SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 18, 1999
Balanced Care Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-13845 25-1761898
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5021 Louise Drive, Suite 200 Mechanicsburg, PA 17055
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 717-796-6100
Page 1 of 5 pages.
Exhibit Index begins on page 5.
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Item 2. Acquisition or Disposition of Assets.
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On March 18, 1999, Balanced Care at Bloomsburg II, Inc.
("BCC-Bloomsburg") and Balanced Care at Saxonburg, Inc. ("BCC-Saxonburg"), two
wholly-owned subsidiaries of Balanced Care Corporation, a Delaware corporation
("BCC"), completed the sale (the "Disposition") of the real property,
improvements, fixtures and equipment located at (1) 3298 Ridge Road, Bloomsburg,
PA 17815 (the "Bloomsburg Property") and (2) 100 Bella Court, Saxonburg, PA
16056 (the "Saxonburg Property") to Pennsylvania BCC Properties, Inc.
("BCC-Properties"), an unrelated Pennsylvania corporation and subsidiary of
Health Care REIT, Inc. The total purchase price for the Bloomsburg Property and
the Saxonburg Property was $3,918,000 and $5,345,000, respectively, which was
paid in cash to BCC by BCC-Properties less closing costs of $170,414 and
$206,231, respectively. The total purchase price was determined by arms' length
negotiations between BCC and BCC-Properties.
In connection with the Disposition, BCC-Bloomsburg and BCC-Saxonburg
each entered into a Lease Agreement dated as of March 15, 1999, as tenant, with
BCC-Properties, as landlord. The Lease Agreements are attached hereto as
Exhibits 10.1 and 10.2. The Lease Agreements are "triple net" leases, wherein
the tenant is responsible for all expenses incurred in connection with the use
and maintenance of the building, including, without limitation, property taxes
and insurance. The Lease Agreements have an initial term of 15 years, with three
renewal terms: two for 5 years and one for 4 years, 11 months.
Item 5. Other Events.
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In a separate transaction, on March 15, 1999, BCC and certain of its
wholly-owned subsidiaries (collectively, the "Borrowers"), entered into a
Secured Term Note in favor of HCFP Funding, Inc., a Delaware corporation
("Lender"), in the original principal amount of $5,000,000. Interest under the
Secured Term Note accrues at a fluctuating rate per annum compounded daily equal
to the Prime Rate (as announced by Fleet National Bank of Connecticut, N.A.)
plus 4%. The Secured Term Note is due and
Page 2 of 5 pages.
Exhibit Index begins on page 5.
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payable no later than May 15, 1999 unless extended by Borrowers until June 15,
1999 upon payment of a $25,000 extension fee and provided no event of default
has occurred. The Secured Term Note is secured by the Borrowers' accounts,
general intangibles, inventory and equipment, together with the real property
and improvements located at (1) 164 Schiebel Road, Butler, PA 16001, (2) 120
Elliot Road, Sarver, PA 16055, (3) 600 Newton Road, Raleigh, NC 27609 and (4)
498 Lisbon Road, Darlingon, PA 16115.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits. The following Exhibits are filed with this Current
Report on Form 8-K:
Exhibit No. Description
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10.1 Lease Agreement between Pennsylvania BCC
Properties, Inc. and Balanced Care at
Saxonburg, Inc.
10.2 Lease Agreement between Pennsylvania BCC
Properties, Inc. and Balanced Care at
Bloomsburg II, Inc.
Page 3 of 5 pages.
Exhibit Index begins on page 5.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Balanced Care Corporation
Date: April 2, 1999 By: /s/ Brad E. Hollinger
-----------------------------
Brad E. Hollinger
Chairman of the Board,
President and Chief Executive
Officer
Page 4 of 5 pages.
Exhibit Index begins on page 5.
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EXHIBIT INDEX
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Exhibit No. Description
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10.1 Lease Agreement between Pennsylvania BCC
Properties, Inc. and Balanced Care at
Saxonburg, Inc.
10.2 Lease Agreement between Pennsylvania BCC
Properties, Inc. and Balanced Care at
Bloomsburg II, Inc.
Page 5 of 5 pages.
LEASE AGREEMENT
BETWEEN
PENNSYLVANIA BCC PROPERTIES, INC.
AND
BALANCED CARE AT BLOOMSBURG II, INC.
, 1999
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BALANCED CARE, BLOOMSBURG
BLOOMSBURG, PENNSYLVANIA
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TABLE OF CONTENTS
SECTION PAGE
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ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS............................ 1
1.1 Leased Property................................................. 1
1.2 Term............................................................ 2
1.3 Definitions..................................................... 2
ARTICLE 2: RENT............................................................. 8
2.1 Base Rent....................................................... 8
2.2 Increase of Lease Rate and Base Rent............................ 9
2.3 Additional Rent................................................. 9
2.4 Place of Payment of Rent........................................ 9
2.5 Net Lease....................................................... 9
2.6 No Termination, Abatement, Etc.................................. 9
2.7 Computational Method............................................ 10
2.8 Commitment Fee.................................................. 10
ARTICLE 3: IMPOSITIONS AND UTILITIES........................................ 10
3.1 Payment of Impositions.......................................... 10
3.2 Definition of Impositions....................................... 11
3.3 Escrow of Impositions........................................... 11
3.4 Utilities....................................................... 12
3.5 Discontinuance of Utilities..................................... 12
3.6 Business Expenses............................................... 12
3.7 Permitted Contests.............................................. 12
ARTICLE 4: INSURANCE........................................................ 13
4.1 Property Insurance.............................................. 13
4.2 Liability Insurance............................................. 14
4.3 Builder's Risk Insurance........................................ 14
4.4 Insurance Requirements.......................................... 15
4.5 Replacement Value............................................... 15
4.6 Blanket Policy.................................................. 16
4.7 No Separate Insurance........................................... 16
4.8 Waiver of Subrogation........................................... 16
4.9 Mortgages....................................................... 16
4.10 Escrows......................................................... 16
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ARTICLE 5: INDEMNITY........................................................ 17
5.1 Tenant's Indemnification........................................ 17
5.2 Environmental Indemnity; Audits................................. 18
5.3 Limitation of Landlord's Liability.............................. 18
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES................................... 19
6.1 Use of Leased Property.......................................... 19
6.2 Acceptance of Leased Property................................... 19
6.3 Conditions of Use and Occupancy................................. 19
ARTICLE 7: REPAIRS AND MECHANICS'LIENS...................................... 19
7.1 Maintenance..................................................... 19
7.2 Required Alterations............................................ 20
7.3 Mechanic's Liens................................................ 20
7.4 Replacements of Fixtures and Personal Property.................. 20
ARTICLE 8: DEFAULTS AND REMEDIES............................................ 21
8.1 Events of Default............................................... 21
8.2 Remedies........................................................ 23
8.3 Right of Set-Off................................................ 25
8.4 Performance of Tenant's Covenants............................... 25
8.5 Late Payment Charge............................................. 25
8.6 Interest........................................................ 25
8.7 Litigation; Attorneys'Fees...................................... 26
8.8 Escrows and Application of Payments............................. 26
8.9 Remedies Cumulative............................................. 26
ARTICLE 9: DAMAGE AND DESTRUCTION........................................... 26
9.1 Notice of Casualty.............................................. 26
9.2 Substantial Destruction......................................... 27
9.3 Partial Destruction............................................. 30
9.4 Restoration..................................................... 30
9.5 Insufficient Proceeds........................................... 30
9.6 Not Trust Funds................................................. 31
9.7 Landlord's Inspection........................................... 31
9.8 Landlord's Costs................................................ 31
9.9 No Rent Abatement............................................... 31
ARTICLE 10: CONDEMNATION.................................................... 31
10.1 Total Taking.................................................... 31
10.2 Partial Taking.................................................. 32
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10.3 Condemnation Proceeds Not Trust Funds........................... 32
ARTICLE 11: TENANT'S PROPERTY............................................... 32
11.1 Tenant's Property............................................... 32
11.2 Requirements for Tenant's Property.............................. 32
ARTICLE 12: RENEWAL OPTIONS................................................. 34
12.1 Renewal Options................................................. 34
12.2 Effect of Renewal............................................... 34
12.3 Effect of Non-Renewal or Expiration of Lease.................... 35
ARTICLE 13: RIGHT OF FIRST REFUSAL.......................................... 35
13.1 Right of First Refusal.......................................... 35
13.2 No Exercise..................................................... 35
ARTICLE 14: NEGATIVE COVENANTS.............................................. 36
14.1 No Debt......................................................... 36
14.2 No Liens........................................................ 36
14.3 No Guaranties................................................... 36
14.4 No Transfer..................................................... 36
14.5 No Dissolution.................................................. 36
14.6 No Change in Management or Operation............................ 36
14.7 No Investments.................................................. 36
14.8 Contracts....................................................... 37
14.9 Subordination of Payments to Affiliates......................... 37
14.10 Change of Location or Name...................................... 37
ARTICLE 15: AFFIRMATIVE COVENANTS........................................... 37
15.1 Perform Obligations............................................. 37
15.2 Proceedings to Enjoin or Prevent Construction................... 37
15.3 Documents and Information....................................... 37
15.4 Compliance With Laws............................................ 39
15.5 Broker's Commission............................................. 39
15.6 Existence and Change in Ownership............................... 39
15.7 Financial Covenants............................................. 39
15.8 Transfer of License............................................. 40
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS.................... 40
16.1 Prohibition on Alterations and Improvements..................... 40
16.2 Approval of Alterations......................................... 40
16.3 Permitted Alterations........................................... 41
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16.4 Requirements for Permitted Alterations.......................... 41
16.5 Ownership and Removal of Permitted Alterations.................. 42
16.6 Signs........................................................... 42
ARTICLE 17: [INTENTIONALLY DELETED]......................................... 42
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY.......................... 42
18.1 Prohibition on Assignment and Subletting........................ 42
18.2 Requests for Landlord's Consent to Assignment, Sublease
or Management Agreement......................................... 42
18.3 Agreements with Residents....................................... 42
18.4 Terms Applicable to all Assignments, Subleases or
Management Agreements........................................... 43
18.5 Collateral Assignment........................................... 43
18.6 Effectiveness................................................... 43
18.7 Sale of Leased Property......................................... 43
18.8 Assignment by Landlord.......................................... 44
ARTICLE 19: HOLDOVER AND SURRENDER.......................................... 44
19.1 Holding Over.................................................... 44
19.2 Surrender....................................................... 44
ARTICLE 20: LETTER OF CREDIT................................................ 44
20.1 Terms of Letter of Credit....................................... 44
20.2 Replacement Letter of Credit.................................... 44
20.3 Draws........................................................... 45
20.4 Partial Draws................................................... 45
20.5 Substitute Letter of Credit..................................... 46
20.6 Reduction in Letter of Credit Amount............................ 46
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND
ESTOPPEL CERTIFICATES........................................................ 46
21.1 Quiet Enjoyment................................................. 46
21.2 Subordination................................................... 46
21.3 Attornment...................................................... 47
21.4 Estoppel Certificates........................................... 47
ARTICLE 22: REPRESENTATIONS AND WARRANTIES.................................. 48
22.1 Organization and Good Standing.................................. 48
22.2 Power and Authority............................................. 48
22.3 Enforceability.................................................. 48
22.4 Government Authorizations....................................... 48
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22.5 Financial Statements............................................ 49
22.6 Condition of Facility........................................... 49
22.7 Compliance with Laws............................................ 49
22.8 No Litigation................................................... 49
22.9 Consents........................................................ 50
22.10 No Violation.................................................... 50
22.11 Reports and Statements.......................................... 50
22.12 ERISA........................................................... 50
22.13 Chief Executive Office.......................................... 50
22.14 Other Name or Entities.......................................... 51
22.15 Parties in Possession........................................... 51
22.16 Access.......................................................... 51
22.17 Utilities....................................................... 51
22.18 Condemnation and Assessments.................................... 51
22.19 Zoning.......................................................... 51
22.20 Pro Forma Statement............................................. 52
22.21 Environmental Matters........................................... 52
22.22 Leases and Contracts............................................ 52
22.23 No Default...................................................... 52
ARTICLE 23: FUTURE PROJECTS; COTERMINOUS FINANCINGS......................... 53
23.1 Project Submissions............................................. 53
23.2 Coterminous Financings.......................................... 53
ARTICLE 24: SECURITY INTEREST............................................... 53
24.1 Collateral...................................................... 53
24.2 Additional Documents............................................ 54
24.3 Notice of Sale.................................................. 54
24.4 Pledge of Accounts to Others.................................... 54
ARTICLE 25: MISCELLANEOUS................................................... 54
25.1 Notices......................................................... 54
25.2 Advertisement of Leased Property................................ 55
25.3 Entire Agreement................................................ 55
25.4 Severability.................................................... 55
25.5 Captions and Headings........................................... 55
25.6 Governing Law................................................... 55
25.7 Memorandum of Lease............................................. 55
25.8 Waiver.......................................................... 55
25.9 Binding Effect.................................................. 55
25.10 Power of Attorney............................................... 55
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25.11 No Offer........................................................ 56
25.12 Modification.................................................... 56
25.13 Landlord's Modification......................................... 56
25.14 No Merger....................................................... 56
25.15 Laches.......................................................... 57
25.16 Limitation on Tenant's Recourse................................. 57
25.17 Construction of Lease........................................... 57
25.18 Counterparts.................................................... 57
25.19 Lease Guaranty.................................................. 57
25.20 Custody of Escrow Funds......................................... 57
25.21 Landlord's Status as a REIT..................................... 57
25.22 Exhibits........................................................ 58
25.23 WAIVER OF JURY TRIAL............................................ 58
25.24 CONSENT TO JURISDICTION......................................... 58
25.25 Attorney's Fees and Expenses.................................... 59
25.26 Survival........................................................ 59
25.27 Access to Records............................................... 59
ARTICLE 26: SUBSTITUTION OF LEASED PROPERTY................................. 59
26.1 Right of Substitution........................................... 59
26.2 Conditions to Substitution...................................... 59
26.3 Conveyance of Existing Facility................................. 62
26.4 Expenses........................................................ 63
EXHIBIT A: LEGAL DESCRIPTION
EXHIBIT A-1: PERSONAL PROPERTY
EXHIBIT B: PERMITTED EXCEPTIONS
EXHIBIT C: DOCUMENTS TO BE DELIVERED
EXHIBIT D: TENANT'S CERTIFICATE AND FACILITY FINANCIAL REPORTS
EXHIBIT E: GOVERNMENT AUTHORIZATIONS TO BE OBTAINED;
ZONING PERMITS
EXHIBIT F: PENDING LITIGATION
EXHIBIT G: LIST OF LEASES AND CONTRACTS
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LEASE AGREEMENT
This Lease Agreement ("Lease" or "Agreement") is made effective as
of the _____ day of ______________, 1999 (the "Effective Date") between
PENNSYLVANIA BCC PROPERTIES, INC., a corporation organized under the laws of the
State of Pennsylvania ("Landlord"), having its principal office located at One
SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603, and BALANCED CARE AT
BLOOMSBURG II, INC., a corporation organized under the laws of the State of
Delaware ("Tenant"), having its chief executive office located at 5021 Louise
Drive, Suite 200, Mechanicsburg, Pennsylvania 17055.
R E C I T A L S
A. As of the date hereof, Landlord acquired the Leased Property
(defined below) and paid the Acquisition Amount (defined below) towards the
purchase price for the Leased Property. The amount paid by Tenant for the
acquisition costs of the Leased Property shall be considered Tenant's
contribution.
B. Landlord desires to lease the Leased Property to Tenant and
Tenant desires to lease the Leased Property from Landlord upon the terms set
forth in this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1.1 LEASED PROPERTY. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the following property:
(a) The land described in Exhibit A attached hereto (the
"Land").
(b) All buildings, structures, and other improvements,
including without limitation, sidewalks, alleys, utility pipes, conduits, and
lines, parking areas, and roadways, now or hereafter situated upon the Land (the
"Improvements").
(c) All easements, rights and other appurtenances relating to
the Land and Improvements (the "Appurtenances").
(d) All permanently affixed equipment, machinery, fixtures,
and other items of real and personal property, including all components thereof,
located in, or used in connection with, and permanently affixed to or
incorporated into the Improvements, including without limitation, all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water
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pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, and
built-in oxygen and vacuum systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto but specifically excluding all items included within the category of
Personal Property as defined below (collectively the "Fixtures").
(e) All machinery, equipment, furniture, furnishings, movable
walls or partitions, computers, trade fixtures, consumable inventory and
supplies, and other personal property used or useful in Tenant's business on the
Leased Property, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory listed on Exhibit A-1 attached
hereto and the replacements therefor, except items, if any, included within the
definition of Fixtures (collectively the "Personal Property").
SUBJECT, HOWEVER, to all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date hereof
as listed on Exhibit B attached hereto (the "Permitted Exceptions").
1.2 TERM. The initial term ("Initial Term") of this Lease commences
on the Effective Date and expires at 12:00 Midnight Eastern Time on the
fifteenth anniversary of the Commencement Date (the "Expiration Date");
provided, however, that [i] Tenant has one or more options to renew the Lease
pursuant to Article 12, and [ii] the Initial Term may be extended from time to
time pursuant to Article 23.
1.3 DEFINITIONS. Except as otherwise expressly provided, [i] the
terms defined in this section have the meanings assigned to them in this section
and include the plural as well as the singular; [ii] all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as of the time applicable; and [iii]
the words "herein", "hereof", and "hereunder" and similar words refer to this
Lease as a whole and not to any particular section.
"Acquisition Amount" means $3,918,000.00.
"ADA" means the federal statute entitled Americans with Disabilities
Act, 42 U.S.C. ss.12101, ET SEQ.
"Affiliate" means any person, corporation, partnership, limited
liability company, trust, or other legal entity that, directly or indirectly,
controls, or is controlled by, or is under common control with Tenant or
Guarantor. "Control" (and the correlative meanings of the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity. "Affiliate" includes, without limitation, Balanced Care
Corporation.
"Annual Facility Budget" means Tenant's projection of what the
Annual Facility Financial Statements will be for the next fiscal year.
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"Annual Financial Statements" means [i] for Tenant, an unaudited
balance sheet, statement of income, and cash flow statements for the most recent
fiscal year; [ii] for the Facility, an unaudited Facility Financial Statement
for the most recent fiscal year and; [iii] for Guarantor, an audited balance
sheet and statement of income for the most recent fiscal year with consolidating
schedules.
"Base Rent" has the meaning set forth in ss.2.1, as increased from
time to time pursuant to ss.2.2.
"Business Day" means any day other than a Saturday, Sunday, or
national holiday.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Closing" means the closing of the purchase of the Leased Property
by Landlord and the lease of the Leased Property to Tenant.
"Commencement Date" means the Effective Date if such date is the
first day of a month, and if it is not, the first day of the first month
following the Effective Date.
"Commitment" means the Commitment letter for the Lease dated
September 22, 1998 as modified by the letter dated February 24, 1999.
"Credit Facility" means the credit facility in an amount up to
$150,000,000.00 the terms of which are set forth in the Commitment. The Credit
Facility consists of multiple phases of funding.
"Current Phase" means the phase of funding under the Credit Facility
which is applicable to this Lease. This Lease is part of the second phase. The
Current Phase includes facilities located in Bloomsburg, Pennsylvania and
Saxonburg, Pennsylvania, and any other facilities mutually designated by
Landlord and Tenant to be included in the Current Phase.
"Earnout Lease Advances" has the meaning set forth in Article 17.
"Effective Date" means the date of this Lease.
"Environmental Laws" means all federal, state, and local laws,
ordinances and policies the purpose of which is to protect human health and the
environment, as amended from time to time, including but not limited to [i]
CERCLA; [ii] the Resource Conservation and Recovery Act; [iii] the Hazardous
Materials Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi]
the Toxic Substances Control Act; [vii] the Occupational Safety and Health Act;
[viii] the Safe Drinking Water Act; and [ix] analogous state laws and
regulations.
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"Event of Default" has the meaning set forth in ss.8.1.
"Expiration Date" has the meaning set forth in ss.1.2.
"Extended Term" has the meaning set forth in ss.12.3(a).
"Facility" means the 36-unit (66-bed) skilled nursing facility known
as Balanced Care, Bloomsburg and located on the Leased Property.
"Facility Financial Statement" means a financial statement for the
Facility which shall include the balance sheet, statement of income, statement
of cash flows, statement of shareholders' equity, occupancy census data
(including payor mix) and a comparison of the actual financial data versus the
Annual Facility Budget for the applicable period.
"Facility Uses" means the uses relating to the operation of the
Facility as a 36-unit (66-bed) skilled nursing facility together with such
additional uses as may be ancillary to or complimentary to a skilled nursing
facility, and which are permitted under applicable law.
"Fair Market Value" has the meaning set forth in ss.13.3.
"Financial Statements" means [i] the annual, quarterly and year to
date financial statements of Tenant and Guarantor; and [ii] all operating
statements for the Facility, that were submitted to Landlord prior to the
Effective Date.
"Government Authorizations" means all permits, licenses, approvals,
consents, and authorizations required to comply with all Legal Requirements,
including but not limited to, [i] zoning permits, variances, exceptions, special
use permits, conditional use permits, and consents; [ii] the permits, licenses,
provider agreements and approvals required for licensure and operation of a
36-unit (66-bed) skilled nursing facility certified as a provider under the
federal Medicare and state Medicaid programs; [iii] environmental, ecological,
coastal, wetlands, air, and water permits, licenses, and consents; [iv] curb
cut, subdivision, land use, and planning permits, licenses, approvals and
consents; [v] building, sign, fire, health, and safety permits, licenses,
approvals, and consents; and [vi] architectural reviews, approvals, and consents
required under restrictive covenants.
"Guarantor" means Balanced Care Corporation, a Delaware corporation.
"Guaranty" means the Unconditional and Continuing Lease Guaranty
entered into by Guarantor to guarantee payment and performance of Tenant's
Obligations and any amendments thereto or substitutions or replacements
therefor.
"Hazardous Materials" means any substance [i] the presence of which
poses a hazard to the health or safety of persons on or about the Land including
but not limited to asbestos containing materials; [ii] which requires removal or
remediation under any Environmental Law, including without limitation any
substance which is toxic, explosive, flammable, radioactive, or
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otherwise hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic including but not limited to any
substance within the meaning of "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance", "regulated substance", "solid waste", or
"pollutant" as defined in any Environmental Law.
"Impositions" has the meaning set forth in ss.3.2.
"Increaser Rate" means [i] in any Lease Year in which the nationwide
Consumer Price Index for all urban consumers increases by a percentage that is
less than 20%, 25 basis points per year for the Initial Term and 25 basis points
per year for each Renewal Term; and [ii] in all other Lease Years, 30 basis
points per year for the Initial Term and 30 basis points for each Renewal Term.
"Initial Term" has the meaning set forth in ss.1.2.
"Issuer" means a financial institution reasonably satisfactory to
Landlord issuing the Letter of Credit and such Issuer's successors and assigns.
Any "Issuer" shall have a Lace Financial Service Rating of "C+" or higher at all
times throughout the Term.
"Landlord Affiliate" means any person, corporation, partnership,
limited liability company, trust, or other legal entity that, directly or
indirectly, controls, or is controlled by, or is under common control with
Landlord. "Control" (and the correlative meanings of the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity. "Landlord Affiliate" includes, without limitation, HCRI Texas
Properties, Ltd., HCRI Pennsylvania Properties, Inc., HCRI Overlook Green, Inc.,
HCRI Nevada Properties, Inc., HCRI Louisiana Properties, L.P., Health Care REIT,
Inc., HCRI Tennessee Properties, Inc., HCRI Tennessee Properties, L.P., and HCN
BCC Holdings, Inc.
"Lease Advance" means [i] the first Lease Advance by Landlord in the
Acquisition Amount; or [ii] any other advance of funds by Landlord to Tenant
pursuant to the term of this Lease.
"Lease Advance Amount" means the amount of any Lease Advance. The
Acquisition Amount is the first Lease Advance Amount.
"Lease Advance Date" means the date on which Landlord makes a Lease
Advance.
"Lease Amount" is an aggregate concept and means the sum of the
Lease Advance Amounts outstanding at the applicable time.
"Lease Documents" means [i] this Lease; and [ii] all other documents
executed by Tenant and Landlord in connection with the Lease.
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"Lease Payments" means the sum of the Base Rent payments (as
increased from time to time) for the applicable period.
"Lease Rate" means the annual rate used to determine Base Rent for
each Lease Advance. The Lease Rate for the Initial Term is the greater of [i]
10.25% or [ii] the sum of the Rate Index plus the Rate Spread, each computed
using the 365/360 method. The Lease Rate includes any accrued Increaser Rate. On
each Renewal Date, the Lease Rate will be reset for the Lease Amount as set
forth in ss.12.2(c).
"Lease Year" means each consecutive period of 365 or 366 days
throughout the Term. The first Lease Year commences on the Commencement Date and
expires on the day before the first anniversary of the Commencement Date.
"Leased Property" means, collectively, the Land, Improvements,
Appurtenances, Fixtures and Personal Property.
"Legal Requirements" means all laws, regulations, rules, orders,
writs, injunctions, decrees, certificates, requirements, agreements, conditions
of participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction, condition and operation of the Facility by Tenant, including but
not limited to, [i] zoning, building, fire, health, safety, sign, and
subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as a 36-unit (66-bed) skilled nursing
facility; [iv] Medicare and Medicaid certification requirements (if applicable);
[v] the ADA; [vi] any Environmental Laws; and [vii] requirements, conditions and
standards for participation in third-party payor insurance programs.
"Letter of Credit" means an irrevocable and transferable Letter of
Credit in an amount initially equal to 5% of the Lease Amount and subject to
reduction as provided in Section 20.6, issued by Issuer in favor of Landlord as
security for the Lease and in form reasonably acceptable to Landlord, and any
amendments thereto or replacements or substitutions therefor.
"Manager" means BCC Development and Management Co., a corporation
organized under the laws of the State of Delaware.
"Material Obligation" means [i] any indebtedness secured by a
security interest in or a lien, deed of trust or mortgage on any of the Leased
Property (or any part thereof, including any Personal Property) and any
agreement relating thereto; [ii] any obligation or agreement that is material to
the construction or operation of the Facility or that is material to Tenant's
business or financial condition; [iii] any indebtedness or capital lease of
Tenant that has an outstanding principal balance of at least $50,000.00 and any
agreement relating thereto; [iv] any obligation to or agreement with the Issuer
relating to the Letter of Credit; and [v] any sublease of the Leased Property,
exclusive of occupancy agreements with residents of the Leased Property.
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"Overdue Rate" has the meaning set forth in ss.8.6.
"Periodic Financial Statements" means [i] for Tenant, an unaudited
balance sheet and statement of income of Tenant for the most recent quarter;
[ii] for the Facility, an unaudited Facility Financial Statement for the most
recent month; and [iii] for Guarantor, an unaudited balance sheet and statement
of income of Guarantor for the most recent quarter.
"Permitted Exceptions" means the exceptions to title set forth on
Exhibit B.
"Permitted Liens" means [i] liens granted to Landlord; [ii] liens
customarily incurred by Tenant in the ordinary course of business for items not
delinquent including mechanic's liens and deposits and charges under worker's
compensation laws; [iii] liens for taxes and assessments not yet due and
payable; [iv] any lien, charge, or encumbrance which is being contested in good
faith pursuant to Section 3.7 of this Agreement; [v] the Permitted Exceptions;
and [vi] purchase money financing and capitalized or operating equipment leases
for the acquisition of personal property provided, however, that Landlord
obtains a nondisturbance agreement from the purchase money lender or equipment
lessor in form and substance as may be reasonably satisfactory to Landlord if
the original cost of the equipment exceeds $75,000.00.
"Phase Facility" means each facility leased by Landlord or any
Landlord Affiliate to Tenant or any Affiliate pursuant to a Phase Lease, whether
now or hereafter existing.
"Phase Lease" means each lease now or hereafter made between
Landlord or any Landlord Affiliate and Tenant or any Affiliate and which is
included within the Current Phase as amended, modified, extended or renewed from
time to time.
"Phase Tenant" means Tenant or any Affiliate that is a tenant under
a Phase Lease.
"Pro Forma Statement" means a financial forecast for the Facility
for the next 5 year period prepared in accordance with the standards for
forecasts established by the American Institute of Certified Public Accountants.
"Rate Determination Date" means the date on which the value for the
Rate Index is established for computing any Lease Rate. For any Lease Advances
made during the Initial Term, the Rate Determination Date is the Lease Advance
Date. For any Renewal Date, the Rate Determination Date is the last Business Day
of the current Term.
"Rate Index" means the yield quoted in the Wall Street Journal on
the applicable Rate Determination Date for the most actively traded United
States Treasury Notes having the nearest equivalent maturity date to the
Expiration Date. For any Lease Advance other than the first Lease Advance, the
yield shall be computed based upon the remainder of the Initial Term.
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"Rate Spread" means the rate spread from time to time used to
calculate the Lease Rate applicable to any Lease Advance during the Initial
Term. The Rate Spread is 340 basis points for the Initial Term.
"Receivables" means [i] all of Tenant's rights to receive payment
for providing resident care and services as set forth in any accounts, contract
rights, and instruments, and [ii] those documents, chattel paper, inventory
proceeds, provider agreements, participation agreements, ledger sheets, files,
records, computer programs, tapes, and agreements relating to Tenant's rights to
receive payment for providing resident care services.
"Renewal Date" means the first day of each Renewal Term.
"Renewal Option" has the meaning set forth in ss.12.1.
"Renewal Rate" means the Lease Rate established for any Renewal Date
as set forth in ss.12.2(c).
"Renewal Term" has the meaning set forth in ss.12.1.
"Rent" has the meaning set forth in ss.2.3.
"Seller" means Tenant.
"State" means the Commonwealth of Pennsylvania.
"Tenant's Obligations" means all payment and performance obligations
of Tenant under this Lease and all documents executed by Tenant in connection
with this Lease.
"Tenant's Organizational Documents" means the Articles of
Incorporation of Tenant certified by the Secretary of State of the state of
organization, as amended to date, and the Bylaws of Tenant certified by Tenant,
as amended to date.
"Tenant's Property" has the meaning set forth in ss.11.1.
"Term" means the Initial Term and each Renewal Term.
ARTICLE 2: RENT
2.1 BASE RENT. Tenant shall pay Landlord base rent ("Base Rent") in
advance in consecutive monthly installments payable on the first day of each
month during the Term commencing on the Commencement Date. If the Effective Date
is not the first day of a month, Tenant shall pay Landlord Base Rent on the
Effective Date for the partial month, i.e. for the period commencing on the
Effective Date and ending on the day before the Commencement Date. The Base Rent
for the Initial Term will be computed monthly and will be equal to 1/12th
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of the sum of the products of each Lease Advance times the Lease Rate for each
Lease Advance. The Base Rent for each Renewal Term will be computed in
accordance with ss.12.2.
2.2 INCREASE OF LEASE RATE AND BASE RENT. Commencing on the first
anniversary of the Commencement Date and on each anniversary thereafter
throughout the Term (including any Renewal Term and Extended Term), the Lease
Rate will increase by the applicable Increaser Rate. On each date that the Lease
Rate is increased, the Base Rent will be increased accordingly and will be equal
to 1/12th of the sum of the products of each Lease Advance times the Lease Rate
(including the applicable Increaser Rate) for each Lease Advance.
2.3 ADDITIONAL RENT. In addition to Base Rent, Tenant shall pay all
other amounts, liabilities, obligations and Impositions which Tenant assumes or
agrees to pay under this Lease and any fine, penalty, interest, charge and cost
which may be added for nonpayment or late payment of such items (collectively
the "Additional Rent"). The Base Rent and Additional Rent are hereinafter
referred to as "Rent". Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of nonpayment of the Rent.
2.4 PLACE OF PAYMENT OF RENT. Tenant shall make all payments of
rent at the Landlord's address set forth in the first paragraph of this Lease or
at such other place as Landlord may designate from time to time.
2.5 NET LEASE. This Lease shall be deemed and construed to be an
"absolute net lease", and Tenant shall pay all Rent and other charges and
expenses in connection with the Leased Property throughout the Term, without
abatement, deduction or set-off.
2.6 NO TERMINATION, ABATEMENT, ETC. Except as otherwise
specifically provided in this Lease, Tenant shall remain bound by this Lease in
accordance with its terms. Tenant shall not, without the consent of Landlord,
modify, surrender or terminate the Lease, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent. Except as expressly provided in this Lease, the obligations of Landlord
and Tenant shall not be affected by reason of [i] any damage to, or destruction
of, the Leased Property or any part thereof from whatever cause or any Taking
(as hereinafter defined) of the Leased Property or any part thereof; [ii] the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; [iii] any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties; [iv] any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or [v]
any other cause, whether similar or dissimilar to any of the foregoing, other
than a discharge of Tenant from any such obligations as a matter of law. Except
as otherwise specifically provided in this Lease, Tenant hereby specifically
waives all rights, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law [a] to modify, surrender or terminate this
Lease or
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quit or surrender the Leased Property or any portion thereof; or [b] entitling
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 the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
2.7 COMPUTATIONAL METHOD. Landlord and Tenant acknowledge that all
rates under this Lease will be computed based on the actual number of days
elapsed over a 360-day year (365/360 method).
2.8 COMMITMENT FEE. On the Effective Date, Tenant shall pay a
commitment fee to Landlord in an amount equal to 1% of the Acquisition Amount.
ARTICLE 3: IMPOSITIONS AND UTILITIES
3.1 PAYMENT OF IMPOSITIONS. Tenant shall pay, as Additional Rent,
all Impositions that may be levied or become a lien on the Leased Property or
any part thereof at any time (whether prior to or during the Term), without
regard to prior ownership of said Leased Property, before any fine, penalty,
interest, or cost is incurred; provided, however, Tenant may contest any
Imposition in accordance with ss.3.7. Tenant shall deliver to Landlord [i] not
more than 5 days after the due date of each Imposition, copies of the invoice
for such Imposition and the check delivered for payment thereof; and [ii] not
more than 30 days after the due date of each Imposition, a copy of the official
receipt evidencing such payment or other proof of payment satisfactory to
Landlord. 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. Tenant, at its expense, shall prepare and file all tax returns
and reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in ss.8.8.
Landlord and Tenant shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. In the
event governmental authorities classify any property covered by this Lease as
personal property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possesses the same, will provide the
other party, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property. Where
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's
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expense as aforesaid, shall fully cooperate with Tenant in such protest, appeal,
or other action. Tenant shall reimburse Landlord for all personal property taxes
paid by Landlord within 30 days after receipt of billings accompanied by copies
of a bill therefor and payments thereof which identify the personal property
with respect to which such payments are made. Impositions imposed in respect to
the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
3.2 DEFINITION OF IMPOSITIONS. "Impositions" means, collectively,
[i] taxes (including without limitation, all capital stock and franchise taxes
of Landlord imposed by the State or any governmental entity in the State due to
this lease transaction or Landlord's ownership of the Leased Property and the
income arising therefrom, or due to Landlord being considered as doing business
in the State because of Landlord's ownership of the Leased Property or lease
thereof to Tenant but only to the extent Tenant would have been obligated to pay
such taxes if Tenant rather than Landlord was the owner of the Leased Property),
all real estate and personal property ad valorem, sales and use, business or
occupation, single business, gross receipts, transaction privilege, rent or
similar taxes; [ii] assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed with the Term); [iii]
ground rents, water, sewer or other rents and charges, excises, tax levies, and
fees (including without limitation, license, permit, inspection, authorization
and similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including without limitation, employee withholding taxes, income taxes
and intangible taxes; [v] all taxes imposed by the State or any governmental
entity in the State with respect to the conveyance of the Leased Property by
Landlord to Tenant or Tenant's designee, including without limitation,
conveyance taxes and capital gains taxes; and [vi] all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property or
any part thereof and/or the Rent (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to, during or
in respect of the Term hereof may be assessed or imposed on or in respect of or
be a lien upon [a] Landlord or Landlord's interest in the Leased Property or any
part thereof; [b] the Leased Property or any part thereof or any rent therefrom
or any estate, right, title or interest therein; or [c] any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Leased Property or the leasing or use of the Leased Property
or any part thereof. Tenant shall not, however, be required to pay any tax [y]
based on income or assets imposed on Landlord by any governmental entity other
than the capital stock and franchise taxes described in clause [i] above or [z]
based on the transfer of Landlord's interest in the Leased Property or equity of
Landlord to a party other than Guarantor unless the transfer occurs pursuant to
an Event of Default.
3.3 ESCROW OF IMPOSITIONS. If an Event of Default occurs and while
it remains uncured, Tenant shall, at Landlord's election, deposit with Landlord
on the first day of each month a sum equal to 1/12th of the Impositions assessed
against the Leased Property for the preceding tax year, which sums shall be used
by Landlord toward payment of such Impositions. Tenant, on demand, shall pay to
Landlord any additional funds necessary to pay and discharge
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the obligations of Tenant pursuant to the provisions of this section. The
receipt by Landlord of the payment of such Impositions by and from Tenant shall
only be as an accommodation to Tenant, the mortgagees, and the taxing
authorities, and shall not be construed as rent or income to Landlord, Landlord
serving, if at all, only as a conduit for delivery purposes.
3.4 UTILITIES. Tenant shall pay, as Additional Rent, all taxes,
assessments, charges, deposits, and bills for utilities, including without
limitation charges for water, gas, oil, sanitary and storm sewer, electricity,
telephone service, and trash collection, which may be charged against the
occupant of the Improvements during the Term. If an Event of Default occurs and
while it remains uncured, Tenant shall, at Landlord's election, deposit with
Landlord on the first day of each month a sum equal to 1/12th of the amount of
the annual utility expenses for the preceding Lease Year, which sums shall be
used by Landlord to pay such utilities. Tenant shall, on demand, pay to Landlord
any additional amount needed to pay such utilities. Landlord's receipt of such
payments shall only be an accommodation to Tenant and the utility companies and
shall not constitute rent or income to Landlord. Tenant shall at all times
maintain that amount of heat necessary to ensure against the freezing of water
lines. Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any liability or damages to the utility systems and the Leased Property
that may result from Tenant's failure to maintain sufficient heat in the
Improvements.
3.5 DISCONTINUANCE OF UTILITIES. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of rent or operate to
release Tenant from any of Tenant's obligations under this Lease.
3.6 BUSINESS EXPENSES. Tenant shall promptly pay all expenses and
costs incurred in connection with the operation of the Facility on the Leased
Property, including without limitation, employee benefits, employee vacation and
sick pay, consulting fees, and expenses for inventory and supplies.
3.7 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 or validity or application, in whole or in part, of any Imposition or
any Legal Requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim 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 Leased Property; [ii] neither the Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; [iii] in
the case of a Legal Requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; [iv] in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge, in excess of $50,000.00, Tenant shall
give such reasonable security as may be demanded by Landlord to insure ultimate
payment of the same and to prevent any sale or forfeiture of the affected Leased
Property or the Rent by reason of such nonpayment or noncompliance; provided,
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however, the provisions of this section shall not be construed to permit Tenant
to contest the payment of Rent (except as to contests concerning the method of
computation or the basis of levy of any Imposition or the basis for the
assertion of any other claim) or any other sums payable by Tenant to Landlord
hereunder; [v] in the case of an insurance requirement, the coverage required by
Article 4 shall be maintained; and [vi] if such contest be finally resolved
against Landlord or Tenant, Tenant shall, as Additional Rent due hereunder,
promptly pay the amount required to be paid, together with all interest and
penalties accrued thereon, or comply with the applicable Legal Requirement or
insurance requirement. Landlord, at Tenant's expense, shall execute and deliver
to Tenant such authorizations and other documents as may be reasonably required
in any such contest, and, if reasonably requested by Tenant or if Landlord so
desires, Landlord shall join as a party therein. Tenant hereby agrees to
indemnify and save Landlord harmless from and against any liability, cost or
expense of any kind that may be imposed upon Landlord in connection with any
such contest and any loss resulting therefrom.
ARTICLE 4: INSURANCE
4.1 PROPERTY INSURANCE. At Tenant's expense, Tenant shall maintain
in full force and effect a property insurance policy or policies insuring the
Leased Property against the following:
(a) Loss or damage commonly covered by a "Special Form"
policy insuring against physical loss or damage to the Improvements and Personal
Property, including but not limited to, risk of loss from fire and other
hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased Property). The policy shall be
in the amount of the full replacement value (as defined in ss.4.5) of the
Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of steam
boilers, pressure vessels, or similar apparatus, now or hereafter installed on
the Leased Property, in commercially reasonable amounts acceptable to Landlord.
(c) Consequential loss of rents and income coverage insuring
against all "Special Form" risk of physical loss or damage with limits and
deductible amounts acceptable to Landlord covering risk of loss during the first
9 months of reconstruction, and containing an endorsement for extended period of
indemnity of at least 6 months, and shall be written with a stipulated amount of
coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in part,
in a federally designated 100-year flood plain area, flood insurance for the
Improvements in an amount equal to the lesser of [i] the full replacement value
of the Improvements; or [ii] the maximum amount
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of insurance available for the Improvements under all federal and private flood
insurance programs.
