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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- ----------
Commission file number 001-35118
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CENTENNIAL HEALTHCARE CORPORATION
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(Exact name of registrant as specified in its charter)
Georgia 58-1839701
-------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (identification No.)
400 Perimeter Center Terrace, Suite 650, Atlanta, Georgia 30346
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 770-698-9040
------------
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
There were 11,923,618 shares of Common Stock outstanding as of November 6,
1998
<PAGE>
CENTENNIAL HEALTHCARE INC
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 23
Signatures
<PAGE>
ITEM I - FINANCIAL STATEMENTS
CENTENNIAL HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents........................ $ 7,164 $ 4,011
Patient accounts receivable and
third-party payor settlements, net of
allowance for doubtful accounts of
approximately $3,600 and $3,000................ 87,602 72,222
Other receivables................................ 29,626 14,612
Deferred income taxes............................ 1,311 2,511
Prepaid expenses and other current assets........ 3,501 1,259
-------- --------
Total current assets........................... 129,204 94,615
Property and equipment, net..................... 71,853 74,379
Intangible assets, net.......................... 41,835 51,331
Notes receivable and other assets............... 30,411 23,324
-------- --------
Total assets................................... $273,303 $243,649
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities......... $ 40,077 $ 40,785
Other current liabilities........................ 14,216 8,270
-------- --------
Total current liabilities...................... 54,293 49,055
Long-term debt, less current maturities........... 101,641 78,913
Other long-term liabilities....................... 2,215 2,577
-------- --------
158,149 130,545
Commitments and contingencies
Shareholders' equity:
Common stock with par value of $.01; 50,000,000
shares authorized; 11,923,618 and 11,862,320
shares issued and outstanding.................. 119 119
Paid-in capital.................................. 101,593 101,299
Retained earnings................................ 13,442 12,214
-------- --------
115,154 113,632
Note receivable from shareholder.................. - (528)
-------- --------
Net shareholders' equity....................... 115,154 113,104
-------- --------
Total liabilities and shareholders' equity..... $273,303 $243,649
======== ========
See accompanying notes to condensed consolidated financial statements.
3
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CENTENNIAL HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
-------- ------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net patient service revenues............................. $ 85,738 $79,964 $253,159 $212,537
Management fees and other revenues....................... 3,847 1,982 11,398 5,583
-------- ------- -------- --------
Total revenues......................................... 89,585 81,946 264,557 218,120
-------- ------- -------- --------
Expenses:
Facility operating expenses:
Salaries, wages and benefits........................... 49,526 42,468 134,446 110,729
Other operating expenses............................... 18,828 20,365 66,807 57,156
Lease expense............................................ 5,756 5,909 16,911 16,342
Corporate administrative costs........................... 5,837 4,122 16,027 11,336
Depreciation and amortization............................ 1,912 1,811 6,574 4,945
Loss on closure of nursing facility...................... 4,010 - 4,010 -
Provision for asset revaluation.......................... 12,152 - 12,152 -
-------- ------- -------- --------
Total operating expenses.............................. 98,021 74,675 256,927 200,508
-------- ------- -------- --------
(8,436) 7,271 7,630 17,612
-------- ------- -------- --------
Other income (expense):
Interest income.......................................... 540 208 1,461 524
Interest expense......................................... (2,499) (1,807) (6,728) (7,095)
-------- ------- -------- --------
Total other expense.................................. (1,959) (1,599) (5,267) (6,571)
-------- ------- -------- --------
(10,395) 5,672 2,363 11,041
Provision for income taxes................................. (4,054) 2,212 921 4,306
-------- ------- -------- --------
Income (loss) before minority interest..................... (6,341) 3,460 1,442 6,735
Minority interest in net income of subsidiary,
net of income taxes...................................... (91) (77) (214) (227)
-------- ------- -------- --------
Income (loss) before extraordinary loss.................... (6,432) 3,383 1,228 6,508
Extraordinary loss on extinguishment of debt, net of
income tax benefit....................................... - (537) - (537)
-------- ------- -------- --------
Net income (loss).................................... (6,432) 2,846 1,228 5,971
Dividends and accretion on preferred stock................. - 4,654 - 5,873
-------- ------- -------- --------
Income (loss) applicable to common stock................... $ (6,432) $(1,808) $ 1,228 $ 98
======== ======= ======== ========
Income (loss) applicable to common stock per common
stock and common stock equivalent share:
Basic.................................................... $ (0.54) $ (0.16) $ 0.10 $ 0.01
======== ======= ======== ========
Diluted.................................................. $ (0.54) $ (0.15) $ 0.10 $ 0.02
======== ======= ======== ========
Weighted average number of common stock and
common stock equivalents outstanding:
Basic.................................................... 11,924 11,579 11,900 7,084
======== ======= ======== ========
Diluted.................................................. 11,942 11,870 12,123 7,206
======== ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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CENTENNIAL HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOTE
COMMON STOCK RECEIVABLE
--------------- PAID-IN RETAINED FROM
SHARES AMOUNT CAPITAL EARNINGS SHAREHOLDER NET
------ ------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997................... 11,862 $119 $101,299 $12,214 $(528) $113,104
Exercise of stock options...................... 61 - 294 - - 294
Proceeds from shareholder note receivable...... - - - - 528 528
Net income..................................... - - - 1,228 - 1,228
------ --- -------- ------- ----- --------
Balance at September 30, 1998.................. 11,923 $119 $101,593 $13,442 $ - $115,154
====== ==== ======== ======= ===== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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CENTENNIAL HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
1998 1997
-------- --------
Operating Activities:
Net income............................................. $ 1,228 $ 5,971
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization...................... 6,574 4,945
Amortization of discount on subordinated debt...... - 62
Extraordinary loss on extinguishment of debt....... - 880
Deferred income taxes.............................. (3,100) 3,978
Consulting expenses offset against
note receivable.................................. 94 63
Minority interest.................................. 350 374
Provision for doubtful accounts.................... 1,144 347
Provision for asset revaluation.................... 12,152 -
Change in assets and liabilities:
Accounts receivable............................. (16,431) (16,846)
Prepaid expenses and other assets............... (7,471) (5,674)
Accounts payable, accrued liabilities and
other current liabilities..................... 4,370 (1,824)
Other........................................... (930) 113
-------- --------
Cash used in operating activities........... (2,020) (7,611)
-------- --------
Investing Activities:
Purchases of property and equipment.................... (5,046) (4,354)
Notes and advances receivable, net of repayments....... (9,422) 280
Acquisitions, net of cash acquired..................... (591) (13,857)
(Increase) decrease in restricted cash................. (531) 4,647
Other.................................................. (1,964) (982)
-------- --------
Cash used in investing activities........... (17,554) (14,266)
-------- --------
Financing Activities:
Proceeds from issuance of preferred stock.............. - 10,000
Proceeds from the exercise of stock options............ 294 23
Proceeds from borrowings............................... 24,200 13,000
Public offering of Common Stock........................ - 68,448
Payment of stock offering costs........................ - (1,420)
Distributions paid to minority partners................ (222) (222)
Payments of dividends to preferred shareholders........ - (462)
Payments on amounts due to related party............... (480) (202)
Redemption of Series E Preferred Stock................. - (5,000)
Repurchase of Series C Preferred Stock................. - (1,009)
Principal payments on subordinated debt................ - (25,300)
Principal payments on long-term debt................... (1,065) (35,743)
-------- --------
Cash provided by financing activities....... 22,727 22,113
-------- --------
Net increase in cash and cash equivalents................ 3,153 236
Cash and cash equivalents, beginning of period........... 4,011 6,030
-------- --------
Cash and cash equivalents, end of period................. $ 7,164 $ 6,266
======== ========
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
CENTENNIAL HEALTHCARE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 1--BASIS OF PRESENTATION AND OTHER INFORMATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnote disclosures required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the financial
statements reflect all adjustments considered necessary for a fair statement of
the results of operations and financial position for the interim periods
presented. All such adjustments are of a normal recurring nature. These
unaudited interim financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 1997
and notes thereto contained in Centennial HealthCare Corporation's Annual Report
on Form 10-K filed with the Securities and Exchange Commission (Commission File
No. 001-35118).
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
results of operations for the nine months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1998 or any interim period.
Certain amounts in the 1997 financial statements of Centennial HealthCare
Corporation ("Centennial" or the "Company") have been reclassified for
comparative purposes.
7
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NOTE 2--EARNINGS PER SHARE
The calculation of earnings per share is as follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income (loss) before dividends
and accretion on preferred stock.................... $(6,432) $ 3,383 $ 1,228 $ 6,508
Dividends and accretion on preferred stock............ - (4,654) - (5,873)
------- ------- ------- -------
Income (loss) applicable to common stock
before extraordinary loss........................... (6,432) (1,271) 1,228 635
Extraordinary loss on extinguishment of
debt (net of tax)................................... - (537) - (537)
------- ------- ------- -------
Income (loss) applicable to common stock.............. $(6,432) $(1,808) $ 1,228 $ 98
Weighted average common shares outstanding............ 11,924 11,579 11,900 7,084
Basic earnings (loss) per common share:
Income (loss) applicable to common stock
before extraordinary loss........................... $ (0.54) $ (0.11) $ 0.10 $ 0.09
Extraordinary loss on extinguishment of debt.......... - (0.05) - (0.08)
------- ------- ------- -------
Basic Earnings (Loss) Per Common Share................ $ (0.54) $ (0.16) $ 0.10 $ 0.01
======= ======= ======= =======
Income (loss) applicable to common stock
before extraordinary loss........................... $(6,432) $(1,271) $ 1,228 $ 635
Interest savings on convertible debt (net of tax)..... - 24 - 41
Extraordinary loss on extinguishment of debt
(net of tax)........................................ - (537) (537)
------- ------- ------- -------
Income (loss) applicable to common stock.............. $(6,432) $(1,784) $ 1,228 $ 139
Weighted average common shares outstanding............ 11,924 11,579 11,900 7,084
Dilutive effect of stock options...................... 18 166 223 80
Conversion of convertible debt........................ - 125 - 42
------- ------- ------- -------
Average diluted common shares outstanding............. 11,942 11,870 12,123 7,206
Diluted earnings (loss) per common share:
Income (loss) applicable to common stock before
extraordinary loss.................................. $ (0.54) $ (0.10) $ 0.10 $ 0.09
Extraordinary loss on extinguishment of debt.......... - (0.05) - (0.07)
------- ------- ------- -------
Diluted Earnings (Loss) Per Common Share.............. $ (0.54) $ (0.15) $ 0.10 $ 0.02
======= ======= ======= =======
</TABLE>
8
<PAGE>
NOTE 3--CERTAIN THIRD QUARTER TRANSACTIONS
In December 1995, as part of the Company's merger with Transitional Health
Services, Inc., (the "THS Merger"), the Company assumed operations of THS of
South Bend, a 191-bed skilled nursing facility located in South Bend, Indiana.
Prior to its acquisition by the Company, this facility had a history of
operating losses, had received negative state licensure surveys, and was in
jeopardy of losing its license. At the time of the acquisition, the Company
recorded a $3.0 million reserve against a future loss on the disposition of the
facility, which the Company intended to complete within two years. The Company
has been unable to sell the facility, and as a result, management has
determined that the best course of action is to close the facility. All
necessary notices for closure have been sent and it is anticipated that the
facility will close during late November 1998. During the third quarter of 1998,
the Company recorded an estimated loss of $4.0 million associated with the
closure of this facility and the relocation of its residents. The Company will
continue to market the facility for sale. The action filed by the local county
prosecutor's office during the third quarter of 1998 remains pending. The
Company continues to believe that this action is without merit.
During the third quarter of 1998, the Company completed its review of the
effects of the upcoming prospective payment system ("PPS") on its operations.
Based upon the Company's projections of future revenue and expense changes
associated with the phase-in of PPS, the Company determined that profitability
at certain of its nursing centers acquired in the THS Merger would be less than
expected. In addition, the Company has experienced continued declines in
revenue at Total Care, Inc., ("TC"), the Company's subsidiary providing home
health services, due to decreases in home health visits during 1998 and
decreases in Medicare reimbursement for home health services. Accordingly,
during the third quarter of 1998, the Company recorded write-downs of certain
long-lived assets at its nursing facilities and TC of $11.0 million and $1.2
million, respectively.
NOTE 4--FACILITY ACQUISITIONS
In June 1998 the Company signed an agreement to lease ten skilled nursing
facilities totaling 1,024 licensed available beds, located throughout Arkansas,
Florida, Kansas, Wisconsin and North Carolina. The leases, with an initial
fourteen-year term and two ten-year renewal options, were effective upon
transfer of the licenses to the Company. Two of the licenses transferred on
August 1, 1998, six of the licenses transferred on October 1, 1998 and the
two remaining facility licenses transferred on November 1, 1998.
In August 1998, the Company financed three skilled nursing facilities under the
lease component of its expanded Senior Credit Facility with First Union National
Bank (First Union), and NationsBank, N.A., (NationsBank), as agents and lenders
and the other lenders named therein, (the "Senior Credit Facility" see Note 5).
Royal Terrace Nursing and Rehabilitation center, a 147-bed facility located in
Kansas, was previously leased by the Company. Chenal Rehabilitation and
Healthcare Center, a 70-bed facility located in Arkansas, was previously managed
by the Company. The third facility, 82-bed Riley Nursing Center, is
Centennial's sixth skilled nursing facility in Mississippi.
NOTE 5--COMMITMENTS AND CONTINGENCIES
On December 16, 1997, the Company expanded its Senior Credit Facility through an
amendment to its existing credit agreement. The Company's maximum aggregated
advance limit was increased from $65.0 million to $125.0 million. Advances under
the Senior Credit Facility may be used for acquisitions, capital expenditures,
working capital and general corporate purposes.
Centennial's borrowing capacity is dependent upon its ability to satisfy certain
financial covenants that are impacted by its debt and capital structure.
In July 1998, the Company refinanced and expanded the Senior Credit Facility
from $125 million to $160 million through syndication with an expanded bank
9
<PAGE>
group led by NationsBank and First Union as agents. Under the expansion, an
initial amount of $40.0 million has been reserved for leases of existing and
future facilities. The Company has the ability to expand the lease portion of
the commitment up to $80.0 million, and in October 1998 the lease portion was
expanded to $70.0 million.
Under the provisions of the Senior Credit Facility, Centennial is required to
hedge a portion of its floating rate debt outstanding under the Senior Credit
Facility. Effective April 20, 1998, the Company entered into an interest rate
swap agreement with First Union. Through the agreement, the Company has
exchanged its floating rate interest obligations on $18.0 million in principal
at a fixed rate of 5.65% per annum for a period of five years. First Union has
the option of canceling the agreement on April 19, 2001. The fixing of interest
rates for this period reduces in part the Company's exposure to the uncertainty
of floating interest rates. The differential paid or received on the interest
rate swap agreement is recognized as an adjustment to interest expense.
Effective October 1998, the Company entered into two additional interest rate
swap agreements, one with NationsBank, and one with Credit Lyonnais
Americas, whereby the Company exchanged its floating rate interest obligations
on a total of $20.0 million in principal at a fixed rate of 5.57% per annum for
a period of five years. Both NationsBank and Credit Lyonnais Americas have the
option of canceling their respective agreements at the end of three years from
the effective dates.
NOTE 6--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, Statement of Financial Accounting Standards No. 133 ("SFAS No.
133"), "Accounting for Derivative Instruments and Hedging Activities," was
issued. This statement requires that all derivatives be recognized in the
statement of financial position as either assets or liabilities and measured at
fair value. In addition, all hedging relationships must be designated,
reassessed and documented pursuant to the provisions of SFAS No. 133. SFAS No.
133 is effective for fiscal years beginning after June 15, 1999. The effect on
the financial statements upon adoption of SFAS No. 133 has not been determined.
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information", ("SFAS
No. 131"). SFAS No. 131 establishes standards for the way that public business
enterprises report information about operating segments in annual and interim
financial statements. SFAS No. 131 is required to be applied beginning with the
Company's 1998 annual financial statements. The Company has not yet determined
the effect, if any, of this statement on its consolidated financial statements.
NOTE 7--SUBSEQUENT EVENTS
On October 22, 1998, Centennial announced that its Board of Directors had
approved the sale of the Company for $16.00 per share in cash to a new company
formed by Welsh, Carson, Anderson & Stowe ("WCAS"), whose affiliates currently
hold approximately 23% of the Company's common stock.
Under the definitive merger agreement, each outstanding share of the Company's
common stock, other than certain shares currently held by the Company's
management, will be converted into the right to receive $16.00 in cash. Certain
shares held by the Company's management will be converted into shares of the
surviving corporation so that management will maintain an equity interest in
such surviving corporation.
The proposed transaction is subject to certain conditions, including regulatory
approvals, approval by the Company's shareholders holding a majority of the
outstanding shares, as well as the approval of a majority of the shares voted by
disinterested shareholders other than those members of management converting
shares into shares of the surviving corporation and WCAS or its affiliates, and
other customary closing conditions. The definitive merger agreement contains no
financing contingencies.
In the fourth quarter of 1998, the Company financed six nursing facilities under
the lease component of the Senior Credit Facility. Lincoln Centers for
Rehabilitation and Healthcare-East, and Lincoln Centers for Rehabilitation and
Healthcare-West, a 90-bed facility and a 76-bed facility, respectively, both
located in Connersville, Indiana, were previously leased by the Company.
Riverbend Health Care Center, a 78-bed facility located in Fort Wayne, Indiana,
and Sheridan Healthcare Center, an 80-bed facility located in Sheridan, Indiana,
were also previously leased by the Company. Ashton Court Care and
Rehabilitation Centre, a 140-bed facility located in Liberty, Missouri and
Woodbine Healthcare and Rehabilitation Centre, a 300-bed facility located in
Gladstone, Missouri are being leased by the Company effective November 1, 1998.
In October 1998, Centennial signed a management contract to manage a facility in
Ackerman, Mississippi, with 22 acute care hospital beds and 68 skilled nursing
beds, which the Company anticipates leasing beginning December 1, 1998,
following receipt of all necessary consents and approvals.
As part of management's decision to close the facility, in October 1998, the
Company acquired its formerly leased facility in South Bend Indiana and
terminated the lease, thereby eliminating the ongoing lease obligation.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
Unaudited Condensed Consolidated Statements of Operations for the three and
nine-month period ended September 30, 1998 and 1997.
CERTAIN STATEMENTS IN THIS FORM 10-Q, INCLUDING INFORMATION SET FORTH UNDER
THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS", CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS INCLUDE
STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF CENTENNIAL
HEALTHCARE CORPORATION AND MEMBERS OF ITS MANAGEMENT TEAM. MANAGEMENT CAUTIONS
THAT A VARIETY OF FACTORS COULD CAUSE CENTENNIAL HEALTHCARE'S ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE ANTICIPATED RESULTS EXPRESSED IN SUCH FORWARD-LOOKING
STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE
SET FORTH IN CENTENNIAL HEALTHCARE'S CAUTIONARY STATEMENTS REGARDING FORWARD-
LOOKING STATEMENTS (EXHIBIT 99.1 TO THIS REPORT), WHICH STATEMENTS ARE
INCORPORATED HEREIN BY REFERENCE.
Centennial HealthCare Corporation ("Centennial" or the "Company") provides a
broad range of long-term healthcare services to meet the medical needs of
elderly and post-acute patients. The Company provides these services through
geographically concentrated networks located in metropolitan and secondary
markets throughout the United States. The Company was organized in 1989 as a
Georgia corporation and conducts business through its operating subsidiaries.
The Company currently operates 103 owned, leased and managed skilled nursing
facilities with approximately 11,200 licensed available beds in 19 states and
the District of Columbia. The Company provides basic and specialty healthcare
services. Basic services include skilled nursing and support, housekeeping,
laundry, dietary, recreational and social services. Specialty services include
comprehensive rehabilitation therapy, respiratory therapy, ventilator care,
infusion therapy, wound care, home health care and other subacute and specialty
services. As components of its specialty services, the Company provides, through
its subsidiaries, comprehensive rehabilitation services and home health
services.
In August 1998, the Company began leasing Riley Nursing Center, an 82-bed
skilled nursing facility located in Mississippi; Walnut Cove Healthcare Center,
a 104-bed skilled nursing facility located in North Carolina; Omro Care Center,
an 80-bed skilled nursing facility located in Wisconsin; and Chenal Health and
Rehabilitation Center, ("Chenal"), an 83-bed skilled nursing facility located in
North Carolina. Chenal was previously managed by the Company. Together, these
acquisitions are hereafter referred to as the "August Facility Acquisitions".
In December 1995, as part of the Company's merger with Transitional Health
Services, Inc., the Company assumed operations of THS of South Bend, a 191-bed
skilled nursing facility located in South Bend, Indiana. Prior to its
acquisition by the Company, this facility had a history of operating losses, had
11
<PAGE>
received negative state licensure surveys, and was in jeopardy of losing its
license. At the time of the acquisition, the Company recorded a $3.0 million
reserve against a future loss on the disposition of the facility, which the
Company intended to complete within two years. The Company has been unable to
sell the facility, and as a result, management has determined that the
best course of action is to close the facility. All necessary notices for
closure have been sent and it is anticipated that the facility will close during
late November 1998. During the third quarter of 1998, the Company recorded an
estimated loss of $4.0 million associated with the closure of this facility and
the relocation of its residents. The Company will continue to market the
facility for sale.
During the third quarter of 1998, the Company completed its review of the
effects of the upcoming prospective payment system ("PPS") on its operations.
Based upon the Company's projections of future revenue and expense changes
associated with the phase-in of PPS, the Company determined that profitability
at certain of its nursing centers acquired in the THS Merger would be less than
expected. In addition, the Company has experienced continued declines in
revenue at Total Care, Inc., ("TC"), the Company's subsidiary providing home
health services, due to decreases in home health visits during 1998 and
decreases in Medicare reimbursement for home health services. Accordingly,
during the third quarter of 1998, the Company recorded write-downs of
certain long-lived assets at its nursing facilities and TC of $11.0 million and
$1.2 million, respectively.
During the first quarter of 1998, the Company entered into management agreements
for six skilled nursing facilities, with a total of 836 licensed available beds,
located in North Carolina. Also in the first quarter of 1998, Centennial
entered into a management agreement for a 59-bed rural hospital in northern
Florida.
In December 1997, Centennial acquired a 58-bed skilled nursing facility in St.
Petersburg, Florida, (the "Florida Facility") which had previously been managed
by the Company since June 1991. The Florida Facility was formerly owned by an
affiliate of the president of the Company. Total consideration of approximately
$3.3 million included borrowings under the Company's Senior Credit Facility of
approximately $1.1 million, and the reduction of a note receivable to the
Company from the facility of approximately $2.2 million.
In August 1997, Centennial acquired substantially all of the business and assets
of Complex Care, Inc., ("CCI"), a provider of physical, occupational and speech
therapy services through 45 contracts with long-term care facilities. The
Company paid total consideration of $7.0 million, utilizing borrowings under its
Senior Credit Facility. The Company may pay additional consideration under an
earn-out agreement.
In May 1997, the Company acquired by merger Total Care Consolidated, Inc.,
("TC"), a provider of home health services, with 25 home health offices. Total
consideration of $8.0 million consisted of $6.0 million in cash, which was
funded under the Senior Credit Facility, and $2.0 million in the form of a
convertible promissory note due April 30, 1999.
In March 1997, the Company acquired a leasehold interest in a rural hospital
located in northern Florida. In October 1996, the Company entered into a
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<PAGE>
management agreement and a lease agreement with the owner of a hospital and
three licensed home health care offices, located in northern Florida. The
agreement provided that the Company would manage the hospital until all
necessary approvals and licenses were obtained, at which time the Company would
operate the hospital under a long-term lease. The Company accounted for the
transaction as a management agreement beginning in October 1996; in June 1997,
all necessary approvals and licenses were obtained, and the Company has operated
the hospital under a long-term lease since that date. The above hospital leases
together are hereafter referred to as the "Hospitals".
RESULTS OF OPERATIONS
Centennial's revenues and earnings for both the three-month and nine-month
period ended September 30, 1998 as compared to the same period for 1997
continued to grow from both expansion and increases in current operations and as
a result of acquisitions.
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997
NET PATIENT SERVICE REVENUES. Net patient service revenues increased from $80.0
million in the third quarter of 1997 to $85.7 million in the same period in
1998, an increase of $5.7 million or 7.2%. Total revenues associated with the
CCI contracts added approximately $1.7 million in the three months ended
September 30, 1998, compared to the same period in 1997. Revenues associated
with the Florida Facility and the August Facility Acquisitions approximated
$829,000 and $2.1 million, respectively, for the third quarter of 1998. Revenues
from home health services decreased approximately $1.4 million during the
quarter due to a decline in home health visits and Medicare rate decreases
implemented in 1998. Revenues from PTS, the Company's subsidiary providing
intravenous therapy and other services, increased approximately $1.5 million in
the third quarter of 1998 compared to the same period in 1997 due primarily to
the addition of new contracts with third parties. Existing facility revenues
increased approximately $1.0 million during the third quarter of 1998 compared
to the same period in 1997, resulting primarily from an increase in the quality
revenue mix of the facilities due to increasing admissions of higher acuity
patients. The Company also experienced general rate increases at certain of its
nursing facilities, which increased patient service revenues in the third
quarter of 1998 compared to the same period in 1997.
MANAGEMENT FEES AND OTHER REVENUES. Management fees and other revenues
increased from $2.0 million in the third quarter of 1997 to $3.8 million in the
third quarter of 1998, an increase of $1.8 million or 94.1%, which was
attributable primarily to the net addition of facility management agreements
subsequent to the third quarter of 1997 and the performance of additional fee-
generating services to existing managed facilities.
FACILITY OPERATING EXPENSES. Facility operating expenses increased from $62.8
million in the third quarter of 1997 to $68.4 million in the same period in
1998, an increase of $5.6 million or 8.8%, of which the CCI therapy contracts
added approximately $1.3 million in the third quarter of 1998 compared to the
same period in 1997. The Florida Facility and the August Facility Acquisitions
added approximately $601,000 and $1.8 million, respectively, to operating
expenses during the third quarter of 1998. Existing facility operating expenses
increased $2.0 million in the third quarter of 1998 compared to the third
quarter of 1997 due to regular increases in salary costs and costs associated
with PPS training for the Company's nursing and support staff. Operating
expenses from home health services decreased approximately $1.4 million during
the quarter resulting from decreased home health visits in 1998 and costs
reductions in the Company's delivery of care. Expenses from PTS increased $1.3
million over the third quarter of 1998 due to the addition of new third party
contracts.
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<PAGE>
CORPORATE ADMINISTRATIVE COSTS. Corporate administrative costs increased from
$4.1 million in the third quarter of 1997 to $5.8 million in the third quarter
of 1998, an increase of $1.7 million, or 41.6%, which was due primarily to the
addition of long-term care facility management agreements and costs incurred in
preparing for the Medicare prospective payment system.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$1.8 million in the third quarter of 1997 to $1.9 million in the same period in
1998, an increase of approximately $101,000, or 5.6%, which was primarily
attributable to additional depreciation expense incurred as a result of fixed
asset purchases.
INTEREST EXPENSE. Interest expense increased from $1.8 million in the third
quarter of 1997 to $2.5 million in the same period in 1998, an increase of
approximately $692,000, or 38.3%, which was primarily attributable to the
increase in debt of approximately $39.0 million subsequent to the third quarter
of 1997 related to borrowings for working capital.
LEASE EXPENSE. Lease expense for the third quarter of 1998 approximated lease
expense in the prior year period.
LOSS ON CLOSURE OF NURSING FACILITY. During the third quarter of 1998, the
Company recorded an estimated loss of $4.0 million associated with the closure
of THS of Southbend and the relocation of the facility's residents.
PROVISION FOR ASSET REVALUATION. During the quarter, Company recorded write-
downs of certain long-lived assets at its nursing facilities and at TC of $11.0
million and $1.2 million, respectively.
PROVISION FOR INCOME TAXES. The Company's effective tax rate for both the third
quarters of 1998 and 1997 was 39.0%.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
NET PATIENT SERVICE REVENUES. Net patient service revenues increased from
$212.5 million in the first nine months of 1997 to $253.2 million in the same
period in 1998, an increase of $40.7 million or 19.1%. Revenues associated with
the acquisition of TC and the acquisition of the CCI contracts added
approximately $9.0 million and $10.7 million, respectively, during the first
nine months of 1998. Revenues from the acquisitions of the Hospitals added
approximately $3.1 million during the first nine months of 1998. Revenues for
the Florida Facility and the August Facility Acquisitions approximated $2.5
million and $2.1 million, respectively, for the first nine months of 1998. The
remaining increase of $13.3 million was primarily attributable to growth in
existing facility revenues, therapy contract revenues and revenues from PTS.
Revenues associated with existing facilities increased by approximately $9.1
million during the first nine months of 1998 as compared to the same period in
the prior year, and resulted primarily from an increase in the quality revenue
mix of the facilities due to increasing admissions of higher acuity patients and
from an increase in the delivery of specialty services. The Company also
experienced general rate increases at its nursing facilities, which increased
patient service revenues in the first nine months of 1998 compared to the same
period in 1997. The increase in revenues at the Company's subsidiary providing
therapy services of approximately $4.0 million resulted from the net addition of
two rehabilitation therapy services contracts subsequent to the third quarter of
1997 as well as growth in existing contract revenue. This same store growth was
primarily the result of favorable salary equivalency rate changes in certain
states in which the Company operates as well as improvements in productivity of
the CCI contracts following a short downturn in volume subsequent to the 1997
contracts acquisition. Revenues from home health services decreased
approximately $2.0 million during the first nine months of 1998 due to a decline
in home health visits and Medicare rate decreases implemented in 1998. Revenue
from PTS increased $2.2 million in the first nine months of 1998 compared to
1997 due to increased volume from existing contracts and the addition of new
third party contracts in 1998.
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<PAGE>
MANAGEMENT FEES AND OTHER REVENUES. Management fees and other revenues
increased from $5.6 million in the first nine months of 1997 to $11.4 million in
the first nine months of 1998, an increase of $5.8 million, which was
attributable primarily to the net addition of facility management agreements
subsequent to the third quarter of 1997 and the performance of additional fee-
generating services to existing managed facilities.
FACILITY OPERATING EXPENSES. Facility operating expenses increased from $167.9
million in the first nine months of 1997 to $201.3 million in the same period in
1998, an increase of $33.4 million or 19.9%, of which the acquisition of TC and
the acquisition of the CCI therapy contracts added approximately $8.3 million
and $8.0 million, respectively, in the first nine months of 1998. The
acquisitions of the Hospitals added $2.7 million to operating expenses during
the first nine months of 1998 compared to 1997. Operating expenses for the
Florida Facility and the August Facility Acquisitions totaled $1.9 million and
$1.8 million, respectively, in the first nine months of 1998. The remaining
increase of $10.7 million was attributable primarily to increases in operating
expenses at existing long-term care facilities, increases in expenses from
existing contract therapy services, and increases at PTS. Operating expenses at
existing facilities increased $7.7 million, due to providing care for higher
acuity patients in the first nine months of 1998 as compared to the prior year
period, as well as costs associated with PPS training for the Company's nursing
and support staff. Operating expenses at the Company's subsidiary providing
therapy services increased $2.5 million as compared to the prior year period,
due to the net addition of two rehabilitation therapy services contracts as well
as increases in therapy volume on certain of the Company's existing contracts.
Expenses from home health services decreased approximately $1.5 million in the
first nine months of 1998 as compared to 1997 due to the decline in home health
visits in 1998 and cost reductions in the Company's delivery of care. Operating
expenses at PTS increased $2.0 million in the first nine months of 1998 compared
to the prior year period due to increased volume from existing contracts and the
addition of new third party contracts.
LEASE EXPENSE. Lease expense increased from $16.3 million in 1997 to $16.9
million in 1998, an increase of approximately $569,000, or 3.5%. The
acquisitions of TC and the Hospitals added approximately $138,000 and $120,000,
respectively, in the first nine months of 1998 compared to the first nine months
of 1997. Lease expense for the August Facility Acquisitions totaled
approximately $244,000 for the first nine months of 1998.
CORPORATE ADMINISTRATIVE COSTS. Corporate administrative costs increased from
$11.3 million in 1997 to $16.0 million in 1998, an increase of $4.7 million, or
41.4%, which was due primarily to additional overhead incurred to accommodate
the acquisition of the CCI contracts, the addition of long-term care facility
management agreements, the acquisition of TC, the Hospitals and the August
Facility Acquisitions, and costs incurred in preparing for the prospective
payment system.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from
$4.9 million in the first nine months of 1997 to $6.6 million in the same period
in 1998, an increase of approximately $1.7, or 32.9%, which was primarily
attributable to acquisitions and additional depreciation expense incurred as a
result of fixed asset purchases.
INTEREST EXPENSE. Interest expense decreased from $7.1 million in 1997 to $6.7
million in 1998, a decrease of approximately $367,000, or 5.2%, which was
primarily attributable to the repayment of $25.3 million of subordinated debt in
the third quarter of 1997, repayment of $35.1 million outstanding under the
Senior Credit Facility in the third and fourth quarters of 1997 as a result of
the completion of the Company's initial public offering, (which occurred in July
1997), and the increase in debt of approximately $39.0 million subsequent to the
third quarter of 1997 related to borrowings for working capital.
PROVISION FOR INCOME TAXES. The Company's effective tax rate for both the first
nine months of 1998 and for the same period in 1997 was 39.0%.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash during the first nine months of 1998 was
borrowings under its Senior Credit Facility. Cash was used by the Company for
capital improvements at several existing facilities, working capital advances
under arrangements with certain of the Company's managed facilities and the day-
to-day operations of the Company's business. The Company anticipates using
borrowings under the Senior Credit Facility to fund the growth in operations of
its existing facilities, the expansion and development of specialty services,
and the acquisition or management of additional long-term care facilities and
related service providers.
Working capital increased from $45.6 million at December 31, 1997, to $74.9
million at September 30, 1998 primarily attributable to increases in patient
accounts receivable, working capital advances under arrangements with certain of
the Company's managed facilities, increases in management fees receivable due to
additional fee-generating services provided to managed facilities, and accrued
liabilities associated with the closure of THS of Southbend. Patient accounts
receivable increased from $72.2 million at December 31, 1997 to $87.6 million at
September 30, 1998, an increase of $15.4 million. This increase was comprised of
$10.3 million associated with the Company's long-term care facilities, with the
remaining $5.1 million resulting from increases in rehabilitation therapy
contract receivables. The increase in receivables at the Company's long-term
care facilities is due primarily to increases in settlement receivables due from
the Medicare program associated with the Company's continued expansion of
specialty services during 1998. Costs incurred under the Medicare program are
reimbursed on a retroactive basis, which extends the collection time of these
receivables. The Company received interim payments totaling $9.1 million from
Medicare on its 1997 and 1998 settlement receivables (up to the routine cost
limits) during the third quarter of 1998. The increase in therapy receivables
during 1998 relates primarily to slowdown in payments from skilled nursing
facilities associated with increases in those providers' Medicare settlements.
As these settlements are collected, obligations to the Company should be
reduced. Working capital advances under arrangements with certain of the
Company's managed facilities increased by approximately $9.5 million, and
management fees related to additional fee-generating services to managed
facilities increased $3.6 million during the first nine months of 1998.
Additional accrued liabilities of $2.4 million, net of tax, were recorded in the
third quarter of 1998 associated with the closure of THS of Southbend.
The Company continued to invest in its leased and owned facilities through
capital expenditures of approximately $5.0 million or approximately $800 per bed
for the nine-month period. These expenditures included the expansion of
existing facilities and the selected rehabilitation of certain facilities.
In July 1998, the Company expanded the Senior Credit Facility from $125 million
to $160 million through syndication with an expanded bank group led by
NationsBank and First Union as agents. Under the expansion, an initial amount
of $40.0 million has been reserved for leases of existing and future facilities.
The Company has the ability to expand the lease portion of the commitment up to
$80.0 million, and in October 1998, the lease portion was expanded to $70.0
million.
In August 1998, the Company financed three skilled nursing facilities under the
lease component of the expanded credit facility. Royal Terrace Nursing and
Rehabilitation Center, a 147-bed facility located in Kansas, was previously
leased by the Company. Chenal Rehabilitation and Healthcare Center, a 70-bed
facility located in Arkansas, was previously managed by the Company. The third
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facility, 82-bed Riley Nursing Center, is Centennial's sixth skilled nursing
facility in Mississippi.
During the first nine months of 1998, the Company borrowed a net of $24.2
million in working capital loans under the Senior Credit Facility which were
utilized primarily to finance capital expenditures at existing facilities and to
provide working capital. As of September 30, 1998, the Company had $65.5 million
outstanding and approximately $52.8 million available under its Senior Credit
Facility, net of issued standby letters of credit of approximately $6.7 million.
The Company believes that operating cash flow and availability under the Senior
Credit Facility will be sufficient to finance its activities and to fund future
acquisitions.
In June 1998 the Company signed an agreement to lease ten skilled nursing
facilities totaling 1,024 licensed available beds, located throughout Arkansas,
Florida, Kansas, Wisconsin and North Carolina. The leases, with an initial
fourteen-year term and two ten-year renewal options, will be effective upon
transfer of the licenses. Two of the licenses transferred on August 1, 1998, six
of the licenses transferred on October 1, 1998 and the two remaining facility
licenses transferred on November 1, 1998. Centennial anticipates using cash
resources in the fourth quarter of 1998 to fund working capital requirements
under these leases.
In the fourth quarter of 1998, the Company financed six nursing facilities under
the lease component of the Senior Credit Facility. Lincoln Centers for
Rehabilitation and Healthcare-East, and Lincoln Centers for Rehabilitation and
Healthcare-West, a 90-bed facility and a 76-bed facility, respectively, both
located in Connersville, Indiana, were previously leased by the Company.
Riverbend Health Care Center, a 78-bed facility located in Fort Wayne, Indiana,
and Sheridan Healthcare Center, an 80-bed facility located in Sheridan, Indiana,
were also previously leased by the Company. Ashton Court Care and
Rehabilitation Centre, a 140-bed facility located in Liberty, Missouri and
Woodbine Healthcare and Rehabilitation Centre, a 300-bed facility located in
Gladstone, Missouri are being leased by the Company effective November 1, 1998.
HEALTH CARE REFORM
The Balanced Budget Act of 1997, (the "Act"), enacted in August 1997, has
targeted the Medicare program for reductions in spending growth of approximately
$9.5 billion for skilled nursing facilities over the next five years, primarily
through the implementation of a Medicare prospective payment system ("PPS") for
skilled services. The PPS per diem, which would cover routine service,
ancillary and capital related costs, will initially be a blended rate based on
(i) a facility-specific payment rate derived from each facility's 1995 cost
report, adjusted by an inflation factor and (ii) a federal per diem rate derived
from all hospital-based and freestanding (skilled nursing facility) 1995 cost
reports, adjusted for case mix and geographic variations in labor costs. The
blended rate will be further adjusted by a facility-specific case mix (acuity)
index.
Management believes that revenues will be lower under PPS; however, reductions
in therapy costs, use of general purchasing agents and other expense reduction
measures should offset the effect of any rate reductions. The Company can give
no assurance that payments under such programs in the future will remain at a
level comparable to the present level or increase, and decreases in the level of
payments could have a material adverse effect on the Company. During both the
third quarter and first nine months of 1998, the Company derived approximately
19% of its revenues from Medicare at its long-term care facilities. The Company
will incur, over the next three quarters, training costs, implementation costs
and other costs in order to prepare for PPS. For the remainder of 1998, the
Company has increased it's budgeted expenses by $1.5 million related to these
costs. Additionally, the Company expects to incur an additional $3.0 million in
the first half of 1999 related to these costs.
The Act has also targeted the Medicare home health program for reductions in
spending of approximately $16.2 billion over the next five years, also primarily
through the implementation of a prospective payment system. An interim payment
system ("IPS") will remain in effect until the new prospective payment system is
implemented for cost reporting periods beginning on or after
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<PAGE>
October 1, 1999. The interim payment system is effective for cost reporting
periods beginning on or after October 1, 1997. Under the IPS, home health
agencies are reimbursed at the lessor of:
. Actual costs
. Per visit cost limits reduced to 105% of the median per visit costs for
freestanding home health agencies; or
. A new blended agency-specific per beneficiary annual limit applied to the
agency's unduplicated census count of Medicare patients and based 75% on 98%
of reasonable costs for the agency's twelve- month cost reporting period
ending during fiscal year 1994.
Implementation of these new limits will effectively reduce reimbursement 15-20%
according to industry experts. For the third quarter and first nine months of
1998, the Company derived approximately 6 % and 7%, respectively, of its
revenues from home health care.
Effective April 10, 1998, regulations were adopted by Health Care Financing
Administration, which revise the methodology for determining the reasonable
cost for contract therapy services, including physical therapy, respiratory
therapy, occupational therapy and speech language pathology. Under the
regulations, the reasonable costs for contract therapy services are limited to
geographically-adjusted salary equivalency guidelines. However, the revised
salary equivalency guidelines will no longer apply when the PPS system
applicable to the particular setting for contract therapy services (e.g. skilled
nursing facilities, home health agencies, etc.) goes into effect. In most
locations the reduced rates have the effect of reducing the amount of
reimbursement for an hour of occupational or speech therapy and increasing the
amount of reimbursement for an hour of physical and respiratory therapy. The
Company believes that such rate reductions will be completely or partially
offset by cost reductions, changes in the method of delivering such services and
the addition of new therapy contracts. Due to these changes in operations and
cost structure and the relative size of the Company's therapy business, the
Company does not expect these reimbursement changes to have a material long-term
adverse effect on the Company. For the third quarter and first nine months of
1998, the Company derived approximately 14 % and 15%, respectively, of its
revenues from third-party contract therapy services.
IMPACT OF THE YEAR 2000 ISSUE
Computer systems and other equipment, including biomedical equipment and
building controls, with embedded computer microchips or processors
(collectively, "Business Systems") may use only two digits to represent the
year, which could result in the inability to process accurately certain date
sensitive data or operations before, during or after the year 2000. Business
and governmental entities are at risk for possible miscalculations or systems
failures causing disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices or engage in similar
normal business activities. This is commonly known as the Year 2000 Issue.
Problems associated with the Year 2000 Issue could affect many of Centennial's
financial and administrative operations as well as its voice and data
communication systems.
The Company is in the process of implementing a Year 2000 compliance plan (the
"Plan") with the objective of having all of its significant internal Business
Systems fully compliant with respect to the Year 2000 Issue before June 30,
1999.
The first component of the Plan is to identify the internal Business Systems of
the Company that are susceptible to processing errors or system failures as a
result of the Year 2000 Issue. This effort is
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<PAGE>
substantially complete, and priorities for all Business Systems that may require
remediation or replacement have been established. Those Business Systems
considered most critical to continuing operations and resident care are being
given the highest priority.
The second component of the Plan involves the actual remediation and replacement
of Business Systems. Business Systems ranked highest in priority have either
been remediated or replaced or scheduled for remediation or replacement. The
Company's objective is to complete substantially all remediation and replacement
of internal Business Systems by March, 1999 to allow time for testing and
verification.
Significant governmental entities, service providers, vendors and suppliers that
are believed to be critical to business operations after January 1, 2000, have
been identified and steps are being undertaken in an attempt to reasonably
ascertain their stage of Year 2000 compliance through questionnaires,
interviews, and other available means.
It is currently estimated that the aggregate cost of the Company's Year 2000
efforts will be approximately $250,000 to $500,000, of which approximately
$80,000 has been spent to date. These costs are being expensed as they are
incurred and are being funded through operating cash flow. These amounts do not
include any costs associated with the implementation of contingency plans, which
are in the process of being developed. The costs associated with the replacement
of computerized systems, hardware or equipment (currently estimated to be
approximately $300,000), substantially all of which would be capitalized, are
not included in the above estimates. The Company does not expect the costs
relating to Year 2000 remediation to have a material effect on Centennial's
results of operations or financial condition.
Because of the interdependent nature of Business Systems, the Company could be
materially adversely affected if federal and state agencies that administer
Medicare and/or Medicaid or private businesses with which the Company does
business or that provide essential services are not Year 2000 compliant. The
business and results of operations of the Company could be materially adversely
affected by a temporary inability of the Company to conduct its business in
the ordinary course for a period of time after January 1, 2000. Any related
costs to the Company are not included in the above cost estimates.
Concurrently with the Plan described above, the Company is developing a
contingency plan intended to mitigate the possible disruption in business
operations that may result from the Year 2000 Issue, and is developing cost
estimates for this plan. Once developed, the contingency plan and related cost
estimates will be continually refined as additional information becomes
available. Management expects that the contingency plan will be in place by the
end of the second quarter of 1999.
The Company's Plan is an ongoing process and the estimates of costs and
completion dates for various components of the Plan described above are subject
to change.
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PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As of September 30, 1998, the Company did not have any pending legal
proceedings that, based on current information and beliefs,
separately or in the aggregate, would be likely to have a material
adverse effect on the business or the results of operations of the
Company. The Company is, and may be in the future, party to
litigation or administrative proceedings which arise in the normal
course of its business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
- - ------- -----------
2.1 Agreement and Plan of Merger between Cougar Holdings Corporation,
Cougar Acquisition Corporation and the Company, dated October 22,
1998 (incorporated by reference to Exhibit 2.1 of the Company's
Current Report on Form 8-K filed on October 28, 1998.)
3.1 Third Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement of Form S-1, Registration No. 333-24267, as
amended).
3.2 Amended and Restated Bylaws of the Company (incorporated by reference
to Exhibit 3.2 of the Company's Registration Statement on Form S-1,
Registration No. 333-24267, as amended).
4.1 Third Amended and Restated Articles of Incorporation of the Company,
included without limitation Article III and Article VII
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1, Registration No. 333-24267, as
amended).
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10.1 Lease between Health Care Property Investors, Inc. as Lessor and
Centennial HealthCare Investment Corporation as Lessee dated as of
June 15, 1998.
10.2 Guaranty of Obligations by the Company concerning obligations of
Centennial HealthCare Investment Corporation as Lessee under that
certain Lease dated June 15, 1998 with Health Care Property
Investors, Inc.
10.3 Participation Agreement dated as of July 29, 1998 among the Company
as Construction Agent and Lessee, certain of subsidiaries of the
Company as Guarantors, First Security Bank, National Association, as
Owner Trustee, the various banks and lending institutions named
therein as the Holders, the various banks and lending institutions
named therein as the Lenders, First Union Capital Markets, as
Syndication Agent, and NationsBank, N.A. as Agent
10.4 Lease Agreement dated as of July 29, 1998 between First Security
Bank, National Association, not individually, but solely as the Owner
Trustee under the Centennial Real Estate Trust 1998-1, as Lessor, and
the Company as Lessee
10.5 Agency Agreement dated as of July 29, 1998 between the Company and
First Security Bank, National Association
10.6 Security Agreement dated as of July 29, 1998 between First Security
Bank, National Association, not individually but solely as the Owner
Trustee under the Centennial Real Estate Trust 1998-1 and
NationsBank, N.A. as the Agent for the Lenders and the Holders, and
accepted and agreed to by the Company
10.7 Lease Supplement No. 1 by and between First Security Bank, National
Association and the Company dated August 5, 1998
10.8 Lease Supplement No. 2 by and between First Security Bank, National
Association and the Company dated August 5, 1998
10.9 Lease Supplement No. 3 by and between First Security Bank, National
Association and the Company dated August 5, 1998
10.10 Lease Supplement No. 4 by and between First Security Bank, National
Association and the Company dated October 9, 1998
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<PAGE>
10.11 Lease Supplement No. 5 by and between First Security Bank, National
Association and the Company dated October 9, 1998
10.12 Lease Supplement No. 6 by and between First Security Bank, National
Association and the Company dated October 9, 1998
10.13 Second Amended and Restated Lease Agreement by and between EBT
Healthcare Properties, L.P. and Centennial HealthCare Properties
Corporation dated October 1, 1998
10.14 Lease Guarantee Agreement by and between EBT Healthcare Properties,
L.P. and the Company dated October 1, 1998.
11.1 Statement Regarding Computation of Per Share Earnings
27.1 Financial Data Schedule (for SEC use only)
99.1 Cautionary Statements
(b) Reports on Form 8-K
On October 28, 1998, the Company filed a Form 8-K reporting a proposed merger of
the Company with a company founded by Welsh, Carson, Anderson & Stowe, whose
affiliates currently own approximately 23% of the Company's outstanding stock.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 16, 1998 CENTENNIAL HEALTHCARE CORPORATION
By: /s/ J. Stephen Eaton
----------------------------------------
J. Stephen Eaton, Chairman of the Board,
President and Chief Executive Officer
Date: November 16, 1998
By: /s/ Alan C. Dahl
------------------------------------------
Alan C. Dahl, Executive Vice President and
Chief Financial Officer
23
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- - ------- -----------
2.1 Agreement and Plan of Merger between Cougar Holdings Corporation,
Cougar Acquisition Corp. and the Company, dated October 22, 1998
(incorporated by reference to Exhibit 2.1 of the Company's Current
Report on Form 8-K filed on October 28, 1998).
3.1 Third Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement of Form S-1, Registration No. 333-24267, as
amended).
3.2 Amended and Restated Bylaws of the Company (incorporated by reference
to Exhibit 3.2 of the Company's Registration Statement on Form S-1,
Registration No. 333-24267, as amended).
4.1 Third Amended and Restated Articles of Incorporation of the Company,
included without limitation Article III and Article VII
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1, Registration No. 333-24267, as
amended).
10.1 Lease between Health Care Property Investors, Inc. as Lessor and
Centennial HealthCare Investment Corporation as Lessee dated as of
June 15, 1998.
10.2 Guaranty of Obligations by the Company concerning obligations of
Centennial HealthCare Investment Corporation as Lessee under that
certain Lease dated June 15, 1998 with Health Care Property
Investors, Inc.
10.3 Participation Agreement dated as of July 29, 1998 among the Company
as Construction Agent and Lessee, certain of subsidiaries of the
Company as Guarantors, First Security Bank, National Association, as
Owner Trustee, the various banks and lending institutions named
therein as the Holders, the various banks and lending institutions
named therein as the Lenders, First Union Capital Markets, as
Syndication Agent, and NationsBank, N.A. as Agent
10.4 Lease Agreement dated as of July 29, 1998 between First Security
Bank, National Association, not individually, but solely as the Owner
Trustee under the Centennial Real Estate Trust 1998-1, as Lessor, and
the Company as Lessee
10.5 Agency Agreement dated as of July 29, 1998 between the Company and
First Security Bank, National Association
10.6 Security Agreement dated as of July 29, 1998 between First Security
Bank, National Association, not individually but solely as the Owner
Trustee under the Centennial Real Estate Trust 1998-1 and
NationsBank, N.A. as the Agent for the Lenders and the Holders, and
accepted and agreed to by the Company
10.7 Lease Supplement No. 1 by and between First Security Bank, National
Association and the Company dated August 5, 1998
10.8 Lease Supplement No. 2 by and between First Security Bank, National
Association and the Company dated August 5, 1998
10.9 Lease Supplement No. 3 by and between First Security Bank, National
Association and the Company dated August 5, 1998
10.10 Lease Supplement No. 4 by and between First Security Bank, National
Association and the Company dated October 9, 1998
24
<PAGE>
10.11 Lease Supplement No. 5 by and between First Security Bank, National
Association and the Company dated October 9, 1998
10.12 Lease Supplement No. 6 by and between First Security Bank, National
Association and the Company dated October 9, 1998
10.13 Second Amended and Restated Lease Agreement by and between EBT
Healthcare Properties, L.P. and Centennial HealthCare Properties
Corporation dated October 1, 1998
10.14 Lease Guarantee Agreement by and between EBT Healthcare Properties,
L.P. and the Company dated October 1, 1998.
