
3.3 Escrow Deposits................................................................................10
3.4 Security Deposit...............................................................................12
3.5 Net Lease......................................................................................14
3.6 Lease Guaranty.................................................................................15
4. Impositions.............................................................................................15
4.1 Payment of Impositions.........................................................................15
4.2 Notice of Impositions..........................................................................15
4.3 Adjustment of Impositions......................................................................15
5. No Affect or Impairment, etc............................................................................16
6. Premises; Tenant's Personal Property....................................................................16
6.1 Ownership of the Premises......................................................................16
6.2 Tenant's Personal Property.....................................................................16
6.3 Landlord's Personal Property...................................................................17
7. Condition and Use of Each Leased Property...............................................................17
7.1 Condition of Each Leased Property..............................................................17
7.2 Use of Each Leased Property....................................................................17
7.3 Authorization Collateral.......................................................................18
7.4 Granting of Easements, etc.....................................................................18
8. Negative and Affirmative Covenants of Tenant............................................................19
8.1 Negative Covenants.............................................................................19
8.2 Affirmative Covenants..........................................................................22
8.3 [Intentionally Omitted]........................................................................25
8.4 Xxxxxx Xxx Financing...........................................................................25
8.5 Operations Transfer Agreement..................................................................25
8.6 P&S Agreement..................................................................................26
9. Maintenance of Facilities...............................................................................27
9.1 Maintenance and Repair.........................................................................27
9.2 Encroachments..................................................................................28
i
Anderleigh
10. Tenant's Representations and Warranties.................................................................29
10.1 Organization and Good Standing.................................................................29
10.2 Power and Authority............................................................................29
10.3 Enforceability.................................................................................29
10.4 Consents.......................................................................................29
10.5 No Violation...................................................................................29
10.6 Reports and Statements.........................................................................29
10.7 No Default.....................................................................................30
10.8 Adverse Matters................................................................................30
10.9 Certification..................................................................................30
10.10 No Reimbursement Audits or Appeals.............................................................30
10.11 No Recoupments Efforts.........................................................................30
10.12 Liability Reserves.............................................................................30
10.13 Primary Intended Use...........................................................................30
10.14 Compliance with Laws...........................................................................30
10.15 Ownership of Authorizations....................................................................31
10.16 Third Party Payor Programs.....................................................................31
10.17 Service Contracts..............................................................................31
10.18 Utilities......................................................................................31
10.19 Compliance with Laws and Codes.................................................................32
10.20 Insurance......................................................................................32
10.21 Documents......................................................................................32
10.22 Physical Condition.............................................................................32
10.23 Compliance with Laws and Codes.................................................................32
10.24 Ownership......................................................................................32
10.25 Financial Information, Absence of Any Undisclosed Liabilities..................................33
10.26 Separate Parcel................................................................................34
10.27 Re-Zoning......................................................................................34
10.28 No Violations..................................................................................34
10.29 Real Estate Taxes..............................................................................34
10.30 Permits........................................................................................34
10.31 Operation Matters..............................................................................35
10.32 Taxes..........................................................................................36
10.33 Environmental Matters..........................................................................36
10.34 Assumed Indebtedness...........................................................................37
10.35 P&S Agreement..................................................................................37
11. Alterations.............................................................................................37
11.1 Alterations....................................................................................37
11.2 Construction Requirements for all Alterations..................................................38
11.3 Capital Expenditures Account...................................................................39
11.4 Annual Capital Expenditure Budget..............................................................42
12. Liens...................................................................................................42
13. Permitted Contests......................................................................................43
ii
Anderleigh
14. Insurance...............................................................................................43
14.1 General Insurance Requirements.................................................................43
14.2 Policies; Certificates.........................................................................45
14.3 Blanket and Loss Limit Policies................................................................46
14.4 Additional Insured; No Separate Insurance......................................................46
14.5 Policy Requirements............................................................................46
14.6 Evidence of Compliance.........................................................................47
14.7 Foreclosure; Transfer..........................................................................47
14.8 Insurance Company..............................................................................47
15. Damage and Destruction..................................................................................47
15.1 Notice of Casualty.............................................................................47
15.2 Substantial Destruction........................................................................48
15.3 Partial Destruction............................................................................48
15.4 Restoration....................................................................................48
15.5 Disbursement of Insurance Proceeds.............................................................49
15.6 Insufficient Proceeds/Risk of Loss.............................................................50
15.7 Excess Proceeds................................................................................50
15.8 Landlord's Inspection..........................................................................50
15.9 Not Trust Funds................................................................................50
15.10 Waiver.........................................................................................50
15.11 Facility Mortgagee.............................................................................50
16. Condemnation............................................................................................51
16.1 Parties' Rights and Obligations................................................................51
16.2 Total Taking...................................................................................51
16.3 Partial Taking.................................................................................51
16.4 Restoration....................................................................................52
16.5 Temporary Taking...............................................................................52
17. Default.................................................................................................52
17.1 Events of Default..............................................................................52
17.2 Remedy Election................................................................................56
17.3 Certain Remedies...............................................................................57
17.4 Damages........................................................................................57
17.5 Waiver; Mitigation; Limitation on Certain Tenant Remedies......................................58
17.6 Application of Funds...........................................................................59
17.7 Nature of Remedies.............................................................................59
17.8 No Mediation or Arbitration....................................................................60
17.9 Deletion of Properties.........................................................................60
18. Landlord's Right to Cure Tenant's Default...............................................................61
19. Holding Over............................................................................................61
20. Subordination...........................................................................................62
20.1 Subordination..................................................................................62
iii
Anderleigh
20.2 Attornment.....................................................................................62
20.3 Mortgagee Cure Rights..........................................................................63
20.4 Modifications..................................................................................63
21. Property and Accounts Collateral........................................................................63
21.1 Landlord's Security Interest...................................................................63
21.2 Accounts Receivable Financing..................................................................64
22. Risk of Loss............................................................................................65
23. Indemnification.........................................................................................65
24. Assignment; Sublease....................................................................................66
24.1 Prohibition....................................................................................66
24.2 Permitted Assignments and Subleases............................................................66
24.3 Rights of Landlord.............................................................................67
25. Financial Statements and Reporting......................................................................67
25.1 Maintenance of Books and Records...............................................................67
25.2 Annual Financial Information...................................................................68
25.3 Quarterly Financial Information................................................................68
25.4 Certifications of Compliance...................................................................68
25.5 Annual Budgets.................................................................................68
25.6 Monthly Financial Information..................................................................69
25.7 Authorizations.................................................................................69
25.8 Actuarial Reports..............................................................................69
25.9 Survey Deficiency Summary Reports..............................................................69
25.10 [Intentionally Omitted]........................................................................69
25.11 Financial Statements of Guarantor..............................................................69
25.12 Estoppel Certificates..........................................................................70
25.13 SEC Reports....................................................................................70
25.14 Supplemental Information.......................................................................70
25.15 Facility Level Meetings and Reviews............................................................70
25.16 Format.........................................................................................71
26. Landlord's Right to Inspect.............................................................................71
27. No Waiver...............................................................................................71
28. Single Lease............................................................................................71
29. Acceptance of Surrender.................................................................................72
30. No Merger of Title......................................................................................72
31. Conveyance by Landlord..................................................................................72
32. Quiet Enjoyment.........................................................................................73
iv
Anderleigh
33. Notices.................................................................................................73
34. General REIT Provisions.................................................................................74
35. Transfer of Tenant's Personal Property..................................................................74
36. Compliance With Environmental Laws......................................................................74
36.1 Hazardous Substances...........................................................................74
36.2 Remediation; Notification......................................................................75
36.3 Indemnity......................................................................................75
36.4 Environmental Inspection.......................................................................76
36.5 Removal........................................................................................76
37. Operational Transfer....................................................................................76
37.1 Exercise; Transfer of Authorizations...........................................................76
37.2 Reasonable Assistance..........................................................................78
37.3 Facility Termination; Limited Term Contraction Right; Limited Extended
Operation by Tenant............................................................................78
37.4 Use of Tenant's Names..........................................................................80
38. Non-Recourse............................................................................................80
39. Combination of Leases...................................................................................80
39.1 Section 39 Lease...............................................................................81
39.2 Additional Properties..........................................................................81
39.3 Combination Lease..............................................................................82
39.4 Section 39 Date................................................................................82
39.5 Additional Actions.............................................................................82
40. New Lease...............................................................................................83
40.1 New Lease Terms................................................................................83
40.2 Amendments to this Lease.......................................................................84
40.3 Effective Date.................................................................................85
40.4 Other Undertakings.............................................................................85
41. Restrictive Covenant....................................................................................85
42. Miscellaneous...........................................................................................85
42.1 Survival.......................................................................................85
42.2 Non-Business Day Payments......................................................................85
42.3 Brokers........................................................................................86
42.4 Headings.......................................................................................86
42.5 Counterparts...................................................................................86
42.6 Integration; Modification; Interpretation; Relationship........................................86
42.7 Time of Essence................................................................................86
42.8 Force Majeure..................................................................................87
42.9 Severability; Maximum Rate.....................................................................87
42.10 Governing Law; Venue...........................................................................87
v
Anderleigh
42.11 Waiver of Trial by Jury........................................................................87
42.12 Waivers; Forbearance...........................................................................88
42.13 Binding Character..............................................................................88
43. Renewal Options.........................................................................................88
43.1 Exercise of Renewal Options....................................................................88
43.2 Renewal Terms..................................................................................88
43.3 Fair Market Rental Determination...............................................................89
43.4 Extended Term Tenant's Proportionate Shares....................................................89
43.5 Other Leases...................................................................................89
43.6 Rights Personal to Original Tenant.............................................................89
44. Medicare; Medicaid......................................................................................89
45. Special Purpose Entity Obligations......................................................................90
46. State Specific Provisions...............................................................................90
46.1 New York.......................................................................................90
46.2 California.....................................................................................90
46.3 Arizona........................................................................................94
47. Right of First Offer....................................................................................94
47.1 Notices........................................................................................94
47.2 Conditions of Sale.............................................................................94
47.3 Right of First Offer Not Applicable to Certain Transfers.......................................95
47.4 Assignment of Right of First Offer.............................................................96
47.5 Rights Personal to Original Tenant.............................................................96
47.6 Other Leases...................................................................................96
48. Xxxxxx Mae; Xxxxxx Xxx Loan.............................................................................97
48.1 Xxxxxx Mae Financing...........................................................................97
48.2 Reserve Payments...............................................................................97
48.3 Xxxxxx Xxx Reserve Deposit.....................................................................97
48.4 Use of Reserves................................................................................97
48.5 Termination of Xxxxxx Mae Financing............................................................98
48.6 SPE; Reference to Leased Properties, Other Leases or Facilities................................98
48.7 New/Additional Financing.......................................................................98
49. Authorizations..........................................................................................98
50. Transaction Closing Costs...............................................................................98
vi
Amberleigh
LIST OF SCHEDULES AND EXHIBITS
Schedule 1 - Primary Intended Use
Schedule 2 - Tenant's Proportionate Shares
Schedule 3.1.1 - Wiring Instructions for Rental Payment
Schedule 3.1.4 - Examples of Tax Adjustment Calculations
Schedule 3.3.1-1 - Insurance Premium Allocations
Schedule 3.3.1-2 - Wiring Instructions for Insurance Premiums
Schedule 3.4.1 - Wiring Instructions for Cash Security Deposit
Schedule 7.3 - Authorization Collateral
Schedule 8.1.4 - Employee Health Plans
Schedule 10.24 - Management Agreements
Schedule 10.31.3 - Operation License Exception
Schedule 10.31.6 - Permits
Schedule 10.34 - Assumed Indebtedness
Schedule 17.1.13 - Licensed Beds
Exhibit A - Descriptions of the Leased Property
Exhibit A-1 - Descriptions of the Other Leased Properties
Exhibit B - Definitions
Exhibit C - Base Year Resident Revenues
Exhibit D - Officer's Certificate
Exhibit E - Estoppel Certificates
Exhibit F - Restrictive Covenant
Exhibit G - Subordination of Management Agreement
Exhibit H - Appraisals
Exhibit I - Special Purpose Entity Obligations
vii
Amberleigh
MASTER LEASE AGREEMENT
This MASTER LEASE AGREEMENT (this agreement, as it may be amended, renewed,
supplemented, extended or replaced by the parties hereto from time to time, this
"Lease") is made and entered into as of June 30, 2005 (the "Effective Date"),
between VENTAS AMBERLEIGH, LLC, a Delaware limited liability company (together
with its successors and assigns, "Landlord"), and CAPITAL SENIOR MANAGEMENT 2,
INC., a Texas corporation (together with its permitted successors and assigns
and any other person or entity that becomes a Tenant under this Lease,
individually and collectively, "Tenant").
RECITALS:
--------
WHEREAS, Landlord owns the real property described by the common
address(es) set forth on Exhibit A attached hereto and legally described in
Exhibit A attached hereto; and
WHEREAS, Landlord desires to lease the Premises (as hereinafter defined) to
Tenant, and Tenant desires to lease the Premises from Landlord; and
WHEREAS, Landlord acquired the Premises from an affiliate of Tenant
pursuant to that certain Purchase and Sale Agreement between Ventas Healthcare
Properties, Inc., BRE/Amberleigh L.L.C. and other entities, dated as of the
Effective Date (as may be amended, renewed, supplemented, extended or replaced
from time to time, the "P&S Agreement"); and
WHEREAS, Tenant's obligations under this Lease are guaranteed pursuant to
that certain Guaranty of Lease (as may be amended, renewed, supplemented,
extended or replaced from time to time, the "Lease Guaranty") bearing even date
herewith made by Capital Senior Living Properties, Inc., a Texas corporation
(together with its permitted successors and assigns, individually and
collectively, "Guarantor"); and
WHEREAS, pursuant to the P&S Agreement, various affiliates of Landlord and
Tenant (respectively) are, contemporaneously herewith, entering into those
certain Other Leases identified on Exhibit A-l, attached hereto, pursuant to
which certain affiliates of Landlord (collectively, and together with their
successors and assigns, "Landlord Lease Affiliates") are leasing to Tenant
(collectively, and together with their successors and assigns, "Tenant Lease
Affiliates") the properties identified on said Exhibit A-l, pursuant to the
terms and conditions of said Other Leases; and
WHEREAS, Landlord and Tenant desire that this Lease and (to the fullest
extent possible) the Other Leases be made the subject of one or more master
leases covering multiple properties, if and when Landlord deems it appropriate
to do so, in accordance with Section 39 below (collectively, "Lease
Combinations"); and
WHEREAS, Landlord and Tenant desire to enter into this Lease upon the terms
and conditions hereinafter set forth.
1
Amberleigh
NOW, THEREFORE, Landlord and Tenant agree upon the leasing and demising of
the Premises by Landlord to Tenant, upon the terms and conditions of this Lease.
1. Leased Property; Term; Joint and Several Liability; Limitation on Rights.
1.1 Leased Property. Effective as of the Commencement Date, upon and
subject to Section 1.3 below and to the other terms and conditions hereinafter
set forth, Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, all of the following:
1.1.1 Land. The parcel(s) of land more particularly described in
Exhibit A attached hereto, together with all easements and interests appurtenant
thereto (collectively, the "Land"; each parcel of Land described in such Exhibit
A, as amended from time to time, together with such appurtenances with respect
to such parcel, being referred to herein as a "Leased Land");
1.1.2 Leased Improvements. All buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind, including, but not
limited to, alleyways, sidewalks, utility pipes, conduits and lines, parking
areas and roadways appurtenant to such buildings and structures situated upon
the Land as of the date hereof and Alterations upon the Land (collectively, the
"Leased Improvements");
1.1.3 Intangible Property. The interest, if any, of Landlord in and to
any of the following intangible property owned by Landlord in connection with
the Land and the Leased Improvements (collectively, the "Intangibles"): (i) the
identity or business of the Facilities as a going concern, including, without
limitation, any names or trade names by which the Facilities or any part thereof
may be known, and all registrations for such names, if any; (ii) to the extent
assignable or transferable, the interest, if any, of Landlord in and to each and
every guaranty and warranty concerning the Leased Improvements, including,
without limitation, any roofing, air conditioning, heating, elevator and other
guaranty or warranty relating to the construction, maintenance or repair of the
Leased Improvements or any portion thereof; and (iii) the interest, if any, of
Landlord in and to all Authorizations to the extent the same were transferred to
Landlord pursuant to the P&S Agreement and can be assigned or transferred to
Tenant in accordance with applicable law; provided, however, that the foregoing
shall not include any CON issued to or transferred to or held by Landlord which
shall only be licensed to Tenant on a temporary basis, which license shall be
revocable at any time by Landlord; and
1.1.4 Landlord's Personal Property. All tangible personal property
owned by Landlord and located at the Land or the Leased Improvements to the
extent the same were transferred to Landlord pursuant to the P&S Agreement
(together with any replacements thereof pursuant to Section 6.3 below, and any
and all other such tangible personal property, if any, acquired and leased
hereunder, the "Landlord's Personal Property").
2
Amberleigh
SUBJECT, HOWEVER, to the Permitted Encumbrances (as hereinafter defined).
1.2 Term. Landlord hereby leases the Premises to Tenant for an initial term
(the "Initial Term") of ten (10) years commencing as of the Commencement Date
(as hereinafter defined) and expiring at midnight on the last day of the
calendar month in which the tenth (10th) anniversary of the Commencement Date
occurs (the "Initial Expiration Date"). Landlord shall have the limited right to
contract the Initial Term (each, a "Landlord Contraction") as to one or more
Leased Properties in order to facilitate an Operational Transfer(s) pursuant to
Section 37. Tenant shall have the right to extend the Initial Term pursuant to
Section 43 below. The Initial Term, as revised as to one or more Leased
Properties pursuant to any applicable Landlord Contraction(s), or as the same
may be extended pursuant to Section 43 below, is referred to herein as the
"Term". The Initial Expiration Date, as revised as to one or more Leased
Properties pursuant to any applicable Landlord Contraction(s), or as the same
may be extended pursuant to Section 43 below, is referred to herein as the
"Expiration Date". Landlord and Tenant acknowledge and agree that (i) on account
of any Landlord Contraction(s) as to a particular Leased Property(ies),
individual Leased Properties may have applicable thereto different Expiration
Dates and (ii) on account of Landlord's exercise of its rights under Section
37.3.3 below, Tenant may be obligated to operate a particular Leased
Property(ies) beyond the Expiration Date(s) applicable thereto.
1.3 Closing under the P&S Agreement. Landlord and Tenant hereby acknowledge
and agree that as of the Effective Date, Landlord does not own the Leased
Property, that Tenant shall have no rights under this Lease unless and until the
Closing occurs, and that Landlord's obligations under this Lease are contingent
and conditioned upon the consummation of the Closing under the P&S Agreement.
Notwithstanding the foregoing, this Lease, as of the Effective Date, constitutes
the legally binding and enforceable agreement of Tenant and may not be rescinded
or otherwise terminated by Tenant, except as expressly set forth in this
Section. During the period between the Effective Date and the date immediately
prior to the Commencement Date, Tenant shall have no obligations to make any
payments of base rent or other payments hereunder (other than such payments as
may be required under Sections 3.2.6, 3.4, 3.6, 8.4 [as pertain to the
obligations of Tenant's Affiliates under the Key Principal Agreement], 8.5, 8.6,
17, 18, 23, 42.3, 49 and 50) or to take any other actions under this Lease
relative to (i) the funding of escrows or reserves; (ii) the procurement or
maintenance of insurance; or (iii) any other item that, pursuant to the specific
terms and conditions of this Lease, is expressly applicable only during the
Term. If the P&S Agreement is terminated or the Closing does not occur on or
before the Outside Date (as defined below), then either Landlord or Tenant may,
upon written notice thereof to the other party, terminate this Agreement prior
to the Closing, in which case the Security Deposit shall be returned to Tenant
(subject to Section 8.6 below) and neither party shall have any further
obligations under this Lease, except for those obligations that survive any
termination of this Lease. Tenant shall have no rights under the immediately
preceding sentence if an Event of Default has occurred or a Potential Default is
continuing. Nothing contained in this Section 1.3 modifies or waives any of the
rights of Landlord under Section 8.6 below. For purposes of this Agreement, the
"Outside Date" shall be October 25, 2005, provided that Landlord may extend the
Outside Date for a like period if the Closing is extended beyond October 25,
2005 pursuant to the P&S Agreement or if Landlord is pursuing specific
3
Amberleigh
performance of Seller's obligations under the P&S Agreement or if the Closing is
otherwise extended beyond October 25, 2005. For purposes of this Lease, the
"Commencement Date" shall mean the date that the Closing is consummated such
that Landlord has become the owner of the Leased Property. Promptly following
the Commencement Date, Landlord and Tenant shall execute and deliver a
memorandum (in form and substance reasonably prepared by Landlord) memorializing
the Commencement Date and the Initial Term.
1.4 Joint and Several Liability; Limitation on Rights. Notwithstanding
anything contained herein to the contrary, if there is at any time more than one
person or entity constituting the "Tenant" hereunder, each such person or entity
shall be jointly and severally liable for the payment and performance of all
obligations and liabilities of Tenant hereunder, including, without limitation,
the obligations and liabilities of each other Tenant hereunder, including,
without limitation, each such other Tenant's obligation to pay Rent hereunder;
provided, however, that, without limitation of the joint and several nature of
the obligations of each Tenant hereunder, the possessory and leasehold rights
that are created by this Lease shall be limited and confined in the case of each
Tenant to the applicable Facility(ies) identified as being leased to and to be
operated by such Tenant on Schedule 1 attached hereto, the Leased Land on which
such Facility is located and the Intangibles and Landlord's Personal Property
that specifically relate to such Leased Land.
1.5 Potential Lease Combinations. Because of the potential for one or more
Lease Combinations pursuant to Section 39 of this Lease and/or other additions
of leased properties hereunder, Landlord and Tenant have, in creating this
Lease, nevertheless retained in this Lease various references to multiple Leased
Properties, multiple Tenants and other provisions and terms that apply to
multiple Leased Properties and/or Tenants. Without limitation of and subject to
Section 39 of this Lease, for so long as this Lease relates to a single Leased
Property and/or Tenant, the aforesaid references to multiple Leased Properties
and/or Tenants, and the aforesaid provisions and terms applicable to multiple
Leased Properties and/or Tenants, shall, if the context so requires in light of
this Lease relating to only a single Leased Property or Tenant, be treated as
references to a single Leased Property or Tenant or as provisions and terms
applicable to a single Leased Property or Tenant. Similarly, there may be other
provisions in this Lease that relate to a specific Other Leased Property that,
consistent with the terms and conditions of that provision, shall only apply if
that property becomes a Leased Property pursuant to a Lease Combination
hereunder.
2. Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP, (ii) all references in this Lease to designated
"Sections", "Subsections" and other subdivisions are to the designated Sections,
Subsections and other subdivisions of this Lease, (iii) the words "herein",
"hereof" and "hereunder" and other words of similar import mean and refer to
this Lease as a whole and not to any particular Section, Subsection or other
subdivision, (iv) the terms defined in Exhibit B attached hereto have the
meanings assigned to them in such exhibit and include the plural as well as the
singular, and the singular as well as the plural, and (v) without limitation of
4
Amberleigh
the definition of "Unit" set forth in Exhibit B attached hereto, all references
in this Lease to "licensed beds" or words of similar import mean and refer, in
the case of each Leased Property, to licensed units or licensed beds, as
applicable depending upon the particular licensing measure used by the
responsible Governmental Authorities in regulating Facilities operated for the
Primary Intended Use that is applicable to such Leased Property (e.g.. in some
states, assisted living facilities are issued licenses for a specified number of
beds and in other states they are issued licenses for a specified number of
units).
3. Rent.
3.1 Fixed Rent.
3.1.1 Rental Payments. Tenant shall pay to Landlord, in advance
and without demand, on or prior to the first (1st) day of each calendar month
(and if such first (1st) day is not a business day, then on the Business Day
immediately prior to said first (1st) day) during the Term, in lawful money of
the United States of America, by wire or ACH transfer of immediately available
funds, and pursuant to the wiring instructions attached hereto as Schedule
3.1.1, or at such place, by such other means or to such other Person(s) as
Landlord from time to time may designate in writing, the Fixed Rent (and
Additional Rent in those instances described in Section 3.2 below) payable in
respect of such month. Landlord may, by written notice to Tenant at any time and
from time to time, elect to require that Rent (or portions thereof designated by
Landlord) owing hereunder be paid to a lock box. Fixed Rent (and Additional Rent
in those instances described in Section 3.2 below) shall be paid in equal,
consecutive monthly installments; provided, however, that the first payment of
Fixed Rent (and the aforesaid Additional Rent) shall be payable on the
Commencement Date and shall be prorated for the period from and including the
Commencement Date through the last calendar day of the month in which the
Commencement Date occurs. Said first payment of Fixed Rent and Additional Rent,
and the last monthly payment of Fixed Rent and Additional Rent shall be prorated
on a per diem basis as to any partial month. No Potential Default shall be
deemed to exist under this Lease solely on account of any failure by Tenant to
have paid Landlord Fixed Rent (and Additional Rent in those instances described
in Section 3.2 below) within the first four (4) calendar days of each month
during the Term.
3.1.2 Rental Amounts. Fixed Rent for the First Lease Year shall
be $1,800,000 per annum, payable in equal monthly installments of $150,000.
Without limitation of Section 28 below, each Tenant's allocable share of Fixed
Rent shall be equal to the product of (i) the Tenant's Proportionate Share for
such Tenant set forth on Schedule 2 attached hereto; and (ii) the Fixed Rent due
hereunder, as applicable. Commencing upon the commencement of the second (2nd)
Lease Year of the Initial Term, and upon the commencement of each Lease Year
thereafter during the Initial Term, the Fixed Rent for such Lease Year shall be
an amount equal to the sum of (x) the Prior Period Fixed Rent applicable to such
Lease Year, plus (y) the product of (a) the Prior Period Fixed Rent applicable
to such Lease Year and (b) provided the Rent Escalation Condition has been
satisfied with respect to such Lease Year, the amount equal to the greater of
(1) two percent (2%) (in the case of Lease Years 2 through 5) and three percent
(3%) (in the case of each Lease Year during the Initial Term after Lease Year
5
Amberleigh
5); or (2) seventy-five percent (75%) of the CPI Increase, expressed as a
percentage, for such Lease Year for which such calculation is being performed.
Notwithstanding anything contained herein to the contrary, if the Rent
Escalation Condition fails with respect to any one or more Lease Years during
the Term, the Fixed Rent determined for the next Lease Year with respect to
which the Rent Escalation Condition is satisfied shall be determined as if the
Rent Escalation Condition had been satisfied for all previous Lease Years and
the Fixed Rent had been escalated pursuant to, and in accordance with, the terms
of this Section 3.1.2 for all prior Lease Years. By way of illustration only,
if: (A) the Rent Escalation Condition has failed for both the second Lease Year
and the third Lease Year of the respective Term; but (B) the Rent Escalation
Condition is satisfied for the fourth Lease Year of the respective Term, the
Fixed Rent for the fourth Lease Year shall be determined as if the Rent
Escalation Condition for the two preceding Lease Years (and all other Lease
Years) had been satisfied such that the Fixed Rent for that fourth Lease Year
shall include, and be determined on the basis of, the escalations for all prior
Lease Years which would have occurred pursuant to this Section 3.1.2 had the
Rent Escalation Condition for all prior Lease Years been satisfied.
3.1.3 Fixed Rent Determinations. Promptly after the publication
of the Cost of Living Index for the month that is two (2) months prior to the
month containing the last day of a particular Lease Year (e.g., the month of
October, in the case of a Lease Year ending on December 31), Landlord shall
calculate the CPI Increase and the Fixed Rent for the next Lease Year and submit
its determination of Fixed Rent for the next Lease Year for Tenant's approval,
which determination shall be deemed approved, absent written notice from Tenant
setting forth with reasonable specificity and detail any manifest errors in such
determination by Landlord within fifteen (15) days after its submission to
Tenant. In the event Landlord and Tenant are unable to determine Fixed Rent for
any Lease Year on or prior to the commencement of such Lease Year, Tenant shall
pay Fixed Rent for such Lease Year assuming a two percent (2%) (in the case of
each of Lease Years 2 through 5) or three percent (3%) (in the case of each
Lease Year after Lease Year 5, including, without limitation, each year of each
Extended Term) increase over the Prior Period Fixed Rent applicable to such
Lease Year until the correct Fixed Rent is determined for such Lease Year. If
the Fixed Rent ultimately determined for any such Lease Year exceeds the assumed
amount, Tenant shall pay any deficiency, with the first installment of Fixed
Rent owing after such determination is made. If the Fixed Rent ultimately
determined for any such Lease Year is less than the assumed amount, any excess
amounts paid by Tenant on account of the Fixed Rent for such Lease Year shall be
credited against the next installment(s) of Fixed Rent due and owing hereunder.
At either party's written request, following the determination of Fixed Rent for
a particular Lease Year, both parties shall, not later than five (5) Business
Days after the non-requesting party's receipt of such request, execute and enter
into a written instrument memorializing the amount of such Fixed Rent.
3.1.4 One-Time Conditional Fixed Rent Reduction. Provided no
Event of Default has occurred and no Potential Default is continuing, if, on or
before the end of the second Lease Year, Tenant furnishes Landlord notice and
evidence in form and substance reasonably satisfactory to Landlord
6
Amberleigh
(collectively, "Tenant's Exceptional Increase Notice") that the annual general
ad valorem real estate taxes payable during the First Lease Year or the second
Lease Year shall have increased above the corresponding amount of annual general
ad valorem taxes payable during the First Lease Year (with respect to the second
Lease Year) or the twelve-month period prior to the First Lease Year (with
respect to the First Lease Year) by more than five percent (that portion of said
annual general ad valorem tax increase that is in excess of 5% over the
immediately preceding year's tax is referred to herein as the "Exceptional
Increase"), then the monthly installments of Fixed Rent otherwise payable
thereafter shall be reduced (effective commencing with the monthly installments
of Fixed Rent payable on the first day of the first full calendar month
following Landlord's receipt of Tenant's Exceptional Increase Notice, or if not
then feasible, as soon thereafter as is reasonably practicable) by an amount
equal to one-half (1/2) of the amount of the Exceptional Increase for the Lease
Year covered by Tenant's Exceptional Increase Notice divided by twelve (12);
provided, however, the combined amount of all reductions of Fixed Rent under
this Lease and all Other Lease Fixed Rent under the Other Leases for any Lease
Year shall in no event whatsoever exceed $200,000 in the aggregate for any Lease
Year. Without limiting the generality or efficacy of the foregoing, if the
aggregate amount of the Exceptional Increase under this Lease and the Other
Lease Exceptional Increases exceeds $400,000 for any Lease Year, then the
reductions of Fixed Rent under this Section and of Other Lease Fixed Rent under
the corresponding Sections of the Other Leases shall be allocated (up to the
aforedescribed aggregate rent reduction cap of $200,000) by Landlord among this
Lease and/or the Other Leases as Landlord may determine in Landlord's sole and
absolute discretion. In no event whatsoever (i) shall Tenant be entitled to give
more than one Tenant's Exceptional Increase Notice under this Lease or to give
any Tenant's Exceptional Increase Notice under this Lease that does not
otherwise strictly conform to all of the terms and conditions of this Section,
nor (ii) shall Tenant be entitled to receive any further reduction of Fixed Rent
under this Lease once the aggregate amount of reductions of Fixed Rent and Other
Lease Fixed Rent made under this Section and the corresponding Sections of the
Other Leases equals $200,000 for any Lease Year. If Landlord timely receives the
Tenant's Exceptional Increase Notice (including, without limitation, the
aforedescribed evidence of the Exceptional Increase) prior to the end of the
Second Lease Year and no Event of Default has occurred and no Potential Default
is continuing, then Landlord shall tender to Tenant an amendment to this Lease,
in form and substance reasonably prepared by Landlord, confirming the timing and
the amount of the Fixed Rent reduction under this Section 3.1.4, which amendment
must be executed and delivered by Tenant within five (5) Business Days after
Tenant's receipt thereof. If at any time the Exceptional Increase for the Lease
Year covered by Tenant's Exceptional Increase Notice is subsequently reduced by
refund, rebate, credit, payment or other successful contest or reduction of such
taxes (it being understood and agreed that any such contest may be pursued in
good faith by both Landlord and Tenant), then (a) Tenant shall promptly notify
Landlord thereof, (b) Landlord and Tenant shall recalculate the Fixed Rent
reduction hereunder utilizing such lower Exceptional Increase figure; and (c)
Tenant shall pay to Landlord a true-up payment equal to the difference between
the Fixed Rent that would have been paid had the lower Exceptional Increase
figure been utilized during all relevant periods (including all Lease Years) and
the Fixed Rent that was actually paid based on the higher Exceptional Increase
figure for said periods. Within ten (10) Business Days after receipt of any such
rebate, refund, credit or other payment, the parties shall also memorialize said
7
Amberleigh
recalculation and increase to Fixed Rent and said true-up payment in a further
amendment to this Lease, in form reasonably prepared by Landlord. If the
aggregate amount of the Exceptional Increase under this Lease and the Other
Lease Exceptional Increases exceeds $400,000, then any and all refunds, rebates,
credits and other payments to Tenant may be allocated by Landlord among this
Lease and the Other Leases as Landlord may determine in its sole and absolute
discretion. For purposes of this Section 3.1.4, all references herein to Other
Leases, Other Lease Fixed Rent and Other Lease Exceptional Increases (and any
related terms) shall in no event include anything pertaining to the Georgetowne
Place facility in Ft. Xxxxx, Indiana, irrespective of whether the lease thereof
otherwise constitutes an Other Lease under this Lease. Schedule 3.1.4 attached
hereto and made a part hereof contains illustrative examples showing the manner
in which adjustments to Fixed Rent shall be calculated pursuant to this Section.
3.2 Additional Rent. In addition to Fixed Rent, Tenant shall pay and
discharge as and when due and payable the following (collectively "Additional
Rent") (any costs or expenses paid or incurred by Landlord on behalf of Tenant
that constitute Additional Rent shall be reimbursed by Tenant to Landlord within
fifteen (15) days after the presentation by Landlord to Tenant of invoices
therefor):
3.2.1 Impositions. Subject to the escrow provisions contained in
Section 3.3 below, Tenant shall pay all Impositions before delinquent, and
regardless of the period to which they relate, and in any event before any fine,
penalty interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible. Tenant shall, promptly upon
request, furnish to Landlord copies of official receipts or other satisfactory
evidence of such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), Tenant may exercise the option to pay
same (and any accrued interest on the unpaid balance of such Imposition) in
installments (provided no such installments shall extend beyond the Term) and,
in such event, shall pay such installments during the Term before any fine,
penalty, premium, further interest or cost may be added thereto.
3.2.2 Utility Charges. Tenant shall pay (before the same are
delinquent) any and all charges for electricity, power, gas, oil, water,
sanitary and storm sewer, refuse collection, medical waste disposal and other
utilities used or consumed in connection with each Leased Property during the
Term. In the event Landlord is billed directly by any utility company for any
utilities or services supplied to Tenant during the Term, Landlord shall send
Tenant the xxxx and Tenant shall pay the same before it is delinquent. Landlord
shall have no obligation or liability with respect to any interruption or
failure in the supply of any such utilities.
3.2.3 Insurance Premiums. Tenant shall pay or cause to be paid
all premiums for the insurance coverage required to be maintained pursuant to
Section 14 hereof.
8
Amberleigh
3.2.4 Other Charges. Tenant shall pay all other amounts,
liabilities, obligations, costs and expenses (of any kind or nature whatsoever)
paid or incurred with respect to the ownership, repair, replacement,
restoration, maintenance and operation of the Premises, irrespective of whether
the same are ordinary or extraordinary or expected or unexpected, except that
Tenant shall not be obligated to pay any of Landlord's franchise, gift, or
inheritance taxes or taxes based on the net income or net profit of Landlord
derived from rents hereunder, except that if and to the extent that a change
occurs in the method of taxation resulting, in whole or in part, in the
substitution of any such taxes, or any other assessment, for any Impositions,
then such substituted taxes or assessments shall be included in the Impositions
and shall be the responsibility of Tenant hereunder.
3.2.5 Late Payment of Rent. If any installment of Fixed Rent or
Additional Rent (but only as to those Additional Rent payments that are payable
directly to Landlord or Landlord's agent or assignee) shall not be paid within
four (4) days after its due date, Tenant shall pay to Landlord for such overdue
installment, on demand, interest computed at the Overdue Rate on the amount of
such installment, from the due date of such installment to the date of payment
thereof. In addition, if any installment of Fixed Rent or Additional Rent (but
only as to those Additional Rent payments that are payable directly to Landlord
or Landlord's agent or assignee) shall not be paid within seven (7) days after
its due date, Tenant shall pay to Landlord, an administrative fee of Five
Thousand Dollars ($5,000.00) in addition to the Fixed Rent or Additional Rent
that has not been paid. In the event of any failure by Tenant to pay any
Additional Rent when due, Tenant shall in addition promptly pay and discharge,
as Additional Rent, every fine, penalty, interest and cost that may be added for
non-payment or late payment of such items.