(e) Loss or damage caused by the breakage of plate glass in
commercially reasonable amounts acceptable to Landlord.
(f) Loss or damage commonly covered by blanket crime
insurance including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property of patients accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to the Landlord.
4.2 LIABILITY INSURANCE. At Tenant's expense, Tenant shall maintain
liability insurance against the following:
(a) Claims for personal injury or property damage commonly
covered by comprehensive general liability insurance with endorsements for
incidental malpractice, contractual, personal injury, owner's protective
liability, voluntary medical payments, products and completed operations, broad
form property damage, and extended bodily injury, with commercially reasonable
amounts for bodily injury, property damage, and voluntary medical payments
acceptable to Landlord, but with a combined single limit of not less than
$5,000,000.00 per occurrence.
(b) Claims for personal injury and property damage commonly
covered by comprehensive automobile liability insurance, covering all owned and
non-owned automobiles, with commercially reasonable amounts for bodily injury,
property damage, and for automobile medical payments acceptable to Landlord, but
with a combined single limit of not less than $5,000,000.00 per occurrence.
(c) Claims for personal injury commonly covered by medical
malpractice insurance in commercially reasonable amounts acceptable to Landlord.
(d) Claims commonly covered by worker's compensation
insurance for all persons employed by Tenant on the Leased Property. Such
worker's compensation insurance shall be in accordance with the requirements of
all applicable local, state, and federal law.
4.3 BUILDER'S RISK INSURANCE. In connection with any construction,
Tenant shall maintain in full force and effect a builder's completed value risk
policy ("Builder's Risk Policy") of insurance in a nonreporting form insuring
against all "Special Form" risk of physical loss or damage to the Improvements,
including but not limited to, risk of loss from fire and other hazards,
collapse, transit coverage, vandalism, malicious mischief, theft, earthquake (if
Leased Property is in earthquake zone 1 or 2) and sinkholes (if usually
recommended in the area of the Leased Property). The Builder's Risk Policy shall
include endorsements providing coverage for building materials and supplies and
temporary premises. The Builder's Risk Policy shall be in the amount of the full
replacement value of the Improvements and shall contain a deductible
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amount acceptable to Landlord. Landlord shall be named as an additional insured.
The Builder's Risk Policy shall include an endorsement permitting initial
occupancy.
4.4 INSURANCE REQUIREMENTS. The following provisions shall apply
to all insurance coverages required hereunder:
(a) The form and substance of all policies shall be subject
to the approval of Landlord, which approval will not be unreasonably withheld.
(b) The carriers of all policies shall have a Best's Rating
of "A" or better and a Best's Financial Category of X or higher and shall be
authorized to do insurance business in the State.
(c) Tenant shall be the "named insured" and Landlord shall be
an "additional insured" on each liability policy. On all property and casualty
policies, Landlord and Tenant shall be joint loss payees.
(d) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. The policies of insurance shall
provide that the policy may not be canceled or not renewed, and no material
change or reduction in coverage may be made, without at least 30 days' prior
written notice to Landlord.
(e) The policies shall contain a severability of interest
and/or cross-liability endorsement, provide that the acts or omissions of Tenant
or Landlord will not invalidate the coverage of the other party, and provide
that Landlord shall not be responsible for payment of premiums.
(f) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(g) At least 10 days prior to the expiration of each
insurance policy, Tenant shall deliver to Landlord a certificate showing renewal
of such policy and payment of the annual premium therefor and a current
Certificate of Compliance (in the form delivered at the time of Closing)
completed and signed by Tenant's insurance agent.
4.5 REPLACEMENT VALUE. The term "full replacement value" means the
actual replacement cost thereof from time to time including increased cost of
construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
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4.6 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this section, Tenant may [i] carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease; and [ii] Tenant may meet the limits of liability for insurance by
maintaining a portion thereof as "excess" insurance under an umbrella policy.
4.7 NO SEPARATE INSURANCE. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing
insurance, by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including Landlord and any mortgagees, are included therein as additional
insureds or loss payees, the loss is payable under said insurance in the same
manner as losses are payable under this Lease, and such additional insurance is
not prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies.
4.8 WAIVER OF SUBROGATION. Each party hereto hereby waives any and
every claim which arises or may arise in its favor and against the other party
hereto during the Term for any and all loss of, or damage to, any of its
property located within or upon, or constituting a part of, the Leased Property,
which loss or damage is covered by valid and collectible insurance policies, to
the extent that such loss or damage is recoverable under such policies. Said
mutual waiver shall be in addition to, and not in limitation or derogation of,
any other waiver or release contained in this Lease with respect to any loss or
damage to property of the parties hereto. Inasmuch as the said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party hereto
agrees immediately to give each insurance company which has issued to it
policies of insurance, written notice of the terms of said mutual waivers, and
to have such insurance policies properly endorsed, if necessary, to prevent the
invalidation of said insurance coverage by reason of said waivers, so long as
such endorsement is available at a reasonable cost.
4.9 MORTGAGES. The following provisions shall apply if Landlord now
or hereafter places a mortgage on the Leased Property or any part thereof: [i]
Tenant shall obtain a standard form of lender's loss payable clause insuring the
interest of the mortgagee; [ii] Tenant shall deliver evidence of insurance to
such mortgagee; [iii] loss adjustment shall require the consent of the
mortgagee; and [iv] Tenant shall provide such other information and documents as
may be required by the mortgagee.
4.10 ESCROWS. After an Event of Default occurs hereunder, Tenant
shall make such periodic payments of insurance premiums in accordance with
Landlord's requirements after receipt of notice thereof from Landlord.
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ARTICLE 5: INDEMNITY
5.1 TENANT'S INDEMNIFICATION. Tenant hereby indemnifies and agrees
to hold harmless Landlord, any successors or assigns of Landlord, and Landlord's
and such successor's and assign's directors, officers, employees and agents from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation, reasonable
attorneys' fees, court costs, and the costs set forth in ss.8.7) incurred in
connection with or arising from: [i] the use or occupancy of the Leased Property
by Tenant or any persons claiming under Tenant; [ii] any activity, work, or
thing done, or permitted or suffered by Tenant in or about the Leased Property;
[iii] any acts, omissions, or negligence of Tenant or any person claiming under
Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant
or any such person; [iv] any breach, violation, or nonperformance by Tenant or
any person claiming under Tenant or the employees, agents, contractors,
invitees, or visitors of Tenant or of any such person, of any term, covenant, or
provision of this Lease or any law, ordinance, or governmental requirement of
any kind including, without limitation, any failure to comply with any
applicable requirements under the ADA; [v] any injury or damage to the person,
property or business of Tenant, its employees, agents, contractors, invitees,
visitors, or any other person entering upon the Leased Property; and [vi] any
construction, alterations, changes or demolition of the Facility performed by or
contracted for Tenant or its employees, agents or contractors; provided,
however, in no event shall Landlord be indemnified or held harmless if the claim
or loss has resulted from the grossly negligent or willful acts or omissions of
Landlord, its employees and agents. If any action or proceeding is brought
against Landlord, its employees, or agents by reason of any such claim, Tenant,
upon notice from Landlord, will defend the claim at Tenant's expense with
counsel reasonably satisfactory to Landlord. All amounts payable to Landlord
under this section shall be payable on written demand and any such amounts which
are not paid within 10 days after demand therefor by Landlord shall bear
interest at the Overdue Rate. In case any action, suit or proceeding is brought
against Tenant by reason of any such occurrence, Tenant shall use its best
efforts to defend such action, suit or proceeding.
5.1.1 NOTICE OF CLAIM. Landlord shall notify Tenant in writing of
any claim or action brought against Landlord in which indemnity may be sought
against Tenant pursuant to this section. Such notice shall be given in
sufficient time to allow Tenant to defend or participate in such claim or
action, but the failure to give such notice in sufficient time shall not
constitute a defense hereunder nor in any way impair the obligations of Tenant
under this section unless the failure to give such notice precludes Tenant's
defense of any such action.
5.1.2 SURVIVAL OF COVENANTS. The covenants of Tenant contained in
this section shall remain in full force and effect after the termination of this
Agreement until the expiration of the period stated in the applicable statute of
limitations during which a claim or cause of action may be brought and payment
in full or the satisfaction of such claim or cause of action and of all expenses
and charges incurred by Landlord relating to the enforcement of the provisions
herein specified.
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5.1.3 REIMBURSEMENT OF EXPENSES. Unless prohibited by law, Tenant
hereby agrees to pay to Landlord all of the reasonable fees, charges and
reasonable out-of-pocket expenses related to the Facility and required hereby,
or incurred by Landlord in enforcing the provisions of this Agreement.
5.2 ENVIRONMENTAL INDEMNITY; AUDITS.
5.2.1 INDEMNIFICATION. Tenant hereby indemnifies and agrees to
hold harmless Landlord, any successors to Landlord's interest in this Lease, and
Landlord's and such successors' directors, officers, employees and agents from
and against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
reasonable consultants' and attorneys' fees) incurred by Landlord or any other
indemnitee or assessed against the Leased Property by virtue of any claim or
lien by any governmental or quasi-governmental unit, body, or agency, or any
third party, for cleanup costs or other costs pursuant to any Environmental Law.
Tenant's indemnity shall survive the termination of this Lease. Provided,
however, Tenant shall have no indemnity obligation with respect to [i] Hazardous
Materials first introduced to the Leased Property subsequent to the date that
Tenant's occupancy of the Leased Property shall have fully terminated; or [ii]
Hazardous Materials introduced to the Leased Property by Landlord, its agent,
employees, successors or assigns. If at any time during the Term of this Lease
any governmental authority notifies Landlord or Tenant of a violation of any
Environmental Law or Landlord reasonably believes that a Facility may violate
any Environmental Law, Landlord may require one or more environmental audits of
the Leased Premises, in such form, scope and substance as specified by Landlord,
at Tenant's expense. Tenant shall, within 30 days after receipt of an invoice
from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing any environmental audit, including without limitation, reasonable
attorneys' fees and costs.
5.3 LIMITATION OF LANDLORD'S LIABILITY. Except for the grossly
negligent or willful acts or omissions of Landlord, its employees or agents,
Landlord, its agents, and employees, will not be liable for any loss, injury,
death, or damage (including consequential damages) to persons, property, or
Tenant's business occasioned by theft, act of God, public enemy, injunction,
riot, strike, insurrection, war, court order, requisition, order of governmental
body or authority, fire, explosion, falling objects, steam, water, rain or snow,
leak or flow of water (including water from the elevator system), rain or snow
from the Leased Property or into the Leased Property or from the roof, street,
subsurface or from any other place, or by dampness or from the breakage,
leakage, obstruction, or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, or lighting fixtures of the Leased
Property, or from construction, repair, or alteration of the Leased Property or
from any acts or omissions of any other occupant or visitor of the Leased
Property, or from any other cause beyond Landlord's control.
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ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
6.1 USE OF LEASED PROPERTY. Tenant shall use and occupy the Leased
Property exclusively for the Facility Uses and for all lawful and licensed
ancillary uses, and for no other purpose without the prior written consent of
the Landlord. Tenant shall obtain and maintain (or cause to be obtained and
maintained) all approvals, licenses, and consents needed to use and operate the
Leased Property as herein permitted. Tenant shall deliver to Landlord complete
copies of surveys, examinations, certification and licensure inspections,
compliance certificates, and other similar reports issued to Tenant by any
governmental agency within 10 days after Tenant's receipt of each item.
6.2 ACCEPTANCE OF LEASED PROPERTY. Tenant acknowledges that [i]
Tenant and its agents have had an opportunity to inspect the Leased Property;
[ii] Tenant has found the Leased Property fit for Tenant's use; [iii] Landlord
will deliver the Leased Property to Tenant in "as-is" condition; [iv] Landlord
is not obligated to make any improvements or repairs to the Leased Property; and
[v] the roof, walls, foundation, heating, ventilating, air conditioning,
telephone, sewer, electrical, mechanical, elevator, utility, plumbing, and other
portions of the Leased Property are in good working order. Tenant waives any
claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS
TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.3 CONDITIONS OF USE AND OCCUPANCY. Tenant agrees that during the
Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed
extrahazardous on account of fire or otherwise; keep the Leased Property in such
repair and condition as may be required by the Board of Health, or other city,
state or federal authorities, free of all cost to Landlord; not permit any acts
to be done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof.
ARTICLE 7: REPAIRS AND MECHANICS' LIENS
7.1 MAINTENANCE. Tenant shall maintain, repair, and replace the
Leased Property, including without limitation, all structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, parking
areas, sidewalks, water, sewer, and gas connections, pipes, and mains. Tenant
shall pay, as Additional Rent, the full cost of maintenance, repairs, and
replacements. Tenant shall maintain all drives, sidewalks, parking areas, and
lawns on or about the Leased Property in a clean and orderly condition, free of
accumulations of dirt, rubbish, snow and ice. Tenant shall permit Landlord to
inspect the Leased
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Property at all reasonable times, and shall implement all reasonable suggestions
of the Landlord as to the maintenance and replacement of the Leased Property.
7.2 REQUIRED ALTERATIONS. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to the Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to maintain licensure or
certification under the Medicare and Medicaid programs (if so certified),
whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatever. All such additions, changes, improvements or
alterations shall be deemed to be Permitted Alterations and shall comply with
all laws requiring such alterations and with the provisions of ss.16.4.
7.3 MECHANIC'S LIENS. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanic's
liens against the Leased Property by reason of work, labor, services or
materials supplied or claimed to have been supplied on or to the Leased
Property. Subject to Tenant's right to contest such lien pursuant to ss.3.7 of
this Lease, Tenant shall remove, bond-off, or otherwise obtain the release of
any mechanic's lien filed against the Leased Property within 10 days after the
filing thereof. Tenant shall pay all expenses in connection therewith, including
without limitation, damages, interest, court costs and reasonable attorneys'
fees.
7.4 REPLACEMENTS OF FIXTURES AND PERSONAL PROPERTY. Tenant shall
not remove Fixtures and Personal Property from the Leased Property except to
replace the Fixtures and Personal Property by other similar items of equal
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Personal Property and replacements therefor. Tenant may finance replacements
for the Fixtures and Personal Property by equipment lease or by a security
agreement and financing statement if [i] Landlord has consented to the terms and
conditions of the equipment lease or security agreement, which consent shall not
be unreasonably withheld, conditioned, or delayed; and [ii] for Fixtures and
Personal Property having a cost in excess of $75,000.00, the equipment lessor or
lender has entered into a nondisturbance agreement with Landlord upon terms and
conditions reasonably acceptable to Landlord, including without limitation, the
following: [a] Landlord shall have the right (but not the obligation) to assume
such security agreement or equipment lease upon the occurrence of an Event of
Default under this Lease; [b] the equipment lessor or lender shall notify
Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
[c] Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or nondisturbance agreement. Tenant shall, within 30
days after receipt of an invoice from Landlord, reimburse Landlord for all costs
and expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including
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without limitation, reasonable attorneys' fees and costs. Tenant shall use its
best efforts to obtain the provisions listed in this section from an equipment
lessor, and Landlord shall be commercially reasonable in negotiating such
nondisturbance agreement.
ARTICLE 8: DEFAULTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant under this Lease, within 10 days
after such payment is due.
(b) Landlord gives Tenant three or more notices of non-
payment of Rent (after expiration of the 10 day grace period) in any Lease Year.
(c) Tenant or Guarantor (where applicable) fails to comply
with any covenant set forth in Article 14, ss.15.6, ss.15.7 or Article 20 of
this Lease.
(d) Tenant fails to observe and perform any other covenant,
condition or agreement under this Lease to be performed by Tenant and [i] such
failure continues for a period of 30 days after written notice thereof is given
to Tenant by Landlord; or [ii] if, by reason of the nature of such default, the
same cannot be remedied within said 30 days, Tenant fails to proceed with
diligence reasonably satisfactory to Landlord after receipt of the notice to
cure the same or, in any event, fails to cure such default within 75 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection of
ss.8.1.
(e) Tenant abandons or vacates the Leased Property or any
material part thereof or ceases to do business or ceases to exist for any reason
for any five or more days.
(f) [i] The filing by Tenant of a petition under 11 U.S.C. or
the commencement of a bankruptcy or similar proceeding by Tenant; [ii] the
failure by Tenant within 60 days to dismiss an involuntary bankruptcy petition
or other commencement of a bankruptcy, reorganization or similar proceeding
against Tenant, or to lift or stay any execution, garnishment or attachment of
such consequence as will impair its ability to carry on its operation at the
Leased Property; [iii] the entry of an order for relief under 11 U.S.C. in
respect of Tenant; [iv] any assignment by Tenant for the benefit of its
creditors; [v] the entry by Tenant into an agreement of composition with its
creditors; [vi] the approval by a court of competent jurisdiction of a petition
applicable to Tenant in any proceeding for its reorganization instituted under
the provisions of any state or federal bankruptcy, insolvency, or similar laws;
[vii] appointment by final order, judgment, or decree of a court of competent
jurisdiction of a receiver of a whole or any substantial part of the properties
of Tenant (provided such receiver shall not have been removed or discharged
within 60 days of the date of his qualification).
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(g) [i] Any receiver, administrator, custodian or other
person takes possession or control of any of the Leased Property and continues
in possession for 60 days; [ii] any writ against any of the Leased Property is
not released within 60 days; [iii] any final nonappealable judgment is rendered
or proceedings are instituted against the Leased Property or Tenant which affect
the Leased Property or any part thereof, which is not dismissed for 60 days
(except as otherwise provided in this section); [iv] all or a substantial part
of the assets of Tenant or Guarantor are attached, seized, subjected to a writ
or distress warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian, or assignee for the benefit of creditors; [v]
Tenant or Guarantor is enjoined, restrained, or in any way prevented by court
order, or any proceeding is filed or commenced seeking to enjoin, restrain or in
any way prevent Tenant from conducting all or a substantial part of its business
or affairs; or [vi] except as otherwise permitted hereunder, a final notice of
lien, levy or assessment is filed of record with respect to all or any part of
the Leased Property or any property of Tenant located at the Leased Property and
is not dismissed, discharged, or bonded-off within 30 days.
(h) Any representation or warranty made by Tenant or
Guarantor in this Lease or any other document executed in connection with this
Lease, any guaranty of or other security for this Lease, or any report,
certificate, application, financial statement or other instrument furnished by
Tenant or Guarantor pursuant hereto or thereto shall prove to be false,
misleading or incorrect in any material respect as of the date made.
(i) Tenant, any Guarantor, or any Affiliate defaults on any
indebtedness or obligation to Landlord or any Landlord Affiliate, or any
agreement with Landlord or any Landlord Affiliate including, without limitation,
any lease with Landlord or any Landlord Affiliate, or Tenant or any Guarantor
defaults on any Material Obligation, and any applicable grace or cure period
with respect to default under such indebtedness or obligation expires without
such default having been cured. This provision applies to all such indebtedness,
obligations and agreements as they may be amended, modified, extended, or
renewed from time to time.
(j) The occurrence of any change in Tenant's leasehold
interest in the Leased Property, without the prior written consent of Landlord.
(k) Guarantor dissolves, terminates, files a petition in
bankruptcy, or is adjudicated insolvent under 11 U.S.C. or any other insolvency
law (provided, however, in the case of an involuntary bankruptcy petition or
other commencement of bankruptcy, reorganization or similar proceeding against
Guarantor, Guarantor shall have 60 days to dismiss such action), or fails to
comply with any covenant or requirement of such Guarantor set forth in this
Lease or in the Guaranty of such Guarantor.
(l) The license for the Facility or any other Government
Authorization, is canceled, suspended or otherwise invalidated, notice of
impending revocation proceedings is received and Tenant fails to diligently
contest such proceeding, or any reduction occurs in the number of licensed beds
or units at the Facility.
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8.2 REMEDIES. Landlord may exercise any one or more of the
following remedies upon the occurrence of an Event of Default:
(a) Landlord may re-enter and take possession of the Leased
Property without terminating the Lease, and lease the Leased Property for the
account of Tenant, holding Tenant liable for all costs of the Landlord in
reletting the Leased Property and for the difference in the amount received by
such reletting and the amounts payable by Tenant under the Lease.
(b) Landlord may terminate this Lease, exclude Tenant from
possession of the Leased Property and use efforts to lease the Leased Property
to others, holding Tenant liable for the difference in the amounts received from
such reletting and the amounts payable by Tenant under the Lease.
(c) Landlord may re-enter the Leased Property and have,
repossess and enjoy the Leased Property as if the Lease had not been made, and
in such event, Tenant and its successors and assigns shall remain liable for any
contingent or unliquidated obligations or sums owing at the time of such
repossession.
(d) Landlord may have access to and inspect, examine and make
copies of the books and records and any and all accounts, data and income tax
and other returns of Tenant insofar as they pertain to the Leased Property.
(e) Landlord may accelerate all of the unpaid Rent hereunder
so that the aggregate Rent for the unexpired term of this Lease becomes
immediately due and payable, subject to Landlord's obligations under law to
leave Tenant in possession of the Leased Property.
(f) Landlord may take whatever action at law or in equity
as may appear necessary or desirable to collect the Rent and other amounts
payable under the Lease then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or covenants of Tenant
under this Lease.
(g) With respect to the Collateral and Landlord's security
interest therein, Landlord may exercise all of its rights as secured party under
Article 9 of the Uniform Commercial Code as adopted in the State. Landlord may
sell the Collateral by public or private sale upon 10 days notice to Tenant.
Tenant agrees that a commercially reasonable manner of disposition of the
Collateral shall include, without limitation and at the option of Landlord, a
sale of the Collateral, in whole or in part, concurrently with the sale of the
Leased Property.
(h) Landlord may obtain control over and collect the
Receivables and apply the proceeds of the collections to satisfaction of
Tenant's Obligations unless prohibited by law. Tenant appoints Landlord or its
designee as attorney for Tenant with powers [i] to receive, to endorse, to sign
and/or to deliver, in Tenant's name or Landlord's name, any and all checks,
drafts, and other instruments for the payment of money relating to the
Receivables, and to waive demand, presentment, notice of dishonor, protest, and
any other notice with respect to any such instrument; [ii] to sign Tenant's name
on any invoice or bill of lading relating to any Receivable,
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drafts against account debtors, assignments and verifications of Receivables,
and notices to account debtors; [iii] to send verifications of Receivables to
any account debtor; and [iv] to do all other acts and things necessary to carry
out this Lease. Except for willful acts or omissions, Landlord shall not be
liable for any omissions, commissions, errors of judgment, or mistakes in fact
or law made in the exercise of any such powers. At Landlord's option, Tenant
shall [i] provide Landlord a full accounting of all amounts received on account
of Receivables with such frequency and in such form as Landlord may require,
either with or without applying all collections on Receivables in payment of
Tenant's Obligations or [ii] deliver to Landlord on the day of receipt all such
collections in the form received and duly endorsed by Tenant. At Landlord's
request, Tenant shall institute any action or enter into any settlement
determined by Landlord to be necessary to obtain recovery or redress from any
account debtor in default of Receivables. Landlord may give notice of its
security interest in the Receivables to any or all account debtors with
instructions to make all payments on Receivables directly to Landlord, thereby
terminating Tenant's authority to collect Receivables. After terminating
Tenant's authority to enforce or collect Receivables, Landlord shall have the
right to take possession of any or all Receivables and records thereof and is
hereby authorized to do so, and only Landlord shall have the right to collect
and enforce the Receivables. Prior to the occurrence of an Event of Default, at
Tenant's cost and expense, but on behalf of Landlord and for Landlord's account,
Tenant shall collect or otherwise enforce all amounts unpaid on Receivables and
hold all such collections in trust for Landlord, but Tenant may commingle such
collections with Tenant's own funds, until Tenant's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Landlord does not assume any of Tenant's obligations
under any Receivable, and Landlord shall not be responsible in any way for the
performance of any of the terms and conditions thereof by Tenant.
(i) Without waiving any prior or subsequent Event of Default,
Landlord may waive any Event of Default or, with or without waiving any Event of
Default, remedy any default.
(j) Landlord may terminate its obligation to disburse Lease
Advances.
(k) Landlord may enter and take possession of the Land and
Facility without terminating the Lease and complete construction and renovation
of the Improvements (or any part thereof) and perform the obligations of Tenant
under the Lease Documents. Without limiting the generality of the foregoing and
for the purposes aforesaid, Tenant hereby appoints Landlord its lawful
attorney-in-fact with full power to do any of the following: [i] complete
construction, renovation and equipping of the Improvements in the name of
Tenant; [ii] use unadvanced funds remaining under the Lease Amount, or funds
that may be reserved, escrowed, or set aside for any purposes hereunder at any
time, or to advance funds in excess of the Lease Amount, to complete the
Improvements; [iii] make changes in the plans and specifications that shall be
necessary or desirable to complete the Improvements in substantially the manner
contemplated by the plans and specifications; [iv] retain or employ new general
contractors, subcontractors, architects, engineers, and inspectors as shall be
required for said purposes; [v] pay, settle, or compromise all existing bills
and claims, which may be liens or security interests, or to avoid such bills and
claims becoming liens against the Facility or security interest
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against fixtures or equipment, or as may be necessary or desirable for the
completion of the construction and equipping of the Improvements or for the
clearance of title; [vi] execute all applications and certificates, in the name
of Tenant, that may be required in connection with any construction; [vii] do
any and every act that Tenant might do in its own behalf, to prosecute and
defend all actions or proceedings in connection with the Improvements; and
[viii] to execute, deliver and file all applications and other documents and
take any and all actions necessary to transfer the operations of the Facility to
Landlord or Landlord's designee. This power of attorney is a power coupled with
an interest and cannot be revoked.
8.3 RIGHT OF SET-OFF. Landlord may, and is hereby authorized by
Tenant to, at any time and from time to time without advance notice to Tenant
(any such notice being expressly waived by Tenant), set-off and apply any and
all sums held by Landlord, any indebtedness of Landlord to Tenant, and any
claims by Tenant against Landlord, against any obligations of Tenant hereunder
and against any claims by Landlord against Tenant, whether or not such
obligations or claims of Tenant are matured and whether or not Landlord has
exercised any other remedies hereunder. The rights of Landlord under this
section are in addition to any other rights and remedies Landlord may have
against Tenant.
8.4 PERFORMANCE OF TENANT'S COVENANTS. Landlord may perform any
obligation of Tenant which Tenant has failed to perform within 5 days after
Landlord has sent a written notice to Tenant informing it of its specific
failure. Tenant shall reimburse Landlord on demand, as Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the
Overdue Rate (as defined in ss.8.6).
8.5 LATE PAYMENT CHARGE. Tenant acknowledges that any default in
the payment of any installment of Rent payable hereunder will result in loss and
additional expense to Landlord in servicing any indebtedness of Landlord secured
by the Leased Property, handling such delinquent payments, and meeting its other
financial obligations, and because such loss and additional expense is extremely
difficult and impractical to ascertain, Tenant agrees that in the event any Rent
payable to Landlord hereunder is not paid within 10 days after the due date,
Tenant shall pay a late charge of 5% of the amount of the overdue payment as a
reasonable estimate of such loss and expenses, unless applicable law requires a
lesser charge, in which event the maximum rate permitted by such law may be
charged by Landlord. The 10 day grace period set forth in this section shall not
extend the time for payment of Rent or the period for curing any default or
constitute a waiver of such default.
8.6 INTEREST. In addition to the late payment charge, any payment
not made by Tenant within 10 days after the due date shall thereafter bear
interest at the rate (the "Overdue Rate") of the greater of [i] 18.5% per annum;
or [ii] 2.5% per annum above the Lease Rate then in effect; provided, however,
that at no time will Tenant be required to pay interest at a rate higher than
the maximum legal rate and, provided further, that if a court of competent
jurisdiction determines that any other charges payable under this Lease are
deemed to be interest, the Overdue Rate shall be adjusted to ensure that the
aggregate interest payable under this Lease does not accrue at a rate in excess
of the maximum legal rate. Tenant shall not be required to pay interest upon any
late payment fees assessed pursuant to ss.8.5.
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8.7 LITIGATION; ATTORNEYS' FEES. Within 5 days after Tenant has
knowledge of any litigation or other proceeding that may be instituted against
Tenant, against the Leased Property to secure or recover possession thereof, or
that may affect the title to or the interest of Landlord in the Leased Property,
Tenant shall give written notice thereof to Landlord. Tenant shall pay all
reasonable costs and expenses incurred by Landlord in enforcing or preserving
Landlord's rights under this Lease, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, including without
limitation, [i] the fees, expenses, and costs of any litigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; [ii]
reasonable attorney, paralegal, consulting and witness fees and disbursements,
whether in house counsel or outside counsel; and [iii] the expenses, including
without limitation, lodging, meals, and transportation, of Landlord and its
employees, agents, attorneys, and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency or other similar proceedings and
attendance at hearings, depositions, and trials in connection therewith. All
such costs, charges and fees payable by Tenant shall be deemed to be Additional
Rent under this Lease.
8.8 ESCROWS AND APPLICATION OF PAYMENTS. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title, and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder until an Event of Default has occurred. Any payments received
by Landlord under any provisions of this Lease during the existence or
continuance of an Event of Default shall be applied to Tenant's obligations in
the order which Landlord may determine.
8.9 REMEDIES CUMULATIVE. Except as otherwise provided herein, the
remedies of Landlord herein are cumulative to and not in lieu of any other
remedies available to Landlord at law or in equity, and the use of any one
remedy shall not be taken to exclude or waive the right to use any other remedy.
ARTICLE 9: DAMAGE AND DESTRUCTION
9.1 NOTICE OF CASUALTY. If the Leased Property shall be destroyed,
in whole or in part, or damaged by fire, flood, windstorm or other casualty (a
"Casualty"), Tenant shall give written notice thereof to the Landlord within one
business day after the occurrence of the Casualty. Within 15 days after the
occurrence of the 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 the type of Leased Property damaged and the area of the Improvements
damaged; [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 the name of the insurer, the insurance coverage limits, the deductible
amount, the expected settlement amount, and the expected settlement date; and
[vii] a description of the business interruption claim including the
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name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date. Within five days
after request from Landlord, Tenant will provide Landlord with copies of all
correspondence to the insurer and any other information reasonably requested by
Landlord.
9.2 SUBSTANTIAL DESTRUCTION.
9.2.1 If the Improvements are substantially destroyed at any time
other than during the final 18 months of the Initial Term or any Renewal Term,
Tenant shall promptly rebuild and restore the Leased Property in accordance with
ss.9.4 and Landlord shall make the insurance proceeds available to Tenant for
such restoration. The term "substantially destroyed" means any casualty
resulting in the loss of use of 50% or more of the licensed beds at any one
Facility.
9.2.2 If the Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term, Landlord may elect to
terminate this Lease or terminate this Lease and all Phase Leases, at Landlord's
option, and retain the insurance proceeds unless Tenant exercises its option to
renew as set forth in ss.9.2.3. If Landlord elects to terminate, Landlord shall
give notice ("Termination Notice") of its election to terminate this Lease (or
this Lease and all Phase Leases, if elected by Landlord) within 30 days after
receipt of Tenant's notice of the damage. If Tenant does not exercise its option
to renew under ss.9.2.3 or its option to purchase under ss.9.2.4 within 15 days
after delivery of the Termination Notice, this Lease (or this Lease and all
Phase Leases, if elected by Landlord) shall terminate on the 15th day after
delivery of the Termination Notice. If this Lease (or this Lease and all Phase
Leases, if elected by Landlord) is so terminated, Tenant shall be liable to
Landlord for all Rent and all other obligations accrued under this Lease through
the effective date of termination and each Phase Tenant shall be liable to
Landlord for all Rent and all other obligations accrued under its respective
Phase Lease through the effective date of termination.
9.2.3 If the Improvements are substantially destroyed during the
final 18 months of the Initial Term or the second Renewal Term and Landlord
gives the Termination Notice, Tenant shall have the option to renew this Lease.
Tenant shall give Landlord irrevocable notice of Tenant's election to renew, and
each Phase Tenant shall give irrevocable notice of renewal, within 15 days after
delivery of the Termination Notice. If Tenant and each Phase Tenant elect to
renew, the Renewal Term will be in effect for the balance of the then current
Term plus a 5 year period. The Renewal Term will commence on the third day
following Landlord's receipt of Tenant's and each Phase Tenant's notice of
renewal. All other terms of this Lease for the Renewal Term shall be in
accordance with Article 12. The Leased Property will be restored by Tenant in
accordance with the provisions of this Article 9 regarding partial destruction.
9.2.4 If the Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term and Landlord gives the
Termination Notice, Tenant shall have the option to purchase the Leased
Property. Tenant shall give Landlord notice of Tenant's election to purchase,
and if required by Landlord, each Phase Tenant shall give notice of its election
to purchase its respective Phase Facility, within 15 days after delivery of the
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Termination Notice. If Tenant and each Phase Tenant elect to purchase their
respective Leased Property, the purchase price will be the greater of [i] the
Lease Amount or [ii] the Fair Market Value and the Fair Market Value will be
determined in accordance with ss.9.2.5. For purposes of determining the Fair
Market Value, the Leased Property will be valued as if it had been restored to
be equal in value to the Leased Property existing immediately prior to the
occurrence of the damage. All other terms of the option to purchase shall be in
accordance with ss.9.2.5. Landlord shall hold the insurance proceeds until the
closing of the purchase of the Leased Property and at closing shall deliver the
proceeds to Tenant.
9.2.5 Fair Market Value. The fair market value (the "Fair Market
Value") of the Leased Property shall be determined as follows:
(a) The parties shall attempt to determine the Fair Market Value
by mutual agreement within 15 days after giving the purchase notice. However, if
the parties do not agree on the Fair Market Value within such 15 day period, the
following provisions shall apply.
(b) Landlord and Tenant shall each give the other party notice of
the name of an acceptable appraiser 15 days after giving of the purchase notice.
The two appraisers will then select a third appraiser within an additional 5
days. Each appraiser must demonstrate to the reasonable satisfaction of both
Landlord and Tenant that it has significant experience in appraising properties
similar to the Leased Property. Within 5 days after designation, each appraiser
shall submit a resume to Landlord and Tenant setting forth such appraiser's
qualifications including education and experience with similar properties. A
notice of objections to the qualifications of any appraiser shall be given
within 10 days after receipt of such resume. If a party fails to timely object
to the qualifications of an appraiser, then the appraiser shall be conclusively
deemed satisfactory. If a party gives a timely notice of objection to the
qualifications of an appraiser, then the disqualified appraiser shall be
replaced by an appraiser selected by the qualified appraisers or, if all
appraisers are disqualified, then by an appraiser selected by a commercial
arbitrator acceptable to Landlord and Tenant.
(c) The Fair Market Value shall be determined by the appraisers
within 45 days after the selection of the appraisers as follows. Each of the
appraisers shall be instructed to prepare an appraisal of the Leased Property in
accordance with the following instructions:
The Leased Property is to be valued upon the three conventional
approaches to estimate value known as the Income, Sales Comparison and Cost
Approaches. Once the approaches are completed, the appraiser correlates the
individual approaches into a final value conclusion.
The three approaches to estimate value are summarized as follows:
INCOME APPROACH: This valuation approach recognizes that the value
of the operating tangible and intangible asset can be represented by
the expected economic viability of the business giving returns on
and of the assets.
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SALES COMPARISON APPROACH: This valuation approach is based upon the
principle of substitution. When a facility is replaceable in the
market, the market approach assumes that value tends to be set at
the price of acquiring an equally desirable substitute facility.
Since healthcare market conditions change and frequently are subject
to regulatory and financing environments, adjustments need to be
considered. These adjustments also consider the operating
differences such as services and demographics.
COST APPROACH: This valuation approach estimates the value of the
tangible assets only. Value is represented by the market value of
the land plus the depreciated reproduction cost of all improvements
and equipment.
In general, the Income and Sales Comparison Approaches are considered the best
representation of value because they cover both tangibles and intangible assets,
consider the operating characteristics of the business and have the most
significant influence on attracting potential investors.
The appraised values submitted by the three appraisers shall be ranked from
highest value to middle value to lowest value, the appraised value (highest or
lowest) which is furthest from the middle appraised value shall be discarded,
and the remaining two appraised values shall be averaged to arrive at the Fair
Market Value.
(d) Tenant shall pay, or reimburse Landlord for, all costs and
expenses in connection with the appraisals.
(e) The purchase of the Leased Property by Tenant shall close on a
date agreed to by Landlord and Tenant which shall be not less than 60 days after
Landlord's receipt of the purchase notice and not more than 60 days after the
Fair Market Value of the Leased Property has been determined. Such date may be
extended by mutual agreement of the parties to accommodate Tenant's financing.
At the closing, Tenant shall pay the Option Price and all closing costs in
immediately available funds and Landlord shall convey title to the Leased
Property to Tenant by a transferable and recordable special warranty deed and
special warranty bill of sale.
(f) If Tenant for any reason fails to purchase the Leased Property
after Tenant has given the purchase notice, then Tenant shall pay Landlord all
costs and expenses incurred by Landlord as a result of the failure to close
including costs of unwinding swap transactions or other interest rate protection
devices and preparing for the closing. Tenant shall continue to be obligated as
lessee hereunder for the remainder of the Term (including the Extended Term as
set forth in ss.12.3).
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9.3 PARTIAL DESTRUCTION. If the Leased Property is not
substantially destroyed, then Tenant shall comply with the provisions of ss.9.4
and Landlord shall make the insurance proceeds available to Tenant for such
restoration.
9.4 RESTORATION. Tenant shall promptly repair, rebuild, or restore
the Leased Property, at Tenant's expense, so as to make the Leased Property at
least equal in value to the Leased Property existing immediately prior to such
occurrence and as nearly similar to it in character as is practicable and
reasonable. Before beginning such repairs or rebuilding, or letting any
contracts in connection with such repairs or rebuilding, Tenant will submit for
Landlord's approval, which approval Landlord will not unreasonably withhold or
delay, plans and specifications meeting the requirements of ss.16.2 for such
repairs or rebuilding. Promptly after receiving Landlord's approval of the plans
and specifications and receiving the proceeds of insurance, Tenant will begin
such repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including attorneys' fees. Payments will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold 10% from each payment until the work
is completed and proof has been furnished to Landlord that no lien or liability
has attached or will attach to the Leased Property or to Landlord in connection
with such repairing or rebuilding. Upon the completion of rebuilding and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating organization, or
similar body. Any remaining proceeds of insurance after such restoration will be
Tenant's property.
9.5 INSUFFICIENT PROCEEDS. If the proceeds of any insurance
settlement are not sufficient to pay the costs of such repair, rebuilding or
restoration in full, Tenant shall deposit with Landlord at Landlord's option,
and within 10 days of Landlord's request, an amount sufficient in Landlord's
reasonable judgment to complete such repair, rebuilding or restoration. Tenant
shall not, by reason of the deposit or payment, be entitled to any reimbursement
from Landlord or diminution in or postponement of the payment of the Rent.
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9.6 NOT TRUST FUNDS. Notwithstanding anything herein or at law or
equity to the contrary, none of the insurance proceeds paid to Landlord as
herein provided shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 9. Tenant expressly assumes
all risk of loss, including a decrease in the use, enjoyment or value, of the
Leased Property from any casualty whatsoever, whether or not insurable or
insured against.
9.7 LANDLORD'S INSPECTION. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine them at
all reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
insurance, according to Article 4, will be applicable to any repairs or
rebuilding under this section.
9.8 LANDLORD'S COSTS. Tenant shall, within 30 days after receipt of
an invoice from Landlord, pay the costs, expenses, and fees of any architect or
engineer employed by Landlord to review any plans and specifications and to
supervise and approve any construction, or for any services rendered by such
architect or engineer to Landlord as contemplated by any of the provisions of
this Lease, or for any services performed by Landlord's attorneys in connection
therewith.
9.9 NO RENT ABATEMENT. Rent will not abate pending the repairs or
rebuilding of the Leased Property, but shall be offset against any rental
insurance proceeds received by Landlord.
ARTICLE 10: CONDEMNATION
10.1 TOTAL TAKING. If, by exercise of the right of eminent domain
or by conveyance made in response to the threat of the exercise of such right
("Taking"), the entire Leased Property is taken, or so much of the Leased
Property is taken that the Leased Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end on the earlier of the vesting of title to the Leased Property in the
condemning authority or the taking of possession of the Leased Property by the
condemning authority. All damages awarded for such Taking under the power of
eminent domain shall be the property of the Landlord, whether such damages shall
be awarded as compensation for diminution in value of the leasehold or the fee
of the Leased Property. If this Lease is terminated with respect to a Facility
subject to a taking as described in this section, Landlord may, at its option,
terminate each Phase Lease.
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10.1.1 If the entire Leased Property is taken during the final 18
months of the Initial Term or any Renewal Term and Landlord elects to terminate
each Phase Lease, Tenant shall have the option to purchase each Phase Facility
(but not less than all Phase Facilities). Tenant shall give Landlord notice of
Tenant's election to purchase within 15 days after delivery of the notice of
Landlord's intent to terminate. If Tenant elects to purchase each Phase
Facility, the Option Price will be determined in accordance with ss.13.2 and the
Fair Market Value will be determined in accordance with ss.13.3. All other terms
of the option to purchase shall be in accordance with Article 13.