11.1 Statement Regarding Computation of Per Share Earnings
27.1 Financial Data Schedule (for SEC use only)
99.1 Cautionary Statements
25
[Junction City, AR]
L E A S E
between
HEALTH CARE PROPERTY INVESTORS, INC.,
as Lessor
AND
CENTENNIAL HEALTHCARE INVESTMENT CORPORATION,
as Lessee
Dated as of June 15, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I................................................. 1
1. Leased Property; Term........................... 1
ARTICLE II................................................ 2
2. Definitions..................................... 2
ARTICLE III............................................... 18
3.1 Rent............................................ 18
3.2 Determination of Additional Rent................ 20
3.3 Confirmation of Gross Revenues.................. 21
3.4 Additional Charges.............................. 21
3.5 Late Payment of Rent............................ 22
3.6 Net Lease....................................... 23
ARTICLE IV................................................ 23
4.1 Impositions..................................... 23
4.2 Utilities....................................... 24
4.3 Insurance....................................... 24
4.4 Impound Account................................. 25
4.5 Tax Service..................................... 25
ARTICLE V................................................. 25
5. No Termination, Abatement, etc.................. 25
ARTICLE VI................................................ 26
6.1 Ownership of the Leased Property................ 26
6.2 Personal Property............................... 26
6.3 Transfer of Personal Property and Capital
Additions to Lessor.................................. 26
ARTICLE VII............................................... 26
7.1 Condition of the Leased Property................ 26
7.2 Use of the Leased Property...................... 27
7.3 [Reserved]...................................... 28
7.4 Preservation of Gross Revenues and Facility
Value 28
ARTICLE VIII.............................................. 28
8. Compliance with Legal and Insurance
Requirements, Instruments, etc.................. 28
ARTICLE IX................................................ 29
9.1 Maintenance and Repair.......................... 29
9.2 Encroachments, Restrictions, etc................ 31
<PAGE>
ARTICLE X................................................. 32
10.1 Construction of Capital Additions and Other
Alterations to the Leased Property.............. 32
10.2 Requirements for Any Alterations Which Do
Not Require Lessor's Consent.................... 32
ARTICLE XI................................................ 41
11. Liens........................................... 41
ARTICLE XII............................................... 41
12. Permitted Contests.............................. 41
ARTICLE XIII.............................................. 42
13.1 General Insurance Requirements.................. 42
13.2 Replacement Cost................................ 43
13.3 Additional Insurance............................ 43
13.4 Waiver of Subrogation........................... 43
13.5 Policy Requirements............................. 44
13.6 Increase in Limits.............................. 44
13.7 Blanket Policies and Policies Covering
Multiple Locations................................... 44
13.8 No Separate Insurance........................... 44
ARTICLE XIV............................................... 45
14.1 Insurance Proceeds.............................. 45
14.2 Insured Casualty................................ 45
14.3 Uninsured Casualty.............................. 46
14.4 No Abatement of Rent............................ 47
14.5 Waiver.......................................... 47
ARTICLE XV................................................ 47
15. Condemnation.................................... 47
15.1 Total Taking............................... 47
15.2 Partial Taking............................. 47
15.3 Restoration................................ 47
15.4 Award-Distribution......................... 47
15.5 Temporary Taking........................... 48
15.6 Sale Under Threat of Condemnation.......... 48
ARTICLE XVI............................................... 48
16.1 Events of Default............................... 48
16.2 Certain Remedies................................ 51
16.3 Damages......................................... 51
16.4 Receiver........................................ 52
16.5 Lessee's Obligation to Purchase................. 52
<PAGE>
16.6 Waiver.......................................... 52
16.7 Application of Funds............................ 53
16.8 Facility Operating Deficiencies................. 53
16.9 [Reserved]...................................... 53
16.10Lessor's Security Interest...................... 53
ARTICLE XVII.............................................. 54
17. Lessor's Right to Cure Lessee's Default......... 54
ARTICLE XVIII............................................. 55
18. Purchase of the Leased Property................. 55
ARTICLE XIX............................................... 55
19. Renewal Terms................................... 55
ARTICLE XX................................................ 56
20. Holding Over.................................... 56
ARTICLE XXI............................................... 56
21.1 Letter(s) of Credit............................. 56
21.2 Uses of Letter(s) of Credit..................... 56
21.3 Treatment of Funds Drawn Under Letter(s) of
Credit............................................... 57
ARTICLE XXII.............................................. 57
22. Risk of Loss.................................... 57
ARTICLE XXIII............................................. 57
23. General Indemnification......................... 57
ARTICLE XXIV.............................................. 58
24. Transfers....................................... 58
24.1 Prohibition................................ 58
24.2 Consent and Transfer Consideration......... 59
24.3 Attornment and Related Matters............. 60
24.4 Assignment of Lessee's Rights Against
Occupant Under a Master Sublease........... 61
24.5 Costs...................................... 61
24.6 No Release of Lessee's Obligations......... 61
24.7 REIT Protection............................ 62
24.8 Transfers In Bankruptcy.................... 62
24.9 Public Offering/Public Trading............. 63
<PAGE>
24.10Special Transactions Not Requiring
Lessor's Consent................................ 63
<PAGE>
ARTICLE XXV............................................... 65
25. Officer's Certificates and Financial
Statements........................................... 65
25.1 Officer's Certificate...................... 65
25.2 Statements................................. 65
25.3 Charges.................................... 66
ARTICLE XXVI.............................................. 67
26. Lessor's Right to Inspect and Show the
Leased Property and Capital Additions........... 67
ARTICLE XXVII............................................. 67
27. No Waiver....................................... 67
ARTICLE XXVIII............................................ 67
28. Remedies Cumulative............................. 67
ARTICLE XXIX.............................................. 68
29. Acceptance of Surrender......................... 68
ARTICLE XXX............................................... 68
30. No Merger....................................... 68
ARTICLE XXXI.............................................. 68
31. Conveyance by Lessor............................ 68
ARTICLE XXXII............................................. 68
32. Quiet Enjoyment................................. 68
ARTICLE XXXIII............................................ 68
33. Notices......................................... 68
ARTICLE XXXIV............................................. 69
34. Appraiser....................................... 69
ARTICLE XXXV.............................................. 71
35. Right of First Offer............................ 71
ARTICLE XXXVI............................................. 72
36.1 Lessor May Grant Liens.......................... 72
36.2 Attornment...................................... 72
ARTICLE XXXVII............................................ 72
37.1 Hazardous Substances............................ 72
37.2 Notices......................................... 73
<PAGE>
37.3 Remediation..................................... 73
37.4 Indemnity....................................... 74
37.5 Environmental Inspection........................ 75
37.6 Review and Approval of Current Environmental
Report............................................... 76
ARTICLE XXXVIII........................................... 78
38. Memorandum of Lease............................. 78
ARTICLE XXXIX............................................. 78
39. Sale of Assets.................................. 78
ARTICLE XL. [INTENTIONALLY DELETED].................... 79
ARTICLE XLI............................................... 79
41. Authority....................................... 79
ARTICLE XLII.............................................. 79
42. Attorneys' Fees................................. 79
ARTICLE XLIII............................................. 79
43. Brokers......................................... 79
ARTICLE XLIV.............................................. 79
44. Submission to Arbitration....................... 79
ARTICLE XLV............................................... 81
45. Miscellaneous................................... 81
45.1 Survival................................... 81
45.2 Severability............................... 81
45.3 Non-Recourse............................... 81
45.4 Licenses................................... 81
45.5 Successors and Assigns..................... 82
45.6 Termination Date........................... 82
45.7 Governing Law.............................. 83
45.8 Waiver of Trial by Jury.................... 83
45.9 Lessee's Equitable Remedies................ 84
45.10Entire Agreement........................... 84
45.11Headings................................... 84
45.12Counterparts............................... 84
45.13Joint and Several.......................... 84
45.14Interpretation............................. 85
45.15Time of Essence............................ 85
45.16Force Majeure.............................. 85
45.17Further Assurances......................... 85
<PAGE>
ARTICLE XLVI.............................................. 85
46. Delays in Delivery of Possession................ 85
ARTICLE XLVII............................................. 86
47. Additional Conditions to Continued
Effectiveness of Lease............................... 86
ARTICLE XLVIII............................................ 87
48. Representations by the Parties.................. 87
ARTICLE XLIX.............................................. 88
49. Renegotiation/Early Termination................. 88
ARTICLE L................................................. 89
50. Minimum Rent and Special Additional Rent
Reallocation......................................... 89
ARTICLE LI................................................ 90
51. Pre-Commencement Provisions..................... 90
Exhibit A Legal Description of the Land
Exhibit B List of Lessor's Personal Property
Exhibit C Form of Amendment
Exhibit D Existing Leases
Exhibit E Facilities Group Leases
Exhibit F Fixed Term Monthly Minimum Rent Schedule; Initial
Minimum Purchase Price and Special Additional Rent
Schedule
Exhibit G Permitted Exceptions
Exhibit H Minimum Rent Reallocation Example(s)
<PAGE>
LEASE
THIS LEASE ("Lease") is dated as of the 15th day of June, 1998, and
is between [HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
("Lessor"), and CENTENNIAL HEALTHCARE INVESTMENT CORPORATION, a Georgia
corporation ("Lessee").
ARTICLE I.
1. Leased Property; Term
Upon and subject to the terms and conditions hereinafter set forth,
Lessor leases to Lessee and Lessee leases from Lessor all of Lessor's rights and
interests in and to the following (collectively the "Leased Property"):
(a) the real property described in Exhibit A
attached hereto (collectively, the "Land");
(b) all buildings, structures, Fixtures and other improvements
of every kind now or hereafter located on the Land, including alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and
off-site to the extent Lessor has obtained any interest in the same), parking
areas and roadways appurtenant to such buildings and structures and Capital
Additions funded by Lessor (collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land
and the Leased Improvements (collectively, the "Related Rights");
(d) all equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof, now and hereafter
located in, on or used in connection with and permanently affixed to or
incorporated into the Leased Improvements, including all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air-cooling and air-conditioning systems, apparatus, sprinkler systems, 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 to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto (collectively, the "Fixtures"); and
(e) the machinery, equipment, furniture and other personal
property described on Exhibit B attached hereto together with any other item of
personal property funded by Lessor as part of a Capital Project pursuant to
Section 10.3 below (as defined below) and any and all replacements and
substitutes for any of the foregoing (collectively, "Lessor's Personal
Property").
SUBJECT, HOWEVER, to the Permitted Exceptions, as defined below, to
have and to hold for (1) a fixed term (the "Fixed Term") commencing on the
Commencement Date, as defined below, and ending at 11:59 p.m. Los Angeles,
California, time on September 30, 2012, and (2) the Extended Terms provided for
in Article XIX unless this Lease is earlier terminated as hereinafter provided.
Following the Commencement Date, the parties shall execute an amendment to this
Lease in substantially the form attached hereto as Exhibit C to confirm certain
matters, including the Commencement Date. In addition, following each Capital
Project Rent Commencement Date (as defined below), if any, the parties shall
similarly execute an amendment to this Lease to confirm the total Project Costs
(as defined below) funded by Lessor on account of a Capital Project (as defined
below) and the applicable increase in the Minimum Rent (as defined below) on
account thereof pursuant to Section 3.1 below. Upon any other change in the
Minimum Rent pursuant to Section 3.1 below or elsewhere in this Lease, the
parties shall again execute an amendment to this Lease confirming such matters.
Notwithstanding the foregoing, the failure of Lessee to so execute and deliver
any such amendment shall not affect Lessor's determination of the matters to be
confirmed thereby.
ARTICLE II.
2. Definitions. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, (i) the terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular; (ii) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP as at the time applicable; (iii) all references in this Lease to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Lease; (iv) the word "including" shall
have the same meaning as the phrase "including, without limitation," and other
similar phrases; and (v) the words "herein," "hereof" and "hereunder" and other
similar words refer to this Lease as a whole and not to any particular Article,
Section or other subdivision:
AAA: As defined in Article XLIV.
Additional Charges: As defined in Article III.
Additional Rent: As defined in Article III.
Adios Date: As defined in Article XLVII.
Adjustment Amount: As defined in Article L.
Affiliate: Any Person which, directly or indirectly (including
through one or more intermediaries), controls or is controlled by or is under
common control with any other Person, including any Subsidiary of a Person. For
purposes of this definition, the definition of "Controlling Person" below, and
Article XXIV below, the term "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly (including
through one or more intermediaries), of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
or control of voting securities, partnership interests or other equity interests
or otherwise. Without limiting the generality of the foregoing, when used with
respect to any corporation, the term "Affiliate" shall also include (i) any
Person which owns, directly or indirectly (including through one or more
intermediaries), Fifty Percent (50%) or more of any class of voting security or
equity interests of such corporation, (ii) any Subsidiary of such corporation
and (iii) any Subsidiary of a Person described in clause (i).
Allocated Value: As defined in the definition of Transfer
Consideration in this Article II and as further determined in accordance with
the appraisal procedures set forth in Article XXXIV.
Appraiser: As defined in Article XXXIV.
Architect: An architect and/or engineer licensed in the State
and selected by Lessee and reasonably approved by Lessor; provided, however,
that with respect to any approved Capital Project, if the scope and nature
thereof does not require the services of an architect and/or engineer as
reasonably determined by Lessee and Lessor, then for purposes of any such
Capital Project, the term "Architect" may instead mean a space planner or other
construction consultant engaged by Lessee and reasonably approved by Lessor.
Award: All compensation, sums or anything of
value awarded, paid or received on a total or partial
Condemnation.
Bankruptcy Code: The United Stated Bankruptcy
Code (11 U.S.C. ss. 101 et seq.), and any successor statute or
legislation thereto.
Base Gross Revenues: (i) For the Fixed Term, the Gross Revenues
for the Gross Revenue Year commencing January 1, 2001 and ending December 31,
2001, (ii) for the first Extended Term (i.e., October 1, 2012 through and
including September 30, 2022), if applicable, the Gross Revenues for the Gross
Revenue Year commencing January 1, 2012 and ending December 31, 2012, and (iii)
for the second Extended Term (i.e., October 1, 2022 through and including
September 30, 2032), if applicable, the Gross Revenues for the Gross Revenue
Year commencing January 1, 2022 and ending December 31, 2022.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banks in the City of New York, New
York are authorized, or obligated, by law or executive order, to close.
Capital Additions: One or more new buildings, or one or more
additional structures annexed to any portion of any of the Leased Improvements,
or the material expansion of existing improvements, which are constructed on any
parcel or portion of the Land, during the Term, including construction of a new
wing or new story, or the renovation of existing improvements on the Leased
Property in order to provide a functionally new facility needed to provide
services not previously offered.
Capital Addition Costs: The costs of any Capital Addition made
to the Leased Property whether paid for by Lessee or Lessor, including (i) all
permit fees and other costs imposed by any Governmental Authority, the cost of
site preparation, the cost of construction including materials and labor, the
cost of supervision and related design, engineering and architectural services,
the cost of any fixtures, and if and to the extent approved by Lessor, the cost
of construction financing; (ii) fees paid to obtain necessary licenses and
certificates; (iii) if and to the extent approved by Lessor in writing and in
advance, the cost of any land contiguous to the Leased Property which is to
become a part of the Leased Property purchased for the purpose of placing
thereon the Capital Addition or any portion thereof or for providing means of
access thereto, or parking facilities therefor, including the cost of surveying
the same; (iv) the cost of insurance, real estate taxes, water and sewage
charges and other carrying charges for such Capital Addition during
construction; (v) the cost of title insurance; (vi) reasonable fees and expenses
of legal counsel; (vii) filing, registration and recording taxes and fees;
(viii) documentary stamp and similar taxes; and (ix) all reasonable costs and
expenses of Lessor and any Person which has committed to finance the Capital
Addition, including (a) the reasonable fees and expenses of their respective
legal counsel; (b) printing expenses; (c) filing, registration and recording
taxes and fees; (d) documentary stamp and similar taxes; (e) title insurance
charges and appraisal fees; and (f) commitment fees charged by any Person
advancing or offering to advance any portion of the financing for such Capital
Addition. All Project Costs advanced or funded by Lessor hereunder on account of
a Capital Project shall be treated as a Capital Addition Cost paid for by Lessor
under this Lease.
Capital Project Rent Commencement Date: With respect to any
Capital Project funded by Lessor pursuant to Section 10.3 below, the earlier of
(i) the Completion Date and (ii) the Outside Date.
Capital Projects: Collectively, any approved (i) Capital
Renovation Project and/or (ii) Capital Addition, in each such instance which is
to be funded by Lessor pursuant to Section 10.3.
Capital Renovation Project: Any capital repairs and/or
improvements to the Leased Property which do not constitute a Capital Addition,
together with any FF&E Refurbishment. As used herein, a "capital repair or
capital improvement" shall be any repair or improvement the cost of which must
be capitalized for financial reporting purposes.
Code: The Internal Revenue Code of 1986, as
amended.
Commencement Date: The date Lessee takes possession of and
commences use and operation of the Leased Property for any purpose whatsoever
following satisfaction of the condition to the continued effectiveness of this
Lease as set forth in Article XLVII below.
Commercial Occupancy Arrangement: Any commercial
(as opposed to resident or patient) Occupancy Arrangement.
Completion Date: The date on which the construction/performance
of any Capital Project has been substantially completed and Lessee has received
all licenses, authorizations and permits, if any, required by any Governmental
Authority for the use and operation of the Capital Project (including a
certificate or temporary certificate of occupancy, if applicable). For purposes
of this Lease, "substantially completed" shall mean that the
improvements/repairs being constructed/performed as part of the Capital Project
and all other work which Lessee is obligated to perform under this Lease with
respect to a Capital Project have been functionally completed in accordance with
the Plans therefor and the applicable provisions of this Lease, notwithstanding
the fact that Punch-List Items remain to be performed.
Condemnation: The exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or a voluntary sale or transfer
by Lessor to any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending.
Condemnor: Any public or quasi-public authority,
or private corporation or individual, having the power of
Condemnation.
Consolidated Financials: For any fiscal year or other accounting
period for any Person and its consolidated Subsidiaries, statements of earnings
and retained earnings and of changes in financial position for such period and
for the period from the beginning of the respective fiscal year to the end of
such period and the related balance sheet as of the end of such period, together
with the notes thereto, all in reasonable detail and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with GAAP.
Consolidated Net Worth: At any time, the sum of
the following for any Person and its consolidated Subsidiaries,
on a consolidated basis determined in accordance with GAAP:
(i) the amount of capital or stated capital (after
deducting the cost of any shares held in its treasury), plus
(ii) the amount of capital surplus and retained earnings
(or, in the case of a capital surplus or retained earnings deficit,
minus the amount of such deficit), minus
(iii)the sum of the following (without duplication of
deductions in respect of items already deducted in arriving at
surplus and retained earnings): (a) unamortized debt discount and
expense; and (b) any write-up in book value of assets resulting from
a revaluation thereof subsequent to the most recent Consolidated
Financials prior to the date hereof, excluding, however, any (i) net
write-up in value of foreign currency in accordance with GAAP, (ii)
write-up resulting from a reversal of a reserve for bad debts or
depreciation, and (iii) write-up resulting from a change in methods
of accounting for inventory.
Controlling Person: Any (i) Person(s) which, directly or
indirectly (including through one or more intermediaries), controls Lessee and
would be deemed an Affiliate of Lessee, including any partners, shareholders,
principals, members, trustees and/or beneficiaries of any such Person(s) to the
extent the same control Lessee and would be deemed an Affiliate of Lessee, and
(ii) Person(s) which controls, directly or indirectly (including through one or
more intermediaries), any other Controlling Person(s) and which would be deemed
an Affiliate of any such Controlling Person(s).
County: The County or Township in which the
Leased Property is located.
CPR: As defined in Article XLIV.
Current Operator: As defined in Article XLVI.
Date of Taking: The date the Condemnor has the
right to possession of the property being condemned.
Environmental Costs: As defined in Article XXXVII.
Environmental Laws: Environmental Laws shall mean any and all
federal, state, municipal and local laws, statutes, ordinances, rules,
regulations, guidances, policies, orders, decrees, judgments, whether statutory
or common law, as amended from time to time, now or hereafter in effect, or
promulgated, pertaining to the environment, public health and safety and
industrial hygiene, including the use, generation, manufacture, production,
storage, release, discharge, disposal, handling, treatment, removal,
decontamination, clean-up, transportation or regulation of any Hazardous
Substance, including the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act, the Federal
Insecticide, Fungicide, Rodenticide Act, the Safe Drinking Water Act and the
Occupational Safety and Health Act.
Environmental Report: As defined in Article
XXXVII.
Event of Default: As defined in Article XVI.
Existing Leases: Those certain leases described on Exhibit D
attached hereto and incorporated herein by this reference between Lessor or an
Affiliate of Lessor and Lessee or an Affiliate of Lessee.
Extended Term(s): As defined in Section 19.1.
Facility: The health care facility being operated
on the Leased Property, together with any Capital Additions, in
accordance with this Lease.
Facility Group Facilities: The "Leased Property"
and "Facilities" covered by each Facility Group Lease (each, a
"Facility Group Facility").
Facility Group Leases: Those certain leases, each of even date
herewith, between Lessor or an Affiliate of Lessor and Lessee or an Affiliate of
Lessee and covering one of the respective facilities described on Exhibit E
attached hereto and incorporated herein by this reference. This Lease shall be
deemed a "Facility Group Lease" for purposes of each other Facility Group Lease.
Facility Mortgage: As defined in Article XIII.
Facility Mortgagee: As defined in Article XIII.
Facility Operating Deficiency: A deficiency in the conduct of
the operation of the Facility which, in the reasonable determination of Lessor,
if not corrected within a reasonable time, would have the likely effect of
causing a revocation or termination of (i) the Facility's applicable licensure
necessary to operate the Facility for its Primary Intended Use or (ii)
certification under government reimbursement programs and which would materially
affect Gross Revenues or a material number of patients/residents.
Fair Market Rental: The fair market rental value of the Leased
Property and all Capital Additions, or applicable portion(s) thereof (including
any appropriate periodic escalations therein), determined in accordance with the
appraisal procedures set forth in Article XXXIV, and assuming the same is
exposed on the open market at the time of the appraisal and taking into account,
among other relevant factors, the income generated from the Leased Property and
all Capital Additions, or applicable portion(s) thereof, but specifically
excluding brokerage commissions and other Lessor payments that do not directly
inure to the benefit of lessees.
Fair Market Value: The fair market value of the Leased Property
and all Capital Additions, determined in accordance with the appraisal
procedures set forth in Article XXXIV and this definition. Fair Market Value
shall also be determined by valuing the Leased Property and all Capital
Additions as a fully-permitted Facility operated in accordance with the
provisions of this Lease.
FF&E Refurbishment: That portion of any Capital Project which
relates to the purchase, installation and/or repair of any tangible moveable
Personal Property for the Facility.
Fixed Term: As defined in Article I.
Fixtures: As defined in Article I.
GAAP: Generally accepted accounting principles.
Governmental Authority: The United States, the State, county,
city and applicable subdivision in which the Leased Property is located or which
exercise jurisdiction over the Leased Property and/or the
construction/performance of a Capital Project, and any court administrator,
agency, department, commission, board, bureau or instrumentality of any of them
which exercise jurisdiction over the Leased Property and/or
construction/performance of a Capital Project.
Gross Revenue Year: Each twelve (12) month period
from January 1 to and including December 31.
Gross Revenues: All revenues received or receivable from or by
reason of the operation of the Facility or any other use of the Leased Property,
Lessee's Personal Property and all Capital Additions including all revenues
received or receivable for the use of or otherwise attributable to units, rooms,
beds and other facilities provided, meals served, services performed (including
ancillary services), space or facilities subleased or goods sold on or from the
Leased Property and all Capital Additions; provided, however, that Gross
Revenues shall not include:
(i) non-operating revenues such as interest income or
income from the sale of assets not sold in the ordinary course of
business; and
(ii) federal, state or local excise taxes and any tax based
upon or measured by such revenues which is added to or made a part of
the amount billed to the patient or other recipient of such services
or goods, whether included in the billing or stated separately.
Gross Revenues for each Gross Revenue Year shall include all
cost report settlement amounts properly estimated and recordable during such
Gross Revenue Year in accordance with GAAP relating to health care accounting,
regardless of the Gross Revenue Year that such settlement amounts based upon
such estimates are actually received or paid; provided, however, that if any
settlements amounts received, paid or charged during any Gross Revenue Year are
attributable to any prior Gross Revenue Year and such amounts actually received
or charged are in excess of or less than the settlements amounts which were
properly estimated and recordable during such prior Gross Revenue Year, then the
amount of such excess or deficiency, as the case may be, shall be included (or
excluded, as the case may be) during the Gross Revenue Year in which paid,
received or charged, as applicable, regardless of the Gross Revenue Year that
such excess or deficiency actually applies to. Gross Revenues shall also include
the Gross Revenues of any Occupant under a Commercial Occupancy Arrangement,
i.e., the Gross Revenues generated from the operations conducted on or from such
subleased, licensed or other used or occupied portion of the Leased Property and
all Capital Additions shall be included directly in the Gross Revenues;
provided, however, that the rent received or receivable by Lessee from or under
such Commercial Occupancy Arrangement shall be excluded from Gross Revenues for
such purpose.
Guarantors: Centennial Healthcare Corporation, a
Delaware corporation.
Guaranty: The Guaranty of Obligations of even
date herewith executed by Guarantor.
Handling: As defined in Article XXXVII.
Hazardous Substances: Collectively, any
petroleum, petroleum product or byproduct, asbestos or material
containing asbestos, polychlorinated biphenyls, or any substance,
material or waste regulated or listed pursuant to any
Environmental Law.
HCPI: Health Care Property Investors, Inc., a
Maryland corporation.
Historical Operating Information: As defined in
Article XLIX.
Impositions: Collectively, all taxes, including capital stock,
franchise and other state taxes of Lessor (and, if Lessor is not HCPI, of HCPI
as a result of its investment in Lessor), ad valorem, sales, use, single
business, gross receipts, transaction privilege, rent or similar taxes;
assessments including assessments for public improvements or benefits, whether
or not commenced or completed prior to the date hereof and whether or not to be
completed within the Term; ground rents; water, sewer and other utility levies
and charges; excise tax levies; fees including license, permit, inspection,
authorization and similar fees; and all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property, any Capital
Additions and/or the Rent and all interest and penalties thereon attributable to
any failure in payment by Lessee which at any time during or in respect of the
Term hereof may be assessed or imposed on or in respect of or be a lien upon (i)
Lessor or Lessor's interest in the Leased Property or any Capital Additions,
(ii) the Leased Property, any Capital Additions or any parts thereof or any rent
therefrom or any estate, right, title or interest therein, or (iii) any
occupancy, operation, use or possession of, or sales from or activity conducted
on or in connection with the Leased Property, any Capital Additions or the
leasing or use of the Leased Property, any Capital Additions or any parts
thereof; provided, however, that nothing contained in this Lease shall be
construed to require Lessee to pay (a) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Lessor or
any other Person, (b) any transfer, or net revenue tax of Lessor or any other
Person except Lessee and its successors, (c) any tax imposed with respect to the
sale, exchange or other disposition by Lessor of any Leased Property, any
Capital Additions or the proceeds thereof, or (d) except as expressly provided
elsewhere in this Lease, any principal or interest on any indebtedness on the
Leased Property for which Lessor is the obligor, except to the extent that any
tax, assessment, tax levy or charge, of the type described in any of clauses
(a), (b), (c) or (d) above is levied, assessed or imposed in lieu of or as or as
a substitute for any tax, assessment, levy or charge which is otherwise included
in this definition of an "Imposition."
Incremental Gross Revenues: The positive amount,
if any, by which the Gross Revenues for the Gross Revenue Year in
question exceeds the Base Gross Revenues.
Insurance Requirements: The terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy and
of any insurance board, association, organization or company necessary for the
maintenance of any such policy.
Intangible Property: All accounts, proceeds of accounts, rents,
profits, income or revenues derived from the use of rooms or other space within
the Leased Property or the providing of services in or from the Leased Property
and all Capital Additions; documents, chattel paper, instruments, contract
rights, deposit accounts, general intangibles, causes of action, now owned or
hereafter acquired by Lessee (including any right to any refund of any
Impositions) arising from or in connection with Lessee's operation or use of the
Leased Property and all Capital Additions; all licenses and permits now owned or
hereinafter acquired by Lessee, which are necessary or desirable for Lessee's
use of the Leased Property and all Capital Additions for the Primary Intended
Use, including, if applicable, any certificate of need or similar certificate;
the right to use any trade name or other name associated with the Facility
(other than the names "Centennial" or "Paragon"); and any and all third-party
provider agreements (including Medicare and Medicaid).
Land: As defined in Article I.
Lease: As defined in the preamble.
Lease Year: Each period of twelve (12) full calendar months from
and after the Commencement Date, unless the Commencement Date is a day other
than the first (1st) day of a calendar month, in which case the first Lease Year
shall be the period commencing on the Commencement Date and ending on the last
day of the eleventh (11th) month following the month in which the Commencement
Date occurs and each subsequent Lease Year shall be each period of twelve (12)
full calendar months after the last day of the prior Lease Year; provided,
however, that the last Lease Year during the Term may be a period of less than
twelve (12) full calendar months and shall end on the last day of the Term.
Leased Improvements; Leased Property: Each as
defined in Article I.
Legal Requirements: Collectively, (i) all federal, state,
county, municipal and other governmental statutes, laws (including common law
and Environmental Laws), rules, policies, guidance, codes, orders, regulations,
ordinances, permits, licenses, covenants, conditions, restrictions, judgments,
decrees and injunctions affecting either the Leased Property, Lessee's Personal
Property and all Capital Additions or the construction, use or alteration
thereof, whether now or hereafter enacted and in force, including any which may
(A) require repairs, modifications or alterations in or to the Leased Property,
Lessee's Personal Property and all Capital Additions, (B) in any way adversely
affect the use and enjoyment thereof, or (C) regulate the transport, handling,
use, storage or disposal or require the cleanup or other treatment of any
Hazardous Substance, and (ii) all Permitted Exceptions.
Lessee: As defined in the preamble.
Lessee's Affidavit: A sworn affidavit of Lessee, in form and
substance reasonably satisfactory to Lessor, stating that to the best of
Lessee's knowledge, all labor and material bills of every kind and character
incurred by Lessee to the date of such affidavit in connection with a Capital
Project has been paid in accordance with the payment provisions of the
applicable Project Contracts except for the unpaid bills to be paid from the
proceeds of the current advance request, and that the builder's risk insurance
as described in Section 10.3 contains sufficient coverage for the
construction/performance of a Capital Project, including the value of any
materials stored off the Leased Property.
Lessee's Personal Property: The Personal Property
other than Lessor's Personal Property.
Lessee's Removable Personal Property: Lessee's computer software
and hardware, all accounting, patient care, payroll, cash management, accounting
and other business information systems, and any and all marketing materials and
management manuals used by Lessee in the operation of the Facility.
Lessor: As defined in the preamble.
Lessor's Personal Property: As defined in Article
I.
Letter(s) of Credit: As defined in Article XXI.
Master Sublease: As defined in Article XXIV.
Maximum Funding Amount: The aggregate total Project Costs which
Lessor or an Affiliate of Lessor has agreed to fund on account of all approved
Capital Projects pursuant to this Lease and the other Facility Group Leases,
which amount is agreed to be the sum of $6 Million and of which $1 Million may
be allocated in the aggregate for FF&E Refurbishment Project Costs pursuant to
this Lease and the other Facility Group Leases.
Minimum Purchase Price: At any given time, the sum of (i) the
initial amount set for as the "Initial Minimum Purchase Price" on Exhibit F
attached hereto and incorporated herein by this reference, as such amount is
increased at the rate of Three Percent (3%) compounded annually for each Lease
Year (to be prorated for partial Lease Years) between the Commencement Date and
the date of any purchase of the Leased Property by Lessee pursuant to this
Lease, plus (ii) 58.33% of the total Project Costs paid or funded by Lessor on
account of any Capital Projects, as such amount is increased at the rate of
Three Percent (3%) compounded annually from the applicable Capital Project Rent
Commencement Date to the date of any such purchase of the Leased Property by
Lessee pursuant to this Lease, plus (iii) any other Capital Addition Costs
(i.e., other than Project Costs attributable to a Capital Project) paid for,
funded or accrued by Lessor, also as such amount is increased at the rate of
Three Percent (3%) computed annually from the date of any such payment, funding
or accrual to the date of any such purchase of the Leased Property by Lessee
pursuant to this Lease.
Minimum Rent: As defined in Article III.
Minimum Rent Reallocation Amount: As defined in
Article L.
Net Worth Hurdle: As defined in Article XXIV.
Occupancy Arrangement: Any sublease, license or other
arrangement with a Person for the right to use, occupy or possess any portion of
the Leased Property and/or any Capital Additions.
Occupant: Any Person under an Occupancy
Arrangement.
Officer's Certificate: A certificate of Lessee
signed by an officer authorized to so sign by its board of
directors or by-laws.
Old Lease: As defined in Article XLVI.
Outside Date: With respect to any Capital Project, subject to
Permitted Delays, the date agreed upon by the parties for completion pursuant to
the approved Plans therefor.
Outside Renegotiation Date: As defined in Article
XLIX.
Overdue Rate: On any date, a rate equal to Two Percent (2%)
above the Prime Rate, but in no event greater than the maximum rate then
permitted under applicable law.
Payment Date: Any due date for the payment of the
installments of Pre-Commencement Rent, Minimum Rent, Additional
Rent, Special Additional Rent or any other sums payable under
this Lease.
Permitted Delays: The actual number of days'
delay in the Completion Date for any Capital Project proximately
caused by:
(i) a breach or default by Lessor of its obligations under
Section 10.3 of this Lease (including Lessor's failure to fund any advance
which Lessor is required to fund under such Section);
(ii) the failure of Lessor to approve or disapprove any Plans
(including changes thereto), any Project Budget and/or any Project
Contracts (to the extent Lessor's approval is required therefor) within
ten (10) Business Days after Lessor's receipt of Lessee's request for
approval thereof; and/or
(iii)any event or occurrence of the type described in Section
45.16 of this Lease; provided, however, that for purposes of determining
the applicable Capital Project Rent Commencement Date only, in no event
shall the Outside Date be extended by more than sixty (60) days in the
aggregate pursuant to this clause (iii).
Permitted Exceptions: Collectively, (i) those easements,
encumbrances, covenants, restrictions and other matters affecting title to the
Leased Property set forth on Exhibit G attached hereto and incorporated herein
by this reference or which would as of the date hereof be disclosed by an
accurate survey of the Leased Property, (ii) any easements, encumbrances,
covenants and restrictions and other matters which affect the Leased Property
and which are created after the date hereof as permitted pursuant to this Lease,
and (iii) any other non-monetary matters affecting title to the Leased Property
as of the date hereof which do not individually or in the aggregate materially
and adversely affect the value of the Leased Property or the maintenance,
occupancy or use of the Leased Property for its Primary Intended Use.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other form of entity.
Personal Property: All machinery, furniture and equipment,
including phone systems and computers, trade fixtures, inventory, supplies and
other personal property used or useful in the use of the Leased Property and any
Capital Additions for their Primary Intended Use, other than Fixtures.
Plans: (i) The final plans and specifications for the
construction/performance of a Capital Project prepared by the Architect and
approved by Lessor, including a construction schedule and time-line and (ii) all
amendments, modifications and supplements thereto which do not require the
approval of Lessor or which have been approved by Lessor subsequent to the
approval of the plans and specifications described in clause (i).
Pre-Commencement Rent: As defined in Article LI.
Pre-Commencement Rent Date: As defined in Article
LI.
Pre-Commencement Term: As defined in Article LI.
Primary Intended Use: For a long-term skilled nursing care
facility and such other uses necessary or incidental to such use, including the
provision of post acute services on both an inpatient and outpatient basis.
Prime Rate: On any date, a rate equal to the annual rate on such
date announced by the Bank of New York to be its prime, base or reference rate
for 90-day unsecured loans to its corporate borrowers of the highest credit
standing but in no event greater than the maximum rate then permitted under
applicable law. If the Bank of New York discontinues its use of such prime, base
or reference rate or ceases to exist, Lessor shall designate the prime, base or
reference rate of another state or federally chartered bank based in New York to
be used for the purpose of calculating the Prime Rate hereunder.
Project Budget: A detailed estimate prepared by Lessee's general
contractor and reasonably approved by Lessor for a Capital Project, together
with such other budget information relating to a Capital Project as Lessor may
reasonably request and approve from Lessee, including a breakdown of hard
construction costs to a level of detail that will allow Lessor to determine the
actual cost and percentage of completion of construction as of the date of any
Request for Advance.
Project Contracts: Any contracts between Lessee and Architect
and any contractor (including subcontractors) relating to rendering of services
or furnishing of materials in connection with the construction/performance of a
Capital Project, contracts between lessee's general contractor and any
subcontractor and contracts between any other Persons relating to the rendering
of services or furnishing materials in connection with the
construction/performance of a Capital Project.
Project Costs: All costs and expenses incurred in connection
with (i) the construction/performance of a Capital Project, as contemplated by
the applicable Project Budget, including costs of constructing/performing work
depicted by the Plans and otherwise in accordance with applicable provisions of
this Lease, costs and fees for bonds, costs and fees for surveys, costs for
title work and premiums for title insurance, environmental fees and expenses,
Architect's fees, engineering costs, the cost of purchase and installation of
any furniture, fixtures and equipment and other Personal Property included as
part of a FF&E Refurbishment included in a Capital Project and all governmental
license and fees. Without limiting the foregoing, Project Costs shall include
all amounts funded or advanced by Lessor pursuant to this Lease on account of a
Capital Project pursuant to section 10.3 below.
Projected Facility Results: As defined in Article
XLIX.
Projected Group Results: As defined in Article
XLIX.
Punch-List Items: Minor details of construction, mechanical
adjustments or decorations which remain to be completed following the Completion
Date for a Capital Project and which do not interfere with Lessee's use of the
Facility for its Primary Intended Use.
Put Event: An Event of Default hereunder pursuant to the
applicable provisions of Section 16.1 arising out of (i) any failure of Lessee
to obtain and/or maintain in effect all material licenses, permits, approvals
and other authorizations required to use and operate the Facility for the
Primary Intended Use in accordance with all Legal Requirements, including
provider agreements and Medicare and Medicaid certification; (ii) except as
provided in Section 7.2.3, Lessee shall fail at all times during the Term to
continuously operate the entire Leased Property and all Capital Additions in
accordance with the Primary Intended Use; or (iii) any breach or default by
Lessee during the term of any of its duties, obligations and liabilities
pursuant to either Section 37.1 or 37.2. Notwithstanding that Lessor and Lessee
have specifically defined a "Put Event" for the limited purpose of setting forth
the circumstances under which Lessor shall be entitled to the remedy set forth
in Section 16.5, in no event shall this definition derogate the materiality of
any other Event of Default (including any Event of Default which does not
constitute a Put Event) or otherwise limit Lessor's rights and remedies upon the
occurrence of any such Event of Default, including those rights and remedies set
forth in Sections 16.2, 16.3, 16.4, 16.8 and/or 16.10.
Remaining Funds: With respect to any Capital Project to be
funded by Lessor pursuant to Section 10.3 below, the lesser of (i) the
unadvanced portion of the Project Costs therefor within the Project Budget, (ii)
the unadvanced portion of the Project Costs therefor which when aggregated with
all other Project Costs funded by Lessor pursuant to Section 10.3 hereof do not
exceed $1.5 Million and (iii) the unadvanced portion of the Maximum Funding
Amount.
Rent: Collectively, the Pre-Commencement Rent,
Minimum Rent, Additional Rent, Special Additional Rent and
Additional Charges.
Rent Adjustment Percentage: As defined in Article
L.
Rent Reallocation Share: As defined in Article L.
Request for Advance: Except as provided in the last sentence
below this definition, with respect to any Capital Project to be funded by
Lessor pursuant to Section 10.3, certificates of Lessee and the Architect, in
each case on the appropriate American Institute of Architects ("AIA") form,
including form G702 together with attached AIA form G703 (or equivalent, which
AIA form G703 or equivalent shall be modified to include columns for the
original estimate of scheduled values for each line item, changes to the
scheduled values for each line item and a revised scheduled value for each line
item after any such change) and/or such other form(s) as Lessor may hereafter
reasonably request which shall: (i) set forth the parties to whom money is owed
and the amount owed each; (ii) certify among other things that such amounts
represent payments due for services actually rendered or materials actually
acquired or furnished in connection with the construction/performance of a
Capital Project approved by Lessor; (iii) state that the sum requested is a
Project Cost within the Project Budget for such items and that, in the opinion
of the Architect and Lessee, the Remaining Funds are sufficient to complete such
Capital Project pursuant to the Plans and to pay for all labor, material,
interest and other expenses in connection therewith; (iv) be accompanied by
copies of billing statements, fee schedules, documentation supporting all costs
to date, copies of all subcontracts not previously submitted and vouchers or
invoices from the parties named therein, in form reasonably satisfactory to
Lessor; (v) refer to an attached schedule, to be verified by the Architect prior
to the advance being requested, identifying in a manner reasonably satisfactory
to Lessor all materials not yet affixed or incorporated into such Capital
Project but which have been covered by certificates submitted to date, including
the current certificate; (vi) contain a statement, to be verified by the
Architect and Lessee prior to the advance being requested, that all such
materials not yet affixed or incorporated into such Capital Project have been
stored at the Leased Property or at one or more other bonded locations approved
by Lessor identified therein (specifying the materials located at each location)
under adequate safeguards to minimize the possibility of loss, damage or
commingling with other materials or projects, and that builder's risk insurance
coverage for such materials stored off the Leased Property; and (vii) be
accompanied by appropriate waivers of lien rights (to the extent not previously
received and approved by Lessor) with respect to work and materials for which
funds have already been advanced pursuant to this Lease, executed by any general
contractor no more than one month in arrears and who has furnished labor or
material to date and whose charges are or will be greater than Twenty-Five
Thousand Dollars ($25,000.00) and by all subcontractors, mechanics and
materialmen no more than one month in arrears and who have furnished labor or
material to date and whose charges are or will be greater than Ten Thousand
Dollars ($10,000.00), unless in any such case Lessee has provided a statutory
payment bond in accordance with applicable Legal Requirements by all other
contractors, subcontractors, mechanics and materialmen. To the extent that any
payment or funding of Project Costs by Lessor hereunder is attributable or
allocable to one or more of the categories comprising a Capital Project, Lessor
shall allocate such Project Costs among such categories as Lessor shall
reasonably determine. Notwithstanding the foregoing, with respect to any single
Capital Project, the cost of which is less than $400,000.00, a "Request for
Advance" shall mean certificates of Lessee and the Architect, in each case on
the appropriate AIA Form, including Form G702 together with attached AIA Form
G703 (or equivalent), and such other forms or information as Lessor may
hereafter reasonably request, and shall be accompanied by the items described in
clause (vii) above.
Required Approvals: As defined in Article XLVII.
Right of First Refusal: As defined in Article
XXXV.
Sale of Business: A Transfer of the type described in any of
clauses (iv), (v) or (vi) of Section 24.1 below, unless such Transfer involves
only the stock and/or assets of Lessee and Lessee has no substantial assets
other than (a) its interest in the Leased Property and any Capital Additions
pursuant to this Lease, (b) the business and operations on the Leased Property
and any Capital Additions and (c) Lessee's Personal Property.
SEC: Securities and Exchange Commission.
Special Additional Rent: As defined in Article
III.
Special Additional Rent Reallocation Amount(s):
As defined in Article L.
State: The State or Commonwealth in which the
Leased Property is located.
Subsidiaries: Corporations, partnerships, limited liability
companies, business trusts or other legal entities with respect to which a
Person owns, directly or indirectly (including through one or more
intermediaries), more than 50% of the voting stock or partnership, membership or
other equity interest, respectively.
Term: Collectively, Pre-Commencement Term, the
Fixed Term and any Extended Term(s), as the context may require,
unless earlier terminated.
Terminating Facility Group Lease: As defined in
Article L.
Terms of the Offer: As defined in Article XXXV.
Total Monthly Minimum Rent: As defined in Article
L.
Transfer: As defined in Article XXIV.
Transfer Consideration: With respect to any Transfer
constituting a Master Sublease (other than a Master Sublease entered into in
connection with a Sale of Business), "Transfer Consideration" shall mean
Twenty-Five Percent (25%) of the positive difference, if any, between the Master
Sublease rent (however denominated and paid but excluding any items in the
nature of reimbursement for and/or payment of Impositions, insurance premiums
and similar expenditures of Lessee) paid by the Occupant or transferee in excess
of the Minimum Rent, Additional Rent and Special Additional Rent payable by
Lessee under this Lease, determined on a monthly basis, prorating such Minimum
Rent, Additional Rent and Special Additional Rent, as appropriate, if less than
all of the Facility is Master Subleased. Twenty-Five Percent (25%) of the
difference shall be paid by Lessee to Lessor monthly when the Minimum Rent is
due; provided, however, that in no event shall the total Transfer Consideration
to which Lessor is entitled in connection with any such Master Sublease exceed
the total consideration given directly or indirectly (including through one or
more intermediaries) to Lessee, to any Controlling Person(s) or to any other
Person in exchange for, in connection with, related to or arising out of the
transaction(s) as to which such Master Sublease is a part. With respect to any
other Transfer (i.e., a Transfer other than pursuant to a Master Sublease, but
including a Master Sublease which is part of a Sale of Business) "Transfer
Consideration" shall mean Twenty-Five Percent (25%) of the sum of (a) any and
all consideration given directly or indirectly (including through one or more
intermediaries) to Lessee, to any Controlling Person(s) or to any other Persons
in exchange for, in connection with, related to or arising out of such Transfer,
less (b) the Net Book Value Adjustment (as hereinafter defined) and the
Unamortized Capital Addition Costs of Lessee (as hereinafter defined); provided,
however, that if such Transfer constitutes a Sale of Business, is a Master
Sublease entered into in connection with a Sale of Business or involves the
Transfer of more than one facility, then "Transfer Consideration" shall mean
Twenty-Five Percent (25%) of the Allocated Value (as hereinafter defined) of the
sum of (i) any and all such consideration given directly or indirectly
(including through one or more intermediaries) to Lessee, to any Controlling
Person(s) or to any other Person in exchange for, in connection with, related to
or arising out of such Sale of Business or Transfer of more than one facility,
less (ii) the Net Book Value Adjustment and the Unamortized Capital Addition
Costs of Lessee. As used herein, the term "Net Book Value Adjustment" shall mean
the book value of any cash or cash equivalents, receivables and any other
tangible assets of Lessee or of any Controlling Person(s) or other
transferor(s), as the case may be, being transferred, conveyed or sold, directly
or indirectly, in connection with such Transfer or Sale of Business, as the case
may be, net of any liabilities relating to such transferred assets being
assumed, directly or indirectly, by the transferee in connection with such
Transfer (e.g., accounts payable, accrued vacation, equipment leases, etc., but
specifically excluding, without limitation, the obligations under this Lease),
all as determined in accordance with GAAP. As used herein, the term "Unamortized
Capital Addition Costs of Lessee" shall mean all Capital Addition Costs incurred
by Lessee for any approved Capital Additions, less accumulated
deprecation/amortization based upon the useful life thereof in accordance with
GAAP. As used herein, the term "Allocated Value" shall mean the sum of clauses
(i) and (ii) above allocated to the Leased Property, any Capital Additions and
Lessee's operations thereon (including any and all business, enterprise and
goodwill value), determined by the appraisal procedures set forth in Article
XXXIV and based upon (x) the present value of the then current earnings before
interest, taxes, depreciation, amortization and rents (including Rents under
this Lease) ("EBITDAR") of the Facility over the remaining Term of this Lease
(taking into account any unexercised Extended Term(s)), less the present value
of the remaining Minimum Rent, Additional Rent and Special Additional Rent to be
paid under this Lease for such period(s), as compared to (y) the sum of the
following with respect to all operations being transferred, conveyed or sold,
directly or indirectly, in connection with such Transfer or Sale of Business:
(1) with respect to all operations conducted at leased facilities (including the
Facility), the present value of the then current EBITDAR of all such operations
over the remaining terms of all such leases (taking into account any unexercised
extension options thereunder), less the present value of the remaining rents to
be paid under such leases for such period(s), and (2) with respect to any
operations conducted at owned facilities, the EBITDAR of such operations
capitalized at the appropriate market capitalization rate, less debt which is
being assumed, directly or indirectly, by the transferee (taking into account
the positive or negative value of such assumed debt attributable to the interest
rate, amortization schedule, maturity date, prepayment penalties and other
relevant terms thereof). As used herein, the term "consideration" shall mean and
include money, services, property and other things of value, including payment
of costs, cancellation or forgiveness of indebtedness, discounts, rebates,
barter and the like. For purposes of Section 24.2.2 and the payment of Transfer
Consideration to Lessor as provided in this Lease, if any such consideration
given in exchange for, in connection with, related to or arising out of such
Transfer is in a form other than cash (such as in kind, equity interests,
indebtedness, earn-outs or other deferred payments, consulting or management
fees, etc.), Lessor shall be entitled to receive the applicable Transfer
Consideration on account thereof in cash based upon the present fair market
value of such consideration at the time of the Transfer. Lessee acknowledges and
agrees that the terms under which Lessor is entitled to the payment of Transfer
Consideration pursuant to this Lease and the amount thereof has been freely
negotiated and represents a fair and equitable division with Lessor of the
consideration payable in connection with a Transfer taking into account, among
other things, Lessor's investment in the Leased Property, the terms of this
Lease and the inherent risks of owning and leasing real property.
Unsuitable for Its Primary Intended Use: A state or condition of
the Facility such that by reason of damage or destruction or Condemnation to the
Leased Property, in the good faith judgment of Lessor and Lessee, the Facility
cannot be operated on a commercially practicable basis for its Primary Intended
Use.
ARTICLE III.
3.1 Rent. Lessee will pay to Lessor in lawful money of the United
States of America which shall be legal tender for the payment of public and
private debts, without offset or deduction, the amounts set forth hereinafter as
Minimum Rent, Additional Rent and Special Additional Rent during the Term.
Payments of Minimum Rent and Additional Rent shall be paid in advance on or
before the first day of each calendar month and shall be made via wire transfer
to an account as Lessor may from time to time designate in writing. Payments of
Special Additional Rent shall be paid in advance on or before the first day of
the month for which the same is due and shall be made via wire transfer to the
same account as Lessor may have then designated for the payment of Minimum Rent
and Additional Rent.
3.1.1 Minimum Rent.
(a) Subject to upward adjustment pursuant to
subsections (b) and (c) below and either upward or downward adjustment pursuant
to Articles XLIX and L below, during the Fixed Term Lessee shall pay to Lessor
as monthly "Minimum Rent," the applicable amounts set forth as the "Fixed Term
Minimum Rent Schedule" and for the relevant time period specified on Exhibit F
attached hereto and incorporated herein by this reference. The first monthly
payment of Minimum Rent shall be payable on the Commencement Date (prorated as
to any partial calendar month at the beginning of the Term).
(b) On any Capital Project Rent Commencement
Date, the applicable monthly Minimum Rent determined pursuant to subsection (a)
above (as the same may have been previously increased pursuant to this
subsection (b) or subsection (c) below for any prior Capital Project funded by
Lessor pursuant to Section 10.3 below), shall be increased by an amount equal to
one-twelfth (1/12th) of the product of (i) 58.33% of the total Project Costs
paid or funded by Lessor on account of the applicable Capital Project as of the
applicable Capital Project Rent Commencement Date, times (ii) Nine Percent (9%).
The monthly Minimum Rent payable for the month during which any such increase is
applicable shall be prorated based on the number of days for which the rental
amounts apply.
(c) Monthly Minimum Rent determined pursuant
to subsection (a) above (as the same may have been previously increased pursuant
to subsection (b) above or pursuant to this subsection (c)) shall further be
increased from time to time on the date of any payment or funding of any such
Project Costs by Lessor pursuant to Section 10.3 below on account of any Capital
Project by an amount equal to one-twelfth (1/12th) of the product of 58.33% of
the amount of any Project Costs paid or funded by Lessor following any
applicable Capital Project Rent Commencement Date (to the extent not included in
subsection (b) above), times (ii) Nine Percent (9%). Again, the monthly Minimum
Rent payable for any month during which such increase is applicable shall be
prorated based upon the number of days for which the different rental amounts
apply.
(d) Minimum Rent for the Extended Terms, if
any, shall be determined in accordance with the provisions of
Article XIX.
3.1.2 Additional Rent and Special Additional Rent.
(a) In addition to the Minimum Rent, Lessee
shall, commencing on the first (1st) day of the fifth (5th) Gross Revenue Year
(i.e., the Gross Revenue Year commencing January 1, 2003) and continuing on the
first (1st) day of each month thereafter during the Fixed Term, pay to Lessor
monthly "Additional Rent" in the amount of one-twelfth (1/12th) of Five Percent
(5%) of Incremental Gross Revenues for the immediately prior Gross Revenue Year.
By way of illustration, if Five Percent (5%) of Lessee's Incremental Gross
Revenues for the fourth (4th) Gross Revenue Year (i.e., the Gross Revenue Year
ending December 31, 2002), is $10,000.00, then commencing on the first (1st) day
of the fifth (5th) Gross Revenue Year Lessee shall pay to Lessor monthly
Additional Rent in advance equal to $844.44 per month (i.e., one-twelfth
(1/12th) of $10,000.00). Beginning in the sixth (6th) Gross Revenue Year (i.e.,
the Gross Revenue Year commencing January 1, 2004) and in each Gross Revenue
Year thereafter during the Fixed Term, monthly Additional Rent shall be at least
equal to the highest monthly Additional Rent attributable to any prior Gross
Revenue Year during the Fixed Term; provided further however, that, subject to
any adjustments in monthly Minimum Rent pursuant to any of Articles XLIX or L
below, commencing with the fifth (5th) Gross Revenue Year of the Fixed Term, in
no event shall the sum of Minimum Rent and Additional Rent paid or payable by
Lessee for any Gross Revenue Year through the expiration of the Fixed Term be
more than One Hundred Three Percent (103%) of the sum of Minimum Rent and
Additional Rent (if applicable) paid or payable by Lessee for the immediately
prior Gross Revenue Year (taking into account the annualized adjusted monthly
Minimum Rent pursuant to either of Articles XLIX or L below, as applicable). In
no event shall the Special Additional Rent payable by Lessee pursuant to
subsection (d) below be added to the Minimum Rent and Additional Rent during any
Gross Revenue Year for purposes of determining whether the foregoing Three
Percent (3%) limitation has been reached.
(b) During each Extended Term, if any,
Lessee shall, commencing on the first (1st) day of the second (2nd) Gross
Revenue Year of such Extended Term (i.e., January 1, 2014 with respect to the
first Extended Term and January 1, 2024 with respect to the second Extended
Term) and continuing through the expiration of such Extended Term, pay to Lessor
monthly "Additional Rent" in the amount of one-twelfth (1/12th) of Five Percent
(5%) of Incremental Gross Revenues for the immediately prior Gross Revenue Year;
provided, however, that beginning in the third (3rd) Gross Revenue Year of such
Extended Term and in each Lease Year thereafter during such Extended Term,
annual Additional Rent shall be at least equal to the highest annual Additional
Rent attributable to any prior Gross Revenue Year during such Extended Term;
provided further however, that, subject to any adjustments in monthly Minimum
Rent pursuant to any of Articles XLIX or L below, commencing with the second
(2nd) Gross Revenue Year of such Extended Term in no event shall the sum of the
Minimum Rent and Additional Rent paid or payable by Lessee for any Gross Revenue
Year through the expiration of such Extended Term be more than One Hundred Three
Percent (103%) of the sum of Minimum Rent and Additional Rent paid or payable by
Lessee for the immediately prior Gross Revenue Year (taking into account the
annualized adjusted monthly Minimum Rent pursuant to either of Articles XLIX or
L below, as applicable). Again, in no event shall the Special Additional Rent
payable by Lessee pursuant to subsection (d) below be added to the Minimum Rent
and Additional Rent during any Gross Revenue Year for purposes of determining
whether the foregoing Three Percent (3%) limitation has been reached.
(c) If the amount of monthly Additional Rent
to be paid by Lessee for any Gross Revenue Year during the Term shall not have
been determined at the commencement of the applicable Gross Revenue Year, then
Lessee shall continue to pay monthly Additional Rent (if applicable) at the last
applicable rate until Lessee receives Lessor's written notice as to the amount
due for the then current Gross Revenue Year. Within ten (10) days after Lessee's
receipt of Lessor's notice, Lessee shall pay to Lessor an amount equal to the
new monthly Additional Rent for such Gross Revenue Year times the number of
months from commencement of the then current Gross Revenue Year to the date of
receipt of Lessor's notice, less the aggregate amount paid by Lessee on account
thereof for the same period. Thereafter, Lessee shall pay monthly Additional
Rent for the applicable Gross Revenue Year at the new rate set forth in Lessor's
notice.
(d) In addition to Minimum Rent and any
Additional Rent payable hereunder, Lessee shall, subject to the provisions of
Article L below, pay one-time payments of "Special Additional Rent" during the
Fixed Term and each Extended Term, if any, in the amounts set forth as the
"Special Additional Rent" and at the times specified on Exhibit F attached
hereto and incorporated herein by this reference.
3.2 Determination of Additional Rent. Within thirty (30) days after
the end of each Gross Revenue Year commencing upon the expiration of the third
(3rd) Gross Revenue Year of the Fixed Term and continuing thereafter, Lessee
shall deliver to Lessor an Officer's Certificate setting forth the Gross
Revenues for such Gross Revenue Year. As soon as practicable following receipt
by Lessor of such Certificate, Lessor shall determine the Additional Rent for
the then current Gross Revenue Year (i.e., the Gross Revenue Year then in
effect) based upon the Incremental Gross Revenues for the prior Gross Revenue
Year and give Lessee notice of the same together with the calculations upon
which such Additional Rent is based.
3.3 Confirmation of Gross Revenues. Lessee shall utilize, or cause to
be utilized, an accounting system for the Leased Property and all Capital
Additions in accordance with its usual and customary practices and in accordance
with GAAP which will accurately record all Gross Revenues and Lessee shall
retain for at least five (5) years after the expiration of each Gross Revenue
Year reasonably adequate records conforming to such accounting system showing
all Gross Revenues for such Gross Revenue Year. Lessor, at its own expense
except as provided hereinbelow, shall have the right from time to time by its
accountants or representatives, to review and/or audit the information set forth
in the Officer's Certificate referred to in Section 3.2 and in connection with
such review and/or audit to examine Lessee's records with respect thereto
(including supporting data and sales tax returns) subject to any prohibitions or
limitations on disclosure of any such data under applicable law or regulations
including any duly enacted "Patients' Bill of Rights" or similar legislation, or
as may be necessary to preserve the confidentiality of the Facility-patient
relationship and the physician-patient privilege. If any such review and/or
audit discloses a deficiency in the payment of Additional Rent for any
applicable Gross Revenue Year, Lessee shall forthwith pay to Lessor the amount
of the deficiency together with interest thereon at the Overdue Rate compounded
quarterly from the date when said payment should have been made to the date of
payment thereof. If any such review and/or audit discloses that the Gross
Revenues actually received by Lessee for any Gross Revenue Year exceed those
reported by Lessee by more than Two Percent (2%), Lessee shall pay the costs of
such review and/or audit. Notwithstanding the foregoing, in the event that
Lessee shall disagree with the results of any such review or audit by Lessor,
Lessee shall so notify Lessor within ten (10) Business Days after receipt of the
results of Lessor's review or audit and shall pay to Lessor currently with such
notice any amount not in dispute. In the event that Lessor and Lessee cannot
agree upon the correct results of such review or audit within thirty (30) days
after Lessee's receipt of Lessor's original results thereof, then either Lessor
or Lessee may submit the dispute to arbitration as provided in Article XLIV of
this Lease. Upon resolution of any such dispute or arbitration, Lessee shall pay
to Lessor the amount of the deficiency determined to be still owing to Lessor
together with interest thereon at the Overdue Rate compounded quarterly from the
date when said payment should have been made to the date of payment thereof. Any
proprietary information obtained by Lessor pursuant to such review and/or audit
shall be treated as confidential, except that such information may be used,
subject to appropriate confidentiality safeguards, in any litigation or
arbitration proceedings between the parties and except further that Lessor may
disclose such information to prospective lenders or purchasers.