3.2.6 Consent Expenses. Tenant shall pay, as Additional Rent, on
behalf of Landlord, or reimburse Landlord for, any and all reasonable
out-of-pocket costs and expenses paid or incurred by Landlord, including,
without limitation, reasonable attorneys' fees, in connection with any of the
following activities undertaken by or on behalf of Landlord under this Lease, if
and to the extent that the following costs or expenses are incurred as a result
of (a) any default or other breach by Tenant under or in connection with this
Lease; (b) any actual or alleged violation of any governmental or
quasi-governmental requirement pertaining to the Leased Property, which
Landlord, in its good faith judgment, deems material or potentially material;
(c) any costs or expenses that are expressly designated under this Lease as
Tenant's responsibility; or (d) to the extent not otherwise described above and
are not part of the routine administration of this Lease, such activities are
otherwise directly or indirectly initiated or caused by Tenant, any Tenant Party
or any other Person claiming by, through or under Tenant: (i) the review by
Landlord or Landlord's Representatives of any notices, reports or other
information required to be re-submitted to Landlord by Tenant pursuant to the
terms hereof because any initial submissions were inaccurate, incomplete or
otherwise not conforming to the requirements of this Lease, including, without
limitation, Financial Statements, Annual Capital Expenditure Budgets, Officer's
Certificates, Estoppel Certificates, Annual Budgets and Operator Reports: (ii)
any inspection performed by Landlord or any of Landlord's Representatives of one
or more Leased Properties pursuant to any inspection rights granted hereunder,
including, without limitation, any inspection rights relative to any restoration
9
Amberleigh
work performed on account of any Casualty or Condemnation; (iii) the review,
execution, negotiation or delivery of any consent, waiver, estoppel,
subordination agreement or approval requested of Landlord by Tenant hereunder,
including, without limitation, any request for consent to Alterations, any
so-called "landlord's waiver", or the negotiation or approval of the terms of,
or any instruments associated with, any AR Financing; (iv) the review by
Landlord or Landlord's Representatives of any Plans and Specifications or
Restoration Plans and Specifications; (v) the review by Landlord or Landlord's
Representatives of any request by Tenant for any other approval or consent
hereunder, or any waiver of any obligation of Tenant hereunder; (vi) any
assistance provided by Landlord in connection with a permitted contest pursuant
to Section 13; (vii) any review by Landlord of invoices, bills, receipts and
other documents required to be reviewed by Landlord, in its reasonable
discretion, to monitor Tenant's compliance with the terms of this Lease in
respect of Impositions, utility charges, insurance premiums or any other
provisions hereunder requiring Tenant to make payments to any third party; and
(viii) any other negotiation, request or other activity comparable to any of the
foregoing that Tenant has requested of Landlord or that has been requested of or
presented to Landlord as a result of Tenant's lack of action (collectively, such
expenses, "Consent Expenses"). Tenant shall reimburse Landlord for (or pay on
behalf of Landlord) any Consent Expenses within fifteen days after the
presentation by Landlord to Tenant of invoices therefor.
3.2.7 Further Obligations. Without limitation of Tenant's other
obligations under this Section 3.2, Tenant shall pay and discharge, or cause to
be paid and discharged, as and when due and payable any Impositions, utility
charges of the nature referenced in Section 3.2.2 above, insurance premiums
and/or other amounts, liabilities, obligations (excluding payment of principal
and interest under the Assumed Indebtedness), costs and expenses relating to the
Premises, in each of the foregoing cases to the extent the same relate to
periods prior to the Commencement Date.
3.3 Escrow Deposits.
3.3.1 Escrow. Tenant shall, on the Commencement Date and on the
first (1st) day of each calendar month thereafter during the Term (or the next
Business Day, if such 1st day is not a Business Day), pay to and deposit with
Landlord a sum equal to (i) one twelfth (1/12th) of the Impositions to be
levied, charged, filed, assessed or imposed upon or against the Premises during
the twelve (12) months from and after the Commencement Date (the "Escrow
Commencement Date") (or any subsequent twelve (12) month period), plus (ii)
one-twelfth (1/12th) of the premiums for the insurance policies required
pursuant to Section 14 hereof that are payable during such twelve (12) month
period. Attached hereto as Schedule 3.3.1-1 is a description of the premiums
payable under this Lease and the Other Leases as of the Effective Date. If the
amount of the Impositions to be levied, charged, filed, assessed or imposed, or
the insurance premiums to be paid, during the twelve (12) months following the
Escrow Commencement Date (or any subsequent twelve (12) month period hereunder)
cannot be determined as of the Escrow Commencement Date (or the commencement of
any subsequent twelve (12) month period), such amount for the purpose of
computing the deposit to be made by Tenant hereunder shall be estimated by
Landlord with an appropriate adjustment to be promptly made between Landlord and
10
Amberleigh
Tenant as soon as such amount becomes determinable. Landlord may, at its option,
from time to time require that any particular deposit be greater than
one-twelfth (1/12th) of the estimated Imposition and/or insurance premium amount
payable during the twelve (12) months after the Escrow Commencement Date (or
during any subsequent twelve (12) month period), if such additional deposit is
required to provide a sufficient fund from which to make payment of all
Impositions on or before the next due date of any installment thereof, or to
make payment of any required insurance premiums not later than the due date
thereof. Tenant shall deliver to Landlord copies of all notices, demands,
claims, bills and receipts in relation to the Impositions and insurance premiums
promptly upon receipt thereof by Tenant. The actual or estimated amounts on
account of Impositions and insurance premiums shall be adjusted annually.
Attached hereto as Schedule 3.3.1-2 are Landlord's current wire transfer
instructions for escrow payments under this Lease. Landlord may, upon advance
written notice thereof to Tenant, designate alternative means of payment and
payees from time to time.
3.3.2 Landlord's Deposit. The escrow deposits made by Tenant
pursuant to this Section 3.3 shall be deposited by Landlord in an account (the
"Escrow Account") of Landlord or (if required under the Xxxxxx Xxx Loan
Documents or any other applicable loan documents) with any Facility Mortgagee,
and may be commingled with other assets of Landlord or such Facility Mortgagee.
Landlord shall not be liable to Tenant or any other Person for any consequent
loss of principal or interest on funds held in the Escrow Account if the Escrow
Account is an Investment Account. Furthermore, neither Landlord nor any Facility
Mortgagee shall bear responsibility for the financial condition of, nor any act
or omission by, any Lending Institution at which the Escrow Account is located.
Any and all interest from deposits into the Escrow Account shall be retained in
the Escrow Account to be applied in accordance with the terms of this Section
3.3.
3.3.3 Use of Deposits. Tenant shall pay or cause to be paid any
and all Impositions and insurance premiums when due and regardless of whether or
not the funds then held in the Escrow Account are sufficient to reimburse Tenant
therefor. The sums deposited by Tenant under this Section 3.3 shall be held by
Landlord or any Facility Mortgagee, and, provided that no default or Event of
Default has occurred and no Potential Default is continuing, shall be used to
reimburse Tenant for any Impositions and/or insurance premiums, as applicable,
paid by Tenant, upon delivery by Tenant to Landlord or such Facility Mortgagee,
as applicable, of documentation evidencing the payment of such Impositions
and/or insurance premiums, which reimbursement shall be provided within five (5)
Business Days after the presentation of such evidence (if Landlord is holding
the Escrow Account) or within five (5) Business Days after Landlord's receipt of
the appropriate reimbursement funds from the Facility Mortgagee that is holding
the Escrow Account (if a Facility Mortgagee is holding the Escrow Account). If
Tenant fails to pay any Impositions or insurance premiums when due and owing
hereunder to the applicable taxing authority or insurance carrier, Landlord or
any Facility Mortgagee may, but shall not be obligated to, pay such Impositions
or insurance premiums from any funds in the Escrow Account. Upon the occurrence
of any Event of Default, Landlord or any Facility Mortgagee may apply any funds
11
Amberleigh
held in the Escrow Account to cure such Event of Default or on account any
damages suffered or incurred by Landlord in connection therewith.
3.3.4 Deficits. Landlord shall have no liability whatsoever to
Tenant if any deposits held by Landlord under this Section 3.3 are not
sufficient to reimburse Tenant for any Imposition or insurance premium paid by
Tenant. Landlord may change its estimate of any Imposition or insurance premium
for any period on the basis of a change in an assessment or tax rate or of a
prior miscalculation or for any other good faith reason. In such event, Tenant
shall deposit with Landlord the amount in excess of the sums previously
deposited with Landlord for the applicable period within ten (10) days after
Landlord's request therefor.
3.3.5 Transfers; Refund, etc. In connection with any assignment
of the Landlord's interest under this Lease, the assigning Landlord or any
predecessor shall have the right to transfer all amounts deposited pursuant to
the provisions of this Section 3.3 and still in its possession to such assignee
and, upon such transfer, the assigning Landlord or any such predecessor, as the
case may be, transferring the deposits shall thereupon be completely released
from all liability with respect to such deposits so transferred, and Tenant
shall look solely to said assignee in reference thereto. As of the Expiration
Date, any sums held by Landlord under this Section 3.3 shall be promptly
returned to Tenant, only as and when the conditions of Section 3.4.3 for the
return of the Security Deposit have been met and provided that any and all
Impositions (including, without limitation, any and all real estate taxes that
have accrued during the Term, but are not due or payable until after the end of
Term or are otherwise unpaid) or insurance premiums due and owing hereunder have
been paid (or caused by Tenant to be paid) in full. Notwithstanding anything
contained herein to the contrary, Tenant shall remain responsible for the timely
payment of all real estate taxes that shall have accrued during the Term, and
with respect to any and all such real estate taxes that are due and payable
after the end of the Term, Tenant shall, within ten (10) Business Days after
Landlord's written request therefor, pay an amount equal to such real estate
taxes (as reasonably prorated through the end of the Term) to Landlord or
Landlord's designee. The provisions of this Section shall survive the expiration
or sooner termination of this Lease.
3.4 Security Deposit.
3.4.1 Cash Security Deposit; Application. Tenant shall pay to
Landlord upon the delivery of this Lease, for immediate deposit with a strict
joint order escrow established by Landlord and Tenant with First American Title
Insurance Company (the "Security Deposit Escrow") an amount equal to three (3)
months of Fixed Rent (subject to increase as described in Section 3.4.3 below,
the "Security Amount") as security (the "Security Deposit") for the full and
faithful performance by Tenant of each and every term, provision, covenant and
condition of this Lease and for Tenant's obligations under Section 8.6 hereof.
The Security Deposit shall be immediately released and paid to Landlord upon
Landlord's sole order upon the sooner of (i) any Event of Default, or (ii) the
Commencement Date. Upon the occurrence of an Event of Default or any event
described in Section 8.6 below, Landlord may, but shall not be required to, use,
12
Amberleigh
apply or retain the whole or any part of the Security Deposit (whether by
drawing upon any Letter of Credit or applying any cash Security Deposit held by
it) for the payment of any Rent in default or for any other sum that Landlord
may expend or be required to expend by reason of Tenant's default, including any
damages or deficiency in the reletting of the Premises, whether such damages or
deficiency accrue before or after summary proceedings or other re-entry by
Landlord, or for any other purpose described in Section 8.6. If and for so long
as Landlord holds the cash Security Deposit hereunder, Landlord shall not
commingle the Security Deposit with Landlord's other funds (other than, at
Landlord's election, any security deposits under the Other Leases), and Landlord
shall hold the cash Security Deposit (subject to the provisions of this Lease
pertaining to Landlord's permitted disbursement and application of such funds)
in an Investment Account established by and for Landlord. Unless a different
rate is specifically required under applicable law, no interest shall be due or
owing with respect to any Security Deposit other than the interest thereon that
is actually paid by the depository to Landlord under the aforedescribed
Investment Account, if any. Any such interest shall (to the extent not
prohibited by applicable law) be retained by Landlord and treated as additional
deposits on the Security Deposit. Landlord shall not be liable to Tenant or any
other Person for any consequent loss of principal or interest on funds held by
Landlord as the Security Deposit if Landlord has deposited such funds in an
Investment Account or for any other loss not caused by Landlord's willful
misconduct. In case of a sale or transfer of the Premises by Landlord, or any
cessation of Landlord's interest therein, whether in whole or in part, Landlord
may pay over or refund to Tenant any unapplied part of the Security Deposit (or,
in the case of any such partial transfer or cessation, such portion as Landlord
allocates to such part of the Premises, in its reasonable discretion) or
transfer any Letter of Credit if the LC Election has been made, with any fees
incident to such transfer being paid by Tenant (which transfer, in the case of
any such partial transfer or cessation, shall require Tenant to cause any Letter
of Credit to be reissued as separate Letters of Credit satisfying the
requirements of Section 3.4.2 as to the remaining Leased Properties) to the
successor owner of the Premises, and from and after such payment or refund,
Landlord shall be relieved of all liability with respect thereto. The provisions
of the preceding sentence shall apply to every subsequent sale or transfer of
the Premises or any part thereof. Attached hereto as Schedule 3.4.1 are
Landlord's current wire transfer instructions for payments of the Security
Deposit. Landlord may, upon advance written notice thereof to Tenant, designate
alternative means of payment and payees from time to time.
3.4.2 LC Election. At any time after the Commencement Date and
Tenant's payment to Landlord of the first month's rent pursuant to Section 3.1
hereof, Tenant may elect (such election, a "LC Election"), in its sole
discretion and by written notice to Landlord, to post the Security Deposit in
the form of an irrevocable, standby Letter of Credit with a face value of the
full Security Amount (the "Letter of Credit"). Within ten (10) days after notice
of an LC Election, Tenant shall deliver to Landlord a Letter of Credit
satisfying the requirements of this Section 3.4.2 in the place and stead of the
cash Security Deposit, whereupon Landlord shall return (or cooperate with Tenant
to cause the escrowee under the Security Deposit Escrow to return) any unapplied
portion of a cash Security Deposit then held by Landlord. The Letter of Credit
shall: (i) be in form and substance acceptable to Landlord in its sole
discretion; (ii) name Landlord as its sole beneficiary; (iii) expressly allow
13
Amberleigh
Landlord to draw upon it at any time, or from time to time, in whole or in part,
by delivering to the issuer, at an office of the issuer located in New York, New
York, Louisville, Kentucky or Chicago, Illinois, a written notice that Landlord
is entitled to draw thereon pursuant to the terms of this Lease; (iv) be issued
by an FDIC-insured Lending Institution that is reasonably satisfactory to
Landlord, but shall in all events have a credit rating of "AA" (or the
equivalent) or higher from one of the Rating Agencies (provided, however, that
if and for so long as they maintain a credit rating of at least "A" or the
equivalent from one of the Rating Agencies, then Tenant may also utilize XX
Xxxxxx Xxxxx Bank or Bank of America or any legal successors thereto for
purposes hereof) and (v) be expressly unconditional, irrevocable and fully
transferable. The Letter of Credit (and any renewals or replacements thereof)
shall be for a term of not less than one (1) year. Tenant agrees that it shall
from time to time, as necessary, renew or replace the original and any
subsequent Letter of Credit not less than thirty-five (35) days prior to its
stated expiration date so that it will remain in full force and effect until the
later of sixty (60) days after the last day of the Term or the date on which
Tenant's obligations under this Lease are satisfied in full. If Tenant fails to
furnish such renewal or replacement at least 30 days prior to the stated
expiration date of the Letter of Credit, Landlord may immediately draw upon such
Letter of Credit. If the credit ratings test set forth in subsection (iv) above
shall at any time cease to be satisfied as to the issuer of the Letter of
Credit, Landlord may immediately draw upon such Letter of Credit. Without
limitation of Landlord's right thereafter to make a LC Election, Landlord shall
hold the proceeds of any such draw upon the Letter of Credit as a portion of the
Security Deposit pursuant to the terms of this Lease. Any renewal of or
replacement for the original or any subsequent Letter of Credit shall be in an
amount not less than the Security Amount and shall otherwise meet the
requirements for the original Letter of Credit as set forth above.
3.4.3 Increase; Restoration of Security Deposit. Tenant, within
five (5) days after any increase in Fixed Rent hereunder, shall deposit with
Landlord cash in, or increase the face amount of the Letter of Credit by, the
amount necessary to ensure that the Security Deposit hereunder then equals three
(3) months' annual Fixed Rent based upon the increased Fixed Rent due hereunder
during such Lease Year. Any failure by Tenant to make any required deposit of
cash or increased face amount pursuant to the immediately preceding sentence
shall not constitute an Event of Default hereunder unless and until Tenant fails
to cure such failure within five (5) Business Days after written notice thereof
from Landlord to Tenant. In the event the Security Deposit (or any portion
thereof) is applied (or drawn upon from time to time in full or partial amounts
in the case of the Letter of Credit and any renewals or replacements thereof) by
Landlord on account of any Event(s) of Default by Tenant hereunder or as
otherwise expressly provided in this Section 3.4, Tenant shall replenish said
Security Deposit in full, within ten (10) days after demand therefor, by paying
to Landlord the amount so applied or, in the case of the Letter of Credit,
restoring the Letter(s) of Credit to its (their) full amount. Tenant's failure
to timely increase the Security Deposit, or to timely replenish and restore the
Security Deposit, after demand as aforesaid shall be an Event of Default. If:
(i) no Event of Default has occurred and no Potential Default is continuing
hereunder and (ii) Tenant has fully performed and satisfied all of its
obligations under the Lease (including, without limitation and as applicable,
its obligations relative to any Operational Transfer(s)), then the Security
Deposit, or the remaining unapplied portion thereof, shall be paid or returned
to Tenant within sixty (60) days after the expiration or termination of this
14
Amberleigh
Lease and the surrender of the Premises to Landlord in the condition required
hereunder; provided, however, that Landlord may retain an amount, as it shall
reasonably determine, to secure the payment of any Rent, the amount of which
Landlord is then unable to determine finally (and Landlord shall return any such
retained amount to Tenant promptly following the final determination of such
Rent amount and the full payment to Landlord of such Rent). The Security Deposit
shall not be deemed an advance payment of Rent or a measure of Landlord's
damages for any default hereunder by Tenant, nor shall it be a bar or defense to
any action that Landlord may at any time commence against Tenant.
3.5 Net Lease. Tenant's obligations to pay Rent under this Lease (i)
are absolute and unconditional, (ii) constitute independent covenants, (iii)
shall not require any notice from Landlord and (iv) shall be free of any offset,
defense or counterclaim whatsoever. Without limiting the generality or efficacy
of the foregoing, Tenant's obligations to pay Rent under this Lease shall not be
subject to any condition that (a) Tenant or Landlord have obtained any Permit or
Authorization, (b) Tenant be entitled (or otherwise able) to use the Leased
Property for the Primary Intended Use or for any other purpose, or (c) any other
condition precedent other than the occurrence of the Commencement Date. The Rent
shall be paid absolutely net to Landlord, free of all Impositions, utility
charges, operating expenses, insurance premiums or any other charges or expenses
in connection with the Premises, without any rights of deduction, set-off or
abatement, so that this Lease shall yield to Landlord the full amount of the
installments of Fixed Rent, throughout the Term. This Lease is intended to be
and shall be construed as an absolutely net lease pursuant to which Landlord
shall not, under any circumstances or conditions, whether presently existing or
hereafter arising, and whether foreseen or unforeseen by the parties, be
required to make any payment or expenditure of any kind whatsoever or be under
any other obligation or liability whatsoever, except as expressly set forth
herein.
3.6 Lease Guaranty. On the date hereof, Tenant shall cause to be
delivered to Landlord the Lease Guaranty made by Guarantor guaranteeing all of
Tenant's obligations under this Lease.
4. Impositions.
4.1 Payment of Impositions. Subject to Section 13 relating to
permitted contests, Tenant shall pay all Impositions payable during the Term as
set forth in Section 3.2.1 and for any tax period occurring during the Term,
irrespective of whether the Impositions for such tax period are due and payable
after the Term. Tenant's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Tenant during the Term, the same
shall be paid over to or retained by Tenant but only if no Event of Default
shall have occurred hereunder and no Potential Default shall be continuing. If
an Event of Default shall have occurred or a Potential Default shall be
continuing hereunder, such refund shall be paid over to and retained by
Landlord. If Tenant nevertheless receives such refund, Tenant shall, upon
15
Amberleigh
receipt, promptly and without notice or demand, pay such refund over to Landlord
in full. Any such funds retained by Landlord due to an Event of Default or
Potential Default shall be applied as Landlord shall determine in its sole
discretion, and if such funds are held due to a Potential Default, then the
balance thereof (net of any costs incurred or paid by Landlord in connection
with such Potential Default) shall be promptly refunded to Tenant if Tenant
cures such Potential Default within the applicable cure period (if any) set
forth in this Lease. In the event any Governmental Authority classifies any
property covered by this Lease as personal property, Tenant shall file any
personal property tax returns that are required with respect thereto. Subject to
the terms of Section 13, Tenant may, upon notice to Landlord, at Tenant's option
and at Tenant's sole cost and expense, protest, appeal, or institute tax
contests to effect a reduction of real estate or personal property assessments
and Landlord, at Tenant's expense as aforesaid, shall cooperate with Tenant in
such protest, appeal, or other action to the extent required by law and
reasonably requested by Tenant.
4.2 Notice of Impositions. Landlord or Landlord's designee shall use
reasonable efforts to give prompt written notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord has received a written invoice or
similar statement, provided, however, that any failure by Landlord to provide
such notice to Tenant shall in no way relieve Tenant of its obligation to timely
pay the Impositions. Tenant shall deliver to Landlord, not more than five (5)
days prior to the due date of each Imposition, copies of the invoice for such
Imposition, the check delivered for payment thereof and (if reasonably
available) an original receipt evidencing such payment or other proof of payment
satisfactory to Landlord.
4.3 Adjustment of Impositions. Any Imposition imposed in respect of
the tax-fiscal period during which the Term terminates or expires shall be
adjusted and prorated between Landlord and Tenant, whether or not such
Imposition is imposed before or after such termination or expiration, and
Tenant's obligation to pay its prorated share thereof shall survive such
termination or expiration.
5. No Affect or Impairment, etc. The respective obligations of Landlord and
Tenant shall not be affected or impaired by reason of (i) any damage to, or
destruction of, any Leased Property or any portion thereof, from whatever cause,
or any Condemnation of any Leased Property or any portion thereof (except as
otherwise expressly and specifically provided in Section 15 or Section 16), (ii)
the interruption or discontinuation of any service or utility servicing any
Leased Property, (iii) the lawful or unlawful prohibition of, or restriction
upon, Tenant's use of any Leased Property, or any portion thereof, due to the
interference with such use by any Person or eviction by paramount title, (iv)
any claim that Tenant has or might have against Landlord on account of any
breach of warranty or default by Landlord under this Lease or any other
agreement by which Landlord is bound, (v) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee or transferee of
Landlord, (vi) the revocation, suspension or non-renewal of any license, permit,
approval or other Authorization, (vii) any withholding, non-payment, reduction
or other adverse change respecting any Facility Provider Agreement or any Third
Party Payor Program, (viii) any admissions hold under any Third Party Payor
Program, or (ix) for any other cause whether similar or dissimilar to any of the
16
Amberleigh
foregoing other than a discharge of Tenant from any such obligations as a matter
of law. Tenant hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law
(x) to modify, surrender or terminate this Lease or quit or surrender any Leased
Property or any portion thereof, or (y) that would entitle Tenant to any
abatement, reduction, suspension or deferment of the Rent or other sums payable
by Tenant hereunder. The obligations of Landlord and Tenant hereunder shall be
separate and independent covenants and agreements and the Rent and all other
sums payable by Tenant hereunder shall continue to be payable in all events
unless and to the extent the obligations to pay the same shall be terminated by
termination of this Lease as to any Leased Property other than by reason of an
Event of Default.
6. Premises; Tenant's Personal Property.
6.1 Ownership of the Premises. Tenant acknowledges that the Premises
are the property of Landlord and that Tenant has only the right to the
possession and use of the Premises upon and subject to the terms and conditions
of this Lease. Notwithstanding anything to the contrary contained in this Lease,
in the case of any easement or other rights that are appurtenant to any Leased
Property, Tenant agrees that Landlord does not make any representation or
warranty relative to Landlord's title thereto or whether such appurtenances are
encumbered, and Landlord shall not be obligated to discharge any liens or
encumbrances with respect to, or otherwise to defend, Landlord's right, title
and interest, if any, in any such appurtenances. Tenant agrees that such
appurtenances shall constitute Permitted Encumbrances, as to which Tenant shall
have the obligations set forth in Section 8.2.6 and Section 23.
6.2 Tenant's Personal Property. Tenant shall provide and maintain
during the entire Term all such Tenant's Personal Property and Landlord's
Personal Property as shall be necessary to maintain the Authorizations in effect
and to operate each Facility in compliance with all licensure and certification
requirements, in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use of each Leased Property. Except as otherwise agreed
in writing by Landlord in its sole discretion, upon the expiration or earlier
termination of this Lease as it applies to any Leased Property, (i) Tenant's
Personal Property that is to be transferred to Landlord pursuant to Section 35
below shall include all of the foregoing required Tenant's Personal Property,
and any other Tenant's Personal Property, in the Required Condition and (ii)
Landlord's Personal Property shall be returned to Landlord, and left at or in
such Leased Property, in the Required Condition.
6.3 Landlord's Personal Property. Tenant may, from time to time, in
Tenant's reasonable discretion, without notice to or approval of Landlord, sell
or dispose of any item of Landlord's Personal Property; provided, however, that,
unless such item is unnecessary for the operation of the Leased Property or is
otherwise functionally obsolete (as determined by Tenant in its reasonable
judgment), Tenant shall promptly replace such item with an item of similar
quality, use and functionality, and any such replacement item (other than items
that, by the terms of Section 35 below, are to be retained by Tenant upon the
17
Amberleigh
expiration or termination of this Lease) shall, for purposes of this Lease,
continue to be treated as part of "Landlord's Personal Property." Tenant shall,
promptly upon Landlord's request from time to time, provide such information as
Landlord may reasonably request relative to any sales, dispositions or
replacements of Landlord's Personal Property pursuant to this Section 6.3.
7. Condition and Use of Each Leased Property.
7.1 Condition of Each Leased Property. Tenant acknowledges receipt and
delivery of possession of each Leased Property. Tenant is leasing each Leased
Property "AS IS" "WHERE IS" and Tenant waives any claim or action against
Landlord in respect of the condition of each Leased Property. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF ANY LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS, DESIGN OR CONDITION FOR
ANY PARTICULAR USE OR PURPOSE OR THE QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, LATENT OR PATENT, OR OTHERWISE, IT BEING AGREED THAT ALL SUCH RISKS ARE
TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT EACH LEASED PROPERTY HAS BEEN
OPERATED BY TENANT AND TENANT'S AFFILIATES AND THAT TENANT BELIEVES EACH LEASED
PROPERTY TO BE IN GOOD ORDER AND REPAIR AND SATISFACTORY FOR ITS PURPOSES
HEREUNDER.
7.2 Use of Each Leased Property.
7.2.1 Primary Intended Use. During the entire Term, Tenant shall
use each Facility (including, without limitation, the Leased Improvements
thereon) solely for its Primary Intended Use (and shall not change, or consent
to or acquiesce in the change of, such Primary Intended Use) and shall operate
each Facility in a manner consistent with the manner of operation existing as of
the Inspection Date and, if any Third Party Payor Programs apply to such
Facility, sound reimbursement principles under any such Third Party Payor
Programs. No use shall be made or permitted to be made of any Leased Property,
and no acts shall be done, that would knowingly cause the cancellation of any
insurance policy covering such Leased Property or any part thereof (and if any
such insurance policy be canceled, Tenant shall immediately replace the same
with an insurance policy satisfying all applicable requirements of this Lease),
nor shall Tenant sell or otherwise provide to occupants or residents therein, or
permit to be kept, used or sold in or about such Leased Property, any article
that may be prohibited by any Legal Requirements or by the standard form of fire
insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriters' regulations.
7.2.2 Authorizations Appurtenant. The Authorizations for any
Facility shall, to the maximum extent permitted by law, relate and apply
exclusively to such Facility, and Tenant acknowledges and agrees that, subject
to all applicable Legal Requirements, the Authorizations are appurtenant to the
Facilities to which they apply, both during and following the termination or
18
Amberleigh
expiration of the Term. In jurisdictions where any other Authorization(s) is/are
issued to a Tenant or its subtenant, as the Facility operator, Tenant agrees
that (i) such other Authorizations shall nevertheless remain the property of
Landlord and be held by Tenant or such subtenant, in trust for the benefit of
Landlord pursuant to a revocable, temporary license that may be revoked by
Landlord at any time after an Event of Default or Potential Default, and (ii) in
connection with an Operational Transfer or as otherwise required by Landlord,
Tenant shall cooperate with Landlord, in accordance with Section 37.1 hereof, to
turn over all of Tenant's rights to the extent transferable in connection with
such other Authorizations to Landlord or Successor Operator, as applicable. This
Section 7.2.2 shall survive the expiration or earlier termination of this Lease.
7.3 Authorization Collateral. To the fullest extent permitted by
applicable law, Tenant hereby grants to Landlord a first priority security
interest in, and lien upon, all Authorizations issued to, leased or licensed to,
or held by, Tenant, including, but not limited to, Tenant's interest in and
rights under all Facility Provider Agreements, with respect to the Facilities
(collectively, the "Authorization Collateral") to secure the performance of all
of Tenant's obligations under this Lease, including, but not limited to, its
obligation to engage in, assist with and facilitate any Operational Transfer.
Tenant represents and warrants to Landlord that attached hereto on Schedule 7.3
is a detailed list and description of all of the Authorization Collateral.
Notwithstanding anything contained herein to the contrary, Tenant shall not
(under any circumstances) grant any lien upon, security interest in and to or
otherwise pledge, encumber, hypothecate, transfer or assign, in whole or in
part, the Authorization Collateral to any Person, irrespective of the priority
of such security interest, pledge or hypothecation. The security interest and
lien granted by this Section 7.3 shall be in addition to any lien of Landlord
that may now or at any time hereafter be provided by law. The provisions of
Section 21.1.1.1 below shall be applicable to the security interest and lien
referenced in this Section 7.3.
7.4 Granting of Easements, etc. Landlord may, from time to time, with
respect to any Leased Property: (i) grant easements, covenants and restrictions,
and other rights in the nature of easements, covenants and restrictions, (ii)
release existing easements, covenants and restrictions, or other rights in the
nature of easements, covenants or restrictions, that are for the benefit of such
Leased Property, (iii) dedicate or transfer unimproved portions of such Leased
Property for road, highway or other public purposes, (iv) execute petitions to
have such Leased Property annexed to any municipal corporation or utility
district, (v) execute amendments to any easements, covenants and restrictions
affecting such Leased Property and (vi) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants, releases, dedications
and transfers (to the extent of its interests in such Leased Property) without
the necessity of obtaining Tenant's consent provided that such easement or other
instrument or action contemplated by this Section 7.4 does not unreasonably
interfere with the conduct of the business of Tenant on such Leased Property. If
any easement or other instrument or action contemplated by this Section 7.4
unreasonably interferes with the conduct of business by the applicable Tenant(s)
at a Leased Property, Landlord shall obtain Tenant's prior written consent to
such proposed easement, instrument or action, which consent may be granted or
withheld by Tenant in its sole discretion (and which consent shall be deemed
19
Amberleigh
given if not expressly given or denied by Tenant, in writing, within five (5)
Business Days of Tenant's receipt of such written request).
8. Negative and Affirmative Covenants of Tenant.
8.1 Negative Covenants. Tenant covenants and agrees with Landlord
that:
8.1.1 Issuance of Equity Interests. No Tenant shall issue or
allow to be created any stocks, shares, partnership or membership interests or
other ownership interests in any Tenant, other than the stocks, shares,
partnership or membership interests and other ownership interests that are
outstanding on the date hereof or any security or other instrument that is
outstanding on the date hereof and by its terms is convertible into or
exchangeable for stock, shares, partnership or membership interests or other
ownership interests in any Tenant.
8.1.2 Change in Business or Organizational Status. No Tenant
shall make any material change in the scope or nature of its business objectives
or operations, or undertake or participate in activities other than in
continuance of its present business. No Tenant shall amend, modify or alter its
Tenant Org Docs or allow itself to be dissolved, voluntarily or involuntarily.
8.1.3 Affiliate Transactions and Payments. No Tenant shall enter
into, or be a party to, any transaction with an Affiliate of any Tenant or any
of the partners, members or shareholders of any Tenant except in the ordinary
course of business and on terms that are no less favorable to any Tenant or such
Affiliate than would be obtained in a comparable arm's-length transaction with
an unrelated third party; provided, however, Tenant may enter into management
agreements with respect to each Facility with any Affiliate of any Tenant or any
Guarantor which provide for management fees of up to five percent (5%) of the
gross revenues of such Facility and provided further that any such Affiliate, as
manager, as well as any other property manager of a Facility, shall enter into a
subordination agreement relative thereto and in favor of Landlord on the terms
set forth in Exhibit G attached hereto. After the occurrence of an Event of
Default or Potential Default and until such Potential Default is cured, no
Tenant shall make any payments or distributions (including, without limitation,
salaries, bonuses, fees, principal, interest, dividends, liquidating
distributions, management fees, cash flow distributions or lease payments) to
any Guarantor or any Affiliate of any Tenant or any Guarantor, or any
shareholder, member, partner or other equity interest holder of any Tenant, any
Guarantor or any Affiliate of any Tenant or any Guarantor (excluding employees
located at the Premises).
8.1.4 ERISA. No Tenant shall engage in any transaction that would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Landlord of any of its rights under this Lease) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under ERISA.
Each Tenant shall deliver to Landlord such certifications or other evidence from
time to time throughout the Term, as requested by Landlord in its sole
20
Amberleigh
discretion, that (i) except as provided on Schedule 8.1.4, such Tenant is not
and does not maintain an "employee benefit plan", as defined in Section 3(3) of
ERISA, that is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (ii) such Tenant is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true: (x) equity interests in such Tenant are publicly offered securities,
within the meaning of 29 C.F.R. ss.2510.3-101(b)(2); (y) less than twenty-five
percent (25%) of each outstanding class of equity interests in such Tenant are
held by "benefit plan investors" within the meaning of 29 C.F.R.
ss.2510.3-101(f)(2); or (z) such Tenant qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29 C.F.R. ss.2510.3-101(c)
or (e).
8.1.5 Debt Cancellation; Other Indebtedness; Guaranties. No
Tenant shall cancel or otherwise forgive or release any claim or debt owed to
any Tenant by any Person, except reasonable and customary write-offs of
non-collectible accounts owed by residents or their estates and other
cancellations made in the ordinary course of such Tenant's business. No Tenant
shall create, incur, assume, or permit to exist any indebtedness other than (i)
trade debt incurred in the ordinary course of Tenant's business (which shall not
include so-called "accounts receivable" financing, which shall be governed by
the terms of Section 21.2); or (ii) any AR Financing pursuant to Section 21.2.
No Tenant shall create, incur, assume, or permit to exist any guarantee of any
loan or other indebtedness except for the endorsement of negotiable instruments
for collection in the ordinary course of business.
8.1.6 Assets; Investing. No Tenant shall purchase or own any
property other than property necessary for, or incidental to, the operation of
the applicable Facility(ies) for its/their Primary Intended Use(s). No Tenant
shall purchase or otherwise acquire, hold, or invest in securities (whether
capital stock or instruments evidencing indebtedness) of any Person. No Tenant
shall make loans or advances to any Person, except for cash balances temporarily
invested in short-term or money market securities pursuant to Tenant's cash
management system approved by Landlord or such other customary investments as
may be approved by Landlord.
8.1.7 Liens; Waste. No Tenant shall create, incur, assume or
suffer to exist any lien (subject to any applicable right of Tenant to contest
mechanic's liens under Section 13 below), charge, encumbrance, easement or
restriction on any portion of any of the Leased Properties or the Lease
Collateral other than a lien upon the Accounts Collateral that is consented to
by Landlord in accordance with Section 21.2 below. No Tenant shall commit or
suffer to be committed any waste on any Leased Property, nor shall any Tenant
cause or permit any nuisance thereon. Tenant shall not take or omit to take any
action, the taking or omission of which may materially impair the value or the
usefulness of any Leased Property or any part thereof for its Primary Intended
Use.
8.1.8 Zoning. No Tenant shall initiate or consent to any zoning
reclassification of any portion of any of the Leased Properties or seek any
variance under any existing zoning ordinance or use (or permit the use of) any
21
Amberleigh
portion of any of the Leased Properties in any manner that could result in such
use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation.
8.1.9 Contracts. Except as may otherwise be expressly permitted
under this Lease, no Tenant shall execute or modify any material contracts or
agreements with respect to any Facility except for contracts and modifications
approved by Landlord (which approval shall not be unreasonably withheld).
Contracts made in the ordinary course of business and that do not require
aggregate payments in an amount in excess of $75,000.00 per Facility per annum
or are cancelable upon thirty (30) days written notice or less without penalty
shall not be considered "material" for purposes of this Section.
8.1.10 No Joint Assessment. No Tenant shall suffer, permit or
initiate the joint assessment of any Leased Property (i) with any other real
property constituting a tax lot separate from such Leased Property, or (ii) with
any portion of such Leased Property that may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes that may be
levied against any such personal property shall be assessed or levied or charged
to such Leased Property.
8.1.11 Use-Specific Negative Covenants. No Tenant shall:
8.1.11.1 Transfer any Authorizations to any location other
than the Facility operated by such Tenant or as otherwise required by the terms
of this Lease nor pledge any Authorizations as collateral security for any loan
or indebtedness except as required by the terms of this Lease.