10.2 PARTIAL TAKING. If, after a Taking, so much of the Leased
Property remains that the Leased Property can be used for substantially the same
purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
the Leased Property in the condemning authority or the taking of possession of
the Leased Property by the condemning authority; [ii] at its cost, Tenant shall
restore so much of the Leased Property as remains to a sound architectural unit
substantially suitable for the purposes for which it was used immediately before
the Taking, using good workmanship and new, first-class materials; [iii] upon
completion of the restoration, Landlord will pay Tenant the lesser of the net
award made to Landlord on the account of the Taking (after deducting from the
total award, attorneys', appraisers', and other fees and costs incurred in
connection with the obtaining of the award and amounts paid to the holders of
mortgages secured by the Leased Property), or Tenant's actual out-of-pocket
costs of restoring the Leased Property; and [iv] Landlord shall be entitled to
the balance of the net award. The restoration shall be completed in accordance
with ss.ss.9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions deemed to apply to
condemnation instead of casualty.
10.3 CONDEMNATION PROCEEDS NOT TRUST FUNDS. Notwithstanding
anything in this Lease or at law or equity to the contrary, none of the
condemnation award paid to Landlord shall be deemed trust funds, and Landlord
shall be entitled to dispose of such proceeds as provided in this Article 10.
Tenant expressly assumes all risk of loss, including a decrease in the use,
enjoyment, or value, of the Leased Property from any Condemnation.
ARTICLE 11: TENANT'S PROPERTY
11.1 TENANT'S PROPERTY. Tenant shall install, place, and use on
the Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Personal Property as may be required or as
Tenant may, from time to time, deem necessary or useful to operate the Leased
Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property".
11.2 REQUIREMENTS FOR TENANT'S PROPERTY. Tenant shall comply with
all of the following requirements in connection with Tenant's Property:
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(a) Tenant shall, at Tenant's sole cost and expense,
maintain, repair, and replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense, keep
Tenant's Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, earthquake (if Leased Property is in
earthquake zone 1 or 2), and other physical loss perils commonly covered by fire
and extended coverage, boiler and machinery, and difference in conditions
insurance in an amount not less than 90% of the then full replacement cost
thereof. Tenant shall use the proceeds from any such policy for the repair and
replacement of Tenant's Property. The insurance shall meet the requirements of
ss.4.3.
(c) Tenant shall pay all taxes applicable to Tenant's
Property.
(d) If Tenant's Property is damaged or destroyed by fire or
any other cause, Tenant shall promptly repair or replace Tenant's Property
unless Landlord elects to terminate this Lease pursuant to ss.9.2.2.
(e) Unless an Event of Default or any event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
has occurred, Tenant may remove Tenant's Property from the Leased Property from
time to time provided that [i] the items removed are not required to operate the
Leased Property for the Facility Uses (unless such items are being replaced by
Tenant); and [ii] Tenant repairs any damage to the Leased Property resulting
from the removal of Tenant's Property.
(f) Tenant shall not, without the prior written consent of
Landlord or as otherwise provided in this Lease, remove any Tenant's Property or
Leased Property. Tenant shall, at Landlord's option, remove Tenant's Property
upon the termination or expiration of this Lease and shall repair any damage to
the Leased Property resulting from the removal of Tenant's Property. If Tenant
fails to remove Tenant's Property within 30 days after request by Landlord, then
Tenant shall be deemed to have abandoned Tenant's Property, Tenant's Property
shall become the property of Landlord, and Landlord may remove, store and
dispose of Tenant's Property. In such event, Tenant shall have no claim or right
against Landlord for such property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay Landlord, upon demand, all
expenses incurred by Landlord in removing, storing, and disposing of Tenant's
Property and repairing any damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration of this Lease.
(g) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Property. For equipment loans or leases
for equipment having an original cost in excess of $75,000.00, Tenant shall
cause such equipment lessor or lender to enter into a nondisturbance agreement
with Landlord upon terms and conditions acceptable to Landlord, including
without limitation, the following: [i] Landlord shall have the right (but not
the obligation) to assume such equipment lease or security agreement upon the
occurrence of an Event of Default by Tenant hereunder; [ii] such equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a
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reasonable opportunity to cure such default; and [iii] Landlord shall have the
right to assign its interest in the equipment lease or security agreement and
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement and
nondisturbance agreement, including without limitation, reasonable attorneys'
fees and costs. Tenant shall use its best efforts to obtain the provisions
listed in this section from an equipment lessor, and Landlord shall be
commercially reasonable in negotiating such nondisturbance agreement.
ARTICLE 12: RENEWAL OPTIONS
12.1 RENEWAL OPTIONS. Tenant has the option to renew ("Renewal
Option") this Lease for two 5-year renewal terms and one 4-year 11-month renewal
term (each a "Renewal Term"). Tenant can exercise the Renewal Option only upon
satisfaction of the following conditions:
(a) There shall be no uncured Event of Default, or any event
which with the passage of time or giving of notice would constitute an Event of
Default, at the time Tenant exercises its Renewal Option nor on the date the
Renewal Term is to commence.
(b) Tenant shall give Landlord irrevocable written notice of
renewal no later than the date which is [i] 90 days prior to the expiration date
of the then current Term; or [ii] 15 days after Landlord's delivery of the
Termination Notice as set forth in ss.9.2.3.
(c) Each Phase Tenant shall concurrently give irrevocable
notice of renewal for each Affiliate Lease.
12.2 Effect of Renewal. The following terms and conditions will be
applicable if Tenant renews the Lease:
(a) EFFECTIVE DATE. Except as otherwise provided in
ss.9.2.3, the effective date of any Renewal Term will be the first day after the
expiration date of the then current Term. The first day of each Renewal Term is
also referred to as the Renewal Date.
(b) LEASE AMOUNT. Effective as of the Renewal Date, a
single Lease Amount will be computed by summing all Lease Advance Amounts
(including the Acquisition Amount).
(c) LEASE RATE. Effective as of the Renewal Date, a single
Lease Rate will be computed equal to the Renewal Rate. The Renewal Rate for each
Renewal Term shall be the greater of [i] the sum of [a] the Lease Rate in effect
during the then current Lease Year plus [b] the Increaser Rate, or [ii] the fair
market rental lease rate for the Facility as determined according to the
provisions of this section. Landlord and Tenant shall attempt to determine the
fair market rental lease rate for the Facility by mutual agreement 180 days
prior to the expiration date for the then current Term. If the parties do not
agree on such lease rate within a 15 day period, appraisers shall
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be chosen as provided in ss.9.2.5 to determine the fair market rental lease
rate. The appraisers shall be instructed to appraise the fair market value lease
rate as a financing lease rate for a health care facility of the same type as
the Facility and shall take into account the lease rate then being charged by
Landlord to tenants of comparable creditworthiness for comparable facilities.
The appraised rates submitted by the three appraisers shall be ranked from
highest to lowest, the rate (highest or lowest) which is furthest from the
middle rate shall be discarded, and the remaining two appraised rates shall be
averaged to arrive at the fair market rental lease rate.
(d) BASE RENT. Effective as of the Renewal Date, the Base
Rent will be changed to equal 1/12th of the product of [i] the Lease Amount on
the Renewal Date times [ii] the new Lease Rate equal to the Renewal Rate.
(e) OTHER TERMS AND CONDITIONS. Except for the modifications
set forth in this ss.12.2, all other terms and conditions of the Lease will
remain the same for the Renewal Term. The Lease Rate and Base Rent will increase
annually as set forth in ss.2.2.
12.3 EFFECT OF NON-RENEWAL OR EXPIRATION OF LEASE. The following
terms and conditions will be applicable if Tenant does not renew this Lease or
exercise its Option to Purchase by the expiration date for the then current
Term:
(a) EXTENSION OF CURRENT TERM. The current Term will be
extended (the "Extended Term") for 120 days; provided, however, that the
Extended Term will expire on such earlier date of the closing of the sale
pursuant to the Option to Purchase.
(b) LEASE PAYMENTS. During the Extended Term, Tenant shall
continue to make monthly payments of Rent (including Base Rent) based upon the
then existing Lease Rate.
ARTICLE 13: RIGHT OF FIRST REFUSAL
13.1 RIGHT OF FIRST REFUSAL. Tenant shall have the right of first
refusal to purchase the Leased Property during the Term of this Lease. If at any
time during the Term, Landlord shall receive a bona fide offer ("Offer") from a
third person for the purchase of the Leased Property, which Offer Landlord
desires to accept, Landlord shall promptly deliver to Tenant a copy of such
Offer. Tenant shall have the right for a period of 60 days thereafter to elect
to purchase the Leased Property on the same terms and conditions as those set
forth in the Offer. If Tenant elects to purchase the Leased Property, Tenant
must give written notice thereof to Landlord no later than the 60th day after
the date Landlord delivers the Offer to Tenant.
13.2 NO EXERCISE. If Tenant does not elect to exercise its right of
first refusal as set forth in ss.13.1, Landlord shall be free to sell and convey
the Leased Property to the third party purchaser in accordance with the terms
and provisions of the Offer. In the event that Landlord does not consummate the
sale of the Leased Property to such purchaser, Tenant's right of first refusal
under this Article 13 shall remain applicable to subsequent bonafide offers from
third persons.
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ARTICLE 14: NEGATIVE COVENANTS
Until Tenant's Obligations shall have been performed in full, Tenant
and Guarantor covenant and agree that Tenant (and Guarantor where applicable)
shall not do any of the following without the prior written consent of Landlord:
14.1 NO DEBT. Tenant shall not create, incur, assume, or permit to
exist any indebtedness other than [i] trade debt incurred in the ordinary course
of Tenant's business; [ii] indebtedness relating to the Letter of Credit; and
[iii] indebtedness that is secured by any Permitted Lien.
14.2 NO LIENS. Tenant shall not create, incur, or permit to exist
any lien, charge, encumbrance, easement or restriction upon the Leased Property
or any lien upon or pledge of any interest in Tenant, except for Permitted
Liens.
14.3 NO GUARANTIES. Tenant shall not 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.
14.4 NO TRANSFER. Tenant shall not sell, lease, sublease, mortgage,
convey, assign or otherwise transfer any legal or equitable interest in the
Leased Property or any part thereof, except for transfers made in connection
with any Permitted Lien without the prior written consent of Landlord, which
consent shall not be unreasonably withheld.
14.5 NO DISSOLUTION. Tenant, Manager (if applicable) or Guarantor
shall not dissolve, liquidate, merge, consolidate or terminate its existence or
sell, assign, lease, or otherwise transfer (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired). Notwithstanding the foregoing, Guarantor may merge
with another entity provided that [i] Guarantor is the surviving corporation;
and [ii] following the merger, Guarantor can satisfy all of the obligations of
Guarantor under the Lease Documents, including but not limited to the financial
covenants in ss.15.7.
14.6 NO CHANGE IN MANAGEMENT OR OPERATION. No material change
shall occur in the management of Manager or in the management or licensed
operation of the Facility. BCC Development and Management Co. shall remain the
Manager of the Facility and Tenant shall remain the licensed operator of the
Facility. Guarantor shall not make a change in its President, Chief Operating
Officer, or Chief Development Officer without giving Landlord prior written
notice (or in the case of death, written notice within a reasonable time
thereafter).
14.7 NO INVESTMENTS. Tenant shall not purchase or otherwise
acquire, hold, or invest in securities (whether capital stock or instruments
evidencing indebtedness) of or make loans or advances to any person, including,
without limitation, any Guarantor, any Affiliate, or any shareholder, member or
partner of Tenant, Guarantor or any Affiliate, except for cash balances
temporarily invested in short-term or money market securities.
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14.8 CONTRACTS. Tenant shall not execute or modify any material
contracts or agreements with respect to the Facility except for contracts and
modifications approved by Landlord. Contracts made in the ordinary course of
business and in an amount less than $250,000.00 shall not be considered
"material" for purposes of this paragraph. The management agreement currently in
effect between Tenant and Manager is acceptable.
14.9 SUBORDINATION OF PAYMENTS TO AFFILIATES. After the occurrence
of an Event of Default and until such Event of Default is cured, Tenant and
Guarantor shall not make any payments or distributions (including, without
limitation, fees, principal, interest, dividends, liquidating distributions,
management fees, cash flow distributions or lease payments) to Guarantor,
Manager (if applicable), any Affiliate, or any shareholder, member or partner of
Tenant, Guarantor, Manager (if applicable) or any Affiliate. Notwithstanding the
foregoing, Guarantor shall be permitted to pay dividends to shareholders and
regularly scheduled salary and bonus payments (but no extraordinary salary,
bonuses, or other compensation).
14.10 CHANGE OF LOCATION OR NAME. Tenant shall not change any of
the following: [i] the location of the principal place of business or chief
executive office of Tenant, or any office where any of Tenant's books and
records are maintained (other than the change to be made in May, 1999 as
previously disclosed to Landlord); or [ii] the name under which Tenant conducts
any of its business or operations.
ARTICLE 15: AFFIRMATIVE COVENANTS
15.1 PERFORM OBLIGATIONS. Tenant shall perform or cause to be
performed all of its obligations under this Lease, the Government
Authorizations, the Permitted Exceptions, and all Legal Requirements. Tenant
shall take all necessary action to obtain all Government Authorizations required
for the operation of the Facility as soon as possible after the Effective Date.
15.2 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 the
Facility or any portion thereof, Tenant will cause such proceedings to be
vigorously contested in good faith, and in the event of an adverse ruling or
decision, prosecute all allowable appeals therefrom, and will, without limiting
the generality of the foregoing, resist the entry or seek the stay of any
temporary or permanent injunction that may be entered, and use all reasonable
commercial efforts to bring about a favorable and speedy disposition of all such
proceedings and any other proceedings.
15.3 DOCUMENTS AND INFORMATION.
15.3.1 FURNISH DOCUMENTS. Tenant shall periodically during the
term of the Lease deliver to Landlord the Annual Financial Statements, Periodic
Financial Statements and other documents described on Exhibit C within the
specified time periods. With each delivery of Annual Financial Statements and
Periodic Financial Statements (other than the monthly Facility Financial
Statement) to Landlord, Tenant shall also deliver to Landlord a certificate
signed by the
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Chief Financial Officer, general partner or managing member (as applicable) of
Tenant, an Annual Facility Financial Report or Quarterly Facility Financial
Report, as applicable, and a Quarterly Facility Accounts Receivable Aging Report
all in the form of Exhibit D. In addition, Tenant shall deliver to Landlord the
Annual Facility Financial Report and a Quarterly Facility Accounts Receivable
Aging Report (based upon internal financial statements) within 60 days after the
end of each fiscal year.
15.3.2 FURNISH INFORMATION. Tenant shall [i] promptly supply
Landlord with such information concerning its financial condition, affairs and
property, as Landlord may reasonably request from time to time hereafter,
including reporting formats used by Landlord and electronic filing and transfer;
[ii] promptly notify Landlord in writing of any condition or event that
constitutes a breach or event of default of any term, condition, warranty,
representation, or provisions of this Agreement or any other agreement, and of
any material adverse change in its financial condition; [iii] maintain a
standard and modern system of accounting; [iv] permit Landlord or any of its
agent or representatives to have access to and to examine all of its books and
records regarding the financial condition of the Facility at any time or times
hereafter during business hours and after reasonable oral or written notice; and
[v] permit Landlord to copy and make abstracts from any and all of said books
and records.
15.3.3 FURTHER ASSURANCES AND INFORMATION. Tenant shall, on request
of Landlord from time to time, execute, deliver, and furnish documents as may be
necessary to fully consummate the transactions contemplated under this
Agreement. Within 15 days after a request from Landlord, Tenant shall provide to
Landlord such additional information regarding Tenant, Tenant's financial
condition or the Facility as Landlord, or any existing or proposed creditor of
Landlord, or any auditor or underwriter of Landlord, may require from time to
time, including, without limitation, a current Tenant's Certificate and Facility
Financial Report in the form of Exhibit D. Upon Landlord's request, but not more
than once every three years, Tenant shall provide to Landlord, at Tenant's
expense, an appraisal prepared by an MAI appraiser setting forth the current
fair market value of the Leased Property.
15.3.4 MATERIAL COMMUNICATIONS. Tenant shall transmit to Landlord,
within 5 business days after receipt thereof, any material communication
affecting a Facility, this Lease, the Legal Requirements or the Government
Authorizations, and Tenant will promptly respond to Landlord's inquiry with
respect to such information. Tenant shall promptly notify Landlord in writing
after Tenant has knowledge of any potential, threatened or existing litigation
or proceeding against, or investigation of, Tenant, Guarantor, or the Facility
that may affect the right to operate the Facility or Landlord's title to the
Facility or Tenant's interest therein.
15.3.5 REQUIREMENTS FOR FINANCIAL STATEMENTS. Tenant and Guarantor
shall meet the following requirements in connection with the preparation of the
financial statements: [i] all audited financial statements shall be prepared in
accordance with general accepted accounting principles consistently applied;
[ii] all unaudited financial statements shall be prepared in a manner
substantially consistent with prior audited and unaudited financial statements
submitted to Landlord; [iii] all financial statements shall fairly present the
financial condition and performance for the relevant period in all material
respects; [iv] the financial statements shall
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include all notes to the financial statements and a complete schedule of
contingent liabilities and transactions with Affiliates; and [v] the audited
financial statements shall contain an unqualified opinion.
15.4 COMPLIANCE WITH LAWS. Tenant shall comply with all Legal
Requirements and keep all Government Authorizations in full force and effect.
Tenant shall pay when due all taxes and governmental charges of every kind and
nature that are assessed or imposed upon Tenant at any time during the term of
the Lease, including, without limitation, all income, franchise, capital stock,
property, sales and use, business, intangible, employee withholding, and all
taxes and charges relating to Tenant's business and operations. Tenant shall be
solely responsible for compliance with all Legal Requirements, including the
ADA, and Landlord shall have no responsibility for such compliance.
15.5 BROKER'S COMMISSION. Tenant shall indemnify Landlord from
claims of brokers arising by the execution hereof or the consummation of the
transactions contemplated hereby and from expenses incurred by Landlord in
connection with any such claims (including attorneys' fees).
15.6 EXISTENCE AND CHANGE IN OWNERSHIP. Tenant, Manager (if
applicable) and Guarantor shall maintain its existence throughout the term of
this Agreement. Any change in the ownership of Tenant or Manager (if
applicable), directly or indirectly, shall require Landlord's prior written
consent. Landlord's consent to a change in ownership of Tenant shall not be
unreasonably withheld.
15.7 FINANCIAL COVENANTS. The defined terms used in this section
are defined in ss.15.7.1. The method of calculating Net Worth and valuing assets
shall be consistent with the Financial Statements. The following financial
covenants shall be met throughout the term of this Lease:
15.7.1 DEFINITIONS.
(a) "Cash Flow" means the net income of Tenant as reflected
on the income statement of Tenant plus [i] the amount of the provision for
depreciation and amortization; [ii] the amount of the provision for management
fees; plus [iii] the amount of the provision for income taxes; plus [iv] the
amount of the provision for Rent payments and interest and lease payments, if
any; minus [v] an imputed management fee equal to 5% of gross revenues (net of
contractual allowances); and minus [vi] an imputed replacement reserve of
$250.00 per licensed bed at the Facility, per year.
(b) "Coverage Ratio" is the ratio of [i] Cash Flow for each
applicable period; to [ii] the Rent payments due pursuant to this Lease and all
other debt service and lease payments relating to the Leased Property for the
applicable period.
(c) "Net Worth" has the meaning given under generally
accepted accounting principles.
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15.7.2 COVERAGE RATIO. Tenant shall maintain for each fiscal
quarter a Coverage Ratio with respect to the Facility of not less than 1.25 to
1.00.
15.7.3 NET WORTH. Guarantor shall maintain for each fiscal quarter
a Net Worth of at least $55,000,000.00 with cash and cash equivalents of at
least $5,000,000.00.
15.7.4 CURRENT RATIO. Guarantor shall maintain for each fiscal
quarter a ratio of current assets to current liabilities of not less than 1.25
to 1.00.
15.7.5 DEBT TO EQUITY RATIO. Guarantor shall maintain for each
fiscal quarter a ratio of total indebtedness to shareholders' equity of not more
than 2.50 to 1.00. The aggregate lease amount under all capitalized and
operating leases shall be included as indebtedness and all subordinated debt
shall be included as equity.
15.8 TRANSFER OF LICENSE. If this Lease is terminated due to
expiration of the Term, pursuant to an Event of Default or for any reason other
than Tenant's purchase of the Leased Property, or if Tenant vacates the Leased
Property without termination of this Lease, Tenant shall execute, deliver and
file all documents and statements requested by Landlord to effect the transfer
of the Facility license and Government Authorizations to an entity designated by
Landlord, subject to any required approval of governmental regulatory
authorities, and Tenant shall provide to Landlord all information and records
required by Landlord in connection with the transfer of the license and
Government Authorizations.
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS
16.1 PROHIBITION ON ALTERATIONS AND IMPROVEMENTS. Except for
Permitted Alterations (as hereinafter defined), Tenant shall not make any
structural or nonstructural changes, alterations, additions and/or improvements
(hereinafter collectively referred to as "Alterations") to the Leased Property.
16.2 APPROVAL OF ALTERATIONS. If Tenant desires to perform any
Permitted Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Within 30 days
after receipt of an invoice, Tenant shall reimburse Landlord for all costs and
expenses incurred by Landlord in reviewing and, if required, approving or
disapproving the Plans and Specifications, inspecting the Leased Property, and
otherwise monitoring compliance with the terms of this Article 16. Tenant shall
comply with the requirements of ss.16.4 in making any Permitted Alterations.
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16.3 PERMITTED ALTERATIONS. Permitted Alterations means any one of
the following: [i] Alterations approved by Landlord; [ii] Alterations required
under ss.7.2; [iii] Alterations having a total cost of less than $250,000.00; or
[iv] repairs, rebuilding and restoration required or undertaken pursuant to
ss.9.4.
16.4 REQUIREMENTS FOR PERMITTED ALTERATIONS. Tenant shall comply
with all of the following requirements in connection with any Permitted
Alterations:
(a) The Permitted Alterations shall be made in accordance
with the Plans and Specifications approved by Landlord, if applicable.
(b) The Permitted Alterations and the installation thereof
shall comply with all applicable legal requirements and insurance requirements.
(c) The Permitted Alterations shall be done in a good and
workmanlike manner, shall not impair the value or the structural integrity of
the Leased Property, and shall be free and clear of all mechanic's liens.
(d) For any Permitted Alterations having a total cost of
$250,000.00 or more, Tenant shall deliver to Landlord a payment and performance
bond, with a surety acceptable to Landlord, in an amount equal to the estimated
cost of the Permitted Alterations, guaranteeing the completion of the work free
and clear of liens and in accordance with the approved Plans and Specifications,
and naming Landlord and any mortgagee of Landlord as joint obligees on such
bond.
(e) Tenant shall, at Tenant's expense, obtain a builder's
completed value risk policy of insurance insuring against all risks of physical
loss, including collapse and transit coverage, in a nonreporting form, covering
the total value of the work performed, and equipment, supplies, and materials,
and insuring initial occupancy. Landlord and any mortgagee of Landlord shall be
additional insureds of such policy. Landlord shall have the right to approve the
form and substance of such policy.
(f) Tenant shall pay the premiums required to increase the
amount of the insurance coverages required by Article 4 to reflect the increased
value of the Improvements resulting from installation of the Permitted
Alterations, and shall deliver to Landlord a certificate evidencing the increase
in coverage.
(g) Tenant shall, not later than 60 days after completion of
the Permitted Alterations, deliver to Landlord a revised "as-built" survey of
the Leased Property if the Permitted Alterations altered the Land or "footprint"
of the Improvements and an "as-built" set of Plans and Specifications for the
Permitted Alterations in form and substance satisfactory to Landlord.
(h) Tenant shall, not later than 30 days after Landlord sends
an invoice, reimburse Landlord for any reasonable costs and expenses, including
attorneys' fees and
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architects' and engineers' fees, incurred in connection with reviewing and
approving the Permitted Alterations and ensuring Tenant's compliance with the
requirements of this section. The daily fee for Landlord's consulting engineer
is $750.00.
16.5 OWNERSHIP AND REMOVAL OF PERMITTED ALTERATIONS. The Permitted
Alterations shall become a part of the Leased Property, owned by Landlord, and
leased to Tenant subject to the terms and conditions of this Lease. Tenant shall
not be required or permitted to remove any Permitted Alterations.
16.6 SIGNS. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease, Tenant shall, within 30 days after notice from Landlord, remove the signs
and restore the Leased Property to its original condition.
ARTICLE 17: [INTENTIONALLY DELETED]
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY
18.1 PROHIBITION ON ASSIGNMENT AND SUBLETTING. Tenant acknowledges
that Landlord has entered into this Lease in reliance on the personal services
and business expertise of Tenant and Guarantor. Tenant may not assign, sublet,
mortgage, hypothecate, pledge, or transfer any interest in this Lease, or in the
Leased Property, in whole or in part, without the prior written consent of
Landlord, which Landlord may withhold in its sole and absolute discretion. The
following transactions will be deemed an assignment or sublease requiring
Landlord's prior written consent: [i] an assignment by operation of law; [ii] an
imposition (whether or not consensual) of a lien, mortgage, or encumbrance upon
Tenant's interest in the Lease; [iii] an arrangement (including but not limited
to, management agreements, concessions, licenses, and easements) which allows
the use or occupancy of all or part of the Leased Property by anyone other than
Tenant; and [iv] a change of ownership of Tenant. An assignment or sublease
without the prior written consent of Landlord will be void at the Landlord's
option. Landlord's consent to one assignment or sublease will not waive the
requirement of its consent to any subsequent assignment or sublease.
18.2 REQUESTS FOR LANDLORD'S CONSENT TO ASSIGNMENT, SUBLEASE OR
MANAGEMENT AGREEMENT. If Tenant is required to obtain Landlord's consent to a
specific assignment, sublease, or management agreement, Tenant shall give
Landlord [i] the name and address of the proposed assignee, subtenant or
manager; [ii] a copy of the proposed assignment, sublease or management
agreement; [iii] reasonably satisfactory information about the nature, business
and business history of the proposed assignee, subtenant, or manager and its
proposed use of the Leased Property; and [iv] banking, financial, and other
credit information, and references about the proposed assignee, subtenant or
manager sufficient to enable Landlord to determine the financial responsibility
and character of the proposed assignee, subtenant or manager.
18.3 AGREEMENTS WITH RESIDENTS. Notwithstanding ss.18.1, Tenant
may enter into an occupancy agreement with residents of the Leased Property
without the prior written consent of Landlord provided that [i] the agreement
does not provide for lifecare services; [ii] Tenant may not
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collect rent for more than one month in advance; and [iii] all residents of the
Leased Property are accurately shown in Tenant's accounting records.
18.4 TERMS APPLICABLE TO ALL ASSIGNMENTS, SUBLEASES OR MANAGEMENT
AGREEMENTS. Any assignment, sublease or management agreement shall contain
provisions to the effect that [a] such assignment, sublease or management
agreement is subject and subordinate to all of the terms and provisions of this
Lease and to the rights of Landlord; [b] such assignment, sublease or management
agreement may not be modified without the prior written consent of Landlord not
to be unreasonably withheld or delayed; [c] if this Lease shall terminate before
the expiration of such assignment, sublease or management agreement, the
assignee, subtenant or manager thereunder will, at Landlord's option, attorn to
Landlord and waive any right the assignee, subtenant or manager may have to
terminate the assignment, sublease or management agreement or surrender
possession thereunder as a result of the termination of this Lease; [d] if the
assignee, subtenant or manager receives a written notice from Landlord stating
that Tenant is in default under this Lease, the assignee, subtenant or manager
shall thereafter pay all rentals or payments under the assignment, sublease or
management agreement directly to Landlord until such default has been cured, and
[e] Tenant or any guarantor shall not be released from its payment and
performance and obligations under this Lease, but rather Tenant, any guarantor,
and Tenant's assignee or sublessee will be jointly and severally liable for such
payment and performance unless Landlord agrees in writing to release such
parties from their respective obligations.
18.5 COLLATERAL ASSIGNMENT. Tenant hereby collaterally assigns to
Landlord, as security for the performance of the Tenant's Obligations hereunder,
and grants a security interest to Landlord in all of Tenant's right, title, and
interest in and to any assignment, sublease or management agreement now or
hereafter existing for all or part of the Leased Property. Tenant shall, at the
request of Landlord, execute such other instruments or documents as Landlord may
request to evidence this collateral assignment.
18.6 EFFECTIVENESS. Any assignment, sublease, or management
agreement shall not be effective until [i] a fully executed copy of the
instrument of assignment, sublease or management agreement has been delivered to
Landlord; [ii] in the case of an assignment, Landlord has received such
documents, instruments, affidavits, letter of credit amendments, proof of
licensure and amendments as Landlord may reasonably request in order to evidence
assignee's assumption and agreement to perform all of Tenant's obligations under
the Lease; [iii] Tenant has paid to Landlord a fee in the amount of $2,500.00;
and [iv] Landlord has received reimbursement from Tenant or the assignee for all
attorneys' fees and expenses and all other reasonable out-of-pocket expenses
incurred in connection with determining whether to give its consent, giving its
consent and all matters relating to the assignment, sublease, or management
agreement.
18.7 SALE OF LEASED PROPERTY. If Landlord or any subsequent owner
of the Leased Property sells the Leased Property, its liability for the
performance of its agreements in this Lease will end on the date of the sale of
the Leased Property, and Tenant will look solely to the purchaser for the
performance of those agreements. For purposes of this Section, any holder of a
mortgage or security agreement which affects the Leased Property at any time,
and any landlord under any lease
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to which this Lease is subordinate at any time, will be a subsequent owner of
the Leased Property when it succeeds to the interest of Landlord or any
subsequent owner of the Leased Property.
18.8 ASSIGNMENT BY LANDLORD. Landlord may transfer, assign,
mortgage, collaterally assign, or otherwise dispose of Landlord's interest in
this Lease or the Leased Property.
ARTICLE 19: HOLDOVER AND SURRENDER
19.1 HOLDING OVER. Should Tenant, with or without the express or
implied consent of Landlord, continue to hold and occupy the Leased Property
after the expiration of the Term, such holding over beyond the Term and the
acceptance or collection of Rent by the Landlord shall operate and be construed
as creating a tenancy from month-to-month and not for any other term whatsoever.
Said month-to-month tenancy may be terminated by Landlord by giving Tenant 10
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.
19.2 SURRENDER. Except for [i] Permitted Alterations; [ii] normal
and reasonable wear and tear (subject to the obligation of Tenant to maintain
the Leased Property in good order and repair during the Term); and [iii] damage
and destruction not required to be repaired by Tenant, Tenant shall surrender
and deliver up the Leased Property at the expiration or termination of the Term
in as good order and condition as of the Commencement Date.
ARTICLE 20: LETTER OF CREDIT
20.1 TERMS OF LETTER OF CREDIT. As security for the performance of
its obligations hereunder, Tenant shall provide Landlord with the Letter of
Credit at the Closing. Tenant shall maintain the Letter of Credit in favor of
Landlord until Tenant's Obligations are performed in full. The Letter of Credit
shall permit partial draws and shall permit drawing upon presentation of a draft
drawn on the issuer and a certificate signed by Landlord stating that an Event
of Default has occurred under this Lease. The Letter of Credit shall be for an
initial term of one year and shall be automatically renewed annually for
successive terms of at least one year unless Landlord receives notice from the
Issuer, by certified mail, at least 60 days prior to the expiry date then in
effect that the Letter of Credit will not be extended for an additional one-year
period.
20.2 REPLACEMENT LETTER OF CREDIT. Tenant shall provide a
replacement Letter of Credit which satisfies the requirements of ss.20.1 from an
Issuer acceptable to Landlord within 30 days after the occurrence of any of the
following: [i] Landlord's receipt of notice from the Issuer that the Letter of
Credit will not be extended for an additional one-year period; [ii] Landlord
gives notice to Tenant that the Lace Financial Service Rating of the Issuer is
less than a "C+"; or [iii] Landlord gives notice to Tenant of the admission by
Issuer in writing of its inability to pay its debts generally as they become
due, or Issuer's filing of a petition in bankruptcy or petitions to take
advantage of any insolvency act, making an assignment for the benefit of its
creditors, consenting to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or filing a petition or answer seeking
reorganization or
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arrangement under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state thereof. Tenant's failure
to comply with the requirements of this section shall be an immediate Event of
Default without any notice (other than as provided for in the section), cure or
grace period.
20.3 DRAWS. Landlord may draw under the Letter of Credit upon the
occurrence of an Event of Default hereunder. Any such draw shall not cure an
Event of Default. Landlord shall have the right, but not the obligation, to
apply all or any portion of the proceeds from the Letter of Credit to pay all or
any portion of [i] all Rent and other charges and expenses payable by Tenant
under this Lease; plus [ii] all expenses and costs incurred by Landlord in
enforcing or preserving Landlord's rights under this Lease or any security for
the Lease, including without limitation, [a] the fees, expenses, and costs of
any litigation, receivership, administrative, bankruptcy, insolvency, or other
similar proceeding; [b] attorney, paralegal, consulting and witness fees and
disbursements; and [c] the expenses, including without limitation, lodging,
meals and transportation of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency,
or similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.
With respect to any portion of the Letter of Credit proceeds that is
not applied to payment of Tenant's Obligations, Landlord shall have the option
to either [i] deposit the proceeds into an interest-bearing account with a
financial institution chosen by Landlord ("LC Account"); or [ii] require Tenant
to obtain a replacement Letter of Credit satisfactory to Landlord, with the
Letter of Credit proceeds made available to Tenant to secure Tenant's
reimbursement obligation for the Letter of Credit. All interest accruing on the
LC Account shall be paid to Landlord and may, from time to time, be withdrawn
from the LC Account by Landlord. At any time and from time to time until
Tenant's Obligations are performed in full, Landlord may apply all or any
portion of the funds held in the LC Account to payment of all or any portion of
Tenant's Obligations. Within 10 days after any such payment from the LC Account,
Landlord shall give written notice to Tenant describing the amount of such
payment and how it was applied to Tenant's Obligations.
Upon the occurrence of either [i] Landlord's receipt of a
replacement Letter of Credit that satisfies the requirements of ss.20.1 and is
issued by an Issuer acceptable to Landlord; or [ii] the date on which all of
Tenant's Obligations are performed in full, Landlord shall pay the principal
balance of the LC Account (but not any accrued interest) to Tenant.
20.4 PARTIAL DRAWS. Upon the occurrence of a monetary Event of
Default under this Lease, Landlord may, at its option, make a partial draw on
the Letter of Credit in an amount not to exceed the amount of Tenant's monetary
obligations under this Lease then past due. If Landlord then applies the
proceeds from such partial draw on the Letter of Credit to payment of all or any
portion of Tenant's monetary obligations then past due, Tenant shall, within 10
days after notice from Landlord of such partial draw and payment, cause the
amount of the Letter of Credit to be reinstated to the amount in effect prior to
such partial draw. Tenant's failure to comply with the requirements of this
section shall be an immediate Event of Default under the Loan Documents without
any notice (other than as provided for in this section), cure or grace
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period. Landlord's rights under this ss.20.4 are in addition to, and not in
limitation of, Landlord's rights under ss.20.3.
20.5 SUBSTITUTE LETTER OF CREDIT. Tenant may, from time to time,
deliver to Landlord a substitute Letter of Credit meeting the requirements of
this Agreement and issued by an Issuer acceptable to Landlord. Upon Landlord's
approval of the substitute Letter of Credit, Landlord shall release the previous
Letter of Credit to the Tenant.
20.6 REDUCTION IN LETTER OF CREDIT AMOUNT. The amount of the Letter
of Credit may be reduced by Tenant from 5% of the Maximum Lease Amount to 2.5%
of the Maximum Lease Amount after all of the following conditions have been met:
[i] the Earnout Conditions have been satisfied; and [ii] no Event of Default has
occurred and is continuing under this Lease.
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL CERTIFICATES
21.1 QUIET ENJOYMENT. So long as Tenant performs all of its
obligations under this Lease, Tenant's possession of the Leased Property will
not be disturbed by Landlord.
21.2 SUBORDINATION. Subject to the terms and conditions of this
section, this Lease and Tenant's rights under this Lease are subordinate to any
ground lease or underlying lease, first mortgage, first deed of trust, or other
first lien against the Leased Property, together with any renewal,
consolidation, extension, modification or replacement thereof, which now or at
any subsequent time affects the Leased Property or any interest of Landlord in
the Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior. The foregoing subordination provision is
expressly conditioned upon any lessor or mortgagee being obligated and bound to
recognize Tenant as the tenant under this Lease, and such lessor or mortgagee
shall have no right to disturb Tenant's possession, use and occupancy of the
Leased Property or Tenant's enjoyment of its rights under this Lease unless and
until an Event of Default occurs hereunder. Any foreclosure action or proceeding
by any mortgagee with respect to the Leased Property shall not affect Tenant's
rights under this Lease and shall not terminate this Lease unless and until an
Event of Default occurs hereunder. The foregoing provisions will be
self-operative, and no further instrument will be required in order to effect
them. However, Tenant shall execute, acknowledge and deliver to Landlord, at any
time and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this section, to confirm or effect any such
subordination, provided that any such document shall include a non-disturbance
provision as set forth in this section satisfactory to Tenant. Any mortgagee of
the Leased Property shall be deemed to be bound by the non-disturbance provision
set forth in this section. If Tenant fails or refuses to execute, acknowledge,
and deliver any such document within 20 days after written demand, Landlord may
execute acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
section. This power of attorney is coupled with an interest and is irrevocable.
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21.3 ATTORNMENT. If any holder of any mortgage, indenture, deed of
trust, or other similar instrument described in ss.21.2 succeeds to Landlord's
interest in the Leased Property, Tenant will pay to such holder all Rent
subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The successor
in interest will not be bound by [i] any payment of Rent for more than one month
in advance; [ii] any amendment or modification of this Lease thereafter made
without its consent as provided in this Lease; [iii] any claim against Landlord
arising prior to the date on which the successor succeeded to Landlord's
interest; or [iv] any claim or offset of Rent against the Landlord. Upon request
by Landlord or such successor in interest and without cost to Landlord or such
successor in interest, Tenant will execute, acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge, and deliver any such instrument within 30 days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.
21.4 ESTOPPEL CERTIFICATES. At the request of Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Landlord or any mortgagee or purchaser of the Leased Property certifying, to
Tenant's knowledge, the following: [i] that the Lease is unmodified and in full
force and effect, or if there have been modifications that the same is in full
force and effect as modified and stating the modifications; [ii] the date to
which Rent and other charges have been paid; [iii] whether Tenant or Landlord is
in default or whether there is any fact or condition which, with notice or lapse
of time, or both, would constitute a default, and specifying any existing
default, if any; [iv] that Tenant has accepted and occupies the Leased Property;
[v] that Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord, if that be the case, or specifying such that exist; and [vi]
such other information as may reasonably be requested by Landlord or any
mortgagee or purchaser. Any purchaser or mortgagee may rely on this estoppel
certificate. If Tenant fails to deliver the estoppel certificates to Landlord
within 20 days after the request of the Landlord, then Tenant shall be deemed to
have certified that to Tenant's knowledge [a] the Lease is in full force and
effect and has not been modified, or that the Lease has been modified as set
forth in the certificate delivered to Tenant; [b] Tenant has not prepaid any
Rent or other charges except for the current month; [c] Tenant has accepted and
occupies the Leased Property; [d] neither Tenant nor Landlord is in default nor
is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; and [e] Tenant has no defenses, set-offs,
deductions, credits, or counterclaims against Landlord. Tenant hereby
irrevocably appoints Landlord as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on Tenant's behalf any estoppel certificate to which
Tenant does not object within 20 days after Landlord sends the certificate to
Tenant. This power of attorney is coupled with an interest and is irrevocable.
This power of attorney is coupled with an interest and is irrevocable. At the
request of Tenant, Landlord shall execute, acknowledge, and deliver an
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estoppel certificate, in recordable form, in favor of Tenant certifying, to
Landlord's knowledge, the following: [i] that the Lease is unmodified and in
full force and effect, or if there have been modifications that the same is in
full force and effect as modified and stating the modifications; [ii] the date
to which Rent and other charges have been received by Landlord; [iii] whether
Tenant or Landlord is in default or whether there is any fact or condition
which, with notice or lapse of time, or both, would constitute a default, and
specifying any existing default, if any; [iv] that Landlord has no defenses,
set-offs, deductions, credits, or counterclaims against Tenant, if that be the
case, or specifying such that exist; and [vi] such other information as may
reasonably be requested by Tenant. If Landlord fails to deliver the estoppel
certificate to Tenant within 20 days after the request of the Tenant, then
Landlord shall be deemed to have certified that to Landlord's knowledge, [a] the
Lease is in full force and effect and has not been modified, or that the Lease
has been modified as set forth in the certificate delivered to Landlord; [b]
Landlord has not received any prepaid Rent or other charges except for the
current month; [c] neither Tenant nor Landlord is in default nor is there any
fact or condition which, with notice or lapse of time, or both, would constitute
a default; and [d] Landlord has no defenses, set-offs, deductions, credits, or
counterclaims against Tenant. Landlord hereby irrevocably appoints Tenant as
Landlord's attorney-in-fact to execute, acknowledge, and deliver on Landlord's
behalf any estoppel certificate to which Landlord does not object within 20 days
after Tenant sends the certificate to Landlord. This power of attorney is
coupled with an interest and is irrevocable.