3.4 Additional Charges. In addition to the Minimum Rent, and
Additional Rent, (i) Lessee shall also pay and discharge as and when due and
payable all other amounts, liabilities, obligations and Impositions which Lessee
assumes or agrees to pay under this Lease; and (ii) in the event of any failure
on the part of Lessee to pay any of those items referred to in clause (i) above,
Lessee shall also promptly pay and discharge every fine, penalty, interest and
cost which may be added for nonpayment or late payment of such items (the items
referred to in clauses (i) and (ii) above being referred to herein collectively
as the "Additional Charges").
3.5 Late Payment of Rent.
(a) LESSEE HEREBY ACKNOWLEDGES THAT LATE PAYMENT BY LESSEE TO
LESSOR OF RENT WILL CAUSE LESSOR TO INCUR COSTS NOT CONTEMPLATED HEREUNDER, THE
EXACT AMOUNT OF WHICH IS PRESENTLY ANTICIPATED TO BE EXTREMELY DIFFICULT TO
ASCERTAIN. SUCH COSTS MAY INCLUDE PROCESSING AND ACCOUNTING CHARGES AND LATE
CHARGES WHICH MAY BE IMPOSED ON LESSOR BY THE TERMS OF ANY LOAN AGREEMENT AND
OTHER EXPENSES OF A SIMILAR OR DISSIMILAR NATURE. ACCORDINGLY, IF ANY
INSTALLMENT OF RENT OTHER THAN ADDITIONAL CHARGES PAYABLE TO A PERSON OTHER THAN
LESSOR SHALL NOT BE PAID WITHIN TEN (10) BUSINESS DAYS AFTER ITS DUE DATE,
LESSEE WILL PAY LESSOR ON DEMAND A LATE CHARGE EQUAL TO THE LESSER OF (I) THREE
PERCENT (3%) OF THE AMOUNT OF SUCH INSTALLMENT OR (II) THE MAXIMUM AMOUNT
PERMITTED BY LAW. THE PARTIES AGREE THAT THIS LATE CHARGE REPRESENTS A FAIR AND
REASONABLE ESTIMATE OF THE COSTS THAT LESSOR WILL INCUR BY REASON OF LATE
PAYMENT BY LESSEE. THE PARTIES FURTHER AGREE THAT SUCH LATE CHARGE IS RENT AND
NOT INTEREST AND SUCH ASSESSMENT DOES NOT CONSTITUTE A LENDER OR
BORROWER/CREDITOR RELATIONSHIP BETWEEN LESSOR AND LESSEE. IN ADDITION, THE
AMOUNT UNPAID, INCLUDING ANY LATE CHARGES, SHALL BEAR INTEREST AT THE OVERDUE
RATE COMPOUNDED MONTHLY FROM THE DUE DATE OF SUCH INSTALLMENT TO
THE DATE OF
PAYMENT THEREOF, AND LESSEE SHALL PAY SUCH INTEREST TO LESSOR ON DEMAND. THE
PAYMENT OF SUCH LATE CHARGE OR SUCH INTEREST SHALL NOT CONSTITUTE WAIVER OF, NOR
EXCUSE OR CURE, ANY DEFAULT UNDER THIS LEASE, NOR PREVENT LESSOR FROM EXERCISING
ANY OTHER RIGHTS AND REMEDIES AVAILABLE TO LESSOR.
Lessor's Initials:
Lessee's Initials:
(b) If Lessee shall, during any six (6) month period, be more
than five (5) Business Days delinquent in the payment of any Rent due and
payable by Lessee hereunder on three (3) or more occasions then, notwithstanding
anything herein to the contrary, Lessor may, by written notice to Lessee, elect
to require Lessee to pay all Pre-Commencement Rent, Minimum Rent, Additional
Rent and Special Additional Rent payable hereunder quarterly in advance (if
applicable). Such right of Lessor shall be in addition to and not in lieu of any
other right of remedy available to Lessor hereunder or at law on account of an
Event of Default by Lessee hereunder.
3.6 Net Lease. This Lease is and is intended to be what is commonly
referred to as a "net, net, net" or "triple net" lease; provided, however, that
such designation shall not be deemed to relieve Lessor of, or impose on Lessee
responsibility or liability for, any of Lessor's express obligations under this
Lease.
ARTICLE IV.
4.1 Impositions.
4.1.1. Subject to Article XII relating to permitted contests,
Lessee shall pay, or cause to be paid, all Impositions before any fine, penalty,
interest or cost may be added for nonpayment. Lessee shall make such payments
directly to the taxing authorities where feasible, and promptly furnish to
Lessor copies of official receipts or other satisfactory proof evidencing such
payments. Lessee's obligation to pay Impositions (to the extent allocable to the
Term) shall be absolutely fixed upon the date such Impositions become a lien
upon the Leased Property, any Capital Additions or any part(s) thereof. If any
Imposition may, at the option of the taxpayer, lawfully be paid in installments,
whether or not interest shall accrue on the unpaid balance of such Imposition,
Lessee may pay the same, and any accrued interest on the unpaid balance of such
Imposition, in installments as the same respectively become due and before any
fine, penalty, premium, further interest or cost may be added thereto; provided,
however, that if during the last five (5) years of the Term, an Imposition in
excess of the aggregate principal amount of $250,000 shall be levied upon the
Leased Property and the same is in the nature of a special assessment for public
improvements or benefits having a useful life beyond the expiration of the Term
of this Lease, then for purposes of determining Lessee's payment obligations
hereunder with respect to such Imposition, the same shall be amortized over the
lesser of (a) ten (10) years and (b) the useful life of such improvements or
benefits, as the case may be, as reasonably determined by Lessor and its
accountants, and Lessee shall be responsible for only that portion of such
amortization applicable to the year in question. Nothing herein, however, shall
prevent Lessor from paying any such Imposition in the nature of a special
assessment for public improvements or benefits in any single lump sum or over a
shorter period of time than the amortization period provided above, so long as
the foregoing procedure with respect Lessee's obligation to pay the same is
followed. In addition, the amortization for which Lessee shall be responsible
for any such Imposition in excess of $250,000 for any year shall include any
interest payable on account of payment of the same in installments as charged by
the taxing authority, or if Lessor shall be required to pay the same in a lump
sum or over a shorter period then the applicable amortization, at a fair market
interest rate as reasonably determined by Lessor.
4.1.2 Lessor shall prepare and file all tax returns and reports
as may be required by Legal Requirements with respect to Lessor's net income,
gross receipts, franchise taxes and taxes on its capital stock, and Lessee shall
prepare and file all other tax returns and reports as may be required by Legal
Requirements.
4.1.3 Any refund due from any taxing authority in respect of any
Imposition paid by Lessee shall be paid over to or retained by Lessee if no
Event of Default shall have occurred hereunder and be continuing. Any other
refund shall be paid over to or retained by Lessor.
4.1.4 Lessor and Lessee shall,upon request of the other, provide
such data as is maintained by the party to whom the request is made with respect
to the Leased Property and all Capital Additions as may be necessary to prepare
any required returns and reports. If any property covered by this Lease is
classified as personal property for tax purposes, Lessee shall file all personal
property tax returns in such jurisdictions where it must legally so file.
Lessor, to the extent it possesses the same, and Lessee, to the extent it
possesses the same, shall provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Lessor is legally required to file personal property
tax returns and to the extent practicable, Lessee shall be provided with copies
of assessment notices indicating a value in excess of the reported value in
sufficient time for Lessee to file a protest.
4.1.5 Lessee may, upon notice to Lessor, at Lessee's option and
at Lessee's sole cost and expense, protest, appeal, or institute such other
proceedings as Lessee may deem appropriate to effect a reduction of real estate
or personal property assessments and Lessor, at Lessee's expense as aforesaid,
shall reasonably cooperate with Lessee in such protest, appeal, or other action
but at no cost or expense to Lessor. Billings for reimbursement by Lessee to
Lessor of personal property or real property taxes shall be accompanied by
copies of a bill therefor and payments thereof which identify the personal
property or real property with respect to which such payments are made.
4.1.6 Lessor shall give prompt notice to Lessee of all
Impositions payable by Lessee hereunder of which Lessor has knowledge, but
Lessor's failure to give any such notice shall in no way diminish Lessee's
obligations hereunder to pay such Impositions.
4.1.7 Impositions imposed in respect of the tax-fiscal period
during which the Term commences and/or terminates shall be adjusted and prorated
between Lessor and Lessee, whether or not such Imposition is imposed before or
after such commencement and/or termination.
4.2 Utilities. Lessee shall pay or cause to be paid all charges for
electricity, power, gas, oil, water and other utilities used in the Leased
Property and all Capital Additions. Lessee shall also pay or reimburse Lessor
for all costs and expenses of any kind whatsoever which at any time with respect
to the Term hereof may be imposed against Lessor by reason of any of the
Permitted Exceptions affecting the Leased Property, any Capital Additions and/or
any part(s) thereof, or with respect to easements, licenses or other rights
over, across or with respect to any adjacent or other property which benefits
the Leased Property and/or any Capital Additions, including any and all costs
and expenses associated with any utility, drainage and parking easements to the
extent the same are Permitted Exceptions.
4.3 Insurance. Lessee shall pay or cause to be paid all premiums for
the insurance coverage required to be maintained by Lessee hereunder.
4.4 Impound Account. If Lessee, at any time during the Term, does not
timely make payment of any Impositions or insurance premiums required pursuant
to Section 4.1 or Section 4.3 and the same constitutes an Event of Default,
Lessor may, at any time thereafter, at its option to be exercised by thirty (30)
days' written notice to Lessee, require Lessee to deposit, at the time of any
payment of Minimum Rent, an amount equal to Lessee's estimated annual taxes, of
every kind and nature, required pursuant to Section 4.1 plus Lessee's estimated
annual insurance premiums required pursuant to Section 4.3 into an impound
account as directed by Lessor. Such amounts shall be applied to the payment of
the obligations in respect of which said amounts were deposited in such order of
priority as Lessor shall determine, on or before the respective dates on which
the same or any of them would become delinquent. The cost of administering such
impound account shall be paid by Lessee. Nothing in this Section 4.4 shall be
deemed to affect any right or remedy of Lessor hereunder.
4.5 Tax Service. If, on more than one (1) occasion during the Term,
Lessee fails to provide Lessor with reasonable documentation demonstrating that
Impositions imposed upon the Leased Property (other than those that are not yet
delinquent) have been paid within ten (10) days after written request therefor
by Lessor, then if requested by Lessor, Lessee shall, at its sole cost and
expense, engage the services of a tax reporting company, to be designated by
Lessor, and cause such company to issue to Lessor reports covering the Leased
Property and all Capital Additions.
ARTICLE V.
5. No Termination, Abatement, etc. Except as otherwise specifically
provided in this Lease, Lessee shall remain bound by this Lease in accordance
with its terms and shall not seek or be entitled to any abatement, deduction,
deferment or reduction of Rent, or set-off against the Rent. Except as otherwise
specifically provided in this Lease, the respective obligations of Lessor and
Lessee shall not be affected by reason of (i) any damage to or destruction of
the Leased Property, any Capital Additions and/or any part(s) thereof from
whatever cause and/or any Condemnation of the Leased Property, any Capital
Additions and/or any part(s) thereof; (ii) the lawful or unlawful prohibition
of, or restriction upon, Lessee's use of the Leased Property, any Capital
Additions and/or any part(s) thereof, the interference with such use by any
Person or by reason of eviction by paramount title, other than by reason of any
such Person claiming by or through Lessor; (iii) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Lessor or any assignee or transferee of Lessor;
or (iv) for any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights arising from any
occurrence whatsoever which may now or hereafter be conferred upon it by law (a)
to modify, surrender or terminate this Lease or quit or surrender the Leased
Property, any Capital Additions and/or any part(s) thereof; or (b) which may
entitle Lessee to any abatement, reduction, suspension or deferment of the Rent
or other sums payable by Lessee hereunder, except as otherwise specifically
provided in this Lease. The obligations of Lessor and Lessee hereunder shall be
separate and independent covenants and agreements and the Rent and all other
sums payable by Lessee hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions of this Lease or by termination of this Lease other than by
reason of an Event of Default.
ARTICLE VI.
6.1 Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only a leasehold
estate in the Leased Property which includes the right to the exclusive
possession and use of the Leased Property upon the terms and conditions of this
Lease. Upon the expiration or earlier termination of this Lease Lessee shall, at
its expense, repair and restore the Leased Property to the condition required by
Section 9.1.4.
6.2 Personal Property. During the Term, Lessee shall, as necessary
and at its expense, install, affix or assemble or place on any parcels of the
Land or in any of the Leased Improvements, any items of Lessee's Personal
Property and replacements thereof which shall be the property of and owned by
Lessee. Except as provided in Sections 6.3 and 16.10, Lessor shall have no
rights to Lessee's Personal Property. Lessee shall provide and maintain during
the entire Term all Personal Property necessary in order to operate the Facility
in compliance with all licensure and certification requirements, all Legal
Requirements and all Insurance Requirements and otherwise in accordance with
customary practice in the industry for the Primary Intended Use.
6.3 Transfer of Personal Property and Capital Additions to Lessor.
Upon the expiration or earlier termination of this Lease, all Capital Additions
not owned by Lessor and Lessee's Personal Property shall become the property of
Lessor, free of any encumbrance and Lessee shall execute all documents and take
any actions reasonably necessary to evidence such ownership and discharge any
encumbrance; provided, however, that Lessee shall be entitled to remove all
Removable Personal Property from the Leased Property at the end of the Term so
long as Lessee repairs any damage to the Leased Property caused by such removal.
Notwithstanding anything to the contrary in this Lease, upon the expiration or
earlier termination of this Lease, Lessor shall not be obligated to reimburse
Lessee for any replacements, rebuildings, alterations, additions, substitutions,
and/or improvements that are surrendered as part of or with the Leased Property
or any Capital Additions.
ARTICLE VII.
7.1 Condition of the Leased Property. Except as otherwise expressly
provided to the contrary in this Lease, Lessee acknowledges that Lessee (i) has
examined and otherwise has knowledge of the condition of the Leased Property
prior to the execution and delivery of this Lease and (ii) Lessee has found the
Leased Property satisfactory for its purposes hereunder. Except as otherwise
expressly provided to the contrary in this Lease, regardless, however, of any
examination or inspection made by Lessee and whether or not any patent or latent
defect or condition was revealed or discovered thereby, Lessee is leasing the
Leased Property "as is" in its present condition. Except as otherwise expressly
provided to the contrary in this Lease, Lessee waives any claim or action
against Lessor in respect of the condition of the Leased Property including any
defects or adverse conditions not discovered or otherwise known by Lessee as of
the date hereof or as of the Commencement Date. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED TO THE CONTRARY IN THIS LEASE, LESSOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY
PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO THE NATURE OR QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, OR THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE.
7.2 Use of the Leased Property.
7.2.1 Lessee ovenants that it will obtain and maintain all
authorizations and approvals needed to use and operate the Leased Property, all
Capital Additions and the Facility for the Primary Intended Use and any other
use conducted on the Leased Property and any Capital Additions as may be
permitted from time to time hereunder in substantial compliance with all Legal
Requirements, including applicable licenses, provider agreements, permits, and
Medicare and/or Medicaid certification.
7.2.2 Lessee shall use or cause to be used the Leased Property,
all Capital Additions and the improvements thereon for the Primary Intended Use.
Lessee shall not use the Leased Property, any Capital Additions or any part(s)
thereof for any other use without the prior written consent of Lessor, which
consent Lessor may withhold in its sole discretion; provided, however, that
Lessor agrees not to unreasonably withhold its consent to a change in use of the
Leased Property from the Primary Intended Use to another health care related
use.
7.2.3 Except as a result of (a) damage, destruction or
Condemnation of the Leased Property and such reasonable period of time to effect
repairs necessitated thereby, (b) temporary closures of portions of the Facility
as may reasonably necessary to effect repairs and/or maintenance to the Facility
and/or to perform any approved Capital Projects, provided that any such
temporary closure shall be (i) only for so long as may be reasonably required to
effect such repairs/maintenance and/or perform such Capital Project and (ii)
limited only to that portion of the Facility effected thereby (including all, if
applicable) or (c) any other occurrence of the nature and type described in
Section 45.16 of this Lease, Lessee shall at all times during the Term operate
continuously the entire Leased Property and all Capital Additions in accordance
with the Primary Intended Use. Lessee shall devote the entire Facility and all
Capital Additions to the Primary Intended Use, except for areas reasonably
required for office or storage space uses incidental to the Primary Intended
Use. Lessee shall not modify the services offered or take any other action
(e.g., removing patients or residents from the Facility or directing patients or
residents, or prospective patients or residents, to another Facility except for
(i) medically appropriate reasons, (ii) patient/resident relations (including
compatibility), or (iii) the acute care needs of such patient/resident) which
would materially reduce the Fair Market Value of the Facility. Lessee shall
utilize commercially reasonable efforts to operate the Facility in such a manner
so as to maintain the reputation and attractiveness of the Facility.
7.2.4 Lessee shall conduct its business at the Facility in
conformity with the standards of patient or resident care practice provided in
similar good-quality facilities in the State. Without limiting generality of the
foregoing, Lessee shall at all times exercise its best efforts to maintain an
adequate staff for the service of its residents and/or patients consistent with
such standards of patient or resident care practice provided in similar
good-quality facilities in the State and industry.
7.2.5 Lessee shall not commit or suffer to be committed any
waste on the Leased Property and/or on or to any Capital Additions or cause or
permit any nuisance to exist thereon or with respect thereto.
7.2.6 [Intentionally Deleted]
7.2.7 [Intentionally Deleted]
7.3 [Reserved]
. Lessee acknowledges that diversion of residents and/or y Value patients, as
applicable, from the Facility to and competition with other facilities or
institutions owned, operated or managed, whether directly or indirectly, by
Lessee or its Affiliates will have a material adverse impact on the value and
utility of the Leased Property and all Capital Additions. Accordingly, Lessor
and Lessee agree as follows:
7.4.1 During the Term and for a period of one (1) year
thereafter, neither Lessee nor any of its Affiliates, directly or indirectly,
shall develop any new facility or institution (including the renovation of any
existing structure(s) not currently operating as a health care facility to
create a functionally new facility or institution, but specifically excluding
the acquisition of any then existing and operating facilities) which will
provide services similar to those provided in connection with the Facility and
the Primary Intended Use, within an eight (8) mile radius outward from the
outside boundary of the Leased Property. All distances shall be measured on a
straight line rather than on a driving distance basis. In the event that any
portion of such new or renovated facility or institution is located within such
restricted area the entire facility or institution shall be deemed located
within such restricted area.
7.4.2 Except as required for medically appropriate reasons,
during the Term and after the expiration or earlier termination of this Lease,
Lessee shall not recommend or solicit the removal or transfer of any resident or
patient from the Facility to any other facility or institution, including any
such facility or institution, owned, operated or managed, whether directly or
indirectly, by Lessee or its Affiliates.
ARTICLE VIII.
8. Compliance with Legal and Insurance Requirements,
Subject to Article XII regarding permitted contests, Lessee, at
its expense, shall promptly (i) comply in all material respects with all Legal
Requirements and Insurance Requirements regarding the use, operation,
maintenance, repair and restoration of the Leased Property, Lessee's Personal
Property and all Capital Additions whether or not compliance therewith may
require structural changes in any of the Leased Improvements or any Capital
Additions or interfere with the use and enjoyment of the Leased Property and
(ii) procure, maintain and comply with all licenses, certificates of need,
provider agreements and other authorizations required for the use of the Leased
Property, Lessee's Personal Property and all Capital Additions for the Primary
Intended Use and any other use of the Leased Property, Lessee's Personal
Property and all Capital Additions then being made, and for the proper erection,
installation, operation and maintenance of the Leased Property, Lessee's
Personal Property and all Capital Additions. Upon the occurrence of an Event of
Default, Lessor may, but shall not be obligated to, enter upon the Leased
Property and all Capital Additions and take such actions and incur such costs
and expenses to effect such compliance as it deems advisable to protect its
interest in the Leased Property and all Capital Additions, and Lessee shall
reimburse Lessor for all costs and expenses incurred by Lessor in connection
with such actions. Lessee covenants and agrees that the Leased Property,
Lessee's Personal Property and all Capital Additions shall not be used for any
unlawful purpose.
ARTICLE IX.
9.1 Maintenance and Repair
9.1.1 Lessee, at its expense, shall maintain the Leased
Property, and every portion thereof, Lessee's Personal Property and all Capital
Additions, and all private roadways, sidewalks and curbs appurtenant to the
Leased Property, and which are under Lessee's control in good order and repair
whether or not the need for such repairs occurs as a result of Lessee's use, any
prior use, the elements or the age of the Leased Property, Lessee's Personal
Property and all Capital Additions, and, with reasonable promptness, make all
necessary and appropriate repairs thereto of every kind and nature, including
those necessary to comply with changes in any Legal Requirements, whether
interior or exterior, structural or nonstructural, ordinary or extraordinary,
foreseen or unforeseen or arising by reason of a condition existing prior to the
Commencement Date. All repairs shall be at least equivalent in quality to the
original work. Lessee will not take or omit to take any action the taking or
omission of which might materially impair the value or the usefulness of the
Leased Property, any Capital Additions, or any part(s) thereof for the Primary
Intended Use.
Notwithstanding anything to the contrary in
this Lease, the following shall apply:
(a) In the event that (i) Lessee shall be required to make
any structural or other capital alterations (excluding, however, ordinary
maintenance and repair) to the Leased Improvements or any Capital
Additions by reason of the enactment of any Legal Requirements after the
Commencement Date, (ii) the aggregate cost of any such structural or other
capital alterations exceeds $100,000.00, and (iii), in Lessee's good faith
judgment, reasonably exercised, because of the cost thereof, the Facility
could not thereafter be operated on a commercially practical basis for its
Primary Intended Use for the remainder of the Term, then, at any time
within four (4) months after the enactment of any such Legal Requirement
necessitating any such structural or other capital alterations, Lessee may
by written notice to Lessor offer to purchase the Leased Property for a
purchase price equal to the then Minimum Purchase Price. Any such written
offer to Lessor shall specify in reasonable detail the nature of the new
Legal Requirement (including the date of enactment thereof), the
structural or other capital alterations necessitated thereby, a detailed
cost estimate for completing the same, and the reasons why the Facility
could not be operated on a commercially reasonable basis if Lessee were
required to make the same. If Lessee shall be entitled to and shall make
such offer and Lessor does not accept the same within fifteen (15)
Business Days after Lessor's receipt thereof, which Lessor shall have the
right to accept or reject in its sole and absolute discretion, then this
Lease shall terminate upon the expiration of the one hundred eightieth
(180th) day following Lessor's receipt of Lessee's written offer to
purchase, unless within such fifteen (15) Business Day period Lessor shall
by written notice to Lessee elect to have Lessee make such structural or
other capital alterations at Lessor's expense, in which event this Lease
shall remain in full force in effect.
(b) In the event that (i) Lessee shall be required to make
any structural or other capital alterations (excluding again, however,
ordinary maintenance and repair) to the Leased Improvements or any Capital
Additions by reason of the enforcement of any Legal Requirements existing
as of the Commencement Date which had not previously been enforced or for
which a waiver of compliance had previously been granted, (ii) the
enforcement of or withdrawal of such waiver is not due to Lessee's failure
to otherwise operate the Facility in compliance with all Legal
Requirements and/or Lessee's request (whether direct or indirect) to any
such Governmental Authority to enforce with such previously unenforced
Legal Requirement or to withdraw such waiver of compliance therewith,
(iii) the aggregate cost of any such structural or other capital
alterations exceeds $100,000.00, and (iv), in Lessee's good faith
judgment, reasonably exercised, because of the cost thereof, the Facility
could not thereafter be operated on a commercially practical basis for its
Primary Intended Use for the remainder of the Term, then, at any time
within four (4) months after the enforcement of or required compliance
with any such existing Legal Requirement necessitating any such structural
or other capital alterations, Lessee may by written notice elect to
terminate this Lease. Any such written notice of termination to Lessor
shall again specify in reasonable detail the nature of the Legal
Requirement being enforced or with which the Facility is required to
comply, the structural or other capital alterations necessitated thereby,
a detailed cost estimate for completing the same, and the reasons why the
Facility could not be operated on a commercially reasonable basis if
Lessee were required to make the same. If Lessee shall be entitled to and
shall exercise its right to terminate, then this Lease shall terminate
upon the expiration of the one hundred eightieth (180th) day following
Lessor's receipt of Lessee's notice of termination, unless within such
fifteen (15) Business Days after receipt of Lessee's notice of termination
Lessor shall by written notice to Lessee elect to have Lessee make such
structural or other capital alterations at Lessor's expense, in which
event this Lease shall remain in full force in effect.
9.1.2 Except as expressly provided in Sections 9.1.1 and 10.3
below, Lessor shall not under any circumstances be required to (i) build or
rebuild any improvements on the Leased Property or any Capital Additions; (ii)
make any repairs, replacements, alterations, restorations or renewals of any
nature to the Leased Property, whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever
with respect thereto; or (iii) maintain the Leased Property or any Capital
Additions in any way. Lessee hereby waives, to the extent permitted by law, the
right to make repairs at the expense of Lessor pursuant to any law in effect at
the time of the execution of this Lease or hereafter enacted.
9.1.3 Nothing contained in this Lease and no action or inaction
by Lessor shall be construed as (i) constituting the consent or request of
Lessor, expressed or implied, to any contractor, subcontractor, laborer,
materialman or vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction, alteration,
addition, repair or demolition of or to the Leased Property, any Capital
Additions or any part(s) thereof; or (ii) giving Lessee any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Lessor in respect thereof or to make any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in the
Leased Property, any Capital Additions or any part(s) thereof.
9.1.4 Unless Lessor shall convey any of the Leased Property to
Lessee pursuant to the provisions of this Lease, Lessee shall, upon the
expiration or earlier termination of the Term, vacate and surrender the Leased
Property, Lessee's Personal Property (other than Lessee's Removable Personal
Property) and all Capital Additions to Lessor in the condition in which the
Leased Property was originally received from Lessor and Lessee's Personal
Property and any Capital Additions were originally introduced to the Facility,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Lease and except for (i) ordinary wear and
tear and (ii) any damage resulting from a casualty or a Condemnation which
Lessee is not required to restore/repair/rebuild pursuant to this Lease.
If any Capital Addition shall, at any time, encroach upon any property, street
or right-of-way, or shall violate any restrictive covenant or other agreement
affecting the Leased Property, any other Capital Additions or any parts thereof,
or shall impair the rights of others under any easement or right-of-way to which
the Leased Property is subject, then promptly upon the request of Lessor or any
Person affected by any such encroachment or violation, Lessee, at its sole cost
and expense, but subject to its right to contest the existence of any such
encroachment or violation, shall protect, indemnify, save harmless and defend
Lessor from and against all losses, liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable
attorneys', consultants' and experts' fees and expenses) based on or arising by
reason of any such encroachment or violation. In the event of an adverse final
determination with respect to any such encroachment or violation, Lessee shall
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or
impairment, whether the same shall affect Lessor or Lessee; or (ii) make such
changes in such Capital Additions, and take such other actions, as Lessee in the
good faith exercise of its judgment deems reasonably practicable, to remove such
encroachment, or to end such violation or impairment, including, if necessary,
the alteration of any Capital Addition, and in any event take all such actions
as may be necessary in order to be able to continue the operation of the Leased
Improvements and any Capital Addition for the Primary Intended Use substantially
in the manner and to the extent the Leased Improvements and Capital Additions
were operated prior to the assertion of such encroachment, violation or
impairment. Lessee's obligations under this Section 9.2 shall be in addition to
and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance and, to the extent the recovery thereof
is not necessary to compensate Lessor for any damages incurred by any such
encroachment or violation, Lessee shall be entitled to a credit for any sums
recovered by Lessor under any such policy of title or other insurance.
ARTICLE X.
10.1 Construction of Capital Additions and Other . Without the prior
written consent of Lessor, which consent may given or withheld in Lessor's sole
and absolute discretion, Lessee shall (a) make no Capital Additions on or
structural alterations to the Leased Property, (b) not enlarge or reduce the
size of the Facility or otherwise alter in any way which materially and
adversely affect any main Facility systems, including any main plumbing,
electrical or heating, ventilating and air conditioning systems of the Facility
and/or (c) make no Capital Additions or other alterations which would tie in or
connect with any improvements on property adjacent to the Land, other than to
public improvements as may be permitted by and in compliance with all applicable
Legal Requirements. Lessee may, without Lessor's prior written consent, make any
alterations, additions, or improvements (collectively, "alterations") to the
Leased Property if such alterations are not of the type described in either
clause (a), (b) or (c) above, so long as in each case: (i) the same do not (A)
decrease the value of the Leased Property, (B) materially and adversely affect
the exterior appearance of the Leased Property, or (C) materially and adversely
affect the structural components of the Leased Improvements or the main
electrical, mechanical, plumbing or ventilating and air conditioning systems for
the Facility, (ii) the same are consistent in terms of style, quality and
workmanship to the original Leased Improvements and Fixtures, (iii) the same are
constructed and performed in accordance with the provisions of Section 10.2
below and (iv) the cost thereof does not exceed, in the aggregate, $75,000.00
for any twelve (12) month period. Any other alterations (i.e., other than
alterations described in clauses (a), (b) or (c) above, and other than
alterations which meet the foregoing requirements of clauses (i), (ii), (iii)
and (iv)) shall be subject to Lessor's prior written consent, which consent
shall not be unreasonably withheld. To the extent Lessor's prior written consent
shall be required in connection with any alterations or Capital Additions,
Lessor may impose such conditions thereon in connection with its approval
thereof, if at all, as Lessor deems appropriate.
10.2 Requirements for Any Alterations Which Do Not . For all
alterations which Lessee desires to make and which do not require Lessor's
approval pursuant to Section 10.1 above, the following shall apply:
(a) Such construction shall not commence until Lessee has
procured and paid for all municipal and other governmental permits and
authorizations required therefor. Lessor shall join in the application for any
such permits or authorizations whenever such action is necessary; provided,
however, that (i) any such joinder shall be at no cost or expense to Lessor; and
(ii) any plans and specifications required to be filed in connection with any
such application shall have been delivered to Lessor.
(b) If the full value of such construction is in excess of
$200,000.00, Lessee shall have procured or caused to be procured a payment and
performance bond for the full value of such construction, which bond shall name
Lessor as an additional obligee and otherwise be in form and substance and
issued by a Person reasonably satisfactory to Lessor.
(c) Such construction shall not, and the Architect shall certify
to Lessor that such construction shall not, impair the structural strength of
any component of the Facility or overburden the main electrical, water,
plumbing, HVAC or other building systems of the Facility or any component
thereof.
(d) The Architect shall certify to Lessor that the detailed
plans and specifications, if applicable, conform to and comply in all material
respects with all applicable building, subdivision and zoning codes, laws,
ordinances, regulations and other Legal Requirements imposed by all Governmental
Authorities, all Insurance Requirements and all Permitted Exceptions.
(e) All work done in connection with such construction shall be
done promptly and in a good and workmanlike manner using first-class materials
and in conformity with all Legal Requirements.
(f) Promptly following the completion of such construction,
Lessee shall deliver to Lessor "as built" drawings of such alteration (if
reasonably appropriate based upon the scope or nature of such Capital Addition),
certified as accurate by the Architect.
(g) If by reason of the construction thereof, a new Certificate
of Occupancy for any component of the Facility is required, Lessee shall obtain
and furnish a copy of the same to Lessor promptly upon completion thereof.
In no event shall the listing of the foregoing requirements with respect to any
alterations not requiring Lessor's prior written approval pursuant to Section
10.1 above be deemed to limit or otherwise reduce Lessor's approval rights with
respect to any Capital Additions or other alterations which do require Lessor's
prior written consent pursuant to such Section 10.1. Notwithstanding the
foregoing provisions of this Section 10.2, Lessee shall not be required to
furnish any certificate of the Architect pursuant to subsections (c) or (d) of
this Section 10.2 or to provide "as built" drawings as provided in subsection
(f) of this Section 10.2, unless the alterations performed by Lessee are of such
a nature that procurement of the services of an Architect are in Lessee's and/or
Lessor's reasonable business judgment necessary for the proper performance of
such alterations.
10.3 Funding of Approved Capital Projects by Lessor.
10.3.1 Agreement to Fund. Provided that (a) no Event of Default
exists and is continuing hereunder and (b) the Capital Project (i.e., approved
by Lessor pursuant to the applicable provisions of this Lease) is commenced
within fifteen (15) months of the Commencement Date and is completed within
twenty-four (24) months of the Commencement Date, subject to Permitted Delays,
then Lessor agrees to provide funding for such Capital Project(s) in accordance
with the provisions of this Section 10.3 up the lesser of (i) the amount set
forth in the applicable Project Budget for such Capital Project, (ii) $1.5
Million when aggregated with all Capital Projects funded by Lessor pursuant to
this Section 10.3 and (iii) the Maximum Funding Amount when aggregated with all
Capital Projects funded by Lessor or an Affiliate of Lessor under this Lease and
all other Facility Group Leases; provided, however, that in no event shall
Lessor provide funding for a Capital Project if the portion of the applicable
Project Budget therefor comprised of land, if any, materials, labor charges and
fixtures shall be less than eighty-five percent (85%) of the total amount of the
Project Budget for such Capital Project.
10.3.2 Capital Projects; Performance, Completion and Funding.
Without limiting any other obligation or liability of Lessee under this Lease,
the following shall apply with respect to any Capital Project to be funded by
Lessee pursuant to this Section 10.3:
(a) Obligations of Lessee.
(i) Construction/Performance of Capital
Projects. Lessee shall be responsible to arrange, supervise, coordinate and
carry out all services necessary for the construction, performance and
completion of each Capital Project in accordance with the Plans and the
applicable provisions of this Lease. Lessee shall cause each Capital Project to
be completed substantially in accordance with the Plans and the terms of the
Project Contracts for an amount not to exceed the applicable Project Budget
thereof and the Completion Date therefor to occur by the Outside Date. If and to
the extent total Project Costs exceed the applicable Project Budget thereof, or
the total of all Project Costs for all Capital Projects paid for or funded (1)
by Lessor hereunder exceed in the aggregate $1.5 Million, or (2) by Lessor
and/or Lessor's Affiliate(s) under this Lease and the other Facility Group
Leases exceed in the aggregate the Maximum Funding Amount, Lessee shall pay and
shall not be reimbursed for such excess.
(ii) Duties and Responsibilities. The
duties and responsibilities of Lessee with respect to any Capital Project shall
specifically include the following:
(A) To administer and monitor the
performance under all Project Contracts and other agreements relating to
the construction/performance of such Capital Project and the monthly
reporting of the status of estimated costs of completing the same in
relation to the Project Budget therefor;
(B) To review and make a
recommendation to Lessor with respect to payment of all applications for
payments under the Project Contracts and other agreements relating to the
construction/performance of such Capital Project and make payments of any
and all bills, invoices or other matters calling for payment by Lessee or
Lessor or for Lessor's account in connection with the
construction/performance of such Capital Project;
(C) To coordinate with the
Architect and any inspecting engineer or consultant employed by Lessor in
the performance of periodic inspections of the Leased Property in order to
confirm that the materials furnished and work performed are in accordance
with the Plans and that the work on such Capital Project is progressing on
schedule;
(D) To stop the work and cause the
correction of any defect in the materials or workmanship furnished by any
contractor or of any failure by any contractor to perform its obligations
under its Project Contract and to promptly inform Lessor of any instances
of faulty materials and/or workmanship;
(E) To make available to Lessor,
upon request, the identities of and copies of contracts with all
subcontractors and any other Person supplying labor or materials for the
construction/performance of such Capital Project; and
(F) To obtain all approvals
necessary to construct/perform such Capital Projects and to operate the
Facility for its Primary Intended Use.
(iii) Performance of Duties. Lessee
agrees that, subject to the performance by Lessor of its obligations under this
Section 10.3, Lessee shall act with prudence and diligence in performing its
duties and responsibilities under this Lease, with respect to each approved
Capital Project.
(b) Completion Guarantee.
(i) Construction and Cost Guarantee.
Lessee unconditionally guarantees to Lessor (A) the construction/performance of
each Capital Project in substantial accordance with the Plans in a good and
workmanlike manner in accordance with sound building and engineering practices
and all applicable Legal Requirements and all covenants and obligations of
Lessee under this Lease, by the Outside Date and (B) the payment without demand,
and without right to reimbursement therefor, of all Project Costs for any
approved Capital Project incurred for any reason whatsoever in excess of the
Project Budget therefor or which when aggregated together with (1) all other
Project Costs funded by Lessor hereunder exceed $1.5 Million or (2) all other
Project Costs funded by Lessee or Lessee's Affiliates under all Facility Group
Leases, exceed the Maximum Funding Amount.
(ii) Completion of Punch List Items. All
Punch List Items, other than those reasonably requiring more than thirty (30)
days to complete due to long scheduling or ordering time or other reasonable
factors, shall be completed within thirty (30) days after the applicable
Completion Date, but in no event later than thirty (30) days after the Outside
Date. Any Punch List Items reasonably requiring more than thirty (30) days to
complete shall be diligently pursued and completed as promptly as practicable.
(d) Other Covenants of Lessee.
(i) Change Orders, Defects. Lessee may,
without obtaining the prior written approval of Lessor change the Plans, permit
the Plans to be changed or permit construction/performance of a Capital Project
other than in substantial accordance with the Plans therefor; provided, however,
that if (1) any such change would (x) change the basic structure or character of
the Facility; (y) change the exterior appearance of the Facility; or (z) change
or reduce the quality of the basic building systems, including the mechanical,
electrical, sprinkler, plumbing, life-safety, heating, air conditioning and
ventilation systems within the Facility, (2) any single change in the Plans
involves an amount in excess of Ten Thousand Dollars ($10,000,00), or (3) any
number of changes in the Plans involves in the aggregate an amount in excess of
Twenty Thousand Dollars ($20,000.00), then in any such event Lessee must obtain
the prior written approval of Lessor prior to implementing such change, which
approval shall not, subject to any other express limitations and provisions of
this Lease, be unreasonably withheld.
(ii)Insurance. Lessee will at all times
maintain or cause to be maintained the following insurance during the
construction/performance of any Capital Project (including through the date of
completion of the Punch List Items):
(A) Builder's risk insurance
covering the construction/performance of such Capital Project, in a face
amount of not less than the full insurable value of such Capital Project
and materials supplied in connection therewith, with appropriate
provisions made to include coverage of materials stored off the Leased
Property in an amount not less than the full insurable value of such
materials stored off the Leased Property from time to time.
(B) Errors and omissions insurance
by the Architect (if applicable) in an amount at least equal to One
Million Dollars ($1,000,000) which can be applied to the
construction/performance of such Capital Projects, covering the entire
period of design and construction/performance of such Capital Project and
terminating upon the receipt of the certificate of occupancy issued by the
appropriate municipality.
All such insurance maintained or caused to be maintained by Lessee
pursuant to clauses (A) and (B) of this clause (iii) shall name Lessor as an
additional insured. All insurance maintained or caused to be maintained by
Lessee pursuant to clause (A) of this clause (ii) shall name Lessee, Lessor and
any general contractor, jointly, as loss payee. In addition, all such insurance
to be maintained or caused to be maintained by Lessee shall otherwise, to the
extent applicable, comply with the provisions of Article XIII of this Lease.
(iv)Performance and Payment Bond.
Lessee shall procure or cause to be procured a performance and payment bond for
the total amount of the hard construction costs (including labor and materials)
set forth in the applicable Project Budget therefor. Such performance and
payment bonds shall name Lessor as an additional obligee and be in form and
substance and from an institution satisfactory to Lessor in its sole discretion.
(v) Liens on Materials. Lessee shall
not at any time during the performance of the work, make or cause to be made, or
permit Lessee's general contractor or any other contractor to make, any contract
for materials or equipment of any kind or nature whatsoever to be incorporated
in or to become a part of the Leased Property, title to which is not good or
which is subject to any lien or title retention arrangement other than inchoate
mechanic's liens. Lessee will deliver to Lessor, on demand, true copies of any
contracts, bills of sale, statements, receipted vouchers, or agreements, under
which Lessee claims title to any materials, fixtures, or articles used in the
construction/performance of such Capital Project.
(vi)Storage of Materials. Lessee will
cause all materials acquired or furnished in connection with the
construction/performance of a Capital Project, but not affixed or incorporated
into the Leased Property, to be stored at the Leased Property or at bonded
locations approved by Lessor, in each case under adequate safeguards to minimize
the possibility of loss, theft, damage or commingling with other materials or
projects. Lessee will employ suitable means to protect from theft or vandalism
the Leased Property and all tools and building materials stored on the Leased
Property.
(vii) Inspections. Without limiting
any of Lessor's rights or remedies under this Lease, at any time during regular
business hours, Lessor and/or its representatives will be permitted to enter
upon the Leased Property and any and all materials to be used in the
construction/performance thereof, and to examine all detailed plans and shop
drawings which are or may be kept at the construction site, provided that in so
doing, Lessor shall unreasonably interfere with the construction/performance of
any Capital Project. Upon request, Lessor will be furnished with reasonable
information regarding the construction/performance of any Capital Project from
Lessee, Architect, Lessee's general contractor and any other contractors or
subcontractors.
(viii) Use of Funds, Deficiency.
(A) Lessee shall expend all the
proceeds of each advance hereunder for Project Costs in amounts and for
the purposes provided in the Project Budget therefor and for no other
purpose whatsoever.
(B) Lessee will promptly advise
Lessor if and when (1) Project Costs shall exceed or appear likely to
exceed the Project Budget therefor or (2) Project Costs with respect to
any particular item in the Project Budget shall exceed or appear likely to
exceed the amount specified for any such site, in the Project Budget, and
shall give Lessor sufficiently detailed information with respect thereto.
(C) If, in the sole good faith
judgment of Lessor, it appears at any time or from time to time that the
Remaining Funds will be insufficient to complete the
construction/performance of any Capital Project in accordance with this
Section 10.3, and to pay for all Project Costs incurred in connection with
such construction/performance, or if any other expenses are required for
such completion which were not scheduled in the Project Budget, Lessor may
request that Lessee demonstrate that the Remaining Funds are sufficient
for such completion and payment. If Lessee does not so demonstrate to
Lessor's reasonable satisfaction within five (5) Business Days of receipt
of Lessor's request to do so, then Lessee shall make arrangements for
additional monies to be made available as shall, in the reasonable good
faith judgment of Lessor, when added to the Remaining Funds, be sufficient
so as to complete and/or pay for the construction/performance of such
Capital Project. Such additional monies of Lessee shall be applied for
payment of costs prior to Lessor advancing any additional funds to
complete the Capital Project. If any such additional monies made available
by Lessee are ultimately not required because the Remaining Funds within
the Project Budget are sufficient for each item to complete and/or pay for
the construction/performance of the Capital Project, then Lessor shall
refund the unused portion of such additional monies to Lessee.
(ix) Documents at Completion. Without
limiting any other provision of this Section 10.3, from time to time as
requested by Lessor and as soon as practicable following the applicable
Completion Date, Lessee shall supply or cause to be supplied to Lessor such
reasonable documents and information pertaining to the applicable Capital
Project and the construction, performance and/or completion of the same as
Lessor shall request.
(e) Advances of Funds by Lessor.
(i) Funding. Subject to the
satisfaction by Lessee of the conditions set forth in Section 10.3(f) below,
Lessor will advance to Lessee funds for a Capital Project up to the lesser of
(A) the amount set forth in the applicable Project Budget therefor, (B) that
amount which when aggregated together with all other Project Costs funded by
Lessor hereunder equals $1.5 Million and (C) that amount which when aggregated
with all Project Costs paid for or funded by Lessor or an Affiliate of Lessor
under this Lease and the other Facility Group Leases equals the Maximum Funding
Amount.
(ii) Limitation of Funding Obligation.
Lessor shall not be obligated to advance to Lessee any sums on account of a
Capital Project (A) in excess of the lesser of the amounts determined by clause
(i) above, (B) for which a Request for Advance is received more than one hundred
twenty (120) days after the Outside Date, or (C) when any of the conditions set
forth in Section 10.3(f) have not been met or fulfilled.
(iii) Advances of Funds by Lessor.
Draw requests will be reviewed monthly and will be based on the prorata share
completion to date of each construction line items listed in the Project Budget.
All advances of funds under this Section 10.3 shall be made by Lessor in
accordance with a Request for Advance. Each Request for Advance shall be honored
within ten (10) Business Days of receipt of the same delivered in accordance
with the notice provisions of this Lease, subject, however, to the limitations
set forth in this Section 10.3. In no event shall Lessor be required to make any
advance for a particular line item which, when aggregated with prior advances,
is in excess of the Project Budget for such line items except to the extent
amounts from contingency line items are unused and/or to the extent savings, in
Lessor's reasonable good faith discretion, in other budget line items remain
unused. Lessor shall issue checks payable to, or otherwise advance funds to,
Lessee, the payees designated in a Request for Advance or jointly to Lessee and
such payees, as Lessor shall reasonably determine. Advances of funds to such
payees or jointly to Lessee and any such payee shall constitute an advance
hereunder as though advanced directly to Lessee.
(iv) Holdbacks. Any advances for costs
and expenses of labor and materials connected with the construction/performance
of a Capital Project shall be limited to Ninety Percent (90%) of such costs and
expenses and shall be made in accordance with the payment schedule of the
Project Contract with Lessee's general contractor for such Capital Project. The
final advance of proceeds representing the Ten Percent (10%) retainage for any
particular item will not be made until the last to occur of (A) the Completion
Date, (B) completion of all Punch List Items and (C) the date Lessor receives
(1) all final lien releases and waivers provided for herein in connection with
such Capital Project, (2) an "As-Built" set of plans and specifications (if
reasonably appropriate in light of the scope or nature of the Capital Project),
(3) an ALTA "As-Built" survey (if reasonably appropriate in light of the scope
or nature of the Capital Project) and (4) such other documents as Lessor may
reasonably request. In no event shall any portion of such retainage be paid if
any mechanics' and/or materialmen's liens or other encumbrances have been filed
and remain on the Leased Property (except for permitted contests pursuant to
Article XII of this Lease).
(f) Conditions to Lessor Obligations to
Advance Funds. Lessor shall not be obligated to make any advance of funds under
this Section 10.3, including the first advance, unless and until the following
conditions shall have been satisfied (with proof thereof in form and sufficiency
as may be reasonably requested by Lessor):
(i) Approvals/Entitlements. To the
extent not theretofore received and approved by Lessor and to the extent of a
material change not permitted herein without approval, Lessor shall have
received and approved (A) the Plans and Project Budget for a Capital Project;
and (B) all Project Contracts with the general contractor selected by Lessee and
reasonably approved by Lessor, the Architect and any other subcontractor or
material supplier that may be reasonably requested by Lessor. In addition,
Lessee shall have received and delivered to Lessor copies of all authorizations
and permits required by any Governmental Authority for the
construction/performance of such Capital Project, including building and grading
permits, a foundation letter (if applicable) and such other authorizations and
permits as are required for the work to be performed in connection with such
Capital Project which are then procurable.
(ii) Utilities and Access. To the
extent reasonably appropriate in light of the scope or nature of the Capital
Project, Lessor shall have received evidence satisfactory to Lessor that (A) all
existing public utilities, including telephone, water, sewage, electricity and
gas are adequate for any expansion of the Facility as part of such Capital
Project; and (B) all existing means of ingress and egress, parking, access to
public streets and drainage facilities are adequate for any expansion of the
Facility as part of such Capital Project.
(iii) Soils and Other Tests. To the
extent reasonably appropriate in light of the scope or nature of the Capital
Project, Lessor shall have received and approved test borings, engineering
reports and such other site analysis as Lessor may reasonably require, all of
which must indicate that the soil is adequate for the proposed
construction/performance of such Capital Project in accordance with the Plans.
(iv) Insurance. Lessor shall have
received certificates with respect to the insurance required to be carried by
Lessee or other Persons pursuant to this Section 10.3, together with evidence
satisfactory to Lessor that the premiums therefor have been paid in full.
(v) Payment and Performance Bond(s).
Lessor shall have received the payment and performance bond(s) fulfilling the
requirements set forth in this Section 10.3 and shall have made arrangements, to
the extent applicable, for the recordation and/or filing of the same for
recordation in the Official Records in the County in which the Land is located,
along with a copy of the approved Project Contract with the general contractor.
(vi) No Default. No Event of Default
shall have occurred and be continuing under this Lease.
(vii) Other Documents and
Assurances. Lessor shall have received such other documents and
assurances as Lessor shall reasonably request.
(ix) Request for Advance. Lessor shall
have received and approved (A) a Request for Advance accompanied by all
necessary documents and certificates as set forth in the definition thereof; (B)
a Lessee's Affidavit; and (C) a certificate from the Architect to the effect
that in the Architect's opinion (1) the construction/performance of such Capital
Project theretofore performed is in accordance with the Plans and (2) the amount
requested is appropriate in light of the percentage of construction completed
and amount of stored material.
(g) Miscellaneous Provisions Applicable to
Capital Projects.
(i) Ownership of Capital Projects. At
all times all Capital Projects shall be owned entirely by Lessor subject to the
leasehold interest of Lessee under this Lease with respect to such Capital
Projects. Upon the request of Lessor, Lessee shall execute and/or cause any
Affiliate of Lessee to execute such documents as Lessor may reasonably request
evidencing and confirming Lessor's ownership of such Capital Projects.
(ii) Advance Not a Waiver. No advance of
funds under this Lease shall constitute a waiver of any of the conditions to
Lessor's obligation to make further advances nor, if Lessee is unable to satisfy
any such condition, shall any such advance have the effect of precluding Lessor
from thereafter declaring such inability to be an Event of Default under this
Lease, if such inability would actually be an Event of Default hereunder after
any applicable notice and cure period.
(iii) Conditions for Benefit of
Lessor. All conditions to the obligations of Lessor hereunder are imposed solely
for the benefit of Lessor and no other Person shall have standing to require
satisfaction of such conditions.
(iv) Compliance Responsibility.
Notwithstanding the review and approval by Lessor of the Plans or any other
matter, Lessor shall have no responsibility for compliance of any Capital
Project with Legal Requirements, sound architectural or engineering practices or
other matters.
ARTICLE XI.
Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any Capital Additions
or any attachment, levy, claim or encumbrance in respect of the Rent, excluding,
however, (i) this Lease; (ii) the matters that existed as of the Commencement
Date; (iii) restrictions, liens and other encumbrances which are consented to in
writing by Lessor, or any easements granted pursuant to the provisions of
Section 7.3; (iv) liens for Impositions which Lessee is not required to pay
hereunder; (v) subleases permitted by Article XXIV; (vi) liens for Impositions
not yet delinquent; (vii) liens of mechanics, laborers, materialmen, suppliers
or vendors for amounts not yet due; (viii) any liens which are the
responsibility of Lessor pursuant to the provisions of Article XXXVI; (ix) any
judgment liens against Lessor for amounts which are not otherwise the
responsibility of Lessee; and any other matter arising by, through or under
Lessor.
ARTICLE XII.
Lessee, upon prior written notice to Lessor, on its own or in Lessor's name,
at Lessee's expense, may contest, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount, validity or application, in whole
or in part, of any licensure or certification decision, Imposition, Legal
Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge
or claim; subject, however, to the further requirement 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 Lessor and from the Leased Property or any Capital Additions; (ii)
neither the Leased Property nor any Capital Additions, the Rent therefrom nor
any part or interest in either thereof would be in any reasonable and imminent
danger of being sold, forfeited, attached or lost pending the outcome of such
proceedings; (iii) in the case of a Legal Requirement, neither Lessor nor Lessee
would be in any reasonable and imminent danger of civil or criminal liability
for failure to comply therewith pending the outcome of such proceedings; (iv) if
any such contest shall involve a sum of money or potential loss in excess of
Fifty Thousand Dollars ($50,000), Lessee shall deliver to Lessor and its counsel
an opinion of legal counsel reasonably acceptable to Lessor to the effect set
forth in clauses (i), (ii) and (iii) above, to the extent applicable; (v) in the
case of a Legal Requirement, Imposition, lien, encumbrance or charge, Lessee
shall give such reasonable security as may be required by Lessor to insure
ultimate payment of the same and to prevent any sale or forfeiture of the Leased
Property or any Capital Additions or the Rent by reason of such nonpayment or
noncompliance; and (vi) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained. If any such contest is finally
resolved against Lessor or Lessee, Lessee shall promptly pay the amount required
to be paid, together with all interest and penalties accrued thereon, or comply
with the applicable Legal Requirement or Insurance Requirement. Lessor, at
Lessee's expense, shall execute and deliver to Lessee such authorizations and
other documents as may reasonably be required in any such contest, and, if
reasonably requested by Lessee or if Lessor so desires, Lessor shall join as a
party therein. The provisions of this Article XII shall not be construed to
permit Lessee to contest the payment of Rent or any other amount payable by
Lessee to Lessor hereunder. Lessee shall indemnify, defend, protect and save
Lessor harmless from and against any liability, cost or expense of any kind that
may be imposed upon Lessor in connection with any such contest and any loss
resulting therefrom.
ARTICLE XIII.
During the Term, Lessee shall at all times keep the Leased Property, and all
property located in or on the Leased Property, including all Capital Additions,
the Fixtures and the Personal Property, insured with the kinds and amounts of
insurance described below. This insurance shall be written by companies
authorized to do insurance business in the State in which the Leased Property is
located. All liability type policies must name Lessor as an "additional
insured." All property, loss of rental and business interruption type policies
shall name Lessor as "loss payee." Losses shall be payable to Lessor and/or
Lessee as provided in Article XIV. In addition, the policies, as appropriate,
shall name as an "additional insured" or "loss payee" the holder of any
mortgage, deed of trust or other security agreement ("Facility Mortgagee")
securing any indebtedness or any other Encumbrance placed on the Leased Property
in accordance with the provisions of Article XXXVI ("Facility Mortgage") by way
of a standard form of mortgagee's loss payable endorsement. Any loss adjustment
shall require the written consent of Lessor, Lessee, and each Facility
Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
requested, with any Facility Mortgagee(s). If any provision of any Facility
Mortgage requires deposits of insurance to be made with such Facility Mortgagee,
Lessee shall either pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to each Facility Mortgagee, or, pursuant to written
direction by Lessor, Lessee shall make such deposits directly with such Facility
Mortgagee. The policies shall insure against the following risks:
13.1.1 Loss or damage by fire, vandalism and malicious mischief,
extended coverage perils commonly known as special form perils, earthquake
(including earth movement), sinkhole and windstorm in an amount not less than
the insurable value on a replacement cost basis (as defined below in Section
13.2) and including a building ordinance coverage endorsement;
13.1.2 Loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus, now or hereafter installed in the Facility, in
such limits with respect to any one accident as may be reasonably requested by
Lessor from time to time;
13.1.3 Flood (when the Leased Property is located in whole or in
part within a designated 100-year flood plain area) and such other hazards and
in such amounts as may be customary for comparable properties in the area;
13.1.4 Loss of rental value in an amount not less than twelve
(12) months' Rent payable hereunder or business interruption in an amount not
less than twelve (12) months of income and normal operating expenses including
payroll and Rent payable hereunder with an endorsement extending the period of
indemnity by at least ninety (90) days (Building Ordinance Increased Period of
Restoration Endorsement) necessitated by the occurrence of any of the hazards
described in Sections 13.1.1, 13.1.2 or 13.1.3;
13.1.5 Claims for bodily injury or property damage under a
policy of commercial general liability insurance with amounts not less than One
Million and No/100 Dollars ($1,000,000.00) combined single limit and Three
Million No/100 Dollars ($3,000,000.00) in the annual aggregate; and
13.1.6 Medical professional liability with amounts not less than
One Million Dollars ($1,000,000) combined single limit and Three Million Dollars
($3,000,000) in the annual aggregate.