8.1.11.2 Rescind, withdraw, revoke, amend, supplement, or
otherwise alter the nature, tenor or scope of (i) any Authorization for any
Facility or (ii) except in the ordinary course of business, any applicable
Facility Provider Agreement for any Facility.
8.1.11.3 Amend or otherwise change, by consent, acquiescence
or otherwise, any Facility's licensed unit capacity and/or the number or type of
units, licensed or otherwise, and/or the licensing category or type and/or the
number of units, licensed or otherwise, participating in governmental payment
programs, in each case as the same exist on the Commencement Date, or apply for
approval of any of the foregoing amendments or changes, provided, however, that,
notwithstanding the foregoing, Tenant may, without the prior approval of
Landlord, (i) remove from service units at a particular Facility so long as the
number of units in service at such Facility is not less than a number equal to
ninety five percent (95%) of the number of licensed units for such Facility set
forth in Schedule 17.1.13 attached hereto and further so long as any such
removal from service does not impair the continued licensure of any such
out-of-service units and (ii) make amendments or changes of the nature
referenced in this Section so long as Tenant may, without the necessity of any
governmental or other regulatory approval, consent of application, revoke or
otherwise unwind any such amendments or changes and return to the pre-amendment
and pre-change status quo.
22
Amberleigh
8.1.11.4 Replace or transfer all or any part of any
Facility's licensed units to another location or apply for approval of any such
replacement or transfer.
8.1.11.5 Jeopardize in any manner any Tenant's participation
in any material
Third Party Payor Program to which any Tenant is subject at any time during the
Term.
8.1.11.6 Enter into any resident or resident care agreements
with residents or with any other Persons that deviate in any material respect
from the standard form customarily used by any Tenant at the applicable
Facility.
8.1.11.7 Change the terms of any Facility Provider
Agreement, any Third Party Payor Program or its normal billing, payment or
reimbursement policies and procedures with respect thereto (including, without
limitation, the amount and timing of finance charges, fees and write-offs);
provided that a Tenant may enter into changes that do not have a material
adverse effect on (i) the business or financial position or results of
operations of such Tenant, (ii) the ability of such Tenant to perform, or of
Landlord to enforce, the terms of this Lease or (iii) the value of the Leased
Properties taken as a whole.
8.1.11.8 Assign or transfer any of its interest in any
Authorization or assign, pledge, hypothecate, transfer or remove, or permit any
other Person to assign, transfer, pledge, hypothecate or remove, any records
pertaining to any Facility, including, without limitation, resident records and
medical and clinical records (except for removal of such resident records as
directed by the residents owning such records).
8.2 Affirmative Covenants. Until all of Tenant's obligations hereunder
have been performed and discharged in full, Tenant covenants and agrees as
follows:
8.2.1 Perform Obligations. Tenant shall perform or cause to be
performed, as and when due, all of its obligations under this Lease and the
Other Leases. In addition, Tenant shall perform or cause to be performed, as and
when due, all of its material obligations (or any other obligations so required
by Landlord) under the Authorizations (including, but not limited to, any
Facility Provider Agreements), any Permitted Encumbrances, any Insurance
Requirements, the Operations Transfer Agreement and any Legal Requirements.
Prior to the date hereof, Tenant has taken all necessary action to obtain all
Authorizations (including, but not limited to, the Facility Provider Agreements)
required for the operation of each of the Facilities for its Primary Intended
Use and shall take all necessary action to maintain such Authorizations
(including, but not limited to, the Facility Provider Agreements) during the
Term.
8.2.2 Proceedings to Enjoin or Prevent Construction. If any
proceedings are filed seeking to enjoin or otherwise prevent or declare invalid
or unlawful Tenant's construction, occupancy, maintenance, or operation of any
Facility or any portion thereof for its Primary Intended Use, Tenant shall cause
such proceedings to be vigorously contested in good faith, and shall, without
limiting the generality of the foregoing, use all reasonable commercial efforts
23
Amberleigh
to bring about a favorable and speedy disposition of all such proceedings and
any other proceedings.
8.2.3 Documents and Information.
8.2.3.1 Furnish Information. Tenant shall (i) promptly
supply Landlord with such information concerning its financial condition,
licensing, affairs and property as Landlord may reasonably request from time to
time hereafter and in the format reasonably designated by Landlord and, without
limitation of the foregoing, promptly, and in any event within fifteen (15)
days, after a request from Landlord, Tenant shall provide to Landlord such
additional information regarding Tenant, Tenant's financial condition or the
Facilities as Landlord (including, without limitation, any existing or proposed
lender or investor of Landlord or Ventas, Inc. or any existing or proposed
Facility Mortgagee, or any auditor or underwriter of Landlord or Ventas, Inc.),
may require from time to time; and (ii) promptly notify Landlord in writing of
any Event of Default, any Potential Default and any other condition or event
that constitutes a breach of any material term, condition, warranty,
representation or provision of any other agreement between Landlord or its
Affiliates and any Tenant, any Guarantor or any of their Affiliates, and of any
adverse change in the financial condition of any Tenant, any Guarantor or
ParentCo. Tenant shall notify Landlord, in writing and within five (5) Business
Days, if any Tenant is advised, in writing, formally or informally, by its
insurance carrier, reinsurance provider, accountants, actuary, any Governmental
Authority, or any Third Party Payor Program provider of any actual, pending,
threatened or contemplated increase in its reserves for expenses relating to
malpractice or professional liability claims or any material increase in the
premium costs for malpractice or professional liability insurance (any of the
foregoing, a "Reserve Event").
8.2.3.2 Further Assurances. Tenant shall, upon request of
Landlord from time to time, execute, deliver, and furnish such documents as may
be necessary or appropriate to consummate fully the transactions contemplated
under this Lease.
8.2.3.3 Material Communications. Tenant shall transmit to
Landlord, within three (3) Business Days after receipt thereof (or immediately
with respect to any correspondence related to any Jeopardy Event), any Actuarial
Correspondence or any material and adverse communication (regardless of form)
relating to (i) Tenant; (ii) any Guarantor; (iii) the ownership or operation of
any Premises or any Other Leased Properties, including, without limitation, any
Third Party Payor Program relating to the Leased Property or any Other Leased
Properties, any Legal Requirements relating to the Leased Property or any Other
Leased Properties, any Insurance Requirements relating to the Leased Property or
any Other Leased Properties, any Facility Provider Agreements relating to the
Leased Property or any Other Leased Properties, or any Authorizations relating
to the Leased Property or any Other Leased Properties; or (iv) to the extent not
otherwise described above, any of the respective rights, duties or obligations
of Landlord or Tenant under this Lease. Tenant shall promptly respond to
inquiries by Landlord with respect to such information. Tenant shall notify
Landlord in writing promptly after any Tenant obtains knowledge of any
potential, threatened or existing litigation or proceeding against, or
investigation of, any Tenant, any Guarantor, any Affiliate of any Tenant or any
23
Amberleigh
Guarantor or any Facility that may affect the right to operate one or more of
the Facilities, any Facility Provider Agreements, any of the Authorizations, the
right to receive regular reimbursement under any Third Party Payor Program or
Landlord's title to any Facility or any Tenant's interest therein.
8.2.3.4 Operator Reports; Actuarial Reports. Tenant shall
provide Landlord with accurate and complete copies of any and all of the census
information concerning the number of licensed units occupied by bona fide
residents, all cost reports, surveys, survey deficiency reports, monthly
financial statements and other reports, materials and information concerning any
Tenant, the Facilities and each Tenant's business operations and compliance with
material laws, ordinances, rules or regulations, any material Authorizations
(including, without limitation, any assisted living licenses) and any material
Facility Provider Agreements that are submitted by Tenant to any Governmental
Authorities or any provider pursuant to any Third Party Payor Program (including
any Health Department), for any of the Facilities (the "Operator Reports")
promptly, and in any event, within five (5) Business Days, after the submission
thereof. All Operator Reports shall be accurate in all material respects as of
the date of such Operator Reports. Tenant shall provide Landlord with any and
all Actuarial Reports received by, or prepared by or on behalf of, any Tenant
within ten (10) Business Days after the receipt or submission thereof by or to
any Tenant.
8.2.4 Compliance With Laws. Tenant shall comply with all
applicable Insurance Requirements and all applicable Legal Requirements (and
Landlord shall have no responsibility for such compliance). Tenant shall keep
all applicable Authorizations and Facility Provider Agreements in full force and
effect.
8.2.5 Financial Covenants. The following financial covenants
shall be met throughout the Term of this Lease:
8.2.5.1 Net Worth. Each Guarantor shall maintain for each
fiscal quarter a Net Worth of not less than $45,000,000. Tenant shall maintain
during each fiscal quarter an aggregate Net Worth of not less than $0.
8.2.5.2 [Intentionally Omitted]
8.2.5.3 Coverage Ratio. Tenant shall maintain for each
fiscal quarter a Coverage Ratio with respect to each Facility of not less than
..50 to 1.0. 8.2.5.4 Portfolio Coverage Ratio. Tenant shall maintain, as of the
end of each fiscal quarter commencing with the fiscal quarter ending on June 30,
2005, a Portfolio Coverage Ratio of not less than 1.00 to 1.00 calculated for
all periods on a trailing twelve month basis. It shall be an Event of Default
under this Lease if Tenant shall fail to maintain as of the end of each fiscal
quarter a Portfolio Coverage Ration of not less than 1.00 to 1.00; provided,
however, that it shall not be an Event of Default hereunder, if (i) the
Portfolio Coverage Ratio is greater than or equal to .75 to 1.00, and (ii)
within fifteen (15) days following the date on which Tenant was required to
deliver its computation of the Portfolio Coverage Ratio for such fiscal quarter,
25
Amberleigh
Tenant deposits with Landlord cash or a Letter of Credit in an amount that, had
such amount been added to the Cash Flow for such 12-month period, the Portfolio
Coverage Ratio for such period would have been equal to 1.00 to 1.00 (the
"Difference"). The Difference will be held by Landlord as an addition to the
Security Deposit and applied, held and returned by Landlord in accordance with
the provisions of Section 3.4; provided, however, that if after the payment by
Tenant to Landlord of the Difference, the Portfolio Coverage Ratio of 1.00 to
1.00 is satisfied for the two (2) most recent consecutive fiscal quarters and no
Event of Default has occurred and no Potential Default is continuing, then
Landlord shall, upon Tenant's written request, promptly return to Tenant any
unapplied Difference then held by Landlord. Notwithstanding the foregoing,
Tenant shall not have the ability to cure a breach of the Portfolio Coverage
Ratio by depositing the Difference for more than three (3) consecutive fiscal
quarters.
8.2.6 Permitted Encumbrances. Tenant shall, at its own cost,
fully observe, perform and comply with all Permitted Encumbrances as the same
apply to or bind Landlord or the Premises. No Tenant shall cause, or permit its
respective Tenant Parties to cause, whether by act or omission, any breach of,
default under or termination of any Permitted Encumbrance applicable to or
binding upon Landlord or the Premises.
8.3 [Intentionally Omitted]
8.4 Xxxxxx Xxx Financing. Tenant shall comply with all of the
covenants and obligations of Landlord and the owner and/or the tenant of the
Leased Property set forth in the Xxxxxx Mae Financing, other than the obligation
of Landlord to make principal and interest payments thereunder. Without limiting
the generality of the foregoing, Tenant shall cause to be kept and maintained in
place and in effect, with Capital Senior Living Properties, Inc. and any other
parties thereto, the Key Principal Agreement. Tenant shall cause Capital Senior
Living Properties, Inc. and any other parties thereto to perform in a timely and
complete manner, the Key Principal Agreement, including, without limitation, all
obligations of the parties to the Key Principal Agreement to keep and maintain
all cash and securities (if any) required thereunder from time to time. Any and
all deposits required under the Key Principal Agreement shall be in addition to
any and all deposits, reserves and other payments required of Tenant hereunder.
Except as may relate solely to any failure by Landlord to pay any installment of
principal or interest owing under the Xxxxxx Xxx Financing or to any fraud or
misappropriation of funds by Landlord, Tenant shall be solely responsible for,
and shall cause to be timely and fully satisfied, any and all liabilities (other
than those for which Xxxxxx Mae is responsible) described in the Key Principal
Agreement and under any non-recourse carve-outs to the Xxxxxx Xxx Financing.
Tenant shall deliver copies of any documents or correspondence it may receive or
deliver relating to the Xxxxxx Mae Financing, promptly following Tenant's
receipt or delivery thereof. Provided that no Event of Default or Potential
Default exists, Landlord will endeavor to deliver to Tenant copies of all
notices of default under the Xxxxxx Xxx Financing from Xxxxxx Mae to Landlord
that are not also addressed (by "cc" or otherwise) to Tenant. If it is
impossible for Tenant, using good faith reasonable efforts, to comply with any
obligation relating to the Xxxxxx Xxx Financing, Tenant shall so notify Landlord
and cooperate and assist Landlord in complying with any such obligation, as may
be reasonably requested by Landlord from time to time.
26
Amberleigh
8.5 Operations Transfer Agreement. Tenant acknowledges and agrees that
the Operations Transfer Agreement must be in full force and effect, and in form
and substance satisfactory to Landlord, as of the Closing. Tenant agrees not to
modify, waive or otherwise change any of the terms or conditions of the
Operations Transfer Agreement after the same shall have been approved by
Landlord, without in each instance the express prior written consent of
Landlord. Tenant shall timely and fully perform, at Tenant's sole cost and
expense, all of Tenant's obligations under the Operations Transfer Agreement,
and Tenant shall take (or cause to be taken), at Tenant's sole cost and expense,
any and all actions thereunder as may be reasonably requested by Landlord from
time to time.
8.6 P&S Agreement. Tenant shall cooperate in connection with the
effectuation of the Closing and shall take any and all action with respect
thereto as may be reasonably requested from time to time by Landlord. Without
limiting the generality of the foregoing, neither Tenant nor any Tenant Party
shall (to the extent within the control of Tenant or any Affiliate of Tenant)
cause any default by the Seller under the P&S Agreement or otherwise cause any
other event or circumstance that would delay, prohibit or otherwise interfere
with the Closing. If, irrespective of fault, (i) the Closing does not occur due
to either (a) any act or omission of Tenant or any Tenant Party or (b) the Buyer
elects (irrespective of whether or not such election is permitted under the P&S
Agreement) not to consummate the Closing due to a MAC Event, and (ii) all or
part of the Xxxxxxx Money (as defined in the P&S Agreement) is forfeited or
otherwise paid to the Seller, then Tenant shall immediately pay to Landlord an
amount equal to the entire amount of the Xxxxxxx Money so forfeited or otherwise
paid to the Seller. Without limiting the generality or efficacy of any other
right or remedy under this Lease or any Other Lease, if any amounts owing from
Tenant to Landlord are not immediately paid, then Landlord shall have the right
to receive and retain the Security Deposit and any and all other security
deposits, letters or credit and other items referenced in Section 17.6 below,
and all such delinquent sums shall bear interest until fully paid at the Overdue
Rate. Without limiting the generality or efficacy of the foregoing or of any of
the provisions of Section 3.4 above, at all times between the Effective Date and
the Closing, the aggregate amount of the Security Deposit and all of the cash
security deposits held under the Other Leases shall at no time be less than One
Million Seven Hundred Thousand Dollars ($1,700,000). Provided no Event of
Default has occurred and no Potential Default is continuing, Landlord hereby
agrees to give Tenant one (1) Business Day's advance notice of any termination
of the P&S Agreement by the Buyer on account of a MAC Event. If within that one
(1) Business Day period, Tenant shall have paid to Landlord the sum of
$2,000,000 in immediately available funds and Tenant shall have delivered to
Landlord (and Landlord shall have actually received) a request by Tenant for an
assignment of the Buyer's rights under the P&S Agreement, then upon Landlord's
timely receipt of said funds and notice, Landlord shall cause the Buyer to
assign to Tenant (if and to the extent assignable) any and all rights, title and
interests of the Buyer under the P&S Agreement pursuant to an assignment and
assumption agreement in form reasonably prepared by the Buyer. The provisions of
this Section are a material inducement to the Buyer entering into the P&S
Agreement and Landlord entering into this Lease, which neither such party would
have done but for the obligations of Tenant under this Section.
27
Amberleigh
9. Maintenance of Facilities.
9.1 Maintenance and Repair.
9.1.1 Facility Repair. Tenant, at its sole expense, shall keep
each Leased Property (and Tenant's Personal Property) in good and safe order and
repair, except for ordinary wear and tear and damage by Casualty and
Condemnation (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of such Leased Property,
Tenant's Personal Property, or any portion thereof). Without limitation of the
foregoing, Tenant shall promptly make (at Tenant's sole expense) all necessary
and appropriate repairs and replacements (capital and otherwise) to each
Facility, of every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term (concealed
or otherwise), including, but not limited to, any roof repairs or replacements
or parking lot repairs or replacements, such that each Leased Property is
maintained in the Required Condition for use for its Primary Intended Use. In
addition, Tenant shall (at Tenant's sole expense) (i) maintain, repair and
replace each Facility such that at all times during the Term, the Required
Condition is satisfied and (ii) periodically replace the furnishings, fixtures
and equipment of each Facility such that each Facility is refurbished not less
frequently than that which is required from time to time in order to comply with
general industry refurbishment standards for substantially similar facilities.
Any and all such replacements shall constitute part of the Leased Property
hereunder. Landlord may from time to time as to any one or more Leased
Properties, and at Tenant's sole expense (but no more than once every two (2)
years at Tenant's expense, when more frequent inspections are required under the
Xxxxxx Xxx Financing), cause an engineer designated by Landlord, in its sole
discretion, to inspect one or more Leased Properties and issue a report (a
"Leased Property Condition Report") with respect to the condition of any such
Leased Properties. Tenant shall, at its own expense, make any and all repairs or
replacements reasonably recommended by such Leased Property Condition Report to
meet the Required Condition. All repairs shall be made in a good and workmanlike
manner and in accordance with all Legal Requirements relating to such work.
Landlord shall not under any circumstances be required to repair, replace, build
or rebuild any improvements on any Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature or description
to any Leased Property, whether ordinary or extraordinary, structural or
non-structural, foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto, or to maintain any Leased Property in any way. Tenant
hereby waives, to the extent permitted by law, the right to make repairs at the
expense of Landlord pursuant to any law currently in effect or hereafter
enacted. In addition, if any Leased Property Condition Report indicates that any
Leased Property has not been properly serviced and maintained, then Landlord may
require that Tenant procure and maintain, at Tenant's sole expense, service and
maintenance contracts with duly licensed contractors or repair services (which
contractors or repair services shall be acceptable to Landlord in its sole
discretion) providing for regular maintenance and repair of any and all major
systems serving that Leased Property, including, but not limited to, the HVAC
systems, life safety systems, plumbing systems and elevator systems.
28
Amberleigh
9.1.2 Notice of Non-Responsibility. Except as expressly set forth
in this Lease, nothing contained in this Lease and no action or inaction by
Landlord shall be construed as: (i) constituting the consent or request of
Landlord, express or implied, to any contractor, subcontractor, laborer,
materialman or vendor to, or for the performance of, any labor or services or
the furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to any Leased Property or any
part thereof; or (ii) giving Tenant any right, power or permission to contract
for or permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Landlord in respect thereof or to make any agreement that might
create, or in any way be the basis for, any right, title, interest, lien, claim
or other encumbrance upon the estate of Landlord in any Leased Property, or any
portion thereof. Landlord may post, at Tenant's sole cost, such notices of
non-responsibility upon, or of record against, any Leased Property to prevent
the lien of any contractor, subcontractor, laborer, materialmen or vendor
providing work, services or supplies to Tenant from attaching against the
Premises. Tenant agrees to promptly execute and record any such notice of
non-responsibility at Tenant's sole cost.
9.1.3 Vacation and Surrender. Tenant shall, upon the expiration
or sooner termination of the Term as to any Leased Property, vacate and
surrender the applicable Leased Property to Landlord in the Required Condition
consistent with the requirements of Section 9.1.1, except as repaired, rebuilt,
restored, altered or added to as permitted or required by the provisions of this
Lease and except for damage from Casualty or Condemnation. Each Leased Property
so returned to Landlord shall include any and all Alterations, which shall be
and remain the property of Landlord as part of such Leased Property (except for
Alterations that Landlord requests, in writing, that Tenant remove, which
Alterations shall be promptly and completely removed by Tenant). Tenant shall
repair, at Tenant's sole cost, any damage to a Leased Property resulting from
Tenant's vacation from or surrender of such Leased Property and/or the removal
of any Alterations therefrom, whether effected by Tenant or Landlord.
9.2 Encroachments. If any of the Leased Improvements on any Leased
Property shall, at any time, encroach upon any property, street or right-of-way
adjacent to such Leased Property, then, promptly upon the request of Landlord,
Tenant shall, at its expense, subject to its right to contest the existence of
any encroachment and, in such case, in the event of any adverse final
determination, either (i) obtain valid waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, whether the same
shall affect Landlord or Tenant, or (ii) make such changes in the Leased
Improvements, and take such other actions, as Tenant, in the good faith exercise
of its judgment deems reasonably practicable, to remove such encroachment,
including, if necessary, the alteration of any of the Leased Improvements, and
in any event take all such actions as may be necessary in order to be able to
continue the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and to the extent the Leased Improvements were
operated prior to the assertion of such encroachment. Landlord hereby agrees not
to direct Tenant to take any action pursuant to the immediately preceding
sentence with respect to any encroachments that constitute Permitted Exceptions
under the P&S Agreement and/or the deeds of conveyance delivered pursuant
thereto, unless a governmental authority or other third party has threatened or
29
Amberleigh
commenced any legal action or other proceeding with respect thereto. Any such
alteration shall be made in conformity with the applicable requirements of
Section 11. Tenant's obligations under this Section 9.2 shall be in addition to
and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance and Tenant shall not be entitled to a
credit for any sums recovered by Landlord under any such policy of title or
other insurance.
10. Tenant's Representations and Warranties. Tenant hereby makes the
following representations and warranties, as of the Effective Date, and again as
of the Commencement Date, to Landlord and acknowledges that Landlord is granting
the Lease in reliance upon such representations and warranties. Tenant's
representations and warranties shall survive the expiration or termination of
this Lease and, except to the extent otherwise specifically limited, shall
continue in full force and effect, and remain true and correct, until Tenant's
obligations hereunder have been performed in full.
10.1 Organization and Good Standing. Tenant is a Texas corporation,
duly organized, validly existing and in good standing under the laws of the
State of Texas. Each Tenant is qualified to do business in and is in good
standing under the laws of the State in which each Facility operated by such
Tenant is located, (it being understood that in Arizona, as of the Effective
Date, Tenant has filed all necessary applications and taken all other actions
required in order to qualify to do business, but has not yet received
confirmation thereof from the Arizona Secretary of State). Tenant has delivered
true and complete copies of the documents, certificates and agreements pursuant
to which each Tenant is organized to do business (the "Tenant Org Docs").
10.2 Power and Authority. Each Tenant has the power and authority to
execute, deliver and perform this Lease and to make itself jointly and severally
liable for the obligations of each other Tenant. Each Tenant has taken all
requisite action necessary to authorize the execution, delivery and performance
of such Tenant's obligations under this Lease.
10.3 Enforceability. This Lease constitutes a legal, valid, and
binding obligation of each Tenant enforceable in accordance with its terms.
10.4 Consents. The execution, delivery and performance of this Lease
will not require any consent, approval, authorization, order, or declaration of,
or any filing or registration with, any court, any Governmental Authority, or
any other Person.
10.5 No Violation. The execution, delivery and performance of this
Lease (i) do not and will not conflict with, and do not and will not result in a
breach of, any Tenant Org Docs; and (ii) do not and will not violate any order,
writ, injunction, decree, statute, rule or regulation applicable to any Tenant
or (to Tenant's knowledge) any of the Facilities.
10.6 Reports and Statements. To Tenant's knowledge, all reports,
statements (financial or otherwise), certificates and other data furnished by or
30
Amberleigh
on behalf of Tenant or any Guarantor to Landlord in connection with this Lease,
and all representations and warranties made herein or in any certificate or
other instrument delivered in connection herewith, are true and correct in all
material respects and (to Tenant's knowledge) do not omit to state any material
fact or circumstance necessary to make the statements contained herein or
therein, in light of the circumstances under which they are made, not misleading
as of the date of such report, statement, certificate or other data.
10.7 No Default. There is no existing Event of Default and there is no
Potential Default. Landlord has performed all obligations of Landlord required
to be performed hereunder as of the Effective Date.
10.8 Adverse Matters. No Tenant nor (to Tenant's knowledge) any Tenant
Parties have been disqualified from participating in either the Medicare or
Medicaid programs. Without limitation of the foregoing, no Tenant nor (to
Tenant's knowledge) any of their respective officers, directors, members or
managing employees or other contractors, subcontractors, employees or agents has
engaged in any activities that are prohibited under criminal law, or are cause
for civil penalties or mandatory or permissive exclusion from any Third Party
Payor Program or any governmental health care program. There is no, and there
shall continue to be no, to Tenant's knowledge threatened, existing or pending
revocation, suspension, termination, probation, restriction, limitation or
non-renewal affecting any Tenant or any Facility with regard to participation in
any Third Party Payor Program or the applicable Authorizations to which any
Tenant or Facility presently or at any time hereafter is/are subject.
10.9 Certification. Each Tenant has obtained or (if not currently
obtainable) shall obtain on or before the Commencement Date, and shall at all
times thereafter keep and maintain, any and all Authorizations necessary or
advisable to operate its Facility(ies) for its Primary Intended Use and to be,
and to continue to be, validly licensed and certified to operate its applicable
Facility in accordance with all applicable governmental rules and regulations
and the requirements of all applicable Governmental Authorities.
10.10 No Reimbursement Audits or Appeals. To Tenant's knowledge there
are no current, pending or outstanding reimbursement audits regarding any Third
Party Payor Program nor any appeals pending at any Facility.
10.11 No Recoupments Efforts. There are no current or pending
recoupment efforts regarding any Third Party Payor Program at (or with respect
to) any Facility. Tenant is not a participant in any federal program whereby any
Governmental Authority may have the right to recover funds by reason of the
advance of federal funds.
10.12 Liability Reserves. For each Facility, the applicable Tenant or
Guarantor has accrued, and will periodically (on an annual basis and upon any
Reserve Event) accrue, reserves for expenses relating to malpractice and
professional liability claims if and to the extent not covered by Tenant's
insurance coverages, which reserves (if any) must be adequate and complete in
the exercise of commercially reasonable judgment and normal commercial practice,
31
Amberleigh
and, if applicable, which reserves have been, and will be, approved by its
independent actuary.
10.13 Primary Intended Use. To Tenant's knowledge, each Facility is
being operated for its Primary Intended Use and contains the number of licensed
and operational units described on Schedule 1 attached hereto.
10.14 Compliance with Laws. To Tenant's knowledge, Tenant is in
substantial compliance with all applicable federal, state and local laws,
regulations and guidelines (including, without limitation, any government
payment program requirements and disclosure of ownership and related information
requirements), quality and safety standards, accepted professional standards and
principles that apply to professionals providing services to assisted or
independent living facilities, in each case, as applicable, accreditation
standards, and requirements of applicable Governmental Authorities, including,
without limitation, those requirements relating to the physical structure and
environment of each Leased Property, licensing, quality and adequacy of medical
care, distribution of pharmaceuticals, rate setting, equipment, personnel,
operating policies, additions to facilities and services and fee splitting. To
Tenant's knowledge, neither Tenant nor any Tenant Party has committed any act
that may give any Governmental Authority the right to cause Tenant to lose any
applicable Authorizations.
10.15 Ownership of Authorizations. The Authorizations: (i) are not,
and have not been, transferred to any location other than the Facility to which
such Authorizations relate; (ii) are not, and have not been, pledged as
collateral security for any loan or indebtedness other than pursuant to the
terms of this Lease; (iii) are held free from restrictions or conflicts that
would materially impair the use or operation of each Facility for its Primary
Intended Use; and (iv) are not provisional, probationary or restricted in any
way.
10.16 Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Tenant or any
Leased Property in respect of any Third Party Payor Programs to which Tenant or
any Facility is subject. All cost reports and financial reports, if any,
submitted by any Tenant pursuant to any Third Party Payor Program have been and
will continue to be materially accurate and complete and have not been and will
not be misleading in any material respects. No such cost report or financial
report for any Leased Property has been audited or contested by the Governmental
Authority or insurer receiving the same (other than audits or contests that have
heretofore been completed or settled), and no such cost report or financial
report remains "open" to audit or contest, if and to the extent that the
Governmental Authority or insurer receiving the same has rules or procedures
pursuant to which, due to the passage of time or otherwise, it may be precluded
from auditing or contesting any such report.
10.17 Service Contracts. There are no contracts of any kind relating
to the management, operation, maintenance or repair of the Leased Property that
are binding upon the owner of the Leased Property or that are otherwise
32
Amberleigh
material, except for the "Service Contracts" (as defined in the P&S Agreement).
All of the Service Contracts that are binding upon or affecting the Leased
Property are identified on Schedule 6.2 to the P&S Agreement, and Tenant has
delivered to Landlord (or made available by Tenant to Landlord at the Leased
Property upon the Inspection Date) true and complete copies of the Service
Contracts and all of the Service Contracts have been assigned to and assumed by
Tenant.
10.18 Utilities. All water, sewer, gas, electric, telephone, drainage
and other utility equipment, facilities and services required by law or
necessary for the operation of the Leased Property are installed and connected
pursuant to valid permits, are (to Tenant's knowledge) adequate to service the
Leased Property, and are in the Required Condition.
10.19 Compliance with Laws and Codes. Because the Leased Property is
an independent living and assisted living facility, it does not receive any
reimbursements or other payments from Medicare or Medicaid and therefore is not
subject to Medicare or Medicaid regulations or requirements.
10.20 Insurance. Neither Tenant, Guarantor, nor any manager (if
applicable) has been advised by its insurance carriers that it need make any
reserves for expenses relating to malpractice or professional liability and no
accountant, governmental or quasi-governmental authority has suggested to Tenant
or any Affiliate of Tenant that such reserves are necessary or desirable. As of
the Commencement Date, Tenant shall have in full force and effect the insurance
coverages relating to each Project described in Section 14 herein (the
"Insurance Policies"). Tenant has not received any written notice from any
insurance carrier alleging any defects or inadequacies with respect to the
Facilities that, if not corrected, would result in termination of insurance
coverage or increase in the normal and customary cost of any or all of the
Insurance Policies.
10.21 Documents. To Tenant's knowledge, none of the documents
delivered by Tenant (or its Affiliates) to Landlord, the Buyer or their
respective Affiliates prior to the Effective Date contain any untrue statement
of a fact or omit to state a fact necessary to make the statement of fact
contained therein misleading in any material respect.
10.22 Physical Condition. Prior to the Effective Date, Tenant
has delivered to Landlord true, correct and complete copies of any and all
physical inspection reports prepared by or for Tenant or any Tenant Party, or
that are in Tenant's or any Tenant Party's actual possession, relating to the
Premises. Neither Tenant nor any Tenant Party has received any written notice
alleging that the Premises contain any material structural defects. Neither
Tenant nor any Tenant Party has received any notice of any impending order or
requirement that would cause additional expenditures to be made to bring the
Premises into compliance with any applicable legal requirement. To Tenant's
knowledge, each Leased Property complies in all material respects with all
applicable municipal, county, state and federal laws, regulations, ordinances
and orders and with all applicable municipal health and building laws and
regulations. No governmental authority having jurisdiction over Tenant or the
Property has issued and delivered any citations with respect to any material
deficiencies or other matters that fail to conform in all material respects to
applicable statutes, regulations or ordinances and that have not been corrected
33
Amberleigh
as of the Inspection Date or that shall not have been corrected on or prior to
the Commencement Date.
10.23 Compliance with Laws and Codes. To Tenant's knowledge, the
Premises and the use and operation thereof, are in compliance in all material
respects with all applicable municipal and other governmental laws, ordinances,
rules, regulations, codes, licenses, permits and authorizations, including the
Permits.
10.24 Ownership. The Premises includes all real and personal property
being used to operate the Facilities as assisted living and independent living
(as applicable). As of the Effective Date and again as of the Commencement Date,
the Premises are not subject to any management agreement, lease (other than
Approved Residency Agreements and Approved Commercial Agreements) or other
agreement for management, use or occupancy, other than the management agreements
in favor of Tenant's Affiliate that are described on Schedule 10.24 attached
hereto. Tenant has delivered to Landlord, prior to the Effective Date, a true,
correct and complete list of all the Approved Commercial Agreements existing as
to the Effective Date.
10.25 Financial Information, Absence of Any Undisclosed Liabilities.
10.25.1 Financial Information. To Tenant's knowledge, the
Operator Reports and Financial Statements delivered by Tenant to Landlord are
accurate and complete copies thereof and represent all of the Operator Reports
and Financial Statements prepared and relied upon by any Tenant in the conduct
of its respective business with respect to the periods covered therein. To
Tenant's knowledge, the Operator Reports and the Financial Statements accurately
set forth the results of the operations of the Leased Property in all material
respects for the periods covered. The Operator Reports have been prepared in
accordance with sound property management practices consistently applied during
the periods described therein. The Financial Statements have been prepared in
accordance with Generally Accepted Accounting Principles consistently applied
during the periods described therein, and fairly present the assets and
liabilities and the results from operations of the Leased Property. To Tenant's
knowledge, there has been no material adverse change in the financial conditions
or operation of the Premises since the periods covered by the Operator Reports
and the Financial Statements. Tenant has no liabilities or obligations, and (to
Tenant's best knowledge) there is no basis for any assertion against Tenant of
any liability or obligations, except those liabilities or obligations that are
(a) fully reflected or adequately reserved against in the Financial Statements,
(b) disclosed in this Agreement or in the schedules hereto, or (c) incurred in
the ordinary course of business consistent with past practice from and after the
date of the last Operator Reports, which in the aggregate are not material to
Tenant.
10.25.2 Absence of Certain Changes. Since the respective dates of
the Operator Reports and the Financial Statements, Tenant has operated the
Premises in the ordinary course, consistent with past practice, and no Tenant
has: (i) suffered any known material adverse change or any event, occurrence,
development or state of circumstances or facts which has had or could reasonably
34
Amberleigh
be expected to result in or have an adverse effect on the ownership and
operation of any Premises; (ii) incurred, assumed or guaranteed any indebtedness
for money borrowed, or incurred any liabilities or obligations other than in the
ordinary course of business; (iii) paid, discharged or satisfied any claim, lien
or liability, other than those: (a) which were reflected or reserved against in
the Financial Statements, and which will be paid, discharged or satisfied in the
ordinary course of business consistent with past practice or (b) which were
incurred and paid, discharged or satisfied since the date of the last applicable
Financial Statement in the ordinary course of business consistent with past
practice; (iv) written down the value of any inventory, or written off as
uncollectible any notes, accounts or other receivables or any portion thereof,
except in the ordinary course of business consistent with past practice; (v)
leased or acquired any capital asset other than in the ordinary course of
business; (vi) entered into any transaction with any of their respective
affiliates, other than in the ordinary course of, and pursuant to the reasonable
requirements of, the business at the Premises and upon terms that are no less
favorable than could be obtained in a comparable transaction with a person who
was not such an affiliate; or (vii) agreed to, or made any commitment to, do any
of the foregoing.
10.26 Separate Parcel. Each parcel of the Land is a separately zoned
parcel.
10.27 Re-Zoning. Tenant is not a party to nor is there (to Tenant's
knowledge) any threatened proceeding for the rezoning of the Premises or any
portion thereof, or the taking of any other action by governmental authorities
that would have an adverse or material impact on the value of the Premises or
use thereof.
10.28 No Violations. Neither Tenant nor the Leased Property is the
subject of any proceeding by any governmental agency, and no notice of any
violation has been issued or (to Tenant's knowledge) threatened by a
governmental agency that would, directly or indirectly, or with the passage of
time:
(i) Impact Tenant's ability to accept and/or retain
residents at a Leased Property; or
(ii) Have an adverse effect on Tenant's ability to accept
and/or retain residents or operate the Leased Property or result in the
imposition of a fine or sanction; or
(iii) Modify, limit or annul or result in the transfer,
suspension, or revocation or imposition of probationary use of any of
the Operator Licenses.
10.29 Real Estate Taxes. Except as may be included in the Documents
heretofore delivered by Tenant to Landlord (if any), Tenant has not received any
written notice of any proposed increase in the assessed valuation of the
Premises. There is not now pending, and Tenant agrees that it will not, without
the prior written consent of Landlord (which consent will not be unreasonably
withheld or delayed), institute prior to the Commencement Date, any proceeding
or application for a reduction in the real estate tax assessment of the Premises
or any other relief for any tax year. There are no outstanding written
agreements with attorneys or consultants with respect to real estate taxes that
will be binding on Landlord or the Premises after the Commencement Date. Except
35
Amberleigh
as may be included in the Documents heretofore delivered by Tenant to Landlord
(if any), no special assessments of any kind (special, bond or otherwise) are or
have been levied against any Premises, or any portion thereof, that are
outstanding or unpaid, and, none will be levied prior to Commencement Date.
10.30 Permits. The Permits represent all of the permits, licenses,
approvals, certificates, consents and other comparable authorizations from
governmental or quasi-governmental authorities (including, but not limited to,
any Governmental Authority) required or necessary to be issued or granted to
Landlord, Tenant or (if applicable) Tenant's manager in connection with the
operation and ownership of the Leased Property under applicable laws,
ordinances, rules and regulations. To Tenant's knowledge, no Tenant is in
material violation of any Permits, nor has Seller received any written notice
alleging any material violation of any Permits. Schedule 10.31.6 contains an
accurate and complete list of (i) all Permits (including any Operator Licenses),
(ii) the parties to whom the same have been issued and (iii) the parties who
issue such Permits.