ARTICLE 22: REPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and warranties, as
of the Effective 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 Closing and, except to the
extent made as of a specific date, shall continue in full force and effect until
Tenant's Obligations have been performed in full.
22.1 ORGANIZATION AND GOOD STANDING. Tenant is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in and is in good standing under the
laws of the State.
22.2 POWER AND AUTHORITY. Tenant has the power and authority to
execute, deliver and perform this Lease. Tenant has taken all requisite action
necessary to authorize the execution, delivery and performance of Tenant's
obligations under this Lease.
22.3 ENFORCEABILITY. This Lease constitutes a legal, valid, and
binding obligation of Tenant enforceable in accordance with its terms.
22.4 GOVERNMENT AUTHORIZATIONS. The Facility is in compliance in
all material respects with all Legal Requirements. All Government Authorizations
are in full force and effect. Except as otherwise noted in Exhibit E, Tenant
holds all Government Authorizations necessary for the operation of the Facility
as a 36-unit (66-bed) skilled nursing facility. Seller presently holds all
Government Authorizations necessary for the Facility's operation as a 36-unit
(66-bed) skilled nursing facility. Upon the Closing, Tenant will be authorized
to operate the Facility as a 36-unit (66-bed) skilled nursing facility until a
license to operate the
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Facility is issued to Tenant. Tenant has filed all applications and reports and
taken all necessary action to obtain all Government Authorizations as soon as
possible after the Effective Date, subject to governmental approval, and Tenant
has no knowledge of any fact or circumstance that would prevent or delay
Tenant's obtaining of such Government Authorizations.
22.5 FINANCIAL STATEMENTS. Tenant has furnished Landlord with true,
correct, and complete copies of the Financial Statements. The Financial
Statements fairly present the financial position of Tenant and Guarantor as
applicable, as of the respective dates and the results of operations for the
periods then ended in conformance with generally accepted accounting principles
applied on a basis consistent with prior periods. The Financial Statements and
other information furnished to Landlord are true, complete and correct and, as
of the Effective Date, no material adverse change has occurred since the
furnishing of such statements and information. As of the Effective Date, the
Financial Statements and other information do not contain any untrue statement
or omission of a material fact and are not misleading in any material respect.
Tenant and Guarantor are solvent, and no bankruptcy, insolvency, or similar
proceeding is pending or contemplated by or, to the knowledge of Tenant, against
Tenant or Guarantor.
22.6 CONDITION OF FACILITY. To Tenant's knowledge, all of the
mechanical and electrical systems, heating and air-conditioning systems,
plumbing, water and sewer systems, and all other items of mechanical equipment
or appliances are in good working order, condition and repair, are of sufficient
size and capacity to service the Facility for the Facility Uses and conform with
all applicable ordinances and regulations, and with all building, zoning, fire,
safety, and other codes, laws and orders. The Improvements, including the roof
and foundation, are structurally sound and free from leaks and other defects.
22.7 COMPLIANCE WITH LAWS. To Tenant's knowledge, there is no
violation of, or noncompliance with, [i] any laws, orders, rules or regulations,
ordinances or codes of any kind or nature whatsoever relating to the Facility or
the ownership or operation thereof (including without limitation, building,
fire, health, occupational safety and health, zoning and land use, planning and
environmental laws, orders, rules and regulations); [ii] any covenants,
conditions, restrictions or agreements affecting or relating to the ownership,
use or occupancy of the Facility; or [iii] any order, writ, regulation or decree
relating to any matter referred to in [i] or [ii] above.
22.8 NO LITIGATION. As of the Effective Date and except as
disclosed on Exhibit F, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending against
Tenant, Guarantor or the Facility; [ii] Tenant has not received notice of any
threatened actions, suits, proceedings or investigations against Tenant,
Guarantor or the Facility at law or in equity, or before any governmental board,
agency or authority which, if determined adversely to Tenant or Guarantor, would
materially and adversely affect the Facility or title to the Facility (or any
part thereof), the right to operate the Facility as presently operated, or the
financial condition of Tenant or Guarantor; [iii] there are no unsatisfied or
outstanding judgments against Tenant, Guarantor or the Facility; [iv] there is
no labor dispute materially and adversely affecting the operation or business
conducted by Tenant,
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Guarantor, or the Facility; and [v] Tenant does not have knowledge of any facts
or circumstances which might reasonably form the basis for any such action,
suit, or proceeding.
22.9 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 federal,
state, or local governmental or regulatory authority, or any other person or
entity, the absence of which would materially impair the ability of Tenant to
operate the Facility for the Facility Uses except for the post-acquisition
filing for licensure of the Facility.
22.10 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 Tenant's Organizational Documents; [ii] do not and will not conflict
with, and do not and will not result in a breach of, and do not and will not
constitute a default under (or an event which, with or without notice or lapse
of time, or both, would constitute a default under), any of the terms,
conditions or provisions of any agreement or other instrument or obligation to
which Tenant is a party or by which its assets are bound; and [iii] do not and
will not violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Tenant or the Facility.
22.11 REPORTS AND STATEMENTS. All reports, statements, certificates
and other data furnished by or on behalf of Tenant or 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 and
therewith, are true and correct in all material respects and 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. The copies of all agreements and instruments submitted to Landlord,
including, without limitation, all agreements relating to management of the
Facility, the Letter of Credit, and Tenant's working capital are true, correct
and complete copies and include all amendments and modifications of such
agreements.
22.12 ERISA. All plans (as defined in ss.4021(a) of the Employee
Retirement Income Security Act of 1974, as amended or supplemented from time to
time ("ERISA")) for which Tenant is an "employer" or a "substantial employer"
(as defined in ss.ss.3(5) and 4001(a)(2) of ERISA, respectively) are in
compliance with ERISA and the regulations and published interpretations
thereunder. To the extent Tenant maintains a qualified defined benefit pension
plan: [i] there exists no accumulated funding deficiency; [ii] no reportable
event and no prohibited transaction has occurred; [iii] no lien has been filed
or threatened to be filed by the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA; and [iv] Tenant has not
been deemed to be a substantial employer.
22.13 CHIEF EXECUTIVE OFFICE. Tenant maintains its chief executive
office and its books and records at the address set forth in the introductory
paragraph of this Agreement. Tenant does not conduct any of its business or
operations other than at its chief executive office and at the Facility.
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22.14 OTHER NAME OR ENTITIES. Except as disclosed herein, none of
Tenant's business is conducted through any corporate subsidiary, unincorporated
association or other entity and Tenant has not, within the six years preceding
the date of this Agreement [i] changed its name, [ii] used any name other than
the name stated at the beginning of this agreement, or [iii] merged or
consolidated with, or acquired any of the assets of, any corporation or other
business except for the acquisition of assets from Gethsemane Retirement
Community and Rehabilitation Center, Inc. in 1997.
22.15 PARTIES IN POSSESSION. Except as disclosed on Exhibit B and
except for residents of the Facility, there are no parties in possession of any
Leased Property or any portion thereof as managers, lessees, tenants at
sufferance, or trespassers.
22.16 ACCESS. Except as disclosed in writing to Landlord, access to
the Land is directly from a dedicated public right-of-way without any easement.
To the knowledge of Tenant, there is no fact or condition which would result in
the termination or reduction of the current access to and from the Land to such
right of way.
22.17 UTILITIES. There are available at the Land gas, municipal
water, and sanitary sewer lines, storm sewers, electrical and telephone services
in operating condition which are adequate for the operation of the Facility at a
reasonable cost. Except as disclosed in writing to Landlord, the Land has direct
access to utility lines located in a dedicated public right-of-way without any
easement. As of the Effective Date, there is no pending or, to the knowledge of
Tenant, threatened governmental or third party proceeding which would impair or
result in the termination of such utility availability.
22.18 CONDEMNATION AND ASSESSMENTS. As of the Effective Date,
except as disclosed in writing to Landlord, Tenant has not received notice of,
and there are no pending or, to Tenant's knowledge, threatened, condemnation,
assessment or similar proceedings affecting or relating to the Facility, or any
portion thereof, or any utilities, sewers, roadways or other public improvements
serving the Facility.
22.19 ZONING. As of the Effective Date, [i] the use and operation
of the Facility for the Facility Uses is permitted under the applicable zoning
code; [ii] except as disclosed on Exhibit E hereto, no special use permits,
conditional use permits, variances, or exceptions have been granted or are
needed for such use of the Facility; [iii] the Land is not located in any
special districts such as historical districts or overlay districts; and [iv]
except as disclosed in writing to the Landlord, the Facility has been
constructed in accordance with and complies with all applicable zoning laws,
including but not limited to, dimensional, parking, setback, screening,
landscaping, sign and curb cut requirements. As disclosed on Exhibit E, Tenant
needs to obtain modification of the zoning Decree (as defined in Exhibit E) to
provide for a 66-bed nursing home, as opposed to a 60-bed nursing home
("Modified Decree"). If and when Tenant obtains the Modified Decree and provided
that no Event of Default has occurred and is continuing, Landlord shall make an
additional Lease Advance of $367,000.00 to Tenant. Landlord acknowledges that as
of the Effective Date, Tenant has provided a Letter of Credit and a title policy
and paid a Commitment Fee based on a Lease Amount that includes the Lease
Advance of
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$367,000.00. Landlord agrees that if Tenant is unable to obtain the Modified
Decree, Tenant may reduce the amount of the Letter of Credit to $195,900.00 and
the amount of the title policy to $3,918,000.00, and Landlord shall credit
Tenant the amount of $3,670.00 for reduction of the Commitment Fee.
22.20 PRO FORMA STATEMENT. Tenant has delivered to Landlord a true,
correct and complete copy of the Pro Forma Statement. The Pro Forma Statement
shows Tenant's reasonable expectation of the most likely results of Facility
operations for the next 5 year period.
22.21 ENVIRONMENTAL MATTERS. During the period of Tenant's
ownership or possession of the Leased Property and, to Tenant's knowledge after
diligent inquiry, for the period prior to Tenant's ownership or possession of
the Leased Property, [i] the Leased Property is in compliance with all
Environmental Laws; [ii] there were no releases or threatened releases of
Hazardous Materials on, from, or under the Leased Property, except in compliance
with all Environmental Laws; [iii] no Hazardous Materials have been, are or will
be used, generated, stored, or disposed of at the Leased Property, except in
compliance with all Environmental Laws; [iv] asbestos has not been and will not
be used in the construction of any Improvements; [v] no permit is or has been
required from the Environmental Protection Agency or any similar agency or
department of any state or local government for the use or maintenance of any
Improvements; [vi] underground storage tanks on or under the Land, if any, have
been and currently are being operated in compliance with all applicable
Environmental Laws; [vii] any closure, abandonment in place or removal of an
underground storage tank on or from the Land was performed in compliance with
applicable Environmental Laws and any such tank had no release contaminating the
Leased Property or, if there had been a release, the release was remediated in
compliance with applicable Environmental Laws to the satisfaction of regulatory
authorities; [viii] no summons, citation or inquiry has been made by any such
environmental unit, body or agency or a third party demanding any right of
recovery for payment or reimbursement for costs incurred under CERCLA or any
other Environmental Laws and the Land is not subject to the lien of any such
agency; and [ix] to the best of Tenant's knowledge, the Environmental Assessment
is true, complete and accurate. "Disposal" and "release" shall have the meanings
set forth in CERCLA.
22.22 LEASES AND CONTRACTS. As of the Effective Date and except
as disclosed on Exhibit G, there are no leases or contracts (including but not
limited to, insurance contracts, maintenance contracts, construction contracts,
employee benefit plans, employment contracts, equipment leases, security
agreements, architect agreements, and management contracts) to which Tenant or
Guarantor is a party relating to any part of the ownership, operation,
possession, construction, management or administration of the Land or the
Facility.
22.23 NO DEFAULT. As of the Effective Date, [i] there is no
existing Event of Default under this Lease; and [ii] no event has occurred
which, with the giving of notice or the passage of time, or both, would
constitute or result in such an Event of Default.
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ARTICLE 23: FUTURE PROJECTS; COTERMINOUS FINANCINGS
23.1 PROJECT SUBMISSIONS. If Tenant, Guarantor or any Affiliate
chooses to submit certain future acquisition and development projects to
Landlord as provided in the Commitment, Tenant, Guarantor or any Affiliate shall
comply with the terms of the Commitment.
23.2 COTERMINOUS FINANCINGS. All Phase Leases will be coterminous
and will have identical renewal dates and option exercise periods. Accordingly,
as each Phase Lease is closed, the current Term, Expiration Date, Renewal Date
and option exercise periods under this Lease will be extended to be coterminous
with the most recently closed Phase Lease.
ARTICLE 24: SECURITY INTEREST
24.1 Collateral. Tenant hereby grants to Landlord a security
interest in the following described property, whether now owned or hereafter
acquired by Tenant (the "Collateral"), to secure the payment and performance of
Tenant's Obligations:
(a) All machinery, furniture, equipment, trade fixtures,
appliances, inventory and all other goods (as "equipment," "inventory" and
"goods" are defined for purposes of Article 9 ("Article 9") of the Uniform
Commercial Code as adopted in the State) and any leasehold interest of Tenant in
any of the foregoing, now or hereafter located in or on or used or usable in
connection with the Land, Improvements, or Fixtures and replacements, additions,
and accessions thereto, including without limitation those items which are to
become fixtures or which are building supplies and materials to be incorporated
into an Improvement or Fixture.
(b) All accounts, contract rights, general intangibles,
instruments, documents, and chattel paper [as "accounts", "contract rights",
"general intangibles", "instruments", "documents", and "chattel paper", are
defined for purposes of Article 9] now or hereafter arising in connection with
the business located in or on or used or usable in connection with the Land,
Improvements, or Fixtures, and replacements, additions, and accessions thereto.
(c) All franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and other general
intangibles regarding the use, occupancy or operation of the Improvements, or
any part thereof, including without limitation, certificates of need, state
health care facility licenses, and Medicare and Medicaid provider agreements, to
the extent permitted by law.
(d) Unless expressly prohibited by the terms thereof, all
contracts, agreements, contract rights and materials relating to the design,
construction, operation or management of the Improvements, including but not
limited to, plans, specifications, drawings, blueprints, models, mock-ups,
brochures, flyers, advertising and promotional materials and mailing lists.
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(e) All ledger sheets, files, records, computer programs,
tapes, other electronic data processing materials, and other documentation
relating to the preceding listed property or otherwise used or usable in
connection with the Land and Improvements.
(f) The products and proceeds of the preceding listed
property, including without limitation cash and non-cash proceeds, proceeds of
proceeds, and insurance proceeds.
24.2 ADDITIONAL DOCUMENTS. At the request of Landlord, Tenant shall
execute additional security agreements, financing statements, and such other
documents as may be requested by Landlord to maintain and perfect such security
interest.
24.3 NOTICE OF SALE. With respect to any sale or other disposition
of any of the Collateral after the occurrence of an Event of Default, Landlord
and Tenant agree that the giving of 5 days notice by Landlord, sent by overnight
delivery, postage prepaid, to Tenant's notice address designating the time and
place of any public sale or the time after which any private sale or other
intended disposition of such Collateral is to be made, shall be deemed to be
reasonable notice thereof and Tenant waives any other notice with respect
thereto.
24.4 PLEDGE OF ACCOUNTS TO OTHERS. Notwithstanding any provision to
the contrary contained herein or in the other Lease Documents, Tenant shall be
permitted to pledge to a lender providing one or more loans to Guarantor all
accounts and receivables from the Facility on a first priority lien basis, in
which case Landlord shall execute and deliver to such lender a subordination or
similar agreement in which [i] Landlord agrees to subordinate its security
interest in such accounts and receivables to such lender; and [ii] Landlord
agrees to such further provisions as may be reasonably required by the lender
and acceptable to Landlord. Landlord's obligation to provide the subordination
is subject to [i] Landlord's receipt and reasonable approval of all financing
documents; [ii] execution by Landlord and the lender of an intercreditor
agreement on reasonable terms acceptable to Landlord, and [iii] Tenant's payment
of all costs and expenses incurred by Landlord in connection with the
subordination including, without limitation, reasonable attorney's fees and
expenses.
ARTICLE 25: MISCELLANEOUS
25.1 NOTICES. Landlord and Tenant hereby agree that all notices,
demands, requests, and consents (hereinafter "notices") required to be given
pursuant to the terms of this Lease shall be in writing, shall be addressed to
the addresses set forth in the introductory paragraph of this Lease, and shall
be served by [i] personal delivery; [ii] certified mail, return receipt
requested, postage prepaid; or [iii] nationally recognized overnight courier.
All notices shall be deemed to be given upon the earlier of actual receipt or 3
days after mailing, or one business day after deposit with the overnight
courier. Any notices meeting the requirements of this section shall be
effective, regardless of whether or not actually received. Landlord or Tenant
may change its notice address at any time by giving the other party notice of
such change.
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25.2 ADVERTISEMENT OF LEASED PROPERTY. In the event the parties
hereto have not executed a renewal Lease within 120 days prior to the expiration
of this Lease, or Tenant has not exercised its Option to Purchase, then Landlord
or its agent shall have the right to enter the Leased Property at all reasonable
times for the purpose of exhibiting the Leased Property to others and to place
upon the Leased Property for and during the period commencing 120 days prior to
the expiration of this Lease, "for sale" or "for rent" notices or signs.
25.3 ENTIRE AGREEMENT. This Lease contains the entire agreement
between Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord except as
set forth in this Lease.
25.4 SEVERABILITY. If any term or provision of this Lease is held
or deemed by Landlord to be invalid or unenforceable, such holding shall not
affect the remainder of this Lease and the same shall remain in full force and
effect, unless such holding substantially deprives Tenant of the use of the
Leased Property or Landlord of the rents herein reserved, in which event this
Lease shall forthwith terminate as if by expiration of the Term.
25.5 CAPTIONS AND HEADINGS. The captions and headings are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Lease or the intent of any provision hereof.
25.6 GOVERNING LAW. This Lease shall be construed under the laws
of the State.
25.7 MEMORANDUM OF LEASE. Tenant shall not record this Lease.
Tenant may, however, record a memorandum of lease approved by Landlord, in its
reasonable discretion.
25.8 WAIVER. No waiver by Landlord 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 any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.
25.9 BINDING EFFECT. This Lease will be binding upon and inure to
the benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
25.10 POWER OF ATTORNEY. Effective upon [i] the occurrence and
during the continuance of an Event of Default, or [ii] termination of this Lease
for any reason other than Tenant's purchase of the Leased Property, Tenant
hereby irrevocably and unconditionally appoints Landlord, or Landlord's
authorized officer, agent, employee or designee, as Tenant's true and lawful
attorney-in-fact, to act for Tenant in Tenant's name, place, and stead, to
execute, deliver and file all applications and any and all other necessary
documents and statements to effect the issuance, transfer, reinstatement,
renewal and/or extension of the Facility license and
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all Governmental Authorizations issued to Tenant or applied for by Tenant in
connection with Tenant's operation of the Facility, to permit any designee of
Landlord or any other transferee to operate the Facility under the Governmental
Authorizations, and to do any and all other acts incidental to any of the
foregoing. Tenant irrevocably and unconditionally grants to Landlord as its
attorney-in-fact full power and authority to do and perform every act necessary
and proper to be done in the exercise of any of the foregoing powers as fully as
Tenant might or could do if personally present or acting, with full power of
substitution, hereby ratifying and confirming all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and is irrevocable prior to Tenant's purchase of the
Leased Property. Except in the case of an emergency, Landlord shall give Tenant
three business days prior written notice before acting on behalf of Tenant
pursuant to this power of attorney.
25.11 NO OFFER. Landlord's submission of this Lease to Tenant is
not an offer to lease the Leased Property, or an agreement by Landlord to
reserve the Leased Property for Tenant. Landlord will not be bound to Tenant
until Tenant has duly executed and delivered duplicate original leases to
Landlord, and Landlord has duly executed and delivered one of these duplicate
original leases to Tenant.
25.12 MODIFICATION. This Lease may only be modified by a writing
signed by both Landlord and Tenant. All references to this Lease, whether in
this Lease or in any other document or instrument, shall be deemed to
incorporate all amendments, modifications and renewals of this Lease, made after
the date hereof. If Tenant requests Landlord's consent to any change in
ownership, merger or consolidation of Tenant or Guarantor, any assumption of the
Lease, or any modification of the Lease, Tenant shall provide Landlord all
relevant information and documents sufficient to enable Landlord to evaluate the
request. In connection with any such request, Tenant shall pay to Landlord a fee
in the amount of $2,500.00 and shall pay all of Landlord's reasonable attorney's
fees and expenses and other reasonable out-of-pocket expenses incurred in
connection with Landlord's evaluation of Tenant's request, the preparation of
any documents and amendments, the subsequent amendment of any documents between
Landlord and its collateral pool lenders (if applicable), and all related
matters.
25.13 LANDLORD'S MODIFICATION. Tenant acknowledges that Landlord
may, subject to Article 21, mortgage the Leased Property or use the Leased
Property as collateral for a collateralized mortgage obligations or Real Estate
Mortgage Investment Companies (REMICS). If any mortgage lender of Landlord
desires any modification of this Lease, Tenant agrees to consider such
modification in good faith and to execute an amendment of this Lease if Tenant
finds such modification acceptable.
25.14 NO MERGER. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of the Leased
Property.
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25.15 LACHES. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
25.16 LIMITATION ON TENANT'S RECOURSE. Tenant's sole recourse
against Landlord, and any successor to the interest of Landlord in the Leased
Property, is to the interest of Landlord, and any such successor, in the Leased
Property. Tenant will not have any right to satisfy any judgment which it may
have against the Landlord, or any such successor, from any other assets of
Landlord, or any such successor. In this section, the terms "Landlord" and
"successor" include the shareholders, venturers, and partners of "Landlord" and
"successor" and the officers, directors, and employees of the same. The
provisions of this section are not intended to limit Tenant's right to seek
injunctive relief or specific performance.
25.17 CONSTRUCTION OF LEASE. This Lease has been prepared by
Landlord and its professional advisors and reviewed by Tenant and its
professional advisors. Landlord, Tenant, and their advisors believe that this
Lease is the product of all their efforts, that it expresses their agreement,
and agree that it shall not be interpreted in favor of either Landlord or Tenant
or against either Landlord or Tenant merely because of their efforts in
preparing it.
25.18 COUNTERPARTS. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
25.19 LEASE GUARANTY. The payment of Rent and the performance of
Tenant's obligations under this Lease are guaranteed by Guarantor pursuant to a
Lease Guaranty of even date.
25.20 CUSTODY OF ESCROW FUNDS. Any funds paid to Landlord in
escrow hereunder may be held by Landlord or, at Landlord's election, by a
financial institution, the deposits or accounts of which are insured or
guaranteed by a federal or state agency. The funds shall not be deemed to be
held in trust, may be commingled with the general funds of Landlord or such
other institution, and shall not bear interest.
25.21 LANDLORD'S STATUS AS A REIT. Tenant acknowledges that
Landlord (or a Landlord Affiliate) has now and may hereafter elect to be taxed
as a real estate investment trust ("REIT") under the Internal Revenue Code.
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25.22 EXHIBITS. The following exhibits are attached hereto and
incorporated herein:
Exhibit A: Legal Description
Exhibit A-1: Personal Property
Exhibit B: Permitted Exceptions
Exhibit C: Documents to be Delivered
Exhibit D: Certificate and Facility Financial Reports
Exhibit E: Government Authorizations to be Obtained;
Zoning Permits
Exhibit F: Pending Litigation
Exhibit G: List of Leases and Contracts
25.23 WAIVER OF JURY TRIAL. LANDLORD AND TENANT WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY ONE EITHER OF THEM
AGAINST ONE OR BOTH OF THE OTHERS ON ALL MATTERS ARISING OUT OF THIS LEASE OR
THE USE AND OCCUPANCY OF THE LEASED PROPERTY (EXCEPT CLAIMS FOR PERSONAL INJURY
OR PROPERTY DAMAGE). IF LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT
OF RENT, TENANT WILL NOT INTERPOSE, AND WAIVES THE RIGHT TO INTERPOSE, ANY
COUNTERCLAIM IN ANY SUCH PROCEEDING.
25.24 CONSENT TO JURISDICTION. TENANT HEREBY IRREVOCABLY SUBMITS
AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR COLUMBIA COUNTY,
PENNSYLVANIA FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO [I] THE COMMITMENT; [II] THIS LEASE; OR [III] ANY
DOCUMENT EXECUTED BY TENANT IN CONNECTION WITH THIS LEASE. TENANT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT TENANT MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING. TENANT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
TENANT AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF
LANDLORD, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT,
THIS LEASE OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR COLUMBIA COUNTY,
PENNSYLVANIA.
TENANT HEREBY CONSENTS TO SERVICE OF PROCESS BY LANDLORD IN ANY
MANNER AND IN ANY JURISDICTION PERMITTED BY LAW.
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NOTHING HEREIN SHALL AFFECT OR IMPAIR LANDLORD'S RIGHT TO SERVE LEGAL PROCESS IN
ANY MANNER PERMITTED BY LAW, OR LANDLORD'S RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST TENANT OR THE PROPERTY OF TENANT IN THE COURTS OF ANY OTHER
JURISDICTION.
25.25 ATTORNEY'S FEES AND EXPENSES. Tenant shall pay to Landlord
all reasonable costs and expenses incurred by Landlord in administering this
Lease and the security for this Lease, enforcing or preserving Landlord's rights
under this Lease and the security for this Lease, and in all matters of
collection, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including but not limited to, [a] reasonable
attorney's and paralegal's fees and disbursements; [b] the fees and expenses of
any litigation, administrative, bankruptcy, insolvency, receivership and any
other similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
consulting and witness fees incurred by Landlord in connection with any
litigation or other proceeding.
25.26 SURVIVAL. The following provisions shall survive termination
of the Lease: Article 9 (Damage and Destruction), Article 10 (Condemnation);
Article 16 (Alterations); and ss.25.26 (Survival).
25.27 ACCESS TO RECORDS. To the extent required by law, Landlord
shall (and, if Landlord carries out any of the duties under this Lease, whether
on Landlord's or Tenant's behalf, through a subcontract with a related
organization and such subcontract has a value or cost of Ten Thousand Dollars
($10,000) or more during any twelve (12) month period, such subcontract shall
contain a clause to the effect that the subcontractor shall) until the
expiration of four (4) years after the furnishing of services pursuant to this
Lease, make available, upon request by the Secretary of Health and Human
Services or upon the request by the U.S. Comptroller General, or any duly
authorized representative of either of them, the books, documents and records of
Landlord (or such subcontractor) that are necessary to verify the nature and
extent of such costs in connection with said services.
ARTICLE 26: SUBSTITUTION OF LEASED PROPERTY
26.1 RIGHT OF SUBSTITUTION. Subject to the conditions set forth in
this Article 26, Tenant will have the right to substitute one or more comparable
health care facilities (individually and collectively called a "Substitute
Facility") for the Facility ("Existing Facility").
26.2 CONDITIONS TO SUBSTITUTION. The following are the
"Substitution Conditions":
(a) SUBSTITUTION NOTICE. Landlord must receive from Tenant a
written notice ("Substitution Notice") of the intent to exercise the right of
substitution at least 90 days prior to the proposed date of substitution. The
Substitution Notice shall include all material information
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concerning the substitution including, but not limited to, the following: [i]
the reason for the proposed substitution; [ii] the proposed date of the
substitution; [iii] information regarding the proposed Substitute Facility
("Proposed Facility") including name, address, city, state, type, units, beds,
current owner, current operator, historical financial statements, proforma
financial statements, Medicaid and Medicare cost reports, and rate letters; [iv]
copy of acquisition documents, if any; and [v] the proposed Tenant.
(b) COMMITMENT FEE. Tenant shall pay Landlord a commitment
fee in an amount equal to 1% of the acquisition amount for the Substitute
Facility.
(c) NO DEFAULTS. As of the applicable substitution date, no
Event of Default shall have occurred (excluding any default which has been cured
in accordance with the terms of this Lease or which has been waived, in writing,
by Landlord), nor any event which with the giving of notice or the passage of
time or both, would constitute such a default.
(d) ENGINEERING AND INSPECTION REPORTS. Landlord shall have
received engineering and inspection reports relating to the Proposed Facility,
reasonably satisfactory in all respects to Landlord.
(e) MAI APPRAISAL. Tenant shall have delivered to Landlord an
MAI appraisal of the Proposed Facility prepared by an appraiser selected by
Tenant and approved by Landlord, in form and substance reasonably satisfactory
to Landlord.
(f) SURVEY. Tenant shall have delivered to Landlord an ALTA
survey of the premises upon which the Proposed Facility is located acceptable to
Landlord and the Title Company.
(g) COMPLIANCE WITH LAWS. Landlord shall be satisfied as to
compliance with [i] all applicable land use, zoning, subdivision and
environmental laws and regulations, [ii] all applicable health care licensure
laws and regulations and [iii] such other matters as Landlord reasonably deems
relevant (including, without limitation, whether the conveyance of the Proposed
Facility to Landlord may be avoided under the Bankruptcy Code).
(h) TITLE COMMITMENT. Tenant shall have delivered to Landlord
a valid and binding owner's title insurance commitment issued by Lawyers Title
Insurance Corporation through its agent, Saunie Risinger in Mansfield, Ohio
("Title Company"), in an amount equal to the acquisition amount for the Proposed
Facility, with such endorsements and affirmative coverages, and in such form, as
Landlord may reasonably require insuring Landlord's fee title to the Proposed
Facility, subject to no encumbrances except those approved or assumed by
Landlord. Arrangements satisfactory to Landlord shall have been made for the
issuance of a title insurance policy as of the substitution closing date.
(i) ENVIRONMENTAL ASSESSMENT. Tenant shall have delivered an
environmental site assessment report for the Proposed Facility, in form and
substance reasonably
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acceptable to Landlord and prepared by an environmental consultant reasonably
acceptable to Landlord.
(j) TAX OPINION. Landlord shall have obtained, at Tenant's
cost, an opinion of Landlord's counsel, in form and substance acceptable to
Landlord, confirming that [i] the substitution of the Proposed Facility for the
Existing Facility will qualify as an exchange solely of property of a like-kind
under Section 1031 of the Internal Revenue Code ("Code"), in which, generally,
except for "boot" such as cash needed to equalize values or discharge
indebtedness, no gain or loss is recognized to Landlord; [ii] the substitution
or sale will not result in ordinary recapture income to Landlord pursuant to
Code Section 1250(d)(4) or any other Code provision; [iii] the substitution or
sale will result in income, if any, to Landlord of a type described in Code
Section 856(c)(2) or (3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6); and [iv] the substitution or sale, together with all other
substitutions and sales made or requested by Tenant, pursuant to any other
leases with Landlord or a Landlord Affiliate during the relevant time period,
will not jeopardize the qualification of Landlord as a real estate investment
trust under Code Section 856-860.
(k) LEGAL OPINION. Landlord shall have received opinions of
Tenant's counsel as to [i] the compliance of the Proposed Facility with land
use, zoning, subdivision and environmental laws and regulations; [ii] the
compliance of Tenant, the proposed substitution and the Proposed Facility with
applicable health care laws and regulations; [iii] the due authorization,
execution and enforceability of the Substitution Documents; and [iv] such other
matters are reasonably requested, in form and substance reasonably acceptable to
Landlord.
(l) SUBSTITUTION DOCUMENTS. Tenant and Guarantor shall have
executed and delivered, or caused to be executed and delivered, such documents
as are reasonably required by Landlord to effectuate the substitution
(collectively, the "Substitution Documents"), including, without limitation, [i]
a deed and bill of sale with full warranties (or such other deed form as is
customary in such geographic area) conveying to Landlord title to the Proposed
Facility free and clear of all liens and encumbrances, except those approved or
assumed by Landlord; [ii] a Lease ("Substitute Lease") duly executed,
acknowledged and delivered by Tenant, containing the same terms and conditions
as are contained in the Lease for the Existing Facility except that [a] the
legal description of the land shall refer to the Proposed Facility, [b] the
acquisition amount for the Proposed Facility shall be an amount equal to the
Lease Amount for the Existing Facility increased or decreased by any adjustments
agreed to by Landlord and Tenant ("Cash Adjustment"), [c] the rent inflation
adjustment (Increaser Rate) under the Substitute Lease in all respects shall
provide Landlord with a substantially equivalent yield at the time of the
substitution to that received from the Existing Facility, taking into account
the Cash Adjustment, if any, and any other relevant factors, and [d] such other
changes therein as may be necessary or appropriate under the circumstances shall
be made; and [iii] UCC financing statements. The Substitution Documents shall be
based upon and contain the same terms and conditions as are set forth in the
Lease Documents in effect prior to the substitution, except that such changes
shall be made as may be necessary or reasonably appropriate under the
circumstances to effectuate the substitution and
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secure the protection and priority of the property and security interests
conveyed and/or granted to Landlord.
(m) OTHER INFORMATION. Without limiting any other provision
contained herein, Tenant shall have delivered to Landlord such other information
and materials relating to Tenant and the Proposed Facility as Landlord may
reasonably request, including, without limitation, leases, receipted bills,
management agreements and other contracts, provider agreements, cost reports,
permits, evidence of legal and actual access to the Proposed Facility, evidence
of the availability and sufficiency of utilities servicing the Proposed
Facility, historical and current operating statements, detailed budgets and
financial statements and Landlord shall have found the same to be satisfactory
in all respects.
(n) TENANT. The Proposed Facility shall be leased by Tenant or
an Affiliate that is acceptable to Landlord; provided, however, that in the
event that the Proposed Facility is leased by any such Affiliate, [i] said
Affiliate shall execute and deliver to Landlord such Substitution Documents as
may be reasonably required by Landlord; and [ii] Landlord shall be provided with
such evidence as it may reasonably require to determine that the conveyance of
the Proposed Facility to Landlord does not constitute a fraudulent conveyance
under applicable federal or state law.
(o) INSURANCE CERTIFICATES. Tenant shall have delivered to
Landlord insurance certificates evidencing compliance with all of the insurance
requirements set forth in this Lease.
(p) RENT. Landlord shall have received all Rent due and
payable under the Existing Lease through the substitution closing date.
(q) VALUATION. The acquisition amount for the Proposed
Facility shall not exceed 90% of the appraised value of the Proposed Facility.
If the equity value of the Existing Facility exceeds the equity value of the
Proposed Facility, then an adjustment will be made in the option price set forth
in the Substitute Lease so that Landlord will receive its bargained-for share of
appreciation in the value of the Existing Facility.
(r) LANDLORD'S APPROVAL. Landlord shall have determined that
the Proposed Facility satisfies all of Landlord's customary due diligence and
underwriting requirements based upon the standards then being applied to similar
customers and facilities.
26.3 CONVEYANCE OF EXISTING FACILITY. Upon satisfaction of the
Substitution Conditions and concurrently with the closing of the substitution
transaction, Landlord will convey the Existing Facility to the respective Tenant
or Tenant's designee by quitclaim deed and quitclaim bill of sale. The date that
the Existing Facility is conveyed by Landlord is referred to herein as the
"Conveyance Date." In the event that [i] Tenant is contractually obligated to
convey the Existing Facility to an unrelated purchaser ("Purchaser") by a
specified closing date ("Contract Date"); [ii] the Substitution Conditions have
not been fully satisfied by the Contract Date; and [iii] Tenant has used its
best efforts to extend the Contract Date, including an offer to pay a reasonable
extension
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fee, but the Contract Date has not been extended to a date by which the
Substitution Conditions are fully satisfied, Tenant shall have the right to
require Landlord to convey the Existing Facility to the Purchaser subject to the
following terms and conditions:
(a) Tenant shall irrevocably identify the Substitute Facility
and notify Landlord thereof within 35 days after the Conveyance Date. Tenant
shall satisfy all Substitution Conditions and cause the Substitute Facility to
be conveyed to Landlord within 180 days after the Conveyance Date.
(b) Tenant acknowledges that Landlord intends to qualify the
sale of the Existing Facility as a like-kind exchange pursuant to Code ss.1031.
Tenant shall cooperate with Landlord in effectuating a qualifying deferred
like-kind exchange and shall require the Purchaser, pursuant to the terms of the
Purchase and Sale Agreement with Purchaser, to so cooperate and to execute all
documents reasonably requested by Landlord to effectuate a qualifying deferred
like-kind exchange.
(c) All proceeds from the sale of the Existing Facility
("Sale Proceeds") shall be deposited with a qualified intermediary specified by
Landlord to facilitate the accomplishment of the deferred like-kind exchange.
Upon conveyance of the Substitute Facility to Landlord, the Sale Proceeds shall
be disbursed for payment of the Substitute Facility purchase price with the
balance, if any, disbursed in accordance with the Cash Adjustment made pursuant
to ss.26.2(l).
(d) To compensate Landlord for the lost Rent during the
period from the Conveyance Date to the date that the Substitute Facility is
conveyed to Landlord ("Deferred Period"), Tenant shall pay to the qualified
intermediary, on a monthly basis, an amount equal to the Base Rent for the
Existing Facility that would otherwise be payable during the Deferred Period.
(e) If Tenant does not comply with the deadlines set forth in
ss.26.3(a), Tenant shall pay Landlord an early termination fee equal to 10% of
the Lease Amount for the Existing Facility that was conveyed by Landlord,
payable within ten days following the missed deadline date.
26.4 EXPENSES. Whether or not any proposed substitution is
consummated, Tenant shall pay all of the out-of-pocket expenses and other costs
incurred or expended by Landlord in connection with any proposed substitution
(collectively the "Substitution Expenses"), including, without limitation,
Landlord's reasonable attorneys' fees and expenses, appraisal costs,
out-of-pocket travel expenses, inspection fees, title insurance premiums and
other title fees, survey expenses, mortgage taxes, transfer, documentary stamp
and other taxes, search charges of any nature, recording, registration and
filing costs, brokers' fees and commissions, if any, escrow fees, fees and
expenses, if any, incurred in qualifying Landlord and maintaining its right to
do business in the state where the Proposed Facility is located, the cost of
obtaining, preparing and recording a release of the Existing Facility from the
lien of any mortgage (other than the amount necessary to payoff such mortgage)
and any other costs expended or incurred by Landlord in connection with the
preparation, documentation and closing of the proposed substitution.
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All Substitution Expenses due and payable at the time of the closing of the
substitution transaction shall be paid by Tenant at closing. Any Substitution
Expenses that are not paid at closing shall be a demand obligation of Tenant to
Landlord and, if not paid within 15 days after demand, shall thereafter (to the
extent permitted by applicable law) bear interest at the Overdue Rate until the
date of payment.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
Signed and acknowledged
in the presence of PENNSYLVANIA BCC PROPERTIES, INC.
Signature By:
------------------------------- --------------------------------
Print Name Title:
------------------------------ ---------------------------
Signature
-------------------------------
Print Name
------------------------------
Signed and acknowledged
in the presence of BALANCED CARE AT BLOOMFIELD II, INC.
Signature By:
------------------------------- ---------------------------------
Print Name Title:
------------------------------ ---------------------------
Signature
-------------------------------
Print Name
------------------------------ Tax I.D. No.:
-----------------------
LEASE AGREEMENT
BETWEEN
PENNSYLVANIA BCC PROPERTIES, INC.
AND
BALANCED CARE AT SAXONBURG, INC.