The term "replacement cost" shall mean the actual replacement cost of the
insured property from time to time with new materials and workmanship of like
kind and quality. If either party believes that the replacement cost has
increased or decreased at any time during the Term, and if the other party does
not so agree, then either party shall have the right to have such replacement
cost redetermined by an impartial national insurance company reasonably
acceptable to both parties (the "impartial appraiser"). The party desiring to
have the replacement cost so redetermined shall forthwith, on receipt of such
determination by the impartial appraiser, give written notice thereof to the
other party hereto. The determination of the impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase or
decrease the amount of the insurance carried pursuant to this Article to the
amount so determined by the impartial appraiser. Each party shall pay one-half
(1/2) of the fee, if any, of the impartial appraiser. If Lessee has made
improvements to the Leased Property, including any Capital Additions, and if
Lessor and Lessee are unable to agree upon replacement cost, then Lessor may at
Lessee's expense have the replacement cost redetermined at any time after such
improvements are made, regardless of when the replacement cost was last
determined.
In addition to the insurance described above, Lessee shall maintain such
additional insurance as may be reasonably required from time to time by any
Facility Mortgagee and shall further at all times maintain adequate workers'
compensation coverage and any other coverage required by Legal Requirements for
all Persons employed by Lessee on the Leased Property and any Capital Additions
in accordance with Legal Requirements.
All insurance policies carried by either party covering the Leased Property
and any Capital Additions and Lessee's Personal Property including contents,
fire and casualty insurance, shall expressly waive any right of subrogation on
the part of the insurer against the other party. Each party waives any claims it
has against the other party to the extent such claim is covered by insurance.
All of the policies of insurance referred to in this Article shall be written
in form satisfactory to Lessor and by insurance companies with a policyholder
rating of "A" and a financial rating of "X" in the most recent version of Best's
Key Rating Guide. Lessee shall pay all of the premiums therefor, and deliver
such policies or certificates thereof to Lessor prior to their effective date
(and with respect to any renewal policy, at least ten (10) days prior to the
expiration of the existing policy), and in the event of the failure of Lessee
either to effect such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certificates thereof to
Lessor, at the times required, Lessor shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, in which
event the cost thereof, together with interest thereon at the Overdue Rate,
shall be repayable to Lessor upon demand therefor. Each insurer shall agree, by
endorsement on the policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor ten (10) days' written notice
before the policy or policies in question shall be altered, allowed to expire or
cancelled. Each policy shall have a deductible or deductibles, if any, which are
no greater than those normally maintained for similar facilities in the State.
If either party shall at any time believe the limits of the insurance required
hereunder to be either excessive or insufficient, the parties shall endeavor to
agree in writing on the proper and reasonable limits for such insurance to be
carried and such insurance shall thereafter be carried with the limits thus
agreed on until further change pursuant to the provisions of this Section. If
the parties shall be unable to agree thereon, the proper and reasonable limits
for such insurance to be carried shall be determined by an impartial nationally
or regionally recognized insurance brokerage firm reasonably selected by Lessor.
Nothing herein shall permit the amount of insurance to be reduced below the
amount or amounts required by any of the Facility Mortgagees.
13.7 Blanket Policies and Policies Covering Multiple .
Notwithstanding anything to the contrary contained in this Article, Lessee's
obligations to carry the casualty insurance provided for herein may be brought
within the coverage of a blanket policy or policies of insurance carried and
maintained by Lessee; provided, however,that the coverage afforded Lessor will
not be reduced or diminished or otherwise be different from that which would
exist under a separate policy meeting all other requirements of this Lease by
reason of the use of such blanket policy of insurance, and provided further that
the requirements of this Article XIII are otherwise satisfied. For any liability
policies covering facilities in addition to the Leased Property, Lessor may
require excess limits as Lessor reasonably determines.
Lessee shall not, on Lessee's own initiative or pursuant to the request or
requirement of any third party, (i) take out separate insurance concurrent in
form or contributing in the event of loss with that required in this Article to
be furnished by, or which may reasonably be required to be furnished by, Lessee
or (ii) increase the amounts of any then existing insurance by securing an
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including in all cases Lessor
and all Facility Mortgagees, are included therein as additional insured and the
loss is payable under such insurance in the same manner as losses are payable
under this Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then existing insurance by securing an additional policy or additional policies.
ARTICLE XIV.
All proceeds payable by reason of any loss or damage to the Leased Property,
any Capital Additions or any part(s) or portion(s) thereof, under any policy of
insurance required to be carried hereunder shall be paid to Lessor and Lessee by
issuance of a joint check and shall be made available to Lessee from time to
time for the reasonable costs of reconstruction or repair, as the case may be,
of any damage to or destruction of the Leased Property, any Capital Additions or
any part(s) or portion(s) thereof. Any excess proceeds of insurance remaining
after the completion of the restoration or reconstruction of the Leased Property
and any Capital Additions to the satisfaction of Lessor shall belong and be paid
over to Lessee; provided, however, that except as otherwise provided in this
Article XIV, in the event neither Lessor nor Lessee is required or elects to
repair and restore, then all such insurance proceeds shall belong to and paid
over to Lessor. At all times salvage resulting from any risk covered by
insurance shall belong to and paid over to Lessor. Lessor hereby represents and
warrants to Lessee that as of the date hereof there are no Facility Mortgagees
who have the right to apply insurance proceeds other than in the manner provided
for in this Lease.
14.2 Insured Casualty
14.2.1 If the Leased Property and/or any Capital Additions are
damaged or destroyed from a risk covered by insurance required to be carried by
Lessee under this Lease such that the Facility thereby is rendered Unsuitable
for its Primary Intended Use, Lessee shall either (i) restore the Leased
Property and such Capital Additions to substantially the same condition as
existed immediately before such damage or destruction, or (ii) offer to acquire
the Leased Property from Lessor for a purchase price equal to the then Minimum
Purchase Price immediately prior to such damage or destruction. If Lessor does
not accept Lessee's offer to so purchase the Leased Property within fifteen (15)
Business Days after Lessee's receipt thereof, Lessee may either withdraw such
offer and proceed to restore the Leased Property to substantially the same
condition as existed immediately before such damage or destruction or terminate
the Lease in which event Lessor shall be entitled to retain the insurance
proceeds.
14.2.2 If the Leased Property and/or any Capital Additions are
damaged from a risk covered by insurance required to be carried by Lessee under
this Lease, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall restore the Leased Property and such Capital
Additions to substantially the same condition as existed immediately before such
damage. Such damage shall not terminate this Lease; provided, however, that if
Lessee cannot within a reasonable time after diligent efforts obtain the
necessary government approvals needed to restore and operate the Facility for
its Primary Intended Use, Lessee may offer to purchase the Leased Property for a
purchase price equal to the then Minimum Purchase Price immediately prior to
such damage. If Lessee shall make such offer and Lessor does not accept the same
within fifteen (15) Business Days after Lessor's receipt thereof, Lessee may by
written notice to Lessor at anytime thereafter either withdraw such offer and
proceed to restore the Leased Property to substantially the same condition as
existed immediately before such damage or destruction, or terminate the Lease
effective as of the date of such notice to Lessor, in which event Lessor shall
be entitled to retain the insurance proceeds.
14.2.3 If Lessee elects or is required to repair and restore as
provided and the cost of the repair or restoration exceeds the amount of
proceeds received by Lessor from the insurance required to be carried hereunder,
Lessee shall contribute any excess amounts needed to restore the Facility. Such
difference shall be paid by Lessee to Lessor together with any other insurance
proceeds, for application to the cost of repair and restoration.
14.2.4 If Lessor accepts Lessee's offer to purchase the Leased
Property, this Lease shall terminate as to the Leased Property upon payment of
the purchase price and Lessor shall remit to Lessee all insurance proceeds
pertaining to the Leased Property then held by Lessor.
14.3 Uninsured Casualty
(a) If the Leased Property is damaged or destroyed from a risk
not covered by insurance required to be carried by Lessee under this Lease or
otherwise carried by Lessee, such that the Facility is thereby rendered
Unsuitable for its Primary Intended Use, Lessee shall either (i) restore the
Leased Property to substantially the same condition as existed immediately prior
to such damage or destruction in accordance with the provisions of Section 14.1,
or (ii) offer to acquire the Leased Property from Lessor for a purchase price
equal to the then Minimum Purchase Price immediately prior to such damage or
destruction. If Lessor does not accept Lessee's offer to so purchase the Leased
Property within fifteen (15) Business Days after Lessor's receipt thereof, which
Lessor shall have the right to accept or reject in its sole and absolute
discretion, then this Lease shall terminate on the date of Lessor's rejection of
Lessee's offer to purchase the Leased Property, unless Lessor within such
fifteen (15) Business Day period shall by written notice to Lessee elect to have
Lessee restore the Facility pursuant to the provisions of Article XIV and
Article X, but at Lessor's cost and expense, in which case this Lease shall
remain in full force and effect.
(b) If the Leased Property is damaged from a risk not covered by
insurance required to be carried by Lessee under this Lease or otherwise carried
by Lessee, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall restore the Leased Property to substantially the same
condition that existed before such damage in accordance with the provisions of
Section 14.1. Such damage shall not terminate this Lease; provided, however,
that if Lessee cannot within a reasonable time after diligent efforts obtain the
necessary government approvals needed to restore and operate the Facility for
its Primary Intended Use, Lessee may offer to purchase the Leased Property for a
purchase price equal to the then Minimum Purchase Price immediately prior to
such damage. If Lessor does not accept Lessee's offer to so purchase the Leased
Property within fifteen (15) Business Days after Lessor's receipt thereof, which
Lessor shall have the right to accept or reject in its sole and absolute
discretion, then this Lease shall terminate on the date of Lessor's rejection of
Lessee's offer to purchase the Leased Property.
(c) If Lessor accepts Lessee's offer to purchase the Leased
Property pursuant to either of Sections 14.3(a) or 14.3(b), as applicable, this
Lease shall terminate as to the Leased Property upon payment of the applicable
purchase price.
This Lease shall remain in full force and effect and Lessee's obligation to
pay the Rent and all other charges required by this Lease shall remain unabated
during the period required for adjusting insurance, satisfying Legal
Requirements, repair and restoration; provided, however, that Lessee shall
receive a credit against its Rent obligations hereunder in an amount equal to
the proceeds of any and all rental value and/or business interruption insurance
carried by Lessee pursuant to this Lease (or other similar insurance carried by
Lessee) which are paid over to Lessor.
Lessee waives any statutory rights of termination which may arise by reason of
any damage or destruction of the Leased Property and/or any Capital Additions.
ARTICLE XV.
15. Condemnation
If the Leased Property and any Capital Additions are totally and permanently
taken by Condemnation, this Lease shall terminate as of the Date of Taking.
If a portion of the Leased Property and any Capital Additions is taken by
Condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable for Its Primary Intended Use, but if the Facility is thereby
rendered Unsuitable for its Primary Intended Use, this Lease shall terminate as
of the Date of Taking.
If there is a partial taking of the Leased Property and any Capital Additions
and this Lease remains in full force and effect pursuant to Section 15.2, Lessor
shall make available to Lessee any portion of the Award not paid on account of
Lessor's fee or other interest in and to the Leased Property and any Capital
Additions and Lessee shall accomplish all necessary restoration whether or not
the amount provided by the Condemnor for restoration is sufficient.
The entire Award shall belong to and be paid to Lessor, except that Lessee
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such item, lost profits value, moving expenses, any then
unamortized (in accordance with GAAP) Capital Addition Costs funded by Lessee
and the value of Lessee's leasehold estate hereunder, provided, that in the
event of a Condemnation which results in a termination of this Lease Lessor
shall receive in any event from the Award, subject to the rights of the Facility
Mortgagees, no less than the Minimum Purchase Price immediately prior to such
Condemnation.
The taking of the Leased Property, any Capital Additions and/or any part(s)
thereof, shall constitute a taking by Condemnation only when the use and
occupancy by the taking authority has continued or will continue for longer than
180 consecutive days. During any shorter period, which shall be a temporary
taking, all the provisions of this Lease shall remain in full force and effect
and the Award allocable to the Term shall be paid to Lessee.
A sale by Lessor to any Condemnor, either under threat of Condemnation or
while Condemnation proceedings are pending, shall be deemed a Condemnation for
purposes of this Lease. Lessor may, without any obligation to Lessee, agree to
sell and/or convey to any Condemnor all or any portion of the Leased Property
free from this Lease and the rights of Lessee hereunder without first requiring
that any action or proceeding be instituted or pursued to judgment.
Notwithstanding the foregoing provisions of this Section 15.6, Lessor may not
agree to sell or convey to a Condemnor all or any portion of the Leased Property
pursuant to this Section 15.6 without the approval of Lessee unless the amount
of the Award payable in connection therewith equals or exceeds the amount
necessary for the restoration of the Leased Property and any Capital Additions
which Lessee is obligated to perform pursuant to this Article XV or, in the case
of a Condemnation which results in the termination of this Lease, the Fair
Market Value of the Leased Property and the Capital Additions immediately prior
to the institution of such Condemnation.
ARTICLE XVI.
Any one or more of the following shall constitute an "Event of
Default":
(a) a default (whether monetary, non-monetary or otherwise)
shall occur under any other Facility Group Lease where the default is not cured
within any applicable grace period set forth therein;
(b) Lessee shall fail to pay any installment of Rent when the
same becomes due and payable and such failure is not cured by Lessee within a
period of five (5) days after receipt of notice thereof from Lessor; provided,
however, that such notice shall be in lieu of and not in addition to any notice
required under applicable law;
(c) the "Lessee" under any other Existing Lease shall fail to
obtain a letter of credit as required by the terms of such Existing Lease and as
supplemented by Article XXI of this Lease within the applicable notice and cure
period provided for in such Existing Lease;
(d) except as otherwise specifically provided for in this
Section 16.1, if Lessee shall fail to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within thirty (30) days after notice thereof from Lessor, unless such failure
cannot with due diligence be cured within a period of thirty (30) days, in which
case such failure shall not be deemed to be an Event of Default if Lessee
proceeds promptly and with due diligence to cure the failure and diligently
completes the curing thereof; provided, however, that such notice shall be in
lieu of and not in addition to any notice required under applicable law;
(e) Lessee or any Guarantor shall:
(i) admit in writing its inability to pay
its debts generally as they become due,
(ii) file a petition in bankruptcy or a
petition to take advantage of any insolvency act,
(iii) make an assignment for the benefit
of its creditors,
(iv) consent to the appointment of a
receiver of itself or of the whole or any substantial part of its
Property, or
(v) file a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof;
(f) Lessee or any Guarantor shall be adjudicated as bankrupt or
a court of competent jurisdiction shall enter an order or decree appointing,
without the consent of Lessee, a receiver of Lessee or of the whole or
substantially all of its property, or approving a petition filed against it
seeking reorganization or arrangement of Lessee under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state thereof, and such judgment, order or decree shall not be vacated or
set aside or stayed within sixty (60) days from the date of the entry thereof;
(g) Except to the extent permitted pursuant to Article XXIV of
this Lease, Lessee or any Guarantor shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all its assets;
(h) the estate or interest of Lessee in the Leased Property, any
Capital Additions or any part(s) thereof shall be levied upon or attached in any
proceeding and the same shall not be vacated or discharged within the later of
ninety (90) days after commencement thereof or thirty (30) days after receipt by
Lessee of notice thereof from Lessor, unless such vacation or discharge cannot
reasonably be obtained within such time periods, in which case failure to obtain
such release or discharges in such time periods shall not be deemed an Event of
Default so long as Lessee proceeds promptly and with due diligence to obtain the
same as promptly as practicable, but in any event within one hundred eighty
(180) days after the same shall be levied upon or attached in any such
proceeding; provided, however, that such notice shall be in lieu of and not in
addition to any notice required under applicable law;
(i) any Transfer occurs without Lessor's consent in accordance
with the provisions of Article XXIV;
(j) any of the representations or warranties made by Lessee
hereunder or otherwise or any Guarantor in the Guaranty or otherwise proves to
be untrue when made in any material respect which materially and adversely
affects Lessor and such representation or warranty is not corrected by Lessee or
such Guarantor within thirty (30) days after notice thereof from Lessor, unless
such correction cannot with due diligence be corrected within such thirty (30)
day period, in which case such untrue representation or warranty shall not be
deemed an Event of Default if Lessee or Guarantor shall proceed promptly with
due diligence to correct the same, and diligently completes the correction
thereof, but in any event within sixty (60) days after notice thereof from
Lessor;
(k) the Facility's applicable license or third-party provider
reimbursement agreements material to the Facility's operation for its Primary
Intended Use are at any time terminated or revoked or suspended for more than
twenty (20) days;
(l) any local, state or federal agency having jurisdiction over
the operation of the Facility removes Ten Percent (10%) or more of the patients
or residents located in the Facility;
(m) Lessee fails to give notice to Lessor not later than ten
(10) Business Days after Lessee's receipt thereof of any Class A (as such term
is customarily used) or equivalent fine notice from any Governmental Authority
or officer acting on behalf thereof relating to the Facility;
(n) Lessee fails to cure or abate any Class A or equivalent
violation occurring during the Term that is claimed by any Governmental
Authority, or any officer acting on behalf thereof, of any law, order,
ordinance, rule or regulation pertaining to the operation of the Facility, and
within the time permitted by such authority or by applicable Legal Requirement
for such cure or abatement;
(o) Lessee fails to notify Lessor within five (5) Business Days
after receipt of any notice from any governmental agency terminating or
suspending or threatening termination or suspension, of any material license or
certification relating to the Facility;
(p) Lessee fails to give notice to Lessor not later than ten
(10) days after any notice, claim or demand from any Governmental Authority or
any officer acting on behalf thereof, of any violation of any material law,
order, ordinance, rule or regulation with respect to the operation of the
Facility;
(q) any proceedings are instituted against Lessee by any
Governmental Authority which more likely than not will result in (i) the
revocation of any license granted to Lessee for the operation of the Facility or
(ii) the decertification of the Facility from participation in the Medicare or
Medicaid reimbursement program;
(r) any default and acceleration of any indebtedness following
any applicable cure period therefor of $1 Million or more of Lessee;
(s) any default shall occur under any Guaranty;
or
(t) a monetary default shall occur under any Existing Lease or
any other agreement or instrument now or hereafter with or in favor of Lessor or
any Affiliate of Lessor and made by or with Lessee or any Affiliate of Lessee
where such monetary default is not cured within any applicable grace period set
forth therein.
. If an Event of Default shall have occurred, Lessor may terminate this Lease by
giving Lessee notice of such termination and the Term shall terminate and all
rights of Lessee under this Lease shall cease. Lessor shall have all rights at
law and in equity available to Lessor as a result of any Event of Default.
Lessee shall pay as Additional Charges all costs and expenses incurred by or on
behalf of Lessor, including reasonable attorneys' fees and expenses, as a result
of any Event of Default hereunder. If an Event of Default shall have occurred
and be continuing, whether or not this Lease has been terminated pursuant to
this Section 16.2, Lessee shall, to the extent permitted by law, if required by
Lessor so to do, immediately surrender to Lessor possession of the Leased
Property and any Capital Additions and quit the same and Lessor may enter upon
and repossess the Leased Property and any Capital Additions by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Lessee and all other
Persons and any of Lessee's Personal Property from the Leased Property and any
Capital Additions.
. (i) The termination of this Lease; (ii) the repossession of the Leased
Property and any Capital Additions; (iii) the failure of Lessor, notwithstanding
reasonable good faith efforts, to relet the Leased Property; (iv) the reletting
of all or any portion of the Leased Property; or (v) the failure or inability of
Lessor to collect or receive any rentals due upon any such reletting, shall not
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If any such termination
occurs, Lessee shall forthwith pay to Lessor all Rent due and payable with
respect to the Leased Property to and including the date of such termination.
Thereafter, following any such termination, Lessee shall forthwith pay to
Lessor, at Lessor's option, as and for liquidated and agreed current damages for
an Event of Default by Lessee, the sum of:
(1) the worth at the time of award of the unpaid Rent which had been
earned at the time of termination,
(2) the worth at the time of award of the amount by which the unpaid
Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Lessee proves could have
been reasonably avoided,
(3) the worth at the time of award of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Lessee proves could be reasonably avoided,
plus
(4) any other amount proved by Lessor to be necessary to compensate
Lessor for all the damages proximately caused by Lessee's failure to
perform its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom.
As used in clauses (1) and (2) above, the "worth at the time of award"
shall be computed by allowing interest at the Overdue Rate. As used in
clause (3) above, the "worth at the time of award" shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank
of San Francisco at the time of award plus One Percent (1%). For purposes
of determining the worth at the time of the award, Additional Rent that
would have been payable for the remainder of the Term shall be deemed to
be the greater of (y) the same as the Additional Rent for the then current
Lease Year or, if not determinable, the immediately preceding Lease Year;
and (z) such other amount as Lessor shall prove could reasonably have been
earned.
Alternatively, if Lessor does not elect to terminate this Lease, then Lessee
shall pay to Lessor, at Lessor's option, as and for agreed damages for such
Event of Default without termination of Lessee's right to possession of the
Leased Property and any Capital Additions, each installment of said Rent and
other sums payable by Lessee to Lessor under the Lease as the same becomes due
and payable, together with interest at the Overdue Rate from the date when due
until paid, and Lessor may enforce, by action or otherwise, any other term or
covenant of this Lease.
Upon the occurrence of an Event of Default, and upon commencement of
proceedings to enforce the rights of Lessor hereunder, Lessor shall be entitled,
as a matter of right, to the appointment of a receiver or receivers acceptable
to Lessor of the Leased Property and any Capital Additions of the revenues,
earnings, income, products and profits thereof, pending the outcome of such
proceedings, with such powers as the court making such appointment shall confer.
Upon the occurrence of a Put Event, Lessor shall be entitled to require Lessee
to purchase the Leased Property on the first Minimum Rent Payment Date occurring
not less than thirty (30) days after the date specified in a notice from Lessor
requiring such purchase for an amount equal to the greater of (i) the Fair
Market Value, or (ii) the Minimum Purchase Price, plus, in either event, all
Rent then due and payable (excluding the installment of Minimum Rent due on the
purchase date). If Lessor exercises such right, Lessor shall convey the Leased
Property to Lessee on the date fixed therefor in accordance with the provisions
of Article XVIII upon receipt of the purchase price therefor and this Lease
shall thereupon terminate. Any purchase by Lessee of the Leased Property
pursuant to this Section shall be in lieu of the damages specified in Section
16.3.
If Lessor initiates judicial proceedings or if this Lease is terminated by
Lessor pursuant to this Article, Lessee waives, to the extent permitted by
applicable law, (i) any right of redemption, re-entry or repossession; and (ii)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
Any payments received by Lessor under any of the provisions of this Lease
during the existence or continuance of any Event of Default which are made to
Lessor rather than Lessee due to the existence of an Event of Default shall be
applied to Lessee's obligations in the order which Lessor may determine or as
may be prescribed by the laws of the State.
On notice or request therefor by Lessor to Lessee, upon the occurrence of a
Facility Operating Deficiency specified with particularity in Lessor's notice,
and for a period equal to the greater of six (6) months or the time necessary
fully to remedy the Facility Operating Deficiency, Lessee shall engage the
services of a management consultant, unaffiliated with Lessee and approved by
Lessor, to review the management of the Facility for the purpose of making
recommendations to remedy the Facility Operating Deficiency(ies). The management
consultant shall have complete access to the Facility, its records, offices and
facilities, in order that it may carry out its duties. Lessee shall cause such
management consultant to prepare and deliver to Lessor and Lessee a written
report of its recommendations within thirty (30) days after its engagement. If
Lessee shall fail to designate a management consultant acceptable to Lessor
within five (5) days after receipt of the notice of request therefor, Lessor may
designate such management consultant by further notice to Lessee. Lessee shall
be responsible for payment of all fees and expenses reasonably charged and
incurred by the management consultant in carrying out its duties. Lessee shall
promptly implement any and all reasonable recommendations made by such
management consultant in order to promptly correct or cure such Facility
Operating Deficiency; provided, however, that in no event shall Lessee implement
any such recommendations if the same would otherwise cause an Event of Default
hereunder (e.g., a Transfer or change in use of the Leased Property), without
Lessor's prior written consent, which consent may be given or withheld in
Lessor's sole and absolute discretion.
16.9 [Reserved]
The parties intend that if an Event of Default occurs under this Lease, Lessor
will control Lessee's Personal Property and the Intangible Property so that
Lessor or its designee or nominee can operate or re-let the Facility intact for
the Primary Intended Use. Accordingly, to implement such intention, and for the
purpose of securing the payment and performance obligations of Lessee hereunder,
Lessor and Lessee agree as follows:
16.10.1 Lessee, as debtor, hereby grants to Lessor, as secured
party, to the extent permitted by applicable Legal Requirements, a security
interest and an express contractual lien upon all of Lessee's right, title and
interest in and to Lessee's Personal Property and in and to the Intangible
Property and any and all products, rents, proceeds and profits thereof in which
Lessee now owns or hereafter acquires an interest or right, including any leased
Lessee's Personal Property. This Lease constitutes a security agreement covering
all such Lessee's Personal Property and the Intangible Property. The security
interest granted to Lessor with respect to Lessee's Personal Property in this
Section 16.10 is intended by Lessor and Lessee to be subordinate to any security
interest granted in connection with the financing or leasing of all or any
portion of the Lessee's Personal Property so long as the lessor or financier of
such Lessee's Personal Property agrees to give Lessor written notice of any
default by Lessee under the terms of such lease or financing arrangement, to
give Lessor a reasonable time following such notice to cure any such default and
consents to Lessor's written assumption of such lease or financing arrangement
upon Lessor's curing of any such defaults. This clause shall be self-operative
and no further instrument of subordination shall be required; provided, however,
that in confirmation of such subordination, Lessor shall execute promptly any
certificate or document that Lessor or any Person providing financing or leasing
of all or any portion of Lessee's Personal Property may reasonably request for
such proposes so long as the same complies with the provisions of the
immediately preceding sentence. This security agreement and the security
interest created herein shall survive the expiration or earlier termination of
this Lease.
16.10.2 If required by Lessor at any time during the Term,
Lessee shall execute and deliver to Lessor, in form reasonably satisfactory to
Lessor, additional security agreements, financing statements, fixture filings
and such other documents as Lessor may reasonably require to perfect or continue
the perfection of Lessor's security interest in Lessee's Personal Property and
the Intangible Property and any and all products and proceeds thereof now owned
or hereafter acquired by Lessee. In the event Lessee fails to execute any
financing statement or other documents for the perfection or continuation of
Lessor's security interest, Lessee hereby appoints Lessor as its true and lawful
attorney-in-fact to execute any such documents on its behalf, which power of
attorney shall be irrevocable and is deemed to be coupled with an interest.
16.10.3 Upon the occurrence of an Event of Default, Lessor shall
be entitled to exercise any and all rights or remedies available to a secured
party under the Uniform Commercial Code, or available to a lessor under the laws
of the State, with respect to Lessee's Personal Property and the Intangible
Property, including the right to sell the same at public or private sale.
ARTICLE XVII.
If Lessee shall fail to make any payment or to perform any act required to be
made or performed hereunder within the applicable notice and cure periods
provided for in this Lease, Lessor, without waiving or releasing any obligation
or default, may, but shall be under no obligation to, make such payment or
perform such act for the account and at the expense of Lessee, and may, to the
extent permitted by law, enter upon the Leased Property and any Capital
Additions for such purpose and take all such action thereon as, in Lessor's
opinion, may be necessary or appropriate therefor. No such entry shall be deemed
an eviction of Lessee. All sums so paid by Lessor and all costs and expenses,
including reasonable attorneys' fees and expenses, so incurred, together with
interest thereon at the Overdue Rate from the date on which such sums or
expenses are paid or incurred by Lessor, shall be paid by Lessee to Lessor on
demand.
ARTICLE XVIII.
If Lessee purchases the Leased Property from Lessor, Lessor shall, upon
receipt from Lessee of the applicable purchase price, together with full payment
of any unpaid Rent due and payable with respect to any period ending on or
before the date of the purchase, deliver to Lessee an appropriate limited or
special warranty deed or other conveyance conveying the entire fee simple or
ground lease interest of Lessor in and to the Leased Property to Lessee free and
clear of all encumbrances other than (i) those that Lessee has agreed hereunder
to pay or discharge; (ii) those mortgage liens, if any, which Lessee has agreed
in writing to accept and to take title subject to; (iii) the Permitted
Exceptions; and (iv) any other encumbrances permitted hereunder to be imposed on
the Leased Property which are assumable at no cost to Lessee or to which Lessee
may take subject without cost to Lessee. The difference between the applicable
purchase price and the total of the encumbrances assumed or taken subject to
shall be paid to Lessor or as Lessor may direct in immediately available funds;
provided, however, that if the total of all such encumbrances exceeds the
applicable purchase price, then the difference shall be paid to Lessee by Lessor
as Lessee may direct in immediately available funds. All expenses of such
conveyance, including the cost of title insurance, reasonable attorneys' fees
incurred by Lessor in connection with such conveyance and release, transfer
taxes and recording and escrow fees, shall be paid by Lessee. Notwithstanding
anything to the contrary in the foregoing provisions, in no event shall Lessee
be required to accept title to the Leased Property subject to any encumbrances
described in clause (iv) above that are not terminable or prepayable without
fee, premium or penalty on or at any time after the date of conveyance of title
of the Leased Property to Lessee.
ARTICLE XIX.
Provided that no Event of Default has occurred and is continuing, either at
the date of exercise or upon the commencement of an Extended Term (as hereunder
defined), then Lessee shall have the right to renew this Lease for two (2)
ten-year renewal terms (each, an "Extended Term"), upon (i) giving written
notice to Lessor of such renewal not less than twelve (12) months and not more
than eighteen (18) months prior to the expiration of the then current Term, (ii)
delivering to Lessor concurrent with such notice a reaffirmation of any guaranty
of Lessee's obligations hereunder executed by each Guarantor stating, in
substance, that such Guarantor's obligations under the guaranty shall extend to
this Lease, as extended by the Extended Term and (iii) the "Lessee" under each
of the other Facility Group Leases, concurrently therewith exercising its right
to renew such other Facility Group Lease for the corresponding Extended Term of
such Facility Group Lease in the manner and within the time provided in Article
XIX thereof. The Extended Terms, if at all, shall commence and end (subject to
earlier termination as herein provided) as follows: (A) the first Extended Term
shall be the period from October 1, 2012 through and including September 30,
2022; and (b) the second Extended Term shall be the period from October 1, 2022
to September 20, 2032. During each Extended Term, if any, all of the terms and
conditions of this Lease shall continue in full force and effect except that the
annual Minimum Rent for and during such Extended Term shall be the greater of
(a) the then current annual Fair Market Rental and (b) the sum of annual Minimum
Rent and Additional Rent payable for the last Lease Year of the immediately
preceding Term.
Notwithstanding anything to the contrary in this Article XIX, Lessor,
in its sole discretion, may waive the condition to Lessee's right to renew this
Lease that no Event of Default, or event which, with notice or lapse of time or
both, would constitute an Event of Default, have occurred or be continuing, and
the same may not be used by Lessee as a means to negate the effectiveness of
Lessee's exercise of its renewal right for such Extended Term.
ARTICLE XX.
If Lessee shall for any reason remain in possession of the Leased Property
and/or any Capital Additions after the expiration or earlier termination of the
Term, such possession shall be as a month-to-month tenant during such period and
Lessee shall pay during such period (i) Minimum Rent monthly in an amount equal
to the monthly Minimum Rent and Additional Rent in effect immediately prior to
the expiration or earlier termination of this Lease to and until Lessor shall
notify Lessee in writing that Lessor deems Lessee a holdover tenant without
permission, in which event, Lessee shall from and thereafter pay Minimum Rent
monthly in an amount equal to One Hundred Fifty Percent (150%) of the monthly
Minimum Rent and Additional Rent in effect immediately prior to the expiration
or earlier termination of this Lease, plus (ii) all Additional Charges and all
other sums payable by Lessee pursuant to this Lease. During such period of
month-to-month tenancy, Lessee shall be obligated to perform and observe all of
the terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by law to month-to-month
tenancies, to continue its occupancy and use of the Leased Property and/or any
Capital Additions. Nothing contained herein shall constitute the consent,
express or implied, of Lessor to the holding over of Lessee after the expiration
or earlier termination of this Lease.
ARTICLE XXI.
Pursuant to the terms of the Existing Leases, the "Lessee" thereunder is
required to obtain and deliver to Lessor or an Affiliate of Lessor a letter(s)
of credit meeting the requirements of the provisions of such other Existing
Leases (collectively, the "Letter(s) of Credit"). Accordingly, for so long as
such Letter(s) of Credit (or any of them) are required to be delivered under the
Existing Leases, such Letter(s) of Credit shall also name Lessor as beneficiary
to secure Lessee's obligations hereunder. Notwithstanding anything to the
contrary in the Existing Leases, Lessee shall cause any such Letter(s) of Credit
to provide that it will be honored upon a signed statement by Lessor that Lessor
is entitled to draw upon such Letter(s) of Credit under this Lease, and shall
require no signature or statement from any party other than Lessor. No notice to
Lessee or any Affiliate of Lessee shall be required to enable Lessor to draw
upon the Letter(s) of Credit. Lessee shall also ensure that such Letter(s) of
Credit provide that following the honor of any drafts in an amount not less than
the aggregate amount of the Letter(s) of Credit, the financial institution shall
return the original Letter(s) of Credit to Lessor or Lessor's Affiliate and
Lessor or Lessor's Affiliate's rights as to the remaining amount of the
Letter(s) of Credit will not be extinguished.
Lessor or Lessor's Affiliate shall have the right to draw upon such Letter(s)
of Credit up to its full amount whenever (a) an Event of Default hereunder has
occurred or, (b) to the extent provided therein, an event of default under any
other lease or agreement between Lessor or an Affiliate of Lessor and Lessee or
an Affiliate of Lessee or under any other letter of credit, guaranty, mortgage,
deed of trust, or other instrument now or hereafter executed by Lessee or an
Affiliate of Lessee in favor of Lessor or an Affiliate of Lessor has occurred
(including a default under any other Facility Group Lease or any Existing Lease)
or (c) an event or circumstance has occurred which with notice or passage of
time, or both, would constitute an Event of Default hereunder or an event of
default under any such other lease, agreement, letter of credit, guaranty,
mortgage, deed of trust or other instrument (including under any other Facility
Group Lease or any Existing Lease), notwithstanding that transmittal of any such
notice may be barred by the Bankruptcy Code or any other applicable federal,
state or local debtor relief law. No such draw shall (i) cure or constitute a
waiver of an Event of Default, (ii) be deemed to fix or determine the amounts to
which Lessor is entitled to recover under this Lease or otherwise, or (iii) be
deemed to limit or waive Lessor's right to pursue any remedies provided for in
this Lease.
In the event that Lessor or any Affiliate of Lessor draws upon a Letter(s) of
Credit the proceeds thereof shall be used only for purposes of application to
any Rent due under this Lease and/or to any damage or loss that Lessor has
suffered or will suffer by reason of any Event of Default hereunder or to the
obligations of the other parties under the other leases and agreements secured
by such letter of credit or to compensate Lessor or Lessor's Affiliate for any
damage or loss which Lessor or Lessor's Affiliate may suffer or reasonably
expect to suffer by reason of default under any such other leases or agreements.
In the event the amounts drawn under such letter(s) of credit exceeds the
obligations secured thereby, then Lessor or Lessor's Affiliate shall remit such
excess to the Person legally entitled thereto upon payment and discharge in full
of all obligations secured by such letter(s) of credit. To and until Lessor or
Lessor's Affiliate remits such excess, such excess shall be held as security for
the performance of the obligations which remain secured by such letter(s) of
credit. Upon delivery of any replacement letter(s) of credit meeting the
requirements of the provisions of the applicable existing Leases, Lessor shall
immediately pay or cause to be paid to the Persons legally entitled thereto any
unused proceeds from the letter(s) of credit upon which Lessor or Lessor's
Affiliate has so drawn.
ARTICLE XXII.
The risk of loss or of decrease in the enjoyment and beneficial use of the
Leased Property and any Capital Additions as a consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and Persons claiming from, through or under Lessor) is
assumed by Lessee, and no such event shall entitle Lessee to any abatement of
Rent.
ARTICLE XXIII.
In addition to the other indemnities contained herein, and notwithstanding the
existence of any insurance carried by or for the benefit of Lessor or Lessee,
and without regard to the policy limits of any such insurance, Lessee shall
protect, indemnify, save harmless and defend Lessor from and against all
liabilities, obligations, claims, damages penalties, causes of action, costs and
expenses, including reasonable attorneys', consultants' and experts' fees and
expenses, imposed upon or incurred by or asserted against Lessor by reason of
any of the following occurrences during the Term: (i) any accident, injury to or
death of Persons or loss of or damage to property occurring on or about the
Leased Property, or any Capital Additions or adjoining sidewalks thereto; (ii)
any use, misuse, non-use, condition, maintenance or repair by Lessee of the
Leased Property or any Capital Additions; (iii) any failure on the part of
Lessee to perform or comply with any of the terms of this Lease; (iv) the
non-performance of any of the terms and provisions of any and all Occupancy
Arrangements of the Leased Property or any Capital Additions to be performed by
any party thereunder entered into by Lessee or any other Occupant claiming by,
through or under Lessee; (v) any claim for malpractice, negligence or misconduct
committed by any Person on or working from the Leased Property or any Capital
Additions; and (vi) the violation of any Legal Requirement. Any amounts which
become payable by Lessee under this Article shall be paid within thirty (30)
days after liability therefor is determined by litigation or otherwise, and if
not timely paid shall bear interest at the Overdue Rate from the date of such
determination to the date of payment; provided, however, that payment of any
liability shall be deferred if such determination is the subject of a pending
appeal or a motion for modification or reconsideration, in which case Lessee
shall not be required to pay such liability until any such appeal or motion for
modification or reconsideration has been denied by any appellate court with
jurisdiction. Lessee, at its sole cost and expense, shall contest, resist and
defend any such claim, action or proceeding asserted or instituted against
Lessor or may compromise or otherwise dispose of the same as Lessee sees fit;
provided, however, that any legal counsel selected by Lessee to defend Lessor
shall be reasonably satisfactory to Lessor. All indemnification covenants are
intended to apply to losses, damages, injuries, claims, etc. incurred directly
by the indemnified parties and their property, as well as by the indemnifying
party or third party, and their property. For purposes of this Article XXIII,
any acts or omissions of Lessee, or by employees, agents, assignees,
contractors, subcontractors or others acting for or on behalf of Lessee (whether
or not they are negligent, intentional, willful or unlawful), shall be strictly
attributable to Lessee. It is understood and agreed that payment shall not be a
condition precedent to enforcement of the foregoing indemnification obligations.
Notwithstanding anything to the contrary in this Lease, Lessee shall not be
required to indemnify Lessor pursuant to this Article XXIII to the extent that
the facts or circumstances surrounding the event that is the subject of the
claim for indemnification occurred prior to the Commencement Date or after the
date Lessee vacates and surrenders possession of the Leased Property to Lessor
following the expiration or earlier termination of the Term of this Lease;
provided, however, that Lessee shall at all times indemnify Lessor pursuant to
this Article XXIII by reason of the occurrence of any of the events described in
clauses (iii) and (iv) above.
ARTICLE XXIV.
24. Transfers
Except as permitted pursuant to Sections 24.9 and 24.10 below, Lessee shall
not, without Lessor's prior written consent, which consent may not be
unreasonably withheld, either directly or indirectly or through one or more step
transactions or tiered transactions, voluntarily or by operation of law, (i)
assign, convey, sell, pledge, mortgage, hypothecate or otherwise encumber,
transfer or dispose of all or any part of this Lease or Lessee's leasehold
estate hereunder, (ii) Master Sublease all or any part of the Leased Property
and/or any Capital Additions, (iii) engage the services of any Person for the
management or operation of all or any part of the Leased Property and/or any
Capital Additions, (iv) convey, sell, assign, transfer or dispose of any stock
or partnership, membership or other interests (whether equity or otherwise) in
Lessee (which shall include any conveyance, sale, assignment, transfer or
disposition of any stock or partnership, membership or other interests (whether
equity or otherwise) in any Controlling Person(s)), if such conveyance, sale,
assignment, transfer or disposition results, directly or indirectly, in a change
in control of Lessee (or in any Controlling Person(s)), (v) dissolve, merge or
consolidate Lessee (which shall include any dissolution, merger or consolidation
of any Controlling Person) with any other Person, if such dissolution, merger or
consolidation, directly or indirectly, results in a change in control of Lessee
or in any Controlling Person(s), (vi) sell, convey, assign, or otherwise
transfer all or substantially all of the assets of Lessee (which shall include
any sale, conveyance, assignment, or other transfer of all or substantially all
of the assets of any Controlling Person(s)), (vii) enter into or permit to be
entered into any agreement or arrangement to do any of the foregoing or to grant
any option or other right to any Person to do any of the foregoing (each of the
aforesaid acts referred to in clauses (i) through (vii) being referred to herein
as a "Transfer"). Any Occupancy Arrangement with respect to more than Ten
Percent (10%) of the Facility in the aggregate to any Person and/or its
Affiliates, directly or indirectly, or through one or more step transactions or
tiered transactions, shall be deemed to be a "Master Sublease" hereunder. For
any Occupancy Arrangement transaction not requiring the consent of Lessor
hereunder (i.e., an Occupancy Arrangement not constituting a Master Sublease),
Lessee shall, within ten (10) days of entering into any such Occupancy
Arrangement, notify Lessor of the existence of such Occupancy Arrangement and
the identity of the Occupant and supply Lessor with a copy of the agreement
relating to such Occupancy Arrangement and any other related documentation,
materials or information reasonably requested by Lessor.
24.2 Consent and Transfer Consideration
24.2.1 Prior to any Transfer for which the
consent of Lessor is required under this Lease, Lessee shall first notify Lessor
of its desire to do so and shall submit in writing to Lessor: (i) the name of
the proposed Occupant, assignee, manager or other transferee; (ii) the terms and
provisions of the Transfer, including any agreements in connection therewith;
and (iii) such financial information as Lessor reasonably may request concerning
the proposed Occupant, assignee, manager or other transferee. Lessor may, as a
condition to granting such consent, and in addition to any other conditions
imposed by Lessor, require that the obligations of any Occupant, assignee,
manager or other transferee which is an Affiliate of another Person be
guaranteed by its parent or Controlling Person and that any Guaranty of this
Lease be reaffirmed by any Guarantor notwithstanding such Transfer. The consent
by Lessor to any Transfer shall not constitute a consent to any subsequent
Transfer or to any subsequent or successive Transfer. Any purported or attempted
Transfer contrary to the provisions of this Article shall be void and, at the
option of Lessor, shall terminate this Lease. In exercising its right of
reasonable approval or disapproval to a proposed Transfer, Lessor shall be
entitled to take into account any fact or factor which Lessor reasonably deems
relevant to such decision, including the following, all of which are agreed to
be reasonable factors for Lessor's consideration:
(a) The financial strength of the
proposed Occupant, assignee, manager or other transferee, including the adequacy
of its working capital.
(b) The operating experience of the
proposed Occupant, assignee, manager or other transferee with respect to a
business of the type and size of the Facility.
(c) Violation of any agreements to
which Lessee is a party.
(d) Whether there then exists any
Event of Default by Lessee pursuant to this Lease.
Moreover, Lessor shall be entitled to be reasonably satisfied that each and
every covenant, condition or obligation imposed upon Lessee by this Lease and
each and every right, remedy or benefit afforded Lessor by this Lease is not
impaired or diminished by such Transfer.
24.2.2 In connection with any Transfer,
Lessor shall be entitled to receive the applicable Transfer Consideration.
24.2.3 The consent by Lessor to any
Transfer shall not constitute a consent to any subsequent Transfer or to any
subsequent or successive Transfer. Any purported or attempted Transfer contrary
to the provisions of this Article shall be void and, at the option of Lessor,
shall terminate this Lease.
Any Occupancy Arrangement (whether or not the same constitutes a Master
Sublease) shall be expressly subject and subordinate to all applicable terms and
conditions of this Lease and provide that Lessor, at its option and without any
obligation to do so, may require any Occupant, upon an Event of Default under
this Lease, to attorn to Lessor, in which event Lessor shall undertake the
obligations of Lessee, as sublessor, licensor or otherwise under such Occupancy
Arrangement from the time of the exercise of such option to the termination of
such Occupancy Arrangement and in such case Lessor shall not be liable for any
prepaid rents, fees or other charges or for any prepaid security deposits paid
by such Occupant to Lessee or for any other prior defaults of Lessee under such
Occupancy Arrangement. In the event that Lessor shall not require such
attornment with respect to any Occupancy Arrangement, then such Occupancy
Arrangement shall automatically terminate upon the expiration or earlier
termination of this Lease, including any early termination by mutual agreement
of Lessor and Lessee. Furthermore, any Occupancy Arrangement or other agreement
regarding a Transfer shall expressly provide that the Occupant, assignee,
manager or other transferee shall furnish Lessor with such financial,
operational and other information about the physical condition of the Facility,
including the information required by Section 25.2 herein, as Lessor may request
from time to time.
24.4 Assignment of Lessee's Rights Against . If Lessor shall
consent to a Master Sublease, then the written instrument of consent, executed
and acknowledged by Lessor, Lessee and the Occupant thereunder, shall contain a
provision substantially similar to the following:
(i) Lessee and such Occupant hereby agree
that, if such Occupant shall be in default of any of its obligations under the
Master Sublease, which default also constitutes an Event of Default by Lessee
under this Lease, then Lessor shall be permitted to avail itself of all of the
rights and remedies available to Lessee against such Occupant in connection
therewith.
(ii) Without limiting the generality of
the foregoing, Lessor shall be permitted (by assignment of a cause of action or
otherwise) to institute an action or proceeding against such Occupant in the
name of Lessee in order to enforce Lessee's rights under the Master Sublease,
and also shall be permitted to take all ancillary actions (e.g., serve default
notices and demands) in the name of Lessee as Lessor reasonably shall determine
to be necessary.
(iii) Lessee agrees to cooperate with
Lessor, and to execute such documents as shall be reasonably necessary, in
connection with the implementation of the foregoing rights of Lessor.
(iv) Lessee expressly acknowledges and
agrees that the exercise by Lessor of any of the foregoing rights and remedies
shall not constitute an election of remedies, and shall not in any way impair
Lessor's entitlement to pursue other rights and remedies directly against
Lessee.
Notwithstanding anything to the contrary in this Section 24.4, Lessor agrees
that Lessor will not implement the foregoing rights of Lessor pursuant to this
Section 24.4 upon the occurrence of an Event of Default under this Lease by
reason of any such default by such Occupant under any such Master Sublease if
Lessee is diligently pursuing and enforcing all rights and remedies Lessee has
against such Occupant under such Master Sublease or at law or in equity.
Lessee shall reimburse Lessor for Lessor's reasonable costs and expenses
incurred in conjunction with the processing and documentation of any request to
Transfer, including attorneys', architects', engineers' or other consultants'
fees whether or not such Transfer is actually consummated.
No Transfer shall relieve Lessee of its obligation to pay the Rent and to
perform all of the other obligations to be performed by Lessee hereunder. The
liability of Lessee named herein and any immediate and remote successor in
interest of Lessee (i.e., by means of any Transfer), and the due performance of
the obligations of this Lease on Lessee's part to be performed or observed,
shall not in any way be discharged, released or impaired by any (i) agreement
which modifies any of the rights or obligations of the parties under this Lease,
(ii) stipulation which extends the time within which an obligation under this
Lease is to be performed, (iii) waiver of the performance of an obligation
required under this Lease, or (iv) failure to enforce any of the obligations set
forth in this Lease. If any Occupant, assignee, manager or other transferee
defaults in any performance due hereunder, Lessor may proceed directly against
the Lessee named herein and/or any immediate and remote successor in interest of
Lessee without exhausting its remedies against such Occupant, assignee, manager
or other transferee.
Anything contained in this Lease to the contrary notwithstanding, (i) no
Transfer shall be consummated on any basis such that the rental or other amounts
to be paid by the Occupant, assignee, manager or other transferee thereunder
would be based, in whole or in part, on the income or profits derived by the
business activities of the Occupant, assignee, manager or other transferee; (ii)
Lessee shall not furnish or render any services to an Occupant, assignee,
manager or other transferee with respect to whom Transfer Consideration is
required to be paid or manage or operate the Leased Property and/or any Capital
Additions so Transferred with respect to which Transfer Consideration is being
paid; (iii) Lessee shall not consummate a Transfer with any Person in which
Lessor, after consultation with its tax counsel, reasonably determines that it
owns an interest, directly or indirectly (by applying constructive ownership
rules set forth in Section 856(d)(5) of the Code); and (iv) Lessee shall not
consummate a Transfer with any Person or in any manner which could cause any
portion of the amounts received by Lessor pursuant to this Lease or any
Occupancy Arrangement to fail to qualify as "rents from real property" within
the meaning of Section 856(d) of the Code, or any similar or successor provision
thereto or which could cause any other income of Lessor to fail to qualify as
income described in Section 856(c)(2) of the Code; provided, however, that
payment of Transfer Consideration by Lessee to Lessor shall not be deemed to be
amounts received by Lessor which fail to qualify as income described in Section
856(c)(2) of the Code. At the request of Lessee, Lessor agrees to cause Lessor's
REIT counsel to review any proposed Transfer or other matter addressed in this
Section 24.7 in order to determine whether the same complies with the provisions
hereof. The reasonable costs and expenses of Lessor's counsel shall be
reimbursed by Lessee to Lessor as an Additional Charge hereunder within ten (10)
days after Lessor's demand therefor. The non-privileged results of any such
review by Lessor's REIT counsel shall be set forth in the form of either a
memorandum or non-binding letter as opposed to a formal legal opinion and shall
be addressed to Lessor and Lessee.
In the event of a Transfer pursuant to the provisions of the Bankruptcy Code,
all consideration payable or otherwise to be delivered in connection with such
Transfer shall be paid or delivered to Lessor, shall be and remain the exclusive
property of Lessor and shall not constitute property of Lessee or of the estate
of Lessee within the meaning of the Bankruptcy Code. Any consideration
constituting Lessor's property pursuant to the immediately preceding sentence
and not paid or delivered to Lessor shall be held in trust for the benefit of
Lessor and be promptly paid or delivered to Lessor. For purposes of this Section
24.8, the term "consideration" shall mean and include money, services, property
and any other thing of value such as payment of costs, cancellation or
forgiveness of indebtedness, discounts, rebates, barter and the like. If any
such consideration is in a form other than cash (such as in kind, equity
interests, indebtedness earn-outs, or other deferred payments, consulting or
management fees, etc.), Lessor shall be entitled to receive in cash the then
present fair market value of such consideration.
Notwithstanding anything to the contrary in this Article XXIV, Lessor's
consent shall not be required in connection with any Transfer of any stock of
Lessee or any Controlling Person(s) as a result of a public offering of Lessee's
or such Controlling Person's stock which (a) constitutes a bona fide public
distribution of such stock pursuant to a firm commitment underwriting or a plan
of distribution registered under the Securities Act of 1933 and (b) results in
such stock being listed for trading on the American Stock Exchange or the New
York Stock Exchange or authorized for quotation on the NASDAQ National Market
immediately upon the completion of such public offering. In addition, so long as
the stock of Lessee or any such Controlling Person(s) is listed for trading on
any such exchange or authorized for quotation on such market, the transfer or
exchange of such stock over such exchange or market shall not be deemed a
Transfer hereunder.
24.10 Special Transactions Not Requiring Lessor's .
Notwithstanding anything to the contrary in Section 24.1, but subject to the
provisions of Section 24.7 above, Lessor's consent shall not be required in
connection with and the provisions of Section 24.2.2 above shall not apply to
any of the following:
24.10.1 Affiliate Transfers. Any Transfer
to an Affiliate of Lessee, including any assignment of this Lease or any Master
Sublease of the Leased Property to any Affiliate of Lessee or Subsidiary of
Guarantor, so long as in connection therewith, each of the following conditions
is met:
(a) In connection with such Transfer,
there is no change in the use of the Leased Property from the
Primary Intended Use;
(b) Except in the case of a Transfer
resulting from merger or consolidation as to which Lessee is not the surviving
party and in which the transferee assumes the obligations of Lessee hereunder as
a matter of law, any Affiliate-transferee shall assume all of the obligations of
Lessee hereunder accruing subsequent to the effective date of such Transfer and
by an instrument in writing in form and substance reasonably satisfactory to
Lessor. A copy of such executed assumption shall be delivered to Lessor along
with the notice specified in clause (e) below;
(c) Any Master Subletting shall be
subject to the provisions of Section 24.3 above.
(d) Neither the original Lessee nor any
Guarantor shall be released from any of the obligations of the Lessee hereunder
or under any guaranty (including the Guaranty), as applicable, whether occurring
prior to or after the effective date of such Transfer;
(e) Within ten (10) days after the
effectiveness of such Transfer, Lessee shall notify Lessor in writing of the
occurrence of such event, the effective date thereof, the facts placing the same
within the provisions of this Section 24.10.1 (including the relationship
between Lessee and such Affiliate-transferee or Guarantor and such
Subsidiary-transferee, as the case may be) and any other change in the address
for billings and notices to Lessee pursuant to this Lease, accompanied by an
executed copy of the assumption or Master Sublease (if any) required pursuant to
this Lease.
24.10.2 Guarantor.
(a) Any sale, conveyance or transfer of
any stock of Guarantor or any shareholder of Guarantor to one or more Persons
(regardless of whether the same causes a "change in control"), except to extent
such a stock transaction is in connection with a merger, consolidation or stock
exchange to which Guarantor is a party or otherwise results in the cessation of
Guarantor as a separate legal entity, in which event the provisions of
subsection (b)(ii) below shall govern (if applicable).