10.31 Operation Matters.
10.31.1 Operator Licenses. To Tenant's knowledge, Tenant has been
issued (or will be issued prior to the Commencement Date) and is in good
standing with respect to any and all. permits, licenses, approvals,
accreditations and comparable authorizations (collectively, "Operator Licenses")
from all applicable governmental and quasi-governmental authorities (including,
but not limited to, any health department) necessary or advisable for the use,
operation and maintenance of the applicable Premises and the conduct of business
therein. To Tenant's knowledge, Tenant is not in violation of any law,
ordinance, rule or regulation, relating to any Operator Licenses. To Tenant's
knowledge, Tenant is not the subject of any investigation, proceeding or
examination by any health department or other governmental or quasi-governmental
authority commission, board or agency concerning an actual or alleged violation
of any laws, ordinances, rules or regulations or any Operator Licenses. Tenant
has timely paid all fines and other monetary relief required under, and shall
timely satisfy (or cause to be satisfied) all remaining actions set forth in,
the plan of correction related to that certain alleged OSHA violation pertaining
to the Amberleigh property, which plan of correction was previously fully
disclosed by Tenant to Landlord. To Tenant's knowledge, the Operator Licenses
(i) may not be, and have not been and will not be, transferred to any location
other than the Premises; (ii) are not and will not be pledged as collateral
security for any loan or indebtedness that will not be released on the
Commencement Date; and (iii) are held and will remain free from restrictions or
known conflicts which would materially impair the use or operation of the
Premises and are not be provisional, probationary or restricted in any way.
Notwithstanding the foregoing, Tenant makes no representation that it shall be
able to obtain permanent replacement licenses of the sort described in Schedule
10.31.3 attached hereto prior to the Commencement Date, but agrees to use all
commercially reasonable efforts to do so and to obtain any and all provisional
Permits and Authorizations as may be necessary or appropriate in connection
therewith as soon as is possible.
36
Amberleigh
10.31.2 Litigation, Proceedings and Investigations. No Tenant is
involved in any litigation, proceeding, or investigation that challenges or
impairs Tenant's right or ability to enter into or perform the Lease or that if
determined or resolved would have a material adverse effect on the ownership,
value or use of any of the Premises.
10.31.3 Licensing Matters. With respect to the Premises, the
Operator Licenses represent (to Tenant's knowledge) all of the licenses,
permits, and approvals necessary in order to operate the Premises as independent
living and assisted living facilities (as applicable), and Tenant has obtained
(or shall cause to be obtained prior to the Commencement Date) all Operator
Licenses. Notwithstanding the foregoing, Tenant makes no representation that it
shall be able to obtain permanent replacement licenses of the sort described in
Schedule 10.31.3 attached hereto prior to the Commencement Date, but agrees to
use all commercially reasonable efforts to do so and to obtain any and all
provisional Permits and Authorizations as may be necessary or appropriate in
connection therewith as soon as is possible. If any such licenses shall not have
been obtained prior to the Commencement Date, then Tenant shall diligently and
continuously pursue such licenses from and after the Commencement Date.
10.31.4 Operator Reporting. To Tenant's knowledge, Tenant has
delivered to Landlord accurate and complete copies of all of the census
information concerning the number of units occupied by bona fide residents,
monthly financial statements and other reports, materials and information
concerning each Tenant's business operations and compliance with laws,
ordinances, rules, regulations, Operator Licenses and Permits that are submitted
by Tenant, for all of the Facilities, and the Operator Reports are accurate in
all material respects.
10.31.5 No Recoupments Efforts. To Tenant's knowledge, there are
no current or pending Medicaid, Medicare or third party payor programs'
recoupment efforts at the Premises.
10.31.6 Permits and Licensing Matters. To Tenant's knowledge, (i)
Schedule 10.31.6 contains an accurate and complete list of all Permits,
including the Operator Licenses, held by Tenant; (ii) there is no suspension,
ban or limitation upon the admission of residents or residents to any of the
Premises; and (iii) Tenant is not the subject of any investigation, proceeding
or examination by any governmental or quasi-governmental agency relating to any
Operator Licenses, nor has Tenant or any Tenant Party received any notice
concerning an actual or alleged violation of any Operator Licenses.
10.32 Taxes. Tenant has paid (or caused to be paid) any and all taxes,
withholding and other Impositions relating to the operation of the Leased
Property, which, if not timely paid, Tenant would impose any lien or other
liability upon Landlord, any Premises or any portion thereof.
10.33 Environmental Matters.
37
Amberleigh
10.33.1 No Violations. To Tenant's knowledge, the Premises have
been and continue to be owned and operated in compliance with all Environmental
Laws. There have been no past claims, complaints, notices, correspondence or
requests for information received by Tenant or any of its Affiliates with
respect to any violation or alleged violation of any Environmental Law, any
releases of Hazardous Substances or with respect to any corrective or remedial
action for or cleanup of the Premises or any portion thereof.
10.33.2 Hazardous Substances. Neither Tenant nor any of its
Affiliates has transported, disposed of or treated, or arranged for the
transportation, disposal or treatment of, any Hazardous Substances to or from
the Premises. No oral or written notification of a release or discharge of a
Hazardous Substance has been filed by or on behalf of, or received by, Tenant or
any of its Affiliates with respect to any of the Premises and none of the
Premises are listed or (to Tenant's knowledge) proposed for listing, on the
National Priorities List promulgated pursuant to CERCLA (as these things are
commonly understood) or on any similar state list of sites requiring
investigation or clean-up.
10.33.3 Underground Storage Tanks. To Tenant's knowledge, there
are no underground storage tanks at, in, under or about the Premises. Tenant has
not removed any underground storage from the Premises.
10.33.4 Asbestos and Polychlorinated Biphenyls. To Tenant's
knowledge, no asbestos, polychlorinated biphenyls or urea formaldehyde is or has
been present at the Premises, nor have any of the foregoing been removed by
Tenant from the Premises.
10.33.5 Liens. To Tenant's knowledge, there are no environmental
liens on any of the Land or Improvements, and no governmental actions have been
taken or (to Tenant's knowledge) are in process that could subject any of the
Land or Improvements to such liens.
10.33.6 Notices. Except as may be described in the Documents
delivered by Tenant to Landlord (if any), to Tenant's knowledge, Tenant has not
received any written notice from any federal, state or local governmental
authority or other person with respect to any actual or alleged violation by
Tenant or any of its Affiliates of any Environmental Law in connection with the
Premises or the conduct of business thereon.
10.34 Assumed Indebtedness. In connection with the delivery of the
Documents, Tenant has delivered to Landlord true, correct and complete copies of
all promissory notes, mortgages, deeds of trust, loan agreements, assignments of
leases and rents, security agreements, financing statements and other
instruments evidencing or securing the Assumed Indebtedness, including, without
limitation, any and all supplements and amendments thereto (collectively, the
"Xxxxxx Xxx Documents"). To Tenant's knowledge, no indebtedness or security
interests encumber the Property or any portion thereof other than the Xxxxxx Mae
Loan Documents. Attached hereto as Schedule 10.34 is a true, correct and
complete description of the Assumed Indebtedness as of the Effective Date,
including, without limitation, the outstanding balance of each such loan and the
outstanding balances of all reserves and escrows held by or for the Lender. The
38
Amberleigh
Xxxxxx Xxx Loan Documents are not cross-collateralized or cross-defaulted with
any other indebtedness or property other than such other debt in favor of Xxxxxx
Mae that is secured by the premises described in the Other Leases. As of the
Commencement Date, Tenant shall have paid all assumption and similar fees due or
owing in connection with the Landlord's assumption of the Assumed Indebtedness
under this Agreement, and the Assumed Indebtedness shall be current and free of
any default under the Xxxxxx Xxx Loan Documents.
10.35 P&S Agreement. To the extent not otherwise addressed above (and
without limiting or qualifying the foregoing representations or warranties in
any way), to Tenant's knowledge, all of the representations and warranties of
the Seller under the P&S Agreement are true and correct in all material respects
as of the date originally made and as of the date of this Lease, and do not omit
to state any material fact or circumstance necessary to make the statements
contained herein or therein, in light of any circumstances under which they are
made, not misleading as of the date originally made or as of the date of this
Lease.
11. Alterations.
11.1 Alterations. Tenant shall not (i) make any Capital Alterations on
or to any Leased Property, (ii) enlarge or reduce the size of any Facility
and/or (iii) make any Capital Alterations or other Alterations that would tie in
or connect with any improvements on property adjacent to the Land. Tenant may,
without Landlord's consent, make any alterations, additions, or improvements
(collectively, with the alterations described in items (i) - (iii) of the
preceding sentence, "Alterations") to any Leased Property if such Alterations
are not of the type described in clause (i), (ii) or (iii) above, so long as in
each case: (w) the same do not (A) decrease the value of the Leased Property,
(B) affect the exterior appearance of the Leased Property, or (C) affect the
structural components of the Leased Property or the main electrical, mechanical,
plumbing, elevator or ventilating and air conditioning systems for any Facility,
(x) the same are consistent in terms of style, quality and workmanship to the
original Leased Property and Fixtures, (y) the same are constructed and
performed in accordance with the provisions of Section 11.2 below and (z) the
cost thereof does not exceed, in the aggregate, $250,000.00 for any consecutive
twelve (12) month period with respect to any single Facility. Except for those
limited Alterations that expressly do not require Landlord's consent pursuant to
the preceding sentence, all Alterations shall be subject to Landlord's prior
written consent, in Landlord's discretion. To the extent Landlord's prior
written consent shall be required in connection with any Alterations, Landlord
may impose such conditions thereon in connection with its approval thereof as
Landlord deems appropriate. Notwithstanding the foregoing, Landlord agrees that
painting, landscaping, and replacement of floor coverings, wall coverings and
window coverings shall be deemed Alterations that do not require Landlord's
consent and do not need to meet the requirements set forth in Sections 11.2.1,
11.2.4 and 11.2.7 below, so long as the same meet the requirements of clauses
(x) and (y) above, and the cost thereof shall not be counted towards the
above-referenced $250,000 threshold.
11.2 Construction Requirements for all Alterations. Whether or not
Landlord's consent is required, for all Alterations of any Leased Property, the
39
Amberleigh
following shall apply and shall be in addition to and not in lieu of any other
requirements that Landlord may impose on Tenant in connection with the making of
any Alterations and the following shall apply whether or not Landlord's consent
to the subject Alteration is required:
11.2.1 Plans and Specifications. Prior to commencing any
Alterations, Tenant shall have submitted to Landlord a written proposal
describing in reasonable detail such proposed Alteration and shall provide to
Landlord for approval (or information, in the case of Alterations that do not
require Landlord's consent) such plans and specifications, permits, licenses,
construction budgets and other information (collectively, the "Plans and
Specifications") as Landlord shall request, showing in reasonable detail the
scope and nature of the proposed Alteration.
11.2.2 Permits. Such construction shall not commence until Tenant
shall have procured and paid for all municipal and other governmental permits
and authorizations required therefor (as well as any permits or approvals
required in connection with any Permitted Encumbrance), and Landlord shall join
in the application for such permits or authorizations whenever such action is
necessary; provided, however, that (i) any such joinder shall be at no
liability, cost or expense to Landlord; and (ii) any Plans and Specifications
required to be filed in connection with any such application that require the
approval of Landlord shall have been so approved by Landlord.
11.2.3 No Impairment. Such construction shall not, and prior to
commencement of such construction Tenant's licensed architect or engineer, if
any, shall certify to Landlord that such construction shall not, impair the
structural strength of any component of the applicable Facility or overburden or
impair the operating efficiency of the electrical, water, plumbing, HVAC or
other building systems of any such Facility.
11.2.4 Compliance Certification. Prior to commencing any
Alterations, Tenant's licensed architect or engineer, if any, shall certify to
Landlord that the Plans and Specifications conform to and comply with all
applicable building, subdivision and zoning codes, laws, ordinances, regulations
and other Legal Requirements.
11.2.5 Parking. During and following completion of such
construction, the parking that is located on the Land adjoining the applicable
Facility shall remain adequate for the operation of such Facility for its
Primary Intended Use and in no event shall such parking be less than is required
by any applicable Legal Requirements or was located on the Land adjoining such
Facility prior to such construction.
11.2.6 Materials; Quality. All work done in connection with such
construction shall be done promptly and in a good and workmanlike manner using
good quality materials and in conformity with all Legal Requirements built to
the standards of the Required Condition.
11.2.7 As-Builts. Promptly following the completion of the
construction of any Alterations, Tenant shall deliver to Landlord: (i) "as
built" drawings of any Capital Alterations included therein, certified as
40
Amberleigh
accurate by the licensed architect or engineer, if any, selected by Tenant to
supervise such work; and (ii) a certificate from Tenant's licensed architect or
engineer, if any, certifying to Landlord that such Alterations have been
completed in compliance with the Plans and Specifications and all applicable
Legal Requirements.
11.2.8 Certificate of Occupancy. If, by reason of the
construction of any Alteration, a new or revised certificate of occupancy for
any component of the applicable Facility is required, Tenant shall obtain such
certificate in compliance with all applicable Legal Requirements and furnish a
copy of the same to Landlord promptly upon receipt thereof.
11.2.9 Lien Waivers. Upon completion of any Alteration, Tenant
shall promptly deliver to Landlord final lien waivers from each and every
general contractor and subcontractor that provided goods or services in
connection with such Alteration indicating that such contractor or subcontractor
has been paid in full for such goods or services, together with such other
evidence as Landlord may reasonably require to satisfy Landlord that no liens
have been created in connection with such Alteration.
11.3 Capital Expenditures Account.
11.3.1 Required Capital Expenditures. In order to assure the
maintenance of the Premises in the Required Condition, Tenant agrees to expend,
during each Lease Year, an amount (the "Required Capital Expenditures Amount")
equal to the product of (i) the Required Per Unit Annual Capital Expenditures
Amount times (ii) the aggregate number of licensed units at the Facilities
(subject to Section 11.3.4 below, prorated for any partial Lease Year and
adjusted in the event of any mid-Lease Year change in the number of licensed
units at the Facilities) on repairs, replacements and improvements to the
Premises (other than any part of Landlord's Personal Property or Tenant's
Personal Property) that (x) in accordance with GAAP, constitute capital
expenditures, (y) are contemplated by the Annual Capital Expenditure Budget
approved by Landlord or have otherwise been reasonably approved by Landlord and
(z) have been completed in a good, workmanlike and lien free fashion and in
compliance with all Legal Requirements and the terms Sections 11.1 and 11.2
applicable to any Alterations (herein, "Capital Expenditures"). Within
forty-five (45) days following the end of each Lease Year (and within forty-five
(45) days following the expiration or termination of this Lease), Tenant shall
deliver to Landlord a report (a "Capital Expenditures Report"), certified as
true, correct and complete by Tenant pursuant to an Officer's Certificate,
summarizing and describing in reasonable detail all of the Capital Expenditures
made by Tenant during the preceding Lease Year (or partial Lease Year, if
applicable), on both an aggregate basis and broken down for each Facility, and
such receipts and other information as Landlord may reasonably request relative
to the Capital Expenditures made by Tenant during the applicable Lease Year (or
partial Lease Year, if applicable). If the amount of the Capital Expenditures so
made and reported by Tenant during a particular Lease Year (or partial Lease
Year, if applicable) (the "Actual Capital Expenditures Amount") is less than the
Required Capital Expenditures Amount applicable to such period, Tenant shall, on
or prior to the due date of the Capital Expenditures Report for such period,
deposit (herein, a "Capital Expenditures Deposit") into an interest bearing
41
Amberleigh
account (the "Capital Expenditures Account") under the sole dominion and control
of Landlord (or any Facility Mortgagee) an amount equal to the amount by which
the Required Capital Expenditures Amount for the applicable period exceeds the
Actual Capital Expenditures Amount for such period. If the Actual Capital
Expenditures Amount so made and reported by Tenant during a particular Lease
Year (or partial Lease Year, if applicable) is greater than the Required Capital
Expenditures Amount applicable to such period, then, provided no default or
Event of Default has occurred and no Potential Default is continuing, within
five (5) Business Days after Tenant's presentation of its Capital Expenditures
Report reflecting such greater expenditure (if Landlord is holding the Capital
Expenditures Account) or within five (5) Business Days after Landlord's receipt
of the necessary funds from the Facility Mortgagee that is holding the Capital
Expenditures Account (if a Facility Mortgagee is holding the Capital
Expenditures Account), Landlord shall pay to Tenant the lesser of (x) the amount
by which the Actual Capital Expenditures Amount so made and reported by Tenant
during a particular period exceeds the Required Capital Expenditures Amount for
such period or (y) the amount of funds in the Capital Expenditures Account.
11.3.2 Capital Expenditures Account. The Capital Expenditures
Account shall be maintained with a Lending Institution reasonably satisfactory
to Landlord or with any Facility Mortgagee. Except for losses resulting solely
and directly from any negligence or willful misconduct of Landlord, Landlord
shall not be liable to Tenant or any other Person for any decline in the value
of the funds held in the Capital Expenditures Account. Furthermore, neither
Landlord nor any Facility Mortgagee shall bear responsibility for the financial
condition of, nor any act or omission by, any Lending Institution at which the
Capital Expenditures Account is located. The interest from deposits into the
Capital Expenditures Account shall be retained in the Capital Expenditures
Account to be applied in accordance with the terms of this Section 11.3. Tenant
hereby grants to Landlord a first priority security interest in the Capital
Expenditures Account pursuant to the Uniform Commercial Code (the "UCC") of the
State whose laws govern the perfection of such security interest, and the
provisions of Section 21.1.1.1 below shall be applicable to such security
interest. Upon the occurrence of any Potential Default or any Event of Default,
Landlord or any Facility Mortgagee may apply any funds held in the Capital
Expenditures Account to cure such Potential Default or Event of Default or on
account of any damages suffered or incurred by Landlord in connection therewith.
In connection with any assignment of Landlord's interest under this Lease, the
assigning Landlord or any predecessor shall have the right, to transfer all
amounts in the Capital Expenditures Account and still in its possession or
control to such assignee and, upon such transfer, the assigning Landlord or any
such predecessor, as the case may be, transferring any such amounts shall
thereupon be completely released from all liability with respect to such amounts
so transferred, and Tenant shall look solely to said assignee in reference
thereto.
11.3.3 Disposition of Capital Expenditures Account. As described
above, within forty-five (45) days following the expiration or termination of
this Lease, Tenant shall deliver to Landlord a Capital Expenditures Report with
respect to the Lease Year or partial Lease Year immediately preceding such
42
Amberleigh
expiration or termination, and, if applicable, make a deposit into the Capital
Expenditures Account. If, on the basis of such Capital Expenditures Report,
Tenant is entitled to a payment as described in Section 11.3.1 above, then,
notwithstanding anything to the contrary contained in such Section 11.3.1, such
payment shall be due and payable to Tenant only as and when the conditions of
Section 3.4.3 for the return of the Security Deposit have, been met. Except as
provided in the preceding sentence, upon the expiration or termination of this
Lease, all funds in the Capital Expenditures Account (including, without
limitation, any funds that are required to be deposited therein by Tenant with
respect to the Lease Year or partial Lease Year immediately preceding such
expiration or termination) shall automatically and without further action of the
parties become the property of Landlord, without any obligation on Landlord's
part to credit Tenant in any manner therefor. The obligations of Landlord and
Tenant under this Section 11.3 shall survive the expiration or termination of
this Lease.
11.3.4 Certain Divisions and Calculations. In the event that this
Lease is terminated as to one or more Leased Properties (but not all of the
Premises) on account of any event, circumstance or transaction to which Section
17.9 or Section 40 is applicable, then, for purposes of dividing any amounts
then held in the Escrow Account or the Capital Expenditures Account between the
amounts that will continue to be held under this Lease and the amounts that will
be transferred to corresponding accounts under a New Lease entered into pursuant
to Section 40 hereof or for any other purpose under this Lease, any such amounts
so held in the Escrow Account or the Capital Expenditures Account shall be
allocated to and among each terminated, and each non-terminated, Leased Property
as determined by Landlord, in its sole discretion if any such termination
results from an Event of Default and otherwise in its reasonable discretion. In
addition, in the event of (i) any termination of this Lease as to one or more
Leased Properties (but not all of the Premises) on account of any New Lease
under Section 40 or (ii) any combination of leases pursuant to Section 39,
calculations of the applicable amounts of the Required Capital Expenditures
Amount, Actual Capital Expenditures Amount, required Capital Expenditures
Deposits and similar items shall be made with respect to the Transferred
Premises (in the case of Section 40) or the combined properties under the
Section 39 Lease (in the case of Section 39) the same as if all of such
Transferred Premises or combined properties, as applicable, had been under the
New Lease or Section 39 Lease relating thereto, as applicable, during any
partial Lease Year preceding the Property Transfer Date (in the case of Section
40) or Section 39 Date (in the case of Section 39) applicable thereto.
11.4 Annual Capital Expenditure Budget. Within thirty (30) days prior
to the commencement of each calendar year, Tenant shall deliver to Landlord, at
Tenant's expense, a budget (the "Annual Capital Expenditure Budget") setting
forth Tenant's reasonable estimate of the capital repairs, replacements and
improvements to the Premises that Tenant anticipates will be necessary in such
calendar year to comply with the maintenance, repair and replacement obligations
contained in Section 9 hereof and maintain the Leased Properties in the Required
Condition. The Annual Capital Expenditure Budget shall be subject to Landlord's
approval (which approval shall not be unreasonably withheld) for purposes of
determining and confirming that the capital repairs, replacements and
improvements are sufficient to satisfy Tenant's obligations pursuant to Section
43
Amberleigh
9 hereof; provided, however, that the grant by Landlord of its approval to any
Annual Capital Expenditure Budget shall not be deemed a consent, acknowledgement
or agreement on Landlord's part that such capital repairs, replacements or
improvements are sufficient to satisfy Tenant's obligations pursuant to Section
9 hereunder. Tenant shall perform any and all capital repairs, replacements or
improvements contemplated by the Annual Capital Expenditure Budget within
twenty-four (24) months after the commencement of the Lease Year to which such
Annual Capital Expenditure Budget relates. If Tenant has not completed such
capital repairs, replacements or improvements within such twenty-four (24) month
period, Landlord may, but shall not be obligated to, complete such capital
repairs, replacements or improvements, in which case Landlord may reimburse
itself for the cost of any such work by withdrawing funds from the Capital
Expenditures Account sufficient to pay for such capital repairs, replacements or
improvements, and Tenant shall, within ten (10) days following demand therefor
by Landlord, (i) restore to the Capital Expenditures Account any amount so
withdrawn therefrom and paid to Landlord and (ii) to the extent there were
insufficient funds in the Capital Expenditures Account fully to reimburse
Landlord for the cost of such work, pay to Landlord any remaining unreimbursed
amount. In the event of any payment by Tenant pursuant to subsection (i) and/or
(ii) above, Tenant shall be entitled to include the amount thereof in its next
Capital Expenditures Report.
12. Liens. Subject to the provisions of Section 13 below governing a
permitted contest by Tenant, Tenant will not, directly or indirectly, create or
allow to remain, and will promptly discharge at its expense, any lien,
encumbrance, attachment, title retention agreement or claim upon any Leased
Property or any attachment, levy, claim or encumbrance in respect of the Rent,
not including, however, (i) liens for those taxes of Landlord that Tenant is not
required to pay hereunder, (ii) liens for Impositions or for sums resulting from
noncompliance with Legal Requirements, so long as (1) the same are not yet
payable or (2) such liens are in the process of being contested as permitted by
Section 13, (iii) liens of mechanics, laborers, materialmen, suppliers or
vendors for sums either disputed in good faith or not yet due, provided that (1)
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
and (2) any such liens are in the process of being contested as permitted by
Section 13, and (iv) any liens that are expressly the responsibility of Landlord
hereunder. Notwithstanding the foregoing, Tenant shall bond over any lien
affecting the applicable Leased Property if Landlord shall request or if any
applicable Facility Mortgagee shall so require.
13. Permitted Contests. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, 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 or any lien,
attachment, levy, encumbrance, charge or claim not otherwise permitted by
Section 12, provided that (i) 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
Landlord and from the applicable Leased Property, (ii) neither the applicable
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be reasonably likely to be in danger of being sold, forfeited, attached or
lost, (iii) Tenant shall indemnify and hold harmless Landlord and the Landlord
44
Amberleigh
Indemnified Parties from and against any Losses incurred by Landlord or the
Landlord Indemnified Parties in connection with any such contest or as a result
thereof, (iv) Tenant shall give such security as may be reasonably demanded by
Landlord to insure ultimate payment of, or compliance with, the same and to
prevent any sale or forfeiture of the affected Leased Property or the Rent by
reason of such non-payment or non-compliance; provided, however, the provisions
of this Section 13 shall not be construed to permit Tenant to contest the
payment of Rent or any other sums payable by Tenant to Landlord hereunder, (v)
in the case of the contest of an Insurance Requirement, the coverage required by
Section 14 shall be maintained, and (vi) if such contest is resolved against
Landlord or Tenant, Tenant shall, as Additional Rent due hereunder, pay to the
appropriate payee the amount required to be paid, together with all interest and
penalties accrued thereon, within ten (10) days after such determination (or
within such shorter period as may be required by the terms of such
determination), and comply, within any cure period allowed therefor by the
applicable agency or authority (or if no such cure period shall be allowed or
specified by the applicable agency or authority, promptly and diligently
following the effective date of such determination); provided, however, that
this subsection (vi) is not intended, and shall not be construed, to afford
Tenant any cure or grace period beyond the effective date of any final
unappealable determination. Landlord, at Tenant's expense, shall execute and
deliver to Tenant such authorizations and other documents as may reasonably be
required in any such contest, and, if reasonably requested by Tenant or if
Landlord so desires, shall join as a party therein. The terms of this Section 13
shall survive the expiration or sooner termination of this Lease.
14. Insurance.
14.1 General Insurance Requirements. Tenant shall obtain and maintain,
or cause to be maintained, insurance for Tenant and the Leased Properties
providing insurance coverages of such types, against such risks, in such
amounts, with such deductibles and self-insurance retentions and with such
endorsements as (i) Landlord, in its reasonable discretion, from time to time
deems (1) commercially reasonable (in light of such factors, including, without
limitation, the availability and cost of particular types and amounts of
coverages) and/or (2) consistent with the insurance coverages that are
maintained by owners of properties similar to the Leased Properties or (ii) as
may be required from time to time by any Facility Mortgagee, but with such
insurance coverages at all times to include (without limitation of the preceding
provisions for greater coverages) at least the following minimum coverages:
14.1.1 Coverage for loss or damage by fire, lightning, wind and
such other perils as are included in a standard "all risk" or "special causes of
loss" endorsement and against loss or damage by other risks and hazards covered
by a standard property insurance policy, including, but not limited to, riot,
civil commotion, vandalism, malicious mischief, burglary and theft, relative to
each Leased Property, in each case (i) in an amount equal to one hundred percent
(100%) of the Full Replacement Cost of such Leased Property; (ii) containing an
agreed amount endorsement with respect to the Leased Improvements and Tenant's
Personal Property at such Leased Property waiving all co-insurance provisions;
and (iii) containing (a) an "Ordinance or Law Coverage" or "Enforcement"
endorsement and (b) "demolition" insurance and "increased cost of construction"
insurance, if any of the Leased Improvements at, or the use of, such Leased
45
Amberleigh
Property shall at any time constitute legal non-conforming structures or uses.
In addition, each Tenant shall at a minimum obtain: (y) flood hazard insurance,
in the event that any portion of the Leased Improvements at any Leased Property
is currently or at any time in the future located in a federally designated
"special flood hazard area", and (z) earthquake insurance, in the event that any
Leased Property is located in an area with a high degree of seismic activity,
provided that the insurance pursuant to clauses (y) and (z) hereof shall be on
terms consistent with the comprehensive all risk insurance policy required under
this Section 14.1.1.
14.1.2 Commercial general liability insurance against claims for
personal injury, bodily injury, death or damage to the Leased Properties
occurring upon, in or about each Leased Property, such insurance (i) to be for a
combined limit, excluding umbrella coverage, of not less than One Million and
No/100 Dollars ($1,000,000.00) per occurrence with not less than a Three Million
and No/100 Dollars ($3,000,000.00) general aggregate limit and (ii) to cover at
least the following: (1) premises and operations; (2) products and completed
operations on an "if any" basis; (3) independent contractors; (4) blanket
contractual liability for legal contracts; (5) contractual liability covering
indemnities, if any, given by Tenant contained in the Facility Mortgage, if any,
applicable to the Leased Property, to the extent the same is available; (6)
broad form property damage; (7) personal injury (including death resulting
therefrom); (8) healthcare professional liability, as to any facility with
assisted living operations, and (9) a liquor liability endorsement if alcoholic
beverages are sold at any Leased Property.
14.1.3 Business interruption insurance (i) with loss payable to
Landlord; (ii) covering all risks required to be covered by the insurance
provided for in Section 14.1.1 above; (iii) in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds that will, in Landlord's sole
discretion, cover a period of not less than twelve (12) months from the date of
casualty or loss; and (iv) containing an extended period of indemnity
endorsement that provides that, after the physical loss to the applicable Leased
Property has been repaired, the continued loss of income will be insured until
such income returns to the same level it was prior to the loss or the expiration
of not less than eighteen (18) months from the date of the loss, whichever first
occurs, and notwithstanding that the policy may expire prior to the end of such
period.
14.1.4 At all times during which Alterations or structural
construction or repairs are being made with respect to any of the Leased
Improvements, and only if the Leased Properties' coverage form does not
otherwise apply, (i) owner's contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (ii) the insurance
provided for in Section 14.1.1 above written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against all risks insured
against pursuant to Section 14.1.1 above, (3) including permission to occupy the
Leased Properties, and (4) with an agreed amount endorsement waiving
co-insurance provisions.
46
Amberleigh
14.1.5 Workers' compensation insurance, subject to the statutory
limits of the State in which the applicable Leased Property is located, and
employer's liability insurance with limits of at least One Hundred Thousand and
No/100 Dollars ($100,000.00) per accident and per disease, per employee, and at
least Five Hundred Thousand and No/100 Dollars ($500,000.00) aggregate in
respect of any work or operations on or about any Leased Property, or in
connection with any Leased Property or its operation (if applicable).
14.1.6 Broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers or other pressure vessels,
machinery, and equipment located in, on or about any Leased Property (including
"system breakdown coverage") and insurance against loss of occupancy or use
arising from any breakdown of such equipment.
14.1.7 Umbrella liability insurance in addition to primary
coverage in an amount not less than Fifteen Million and No/100 Dollars
($15,000,000.00) per occurrence on terms consistent with the commercial general
liability insurance policy required under Section 14.1.2 above and covering all
claims typically covered by an umbrella liability policy.
14.1.8 Motor vehicle liability coverage for all owned and
non-owned vehicles, including, but not limited to, rented and leased vehicles,
containing limits per occurrence, including umbrella coverage, of not less than
One Million and No/100 Dollars ($1,000,000.00).
14.1.9 If alcoholic beverages are sold at any Leased Property,
so-called "dramshop" insurance or other liability insurance required in
connection with the sale of alcoholic beverages.
14.1.10 Insurance against employee dishonesty.
14.2 Policies; Certificates. All insurance provided for in Section
14.1 above shall be obtained under valid and enforceable policies (individually,
a "Policy" and, collectively, the "Policies") and shall be subject to the
approval of Landlord. Not less than two (2) Business Days (provided that if such
insurance renewal or expiration dates coincide with the commencement of any
Extended Term, than said two Business Day period shall automatically increase to
fourteen days) prior to the expiration date of each Policy, a certificate of
insurance or other binder in form and substance acceptable to Landlord,
evidencing the renewal of such Policy, accompanied by evidence satisfactory to
Landlord of payment of the premiums then due thereunder (the "Insurance
Premiums"), shall be delivered by Tenant to Landlord. Tenant shall deliver
certified copies of the Policies to Landlord prior to the date hereof and
thereafter upon Landlord's written request. All Policies must have a term of not
less than one (1) year.
14.3 Blanket and Loss Limit Policies. If, as to any Leased Property,
the amount of coverage from time to time required hereunder is reduced or
47
Amberleigh
diminished on account of claims pertaining to other premises or otherwise, then
Tenant shall immediately replenish and supplement such coverages to the limits
required under Section 14.1.
14.4 Additional Insured; No Separate Insurance. All Policies provided
for or contemplated by Section 14.1 above, except for the Policy referenced in
Section 14.1.5, shall name each applicable Tenant as the insured and Landlord
and any Facility Mortgagee(s) and its/their successors and/or assigns as
additional insureds, as its/their interests may appear, and, in the case of
property damage, loss of rent, business interruption, terrorism, boiler and
machinery, flood and earthquake insurance, shall contain a so-called New York
standard non-contributing mortgagee clause in favor of Landlord or any Facility
Mortgagee, as applicable, providing that the loss thereunder shall be payable to
Landlord or such Facility Mortgagee, as applicable. Tenant shall not, on
Tenant's own initiative or pursuant to the request or requirement of any third
party, (i) take out separate insurance concurrent in form or contributing in the
event of loss with that required in this Section 14 to be furnished by Tenant or
(ii) increase the amounts of any then existing insurance by securing an
additional policy or policies, unless all parties having an insurable interest
in the subject matter of the insurance, including in all cases Landlord and all
Facility Mortgagees, are included therein as additional insureds and the loss is
payable under such insurance in the same manner as losses are payable under this
Lease. Tenant shall immediately notify Landlord 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 policies.
14.5 Policy Requirements. All Policies of insurance provided for in
Section 14.1 shall contain clauses or endorsements to the effect that, or
otherwise operate such that:
(i) no act or negligence of Tenant or any Tenant Party, or
failure to comply with the provisions of any Policy, that might
otherwise result in a forfeiture or impairment of the insurance or any
part thereof, shall in any way affect the validity or enforceability of
the insurance insofar as Landlord or any Facility Mortgagee is
concerned;
(ii) the Policy shall not be materially amended (other than to
increase the coverage provided thereby) or canceled without at least
thirty (30) days' written notice to Landlord, any Facility Mortgagee
and any other party named therein as an additional insured or loss
payee;
(iii) neither Landlord nor any Facility Mortgagee shall be
liable for any Insurance Premiums thereon or subject to any assessments
thereunder; and
(iv) a customary waiver of subrogation rights under all
property insurance policies (including, without limitation, the
coverages described in Sections 14.1.1, 14.1.3 and 14.1.6 above) and
commercial general liability insurance policies (including, without
limitation, the coverages described in Sections 14.1.2 and 14.1.7
above) as to Landlord and any Facility Mortgagee.
48
Amberleigh
14.6 Evidence of Compliance. If at any time Landlord is not in receipt
of written evidence that all insurance required hereunder is in full force and
effect, Landlord shall have the right, without notice to Tenant (except as may
be expressly required below), to take such action as Landlord deems necessary to
protect its interest in the Leased Properties, including, but not limited to,
the obtaining of such insurance coverages as Landlord in its sole discretion
deems appropriate (it being understood that Landlord shall endeavor to give
Tenant at least one (1) Business Days' oral or written notice thereof, unless
such coverage shall have already expired, in which case no such notice shall be
required), and all out-of-pocket premiums incurred by Landlord in connection
with any such action or in obtaining any such insurance and keeping it in effect
shall be paid by Tenant to Landlord upon demand and shall bear interest at the
Overdue Rate until paid.
14.7 Foreclosure; Transfer. In the event of foreclosure of any
Facility Mortgage or other transfer of title to any Leased Property, all right,
title and interest of the applicable Tenant in and to the Policies then in force
concerning the Leased Properties and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or in Landlord, Facility
Mortgagee or other transferee in the event of such other transfer of title.
14.8 Insurance Company. The Policies shall be issued by one or more
insurance companies, duly qualified to do business in the jurisdictions where
the Leased Properties are located and rated A-: VII or better by A.M. Best and
having a claims-paying ability of at least "A" or its equivalent by each of the
Rating Agencies, or by a syndicate of insurers through which at least
seventy-five percent (75%) of the coverage (if there are four (4) or fewer
members of the syndicate) or at least sixty percent (60%) of the coverage (if
there are five (5) or more members of the syndicate) is with carriers having
such claims-paying ability ratings (provided that all such carriers shall have
claims-paying ability ratings of not less than "A" or the equivalent by each of
the Rating Agencies).
15. Damage and Destruction.
15.1 Notice of Casualty. If any Leased Property shall be destroyed, in
whole or in part, or damaged by Casualty, Tenant shall give prompt written
notice thereof to Landlord and any Facility Mortgagee, in no event more than
five (5) Business Days after the occurrence of a Casualty, but immediately with
respect to any material Casualty. Within fifteen (15) days after the occurrence
of a Casualty, or as soon thereafter as such information is reasonably available
to Tenant, Tenant shall provide the following information to Landlord: (i) the
date of the Casualty; (ii) the nature of the Casualty; (iii) a description of
the damage or destruction caused by the Casualty, including, but not limited to,
the type of Leased Property damaged, the area of the Leased Improvements damaged
and the general extent of such damage; (iv) a preliminary estimate of the cost
to repair, rebuild, restore or replace the Leased Property; (v) a preliminary
estimate of the schedule to complete the repair, rebuilding, restoration or
replacement of the Leased Property; (vi) a description of the anticipated
property insurance claim, including, but not limited to, the name of the
insurer, the insurance coverage limits, the deductible amounts, the expected
settlement amount (if and when known) and the expected settlement date (if and
when known); and (vii) (if and when known) a description of the business
49
Amberleigh
interruption claim, including, but not limited to, the name of the insurer, the
insurance coverage limits, the deductible amounts, the expected settlement
amount and the expected settlement date. Tenant shall provide Landlord with
copies of any and all material correspondence to and from the insurance provider
within five (5) Business Days after Tenant's receipt or submission thereof and
provide any other information reasonably requested by Landlord.