, 1999
------------
OUTLOOK POINTE COMMONS AT SAXONBURG
SAXONBURG, PENNSYLVANIA
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
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ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS............................ 1
1.1 Leased Property................................................. 1
1.2 Term............................................................ 2
1.3 Definitions..................................................... 2
ARTICLE 2: RENT............................................................. 8
2.1 Base Rent....................................................... 8
2.2 Increase of Lease Rate and Base Rent............................ 8
2.3 Additional Rent................................................. 9
2.4 Place of Payment of Rent........................................ 9
2.5 Net Lease....................................................... 9
2.6 No Termination, Abatement, Etc.................................. 9
2.7 Computational Method............................................ 10
2.8 Commitment Fee.................................................. 10
ARTICLE 3: IMPOSITIONS AND UTILITIES........................................ 10
3.1 Payment of Impositions.......................................... 10
3.2 Definition of Impositions....................................... 11
3.3 Escrow of Impositions........................................... 11
3.4 Utilities....................................................... 11
3.5 Discontinuance of Utilities..................................... 12
3.6 Business Expenses............................................... 12
3.7 Permitted Contests.............................................. 12
ARTICLE 4: INSURANCE........................................................ 13
4.1 Property Insurance.............................................. 13
4.2 Liability Insurance............................................. 14
4.3 Builder's Risk Insurance........................................ 14
4.4 Insurance Requirements.......................................... 15
4.5 Replacement Value............................................... 15
4.6 Blanket Policy.................................................. 16
4.7 No Separate Insurance........................................... 16
4.8 Waiver of Subrogation........................................... 16
4.9 Mortgages....................................................... 16
4.10 Escrows......................................................... 16
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ARTICLE 5: INDEMNITY........................................................ 17
5.1 Tenant's Indemnification........................................ 17
5.2 Environmental Indemnity; Audits................................. 17
5.3 Limitation of Landlord's Liability.............................. 18
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES................................... 19
6.1 Use of Leased Property.......................................... 19
6.2 Acceptance of Leased Property................................... 19
6.3 Conditions of Use and Occupancy................................. 19
ARTICLE 7: REPAIRS AND MECHANICS'LIENS...................................... 19
7.1 Maintenance..................................................... 19
7.2 Required Alterations............................................ 20
7.3 Mechanic's Liens................................................ 20
7.4 Replacements of Fixtures and Personal Property.................. 20
ARTICLE 8: DEFAULTS AND REMEDIES............................................ 21
8.1 Events of Default............................................... 21
8.2 Remedies........................................................ 23
8.3 Right of Set-Off................................................ 25
8.4 Performance of Tenant's Covenants............................... 25
8.5 Late Payment Charge............................................. 25
8.6 Interest........................................................ 25
8.7 Litigation; Attorneys'Fees...................................... 26
8.8 Escrows and Application of Payments............................. 26
8.9 Remedies Cumulative............................................. 26
ARTICLE 9: DAMAGE AND DESTRUCTION........................................... 26
9.1 Notice of Casualty.............................................. 26
9.2 Substantial Destruction......................................... 27
9.3 Partial Destruction............................................. 30
9.4 Restoration..................................................... 30
9.5 Insufficient Proceeds........................................... 30
9.6 Not Trust Funds................................................. 30
9.7 Landlord's Inspection........................................... 30
9.8 Landlord's Costs................................................ 30
9.9 No Rent Abatement............................................... 30
ARTICLE 10: CONDEMNATION.................................................... 31
10.1 Total Taking.................................................... 31
10.2 Partial Taking.................................................. 32
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10.3 Condemnation Proceeds Not Trust Funds........................... 32
ARTICLE 11: TENANT'S PROPERTY............................................... 32
11.1 Tenant's Property............................................... 32
11.2 Requirements for Tenant's Property.............................. 32
ARTICLE 12: RENEWAL OPTIONS................................................. 34
12.1 Renewal Options................................................. 34
12.2 Effect of Renewal............................................... 34
12.3 Effect of Non-Renewal or Expiration of Lease.................... 35
ARTICLE 13: RIGHT OF FIRST REFUSAL.......................................... 35
13.1 Right of First Refusal.......................................... 35
13.2 No Exercise..................................................... 35
ARTICLE 14: NEGATIVE COVENANTS.............................................. 36
14.1 No Debt......................................................... 36
14.2 No Liens........................................................ 36
14.3 No Guaranties................................................... 36
14.4 No Transfer..................................................... 36
14.5 No Dissolution.................................................. 36
14.6 No Change in Management or Operation............................ 36
14.7 No Investments.................................................. 36
14.8 Contracts....................................................... 36
14.9 Subordination of Payments to Affiliates......................... 36
14.10 Change of Location or Name...................................... 36
ARTICLE 15: AFFIRMATIVE COVENANTS........................................... 36
15.1 Perform Obligations............................................. 36
15.2 Proceedings to Enjoin or Prevent Construction................... 36
15.3 Documents and Information....................................... 36
15.4 Compliance With Laws............................................ 39
15.5 Broker's Commission............................................. 39
15.6 Existence and Change in Ownership............................... 39
15.7 Financial Covenants............................................. 39
15.8 Transfer of License............................................. 40
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS.................... 40
16.1 Prohibition on Alterations and Improvements..................... 40
16.2 Approval of Alterations......................................... 41
16.3 Permitted Alterations........................................... 41
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16.4 Requirements for Permitted Alterations.......................... 41
16.5 Ownership and Removal of Permitted Alterations.................. 41
16.6 Signs........................................................... 41
ARTICLE 17: EARNOUT LEASE ADVANCES.......................................... 42
17.1 First Earnout Lease Advance..................................... 42
17.2 Second Earnout Lease Advance.................................... 43
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY.......................... 43
18.1 Prohibition on Assignment and Subletting........................ 43
18.2 Requests for Landlord's Consent to Assignment, Sublease
or Management Agreement......................................... 44
18.3 Agreements with Residents....................................... 44
18.4 Terms Applicable to all Assignments, Subleases or
Management Agreements........................................... 44
18.5 Collateral Assignment........................................... 44
18.6 Effectiveness................................................... 45
18.7 Sale of Leased Property......................................... 45
18.8 Assignment by Landlord.......................................... 45
ARTICLE 19: HOLDOVER AND SURRENDER.......................................... 45
19.1 Holding Over.................................................... 45
19.2 Surrender....................................................... 45
ARTICLE 20: LETTER OF CREDIT................................................ 45
20.1 Terms of Letter of Credit....................................... 45
20.2 Replacement Letter of Credit.................................... 46
20.3 Draws........................................................... 46
20.4 Partial Draws................................................... 47
20.5 Substitute Letter of Credit..................................... 47
20.6 Reduction in Letter of Credit Amount............................ 47
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND
ESTOPPEL CERTIFICATES........................................... 47
21.1 Quiet Enjoyment................................................. 47
21.2 Subordination................................................... 47
21.3 Attornment...................................................... 48
21.4 Estoppel Certificates........................................... 48
ARTICLE 22: REPRESENTATIONS AND WARRANTIES.................................. 49
22.1 Organization and Good Standing.................................. 50
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22.2 Power and Authority............................................. 50
22.3 Enforceability.................................................. 50
22.4 Government Authorizations....................................... 50
22.5 Financial Statements............................................ 50
22.6 Condition of Facility........................................... 50
22.7 Compliance with Laws............................................ 51
22.8 No Litigation................................................... 51
22.9 Consents........................................................ 51
22.10 No Violation.................................................... 51
22.11 Reports and Statements.......................................... 51
22.12 ERISA........................................................... 52
22.13 Chief Executive Office.......................................... 52
22.14 Other Name or Entities.......................................... 52
22.15 Parties in Possession........................................... 52
22.16 Access.......................................................... 52
22.17 Utilities....................................................... 52
22.18 Condemnation and Assessments.................................... 52
22.19 Zoning.......................................................... 53
22.20 Pro Forma Statement............................................. 53
22.21 Environmental Matters........................................... 53
22.22 Leases and Contracts............................................ 53
22.23 No Default...................................................... 53
ARTICLE 23: FUTURE PROJECTS; COTERMINOUS FINANCINGS......................... 54
23.1 Project Submissions............................................. 54
23.2 Coterminous Financings.......................................... 54
ARTICLE 24: SECURITY INTEREST............................................... 54
24.1 Collateral...................................................... 54
24.2 Additional Documents............................................ 55
24.3 Notice of Sale.................................................. 55
24.4 Pledge of Accounts to Others.................................... 55
ARTICLE 25: MISCELLANEOUS................................................... 55
25.1 Notices......................................................... 55
25.2 Advertisement of Leased Property................................ 56
25.3 Entire Agreement................................................ 56
25.4 Severability.................................................... 56
25.5 Captions and Headings........................................... 56
25.6 Governing Law................................................... 56
25.7 Memorandum of Lease............................................. 56
25.8 Waiver.......................................................... 56
25.9 Binding Effect.................................................. 56
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25.10 Power of Attorney............................................... 56
25.11 No Offer........................................................ 57
25.12 Modification.................................................... 57
25.13 Landlord's Modification......................................... 57
25.14 No Merger....................................................... 57
25.15 Laches.......................................................... 58
25.16 Limitation on Tenant's Recourse................................. 58
25.17 Construction of Lease........................................... 58
25.18 Counterparts.................................................... 58
25.19 Lease Guaranty.................................................. 58
25.20 Custody of Escrow Funds......................................... 58
25.21 Landlord's Status as a REIT..................................... 58
25.22 Exhibits........................................................ 59
25.23 WAIVER OF JURY TRIAL............................................ 59
25.24 CONSENT TO JURISDICTION......................................... 59
25.25 Attorney's Fees and Expenses.................................... 60
25.26 Survival........................................................ 60
25.27 Access to Records............................................... 60
ARTICLE 26: SUBSTITUTION OF LEASED PROPERTY................................. 60
26.1 Right of Substitution........................................... 60
26.2 Conditions to Substitution...................................... 60
26.3 Conveyance of Existing Facility................................. 63
26.4 Expenses........................................................ 64
EXHIBIT A: LEGAL DESCRIPTION
EXHIBIT A-1: PERSONAL PROPERTY
EXHIBIT B: PERMITTED EXCEPTIONS
EXHIBIT C: DOCUMENTS TO BE DELIVERED
EXHIBIT D: TENANT'S CERTIFICATE AND FACILITY FINANCIAL REPORTS
EXHIBIT E: GOVERNMENT AUTHORIZATIONS TO BE OBTAINED;
ZONING PERMITS
EXHIBIT F: PENDING LITIGATION
EXHIBIT G: LIST OF LEASES AND CONTRACTS
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LEASE AGREEMENT
This Lease Agreement ("Lease" or "Agreement") is made effective as
of the day of , 1999 (the "Effective Date") between
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PENNSYLVANIA BCC PROPERTIES, INC., a corporation organized under the laws of the
State of Pennsylvania ("Landlord"), having its principal office located at One
SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603, and BALANCED CARE AT
SAXONBURG, INC., a corporation organized under the laws of the State of Delaware
("Tenant"), having its chief executive office located at 5021 Louise Drive,
Suite 200, Mechanicsburg, Pennsylvania 17055.
R E C I T A L S
A. As of the date hereof, Landlord acquired the Leased Property
(defined below) and paid the Acquisition Amount (defined below) towards the
purchase price for the Leased Property. The amount paid by Tenant for the
acquisition costs of the Leased Property shall be considered Tenant's
contribution.
B. Landlord desires to lease the Leased Property to Tenant and
Tenant desires to lease the Leased Property from Landlord upon the terms set
forth in this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS
1.1 LEASED PROPERTY. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the following property:
(a) The land described in Exhibit A attached hereto (the
"Land").
(b) All buildings, structures, and other improvements,
including without limitation, sidewalks, alleys, utility pipes, conduits, and
lines, parking areas, and roadways, now or hereafter situated upon the Land (the
"Improvements").
(c) All easements, rights and other appurtenances relating
to the Land and Improvements (the "Appurtenances").
(d) All permanently affixed equipment, machinery, fixtures,
and other items of real and personal property, including all components thereof,
located in, or used in connection with, and permanently affixed to or
incorporated into the Improvements, including without limitation, all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water
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pollution control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, and
built-in oxygen and vacuum systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications, alterations and additions
thereto but specifically excluding all items included within the category of
Personal Property as defined below (collectively the "Fixtures").
(e) All machinery, equipment, furniture, furnishings, movable
walls or partitions, computers, trade fixtures, consumable inventory and
supplies, and other personal property used or useful in Tenant's business on the
Leased Property, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory listed on Exhibit A-1 attached
hereto and the replacements therefor, except items, if any, included within the
definition of Fixtures (collectively the "Personal Property").
SUBJECT, HOWEVER, to all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date hereof
as listed on Exhibit B attached hereto (the "Permitted Exceptions").
1.2 TERM. The initial term ("Initial Term") of this Lease commences
on the Effective Date and expires at 12:00 Midnight Eastern Time on the
fifteenth anniversary of the Commencement Date (the "Expiration Date");
provided, however, that [i] Tenant has one or more options to renew the Lease
pursuant to Article 12, and [ii] the Initial Term may be extended from time to
time pursuant to Article 23.
1.3 DEFINITIONS. Except as otherwise expressly provided, [i] the
terms defined in this section have the meanings assigned to them in this section
and include the plural as well as the singular; [ii] all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as of the time applicable; and [iii]
the words "herein", "hereof", and "hereunder" and similar words refer to this
Lease as a whole and not to any particular section.
"Acquisition Amount" means $5,345,000.00.
"ADA" means the federal statute entitled Americans with Disabilities
Act, 42 U.S.C. ss.12101, et seq.
"Affiliate" means any person, corporation, partnership, limited
liability company, trust, or other legal entity that, directly or indirectly,
controls, or is controlled by, or is under common control with Tenant or
Guarantor. "Control" (and the correlative meanings of the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity. "Affiliate" includes, without limitation, Balanced Care
Corporation.
"Annual Facility Budget" means Tenant's projection of what the
Annual Facility Financial Statements will be for the next fiscal year.
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"Annual Financial Statements" means [i] for Tenant, an unaudited
balance sheet, statement of income, and cash flow statements for the most recent
fiscal year; [ii] for the Facility, an unaudited Facility Financial Statement
for the most recent fiscal year; and [iii] for Guarantor, an audited balance
sheet and statement of income for the most recent fiscal year with consolidating
schedules.
"Base Rent" has the meaning set forth in ss.2.1, as increased from
time to time pursuant to ss.2.2.
"Business Day" means any day other than a Saturday, Sunday, or
national holiday.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Closing" means the closing of the purchase of the Leased Property
by Landlord and the lease of the Leased Property to Tenant.
"Commencement Date" means the Effective Date if such date is the
first day of a month, and if it is not, the first day of the first month
following the Effective Date.
"Commitment" means the Commitment letter for the Lease dated
September 22, 1998 as modified by the letter dated February 24, 1999.
"Credit Facility" means the credit facility in an amount up to
$150,000,000.00 the terms of which are set forth in the Commitment. The Credit
Facility consists of multiple phases of funding.
"Current Phase" means the phase of funding under the Credit Facility
which is applicable to this Lease. This Lease is part of the second phase. The
Current Phase includes facilities located in Bloomsburg Pennsylvania and
Saxonburg, Pennsylvania, and any other facilities mutually designated by
Landlord and Tenant to be included in the Current Phase.
"Earnout Lease Advances" has the meaning set forth in Article 17.
"Effective Date" means the date of this Lease.
"Environmental Laws" means all federal, state, and local laws,
ordinances and policies the purpose of which is to protect human health and the
environment, as amended from time to time, including but not limited to [i]
CERCLA; [ii] the Resource Conservation and Recovery Act; [iii] the Hazardous
Materials Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi]
the Toxic Substances Control Act; [vii] the Occupational Safety and Health Act;
[viii] the Safe Drinking Water Act; and [ix] analogous state laws and
regulations.
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"Event of Default" has the meaning set forth in ss.8.1.
"Expiration Date" has the meaning set forth in ss.1.2.
"Extended Term" has the meaning set forth in ss.12.3(a).
"Facility" means the 77-unit (123-bed) assisted living (personal
care boarding home) facility known as Outlooke Pointe Commons at Saxonburg and
located on the Leased Property.
"Facility Financial Statement" means a financial statement for the
Facility which shall include the balance sheet, statement of income, statement
of cash flows, statement of shareholders' equity, occupancy census data
(including payor mix) and a comparison of the actual financial data versus the
Annual Facility Budget for the applicable period.
"Facility Uses" means the uses relating to the operation of the
Facility as a 77-unit (123-bed) assisted living (personal care boarding home)
facility together with such additional uses as may be ancillary to or
complimentary to an assisted living facility, and which are permitted under
applicable law.
"Fair Market Value" has the meaning set forth in ss.13.3.
"Financial Statements" means [i] the annual, quarterly and year to
date financial statements of Tenant and Guarantor; and [ii] all operating
statements for the Facility, that were submitted to Landlord prior to the
Effective Date.
"Government Authorizations" means all permits, licenses, approvals,
consents, and authorizations required to comply with all Legal Requirements,
including but not limited to, [i] zoning permits, variances, exceptions, special
use permits, conditional use permits, and consents; [ii] the permits, licenses,
provider agreements and approvals required for licensure and operation of a
77-unit (123-bed) assisted living (personal care boarding home) facility
certified as a provider under the federal Medicare and state Medicaid programs;
[iii] environmental, ecological, coastal, wetlands, air, and water permits,
licenses, and consents; [iv] curb cut, subdivision, land use, and planning
permits, licenses, approvals and consents; [v] building, sign, fire, health, and
safety permits, licenses, approvals, and consents; and [vi] architectural
reviews, approvals, and consents required under restrictive covenants.
"Guarantor" means Balanced Care Corporation, a Delaware corporation.
"Guaranty" means the Unconditional and Continuing Lease Guaranty
entered into by Guarantor to guarantee payment and performance of Tenant's
Obligations and any amendments thereto or substitutions or replacements
therefor.
"Hazardous Materials" means any substance [i] the presence of which
poses a hazard to the health or safety of persons on or about the Land including
but not limited to asbestos
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containing materials; [ii] which requires removal or remediation under any
Environmental Law, including without limitation any substance which is toxic,
explosive, flammable, radioactive, or otherwise hazardous; or [iii] which is
regulated under or classified under any Environmental Law as hazardous or toxic
including but not limited to any substance within the meaning of "hazardous
substance", "hazardous material", "hazardous waste", "toxic substance",
"regulated substance", "solid waste", or "pollutant" as defined in any
Environmental Law.
"Impositions" has the meaning set forth in ss.3.2.
"Increaser Rate" means [i] in any Lease Year in which the nationwide
Consumer Price Index for all urban consumers increases by a percentage that is
less than 20%, 25 basis points per year for the Initial Term and 25 basis points
per year for each Renewal Term; and [ii] in all other Lease Years, 30 basis
points per year for the Initial Term and 30 basis points for each Renewal Term.
"Initial Term" has the meaning set forth in ss.1.2.
"Issuer" means a financial institution reasonably satisfactory to
Landlord issuing the Letter of Credit and such Issuer's successors and assigns.
Any "Issuer" shall have a Lace Financial Service Rating of "C+" or higher at all
times throughout the Term.
"Landlord Affiliate" means any person, corporation, partnership,
limited liability company, trust, or other legal entity that, directly or
indirectly, controls, or is controlled by, or is under common control with
Landlord. "Control" (and the correlative meanings of the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity. "Landlord Affiliate" includes, without limitation, HCRI Texas
Properties, Ltd., HCRI Pennsylvania Properties, Inc., HCRI Overlook Green, Inc.,
HCRI Nevada Properties, Inc., HCRI Louisiana Properties, L.P., Health Care REIT,
Inc., HCRI Tennessee Properties, Inc., HCRI Tennessee Properties, L.P., and HCN
BCC Holdings, Inc.
"Lease Advance" means [i] the first Lease Advance by Landlord in the
Acquisition Amount; or [ii] any other advance of funds by Landlord to Tenant
pursuant to the term of this Lease including any Earnout Lease Advance.
"Lease Advance Amount" means the amount of any Lease Advance. The
Acquisition Amount is the first Lease Advance Amount.
"Lease Advance Date" means the date on which Landlord makes a Lease
Advance.
"Lease Amount" is an aggregate concept and means the sum of the
Lease Advance Amounts outstanding at the applicable time.
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"Lease Documents" means [i] this Lease; and [ii] all other documents
executed by Tenant and Landlord in connection with the Lease.
"Lease Payments" means the sum of the Base Rent payments (as
increased from time to time) for the applicable period.
"Lease Rate" means the annual rate used to determine Base Rent for
each Lease Advance. The Lease Rate for the Initial Term is the greater of [i]
10.25% or [ii] the sum of the Rate Index plus the Rate Spread, each computed
using the 365/360 method. The Lease Rate includes any accrued Increaser Rate. On
each Renewal Date, the Lease Rate will be reset for the Lease Amount as set
forth in ss.12.2(c).
"Lease Year" means each consecutive period of 365 or 366 days
throughout the Term. The first Lease Year commences on the Commencement Date and
expires on the day before the first anniversary of the Commencement Date.
"Leased Property" means, collectively, the Land, Improvements,
Appurtenances, Fixtures and Personal Property.
"Legal Requirements" means all laws, regulations, rules, orders,
writs, injunctions, decrees, certificates, requirements, agreements, conditions
of participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction, condition and operation of the Facility by Tenant, including but
not limited to, [i] zoning, building, fire, health, safety, sign, and
subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as a 77-unit (123-bed) assisted living
(personal care boarding home) facility; [iv] Medicare and Medicaid certification
requirements (if applicable); [v] the ADA; [vi] any Environmental Laws; and
[vii] requirements, conditions and standards for participation in third-party
payor insurance programs.
"Letter of Credit" means an irrevocable and transferable Letter of
Credit in an amount initially equal to 5% of the Lease Amount and subject to
reduction as provided in Section 20.6, issued by Issuer in favor of Landlord as
security for the Lease and in form reasonably acceptable to Landlord, and any
amendments thereto or replacements or substitutions therefor.
"Manager" means BCC Development and Management Co., a corporation
organized under the laws of the State of Delaware.
"Material Obligation" means [i] any indebtedness secured by a
security interest in or a lien, deed of trust or mortgage on any of the Leased
Property (or any part thereof, including any Personal Property) and any
agreement relating thereto; [ii] any obligation or agreement that is material to
the construction or operation of the Facility or that is material to Tenant's
business or financial condition; [iii] any indebtedness or capital lease of
Tenant that has an outstanding
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principal balance of at least $50,000.00 and any agreement relating thereto;
[iv] any obligation to or agreement with the Issuer relating to the Letter of
Credit; and [v] any sublease of the Leased Property, exclusive of occupancy
agreements with residents of the Leased Property.
"Overdue Rate" has the meaning set forth in ss.8.6.
"Periodic Financial Statements" means [i] for Tenant, an unaudited
balance sheet and statement of income of Tenant for the most recent quarter;
[ii] for the Facility, an unaudited Facility Financial Statement for the most
recent month; and [iii] for Guarantor, an unaudited balance sheet and statement
of income of Guarantor for the most recent quarter.
"Permitted Exceptions" means the exceptions to title set forth on
Exhibit B.
"Permitted Liens" means [i] liens granted to Landlord; [ii] liens
customarily incurred by Tenant in the ordinary course of business for items not
delinquent including mechanic's liens and deposits and charges under worker's
compensation laws; [iii] liens for taxes and assessments not yet due and
payable; [iv] any lien, charge, or encumbrance which is being contested in good
faith pursuant to Section 3.7 of this Agreement; [v] the Permitted Exceptions;
and [vi] purchase money financing and capitalized or operating equipment leases
for the acquisition of personal property provided, however, that Landlord
obtains a nondisturbance agreement from the purchase money lender or equipment
lessor in form and substance as may be reasonably satisfactory to Landlord if
the original cost of the equipment exceeds $75,000.00.
"Phase Facility" means each facility leased by Landlord or any
Landlord Affiliate to Tenant or any Affiliate pursuant to a Phase Lease, whether
now or hereafter existing.
"Phase Lease" means each lease now or hereafter made between
Landlord or any Landlord Affiliate and Tenant or any Affiliate and which is
included within the Current Phase as amended, modified, extended or renewed from
time to time.
"Phase Tenant" means Tenant or any Affiliate that is a tenant under
a Phase Lease.
"Pro Forma Statement" means a financial forecast for the Facility
for the next 5 year period prepared in accordance with the standards for
forecasts established by the American Institute of Certified Public Accountants.
"Rate Determination Date" means the date on which the value for the
Rate Index is established for computing any Lease Rate. For any Lease Advances
made during the Initial Term, the Rate Determination Date is the Lease Advance
Date. For any Renewal Date, the Rate Determination Date is the last Business Day
of the current Term.
"Rate Index" means the yield quoted in the Wall Street Journal on
the applicable Rate Determination Date for the most actively traded United
States Treasury Notes having the nearest equivalent maturity date to the
Expiration Date. For any Lease Advance other than the first Lease Advance, the
yield shall be computed based upon the remainder of the Initial Term.
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"Rate Spread" means the rate spread from time to time used to
calculate the Lease Rate applicable to any Lease Advance during the Initial
Term. The Rate Spread is 340 basis points for the Initial Term.
"Receivables" means [i] all of Tenant's rights to receive payment
for providing resident care and services as set forth in any accounts, contract
rights, and instruments, and [ii] those documents, chattel paper, inventory
proceeds, provider agreements, participation agreements, ledger sheets, files,
records, computer programs, tapes, and agreements relating to Tenant's rights to
receive payment for providing resident care services.
"Renewal Date" means the first day of each Renewal Term.
"Renewal Option" has the meaning set forth in ss.12.1.
"Renewal Rate" means the Lease Rate established for any Renewal Date
as set forth in ss.12.2(c).
"Renewal Term" has the meaning set forth in ss.12.1.
"Rent" has the meaning set forth in ss.2.3.
"Seller" means Tenant.
"State" means the Commonwealth of Pennsylvania.
"Tenant's Obligations" means all payment and performance obligations
of Tenant under this Lease and all documents executed by Tenant in connection
with this Lease.
"Tenant's Organizational Documents" means the Articles of
Incorporation of Tenant certified by the Secretary of State of the state of
organization, as amended to date, and the Bylaws of Tenant certified by Tenant,
as amended to date.
"Tenant's Property" has the meaning set forth in ss.11.1.
"Term" means the Initial Term and each Renewal Term.
ARTICLE 2: RENT
2.1 BASE RENT. Tenant shall pay Landlord base rent ("Base Rent") in
advance in consecutive monthly installments payable on the first day of each
month during the Term commencing on the Commencement Date. If the Effective Date
is not the first day of a month, Tenant shall pay Landlord Base Rent on the
Effective Date for the partial month, i.e. for the period commencing on the
Effective Date and ending on the day before the Commencement Date. The Base Rent
for the Initial Term will be computed monthly and will be equal to 1/12th
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of the sum of the products of each Lease Advance times the Lease Rate for each
Lease Advance. The Base Rent for each Renewal Term will be computed in
accordance with ss.12.2.
2.2 INCREASE OF LEASE RATE AND BASE RENT. Commencing on the first
anniversary of the Commencement Date and on each anniversary thereafter
throughout the Term (including any Renewal Term and Extended Term), the Lease
Rate will increase by the applicable Increaser Rate. On each date that the Lease
Rate is increased, the Base Rent will be increased accordingly and will be equal
to 1/12th of the sum of the products of each Lease Advance times the Lease Rate
(including the applicable Increaser Rate) for each Lease Advance.
2.3 ADDITIONAL RENT. In addition to Base Rent, Tenant shall pay all
other amounts, liabilities, obligations and Impositions which Tenant assumes or
agrees to pay under this Lease and any fine, penalty, interest, charge and cost
which may be added for nonpayment or late payment of such items (collectively
the "Additional Rent"). The Base Rent and Additional Rent are hereinafter
referred to as "Rent". Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Lease or by statute or
otherwise in the case of nonpayment of the Rent.
2.4 PLACE OF PAYMENT OF RENT. Tenant shall make all payments of
Rent at the Landlord's address set forth in the first paragraph of this Lease or
at such other place as Landlord may designate from time to time.
2.5 NET LEASE. This Lease shall be deemed and construed to be an
"absolute net lease", and Tenant shall pay all Rent and other charges and
expenses in connection with the Leased Property throughout the Term, without
abatement, deduction or set-off.
2.6 NO TERMINATION, ABATEMENT, ETC. Except as otherwise
specifically provided in this Lease, Tenant shall remain bound by this Lease in
accordance with its terms. Tenant shall not, without the consent of Landlord,
modify, surrender or terminate the Lease, nor seek nor be entitled to any
abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent. Except as expressly provided in this Lease, the obligations of Landlord
and Tenant shall not be affected by reason of [i] any damage to, or destruction
of, the Leased Property or any part thereof from whatever cause or any Taking
(as hereinafter defined) of the Leased Property or any part thereof; [ii] the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; [iii] any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which Landlord
and Tenant are parties; [iv] any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; or [v]
any other cause, whether similar or dissimilar to any of the foregoing, other
than a discharge of Tenant from any such obligations as a matter of law. Except
as otherwise specifically provided in this Lease, Tenant hereby specifically
waives all rights, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law [a] to modify, surrender or terminate this
Lease or
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quit or surrender the Leased Property or any portion thereof; or [b] entitling
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 the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
2.7 COMPUTATIONAL METHOD. Landlord and Tenant acknowledge that all
rates under this Lease will be computed based on the actual number of days
elapsed over a 360-day year (365/360 method).
2.8 COMMITMENT FEE. On the Effective Date, Tenant shall pay a
commitment fee to Landlord in an amount equal to 1% of the Acquisition Amount.
ARTICLE 3: IMPOSITIONS AND UTILITIES
3.1 PAYMENT OF IMPOSITIONS. Tenant shall pay, as Additional Rent,
all Impositions that may be levied or become a lien on the Leased Property or
any part thereof at any time (whether prior to or during the Term), without
regard to prior ownership of said Leased Property, before any fine, penalty,
interest, or cost is incurred; provided, however, Tenant may contest any
Imposition in accordance with ss.3.7. Tenant shall deliver to Landlord [i] not
more than 5 days after the due date of each Imposition, copies of the invoice
for such Imposition and the check delivered for payment thereof; and [ii] not
more than 30 days after the due date of each Imposition, a copy of the official
receipt evidencing such payment or other proof of payment satisfactory to
Landlord. 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. Tenant, at its expense, shall prepare and file all tax returns
and reports in respect of any Imposition as may be required by governmental
authorities. Tenant shall be entitled to any refund due from any taxing
authority if no Event of Default shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in ss.8.8.
Landlord and Tenant shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to the Leased
Property as may be necessary to prepare any required returns and reports. In the
event governmental authorities classify any property covered by this Lease as
personal property, Tenant shall file all personal property tax returns in such
jurisdictions where it may legally so file. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possesses the same, will provide the
other party, upon request, with cost and depreciation records necessary for
filing returns for any property so classified as personal property. Where
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's
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expense as aforesaid, shall fully cooperate with Tenant in such protest, appeal,
or other action. Tenant shall reimburse Landlord for all personal property taxes
paid by Landlord within 30 days after receipt of billings accompanied by copies
of a bill therefor and payments thereof which identify the personal property
with respect to which such payments are made. Impositions imposed in respect to
the tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
3.2 DEFINITION OF IMPOSITIONS. "Impositions" means, collectively,
[i] taxes (including without limitation, all capital stock and franchise taxes
of Landlord imposed by the State or any governmental entity in the State due to
this lease transaction or Landlord's ownership of the Leased Property and the
income arising therefrom, or due to Landlord being considered as doing business
in the State because of Landlord's ownership of the Leased Property or lease
thereof to Tenant but only to the extent Tenant would have been obligated to pay
such taxes if Tenant rather than Landlord was the owner of the Leased Property),
all real estate and personal property ad valorem, sales and use, business or
occupation, single business, gross receipts, transaction privilege, rent or
similar taxes; [ii] assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed with the Term); [iii]
ground rents, water, sewer or other rents and charges, excises, tax levies, and
fees (including without limitation, license, permit, inspection, authorization
and similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including without limitation, employee withholding taxes, income taxes
and intangible taxes; [v] all taxes imposed by the State or any governmental
entity in the State with respect to the conveyance of the Leased Property by
Landlord to Tenant or Tenant's designee, including without limitation,
conveyance taxes and capital gains taxes; and [vi] all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property or
any part thereof and/or the Rent (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to, during or
in respect of the Term hereof may be assessed or imposed on or in respect of or
be a lien upon [a] Landlord or Landlord's interest in the Leased Property or any
part thereof; [b] the Leased Property or any part thereof or any rent therefrom
or any estate, right, title or interest therein; or [c] any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Leased Property or the leasing or use of the Leased Property
or any part thereof. Tenant shall not, however, be required to pay any tax [y]
based on income or assets imposed on Landlord by any governmental entity other
than the capital stock and franchise taxes described in clause [i] above or [z]
based on the transfer of Landlord's interest in the Leased Property or equity of
Landlord to a party other than Guarantor unless the transfer occurs pursuant to
an Event of Default.
3.3 ESCROW OF IMPOSITIONS. If an Event of Default occurs and while
it remains uncured, Tenant shall, at Landlord's election, deposit with Landlord
on the first day of each month a sum equal to 1/12th of the Impositions assessed
against the Leased Property for the preceding tax year, which sums shall be used
by Landlord toward payment of such Impositions. Tenant, on demand, shall pay to
Landlord any additional funds necessary to pay and discharge
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the obligations of Tenant pursuant to the provisions of this section. The
receipt by Landlord of the payment of such Impositions by and from Tenant shall
only be as an accommodation to Tenant, the mortgagees, and the taxing
authorities, and shall not be construed as rent or income to Landlord, Landlord
serving, if at all, only as a conduit for delivery purposes.
3.4 UTILITIES. Tenant shall pay, as Additional Rent, all taxes,
assessments, charges, deposits, and bills for utilities, including without
limitation charges for water, gas, oil, sanitary and storm sewer, electricity,
telephone service, and trash collection, which may be charged against the
occupant of the Improvements during the Term. If an Event of Default occurs and
while it remains uncured, Tenant shall, at Landlord's election, deposit with
Landlord on the first day of each month a sum equal to 1/12th of the amount of
the annual utility expenses for the preceding Lease Year, which sums shall be
used by Landlord to pay such utilities. Tenant shall, on demand, pay to Landlord
any additional amount needed to pay such utilities. Landlord's receipt of such
payments shall only be an accommodation to Tenant and the utility companies and
shall not constitute rent or income to Landlord. Tenant shall at all times
maintain that amount of heat necessary to ensure against the freezing of water
lines. Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any liability or damages to the utility systems and the Leased Property
that may result from Tenant's failure to maintain sufficient heat in the
Improvements.
3.5 DISCONTINUANCE OF UTILITIES. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of rent or operate to
release Tenant from any of Tenant's obligations under this Lease.
3.6 BUSINESS EXPENSES. Tenant shall promptly pay all expenses and
costs incurred in connection with the operation of the Facility on the Leased
Property, including without limitation, employee benefits, employee vacation and
sick pay, consulting fees, and expenses for inventory and supplies.
3.7 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 or
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim 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 Leased Property; [ii] neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost; [iii] in the case
of a Legal Requirement, Landlord would not be in any immediate danger of civil
or criminal liability for failure to comply therewith pending the outcome of
such proceedings; [iv] in the case of a Legal Requirement and/or an Imposition,
lien, encumbrance or charge, in excess of $50,000.00, Tenant shall give such
reasonable security as may be demanded by Landlord to insure ultimate payment of
the same and to prevent any sale or forfeiture of the affected Leased Property
or the Rent by reason of such nonpayment or noncompliance; provided,
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however, the provisions of this section shall not be construed to permit Tenant
to contest the payment of Rent (except as to contests concerning the method of
computation or the basis of levy of any Imposition or the basis for the
assertion of any other claim) or any other sums payable by Tenant to Landlord
hereunder; [v] in the case of an insurance requirement, the coverage required by
Article 4 shall be maintained; and [vi] if such contest be finally resolved
against Landlord or Tenant, Tenant shall, as Additional Rent due hereunder,
promptly pay the amount required to be paid, together with all interest and
penalties accrued thereon, or comply with the applicable Legal Requirement or
insurance requirement. Landlord, at Tenant's expense, shall execute and deliver
to Tenant such authorizations and other documents as may be reasonably required
in any such contest, and, if reasonably requested by Tenant or if Landlord so
desires, Landlord shall join as a party therein. Tenant hereby agrees to
indemnify and save Landlord harmless from and against any liability, cost or
expense of any kind that may be imposed upon Landlord in connection with any
such contest and any loss resulting therefrom.
ARTICLE 4: INSURANCE
4.1 PROPERTY INSURANCE. At Tenant's expense, Tenant shall maintain
in full force and effect a property insurance policy or policies insuring the
Leased Property against the following:
(a) Loss or damage commonly covered by a "Special Form"
policy insuring against physical loss or damage to the Improvements and Personal
Property, including but not limited to, risk of loss from fire and other
hazards, collapse, transit coverage, vandalism, malicious mischief, theft,
earthquake (if the Leased Property is in earthquake zone 1 or 2) and sinkholes
(if usually recommended in the area of the Leased Property). The policy shall be
in the amount of the full replacement value (as defined in ss.4.5) of the
Improvements and Personal Property and shall contain a deductible amount
acceptable to Landlord. Landlord shall be named as an additional insured. The
policy shall include a stipulated value endorsement or agreed amount endorsement
and endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of steam
boilers, pressure vessels, or similar apparatus, now or hereafter installed on
the Leased Property, in commercially reasonable amounts acceptable to Landlord.
(c) Consequential loss of rents and income coverage insuring
against all "Special Form" risk of physical loss or damage with limits and
deductible amounts acceptable to Landlord covering risk of loss during the first
9 months of reconstruction, and containing an endorsement for extended period of
indemnity of at least 6 months, and shall be written with a stipulated amount of
coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in part,
in a federally designated 100-year flood plain area, flood insurance for the
Improvements in an amount equal to the lesser of [i] the full replacement value
of the Improvements; or [ii] the maximum amount
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of insurance available for the Improvements under all federal and private flood
insurance programs.
(e) Loss or damage caused by the breakage of plate glass in
commercially reasonable amounts acceptable to Landlord.
(f) Loss or damage commonly covered by blanket crime
insurance including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property of patients accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to the Landlord.
4.2 LIABILITY INSURANCE. At Tenant's expense, Tenant shall maintain
liability insurance against the following:
(a) Claims for personal injury or property damage commonly
covered by comprehensive general liability insurance with endorsements for
incidental malpractice, contractual, personal injury, owner's protective
liability, voluntary medical payments, products and completed operations, broad
form property damage, and extended bodily injury, with commercially reasonable
amounts for bodily injury, property damage, and voluntary medical payments
acceptable to Landlord, but with a combined single limit of not less than
$5,000,000.00 per occurrence.
(b) Claims for personal injury and property damage commonly
covered by comprehensive automobile liability insurance, covering all owned and
non-owned automobiles, with commercially reasonable amounts for bodily injury,
property damage, and for automobile medical payments acceptable to Landlord, but
with a combined single limit of not less than $5,000,000.00 per occurrence.
(c) Claims for personal injury commonly covered by medical
malpractice insurance in commercially reasonable amounts acceptable to Landlord.
(d) Claims commonly covered by worker's compensation insurance
for all persons employed by Tenant on the Leased Property. Such worker's
compensation insurance shall be in accordance with the requirements of all
applicable local, state, and federal law.
4.3 BUILDER'S RISK INSURANCE. In connection with any construction,
Tenant shall maintain in full force and effect a builder's completed value risk
policy ("Builder's Risk Policy") of insurance in a nonreporting form insuring
against all "Special Form" risk of physical loss or damage to the Improvements,
including but not limited to, risk of loss from fire and other hazards,
collapse, transit coverage, vandalism, malicious mischief, theft, earthquake (if
Leased Property is in earthquake zone 1 or 2) and sinkholes (if usually
recommended in the area of the Leased Property). The Builder's Risk Policy shall
include endorsements providing coverage for building materials and supplies and
temporary premises. The Builder's Risk Policy shall be in the amount of the full
replacement value of the Improvements and shall contain a deductible
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amount acceptable to Landlord. Landlord shall be named as an additional insured.
The Builder's Risk Policy shall include an endorsement permitting initial
occupancy.
4.4 INSURANCE REQUIREMENTS. The following provisions shall apply
to all insurance coverages required hereunder:
(a) The form and substance of all policies shall be subject
to the approval of Landlord, which approval will not be unreasonably withheld.
(b) The carriers of all policies shall have a Best's Rating
of "A" or better and a Best's Financial Category of X or higher and shall be
authorized to do insurance business in the State.
(c) Tenant shall be the "named insured" and Landlord shall be
an "additional insured" on each liability policy. On all property and casualty
policies, Landlord and Tenant shall be joint loss payees.
(d) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. The policies of insurance shall
provide that the policy may not be canceled or not renewed, and no material
change or reduction in coverage may be made, without at least 30 days' prior
written notice to Landlord.
(e) The policies shall contain a severability of interest
and/or cross-liability endorsement, provide that the acts or omissions of Tenant
or Landlord will not invalidate the coverage of the other party, and provide
that Landlord shall not be responsible for payment of premiums.
(f) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(g) At least 10 days prior to the expiration of each
insurance policy, Tenant shall deliver to Landlord a certificate showing renewal
of such policy and payment of the annual premium therefor and a current
Certificate of Compliance (in the form delivered at the time of Closing)
completed and signed by Tenant's insurance agent.
4.5 REPLACEMENT VALUE. The term "full replacement value" means the
actual replacement cost thereof from time to time including increased cost of
construction endorsement, with no reductions or deductions. Tenant shall, in
connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
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4.6 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this section, Tenant may [i] carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease; and [ii] Tenant may meet the limits of liability for insurance by
maintaining a portion thereof as "excess" insurance under an umbrella policy.
4.7 NO SEPARATE INSURANCE. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing
insurance, by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including Landlord and any mortgagees, are included therein as additional
insureds or loss payees, the loss is payable under said insurance in the same
manner as losses are payable under this Lease, and such additional insurance is
not prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies.