(b) Any (i) sale, conveyance or transfer
of all or substantially all of the assets of Guarantor to a single Person or
(ii) merger, consolidation or stock exchange to which Guarantor is a party
(whether as the surviving, disappearing or acquired Person) so long as in
connection therewith, each of the following conditions is met:
(A) Except in the case of a
transaction as described in clause (ii) above and in which the transferee
assumes the obligations of Guarantor as a matter of law, such transferee
shall assume all of the obligations of Guarantor under the Guaranty by an
instrument in writing in form and substance reasonably satisfactory to
Lessor. A copy of such executed assumption shall be delivered to Lessor
along with the notice specified in clause (D) below. In the event that the
form of assumption instrument executed and delivered to Lessor is not
reasonably acceptable to Lessor, Lessor shall be entitled to require that
a reasonably acceptable replacement instrument be executed and delivered
to Lessor following the closing of such transaction;
(B) In the event of a transaction
of the type described in clause (ii) above and in which Guarantor is the
surviving Person, Guarantor shall not be released from any of the
obligations of the Guarantor under the Guaranty, whether prior to or after
the effective date of such transaction;
(C) If either Guarantor (unless
Guarantor is not the surviving Person in connection with a transaction of
the type described in clause (ii) above) or the transferee does not have a
Consolidated Net Worth following the effectiveness of any such transaction
equal to or greater than Seventy-Five Percent (75%) of the average
Consolidated Net Worth of Guarantor for the twelve (12) month period
immediately prior to the effectiveness of such transaction (the "Net Worth
Hurdle"), then either (x) the ultimate parent entity of such transferee
(if one exists) or (y), if a parent entity exists but refuses to execute a
guaranty or such a parent does not exist, then another responsible Person,
in either case with a Consolidated Net Worth equal to or greater than the
Net Worth Hurdle shall execute and deliver to Lessor a written guaranty of
Lessee's obligations under this Lease in form and substance substantially
identical to the Guaranty. If either Guarantor (if applicable) or such
transferee's Consolidated Net Worth equals or exceeds the Net Worth
Hurdle, evidence of the same shall be delivered via the Consolidated
Financials of Guarantor or such transferee, as applicable, to Lessor
concurrent with the notice specified in clause (D) below. If not, then a
copy of such new guaranty, along with the Consolidated Financials of such
parent entity or other Person, shall be delivered to Lessor concurrent
with the notice specified in clause (D) below; and
(D) Within ten (10) days after the
effectiveness of any such transaction, Guarantor shall notify Lessor in
writing of the occurrence of such event, the effective date thereof and
any change in the address for notices pursuant to the Guaranty,
accompanied by an executed copy of an assumption instrument pursuant to
clause (A) above or any new guaranty and other information from any
ultimate parent entity or other Person as may be required pursuant to
clause (C) above.
ARTICLE XXV.
25. Officer's Certificates and Financial Statements
At any time and from time to time upon Lessee's receipt of not less than
twenty (20) days' prior written request by Lessor, Lessee shall furnish to
Lessor an Officer's Certificate certifying (i) that this Lease is unmodified and
in full force and effect, or that this Lease is in full force and effect as
modified and setting forth the modifications; (ii) the dates to which the Rent
has been paid; (iii) whether or not, to the best knowledge of Lessee, Lessor is
in default in the performance of any covenant, agreement or condition contained
in this Lease and, if so, specifying each such default of which Lessee may have
knowledge; and (iv) responses to such other questions or statements of fact as
Lessor, any ground or underlying lessor, any purchaser or any current or
prospective Facility Mortgagee shall reasonably request. Lessee's failure to
deliver such statement within such time shall constitute an acknowledgement by
Lessee that (x) this Lease is unmodified and in full force and effect except as
may be represented to the contrary by Lessor; (y) Lessor is not in default in
the performance of any covenant, agreement or condition contained in this Lease;
and (z) the other matters set forth in such request, if any, are true and
correct. Any such certificate furnished pursuant to this Article may be relied
upon by Lessor and any current or prospective Facility Mortgagee, ground or
underlying lessor or purchaser of the Leased Property.
Lessee shall furnish the following statements to Lessor:
(a) within 120 days after the end of each of
Lessee's and Guarantor's fiscal years, a copy of the audited consolidated
balance sheets of Lessee, its consolidated Subsidiaries and Guarantor as of the
end of such fiscal year, and related audited consolidated statements of income,
changes in common stock and other stockholders' equity and changes in the
financial position of Lessee, its consolidated Subsidiaries and Guarantor for
such fiscal year, prepared in accordance with GAAP applied on a basis
consistently maintained throughout the period involved, such consolidated
financial statements to be certified by nationally recognized certified public
accountants;
(b) within 120 days after the end of each of
Lessee's and Guarantor's fiscal years, and together with the annual audit report
furnished in accordance with clause (a) above, an Officer's Certificate stating
that to the best of the signer's knowledge and belief after making due inquiry,
Lessee is not in default in the performance or observance of any of the terms of
this Lease, or if Lessee shall be in default, specifying all such defaults, the
nature thereof, and the steps being taken to remedy the same;
(c) within forty-five (45) days after the
end of each of Lessee's quarters, all quarterly consolidated financial reports
Lessee produces for reporting purposes and detailed statements of income and
detailed operational statistics regarding occupancy rates, patient and resident
mix and patient and resident rates by type for the Facility;
(d) within thirty (30) days after the same
is required to be filed with the appropriate Governmental
Authority, a copy of each cost report for the Facility;
(e) within thirty (30) days after they are
required to be filed with the SEC, copies of any annual reports and of
information, documents and other reports, or copies of such portions of any of
the foregoing as the SEC may prescribe, which Lessee is required to file with
the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934;
(f) immediately upon Lessee's receipt
thereof, copies of all written communications received by Lessee from any
regulatory agency relating to (i) surveys of the Facility for purposes of
licensure, Medicare and Medicaid certification and accreditation and (ii) any
proceeding, formal or informal, with respect to cited deficiencies with respect
to services and activities provided and performed at the Facility, including
patient and resident care, patient and resident activities, patient and resident
therapy, dietary, medical records, drugs and medicines, supplies, housekeeping
and maintenance, or the condition of the Facility, and involving an actual or
threatened warning, imposition of a fine or a penalty, or suspension,
termination or revocation of the Facility's license to be operated in accordance
with its Primary Intended Use;
(g) [Intentionally Deleted];
(h) immediately upon Lessee's receipt
thereof, copies of all claims, reports, complaints, notices, warnings or
asserted violations relating in any way to the Leased Property or any Capital
Additions or Lessee's use thereof; and
(i) with reasonable promptness, such other
information respecting (i) the financial and operational condition and affairs
of Lessee, any Guarantor and the Facility, (ii) the physical condition of the
Leased Property and any Capital Additions and (iii) any suspected Transfer,
including the then equity or voting ownership in Lessee or in any Controlling
Person(s), in each case as Lessor may reasonably request, in the form of a
questionnaire or otherwise, from time to time, but not more often than is
reasonable under the circumstances.
Lessee acknowledges that the failure to furnish Lessor with any of the
certificates or statements required by this Article XXV will cause Lessor to
incur costs and expenses not contemplated hereunder, the exact amount of which
is presently anticipated to be extremely difficult to ascertain. Accordingly, if
Lessee fails to furnish Lessor with any of the certificates or statements
required by this Article XXV, Lessee shall pay to Lessor upon demand $500.00 for
each such failure as Additional Charges; provided, however, that with respect to
the first three (3) only occurrences when Lessee fails to furnish Lessor with
any certificate or statement required by this Article XXV during the Term,
Lessee shall not be required to pay such $500.000 additional charge thereon if
Lessee delivers its certificate or statement required within five (5) Business
Days after receipt of written notice from Lessor of Lessee's failure to deliver
the same. The parties agree that this charge represents a fair and reasonable
estimate of the costs that Lessor will incur by reason of Lessee's failure to
furnish Lessor with such certificates and statements.
ARTICLE XXVI.
26. Lessor's Right to Inspect and Show the Leased . Lessee shall
permit Lessor and its authorized representatives to (i) inspect the Leased
Property and any Capital Additions and (ii) exhibit the same to prospective
purchasers and lenders, and during the last twelve (12) months of the Term, to
prospective Lessees or managers, in each instance during usual business hours
and subject to any reasonable security, health, safety or confidentiality
requirements of Lessee or any Legal Requirement or Insurance Requirement. Lessee
shall cooperate with Lessor in exhibiting the Leased Property and any Capital
Additions to prospective purchasers, lenders, Lessees and managers.
ARTICLE XXVII.
. No failure by Lessor to insist upon the strict performance of any term hereof
or to exercise any right, power or remedy hereunder and no acceptance of full or
partial payment of Rent during the continuance of any default or Event of
Default shall constitute a waiver of any such breach or of any such term. No
waiver of any breach shall affect or alter this Lease, which shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
ARTICLE XXVIII.
Except as expressly otherwise provided in this Lease, each legal, equitable or
contractual right, power and remedy of Lessor or Lessee now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor or Lessee of any one or more
of such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Lessor or Lessee of any or all of such other rights,
powers and remedies.
ARTICLE XXIX.
. No surrender to Lessor of this Lease or of the Leased Property or any Capital
Additions or any part(s) thereof or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.
ARTICLE XXX.
There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same Person may acquire, own or hold,
directly or indirectly, (i) this Lease or the leasehold estate created hereby or
any interest in this Lease or such leasehold estate and (ii) the fee estate in
the Leased Property.
ARTICLE XXXI.
Except as expressly or otherwise provided in this Lease, if Lessor or any
successor owner of the Leased Property shall convey the Leased Property other
than as security for a debt, and the grantee or transferee of the Leased
Property shall assume all obligations of Lessor hereunder arising or accruing
from and after the date of such conveyance or transfer, Lessor or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of the lessor under this Lease arising or accruing
from and after the date of such conveyance or other transfer provided that the
new owner expressly assumes in writing all such further liabilities and all such
future liabilities and obligations shall thereupon be binding upon such new
owner.
ARTICLE XXXII.
So long as Lessee shall pay the Rent as the same becomes due and shall fully
comply with all of the terms of this Lease and fully perform its obligations
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased
Property for the Term, free of any claim or other action by Lessor or anyone
claiming by, through or under Lessor, but subject to all the Permitted
Exceptions.
ARTICLE XXXIII.
Any notice, consent, approval, demand or other communication
required or permitted to be given hereunder (a "notice") must be
in writing and may be served personally or by U.S. Mail. If
served by U.S. Mail, it shall be addressed as follows:
If to Lessor: Health Care Property Investors, Inc.
4675 MacArthur Court, Suite 900
Newport Beach, California 92660
Attn: Legal Department
Fax: (949) 221-0607
with a copy to: Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attn: David H. Vena, Esq.
Fax: (213) 891-8763
If to Lessee: Centennial Healthcare Corporation
400 Perimeter Center Terrace, Suite 650
Atlanta, Georgia 30346
Attn: Chief Executive Office and
Chairman of the Board
Fax: (770) 730-1300
with a copy to: King & Spalding
101 Peachtree Street
Atlanta, Georgia 30303
Attn: Paul A. Quiros, Esq.
Fax: (404) 572-5100
Any notice which is personally served shall be effective upon the date of
service; any notice given by U.S. Mail shall be deemed effectively given, if
deposited in the United States Mail, registered or certified with return receipt
requested, postage prepaid and addressed as provided above, on the date of
receipt, refusal or non-delivery indicated on the return receipt. In addition,
either party may send notices by facsimile or by a nationally recognized
overnight courier service which provides written proof of delivery (such as
U.P.S. or Federal Express). Any notice sent by facsimile shall be effective upon
confirmation of receipt in legible form, and any notice sent by a nationally
recognized overnight courier shall be effective on the date of delivery to the
party at its address specified above as set forth in the courier's delivery
receipt. Either party may, by notice to the other from time to time in the
manner herein provided, specify a different address for notice purposes.
ARTICLE XXXIV.
If it becomes necessary to determine the Fair Market Value or Fair Market
Rental for any purpose of this Lease or the Allocated Value for purposes of
determining Transfer Consideration payable to Lessor in connection with a Sale
of Business or other Transfer pursuant to this Lease, the same shall be
determined by an independent appraisal firm, in which one or more of the
members, officers or principals of such firm are Members of the Appraisal
Institute (or any successor organization thereto), as may be reasonably selected
by Lessor and approved by Lessee (the "Appraiser"). Lessor shall cause such
Appraiser to determine the Fair Market Value, Fair Market Rental or Allocated
Value as of the relevant date (giving effect to the impact, if any, of inflation
from the date of the Appraiser's decision to the relevant date) and the
determination of such Appraiser shall be final and binding upon the parties. A
written report of such Appraiser shall be delivered and addressed to each of
Lessor and Lessee. To the extent consistent with sound appraisal practice as
then existing at the time of any such appraisal, an appraisal of Fair Market
Value for purposes of this Lease shall take into account and shall give
appropriate consideration to all three customary methods of appraisal (i.e., the
cost approach, the sales comparison approach and the income approach), and no
one method or approach shall be deemed conclusive simply by reason of the nature
of Lessor's business or because such approach may have been used for purposes of
determining the fair market value of the Facility at the time of acquisition
thereof by Lessor. This provision for determination by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
except as otherwise provided by applicable law. Lessor and Lessee shall each pay
one-half of the fees and expenses of the Appraiser(s) and one-half of all other
costs and expenses incurred in connection with such appraisal. If Lessor and
Lessee are unable to agree upon the Appraiser within fifteen (15) days after
Lessor notifies Lessee of the identity of Lessor's selected Appraiser, then the
following shall apply:
(a) Within ten (10) days after Lessee's receipt of Lessor's
selected Appraiser, Lessee shall by notice to Lessor appoint a second Appraiser
meeting the requirements set forth above to act on its behalf. In such event,
the Appraisers thus appointed shall, within forty-five (45) days after the date
of Lessor's notice of its originally selected Appraiser, proceed to determine
the Fair Market Value, Fair Market Rental or Allocated Value as of the relevant
date (giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date); provided, however, that if Lessee fails to
appoint its Appraiser within the time permitted, or if two Appraisers shall have
been so appointed but only one such Appraiser shall have made such determination
within such forty-five (45) day period, then the determination of such sole
Appraiser shall be final and binding upon the parties.
(b) If the two Appraisers shall have been appointed and shall
have made their determinations within the respective requisite periods set forth
above and if the difference between the amounts so determined shall not exceed
ten percent (10%) of the lesser of such amounts then the Fair Market Value, Fair
Market Rental or Allocated Value, as the case may be, shall be an amount equal
to fifty percent (50%) of the sum of the amounts so determined. If the
difference between the amounts so determined shall exceed ten percent (10%) of
the lesser of such amounts, then such two Appraisers shall have twenty (20) days
to appoint a third Appraiser meeting the above requirements, but if such
Appraisers fail to do so, then either party may request the CPR or AAA (as such
terms are defined in Article XLIV) or any successor organization(s) thereto to
appoint an Appraiser meeting the above requirements within twenty (20) days of
such request, and both parties shall be bound by any appointment so made within
such twenty (20) day period. If no such Appraiser shall have been appointed
within such twenty (20) days or within ninety (90) days of the original request
for a determination of Fair Market Value, Fair Market Rental or Allocated Value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have such appointment made by such court. Any Appraiser
appointed by the original Appraisers, by the CPR or AAA or by such court shall
be instructed to determine the Fair Market Value, Fair Market Rental or
Allocated Value within thirty (30) days after appointment of such Appraiser.
(c) The determination of the Appraiser which differs most in
terms of dollar amount from the determinations of the other two Appraisers shall
be excluded, and fifty percent (50%) of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value, Fair Market Rental or Allocated Value. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. If the foregoing three (3) Appraiser system is utilized, then Lessor and
Lessee shall each pay the fees and expenses of the Appraiser appointed by it and
each shall pay one-half of the fees and expenses of the third Appraiser and
one-half of all other cost and expenses incurred in connection with each
appraisal.
ARTICLE XXXV.
35. Right of First Offer
(a) Provided no Event of Default has occurred and is continuing
hereunder, then in the event that during the Term of this Lease Lessor desires
to transfer or sell the Leased Property, Lessor agrees that it shall first offer
to sell the Leased Property to Lessee ("Right of First Offer"). Such Right of
First Offer shall be by written notice from Lessor to Lessee, and shall specify
the purchase price of the Leased Property and the material terms of the proposed
transaction (collectively, the "Terms of the Offer"). Within twenty (20) days
after delivery to Lessee of Lessor's notice stating the Terms of the Offer,
Lessee shall by written notice to Lessor (i) accept the Terms of the Offer, (ii)
reject the Terms of the Offer or (iii) reject the Terms of the Offer but counter
with a new offer under its own terms. If Lessee fails to deliver such written
notice to Lessor in the manner and within the time specified in this subsection
(a), then Lessee shall be deemed to have elected not to accept the Terms of the
Offer.
(b) In the event Lessee shall, in the manner
and within the time specified above, (i) elect to accept the Terms of the Offer
or (ii) reject the Terms of the Offer but propose a counter offer under its own
terms and, Lessor shall by written notice to Lessee in its sole and absolute
discretion accept such counter offer within five (5) days after Lessee's
delivery of its notice of such counter offer, then Lessor and Lessee shall enter
into a written agreement under the Terms of the Offer or the terms of Lessee's
counter offer, as the case may be. If Lessor fails to accept or reject Lessee's
counter offer in the manner and within the time specified in this subsection
(b), then Lessor shall be deemed to have elected not to accept Lessee's counter
offer.
(c) In the event that Lessee rejects or is
deemed to have rejected the Terms of the Offer pursuant to subsection (a) above,
or Lessor rejects or is deemed to have rejected Lessee's counter offer pursuant
to subsection (b) above, Lessor shall have the right to offer to sell the Leased
Property to any third Person and to negotiate with any third Person upon such
terms as shall be acceptable to Lessor and such purchaser without again offering
the Leased Property to Lessee. It is understood and agreed that the provisions
of this Section 35 create only an obligation for Lessor to offer the Leased
Property to Lessee only once and a right of Lessee to require such first offer
only once.
(d) Notwithstanding anything to the contrary
contained in this Section 35, the provisions of subsections (a) through (c)
above and Lessee's Right of First Offer shall not apply to the sale or transfer
of the Leased Property, (i) to any Affiliate of Lessor, (ii) to the surviving
Person in connection with a merger, consolidation or acquisition of or with
Lessor, (iii) to any Person which acquires all or substantially all of the
assets or stock of Lessor or (iv) any transfer of the Leased Property to any
bona fide mortgagee or any subsequent holder of a note secured by an interest in
the Leased Property who acquires the same by foreclosure or deed in lieu of
foreclosure.
ARTICLE XXXVI.
36.1 Lessor May Grant Liens. Without the consent of Lessee, Lessor
may, from time to time, directly or indirectly, create or otherwise cause to
exist any ground lease, mortgage, trust deed, lien, encumbrance or title
retention agreement (collectively, an "encumbrance") upon the Leased Property
and any Capital Additions or any part(s) or portion(s) thereof or interests
therein. This Lease is and at all times shall be subject and subordinate to any
such encumbrance which may now or hereafter affect the Leased Property and/or
any such Capital Additions and to all renewals, modifications, consolidations,
replacements and extensions thereof. This clause shall be self-operative and no
further instrument of subordination shall be required; provided, however, that
in confirmation of such subordination, Lessee shall execute promptly any
certificate or document that Lessor or any ground or underlying lessor,
mortgagee or beneficiary may request for such purposes; provided further,
however, that any such subjection and subordination of this Lease or Lessee's
leasehold interest hereunder to any such encumbrance imposed after the date
hereof shall be conditioned upon the execution by the holder of such encumbrance
and delivery to Lessee of a non-disturbance and attornment agreement in form
reasonably satisfactory to Lessor, Lessee and such holder of such encumbrance
and which provides, in substance, in addition to such other reasonable matters,
that so long as no Event of Default has occurred, the holder of such encumbrance
shall not disturb either Lessee's leasehold interest or possession of the Leased
Property in accordance with the terms hereof. Lessee shall also promptly execute
and deliver to Lessor and such holder of such encumbrance such non-disturbance
and attornment agreement if requested by Lessor and/or such holder.
36.2 Attornment. Subject to the provisions of Section 36.1 above, if
Lessor's interest in the Leased Property and/or any Capital Additions is sold or
conveyed upon the exercise of any remedy provided for in any Facility Mortgage,
or otherwise by operation of law: (i) at the new owner's option, Lessee shall
attorn to and recognize the new owner as Lessee's Lessor under this Lease or
enter into a new lease substantially in the form of this Lease with the new
owner, and Lessee shall take such actions to confirm the foregoing within ten
(10) days after request; and (ii) the new owner shall not be (a) liable for any
act or omission of Lessor under this Lease occurring prior to such sale or
conveyance, or (b) subject to any offset, abatement or reduction of rent because
of any default of Lessor under this Lease occurring prior to such sale or
conveyance.
ARTICLE XXXVII.
37.1 Hazardous Substances. During the Term of this Lease, Lessee
shall not allow any Hazardous Substance to be located in, on or under the Leased
Property or incorporated in the Facility (other than those Hazardous Substances,
if any, located in, on or under the Leased Property as of the Commencement
Date); provided, however, that Hazardous Substances may be brought, kept, used
or disposed of in, on or about the Leased Property or any Capital Additions in
quantities and for purposes similar to those brought, kept, used or disposed of
in, on or about similar facilities used for purposes similar to the Primary
Intended Use and which are brought, kept, used and disposed of in compliance
with Legal Requirements. Lessee shall not allow the Leased Property or any
Capital Additions to be used as a waste disposal site or, except as permitted in
the immediately preceding sentence, for the manufacturing, handling, storage,
distribution or disposal of any Hazardous Substance.
37.2 Notices. Lessee shall provide to Lessor promptly, and in any
event immediately upon Lessee's receipt thereof, a copy of any notice, or
notification to Lessee or its Affiliates with respect to, (i) any violation of a
Legal Requirement relating to Hazardous Substances located in, on, or under the
Leased Property or any Capital Additions or any adjacent property thereto; (ii)
any enforcement, cleanup, removal, or other governmental or regulatory action
instituted, completed or threatened with respect to the Leased Property or any
Capital Additions; (iii) any claim made or threatened by any Person against
Lessee or the Leased Property or any Capital Additions relating to damage,
contribution, cost recovery, compensation, loss, or injury resulting from or
claimed to result from any Hazardous Substance; and (iv) any reports made to any
federal, state or local environmental agency arising out of or in connection
with any Hazardous Substance in, on, under or removed from the Leased Property
or any Capital Additions, including any complaints, notices, warnings or
asserted violations in connection therewith.
37.3 Remediation.
(a) Except as provided in subsection (b) below, if Lessee
becomes aware of a violation of any Legal Requirement relating to any Hazardous
Substance in, on or under the Leased Property or any Capital Additions or any
adjacent property thereto, or if Lessee, Lessor or the Leased Property or any
Capital Additions becomes subject to any order of any federal, state or local
agency to repair, close, detoxify, decontaminate or otherwise remediate the
Leased Property and any Capital Additions, Lessee shall immediately notify
Lessor of such event and, at its sole cost and expense with respect to any such
Hazardous Substances in, on or under the Leased Property (but not adjacent
thereto unless caused by Lessee), cure such violation or effect such repair,
closure, detoxification, decontamination or other remediation; provided,
however, that Lessor shall be responsible for any Hazardous Substances in, on,
under or about the Leased Property as of the Commencement Date. If Lessee fails
to implement and diligently pursue any such cure, repair, closure,
detoxification, decontamination or other remediation, Lessor shall have the
right, but not the obligation, to carry out such action and to recover from
Lessee all of Lessor's costs and expenses incurred in connection therewith.
(b) Notwithstanding anything to the contrary in this Lease, if
Lessor becomes aware of a violation of any Legal Requirement relating to any
Hazardous Substance in, on, under or about the Leased Property or any Capital
Additions or any adjacent property thereto resulting from the presence of
Hazardous Substances in, on, under or about the Leased Property as of the
Commencement Date, or if Lessee, Lessor or the Leased Property or any Capital
Additions becomes subject to any order of any federal, state or local agency to
repair, close, detoxify, decontaminate or otherwise remediate the Leased
Property and any Capital Additions, resulting from the presence of Hazardous
Substances in, on, under or about the Leased Property as of the Commencement
Date, Lessor shall immediately notify Lessee of such event and, at its sole cost
and expense (subject to Lessor's right to seek indemnification or contribution
from other Persons), cure such violation or effect such repair, closure,
detoxification, decontamination or other remediation. If Lessor fails to
implement and diligently pursue any such cure, repair, closure, detoxification,
decontamination or other remediation for which Lessor is responsible pursuant to
this subsection (b), Lessee shall have the right, but not the obligation, to
carry out such action and to recover from Lessor all of Lessee's costs and
expenses incurred in connection therewith.
37.4 Indemnity.
(a) Lessee shall indemnify, defend, protect, save, hold
harmless, and reimburse Lessor for, from and against any and all costs, losses
(including, losses of use or economic benefit or diminution in value),
liabilities, damages, assessments, lawsuits, deficiencies, demands, claims and
expenses (collectively, "Environmental Costs") (whether or not arising out of
third-party claims and regardless of whether liability without fault is imposed,
or sought to be imposed, on Lessor) incurred in connection with, arising out of,
resulting from or incident to, directly or indirectly, during the Term (i) the
production, use, generation, storage, treatment, transporting, disposal,
discharge, release or other handling or disposition of any Hazardous Substances
from, in, on or about the Leased Property or any Capital Additions (but not
adjacent thereto unless caused or contributed to by Lessee) (collectively,
"Handling"), including the effects of such Handling of any Hazardous Substances
on any Person or property within or outside the boundaries of the Leased
Property or any Capital Additions, (ii) the presence of any Hazardous Substances
in, on, under or about the Leased Property or any Capital Additions (other than
by reason of the presence of Hazardous Substances in, on, under or about the
Leased Property as of the Commencement Date) and (iii) the violation of any
Legal Requirements (including Environmental Laws), other than by reason of any
violations of any such Legal Requirements existing in, on, under or about the
Leased Property as of the Commencement Date. "Environmental Costs" include
interest, costs of response, removal, remedial action, containment, cleanup,
investigation, design, engineering and construction, damages (including actual,
consequential and punitive damages) for personal injuries and for injury to,
destruction of or loss of property or natural resources, relocation or
replacement costs, penalties, fines, charges or expenses, attorney's fees,
expert fees, consultation fees, and court costs, and all amounts paid in
investigating, defending or settling any of the foregoing.
Without limiting the scope or generality of
the foregoing, Lessee expressly agrees to reimburse Lessor for any and all costs
and expenses incurred by Lessor to the extent covered by the foregoing
indemnity:
(A) In investigating any and all matters
relating to the Handling of any Hazardous Substances, in, on, from, under or
about the Leased Property or any Capital Additions (other than by reason of the
presence of Hazardous Substances in, on, under or about the Leased Property as
of the Commencement Date);
(B) In bringing the Leased Property or any
Capital Additions into compliance with all Legal Requirements; and
(C) Removing, treating, storing,
transporting, cleaning-up and/or disposing of any Hazardous Substances used,
stored, generated, released or disposed of in, on, from, under or about the
Leased Property or any Capital Additions or offsite (other than by reason of the
presence of Hazardous Substances in, on, under about the Leased Property as of
the Commencement Date).
Subject to the right of Lessee to contest any
such claim (including exhaustion of all appeal processes) as provided in Article
XII, if any claim is made hereunder, Lessee agrees to pay such claim promptly,
and in any event to pay such claim within thirty (30) calendar days after
receipt by Lessee of notice thereof. If any such claim is not so paid and Lessor
is ultimately found or agrees to be responsible therefore, Lessee agrees also to
pay interest on the amount paid from the date of the first notice of such claim,
at the Overdue Rate.
(b) Lessor shall indemnify, defend, protect, save, hold
harmless, and reimburse Lessee for, from and against any and all Environmental
Costs (whether or not arising out of third-party claims and regardless of
whether liability without fault is imposed, or sought to be imposed, on Lessor)
incurred in connection with, arising out of, resulting from or incident to,
directly or indirectly, the presence of Hazardous Substances in, on, under or
about the Leased Property as of the Commencement Date.
Without limiting the scope or generality of
the foregoing, Lessor expressly agrees to reimburse Lessee for any and all costs
and expenses incurred by Lessee to the extent covered by the foregoing
indemnity:
(A) In investigating any and all matters
relating to the Handling of any Hazardous Substances, in, on, from, under or
about the Leased Property or any Capital Additions by reason of the presence of
Hazardous Substances in, on, under or about the Leased Property as of the
Commencement Date;
(B) In bringing the Leased Property or any
Capital Additions into compliance with all Legal Requirements by reason of the
presence of Hazardous Substances in, on, under or about the Leased Property as
of the Commencement Date; and
(B) Removing, treating, storing,
transporting, cleaning-up and/or disposing of any Hazardous Substances present
in, on, from, under or about the Leased Property or any Capital Additions as of
the Commencement Date.
37.5 Environmental Inspection. Lessor shall have the right, from time
to time, and upon not less than five (5) days' written notice to Lessee, except
in the case of an emergency in which event no notice shall be required, to
conduct an inspection of the Leased Property and all Capital Additions to
determine the existence or presence of Hazardous Substances on or about the
Leased Property or any such Capital Additions. Lessor shall have the right to
enter and inspect the Leased Property and all Capital Additions, conduct any
testing, sampling and analyses it deems reasonably necessary and shall have the
right to inspect materials brought into the Leased Property or any such Capital
Additions. Lessor may, in its discretion, retain such experts to conduct the
inspection, perform the tests referred to herein, and to prepare a written
report in connection therewith. In the event that any such inspections detect
unfavorable conditions relating to Hazardous Substances for which Lessee is
responsible under this Lease, then all costs and expenses incurred by Lessor
under this Section shall be paid on demand as Additional Charges by Lessee to
Lessor. Failure to conduct an environmental inspection or to detect unfavorable
conditions if such inspection is conducted shall in no fashion be intended as a
release of any liability for environmental conditions subsequently determined to
be associated with or to have occurred during Lessee's tenancy. Lessee shall
remain liable for any environmental condition related to or having occurred
during its tenancy regardless of when such conditions are discovered and
regardless of whether or not Lessor conducts an environmental inspection at the
termination of this Lease. The obligations set forth in this Article shall
survive the expiration or earlier termination of the Lease.
37.6 Review and Approval of Current Environmental Report.
(a) The continued effectiveness of this Lease and the other
Facility Group Leases and the obligations of the respective "Lessor" and
"Lessee" hereunder and thereunder are expressly conditioned upon Lessee and the
"Lessee" under each other Facility Group Lease obtaining and approving a Phase 1
environmental assessment and survey of the Leased Property and the other
Facility Group Facilities within the time and in the manner provided in this
Section 37.6 and in Section 37.6 of each other Facility Group Lease.
(b) Accordingly, promptly upon the execution and delivery of
this Lease Lessee shall, at its sole cost, cause an environmental consultant
selected by Lessee and reasonably approved by Lessor to make a Phase 1
environmental assessment and survey of the Leased Property (the "Environmental
Report"); provided, however, that upon the Commencement Date or any early
termination of this Lease pursuant to this Section 37.6, if at all, Lessor shall
reimburse (to the extent not already paid) to Lessee the lesser of (a) $3,000.00
and (b) the actual out-of-pocket costs incurred by Lessee in obtaining such
Environmental Report. Following the execution and delivery of this Lease, Lessee
and its approved environmental consultant shall have the right to enter the
Leased Property for purposes of inspecting the same in connection with the
preparation of such Environmental Report; provided, however, that no such
inspections shall (x) damage the Lease Property in any respect, or (y) disturb
or disrupt the business activities of the Current Operator, and all such
inspections shall be conducted only after delivering to Lessor (i) prior written
notice of the date, time, location, type and extent of each such inspection, and
(ii) evidence satisfactory to Lessor that adequate public liability and other
insurance is available respecting such inspection and naming Lessor and the
Current Operator as additional insureds. Lessor reserves the right to have its
own representative present during any inspections. The provisions of Article
XXIII of this Lease shall specifically apply to any and all such inspections
conducted by Lessee or its consultant pursuant to this Section 37.6.
(c) Promptly upon receipt of such Environmental Report (and in
any case on or before June 20, 1998), Lessee shall cause Lessee's consultant at
no additional charge to Lessor, to deliver to Lessor a copy of such
Environmental Report. Lessee shall be deemed to have approved of the
Environmental Report, unless Lessee has delivered written notice of its
reasonable disapproval thereof on or before June 26, 1998 (regardless whether
Lessee has received a copy of such Environmental Report by such date); provided,
however, that if (1) Lessee actually receives such Environmental Report, (2) the
same recommends any so-called "Phase II" tests, (3) Lessee has, by written
notice to Lessor on or before June 26, 1998 elected to conduct such Phase II
testing, and (4) Lessor has approved the scope and duration of such testing,
then the foregoing June 26, 1998 date shall be extended for such Phase II tests
to and until July 6, 1998 and the term "Environmental Report" as used in this
Section 37.6 shall include the results of any such Phase II tests. In addition
to the amount for which Lessor is responsible on account of the Environmental
Report pursuant to subsection (b) above, Lessor also agrees to pay to Lessee (or
reimburse Lessee for) upon the Commencement Date or any earlier termination of
this Lease pursuant to this Section 37.6 the lesser of (x) $5,000.00 or (y) the
actual out-of-pocket costs incurred by Lessee for such approved Phase II tests.
In the event that Lessee shall reasonably disapprove of the Environmental Report
within the time and in the manner provided in this Section 37.6, then Lessor
shall have a period of ten (10) Business Days following Lessor's receipt of
Lessee's notice of disapproval within which to investigate such disapproved
matters and to notify Lessee in writing whether Lessor intends, in its sole
discretion, to cure such the same without cost therefor to Lessee. In the event
that Lessor so elects then, subject to the provisions of subsection (c) below,
this Lease shall continue in full force and effect and Lessor shall proceed
promptly and in good faith to cure any such disapproved items in accordance with
all applicable Legal Requirements. Failure of Lessor to so notify Lessee of its
intention to cure within said ten (10) Business Day period, however, shall be
deemed Lessor's election not to cure. In the event that Lessor has elected or is
deemed to have elected not to cure, Lessee shall have a period of five (5)
Business Days after receipt of Lessor's notice of its election not to cure or
the date Lessor is deemed to have elected not to cure within which to elect in
writing to Lessor to either (A) to terminate this Lease or (B) waive the
previously disapproved matter, in which case this Lease, subject to the
provisions of subsection (c) below, shall continue in full force and effect.
Failure of Lessee to so waive such disapproved matter within such five (5)
Business Day period shall be deemed Lessee's election to terminate this Lease.
Upon any such termination of this Lease pursuant to this Section 37.6, each
party shall bear its own costs and fees incurred in the negotiation and
preparation of this Lease and in performing its respective obligations hereunder
through the date of such termination and neither party shall have any further
obligation to the other hereunder except for those obligations which are
intended to survive the earlier termination of this Lease prior to the
Commencement Date, if any. Pending any such termination, each party shall
perform its respective obligations pursuant to this Lease.
(d) Notwithstanding anything to the contrary in this Lease, in
the event that any other Facility Group Lease shall be terminated pursuant to
Section 37.6 thereof, then this Lease shall without further action of Lessor and
Lessee hereunder also automatically terminate. In other words, the election or
deemed election of any other "Lessee" to terminate another Facility Group Lease
pursuant to Section 37.6 of such Facility Group Lease shall also be deemed to be
Lessor's and Lessee's mutual election to terminate this Lease.
ARTICLE XXXVIII.
38. Memorandum of Lease. Lessor and Lessee shall, promptly upon the
request of either, enter into a short form memorandum of this Lease, in form
suitable for recording under the laws of the State. Lessee shall pay all costs
and expenses of recording any such memorandum and shall fully cooperate with
Lessor in removing from record any such memorandum upon the expiration or
earlier termination of the Term.
ARTICLE XXXIX.
39. Sale of Assets. Notwithstanding any other provision of this
Lease, Lessor shall not be required to (a) sell or transfer the Leased Property,
or any portion thereof, which is a real estate asset as defined in Section
856(c)(5)(B), or functionally equivalent successor provision, of the Code, to
Lessee if Lessor's counsel reasonably advises Lessor that such sale or transfer
has a significant risk of being deemed a sale of property subject to the tax
imposed by Section 857(b)(6), or functionally equivalent successor provision, of
the Code or (b) sell or transfer the Leased Property, or any portion thereof, to
Lessee if Lessor's counsel reasonably advises Lessor that such sale or transfer
has a significant risk of resulting in a significant amount of non-qualifying
gross income for purposes of the Ninety-Five Percent (95%) gross income test
contained in Section 856(c)(2), or functionally equivalent successor provision,
of the Code, that would create a material risk that Lessor would be unable to
satisfy the Ninety-Five Percent (95%) gross income test for the taxable year of
such scheduled sale or transfer. If Lessee has the right or obligation to
purchase the Leased Property pursuant to the terms herein, and if Lessor
determines not to sell such Leased Property pursuant to the above sentence, then
Lessee shall purchase such Leased Property, upon and subject to all applicable
terms and conditions set forth in this Lease, at such time as the transaction,
upon the reasonable advice of Lessor's counsel, no longer has a significant risk
of (i) being deemed a sale of property (to the extent the Leased Property is a
real estate asset) subject to the tax imposed by Section 857(b)(6), or
functionally equivalent successor provision, of the Code, or (ii) resulting in a
significant amount of non-qualifying gross income for purposes of the
Ninety-Five Percent (95%) gross income test contained in Section 856(c)(2), or
functionally equivalent successor provision of the Code, that would create a
material risk that Lessor would be unable to satisfy the Ninety-Five Percent
(95%) gross income test for the taxable year of such scheduled sale or transfer,
and until such time Lessee shall lease the Leased Property and all Capital
Additions from Lessor at the lesser of (A) the then Fair Market Rental and (B)
the sum of the monthly Minimum Rent and Additional Rent in effect immediately
prior to the date Lessee has the right or becomes obligated to purchase the
Leased Property pursuant to this Lease; provided, however, that (x) there shall
be no further increase in the applicable purchase price for the Leased Property
by reason of any such delay and (y) during any such lease period to and until
Lessee purchases the Leased Property, Lessee shall be relieved of all operating
covenants and liabilities under this Lease, including all maintenance, repair
and/or reconstruction obligations; provided further, however, that at all times
during such period Lessee shall remain responsible for its obligations pursuant
to Articles XXIII or XXXVIII of this Lease. Notwithstanding anything to the
contrary in this Article XXXIX, Lessor agrees that the foregoing provisions
shall not delay or otherwise postpone any sale of the Leased Property to Lessee
(to the extent Lessee shall be entitled or required to purchase the same) so
long as Lessor or any Affiliate of Lessor has not sold (and is not required to
sell) any other property to Lessee or any Affiliate of Lessee (including
pursuant to any other Facility Group Lease) during the calendar year in which
Lessee is required or entitled to purchase the Leased Property under this Lease.
ARTICLE XL.
[INTENTIONALLY DELETED]
ARTICLE XLI.
41. Authority. If Lessee is a corporation, trust, or partnership,
Lessee, and each individual executing this Lease on behalf of Lessee, represent
and warrant that each is duly authorized to execute and deliver this Lease on
behalf of Lessee and shall concurrently with the execution of this Lease deliver
to Lessor evidence of such authority satisfactory to Lessor.
ARTICLE XLII.
42. Attorneys' Fees. If Lessor or Lessee brings an action or other
proceeding (including an arbitration pursuant to Article XLIV) against the other
to enforce any of the terms, covenants or conditions hereof or any instrument
executed pursuant to this Lease, or by reason of any breach or default hereunder
or thereunder, the party prevailing in any such action or proceeding and any
appeal thereupon shall be paid all of its costs and reasonable attorneys' fees
incurred therein.
ARTICLE XLIII.
43. Brokers. Lessee warrants that it has not had any contact or
dealings with any Person or real estate broker which would give rise to the
payment of any fee or brokerage commission in connection with this Lease, and
Lessee shall indemnify, protect, hold harmless and defend Lessor from and
against any liability with respect to any fee or brokerage commission arising
out of any act or omission of Lessee. Lessor warrants that it has not had any
contact or dealings with any Person or real estate broker which would give rise
to the payment of any fee or brokerage commission in connection with this Lease,
and Lessor shall indemnify, protect, hold harmless and defend Lessee from and
against any liability with respect to any fee or brokerage commission arising
out of any act or omission of Lessor.
ARTICLE XLIV.
44. Submission to Arbitration.
44.1 Except as provided in Section 44.2 below, any controversy,
dispute or claim of whatsoever nature arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Lease, including
any claim based on contract, tort or statute, shall be determined by final and
binding, confidential arbitration in accordance with the then current CPR
Institute for Dispute Resolution Rules for Non-Administered Arbitration of
Business Disputes ("CPR"), by a sole arbitrator selected from among the CPR
Panel of Distinguished Neutrals; provided, however, that if the CPR (or any
successor organization thereto) no longer exists, then such arbitration shall be
administered by the American Arbitration Association ("AAA") in accordance with
its then-existing Commercial Arbitration Rules, and the sole arbitrator shall be
selected in accordance with such AAA rules. Any arbitration hereunder shall be
governed by the United States Arbitration Act, 9 U.S.C. 1-16 (or any successor
legislation thereto), and judgment upon the award rendered by the arbitrator may
be entered by any state or federal court having jurisdiction thereof. Neither
Lessor, Lessee nor the arbitrator shall disclose the existence, content or
results of any arbitration hereunder without the prior written consent of all
parties; provided, however, that either party may disclose the existence,
content or results of any such arbitration to its partners, officers, directors,
employees, agents, attorneys and accountants and to any other Person to whom
disclosure is required by applicable Legal Requirements, including pursuant to
an order of a court of competent jurisdiction. Unless otherwise agreed by the
parties, any arbitration hereunder shall be held at a neutral location selected
by the arbitrator in the major metropolitan area in the State closest in
proximity to the Leased Property. The cost of the arbitrator and the expenses
relating to the arbitration (exclusive of legal fees) shall be borne equally by
Lessor and Lessee unless otherwise specified in the award of the arbitrator.
Such fees and costs paid or payable to the arbitrator shall be included in
"costs and reasonable attorneys' fees" for purposes of Article XLII and the
arbitrator shall specifically have the power to award to the prevailing party
pursuant to such Article XLII such party's costs and expenses incurred in such
arbitration, including fees and costs paid to the arbitrator.
44.2 The provisions of this Article XLIV shall not apply to:
(a) Any unlawful detainer or other similar
summary or expedited proceeding for ejectment or recovery of possession of the
Leased Property and Capital Additions instituted by Lessor in accordance with
applicable Legal Requirements as the result of an Event of Default or alleged
Event of Default by Lessee pursuant to this Lease. In addition, if permitted by
applicable Legal Requirements, Lessor shall be entitled in connection with any
such proceeding to seek any damages to which it is entitled at law, including
those set forth in Article XVI.
(b) Any specific controversy, dispute,
question or issue as to which this Lease specifically provides another method of
determining such controversy, dispute, question or issue and provides that a
determination pursuant to such method is final and binding, unless both Lessor
and Lessee agree in writing to waive such procedure and proceed instead pursuant
to this Article XLIV.
(c) Any request or application for an order
or decree granting any provisional or ancillary remedy (such as a temporary
restraining order or injunction) with respect to any right or obligation of
either party to this Lease, and any preliminary determination of the underlying
controversy, dispute, question or issue as is required to determine whether or
not to grant such relief. A final and binding determination of such underlying
controversy, dispute, question or issue shall be made by an arbitration
conducted pursuant to this Article XLIV after an appropriate transfer or
reference to the arbitrator selected pursuant to this Article XLIV upon motion
or application of either party hereto. Any ancillary or provisional relief which
is granted pursuant to this clause (c) shall continue in effect pending an
arbitration determination and entry of judgment thereon pursuant to this Article
XLIV.
ARTICLE XLV.
45. Miscellaneous
45.1 Survival. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities and indemnities of, Lessee
or Lessor arising prior to the expiration or earlier termination of the Term
shall survive such expiration or termination. In addition, all claims against,
and all liabilities and indemnities hereunder of Lessee shall continue in full
force and effect and in favor of the Lessor named herein and its successors and
assigns, notwithstanding any conveyance of the Leased Property to Lessee.
45.2 Severability. If any term or provision of this Lease or any
application thereof shall be held invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby.
45.3 Non-Recourse. Lessee specifically agrees to look solely to
the Leased Property and any other Facility Group Facility owned by Lessor and
covered by any other Facility Group Lease for recovery of any judgment from
Lessor; provided, however, that if Lessor's aggregate equity in the Leased
Property together with the other Facility Group Facilities owned by Lessor is
less than $3 Million, then other assets of Lessor shall be available to satisfy
any judgment against Lessor as provided herein, but only to the extent of the
difference between (i) the then sum of Lessor's equity in the Leased Property
and each such other Facility Group Facility and (ii) $3 Million; and provided
further, however, that all assets of Lessor shall be available to satisfy any
judgment against Lessor hereunder on account of any failure of Lessor to fund an
approved Capital Project up to the maximum amount required to be funded by
Lessor on account thereof pursuant to Section 10.3. It is specifically agreed,
however, that no constituent partner in Lessor or officer, director or employee
of Lessor shall ever be personally liable for any such judgment or for the
payment of any monetary obligation to Lessee. The provision contained in the
foregoing sentence is not intended to, and shall not, limit any right that
Lessee might otherwise have to obtain injunctive relief against Lessor, or any
action not involving the personal liability of Lessor.
45.4 Licenses. Upon the expiration or earlier termination of the
Term, Lessee shall operate in good faith and use commercially reasonable efforts
to transfer to Lessor or Lessor's nominee a fully operational Facility and shall
cooperate with Lessor or Lessor's designee or nominee in connection with the
preparation and processing by Lessor or Lessor's designee or nominee of any
applications for all licenses, operating permits and other governmental
authorization, and in the transaction of all contracts, including contracts with
governmental or quasi-governmental entities, business records, data, patient and
resident records, and patient and resident trust accounts, which may be
reasonably requested by Lessor for the orderly transition of operations of the
Facility; provided that the costs and expenses of any such transfer or the
preparation and processing of any such application shall be paid by Lessor or
Lessor's designee or nominee. Lessee shall not intentionally or in bad faith
commit any act or be remiss in the undertaking of any act that would jeopardize
the licensure or certification of the Facility, and Lessee shall comply with all
commercially reasonable requests for an orderly transfer of the same upon the
expiration or early termination of the Term. In addition, upon request, Lessee
shall promptly deliver copies of all non-proprietary books and records (other
than personnel evaluations) relating to the Leased Property and all Capital
Additions and operations thereon to Lessor or Lessor's designee or nominee, as
the case may be (it being understood that Lessee may keep copies of all such
books and records for its own files).
45.5 Successors and Assigns. This Lease shall be binding upon
Lessor and its successors and assigns and, subject to the provisions of Article
XXIV, upon Lessee and its successors and assigns.
45.6 Termination Date. If this Lease is terminated by Lessor or
Lessee under any provision hereof, and upon the expiration of the Term
(collectively, the "termination date"), the following shall pertain:
(a) Lessee shall vacate and surrender the
Leased Property, Lessee's Personal Property (other than Lessee's Removable
Personal Property) and all Capital Additions to Lessor in the condition required
by Section 9.1.4. Prior to such vacation and surrender, Lessee shall remove any
items which Lessee is permitted or required to remove hereunder. Lessee shall,
at Lessee's cost, repair any damage to the Leased Property, Lessee's Personal
Property and any Capital Additions caused by such vacation and/or removal of any
items which Lessee is required or permitted hereunder to remove. Any items which
Lessee is permitted to remove but fails to remove prior to the surrender to
Lessor of the Leased Property, Lessee's Personal Property and any Capital
Additions shall be deemed abandoned by Lessee, and Lessor may retain or dispose
of the same as Lessor sees fit without claim by Lessee thereto or to any
proceeds thereof. If Lessor elects to remove and dispose of any such items
abandoned by Lessee, the cost of such removal and disposal shall be an
Additional Charge payable by Lessee to Lessor upon demand. Lessee shall pay all
amounts payable by it through the termination date and any costs charged
pursuant to the immediately preceding sentence, each of the parties shall bear
their own costs and fees incurred (including all costs incurred in performing
their respective obligations hereunder) through the termination date and from
and after the termination date neither party shall have any further obligations
to the other, except for those obligations set forth in this subsection (a),
those obligations hereunder which are intended to survive the expiration or
earlier termination of this Lease and those specific obligations set forth in
subsection (b) below.
(b) Notwithstanding the provisions of clause
(i), upon any such termination or expiration of this Lease, the following shall
pertain:
(i) Lessee shall remain liable for the
cost of all utilities used in or at the Leased Property and any Capital
Additions through the termination date and accrued and unpaid, whether or not
then billed, as of the termination date until full payment thereof by Lessee.
Lessee shall obtain directly from the companies providing such services closing
statements for all services rendered through the termination date and shall
promptly pay the same. If any utility statement with respect to the Leased
Property and any Capital Additions includes charges for a period partially prior
to and partially subsequent to the termination date, such charges shall be
prorated as between Lessor and Lessee, with Lessee responsible for the portion
thereof (based upon a fraction the numerator of which is the number of days of
service on such statement through the termination date and the denominator of
which is the total number of days of service on such statement) through the
termination date and Lessor shall be responsible for the balance. The party
receiving any such statement which requires proration hereunder shall promptly
pay such statement and the other party shall, within ten (10) days after receipt
of a copy of such statement, remit to the party paying the statement any amount
for which such other party is responsible hereunder.
(ii) Lessee shall remain responsible to
the extent required under Article IV for any and all Impositions imposed against
the Leased Property, the Personal Property and any Capital Additions with a lien
date prior to the termination date (irrespective of the date of billing
therefor) and for its pro rata share of any Impositions imposed in respect of
the tax-fiscal period during which the Term terminates as provided in Section
4.1.7, and Lessee shall indemnify and hold Lessor harmless with respect to any
claims for such Impositions or resulting from nonpayment thereof.
(iii)Lessee shall (y) execute all
documents and take any actions reasonably necessary to (1) cause the transfer of
all of Lessee's Personal Property (other than Lessee's Removable Personal
Property) and any Capital Additions not owned by Lessor to Lessor, in each case
free of any encumbrance, as provided in Section 6.3 and (2) remove this Lease
and/or any memorandum hereof as a matter affecting title to the Leased Property
as provided in Article XXXVIII and (z) comply with its covenants set forth in
Section 45.4.
(iv) Lessee shall continue to observe
the covenants of Lessee set forth in Sections 7.4.1 and 7.4.2 and any other
covenant or agreement of Lessee in this Lease which is intended to survive the
expiration or sooner termination of this Lease.
45.7 Governing Law. THIS LEASE (AND ANY AGREEMENT FORMED
PURSUANT TO THE TERMS HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE (WITHOUT REGARD OF PRINCIPLES
OR CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
45.8 Waiver of Trial by Jury. EACH OF LESSOR AND LESSEE
ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO
ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTION OF THE UNITED STATES AND THE
STATE. EACH OF LESSOR AND LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS HEREOF) OR (ii) IN ANY
MANNER CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF LESSOR AND
LESSEE WITH RESPECT TO THIS LEASE (OR ANY AGREEMENT FORMED PURSUANT TO THE TERMS
HEREOF) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREINAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; EACH OF LESSOR AND LESSEE HEREBY AGREES AND CONSENTS THAT,
SUBJECT TO ARTICLE XLIV, ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A
COPY OF THIS SECTION WITH ANY COURT AS CONCLUSIVE EVIDENCE OF THE CONSENT OF
EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
LESSOR'S INITIALS: _______
LESSEE'S INITIALS: _______
45.9 Lessee's Equitable Remedies. In the event that Lessee
claims or asserts that Lessor has violated or failed to perform a covenant of
Lessor not to unreasonably withhold or delay Lessor's consent or approval
hereunder, or in any case where Lessor's reasonableness in exercising its
judgment is in issue, Lessee's sole remedy shall be an action for specific
performance, declaratory judgment or injunction, and (a) in no event shall
Lessee be entitled to any monetary damages for a breach of such covenant, and
(b) Lessee hereby specifically waives the right to any monetary damages or other
remedies in connection with any such claim or assertion; provided, however, that
if Lessee shall establish in a court of competent jurisdiction that Lessor has
acted maliciously or in bad faith in withholding its consent in any instance
where Lessor has agreed hereunder not to unreasonably delay or withhold its
consent, then the foregoing limitations shall not apply and Lessee shall be
entitled to seek any remedies available at law or in equity by reason of
Lessor's actions.
45.10 Entire Agreement. This Lease and the Exhibits hereto and
thereto and such other documents as are contemplated hereunder or thereunder,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and may not be changed or modified except by an agreement in
writing signed by the parties. Lessor and Lessee hereby agree that all prior or
contemporaneous oral understandings, agreements or negotiations relative to the
leasing of the Leased Property are merged into and revoked by this Lease.
45.11 Headings. All titles and headings to sections,subsections,
paragraphs or other divisions of this Lease are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect to
the other contents of such sections, subsections, paragraphs or other divisions,
such other content being controlling as to the agreement among the parties
hereto.
45.12 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be a valid and binding original, but all of
which together shall constitute one and the same instrument.
45.13J oint and Several. If more than one Person is the Lessee
under this Lease, the liability of such Persons under this Lease shall be joint
and several.
45.14 Interpretation. Both Lessor and Lessee have been
represented by counsel and this Lease and every provision hereof has been freely
and fairly negotiated. Consequently, all provisions of this Lease shall be
interpreted according to their fair meaning and shall not be strictly construed
against any party.
45.15 Time of Essence. Time is of the essence of this Lease and
each provision hereof in which time of performance is established.
45.16 Force Majeure. In the event that either Lessor or Lessee
is delayed in performing its respective obligations pursuant to this Lease by
any cause beyond the reasonable control of the party required to perform such
obligation, the time period for performing such obligation shall be extended by
a period of time equal to the period of the delay. For purposes of this Lease:
(a) A cause shall be beyond the reasonable
control of a party to this Lease when such cause would affect any person
similarly situated (such as power outage, labor strike, Act of God or trucker's
strike) but shall not be beyond the reasonable control of such party when
peculiar to such party (such as financial inability or failure to order long
lead time material sufficiently in advance).
(b) This Section shall not apply to any
obligation to pay money or otherwise perform any financial
obligation hereunder.
(c) In the event of any occurrence which a
party believes constitutes a cause beyond the reasonable control of such party
and which will delay any performance by such party, such party shall promptly in
writing notify the other party of the occurrence and nature of such cause, the
anticipated period of delay and the steps being taken by such party to mitigate
the effects of such delay. Failure to give such notice promptly, shall deem such
occurrence or event not to be a cause beyond the reasonable control of such
party.
45.17 Further Assurances. The parties agree to promptly sign all
documents reasonably requested to give effect to the provisions of this Lease.
ARTICLE XLVI.
46. Delays in Delivery of Possession. Lessee acknowledges that (i)
the Leased Property is currently occupied and operated as a long-term skilled
nursing care facility by a subsidiary of either Vencor, Inc., Beverly
Enterprises, Inc. or Hunter Care, Inc. (or a subsidiary of any of the foregoing)
(the "Current Operator") pursuant to the terms of a written lease between
Current Operator and Lessor (the "Old Lease") and (ii) Lessor's ability to
tender delivery of possession of and/or Lessee's ability to obtain possession of
the Leased Property is conditioned upon Current Operator's surrender of the
Leased Property, which is expected to occur upon satisfaction of the last of the
conditions to the continued effectiveness of this Lease pursuant to Article
XLVII below. The target Commencement Date is August 1, 1998; provided, however,
that if the Commencement Date shall not have occurred on or before the target
Commencement Date, this Lease shall not be void or voidable, nor shall Lessor be
liable for any loss or damage resulting therefrom. Instead this Lease shall
continue in full force and effect to and until occurrence of the Commencement
Date, unless earlier terminated as herein provided.
ARTICLE XLVII.
47. Additional Conditions to Continued Effectiveness of Lease. In
addition to the provisions of Section 37.6 above, the continued effectiveness of
this Lease and the obligations of Lessor and Lessee hereunder are expressly
conditioned upon Lessee's ability to obtain all licenses, permits,
accreditations, authorizations and certifications from all governmental or
quasi-governmental authorities, agencies, departments or otherwise which are
required for the operation of the Facility for its Primary Intended Use,
including any certificate of need and any accreditations or certifications from
Medicare and/or Medicaid (collectively, the "Required Approvals"). Promptly upon
execution and delivery of this Lease, Lessee shall cooperate with Current
Operator (to the extent applicable) and shall make application for and shall
thereafter operate in good faith and use commercially reasonable efforts to
diligently pursue and obtain all such Required Approvals. Lessor hereby agrees
that it will also cooperate with Lessee in connection with the obtaining such
Required Approvals as reasonably requested by Lessee, but without requirement
that Lessor incur any out-of-pocket costs or assume and obligations (financial
or otherwise). Notwithstanding the Current Operator's apparent willingness to
cooperate with Lessee's efforts to obtain the Required Approvals and in
effecting a smooth transition of the operations of the Facility to Lessee, there
can be no assurances that the Current Operator will in fact cooperate and/or
continue to cooperate, and no such non-cooperation or cessation of cooperation
by the Current Operator shall relieve Lessee from its obligation to operate in
good faith and use commercially reasonable efforts to obtain the same. Promptly
upon satisfaction of the condition described in this paragraph (i.e., obtaining
all such Required Approvals), Lessee shall notify Lessor of the same.