15.2 Substantial Destruction. Except as otherwise set forth herein, if
a Facility is substantially destroyed or rendered Unsuitable For Its Primary
Intended Use by a Casualty at any time during the Term, Landlord may elect to
terminate this Lease with respect to the Leased Property on which such Facility
is located by providing written notice to Tenant within ninety (90) days of the
date upon which Tenant notifies Landlord of the Casualty, which termination
shall be effective as of the date of Tenant's receipt of such notice. If
Landlord elects to terminate, then Landlord shall receive any and all of the
insurance proceeds payable by reason of the Casualty (the "Casualty Insurance
Proceeds") and Tenant shall within five (5) Business Days pay to Landlord an
amount equal to any uninsured deductible, and as of the date of such
termination, the applicable Leased Property shall be deleted from this Lease and
the provisions of Section 17.9 governing a deletion of a Leased Property after
Casualty shall be applicable. If Landlord does not elect to terminate, then
Tenant shall promptly rebuild and restore the Leased Property in accordance with
Section 15.4 below and Landlord shall make the Casualty Insurance Proceeds
available to Tenant for such restoration only pursuant to, and in accordance
with, Section 15.5 below. The term "substantially destroyed" means any Casualty
resulting in the loss of use of fifty percent (50%) or more of the total units
at the Facility located on the relevant Leased Property or that would require
more than fifty percent (50%) of the value of the Leased Improvements to
restore.
15.3 Partial Destruction. If a Leased Property is damaged by a
Casualty but the Facility(ies) located on such Leased Property is not
substantially destroyed or rendered Unsuitable For Its Primary Intended Use,
then, subject to the requirements of any Facility Mortgage binding upon, or
secured by, the Leased Property, Tenant shall restore the Leased Property in
accordance with the requirements of Section 15.4 below and Landlord shall make
the Casualty Insurance Proceeds available to Tenant for such restoration
pursuant to Section 15.5 below. Notwithstanding the foregoing, if such Casualty
shall occur during the final Lease Year of the Term and the repair and
restoration resulting from the same would cost, according to the Landlord's
reasonable estimate, more than $200,000 per Facility, then Landlord shall have
the right to terminate this Lease with respect to such Leased Property and
retain any Casualty Insurance Proceeds, by delivering notice of such election to
Tenant within ninety (90) days of its receipt of notice from Tenant of such
Casualty, which termination shall be effective as of the date such notice of
termination from Landlord is received by Tenant, whereupon Tenant shall
immediately pay to Landlord the amount of any uninsured deductible and the
applicable Leased Property shall be deleted herefrom pursuant to Section 17.9
below governing the deletion of a Leased Property in connection with a Casualty.
50
Amberleigh
15.4 Restoration.
15.4.1 Commencement of Restoration. Within forty-five (45) days
after the earliest to occur of (i) Tenant's receipt of notice from Landlord
directing Tenant to restore a Leased Property damaged or destroyed by a
Casualty, (ii) in the case of a Casualty that results in Landlord having the
option to terminate this Lease as to the affected Leased Property pursuant to
Section 15.2 or Section 15.3, the expiration of the period in which Landlord may
exercise such option to terminate if Landlord fails to affirmatively elect to
terminate this Lease with respect to such Leased Property, or (iii) in the case
of damage to a Leased Property by Casualty that does not result in the
substantial destruction or the rendering Unsuitable For Its Primary Intended Use
of the applicable Facility(ies), and that does not occur during the final Lease
Year of the Term, the date of such Casualty, Tenant shall furnish to Landlord
complete plans and specifications (the "Restoration Plans and Specifications")
describing the work Tenant intends to undertake to restore the applicable Leased
Property (the "Work") for Landlord's approval, which approval shall not be
unreasonably withheld. The Restoration Plans and Specifications shall be
prepared in accordance with good and customary construction and design practices
and bear the signed approval thereof by an architect licensed to do business in
the State where the applicable Leased Property is located and shall be
accompanied by a written estimate from the architect containing the projected
cost of completing the Work. The Restoration Plans and Specifications shall
contemplate Work of such nature, quality and extent that, upon the completion
thereof, the Leased Property shall be at least equal in value and general
utility to its value and general utility prior to the Casualty and shall be
adequate to operate the applicable Facility(ies) for its Primary Intended Use.
Tenant shall satisfy all of the terms and conditions set forth in Sections
11.2.1 through 11.2.4 hereof relative to Alterations as to the Work and the
Restoration Plans and Specifications.
15.4.2 Permits. Prior to the commencement of the Work, Tenant
shall furnish to Landlord certified or photostatic copies of all permits and
contracts required by any and all applicable Legal Requirements or Insurance
Requirements in connection with the commencement and conduct of the Work.
15.4.3 Conduct of Work. Upon satisfaction of the requirements set
forth in Section 15.4.1 and Section 15.4.2 above, Tenant shall perform the Work
diligently and in a good, workmanlike and lien-free fashion, in accordance with
(i) the Restoration Plans and Specifications; (ii) the permits and contracts
referred to in Section 15.4.2 above; and (iii) all applicable Legal Requirements
and other requirements of this Lease.
15.5 Disbursement of Insurance Proceeds. Tenant shall use commercially
reasonable efforts to complete the Work on or prior to the estimated completion
date provided by its architect. If Landlord is required or elects to apply any
Casualty Insurance Proceeds toward repair or restoration of the applicable
Facility, provided Tenant is diligently performing the Work in accordance with
this Lease, Landlord shall disburse such Casualty Insurance Proceeds as and when
required by Tenant in accordance with normal and customary practice for the
payment of a general contractor in connection with construction projects similar
51
Amberleigh
in scope and nature to the Work, including, at Landlord's option, the
withholding of 10% of each disbursement of such Casualty Insurance Proceeds
until the Work is completed as evidenced by a certificate of occupancy or
similar evidence issued upon an inspection by the applicable Governmental
Authority and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the applicable Leased Property or to Landlord in
connection with the Work. Upon the completion of the Work and the furnishing of
such proof, the balance of the Casualty Insurance Proceeds payable to Tenant on
account of the Work shall be paid to Tenant as and when the terms of Sections
15.4.1 through 15.4.3 have been complied with. Prior to any final disbursement
of Casualty Insurance Proceeds, Tenant shall satisfy all of the conditions set
forth in Sections 11.2.5 through 11.2.9 relative to Alterations as to the Work,
as well as provide evidence reasonably satisfactory to Landlord that any amounts
required to be paid by Tenant in connection with such Work pursuant to Section
15.6 below have been paid in full. Notwithstanding anything contained herein to
the contrary, any Facility Mortgagee may retain and disburse the Casualty
Insurance Proceeds and Tenant shall comply with the requests and requirements of
such Facility Mortgagee in connection with the Work and the disbursement of
Casualty Insurance Proceeds.
15.6 Insufficient Proceeds/Risk of Loss. If the Casualty Insurance
Proceeds are not sufficient to pay the costs of the Work in full, Tenant shall
nevertheless remain responsible, at its sole cost and expense, to complete the
Work. Tenant expressly assumes all risk of loss, including, but not limited to,
a decrease in the use, enjoyment or value of the Leased Property from any
Casualty whatsoever, whether or not insurable or insured against. Tenant shall
pay any insurance deductible and any other uninsured Losses.
15.7 Excess Proceeds. Provided no Event of Default has occurred and no
Potential Default is continuing and this Lease is not terminated pursuant to
Section 15 with respect to the Leased Property on which the applicable Facility
is located, any amount by which the Casualty Insurance Proceeds exceed the
amount necessary to complete the Work shall be promptly paid by Landlord to
Tenant, provided, however, that any such excess Casualty Insurance Proceeds
shall be paid by Landlord to Tenant only following the disbursement of Casualty
Insurance Proceeds necessary to complete the Work in accordance with Section
15.5.
15.8 Landlord's Inspection. During the progress of the Work, Landlord
and Landlord's Representatives may, from time to time, inspect the Work and the
Leased Property. If, during such inspection or otherwise, Landlord and
Landlord's Representatives determine that the Work is not being done in
accordance with the Restoration Plans and Specifications, this Lease or any
Legal Requirements, upon receipt by Tenant from Landlord of a written notice
setting forth in reasonable specificity and detail any defect in the Work,
Tenant will cause corrections to be made to any such defect.
15.9 Not Trust Funds. Notwithstanding anything herein or at law or in
equity to the contrary, none of the Casualty Insurance Proceeds, or Award on
account of any Condemnation, that may be paid to Landlord as herein provided
shall be deemed trust funds, and Landlord shall be entitled to dispose of such
Casualty Insurance Proceeds or Award as provided in this Section 15 or in
Section 16 or Section 17.6 below, as applicable.
52
Amberleigh
15.10 Waiver. Tenant waives any statutory rights of termination that
may arise by reason of any Casualty or Condemnation.
15.11 Facility Mortgagee. Notwithstanding anything contained herein to
the contrary, in the event that any Facility Mortgagee elects to require that
any Casualty Insurance Proceeds in connection with any Casualty, or the Award in
connection with any Condemnation, be applied by Landlord to reduce the
outstanding principal balance of any loan secured by any Leased Property,
Landlord may elect, in its sole discretion and by written notice to Tenant,
delivered promptly after the receipt by Landlord of written notice of such
election from Facility Mortgagee, to terminate this Lease as to the Leased
Property affected by such Casualty or Condemnation, in which event the
provisions of Section 17.9 governing a deletion of one or more Leased Properties
from this Lease after a Casualty or Condemnation shall apply. Notwithstanding
anything contained in Section 15 or Section 16 hereof, Tenant shall remain
liable for any uninsured portion of any Casualty or the cost of any restoration
not covered by an Award in the event this Lease is terminated as to the
applicable Leased Property pursuant to Section 15 or Section 16 hereof. In the
event a Facility Mortgagee so elects to apply any Casualty Insurance Proceeds or
Award in reduction of a loan secured by a particular Leased Property and
Landlord elects not to exercise its above-described termination right as to such
Leased Property, Landlord shall be obligated to disburse its own funds in
replacement for any Casualty Insurance Proceeds or Award so applied by the
Facility Mortgagee, and, in such event, Landlord's own funds shall be disbursed
to Tenant from time to time as, when and subject to the satisfaction of the same
terms, conditions and requirements as would have governed the disbursement of
the Casualty Insurance Proceeds or Award that Landlord's funds replace (e.g.,
the requirements of Section 15.5 shall continue to be required to be satisfied
as a pre-condition to any disbursement of Landlord's funds).
16. Condemnation.
16.1 Parties' Rights and Obligations. If during the Term there is any
Condemnation of all or any part of any Leased Property, the rights and
obligations of the parties shall be determined by this Section 16.
16.2 Total Taking. If any Leased Property is totally taken by
Condemnation, this Lease shall terminate as to such Leased Property on the Date
of Taking, in which event the provisions of Section 17.9 governing the deletion
of one or more Leased Properties from this Lease upon a Condemnation shall
apply. In the event of a total taking by Condemnation of any Leased Property,
the Award shall be solely the property of Landlord, whether such damages shall
be awarded as compensation for diminution in value of the leasehold or the fee
estate of the Premises; provided, however, Tenant shall be entitled to any
damages specifically attributable to reasonable removal and relocation costs
included in the Award.
16.3 Partial Taking. If any portion of any Leased Property is taken by
Condemnation, this Lease shall remain in effect as to such Leased Property if
the Facility(ies) located thereon is not thereby rendered Unsuitable For Its
Primary Intended Use as reasonably determined by Landlord, but if the
53
Amberleigh
Facility(ies) is/are thereby rendered Unsuitable For Its Primary Intended Use,
this Lease shall terminate as to such Leased Property on the Date of Taking, in
which event the provisions of Section 17.9 governing the deletion of one or more
Leased Properties from this Lease upon a Condemnation shall apply. If, as a
result of any such partial taking by Condemnation, this Lease is not terminated
as provided above, Tenant's obligation to make payments of Rent and to pay all
other charges required under this Lease shall remain unabated during the Term
notwithstanding such Condemnation. In the event of any partial taking by
Condemnation of any Leased Property, the entire Award shall belong to and be
paid to Landlord, except that, subject to the rights of any Facility Mortgagees,
Tenant shall be entitled to receive from the Award, if and to the extent such
Award specifically includes such item, the following: (i) a sum specifically
attributable to Tenant's Personal Property and any reasonable removal and
relocation costs included in the Award; and (ii) a sum specifically attributable
to the cost of restoring the Leased Property in accordance with Section 16.4
hereof; and (iii) a sum specifically attributable to the interruption of
business operations, which sum, if and to the extent received by Landlord, shall
be credited against payments of Rent and other charges due from Tenant to
Landlord under this Lease unless the taking permanently removes from operation a
material number of units in the Facility on any Leased Property, in which event,
from and after such taking, the Fixed Rent hereunder for such Leased Property
shall be equitably abated, as determined by Landlord, in its reasonable
discretion, provided that in no event shall any such abatement exceed (on an
annual basis) an amount in excess of eight percent of the condemnation award
retained by Landlord with respect to such taking and not applied to repair or
restore such Facility.
16.4 Restoration. If there is a partial taking by Condemnation of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 16.3, Tenant at its cost shall accomplish all necessary restoration,
which restoration activities shall be performed in accordance with the terms and
conditions applicable to Work under Section 15.
16.5 Temporary Taking. The taking of any Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the Condemnor has continued for
longer than four (4) months. During any such four (4) month period, all the
provisions of this Lease shall remain in full force and effect and Rent shall
continue without abatement or reduction.
17. Default.
17.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Lease:
17.1.1 Payment Default. Tenant fails to make payment of the Rent
or any other sum payable under or pursuant to the terms of this Lease when the
same becomes due and payable and such failure is not cured within four (4) days
after such due and payable date.
17.1.2 Certain Covenant Defaults. Tenant fails to observe or
perform any term, covenant or agreement on its part to be performed or observed
54
Amberleigh
in the time and manner set forth in Section 3.4.3, Section 8.1.11, Section
8.2.5, (subject to any express cure rights set forth in Section 8.2.5.4),
Section 12 (subject to any express contest rights set forth in Section 13), item
(vi) of Section 13, Section 14.1, Section 14.2, Section 14.5, Section 20.1
(i.e., delivery of the subordination agreement set forth therein within the
relevant time period described therein), Section 24, Section 25.2 or Section
25.12.
17.1.3 Reporting Obligations. Any Tenant fails to observe or
perform any term, covenant or other obligation of Tenant set forth in Section 25
hereof and such failure is not cured within a period of five (5) days after
receipt of written notice thereof from Landlord.
17.1.4 General Covenant Defaults. Tenant fails to observe or
perform any term, covenant or condition of this Lease not specifically provided
for in this Section 17.1 and such failure is not cured within a period of thirty
(30) days after receipt of written notice from Landlord, provided that if such
default is not reasonably susceptible of cure within said initial thirty (30)
day period, but Tenant has diligently and continuously attempted to cure such
failure within said initial thirty (30) day period, then said initial thirty
(30) day period may be extended one-time only, by up to thirty (30) additional
days (for a total of sixty (60) days), provided that during such extension
Tenant diligently and continuously pursues such cure.
17.1.5 Representations and Warranties. Any representation or
warranty made by or on behalf of Tenant under or in connection with this Lease
or any document, financial statement, certificate or agreement delivered by or
on behalf of Tenant in connection with this Lease (including, but not limited
to, any Officer's Certificate or Estoppel Certificate) proves to have been false
or misleading in any material respect on the day when made or deemed made. In
addition, with respect to any representation or warranty made by or on behalf of
Tenant under or in connection with this Lease or any document, financial
statement, certificate or agreement delivered by or on behalf of Tenant in
connection with this Lease (including, but not limited to, any Officer's
Certificate or Estoppel Certificate) that would have been false or misleading in
any material respect on the day when made or deemed made but for a qualification
based on Tenant's knowledge (or any similar qualification) and such matter (in
Landlord's reasonable judgment) is material and adverse with respect to Tenant,
any Guarantor and/or the Leased Property then, such matter shall constitute an
Event of Default hereunder unless such matter is fully cured within thirty (30)
days (but immediately with respect to any Jeopardy Event) after Tenant first
obtains knowledge of such matter.
17.1.6 Lease Guaranty Defaults. Any Guarantor shall fail to
observe or perform any term, covenant or condition of any Lease Guaranty and
such failure is not cured within any applicable cure period provided for in such
Lease Guaranty.
17.1.7 Bankruptcy. Any Tenant, any Guarantor or any ParentCo: (i)
admits in writing its inability to pay its debts generally as they become due;
(ii) files a petition in bankruptcy or a petition to take advantage of any
bankruptcy, reorganization or insolvency act; (iii) makes an assignment for the
55
Amberleigh
benefit of its creditors; (iv) consents to the appointment of a receiver for
itself or for the whole or any substantial part of its property; or (v) files a
petition or answer seeking reorganization or arrangement under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof.
17.1.8 Bankruptcy Petition. Any petition is filed by or against
any Tenant, any Guarantor or any ParentCo under federal bankruptcy laws, or any
other proceeding is instituted by or against any Tenant, any Guarantor or any
ParentCo seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for any
Tenant, any Guarantor or any ParentCo, or for any substantial part of the
property of any Tenant, any Guarantor or any ParentCo, and such proceeding is
not dismissed within sixty (60) days after institution thereof, or any Tenant,
any Guarantor or any ParentCo shall take any action to authorize or effect any
of the actions set forth above in this Section 17.1.8.
17.1.9 Liquidation. Any Tenant, any Guarantor or any ParentCo is
liquidated or dissolved, or shall begin proceedings toward such liquidation or
dissolution.
17.1.10 Levy. The estate or interest of any Tenant in any Leased
Property or any part thereof is levied upon or attached in any proceeding and
the same shall not be vacated or discharged within the later of sixty (60) days
after commencement thereof or thirty (30) days after receipt by such Tenant of
notice thereof from Landlord or any other Person (unless such Tenant shall be
contesting such lien or attachment in good faith in accordance with Section 13
hereof).
17.1.11 Receiver. Any receiver, trustee, custodian or other
similar official is appointed for any Tenant, any Guarantor or any of the
Facilities and any such appointment is not dismissed within sixty (60) days
after the date of such appointment and prior to the entry of a final,
unappealable order approving such appointment.
17.1.12 Licensure, Authorization or Facility Provider Agreement
Defaults. The receipt by Tenant of written notice of any (i) determination by
applicable Governmental Authorities of Tenant's non-compliance with Legal
Requirements affecting the Properties in any material way applicable to any
Leased Property, or (ii) revocation of any license, permit, approval or other
Authorization required for the lawful operation of a Leased Property in
accordance with its Primary Intended Use, or (iii) other circumstances under
which (a) a Tenant is required by a determination of any Governmental Authority
to cease operation of a Facility in accordance with its Primary Intended Use or
(b) any Facility Provider Agreement or reimbursement agreement, or certification
of Tenant under Medicare or Medicaid pursuant thereto, is terminated, in whole
or in part, prior to the expiration of the term thereof or, without the prior
written consent of Landlord in each instance (which consent may be withheld in
Landlord's sole and absolute discretion), is not renewed or extended, in whole
or in part, upon the expiration of the stated term thereof. Tenant may, however,
56
Amberleigh
upon prior written notice to Landlord, (i) fully satisfy within any applicable
time frame set forth therein, all payments and other actions required under the
applicable determination described above, or (ii) contest the legality or
applicability of any determination described above, if Tenant, at Tenant's own
expense, maintains such action in good faith, by appropriate proceedings and
with due diligence, and on a regular basis fully informs Landlord of the status
of, and material developments in, any such contest and furnishes Landlord with
such additional documents and information concerning such contest as Landlord
may reasonably request from time to time, and if Tenant subsequently fully
complies within any applicable time from set forth therein with any final,
non-appealable determination. If compliance with any such determination pending
the prosecution of any such proceeding may legally be delayed (x) without the
incurrence of any lien, charge or liability of any kind against the applicable
Facility or Landlord's interest therein, (y) without any loss of licensure,
certification or other Authorization that would materially and adversely impair
Tenant's ability to continue to operate the affected Facility in accordance with
its Primary Intended Use during Tenant's contest, and (z) without subjecting
Landlord to any liability, civil or criminal, for failure so to comply
therewith, Tenant may delay compliance therewith until the final unappealable
determination of such proceeding, provided, however, if any such lien, charge or
civil or criminal liability would be incurred by reason of any such delay,
Tenant may nonetheless contest as aforesaid and delay as aforesaid provided that
such delay would not subject Landlord to criminal liability and Tenant (i)
furnishes to Landlord security reasonably satisfactory to Landlord against any
loss or injury by reason of such contest or delay, (ii) prosecutes the contest
with due diligence and in good faith, and (iii) keeps Landlord informed, and
provides additional documentation and information, relative to such contest as
described above.
17.1.13 Reduction in Number of Licensed Units. There is a
reduction in the number of licensed units, at the appropriate facility, as set
forth on Schedule 17.1.13 attached hereto or a change in the type of licensed
units for any Facility in violation of the requirements of this Lease.
17.1.14 [Intentionally Omitted]
17.1.15 Adverse Regulatory Actions. With respect to any Facility,
any Governmental Authority (i) makes a material substandard quality of care
determination regarding such Facility and the underlying conditions that
resulted in such determination are not corrected within ninety (90) days (or
such lesser period as may be permitted by the applicable Governmental Authority
or applicable Legal Requirement); (ii) makes a determination that such Facility
is not in material substantial compliance with any applicable regulatory
requirements and the underlying conditions that resulted in such determination
are not corrected within ninety (90) days (or such lesser period as may be
permitted by the applicable Governmental Authority or applicable Legal
Requirement); (iii) designates any portion of such Facility or the entirety of
such Facility as part of a "poor performing chain" and the underlying conditions
that resulted in such designation are not corrected within ninety (90) days (or
such lesser period as may be permitted by the applicable Governmental Authority
or applicable Legal Requirement); (iv) takes materially adverse regulatory
action with respect to such Facility, including, without limitation, the
57
Amberleigh
imposing of civil money penalties, with such adverse regulatory action
continuing unremedied for a period of ninety (90) days (or such lesser period as
may be permitted by the applicable Governmental Authority or applicable Legal
Requirement) following the commencement of such adverse regulatory action; (v)
commences procedures to impose a ban on new admissions generally or on the
admission of residents otherwise qualifying for reimbursement under any
applicable governmental reimbursement program and the underlying conditions that
resulted in the commencement of such procedures are not corrected on or prior to
the earlier of ninety (90) days (or such lesser period as may be permitted by
the applicable Governmental Authority or applicable Legal Requirement) or the
imposition of such a ban; or (vi) imposes a ban of the nature described in
clause (v) above. Tenant may, however, upon prior written notice to Landlord,
(i) fully satisfy within any applicable time frame set forth therein, all
payments and other actions required under the applicable determination described
above, or (ii) contest the legality or applicability of any determination
described above, if Tenant, at Tenant's own expense, maintains such action in
good faith, by appropriate proceedings and with due diligence, and on a regular
basis fully informs Landlord ' of the status of, and material developments in,
any such contest and furnishes Landlord with such additional documents and
information concerning such contest as Landlord may reasonably request from time
to time, and if Tenant subsequently fully complies within any applicable time
frame set forth therein with any final, non-appealable determination. If
compliance with any such determination pending the prosecution of any such
proceeding may legally be delayed (x) without the incurrence of any lien, charge
or liability of any kind against the applicable Facility or Landlord's interest
therein, (y) without any loss of licensure, certification or other Authorization
that would materially and adversely impair Tenant's ability to continue to
operate the affected Facility in accordance with its Primary Intended Use during
Tenant's contest, and (z) without subjecting Landlord to any liability, civil or
criminal, for failure so to comply therewith, Tenant may delay compliance
therewith until the final unappealable determination of such proceeding,
provided, however, if any such lien, charge or civil or criminal liability would
be incurred by reason of any such delay, Tenant may nonetheless contest as
aforesaid and delay as aforesaid provided that such delay would not subject
Landlord to criminal liability and Tenant (i) furnishes to Landlord security
reasonably satisfactory to Landlord against any loss or injury by reason of such
contest or delay, (ii) prosecutes the contest with due diligence and in good
faith, and (iii) keeps Landlord informed, and provides additional documentation
and information, relative to such contest as described above.
17.1.16 Cessation of Services. Except in connection with
restoration of any Casualty or Condemnation or on account of any Alteration
permitted by the terms of this Lease, any cessation of operations at all or any
material part of any Facility.
17.1.17 Reserve Event. The occurrence of any Reserve Event
following notice and thirty (30) days to cure said Reserve Event.
17.1.18 Default Under Other Leases or Guaranties. Any default by
any Tenant Lease Affiliate or guarantor that continues beyond any applicable
grace or cure period shall occur under the terms of (i) any of the Other Leases
58
Amberleigh
or (ii) any guaranty(ies) of any of the leases referenced in subsection (i)
above by Guarantor, any other guarantor or any of their respective successors
and assigns.
No cure period set forth in this Section 17.1 shall be duplicative of, or
otherwise in addition to, any express cure period or other period for
performance of the subject event or circumstance set forth in this Lease or any
other applicable instrument referenced in this Lease.
17.2 Remedy Election. Upon the occurrence of any Event of Default,
Landlord may, at its option and by written notice to Tenant, terminate this
Lease (i) as to the Premises and/or (ii) if such Event of Default is a Facility
Default, as to any one or more of the Leased Property(ies) (selected in
Landlord's sole discretion and by written notice to Tenant) to which such
Facility Default relates (a termination of this Lease as to less than all of the
Premises as provided in this subsection (ii) is herein referred to as a "Limited
Termination Election") (the Leased Property(ies) as to which Landlord elects to
terminate this Lease as provided in subsection (i) or subsection (ii) above are
herein referred to as "Terminated Lease Properties"). Upon receipt of a
termination notice as provided in this Section 17.2, Tenant shall have no right
to cure the Event of Default in question, all rights of Tenant under this Lease
shall cease as to the Leased Property(ies) so specified, and, if the Leased
Property(ies) so specified is/are less than all of the Premises, the provisions
of Section 17.9 shall apply. Without limitation of the foregoing, if Landlord
makes a Limited Termination Election, the deletion of the applicable Terminated
Lease Properties from this Lease shall be absolutely without limitation of each
Tenant's continuing obligation (on a joint and several basis) for the damages
and other amounts owing on account of the Event of Default giving rise to the
deletion herefrom of such Terminated Lease Properties and/or the termination of
this Lease as to such Terminated Lease Properties. Notwithstanding any Limited
Termination Election, Tenant shall pay, as Additional Rent, all Litigation Costs
as a result of any Event of Default hereunder.
17.3 Certain Remedies. If an Event of Default shall have occurred,
Tenant shall, if and to the extent required by Landlord so to do, immediately
surrender to Landlord the Leased Property(ies) specified by Landlord and as to
which the Lease has been or may be terminated pursuant to Section 17.2 or
otherwise, and Landlord may enter upon and repossess such Leased Property(ies)
by reasonable force, summary proceedings, ejectment or otherwise, and may remove
Tenant and all other Persons and all personal property from such Leased
Property(ies) subject to the rights of any occupants or residents and to any
requirement of law. The provisions of this Section are subject to the terms of
Section 46.2.8 below. Any action by Landlord to recover possession of the
Premises, any attempt by Tenant to surrender the Premises and any acceptance of
possession by Landlord shall not be deemed a termination of this Lease unless
Landlord specifically notifies Tenant in writing that this Lease is terminated
and that Tenant's liability for rent thereafter accruing has been released.
17.4 Damages. To the extent permitted by law, neither (i) the
termination of this Lease pursuant to Section 17.2, (ii) the repossession of any
or all of the Leased Properties or any portion thereof, (iii) the failure of
Landlord to relet any or all of the Leased Properties or any portion thereof,
59
Amberleigh
(iv) the reletting of any or all of the Leased Properties or any portion
thereof, (v) the failure of Landlord to collect or receive any rentals due upon
any such reletting, nor (vi) the election by Landlord not to terminate the Lease
but rather to seek all damages provided at law or in equity, shall relieve
Tenant of any of its liabilities or obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination of this Lease (or any termination of this Lease as to less than
all of the Leased Properties in the event of a Limited Termination Election or
the election by Landlord not to terminate this Lease as to such Leased
Properties, but rather to pursue its damages at law or in equity), without
limitation of Section 17.5 and Section 19 below, Tenant shall forthwith pay to
Landlord, at Landlord's option, as liquidated damages with respect to Rent for
the Premises (or the Terminated Lease Properties in the event of any Limited
Termination Election), either:
(A) the sum of: (1) the unpaid Rent that had been earned at the time
of termination (or the unpaid Rent as to the Terminated Lease Properties in the
event of a Limited Termination Election), which Rent shall bear interest at the
Overdue Rate from the date of such termination until paid; and (2) the then net
present value (computed using a discount rate equal to 8%) of the amount of
unpaid Rent (or the unpaid Rent as to the Terminated Lease Properties in the
event of a Limited Termination Election) for the balance of the Term not
previously collected pursuant to clause (B) below following the date of
termination (excluding, however, any period following termination on account of
which Landlord previously collected Rent pursuant to clause (B) below) without,
subject to Section 17.5 below, any obligation or deemed obligation on the part
of Landlord to mitigate damages, or
(B) each installment of Rent hereof and other sums payable hereunder
(or such Rent and other sums as to the Terminated Lease Properties in the event
of a Limited Termination Election) as the same become due and payable, to the
extent that such Rent and other sums exceed the rent and other sums actually
collected by Landlord for the corresponding period pursuant to any reletting
(without subject to Section 17.5 below, any obligation or deemed obligation on
the part of Landlord to mitigate damages) of the Premises (or the Terminated
Lease Properties in the event of a Limited Termination Election).
Notwithstanding anything contained herein to the contrary, in the event
that Landlord elects to collect damages pursuant to clause (A) or clause (B)
above, Landlord may subsequently elect to collect damages pursuant to the other
of clause (A) and clause (B) above, in each case so long as Landlord does not
collect, and provided that Landlord may not collect, any damages pursuant to
clause (A) or clause (B) above, as applicable, with respect to any period as to
which Landlord has theretofore actually collected damages from Tenant pursuant
to the other of clause (A) and clause (B) above, as applicable. In case of any
Event of Default, Landlord may, with or without terminating this Lease, (x)
relet any or all of the Premises or any part or parts thereof, either in the
name of Landlord or otherwise, for a term or terms that may, at Landlord's
option, be equal to, less than or exceed the period that would otherwise have
constituted the balance of the Term and may grant concessions or free rent to
the extent that Landlord considers advisable or necessary to relet the same, and
(y) make such reasonable alterations, repairs and decorations in the applicable
Leased Property(ies) or any portion thereof as Landlord, in its sole judgment,
considers advisable or necessary for the purpose of reletting the applicable
60
Amberleigh
Leased Property(ies); and such reletting and the making of such alterations,
repairs and decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be liable in any
way whatsoever for failure to relet any Leased Property, or, in the event that
any Leased Property is relet, for failure to collect the rent under such
reletting. To the fullest extent permitted by law, Tenant hereby expressly
waives any and all rights of redemption granted under any present or future laws
in the event of Tenant's being evicted or dispossessed, or in the event of
Landlord's obtaining possession of any Leased Property, by reason of the
violation by Tenant of any of the covenants and conditions of this Lease or any
other Event of Default. The provisions of this Section are subject to the terms
of Section 46.2.8 below.
17.5 Waiver; Mitigation; Limitation on Certain Tenant Remedies. If
this Lease is terminated pursuant to this Section 17, whether in whole or, in
the case of any Limited Termination Election, in part, Tenant waives, to the
maximum extent permitted by applicable law, (i) any right of redemption,
re-entry or repossession granted under any present and future laws in the event
Landlord obtains the right to possession of the Leased Property(ies) by reason
of the violation by Tenant of any of the covenants and conditions of this Lease
or otherwise, (ii) any right to a trial by jury in the event of proceedings to
enforce the remedies set forth in this Section 17, and (iii) the benefit of any
moratorium laws or any laws now or hereafter in force exempting property from
liability for rent or for debt. In addition, Tenant waives, to the maximum
extent permitted by applicable law, (x) any duty on the part of Landlord to
mitigate the damages recoverable from Tenant on account of any breach or Event
of Default, except that, notwithstanding the foregoing or anything to the
contrary contained in this Lease, Landlord agrees to comply with any
non-waivable duty to mitigate the aforesaid damages that may be imposed by
applicable law, and (y) the right to interpose any counterclaim (other than
compulsory counterclaims) in any summary proceeding instituted by Landlord
against Tenant in any court or in any action instituted by Landlord in any court
for unpaid Rent under this Lease. In the event that Tenant claims or asserts
that Landlord has violated or failed to perform a covenant of Landlord not to
unreasonably withhold, delay or condition Landlord's consent or approval
hereunder, or in any case where Landlord's reasonableness in exercising its
judgment is in issue, Tenant's sole remedy shall be an action for specific
performance, declaratory judgment or injunction, and in no event shall Tenant be
entitled to any monetary damages for a breach of any such covenant or
unreasonable exercise of judgment, and Tenant hereby specifically waives the
right to any monetary damages or other remedies in connection with any such
breach or unreasonable exercise of judgment. Without limitation of the foregoing
and notwithstanding anything to the contrary contained in this Lease, Tenant
agrees that no breach or default by Landlord hereunder or by any Landlord Lease
Affiliate other than any Other Lease shall excuse Tenant from performing, or
constitute a defense to Tenant's performance of, any duty, liability or
obligation of Tenant under this Lease and in no event shall any breach or
default by Landlord hereunder or by any Landlord Lease Affiliate other than any
Other Lease entitle Tenant to terminate this Lease, or xxxxx Rent, in whole or
in part.
17.6 Application of Funds. Notwithstanding anything to the contrary
contained in this Lease, any and all security deposits, letters of credit,
61
Amberleigh
collateral, payments, deposits, escrows, Casualty Insurance Proceeds or Awards
received or held by Landlord or any Landlord Lease Affiliate under any of the
provisions of this Lease or any Other Lease may, during the existence of any
Potential Default or any Event of Default and at Landlord's option, in its sole
discretion, be drawn upon and applied to Tenant's obligations in the order that
Landlord in its sole discretion may determine.
17.7 Nature of Remedies. Landlord shall have all rights at law and in
equity available to Landlord as a result of an Event of Default or Tenant's
breach of this Lease, including, without limitation, to the extent permitted by
law (but subject, in the case of any Leased Property located in California, to
any provisions of California law providing that this Lease will be deemed
terminated as to any Leased Property as to which Tenant's right to possession is
terminated by Landlord due to an Event of Default), the right to dispossess
Tenant from a Leased Property without terminating this Lease as it applies to
such Leased Property and thereafter, unless and until Landlord terminates this
Lease as it applies to such Leased Property, collect Rent and other sums payable
hereunder as to such Leased Property as the same become due and payable, to the
extent such Rent and other sums exceed the rent and other sums actually
collected by Landlord for the corresponding period pursuant to any reletting
(without, subject to Section 17.5 above, any obligation or deemed obligation on
the part of Landlord to mitigate damages) of such Leased Property. To the extent
permitted by law, the rights and remedies of Landlord under this Lease, at law
and in equity shall be cumulative and may be exercised concurrently or
successively, on one or more occasions, as Landlord deems appropriate in its
sole discretion, as often as occasion therefor arises. To the extent permitted
by law, each such right and remedy shall be in addition to all other such rights
and remedies, and the exercise by Landlord of any one or more of such rights and
remedies shall not preclude the simultaneous or subsequent exercise of any or
all other such rights and remedies. Without limiting the generality of the
foregoing, the liquidated damages in respect of Rent provided for in clauses (A)
and (B) of Section 17.4 hereof, and in Section 19 hereof, shall be payable by
Tenant in addition to, and not in lieu of, any other damages suffered by
Landlord in connection with any default or Event of Default by Tenant
(including, without limitation, Litigation Costs and costs of reletting).
17.8 No Mediation or Arbitration. Upon any Event of Default by Tenant,
Landlord shall be entitled to proceed immediately to enforce its rights and
remedies pursuant to this Section 17 and the other terms of this Lease, and
neither any Event of Default, nor the rights and obligations of Tenant and
Landlord under this Lease, shall be subject to mediation or arbitration of any
kind.