4.8 WAIVER OF SUBROGATION. Each party hereto hereby waives any and
every claim which arises or may arise in its favor and against the other party
hereto during the Term for any and all loss of, or damage to, any of its
property located within or upon, or constituting a part of, the Leased Property,
which loss or damage is covered by valid and collectible insurance policies, to
the extent that such loss or damage is recoverable under such policies. Said
mutual waiver shall be in addition to, and not in limitation or derogation of,
any other waiver or release contained in this Lease with respect to any loss or
damage to property of the parties hereto. Inasmuch as the said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party hereto
agrees immediately to give each insurance company which has issued to it
policies of insurance, written notice of the terms of said mutual waivers, and
to have such insurance policies properly endorsed, if necessary, to prevent the
invalidation of said insurance coverage by reason of said waivers, so long as
such endorsement is available at a reasonable cost.
4.9 MORTGAGES. The following provisions shall apply if Landlord now
or hereafter places a mortgage on the Leased Property or any part thereof: [i]
Tenant shall obtain a standard form of lender's loss payable clause insuring the
interest of the mortgagee; [ii] Tenant shall deliver evidence of insurance to
such mortgagee; [iii] loss adjustment shall require the consent of the
mortgagee; and [iv] Tenant shall provide such other information and documents as
may be required by the mortgagee.
4.10 ESCROWS. After an Event of Default occurs hereunder, Tenant
shall make such periodic payments of insurance premiums in accordance with
Landlord's requirements after receipt of notice thereof from Landlord.
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ARTICLE 5: INDEMNITY
5.1 TENANT'S INDEMNIFICATION. Tenant hereby indemnifies and agrees
to hold harmless Landlord, any successors or assigns of Landlord, and Landlord's
and such successor's and assign's directors, officers, employees and agents from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation, reasonable
attorneys' fees, court costs, and the costs set forth in ss.8.7) incurred in
connection with or arising from: [i] the use or occupancy of the Leased Property
by Tenant or any persons claiming under Tenant; [ii] any activity, work, or
thing done, or permitted or suffered by Tenant in or about the Leased Property;
[iii] any acts, omissions, or negligence of Tenant or any person claiming under
Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant
or any such person; [iv] any breach, violation, or nonperformance by Tenant or
any person claiming under Tenant or the employees, agents, contractors,
invitees, or visitors of Tenant or of any such person, of any term, covenant, or
provision of this Lease or any law, ordinance, or governmental requirement of
any kind including, without limitation, any failure to comply with any
applicable requirements under the ADA; [v] any injury or damage to the person,
property or business of Tenant, its employees, agents, contractors, invitees,
visitors, or any other person entering upon the Leased Property; and [vi] any
construction, alterations, changes or demolition of the Facility performed by or
contracted for Tenant or its employees, agents or contractors; provided,
however, in no event shall Landlord be indemnified or held harmless if the claim
or loss has resulted from the grossly negligent or willful acts or omissions of
Landlord, its employees and agents. If any action or proceeding is brought
against Landlord, its employees, or agents by reason of any such claim, Tenant,
upon notice from Landlord, will defend the claim at Tenant's expense with
counsel reasonably satisfactory to Landlord. All amounts payable to Landlord
under this section shall be payable on written demand and any such amounts which
are not paid within 10 days after demand therefor by Landlord shall bear
interest at the Overdue Rate. In case any action, suit or proceeding is brought
against Tenant by reason of any such occurrence, Tenant shall use its best
efforts to defend such action, suit or proceeding.
5.1.1 NOTICE OF CLAIM. Landlord shall notify Tenant in writing of
any claim or action brought against Landlord in which indemnity may be sought
against Tenant pursuant to this section. Such notice shall be given in
sufficient time to allow Tenant to defend or participate in such claim or
action, but the failure to give such notice in sufficient time shall not
constitute a defense hereunder nor in any way impair the obligations of Tenant
under this section unless the failure to give such notice precludes Tenant's
defense of any such action.
5.1.2 SURVIVAL OF COVENANTS. The covenants of Tenant contained in
this section shall remain in full force and effect after the termination of this
Agreement until the expiration of the period stated in the applicable statute of
limitations during which a claim or cause of action may be brought and payment
in full or the satisfaction of such claim or cause of action and of all expenses
and charges incurred by Landlord relating to the enforcement of the provisions
herein specified.
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5.1.3 REIMBURSEMENT OF EXPENSES. Unless prohibited by law, Tenant
hereby agrees to pay to Landlord all of the reasonable fees, charges and
reasonable out-of-pocket expenses related to the Facility and required hereby,
or incurred by Landlord in enforcing the provisions of this Agreement.
5.2 ENVIRONMENTAL INDEMNITY; AUDITS.
5.2.1 INDEMNIFICATION. Tenant hereby indemnifies and agrees to hold
harmless Landlord, any successors to Landlord's interest in this Lease, and
Landlord's and such successors' directors, officers, employees and agents from
and against any losses, claims, damages (including consequential damages),
penalties, fines, liabilities (including strict liability), costs (including
cleanup and recovery costs), and expenses (including expenses of litigation and
reasonable consultants' and attorneys' fees) incurred by Landlord or any other
indemnitee or assessed against the Leased Property by virtue of any claim or
lien by any governmental or quasi-governmental unit, body, or agency, or any
third party, for cleanup costs or other costs pursuant to any Environmental Law.
Tenant's indemnity shall survive the termination of this Lease. Provided,
however, Tenant shall have no indemnity obligation with respect to [i] Hazardous
Materials first introduced to the Leased Property subsequent to the date that
Tenant's occupancy of the Leased Property shall have fully terminated; or [ii]
Hazardous Materials introduced to the Leased Property by Landlord, its agent,
employees, successors or assigns. If at any time during the Term of this Lease
any governmental authority notifies Landlord or Tenant of a violation of any
Environmental Law or Landlord reasonably believes that a Facility may violate
any Environmental Law, Landlord may require one or more environmental audits of
the Leased Premises, in such form, scope and substance as specified by Landlord,
at Tenant's expense. Tenant shall, within 30 days after receipt of an invoice
from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing any environmental audit, including without limitation, reasonable
attorneys' fees and costs.
5.3 LIMITATION OF LANDLORD'S LIABILITY. Except for the grossly
negligent or willful acts or omissions of Landlord, its employees or agents,
Landlord, its agents, and employees, will not be liable for any loss, injury,
death, or damage (including consequential damages) to persons, property, or
Tenant's business occasioned by theft, act of God, public enemy, injunction,
riot, strike, insurrection, war, court order, requisition, order of governmental
body or authority, fire, explosion, falling objects, steam, water, rain or snow,
leak or flow of water (including water from the elevator system), rain or snow
from the Leased Property or into the Leased Property or from the roof, street,
subsurface or from any other place, or by dampness or from the breakage,
leakage, obstruction, or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, or lighting fixtures of the Leased
Property, or from construction, repair, or alteration of the Leased Property or
from any acts or omissions of any other occupant or visitor of the Leased
Property, or from any other cause beyond Landlord's control.
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ARTICLE 6: USE AND ACCEPTANCE OF PREMISES
6.1 USE OF LEASED PROPERTY. Tenant shall use and occupy the Leased
Property exclusively for the Facility Uses and for all lawful and licensed
ancillary uses, and for no other purpose without the prior written consent of
the Landlord. Tenant shall obtain and maintain (or cause to be obtained and
maintained) all approvals, licenses, and consents needed to use and operate the
Leased Property as herein permitted. Tenant shall deliver to Landlord complete
copies of surveys, examinations, certification and licensure inspections,
compliance certificates, and other similar reports issued to Tenant by any
governmental agency within 10 days after Tenant's receipt of each item.
6.2 ACCEPTANCE OF LEASED PROPERTY. Tenant acknowledges that [i]
Tenant and its agents have had an opportunity to inspect the Leased Property;
[ii] Tenant has found the Leased Property fit for Tenant's use; [iii] Landlord
will deliver the Leased Property to Tenant in "as-is" condition; [iv] Landlord
is not obligated to make any improvements or repairs to the Leased Property; and
[v] the roof, walls, foundation, heating, ventilating, air conditioning,
telephone, sewer, electrical, mechanical, elevator, utility, plumbing, and other
portions of the Leased Property are in good working order. Tenant waives any
claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS
TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.3 CONDITIONS OF USE AND OCCUPANCY. Tenant agrees that during the
Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed
extrahazardous on account of fire or otherwise; keep the Leased Property in such
repair and condition as may be required by the Board of Health, or other city,
state or federal authorities, free of all cost to Landlord; not permit any acts
to be done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times to examine the condition thereof.
ARTICLE 7: REPAIRS AND MECHANICS' LIENS
7.1 MAINTENANCE. Tenant shall maintain, repair, and replace the
Leased Property, including without limitation, all structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, parking
areas, sidewalks, water, sewer, and gas connections, pipes, and mains. Tenant
shall pay, as Additional Rent, the full cost of maintenance, repairs, and
replacements. Tenant shall maintain all drives, sidewalks, parking areas, and
lawns on or about the Leased Property in a clean and orderly condition, free of
accumulations of dirt, rubbish, snow and ice. Tenant shall permit Landlord to
inspect the Leased
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Property at all reasonable times, and shall implement all reasonable suggestions
of the Landlord as to the maintenance and replacement of the Leased Property.
7.2 REQUIRED ALTERATIONS. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to the Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to maintain licensure or
certification under the Medicare and Medicaid programs (if so certified),
whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatever. All such additions, changes, improvements or
alterations shall be deemed to be Permitted Alterations and shall comply with
all laws requiring such alterations and with the provisions of ss.16.4.
7.3 MECHANIC'S LIENS. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanic's
liens against the Leased Property by reason of work, labor, services or
materials supplied or claimed to have been supplied on or to the Leased
Property. Subject to Tenant's right to contest such lien pursuant to ss.3.7 of
this Lease, Tenant shall remove, bond-off, or otherwise obtain the release of
any mechanic's lien filed against the Leased Property within 10 days after the
filing thereof. Tenant shall pay all expenses in connection therewith, including
without limitation, damages, interest, court costs and reasonable attorneys'
fees.
7.4 REPLACEMENTS OF FIXTURES AND PERSONAL PROPERTY. Tenant
shall not remove Fixtures and Personal Property from the Leased Property except
to replace the Fixtures and Personal Property by other similar items of equal
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Personal Property and replacements therefor. Tenant may finance replacements
for the Fixtures and Personal Property by equipment lease or by a security
agreement and financing statement if [i] Landlord has consented to the terms and
conditions of the equipment lease or security agreement, which consent shall not
be unreasonably withheld, conditioned, or delayed; and [ii] for Fixtures and
Personal Property having a cost in excess of $75,000.00, the equipment lessor or
lender has entered into a nondisturbance agreement with Landlord upon terms and
conditions reasonably acceptable to Landlord, including without limitation, the
following: [a] Landlord shall have the right (but not the obligation) to assume
such security agreement or equipment lease upon the occurrence of an Event of
Default under this Lease; [b] the equipment lessor or lender shall notify
Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
[c] Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or nondisturbance agreement. Tenant shall, within 30
days after receipt of an invoice from Landlord, reimburse Landlord for all costs
and expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including
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without limitation, reasonable attorneys' fees and costs. Tenant shall use its
best efforts to obtain the provisions listed in this section from an equipment
lessor, and Landlord shall be commercially reasonable in negotiating such
nondisturbance agreement.
ARTICLE 8: DEFAULTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant under this Lease, within 10 days
after such payment is due.
(b) Landlord gives Tenant three or more notices of non-
payment of Rent (after expiration of the 10 day grace period) in any Lease Year.
(c) Tenant or Guarantor (where applicable) fails to comply
with any covenant set forth in Article 14, ss.15.6, ss.15.7 or Article 20 of
this Lease.
(d) Tenant fails to observe and perform any other covenant,
condition or agreement under this Lease to be performed by Tenant and [i] such
failure continues for a period of 30 days after written notice thereof is given
to Tenant by Landlord; or [ii] if, by reason of the nature of such default, the
same cannot be remedied within said 30 days, Tenant fails to proceed with
diligence reasonably satisfactory to Landlord after receipt of the notice to
cure the same or, in any event, fails to cure such default within 75 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection of
ss.8.1.
(e) Tenant abandons or vacates the Leased Property or any
material part thereof or ceases to do business or ceases to exist for any reason
for any five or more days.
(f) [i] The filing by Tenant of a petition under 11 U.S.C. or
the commencement of a bankruptcy or similar proceeding by Tenant; [ii] the
failure by Tenant within 60 days to dismiss an involuntary bankruptcy petition
or other commencement of a bankruptcy, reorganization or similar proceeding
against Tenant, or to lift or stay any execution, garnishment or attachment of
such consequence as will impair its ability to carry on its operation at the
Leased Property; [iii] the entry of an order for relief under 11 U.S.C. in
respect of Tenant; [iv] any assignment by Tenant for the benefit of its
creditors; [v] the entry by Tenant into an agreement of composition with its
creditors; [vi] the approval by a court of competent jurisdiction of a petition
applicable to Tenant in any proceeding for its reorganization instituted under
the provisions of any state or federal bankruptcy, insolvency, or similar laws;
[vii] appointment by final order, judgment, or decree of a court of competent
jurisdiction of a receiver of a whole or any substantial part of the properties
of Tenant (provided such receiver shall not have been removed or discharged
within 60 days of the date of his qualification).
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(g) [i] Any receiver, administrator, custodian or other
person takes possession or control of any of the Leased Property and continues
in possession for 60 days; [ii] any writ against any of the Leased Property is
not released within 60 days; [iii] any final nonappealable judgment is rendered
or proceedings are instituted against the Leased Property or Tenant which affect
the Leased Property or any part thereof, which is not dismissed for 60 days
(except as otherwise provided in this section); [iv] all or a substantial part
of the assets of Tenant or Guarantor are attached, seized, subjected to a writ
or distress warrant, or are levied upon, or come into the possession of any
receiver, trustee, custodian, or assignee for the benefit of creditors; [v]
Tenant or Guarantor is enjoined, restrained, or in any way prevented by court
order, or any proceeding is filed or commenced seeking to enjoin, restrain or in
any way prevent Tenant from conducting all or a substantial part of its business
or affairs; or [vi] except as otherwise permitted hereunder, a final notice of
lien, levy or assessment is filed of record with respect to all or any part of
the Leased Property or any property of Tenant located at the Leased Property and
is not dismissed, discharged, or bonded-off within 30 days.
(h) Any representation or warranty made by Tenant or
Guarantor in this Lease or any other document executed in connection with this
Lease, any guaranty of or other security for this Lease, or any report,
certificate, application, financial statement or other instrument furnished by
Tenant or Guarantor pursuant hereto or thereto shall prove to be false,
misleading or incorrect in any material respect as of the date made.
(i) Tenant, any Guarantor, or any Affiliate defaults on any
indebtedness or obligation to Landlord or any Landlord Affiliate, or any
agreement with Landlord or any Landlord Affiliate including, without limitation,
any lease with Landlord or any Landlord Affiliate, or Tenant or any Guarantor
defaults on any Material Obligation, and any applicable grace or cure period
with respect to default under such indebtedness or obligation expires without
such default having been cured. This provision applies to all such indebtedness,
obligations and agreements as they may be amended, modified, extended, or
renewed from time to time.
(j) The occurrence of any change in Tenant's leasehold
interest in the Leased Property, without the prior written consent of Landlord.
(k) Guarantor dissolves, terminates, files a petition in
bankruptcy, or is adjudicated insolvent under 11 U.S.C. or any other insolvency
law (provided, however, in the case of an involuntary bankruptcy petition or
other commencement of bankruptcy, reorganization or similar proceeding against
Guarantor, Guarantor shall have 60 days to dismiss such action), or fails to
comply with any covenant or requirement of such Guarantor set forth in this
Lease or in the Guaranty of such Guarantor.
(l) The license for the Facility or any other Government
Authorization, is canceled, suspended or otherwise invalidated, notice of
impending revocation proceedings is received and Tenant fails to diligently
contest such proceeding, or any reduction occurs in the number of licensed beds
or units at the Facility.
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8.2 REMEDIES. Landlord may exercise any one or more of the
following remedies upon the occurrence of an Event of Default:
(a) Landlord may re-enter and take possession of the Leased
Property without terminating the Lease, and lease the Leased Property for the
account of Tenant, holding Tenant liable for all costs of the Landlord in
reletting the Leased Property and for the difference in the amount received by
such reletting and the amounts payable by Tenant under the Lease.
(b) Landlord may terminate this Lease, exclude Tenant from
possession of the Leased Property and use efforts to lease the Leased Property
to others, holding Tenant liable for the difference in the amounts received from
such reletting and the amounts payable by Tenant under the Lease.
(c) Landlord may re-enter the Leased Property and have,
repossess and enjoy the Leased Property as if the Lease had not been made, and
in such event, Tenant and its successors and assigns shall remain liable for any
contingent or unliquidated obligations or sums owing at the time of such
repossession.
(d) Landlord may have access to and inspect, examine and make
copies of the books and records and any and all accounts, data and income tax
and other returns of Tenant insofar as they pertain to the Leased Property.
(e) Landlord may accelerate all of the unpaid Rent hereunder
so that the aggregate Rent for the unexpired term of this Lease becomes
immediately due and payable, subject to Landlord's obligations under law to
leave Tenant in possession of the Leased Property.
(f) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and other amounts payable
under the Lease then due and thereafter to become due, or to enforce performance
and observance of any obligations, agreements or covenants of Tenant under this
Lease.
(g) With respect to the Collateral and Landlord's security
interest therein, Landlord may exercise all of its rights as secured party under
Article 9 of the Uniform Commercial Code as adopted in the State. Landlord may
sell the Collateral by public or private sale upon 10 days notice to Tenant.
Tenant agrees that a commercially reasonable manner of disposition of the
Collateral shall include, without limitation and at the option of Landlord, a
sale of the Collateral, in whole or in part, concurrently with the sale of the
Leased Property.
(h) Landlord may obtain control over and collect the
Receivables and apply the proceeds of the collections to satisfaction of
Tenant's Obligations unless prohibited by law. Tenant appoints Landlord or its
designee as attorney for Tenant with powers [i] to receive, to endorse, to sign
and/or to deliver, in Tenant's name or Landlord's name, any and all checks,
drafts, and other instruments for the payment of money relating to the
Receivables, and to waive demand, presentment, notice of dishonor, protest, and
any other notice with respect to any such instrument; [ii] to sign Tenant's name
on any invoice or bill of lading relating to any Receivable,
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drafts against account debtors, assignments and verifications of Receivables,
and notices to account debtors; [iii] to send verifications of Receivables to
any account debtor; and [iv] to do all other acts and things necessary to carry
out this Lease. Except for willful acts or omissions, Landlord shall not be
liable for any omissions, commissions, errors of judgment, or mistakes in fact
or law made in the exercise of any such powers. At Landlord's option, Tenant
shall [i] provide Landlord a full accounting of all amounts received on account
of Receivables with such frequency and in such form as Landlord may require,
either with or without applying all collections on Receivables in payment of
Tenant's Obligations or [ii] deliver to Landlord on the day of receipt all such
collections in the form received and duly endorsed by Tenant. At Landlord's
request, Tenant shall institute any action or enter into any settlement
determined by Landlord to be necessary to obtain recovery or redress from any
account debtor in default of Receivables. Landlord may give notice of its
security interest in the Receivables to any or all account debtors with
instructions to make all payments on Receivables directly to Landlord, thereby
terminating Tenant's authority to collect Receivables. After terminating
Tenant's authority to enforce or collect Receivables, Landlord shall have the
right to take possession of any or all Receivables and records thereof and is
hereby authorized to do so, and only Landlord shall have the right to collect
and enforce the Receivables. Prior to the occurrence of an Event of Default, at
Tenant's cost and expense, but on behalf of Landlord and for Landlord's account,
Tenant shall collect or otherwise enforce all amounts unpaid on Receivables and
hold all such collections in trust for Landlord, but Tenant may commingle such
collections with Tenant's own funds, until Tenant's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Landlord does not assume any of Tenant's obligations
under any Receivable, and Landlord shall not be responsible in any way for the
performance of any of the terms and conditions thereof by Tenant.
(i) Without waiving any prior or subsequent Event of Default,
Landlord may waive any Event of Default or, with or without waiving any Event of
Default, remedy any default.
(j) Landlord may terminate its obligation to disburse Lease
Advances.
(k) Landlord may enter and take possession of the Land and
Facility without terminating the Lease and complete construction and renovation
of the Improvements (or any part thereof) and perform the obligations of Tenant
under the Lease Documents. Without limiting the generality of the foregoing and
for the purposes aforesaid, Tenant hereby appoints Landlord its lawful
attorney-in-fact with full power to do any of the following: [i] complete
construction, renovation and equipping of the Improvements in the name of
Tenant; [ii] use unadvanced funds remaining under the Lease Amount, or funds
that may be reserved, escrowed, or set aside for any purposes hereunder at any
time, or to advance funds in excess of the Lease Amount, to complete the
Improvements; [iii] make changes in the plans and specifications that shall be
necessary or desirable to complete the Improvements in substantially the manner
contemplated by the plans and specifications; [iv] retain or employ new general
contractors, subcontractors, architects, engineers, and inspectors as shall be
required for said purposes; [v] pay, settle, or compromise all existing bills
and claims, which may be liens or security interests, or to avoid such bills and
claims becoming liens against the Facility or security interest
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against fixtures or equipment, or as may be necessary or desirable for the
completion of the construction and equipping of the Improvements or for the
clearance of title; [vi] execute all applications and certificates, in the name
of Tenant, that may be required in connection with any construction; [vii] do
any and every act that Tenant might do in its own behalf, to prosecute and
defend all actions or proceedings in connection with the Improvements; and
[viii] to execute, deliver and file all applications and other documents and
take any and all actions necessary to transfer the operations of the Facility to
Landlord or Landlord's designee. This power of attorney is a power coupled with
an interest and cannot be revoked.
8.3 RIGHT OF SET-OFF. Landlord may, and is hereby authorized by
Tenant to, at any time and from time to time without advance notice to Tenant
(any such notice being expressly waived by Tenant), set-off and apply any and
all sums held by Landlord, any indebtedness of Landlord to Tenant, and any
claims by Tenant against Landlord, against any obligations of Tenant hereunder
and against any claims by Landlord against Tenant, whether or not such
obligations or claims of Tenant are matured and whether or not Landlord has
exercised any other remedies hereunder. The rights of Landlord under this
section are in addition to any other rights and remedies Landlord may have
against Tenant.
8.4 PERFORMANCE OF TENANT'S COVENANTS. Landlord may perform any
obligation of Tenant which Tenant has failed to perform within 5 days after
Landlord has sent a written notice to Tenant informing it of its specific
failure. Tenant shall reimburse Landlord on demand, as Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the
Overdue Rate (as defined in ss.8.6).
8.5 LATE PAYMENT CHARGE. Tenant acknowledges that any default in
the payment of any installment of Rent payable hereunder will result in loss and
additional expense to Landlord in servicing any indebtedness of Landlord secured
by the Leased Property, handling such delinquent payments, and meeting its other
financial obligations, and because such loss and additional expense is extremely
difficult and impractical to ascertain, Tenant agrees that in the event any Rent
payable to Landlord hereunder is not paid within 10 days after the due date,
Tenant shall pay a late charge of 5% of the amount of the overdue payment as a
reasonable estimate of such loss and expenses, unless applicable law requires a
lesser charge, in which event the maximum rate permitted by such law may be
charged by Landlord. The 10 day grace period set forth in this section shall not
extend the time for payment of Rent or the period for curing any default or
constitute a waiver of such default.
8.6 INTEREST. In addition to the late payment charge, any payment
not made by Tenant within 10 days after the due date shall thereafter bear
interest at the rate (the "Overdue Rate") of the greater of [i] 18.5% per annum;
or [ii] 2.5% per annum above the Lease Rate then in effect; provided, however,
that at no time will Tenant be required to pay interest at a rate higher than
the maximum legal rate and, provided further, that if a court of competent
jurisdiction determines that any other charges payable under this Lease are
deemed to be interest, the Overdue Rate shall be adjusted to ensure that the
aggregate interest payable under this Lease does not accrue at a rate in excess
of the maximum legal rate. Tenant shall not be required to pay interest upon any
late payment fees assessed pursuant to ss.8.5.
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8.7 LITIGATION; ATTORNEYS' FEES. Within 5 days after Tenant has
knowledge of any litigation or other proceeding that may be instituted against
Tenant, against the Leased Property to secure or recover possession thereof, or
that may affect the title to or the interest of Landlord in the Leased Property,
Tenant shall give written notice thereof to Landlord. Tenant shall pay all
reasonable costs and expenses incurred by Landlord in enforcing or preserving
Landlord's rights under this Lease, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, including without
limitation, [i] the fees, expenses, and costs of any litigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; [ii]
reasonable attorney, paralegal, consulting and witness fees and disbursements,
whether in house counsel or outside counsel; and [iii] the expenses, including
without limitation, lodging, meals, and transportation, of Landlord and its
employees, agents, attorneys, and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency or other similar proceedings and
attendance at hearings, depositions, and trials in connection therewith. All
such costs, charges and fees payable by Tenant shall be deemed to be Additional
Rent under this Lease.
8.8 ESCROWS AND APPLICATION OF PAYMENTS. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title, and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder until an Event of Default has occurred. Any payments received
by Landlord under any provisions of this Lease during the existence or
continuance of an Event of Default shall be applied to Tenant's obligations in
the order which Landlord may determine.
8.9 REMEDIES CUMULATIVE. Except as otherwise provided herein, the
remedies of Landlord herein are cumulative to and not in lieu of any other
remedies available to Landlord at law or in equity, and the use of any one
remedy shall not be taken to exclude or waive the right to use any other remedy.
ARTICLE 9: DAMAGE AND DESTRUCTION
9.1 NOTICE OF CASUALTY. If the Leased Property shall be destroyed,
in whole or in part, or damaged by fire, flood, windstorm or other casualty (a
"Casualty"), Tenant shall give written notice thereof to the Landlord within one
business day after the occurrence of the Casualty. Within 15 days after the
occurrence of the 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 the type of Leased Property damaged and the area of the Improvements
damaged; [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 the name of the insurer, the insurance coverage limits, the deductible
amount, the expected settlement amount, and the expected settlement date; and
[vii] a description of the business interruption claim including the
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name of the insurer, the insurance coverage limits, the deductible amount, the
expected settlement amount, and the expected settlement date. Within five days
after request from Landlord, Tenant will provide Landlord with copies of all
correspondence to the insurer and any other information reasonably requested by
Landlord.
9.2 SUBSTANTIAL DESTRUCTION.
9.2.1 If the Improvements are substantially destroyed at any time
other than during the final 18 months of the Initial Term or any Renewal Term,
Tenant shall promptly rebuild and restore the Leased Property in accordance with
ss.9.4 and Landlord shall make the insurance proceeds available to Tenant for
such restoration. The term "substantially destroyed" means any casualty
resulting in the loss of use of 50% or more of the licensed beds at any one
Facility.
9.2.2 If the Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term, Landlord may elect to
terminate this Lease or terminate this Lease and all Phase Leases, at Landlord's
option, and retain the insurance proceeds unless Tenant exercises its option to
renew as set forth in ss.9.2.3. If Landlord elects to terminate, Landlord shall
give notice ("Termination Notice") of its election to terminate this Lease (or
this Lease and all Phase Leases, if elected by Landlord) within 30 days after
receipt of Tenant's notice of the damage. If Tenant does not exercise its option
to renew under ss.9.2.3 or its option to purchase under ss.9.2.4 within 15 days
after delivery of the Termination Notice, this Lease (or this Lease and all
Phase Leases, if elected by Landlord) shall terminate on the 15th day after
delivery of the Termination Notice. If this Lease (or this Lease and all Phase
Leases, if elected by Landlord) is so terminated, Tenant shall be liable to
Landlord for all Rent and all other obligations accrued under this Lease through
the effective date of termination and each Phase Tenant shall be liable to
Landlord for all Rent and all other obligations accrued under its respective
Phase Lease through the effective date of termination.
9.2.3 If the Improvements are substantially destroyed during the
final 18 months of the Initial Term or the second Renewal Term and Landlord
gives the Termination Notice, Tenant shall have the option to renew this Lease.
Tenant shall give Landlord irrevocable notice of Tenant's election to renew, and
each Phase Tenant shall give irrevocable notice of renewal, within 15 days after
delivery of the Termination Notice. If Tenant and each Phase Tenant elect to
renew, the Renewal Term will be in effect for the balance of the then current
Term plus a 5 year period. The Renewal Term will commence on the third day
following Landlord's receipt of Tenant's and each Phase Tenant's notice of
renewal. All other terms of this Lease for the Renewal Term shall be in
accordance with Article 12. The Leased Property will be restored by Tenant in
accordance with the provisions of this Article 9 regarding partial destruction.
9.2.4 If the Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term and Landlord gives the
Termination Notice, Tenant shall have the option to purchase the Leased
Property. Tenant shall give Landlord notice of Tenant's election to purchase,
and if required by Landlord, each Phase Tenant shall give notice of its election
to purchase its respective Phase Facility, within 15 days after delivery of the
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Termination Notice. If Tenant and each Phase Tenant elect to purchase their
respective Leased Property, the purchase price will be the greater of [i] the
Lease Amount or [ii] the Fair Market Value and the Fair Market Value will be
determined in accordance with ss.9.2.5. For purposes of determining the Fair
Market Value, the Leased Property will be valued as if it had been restored to
be equal in value to the Leased Property existing immediately prior to the
occurrence of the damage. All other terms of the option to purchase shall be in
accordance with ss.9.2.5. Landlord shall hold the insurance proceeds until the
closing of the purchase of the Leased Property and at closing shall deliver the
proceeds to Tenant.
9.2.5 Fair Market Value. The fair market value (the "Fair Market
Value") of the Leased Property shall be determined as follows:
(a) The parties shall attempt to determine the Fair Market Value
by mutual agreement within 15 days after giving the purchase notice. However, if
the parties do not agree on the Fair Market Value within such 15 day period, the
following provisions shall apply.
(b) Landlord and Tenant shall each give the other party notice of
the name of an acceptable appraiser 15 days after giving of the purchase notice.
The two appraisers will then select a third appraiser within an additional 5
days. Each appraiser must demonstrate to the reasonable satisfaction of both
Landlord and Tenant that it has significant experience in appraising properties
similar to the Leased Property. Within 5 days after designation, each appraiser
shall submit a resume to Landlord and Tenant setting forth such appraiser's
qualifications including education and experience with similar properties. A
notice of objections to the qualifications of any appraiser shall be given
within 10 days after receipt of such resume. If a party fails to timely object
to the qualifications of an appraiser, then the appraiser shall be conclusively
deemed satisfactory. If a party gives a timely notice of objection to the
qualifications of an appraiser, then the disqualified appraiser shall be
replaced by an appraiser selected by the qualified appraisers or, if all
appraisers are disqualified, then by an appraiser selected by a commercial
arbitrator acceptable to Landlord and Tenant.
(c) The Fair Market Value shall be determined by the appraisers
within 45 days after the selection of the appraisers as follows. Each of the
appraisers shall be instructed to prepare an appraisal of the Leased Property in
accordance with the following instructions:
The Leased Property is to be valued upon the three conventional
approaches to estimate value known as the Income, Sales Comparison and Cost
Approaches. Once the approaches are completed, the appraiser correlates the
individual approaches into a final value conclusion.
The three approaches to estimate value are summarized as follows:
INCOME APPROACH: This valuation approach recognizes that the value
of the operating tangible and intangible asset can be represented by
the expected economic viability of the business giving returns on
and of the assets.
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SALES COMPARISON APPROACH: This valuation approach is based upon the
principle of substitution. When a facility is replaceable in the
market, the market approach assumes that value tends to be set at
the price of acquiring an equally desirable substitute facility.
Since healthcare market conditions change and frequently are subject
to regulatory and financing environments, adjustments need to be
considered. These adjustments also consider the operating
differences such as services and demographics.
COST APPROACH: This valuation approach estimates the value of the
tangible assets only. Value is represented by the market value of
the land plus the depreciated reproduction cost of all improvements
and equipment.
In general, the Income and Sales Comparison Approaches are considered the best
representation of value because they cover both tangibles and intangible assets,
consider the operating characteristics of the business and have the most
significant influence on attracting potential investors.
The appraised values submitted by the three appraisers shall be ranked from
highest value to middle value to lowest value, the appraised value (highest or
lowest) which is furthest from the middle appraised value shall be discarded,
and the remaining two appraised values shall be averaged to arrive at the Fair
Market Value.
(d) Tenant shall pay, or reimburse Landlord for, all costs and
expenses in connection with the appraisals.
(e) The purchase of the Leased Property by Tenant shall close on a
date agreed to by Landlord and Tenant which shall be not less than 60 days after
Landlord's receipt of the purchase notice and not more than 60 days after the
Fair Market Value of the Leased Property has been determined. Such date may be
extended by mutual agreement of the parties to accommodate Tenant's financing.
At the closing, Tenant shall pay the Option Price and all closing costs in
immediately available funds and Landlord shall convey title to the Leased
Property to Tenant by a transferable and recordable special warranty deed and
special warranty bill of sale.
(f) If Tenant for any reason fails to purchase the Leased Property
after Tenant has given the purchase notice, then Tenant shall pay Landlord all
costs and expenses incurred by Landlord as a result of the failure to close
including costs of unwinding swap transactions or other interest rate protection
devices and preparing for the closing. Tenant shall continue to be obligated as
lessee hereunder for the remainder of the Term (including the Extended Term as
set forth in ss.12.3).
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9.3 PARTIAL DESTRUCTION. If the Leased Property is not
substantially destroyed, then Tenant shall comply with the provisions of ss.9.4
and Landlord shall make the insurance proceeds available to Tenant for such
restoration.
9.4 RESTORATION. Tenant shall promptly repair, rebuild, or restore
the Leased Property, at Tenant's expense, so as to make the Leased Property at
least equal in value to the Leased Property existing immediately prior to such
occurrence and as nearly similar to it in character as is practicable and
reasonable. Before beginning such repairs or rebuilding, or letting any
contracts in connection with such repairs or rebuilding, Tenant will submit for
Landlord's approval, which approval Landlord will not unreasonably withhold or
delay, plans and specifications meeting the requirements of ss.16.2 for such
repairs or rebuilding. Promptly after receiving Landlord's approval of the plans
and specifications and receiving the proceeds of insurance, Tenant will begin
such repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including attorneys' fees. Payments will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold 10% from each payment until the work
is completed and proof has been furnished to Landlord that no lien or liability
has attached or will attach to the Leased Property or to Landlord in connection
with such repairing or rebuilding. Upon the completion of rebuilding and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating organization, or
similar body. Any remaining proceeds of insurance after such restoration will be
Tenant's property.
9.5 INSUFFICIENT PROCEEDS. If the proceeds of any insurance
settlement are not sufficient to pay the costs of such repair, rebuilding or
restoration in full, Tenant shall deposit with Landlord at Landlord's option,
and within 10 days of Landlord's request, an amount sufficient in Landlord's
reasonable judgment to complete such repair, rebuilding or restoration. Tenant
shall not, by reason of the deposit or payment, be entitled to any reimbursement
from Landlord or diminution in or postponement of the payment of the Rent.
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9.6 NOT TRUST FUNDS. Notwithstanding anything herein or at law or
equity to the contrary, none of the insurance proceeds paid to Landlord as
herein provided shall be deemed trust funds, and Landlord shall be entitled to
dispose of such proceeds as provided in this Article 9. Tenant expressly assumes
all risk of loss, including a decrease in the use, enjoyment or value, of the
Leased Property from any casualty whatsoever, whether or not insurable or
insured against.
9.7 LANDLORD'S INSPECTION. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications at
the building, and Landlord and its architects and engineers may examine them at
all reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
insurance, according to Article 4, will be applicable to any repairs or
rebuilding under this section.
9.8 LANDLORD'S COSTS. Tenant shall, within 30 days after receipt of
an invoice from Landlord, pay the costs, expenses, and fees of any architect or
engineer employed by Landlord to review any plans and specifications and to
supervise and approve any construction, or for any services rendered by such
architect or engineer to Landlord as contemplated by any of the provisions of
this Lease, or for any services performed by Landlord's attorneys in connection
therewith.
9.9 NO RENT ABATEMENT. Rent will not abate pending the repairs or
rebuilding of the Leased Property, but shall be offset against any rental
insurance proceeds received by Landlord.
ARTICLE 10: CONDEMNATION
10.1 TOTAL TAKING. If, by exercise of the right of eminent domain
or by conveyance made in response to the threat of the exercise of such right
("Taking"), the entire Leased Property is taken, or so much of the Leased
Property is taken that the Leased Property cannot be used by Tenant for the
purposes for which it was used immediately before the Taking, then this Lease
will end on the earlier of the vesting of title to the Leased Property in the
condemning authority or the taking of possession of the Leased Property by the
condemning authority. All damages awarded for such Taking under the power of
eminent domain shall be the property of the Landlord, whether such damages shall
be awarded as compensation for diminution in value of the leasehold or the fee
of the Leased Property. If this Lease is terminated with respect to a Facility
subject to a taking as described in this section, Landlord may, at its option,
terminate each Phase Lease.
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10.1.1 If the entire Leased Property is taken during the final 18
months of the Initial Term or any Renewal Term and Landlord elects to terminate
each Phase Lease, Tenant shall have the option to purchase each Phase Facility
(but not less than all Phase Facilities). Tenant shall give Landlord notice of
Tenant's election to purchase within 15 days after delivery of the notice of
Landlord's intent to terminate. If Tenant elects to purchase each Phase
Facility, the Option Price will be determined in accordance with ss.13.2 and the
Fair Market Value will be determined in accordance with ss.13.3. All other terms
of the option to purchase shall be in accordance with Article 13.
10.2 PARTIAL TAKING. If, after a Taking, so much of the Leased
Property remains that the Leased Property can be used for substantially the same
purposes for which it was used immediately before the Taking, then [i] this
Lease will end as to the part taken on the earlier of the vesting of title to
the Leased Property in the condemning authority or the taking of possession of
the Leased Property by the condemning authority; [ii] at its cost, Tenant shall
restore so much of the Leased Property as remains to a sound architectural unit
substantially suitable for the purposes for which it was used immediately before
the Taking, using good workmanship and new, first-class materials; [iii] upon
completion of the restoration, Landlord will pay Tenant the lesser of the net
award made to Landlord on the account of the Taking (after deducting from the
total award, attorneys', appraisers', and other fees and costs incurred in
connection with the obtaining of the award and amounts paid to the holders of
mortgages secured by the Leased Property), or Tenant's actual out-of-pocket
costs of restoring the Leased Property; and [iv] Landlord shall be entitled to
the balance of the net award. The restoration shall be completed in accordance
with ss.ss.9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions deemed to apply to
condemnation instead of casualty.
10.3 CONDEMNATION PROCEEDS NOT TRUST FUNDS. Notwithstanding
anything in this Lease or at law or equity to the contrary, none of the
condemnation award paid to Landlord shall be deemed trust funds, and Landlord
shall be entitled to dispose of such proceeds as provided in this Article 10.
Tenant expressly assumes all risk of loss, including a decrease in the use,
enjoyment, or value, of the Leased Property from any Condemnation.
ARTICLE 11: TENANT'S PROPERTY
11.1 TENANT'S PROPERTY. Tenant shall install, place, and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Personal Property as may be required or as
Tenant may, from time to time, deem necessary or useful to operate the Leased
Property for its permitted purposes. All fixtures, furniture, equipment,
inventory, and other personal property installed, placed, or used on the Leased
Property which is owned by Tenant or leased by Tenant from third parties is
hereinafter referred to as "Tenant's Property".
11.2 REQUIREMENTS FOR TENANT'S PROPERTY. Tenant shall comply with
all of the following requirements in connection with Tenant's Property:
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(a) Tenant shall, at Tenant's sole cost and expense,
maintain, repair, and replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense, keep
Tenant's Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, earthquake (if Leased Property is in
earthquake zone 1 or 2), and other physical loss perils commonly covered by fire
and extended coverage, boiler and machinery, and difference in conditions
insurance in an amount not less than 90% of the then full replacement cost
thereof. Tenant shall use the proceeds from any such policy for the repair and
replacement of Tenant's Property. The insurance shall meet the requirements of
ss.4.3.
(c) Tenant shall pay all taxes applicable to Tenant's
Property.
(d) If Tenant's Property is damaged or destroyed by fire or
any other cause, Tenant shall promptly repair or replace Tenant's Property
unless Landlord elects to terminate this Lease pursuant to ss.9.2.2.
(e) Unless an Event of Default or any event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
has occurred, Tenant may remove Tenant's Property from the Leased Property from
time to time provided that [i] the items removed are not required to operate the
Leased Property for the Facility Uses (unless such items are being replaced by
Tenant); and [ii] Tenant repairs any damage to the Leased Property resulting
from the removal of Tenant's Property.