In the event that (a) such condition is not satisfied on or before
December 15, 1998 (the "Adios Date"), or (b) Lessor reasonably determines in
good faith any time after the date of this Lease that Lessee is not operating in
good faith and using its commercially reasonable efforts to obtain such Required
Approvals on or before the Adios Date, then Lessor shall have the right and
option to terminate this Lease. Such option shall be exercised by Lessor, if at
all, at any time after the Adios Date or the date Lessor makes the determination
set forth in clause (b) above, and prior to the date Lessee receives the
Required Approvals. In addition, if after operating in good faith and using
commercially reasonable efforts, Lessee has been unable to obtain the Required
Approvals on or before the Adios Date and Lessor has not previously elected to
terminate this Lease as provided above, then at any time after the Adios Date
and prior to receipt of such Required Approvals, Lessee shall also have the
option to terminate this Lease by written notice to Lessor. Upon any termination
of this Lease pursuant to this Article XLVII, each party shall bear its own
costs and fees incurred in the negotiation and preparation of this Lease and in
performing its respective obligations hereunder through the date of such
termination and neither party shall have any further obligation to the other
hereunder except for those obligations which are intended to survive the earlier
termination of this Lease prior to the Commencement Date, if any. Pending any
such termination, each party shall perform its respective obligations pursuant
to this Lease.
ARTICLE XLVIII.
48. Representations by the Parties. As of the date of hereof, Lessor
and Lessee hereby represent and warrant to the other, as applicable, as follows:
48.1 By Both Lessor and Lessee.
(a) Such party is duly organized, validly existing and, to
the extent applicable, in good standing under the laws of its state
of organization/formation, is qualified to do business and, to the
extent applicable, in good standing in the State and has full power,
authority and legal right to execute and deliver and to perform and
observe the provisions of this Lease to be observed and/or performed
by such party hereunder.
(b) This Lease has been duly authorized, executed and
delivered by such party, and constitutes and will constitute the
valid and binding obligations of such party enforceable against such
party in accordance with their respective terms.
(c) Such party is solvent, has timely and accurately filed
all tax returns required to be filed by such party, and is not in
default in the payment of any taxes levied or assessed against such
party or any of its assets, or subject to any judgment, order,
decree, rule or regulation of any Governmental Authority which would,
in each case or in the aggregate, adversely affect its condition,
financial or otherwise, or its prospects or the Leased Property.
(d) Except for the Required Approvals to use and operate
the Facility for its Primary Intended Use, no other consent, approval
or other authorization of, or registration, declaration or filing
with, any Governmental Authority is required for the due execution
and delivery of this Lease, or for the performance by or the validity
or enforceability of this Lease against such party.
(e) The execution and delivery of this Lease and compliance
with the provisions hereof will not result in (i) a breach or
violation of (A) any Legal Requirement applicable to such party now
in effect; (B) the organizational or charter documents of such party;
(C) any judgment, order or decree of any Governmental Authority
binding upon such party; or (D) any agreement or instrument to which
such party is a counterparty or by which it is bound; or (ii) the
acceleration of any obligation of such party.
48.2 By Lessor Only.
(a) To the best knowledge of Lessor, the Leased Property is
free and clear of all liens and other encumbrances other than the
Permitted Exceptions. There are no current Facility Mortgages
encumbering the Leased Property.
(b) To the actual knowledge of Lessor, there are no
actions, proceedings or investigations, including Condemnation
proceedings pending or threatened, against or affecting the Leased
Property.
(c) Lessor has furnished to Lessee true and correct copies
of those financial and other operating statements relating to the
Leased Property, including cost reports, which were supplied by the
Current Operator to Lessor and which Lessor, in its reasonable
judgment, has deemed to be relevant for Lessee's purposes.
(d) To the actual knowledge of Lessor, the Facility is not
subject to any hold on admissions or other similar sanction imposed
by any applicable Governmental Authority.
As used herein, the term "actual knowledge of Lessor" shall mean the
present actual knowledge of any senior officer of HCPI, without
investigation and without the duty to conduct any investigation.
ARTICLE XLIX.
49. Renegotiation/Early Termination. In connection with Guarantor's
initial due diligence and economic feasibility studies of the Facility and the
other Facility Group Facilities, Lessor or its Affiliate(s) obtained and
delivered to Guarantor and/or its Affiliate(s) certain financial information
prepared by the Current Operator and/or its Affiliate(s) respecting the
historical operating revenues and expenses of the Facility and the other
Facility Group Facilities (collectively, the "Historical Operating
Information"). Based upon such Historical Operating Information, Lessee and its
Affiliate(s) prepared proforma financial projections and models concerning the
Facility (the "Projected Facility Results") and the other Facility Group
Facilities (collectively, the "Projected Group Results"). Accordingly, Lessor
and Lessee agree that if, at anytime after the date hereof through June 30,
1999, it is discovered that either (a) the Historical Operating Information was
materially inaccurate, that as a direct result thereof the Projected Group
Results were materially overstated, and that, when taken as a whole, the results
of operations from the Facility and the other Facility Group Facilities are
materially less than that expected in the Projected Group Results or (b) the
Historical Operating Information specifically relating to the Facility was
materially inaccurate, that as a direct result thereof the Projected Facility
Results and Projected Group Results were both materially overstated, and that
the results of operation from the Facility in and of itself has had a material
adverse effect on the results of operation from all of the Facility Group
Facilities and has caused the same to be materially less than that expected in
the Projected Group Results, then in either such event Lessee may so notify
Lessor of the same along with Lessee's desire to renegotiate the Minimum Rent
and Special Additional Rent payable under this Lease during the Term (but
specifically excluding any right to renegotiate Additional Rent payable under
this Lease or any component or variable thereof, including Base Gross Revenues
or Incremental Revenues). It is specifically agreed, however, that Lessor shall
be under no obligation whatsoever to renegotiate the Minimum Rent or Special
Additional Rent to be so paid hereunder. In the event that Lessee shall be
entitled to and so shall notify Lessor of its desire to renegotiate the same on
or before June 30, 1999, and Lessor and Lessee are unable to mutually agree upon
the Rent to be so paid under this Lease within thirty (30) days after Lessor's
receipt of Lessee notice (the "Outside Renegotiation Date"), then Lessee may at
anytime after the Outside Renegotiation Date and prior to the parties reaching
agreement on the same, if at all, terminate this Lease by written notice to
Lessor. In such event, this Lease shall terminate 180 days following Lessor's
receipt of Lessee's notice of termination. Notwithstanding anything to the
contrary in this Lease, in the event that any other Facility Group Lease shall
be terminated pursuant to clause (a) of Section 49 thereof (but not clause (b)),
then this Lease shall without further action of Lessor and Lessee hereunder also
automatically terminate. In other words, the election or deemed election of any
other "Lessee" to terminate another Facility Group Lease pursuant to clause (a)
of Section 49 of such Facility Group Lease shall also be deemed to be Lessor's
and Lessee's mutual election to terminate this Lease.
ARTICLE L.
50. Minimum Rent and Special Additional Rent Reallocation.
Notwithstanding anything to the contrary in this Lease, if any one (1) or more
Facility Group Lease(s) is/are terminated for any reason whatsoever prior to the
expiration of the stated Term (including by reason of damage, destruction,
Condemnation, failure of condition, default or any other reason) (each, a
"Terminating Facility Group Lease") and this Lease is not also terminated
concurrently therewith, then the monthly Minimum Rent and Special Additional
Rent payable hereunder shall be adjusted in accordance with the following
provisions:
(a) First, Lessor shall determine the total monthly Minimum Rent
("Total Monthly Minimum Rent") under all remaining Facility Group Leases
(i.e., excluding any Terminating Facility Group Leases) at the then
current rate.
(b) Second, Lessor shall determine the "Rent Reallocation Share"
for each remaining Facility Group Lease (i.e., excluding any Terminating
Facility Group Lease) by dividing the Total Monthly Minimum Rent (i.e., as
the denominator) into the monthly Minimum Rent at the then current rate
for each such Facility Group Lease (i.e., as the numerator).
(c) Third, Lessor shall determine the "Minimum Rent Reallocation
Amount" for each Terminating Facility Group Lease by multiplying (i) the
monthly Minimum Rent at the rate in effect under such Terminating Facility
Group Lease immediately prior to termination thereof, times (ii) the
percentage (positive or negative) set forth as the "Rent Adjustment
Percentage" on Exhibit F attached hereto. Similarly, Lessor shall
determine the "Special Additional Rent Reallocation Amount(s)" for each
payment of Special Additional Rent then unpaid under each Terminating
Facility Group Lease by multiplying (A) each such payment of Special
Additional Rent then unpaid, times (B) such "Rent Adjustment Percentage."
If the Rent Adjustment Percentage is stated to be a negative (-)
percentage, then the Minimum Rent Reallocation Amount and Special
Additional Rent Reallocation Amount(s) resulting from the foregoing
calculations shall also be stated as negative amount(s). If the Rent
Adjustment Percentage is stated to be a positive (+) percentage, then the
Minimum Rent Reallocation Amount and Special Additional Rent Reallocation
Amount(s) resulting from the foregoing calculations shall also be stated
as a positive amount(s).
(e) Fourth, Lessor shall determine the "Minimum Rent Adjustment
Amount" and the "Special Additional Rent Adjustment Amount(s)" for each
remaining Facility Group Lease by multiplying the Minimum Rent
Reallocation Amount and Special Additional Rent Reallocation Amount(s)
(whether positive or negative), respectively, by the Rent Reallocation
Share for each such remaining Facility Group Lease as determined pursuant
to clause (a) above.
(f) Finally, effective on the date of termination of any
Terminating Facility Group Lease, the monthly Minimum Rent and Special
Additional Rent(s) payable hereunder shall be adjusted by the Minimum Rent
Adjustment Amount and the Special Additional Rent Adjustment Amount(s)
applicable to this Lease (each, an "Adjustment Amount"). Provided,
however, that if the applicable Adjustment Amounts shall not have been
determined as of the termination date of any Terminating Facility Group
Lease, then Lessee shall continue to pay monthly Minimum Rent and Special
Additional Rent at the last applicable rate until Lessee receives Lessor's
written notice as to the Adjustment Amounts. If such Adjustment Amounts
are positive, then within ten (10) days after Lessee's receipt of Lessor's
notice, Lessee shall pay to Lessor an amount equal to the new monthly
Minimum Rent times the number of months from the date of termination of
such Terminating Facility Group Lease(s) to the date of receipt of
Lessor's notice and the total amount of any such Special Additional Rent
then due, in each case less the aggregate amount paid by Lessee on account
thereof for the same period. If such Adjustment Amounts are negative, the
amount of excess Rent paid by Lessee on account of such monthly Minimum
Rent and Special Additional Rent shall be credited against the next
amounts coming due on account of monthly Minimum Rent hereunder.
Thereafter, Lessee shall pay monthly Minimum Rent and any such Special
Additional Rent at the new rate(s) set forth in Lessor's notice.
By way of illustration only, attached hereto as Exhibit H are two examples of
the calculation of the Minimum Rent Adjustment Amounts pursuant to this Article
L in the event of a termination of any other Facility Group Lease.
ARTICLE LI.
51. Pre-Commencement Provisions.
51.1 Pre-Commencement Term. The Term of this Lease consists of
the aggregate of the Pre-Commencement Term, the Fixed Term and the Extended
Terms, if any, unless sooner terminated pursuant to any provisions of this
Lease. The "Pre-Commencement Term" shall be the period from the date of
execution and delivery hereof to and until the Commencement Date. During the
Pre-Commencement Term, the sole obligations of Lessor and Lessee pursuant to
this Lease shall be as set forth in Section 37.6 above, Articles XLVI, XLVII and
XLVIII above, and this Article LI; provided, however, that at all times from and
after the execution and delivery of this Lease, the applicable provisions of
Articles I, II, V, VI, XI, XVI, XVII, XVIII, XXIV, XXI, XXVII, XXVIII, XXXI,
XXXIII, XXXV, XXXVI, XXXIX, XLI, XLII, XLIII, XLIV, XLV and Sections 7.1, 7.4
and 23(iii) of this Lease shall at all times be in full force and effect and
shall apply to Lessor and Lessee.
51.2 Pre-Commencement Rent Date. Lessor and Lessee acknowledge
and agree that prior to the Commencement Date Lessee may take possession and
commence use and occupancy of the Leased Property prior to receipt of the
Required Approvals either as manager, sublessee or otherwise pursuant to any
agreement concerning such matters as may be agreed upon by the Current Operator
and Lessee. In such event, the date that Lessee shall so take possession or
commence the management or operation of the Leased Property for any reason by or
through the Current Operator shall be referred to herein as the
"Pre-Commencement Rent Date." From and after the Pre-Commencement Rent Date, if
at all, through the Commencement Date, the following shall apply:
(a) Lessee shall pay to Lessor in lawful
money of the United States of America, without offset or deduction, the
Pre-Commencement Rent (as hereinafter defined). As used herein, the term
"Pre-Commencement Rent" shall mean an amount equal the positive difference, if
any, between the Rent which would have been payable by Lessee under this Lease
assuming that the Commencement Date had occurred on the Pre-Commencement Rent
Date and the total rent payable by the Current Operator to or for the benefit of
Lessor during such period. Such Pre-Commencement Rent shall be prorated as to
any partial calendar month at the beginning of the Term. If the total rent
payable by the Current Operator to Lessor is more than the Rent which would have
been payable by Lessee under this Lease assuming the Commencement Date had
occurred on the Pre-Commencement Date, then such excess payment by such current
operator shall be accrued and carried forward and provided by Lessor to Lessee
as a credit towards Lessee's Minimum Rent obligations under this Lease on and as
of the Commencement Date. Payments of Pre-Commencement Rent shall be paid in
advance on or before the first day of each calendar month and shall be made via
wire transfer to an account as Lessor may from time to time designate in
writing.
(b) Lessee shall maintain the insurance
specified in accordance with Sections 13.1.5 and 13.1.6.
(c) Article XXIII shall apply at all times
during such period.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.
"Lessor" "Lessee"
HEALTH CARE PROPERTY INVESTORS, CENTENNIAL HEALTHCARE INVESTMENT
INC., a Maryland corporation CORPORATION, a Georgia
corporation
By:/s/ Arthur G. Sundby
Its: Vice President By: /s/ Alan C. Dahl
Its: Vice President
<PAGE>
A-1
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
THIS EXHIBIT INTENTIONALLY OMITTED
<PAGE>
B-1
EXHIBIT B
LESSOR'S PERSONAL PROPERTY
All machinery, equipment, furniture, furnishings, moveable walls or
partitions, computers or trade fixtures or other tangible personal
property in, on or about the Facility on and as of the Commencement
Date and owned by Lessor, excluding items, if any, included within
the definition of Fixtures.
<PAGE>
C-2
EXHIBIT C
FORM OF AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is dated as of
_________________, 1998 by and between HEALTH CARE PROPERTY INVESTORS, INC., a
Maryland corporation "Lessor"), and CENTENNIAL HEALTHCARE INVESTMENT
CORPORATION, a Georgia corporation ("Lessee").
RECITALS
A. Lessor and Lessee entered into a Lease dated as of
June 15, 1998 (the "Lease") for the
__________________________________________ facility located in
- - ----------------------------------------.
B. Lessor and Lessee desire to memorialize their understanding
regarding certain provisions of the Lease.
AGREEMENT
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Lease. Lessor and Lessee hereby agree as follows:
1. The Commencement Date of the Lease is_____________;
2. The first Lease Year for the Lease commences on ____________,
199__ and ends on ____________, 199__;
Except as amended above, the Lease between Lessor and Lessee shall
remain in full force and effect. This Amendment may be executed in any number of
counterparts, all of which together shall constitute one and the same
instrument.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first above written.
"Lessor" "Lessee"
HEALTH CARE PROPERTY INVESTORS, CENTENNIAL HEALTHCARE INVESTMENT
INC., a Maryland corporation CORPORATION, a Georgia
corporation
By:
Its: By:
Its:
The undersigned Guarantor hereby consents to this Amendment and reaffirms
to Lessor that its obligations under the Guaranty dated as of June 15, 1998,
remain in full force and effect with respect to the Lease as amended hereby.
CENTENNIAL HEALTHCARE
CORPORATION, a Delaware
corporation
By:
Its:
<PAGE>
D-2
C-1
EXHIBIT D
EXISTING LEASES
The following leases (as the same may be further amended, modified or
supplemented from time to time in accordance with the respective terms thereof)
shall be "Existing Leases" for purposes of this Lease:
1. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal of Indiana, Inc., a Kentucky corporation ("Cardinal"), as the original
lessee, as amended by that certain Amendment to Operating Lease made and
effective November 1, 1993, that certain Second Amendment to Operating Lease
made and effective as of April 1, 1994 and that certain Third Amendment to
Operating Lease made and effective as of March 31, 1995. On November 1, 1993,
Cardinal assigned its lessee/tenant interests under such Lease to Transitional
Health Partners d/b/a Transitional Health Services, a Delaware general
partnership ("THS") pursuant to a Lease Assignment, Consent and Release, which
is recorded as Instrument No. 93-2187 in Misc. Book 94, Pages 326-333, with the
Register of Deeds of Pike County, Indiana.
2. Operating Lease dated as of August 8, 1990 between HCPI, as lessor, and HRO
Acquisition Corporation, a Kentucky corporation ("HRO"), as the original lessee,
as amended by that certain Amendment to Operating Lease made and effective
November 1, 1993, that certain Second Amendment to Operating Lease made and
effective as of April 1, 1994 and that certain Third Amendment to Operating
Lease made and effective as of March 31, 1995. On November 1, 1993, HRO assigned
its lessee/tenant interests under such Lease to THS pursuant to a Lease
Assignment, Consent and Release, which is recorded as Instrument No. 93-19199
with the Register of Deeds of La Porte County, Indiana.
3. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal, as the original lessee, as amended by that certain Amendment to
Operating Lease made and effective November 1, 1993, that certain Second
Amendment to Operating Lease made and effective as of April 1, 1994 and that
certain Third Amendment to Operating Lease made and effective as of March 31,
1995. On November 1, 1993, Cardinal assigned its lessee/tenant interests under
such Lease to THS pursuant to a Lease Assignment, Consent and Release, which is
recorded as Instrument No. 93-11-0923 with the Register of Deeds of Kosciusko
County, Indiana.
4. Operating Lease dated as of August 8, 1990 between HCPI, as lessor, and HRO,
as the original lessee, as amended by that certain Amendment to Operating Lease
made and effective November 1, 1993, that certain Second Amendment to Operating
Lease made and effective as of April 1, 1994, that certain Third Amendment to
Operating Lease made and effective as of June 29, 1994, that certain Fourth
Amendment to Operating Lease made and effective March 31, 1995 and that certain
Fifth Amendment to Operating Lease made and effective July 10, 1995. On November
1, 1993, HRO assigned its lessee/tenant interests under such Lease to THS
pursuant to a Lease Assignment, Consent and Release, which is recorded as
Instrument No. 18089 in Misc. Drawer 25, with the Register of Deeds of Clark
County, Indiana.
5. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal, as the original lessee, as amended by that certain Amendment to
Operating Lease made and effective November 1, 1993, that certain Second
Amendment to Operating Lease made and effective as of April 1, 1994 and that
certain Third Amendment to Operating Lease made and effective as of March 31,
1995. On November 1, 1993, Cardinal assigned its lessee/tenant interests under
such Lease to the Lessee pursuant to a Lease Assignment, Consent and Release,
which is recorded as Instrument No. 174875 in Book 92, Page 118, with the
Register of Deeds of Dubois County, Indiana.
6. Operating Lease dated as of March 28, 1991 between HCPI, as lessor, and
Cardinal, as the original lessee, as amended by that certain Amendment to
Operating Lease made and effective November 1, 1993, that certain Second
Amendment to Operating Lease made and effective as of April 1, 1994 and that
certain Third Amendment to Operating Lease made and effective as of March 31,
1995. On November 1, 1993, Cardinal assigned its lessee/tenant interests under
such Lease to THS pursuant to a Lease Assignment, Consent and Release, which is
recorded as Instrument No. 93080020 with the Register of Deeds of Lake County,
Indiana.
7. Operating Lease dated as of June 19, 1995 between HCPI Charlotte, Inc., a
Delaware corporation and an affiliate of HCPI, as lessor, and THS, as lessee.
8. Operating Lease dated as of June 19, 1995 between HCPI Knightdale, Inc., a
Delaware corporation and an affiliate of HCPI, as lessor, and THS, as lessee.
<PAGE>
E-1
D-1
EXHIBIT E
FACILITIES GROUP LEASES
Those leases, each dated as of June 15, 1998, between Lessor or an Affiliate of
Lessor and Lessee or an Affiliate of Lessee, for the following facilities shall
be "Facility Group Leases" for purposes of this Lease:
<PAGE>
1. Walnut Cove, NC;
2. Orlando, FL;
3. Omro, WI;
4. Port St. Lucie, FL;
5. Green Bay, WI;
6. Salina, KS;
7. Junction City, AR;
8. Dumas, AR;
9. Piggott, AR; and
10. Lake City, FL.
<PAGE>
LESSOR'S
INITIALS
LESSOR'S
INITIALS
LESSEE'S
- - -------------------------------------------------------------------
- - -------------------------------------------------------------------
INITIALS
- - -------------------------------------------------------------------
LESSEE'S
- - -------------------------------------------------------------------
INITIALS
F-1
E-1
EXHIBIT F
FIXED TERM MONTHLY MINIMUM RENT SCHEDULE
Subject to upward adjustment pursuant to Sections 3.1.1(b) and (c)
and subject further to adjustment pursuant to either Articles XLIX or L of
this Lease, during the Fixed Term Lessee shall pay to Lessor as monthly
"Minimum Rent," the following amounts in accordance with the following
schedule:
(a) For the period from the Commencement Date through the expiration
of the first (1st) Lease Year of the Fixed Term, the sum of $12,500.00;
(b) For the second (2nd) Lease Year of the Fixed Term,
the sum of $12,847.25;
(c) For the third (3rd) Lease Year of the Fixed Term,
the sum of $13,368.08; and
(d) For the balance of the Fixed Term, the sum of
$13,809.00.
INITIAL MINIMUM PURCHASE PRICE
The initial Minimum Purchase Price for the Leased Property shall be
the sum of $1,747,600.00.
SPECIAL ADDITIONAL RENT
Subject to Article L of this Lease, Lessee shall pay one-time
payments of "Special Additional Rent" during the Fixed Term and each
Extended Term, if any, the following amounts in accordance with the
following schedule:
(a) On October 1, 2001, the sum of $1,666.66.
(b) On October 1, 2013, the sum of $2,500.00.
(c) On October 1, 2023, the sum of $3,333.33.
<PAGE>
E-1
E-1
RENT ADJUSTMENT PERCENTAGE
The Rent Adjustment Percentage for this Lease for purposes of Article
L is 34.7133 %.
<PAGE>
G-1
E-1
EXHIBIT G
PERMITTED EXCEPTIONS
THIS EXHIBIT INTENTIONALLY OMITTED
<PAGE>
H-1
G-1
EXHIBIT H
MINIMUM RENT REALLOCATION EXAMPLE(S)
THIS EXHIBIT INTENTIONALLY OMITTED
<PAGE>
Centennial HealthCare Investment Corporation has entered into
lease Lease Agreements substantially identical to Exhibit 10.1 as
follows:
1. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Green Bay, Wisconsin facility.
Material details in which this Lease Agreement differs
from Exhibit 10.1 are that the base rent per year is YEAR
1 $400,000, YEAR 2 $411,111, YEAR 3 $427,778, and YEAR 4 $441,889.
2. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Salima, KS facility. Material
details in which this Lease Agreement differs from
Exhibit 10.1 are that the base rent per year is YEAR 1
$290,000, YEAR 2 $298,056, YEAR 3 $310,139, and YEAR 4 $320,369.
3. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Junction City, AR facility.
Material details in which this Lease Agreement differs
from Exhibit 10.1 are that the base rent per year is YEAR 1
$150,000, YEAR 2 $154,167, YEAR 3 $160,417, Healthcare Property
Investors, INC., and YEAR 4 $165,708.
4. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Dumas, AR facility. Material
details in which this Lease Agreement differs from
Exhibit 10.1 are that the base rent per year is YEAR 1 $270,000,
YEAR 2 $277,500 YEAR 3 $288,750, and YEAR 4 $298,275.
5. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Port St. Lucie, FL facility.
Material details in which this Lease Agreement differs
from Exhibit 10.1 are that the base rent per year is YEAR 1
$560,000, YEAR 2 $575,556, YEAR 3 $598,889, and YEAR 4 $618,644.
6. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., Healthcare Property Investors, Inc., for
the Piggot, AR facility. Material details in which this
Lease Agreement differs from Exhibit 10.1 are that the
base rent per year is YEAR 1 $290,000, YEAR 2 $298,056, YEAR 3
$310,139, and YEAR 4 $320,369.
7. Lease Agreement dated June 15, 1998 with Health Care Property
Investors, Inc., for the Lake City, FL facility. Material
details in which this Lease Agreement differs from
Exhibit 10.1 are that the base rent per year is YEAR 1
$330,000, YEAR 2 $339,157, YEAR 3 $352,917, and YEAR 4 $364,558.
8. Lease Agreement dated June 15, 1998 with Health Care Property
Partners, for the Omro, Wisconsin facility. Material details
in which this Lease Agreement differs from Exhibit 10.1
are that the base rent per year is YEAR 1 $400,000, YEAR 2 $411,111,
YEAR 3 $427,778, and YEAR 4 $441,889.
9. Lease Agreement dated June 15, 1998 with Health Care Propery
Partners, for the Walnut Cove, NC facility. Material details
in which this Lease Agreement differs from Exhibit 10.1 are
that the base rent per year is YEAR 1 $350,000, YEAR 2
$359,722, YEAR 3 $374,306, and YEAR 4 $386,653.
10. Lease Agreement dated June 15, 1998 with Health Care
Property Partners, for the Orlando, FL facility. Material
details in which this Lease Agreement differs from
Exhibit 10.11 are that the base rent per year is YEAR 1
$560,000, YEAR 2 $575,556, YEAR 3 $598,889, and YEAR 4 $618,644.
GUARANTY OF OBLIGATIONS
The undersigned, CENTENNIAL HEALTHCARE CORPORATION, a Delaware
corporation ("Guarantor"), as a material and necessary inducement to HEALTH CARE
PROPERTY PARTNERS, a California general partnership ("Owner"), to enter into a
Lease dated as of June 15, 1998, with CENTENNIAL HEALTHCARE INVESTMENT
CORPORATION, a Georgia corporation ("Lessee"), as Lessee, covering that certain
property located in the city or town and state identified in the upper right
comer of this page, as more particularly described in the Lease (the "Property")
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Lease"), hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to
Owner:
(a) the payment when due of all costs, expenses, fees, rents and
other sums payable by Lessee under the Lease and the full, faithful and prompt
performance when due of each and every one of the terms, conditions and
covenants to be kept and performed by Lessee under the Lease, including, without
limitation, (i) any and all indemnification and insurance obligations, (ii) all
obligations to operate, purchase, rebuild, restore or replace the Property
covered by the Lease or any facilities or improvements now or hereafter
constituting a portion of the Property covered by the Lease and (iii) all
obligations of the Lessee under the Lease resulting from the exercise of any
renewal or extension option under such Lease; and
(b) the payment, on demand, of any fees, costs and charges of
enforcement of the Lease, and the preservation and protection of the Property
and collateral from Lessee, if any, which would be owing by Lessee under clause
(a) above, but for the effect of the federal Bankruptcy Code or any other state
or local debtor relief law.
The foregoing obligations are hereafter collectively referred to as the
"Guaranteed Obligations. " The Guaranteed Obligations shall not be reduced by
any payments or performance made by any other guarantor or surety, the retention
or receipt of any collateral, letter of credit or bond securing or otherwise
supporting the Guaranteed Obligations, or the receipt of any proceeds thereof,
except to the extent that any such payment or performance or receipt of any such
proceeds is received by Owner and applied against the Guaranteed Obligations. So
long as there are no other obligations owing to Owner except for the Guaranteed
Obligations, then any such payment or performance or receipt of proceeds shall
be applied against the Guaranteed Obligations. In the event that there are
obligations owing to Owner in addition to the Guaranteed Obligations, Owner
shall be entitled to apply any such payment or receipt of proceeds to or deem
such performance on account of any obligations (including the Guaranteed
Obligations) and in such order of priority as Owner
shall determine in its sole discretion. In the event of the failure of Lessee
to pay or perform any of the Guaranteed Obligations when due, Guarantor shall
forthwith pay or perform the same, as applicable, and pay all damages that may
result from the non-payment or nonperformance thereof to the full extent
provided under the Lease. Payment by Guarantor shall be made to Owner in
inunediately available federal funds to an account designated by Owner.
2. Guarantor represents, warrants and covenants that:
(a) Guarantor is duly organized, validly existing and in good
standing under the laws of its state of organization/fonnation, and has
full power, authority and legal right to execute and to deliver and to
perform and observe the obligations and provisions of this Guaranty;
(b) this Guaranty has been duly authorized, executed and
delivered by Guarantor, and constitutes the valid and binding obligation
of Guarantor, enforceable against Guarantor in accordance with its terms;
(c) Guarantor is solvent, has timely and accurately filed all
tax returns required to be filed by it and is not in default in the
payment of any taxes levied or assessed against it or any of its assets,
or subject to any judgment, audit, order, decree, rule or regulation of
any governmental authority which would, in each case or in the aggregate,
adversely affect Guarantor's condition, financial or otherwise, or
Guarantor's prospects;
(d) no consent, approval or other authorization of, or
registration, declaration or filing with, any governmental authority is
required for the due execution and delivery by Guarantor of this Guaranty,
or for the performance by or the validity or enforceability hereof against
Guarantor;
(e) there are no actions, proceedings or investigations,
including tax audits, pending or threatened, against or affecting
Guarantor, seeking to enjoin, challenge or collect damages in connection
with the transactions contemplated under the Lease or which could
reasonably be expected to materially and adversely affect the financial
condition or operations of Guarantor or the ability of Guarantor to carry
out its obligations under this Guaranty; and
(f) to the best knowledge of Guarantor, neither this Guaranty
nor any material certificate, statement or other document furnished or to
be furnished to Owner by or on behalf of Guarantor in connection with the
this Guaranty or the Lease contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
3. Guarantor hereby unconditionally and irrevocably indemnities,
protects and agrees to defend and hold hannless Owner from and against any and
all loss, cost or
2
expense, including costs and reasonable legal fees, arising from the breach or
violation of any representation or warranty of Guarantor hereunder.
4. In such manner, upon such terms and at such times as Owner in its
sole discretion deems necessary or expedient, and without notice to or consent
by Guarantor, which notice and consent are hereby expressly waived by
Guarantor, Owner may alter, compromise, accelerate, extend or change the time
or manner for the payment or the performance of any Guaranteed Obligation;
extend, amend or terminate the Lease; release Lessee or any other party to the
Lease by consent to any assignment, sublease or otherwise as to all or any
portion of the Guaranteed Obligations; release, substitute or add any one or
more guarantors, lessees or sublessees (including by consent to sublease or
otherwise); accept additional or substituted security for any Guaranteed
Obligation; or release or subordinate any security for any Guaranteed
Obligation. No exercise or non-exercise by Owner of any right hereby given
Owner, no neglect or delay in connection with exercising any such right, no
dealing by Owner with Lessee, any other guarantor or any other person, and no
change, impairment, release or suspension of any right or remedy of Owner
against any person, including Lessee and any other guarantor or other person,
shall in any way affect any of the obligations of Guarantor hereunder or any
security furnished by Guarantor or give Guarantor any recourse or right of
offset against Owner. If Owner has exculpated Lessee or any other party to the
Lease from liability in whole or in part and/or agreed to look solely to the
Property, any security for the Guaranteed Obligations or any other asset for
the satisfaction of the Guaranteed Obligations, such exculpation and/or
agreement shall not affect the obligations of Guarantor hereunder, it being
understood that Guarantor's obligations hereunder are independent of the
obligations of Lessee, any other guarantor and any other party to the Lease,
and are to be construed as if no such exculpation or agreement had been given
to Lessee, any other guarantor or any other party to the Lease. It is further
understood and agreed that if any such exculpation or agreement has been or at
any time hereafter is given to Lessee, any other guarantor or any other party
to the Lease, Owner has done or will do so in reliance upon the agreement of
Guarantor expressed herein.
5. [Intentionally Deleted]
6. Guarantor hereby waives and relinquishes all rights and remedies
accorded by applicable law to sureties and/or guarantors or any other
accommodation parties, under any statutory provision, common law or any other
provision of law, custom or practice, and agrees not to assert or take
advantage of any such rights or remedies, including, without limitation, (a)
any right to require Owner to proceed against Lessee, any other guarantor or
any other person or to proceed against or exhaust any security held by Owner
at any time or to pursue any other remedy in Owner's power before proceeding
against Guarantor; (b) any defense that may arise by reason of the incapacity,
lack of authority, insolvency, bankruptcy, death or disability of any other
guarantor or other person or the failure of Owner to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other guarantor or other person; (c) notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of I-essee or any other party to the Lease, or any
creditor thereof, or on the part of any other guarantor or other person under
any other instrument in
3
connection with any obligation or evidence of indebtedness held by Owner or in
connection with any Guaranteed Obligation; (d) any defense based upon an
election of remedies by Owner which destroys or otherwise impairs any
subrogation rights of Guarantor or any right of Guarantor to proceed against
Lessee or any other party to the Lease for reimbursement, or both; (e) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (f) any duty on the part of Owner to
disclose to Guarantor any facts Owner may now or hereafter know about Lessee or
any other party to the Lease, regardless of whether Owner has reason to believe
that any such fact materially increases the risk beyond that which Guarantor
intends to assume or has reason to believe that any such fact is unknown to
Guarantor or has a reasonable opportunity to communicate such fact to Guarantor,
it being understood and agreed that Guarantor is fully responsible for being and
keeping informed of the financial condition of Lessee and all other parties to
the Lease and of all circumstances bearing on the risk of non-payment or
non-performance of any Guaranteed Obligation; (g) any defense arising because of
Owner's election, in any proceeding instituted under the federal Bankruptcy
Code, of the application of Section 1 1 1 1 (b)(2) of the federal Bankruptcy
Code; (h) any defense based upon the validity or enforceability of, or change
in, this Guaranty, or the Lease; (i) any defense or rights arising under any
appraisal, valuation, stay, extension, marshalling of assets, redemption or
similar law or requirement, which may delay, prevent or otherwise affect the
performance by Guarantor of any of the Guaranteed Obligations; 0) diligence,
presentment -and demand; (k) any requirement to mitigate any damages resulting
from any default under the Lease; and (1) any defense based on any borrowing or
grant of a security interest under Section 364 of the federal Bankruptcy Code.
Without limiting the generality of the foregoing or any other provision hereof,
Guarantor hereby expressly waives any and all benefits which might otherwise be
available to guarantors under the laws of the state in which the Property is
located, in each instance to the extent such laws, or any one of them, are
applicable to this Guaranty, the Lease or any of the Guaranteed Obligations.
7 . Until all of the Guaranteed Obligations have been satisfied and
discharged in full, Guarantor shall not exercise its right of subrogation and
Guarantor hereby waives any right to enforce any remedy which Owner now has or
may hereafter have against Lessee, any other guarantor or any other party to the
Lease and any benefit of, and any right to participate in, any security or other
assets now or hereafter held by Owner with respect to the Lease.
8 All existing and future indebtedness and other obligations to
Guarantor of Lessee and each other party to the Lease and the right of Guarantor
to withdraw any capital invested by Guarantor in Lessee is hereby subordinated
to the Guaranteed Obligations. From and after the occurrence of any event of
default (i.e., after any applicable notice and cure period) under the Lease and
so long as such event of default remains uncured, (a) no portion of such
subordinated indebtedness or capital shall be paid or withdrawn, nor will
Guarantor accept any payment of or on account of any such indebtedness or as a
withdrawal of capital, without the prior written consent of Owner and (b) at
Owner's request, Guarantor shall cause Lessee or such other party to pay to
Owner all or any part of such subordinated indebtedness or capital which
Guarantor is entitled to withdraw for application by Owner to
4
the Guaranteed Obligations. Any payment of such subordinated indebtedness and
any capital which Guarantor is entitled to withdraw which is received by
Guarantor after receipt of the above-referenced request shall be received by
Guarantor in trust for Owner, and Guarantor shall cause the same to be paid
immediately to Owner on account of the Guaranteed Obligations. No such payment
shall reduce or affect in any manner the liability of Guarantor under this
Guaranty, except to the extent provided in the second through fourth sentences
of the unindented paragraph directly below Paragraph l(b) above.
9. [Intentionally Deleted]
10. With or without notice to Guarantor, Owner, in Owner's sole
discretion and at any time and from time to time and in such manner and upon
such terms as Owner deems fit, may (a) apply any or all payments or recoveries
from Lessee or from any other guarantor or party to the Lease or realized from
any security, in such manner and order of priority as Owner may determine, to
any indebtedness or obligation of Lessee with respect to the Lease, whether or
not such indebtedness or obligation is a Guaranteed Obligation or is otherwise
secured or is due at the time of such application, and (b) refund to Lessee any
payment received by Owner under the Lease.
11. The amount of Guarantor's liability and all rights, powers and
remedies of Owner hereunder and under any other agreement now or at any time
hereafter in force between Owner and Guarantor, including, without limitation,
any other guaranty executed by Guarantor relating to any indebtedness or other
obligation of Lessee to Owner, shall be cumulative and not alternative, and such
rights, powers and remedies shall be in addition to all rights, powers and
remedies given to Owner by law. This Guaranty is in addition to and exclusive of
any other guaranty of the Guaranteed Obligations, including, without limitation,
any other guaranty.
12. The obligations of Guarantor hereunder are primary, direct and
independent of the obligations of Lessee and any other party to the Lease,
including, without limitation, any other guarantor, and, in the event of any
default under the Lease following the expiration of any grace period, a separate
action or actions may be brought and prosecuted against Guarantor, whether or
not Lessee or any other party to the Lease, including, without limitation, any
other guarantor, is joined therein or a separate action or actions are brought
against Lessee or any other party to the Lease, including, without limitation,
any other guarantor. Owner may maintain successive actions for other defaults.
Owner's rights hereunder shall not be exhausted by its exercise of any of its
rights or remedies or by any such action or by any number of successive actions
until and unless all Guaranteed Obligations have been paid in full in cash or
performed in full.
13. Guarantor shall pay to Owner reasonable attorneys' fees and all
costs and other expenses which Owner expends or incurs in collecting or
compromising or enforcing payment or performance of the Guaranteed Obligations
or in enforcing this Guaranty, whether or not suit is filed, including, without
limitation, all reasonable attorneys' fees and all costs and other expenses
expended or incurred by Owner in connection with any insolvency, bankruptcy,
reorganization, arrangement or other similar proceedings involving
5
Guarantor which in any way affects the exercise by Owner of its rights and
remedies hereunder.
14. If any provision or portion of this Guaranty is declared or found
by a court of competent jurisdiction to be unenforceable or null and void, such
provision or portion hereof shall be deemed stricken and severed from this
Guaranty, and the remaining provisions and portions hereof shall continue in
ftill force and effect.
15. This Guaranty shall inure to the benefit of Owner, its successors
and assigns, including, without limitation, the assignees of any of the
Guaranteed Obligations, and any subsequent owners or encumbrancers of the
Property, and shall bind the heirs, executors, administrators, personal
representatives, successors and assigns of Guarantor, whether by operation of
law or otherwise; provided, however, that, except in connection with a
termination as expressly permitted in Section 24. 1 0 of the Lease, Guarantor
may not, without Owner's prior written consent, which such consent may be
granted or withheld in Owner's sole discretion, assign or transfer (whether
voluntarily, by operation of law, including merger or other transaction) any of
its rights, powers, duties or obligations hereunder. This Guaranty may be
assigned by Owner with respect to all or any portion of the Guaranteed
Obligations to any subsequent owners or encumbrancers of the Property. When so
assigned, Guarantor shall be liable to the assignees under this Guaranty without
in any manner affecting the liability of Guarantor hereunder with respect to any
of the Guaranteed Obligations retained by Owner.
16. No provision of this Guaranty or right of Owner hereunder can be
waived in whole or in part, nor can Guarantor be released from its obligations
hereunder, except by a writing duly executed by an authorized officer of Owner.
17. When the context and construction so
require, all words used in the
singular herein shall be deemed to have been used in the
plural and the masculine shall
include the feminine and neuter and vice versa. The word
"person" as used herein shall include any individual, company,
firm, association, partnership, corporation, trust or other legal entity of any
kind whatsoever. The term "Lessee," as used herein, shall mean the party herein
so named and its respective successors and assigns, whether by operation of law
or otherwise, including, without limitation, a debtor in possession under
Chapter 1 1 of the federal Bankruptcy Code and any other person at any time
assuming or succeeding to all or substantially all of the Guaranteed
Obligations. If more than one person or entity is a Guarantor hereunder, the
obligations of all such persons and/or entities shall be joint and several.
18. Guarantor represents and warrants that the value of the
consideration received, and to be received, by Guarantor in connection with the
transactions contemplated under the Lease is worth at least as much as the
liabilities and obligations of Guarantor under this Guaranty, and that such
liabilities and obligations are expected to benefit Guarantor either directly or
indirectly.
6
19. EXCEPT WHERE FEDERAL LAW IS APPLICABLE AND UNLESS OTHERWISE
EXPRESSLY PROVIDED HEREIN, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED. In
addition, the applicable arbitration provisions set forth in Article XLIV of the
Lease are hereby incorporated into and made part of this Guaranty by this
reference and shall govern any controversy, dispute or claim of whatsoever
nature arising out of, in connection with, or in relation to the interpretation,
performance or breach of this Guaranty.
20. GUARANTOR ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF
ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS
OF THE UNITED STATES, THE STATE IN WHICH THE PROPERTY IS LOCATED. EACH OF
GUARANTOR AND OWNER BY ITS ACCEPTANCE HEREOF HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING
UNDER THIS GUARANTY OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF OWNER AND GUARANTOR WITH RESPECT TO THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH OF GUARANTOR AND OWNER HEREBY BY ITS ACCEPTANCE HEREOF AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT OWNER MAY FILE A COPY OF THIS PARAGRAPH WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH PARTY TO THE WAIVER O-E-@TS
RIGHT TO TRIAL BY JURY.
Guarantor's Initials:/s/ P.C
21. Except as provided in any other written agreement now or at any
time hereafter in force between Owner and Guarantor, this Guaranty shall
constitute the entire agreement of Guarantor with Owner with respect to the
subject matter hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding upon Owner or
Guarantor unless expressed herein.
22. This Guaranty shall remain in full force and effect and continue
to be effective in the event any petition is filed by or against Lessee, any
other party to the Lease or Guarantor for liquidation or reorganization, in the
event Guarantor becomes insolvent or makes an assignment for the benefit of
creditors or in the event a receiver or trustee is appointed for all or any
significant part of the assets of Lessee, any other party to the Lease or
Guarantor, and shall continue to be effective or be reinstated, as the case may
be, if at any time payment or performance of the Guaranteed Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by Owner, whether as a "voidable
preference," "fraudulent conveyance" or
7
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Guaranteed Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or r etumed.
23. Guarantor will from time to time promptly execute and deliver all
further instruments and take all further action that may be necessary or
desirable, or that Owner may reasonably request, in order to enable Owner to
exercise and enforce its rights and remedies under this Guaranty or to carry out
the provisions and purposes hereof.
24. Any notice, demand and other communication hereunder shall be
given in accordance with the provisions therefor set forth in the Lease, except
that for purposes of this Guaranty the address for notice for Guarantor is set
forth below its signature hereto.
[Signature Page Follows]
8
EXECUTED as of this 15th day of June, 1998.
"Guarantor"
CENTENNIAL HEALTHCARE
CORPORATION, a Delaware corporation
By: /s/ Alan C. Dahl
Its: E.V.P.
Address for Notices:
Centennial Healthcare Corporation
400 Perimeter Center Terrace, Suite 650
Atlanta, Georgia 30346
Attn: Chief Executive Office and
Chairman of the Board
Fax: (770) 730-1300
9
SCHEDULE 10.2
CHIC has entered into guarantee of obligation agreements substantially
identical to Exhibit 10.2 as follows:
1. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Green Bay, Wisconsin facility.
2. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Salina, Kansas facility.
3. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Junction City, Arkansas facility.
4. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Dumas, Arkansas facility.
5. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Port St. Lucie, Florida facility.
6. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Piggott, Arkansas facility.
7. Guarantee of Obligations Agreement dated June 15, 1998 with Health
Care Property Investors, Inc. for the Lake City, Florida facility.
8. Guarantee of Obligations Agreement dated June 15, 1998 with Health Care
Property Partners for the Omro, Wisconsin facility.
9. Guarantee of Obligations Agreement dated June 15, 1998 with Health Care
Property Partners for the Walnut Cove, North Carolina facility.
10. Guarantee of Obligations Agreement dated June 15, 1998 with
Health Care Property Partners for the Orlando, Florida facility.
PARTICIPATION AGREEMENT
Dated as of July 29, 1998
among
CENTENNIAL HEALTHCARE CORPORATION,
as the Construction Agent and as the Lessee,
THE VARIOUS PARTIES HERETO FROM TIME TO TIME,
as the Guarantors,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE
PARTIES HERETO FROM TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE
PARTIES HERETO FROM TIME TO TIME, as the Lenders,
FIRST UNION CAPITAL MARKETS, A DIVISION OF WHEAT FIRST
SECURITIES, INC.,
as Syndication Agent,
and
NATIONSBANK, N.A.,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Lenders and the Holders,
to the extent of their interests
<PAGE>
iii
TABLE OF CONTENTS
Page
SECTION 1. THE LOANS.............................................1
SECTION 2. HOLDER ADVANCES.......................................2
SECTION 3. SUMMARY OF TRANSACTIONS...............................2
3.1. Operative Agreements...................................2
3.2. Property Purchase......................................2
3.3. Construction of Improvements; Commencement of Basic
Rent........................................................3
3.4. [Intentionally Omitted]................................3
SECTION 4. THE CLOSINGS..........................................3
4.1. Initial Closing Date...................................3
4.2. Initial Closing Date; Property Closing Dates;
Acquisition Advances; Construction Advances.................3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING
REQUIREMENTS ON COMPLETION DATE; THE LESSEE'S DELIVERY OF
NOTICES; RESTRICTIONS ON LIENS....................................3
5.1. General................................................3
5.2. Procedures for Funding.................................4
5.3. Conditions Precedent for the Lessor, the Agent, the
Lenders and the Holders Relating to the Initial Closing Date
and the Advance of Funds for the Acquisition of a Property..6
5.4. Conditions Precedent for the Lessor, the Agent, the
Lenders and the Holders Relating to the Advance of Funds
after the Acquisition Advance..............................11
5.5. Additional Reporting and Delivery Requirements on
Completion Date and on Construction Period Termination Date.13
5.6. The Construction Agent's Delivery of Construction
Budget Modifications.......................................14
5.7. Restrictions on Liens.................................14
5.8 Joinder Agreement Requirements.........................14
5.9 [Intentionally Omitted]................................15
5.10. Payments.............................................15
5.11. Increase in Holder Commitments and Lender Commitments.15
5.12. Modifications of Schedules Reflecting Holder
Commitments and/or Lender Commitments......................15
5.13. Substitution of Properties...........................16
5.14. Minimum Size of Construction Advance.................16
5.15. Time Limit for Acquisition of Properties.............16
SECTION 6. REPRESENTATIONS AND WARRANTIES.......................16
6.1. Representations and Warranties of the Borrower........16
6.2. Representations and Warranties of the Construction
Agent and the Lessee.......................................19
SECTION 6B. GUARANTY............................................24
6B.1. Guaranty of Payment and Performance..................24
6B.2. Obligations Unconditional............................25
6B.3. Modifications........................................26
6B.4. Waiver of Rights.....................................26
6B.5. Reinstatement........................................27
6B.6. Remedies.............................................27
6B.7. Limitation of Guaranty...............................27
6B.9. Release of Guarantors................................28
SECTION 7. PAYMENT OF CERTAIN EXPENSES...........................28
7.1. Transaction Expenses..................................28
7.2. Brokers' Fees.........................................29
7.3. Certain Fees and Expenses.............................29
7.4. Unused Fee............................................30
7.5. Upfront Fee...........................................30
7.6. Agent's Fee...........................................30
SECTION 8. OTHER COVENANTS AND AGREEMENTS.......................31
8.1. Cooperation with the Construction Agent or the Lessee.31
8.2. Covenants of the Owner Trustee and the Holders........31
8.3. Credit Party Covenants, Consent and Acknowledgment....33
8.4. Sharing of Certain Payments...........................37
8.5. Grant of Easements, etc...............................38
8.6. Appointment of Agent..................................38
8.7. Collection and Allocation of Payments and Other Amounts.39
8.8. Release of Properties, etc............................42
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.................42
9.1. The Construction Agent's and the Lessee's Credit
Agreement Rights...........................................42
9.2. The Construction Agent's and the Lessee's Trust
Agreement Rights...........................................43
SECTION 10. TRANSFER OF INTEREST................................44
10.1. Restrictions on Transfer.............................44
10.2. Effect of Transfer...................................45
SECTION 11. INDEMNIFICATION.....................................45
11.1. General Indemnity....................................45
11.2. General Tax Indemnity................................48
11.3. Increased Costs, Illegality, etc.....................52
11.4. Funding/Contribution Indemnity.......................54
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE,
STRICT LIABILITY, ETC......................................54
SECTION 12. MISCELLANEOUS.......................................55
12.1. Survival of Agreements...............................55
12.2. Notices..............................................55
12.3. Counterparts.........................................57
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous
Vote Matters...............................................57
12.5. Headings, etc........................................59
12.6. Parties in Interest..................................59
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; VENUE..........................................59
12.8. Severability.........................................60
12.9. Liability Limited....................................60
12.10. Rights of the Credit Parties........................61
12.11. Further Assurances..................................62
12.12. Calculations under Operative Agreements.............62
12.13. Confidentiality.....................................62
12.14. Financial Reporting/Tax Characterization............63
12.15. Set-off.............................................63
EXHIBITS
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - Form of Officer's Certificate - Section 5.3(z)
D- Form of Secretary's Certificate - Section 5.3(aa)
E - Form of Officer's Certificate - Section 5.3(cc)
F - Form of Secretary's Certificate - Section 5.3(dd)
G - Form of Outside Counsel Opinion for the Owner Trustee Section 5.3(ee)
H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(ff)
I - Form of Officer's Certificate - Section 5.5
J - Form of Joinder Agreement - Section 5.8(a)
K - Description of Material Litigation - Section 6.2(d)
L - State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.2(i)
M - Form of Officer's Compliance Certificate - Section 8.3(l)
Appendix A - Rules of Usage and Definitions
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of July 29, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among CENTENNIAL HEALTHCARE CORPORATION, a Georgia
corporation (the "Lessee" or the "Construction Agent"); the various parties
hereto from time to time as guarantors (subject to the definition of Guarantors
in Appendix A hereto, individually, a "Guarantor" and collectively, the
"Guarantors"); FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually (in its individual capacity, the "Trust Company"),
except as expressly stated herein, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1 (the "Owner Trustee", the "Borrower" or the
"Lessor"); the various banks and other lending institutions which are parties
hereto from time to time as holders of certificates issued with respect to the
Centennial Real Estate Trust 1998-1 (subject to the definition of Holders in
Appendix A hereto, individually, a "Holder" and collectively, the "Holders");
the various banks and other lending institutions which are parties hereto from
time to time as lenders (subject to the definition of Lenders in Appendix A
hereto, individually, a "Lender" and collectively, the "Lenders"); FIRST UNION
CAPITAL MARKETS, A DIVISION OF WHEAT FIRST SECURITIES, INC., a Virginia
corporation, as syndication agent ("Syndication Agent"), and NATIONSBANK, N.A.,
a national banking association, as the agent for the Lenders and respecting the
Security Documents, as the agent for the Lenders and the Holders, to the extent
of their interests (in such capacity, the "Agent"). Capitalized terms used but
not otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.
In consideration of the mutual agreements herein contained and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the Lenders
have severally agreed to make Loans to the Lessor from time to time in an
aggregate principal amount of up to the amount of the respective Lender
Commitments in order for the Lessor to acquire the Properties and certain
Improvements, to develop and construct certain Improvements in accordance with
the Agency Agreement and the terms and provisions hereof and for the other
purposes described herein, and in consideration of the receipt of proceeds of
the Loans, the Lessor will issue the Notes. The Loans shall be made and the
Notes shall be issued pursuant to the Credit Agreement. Pursuant to Section 5 of
this Agreement and Section 2 of the Credit Agreement, the Loans will be made to
the Lessor from time to time at the request of the Construction Agent in
consideration for the Construction Agent agreeing for the benefit of the Lessor,
pursuant to the Agency Agreement, to acquire the Properties, to acquire the
Equipment, to construct certain Improvements and to cause the Lessee to lease
the Properties, each in accordance with the Agency Agreement and the other
Operative Agreements. The Loans and the obligations of the Lessor under the
Credit Agreement shall be secured by the Collateral.
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, on each
date Advances are requested to be made in accordance with Section 5 hereof, each
Holder severally shall make a Holder Advance on a pro rata basis to the Lessor
with respect to the Centennial Real Estate Trust 1998-1 based on its Holder
Commitment in an amount in immediately available funds such that the aggregate
of all Holder Advances made by the Holders on such date shall be three percent
(3%) of the amount of the Requested Funds on such date; provided, that no Holder
shall be obligated for any Holder Advance in excess of its pro rata share of the
Available Holder Commitment. The aggregate amount of Holder Advances shall be up
to the aggregate amount of the Holder Commitments. No prepayment or any other
payment with respect to any Advance shall be permitted such that the Holder
Advance with respect to such Advance is less than three percent (3%) of the
outstanding amount of such Advance, except in connection with termination or
expiration of the Term or in connection with the exercise of remedies relating
to the occurrence of a Lease Event of Default. The representations, warranties,
covenants and agreements of the Holders herein and in the other Operative
Agreements are several, and not joint or joint and several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. Operative Agreements.
On the date hereof, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, each applicable Ground
Lease, the Agency Agreement, the Credit Agreement, the Notes, the Trust
Agreement, the Certificates, the Security Agreement, each applicable Mortgage
Instrument and such other documents, instruments, certificates and opinions of
counsel as agreed to by the parties hereto.
3.2. Property Purchase.
On each Property Closing Date and subject to the terms and conditions of
this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement, (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement, (c) the Lessor will purchase and acquire good and marketable title to
or ground lease pursuant to a Ground Lease, the applicable Property, each to be
within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Bill of Sale or Ground Lease, as the case may be, and grant
the Agent a lien on such Property by execution of the required Security
Documents, (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property and (e) the Basic Term shall commence
with respect to such Property.
3.3. Construction of Improvements; Commencement of Basic
Rent.