17.9 Deletion of Properties. In the event that this Lease is
terminated as to one or more Deleted Properties (but not all of the Premises)
pursuant to Section 17.2 or as to one or more Leased Properties (but not all of
the Premises) in connection with a Casualty or Condemnation, the provisions of
this Section 17.9 shall be applicable. Without necessity of any further action
of the parties, this Lease shall terminate as to the Deleted Property(ies), and
the Deleted Property(ies) shall be separated and removed herefrom, at such time
(such date, the "Property Removal Date") as Landlord delivers written notice to
Tenant exercising its termination rights pursuant to Section 15, Section 16 or
Section 17.2 (any of the foregoing, a "Deletion Notice"). As of the applicable
62
Amberleigh
Property Removal Date, this Lease shall be automatically and ipso facto amended
to:
(i) delete and eliminate the Deleted Property(ies) herefrom;
(ii) exclude the applicable Deleted Properties from the
definition of Premises;
(iii) reduce the Fixed Rent payable hereunder by an amount
equal to the product of: (x) the aggregate Tenant's Proportionate
Share(s) applicable to all of the Deleted Properties; and (y) the
aggregate Fixed Rent in effect under this Lease as of the Property
Removal Date;
(iv) amend and reduce, respectively, Exhibit C attached hereto
and the Base Year Resident Revenues to delete and eliminate the Deleted
Property(ies) therefrom and reduce the Base Year Resident Revenues
applicable to the remaining Leased Property(ies) by the amount of the
Allocated Base Year Resident Revenues applicable to the Deleted
Properties for the purposes of determining whether the Rent Escalation
Condition has been satisfied and otherwise; and
(v) revise Schedule 2 attached hereto to remove the Tenant's
Proportionate Share(s) for all of the Deleted Property(ies), and to
recalculate the Tenant's Proportionate Shares applicable to the
remaining Facilities set forth on Schedule 2 attached hereto so that
each Tenant of a remaining Facility shall have a Tenant's Proportionate
Share equal to the percentage that the Tenant's Proportionate Share for
the Facility(ies) operated by such Tenant comprises of the aggregate
Tenant's Proportionate Shares, prior to such revision of Schedule 2,
for all of the Facilities remaining under this Lease such that the
aggregate of all of such recalculated Tenant's Proportionate Shares
equals one hundred percent (100%).
With respect to any Terminated Lease Property(ies), the terms of items (i)
through (v) above shall be without limitation upon the liability of Tenant
(joint and several) for the rental amounts allocated to the Terminated Lease
Property(ies), and (a) in case of any termination of this Lease as a result of
any Event of Default, for any damages resulting from the Event of Default that
resulted in the deletion of such Terminated Lease Property(ies) herefrom and (b)
in case of any termination of this Lease pursuant to Section 15 or Section 16
hereof, for any obligations owed by Tenant to Landlord on account of such
termination under Section 15 or Section 16 hereof. Promptly (and in any event
within ten (10) days) after receipt of Landlord's request therefor, Tenant shall
execute and deliver to Landlord such instrument(s) as Landlord may from time to
time request reflecting the elimination of any Deleted Property(ies) herefrom on
the terms described above.
18. Landlord's Right to Cure Tenant's Default. If an Event of Default shall
have occurred and shall be continuing, Landlord, without waiving or releasing
any obligation of Tenant or the Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payments or perform such acts
63
Amberleigh
for the account and at the expense of Tenant, and may, to the extent permitted
by law, enter upon any or each Leased Property or any portion thereof for the
purpose of curing such Potential Default or Event of Default and take all such
action thereon as, in Landlord's opinion, may be necessary or appropriate in
connection with curing such Event of Default. No such entry shall be deemed an
eviction of Tenant. All sums so paid or advanced by Landlord and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) so incurred, together with interest thereon (to the maximum extent
permitted by law) as Additional Rent hereunder at the Overdue Rate from the date
on which such sums or expenses are paid or incurred by Landlord, shall be paid
by Tenant to Landlord on demand. The obligations of Tenant and rights of
Landlord contained in this Section 18 and in Section 17 above shall survive the
expiration or earlier termination of this Lease.
19. Holding Over. If Tenant shall, for any reason, remains in possession of
any Leased Property after the expiration or earlier termination of the Term as
to such Leased Property, such possession shall, at the option of Landlord, in
its sole discretion as to each such Leased Property, be as a month-to-month
tenant during which time Tenant shall pay as rental each month (which rental
constitutes liquidated damages with respect to Fixed Rent, and not a penalty,
for the period to which it relates), one and one-half (1 1/2) times the
aggregate of the Fixed Rent payable by Tenant pursuant to the provisions of this
Lease, in each case, with respect to the Leased Property(ies) in question
(determined on the basis of the aggregate Tenant's Proportionate Share of each
applicable Tenant for the affected Leased Properties without adjustment or
removal of the Tenant's Proportionate Share for such Leased Property pursuant to
Section 17.9 hereof). During such period of month-to-month tenancy, Tenant shall
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease with respect to the Leased Property(ies) in question (including,
but not limited to, its obligation to pay Additional Rent), but shall have no
rights hereunder other than the right, to the extent given by law to
month-to-month tenancies, to continue its occupancy and use of the applicable
Leased Property(ies). Landlord shall have the right to terminate Tenant's
month-to-month tenancy at any time after giving Tenant ten (10) days' prior
written notice, and at any time thereafter, Landlord may re-enter and take
possession of the Premises. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease. The terms of this Section 19
shall be without limitation upon any other right Landlord may have hereunder, at
law or in equity, on account of any holdover with respect to the applicable
Leased Property(ies). The obligations of Tenant and the rights of Landlord
contained in this Section 19 shall survive the expiration or earlier termination
of this Lease.
20. Subordination.
20.1 Subordination. This Lease and all rights of Tenant hereunder are
subject and subordinate to all Facility Mortgages that may now or hereafter
affect Landlord's interest in any Leased Property, and to all renewals,
modifications, consolidations, replacements and extensions of all Facility
Mortgages, provided, however, that, in the case of any Facility Mortgage that is
not currently in existence, Tenant's aforesaid subordination shall be
conditioned on Tenant's receipt of a so-called "non-disturbance" agreement in
64
Amberleigh
favor of Tenant from the Facility Mortgagee under any such Facility Mortgage on
such Facility Mortgagee's commercially reasonable standard form. This Section
shall be self-operative and no further instrument of subordination shall be
required. In confirmation of such subordination, Tenant also agrees to execute
and deliver promptly (and in any event within ten (10) Business Days) any
commercially reasonable and customary agreement (in recordable form, if
requested) that Landlord or any Facility Mortgagee may request to evidence such
subordination. Landlord agrees to use reasonable efforts to obtain a so-called
"non-disturbance" agreement in favor of Tenant from each Facility Mortgagee
under each currently existing Facility Mortgage on such Facility Mortgagee's
commercially reasonable standard form.
20.2 Attornment. If the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of a Facility Mortgage, then Tenant shall, at the
option of such purchaser or assignee, as the case may be, (i) attorn to such
party and perform for its benefit all the terms, covenants and conditions of
this Lease on Tenant's part to be performed with the same force and effect as if
such party were the landlord originally named in this Lease, or (ii) enter into
a New Lease with such party, as landlord, pursuant to Section 40 hereof for the
remaining Term and otherwise on the same terms and conditions as this Lease,
except that such successor landlord shall not be (w) liable for any previous
act, omission, breach, default or negligence of Landlord under this Lease; (x)
subject to any counterclaim, defense or offset that theretofore shall have
accrued to Tenant against Landlord; (y) bound by any previous modification or
amendment of this Lease or by any previous prepayment of more than one month's
rent, unless such modification, amendment or prepayment shall have been approved
in writing by the Facility Mortgagee through or by reason of which such
successor landlord shall have succeeded to the rights of Landlord under this
Lease or, in case of any such prepayment, such prepayment of rent has actually
been delivered to such successor landlord; or (z) liable for any security
deposited pursuant to this Lease unless such security has actually been
delivered to such successor landlord. Nothing contained in this Section 20.2
shall be construed to impair any right otherwise exercisable by any such owner,
holder or lessee.
20.3 Mortgagee Cure Rights. If any act or omission by Landlord would
give Tenant the right, immediately or after lapse of time, to cancel or
terminate this Lease or to claim a partial or total eviction, or an abatement of
Rent, setoff or counterclaim not otherwise expressly permitted by the terms of
this Lease, or to declare a default hereunder, Tenant will not exercise any such
right until (i) it has given written notice of such act or omission to each
Facility Mortgagee whose name and address shall have previously been furnished
to Tenant, (ii) Landlord shall have failed to cure the same after the delivery
of such notice as may be herein required and within the time limits set forth in
this Lease, and (iii) following the giving of such notice to each Facility
Mortgagee, no Facility Mortgagee shall have remedied such act or omission (x) in
the case of an act or omission that is capable of being remedied without
possession of the applicable Leased Property, within the cure period available
to Landlord under this Lease plus thirty (30) days; and (y) in the case of any
act or omission that is incapable of being remedied without possession of the
applicable Leased Property, within thirty (30) days following the date on which
65
Amberleigh
possession is obtained (either by such Facility Mortgagee or by a receiver in an
action commenced by such Facility Mortgagee).
20.4 Modifications. Tenant shall execute any modification of this
Lease reasonably requested by any Facility Mortgagee or prospective Facility
Mortgagee to cause the terms of this Lease to conform with customary and
reasonable mortgage financing requirements, provided that such modifications (i)
do not materially adversely increase the obligations of Tenant hereunder or
materially diminish Tenant's rights under this Lease, (ii) do not increase Rent
payable hereunder, and (iii) are requested by any such Facility Mortgagee or
prospective Facility Mortgagee only at the time of its initial loan advance or
any subsequent extension of the maturity date of its loan or material
modification of the terms of its loan. Tenant will not unreasonably withhold,
delay or condition its consent to such modification, provided subsections (i),
(ii) and (iii) above are complied with.
21. Property and Accounts Collateral.
21.1 Landlord's Security Interest. The parties intend that, if an
Event of Default occurs under this Lease, Landlord will control Tenant's
Personal Property (except that personal property expressly excluded under
Section 35 below) so that Landlord or its designee or nominee can operate, sell
or re-let each Facility for its Primary Intended Use. Accordingly, to implement
such intention, and for the purpose of securing the payment and performance
obligations of Tenant hereunder, Landlord and Tenant agree as follows:
21.1.1 Property Collateral; Accounts Collateral. Tenant, as
debtor, hereby grants to Landlord, as secured party, a security interest in, and
lien upon, (i) all of Tenant's right, title and interest in and to Tenant's
Personal Property and any and all products, rents, proceeds and profits thereof
in which Tenant now owns or hereafter acquires an interest or right
(collectively, the "Property Collateral") and (ii) all accounts receivable with
respect to each Facility that Tenant now owns or in which Tenant hereafter
acquires an interest or right (collectively, the "Accounts Collateral"). The
security interests and liens granted to Landlord in this Section 21.1 with
respect to the Accounts Collateral may be subordinated to any first priority
security interest granted in connection with any permitted AR Financing (as
defined in Section 21.2 below); provided, however, that, in connection with such
AR Financing, Landlord shall furnish Tenant's financiers, and Tenant's
financiers shall execute and return to Landlord, an intercreditor agreement in
form and substance reasonably acceptable to Landlord.
21.1.1.1 Security Agreement. This Lease constitutes a
security agreement pursuant to and in accordance with the UCC covering all
Property Collateral and Accounts Collateral, as well as the Authorization
Collateral and any other property in or against which Landlord is granted a
security interest or lien by the terms of this Lease (collectively, the "Lease
Collateral"), and such security agreement, and the security interests and liens
created in this Lease, shall survive the expiration or earlier termination of
this Lease. Tenant hereby authorizes Landlord to file such financing statements,
continuation statements and other documents as may be necessary or desirable to
66
Amberleigh
perfect or continue the perfection of Landlord's security interests and liens in
the Lease Collateral pursuant to the UCC. In addition, if required by Landlord
at any time during the Term, Tenant shall execute and deliver to Landlord, in
form reasonably satisfactory to Landlord, additional security agreements,
financing statements, fixture filings and such other documents as Landlord may
reasonably require to perfect or continue the perfection of Landlord's security
interests and liens in the Lease Collateral. Upon the occurrence of an Event of
Default or in connection with an Operational Transfer, Landlord shall be
entitled to exercise any and all rights and remedies available to a secured
party under the UCC, or available to a landlord under the laws of the State(s)
where the applicable Leased Property(ies) is (are) located, with respect to the
Lease Collateral, including the right to sell the same at public or private
sale, and, in connection with any such sale, Tenant agrees that the giving of
ten (10) days' notice by Landlord, designating the time and place of any public
sale of any Lease Collateral, or the time after which any private sale or other
intended disposition of any Lease Collateral is to be made, shall be deemed to
be reasonable notice thereof, and Tenant waives any other notice with respect
thereto.
21.1.2 Certain Changes. Tenant shall give Landlord at least
thirty (30) days' prior written notice of any change in any Tenant's principal
place of business, name, identity, jurisdiction of organization or corporate
structure, and any such change in jurisdiction of organization or corporate
structure shall, without limitation of Section 24 hereof, be subject to
Landlord's prior written approval, which approval shall not be unreasonably
withheld. With respect to any such change first mentioned above, Tenant will
promptly execute and deliver such instruments, documents and notices and take
such actions, as Landlord deems necessary or desirable to create, perfect and
protect the security interests and liens of Landlord in the Lease Collateral.
21.2 Accounts Receivable Financing. Tenant shall not obtain so-called
"Accounts Receivable" financing with respect to any Facility (or its operations
therein) or otherwise pledge any receivables as collateral ("AR Financing")
unless (i) the terms and conditions of this Section 21 have been satisfied; (ii)
Tenant obtains Landlord's consent to the terms thereof; and (iii) no Event of
Default has occurred and no Potential Default is continuing hereunder, Landlord
shall not unreasonably withhold or delay its consent to any AR Financing secured
by a first lien upon Tenant's Accounts Collateral and as to which Landlord has
received an intercreditor agreement as required pursuant to Section 21.1.1, and,
as to any other AR Financing, Landlord may withhold its consent in its sole
discretion.
22. Risk of Loss. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of each Leased Property in consequence of the
damage or destruction thereof by fire, the elements, acts of terrorism,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
attachments, levies or executions is assumed by Tenant, and Landlord shall in no
event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Tenant to any abatement of Rent.
23. Indemnification. Notwithstanding the existence of any insurance
provided for herein, and without regard to the policy limits of any such
67
Amberleigh
insurance, Tenant shall protect, indemnify, save harmless and defend Landlord
and the Landlord Indemnified Parties from and against all Losses (including,
without limitation, Litigation Costs), to the maximum extent permitted by law,
imposed upon or incurred by, or asserted or alleged against, Landlord or any
Landlord Indemnified Parties by reason of: (i) any accident, injury to, or death
of, persons or loss of, or damage to, property occurring on or about any Leased
Property; (ii) any use, misuse, non-use, condition, maintenance or repair of any
Leased Property by Tenant, any Tenant Parties or anyone claiming under Tenant or
any Tenant Parties; (iii) any Impositions; (iv) any failure on the part of
Tenant, any Tenant Parties or anyone claiming under Tenant or any Tenant Parties
to perform or comply with any of the terms of this Lease; (v) any claims for
work or labor performed or materials supplied to Tenant or any Tenant Parties;
(vi) any breach by Tenant of any of its representations and warranties
hereunder; (vii) any breach or default under any Authorization by any Tenant (or
any Facility) or any revocation of any Authorizations (including, but not
limited to, any Facility Provider Agreement); (viii) any negligence or
misconduct on the part of Tenant or any Tenant Parties; (ix) the non-performance
of any of the terms and provisions of any and all existing and future subleases
of any Leased Property to be performed by the subtenant thereunder; (x) any
failure on the part of Tenant, any Tenant Parties or anyone claiming under
Tenant or any Tenant Parties to perform or comply with any of the terms of any
Other Lease, the P&S Agreement, the Operations Transfer Agreement, the Key
Principal Agreement or any other agreement referenced in this Lease or relating
to any of the Premises to which any of the foregoing is a party; (xi) any claim,
matter or other thing for which the Buyer (as defined in the P&S Agreement) had
agreed to indemnify, defend or hold harmless Seller (or any of its Affiliates)
under or in connection with the P&S Agreement or any closing documents delivered
in connection therewith, which pertain (in whole or in part) to the use or
operation of the Premises upon or at any time after Closing; and/or (xii) the
claims of any broker or finder made in connection with this Lease except to the
extent claiming under the written agreements of Landlord. Any amounts that
become payable by Tenant under this Section 23 shall be paid within ten (10)
Business Days after demand by Landlord, and if not timely paid, shall bear
interest at the Overdue Rate from the date of such demand until paid. Tenant, at
its expense, shall contest, resist and defend any such claim, action or
proceeding asserted or instituted against Landlord or any Landlord Indemnified
Parties with counsel acceptable to Landlord in its sole discretion and shall
not, under any circumstances, compromise or otherwise dispose of any suit,
action or proceeding without obtaining Landlord's written consent. Tenant shall
have the right to control the defense or settlement of any claim provided that
(A) Tenant shall first confirm in writing to Landlord that such claim is within
the scope of this indemnity and that Tenant shall pay any and all amounts
required to be paid in respect of such claim; and (B) any compromise or
settlement shall require the prior written approval of Landlord, which approval
shall not be unreasonably withheld provided Landlord (or the applicable Landlord
Indemnified Parties) are irrevocably released from all liabilities in connection
with such claim as part of such settlement or compromise. Landlord, at its
election and sole cost and expense, shall have the right, but not the
obligation, to participate in the defense of any claim. If Tenant does not act
promptly and completely to satisfy its indemnification obligations hereunder,
Landlord may after notice to Tenant resist and defend any such claims or causes
of action against Landlord or any Landlord Indemnified Party at Tenant's sole
68
Amberleigh
cost. The terms of this Section 23 shall survive the expiration or sooner
termination of this Lease.
24. Assignment; Sublease.
24.1 Prohibition. Subject to Tenant's rights to enter into Permitted
Transactions pursuant to Section 24.2 below, Tenant shall not, either directly
or indirectly, or through one or more step transactions or tiered transactions,
voluntarily or by operation of law, (i) assign, convey, sell, pledge, mortgage,
hypothecate or otherwise encumber, transfer or dispose of all or any part of
this Lease or any Tenant's leasehold estate hereunder, (ii) sublease all or any
part of any Leased Property; (iii) engage the services of any Person for the
management or operation of all or any part of any Leased Property, except as
expressly described in Schedule 10.24 hereto; (iv) convey, sell, assign,
transfer, pledge, hypothecate, encumber or otherwise dispose of any stock,
partnership, membership or other interests (whether equity or otherwise) in any
Tenant, any Guarantor or any Person(s) controlling any Tenant or Guarantor, if
such conveyance, sale, assignment, transfer, pledge, hypothecation, encumbrance
or disposition results, directly or indirectly, in a change in control of such
Tenant or Guarantor (or of such controlling Person(s)); (v) dissolve, merge or
consolidate any Tenant or any Guarantor or any Persons controlling any Tenant or
any Guarantor with any other Person, if such dissolution, merger or
consolidation, directly or indirectly, results in a change in control of such
Tenant or Guarantor (or in such controlling Person(s)); (vi) sell, convey,
assign, or otherwise transfer all or substantially all of the assets of any
Tenant or any Persons controlling any Tenant; (vii) sell, convey, assign, or
otherwise transfer any of the assets of any Tenant or any Persons controlling
any Tenant or any Guarantor, if the consolidated net worth of such Tenant or
Guarantor (or such controlling Person(s), as the case may be) immediately
following such transaction is not at least equal to the greater of (1) the
consolidated net worth of such Tenant or Guarantor (or such controlling
Person(s), as the case may be) immediately prior to such transaction and (2) the
consolidated net worth of such Tenant or Guarantor (or controlling Person(s), as
the case may be) as of the Commencement Date; or (viii) enter into or permit to
be entered into any agreement or arrangement to do any of the foregoing or to
grant any option or other right to any Person to do any of the foregoing (each
of the aforesaid acts referred to in clauses (i) through (viii) being referred
to herein as a "Transfer").
24.2 Permitted Assignments and Subleases. Any purported Transfer made
without the prior written consent of Landlord, in Landlord's sole discretion,
shall be absolutely null and void. If Landlord consents to any Transfer, such
Transfer shall not be effective and valid unless and until the applicable
transferee executes and delivers to Landlord any and all documentation
reasonably required by Landlord. Any consent by Landlord to a particular
Transfer shall not constitute consent or approval of any subsequent Transfer,
and Landlord's written consent shall be required in all such instances. No
consent by Landlord to any Transfer shall be deemed to release any Tenant from
its obligations hereunder and each Tenant shall remain fully liable for payment
and performance of all obligations under this Lease. Notwithstanding anything to
the contrary contained in this Section 24, Landlord's consent shall not be
required with respect to any of the following transactions (collectively, the
"Permitted Transactions"): (i) Tenant may assign its interest and rights under
69
Amberleigh
this Lease to a single entity that is either a Guarantor or a Person wholly
owned and controlled by any Guarantor, provided and on the conditions that (x)
Tenant and such assignee first deliver to Landlord an assignment and assumption
agreement relative to this Lease pursuant to which such assignee assumes
Tenant's obligations under this Lease and that is otherwise reasonably
acceptable to Landlord and such other documentation relative to such assignment
as Landlord may reasonably require and (y) neither Tenant nor any Guarantor
shall be released from any of their respective obligations under this Lease, any
Other Lease or any Lease Guaranty on account of such assignment; (ii) in the
event the Primary Intended Use of a particular Leased Property is operation of
an assisted living facility and/or an independent living facility, Tenant may
enter into Approved Residency Agreements with residents of such facility and
Approved Commercial Agreements, provided that all of the requirements for
constituting an Approved Residency Agreement and Approved Commercial Agreements
are complied with in all material respects at the time of entry into such
agreement and at all times thereafter; and (iii) any transfer of publicly traded
stock and other securities listed on the New York Stock Exchange, NASDAQ or any
other national securities exchange of Tenant, any Guarantor or any Person
controlling Tenant or any Guarantor.
24.3 Rights of Landlord. If this Lease is assigned, or if the Premises
(or any part thereof) are sublet or used or occupied by anyone other than
Tenant, whether or not in violation of this Lease, Landlord may (without
prejudice to or waiver of its rights), collect rent from the assignee, subtenant
or occupant. Landlord may apply the net amount collected to the Rent herein
required to be paid by Tenant, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Section 24.
With respect to the allocable portion of the Premises sublet, in the event that
the total rent and any other considerations received under any sublease by
Tenant is greater than the total Fixed Rent required to be paid, from time to
time, under this Lease, Tenant shall pay to Landlord fifty percent (50%) of such
excess received from any subtenant (excluding any subtenant under any Approved
Residency Agreement or any Approved Commercial Agreement) and such amount shall
be deemed a component of the Additional Rent.
25. Financial Statements and Reporting.
25.1 Maintenance of Books and Records. Tenant shall keep and maintain,
or cause to be kept and maintained, proper and accurate books and records in
accordance with GAAP, and a standard modern system of accounting, in all
material respects reflecting the financial affairs of each Tenant and the
results from operations of each Facility. Landlord shall have the right, from
time to time during normal business hours after five (5) Business Days prior
oral or written notice to the applicable Tenant, itself or through any of
Landlord's Representatives, to examine such books and records at the office of
such Tenant or other Person maintaining such books and records and to make such
copies or extracts thereof as Landlord or Landlord's Representatives shall
request.
25.2 Annual Financial Information. As soon as available, and in any
event within one hundred twenty (120) days after the close of each Fiscal Year,
Tenant shall deliver to Landlord, presented on a consolidated basis (which must
70
Amberleigh
include Facility-level information), as well as on a property-by-property basis,
financial statements prepared for such Fiscal Year with respect to Tenant,
including a balance sheet and operating statement as of the end of such Fiscal
Year, together with related statements of income for such Fiscal Year, certified
by an Officer's Certificate to the effect that such financial statements are
true and correct and have been prepared in accordance with GAAP, applied on a
consistent basis. Together with Tenant's annual financial statements, Tenant
shall deliver to Landlord: (i) a statement of cash flows for each Leased
Property; and (ii) such other information as Landlord shall reasonably request.
If Tenant ever obtains any audited financial statements during the Term
pertaining to Tenant, then Tenant shall promptly (and in any event with five
Business Days after Tenant's receipt thereof) deliver the same to Landlord,
together with copies of any and all management letters and other similar
materials pertaining to such audit.
25.3 Quarterly Financial Information. If Tenant is obligated to
prepare the same
for any other Person or if Tenant otherwise prepares the same, then as soon as
available, and in any event within forty-five (45) days after the end of each
fiscal quarter, Tenant shall deliver to Landlord, presented on a consolidated
basis (which must include Facility-level information), as well as a
property-by-property basis, quarterly and year-to-date unaudited financial
statements prepared for such fiscal quarter with respect to Tenant, including a
balance sheet and operating statement as of the end of such fiscal quarter and
further including related statements of cash flows for such fiscal quarter and
for the portion of the Fiscal Year ending with such fiscal quarter. Each such
quarterly statement shall show the separate operations of each Leased Property,
including, without limitation, (i) a breakdown of Resident Revenues and other
revenues itemized by payor type and a reasonably detailed breakdown of operating
expenses and (ii) resident census information by payor type (collectively,
"Census Information"). Each such quarterly report shall be accompanied by the
following: (x) a statement in reasonable detail showing the calculation of Net
Operating Income for each Facility for the trailing four fiscal quarters, in
each case, ending at the end of the fiscal quarter as to which such statement is
being delivered; (y) a then current occupancy report for each Facility; and (z)
such other information as Landlord shall reasonably request.
25.4 Certifications of Compliance. Simultaneously with the delivery of
the annual and quarterly financial statements contemplated by Sections 25.2 and
25.3 and the monthly financial information contemplated under Section 25.6,
Tenant shall deliver to Landlord an Officer's Certificate in the form of Exhibit
D attached hereto and dated as of the date of such delivery.
25.5 Annual Budgets. Tenant has previously delivered to Landlord the
Annual Budget for each Leased Property for the 2005 Fiscal Year. At least thirty
(30) days prior to the commencement of each subsequent Fiscal Year during the
Term, Tenant shall deliver to Landlord an Annual Budget presented on a
consolidated basis (which include Facility-level information), as well as a
property-by-property basis for the ensuing Fiscal Year and, promptly after
preparation thereof, any subsequent revisions to the Annual Budget.
25.6 Monthly Financial Information. To the extent not already
furnished under Section 8.2.3.4, as soon as available, and in any event within
71
Amberleigh
thirty (30) days after the end of each calendar month, Tenant shall deliver to
Landlord, presented on a consolidated basis (which include Facility-level
information), as well as a property-by-property basis, monthly, rolling
twelve-month and year-to-date unaudited financial statements prepared for the
applicable month with respect to Tenant, including a balance sheet and operating
statement as of the end of such month and further including related statements
of cash flows for such month and for the portion of the Fiscal Year ending with
such month, which statements shall be accompanied by an Officer's Certificate
certifying (i) that the same are true and correct and were prepared in
accordance with GAAP, applied on a consistent basis, subject to changes
resulting from audit and normal year-end audit adjustments, and (ii) as to any
material variances from the approved Annual Budget on a line-item basis. Each
monthly report shall show the separate operations of each Leased Property,
including, without limitation, the monthly cash flow and Census Information for
such Leased Property. Each such monthly report shall be accompanied by the
following: (1) a statement setting forth in reasonable detail the calculation of
Net Operating Income for each Facility for the trailing twelve (12) months, in
each case, ending at the end of the calendar month as to which such statement is
being delivered; (2) a then current occupancy report for each Facility; (3) a
monthly summary of accounts receivable with respect to each Facility and all of
the Facilities in form acceptable to Landlord; and (4) such other information as
Landlord shall reasonably request.
25.7 Authorizations. Within ten (10) days after Landlord's written
request therefor, Tenant shall deliver to Landlord copies of any and all
Authorizations (together with any renewals or extensions therefor) certified by
Tenant as accurate and complete in an Officer's Certificate.
25.8 Actuarial Reports. Promptly (and in any event no later than ten
(10) days) after Tenant's receipt thereof, Tenant shall deliver to Landlord a
complete copy of any Actuarial Report(s) received by Tenant.
25.9 Survey Deficiency Summary Reports. Within ten (10) days after
Landlord's request therefor, Tenant shall deliver to Landlord a consolidated
survey deficiency summary report, indicating for each Facility whether any
survey, citation or report alleging any deficiency with respect to such Facility
has been issued during the prior fiscal quarter and, if so, setting forth the
identity of the Governmental Authority that issued such survey, citation or
report, a description of the alleged deficiency and the timetable or deadline
for remedying same and Tenant's plan for curing such deficiency and any other
plan of correction. Tenant shall also deliver to Landlord within ten (10) days
after written request therefor by Landlord any other Facility specific survey
reports reasonably requested by Landlord.
25.10 [Intentionally Omitted]
25.11 Financial Statements of Guarantor. Tenant shall cause each
Guarantor to deliver to Landlord on a timely basis the annual financial
statements, and Officer's Certificates, that are required by the terms of each
Lease Guaranty.
72
Amberleigh
25.12 Estoppel Certificates. Upon request by Landlord in connection
with a proposed sale or refinancing of any Leased Property(ies) by Landlord or
otherwise (and, in the case of any such request, in any case within ten (10)
days), Tenant shall deliver an "Estoppel Certificate" in form and substance
satisfactory to Landlord and certifying as to the matters described in Exhibit E
attached thereto. Each such Estoppel Certificate shall be certified to Landlord
and Landlord's designees and may be relied upon by Landlord and its designees.
Any Estoppel Certificate shall, at Landlord's request, be delivered together
with complete and accurate copies (originals of which shall be made available
for inspection upon request by Landlord) of all licenses, permits and other
Authorizations necessary to operate the Facilities in accordance with all
applicable laws.
25.13 SEC Reports. As soon as reasonably available, Tenant shall
deliver to Landlord copies of any Forms 10K, 10Q and 8K, and any other annual,
quarterly, monthly or other reports, copies of all registration statements and
any other public information that any Tenant, any Guarantor, any ParentCo or any
Affiliate of any Tenant, any Guarantor or any ParentCo files with the SEC or any
other Governmental Authority. Promptly upon the furnishing thereof to the
shareholders of any Tenant, any Guarantor, any ParentCo or any Affiliate of any
Tenant, any Guarantor or any ParentCo, Tenant shall deliver to Landlord copies
of all statements, reports, notices and proxy statements so furnished. Tenant
shall not be deemed in default on account of any failure to furnish any of the
materials described in this Section 25.13 if such materials are publicly filed
on a scheduled basis and are readily available to Landlord, at little or no
charge, through on-line public information data bases maintained by ParentCo. If
any of the materials described in this Section 25.13 are available in electronic
format, then upon Landlord's written request therefor, Tenant shall promptly
furnish such electronic copies to Landlord.
25.14 Supplemental Information. Tenant shall deliver to Landlord such
supplements to the foregoing documents, and such other information and reports
(including, without limitation, non-financial information), as Landlord or any
Facility Mortgagee may reasonably request from time to time, provided such
supplements, and such information and reports, are consistent with the types of
supplements, reports and information generally utilized by institutions within
the healthcare or financing industry.
25.15 Facility Level Meetings and Reviews. Upon reasonable advance
written request by Landlord (provided no such written request shall be required
with respect to any Jeopardy Event), Tenant shall permit and shall make
appropriate arrangements for, Landlord and/or Landlord's Representatives to
discuss the affairs, operations, finances and accounts of each Tenant, each
Guarantor and their respective Affiliates with, and be advised as to the same
by, senior officers of each Tenant (and such of each Tenant's independent
accountants and other financial advisors as would be relevant to the topic(s) of
the particular meeting), all as Landlord may deem appropriate for the purpose of
verifying any report(s) delivered by Tenant to Landlord under this Lease or for
otherwise ascertaining compliance with this Lease by Tenant or the business,
operational or financial condition of each Tenant, each Guarantor and/or their
respective Affiliates and/or any of the Facilities. Without limitation of the
foregoing, from time to time promptly following receipt of written notice from
73
Amberleigh
Landlord to Tenant (and in any event within ten (10) Business Days of such
receipt), Tenant shall permit, and shall make appropriate arrangements for,
Landlord and/or Landlord's Representatives to discuss the business, operational
and financial condition of specific Facility(ies) designated by Landlord with,
and be advised as to the same by, appropriate personnel of Tenant and its
Affiliates having operational and accounting responsibilities for the
Facility(ies) so specified by Landlord and to review, and make abstracts from
and copies of, the books, accounts and records of Tenant and its Affiliates
relative to any such Facility(ies). Unless otherwise agreed in writing by
Landlord and Tenant, all of the discussions, reviews, abstracting and copying
referenced in this Section 25.15 shall occur during normal business hours.
25.16 Format. Notwithstanding anything contained herein to the
contrary, Tenant shall deliver to Landlord the financial information,
statements, reports, operating budgets and other financial data contemplated by
Section 25 in electronic form, and if an electronic form is not available, a
format acceptable to Landlord in the exercise of its reasonable discretion.
26. Landlord's Right to Inspect. Tenant shall permit Landlord, Landlord's
Representatives, any then current or prospective Facility Mortgagee or other
lender to Landlord, any then current or prospective investment banker, mortgage
broker or other professional engaged by Landlord, any prospective purchaser of
any Leased Property or any investor in Landlord or any Affiliate of Landlord
and/or any prospective lessee, and its and their respective authorized
representatives, to enter upon and conduct a physical inspection of any Leased
Property at Landlord's expense (unless such item is otherwise expressly required
to be performed at Tenant's or any Tenant Party's expense pursuant to this Lease
or any other agreement between Landlord and Tenant or any Tenant Party) during
normal business hours and, except in an emergency, upon not less than five (5)
days' prior written notice, subject to any security, health, safety or
confidentiality requirements of any Governmental Authority relating to the
Premises, or imposed by law or applicable regulations or any insurance
requirement, and provided that no such entry or inspection shall materially
interfere with Tenant's business operations within the affected Leased
Property(ies). Nothing contained in this Section 26 shall limit or impair
Landlord's right to immediately enter upon and inspect the Premises, or any of
Landlord's other rights or remedies, upon the occurrence of any Event of Default
by Tenant.
27. No Waiver. No failure by Landlord or Tenant to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
28. Single Lease. Tenant hereby acknowledges that the agreement between
Landlord and Tenant to treat this Lease as single lease in all respects was and
is of primary importance to Landlord, and Landlord would not have entered into
74
Amberleigh
this Lease without there being such an agreement and such treatment of this
Lease. All rights and obligations under this Lease relating to the Premises
shall apply to each Leased Property and any default under this Lease pertaining
to a single Leased Property or to the Premises or any portion thereof shall be
an Event of Default pertaining to the Premises and each Leased Property. Without
limiting the generality of the foregoing, the parties hereto acknowledge that,
notwithstanding any references herein to any individual Leased Property and
notwithstanding the possibility that certain individual Leased Properties may be
deleted herefrom pursuant to the express provisions of this Lease under certain
limited circumstances, the parties hereto expressly intend and agree that this
Lease is not divisible and shall be treated as a single lease for all purposes
whatsoever (including, without limitation, in the context of Tenant's attempted
rejection, assumption and/or assignment of this Lease in any bankruptcy or other
insolvency proceeding affecting any Tenant, in which case the parties hereto
intend for such rejection to terminate this Lease with respect to the entire
Premises or such assumption to apply with respect to the entire Premises, i.e.,
all but not less than all of the Leased Properties). Notwithstanding anything
contained in this Section 28 or elsewhere in this Lease to the contrary, the
existence of Tenant's Proportionate Share and the allocations of Rent described
in Section 3.1.2 hereof and elsewhere in this Lease do not change the joint and
several nature of each Tenant's obligation to pay all Rent owing hereunder as
provided in Section 1.3 above. This Lease does not constitute, and may not be
enforced (except at Landlord's sole discretion in connection with a Limited
Termination Election) or treated as, a separate lease for any individual Leased
Property. Notwithstanding the foregoing, the right of possession and leasehold
right granted to each Tenant hereunder is limited as provided in Section 1.3
above.
29. Acceptance of Surrender. No surrender to Landlord of this Lease or of
any Leased Property or any part thereof, or of any interest herein or therein,
shall be valid or effective unless agreed to and accepted in writing by
Landlord, and no act by Landlord or any representative or agent of Landlord,
other than such a written acceptance by Landlord, shall constitute an acceptance
of any such surrender.
30. 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 may
acquire, own or hold, directly or indirectly, (i) this Lease or the leasehold
estate created hereby or any interest in this Lease or such leasehold estate and
(ii) the fee estate in any Leased Property.
31. Conveyance by Landlord. Landlord may, without the consent or approval
of Tenant, sell, transfer, assign, pledge, encumber, hypothecate, convey or
otherwise dispose of all or any portion of the Premises. If Landlord or any
successor owner of any Leased Property shall sell, transfer, assign, convey or
otherwise dispose of any Leased Property in accordance with the terms hereof
other than as security for a debt, and the purchaser, grantee, assignee or
transferee of the Leased Property(ies) shall expressly assume all obligations of
Landlord hereunder with respect to such Leased Property(ies) arising or accruing
from and after the date of such sale, conveyance, transfer, assignment or other
disposition, Landlord or such successor owner, as the case may be, shall
thereupon be released from all future liabilities and obligations of Landlord
under this Lease with respect to such Leased Property(ies) arising or accruing
from and after the date of such sale, conveyance, transfer, assignment or other
disposition as to such Leased Property(ies) and all such future liabilities and
75
Amberleigh
obligations with respect to such Leased Property(ies) shall thereupon be binding
upon such purchaser, grantee, assignee or transferee. In the event of any such
sale, transfer, assignment, conveyance or other disposition (other than as
security for a debt) of less than all of the Premises, the provisions of Section
40 hereof governing New Leases shall apply.