(f) Tenant shall not, without the prior written consent of
Landlord or as otherwise provided in this Lease, remove any Tenant's Property or
Leased Property. Tenant shall, at Landlord's option, remove Tenant's Property
upon the termination or expiration of this Lease and shall repair any damage to
the Leased Property resulting from the removal of Tenant's Property. If Tenant
fails to remove Tenant's Property within 30 days after request by Landlord, then
Tenant shall be deemed to have abandoned Tenant's Property, Tenant's Property
shall become the property of Landlord, and Landlord may remove, store and
dispose of Tenant's Property. In such event, Tenant shall have no claim or right
against Landlord for such property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay Landlord, upon demand, all
expenses incurred by Landlord in removing, storing, and disposing of Tenant's
Property and repairing any damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration of this Lease.
(g) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Property. For equipment loans or leases
for equipment having an original cost in excess of $75,000.00, Tenant shall
cause such equipment lessor or lender to enter into a nondisturbance agreement
with Landlord upon terms and conditions acceptable to Landlord, including
without limitation, the following: [i] Landlord shall have the right (but not
the obligation) to assume such equipment lease or security agreement upon the
occurrence of an Event of Default by Tenant hereunder; [ii] such equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a
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reasonable opportunity to cure such default; and [iii] Landlord shall have the
right to assign its interest in the equipment lease or security agreement and
nondisturbance agreement. Tenant shall, within 30 days after receipt of an
invoice from Landlord, reimburse Landlord for all costs and expenses incurred in
reviewing and approving the equipment lease, security agreement and
nondisturbance agreement, including without limitation, reasonable attorneys'
fees and costs. Tenant shall use its best efforts to obtain the provisions
listed in this section from an equipment lessor, and Landlord shall be
commercially reasonable in negotiating such nondisturbance agreement.
ARTICLE 12: RENEWAL OPTIONS
12.1 RENEWAL OPTIONS. Tenant has the option to renew ("Renewal
Option") this Lease for two 5-year renewal terms and one 4-year 11-month renewal
term (each a "Renewal Term"). Tenant can exercise the Renewal Option only upon
satisfaction of the following conditions:
(a) There shall be no uncured Event of Default, or any event
which with the passage of time or giving of notice would constitute an Event of
Default, at the time Tenant exercises its Renewal Option nor on the date the
Renewal Term is to commence.
(b) Tenant shall give Landlord irrevocable written notice of
renewal no later than the date which is [i] 90 days prior to the expiration date
of the then current Term; or [ii] 15 days after Landlord's delivery of the
Termination Notice as set forth in ss.9.2.3.
(c) Each Phase Tenant shall concurrently give irrevocable
notice of renewal for each Affiliate Lease.
12.2 EFFECT OF RENEWAL. The following terms and conditions will be
applicable if Tenant renews the Lease:
(a) EFFECTIVE DATE. Except as otherwise provided in ss.9.2.3,
the effective date of any Renewal Term will be the first day after the
expiration date of the then current Term. The first day of each Renewal Term is
also referred to as the Renewal Date.
(b) LEASE AMOUNT. Effective as of the Renewal Date, a single
Lease Amount will be computed by summing all Lease Advance Amounts (including
the Acquisition Amount).
(c) LEASE RATE. Effective as of the Renewal Date, a single
Lease Rate will be computed equal to the Renewal Rate. The Renewal Rate for each
Renewal Term shall be the greater of [i] the sum of [a] the Lease Rate in effect
during the then current Lease Year plus [b] the Increaser Rate, or [ii] the fair
market rental lease rate for the Facility as determined according to the
provisions of this section. Landlord and Tenant shall attempt to determine the
fair market rental lease rate for the Facility by mutual agreement 180 days
prior to the expiration date for the then current Term. If the parties do not
agree on such lease rate within a 15 day period, appraisers shall
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be chosen as provided in ss.9.2.5 to determine the fair market rental lease
rate. The appraisers shall be instructed to appraise the fair market value lease
rate as a financing lease rate for a health care facility of the same type as
the Facility and shall take into account the lease rate then being charged by
Landlord to tenants of comparable creditworthiness for comparable facilities.
The appraised rates submitted by the three appraisers shall be ranked from
highest to lowest, the rate (highest or lowest) which is furthest from the
middle rate shall be discarded, and the remaining two appraised rates shall be
averaged to arrive at the fair market rental lease rate.
(d) BASE RENT. Effective as of the Renewal Date, the Base
Rent will be changed to equal 1/12th of the product of [i] the Lease Amount on
the Renewal Date times [ii] the new Lease Rate equal to the Renewal Rate.
(e) OTHER TERMS AND CONDITIONS. Except for the modifications
set forth in this ss.12.2, all other terms and conditions of the Lease will
remain the same for the Renewal Term. The Lease Rate and Base Rent will increase
annually as set forth in ss.2.2.
12.3 EFFECT OF NON-RENEWAL OR EXPIRATION OF LEASE. The following
terms and conditions will be applicable if Tenant does not renew this Lease or
exercise its Option to Purchase by the expiration date for the then current
Term:
(a) EXTENSION OF CURRENT TERM. The current Term will be
extended (the "Extended Term") for 120 days; provided, however, that the
Extended Term will expire on such earlier date of the closing of the sale
pursuant to the Option to Purchase.
(b) LEASE PAYMENTS. During the Extended Term, Tenant shall
continue to make monthly payments of Rent (including Base Rent) based upon the
then existing Lease Rate.
ARTICLE 13: RIGHT OF FIRST REFUSAL
13.1 RIGHT OF FIRST REFUSAL. Tenant shall have the right of first
refusal to purchase the Leased Property during the Term of this Lease. If at any
time during the Term, Landlord shall receive a bona fide offer ("Offer") from a
third person for the purchase of the Leased Property, which Offer Landlord
desires to accept, Landlord shall promptly deliver to Tenant a copy of such
Offer. Tenant shall have the right for a period of 60 days thereafter to elect
to purchase the Leased Property on the same terms and conditions as those set
forth in the Offer. If Tenant elects to purchase the Leased Property, Tenant
must give written notice thereof to Landlord no later than the 60th day after
the date Landlord delivers the Offer to Tenant.
13.2 NO EXERCISE. If Tenant does not elect to exercise its right
of first refusal as set forth in ss.13.1, Landlord shall be free to sell and
convey the Leased Property to the third party purchaser in accordance with the
terms and provisions of the Offer. In the event that Landlord does not
consummate the sale of the Leased Property to such purchaser, Tenant's right of
first refusal under this Article 13 shall remain applicable to subsequent
bonafide offers from third persons.
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ARTICLE 14: NEGATIVE COVENANTS
Until Tenant's Obligations shall have been performed in full, Tenant
and Guarantor covenant and agree that Tenant (and Guarantor where applicable)
shall not do any of the following without the prior written consent of Landlord:
14.1 NO DEBT. Tenant shall not create, incur, assume, or permit to
exist any indebtedness other than [i] trade debt incurred in the ordinary course
of Tenant's business; [ii] indebtedness relating to the Letter of Credit; and
[iii] indebtedness that is secured by any Permitted Lien.
14.2 NO LIENS. Tenant shall not create, incur, or permit to exist
any lien, charge, encumbrance, easement or restriction upon the Leased Property
or any lien upon or pledge of any interest in Tenant, except for Permitted
Liens.
14.3 NO GUARANTIES. Tenant shall not 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.
14.4 NO TRANSFER. Tenant shall not sell, lease, sublease,
mortgage, convey, assign or otherwise transfer any legal or equitable interest
in the Leased Property or any part thereof, except for transfers made in
connection with any Permitted Lien without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.
14.5 NO DISSOLUTION. Tenant, Manager (if applicable) or Guarantor
shall not dissolve, liquidate, merge, consolidate or terminate its existence or
sell, assign, lease, or otherwise transfer (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired). Notwithstanding the foregoing, Guarantor may merge
with another entity provided that [i] Guarantor is the surviving corporation;
and [ii] following the merger, Guarantor can satisfy all of the obligations of
Guarantor under the Lease Documents, including but not limited to the financial
covenants in ss.15.7.
14.6 NO CHANGE IN MANAGEMENT OR OPERATION. No material change
shall occur in the management of Manager or in the management or licensed
operation of the Facility. Balanced Care at Saxonburg, Inc. shall remain the
Manager of the Facility and Tenant shall remain the licensed operator of the
Facility. Guarantor shall not make a change in its President, Chief Operating
Officer, or Chief Development Officer without giving Landlord prior written
notice (or in the case of death, written notice within a reasonable time
thereafter).
14.7 NO INVESTMENTS. Tenant shall not purchase or otherwise
acquire, hold, or invest in securities (whether capital stock or instruments
evidencing indebtedness) of or make loans or advances to any person, including,
without limitation, any Guarantor, any Affiliate, or any shareholder, member or
partner of Tenant, Guarantor or any Affiliate, except for cash balances
temporarily invested in short-term or money market securities.
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14.8 CONTRACTS. Tenant shall not execute or modify any material
contracts or agreements with respect to the Facility except for contracts and
modifications approved by Landlord. Contracts made in the ordinary course of
business and in an amount less than $250,000.00 shall not be considered
"material" for purposes of this paragraph. The management agreement currently in
effect between Tenant and Manager is acceptable.
14.9 SUBORDINATION OF PAYMENTS TO AFFILIATES. After the occurrence
of an Event of Default and until such Event of Default is cured, Tenant and
Guarantor shall not make any payments or distributions (including, without
limitation, fees, principal, interest, dividends, liquidating distributions,
management fees, cash flow distributions or lease payments) to Guarantor,
Manager (if applicable), any Affiliate, or any shareholder, member or partner of
Tenant, Guarantor, Manager (if applicable) or any Affiliate. Notwithstanding the
foregoing, Guarantor shall be permitted to pay dividends to shareholders and
regularly scheduled salary and bonus payments (but no extraordinary salary,
bonuses, or other compensation).
14.10 CHANGE OF LOCATION OR NAME. Tenant shall not change any of
the following: [i] the location of the principal place of business or chief
executive office of Tenant, or any office where any of Tenant's books and
records are maintained (other than the change to be made in May, 1999 as
previously disclosed to Landlord); or [ii] the name under which Tenant conducts
any of its business or operations.
ARTICLE 15: AFFIRMATIVE COVENANTS
15.1 PERFORM OBLIGATIONS. Tenant shall perform or cause to be
performed all of its obligations under this Lease, the Government
Authorizations, the Permitted Exceptions, and all Legal Requirements. Tenant
shall take all necessary action to obtain all Government Authorizations required
for the operation of the Facility as soon as possible after the Effective Date.
15.2 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 the
Facility or any portion thereof, Tenant will cause such proceedings to be
vigorously contested in good faith, and in the event of an adverse ruling or
decision, prosecute all allowable appeals therefrom, and will, without limiting
the generality of the foregoing, resist the entry or seek the stay of any
temporary or permanent injunction that may be entered, and use all reasonable
commercial efforts to bring about a favorable and speedy disposition of all such
proceedings and any other proceedings.
15.3 DOCUMENTS AND INFORMATION.
15.3.1 FURNISH DOCUMENTS. Tenant shall periodically during the
term of the Lease deliver to Landlord the Annual Financial Statements, Periodic
Financial Statements and other documents described on Exhibit C within the
specified time periods. With each delivery of Annual Financial Statements and
Periodic Financial Statements (other than the monthly Facility Financial
Statement) to Landlord, Tenant shall also deliver to Landlord a certificate
signed by the
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Chief Financial Officer, general partner or managing member (as applicable) of
Tenant, an Annual Facility Financial Report or Quarterly Facility Financial
Report, as applicable, and a Quarterly Facility Accounts Receivable Aging Report
all in the form of Exhibit D. In addition, Tenant shall deliver to Landlord the
Annual Facility Financial Report and a Quarterly Facility Accounts Receivable
Aging Report (based upon internal financial statements) within 60 days after the
end of each fiscal year.
15.3.2 FURNISH INFORMATION. Tenant shall [i] promptly supply
Landlord with such information concerning its financial condition, affairs and
property, as Landlord may reasonably request from time to time hereafter,
including reporting formats used by Landlord and electronic filing and transfer;
[ii] promptly notify Landlord in writing of any condition or event that
constitutes a breach or event of default of any term, condition, warranty,
representation, or provisions of this Agreement or any other agreement, and of
any material adverse change in its financial condition; [iii] maintain a
standard and modern system of accounting; [iv] permit Landlord or any of its
agent or representatives to have access to and to examine all of its books and
records regarding the financial condition of the Facility at any time or times
hereafter during business hours and after reasonable oral or written notice; and
[v] permit Landlord to copy and make abstracts from any and all of said books
and records.
15.3.3 FURTHER ASSURANCES AND INFORMATION. Tenant shall, on request
of Landlord from time to time, execute, deliver, and furnish documents as may be
necessary to fully consummate the transactions contemplated under this
Agreement. Within 15 days after a request from Landlord, Tenant shall provide to
Landlord such additional information regarding Tenant, Tenant's financial
condition or the Facility as Landlord, or any existing or proposed creditor of
Landlord, or any auditor or underwriter of Landlord, may require from time to
time, including, without limitation, a current Tenant's Certificate and Facility
Financial Report in the form of Exhibit D. Upon Landlord's request, but not more
than once every three years, Tenant shall provide to Landlord, at Tenant's
expense, an appraisal prepared by an MAI appraiser setting forth the current
fair market value of the Leased Property.
15.3.4 MATERIAL COMMUNICATIONS. Tenant shall transmit to Landlord,
within 5 business days after receipt thereof, any material communication
affecting a Facility, this Lease, the Legal Requirements or the Government
Authorizations, and Tenant will promptly respond to Landlord's inquiry with
respect to such information. Tenant shall promptly notify Landlord in writing
after Tenant has knowledge of any potential, threatened or existing litigation
or proceeding against, or investigation of, Tenant, Guarantor, or the Facility
that may affect the right to operate the Facility or Landlord's title to the
Facility or Tenant's interest therein.
15.3.5 REQUIREMENTS FOR FINANCIAL STATEMENTS. Tenant and Guarantor
shall meet the following requirements in connection with the preparation of the
financial statements: [i] all audited financial statements shall be prepared in
accordance with general accepted accounting principles consistently applied;
[ii] all unaudited financial statements shall be prepared in a manner
substantially consistent with prior audited and unaudited financial statements
submitted to Landlord; [iii] all financial statements shall fairly present the
financial condition and performance for the relevant period in all material
respects; [iv] the financial statements shall
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include all notes to the financial statements and a complete schedule of
contingent liabilities and transactions with Affiliates; and [v] the audited
financial statements shall contain an unqualified opinion.
15.4 COMPLIANCE WITH LAWS. Tenant shall comply with all Legal
Requirements and keep all Government Authorizations in full force and effect.
Tenant shall pay when due all taxes and governmental charges of every kind and
nature that are assessed or imposed upon Tenant at any time during the term of
the Lease, including, without limitation, all income, franchise, capital stock,
property, sales and use, business, intangible, employee withholding, and all
taxes and charges relating to Tenant's business and operations. Tenant shall be
solely responsible for compliance with all Legal Requirements, including the
ADA, and Landlord shall have no responsibility for such compliance.
15.5 BROKER'S COMMISSION. Tenant shall indemnify Landlord from
claims of brokers arising by the execution hereof or the consummation of the
transactions contemplated hereby and from expenses incurred by Landlord in
connection with any such claims (including attorneys' fees).
15.6 EXISTENCE AND CHANGE IN OWNERSHIP. Tenant, Manager (if
applicable) and Guarantor shall maintain its existence throughout the term of
this Agreement. Any change in the ownership of Tenant or Manager (if
applicable), directly or indirectly, shall require Landlord's prior written
consent. Landlord's consent to a change in ownership of Tenant shall not be
unreasonably withheld.
15.7 FINANCIAL COVENANTS. The defined terms used in this section
are defined in ss.15.7.1. The method of calculating Net Worth and valuing assets
shall be consistent with the Financial Statements. The following financial
covenants shall be met throughout the term of this Lease:
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15.7.1 DEFINITIONS.
(a) "Cash Flow" means the net income of Tenant as reflected
on the income statement of Tenant plus [i] the amount of the provision for
depreciation and amortization; [ii] the amount of the provision for management
fees; plus [iii] the amount of the provision for income taxes; plus [iv] the
amount of the provision for Rent payments and interest and lease payments, if
any; minus [v] an imputed management fee equal to 5% of gross revenues (net of
contractual allowances); and minus [vi] an imputed replacement reserve of
$250.00 per licensed bed at the Facility, per year.
(b) "Coverage Ratio" is the ratio of [i] Cash Flow for each
applicable period; to [ii] the Rent payments due pursuant to this Lease and all
other debt service and lease payments relating to the Leased Property for the
applicable period.
(c) "Net Worth" has the meaning given under generally accepted
accounting principles.
15.7.2 COVERAGE RATIO. Tenant shall maintain for each fiscal
quarter a Coverage Ratio with respect to the Facility of not less than 1.25 to
1.00.
15.7.3 NET WORTH. Guarantor shall maintain for each fiscal quarter
a Net Worth of at least $55,000,000.00 with cash and cash equivalents of at
least $5,000,000.00.
15.7.4 CURRENT RATIO. Guarantor shall maintain for each fiscal
quarter a ratio of current assets to current liabilities of not less than 1.25
to 1.00.
15.7.5 DEBT TO EQUITY RATIO. Guarantor shall maintain for each
fiscal quarter a ratio of total indebtedness to shareholders' equity of not more
than 2.50 to 1.00. The aggregate lease amount under all capitalized and
operating leases shall be included as indebtedness and all subordinated debt
shall be included as equity.
15.8 TRANSFER OF LICENSE. If this Lease is terminated due to
expiration of the Term, pursuant to an Event of Default or for any reason other
than Tenant's purchase of the Leased Property, or if Tenant vacates the Leased
Property without termination of this Lease, Tenant shall execute, deliver and
file all documents and statements requested by Landlord to effect the transfer
of the Facility license and Government Authorizations to an entity designated by
Landlord, subject to any required approval of governmental regulatory
authorities, and Tenant shall provide to Landlord all information and records
required by Landlord in connection with the transfer of the license and
Government Authorizations.
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS
16.1 PROHIBITION ON ALTERATIONS AND IMPROVEMENTS. Except for
Permitted Alterations (as hereinafter defined), Tenant shall not make any
structural or nonstructural
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changes, alterations, additions and/or improvements (hereinafter collectively
referred to as "Alterations") to the Leased Property.
16.2 APPROVAL OF ALTERATIONS. If Tenant desires to perform any
Permitted Alterations, Tenant shall deliver to Landlord plans, specifications,
drawings, and such other information as may be reasonably requested by Landlord
(collectively the "Plans and Specifications") showing in reasonable detail the
scope and nature of the Alterations that Tenant desires to perform. It is the
intent of the parties hereto that the level of detail shall be comparable to
that which is referred to in the architectural profession as "design development
drawings" as opposed to working or biddable drawings. Landlord agrees not to
unreasonably delay its review of the Plans and Specifications. Within 30 days
after receipt of an invoice, Tenant shall reimburse Landlord for all costs and
expenses incurred by Landlord in reviewing and, if required, approving or
disapproving the Plans and Specifications, inspecting the Leased Property, and
otherwise monitoring compliance with the terms of this Article 16. Tenant shall
comply with the requirements of ss.16.4 in making any Permitted Alterations.
16.3 PERMITTED ALTERATIONS. Permitted Alterations means any one of
the following: [i] Alterations approved by Landlord; [ii] Alterations required
under ss.7.2; [iii] Alterations having a total cost of less than $250,000.00; or
[iv] repairs, rebuilding and restoration required or undertaken pursuant to
ss.9.4.
16.4 REQUIREMENTS FOR PERMITTED ALTERATIONS. Tenant shall comply
with all of the following requirements in connection with any Permitted
Alterations:
(a) The Permitted Alterations shall be made in accordance
with the Plans and Specifications approved by Landlord, if applicable.
(b) The Permitted Alterations and the installation thereof
shall comply with all applicable legal requirements and insurance requirements.
(c) The Permitted Alterations shall be done in a good and
workmanlike manner, shall not impair the value or the structural integrity of
the Leased Property, and shall be free and clear of all mechanic's liens.
(d) For any Permitted Alterations having a total cost of
$250,000.00 or more, Tenant shall deliver to Landlord a payment and performance
bond, with a surety acceptable to Landlord, in an amount equal to the estimated
cost of the Permitted Alterations, guaranteeing the completion of the work free
and clear of liens and in accordance with the approved Plans and Specifications,
and naming Landlord and any mortgagee of Landlord as joint obligees on such
bond.
(e) Tenant shall, at Tenant's expense, obtain a builder's
completed value risk policy of insurance insuring against all risks of physical
loss, including collapse and transit coverage, in a nonreporting form, covering
the total value of the work performed, and equipment, supplies, and materials,
and insuring initial occupancy. Landlord and any mortgagee
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of Landlord shall be additional insureds of such policy. Landlord shall have the
right to approve the form and substance of such policy.
(f) Tenant shall pay the premiums required to increase the
amount of the insurance coverages required by Article 4 to reflect the increased
value of the Improvements resulting from installation of the Permitted
Alterations, and shall deliver to Landlord a certificate evidencing the increase
in coverage.
(g) Tenant shall, not later than 60 days after completion of
the Permitted Alterations, deliver to Landlord a revised "as-built" survey of
the Leased Property if the Permitted Alterations altered the Land or "footprint"
of the Improvements and an "as-built" set of Plans and Specifications for the
Permitted Alterations in form and substance satisfactory to Landlord.
(h) Tenant shall, not later than 30 days after Landlord sends
an invoice, reimburse Landlord for any reasonable costs and expenses, including
attorneys' fees and architects' and engineers' fees, incurred in connection with
reviewing and approving the Permitted Alterations and ensuring Tenant's
compliance with the requirements of this section. The daily fee for Landlord's
consulting engineer is $750.00.
16.5 OWNERSHIP AND REMOVAL OF PERMITTED ALTERATIONS. The Permitted
Alterations shall become a part of the Leased Property, owned by Landlord, and
leased to Tenant subject to the terms and conditions of this Lease. Tenant shall
not be required or permitted to remove any Permitted Alterations.
16.6 SIGNS. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of this
Lease, Tenant shall, within 30 days after notice from Landlord, remove the signs
and restore the Leased Property to its original condition.
ARTICLE 17: EARNOUT LEASE ADVANCES
17.1 FIRST EARNOUT LEASE ADVANCE. Prior to the third anniversary
of the Effective Date, Landlord shall, at Tenant's request, make a Lease Advance
to Tenant in an amount not to exceed $125,000.00 ("First Earnout Lease Advance")
upon satisfaction of the First Earnout Conditions (defined below).
17.1.1 CONDITIONS TO FIRST EARNOUT LEASE ADVANCE. Landlord's
obligation to make the First Earnout Advance pursuant to ss.17.1 is subject to
the following conditions ("First Earnout Conditions"): [i] the Facility achieves
an Adjusted Coverage Ratio (defined below) of 1.25 to 1.00 for four consecutive
quarters based on audited financial statements; [ii] the Lease Amount including
the First Earnout Lease Advance is less than 90% of the appraised value of the
Leased Property and not greater than replacement costs based on a current
appraisal; [iii] no Event of Default shall have occurred under any agreements
between Tenant, any Affiliate, Manager, or Guarantor with Landlord; [iv] no
material adverse change shall have occurred in the condition of
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Tenant, Guarantor, the local market or the assisted living industry; and [v] to
the extent available from the title company insuring Landlord's title to the
Leased Property, Tenant has provided, at Tenant's expense, an endorsement to the
Title Policy increasing the amount of the coverage by the amount of the First
Earnout Lease Advance. "Adjusted Coverage Ratio" means the ratio of [i] Cash
Flow for each applicable period; to [ii] rent payments due pursuant to this
Lease (assuming that the First Earnout Lease Advance was made using a Blended
Lease Rate (defined below) and all other debt service and lease payments
relating to the Leased Property for the applicable period. The "Blended Lease
Rate" shall mean the rate determined by calculating the weighted average of [i]
the existing Lease Rate and [ii] the Estimated Lease Rate. The "Estimated Lease
Rate" shall mean the greater of [a] the rate estimated by Landlord to be in
effect at the time that the First Earnout Lease Advance is funded based upon
Landlord's reasonable estimate of the yield on comparative term United States
Treasury Notes for the remaining years left in Term at the time that funding of
the First Earnout Lease Advance is anticipated; or [b] 10.25% plus the
applicable inflation adjustments.
17.2 SECOND EARNOUT LEASE ADVANCE. Prior to the third anniversary
of the Effective Date, Landlord shall, at Tenant's request, make a Lease Advance
to Tenant in an amount not to exceed $125,000.00 ("Second Earnout Lease
Advance") upon satisfaction of the Second Earnout Conditions (defined below).
The First Earnout Lease Advance and the Second Earnout Lease Advance may be
collectively called "Earnout Lease Advances". Tenant may use the Earnout Lease
Advances for any purposes.
17.2.1 CONDITIONS TO SECOND EARNOUT LEASE ADVANCE. Landlord's
obligation to make the Second Earnout Advance pursuant to ss.17.2 is subject to
the following conditions ("Second Earnout Conditions"): [i] the Facility
achieves an Adjusted Coverage Ratio (defined in ss.17.1.1) of 1.25 to 1.00 for
four consecutive quarters following disbursement of the First Earnout Lease
Advance based on audited financial statements; [ii] the Lease Amount including
the Earnout Lease Advances is less than 90% of the appraised value of the Leased
Property and not greater than replacement costs based on a current appraisal;
[iii] no Event of Default shall have occurred under any agreements between
Tenant, any Affiliate, Manager, or Guarantor with Landlord; [iv] no material
adverse change shall have occurred in the condition of Tenant, Guarantor, the
local market or the assisted living industry; and [v] to the extent available
from the title company insuring Landlord's title to the Leased Property, Tenant
has provided, at Tenant's expense, an endorsement to the Title Policy increasing
the amount of the coverage by the amount of the Second Earnout Lease Advance.
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY
18.1 PROHIBITION ON ASSIGNMENT AND SUBLETTING. Tenant acknowledges
that Landlord has entered into this Lease in reliance on the personal services
and business expertise of Tenant and Guarantor. Tenant may not assign, sublet,
mortgage, hypothecate, pledge, or transfer any interest in this Lease, or in the
Leased Property, in whole or in part, without the prior written consent of
Landlord, which Landlord may withhold in its sole and absolute discretion. The
following transactions will be deemed an assignment or sublease requiring
Landlord's prior written consent: [i] an assignment by operation of law; [ii] an
imposition (whether or not consensual) of a lien, mortgage, or encumbrance upon
Tenant's interest in the Lease; [iii] an arrangement (including
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but not limited to, management agreements, concessions, licenses, and easements)
which allows the use or occupancy of all or part of the Leased Property by
anyone other than Tenant; and [iv] a change of ownership of Tenant. An
assignment or sublease without the prior written consent of Landlord will be
void at the Landlord's option. Landlord's consent to one assignment or sublease
will not waive the requirement of its consent to any subsequent assignment or
sublease.
18.2 REQUESTS FOR LANDLORD'S CONSENT TO ASSIGNMENT, SUBLEASE OR
MANAGEMENT AGREEMENT. If Tenant is required to obtain Landlord's consent to a
specific assignment, sublease, or management agreement, Tenant shall give
Landlord [i] the name and address of the proposed assignee, subtenant or
manager; [ii] a copy of the proposed assignment, sublease or management
agreement; [iii] reasonably satisfactory information about the nature, business
and business history of the proposed assignee, subtenant, or manager and its
proposed use of the Leased Property; and [iv] banking, financial, and other
credit information, and references about the proposed assignee, subtenant or
manager sufficient to enable Landlord to determine the financial responsibility
and character of the proposed assignee, subtenant or manager.
18.3 AGREEMENTS WITH RESIDENTS. Notwithstanding ss.18.1, Tenant
may enter into an occupancy agreement with residents of the Leased Property
without the prior written consent of Landlord provided that [i] the agreement
does not provide for lifecare services; [ii] Tenant may not collect rent for
more than one month in advance; and [iii] all residents of the Leased Property
are accurately shown in Tenant's accounting records.
18.4 TERMS APPLICABLE TO ALL ASSIGNMENTS, SUBLEASES OR MANAGEMENT
AGREEMENTS. Any assignment, sublease or management agreement shall contain
provisions to the effect that [a] such assignment, sublease or management
agreement is subject and subordinate to all of the terms and provisions of this
Lease and to the rights of Landlord; [b] such assignment, sublease or management
agreement may not be modified without the prior written consent of Landlord not
to be unreasonably withheld or delayed; [c] if this Lease shall terminate before
the expiration of such assignment, sublease or management agreement, the
assignee, subtenant or manager thereunder will, at Landlord's option, attorn to
Landlord and waive any right the assignee, subtenant or manager may have to
terminate the assignment, sublease or management agreement or surrender
possession thereunder as a result of the termination of this Lease; [d] if the
assignee, subtenant or manager receives a written notice from Landlord stating
that Tenant is in default under this Lease, the assignee, subtenant or manager
shall thereafter pay all rentals or payments under the assignment, sublease or
management agreement directly to Landlord until such default has been cured, and
[e] Tenant or any guarantor shall not be released from its payment and
performance and obligations under this Lease, but rather Tenant, any guarantor,
and Tenant's assignee or sublessee will be jointly and severally liable for such
payment and performance unless Landlord agrees in writing to release such
parties from their respective obligations.
18.5 COLLATERAL ASSIGNMENT. Tenant hereby collaterally assigns to
Landlord, as security for the performance of the Tenant's Obligations hereunder,
and grants a security interest to Landlord in all of Tenant's right, title, and
interest in and to any assignment, sublease or management agreement now or
hereafter existing for all or part of the Leased Property. Tenant
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shall, at the request of Landlord, execute such other instruments or documents
as Landlord may request to evidence this collateral assignment.
18.6 EFFECTIVENESS. Any assignment, sublease, or management
agreement shall not be effective until [i] a fully executed copy of the
instrument of assignment, sublease or management agreement has been delivered to
Landlord; [ii] in the case of an assignment, Landlord has received such
documents, instruments, affidavits, letter of credit amendments, proof of
licensure and amendments as Landlord may reasonably request in order to evidence
assignee's assumption and agreement to perform all of Tenant's obligations under
the Lease; [iii] Tenant has paid to Landlord a fee in the amount of $2,500.00;
and [iv] Landlord has received reimbursement from Tenant or the assignee for all
attorneys' fees and expenses and all other reasonable out-of-pocket expenses
incurred in connection with determining whether to give its consent, giving its
consent and all matters relating to the assignment, sublease, or management
agreement.
18.7 SALE OF LEASED PROPERTY. If Landlord or any subsequent owner
of the Leased Property sells the Leased Property, its liability for the
performance of its agreements in this Lease will end on the date of the sale of
the Leased Property, and Tenant will look solely to the purchaser for the
performance of those agreements. For purposes of this Section, any holder of a
mortgage or security agreement which affects the Leased Property at any time,
and any landlord under any lease to which this Lease is subordinate at any time,
will be a subsequent owner of the Leased Property when it succeeds to the
interest of Landlord or any subsequent owner of the Leased Property.
18.8 ASSIGNMENT BY LANDLORD. Landlord may transfer, assign,
mortgage, collaterally assign, or otherwise dispose of Landlord's interest in
this Lease or the Leased Property.
ARTICLE 19: HOLDOVER AND SURRENDER
19.1 HOLDING OVER. Should Tenant, with or without the express or
implied consent of Landlord, continue to hold and occupy the Leased Property
after the expiration of the Term, such holding over beyond the Term and the
acceptance or collection of Rent by the Landlord shall operate and be construed
as creating a tenancy from month-to-month and not for any other term whatsoever.
Said month-to-month tenancy may be terminated by Landlord by giving Tenant 10
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property.
19.2 SURRENDER. Except for [i] Permitted Alterations; [ii] normal
and reasonable wear and tear (subject to the obligation of Tenant to maintain
the Leased Property in good order and repair during the Term); and [iii] damage
and destruction not required to be repaired by Tenant, Tenant shall surrender
and deliver up the Leased Property at the expiration or termination of the Term
in as good order and condition as of the Commencement Date.
ARTICLE 20: LETTER OF CREDIT
20.1 TERMS OF LETTER OF CREDIT. As security for the performance of
its obligations hereunder, Tenant shall provide Landlord with the Letter of
Credit at the Closing.
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Tenant shall maintain the Letter of Credit in favor of Landlord until Tenant's
Obligations are performed in full. The Letter of Credit shall permit partial
draws and shall permit drawing upon presentation of a draft drawn on the issuer
and a certificate signed by Landlord stating that an Event of Default has
occurred under this Lease. The Letter of Credit shall be for an initial term of
one year and shall be automatically renewed annually for successive terms of at
least one year unless Landlord receives notice from the Issuer, by certified
mail, at least 60 days prior to the expiry date then in effect that the Letter
of Credit will not be extended for an additional one-year period.
20.2 REPLACEMENT LETTER OF CREDIT. Tenant shall provide a
replacement Letter of Credit which satisfies the requirements of ss.20.1 from an
Issuer acceptable to Landlord within 30 days after the occurrence of any of the
following: [i] Landlord's receipt of notice from the Issuer that the Letter of
Credit will not be extended for an additional one-year period; [ii] Landlord
gives notice to Tenant that the Lace Financial Service Rating of the Issuer is
less than a "C+"; or [iii] Landlord gives notice to Tenant of the admission by
Issuer in writing of its inability to pay its debts generally as they become
due, or Issuer's filing of a petition in bankruptcy or petitions to take
advantage of any insolvency act, making an assignment for the benefit of its
creditors, consenting to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or filing 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.
Tenant's failure to comply with the requirements of this section shall be an
immediate Event of Default without any notice (other than as provided for in the
section), cure or grace period.
20.3 DRAWS. Landlord may draw under the Letter of Credit upon the
occurrence of an Event of Default hereunder. Any such draw shall not cure an
Event of Default. Landlord shall have the right, but not the obligation, to
apply all or any portion of the proceeds from the Letter of Credit to pay all or
any portion of [i] all Rent and other charges and expenses payable by Tenant
under this Lease; plus [ii] all expenses and costs incurred by Landlord in
enforcing or preserving Landlord's rights under this Lease or any security for
the Lease, including without limitation, [a] the fees, expenses, and costs of
any litigation, receivership, administrative, bankruptcy, insolvency, or other
similar proceeding; [b] attorney, paralegal, consulting and witness fees and
disbursements; and [c] the expenses, including without limitation, lodging,
meals and transportation of Landlord and its employees, agents, attorneys, and
witnesses in preparing for litigation, administrative, bankruptcy, insolvency,
or similar proceedings and attendance at hearings, depositions, and trials in
connection therewith.
With respect to any portion of the Letter of Credit proceeds that is
not applied to payment of Tenant's Obligations, Landlord shall have the option
to either [i] deposit the proceeds into an interest-bearing account with a
financial institution chosen by Landlord ("LC Account"); or [ii] require Tenant
to obtain a replacement Letter of Credit satisfactory to Landlord, with the
Letter of Credit proceeds made available to Tenant to secure Tenant's
reimbursement obligation for the Letter of Credit. All interest accruing on the
LC Account shall be paid to Landlord and may, from time to time, be withdrawn
from the LC Account by Landlord. At any time and from time to time until
Tenant's Obligations are performed in full,
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Landlord may apply all or any portion of the funds held in the LC Account to
payment of all or any portion of Tenant's Obligations. Within 10 days after any
such payment from the LC Account, Landlord shall give written notice to Tenant
describing the amount of such payment and how it was applied to Tenant's
Obligations.
Upon the occurrence of either [i] Landlord's receipt of a
replacement Letter of Credit that satisfies the requirements of ss.20.1 and is
issued by an Issuer acceptable to Landlord; or [ii] the date on which all of
Tenant's Obligations are performed in full, Landlord shall pay the principal
balance of the LC Account (but not any accrued interest) to Tenant.
20.4 PARTIAL DRAWS. Upon the occurrence of a monetary Event of
Default under this Lease, Landlord may, at its option, make a partial draw on
the Letter of Credit in an amount not to exceed the amount of Tenant's monetary
obligations under this Lease then past due. If Landlord then applies the
proceeds from such partial draw on the Letter of Credit to payment of all or any
portion of Tenant's monetary obligations then past due, Tenant shall, within 10
days after notice from Landlord of such partial draw and payment, cause the
amount of the Letter of Credit to be reinstated to the amount in effect prior to
such partial draw. Tenant's failure to comply with the requirements of this
section shall be an immediate Event of Default under the Loan Documents without
any notice (other than as provided for in this section), cure or grace period.
Landlord's rights under this ss.20.4 are in addition to, and not in limitation
of, Landlord's rights under ss.20.3.
20.5 SUBSTITUTE LETTER OF CREDIT. Tenant may, from time to time,
deliver to Landlord a substitute Letter of Credit meeting the requirements of
this Agreement and issued by an Issuer acceptable to Landlord. Upon Landlord's
approval of the substitute Letter of Credit, Landlord shall release the previous
Letter of Credit to the Tenant.
20.6 REDUCTION IN LETTER OF CREDIT AMOUNT. The amount of the Letter
of Credit may be reduced by Tenant from 5% of the Maximum Lease Amount to 2.5%
of the Maximum Lease Amount after all of the following conditions have been met:
[i] the Earnout Conditions have been satisfied; and [ii] no Event of Default has
occurred and is continuing under this Lease.
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL CERTIFICATES
21.1 QUIET ENJOYMENT. So long as Tenant performs all of its
obligations under this Lease, Tenant's possession of the Leased Property will
not be disturbed by Landlord.
21.2 SUBORDINATION. Subject to the terms and conditions of this
section, this Lease and Tenant's rights under this Lease are subordinate to any
ground lease or underlying lease, first mortgage, first deed of trust, or other
first lien against the Leased Property, together with any renewal,
consolidation, extension, modification or replacement thereof, which now or at
any subsequent time affects the Leased Property or any interest of Landlord in
the Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior. The foregoing subordination provision is
expressly conditioned upon any lessor or
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mortgagee being obligated and bound to recognize Tenant as the tenant under this
Lease, and such lessor or mortgagee shall have no right to disturb Tenant's
possession, use and occupancy of the Leased Property or Tenant's enjoyment of
its rights under this Lease unless and until an Event of Default occurs
hereunder. Any foreclosure action or proceeding by any mortgagee with respect to
the Leased Property shall not affect Tenant's rights under this Lease and shall
not terminate this Lease unless and until an Event of Default occurs hereunder.
The foregoing provisions will be self-operative, and no further instrument will
be required in order to effect them. However, Tenant shall execute, acknowledge
and deliver to Landlord, at any time and from time to time upon demand by
Landlord, such documents as may be requested by Landlord or any mortgagee or any
holder of any mortgage or other instrument described in this section, to confirm
or effect any such subordination, provided that any such document shall include
a non-disturbance provision as set forth in this section satisfactory to Tenant.
Any mortgagee of the Leased Property shall be deemed to be bound by the
non-disturbance provision set forth in this section. If Tenant fails or refuses
to execute, acknowledge, and deliver any such document within 20 days after
written demand, Landlord may execute acknowledge and deliver any such document
on behalf of Tenant as Tenant's attorney-in-fact. Tenant hereby constitutes and
irrevocably appoints Landlord, its successors and assigns, as Tenant's
attorney-in-fact to execute, acknowledge, and deliver on behalf of Tenant any
documents described in this section. This power of attorney is coupled with an
interest and is irrevocable.
21.3 ATTORNMENT. If any holder of any mortgage, indenture, deed of
trust, or other similar instrument described in ss.21.2 succeeds to Landlord's
interest in the Leased Property, Tenant will pay to such holder all Rent
subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The successor
in interest will not be bound by [i] any payment of Rent for more than one month
in advance; [ii] any amendment or modification of this Lease thereafter made
without its consent as provided in this Lease; [iii] any claim against Landlord
arising prior to the date on which the successor succeeded to Landlord's
interest; or [iv] any claim or offset of Rent against the Landlord. Upon request
by Landlord or such successor in interest and without cost to Landlord or such
successor in interest, Tenant will execute, acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge, and deliver any such instrument within 30 days after
written demand, then Landlord or such successor in interest will be entitled to
execute, acknowledge, and deliver any document on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any such document. This power of
attorney is coupled with an interest and is irrevocable.