Construction Advances will be made with respect to particular Improvements
to be constructed and with respect to ongoing Work regarding the Equipment and
construction of particular Improvements, in each case, pursuant to the terms and
conditions of this Agreement and the Agency Agreement. The Construction Agent
will act as a construction agent on behalf of the Lessor respecting the Work
regarding the Equipment, the construction of such Improvements and the
expenditures of the Construction Advances related to the foregoing. The
Construction Agent shall promptly notify the Lessor upon Completion of the
Improvements and the Lessee shall commence to pay Basic Rent as of the Rent
Commencement Date.
3.4. [Intentionally Omitted]
SECTION 4. THE CLOSINGS.
4.1. Initial Closing Date.
All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of Moore & Van Allen, PLLC,
Charlotte, North Carolina, or at such other location as may be determined by the
Lessor, the Agent and the Lessee.
4.2. Initial Closing Date; Property Closing Dates;
Acquisition Advances; Construction Advances.
The Construction Agent shall deliver to the Agent a requisition (a
"Requisition"), in the form attached hereto as Exhibit A or in such other form
as is satisfactory to the Agent, in its reasonable discretion, in connection
with (a) the Transaction Expenses and other fees, expenses and disbursements
payable, pursuant to Section 7.1, by the Lessor and (b) each Acquisition Advance
pursuant to Section 5.3 and (c) each Construction Advance pursuant to Section
5.4.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. General.
(a) To the extent funds have been advanced to the Lessor as Loans by
the Lenders and to the Lessor as Holder Advances by the Holders, the
Lessor will use such funds from time to time in accordance with the terms
and conditions of this Agreement and the other Operative Agreements (i) at
the direction of the Construction Agent to acquire the Properties in
accordance with the terms of this Agreement, the Agency Agreement and the
other Operative Agreements, (ii) to make Advances to the Construction
Agent to permit the acquisition, testing, engineering, installation,
development, construction, modification, design, and renovation, as
applicable, of the Properties (or components thereof) in accordance with
the terms of the Agency Agreement and the other Operative Agreements, and
(iii) to pay Transaction Expenses, fees, expenses and other disbursements
payable by the Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and Holder Yield
on the Holder Advances on any Scheduled Interest Payment Date with respect
to any Property during the period prior to the Rent Commencement Date with
respect to such Property, (i) each Lender's Loan shall automatically be
increased by the amount of interest accrued and unpaid on such Loan for
such period (except to the extent that at any time such increase would
cause such Lender's Loan to exceed such Lender's Available Commitment, in
which case the Lessee shall pay such excess amount to such Lender in
immediately available funds on the date such Lender's Available Commitment
was exceeded), and (ii) each Holder's Holder Advance shall automatically
be increased by the amount of Holder Yield accrued and unpaid on such
Holder Advance for such period (except to the extent that at any time such
increase would cause the Holder Advance of such Holder to exceed such
Holder's Available Holder Commitment, in which case the Lessee shall pay
such excess amount to such Holder in immediately available funds on the
date the Available Holder Commitment of such Holder was exceeded). Such
increases in a Lender's Loan and a Holder's Holder Advance shall occur
without any disbursement of funds by any Person.
5.2. Procedures for Funding.
(a) The Construction Agent shall designate the date for Advances
hereunder in accordance with the terms and provisions hereof; provided,
however, it is understood and agreed that no more than four (4) Advances
(excluding any conversion and/or continuation of any Loan or Holder
Advance) may be requested during any calendar month. Not less than (i)
three (3) Business Days prior to the date that the first Advance is
requested hereunder and (ii) three (3) Business Days prior to the date on
which any subsequent Acquisition Advance or Construction Advance is to be
made, the Construction Agent shall deliver to the Agent, (A) with respect
to the date that the first Advance is requested hereunder and each
subsequent Acquisition Advance, a Requisition as described in Section 4.2
hereof (including without limitation a legal description of the Land, if
any, a schedule of the Improvements, if any, and a schedule of the
Equipment, if any, acquired or to be acquired on such date, and a schedule
of the Work, if any, to be performed, each of the foregoing in a form
reasonably acceptable to the Agent) and (B) with respect to each
Construction Advance, a Requisition identifying (among other things) the
Property to which such Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request funds in
an amount that is not in excess of the total aggregate of the Available
Commitments plus the Available Holder Commitments at such time, and (iii)
request that the Holders make Holder Advances and that the Lenders make
Loans to the Lessor for the payment of Transaction Expenses, Property
Acquisition Costs (in the case of an Acquisition Advance) or other
Property Costs (in the case of a Construction Advance) that have
previously been incurred or are to be incurred on the date of such Advance
to the extent such were not subject to a prior Requisition, in each case
as specified in the Requisition.
(c) Subject to the satisfaction of the conditions precedent set forth
in Sections 5.3 or 5.4, as applicable, on each Property Closing Date or
the date on which the Construction Advance is to be made, as applicable,
(i) the Lenders severally shall make Loans based on their respective
Lender Commitments to the Lessor in an aggregate amount equal to
ninety-seven percent (97%) of the Requested Funds specified in any
Requisition (ratably between the Tranche A Lenders and the Tranche B
Lenders with the Tranche A Lenders funding eighty-eight percent (88%) of
the Requested Funds and the Tranche B Lenders funding nine percent (9%) of
the Requested Funds), up to an aggregate principal amount equal to the
aggregate of the Available Commitments, (ii) the Holders severally shall
make Holder Advances based on their respective Holder Commitments in an
aggregate amount equal to three percent (3%) of the balance of the
Requested Funds specified in such Requisition, up to the aggregate
advanced amount equal to the aggregate of the Available Holder
Commitments; and (iii) the total amount of such Loans and Holder Advances
made on such date shall (x) be used by the Lessor to pay Property Costs
and/or Transaction Expenses within ten (10) Business Days of the receipt
by the Lessor of such Advance unless such advance is in connection with an
Escrowed Closing (as defined in Section 5.2(d) hereof) and within ninety
(90) days of receipt by the Lessor of such Advance if such Advance is made
in connection with an Escrowed Closing or (y) be advanced by the Lessor on
the date of such Advance to the Construction Agent or the Lessee to pay
Property Costs, as applicable. Notwithstanding that the Operative
Agreements state that Advances shall be directed to the Lessor, each
Advance shall in fact be directed to the Agent (for the benefit of the
Lessor) and applied by the Agent (for the benefit of the Lessor) pursuant
to the requirements imposed on the Lessor under the Operative Agreements.
(d) With respect to an Advance obtained by the Lessor to pay for
Property Costs and/or Transaction Expenses or other costs payable under
Section 7.1 hereof and not expended by the Lessor for such purpose on the
date of such Advance, such amounts shall either (i) be held by the Lessor
(or the Agent on behalf of the Lessor) until the applicable closing date
and applied for such purpose on such closing date or (ii) be held by an
escrow agent on behalf of the Lessor until the applicable closing date
pursuant to an escrow agreement in a form acceptable to the Agent and
applied for such purpose in accordance with the terms and subject to the
conditions set forth in such escrow agreement (an "Escrowed Closing"). If
the closing does not occur within ten (10) Business Days (or within ninety
(90) days in the case of an Escrowed Closing) of the date of the Lessor's
receipt of such Advance, such amounts shall be applied regarding the
applicable Advance to repay the Lenders and the Holders and, subject to
the terms hereof, and of the Credit Agreement and the Trust Agreement,
shall become upon such repayment available for future Advances. Amounts
paid pursuant to Section 5.13 of this Agreement or otherwise in connection
with a Terminated Property shall become upon such repayment available for
future Advances up to but not to exceed the aggregate amount of the
Advances made for the Terminated Property. Any such amounts held by the
Lessor (or the Agent or escrow agent on behalf of the Lessor) shall be
subject to the lien of the Security Agreement.
(e) All Operative Agreements which are to be delivered to the Lessor,
the Agent, the Lenders or the Holders shall be delivered to the Agent, on
behalf of the Lessor, the Agent, the Lenders or the Holders, and such
items (except for Notes, Certificates, Bills of Sale, the Ground Leases
and chattel paper originals, with respect to which in each case there
shall be only one original) shall be delivered with originals sufficient
for the Lessor, the Agent, each Lender and each Holder. All other items
which are to be delivered to the Lessor, the Agent, the Lenders or the
Holders shall be delivered to the Agent, on behalf of the Lessor, the
Agent, the Lenders or the Holders, and such other items shall be held by
the Agent. To the extent any such other items are requested in writing
from time to time by the Lessor, any Lender or any Holder, the Agent shall
provide a copy of such item to the party requesting it.
(f) Notwithstanding the completion of any closing under this
Agreement pursuant to Sections 5.3 or 5.4, each condition precedent in
connection with any such closing may be subsequently enforced by the Agent
(unless such has been expressly waived in writing by the Agent, acting at
the direction of the Majority Secured Parties).
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the
Holders Relating to the Initial Closing Date and the Advance of Funds
for the Acquisition of a Property.
The obligations (i) on the Initial Closing Date of the Lessor, the Agent,
the Lenders and the Holders to enter into the transactions contemplated by this
Agreement, including without limitation the obligation to execute and deliver
the applicable Operative Agreements to which each is a party on the Initial
Closing Date, (ii) on the Initial Closing Date of the Holders to make Holder
Advances, and of the Lenders to make Loans in order to pay Transaction Expenses,
fees, expenses and other disbursements payable by the Lessor under Section
7.1(a) of this Agreement and (iii) on a Property Closing Date of the Holder to
make Holder Advances and of the Lenders to make Loans for the purpose of
providing funds to the Lessor necessary to pay the Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Section 7.1(b) of
this Agreement and to acquire or ground lease a Property (an "Acquisition
Advance"), in each case (with regard to the foregoing Sections 5.3(i), (ii) and
(iii)) are subject to the satisfaction or waiver of the following conditions
precedent on or prior to the Initial Closing Date or the applicable Property
Closing Date, as the case may be (to the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion;
notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.3 which are required to be
performed by such party):
(a) the correctness (as to the Lessee, only in all material respects)
of the representations and warranties of the parties to this Agreement
contained herein, in each of the other Operative Agreements and each
certificate delivered pursuant to any Operative Agreement (including
without limitation the Incorporated Representations and Warranties) on
each such date;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart copy
of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the representations
and warranties set forth in Section 6.2(l) hereof;
(e) the Construction Agent shall have delivered to the Agent a good
standing certificate for the Construction Agent in the state where each
such Property is located, the Deed with respect to the Land and existing
Improvements (if any), a copy of the Ground Lease (if any), and a copy of
the Bill of Sale with respect to the Equipment (if any), respecting such
of the foregoing as are being acquired or ground leased on each such date
with the proceeds of the Loans and Holder Advances or which have been
previously acquired or ground leased with the proceeds of the Loans and
Holder Advances and such Land, existing Improvements (if any) and
Equipment (if any) shall be located in an Approved State;
(f) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Advance requested by each such Requisition;
(g) the Construction Agent shall have delivered to the Agent title
insurance commitments to issue policies respecting each such Property in
favor of the Lessor (as fee simple owner of each such Property, and the
Construction Agent shall use all commercially reasonable efforts to obtain
a special endorsement (to the extent such special endorsement does not
exceed $500 in cost) providing that in the event the Lease respecting any
such Property is ever deemed to be a mortgage, such policy insures the
interests of the Lessor as a mortgagee) and the Agent from a title
insurance company acceptable to the Agent, with such title exceptions
thereto as are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the Agent an
environmental site assessment respecting each such Property prepared by an
independent recognized professional acceptable to the Agent;
(i) the Construction Agent shall have delivered to the Agent a survey
(with a flood hazard certification) respecting each such Property prepared
by an independent recognized professional acceptable to the Agent;
(j) unless such an opinion has previously been delivered with respect
to a particular state, the Construction Agent shall have caused to be
delivered to the Agent a legal opinion in the form attached hereto as
Exhibit B or in such other form (excluding zoning, permits or similar land
use, development or construction laws) as is reasonably acceptable to the
Agent with respect to local law real property issues respecting the state
in which each such Property is located addressed to the Lessor, the Agent,
the Lenders and the Holders, from counsel located in the state where each
such Property is located, prepared by counsel acceptable to the Agent and
a separate flood hazard certificate respecting each such Property prepared
by an independent recognized professional acceptable to the Agent;
(k) the Agent shall be satisfied that the acquisition, ground leasing
and/or holding of each such Property and the execution of the Mortgage
Instrument and the other Security Documents will not materially and
adversely affect the rights of the Lessor, the Agent, the Holders or the
Lenders under or with respect to the Operative Agreements;
(l) the Construction Agent shall have delivered to the Agent copies
of invoices for, or other reasonably satisfactory evidence of, the various
Transaction Expenses and other fees, expenses and disbursements referenced
in Sections 7.1(a) or 7.1(b) of this Agreement, as appropriate;
(m) the Construction Agent shall have caused to be delivered to the
Agent a Mortgage Instrument (in such form as is acceptable to the Agent,
with revisions as necessary to conform to applicable state law), Lessor
Financing Statements and Lender Financing Statements respecting each such
Property, all fully executed and in recordable form;
(n) the Lessee shall have delivered to the Agent (or the escrow agent
in connection with an Escrowed Closing) with respect to each such Property
a Lease Supplement and a memorandum (or short form lease) regarding the
Lease and such Lease Supplement (such memorandum or short form lease to be
in the form attached to the Lease as Exhibit B or in such other form as is
acceptable to the Agent, with modifications as necessary to conform to
applicable state law, and in form suitable for recording);
(o) with respect to each Acquisition Advance, the sum of the
Available Commitment plus the Available Holder Commitment (after deducting
the Unfunded Amount, if any, and after giving effect to the Acquisition
Advance) will be sufficient to pay all amounts payable therefrom;
(p) if any such Property is subject to a Ground Lease, the
Construction Agent shall have caused a lease memorandum (or short form
lease) to be delivered to the Agent (or the escrow agent in connection
with an Escrowed Closing) for such Ground Lease and, if requested by the
Agent, a landlord waiver and a mortgagee waiver (in each case, in such
form as is reasonably acceptable to the Agent);
(q) counsel (acceptable to the Agent) for the ground lessor of each
such Property subject to a Ground Lease shall have issued to the Lessor,
the Agent, the Lenders and the Holders, its opinion;
(r) the Construction Agent shall have delivered to the Agent a
preliminary Construction Budget for each such Property, if applicable;
(s) the Construction Agent shall have provided evidence to the Agent
of insurance with respect to each such Property as provided in the Lease;
(t) subject to Section 8.3(e) of this Agreement, the Construction
Agent shall have caused an Appraisal regarding each such Property to be
provided to the Agent from an appraiser selected by the Agent;
(u) the Construction Agent shall cause (i) Uniform Commercial Code
lien searches, tax lien searches and judgment lien searches regarding the
Lessee to be conducted (and copies thereof to be delivered to the Agent)
in such jurisdictions as determined by the Agent by a nationally
recognized search company acceptable to the Agent and (ii) the liens
referenced in such lien searches which are objectionable to the Agent to
be either removed or otherwise handled in a manner satisfactory to the
Agent;
(v) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements and/or documents related thereto shall have been paid or
provisions for such payment shall have been made to the satisfaction of
the Agent;
(w) in the opinion of the Agent and its counsel, the transactions
contemplated by the Operative Agreements do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any violation of Law;
(x) each of the Operative Agreements to be entered into on such date
shall have been duly authorized, executed and delivered by the parties
thereto, and shall be in full force and effect, and the Agent shall have
received a fully executed copy of each of the Operative Agreements;
(y) since the date of the most recent audited financial statements
(as delivered pursuant to the requirements of the Lessee Credit Agreement)
of the Lessee, there shall not have occurred any event, condition or state
of facts which shall have or could reasonably be expected to have a
Material Adverse Effect; provided, the foregoing shall not prevent the
Lessee from exercising rights expressly granted to the Lessee pursuant to
the provisions of the Operative Agreements;
(z) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate, dated as of the Initial Closing Date,
of the Lessee in the form attached hereto as Exhibit C or in such other
form as is acceptable to the Agent stating that (i) each and every
representation and warranty of each Credit Party contained in the
Operative Agreements to which it is a party is true and correct in all
material respects on and as of the Initial Closing Date; (ii) no Default
or Event of Default has occurred and is continuing under any Operative
Agreement; (iii) each Operative Agreement to which any Credit Party is a
party is in full force and effect with respect to it; and (iv) each Credit
Party has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Initial Closing Date;
(aa) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary or an Assistant Secretary of
each Credit Party, dated as of the Initial Closing Date, in the form
attached hereto as Exhibit D or in such other form as is acceptable to the
Agent attaching and certifying as to (1) the resolutions of the Board of
Directors of such Credit Party duly authorizing the execution, delivery
and performance by such Credit Party of each of the Operative Agreements
to which it is or will be a party, (2) the articles of incorporation of
such Credit Party certified as of a recent date by the Secretary of State
of its state of incorporation and its by-laws and (3) the incumbency and
signature of persons authorized to execute and deliver on behalf of such
Credit Party the Operative Agreements to which it is or will be a party
and (ii) a good standing certificate (or local equivalent) from the
respective states where such Credit Party is incorporated and where the
principal place of business of such Credit Party is located as to its good
standing in each such state. To the extent any Credit Party is a
partnership, a limited liability company or is otherwise organized, such
Person shall deliver to the Agent (in form and substance satisfactory to
the Agent) as of the Initial Closing Date (A) a certificate regarding such
Person and any corporate general partners covering the matters described
in Exhibit D and (B) a good standing certificate, a certificate of limited
partnership or a local equivalent of either of the foregoing, as
applicable;
(bb) as of the Initial Closing Date only, there shall not have
occurred any materially adverse change in the business, financial
condition, assets or property of the Lessee and its Subsidiaries taken as
a whole as a result of any event, condition, circumstance or contingency
from that set forth in the most recent audited consolidated financial
statements of the Credit Parties which have been provided to the Agent;
(cc) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate of the Lessor dated as of the Initial
Closing Date in the form attached hereto as Exhibit E or in such other
form as is acceptable to the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct in all material
respects on and as of the Initial Closing Date, (ii) each Operative
Agreement to which the Lessor is a party is in full force and effect with
respect to it and (iii) the Lessor has duly performed and complied with
all covenants, agreements and conditions contained herein or in any
Operative Agreement required to be performed or complied with by it on or
prior to the Initial Closing Date;
(dd) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary, an Assistant Secretary, Trust
Officer or Vice President of the Trust Company in the form attached hereto
as Exhibit F or in such other form as is acceptable to the Agent,
attaching and certifying as to (A) the signing resolutions duly
authorizing the execution, delivery and performance by the Lessor of each
of the Operative Agreements to which it is or will be a party, (B) its
articles of association or other equivalent charter documents and its
by-laws, as the case may be, certified as of a recent date by an
appropriate officer of the Trust Company and (C) the incumbency and
signature of persons authorized to execute and deliver on its behalf the
Operative Agreements to which it is a party and (ii) a good standing
certificate from the Office of the Comptroller of the Currency;
(ee) as of the Initial Closing Date only, counsel for the Lessor
acceptable to the Agent shall have issued to the Lessee, the Holders, the
Lenders and the Agent its opinion in the form attached hereto as Exhibit G
or in such other form as is reasonably acceptable to the Agent;
(ff) as of the Initial Closing Date only, the Construction Agent
shall have caused to be delivered to the Agent a legal opinion in the form
attached hereto as Exhibit H or in such other form as is reasonably
acceptable to the Agent, addressed to the Lessor, the Agent, the Lenders
and the Holders, from counsel acceptable to the Agent; and
(gg) as of the Initial Closing Date only, the Construction Agent
shall cause (i) tax lien searches and judgment lien searches regarding
each Credit Party to be conducted (and copies thereof to be delivered to
the Agent) in such jurisdictions as determined by the Agent by a
nationally recognized search company acceptable to the Agent and (ii) the
liens referenced in such lien searches which are objectionable to the
Agent to be either removed or otherwise handled in a manner satisfactory
to the Agent.
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the
Holders Relating to the Advance of Funds after the Acquisition
Advance.
The obligations of the Holders to make Holder Advances, and the Lenders to
make Loans in connection with all requests for Advances subsequent to the
acquisition of a Property (and to pay the Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Section 7.1 of this
Agreement in connection therewith) are subject to the satisfaction or waiver of
the following conditions precedent. (To the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion.
Notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.4 which are required to be
performed by such party.):
(a) the correctness (as to the Lessee, only in all material respects)
on such date of the representations and warranties of the parties to this
Agreement contained herein, in each of the other Operative Agreements and
in each certificate delivered pursuant to any Operative Agreement
(including without limitation the Incorporated Representations and
Warranties) as of the date given or made or deemed given or made;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart of the
Requisition, appropriately completed;
(d) based upon the applicable Construction Budgets which shall
satisfy the requirements of this Agreement, the Available Commitments and
the Available Holder Commitment (after deducting the Unfunded Amount) will
be sufficient to complete the Improvements;
(e) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Construction Advance requested by the
applicable Requisition;
(f) the title insurance policy delivered in connection with the
requirements of Section 5.3(g) shall provide for (or shall be endorsed to
provide for) insurance in an amount at least equal to the maximum total
Property Cost indicated by the Construction Budget referred to in
subparagraph (d) above and there shall be no title change or exception
reasonably objectionable to the Agent;
(g) the Construction Agent shall have delivered to the Agent copies
of the Plans and Specifications for the applicable Improvements;
(h) the Construction Agent shall have delivered to the Agent invoices
for, or other reasonably satisfactory evidence of, any Transaction
Expenses and other fees, expenses and disbursements referenced in Section
7.1(b) that are to be paid with the Advance;
(i) the Construction Agent shall have delivered, or caused to be
delivered to the Agent, invoices, Bills of Sale or other documents
acceptable to the Agent, in each case with regard to any Equipment or
other components of such Property then being acquired with the proceeds of
the Loans and Holder Advances and naming the Lessor as purchaser and
transferee;
(j) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements shall have been paid or provisions for such payment shall have
been made to the satisfaction of the Agent;
(k) since the date of the most recent audited Financial Statements
(as such term is defined in the Lessee Credit Agreement) of the Lessee,
there shall not have occurred any event, condition or state of facts which
shall have or could reasonably be expected to have a Material Adverse
Effect; provided, the foregoing shall not prevent the Lessee from
exercising rights expressly granted to the Lessee pursuant to the
provisions of the Operative Agreements; and
(l) in the opinion of the Agent and its counsel, the transactions
contemplated by the Operative Agreements do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any violation of Law.
5.5. Additional Reporting and Delivery Requirements on
Completion Date and on Construction Period Termination
Date.
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as Exhibit I or in such other form as is acceptable to the Agent
specifying (a) the address for such Property, (b) the Completion Date for such
Property, (c) the aggregate Property Cost for such Property, (d) detailed,
itemized documentation supporting the asserted Property Cost figures and (e)
that all representations and warranties of the Construction Agent and Lessee in
each of the Operative Agreements and each certificate delivered pursuant thereto
(including without limitation the Incorporated Representations and Warranties)
are true and correct in all material respects as of the Completion Date. The
Agent shall have the right to contest the information contained in such
Officer's Certificate. Furthermore, on or prior to the Completion Date for each
Property, the Construction Agent shall deliver or cause to be delivered to the
Agent (unless previously delivered to the Agent) originals of the following,
each of which shall be in form and substance acceptable to the Agent, in its
reasonable discretion: (w) a title insurance endorsement regarding the title
insurance policy delivered in connection with the requirements of Section
5.3(g), but only to the extent such endorsement is necessary to provide for
insurance in an amount at least equal to the maximum total Property Cost and, if
endorsed, the endorsement shall not include a title change or exception
objectionable to the Agent; (x) an as-built survey for such Property, (y)
insurance certificates respecting such Property as required hereunder and under
the Lease Agreement, and (z) if requested by the Agent, amendments to the Lessor
Financing Statements executed by the appropriate parties. In addition, on the
Completion Date for such Property the Construction Agent covenants and agrees
that the recording fees, documentary stamp taxes or similar amounts required to
be paid in connection with the related Mortgage Instrument shall be paid in an
amount required by applicable law, subject, however, to the obligations of the
Lenders and the Holders to fund such costs to the extent required pursuant to
Section 7.1.
5.6. The Construction Agent's Delivery of Construction
Budget Modifications.
The Construction Agent covenants and agrees to deliver to the Agent each
month notification of any modification to any Construction Budget regarding any
Property if such modification increases the cost to construct such Property;
provided no Construction Budget may be increased unless (a) the title insurance
policies referenced in Section 5.3(g) are also modified or endorsed, if
necessary, to provide for insurance in an amount that satisfies the requirements
of Section 5.4(f) of this Agreement and (b) after giving effect to any such
amendment, the Construction Budget remains in compliance with the requirements
of Section 5.4(d) of this Agreement.
5.7. Restrictions on Liens.
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.2(r)(i) and 6.2(r)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than Lessor Liens and such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved or accepted by the Agent).
5.8 Joinder Agreement Requirements.
Each Domestic Subsidiary formed or acquired subsequent to the Initial
Closing Date shall become a Guarantor and shall satisfy the following conditions
within thirty (30) days after the formation or acquisition of such Domestic
Subsidiary:
(a) such Domestic Subsidiary shall execute and deliver to the Agent a
Joinder Agreement in the form attached hereto as Exhibit J;
(b) such Domestic Subsidiary shall have delivered to the Agent (x) an
Officer's Certificate of such Domestic Subsidiary in the form attached
hereto as Exhibit C, (y) a certificate of the Secretary or an Assistant
Secretary of such Domestic Subsidiary in the form attached hereto as
Exhibit D and (z) good standing certificates (or local equivalent) from
the respective states where such Domestic Subsidiary is incorporated or
organized and where the principal place of business of such Domestic
Subsidiary is located as to its good standing in each such state;
(c) such Domestic Subsidiary shall have delivered to the Agent an
opinion of counsel (acceptable to the Agent) in the form attached hereto
as Exhibit H; and
(d) the Agent shall have received such other documents, certificates
and information as the Agent shall have reasonably requested.
5.9 [Intentionally Omitted].
5.10.Payments.
All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be made by the Construction Agent or the Lessee under this
Agreement or any other Operative Agreements (excluding Excepted Payments which
shall be paid directly to the party to whom such payments are owed) shall be
made to the Agent at the office designated by the Agent from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim. Subject to the definition of "Interest Period" in Appendix A
attached hereto, whenever any payment under this Agreement or any other
Operative Agreements shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of interest,
Holder Yield and fees payable pursuant to the Operative Agreements, as
applicable and as the case may be.
5.11.Increase in Holder Commitments and Lender Commitments.
From time to time prior to the Construction Period Termination Date and
upon no less than thirty (30) Business Days' notice delivered to the Agent, the
Construction Agent on behalf of the Owner Trustee may elect to increase the
Holder Commitments and the Lender Commitments of each Holder and each Lender,
ratably, by an amount equal to the aggregate proposed amount of increase
multiplied by (x) in the case of each Holder, the fraction in which the
numerator is the Holder Commitment of such Holder and the denominator is the sum
of all Holder Commitments and all Lender Commitments and (y) in the case of each
Lender, the fraction in which the numerator is the Lender Commitment of such
Lender and the denominator is the sum of all Holder Commitments and all Lender
Commitments; provided, no such increase in the Holder Commitments and/or the
Lender Commitments shall be effective, valid or enforceable unless: (a) there
shall be a concurrent, dollar for dollar reduction in the Lessee Credit
Agreement Commitment Amount of each lender thereunder corresponding to the
increase in the Holder Commitments and the Lender Commitments, (b) no Default or
Event of Default shall have occurred and be continuing as of the date such
increase is to be made and (c) in the aggregate, all such increases in the
Holder Commitments and the Lender Commitments from time to time shall not exceed
forty million Dollars ($40,000,000). Each party to this Agreement agrees to the
above-referenced mechanics for increases in the Holder Commitments and the
Lender Commitments. The Agent shall promptly notify each Holder and each Lender
upon receipt by the Agent of any notice pursuant to the first sentence of this
Section 5.11.
5.12.Modifications of Schedules Reflecting Holder
Commitments and/or Lender Commitments.
To the extent the Holder Commitments and/or the Lender Commitments are
increased or decreased in accordance with the terms of the Operative Agreements,
then the Agent shall prepare and distribute a replacement Schedule I for the
Trust Agreement and a replacement Schedule 1.1 for the Credit Agreement which,
in each case, shall be binding and enforceable against all parties (absent
manifest error).
5.13.Substitution of Properties.
From time to time and upon no less than thirty (30) days prior notice to
the Agent, Lessee may request to substitute a property (the "Substitute
Property") for another Property then subject to the Operative Agreements (the
"Terminated Property"). The Financing Parties shall permit the substitution of
the Substitute Property so long as all conditions precedent for the Substitute
Property are satisfied pursuant to the Operative Agreements (including without
limitation Section 5.3 of this Agreement) prior to the date specified for such
substitution and the Fair Market Sales Value of the Substitute Property is equal
to or greater than the Fair Market Sales Value of the Terminated Property, such
determination of Fair Market Sales Value to be determined by the Appraisal
Procedure and to the extent Appraisals are required, such Appraisals to be
conducted within sixty (60) days prior to the date specified for such
substitution. The Terminated Property shall be sold to the Lessee pursuant to
Sections 20.1 and 20.2 of the Lease but shall not count against the limited
number of Properties which may be purchased by the Lessee prior to the
Expiration Date.
5.14.Minimum Size of Construction Advance.
The Holders and the Lenders shall have no obligation to make Advances
at any time for modifications, improvements or the like regarding any Property
unless each such Advance is in excess of five hundred Dollars ($500) per bed per
Property.
5.15.Time Limit for Acquisition of Properties.
On and after the Construction Period Termination Date, (a) the Owner
Trustee shall not acquire any Property (subject, however, to Section 5.13) and
(b) no Financing Party shall be required to make any Advance for the acquisition
of any Property.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. Representations and Warranties of the Borrower.
Effective as of the Initial Closing Date and the date of each Advance, the
Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly organized and
validly existing and in good standing under the laws of the United States
of America and has the power and authority to enter into and perform its
obligations under the Trust Agreement and (assuming due authorization,
execution and delivery of the Trust Agreement by the Holders) has the
corporate and trust power and authority to act as the Owner Trustee and to
enter into and perform the obligations under each of the other Operative
Agreements to which the Trust Company or the Owner Trustee, as the case
may be, is or will be a party and each other agreement, instrument and
document to be executed and delivered by it on or before such Closing Date
in connection with or as contemplated by each such Operative Agreement to
which the Trust Company or the Owner Trustee, as the case may be, is or
will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) as the Owner Trustee, as the case may be,
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) does or will require any approval or
consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any Legal Requirement relating
to its banking or trust powers, (iii) does or will contravene or result in
any breach of or constitute any default under, or result in the creation
of any Lien upon any of its property under, (A) its charter or by-laws, or
(B) any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement or other agreement or
instrument to which it is a party or by which it or its properties may be
bound or affected, which contravention, breach, default or Lien under
clause (B) would materially and adversely affect its ability, in its
individual capacity or as the Owner Trustee, to perform its obligations
under the Operative Agreements to which it is a party or (iv) does or will
require any Governmental Action by any Governmental Authority regulating
its banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is the
legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party have been, or on or before such Closing Date
will be, duly executed and delivered by the Trust Company or the Owner
Trustee, as the case may be, and the Trust Agreement and each such other
Operative Agreement to which the Trust Company or the Owner Trustee, as
the case may be, is a party constitutes, or upon execution and delivery
will constitute, a legal, valid and binding obligation enforceable against
the Trust Company or the Owner Trustee, as the case may be, in accordance
with the terms thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party, either in its individual
capacity or as the Owner Trustee, before any Governmental Authority that,
if adversely determined, would materially and adversely affect its
ability, in its individual capacity or as the Owner Trustee, to perform
its obligations under the Operative Agreements to which it is a party or
would question the validity or enforceability of any of the Operative
Agreements to which it is or will become a party;
(e) It has not assigned or transferred any of its right, title or
interest in or under the Lease, the Agency Agreement or its interest in
any Property or any portion thereof, except in accordance with the
Operative Agreements;
(f) No Default of Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative Agreements, the
proceeds of the Loans and Holder Advances shall not be applied by the
Owner Trustee for any purpose other than the purchase and/or lease of the
Properties, the acquisition, installation and testing of the Equipment,
the construction of Improvements and the payment of Transaction Expenses
and the fees, expenses and other disbursements referenced in Sections
7.1(a) and 7.1(b) of this Agreement, in each case which accrue prior to
the Rent Commencement Date with respect to a particular Property;
(h) Neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf has offered or sold any interest in the Trust
Estate or the Notes, or in any similar security relating to a Property, or
in any security the offering of which for the purposes of the Securities
Act would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the
same from, any Person other than, in the case of the Notes, the Agent, and
neither the Owner Trustee nor any Person authorized by the Owner Trustee
to act on its behalf will take any action which would subject, as a direct
result of such action alone, the issuance or sale of any interest in the
Trust Estate or the Notes to the provisions of Section 5 of the Securities
Act or require the qualification of any Operative Agreement under the
Trust Indenture Act of 1939, as amended;
(i) The Owner Trustee's principal place of business, chief executive
office and office where the documents, accounts and records relating to
the transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 79 South Main Street, Salt Lake City,
Utah 84111;
(j) The Owner Trustee is not engaged principally in, and does not
have as one (1) of its important activities, the business of extending
credit for the purpose of purchasing or carrying any margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal
Reserve System of the United States), and no part of the proceeds of the
Loans or the Holder Advances will be used by it to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing
or carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations T, U, or X of the Board
of Governors of the Federal Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act;
(l) Each Property is free and clear of all Lessor Liens attributable
to the Owner Trustee in its individual capacity; and
(m) The Owner Trustee, in its trust capacity, is a party to no
documents, instruments or agreements other than the Operative Agreements
to which it is a party and any other documents delivered by the Owner
Trustee in connection with the Operative Agreements.
6.2. Representations and Warranties of the Construction Agent and the
Lessee.
Effective as of the Initial Closing Date, the date of each Advance, the
date each Domestic Subsidiary delivers a Joinder Agreement and the Rent
Commencement Date, each Credit Party represents and warrants to each of the
other parties hereto that:
(a) The Incorporated Representations and Warranties are true and
correct in all material respects (unless such relate solely to an earlier
point in time) and the Lessee has delivered to the Agent the financial
statements and other reports referred to in Section 3 of the Lessee Credit
Agreement;
(b) The execution and delivery by each Credit Party of this Agreement
and the other applicable Operative Agreements as of such date and the
performance by each Credit Party of its respective obligations under this
Agreement and the other applicable Operative Agreements are within the
corporate, partnership or limited liability company (as the case may be)
powers of each Credit Party, have been duly authorized by all necessary
corporate, partnership or limited liability company (as the case may be)
action on the part of each Credit Party (including without limitation any
necessary shareholder action), have been duly executed and delivered, have
received all necessary governmental approval, and do not and will not (i)
violate any Legal Requirement which is binding on any Credit Party or any
of its Subsidiaries, (ii) contravene or conflict with, or result in a
breach of, any provision of the Articles of Incorporation, By-Laws or
other organizational documents of any Credit Party or any of its
Subsidiaries or of any agreement, indenture, instrument or other document
which is binding on any Credit Party or any of its Subsidiaries or (iii)
result in, or require, the creation or imposition of any Lien (other than
pursuant to the terms of the Operative Agreements) on any asset of any
Credit Party or any of its Subsidiaries;
(c) This Agreement and the other applicable Operative Agreements,
executed prior to and as of such date by any Credit Party, constitute the
legal, valid and binding obligation of such Credit Party, as applicable,
enforceable against such Credit Party, as applicable, in accordance with
their terms. Each Credit Party has executed the various Operative
Agreements required to be executed by such Credit Party as of such date;
(d) Except as described in Exhibit K, there are no material actions,
suits or proceedings pending or, to our knowledge, threatened against any
Credit Party in any court or before any Governmental Authority (nor shall
any order, judgment or decree have been issued or proposed to be issued by
any Governmental Authority to set aside, restrain, enjoin or prevent the
full performance of any Operative Agreement or any transaction
contemplated thereby) that (i) concern any Property or any Credit Party's
interest therein, (ii) question the validity or enforceability of any
Operative Agreement to which any Credit Party is a party or the overall
transaction described in the Operative Agreements to which any Credit
Party is a party or (iii) have or could reasonably be expected to have a
Material Adverse Effect;
(e) No Governmental Action by any Governmental Authority or other
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person pursuant to any Legal Requirement,
contract, indenture, instrument or agreement or for any other reason is
required to authorize or is required in connection with (i) the execution,
delivery or performance of any Operative Agreement, (ii) the legality,
validity, binding effect or enforceability of any Operative Agreement,
(iii) the acquisition, ownership, construction, completion, occupancy,
operation, leasing or subleasing of any Property or (iv) any Advance, in
each case, except those which have been obtained and are in full force and
effect;
(f) Upon the execution and delivery of each Lease Supplement to the
Lease, (i) the Lessee will have unconditionally accepted the Property
subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in such Property, subject only to the Permitted Liens,
and (ii) no offset will exist with respect to any Rent or other sums
payable under the Lease;
(g) Except as otherwise contemplated by the Operative Agreements, the
Construction Agent shall not use the proceeds of any Holder Advance or
Loan for any purpose other than the purchase and/or lease of the
Properties, the acquisition, installation and testing of the Equipment,
the construction of Improvements and the payment of Transaction Expenses
and the fees, expenses and other disbursements referenced in Sections
7.1(a) and 7.1(b) of this Agreement, in each case which accrue prior to
the Rent Commencement Date with respect to a particular Property;
(h) All information heretofore or contemporaneously herewith
furnished by each Credit Party or its Subsidiaries to the Agent, the Owner
Trustee, any Lender or any Holder for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and all
information hereafter furnished by or on behalf of each Credit Party or
its Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder
pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated
or certified, and such information, taken as a whole, does not and will
not omit to state any material fact necessary to make such information,
taken as a whole, not misleading;
(i) The principal place of business, chief executive office and
office of the Construction Agent and the Lessee where the documents,
accounts and records relating to the transactions contemplated by this
Agreement and each other Operative Agreement are kept are located at 400
Perimeter Center Terrace, Suite 650, Atlanta, Georgia 30346, in DeKalb
County, Georgia and the states of formation and the chief executive
offices of each other Credit Party are located at the places set forth in
Exhibit L;
(j) The representations and warranties of each Credit Party set forth
in any of the Operative Agreements are true and correct in all material
respects on and as of each such date as if made on and as of such date.
Each Credit Party is in all material respects in compliance with its
obligations under the Operative Agreements and there exists no Default or
Event of Default under any of the Operative Agreements which is continuing
and which has not been cured within any cure period expressly granted
under the terms of the applicable Operative Agreement or otherwise waived
in accordance with the applicable Operative Agreement. No Default or Event
of Default will occur under any of the Operative Agreements as a result
of, or after giving effect to, the Advance requested by the Requisition on
the date of each Advance;
(k) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property then being
financed consists of (i) unimproved Land or (ii) Land and existing
Improvements thereon which Improvements are either suitable for occupancy
at the time of acquisition or ground leasing or will be renovated and/or
modified in accordance with the terms of this Agreement. Each Property
then being financed is located at the location set forth on the applicable
Requisition, each of which is in one (1) of the Approved States;
(l) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, the Lessor has good and
marketable fee simple title to each Property, or, if any Property is the
subject of a Ground Lease, the Lessor will have a valid ground leasehold
interest enforceable against the ground lessor of such Property in
accordance with the terms of such Ground Lease, subject only to (i) such
Liens referenced in Sections 6.2(r)(i) and 6.2(r)(ii) on the applicable
Property Closing Date and (ii) subject to Section 5.7, Permitted Liens
after the applicable Property Closing Date;
(m) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, no portion of any Property is
located in an area identified as a special flood hazard area by the
Federal Emergency Management Agency or other applicable agency, or if any
such Property is located in an area identified as a special flood hazard
area by the Federal Emergency Management Agency or other applicable
agency, then flood insurance has been obtained for such Property in
accordance with Section 14.2(b) of the Lease and in accordance with the
National Flood Insurance Act of 1968, as amended;
(n) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Insurance Requirements and, in all material respects, all standards of
Lessee with respect to similar properties owned by Lessee;
(o) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Legal Requirements as of such date (including without limitation all
zoning and land use laws and Environmental Laws), except to the extent
that failure to comply therewith, individually or in the aggregate, shall
not have and could not reasonably be expected to have a Material Adverse
Effect;
(p) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, all utility services and
facilities necessary for the construction and operation of the
Improvements and the installation and operation of the Equipment regarding
each Property (including without limitation gas, electrical, water and
sewage services and facilities) are available at the applicable Land or
will be constructed prior to the Completion Date for such Property;
(q) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, acquisition, installation and
testing of the Equipment (if any) and construction of the Improvements (if
any) to such date shall have been performed in a good and workmanlike
manner, substantially in accordance with the applicable Plans and
Specifications;
(r) (i) The Security Documents create, as security for the
Obligations (as such term is defined in the Security Agreement),
valid and enforceable security interests in, and Liens on, all of the
Collateral, in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements, and such security interests and Liens are
subject to no other Liens other than Liens that are expressly set
forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to the applicable Property, to the extent
such title commitment has been approved by the Agent. Upon
recordation of the Mortgage Instrument in the real estate recording
office in the applicable Approved State identified by the
Construction Agent or the Lessee, the Lien created by the Mortgage
Instrument in the real property described therein shall be a
perfected first priority mortgage Lien on such real property in favor
of the Agent, for the ratable benefit of the Lenders and the Holders,
as their respective interests appear in the Operative Agreements, and
(subject to Section 5.7) Permitted Liens after the applicable
Property Closing Date. To the extent that the security interests in
the portion of the Collateral comprised of personal property can be
perfected by filing in the filing offices in the applicable Approved
States or elsewhere identified by the Construction Agent or the
Lessee, upon filing of the Lender Financing Statements in such filing
offices, the security interests created by the Security Agreement
shall be perfected first priority security interests in such personal
property in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements, and (subject to Section 5.7) Permitted Liens
after the applicable Property Closing Date;
(ii) The Lease Agreement creates, as security for the
obligations of the Lessee under the Lease Agreement, valid and
enforceable security interests in, and Liens on, each Property leased
thereunder, in favor of the Lessor, and such security interests and
Liens are subject to no other Liens other than (aa) Liens that are
expressly set forth as title exceptions on the title commitment
issued under Section 5.3(g) with respect to the applicable Property,
to the extent such title commitment has been approved by the Agent,
and (bb) (subject to Section 5.7) Permitted Liens after the
applicable Property Closing Date. Upon recordation of the memorandum
of the Lease Agreement and the memorandum of a Ground Lease (or, in
either case, a short form lease) in the real estate recording office
in the applicable Approved State identified by the Construction Agent
or the Lessee, the Lien created by the Lease Agreement in the real
property described therein shall be a perfected first priority
mortgage Lien on such real property in favor of the Agent, for the
ratable benefit of the Lenders and the Holders, as their respective
interests appear in the Operative Agreements. To the extent that the
security interests in the portion of any Property comprised of
personal property can be perfected by the filing in the filing
offices in the applicable Approved State or elsewhere identified by
the Construction Agent or the Lessee upon filing of the Lessor
Financing Statements in such filing offices, a security interest
created by the Lease Agreement shall be perfected first priority
security interests in such personal property in favor of the Lessor,
which rights pursuant to the Lessor Financing Statements are assigned
to the Agent, for the ratable benefit of the Lenders and the Holders,
as their respective interests appear in the Operative Agreements;
(s) The Plans and Specifications for each Property will be prepared
prior to the commencement of construction in accordance with all
applicable Legal Requirements (including without limitation all applicable
Environmental Laws and building, planning, zoning and fire codes), except
to the extent the failure to comply therewith, individually or in the
aggregate, shall not have and could not reasonably be expected to have a
Material Adverse Effect. Upon completion of the Improvements for each
Property in accordance with the applicable Plans and Specifications, such
Improvements will be within any building restriction lines and will not
encroach in any manner onto any adjoining land (except as permitted by
express written easements, which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property shall be
improved substantially in accordance with the applicable Plans and
Specifications and in a good and workmanlike manner and shall be
operational;
(u) As of the Initial Closing Date, each Domestic Subsidiary (formed
prior to or on such date) shall have executed this Agreement in its
capacity as a Guarantor;
(v) As of each Property Closing Date only, each Property has been
acquired or ground leased pursuant to a Ground Lease at a price that is
not materially in excess of fair market value or fair market rental value,
as the case may be;
(w) Respecting each Property for which no Appraisal satisfying the
requirements of the Operative Agreements has been provided to the Agent,
the anticipated Property Cost for all such Properties which have the same
Property Closing Date (determined pursuant to the Construction Budget
therefor) does not exceed eight (8) times the pro forma EBITDA for all
such Properties and the actual Property Cost for all such Properties does
not exceed eight (8) times the pro forma EBITDA for all such Properties;
and
(x) Each Credit Party has (i) initiated a review and assessment of
all areas within its and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers of each
Credit Party and the Subsidiaries of each Credit Party) that could be
adversely affected by the Year 2000 Problem, (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis and (iii)
to date, implemented that plan in accordance with that timetable. Based on
the foregoing, each Credit Party believes that all computer applications
(including those of suppliers, vendors and customers of each Credit Party
and the Subsidiaries of each Credit Party) that are material to its or any
of its Subsidiaries' business and operations are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions for
all dates before and after January 1, 2000 (that is, be "Year 2000
Compliant"), except to the extent that a failure to do so shall not have
and could not reasonably be expected to have a Material Adverse Effect.
SECTION 6B. GUARANTY
6B.1.Guaranty of Payment and Performance.
Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Company Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed; provided, notwithstanding the foregoing, the
obligations of the Guarantors under this Section 6B shall not constitute a
direct guaranty of the indebtedness of the Lessor evidenced by the Notes but
rather a guaranty of the Company Obligations arising under the Operative
Agreements. This Section 6B is a guaranty of payment and performance and not of
collection and is a continuing guaranty and shall apply to all Company
Obligations whenever arising. All rights granted to the Financing Parties under
this Section 6B shall be subject to the provisions of Section 8.2(h) and 8.6.
6B.2.Obligations Unconditional.
Each Guarantor agrees that the obligations of the Guarantors hereunder are
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Operative Agreements, or any other
agreement or instrument referred to therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Company
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor or
co-obligor, it being the intent of this Section 6B.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that this Section 6B may be enforced by the
Financing Parties without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the Notes, the Certificates or any other of the
Operative Agreements or any collateral, if any, hereafter securing the Company
Obligations or otherwise and each Guarantor hereby waives the right to require
the Financing Parties to proceed against the Construction Agent, the Lessee or
any other Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it hereby subordinates any and all right of
subrogation, indemnity, reimbursement or contribution against the Lessee and the
Construction Agent or any other Guarantor of the Company Obligations for amounts
paid under this Section 6B until such time as the Loans, Holder Advances,
accrued but unpaid interest, accrued but unpaid Holder Yield and all other
amounts owing under the Operative Agreements have been paid in full, and each
Guarantor further agrees not to assert any such right until the Financing
Parties have been paid in full with respect to all amounts owed under or
pursuant to the Operative Agreements. Without limiting the generality of the
waiver provisions of this Section 6B, each Guarantor hereby waives any rights to
require the Financing Parties to proceed against the Construction Agent, the
Lessee or any co-guarantor or to require Lessor to pursue any other remedy or
enforce any other right, including without limitation, any and all rights under
N.C. Gen. Stat. ss. 26-7 through 26-9. Each Guarantor further agrees that
nothing contained herein shall prevent the Financing Parties from suing on any
Operative Agreement or foreclosing any security interest in or Lien on any
collateral, if any, securing the Company Obligations or from exercising any
other rights available to it under any Operative Agreement, or any other
instrument of security, if any, and the exercise of any of the aforesaid rights
and the completion of any foreclosure proceedings shall not constitute a
discharge of any Guarantor's obligations hereunder; it being the purpose and
intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances; provided that any
amounts due under this Section 6B which are paid to or for the benefit of any
Financing Party shall reduce the Company Obligations by a corresponding amount
(unless required to be rescinded at a later date). Neither any Guarantor's
obligations under this Section 6B nor any remedy for the enforcement thereof
shall be impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of the
Construction Agent or the Lessee or by reason of the bankruptcy or insolvency of
the Construction Agent or the Lessee or any other Credit Party. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Company Obligations and notice of or proof of reliance by any Financing
Party upon this Section 6B or acceptance of this Section 6B. The Company
Obligations shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this Section
6B. All dealings between the Construction Agent, the Lessee and any of the
Guarantors, on the one hand, and the Financing Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Section 6B.
6B.3.Modifications.
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Construction Agent, the Lessee and any other party liable for
payment under the Operative Agreements may be granted indulgences generally; (e)
any of the provisions of the Notes, the Certificates or any of the other
Operative Agreements may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Construction Agent, the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Company Obligations, all without notice to or further assent by
such Guarantor, which shall remain bound thereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
6B.4.Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Company Obligations; (c) protest and notice of dishonor or of default with
respect to the Company Obligations or with respect to any security therefor; (d)
notice of any Financing Party obtaining, amending, substituting for, releasing,
waiving or modifying any security interest, lien or encumbrance, if any,
hereafter securing the Company Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which such Guarantor
might otherwise be entitled. Notwithstanding anything to the contrary herein,
(i) each Guarantor's payments hereunder shall be due five (5) Business Days
after written demand by the Agent for such payment (unless the Company
Obligations are automatically accelerated pursuant to the applicable provisions
of the Operative Agreements in which case the Guarantors' payments shall be
automatically due) and (ii) any modification of the Operative Agreements which
has the effect of increasing the Company Obligations shall not be enforceable
against a Guarantor unless such Guarantor executes the document evidencing such
modification or otherwise reaffirms its guaranty in writing in connection with
such modification.
6B.5.Reinstatement.
The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Company Obligations is rescinded or
must be otherwise restored by any holder of any of the Company Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify each Financing Party
on demand for all reasonable costs and expenses (including, without limitation,
reasonable fees of counsel) incurred by any Financing Party in connection with
such rescission or restoration, including without limitation any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
6B.6.Remedies.
The Guarantors agree that, as between the Guarantors, on the one hand, and
each Financing Party, on the other hand, the Company Obligations may be declared
to be forthwith due and payable as provided in the applicable provisions of the
Operative Agreements (and shall be deemed to have become automatically due and
payable in the circumstances provided therein) notwithstanding any stay,
injunction or other prohibition preventing such declaration (or preventing such
Company Obligations from becoming automatically due and payable) as against any
other Person and that, in the event of such declaration (or such Company
Obligations being deemed to have become automatically due and payable), such
Company Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by the Guarantors in accordance with the
applicable provisions of the Operative Agreements.
6B.7.Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein or in any
of the other Operative Agreements, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including without limitation
the Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company Obligations
in full, regardless of the source of payment, the Guarantors' obligations
hereunder shall be deemed satisfied, discharged and terminated other than
indemnifications set forth herein that expressly survive.
6B.8.Payment of Amounts to the Agent.
Each Financing Party hereby instructs each Guarantor, and each Guarantor
hereby acknowledges and agrees, that until such time as the Loans and the Holder
Advances are paid in full and the Liens evidenced by the Security Agreement and
the Mortgage Instruments have been released any and all Rent (excluding Excepted
Payments which shall be payable to each Holder or other Person as appropriate)
and any and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person shall instead be paid directly
to the Agent (excluding Excepted Payments which shall be payable to each Holder
or other Person as appropriate) or as the Agent may direct from time to time for
allocation and distribution in accordance with the procedures set forth in
Section 8.7 hereof.
6B.9.Release of Guarantors.
Each Financing Party hereby agrees that (a) the Agent shall be permitted
to release any Guarantor from its guaranty obligations under this Section 6B
without the consent of any other Financing Party if the release is granted in
connection with a disposition by the applicable Credit Party of all the shares
of stock or partnership or other equity interest in such Guarantor and such
disposition is permitted pursuant to the applicable provisions of the Operative
Agreements and the Lessee Credit Agreement and (b) the Agent shall be permitted
to release any Guarantor from its guaranty obligations under this Section 6B.9
without the consent of any other Financing Party if the release is requested by
Centennial in connection with a dissolution of the Guarantor, subject to
Centennial providing to the Agent written representations to the effect that
such Guarantor has no business operations and no assets.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. Transaction Expenses.
(a) The Lessor agrees on the Initial Closing Date, to pay, or cause
to be paid, all Transaction Expenses arising from the Initial Closing
Date, including without limitation all reasonable fees, expenses and
disbursements of the various legal counsels for the Lessor and the Agent
in connection with the transactions contemplated by the Operative
Agreements and incurred in connection with such Initial Closing Date, the
initial fees and expenses of the Owner Trustee due and payable on such
Initial Closing Date, all fees, taxes and expenses for the recording,
registration and filing of documents and all other reasonable fees,
expenses and disbursements incurred in connection with such Initial
Closing Date; provided, however, the Lessor shall pay such amounts
described in this Section 7.1(a) only if (i) such amounts are properly
described in a Requisition delivered on or before the Initial Closing
Date, and (ii) funds are made available by the Lenders and the Holders in
connection with such Requisition in an amount sufficient to allow such
payment. On the Initial Closing Date after delivery and receipt of the
Requisition referenced in Section 4.2(a) hereof and satisfaction of the
other conditions precedent for such date, the Holders severally shall make
Holder Advances and the Lenders severally shall make Loans to the Lessor
to pay for the Transaction Expenses, fees, expenses and other
disbursements referenced in this Section 7.1(a). The Lessee agrees to
timely pay all amounts referred to in this Section 7.1(a) to the extent
not paid by the Lessor.
(b) Assuming no Default or Event of Default shall have occurred and
be continuing and only for the period prior to the Rent Commencement Date,
the Lessor agrees on each Property Closing Date, on the date of any
Construction Advance and on the Completion Date to pay, or cause to be
paid, all Transaction Expenses including without limitation all reasonable
fees, expenses and disbursements of the various legal counsels for the
Lessor and the Agent in connection with the transactions contemplated by
the Operative Agreements and billed in connection with such Advance or
such Completion Date, all amounts described in Section 7.1(a) of this
Agreement which have not been previously paid, the annual fees and
reasonable out-of-pocket expenses of the Owner Trustee, all fees, expenses
and disbursements incurred with respect to the various items referenced in
Sections 5.3, 5.4 and/or 5.5 (including without limitation any premiums
for title insurance policies and charges for any updates to such policies)
and all other reasonable fees, expenses and disbursements in connection
with such Advance or such Completion Date including without limitation all
expenses relating to and all fees, taxes and expenses for the recording,
registration and filing of documents and during the Commitment Period, all
fees, expenses and costs referenced in Sections 7.3(a), 7.3(b), 7.3(d) and
7.4; provided, however, the Lessor shall pay such amounts described in
this Section 7.1(b) only if (i) such amounts are properly described in a
Requisition delivered on the applicable date and (ii) funds are made
available by the Lenders and the Holders in connection with such
Requisition in an amount sufficient to allow such payment. On each
Property Closing Date, on the date of any Construction Advance or any
Completion Date, after delivery of the applicable Requisition and
satisfaction of the other conditions precedent for such date, the Holders
severally shall make Holder Advances and the Lenders severally shall make
Loans to the Lessor to pay for the Transaction Expenses, fees, expenses
and other disbursements referenced in this Section 7.1(b). The Lessee
agrees to timely pay all amounts referred to in this Section 7.1(b) to the
extent not paid by the Lessor.
(c) Fees payable under the Operative Agreements shall be calculated
on the basis of a year of three hundred sixty (360) days for the actual
days elapsed.
7.2. Brokers' Fees.
The Lessee agrees to pay or cause to be paid any and all brokers' fees, if
any, including without limitation any interest and penalties thereon, which are
payable in connection with the transactions contemplated by this Agreement and
the other Operative Agreements.