32. Quiet Enjoyment. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly enjoy each
Leased Property for the Term hereof, free of any claim, interruption or other
action by Landlord or anyone claiming through Landlord, but subject to all
Permitted Encumbrances. No failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to xxxxx, reduce or make a deduction from
or offset against the Rent or any other sum payable under this Lease, or to fail
to perform any other obligation of Tenant hereunder. Notwithstanding the
foregoing, Tenant shall have all rights and remedies available at law or in
equity, except as otherwise provided herein, by separate and independent action,
to pursue any claim or claims it may have against Landlord as a result of any
breach by Landlord of the covenant of quiet enjoyment contained in this Section
32.
33. Notices. All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered (i) by mail
(registered or certified mail, return receipt requested), in which case such
notice shall be deemed received three (3) Business Days after its deposit, (ii)
by confirmed facsimile, in which case such notice shall be deemed received the
next Business Day, or (iii) by reputable nationally recognized overnight courier
service, in which case such notice shall be deemed received the next Business
Day, addressed to the respective parties, as follows:
(a) if to any Tenant:
Capital Senior Living Corporation
000 Xxxx Xxxxxx
Xxxxx #0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxx
Fax: (000) 000-0000
With a copy to:
Capital Senior Living Corporation
00000 Xxxxxx Xxxxxxx
Xxxxx #000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
76
Amberleigh
(b) if to Landlord:
Ventas Amberleigh, LLC
c/o Ventas, Inc.
00000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Lease Administration
Facsimile: (000) 000-0000
With a copy to:
Ventas, Inc.
00000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
or to such other address as either party may hereunder designate in writing.
34. General REIT Provisions. Tenant understands that, in order for
Landlord's Affiliate, Ventas, Inc., to qualify as a REIT, certain requirements
(the "REIT Requirements") must be satisfied, including, without limitation, the
provisions of Section 856 of the Code. Accordingly, Tenant agrees, and agrees to
cause its Affiliates, permitted subtenants, if any, and any other parties
subject to its control by ownership or contract, to reasonably cooperate with,
and to take such actions as are reasonably requested by, Landlord to ensure that
the REIT Requirements are satisfied, including, but not limited to, providing
Landlord or Ventas, Inc. with information about the ownership of Tenant and its
Affiliates.
35. Transfer of Tenant's Personal Property. Upon the expiration or earlier
termination of this Lease with respect to a Leased Property (unless such
termination is the result of Tenant's purchase of such Leased Property), all
Tenant's Personal Property relating to such Leased Property shall become the
property of Landlord, free of any lien, claim or encumbrance, and Tenant shall,
at its expense, take any actions reasonably necessary to discharge any
applicable lien, claim or encumbrance (and, relative to any Tenant's Personal
Property that is leased by Tenant, Tenant agrees, at its expense, immediately to
acquire title thereto, in order to be able to convey title thereto to Landlord
as provided in this Section 35). Landlord acknowledges and agrees that neither
Tenant's proprietary software nor Tenant's trademarks nor Tenant's accounts
receivable nor Tenant's policy manuals are to be transferred to Landlord
pursuant to this Section 35. Tenant shall execute and deliver such assignments,
conveyance documents, bills of sale and other instruments as Landlord shall
reasonably require to evidence the conveyances and transfers referenced in this
Section 35 and otherwise reasonably assist Landlord with such conveyances and
transfers.
77
Xxxxxxxxxx
00. Compliance With Environmental Laws.
36.1 Hazardous Substances. Tenant shall not place or hold any
Hazardous Substances under, on or at any of the Leased Properties, except as is
necessary or reasonable in the ordinary course of its business. If Tenant's
business requires the use of any Hazardous Substances, other than such cleaning
materials as are typically found in healthcare facilities, Tenant shall notify
Landlord in writing and shall comply with hazard communication and notification
requirements of the Occupational Safety and Health Act and any other
Environmental Laws with respect to such Hazardous Substances. Tenant shall
comply with all Environmental Laws in connection with its use, operation and
management of the Leased Properties. Tenant shall not cause or allow any
asbestos to be incorporated into any Leased Improvements or Alterations that it
makes or causes to be made on or to any of the Leased Improvements. Tenant shall
not use any of the Leased Properties as a treatment, storage, or disposal
(whether permanent or temporary) facility for Hazardous Substances as defined
under RCRA. If Tenant, in the ordinary course of its business (e.g., customary
cleaning supplies), generates Hazardous Substances, then Tenant shall comply
with all Environmental Laws relating to the appropriate use, storage,
transportation and disposal of Hazardous Substances. Tenant further agrees that
it shall properly, and in compliance in all material respects with all
Environmental Laws, dispose of all "infectious waste" such as, without
limitation, laboratory waste, pathological waste, blood specimens or products,
resident waste, including, without limitation, bandages and disposable gowns,
sharp waste and any material generated by the production or testing of
biological agents. All of the terms, covenants, warranties and indemnifications
contained in this Section 36 shall survive the expiration or sooner termination
of this Lease.
36.2 Remediation; Notification. If Tenant becomes aware of a material
violation of any Environmental Laws relating to any Hazardous Substance or
otherwise in, on, under or about any Leased Property or any adjacent property
thereto, or if Tenant, Landlord or a Leased Property becomes subject to any
order of any federal, state or local agency to repair, close, detoxify,
decontaminate or otherwise remediate such Leased Property, Tenant shall promptly
notify Landlord of such event and, at its sole cost and expense, cure such
violation or effect such repair, closure, detoxification, decontamination or
other remediation, which activities shall in all events be performed in
accordance with all applicable Environmental Laws and shall be subject to
Landlord's written approval as to their scope, process, content and standard for
completion prior to their commencement, such approval not to be unreasonably
withheld. If Tenant fails to implement and diligently pursue any such cure,
repair, closure, detoxification, decontamination or other remediation as
required under this Section 36.2, Landlord shall have the right, but not the
obligation, to carry out such action and to recover from Tenant all of
Landlord's costs and expenses incurred in connection therewith. Each of Landlord
and Tenant shall promptly notify the other upon becoming aware (or being
notified) of (i) any claims, suits, proceedings, investigations or demands, or
any enforcement, cleanup or other regulatory or judicial action, threatened,
made, or initiated against or involving it and relating to any of the Leased
Properties pursuant to any Environmental Laws, including, without limitation,
those relating to the presence, treatment, storage, handling, disposal,
generation, spill, release or discharge of any Hazardous Substances on, at, in,
under or about the Leased Properties or the migration thereof from or to any
78
Amberleigh
other property; and (ii) the imposition of any lien arising under Environmental
Laws on any of the Leased Properties.
36.3 Indemnity. Tenant shall indemnify, defend, protect, save, hold
Landlord and all of the Landlord Indemnified Parties harmless from and against
any and all Losses (including, but not limited to, losses of use or economic
benefit or diminution in value) suffered or incurred by Landlord or any Landlord
Indemnified Parties in connection with, arising out of, resulting from or
incident to: (i) the production, use, generation, storage, treatment,
transporting, disposal, discharge, release or other handling or disposition of
any Hazardous Substances from, in, on or about any of the Leased Properties,
whenever caused, arising or occurring, except to the extent caused by Landlord
or any of the Landlord Indemnified Parties from and after the date hereof; (ii)
the presence of any Hazardous Substances in, on, under or about any Leased
Properties before the Commencement Date or during the Term; (iii) the violation
of any Environmental Laws with respect to any Leased Property during the Term or
prior to the Commencement Date; and (iv) any breach by Tenant or any Tenant
Parties of this Section 36.
36.4 Environmental Inspection. Landlord shall have the right, upon not
less than five (5) days' written notice to Tenant, except in the case of an
emergency, in which event no notice shall be required, to conduct an inspection
of any Leased Property to determine the existence or presence of Hazardous
Substances at, in, on, under or about any Leased Property in violation of any
Environmental Laws or the existence at any Leased Property of any violation of
any Environmental Laws. Landlord shall have the right to enter and inspect any
Leased Property and to conduct any testing, sampling and analyses reasonably
necessary and shall further have the right to inspect materials brought into any
Leased Property. Landlord may, in its discretion, retain such experts to conduct
the inspections, or perform the tests, referred to herein, and to prepare a
written report in connection therewith. Landlord shall have the right to inspect
the Leased Properties with regard to the management and disposal of Hazardous
Substances at all reasonable times during the Term. All reasonable costs and
expenses incurred by Landlord under this Section 36.4 shall be paid by Tenant as
Consent Expenses.
36.5 Removal. Upon the earlier of the expiration or earlier
termination of this Lease as to one or more Leased Properties, Tenant shall
forthwith remove all Hazardous Substances from any portion of the Leased
Properties as to which such expiration or termination relates, to the extent
such Hazardous Substances are present due to the acts or omissions of Tenant or
any Tenant Parties, which removal shall be performed in accordance with any
Environmental Laws and to Landlord's satisfaction.
37. Operational Transfer.
37.1 Exercise; Transfer of Authorizations.
37.1.1 Exercise. Upon (i) the expiration of this Lease as to any
Leased Property in accordance with its terms as of the Expiration Date
79
Amberleigh
applicable to such Leased Property, (ii) the occurrence of an Early Termination
Event as to any Leased Property (including any Deleted Property) or (iii) the
earlier dispossession of Tenant from any Leased Property, Landlord shall have
the unequivocal, unilateral right to require an Operational Transfer with
respect to such Leased Property (any Leased Property with respect to which
Landlord elects to require an Operational Transfer, a "Transition Property") by
delivery of written notice to Tenant specifying such election (a "Transition
Notice"). Landlord may exercise (in its sole discretion) its right to require an
Operational Transfer, with respect to any Leased Property with respect to which
this Lease will terminate by its terms as of the Expiration Date applicable to
such Leased Property, by delivering a Transition Notice on or prior to ten (10)
days prior to such Expiration Date. In the event of an Early Termination Event
as to any Leased Property or dispossession of Tenant with respect to any Leased
Property, Landlord may exercise (in its sole discretion) its right to require an
Operational Transfer with respect to such Leased Property at any time by
delivering a Transition Notice to Tenant.
37.1.2 Transfer of Authorizations. If Landlord exercises its
right to require an Operational Transfer with respect to a particular Leased
Property(ies), Tenant shall take any and all necessary actions; file such
applications, petitions, and transfer notices; make such assignments,
conveyances and transfers of permits, licenses, approvals and Facility Provider
Agreements issued to Tenant to and for the benefit of Landlord and/or any
Landlord's designee (any such designee, a "Successor Operator"); and cause such
permits, licenses, approvals and Facility Provider Agreements to be issued to
and for the benefit of Landlord and/or any Successor Operator, in any and all
such cases as are necessary, desirable, or advisable, such that the day-to-day
operations of the Transition Property(ies) for the Primary Intended Use(s) of
the Facility(ies) located on such Transition Property(ies) are transferred and
transitioned, practically and legally, to Landlord and/or any Successor Operator
simultaneously with the termination or earlier expiration of this Lease as to
the Transition Property(ies) without interruption of the business activities
therein, regulatory or otherwise (such transfer of operations, an "Operational
Transfer"). Without limitation of the foregoing or any other rights of Landlord
or any Successor Operator as set forth in this Section 37, as part of any
Operational Transfer, Tenant shall, to the extent permitted by applicable law,
(i) sell, transfer, convey and assign to Landlord and/or any Successor Operator,
as applicable, those of the Authorizations that Landlord elects to assume and
accept (or cause Successor Operator to assume and accept) (the "Assigned
Authorizations") or allow Landlord or any Successor Operator to continue to rely
upon any Authorizations (including, but not limited to, any Facility Provider
Agreements); (ii) use its unconditional, best efforts to enable Landlord and/or
Successor Operator to apply for and obtain any and all licenses, operating
permits, Provider Agreements, provider status, certificates of need,
certificates of exemption, approvals, waivers, variances and other governmental,
quasi-governmental and private authorizations necessary or advisable for the
continuous operation of the Facility(ies) located on each Transition Property
for its/their Primary Intended Use(s) (collectively, "Transfer Authorizations");
(iii) assign to Landlord or any Successor Operator, as applicable, such
assignable resident, vendor, service provider and other contracts relating to
the Facility(ies) located on each Transition Property as Landlord or any
Successor Operator may request (the "Assigned Contracts"); (iv) if requested by
00
Xxxxxxxxxx
Xxxxxxxx, enter into an operations transfer agreement with Landlord or Successor
Operator, as applicable, that is reasonably acceptable to Landlord; (v) not
unreasonably withhold, condition or delay its consent to entering into any
interim sublease or management agreements as may be necessary to effectuate an
early transfer of the operations of the Facility(ies) located on each Transition
Property for its/their Primary Intended Use(s) prior to the time that Landlord
or Successor Operator, as applicable, holds all Authorizations from all
applicable Governmental Authorities necessary to so operate such Facility(ies);
and (vi) indemnify, defend, protect and hold harmless Landlord and any Successor
Operator from and against any loss, damage, cost or expense incurred by Landlord
or Successor Operator in connection with the correction of any and all
deficiencies of a physical nature identified by any Governmental Authority in
the course of any Operational Transfer. Except as may be expressly assumed and
paid by any successor third party operator, the costs and expenses incident to
any Operational Transfer, including, but not limited to, any costs incident to
assigning the Assigned Authorizations, obtaining Transfer Authorizations and
assigning the Assigned Contracts, shall be paid entirely by Tenant as Consent
Expenses. It is the express intention of the parties that, at the expiration or
earlier termination of the Term as to each Transition Property, and upon any
dispossession of Tenant in connection with any Event of Default as to any
Facility(ies) located on a Transition Property, any and all Authorizations
needed to operate each Transition Property as to which the Term is expired or
terminated, or as to which Tenant has been dispossessed, for its/their Primary
Intended Use(s) shall, to the maximum extent permitted by applicable law, and if
Landlord so elects, remain with such Facility(ies) and shall be transferred into
the name of Landlord and/or Successor Operator, as applicable, regardless of
whether any such Authorization is in the name of Tenant at any time during the
Term.
37.2 Reasonable Assistance. In anticipation of the expiration of
this Lease as to any Leased Property, or upon any Early Termination Event as to
any Leased Property, or the earlier dispossession of Tenant with respect to any
Leased Property, Tenant shall cooperate with Landlord in all respects to
facilitate and effectuate an Operational Transfer if Landlord elects to require
an Operational Transfer. Such cooperation shall include, without limitation: (i)
furnishing to Landlord or any prospective Successor Operator complete and
accurate books, records, files, documents and information in Tenant's
possession, custody or control necessary or reasonably requested by Landlord or
Successor Operator in connection with any Operational Transfer, the assessment
and/or assumption of the operations of any Transition Property(ies) and/or the
completion and processing of any applications for the assignment of the Assigned
Authorizations or the Assigned Contracts or obtaining Transfer Authorizations;
and (ii) facilitating the evaluation and employment by Landlord or any
prospective Successor Operator of such employees of Tenant or its Affiliates (or
any third party employment agency with whom Tenant or its Affiliates has an
agreement pursuant to which such agency employs such parties) as Landlord or
Successor Operator may elect to evaluate or employ, including, without
limitation, to the extent permitted by law, affording Landlord or Successor
Operator, as applicable, access to all relevant personnel files, records,
documents and information in Tenant's or its Affiliates' possession, custody or
control.
81
Amberleigh
37.3 Facility Termination; Limited Term Contraction Right; Limited
Extended Operation by Tenant.
37.3.1 Facility Termination. Notwithstanding anything to the
contrary contained in this Lease, Tenant shall not, prior to the fifteenth
(15th) day preceding the Expiration Date applicable to each Leased Property,
commence to wind up and terminate the operations of the Facility(ies) operated
thereon (a "Facility Termination"). In no event, and under no circumstances,
shall any Tenant relocate the residents or occupants of any Facility to any
other healthcare facility without obtaining Landlord's prior written consent
(which consent may be withheld in Landlord's sole discretion); provided,
however, that, if Landlord has not delivered a Transition Notice to Tenant prior
to the fifteenth (15th) day preceding the Expiration Date applicable under this
Lease to a particular Leased Property, then Tenant may commence the Facility
Termination (including the relocation of residents) as to the Facility(ies)
located on such Leased Property and, upon the expiration of this Lease as to
such Leased Property and Facility(ies), Tenant shall vacate such Leased Property
and surrender possession thereof to Landlord in accordance with all of the
applicable requirements of this Lease. If, prior to the fifteenth (15th) day
preceding the Expiration Date applicable under this Lease to a particular Leased
Property, Landlord elects to require an Operational Transfer by delivering a
Transition Notice to Tenant, Tenant shall not commence or otherwise engage in a
Facility Termination with respect to the Facility(ies) located on such Leased
Property. In the event of an Early Termination Event or early dispossession of
Tenant with respect to any Leased Property, Tenant shall in no event commence a
Facility Termination in connection with the applicable Leased Property unless
and until Landlord affirmatively elects, in writing and in its sole discretion,
not to deliver a Transition Notice with respect to such Leased Property.
37.3.2 Limited Term Contraction Right. Landlord shall have the
right, as to each Leased Property, to elect to contract the Term, and accelerate
the Expiration Date, of this Lease as it applies to such Leased Property. To
exercise such election and right as to a particular Leased Property, Landlord
shall give a written notice (a "Contraction Notice") to Tenant specifying the
revised, earlier Expiration Date that will, for all purposes of this Lease,
thereafter be applicable to such Leased Property, which revised, earlier
Expiration Date so specified by Landlord shall be (i) not more than one hundred
twenty (120) days prior to the Initial Expiration Date, (ii) no sooner than
sixty (60) days after the date of Landlord's aforesaid Contraction Notice, and
(iii) binding upon Landlord and Tenant upon Landlord's issuance of such
Contraction Notice. Landlord may issue one, but not more than one, Contraction
Notice as to each Leased Property.
37.3.3 Limited Extended Operation by Tenant. In the event
Landlord delivers a Transition Notice as to a particular Transition Property,
Tenant shall thereafter operate the Facility(ies) located on such Transition
Property in accordance with all of the requirements of this Lease until the
earliest to occur of (i) the date (on or after the expiration of this Lease as
to such Transition Property and Facility(ies)) on which Landlord or Successor
Operator, as applicable, will assume the operation of such Facility(ies), as
specified in a written notice from Landlord to Tenant given not less than sixty
(60) days prior to the date of such assumption; (ii) the date that is one
hundred twenty (120) days after the Expiration Date applicable to such
82
Amberleigh
Transition Property and Facility(ies) (except that in connection with any Early
Termination Event or any early dispossession of Tenant with respect to any
Leased Property, such one hundred twenty (120) day period shall not commence
until Landlord delivers a Transition Notice as to the applicable Leased
Property); and (iii) the date (on or after the Expiration Date applicable to any
Transition Property and Facility(ies)) that is ninety (90) days after Tenant
receives written notice from Landlord that, notwithstanding the foregoing,
Tenant may commence the Facility Termination, on which earliest date, Tenant
shall vacate the Leased Property in question and surrender possession thereof to
Landlord in accordance with all of the applicable requirements of this Lease. In
the event Landlord sends Tenant a Transition Notice with respect to a Leased
Property as to which this Lease has terminated as of the Expiration Date
applicable to such Leased Property (e.g. not in the case of an Early Termination
Event or early dispossession of Tenant), and, as a result thereof, Tenant
operates a Facility(ies) beyond the aforesaid Expiration Date applicable to such
Leased Property, then, from and after the expiration of this Lease as to such
Leased Property and until the earliest to occur of the dates described in
clauses (i), (ii) and (iii) above relative to such Leased Property (the
"Reimbursement Period"), (x) Landlord shall provide Tenant with an operating
budget, (y) Landlord shall include in the aforesaid operating budget, and Tenant
shall continue to pay during the Reimbursement Period, all Rent that would have
been owing under this Lease as to such Leased Property if this Lease had not
expired as to such Leased Property, and (z) Landlord shall reimburse Tenant for
any operating deficits with respect to such Leased Property that Tenant may be
required to fund out-of-pocket on account of operating losses and expenses of
such Leased Property incurred by Tenant by reason of, or arising out of
compliance with, such budget with respect to the Reimbursement Period applicable
to such Leased Property. Any such reimbursement shall be due from Landlord to
Tenant within thirty (30) days after written request by Tenant, provided that
Tenant shall furnish such documentation of any operating deficits, losses and
expenses as Landlord may reasonably request. The terms of this Section 37 shall
survive the expiration or sooner termination of this Lease.
37.4 Use of Tenant's Names. Without limitation of the other
provisions of this Section 37 and notwithstanding anything to the contrary
contained in this Lease, Tenant agrees to allow Landlord or any Successor
Operator, at its option and at no cost to Landlord or any such Successor
Operator, to continue to use, in its signage, marketing and advertising
materials, operations and otherwise, any or all name(s) of Tenant and its
Affiliates (including, without limitation, tradenames) associated with the
operation of a particular Leased Property and related Facility as a going
concern except Landlord, its affiliate or assign shall not use "Capital Senior
Living" or any variation thereof (e.g., CSL) following (i) the expiration or
termination of this Lease as it applies to such Leased Property and Facility and
(ii) the vacation from, and surrender of, such Leased Property and Facility by
Tenant in accordance with this Section 37 and the other requirements of this
Lease. As to any name (including, without limitation, any trade name) or any
portion thereof that is associated solely with any Leased Property and related
Facility, it is understood that any such name is and shall at all times remain
the property of Landlord, and that Tenant shall have a license (to the full
extent, if any, that Landlord is entitled to do so) to use such property or
facility name(s) during the Term hereof, but that Landlord makes no
representations or warranties regarding said license or said name(s) and that
83
Amberleigh
any failure of other defect in such name(s) shall not give rise to any claim,
defense or other matter whatsoever.
38. Non-Recourse. Tenant specifically agrees to look solely to Landlord's
and any successor owner's interest in the then applicable Premises for recovery
of any judgment against Landlord, it being specifically agreed that neither
Landlord, any such successor owner, nor any officer, director, employee, lender,
agent or Affiliate of Landlord or any such successor owner shall ever be
personally liable for any such judgment or for the payment of any monetary
obligation to Tenant. Tenant shall have no recourse against any other property
or assets of Landlord or any successor owner, or against any property or assets
of any officer, director, employee, lender, agent or Affiliate of Landlord or
any successor owner. Furthermore, in no event shall Landlord (original or
successor) ever be liable to Tenant for any special, indirect or consequential
damages suffered by Tenant from whatever cause. Landlord shall have no recourse
against Tenant's officers and directors personally for any judgment against
Tenant; provided, however, that said limitation shall not apply if and to the
extent that Landlord has a claim that would otherwise be covered by a directors'
and officers' (i.e., "D&O") liability policy or any other applicable policy of
insurance.
39. Combination of Leases. If Landlord is the landlord under both this
Lease and any Other Lease, Landlord shall have the right, at any time during the
Term, by written notice to Tenant, to require that this Lease and such Other
Lease (the "Combination Lease") be combined into a single lease and to require
Tenant to execute an amendment to this Lease whereby (i) if this Lease is the
Section 39 Lease, the Leased Properties covered by the Combination Lease
("Additional Properties") are added as Leased Properties under this Lease and
otherwise merged into this Lease or (ii) if the Combination Lease is the Section
39 Lease, the Leased Properties covered by this Lease are added as Leased
Properties under the Combination Lease and otherwise merged into the Combination
Lease, in each case subject to the following terms and conditions:
39.1 Section 39 Lease. References in this Lease to the "Section 39
Lease" shall mean and refer to whichever of this Lease or the Combination Lease
is chosen by Landlord to be the Section 39 Lease.
39.2 Additional Properties. If this Lease is the Section 39 Lease,
effective as of the date specified in Section 39.4 below (the "Section 39
Date"), this Lease shall be deemed to be amended as follows:
39.2.1 The Additional Properties shall be included as Leased
Properties under this Lease and the appropriate exhibits to this Lease shall be
amended to add the addresses and legal descriptions of such Additional
Properties.
39.2.2 Fixed Rent under this Lease shall be the combination of
the respective amounts of the Fixed Rent under this Lease and the Combination
Lease.
39.2.3 Any rental escalations that are to be made with respect to
the Leased Properties under this Lease shall also be made with respect to the
84
Amberleigh
Additional Properties as if such Additional Properties had been Leased
Properties under this Lease since the beginning of the Term.
39.2.4 Schedule 2 to this Lease shall be amended so as to add
thereto the Tenant's Proportionate Share(s) relative to the Tenant(s) under the
Combination Lease that was/were previously included in Schedule 2 to the
Combination Lease, and the Tenant's Proportionate Share(s) of the Tenant(s)
included in this Lease (including, without limitation, the additional Tenant(s)
from the Combination Lease) shall be recalculated so that each such Tenant shall
have a Tenant's Proportionate Share equal to the percentage that the Fixed Rent
allocable to the Facility(ies) operated by such Tenant (which allocable portion
of Fixed Rent shall remain equal to the share of Fixed Rent that was allocated
to such Facility(ies) under this Lease or the Combination Lease, as applicable,
prior to the combination of the Leases pursuant to this Section 39) comprises of
the aggregate Fixed Rents for all Leased Properties included in this Lease
(including, without limitation, the Additional Properties) and so that the
aggregate of all Tenant's Proportionate Shares equals one hundred percent
(100%).
39.2.5 Tenant under this Lease shall be responsible for the
payment, performance and satisfaction of all duties, obligations and liabilities
arising under the Combination Lease, insofar as they relate to the Additional
Properties, that were not paid, performed and satisfied in full prior to the
Section 39 Date, and, without limitation of the foregoing, (i) any Event of
Default that had occurred, arisen or accrued under the Combination Lease prior
to the Section 39 Date shall be, and shall be deemed to be, an Event of Default
under this Lease, as to which the rights and remedies and other provisions of
this Lease shall be applicable, (ii) any breach or default that had occurred,
arisen or accrued under the Combination Lease prior to the Section 39 Date but
had not yet become an Event of Default under the Combination Lease as of the
Section 39 Date shall be, and be deemed to be, a breach or default under this
Lease, as to which the cure periods, rights and remedies and other provisions of
this Lease shall be applicable, and (iii) with respect to any breach or default
described in subsection (ii) above, although the cure periods, rights and
remedies and other provisions of this Lease shall be applicable, the portion of
any cure period under the Combination Lease that had elapsed as of the Section
39 Date shall be counted in determining whether and when the applicable cure
period under this Lease has expired.
39.2.6 The Additional Properties shall otherwise be incorporated
into this Lease as Leased Properties included under this Lease the same as if
this Lease, from the inception of the Lease, had included such Leased Properties
as Leased Properties hereunder on the rent, lease terms and other economic terms
described in the Combination Lease (and, in such regard, any provisions of the
Combination Lease that apply particularly, or in a particular manner, to any or
all of the Additional Properties shall continue to apply thereto under this
Lease (e.g. if an Additional Property is located in a particular jurisdiction
and, under Section 46 of the Combination Lease, particular provisions apply
thereto on account thereof, such provisions shall continue to apply to such
Additional Property under this Lease, as the Section 39 Lease)).
85
Amberleigh
39.2.7 Exhibit C attached hereto and the Base Year Resident
Revenues shall thereafter be amended and increased, respectively, to include the
Additional Properties and increase the Base Year Resident Revenues by the amount
of the Allocated Base Year Resident Revenues applicable to the Additional
Properties.
39.3 Combination Lease. If this Lease is not the Section 39 Lease,
effective as of the Section 39 Date, this Lease shall be amended as necessary
(i) to incorporate into the Combination Lease as Leased Properties thereunder
the Leased Properties covered by this Lease the same as if the Leased Properties
covered by this Lease had, from the inception of this Lease, been included in
the Combination Lease as Leased Properties thereunder on the rent, lease terms
and other economic terms described in this Lease and (ii) otherwise to comply
with the requirements of Section 39 of the Combination Lease, as the Section 39
Lease thereunder. Tenant acknowledges and agrees that, without limitation of
Section 39.2.5 above, the amendment referenced in this Section 39.3 shall not
result in Tenant being released from any duties, liabilities or obligations that
had accrued under this Lease through the Section 39 Date.
39.4 Section 39 Date. In the case of any combination of leases
pursuant to this Section 39, such combination shall be effective on the date
that is the earlier of (i) the date the required amendments to the Lease and the
Combination Lease are fully executed and delivered by the parties thereto and
(ii) the date specified in the written notice from Landlord to Tenant requiring
a combination of this Lease and the Combination Lease as described above, which
date shall be no sooner than ten (10) days, nor later than sixty (60) days,
after the date such notice is issued.
39.5 Additional Actions. Landlord and each Tenant shall take such
actions and execute and deliver such documents, including, without limitation,
required amendments to this Lease and the Combination Lease, as are reasonably
necessary and appropriate to effectuate fully the provisions and intent of this
Section 39 and, in the event any ambiguity, or actual or apparent conflict in
the terms or provisions of this Lease and the Combination Lease, arises on
account of any combination of leases pursuant to this Section 39, such ambiguity
or conflict shall be resolved by Landlord, in its reasonable discretion.
40. New Lease. Landlord shall have the right, at any time and from
time to time during the Term, by written notice to Tenant, to require Tenant to
execute an amendment to this Lease whereby one or more Leased Properties
(individually, a "Transferred Premises" or collectively, "Transferred Premises")
are separated and removed from this Lease, and simultaneously to execute a
substitute lease with respect to such Transferred Premises, in which case:
40.1 New Lease Terms. Landlord and Tenant shall execute a new
lease (the "New Lease") for such Transferred Premises, effective as of the date
specified in Section 40.3 below (the "Property Transfer Date"), in the same form
and substance as this Lease, but with the following changes thereto:
86
Amberleigh
40.1.1 Fixed Rent. The initial Fixed Rent for such Transferred
Premises shall be an amount equal to the product of (i) the sum of Tenant's
Proportionate Shares applicable to all of the Facilities located on the
Transferred Premises, and (ii) aggregate Fixed Rent in effect under this Lease
immediately prior to the Property Transfer Date. The allocable share of Fixed
Rent for each Tenant under the New Lease shall be equal to the product of (x)
Tenant's Proportionate Share for the Facility(ies) located on such Transferred
Premises under the New Lease, as calculated pursuant to Section 40.1.2, and (y)
Fixed Rent under the New Lease. Any rental escalations required under this Lease
shall be made under the New Lease on the same date and in the same manner as is
required under this Lease, in the full amount required as if such Transferred
Premises had been under the New Lease for a full year, notwithstanding that the
period from the Property Transfer Date to the rent escalation date may be less
than one full year. The Base Year Resident Revenues applicable to the
Transferred Premises for purposes of determining whether the Rent Escalation
Condition under such New Lease has been satisfied shall be equal to the
aggregate of the Allocated Base Year Resident Revenues for all of the
Transferred Premises.
40.1.2 Proportionate Shares. An exhibit to such New Lease
comparable to Schedule 2 attached to this Lease shall include a Tenant's
Proportionate Share for each Facility located on the Transferred Premises
covered by the New Lease equal to the percentage that the Fixed Rent allocable
to such Facility under the New Lease comprises of the aggregate Fixed Rent for
all Facilities located on all of the Transferred Premises under such New Lease
(and the aggregate of all such Tenant's Proportionate Shares under such New
Lease shall equal one hundred percent (100%)).
40.1.3 Liabilities and Obligations. The New Lease shall provide
that each Tenant thereunder shall be responsible for the payment, performance
and satisfaction of all duties, obligations and liabilities arising under this
Lease, insofar as they relate to the Transferred Premises subject to the New
Lease, that were not paid, performed and satisfied in full prior to the
commencement date of the New Lease (and Tenant under this Lease shall also be
responsible for the payment, performance and satisfaction of the aforesaid
duties, obligations and liabilities not paid, performed and satisfied in full
prior to the commencement date of such New Lease), and shall further provide
that the Tenant thereunder shall not be responsible for the payment, performance
or satisfaction of any duties, obligations and liabilities of Tenant under this
Lease arising after the Property Transfer Date.
40.1.4 Single Leased Property. If the New Lease relates to a
single Leased Property, the New Lease shall provide that (i) because, for
example, such New Lease may thereafter be amended by agreement of Landlord and
Tenant to include one or more other leased properties or such New Lease may
thereafter be combined with a Combination Lease pursuant to Section 39 of such
New Lease, with such New Lease as the Section 39 Lease, Landlord and Tenant
under such New Lease have, in creating such New Lease, nevertheless retained in
such New Lease references to multiple Leased Properties and provisions and terms
that apply to multiple Leased Properties and (ii) without limitation of and
subject to Section 39 of such New Lease, for so long as such New Lease relates
to a single Leased Property, the aforesaid references to multiple Leased
Properties, and the aforesaid provisions and terms applicable to multiple Leased
Properties, shall, if the context so requires in light of such New Lease
87
Amberleigh
relating to only a single Leased Property, be treated as references to a single
Leased Property or as provisions and terms applicable to a single Leased
Property.
40.1.5 Deletion of Provisions. At the election of Landlord, any
one or more of the provisions of the New Lease pertaining to the REIT status of
Ventas, Inc. shall be deleted. In addition, Landlord may delete and eliminate
from such New Lease such provisions herein as it elects, provided such deletion
and elimination do not materially and adversely affect the Tenant under such New
Lease.
40.1.6 Security Deposit; Escrow Deposits; Capital Expenditures
Deposits. Such New Lease shall contemplate both a security deposit and escrow
and capital expenditures deposits in the same manner or fashion as contemplated
by this Lease. Such amounts under the New Lease shall initially be funded by
Landlord from the Security Deposit held by Landlord and the escrow and capital
expenditures deposits held in the Escrow Account and Capital Expenditures
Account, with the Security Deposit under the New Lease to be equal to the
product of (i) the sum of Tenant's Proportionate Shares applicable to all of the
Facilities located on the Transferred Premises and (ii) the aggregate Security
Deposit held by Landlord under this Lease immediately prior to the Property
Transfer Date and the initial amounts to be held in the escrow and capital
expenditures accounts under the New Lease to be determined as provided in
Section 11.3.4 hereof.
40.2 Amendments to this Lease. Upon execution of such New Lease, and
effective as of the Property Transfer Date, this Lease shall be deemed to be
amended as follows: (i) the Transferred Premises shall be excluded from the
Premises hereunder; (ii) Fixed Rent hereunder shall be reduced by the amount of
the Fixed Rent allocable to the Transferred Premises; (iii) Exhibit C attached
hereto and the Base Year Resident Revenues shall be amended and reduced,
respectively, to delete and eliminate the Transferred Premises therefrom and
reduce the Base Year Resident Revenues by the amount of the Allocated Base Year
Resident Revenues applicable to the Transferred Premises for purposes of
determining whether the Rent Escalation Condition has been satisfied or
otherwise under this Lease; and (iv) Schedule 2 attached hereto shall be
modified so as to remove the Tenant's Proportionate Shares for the Transferred
Premises, and the Tenant's Proportionate Shares for the Leased Properties
remaining under this Lease shall be recalculated so that each such Facility
shall have a Tenant's Proportionate Share equal to the percentage that the Fixed
Rent for such Facility comprises of the aggregate Fixed Rents for all Premises
remaining under this Lease, and so that the aggregate of all Tenant's
Proportionate Shares remaining under this Lease equals 100%. Such amendments
shall occur automatically and without the necessity of any further action by
Landlord or Tenant, but, at Landlord's election, the same shall be reflected in
a formal amendment to this Lease, which amendment shall be promptly executed by
Tenant.
40.3 Effective Date. Any New Lease shall be effective on the date
which is the earlier of: (i) the date the New Lease is fully executed and
delivered by the parties thereto and (ii) the date specified in the written
88
Amberleigh
notice from Landlord to Tenant requiring a New Lease as described above, which
date shall be no sooner than ten (10) days, nor later than sixty (60) days,
after the date such notice is issued.
40.4 Other Undertakings. Tenant shall take such actions and execute
and deliver such documents, including without limitation the New Lease and new
or amended Memorandum(s) of Lease and, if requested by Landlord, an amendment to
this Lease, as are reasonably necessary and appropriate to effectuate fully the
provisions and intent of this Section 40, and Landlord shall execute and deliver
such new or amended Memorandum(s) of Lease as are reasonably necessary and
appropriate to effectuate fully the provisions and intent of this Section 40 and
an amendment of this Lease in accordance with Section 40.2 above, as applicable.
41. Restrictive Covenant. Tenant, Guarantor and their respective Affiliates
shall be subject to the restrictive covenants and conditions governing the
ownership, leasing, management or operation of additional healthcare facilities
contained in Exhibit F attached hereto.
42. Miscellaneous.
42.1 Survival. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination, and, without limitation of the
foregoing, Tenant's obligation to pay any Rent owing hereunder with respect to
any period on or prior to the expiration or termination of this Lease, as this
Lease applies to any or all of the Premises, shall survive any such expiration
or termination.
42.2 Non-Business Day Payments. Notwithstanding anything herein to the
contrary, if any payment required to be made hereunder falls on a date that is
not a Business Day, then such required payment shall be made on the Business Day
immediately preceding the date on which such payment would otherwise be due.