21.4 ESTOPPEL CERTIFICATES. At the request of Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Landlord or any mortgagee or purchaser of the Leased Property certifying, to
Tenant's knowledge, the following: [i] that the Lease is unmodified and in full
force and effect, or if there have been modifications that the same is in full
force and effect as modified and stating the modifications; [ii] the date to
which Rent and other charges have been
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paid; [iii] whether Tenant or Landlord is in default or whether there is any
fact or condition which, with notice or lapse of time, or both, would constitute
a default, and specifying any existing default, if any; [iv] that Tenant has
accepted and occupies the Leased Property; [v] that Tenant has no defenses,
set-offs, deductions, credits, or counterclaims against Landlord, if that be the
case, or specifying such that exist; and [vi] such other information as may
reasonably be requested by Landlord or any mortgagee or purchaser. Any purchaser
or mortgagee may rely on this estoppel certificate. If Tenant fails to deliver
the estoppel certificates to Landlord within 20 days after the request of the
Landlord, then Tenant shall be deemed to have certified that to Tenant's
knowledge [a] the Lease is in full force and effect and has not been modified,
or that the Lease has been modified as set forth in the certificate delivered to
Tenant; [b] Tenant has not prepaid any Rent or other charges except for the
current month; [c] Tenant has accepted and occupies the Leased Property; [d]
neither Tenant nor Landlord is in default nor is there any fact or condition
which, with notice or lapse of time, or both, would constitute a default; and
[e] Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact to execute, acknowledge, and deliver on Tenant's behalf any
estoppel certificate to which Tenant does not object within 20 days after
Landlord sends the certificate to Tenant. This power of attorney is coupled with
an interest and is irrevocable. This power of attorney is coupled with an
interest and is irrevocable. At the request of Tenant, Landlord shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Tenant certifying, to Landlord's knowledge, the following: [i] that the Lease
is unmodified and in full force and effect, or if there have been modifications
that the same is in full force and effect as modified and stating the
modifications; [ii] the date to which Rent and other charges have been received
by Landlord; [iii] whether Tenant or Landlord is in default or whether there is
any fact or condition which, with notice or lapse of time, or both, would
constitute a default, and specifying any existing default, if any; [iv] that
Landlord has no defenses, set-offs, deductions, credits, or counterclaims
against Tenant, if that be the case, or specifying such that exist; and [vi]
such other information as may reasonably be requested by Tenant. If Landlord
fails to deliver the estoppel certificate to Tenant within 20 days after the
request of the Tenant, then Landlord shall be deemed to have certified that to
Landlord's knowledge, [a] the Lease is in full force and effect and has not been
modified, or that the Lease has been modified as set forth in the certificate
delivered to Landlord; [b] Landlord has not received any prepaid Rent or other
charges except for the current month; [c] neither Tenant nor Landlord is in
default nor is there any fact or condition which, with notice or lapse of time,
or both, would constitute a default; and [d] Landlord has no defenses, set-offs,
deductions, credits, or counterclaims against Tenant. Landlord hereby
irrevocably appoints Tenant as Landlord's attorney-in-fact to execute,
acknowledge, and deliver on Landlord's behalf any estoppel certificate to which
Landlord does not object within 20 days after Tenant sends the certificate to
Landlord. This power of attorney is coupled with an interest and is irrevocable.
ARTICLE 22: REPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and warranties, as
of the Effective 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
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the Closing and, except to the extent made as of a specific date, shall continue
in full force and effect until Tenant's Obligations have been performed in full.
22.1 ORGANIZATION AND GOOD STANDING. Tenant is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in and is in good standing under the
laws of the State.
22.2 POWER AND AUTHORITY. Tenant has the power and authority to
execute, deliver and perform this Lease. Tenant has taken all requisite action
necessary to authorize the execution, delivery and performance of Tenant's
obligations under this Lease.
22.3 ENFORCEABILITY. This Lease constitutes a legal, valid, and
binding obligation of Tenant enforceable in accordance with its terms.
22.4 GOVERNMENT AUTHORIZATIONS. The Facility is in compliance in
all material respects with all Legal Requirements. All Government Authorizations
are in full force and effect. Except as otherwise noted in Exhibit E, Tenant
holds all Government Authorizations necessary for the operation of the Facility
as a 77-unit (123-bed) assisted living (personal care boarding home) facility.
Seller presently holds all Government Authorizations necessary for the
Facility's operation as a 77-unit (123-bed) assisted living (personal care
boarding home) facility. Upon the Closing, Tenant will be authorized to operate
the Facility as a 77-unit (123-bed) assisted living (personal care boarding
home) facility until a license to operate the Facility is issued to Tenant.
Tenant has filed all applications and reports and taken all necessary action to
obtain all Government Authorizations as soon as possible after the Effective
Date, subject to governmental approval, and Tenant has no knowledge of any fact
or circumstance that would prevent or delay Tenant's obtaining of such
Government Authorizations.
22.5 FINANCIAL STATEMENTS. Tenant has furnished Landlord with true,
correct, and complete copies of the Financial Statements. The Financial
Statements fairly present the financial position of Tenant and Guarantor as
applicable, as of the respective dates and the results of operations for the
periods then ended in conformance with generally accepted accounting principles
applied on a basis consistent with prior periods. The Financial Statements and
other information furnished to Landlord are true, complete and correct and, as
of the Effective Date, no material adverse change has occurred since the
furnishing of such statements and information. As of the Effective Date, the
Financial Statements and other information do not contain any untrue statement
or omission of a material fact and are not misleading in any material respect.
Tenant and Guarantor are solvent, and no bankruptcy, insolvency, or similar
proceeding is pending or contemplated by or, to the knowledge of Tenant, against
Tenant or Guarantor.
22.6 CONDITION OF FACILITY. To Tenant's knowledge, all of the
mechanical and electrical systems, heating and air-conditioning systems,
plumbing, water and sewer systems, and all other items of mechanical equipment
or appliances are in good working order, condition and repair, are of sufficient
size and capacity to service the Facility for the Facility Uses and conform with
all applicable ordinances and regulations, and with all building, zoning, fire,
safety, and
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other codes, laws and orders. The Improvements, including the roof and
foundation, are structurally sound and free from leaks and other defects.
22.7 COMPLIANCE WITH LAWS. To Tenant's knowledge, there is no
violation of, or noncompliance with, [i] any laws, orders, rules or regulations,
ordinances or codes of any kind or nature whatsoever relating to the Facility or
the ownership or operation thereof (including without limitation, building,
fire, health, occupational safety and health, zoning and land use, planning and
environmental laws, orders, rules and regulations); [ii] any covenants,
conditions, restrictions or agreements affecting or relating to the ownership,
use or occupancy of the Facility; or [iii] any order, writ, regulation or decree
relating to any matter referred to in [i] or [ii] above.
22.8 NO LITIGATION. As of the Effective Date and except as
disclosed on Exhibit F, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending against
Tenant, Guarantor or the Facility; [ii] Tenant has not received notice of any
threatened actions, suits, proceedings or investigations against Tenant,
Guarantor or the Facility at law or in equity, or before any governmental board,
agency or authority which, if determined adversely to Tenant or Guarantor, would
materially and adversely affect the Facility or title to the Facility (or any
part thereof), the right to operate the Facility as presently operated, or the
financial condition of Tenant or Guarantor; [iii] there are no unsatisfied or
outstanding judgments against Tenant, Guarantor or the Facility; [iv] there is
no labor dispute materially and adversely affecting the operation or business
conducted by Tenant, Guarantor, or the Facility; and [v] Tenant does not have
knowledge of any facts or circumstances which might reasonably form the basis
for any such action, suit, or proceeding.
22.9 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 federal,
state, or local governmental or regulatory authority, or any other person or
entity, the absence of which would materially impair the ability of Tenant to
operate the Facility for the Facility Uses except for the post-acquisition
filing for licensure of the Facility.
22.10 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 Tenant's Organizational Documents; [ii] do not and will not
conflict with, and do not and will not result in a breach of, and do not and
will not constitute a default under (or an event which, with or without notice
or lapse of time, or both, would constitute a default under), any of the terms,
conditions or provisions of any agreement or other instrument or obligation to
which Tenant is a party or by which its assets are bound; and [iii] do not and
will not violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Tenant or the Facility.
22.11 REPORTS AND STATEMENTS. All reports, statements, certificates
and other data furnished by or on behalf of Tenant or 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 and
therewith, are true and correct in all material respects and do not omit to
state any material fact or circumstance necessary to make the statements
contained herein or
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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. The copies
of all agreements and instruments submitted to Landlord, including, without
limitation, all agreements relating to management of the Facility, the Letter of
Credit, and Tenant's working capital are true, correct and complete copies and
include all amendments and modifications of such agreements.
22.12 ERISA. All plans (as defined in ss.4021(a) of the Employee
Retirement Income Security Act of 1974, as amended or supplemented from time to
time ("ERISA")) for which Tenant is an "employer" or a "substantial employer"
(as defined in ss.ss.3(5) and 4001(a)(2) of ERISA, respectively) are in
compliance with ERISA and the regulations and published interpretations
thereunder. To the extent Tenant maintains a qualified defined benefit pension
plan: [i] there exists no accumulated funding deficiency; [ii] no reportable
event and no prohibited transaction has occurred; [iii] no lien has been filed
or threatened to be filed by the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA; and [iv] Tenant has not
been deemed to be a substantial employer.
22.13 CHIEF EXECUTIVE OFFICE. Tenant maintains its chief executive
office and its books and records at the address set forth in the introductory
paragraph of this Agreement. Tenant does not conduct any of its business or
operations other than at its chief executive office and at the Facility.
22.14 OTHER NAME OR ENTITIES. Except as disclosed herein, none of
Tenant's business is conducted through any corporate subsidiary, unincorporated
association or other entity and Tenant has not, within the six years preceding
the date of this Agreement [i] changed its name, [ii] used any name other than
the name stated at the beginning of this agreement, or [iii] merged or
consolidated with, or acquired any of the assets of, any corporation or other
business except for the acquisition of assets from Butler Senior Care, Inc. in
1997.
22.15 PARTIES IN POSSESSION. Except as disclosed on Exhibit B and
except for residents of the Facility, there are no parties in possession of any
Leased Property or any portion thereof as managers, lessees, tenants at
sufferance, or trespassers.
22.16 ACCESS. Except as disclosed in writing to Landlord, access to
the Land is directly from a dedicated public right-of-way without any easement.
To the knowledge of Tenant, there is no fact or condition which would result in
the termination or reduction of the current access to and from the Land to such
right of way.
22.17 UTILITIES. There are available at the Land gas, municipal
water, and sanitary sewer lines, storm sewers, electrical and telephone services
in operating condition which are adequate for the operation of the Facility at a
reasonable cost. Except as disclosed in writing to Landlord, the Land has direct
access to utility lines located in a dedicated public right-of-way without any
easement. As of the Effective Date, there is no pending or, to the knowledge of
Tenant, threatened governmental or third party proceeding which would impair or
result in the termination of such utility availability.
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22.18 CONDEMNATION AND ASSESSMENTS. As of the Effective Date,
except as disclosed in writing to Landlord, Tenant has not received notice of,
and there are no pending or, to Tenant's knowledge, threatened, condemnation,
assessment or similar proceedings affecting or relating to the Facility, or any
portion thereof, or any utilities, sewers, roadways or other public improvements
serving the Facility.
22.19 ZONING. As of the Effective Date, [i] the use and operation
of the Facility for the Facility Uses is permitted under the applicable zoning
code; [ii] except as disclosed on Exhibit E hereto, no special use permits,
conditional use permits, variances, or exceptions have been granted or are
needed for such use of the Facility; [iii] the Land is not located in any
special districts such as historical districts or overlay districts; and [iv]
except as disclosed in writing to Landlord, the Facility has been constructed in
accordance with and complies with all applicable zoning laws, including but not
limited to, dimensional, parking, setback, screening, landscaping, sign and curb
cut requirements.
22.20 PRO FORMA STATEMENT. Tenant has delivered to Landlord a true,
correct and complete copy of the Pro Forma Statement. The Pro Forma Statement
shows Tenant's reasonable expectation of the most likely results of Facility
operations for the next 5 year period.
22.21 ENVIRONMENTAL MATTERS. During the period of Tenant's
ownership or possession of the Leased Property and, to Tenant's knowledge after
diligent inquiry, for the period prior to Tenant's ownership or possession of
the Leased Property, [i] the Leased Property is in compliance with all
Environmental Laws; [ii] there were no releases or threatened releases of
Hazardous Materials on, from, or under the Leased Property, except in compliance
with all Environmental Laws; [iii] no Hazardous Materials have been, are or will
be used, generated, stored, or disposed of at the Leased Property, except in
compliance with all Environmental Laws; [iv] asbestos has not been and will not
be used in the construction of any Improvements; [v] no permit is or has been
required from the Environmental Protection Agency or any similar agency or
department of any state or local government for the use or maintenance of any
Improvements; [vi] underground storage tanks on or under the Land, if any, have
been and currently are being operated in compliance with all applicable
Environmental Laws; [vii] any closure, abandonment in place or removal of an
underground storage tank on or from the Land was performed in compliance with
applicable Environmental Laws and any such tank had no release contaminating the
Leased Property or, if there had been a release, the release was remediated in
compliance with applicable Environmental Laws to the satisfaction of regulatory
authorities; [viii] no summons, citation or inquiry has been made by any such
environmental unit, body or agency or a third party demanding any right of
recovery for payment or reimbursement for costs incurred under CERCLA or any
other Environmental Laws and the Land is not subject to the lien of any such
agency; and [ix] to the best of Tenant's knowledge, the Environmental Assessment
is true, complete and accurate. "Disposal" and "release" shall have the meanings
set forth in CERCLA.
22.22 LEASES AND CONTRACTS. As of the Effective Date and except as
disclosed on Exhibit G, there are no leases or contracts (including but not
limited to, insurance contracts, maintenance contracts, construction contracts,
employee benefit plans, employment contracts, equipment leases, security
agreements, architect agreements, and management contracts) to
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which Tenant or Guarantor is a party relating to any part of the ownership,
operation, possession, construction, management or administration of the Land or
the Facility.
22.23 NO DEFAULT. As of the Effective Date, [i] there is no
existing Event of Default under this Lease; and [ii] no event has occurred
which, with the giving of notice or the passage of time, or both, would
constitute or result in such an Event of Default.
ARTICLE 23: FUTURE PROJECTS; COTERMINOUS FINANCINGS
23.1 PROJECT SUBMISSIONS. If Tenant, Guarantor or any Affiliate
chooses to submit certain future acquisition and development projects to
Landlord as provided in the Commitment, Tenant, Guarantor or any Affiliate shall
comply with the terms of the Commitment.
23.2 COTERMINOUS FINANCINGS. All Phase Leases will be coterminous
and will have identical renewal dates and option exercise periods. Accordingly,
as each Phase Lease is closed, the current Term, Expiration Date, Renewal Date
and option exercise periods under this Lease will be extended to be coterminous
with the most recently closed Phase Lease.
ARTICLE 24: SECURITY INTEREST
24.1 COLLATERAL. Tenant hereby grants to Landlord a security
interest in the following described property, whether now owned or hereafter
acquired by Tenant (the "Collateral"), to secure the payment and performance of
Tenant's Obligations:
(a) All machinery, furniture, equipment, trade fixtures,
appliances, inventory and all other goods (as "equipment," "inventory" and
"goods" are defined for purposes of Article 9 ("Article 9") of the Uniform
Commercial Code as adopted in the State) and any leasehold interest of Tenant in
any of the foregoing, now or hereafter located in or on or used or usable in
connection with the Land, Improvements, or Fixtures and replacements, additions,
and accessions thereto, including without limitation those items which are to
become fixtures or which are building supplies and materials to be incorporated
into an Improvement or Fixture.
(b) All accounts, contract rights, general intangibles,
instruments, documents, and chattel paper [as "accounts", "contract rights",
"general intangibles", "instruments", "documents", and "chattel paper", are
defined for purposes of Article 9] now or hereafter arising in connection with
the business located in or on or used or usable in connection with the Land,
Improvements, or Fixtures, and replacements, additions, and accessions thereto.
(c) All franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and other general
intangibles regarding the use, occupancy or operation of the Improvements, or
any part thereof, including without limitation, certificates of need, state
health care facility licenses, and Medicare and Medicaid provider agreements, to
the extent permitted by law.
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(d) Unless expressly prohibited by the terms thereof, all
contracts, agreements, contract rights and materials relating to the design,
construction, operation or management of the Improvements, including but not
limited to, plans, specifications, drawings, blueprints, models, mock-ups,
brochures, flyers, advertising and promotional materials and mailing lists.
(e) All ledger sheets, files, records, computer programs,
tapes, other electronic data processing materials, and other documentation
relating to the preceding listed property or otherwise used or usable in
connection with the Land and Improvements.
(f) The products and proceeds of the preceding listed
property, including without limitation cash and non-cash proceeds, proceeds of
proceeds, and insurance proceeds.
24.2 ADDITIONAL DOCUMENTS. At the request of Landlord, Tenant shall
execute additional security agreements, financing statements, and such other
documents as may be requested by Landlord to maintain and perfect such security
interest.
24.3 NOTICE OF SALE. With respect to any sale or other disposition
of any of the Collateral after the occurrence of an Event of Default, Landlord
and Tenant agree that the giving of 5 days notice by Landlord, sent by overnight
delivery, postage prepaid, to Tenant's notice address designating the time and
place of any public sale or the time after which any private sale or other
intended disposition of such Collateral is to be made, shall be deemed to be
reasonable notice thereof and Tenant waives any other notice with respect
thereto.
24.4 PLEDGE OF ACCOUNTS TO OTHERS. Notwithstanding any provision
to the contrary contained herein or in the other Lease Documents, Tenant shall
be permitted to pledge to a lender providing one or more loans to Guarantor all
accounts and receivables from the Facility on a first priority lien basis, in
which case Landlord shall execute and deliver to such lender a subordination or
similar agreement in which [i] Landlord agrees to subordinate its security
interest in such accounts and receivables to such lender; and [ii] Landlord
agrees to such further provisions as may be reasonably required by the lender
and acceptable to Landlord. Landlord's obligation to provide the subordination
is subject to [i] Landlord's receipt and reasonable approval of all financing
documents; [ii] execution by Landlord and the lender of an intercreditor
agreement on reasonable terms acceptable to Landlord, and [iii] Tenant's payment
of all costs and expenses incurred by Landlord in connection with the
subordination including, without limitation, reasonable attorney's fees and
expenses.
ARTICLE 25: MISCELLANEOUS
25.1 NOTICES. Landlord and Tenant hereby agree that all notices,
demands, requests, and consents (hereinafter "notices") required to be given
pursuant to the terms of this Lease shall be in writing, shall be addressed to
the addresses set forth in the introductory paragraph of this Lease, and shall
be served by [i] personal delivery; [ii] certified mail, return receipt
requested, postage prepaid; or [iii] nationally recognized overnight courier.
All notices
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shall be deemed to be given upon the earlier of actual receipt or 3 days after
mailing, or one business day after deposit with the overnight courier. Any
notices meeting the requirements of this section shall be effective, regardless
of whether or not actually received. Landlord or Tenant may change its notice
address at any time by giving the other party notice of such change.
25.2 ADVERTISEMENT OF LEASED PROPERTY. In the event the parties
hereto have not executed a renewal Lease within 120 days prior to the expiration
of this Lease, or Tenant has not exercised its Option to Purchase, then Landlord
or its agent shall have the right to enter the Leased Property at all reasonable
times for the purpose of exhibiting the Leased Property to others and to place
upon the Leased Property for and during the period commencing 120 days prior to
the expiration of this Lease, "for sale" or "for rent" notices or signs.
25.3 ENTIRE AGREEMENT. This Lease contains the entire agreement
between Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord except as
set forth in this Lease.
25.4 SEVERABILITY. If any term or provision of this Lease is held
or deemed by Landlord to be invalid or unenforceable, such holding shall not
affect the remainder of this Lease and the same shall remain in full force and
effect, unless such holding substantially deprives Tenant of the use of the
Leased Property or Landlord of the rents herein reserved, in which event this
Lease shall forthwith terminate as if by expiration of the Term.
25.5 CAPTIONS AND HEADINGS. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.
25.6 GOVERNING LAW. This Lease shall be construed under the laws
of the State.
25.7 MEMORANDUM OF LEASE. Tenant shall not record this Lease.
Tenant may, however, record a memorandum of lease approved by Landlord, in its
reasonable discretion.
25.8 WAIVER. No waiver by Landlord 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 any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.
25.9 BINDING EFFECT. This Lease will be binding upon and inure to
the benefit of the heirs, successors, personal representatives, and permitted
assigns of Landlord and Tenant.
25.10 POWER OF ATTORNEY. Effective upon [i] the occurrence and
during the continuance of an Event of Default, or [ii] termination of this Lease
for any reason other than
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Tenant's purchase of the Leased Property, Tenant hereby irrevocably and
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact, to act for
Tenant in Tenant's name, place, and stead, to execute, deliver and file all
applications and any and all other necessary documents and statements to effect
the issuance, transfer, reinstatement, renewal and/or extension of the Facility
license and all Governmental Authorizations issued to Tenant or applied for by
Tenant in connection with Tenant's operation of the Facility, to permit any
designee of Landlord or any other transferee to operate the Facility under the
Governmental Authorizations, and to do any and all other acts incidental to any
of the foregoing. Tenant irrevocably and unconditionally grants to Landlord as
its attorney-in-fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as Tenant might or could do if personally present or acting, with full
power of substitution, hereby ratifying and confirming all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is coupled with an interest and is irrevocable prior to Tenant's purchase of the
Leased Property. Except in the case of an emergency, Landlord shall give Tenant
three business days prior written notice before acting on behalf of Tenant
pursuant to this power of attorney.
25.11 NO OFFER. Landlord's submission of this Lease to Tenant is
not an offer to lease the Leased Property, or an agreement by Landlord to
reserve the Leased Property for Tenant. Landlord will not be bound to Tenant
until Tenant has duly executed and delivered duplicate original leases to
Landlord, and Landlord has duly executed and delivered one of these duplicate
original leases to Tenant.
25.12 MODIFICATION. This Lease may only be modified by a writing
signed by both Landlord and Tenant. All references to this Lease, whether in
this Lease or in any other document or instrument, shall be deemed to
incorporate all amendments, modifications and renewals of this Lease, made after
the date hereof. If Tenant requests Landlord's consent to any change in
ownership, merger or consolidation of Tenant or Guarantor, any assumption of the
Lease, or any modification of the Lease, Tenant shall provide Landlord all
relevant information and documents sufficient to enable Landlord to evaluate the
request. In connection with any such request, Tenant shall pay to Landlord a fee
in the amount of $2,500.00 and shall pay all of Landlord's reasonable attorney's
fees and expenses and other reasonable out-of-pocket expenses incurred in
connection with Landlord's evaluation of Tenant's request, the preparation of
any documents and amendments, the subsequent amendment of any documents between
Landlord and its collateral pool lenders (if applicable), and all related
matters.
25.13 LANDLORD'S MODIFICATION. Tenant acknowledges that Landlord
may, subject to Article 21, mortgage the Leased Property or use the Leased
Property as collateral for a collateralized mortgage obligations or Real Estate
Mortgage Investment Companies (REMICS). If any mortgage lender of Landlord
desires any modification of this Lease, Tenant agrees to consider such
modification in good faith and to execute an amendment of this Lease if Tenant
finds such modification acceptable.
25.14 NO MERGER. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of
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Tenant's default will not work a merger, and will, at Landlord's option,
terminate any subleases or operate as an assignment to Landlord of any
subleases. Landlord's option under this paragraph will be exercised by notice to
Tenant and all known subtenants of the Leased Property.
25.15 LACHES. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
25.16 LIMITATION ON TENANT'S RECOURSE. Tenant's sole recourse
against Landlord, and any successor to the interest of Landlord in the Leased
Property, is to the interest of Landlord, and any such successor, in the Leased
Property. Tenant will not have any right to satisfy any judgment which it may
have against the Landlord, or any such successor, from any other assets of
Landlord, or any such successor. In this section, the terms "Landlord" and
"successor" include the shareholders, venturers, and partners of "Landlord" and
"successor" and the officers, directors, and employees of the same. The
provisions of this section are not intended to limit Tenant's right to seek
injunctive relief or specific performance.
25.17 CONSTRUCTION OF LEASE. This Lease has been prepared by
Landlord and its professional advisors and reviewed by Tenant and its
professional advisors. Landlord, Tenant, and their advisors believe that this
Lease is the product of all their efforts, that it expresses their agreement,
and agree that it shall not be interpreted in favor of either Landlord or Tenant
or against either Landlord or Tenant merely because of their efforts in
preparing it.
25.18 COUNTERPARTS. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
25.19 LEASE GUARANTY. The payment of Rent and the performance of
Tenant's obligations under this Lease are guaranteed by Guarantor pursuant to a
Lease Guaranty of even date.
25.20 CUSTODY OF ESCROW FUNDS. Any funds paid to Landlord in escrow
hereunder may be held by Landlord or, at Landlord's election, by a financial
institution, the deposits or accounts of which are insured or guaranteed by a
federal or state agency. The funds shall not be deemed to be held in trust, may
be commingled with the general funds of Landlord or such other institution, and
shall not bear interest.
25.21 LANDLORD'S STATUS AS A REIT. Tenant acknowledges that
Landlord (or a Landlord Affiliate) has now and may hereafter elect to be taxed
as a real estate investment trust ("REIT") under the Internal Revenue Code.
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25.22 EXHIBITS. The following exhibits are attached hereto and
incorporated herein:
Exhibit A: Legal Description
Exhibit A-1: Personal Property
Exhibit B: Permitted Exceptions
Exhibit C: Documents to be Delivered
Exhibit D: Certificate and Facility Financial Reports
Exhibit E: Government Authorizations to be Obtained;
Zoning Permits
Exhibit F: Pending Litigation
Exhibit G: List of Leases and Contracts
25.23 WAIVER OF JURY TRIAL. LANDLORD AND TENANT WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY ONE EITHER OF THEM
AGAINST ONE OR BOTH OF THE OTHERS ON ALL MATTERS ARISING OUT OF THIS LEASE OR
THE USE AND OCCUPANCY OF THE LEASED PROPERTY (EXCEPT CLAIMS FOR PERSONAL INJURY
OR PROPERTY DAMAGE). IF LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT
OF RENT, TENANT WILL NOT INTERPOSE, AND WAIVES THE RIGHT TO INTERPOSE, ANY
COUNTERCLAIM IN ANY SUCH PROCEEDING.
25.24 CONSENT TO JURISDICTION. TENANT HEREBY IRREVOCABLY SUBMITS
AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR BUTLER COUNTY, PENNSYLVANIA
FOR ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR
RELATED TO [I] THE COMMITMENT; [II] THIS LEASE; OR [III] ANY DOCUMENT EXECUTED
BY TENANT IN CONNECTION WITH THIS LEASE. TENANT HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT TENANT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. TENANT AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
TENANT AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF
LANDLORD, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT,
THIS LEASE OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL
COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR BUTLER COUNTY,
PENNSYLVANIA.
TENANT HEREBY CONSENTS TO SERVICE OF PROCESS BY LANDLORD IN ANY
MANNER AND IN ANY JURISDICTION PERMITTED BY LAW.
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NOTHING HEREIN SHALL AFFECT OR IMPAIR LANDLORD'S RIGHT TO SERVE LEGAL PROCESS IN
ANY MANNER PERMITTED BY LAW, OR LANDLORD'S RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST TENANT OR THE PROPERTY OF TENANT IN THE COURTS OF ANY OTHER
JURISDICTION.
25.25 ATTORNEY'S FEES AND EXPENSES. Tenant shall pay to Landlord
all reasonable costs and expenses incurred by Landlord in administering this
Lease and the security for this Lease, enforcing or preserving Landlord's rights
under this Lease and the security for this Lease, and in all matters of
collection, whether or not an Event of Default has actually occurred or has been
declared and thereafter cured, including but not limited to, [a] reasonable
attorney's and paralegal's fees and disbursements; [b] the fees and expenses of
any litigation, administrative, bankruptcy, insolvency, receivership and any
other similar proceeding; [c] court costs; [d] the expenses of Landlord, its
employees, agents, attorneys and witnesses in preparing for litigation,
administrative, bankruptcy, insolvency and other proceedings and for lodging,
travel, and attendance at meetings, hearings, depositions, and trials; and [e]
consulting and witness fees incurred by Landlord in connection with any
litigation or other proceeding.
25.26 SURVIVAL. The following provisions shall survive termination
of the Lease: Article 9 (Damage and Destruction), Article 10 (Condemnation);
Article 16 (Alterations); and ss.25.26 (Survival).
25.27 ACCESS TO RECORDS. To the extent required by law, Landlord
shall (and, if Landlord carries out any of the duties under this Lease, whether
on Landlord's or Tenant's behalf, through a subcontract with a related
organization and such subcontract has a value or cost of Ten Thousand Dollars
($10,000) or more during any twelve (12) month period, such subcontract shall
contain a clause to the effect that the subcontractor shall) until the
expiration of four (4) years after the furnishing of services pursuant to this
Lease, make available, upon request by the Secretary of Health and Human
Services or upon the request by the U.S. Comptroller General, or any duly
authorized representative of either of them, the books, documents and records of
Landlord (or such subcontractor) that are necessary to verify the nature and
extent of such costs in connection with said services.
ARTICLE 26: SUBSTITUTION OF LEASED PROPERTY
26.1 RIGHT OF SUBSTITUTION. Subject to the conditions set forth in
this Article 26, Tenant will have the right to substitute one or more comparable
health care facilities (individually and collectively called a "Substitute
Facility") for the Facility ("Existing Facility").
26.2 CONDITIONS TO SUBSTITUTION. The following are the
"Substitution Conditions":
(a) SUBSTITUTION NOTICE. Landlord must receive from Tenant a
written notice ("Substitution Notice") of the intent to exercise the right of
substitution at least 90 days prior to the proposed date of substitution. The
Substitution Notice shall include all material information concerning the
substitution including, but not limited to, the following: [i] the reason for
the
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proposed substitution; [ii] the proposed date of the substitution; [iii]
information regarding the proposed Substitute Facility ("Proposed Facility")
including name, address, city, state, type, units, beds, current owner, current
operator, historical financial statements, proforma financial statements,
Medicaid and Medicare cost reports, and rate letters; [iv] copy of acquisition
documents, if any; and [v] the proposed Tenant.
(b) COMMITMENT FEE. Tenant shall pay Landlord a commitment
fee in an amount equal to 1% of the acquisition amount for the Substitute
Facility.
(c) NO DEFAULTS. As of the applicable substitution date, no
Event of Default shall have occurred (excluding any default which has been cured
in accordance with the terms of this Lease or which has been waived, in writing,
by Landlord), nor any event which with the giving of notice or the passage of
time or both, would constitute such a default.
(d) ENGINEERING AND INSPECTION REPORTS. Landlord shall have
received engineering and inspection reports relating to the Proposed Facility,
reasonably satisfactory in all respects to Landlord.
(e) MAI APPRAISAL. Tenant shall have delivered to Landlord an
MAI appraisal of the Proposed Facility prepared by an appraiser selected by
Tenant and approved by Landlord, in form and substance reasonably satisfactory
to Landlord.
(f) SURVEY. Tenant shall have delivered to Landlord an ALTA
survey of the premises upon which the Proposed Facility is located acceptable to
Landlord and the Title Company.
(g) COMPLIANCE WITH LAWS. Landlord shall be satisfied as to
compliance with [i] all applicable land use, zoning, subdivision and
environmental laws and regulations, [ii] all applicable health care licensure
laws and regulations and [iii] such other matters as Landlord reasonably deems
relevant (including, without limitation, whether the conveyance of the Proposed
Facility to Landlord may be avoided under the Bankruptcy Code).
(h) TITLE COMMITMENT. Tenant shall have delivered to Landlord
a valid and binding owner's title insurance commitment issued by Lawyers Title
Insurance Corporation through its agent, Saunie Risinger in Mansfield, Ohio
("Title Company"), in an amount equal to the acquisition amount for the Proposed
Facility, with such endorsements and affirmative coverages, and in such form, as
Landlord may reasonably require insuring Landlord's fee title to the Proposed
Facility, subject to no encumbrances except those approved or assumed by
Landlord. Arrangements satisfactory to Landlord shall have been made for the
issuance of a title insurance policy as of the substitution closing date.
(i) ENVIRONMENTAL ASSESSMENT. Tenant shall have delivered an
environmental site assessment report for the Proposed Facility, in form and
substance reasonably acceptable to Landlord and prepared by an environmental
consultant reasonably acceptable to Landlord.
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(j) TAX OPINION. Landlord shall have obtained, at Tenant's
cost, an opinion of Landlord's counsel, in form and substance acceptable to
Landlord, confirming that [i] the substitution of the Proposed Facility for the
Existing Facility will qualify as an exchange solely of property of a like-kind
under Section 1031 of the Internal Revenue Code ("Code"), in which, generally,
except for "boot" such as cash needed to equalize values or discharge
indebtedness, no gain or loss is recognized to Landlord; [ii] the substitution
or sale will not result in ordinary recapture income to Landlord pursuant to
Code Section 1250(d)(4) or any other Code provision; [iii] the substitution or
sale will result in income, if any, to Landlord of a type described in Code
Section 856(c)(2) or (3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6); and [iv] the substitution or sale, together with all other
substitutions and sales made or requested by Tenant, pursuant to any other
leases with Landlord or a Landlord Affiliate during the relevant time period,
will not jeopardize the qualification of Landlord as a real estate investment
trust under Code Section 856-860.
(k) LEGAL OPINION. Landlord shall have received opinions of
Tenant's counsel as to [i] the compliance of the Proposed Facility with land
use, zoning, subdivision and environmental laws and regulations; [ii] the
compliance of Tenant, the proposed substitution and the Proposed Facility with
applicable health care laws and regulations; [iii] the due authorization,
execution and enforceability of the Substitution Documents; and [iv] such other
matters are reasonably requested, in form and substance reasonably acceptable to
Landlord.
(l) SUBSTITUTION DOCUMENTS. Tenant and Guarantor shall have
executed and delivered, or caused to be executed and delivered, such documents
as are reasonably required by Landlord to effectuate the substitution
(collectively, the "Substitution Documents"), including, without limitation, [i]
a deed and bill of sale with full warranties (or such other deed form as is
customary in such geographic area) conveying to Landlord title to the Proposed
Facility free and clear of all liens and encumbrances, except those approved or
assumed by Landlord; [ii] a Lease ("Substitute Lease") duly executed,
acknowledged and delivered by Tenant, containing the same terms and conditions
as are contained in the Lease for the Existing Facility except that [a] the
legal description of the land shall refer to the Proposed Facility, [b] the
acquisition amount for the Proposed Facility shall be an amount equal to the
Lease Amount for the Existing Facility increased or decreased by any adjustments
agreed to by Landlord and Tenant ("Cash Adjustment"), [c] the rent inflation
adjustment (Increaser Rate) under the Substitute Lease in all respects shall
provide Landlord with a substantially equivalent yield at the time of the
substitution to that received from the Existing Facility, taking into account
the Cash Adjustment, if any, and any other relevant factors, and [d] such other
changes therein as may be necessary or appropriate under the circumstances shall
be made; and [iii] UCC financing statements. The Substitution Documents shall be
based upon and contain the same terms and conditions as are set forth in the
Lease Documents in effect prior to the substitution, except that such changes
shall be made as may be necessary or reasonably appropriate under the
circumstances to effectuate the substitution and secure the protection and
priority of the property and security interests conveyed and/or granted to
Landlord.
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(m) OTHER INFORMATION. Without limiting any other provision
contained herein, Tenant shall have delivered to Landlord such other information
and materials relating to Tenant and the Proposed Facility as Landlord may
reasonably request, including, without limitation, leases, receipted bills,
management agreements and other contracts, provider agreements, cost reports,
permits, evidence of legal and actual access to the Proposed Facility, evidence
of the availability and sufficiency of utilities servicing the Proposed
Facility, historical and current operating statements, detailed budgets and
financial statements and Landlord shall have found the same to be satisfactory
in all respects.
(n) TENANT. The Proposed Facility shall be leased by Tenant
or an Affiliate that is acceptable to Landlord; provided, however, that in the
event that the Proposed Facility is leased by any such Affiliate, [i] said
Affiliate shall execute and deliver to Landlord such Substitution Documents as
may be reasonably required by Landlord; and [ii] Landlord shall be provided with
such evidence as it may reasonably require to determine that the conveyance of
the Proposed Facility to Landlord does not constitute a fraudulent conveyance
under applicable federal or state law.
(o) INSURANCE CERTIFICATES. Tenant shall have delivered to
Landlord insurance certificates evidencing compliance with all of the insurance
requirements set forth in this Lease.
(p) RENT. Landlord shall have received all Rent due and
payable under the Existing Lease through the substitution closing date.
(q) VALUATION. The acquisition amount for the Proposed
Facility shall not exceed 90% of the appraised value of the Proposed Facility.
If the equity value of the Existing Facility exceeds the equity value of the
Proposed Facility, then an adjustment will be made in the option price set forth
in the Substitute Lease so that Landlord will receive its bargained-for share of
appreciation in the value of the Existing Facility.
(r) LANDLORD'S APPROVAL. Landlord shall have determined that
the Proposed Facility satisfies all of Landlord's customary due diligence and
underwriting requirements based upon the standards then being applied to similar
customers and facilities.
26.3 CONVEYANCE OF EXISTING FACILITY. Upon satisfaction of the
Substitution Conditions and concurrently with the closing of the substitution
transaction, Landlord will convey the Existing Facility to the respective Tenant
or Tenant's designee by quitclaim deed and quitclaim bill of sale. The date that
the Existing Facility is conveyed by Landlord is referred to herein as the
"Conveyance Date." In the event that [i] Tenant is contractually obligated to
convey the Existing Facility to an unrelated purchaser ("Purchaser") by a
specified closing date ("Contract Date"); [ii] the Substitution Conditions have
not been fully satisfied by the Contract Date; and [iii] Tenant has used its
best efforts to extend the Contract Date, including an offer to pay a reasonable
extension fee, but the Contract Date has not been extended to a date by which
the Substitution Conditions are fully satisfied, Tenant shall have the right to
require Landlord to convey the Existing Facility to the Purchaser subject to the
following terms and conditions:
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(a) Tenant shall irrevocably identify the Substitute
Facility and notify Landlord thereof within 35 days after the Conveyance Date.
Tenant shall satisfy all Substitution Conditions and cause the Substitute
Facility to be conveyed to Landlord within 180 days after the Conveyance Date.
(b) Tenant acknowledges that Landlord intends to qualify the
sale of the Existing Facility as a like-kind exchange pursuant to Code ss.1031.
Tenant shall cooperate with Landlord in effectuating a qualifying deferred
like-kind exchange and shall require the Purchaser, pursuant to the terms of the
Purchase and Sale Agreement with Purchaser, to so cooperate and to execute all
documents reasonably requested by Landlord to effectuate a qualifying deferred
like-kind exchange.
(c) All proceeds from the sale of the Existing Facility
("Sale Proceeds") shall be deposited with a qualified intermediary specified by
Landlord to facilitate the accomplishment of the deferred like-kind exchange.
Upon conveyance of the Substitute Facility to Landlord, the Sale Proceeds shall
be disbursed for payment of the Substitute Facility purchase price with the
balance, if any, disbursed in accordance with the Cash Adjustment made pursuant
to ss.26.2(l).
(d) To compensate Landlord for the lost Rent during the
period from the Conveyance Date to the date that the Substitute Facility is
conveyed to Landlord ("Deferred Period"), Tenant shall pay to the qualified
intermediary, on a monthly basis, an amount equal to the Base Rent for the
Existing Facility that would otherwise be payable during the Deferred Period.
(e) If Tenant does not comply with the deadlines set forth in
ss.26.3(a), Tenant shall pay Landlord an early termination fee equal to 10% of
the Lease Amount for the Existing Facility that was conveyed by Landlord,
payable within ten days following the missed deadline date.
26.4 EXPENSES. Whether or not any proposed substitution is
consummated, Tenant shall pay all of the out-of-pocket expenses and other costs
incurred or expended by Landlord in connection with any proposed substitution
(collectively the "Substitution Expenses"), including, without limitation,
Landlord's reasonable attorneys' fees and expenses, appraisal costs,
out-of-pocket travel expenses, inspection fees, title insurance premiums and
other title fees, survey expenses, mortgage taxes, transfer, documentary stamp
and other taxes, search charges of any nature, recording, registration and
filing costs, brokers' fees and commissions, if any, escrow fees, fees and
expenses, if any, incurred in qualifying Landlord and maintaining its right to
do business in the state where the Proposed Facility is located, the cost of
obtaining, preparing and recording a release of the Existing Facility from the
lien of any mortgage (other than the amount necessary to payoff such mortgage)
and any other costs expended or incurred by Landlord in connection with the
preparation, documentation and closing of the proposed substitution.
All Substitution Expenses due and payable at the time of the closing of the
substitution transaction shall be paid by Tenant at closing. Any Substitution
Expenses that are not paid at closing shall be a
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demand obligation of Tenant to Landlord and, if not paid within 15 days after
demand, shall thereafter (to the extent permitted by applicable law) bear
interest at the Overdue Rate until the date of payment.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
Signed and acknowledged
in the presence of PENNSYLVANIA BCC PROPERTIES, INC.
Signature
------------------------------ By:
Print Name --------------------------------
----------------------------- Title:
------------------------
Signature
------------------------------
Print Name
-----------------------------
BALANCED CARE AT SAXONBURG, INC.
Signature By:
----------------------------- -------------------------------
Print Name
----------------------------- Title:
------------------------
Signature
----------------------------- Tax I.D. No.:
Print Name ----------------------
-----------------------------