42.3 Brokers. Tenant warrants that, it has not had any contact or
dealings with any Person that would give rise to the payment of any fee or
brokerage commission in connection with this Lease, and Tenant shall indemnify,
protect, hold harmless and defend Landlord from and against any liability with
respect to any fee or brokerage commission arising out of any act or omission of
Tenant. Landlord warrants that, it has not had any contact or dealings with any
Person that would give rise to the payment of any fee or brokerage commission in
connection with this Lease, and Landlord shall indemnify, protect, hold harmless
and defend Tenant from and against any liability with respect to any fee or
brokerage commission arising out of any act or omission of Landlord.
42.4 Headings. The headings in this Lease are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
89
Amberleigh
42.5 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be a valid and binding original, but all of
which together shall constitute one and the same instrument.
42.6 Integration; Modification; Interpretation; Relationship. This
Lease (including, without limitation, the preamble, recitals, schedules and
exhibits hereto, each of which is fully incorporated into and made a part of
this Lease) contains the entire agreement between Landlord and Tenant with
respect to the subject matter hereof; it being understood and agreed that
nothing contained herein modifies or waives those confidentiality agreements
signed by Landlord's Affiliates and Tenant's affiliate dated as of February 11,
2005 (as amended effective April 21, 2005) and April 1, 2005 or that certain
Nondisclosure Agreement between Landlord's Affiliates and Tenant's Affiliates
dated as of April 1, 2005. Landlord and Tenant hereby agree that all prior or
contemporaneous oral understandings, agreements or negotiations relative to the
leasing of the Premises are merged into and revoked by this Lease. No
representations, warranties or agreements have been made by Landlord except as
set forth in this Lease. This Lease may be only be modified by a writing signed
by both Landlord and Tenant. Both Landlord and Tenant have been represented by
counsel, and this Lease and every provision hereof has been freely and fairly
negotiated. Consequently, all provisions of this Lease shall be interpreted
according to their fair meaning and shall not be strictly construed against any
party. Landlord and Tenant agree that nothing contained in the P&S Agreement
shall abrogate or impair any of the rights, duties and obligations of Landlord
and Tenant under this Lease and that, in the event of any conflict between the
terms and provisions of this Lease and the terms and provisions of the P&S
Agreement, the terms and provisions of this Lease shall govern. The sole
relationship between Landlord and Tenant under this Lease is that of landlord
and tenant. Nothing contained in this Lease shall be deemed or construed by the
parties hereto or by any third party to create the relationship of principal and
agent, borrower and lender, partnership, joint venture or any association
between Landlord and Tenant; it being expressly understood and agreed that
neither the method of computation of rent nor any act of the parties hereto
shall be deemed to create any relationship between Landlord and Tenant other
than the relationship of landlord and tenant.
42.7 Time of Essence. Time is of the essence of this Lease and each
provision hereof in which time of performance is established.
42.8 Force Majeure. In the event that either Landlord or Tenant is
delayed in performing its respective obligations pursuant to this Lease by any
cause beyond the reasonable control of the party required to perform such
obligation, the time period for performing such obligation shall be extended by
a period of time equal to the period of the delay. For purposes of this Lease:
(i) a cause shall be beyond the reasonable control of a party to this Lease when
such cause would affect any Person similarly situated (such as a power outage,
labor strike, Act of God or trucker's strike) but shall not be beyond the
reasonable control of such party when peculiar to such party (such as financial
inability or failure to order long lead time material sufficiently in advance);
(ii) this Section shall not apply to any obligation to pay money or otherwise
perform any financial obligation hereunder; and (iii) in the event of any
occurrence that a party believes constitutes a cause beyond the reasonable
90
Amberleigh
control of such party and that will delay any performance by such party, such
party shall promptly in writing notify the other party of the occurrence and
nature of such cause, the anticipated period of delay and the steps being taken
by such party to mitigate the effects of such delay.
42.9 Severability; Maximum Rate. If any term or provision of this
Lease is held or deemed to be invalid or unenforceable, such term or provision
shall be modified as slightly as possible so as to render it valid and
enforceable; if such term or provision, as modified, shall be held or deemed
invalid or unenforceable, such holding shall not affect the remainder of this
Lease and same shall remain in full force and effect. If any late charges or
interest computations 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 or interest computations shall be fixed at the maximum
permissible rate.
42.10 Governing Law; Venue. This Lease was negotiated in the State of
Illinois, which State the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby. In all respects, the
internal laws of the State of Illinois (without regard to principles of
conflicts of laws) and any applicable laws of the United States of America shall
govern the validity, enforceability and construction of the obligations of the
parties set forth herein, but all provisions hereof relating to the creation of
the leasehold estate and remedies set forth in Section 17 shall be governed by
the laws of the State in which each applicable Leased Property that is the
subject of dispute is located. The parties hereto will submit to jurisdiction
and the laying of venue for any suit on this Lease in the jurisdiction of the
Leased Property that is the subject of the dispute or, if no such jurisdiction
is available or ascertainable, the Commonwealth of Kentucky.
42.11 Waiver of Trial by Jury. EACH OF LANDLORD AND TENANT
ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO
ITS RIGHTS TO TRIAL BY JURY. EACH OF LANDLORD AND TENANT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS LEASE OR (ii) IN ANY MANNER CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF LANDLORD AND TENANT WITH RESPECT TO THIS LEASE OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. EACH OF LANDLORD AND TENANT HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL
WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A COPY OF THIS SECTION WITH ANY
COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF SUCH PARTY TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
91
Amberleigh
42.12 Waivers; Forbearance. All waivers, consents and releases
provided for in this Lease are effective only to the extent permitted by
applicable law. No waiver of any condition or covenant herein contained, or of
any breach of any such condition or covenant, shall be held or taken to be a
waiver of any subsequent breach of such covenant or condition, or to permit or
excuse its continuance or any future breach thereof, or of Landlord's right to
terminate this Lease or exercise any other remedy granted herein on account of
such existing breach. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or breach by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
42.13 Binding Character. This Lease shall be binding upon and shall
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
43. Renewal Options.
43.1 Exercise of Renewal Options. Tenant is hereby granted the right
to renew this Lease, with respect to all, but not less than all, of the Premises
for two (2), 5-year option renewal terms (collectively, the "Extended Terms" and
each an "Extended Term") upon giving written notice to Landlord of each such
renewal at least twelve (12) months but not more than eighteen (18) months prior
to the termination of the then current Term, provided that, at the time Tenant
gives a renewal notice as set forth above and at the time of the commencement of
the applicable Extended Term, no Event of Default shall have occurred and no
Potential Default shall be continuing under this Lease. Tenant may not exercise
its option for more than one Extended Term at a time or for more than the two
(2) Extended Terms expressly described herein.
43.2 Renewal Terms. During each Extended Term, all of the terms and
conditions of this Lease shall continue in full force and effect, subject,
however, to the following provisions. In the case of each Extended Term, the
Fixed Rent for the first Lease Year of any such Extended Term shall be equal to
the greater of (i) the annual Fixed Rent for the immediately preceding Lease
Year multiplied by 1.025 or (ii) the Fair Market Rental of the Premises (as
determined in accordance with this Section 43.2 and Section 43.3 hereof) for
such first Lease Year of the applicable Extended Term. Commencing upon the
commencement of the second (2nd) Lease Year of each Extended Term, and upon the
commencement of each Lease Year thereafter during the Extended Term, the Fixed
Rent for such Lease Year shall be an amount equal to the sum of (x) the Prior
Period Fixed Rent applicable to such Lease Year, plus (y) the product of (a) the
Prior Period Fixed Rent applicable to such Lease Year and (b) provided the Rent
Escalation Condition has been satisfied with respect to such Lease Year, the
amount equal to the greater of (1) two and one-half percent (2 1/2%) or (2)
seventy-five percent (75%) of the CPI Increase, expressed as a percentage, for
such Lease Year for which such calculation is being performed.
43.3 Fair Market Rental Determination. Within thirty (30) days after
receipt from Tenant of a notice of renewal under Section 43.1 hereof, the Fair
92
Amberleigh
Market Rental of the Premises, and the Fair Market Rental of each Leased
Property within the Premises, shall be determined by appraisal under the
procedures of Exhibit H attached hereto. Without limiting the efficacy of
Section 43.2 above, in no event shall the Fixed Rent for the first Lease Year of
any Extended Term be less than 102.5% of the Fixed Rent for the immediately
preceding Lease Year.
43.4 Extended Term Tenant's Proportionate Shares. If Fixed Rent for
the first Lease Year of any Extended Term is based upon the Fair Market Rental
of the Premises as determined pursuant to Section 43.2 and Section 43.3 hereof,
then, effective as of the first day of such Extended Term, Schedule 2 attached
hereto shall be revised so as to allocate the aggregate Fixed Rent payable
hereunder to the individual Leased Properties covered by this Lease, and to
assign Tenant's Proportionate Shares to such Leased Properties, in a manner that
is consistent with the respective Fair Market Rentals of such Leased Properties
as determined pursuant to Section 43.2 and Section 43.3 hereof.
43.5 Other Leases. Notwithstanding anything to the contrary contained
in this Section 43 or elsewhere in this Lease, Tenant acknowledges and agrees
that (i) any purported renewal notice sent by it under this Lease shall be void
and of no force or effect unless, simultaneously with the issuance of any such
renewal notice, the Tenant Lease Affiliate under each of the Other Leases that
remains in effect also issues a renewal notice with respect to the property(ies)
to which each such Other Lease applies and (ii) any Potential Default or Event
of Default by any such Tenant Lease Affiliates of its obligations under its
Other Lease shall preclude Tenant's exercise of renewal rights hereunder.
43.6 Rights Personal to Original Tenant. Tenant's rights under this
Section 43 are personal to Capital Senior Management 2, Inc., a Texas
corporation, the original Tenant under this Lease, and shall automatically
terminate upon any assignment of this Lease by Tenant (whether by operation of
law or otherwise) and upon any sublease by Tenant of more than ten percent (10%)
of the rentable area of any Improvements, excepting from said ten percent (10%)
calculation any Approved Residency Agreement or any Approved Commercial
Agreement.
44. Medicare; Medicaid. Tenant acknowledges that, at present, assisted
living facilities and independent living facilities do not participate in
Medicare or Medicaid and are not regulated or inspected by Governmental
Authorities or other Persons administering Third Party Payor Programs to the
same degree and extent as hospitals and/or skilled nursing facilities (e.g.,
through the issuance of certificates of need, periodic surveys of the quality of
care, issuance of deficiency reports, assignment of deficiency ratings of a
particular scope or severity or constituting immediate Jeopardy Events, etc.),
and agrees that, in the event that, during the Term, any of the Leased
Properties determines to participate in Medicare or Medicaid and/or becomes
subject to increased levels of regulation or inspection by Governmental
Authorities or any of the other aforesaid Persons, Landlord shall be entitled
from time to time to impose, and Tenant shall be obligated to comply with, such
additional covenants and other obligations relating to the Leased Properties and
Tenant's leasing and operation thereof as Landlord or its Affiliates customarily
impose upon tenants entering into new leases with Landlord or its Affiliates for
93
Amberleigh
properties like the Leased Properties and/or as Landlord from time to time
determines, in Landlord's discretion, are consistent with the practices of
landlords entering into new leases for properties like the Leased Properties.
45. Special Purpose Entity Obligations. Tenant agrees to comply, and to
cause all Tenant Lease Affiliates to comply, with the representations,
warranties, covenants and agreements set forth in Exhibit I attached hereto.
46. State Specific Provisions. The following provisions shall apply to
those Leased Properties that are located within the following states:
46.1 New York.
46.1.1 Relative to Section 15 of this Lease, the Tenant agrees
that the provisions of this Lease relating to casualties shall be deemed as an
express agreement as to damage or destruction of the premises by fire or other
casualty. New York Real Property Law Section 227 (and any similar or successor
statute), providing for such a contingency in the absence of the express
agreement, shall have no application in such case.
46.1.2 Relative to Section 17.5 of this Lease, the Tenant
explicitly agrees to waive the provisions of Section 761 of the Real Property
Actions & Proceedings Law, or any similar or successor statute, of the State of
New York.
46.2 California.
46.2.1 Relative to Sections 3.4.1 and 8.2.5.4 of this Lease and
any other provisions of this Lease relating to the Security Deposit, Tenant
waives the provisions of any applicable law or statute affording tenants rights
with respect to security deposits (including, without limitation, Section 1950.7
of the California Civil Code) and agrees that the provisions of Sections 3.4.1
and 8.2.5.4 of this Lease and any other provisions of this Lease relating to the
Security Deposit shall govern the treatment of the Security Deposit in all
respects.
46.2.2 Relative to Section 9.1.1 of this Lease, Tenant agrees
that the waiver contained in the last sentence thereof shall include, without
limitation, to the extent permitted by law, a waiver of any rights Tenant may
have under the provisions of California Civil Code Sections 1941 and 1942 and
any successor statutes or laws permitting Tenant to make repairs at Landlord's
expense.
46.2.3 Relative to Section 11.2 of this Lease, the Tenant shall,
following the completion of any Alteration, promptly cause to be recorded in the
county in which the Leased Property is located a Notice of Completion in
accordance with Section 3093 of the California Civil Code or any successor
statute with respect to such work, and deliver a copy thereof to Landlord.
94
Amberleigh
46.2.4 Relative to Section 15.10 of this Lease, Tenant waives any
statutory rights of termination that may arise by reason of any Casualty
(including, without limitation, the provisions of California Civil Code Section
1932, Subsection 2, and Section 1933, Subsection 4 and any successor statutes or
laws of a similar nature) or Condemnation (including, without limitation, the
provisions of California Code of Civil Procedure Sections 1265.110 through
1265.160 and any successor statutes or laws of a similar nature), and the
parties agree that their respective rights and obligations in the event of any
Casualty shall be governed by the terms of this Lease.
46.2.5 Relative to Section 17.1.1 of this Lease and the other
subsections of Section 17.1, Tenant agrees that the provision of any notice of
default as set forth in such subsections shall be in lieu of, and not in
addition to, any notice required under applicable law (including, without
limitation, California Code of Civil Procedure Section 1161 regarding unlawful
detainer actions and any successor statute or similar law).
46.2.6 Relative to Section 16.3 of this Lease, Tenant waives any
statutory rights of termination that may arise by reason of any Condemnation of
any part of the Leased Property (including, without limitation, the provisions
of California Code of Civil Procedure Section 1265.130 and any successor
statutes or laws of a similar nature).
46.2.7 Relative to Sections 17.3 and 17.4 of this Lease, Landlord
and Tenant agree that, if an Event of Default occurs and, on account thereof,
this Lease is terminated as to all of the Leased Properties or Landlord makes a
Limited Termination Election (other than a Limited Termination Election
involving only a Leased Property(ies) located outside of California), the
provisions of Sections 17.3 and 17.4 of this Lease shall be revised in their
entirety to apply to any such complete termination or Limited Termination
Election, as applicable, as follows:
"17.3 Certain Remedies. If an Event of
Default giving rise to termination under Section 17.2 shall
have occurred, Tenant shall, if and to the extent required
by Landlord so to do, immediately surrender to Landlord the
Leased Property(ies) specified by Landlord and as to which
the Lease has been or may be terminated pursuant to Section
17.2 or otherwise, and Landlord may enter upon and repossess
such Leased Property(ies) by summary proceedings, ejectment
or otherwise, and may remove Tenant and all other Persons
and all personal property from such Leased Property(ies)
subject to the rights of any occupants or patients and to
any requirement of law. Landlord shall also have the right
to exercise all or any of the rights and remedies afforded
Landlord by California law, including, but not limited to,
the remedies provided under California Civil Code Sections
1951.2 or 1951.4. Pursuant to California Civil Code Section
1951.2, the damages Landlord may recover against Tenant
include, but are not limited to, 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 for the same period that the Tenant proves
could be reasonably avoided. Pursuant to California Civil
Code Section 1951.4, Landlord may continue this Lease in
effect after Tenant's breach of this Lease and abandonment
95
Amberleigh
of the Leased Properties and recover Rent as to the Leased
Properties (or as to the Terminated Lease Properties, in the
event of a Limited Termination Election) as it becomes due,
if Tenant has the right to sublet the Leased Properties or
assign this Lease, subject only to reasonable limitations
(and, in such regard, Tenant agrees that the limitations on
subletting and assignment that are set forth in Section 24
hereof are reasonable)."
17.4. Damages. To the extent permitted by
law, neither (i) the termination of this Lease pursuant to
Section 17.2, (ii) the repossession of any or all of the
Leased Properties or any portion thereof, (iii) the failure
of Landlord to relet any or all of the Leased Properties or
any portion thereof, (iv) the reletting of any or all of the
Leased Properties or any portion thereof, (v) the failure of
Landlord to collect or receive any rentals due upon any such
reletting, nor (vi) the election by Landlord not to
terminate the Lease but rather to seek all damages provided
at law or in equity, shall relieve Tenant of any of its
liabilities or obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In
the event of any such termination of this Lease (or any
termination of this Lease as to less than all of the Leased
Properties in the event of a Limited Termination Election or
the election by Landlord not to terminate this Lease as to
such Leased Properties, but rather to pursue its damages at
law or in equity), without limitation of Section 17.5 and
Section 19 below, Landlord shall be entitled to collect from
Tenant:
(a) The worth at the time of award of any
unpaid Rent (or any unpaid Rent as to the Terminated Lease
Properties, in the event of a Limited Termination Election)
which had been earned at the time of such termination; plus
(b) The worth at the time of award of the
amount by which the unpaid Rent for the Leased Properties
(or for the Terminated Lease Properties, in the event of a
Limited Termination Election) which would have been earned
after termination until the time of award exceeds the amount
of such Rent loss relative to the Leased Properties (or
relative to the Terminated Lease Properties, in the event of
a Limited Termination Election) that Tenant proves could
have been reasonably avoided; plus
(c) The worth at the time of award of the
amount by which the unpaid Rent for the Leased Properties
(or for the Terminated Lease Properties, in the event of a
Limited Termination Election) for the balance of the Term
after the time of award exceeds the amount of such Rent loss
relative to the Leased Properties (or relative to the
Terminated Lease Properties, in the event of a Limited
Termination Election) that Tenant proves could be reasonably
avoided; plus
(d) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease
or which, in the ordinary course of things, results
therefrom.
96
Amberleigh
As used in Sections 17.4(a) and (b) above,
the "worth at the time of award" is computed by allowing
interest at the Overdue Rate. As used in Section 17.4(c)
above, the "worth at the time of award" 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%) per annum.
In case of any Event of Default, Landlord
may, with or without terminating this Lease (but subject, in
the case of any Leased Property(ies) located in California,
to any provisions of California law providing that this
Lease will be deemed terminated as to any Leased
Property(ies) as to which Tenant's right to possession is
terminated by Landlord due to an Event of Default), (x)
relet any or all of the Premises or any part or parts
thereof, for a term or terms that may, at Landlord's option,
be equal to, less than or exceed the period that would
otherwise have constituted the balance of the Term and may
grant concessions or free rent to the extent that Landlord
considers advisable or necessary to relet the same, and (y)
make such reasonable alterations, repairs and decorations in
the applicable Leased Property(ies) or any portion thereof
as Landlord, in its sole judgment, considers advisable or
necessary for the purpose of reletting the applicable Leased
Property(ies); and such reletting and the making of such
alterations, repairs and decorations shall not operate or be
construed to release Tenant from liability hereunder as
aforesaid. Landlord shall in no event be liable in any way
whatsoever for failure to relet any Leased Property, or, in
the event that any Leased Property is relet, for failure to
collect the rent under such reletting. To the fullest extent
permitted by law, Tenant hereby expressly waives the service
of any notice of intention to re-enter provided for in any
statute, and also waives any and all rights of redemption or
re-entry or re-possession in case Tenant shall be
dispossessed by a judgment or by warrant of any court or
judge or in case of re-entry or re-possession by Landlord or
in case of any expiration or termination of this Lease. The
terms "enter", "re-enter", "entry", or "re-entry" as used in
this Lease are not restricted to their technical legal
meanings."
46.2.8 Relative to Section 17.5 of this Lease, Tenant agrees
that, in addition to the waivers referenced therein, Tenant waives, to the
maximum extent permitted by applicable law, any right it may have under
California Code of Civil Procedure Section 1179 to apply to a court to relieve
Tenant from forfeiture of this Lease following a judgment for possession of the
applicable Leased Property(ies).
46.2.9 Relative to Section 24 of this Lease, Tenant waives, to
the maximum extent permitted by applicable law, any right it may have under
California Civil Code Section 1995.310 to the remedies set forth therein, and
any successor statutes or laws of a similar nature.
46.2.10 Relative to Section 36.1 of this Lease, Tenant, at its
sole cost and expense, shall comply with all laws relating to the storage, use,
handling and disposal of hazardous, toxic or radioactive matter.
97
Amberleigh
46.3 Arizona. Relative to Section 16 of this Lease, the Tenant hereby
waives the provisions of Arizona Revised Statutes Section 33-343 and agrees that
the provisions of this Lease shall govern in the event of damage to or
destruction of the Premises or in the event that the Premises otherwise becomes
untenantable.
47. Right of First Offer. Provided no Event of Default shall have occurred
and no Potential Default shall be continuing, prior to Landlord agreeing during
the Term to sell its fee simple interest in the Leased Property to any person or
entity that is not an Affiliate of Landlord or Tenant (a "Third Party"), Tenant
shall have a right of first offer to purchase Landlord's fee simple title to the
Leased Property, on the terms and conditions as set forth in this Section 47
(the "Right of First Offer"). Subject to the foregoing and the other terms and
conditions of this Section, if, during the Term, Landlord shall elect to sell
its fee simple interest in the Leased Property:
47.1 Notices. Landlord shall promptly deliver to Tenant a notice of
such election to sell, together with a statement of a purchase price, closing
date and (at Landlord's sole option) any other material terms and conditions
upon which Landlord is willing to sell its fee simple interest in the Leased
Property (the "ROFO Notice"). Tenant may, within ten (10) Business Days after
Landlord's delivery to Tenant of a ROFO Notice, make an unqualified offer to
purchase Landlord's fee simple interest in the Leased Property on all of the
same terms as those set forth in such ROFO Notice and no other terms and
conditions (the "ROFO Acceptance Notice").
47.2 Conditions of Sale. If, for any reason, (i) within said ten (10)
Business Day Period, either Tenant does not reply to Landlord's ROFO Notice with
a ROFO Acceptance Notice; or (ii) Tenant and Landlord shall not have entered
into the Purchase Contract within twenty (20) Business Days after Landlord's
delivery to Tenant of a Purchase Contract, then the Right of First Refusal and
Tenant's rights under this Section shall be forever waived, terminated and of no
further force and effect whatsoever, and Landlord shall have the unrestricted
right (without any obligation to do so) to sell the Leased Property to any
person or entity on such terms and conditions as shall be acceptable to Landlord
in its sole and absolute discretion. Notwithstanding the foregoing, the Right of
First Offer shall be revived if and only if either of the following two (2)
conditions is satisfied: (a) if, on or before the first anniversary of the date
of Landlord's delivery of the applicable ROFO Notice, Landlord elects to sell
its fee simple interest in the Leased Property to any Third Party at a purchase
price that is less than 93% of the purchase price contained in the applicable
ROFO Notice, or (b) if Landlord shall not have made or accepted an offer to sell
its fee simple interest on or before the first anniversary of the date of
Landlord's delivery of the applicable ROFO Notice, then in either such
circumstance, Tenant shall be entitled to a new ROFO Notice prior to any such
subsequent sale of Landlord's fee simple interest in the Leased Property to a
Third Party. If the Right of First Offer is waived and the purchase and sale of
the Leased Property is consummated with a Third Party, the purchaser of the
Leased Property shall assume this Lease and agree to perform each and every
covenant of Landlord contained in this Lease (it being understood and agreed,
however, that the provisions of this Section 47 shall no longer be applicable)
and Tenant shall attorn to such purchaser as Landlord hereunder.
98
Amberleigh
If Tenant timely and properly delivers to Landlord a ROFO Acceptance Notice as
described in Section 47.1 above, then not later than ten (10) Business Days
after Landlord's receipt of the ROFO Acceptance Notice, Landlord shall (if it
has not done so already) prepare and deliver to Tenant an agreement for the
purchase and sale of the Leased Property conforming to the terms and conditions
set forth in the ROFO Notice and otherwise in form and substance prepared by
Landlord (as may be supplemented and amended, the "Purchase Contract"). Landlord
may, but need not, include a copy of the Purchase Contract with the ROFO Notice.
If Tenant has given Landlord a ROFO Acceptance Notice, then on or before the
twentieth (20) Business Day after Landlord's delivery to Tenant of the form of
the Purchase Contract, Tenant shall execute and deliver the Purchase Contract;
failing which Tenant shall have no further rights under this Section 47. Any
default by Tenant under the Purchase Contract shall constitute an Event of
Default under this Lease, entitling Landlord to any and all rights and remedies
available under this Lease, available under said Purchase Contract and otherwise
available at law or in equity. Tenant shall continue to pay all Fixed Rent,
Additional Rent and other rent and charges due and owing under this Lease
through the date of the consummation of any such sale to Tenant.
47.3 Right of First Offer Not Applicable to Certain Transfers. Without
in any way (by implication or otherwise) expanding the scope of the Right of
First Offer, Tenant acknowledges and agrees that this Section 47 and the Right
of First Offer shall not be applicable to any sale of the Leased Property
described below:
(i) Any transfer to any Affiliate of Landlord or Tenant;
(ii) Any mortgage or deed of trust made by Landlord, or any
transfer made in connection with the foreclosure or other realization
upon any such mortgage or deed of trust, or any transfer made in lieu
of foreclosure;
(iii) Any transfer in connection with a liquidation,
reorganization or similar action whereby the assets of Landlord are
distributed to any owners of Landlord or any Affiliates of Landlord
(including, without limitation, any affiliates of any owners of
Landlord of any tier);
(iv) Any transfer of the Leased Property as a result of a
merger, combination, consolidation, sale of all or substantially all of
Landlord's assets, or any sale of all or any portion of the membership
or other ownership interests of Landlord;
(v) Any transfer by condemnation, eminent domain or similar
taking of the Leased Property, or any transfer made in lieu thereof;
(vi) Any transfer of a fractional or other partial interest in
the Leased Property or any part thereof;
(vii) Any transfer of any part of the Leased Property other
than the Land or the Improvements;
(viii) Any gift, donation or other transfer made without cash
consideration; or
99
Amberleigh
(ix) Any transfer due to any tax sale or any other involuntary
transfer.
Moreover, Landlord shall not be deemed to have breached the provisions
of this Section if it shall have made or accepted any offer to sell Landlord's
fee simple interest in the Leased Property to a Third Party (i) that is
conditional upon the waiver of Tenant's rights under this Section 47, or (ii) if
any contemplated sale of the Leased Property is scheduled to close at any time
after the end of the Term. Landlord shall have no obligation or other liability
to Tenant under this Section unless Landlord shall have failed to comply with
its express obligations under this Section 47 and Landlord shall have actually
consummated the sale of fee simple title to the Leased Property to a Third Party
during the Term.
47.4 Assignment of Right of First Offer. Tenant shall not have the
right to assign or transfer in any way any of Tenant's rights under this Section
47, including, without limitation, any rights of Tenant under any purchase and
sale agreement entered into pursuant hereto.
47.5 Rights Personal to Original Tenant. Tenant's rights under this
Section 47 are personal to Capital Senior Management 2, Inc., a Texas
corporation, the original Tenant under this Lease, and shall automatically
terminate upon any assignment of this Lease by Tenant (whether by operation of
law or otherwise) and upon any sublease by Tenant of more than ten percent of
the rentable area of any Improvements, excepting from said ten percent (10%)
calculation any Approved Residency Agreement or any Approved Commercial
Agreement.
47.6 Other Leases. If, at any time following the giving of a ROFO
Notice under this Lease, Landlord has also given to Tenant, any Tenant Lease
Affiliate or any other Affiliate, successor or assign of the foregoing
(collectively, the "Other Lease Parties") a right of first offer or other offer
to sell any of the leased properties (or any portion thereof) described in any
or all of the Other Leases (collectively, "Other Sale Offers") and such Other
Sale Offers remain outstanding, then (notwithstanding anything contained in this
Section 47 to the contrary) Tenant shall have no right to exercise its Right of
First Offer under this Lease unless the applicable Other Lease Party shall have
contemporaneously exercised all of its rights to purchase the property described
in the Other Sale Offers. Moreover, any default by Tenant, any Tenant Lease
Affiliate or any Other Lease Party under any agreement to effectuate any Other
Sale Offer shall constitute an Event of Default under this Lease, entitling
Landlord and Landlord Lease Affiliate to terminate this Lease, to terminate any
purchase and sale agreement entered into in connection with this Section 47 and
to any and all other rights and remedies available under this Lease, available
under said agreement and otherwise available at law or in equity.
48. Xxxxxx Xxx; Xxxxxx Xxx Loan.
48.1 Xxxxxx Mae Financing. The provisions of this Section 48 do not in
any way limit the generality or efficacy of the provisions of Section 8.4 above.
100
Amberleigh
48.2 Reserve Payments. In connection with the Xxxxxx Xxx Financing,
Landlord is or may be required to make payments to Xxxxxx Mae from time to time
in order to maintain various reserves ("Xxxxxx Xxx Reserves") required under the
Xxxxxx Mae Loan Documents, including, without limitation, reserves for taxes,
insurance and replacements relating to the Leased Property (each an "Xxxxxx Xxx
Reserve Payment"). So long as the Xxxxxx Mae Financing encumbers the Leased
Property, Tenant shall deposit with Landlord (at least five (5) Business Days
prior to being due and payable to Xxxxxx Xxx), the greater of (a) the amount of
the required Xxxxxx Mae Reserve Payments or (b) the amounts Tenant would
otherwise be required to deposit pursuant to either (A) the terms and conditions
of Section 3.3 hereof with respect to deposits for taxes and insurance, and (B)
the terms and conditions of Section 11.3 hereof with respect to deposits for
replacements; provided, however, that Tenant shall fund and make any and all
other sums, reserves and deposits as may be required under said Sections 3.3 and
11.3, respectively, if any Event of Default has occurred or if any Potential
Default is continuing. If an Event of Default has occurred, Tenant shall be
required to make payments under both clause (a) and clause (b) above. At least
five (5) Business Days prior to being due and payable to Xxxxxx Xxx, Tenant
shall pay to Landlord any expenses charged by Xxxxxx Mae to Landlord for
compliance with or calculation of reserves required under the Xxxxxx Xxx Loan
Documents.
48.3 Xxxxxx Mae Reserve Deposit. Upon the Commencement Date, Tenant
shall pay to Landlord, as additional Rent, an amount equal to the sum of the
amount paid or credited by Landlord, the Buyer or its Affiliate in connection
with the Closing under the P&S Agreement for the Xxxxxx Xxx Reserves for the
Leased Property, minus any net credit received by the Buyer from the Seller
under the P&S Agreement for accrued real estate taxes for the Leased Property.
If and to the extent that the Buyer receives in connection with the Closing a
net credit from the Seller for accrued real estate taxes for the Leased Property
in excess of the amounts payable by the Buyer for the corresponding Xxxxxx Mae
Reserve for real estate taxes (after any reconciliation of such amounts as
contemplated under the P&S Agreement) for the Leased Property, then Landlord
shall deposit into the escrow for Impositions described in Section 3.3.1 above
an amount equal to such positive difference, provided that no Event of Default
has occurred and no Potential Default is continuing. If upon the expiration of
this Lease, no Event of Default has occurred and no Potential Default is
outstanding, then any amounts then remaining in the Xxxxxx Xxx Reserves that
have been funded by Tenant (including, if applicable, any interest thereon)
shall be promptly returned to Tenant, only as and when the conditions of Section
3.3.5 for the return of the Impositions escrows have been met and provided that
any and all Impositions (including, without limitation, any and all real estate
taxes that have accrued during the Term, but are not due or payable until after
the end of Term or are otherwise unpaid) or insurance due or owing hereunder
have been paid (or caused by Tenant to be paid) in full.
48.4 Use of Reserves. In the event of any dispute or disagreement
between Landlord and Tenant as to the manner in which Xxxxxx Mae Reserves are to
be expended, the determination of Landlord shall govern and control. In no event
whatsoever shall Landlord ever be liable to Tenant for (and Tenant hereby agrees
to waive forever and not to make or pursue) any claim relating to Landlord's
handling of the Xxxxxx Xxx Reserves.
101
Amberleigh
48.5 Termination of Xxxxxx Mae Financing. If at any time the Xxxxxx
Xxx Financing ceases to encumber the Premises, Tenant shall immediately deposit
with Landlord such amounts sufficient to cause the amount of deposits pursuant
to (A) the terms and conditions of Section 3.3 hereof with respect to deposits
for taxes and insurance, and (B) the terms and conditions of Section 11.3 hereof
with respect to deposits for replacements, to be at the level they would have
been but for the operation of Section 48.1.
48.6 SPE; Reference to Leased Properties, Other Leases or Facilities.
If the Xxxxxx Mae Loan Documents now or hereafter require that Tenant be a
single-asset special purpose entity, then (i) Tenant shall reasonably cooperate
with Landlord in replacing the Tenant as to each applicable Leased Property with
a special purpose entity owned and controlled by Tenant, which meets the special
purpose entity requirements of Xxxxxx Xxx and is otherwise acceptable to
Landlord; and (ii) any reference in this Lease to multiple Leased Properties,
Other Leases, other Facilities or any other plural term shall not constitute
permission for Tenant to hold an interest in any other property or facility
other than the Leased Property.
48.7 New/Additional Financing. Without limiting the generality of
Section 20.4 hereof, if Landlord, at its sole option, ever obtains any new or
additional financing that is secured in whole or in part by any of the Premises
(including, without limitation, any Facility Mortgage), then Tenant shall, if so
required by Landlord (at its sole option), amend this Lease to contain
provisions of the sort contained in this Section 48 (and no more onerous than
the provisions of this Section 48 or any other provisions of this Lease) with
respect to any such new or additional financing and any and all other provisions
as Landlord may (in its reasonable discretion) deem reasonably necessary in
order to conform this Lease to the terms and conditions of any such new or
additional financing.
49. Authorizations. Without limiting the generality or efficacy of any
duty, obligation or liability of Tenant under this Lease or any Other Lease,
Tenant hereby agrees to use commercially reasonable efforts to cause to be
obtained as soon as possible, each of those Authorizations described in Sections
9.1.5, 9.1.10 and 9.1.11 of the P&S Agreement, together with any and all other
Authorizations as may be required in order for Landlord to own the Leased
Property or for Tenant (or its permitted manager) to legally operate the Leased
Property according to its Primary Intended Use. Tenant shall reasonably consult
with Landlord before taking any and all such actions and Tenant shall not suffer
or permit any action that violates or is otherwise in conflict with any request
or other direction from Landlord to Tenant with respect to such Authorizations.
50. Transaction Closing Costs. For purposes of this Lease, "Transaction
Closing Costs" shall mean any and all costs and expenses paid or incurred by
Landlord, the Buyer or any Affiliate of Landlord or the Buyer in connection with
the consummation of the transactions contemplated by the P&S Agreement,
including, but not limited to, (i) any and all costs associated with any and all
due diligence inspection under the P&S Agreement; (ii) any costs and expenses
(including, without limitation, attorneys' fees and expenses) paid or incurred
by Landlord or any Affiliate of Landlord to negotiate, execute and deliver this
102
Amberleigh
Lease, the P&S Agreement, the Terms Sheet Letter or any other letter of intent
or term sheet associated with the transactions contemplated hereby; (iv) any and
all loan assumption fees and expenses paid or incurred by the Buyer under the
P&S Agreement; (v) any and all closing and other transactions costs incurred or
paid by the Buyer or any Affiliate of the Buyer under or in connection with the
P&S Agreement; (vi) any and all costs and expenses (including, without
limitation, attorney's fees) incurred by Landlord, the Buyer, Tenant or any
Affiliate of any of them relating to any Authorizations; and (vii) any costs and
expenses paid or incurred by Landlord, the Buyer or any Affiliate of Landlord or
the Buyer that are similar to any of the foregoing. The parties acknowledge and
agree that Transaction Closing Costs do not include any costs or expenses
payable by the Seller under the Purchase and Sale Agreement. On or before the
Effective Date and again as of the Commencement Date, Tenant shall pay to
Landlord any and all Transaction Closing Costs with respect to which Landlord
has theretofore invoiced or otherwise notified Tenant, but which Tenant has not
then already reimbursed Landlord. Any and all Transaction Closing Costs not
invoiced or otherwise made the subject of any notice or demand from Landlord to
Tenant or not paid prior to the foregoing dates shall be paid by Tenant to
Landlord within ten (10) Business Days after the submission to Tenant of the
applicable invoice, notice or other demand therefor. Delinquent amounts owing
from Tenant to Landlord hereunder shall bear interest at the Overdue Rate. The
provisions of this Section shall survive any termination of this Lease.
[The remainder of this page is intentionally left blank]
103
Amberleigh
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and their respective corporate seals to be hereunto affixed and attested by
their respective officers hereunto duly authorized.
LANDLORD:
VENTAS AMBERLEIGH, LLC, a Delaware
limited liability company
By: VENTAS REALTY, LIMITED
PARTNERSHIP, a Delaware limited
partnership, its Sole Member
By: VENTAS, INC., a Delaware
_ corporation, as its general partner
By: /s T. Xxxxxxx Xxxxx
---------------------------------
Name: T. Xxxxxxx Xxxxx
Title: Executive Vice President and
General Counsel
TENANT:
CAPITAL SENIOR MANAGEMENT 2, INC., a
Texas corporation
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
S-1