7.3. Certain Fees and Expenses.
The Lessee agrees to pay or cause to be paid (a) the $5,000 initial fee
and the $5,000 annual fee, each payable to the Owner Trustee (for its individual
account) and all reasonable expenses of the Owner Trustee and any co-trustees
(including without limitation reasonable counsel fees and expenses) or any
successor owner trustee and/or co-trustee, for acting as the owner trustee under
the Trust Agreement, (b) all reasonable costs and expenses incurred by the
Credit Parties, the Agent, the Lenders, the Holders or the Lessor in entering
into any Lease Supplement and any future amendments, modifications, supplements,
restatements and/or replacements with respect to any of the Operative
Agreements, whether or not such Lease Supplement, amendments, modifications,
supplements, restatements and/or replacements are ultimately entered into, or
giving or withholding of waivers of consents hereto or thereto, which have been
requested by any Credit Party, the Agent, the Lenders, the Holders or the
Lessor, (c) all reasonable costs and expenses incurred by the Credit Parties,
the Agent, the Lenders, the Holders or the Lessor in connection with any
exercise of remedies under any Operative Agreement or any purchase of any
Property by the Construction Agent, the Lessee or any third party and (d) all
reasonable costs and expenses incurred by the Credit Parties, the Agent, the
Lenders, the Holders or the Lessor in connection with any transfer or conveyance
of any Property, whether or not such transfer or conveyance is ultimately
accomplished.
7.4. Unused Fee.
During the Commitment Period, the Lessee agrees to pay or to cause to be
paid to the Agent for the account of (a) the Lenders, respectively, an unused
fee (the "Lender Unused Fee") equal to the product of the average daily
Available Commitment of each Lender during the Commitment Period multiplied by
the Applicable Percentage per annum and (b) the Holders, respectively, an unused
fee (the "Holder Unused Fee") equal to the product of the average daily
Available Holder Commitment of each Holder during the Commitment Period
multiplied by the Applicable Percentage per annum. Such Unused Fees shall be
payable quarterly in arrears on each Unused Fee Payment Date. If all or a
portion of any such Unused Fee shall not be paid when due, such overdue amount
shall bear interest, payable by the Lessee on demand, at a rate per annum equal
to the ABR (or in the case of Holder Yield, the ABR plus the Applicable
Percentage for Eurodollar Holder Advances) plus two percent (2%) from the date
of such non-payment until such amount is paid in full (as well as before
judgment).
7.5. Upfront Fee.
The Lessee shall pay or cause to be paid on the Initial Closing Date an
upfront fee payable to each Lender and each Holder (for the respective
individual accounts of each such entity) on the terms and conditions and at such
times set forth or referenced in a letter agreement concerning such fees dated
on or about the Initial Closing Date addressed to Centennial from the Agent.
7.6. Agent's Fee.
The Lessee shall pay or cause to be paid an administrative agency fee
payable to the Agent for its individual account on the terms and conditions and
at such terms set forth or referenced in a letter agreement concerning such fee
dated on or about the Initial Closing Date addressed to Centennial from the
Agent.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. Cooperation with the Construction Agent or the Lessee.
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. Covenants of the Owner Trustee and the Holders.
Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:
(a) Neither the Owner Trustee (in its trust capacity or in its
individual capacity) nor any Holder will create or permit to exist at any
time, and each of them will, at its own cost and expense, promptly take
such action as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens on the Properties attributable to it;
provided, however, that the Owner Trustee and the Holders shall not be
required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted
so long as such proceedings shall not materially and adversely affect the
rights of the Lessee under the Lease and the other Operative Agreements or
involve any material danger of impairment of the Liens of the Security
Documents or of the sale, forfeiture or loss of, and shall not interfere
with the use or disposition of, any Property or title thereto or any
interest therein or the payment of Rent;
(b) Without prejudice to any right under the Trust Agreement of the
Owner Trustee to resign (subject to the requirement set forth in the Trust
Agreement that such resignation shall not be effective until a successor
shall have agreed to accept such appointment), or the Holders' rights
under the Trust Agreement to remove the institution acting as the Owner
Trustee (after consent to such removal by the Agent as provided in the
Trust Agreement), each of the Owner Trustee and the Holders hereby agrees
with the Lessee and the Agent (i) not to terminate or revoke the trust
created by the Trust Agreement except as permitted by Article VIII of the
Trust Agreement, (ii) not to amend, supplement, terminate or revoke or
otherwise modify any provision of the Trust Agreement in such a manner as
to adversely affect the rights of any such party without the prior written
consent of such party and (iii) to comply with all of the terms of the
Trust Agreement, the nonperformance of which would adversely affect such
party;
(c) The Owner Trustee or any successor may resign or be removed by
the Holders as the Owner Trustee, a successor Owner Trustee may be
appointed and a corporation may become the Owner Trustee under the Trust
Agreement, only in accordance with the provisions of Article IX of the
Trust Agreement and, with respect to such appointment, with the consent of
the Lessee (so long as there shall be no Lease Event of Default that shall
have occurred and be continuing), which consent shall not be unreasonably
withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner Trustee under the
Trust Agreement, and not in its individual capacity, shall not contract
for, create, incur or assume any Indebtedness, or enter into any business
or other activity or enter into any contracts or agreements, other than
pursuant to or under the Operative Agreements;
(e) The Holders will not instruct the Owner Trustee to take any
action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i) commence any
case, proceeding or other action with respect to the Owner Trustee under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seek appointment of a receiver,
trustee, custodian or other similar official with respect to the Owner
Trustee or for all or any substantial benefit of the creditors of the
Owner Trustee; and neither any Holder nor the Owner Trustee shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee, the
Holders and the Agent if the Owner Trustee's principal place of business
or chief executive office, or the office where the records concerning the
accounts or contract rights relating to any Property are kept, shall cease
to be located at 79 South Main Street, Salt Lake City, Utah 84111, or if
it shall change its name;
(h) The Owner Trustee shall take or refrain from taking such actions
and grant or refrain from granting such approvals with respect to the
Operative Agreements and/or relating to any Property in each case as
directed in writing by the Agent (until such time as the Loans are paid in
full, and then by the Majority Holders) or, in connection with Sections
8.5 and 9.2 hereof, the Lessee; provided, however, that notwithstanding
the foregoing provisions of this subparagraph (h) the Owner Trustee, the
Agent, the Lenders and the Holders each acknowledge, covenant and agree
that neither the Owner Trustee nor the Agent shall act or refrain from
acting, regarding each Unanimous Vote Matter, until such party has
received the approval of each Lender and each Holder affected by such
matter; and
(i) The Owner Trustee shall be restricted to acquiring and/or
constructing Properties identified by the Construction Agent.
8.3. Credit Party Covenants, Consent and Acknowledgment.
(a) Each Credit Party acknowledges and agrees that the Owner Trustee,
pursuant to the terms and conditions of the Security Agreement and the
Mortgage Instruments, shall create Liens respecting the various personal
property, fixtures and real property described therein in favor of the
Agent. Each Credit Party hereby irrevocably consents to the creation,
perfection and maintenance of such Liens. Each Credit Party shall, to the
extent reasonably requested by any of the other parties hereto, cooperate
with the other parties in connection with their covenants herein or in the
other Operative Agreements and shall from time to time duly execute and
deliver any and all such further instruments, documents and financing
statements (and continuation statements related thereto) as any other
party hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and each Credit
Party hereby acknowledges and agrees, that until such time as the Loans
and the Holder Advances are paid in full and the Liens evidenced by the
Security Agreement and the Mortgage Instruments have been released (i) any
and all Rent (excluding Excepted Payments which shall be payable to each
Holder or other Person as appropriate) and any and all other amounts of
any kind or type under any of the Operative Agreements due and owing or
payable to any Person shall instead be paid directly to the Agent
(excluding Excepted Payments which shall be payable to each Holder or
other Person as appropriate) or as the Agent may direct from time to time
for allocation and distribution in accordance with the procedures set
forth in Section 8.7 hereof, (ii) all rights of the Lessor under the Lease
shall be exercised by the Agent and (iii) each Credit Party shall cause
all notices, certificates, financial statements, communications and other
information which are delivered, or are required to be delivered, to the
Lessor, to also to be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any amendment,
supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.4 of this
Agreement.
(d) Each Credit Party hereby covenants and agrees that, except for
amounts payable as Basic Rent, any and all payment obligations owing from
time to time under the Operative Agreements by any Person to the Agent,
any Lender, any Holder or any other Person shall (without further action)
be deemed to be Supplemental Rent obligations payable by the Lessee and
guaranteed by the other Credit Parties. Without limitation, such
obligations of the Credit Parties shall include without limitation
arrangement fees, administrative fees, unused fees, breakage costs,
indemnities, trustee fees and transaction expenses incurred by the parties
hereto in connection with the transactions contemplated by the Operative
Agreements.
(e) The Lessee hereby covenants and agrees to cause an Appraisal for
each Property to be issued and delivered to the Agent as of the applicable
Property Closing Date (or, with respect to either of the Properties
identified on Exhibit N hereto, within forty-five (45) days after the
Property Closing Date for the applicable Property) until such time as the
aggregate appraised value (pursuant to such Appraisals) of Properties then
subject to the Lease Agreement equals or exceeds an amount equal to
one-half (1/2) of the then current Commitment (the "Minimum Appraisal
Level"). To the extent the appraised value (pursuant to such Appraisals)
of Properties then subject to the Lease Agreement at any time or from time
to time is below the Minimum Appraisal Level, the Lessee further covenants
and agrees to cause Appraisals and/or reappraisals to be issued and
delivered to the Agent respecting Properties then subject to the Lease
Agreement to re-establish the Minimum Appraisal Level within thirty (30)
days. In addition, the Lessee covenants and agrees to cause an Appraisal
or reappraisal to be issued respecting each Property as requested by the
Agent from time to time (i) at each and every time as such shall be
required to satisfy any regulatory requirements imposed on the Agent, the
Lessor, the Trust Company, any Lender and/or any Holder, (ii) after the
occurrence and during the continuation of an Event of Default and (iii) as
required pursuant to Section 5.13 of this Agreement and Section 20.1 of
the Lease. All Appraisals and reappraisals issued pursuant to the
Operative Agreements (including without limitation this Section 8.3(e))
must be in form and substance satisfactory to the Agent, at the cost and
expense of the Lessee, delivered to the Agent and from an appraiser
selected by the Agent.
(f) [Intentionally Omitted]
(g) At any time the Lessor or the Agent is entitled under the
Operative Agreements to possession of a Property or any component thereof,
each of the Construction Agent and the Lessee hereby covenants and agrees,
at its own cost and expense, to assemble and make the same available to
the Agent (on behalf of the Lessor).
(h) The Lessee hereby covenants and agrees that Non-Integral
Equipment respecting any individual parcel of Property shall at no time
constitute in excess of ten percent (10%) of the aggregate Advances
respecting such parcel of Property funded at such time under the Operative
Agreements.
(i) The Lessee hereby covenants and agrees that as of Completion (i)
the Property Cost for each individual parcel of the Property shall be no
less than $2,000,000 and (ii) each parcel of the Property shall be a
Permitted Facility.
(j) The Lessee hereby covenants and agrees that it shall give prompt
notice to the Agent if the Lessee's principal place of business or chief
executive office, or the office where the records concerning the accounts
or contract rights relating to any Property are kept, shall cease to be
located at 400 Perimeter Center Terrace, Suite 650, Atlanta, DeKalb
County, Georgia, 30346 or if it shall change its name.
(k) Unless the Agent otherwise agrees in writing, the Lessee hereby
covenants and agrees that the aggregate Property Cost of Properties
purchased for any reason by the Lessee prior to the Expiration Date shall
not exceed twenty-five percent (25%) of the aggregate Property Cost for
all Properties funded during the Commitment Period; provided, however,
Properties constituting Terminated Properties shall not be considered when
calculating such twenty-five percent (25%) maximum.
(l) Until all the obligations of the Credit Parties under the
Operative Agreements (other than indemnity claims unasserted as of the
Expiration Date) have been finally and indefeasibly paid and satisfied in
full, the Lender Commitments and the Holder Commitments terminated and the
Term has expired or been earlier terminated, then unless consent has been
obtained from the Majority Secured Parties, the Lessee will furnish or
cause to be furnished to each Holder, each Lender and the Agent at their
respective addresses set forth or referenced in Section 12.2 of this
Agreement, or such other office as may be designated by any such Holder,
Lender or the Agent from time to time: (i) at each time financial
statements are delivered or to be delivered pursuant to Section 28.1 of
the Lease, a certificate duly signed by the chief executive officer, chief
operating officer, chief financial officer, treasurer or controller of
Centennial setting forth the Adjusted Total Debt to Adjusted EBITDAR ratio
for the Rolling Period ending with such quarter-end and setting forth the
computations employed in calculating the ratio (the "Margin Certificate")
and (ii) at each time financial statements are delivered or to be
delivered pursuant to Section 28.1 of the Lease, a compliance certificate
duly executed by the president, treasurer, chief financial officer or
controller of Centennial substantially in the form of Exhibit M attached
hereto (the "Officer's Compliance Certificate").
(m) The Lessee hereby covenants and agrees that the rights of the
Lessee under this Agreement and the Lease shall not impair or in any way
diminish the obligations of the Construction Agent and/or the rights of
the Lessor under the Agency Agreement.
(n) Each Credit Party hereby covenants and agrees to cause each
Domestic Subsidiary formed or acquired after the Initial Closing Date to
execute a Joinder Agreement within thirty (30) days of the formation or
acquisition of such Domestic Subsidiary.
(o) Each Credit Party shall promptly notify the Agent, or cause the
Agent to be promptly notified, upon such Credit Party gaining Knowledge of
the occurrence of any Default or Event of Default which is continuing at
such time. In any event, such notice shall be provided to the Agent within
ten (10) days of when such Credit Party gains such Knowledge.
(p) Until all of the obligations under the Operative Agreements,
other than indemnity claims unasserted as of the Expiration Date, have
been finally and indefeasibly paid and satisfied in full and the Lender
Commitments and the Holder Commitments terminated unless consent has been
obtained from the Majority Secured Parties, each Credit Party will:
(i) except as permitted by the express provisions of the Lessee
Credit Agreement, preserve and maintain its separate legal existence
and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a
foreign corporation (or partnership, limited liability company or
other such similar entity, as the case may be) and authorized to do
business in each jurisdiction in which the failure to do so qualify
would have a Material Adverse Effect;
(ii) pay and perform all obligations of the Credit Parties under
the Operative Agreements and pay and perform (A) all taxes,
assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (B) all other
indebtedness, obligations and liabilities in accordance with
customary trade practices, which if not paid would have a Material
Adverse Effect; provided that any Credit Party may contest any item
described in this Section 8.3(p)(ii) in good faith so long as
adequate reserves are maintained with respect thereto in accordance
with GAAP;
(iii)to the extent failure to do so would have a Material
Adverse Effect, (A) observe and remain in compliance with all
applicable Laws and maintain in full force and effect all
Governmental Actions, in each case applicable to the conduct of its
business, (B) keep in full force and effect all licenses,
certifications or accreditations necessary for any Facility to carry
on its business and (C) not permit the termination of any insurance
reimbursement program available to any Facility;
(iv) permit the Financing Parties, or their respective agents
from time to time to conduct inspections of the Properties and the
Health Care Facilities during normal business hours at reasonable
times and, except upon the occurrence and during the continuation of
any Event of Default, without undue disruption of operations at any
such Property or Health Care Facility; and
(v) keep and maintain satisfactory and adequate books and
records of account in accordance with GAAP and make or cause the same
to be made available to the Financing Parties, or their respective
agents, during normal business hours at any reasonable time upon
reasonable notice for inspection and to make extracts thereof and
permit any Financing Party, or any of its respective agents, to
discuss the contents of same with senior officers of the appropriate
Credit Party and also with outside auditors and accountants of such
Credit Party. With the consent of the appropriate Credit Party, which
consent will not be unreasonably withheld and which consent shall not
be required during the existence of an Event of Default, any
Financing Party, or any of its respective agents, may also meet with
other officers and employees of such Credit Party.
(q) The Lessee shall perform any and all obligations of the Lessor
under, and cause the Lessor to otherwise remain in full compliance with,
the terms and provisions of each Ground Lease, if any.
(r) To the extent the Lessee is in compliance with its obligations
under the Operative Agreements (including without limitation Sections
5.3(t) and 8.3(e) of this Agreement) to provide Appraisals respecting the
Properties, then additional Properties may be financed under the Operative
Agreements without providing Appraisals; provided, the anticipated
Property Cost (for Properties which are not Completed at the Property
Closing Date therefor, as such cost is reflected in the applicable
Construction Budget) and the actual Property Cost (for Properties which
are Completed at the Property Closing Date therefor) of all Properties for
which Appraisals are not supplied shall not exceed an amount equal to
eight (8) times the pro forma EBITDAR for all such Properties; provided,
further, if the anticipated Property Cost (for Properties which are not
Completed at the Property Closing Date therefor, as such cost is reflected
in the applicable Construction Budget) and the actual Property Cost (for
Properties which are Completed at the Property Closing Date therefor) for
all Properties for which Appraisals are not supplied exceeds eight (8)
times such pro forma EBITDAR for all such Properties, then the applicable
prospective additional Properties shall be ineligible for financing under
the Operative Agreements.
(s) If the Lessee Credit Agreement is secured at any time or from
time to time after the Initial Closing Date with additional collateral,
then the Lessee shall cause all obligations secured pursuant to the
Operative Agreements at each such time (including without limitation the
obligations owed to the Financing Parties pursuant to the Operative
Agreements) to be secured ratably at each such time with the Lessee Credit
Agreement.
(t) Each Credit Party will promptly notify the Agent in the event
such Credit Party discovers or determines that any computer application
(including those of any supplier, vendor or customer of such Credit Party
or any Subsidiary of such Credit Party) that is material to such Credit
Party's or any of its Subsidiaries' business and operations will not be
Year 2000 Compliant, except to the extent that such failure shall not have
and could not reasonably be expected to have a Material Adverse Effect.
8.4. Sharing of Certain Payments.
Except for Excepted Payments, the parties hereto acknowledge and agree
that all payments due and owing by any Credit Party to the Lessor under the
Lease or any of the other Operative Agreements shall be made by any Credit Party
directly to the Agent as more particularly provided in Section 8.3 hereof. The
Lessor, the Holders, the Agent, the Lenders and the Credit Parties acknowledge
the terms of Section 8.7 of this Agreement regarding the allocation of payments
and other amounts made or received from time to time under the Operative
Agreements and agree, that all such payments and amounts are to be allocated as
provided in Section 8.7 of this Agreement.
8.5. Grant of Easements, etc.
The Agent, the Lenders and the Holders hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Owner Trustee shall,
from time to time at the request of the Lessee (and with the prior consent of
the Agent), in connection with the transactions contemplated by the Agency
Agreement, the Lease or the other Operative Agreements, (i) grant easements and
other rights in the nature of easements with respect to any Property, (ii)
release existing easements or other rights in the nature of easements which are
for the benefit of any Property, (iii) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants or releases, and (iv)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development, construction, testing or operation
of any Property, including without limitation reciprocal easement agreements,
construction contracts, operating agreements, development agreements, plats,
replats or subdivision documents; provided, that each of the agreements referred
to in this Section 8.5 shall be of the type normally executed by the Lessee in
the ordinary course of the Lessee's business and shall be on commercially
reasonable terms so as not to diminish the value of any Property in any material
respect.
8.6. Appointment of Agent.
The Holders hereby appoint the Agent to act as collateral agent for the
Holders in connection with the Lien granted by the Security Documents to secure
the Holder Amount. The Lenders and the Holders acknowledge and agree and direct
that the rights and remedies of the beneficiaries of the Lien of the Security
Documents shall be exercised by the Agent on behalf of the Lenders and the
Holders as directed from time to time by the Majority Secured Parties or,
pursuant to Sections 8.2(h) and 12.4, all of the Lenders and the Holders, as the
case may be; provided, in all cases, the Agent shall allocate payments and other
amounts received in accordance with Section 8.7. The Agent is further appointed
to provide notices under the Operative Agreements on behalf of the Owner Trustee
(as determined by the Agent, in its reasonable discretion), to receive notices
under the Operative Agreements on behalf of the Owner Trustee and (subject to
Sections 8.5 and 9.2) to take such other action under the Operative Agreements
on behalf of the Owner Trustee as the Agent shall determine in its reasonable
discretion from time to time. The Agent hereby accepts such appointments. For
purposes hereof, the provisions of Section 7 of the Credit Agreement, together
with such other terms and provisions of the Credit Agreement and the other
Operative Agreements as required for the full interpretation and operation of
Section 7 of the Credit Agreement are hereby incorporated by reference as if
restated herein for the mutual benefit of the Agent and each Holder as if each
Holder were a Lender thereunder. Outstanding Holder Advances and outstanding
Loans shall each be taken into account for purposes of determining Majority
Secured Parties. Further, the Agent shall be entitled to take such action on
behalf of the Owner Trustee as is delegated to the Agent under any Operative
Agreement (whether express or implied) as may be reasonably incidental thereto.
The parties hereto hereby agree to the provisions contained in this Section 8.6.
Any appointment of a successor agent under Section 7.9 of the Credit Agreement
shall also be effective as an appointment of a successor agent for purposes of
this Section 8.6.
8.7. Collection and Allocation of Payments and Other
Amounts.
(a) Each Credit Party has agreed pursuant to Section 5.8 and
otherwise in accordance with the terms of this Agreement to pay to (i) the
Agent any and all Rent and any and all other amounts of any kind or type
under any of the Operative Agreements due and owing or payable to any
Person (excluding Excepted Payments) and (ii) each Person as appropriate
the Excepted Payments. Promptly after receipt, the Agent shall apply and
allocate, in accordance with the terms of this Section 8.7, such amounts
received from any Credit Party and all other payments, receipts and other
consideration of any kind whatsoever received by the Agent pursuant to the
Security Agreement or otherwise received by the Agent, the Holders or any
of the Lenders in connection with the Collateral, the Security Documents
or any of the other Operative Agreements. Ratable distributions among the
Lenders and the Holders under this Section 8.7 shall be made based on (in
the case of the Lenders) the ratio of the outstanding Loans to the
aggregate Property Cost and (in the case of the Holders) the ratio of the
outstanding Holder Advances to the aggregate Property Cost. Ratable
distributions among the Tranche A Lenders under this Section 8.7 shall be
made based on the ratio of the individual Tranche A Lender's Lender
Commitment for Tranche A Loans to the aggregate of all the Tranche A
Lenders' Lender Commitments for Tranche A Loans. Ratable distributions
among the Tranche B Lenders under this Section 8.7 shall be made based on
the ratio of the individual Tranche B Lender's Lender Commitment for
Tranche B Loans to the aggregate of all the Tranche B Lenders' Lender
Commitments for Tranche B Loans. Ratable distributions among the Lenders
(in situations where the Tranche A Lenders are not differentiated from the
Tranche B Lenders) shall be made based on the ratio of the individual
Lender's Lender Commitment to the aggregate of all the Lenders' Lender
Commitments. Ratable distributions among the Holders under this Section
8.7 shall be based on the ratio of the individual Holder's Holder
Commitment to the aggregate of all the Holders' Holder Commitments.
(b) Payments and other amounts received by the Agent from time to
time in accordance with the terms of subparagraph (a) shall be applied and
allocated as follows:
(i) Any such payment or amount identified as or deemed to be
Basic Rent shall be applied and allocated by the Agent first, ratably
to the Lenders and the Holders for application and allocation to the
payment of interest on the Loans and thereafter the principal of the
Loans which is due and payable on such date and to the payment of
accrued Holder Yield with respect to the Holder Advances and
thereafter the portion of the Holder Advances which is due on such
date; and second, if no Default or Event of Default is in effect, any
excess shall be paid to such Person or Persons as the Lessee may
designate; provided, that if a Default or Event of Default is in
effect, such excess (if any) shall instead be held by the Agent until
the earlier of (I) the first date thereafter on which no Default or
Event of Default shall be in effect (in which case such payments
shall then be made to such other Person or Persons as the Lessee may
designate) and (II) the Maturity Date or the Expiration Date, as the
case may be (or, if earlier, the date of any Acceleration), in which
case such amounts shall be applied and allocated in the manner
contemplated by Section 8.7(b)(iv).
(ii) If on any date the Agent or the Lessor shall receive any
amount in respect of (A) any Casualty or Condemnation pursuant to
Sections 15.1(a) or 15.1(g) of the Lease (excluding any payments in
respect thereof which are payable to the Lessee in accordance with
the Lease), or (B) the Termination Value in connection with the
delivery of a Termination Notice pursuant to Article XVI of the
Lease, or (C) the Termination Value in connection with the exercise
of the Purchase Option under Section 20.1 of the Lease or the
exercise of the option of the Lessor to transfer the Properties to
the Lessee pursuant to Section 20.3 of the Lease, or (D) any payment
required to be made or elected to be made by the Construction Agent
to the Lessor pursuant to the terms of the Agency Agreement, or (E)
any payment made pursuant to Section 5.13 or otherwise in connection
with a Terminated Property, then in each case, the Lessor shall be
required to pay such amount received (1) if no Acceleration has
occurred, to prepay the principal balance of the Loans and the Holder
Advances, on a pro rata basis, a portion of such amount to be
distributed to the Lenders and the Holders or (2) if an Acceleration
has occurred, to apply and allocate the proceeds respecting Sections
8.7(b)(ii)(A) through 8.7(b)(ii)(D) in accordance with Section
8.7(b)(iii) hereof.
(iii)Subject to Section 8.7(c), an amount equal to any payment
identified as proceeds of the sale or other disposition (or lease
upon the exercise of remedies) of the Properties or any portion
thereof, whether pursuant to Article XXII of the Lease or the
exercise of remedies under the Security Documents or otherwise, the
execution of remedies set forth in the Lease and any payment in
respect of excess wear and tear pursuant to Section 22.3 of the Lease
(whether such payment relates to a period before or after the
Construction Period Termination Date) shall be applied and allocated
by the Agent first, ratably to the payment of the principal and
interest of the Tranche B Loans then outstanding, second, ratably to
the payment to the Holders of the outstanding principal balance of
all Holder Advances plus all outstanding Holder Yield with respect to
such outstanding Holder Advances, third, to the extent such amount
exceeds the maximum amount to be returned pursuant to the foregoing
provisions of this paragraph (iii), ratably to the payment of the
principal and interest of the Tranche A Loans then outstanding,
fourth, to any and all other amounts owing under the Operative
Agreements to the Lenders under the Tranche B Loans, fifth, to any
and all other amounts owing under the Operative Agreements to the
Holders, sixth, to any and all other amounts owing under the
Operative Agreements to the Lenders under the Tranche A Loans, and
seventh, to the extent moneys remain after application and allocation
pursuant to clauses first through sixth above, to the Owner Trustee
for application and allocation to any and all other amounts owing to
the Holders or the Owner Trustee and as the Holders shall determine;
provided, where no Event of Default shall exist and be continuing and
a prepayment is made for any reason with respect to less than the
full amount of the outstanding principal amount of the Loans and the
outstanding Holder Advances, the proceeds shall be applied and
allocated ratably to the Lenders and to the Holders.
(iv) Subject to Section 8.7(c), an amount equal to (A) any such
payment identified as a payment pursuant to Section 22.1(b) of the
Lease (or otherwise) of the Maximum Residual Guarantee Amount (and
any such lesser amount as may be required by Section 22.1(b) of the
Lease) in respect of the Properties and (B) any other amount payable
upon any exercise of remedies after the occurrence of an Event of
Default not covered by Sections 8.7(b)(i) or 8.7(b)(iii) above
(including without limitation any amount received in connection with
an Acceleration which does not represent proceeds from the sale or
liquidation of the Properties) and (C) any other amount payable by
any Guarantor pursuant to Section 6B shall be applied and allocated
by the Agent first, ratably, to the payment of the principal and
interest balance of Tranche A Loans then outstanding, second, ratably
to the payment of the principal and interest balance of the Tranche B
Loans then outstanding, third, ratably to the payment of the
principal balance of all Holder Advances plus all outstanding Holder
Yield with respect to such outstanding Holder Advances, fourth, to
the payment of any other amounts owing to the Lenders hereunder or
under any of the other Operative Agreement, and fifth, to the extent
moneys remain after application and allocation pursuant to clauses
first through fourth above, to the Owner Trustee for application and
allocation to Holder Advances and Holder Yield and any other amounts
owing to the Holders or the Owner Trustee as the Holders shall
determine.
(v) An amount equal to any such payment identified as
Supplemental Rent shall be applied and allocated by the Agent to the
payment of any amounts then owing to the Agent, the Lenders, the
Holders and the other parties to the Operative Agreements (or any of
them) (other than any such amounts payable pursuant to the preceding
provisions of this Section 8.7(b)) as shall be determined by the
Agent in its reasonable discretion; provided, however, that
Supplemental Rent received upon the exercise of remedies after the
occurrence and during the continuation of an Event of Default in lieu
of or in substitution of the Maximum Residual Guarantee Amount or as
a partial payment thereon shall be applied and allocated as set forth
in Section 8.7(b)(iv).
(vi) The Agent in its reasonable judgment shall identify the
nature of each payment or amount received by the Agent and apply and
allocate each such amount in the manner specified above.
(c) Upon the termination of the Lender Commitments and the Holder
Commitments and the payment in full of the Loans and all other amounts
owing by the Owner Trustee hereunder or under any Credit Document and the
payment in full of all amounts owing to the Holders and the Owner Trustee
under the Trust Agreement, any moneys remaining with the Agent shall be
returned to the Owner Trustee or such other Person or Persons as the
Holders may designate for application and allocation to any and all other
amounts owing to the Holders or the Owner Trustee and as the Holders shall
determine. In the event of an Acceleration it is agreed that, prior to the
application and allocation of amounts received by the Agent in the order
described in Section 8.7(b) above, any such amounts shall first be applied
and allocated to the payment of (i) any and all sums advanced by the Agent
in order to preserve the Collateral or to preserve its Lien thereon, (ii)
the expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing or realizing on the Collateral, or of any exercise by
the Agent of its rights under the Security Documents, together with
reasonable attorneys' fees and expenses and court costs and (iii) any and
all other amounts reasonably owed to the Agent under or in connection with
the transactions contemplated by the Operative Agreements (including
without limitation any accrued and unpaid administration fees).
8.8. Release of Properties, etc.
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to make a prepayment (with the proceeds of such sale) of the Loans,
Holder Advances and all other amounts owing to the Lenders and the Holders under
the Operative Agreements, the Agent is hereby authorized and directed to release
such Properties from the Liens created by the Security Documents to the extent
of its interest therein. In addition, upon the termination of the Lender
Commitments and the Holder Commitments and the payment in full of the Loans, the
Holder Advances and all other amounts owing by the Owner Trustee and the Lessee
hereunder or under any other Operative Agreement the Agent is hereby authorized
and directed to release all of the Properties from the Liens created by the
Security Documents to the extent of its interest therein. Upon request of the
Owner Trustee following any such release, the Agent shall, at the sole cost and
expense of the Lessee, execute and deliver to the Owner Trustee and the Lessee
such documents as the Owner Trustee or the Lessee shall reasonably request to
evidence such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights.
Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Holders, the Construction Agent, the
Credit Parties and the Owner Trustee hereby agree that, prior to the occurrence
and continuation of any Default or Event of Default, the Construction Agent or
the Lessee, as the case may be, shall have the following rights:
(a) the right to designate an account to which amounts funded under
the Operative Agreements shall be credited pursuant to Section 2.3(a) of
the Credit Agreement;
(b) the right to terminate or change the Lender Commitments pursuant
to Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation options
pursuant to Section 2.7 of the Credit Agreement;
(d) the right to receive any notice and any certificate, in each case
issued pursuant to Section 2.11(a) of the Credit Agreement;
(e) the right to replace any Lender pursuant to Section 2.11(b) of
the Credit Agreement;
(f) the right to approve any successor agent pursuant to Section 7.9
of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to which the
Lessor has the right to consent pursuant to Section 9.8 of the Credit
Agreement.
9.2. The Construction Agent's and the Lessee's Trust
Agreement Rights.
Notwithstanding anything to the contrary contained in the Trust Agreement,
the Credit Parties, the Owner Trustee and the Holders hereby agree that, prior
to the occurrence and continuation of any Default or Event of Default, the
Construction Agent or the Lessee, as the case may be, shall have the following
rights:
(a) the right to exercise the conversion and continuation options
pursuant to Section 3.8 of the Trust Agreement;
(b) the right to receive any notice and any certificate, in each case
issued pursuant to Section 3.9(a) of the Trust Agreement;
(c) the right to replace any Holder pursuant to Section 3.9(b) of the
Trust Agreement;
(d) the right to exercise the removal options contained in Section
3.9 of the Trust Agreement; and
(e) no removal of the Owner Trustee and appointment of a successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement shall be made
without the prior written consent (not to be unreasonably withheld or
delayed) of the Lessee.
SECTION 10. TRANSFER OF INTEREST.
10.1.Restrictions on Transfer.
Each Lender may participate, assign or transfer all or a portion of its
interest hereunder and under the other Operative Agreements in accordance with
Sections 9.7 and 9.8 of the Credit Agreement; provided, each participant,
assignee or transferee must obtain the same ratable interest in Tranche A Loans,
Tranche A Commitments, Tranche B Loans, Tranche B Commitments and the loans and
loan commitments with regard to the Lessee Credit Agreement (and to the extent
the selling Lender is also a Holder, each such participant, assignor or
transferee must also obtain the same percentage interest (regarding the
percentage interest sold by the selling Lender in and to the Tranche A Loans,
Tranche A Commitments, Tranche B Loans, Tranche B Commitments and the loans and
loan commitments with regard to the Lessee Credit Agreement) of the applicable
Holder's ratable interest in and to the Trust Estate); provided, further, except
after the occurrence and during the continuation of any Event of Default, no
participant, assignee or transferee shall be a Person in a Permitted Line of
Business; provided, further, that each Lender that assigns or transfers all or a
portion of its interest hereunder and under the other Operative Agreements shall
deliver to the Agent a copy of each Assignment and Acceptance (as referenced in
Section 9.8 of the Credit Agreement) for purposes of maintaining the Register.
The Holders may, directly or indirectly, assign, convey or otherwise transfer
any of their right, title or interest in and to the Trust Estate and the Trust
Agreement with the prior written consent of the Agent and the Lessee (which
consent shall not be unreasonably withheld or delayed) and in accordance with
the terms of Section 11.8(b) of the Trust Agreement; provided, to the extent the
selling Holder is also a Lender, each such assignee, receiver of a conveyance or
other transferee must also obtain the same percentage interest (regarding the
percentage interest sold by the selling Holder in and to the Trust Estate and
the Trust Agreement) of the applicable Lender's ratable interest in and to the
Tranche A Loans, Tranche A Commitments, Tranche B Loans, Tranche B Commitments
and the loans and loan commitments with regard to the Lessee Credit Agreement;
provided, further, except after the occurrence and during the continuation of
any Event of Default, no assignee, receiver of a conveyance or other transferee
shall be a Person in a Permitted Line of Business. The Owner Trustee may,
subject to the rights of the Lessee under the Lease and the other Operative
Agreements and to the Lien of the applicable Security Documents but only with
the prior written consent of the Agent (which consent may be withheld by the
Agent in its sole discretion) and (provided, no Default or Event of Default has
occurred and is continuing) with the consent of the Lessee, directly or
indirectly, assign, convey, appoint an agent with respect to enforcement of, or
otherwise transfer any of its right, title or interest in or to any Property,
the Lease, the Trust Agreement and the other Operative Agreements (including
without limitation any right to indemnification thereunder), or any other
document relating to a Property or any interest in a Property as provided in the
Trust Agreement and the Lease. The provisions of the immediately preceding
sentence shall not apply to the obligations of the Owner Trustee to transfer
Property to the Lessee or a third party purchaser pursuant to Article XXII of
the Lease upon payment for such Property in accordance with the terms and
conditions of the Lease. No Credit Party may assign any of the Operative
Agreements or any of their respective rights or obligations thereunder or with
respect to any Property in whole or in part to any Person without the prior
written consent of the Agent, the Lenders, the Holders and the Lessor.
10.2.Effect of Transfer.
From and after any transfer effected in accordance with this Section 10,
the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein to
the transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 10, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1.General Indemnity.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person) in any way relating to or arising or alleged to arise
out of the execution, delivery, performance or enforcement of this Agreement,
the Lease or any other Operative Agreement or on or with respect to any Property
or any component thereof, including without limitation Claims in any way
relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance, rejection, ownership, design, construction,
refurbishment, development, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, occupancy, operation, maintenance, repair,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Property or
any part thereof, including without limitation the acquisition, holding or
disposition of any interest in the Property, lease or agreement comprising a
portion of any thereof; (b) any latent or other defects in any Property or any
portion thereof whether or not discoverable by an Indemnified Person or the
Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims
or other loss of or damage to any property or the environment relating to the
Property, the Lease, the Agency Agreement or the Indemnity Provider; (d) the
Operative Agreements, or any transaction contemplated thereby; (e) any breach by
the Indemnity Provider of any of its representations or warranties under the
Operative Agreements to which the Indemnity Provider is a party or failure by
the Indemnity Provider to perform or observe any covenant or agreement to be
performed by it under any of the Operative Agreements; (f) the transactions
contemplated hereby or by any other Operative Agreement, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA; and (g) personal
injury, death or property damage, including without limitation Claims based on
strict or absolute liability in tort.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding), for any Claim, such Indemnified
Person shall promptly notify the Indemnity Provider in writing and shall not
take action with respect to such Claim without the consent of the Indemnity
Provider for thirty (30) days after the receipt of such notice by the Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
be required by law or regulation to be taken prior to the end of such period of
thirty (30) days, such Indemnified Person shall endeavor to, in such notice to
the Indemnity Provider, inform the Indemnity Provider of such shorter period,
and no action shall be taken with respect to such Claim without the consent of
the Indemnity Provider before seven (7) days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
the notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure precludes in
all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the Indemnified
Person (or such shorter period as the Indemnified Person has notified the
Indemnity Provider is required by law or regulation for the Indemnified Person
to respond to such Claim), the Indemnity Provider shall request in writing that
such Indemnified Person respond to such Claim, the Indemnified Person shall, at
the expense of the Indemnity Provider, in good faith conduct and control such
action (including without limitation by pursuit of appeals) (provided, however,
that (A) if such Claim, in the Indemnity Provider's reasonable discretion, can
be pursued by the Indemnity Provider on behalf of or in the name of such
Indemnified Person, the Indemnified Person, at the Indemnity Provider's request,
shall allow the Indemnity Provider to conduct and control the response to such
Claim and (B) in the case of any Claim (and notwithstanding the provisions of
the foregoing subsection (A)), the Indemnified Person may request the Indemnity
Provider to conduct and control the response to such Claim (with counsel to be
selected by the Indemnity Provider and consented to by such Indemnified Person,
such consent not to be unreasonably withheld; provided, however, that any
Indemnified Person may retain separate counsel at the expense of the Indemnity
Provider in the event of a conflict of interest between such Indemnified Person
and the Indemnity Provider)) by, in the sole discretion of the Person conducting
and controlling the response to such Claim (1) resisting payment thereof, (2)
not paying the same except under protest, if protest is necessary and proper,
(3) if the payment be made, using reasonable efforts to obtain a refund thereof
in appropriate administrative and judicial proceedings, or (4) taking such other
action as is reasonably requested by the Indemnity Provider from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the controlling
party. The parties agree that an Indemnified Person may at any time decline to
take further action with respect to the response to such Claim and may settle
such Claim if such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in respect of such
Claim (and any future Claim, the pursuit of which is precluded by reason of such
resolution of such Claim) and shall pay to the Indemnity Provider any amount
previously paid or advanced by the Indemnity Provider pursuant to this Section
11.1 by way of indemnification or advance for the payment of an amount regarding
such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay and shall pay to such Indemnified Person on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed by
the Indemnity Provider), the Indemnity Provider shall have agreed that the Claim
is an indemnifiable Claim hereunder, (B) in the case of a Claim that must be
pursued in the name of an Indemnified Person (or an Affiliate thereof), the
amount of the potential indemnity (taking into account all similar or logically
related Claims that have been or could be raised for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified Person), (C) the Indemnified Person shall
have reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability, (D) if such Claim shall involve the
payment of any amount prior to the resolution of such Claim, the Indemnity
Provider shall provide to the Indemnified Person an interest-free advance in an
amount equal to the amount that the Indemnified Person is required to pay (with
no additional net after-tax cost to such Indemnified Person) prior to the date
such payment is due, (E) in the case of a Claim that must be pursued in the name
of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall
have provided to such Indemnified Person an opinion of independent counsel
selected by the Indemnity Provider and reasonably satisfactory to the
Indemnified Person stating that a reasonable basis exists to contest such Claim
(or, in the case of an appeal of an adverse determination, an opinion of such
counsel to the effect that the position asserted in such appeal will more likely
than not prevail) and (F) no Event of Default shall have occurred and be
continuing. In no event shall an Indemnified Person be required to appeal an
adverse judicial determination to the United States Supreme Court. In addition,
an Indemnified Person shall not be required to contest any Claim in its name (or
that of an Affiliate) if the subject matter thereof shall be of a continuing
nature and shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnity Provider and reasonably
acceptable to the Indemnified Person stating that as a result of such change in
law (or interpretation thereof), it is more likely than not that the Indemnified
Person will prevail in such contest. In no event shall the Indemnity Provider be
permitted to adjust or settle any Claim without the consent of the Indemnified
Person to the extent any such adjustment or settlement involves, or is
reasonably likely to involve, any performance by or adverse admission by or with
respect to the Indemnified Person.
11.2.General Tax Indemnity.
(a) The Indemnity Provider shall pay and assume liability for, and
does hereby agree to indemnify, protect and defend each Property and all
Indemnified Persons, and hold them harmless against, all Impositions on an
After Tax Basis, and all payments pursuant to the Operative Agreements
shall be made free and clear of and without deduction for any and all
present and future Impositions.
(b) Notwithstanding anything to the contrary in Section 11.2(a)
hereof, the following shall be excluded from the indemnity required by
Section 11.2(a):
(i) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on a Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by the United States federal government that
are based on or measured by the net income (including without
limitation taxes based on capital gains and minimum taxes) of such
Person; provided, that this clause (i) shall not be interpreted to
prevent a payment from being made on an After Tax Basis if such
payment is otherwise required to be so made;
(ii) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on any Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by any state or local jurisdiction or taxing
authority within any state or local jurisdiction and that are based
upon or measured by the net income (including without limitation
taxes based on capital gains and minimum taxes) of such Person;
provided that such Taxes shall not be excluded under this
subparagraph (ii) to the extent such Taxes would have been imposed
had the location, possession or use of any Property in, the location
or the operation of the Lessee in, or the Lessee's making payments
under the Operative Agreements from, the jurisdiction imposing such
Taxes been the sole connection between such Indemnified Person and
the jurisdiction imposing such Taxes; provided, further, that this
clause (ii) shall not be interpreted to prevent a payment from being
made on an After Tax Basis if such payment is otherwise required to
be so made;
(iii)any Tax to the extent it relates to any act, event or
omission that occurs after the termination of the Lease and
redelivery or sale of the Property in accordance with the terms of
the Lease (but not any Tax that relates to such termination,
redelivery or sale and/or to any period prior to such termination,
redelivery or sale); and
(iv) any Taxes which are imposed on an Indemnified Person as a
result of the gross negligence or willful misconduct of such
Indemnified Person itself, as determined by a court of competent
jurisdiction (as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person), but not Taxes imposed as a
result of ordinary negligence of such Indemnified Person;
(c) (i) Subject to the terms of Section 11.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to
the taxing authorities where feasible and otherwise to the
Indemnified Person, as appropriate, and the Indemnity Provider shall
at its own expense, upon such Indemnified Person's reasonable
request, furnish to such Indemnified Person copies of official
receipts or other satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 11.2(f) and which the Indemnity
Provider pays directly to the taxing authorities, the Indemnity
Provider shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In the
case of Impositions for which the Indemnity Provider reimburses an
Indemnified Person, the Indemnity Provider shall do so within thirty
(30) days after receipt by the Indemnity Provider of demand by such
Indemnified Person describing in reasonable detail the nature of the
Imposition and the basis for the demand (including without limitation
the computation of the amount payable), accompanied by receipts or
other reasonable evidence of such demand. In the case of Impositions
for which a contest is conducted pursuant to Section 11.2(f), the
Indemnity Provider shall pay such Impositions or reimburse such
Indemnified Person for such Impositions, to the extent not previously
paid or reimbursed pursuant to subsection (a), prior to the latest
time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 11.2(f).
(iii)At the Indemnity Provider's request, the amount of any
indemnification payment by the Indemnity Provider pursuant to
subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Indemnity Provider
and the Indemnified Person. The fees and expenses of such independent
public accounting firm shall be paid by the Indemnity Provider unless
such verification shall result in an adjustment in the Indemnity
Provider's favor of fifteen percent (15%) or more of the payment as
computed by the Indemnified Person, in which case such fee shall be
paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for preparing and
filing any real and personal property or ad valorem tax returns in respect
of each Property and any other tax returns required for the Owner Trustee
respecting the transactions described in the Operative Agreements. In case
any other report or tax return shall be required to be made with respect
to any obligations of the Indemnity Provider under or arising out of
subsection (a) and of which the Indemnity Provider has knowledge or should
have knowledge, the Indemnity Provider, at its sole cost and expense,
shall notify the relevant Indemnified Person of such requirement and
(except if such Indemnified Person notifies the Indemnity Provider that
such Indemnified Person intends to prepare and file such report or return)
(A) to the extent required or permitted by and consistent with Legal
Requirements, make and file in the Indemnity Provider's name such return,
statement or report; and (B) in the case of any other such return,
statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such
return, statement or report for filing by such Indemnified Person or,
where such return, statement or report shall be required to reflect items
in addition to any obligations of the Indemnity Provider under or arising
out of subsection (a), provide such Indemnified Person at the Indemnity
Provider's expense with information sufficient to permit such return,
statement or report to be properly made with respect to any obligations of
the Indemnity Provider under or arising out of subsection (a). Such
Indemnified Person shall, upon the Indemnity Provider's request and at the
Indemnity Provider's expense, provide any data maintained by such
Indemnified Person (and not otherwise available to or within the control
of the Indemnity Provider) with respect to each Property which the
Indemnity Provider may reasonably require to prepare any required tax
returns or reports.
(e) As between the Indemnity Provider on one hand, and each Financing
Party on the other hand, the Indemnity Provider shall be responsible for,
and the Indemnity Provider shall indemnify and hold harmless each
Financing Party (without duplication of any indemnification required by
subsection (a)) on an After Tax Basis against, any obligation for United
States or foreign withholding taxes or similar levies, imposts, charges,
fees, deductions or withholdings (collectively, "Withholdings") imposed in
respect of the interest payable on the Notes, Holder Yield payable on the
Certificates or with respect to any other payments under the Operative
Agreements (all such payments being referred to herein as "Exempt
Payments" to be made without deduction, withholding or set off) (and, if
any Financing Party receives a demand for such payment from any taxing
authority or a Withholding is otherwise required with respect to any
Exempt Payment, the Indemnity Provider shall discharge such demand on
behalf of such Financing Party); provided, however, that the obligation of
the Indemnity Provider under this Section 11.2(e) shall not apply to:
(i) Withholdings on any Exempt Payment to any Financing Party
which is a non-U.S. Person unless such Financing Party is, on the
date hereof (or on the date it becomes a Financing Party hereunder)
and on the date of any change in the principal place of business or
the lending office of such Financing Party, entitled to submit a Form
1001 (relating to such Financing Party and entitling it to a complete
exemption from Withholding on such Exempt Payment) or Form 4224 or is
otherwise subject to exemption from Withholding with respect to such
Exempt Payment (except where the failure of the exemption results
from a change in the principal place of business of the Lessee;
provided if a failure of exemption for any Financing Party results
from a change in the principal place of business or lending office of
any other Financing Party, then such other Financing Party shall be
liable for any Withholding or indemnity with respect thereto), or
(ii) Any U.S. Taxes imposed solely by reason of the failure by a
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United
States of America of such non-U.S. Person if such compliance is
required by statute or regulation of the United States of America as
a precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a
corporation, partnership or other entity created or organized in or under
any laws of the United States of America or any State thereof, or any
estate or trust that is subject to Federal income taxation regardless of
the source of its income, (B) "U.S. Taxes" shall mean any present or
future tax, assessment or other charge or levy imposed by or on behalf of
the United States of America or any taxing authority thereof or therein,
(C) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced
Rate Certificate) of the Department of the Treasury of the United States
of America and (D) "Form 4224" shall mean Form 4224(R) (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States) of the Department of Treasury of
the United States of America (or in relation to either such Form such
successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a
claim to which such Form relates). Each of the Forms referred to in the
foregoing clauses (C) and (D) shall include such successor and related
forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which
such Form relates.
If a Financing Party or an Affiliate with whom such Financing Party
files a consolidated tax return (or equivalent) subsequently receives the
benefit in any country of a tax credit or an allowance resulting from U.S.
Taxes with respect to which it has received a payment of an additional
amount under this Section 11.2(e), such Financing Party will pay to the
Indemnity Provider such part of that benefit as in the opinion of such
Financing Party will leave it (after such payment) in a position no more
and no less favorable than it would have been in if no additional payment
had been required to be paid, provided always that (i) such Financing
Party will be the sole judge of the amount of any such benefit and of the
date on which it is received, (ii) such Financing Party will have the
absolute discretion as to the order and manner in which it employs or
claims tax credits and allowances available to it and (iii) such Financing
Party will not be obliged to disclose to the Indemnity Provider any
information regarding its tax affairs or tax computations.
Each non-U.S. Person that shall become a Financing Party after the
date hereof shall, upon the effectiveness of the related transfer or
otherwise upon becoming a Financing Party hereunder, be required to
provide all of the forms and statements referenced above or other
evidences of exemption from Withholdings.
(f) If a written Claim is made against any Indemnified Person or if
any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for
any Impositions, the provisions in Section 11.1 relating to notification
and rights to contest shall apply; provided, however, that the Indemnity
Provider shall have the right to conduct and control such contest only if
such contest involves a Tax other than a Tax on net income of the
Indemnified Person and can be pursued independently from any other
proceeding involving a Tax liability of such Indemnified Person.
11.3.Increased Costs, Illegality, etc.
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with
any guideline or request hereafter adopted, promulgated or made by any
central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Financing
Party of agreeing to make or making, funding or maintaining Advances, then
the Lessee shall from time to time, upon demand by such Financing Party
(with a copy of such demand to the Agent but subject to the terms of
Section 2.11 of the Credit Agreement and 3.9 of the Trust Agreement, as
the case may be), pay to the Agent for the account of such Financing Party
additional amounts sufficient to compensate such Financing Party for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Lessee and the Agent by such Financing Party, shall be
conclusive and binding for all purposes, absent manifest error.
(b) If any Financing Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law, but in
each case promulgated or made after the date hereof) affects or would
affect the amount of capital required or expected to be maintained by such
Financing Party or any corporation controlling such Financing Party and
that the amount of such capital is increased by or based upon the
existence of such Financing Party's commitment to make Advances and other
commitments of this type or upon the Advances, then, upon demand by such
Financing Party (with a copy of such demand to the Agent but subject to
the terms of Section 2.11 of the Credit Agreement and 3.9 of the Trust
Agreement), the Lessee shall pay to the Agent for the account of such
Financing Party, from time to time as specified by such Financing Party,
additional amounts sufficient to compensate such Financing Party or such
corporation in the light of such circumstances, to the extent that such
Financing Party reasonably determines such increase in capital to be
allocable to the existence of such Financing Party's commitment to make
such Advances. A certificate as to such amounts submitted to the Lessee
and the Agent by such Financing Party shall be conclusive and binding for
all purposes, absent manifest error.
(c) Without limiting the effect of the foregoing, the Lessee shall
pay to each Financing Party on the last day of the Interest Period
therefor so long as such Financing Party is maintaining reserves against
"Eurocurrency liabilities" under Regulation D an additional amount
(determined by such Financing Party and notified to the Lessee through the
Agent) equal to the product of the following for each Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, for each day during such
Interest Period:
(i) the principal amount of such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, outstanding on such day; and
(ii) the remainder of (x) a fraction the numerator of which is
the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for
such Interest Period as provided in the Credit Agreement or the Trust
Agreement, as the case may be (less the Applicable Percentage), and
the denominator of which is one (1) minus the effective rate
(expressed as a decimal) at which such reserve requirements are
imposed on such Financing Party on such day minus (y) such numerator;
and
(iii)1/360.
(d) Without affecting its rights under Sections 11.3(a), 11.3(b) or
11.3(c) or any other provision of any Operative Agreement, each Financing
Party agrees that if there is any increase in any cost to or reduction in
any amount receivable by such Financing Party with respect to which the
Lessee would be obligated to compensate such Financing Party pursuant to
Sections 11.3(a) or 11.3(b), such Financing Party shall use reasonable
efforts to select an alternative office for Advances which would not
result in any such increase in any cost to or reduction in any amount
receivable by such Financing Party; provided, however, that no Financing
Party shall be obligated to select an alternative office for Advances if
such Financing Party determines that (i) as a result of such selection
such Financing Party would be in violation of any applicable law,
regulation, treaty, or guideline, or would incur additional costs or
expenses or (ii) such selection would be inadvisable for regulatory
reasons or materially inconsistent with the interests of such Financing
Party.
(e) With reference to the obligations of the Lessee set forth in
Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation
to pay to any Financing Party amounts owing under such Sections for any
period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.
(f) Notwithstanding any other provision of this Agreement, if any
Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for any Financing Party to perform its obligations
hereunder to make or maintain Eurodollar Loans or Eurodollar Holder
Advances, as the case may be, then (i) each Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, will automatically, at the earlier of
the end of the Interest Period for such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, or the date required by law, convert
into an ABR Loan or an ABR Holder Advance, as the case may be, and (iii)
the obligation of the Financing Parties to make, convert or continue
Eurodollar Loans or Eurodollar Holder Advances, as the case may be, shall
be suspended until the Agent shall notify the Lessee that such Financing
Party has determined that the circumstances causing such suspension no
longer exist.
11.4.Funding/Contribution Indemnity.
Subject to the provisions of Section 2.11(a) of the Credit Agreement and
3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof has
been given in accordance with the provisions of the Operative Agreements or (c)
the making of a voluntary or involuntary prepayment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification shall be in
an amount equal to the excess, if any, of (x) the amount of interest or Holder
Yield, as the case may be, which would have accrued on the amount so prepaid, or
not so borrowed, accepted, converted or continued for the period from the date
of such prepayment or of such failure to borrow, accept, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
accept, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable Eurodollar Rate plus
the Applicable Percentage for such Loan or Holder Advance, as the case may be,
for such Interest Period over (y) the amount of interest (as determined by such
Financing Party in its reasonable discretion) which would have accrued to such
Financing Party on such amount by (i) (in the case of the Lenders) reemploying
such funds in loans of the same type and amount during the period from the date
of prepayment or failure to borrow to the last day of the then applicable
Interest Period (or, in the case of a failure to borrow, the Interest Period
that would have commenced on the date of such failure) and (ii) (in the case of
the Holders) placing such amount on deposit for a comparable period with leading
banks in the relevant interest rate market. This covenant shall survive the
termination of the Operative Agreements and the payment of all other amounts
payable hereunder.
11.5.EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE,
STRICT LIABILITY, ETC.
WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION PROVISIONS OF ANY
AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING INDEMNIFICATION OF
ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER EXPRESSLY RELEASES
EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS FOR LOSS OR DAMAGE,
DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR OMISSION ON THE PART
OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR
CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY, AND INDEMNIFIES,
EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE AND HARMLESS FROM AND AGAINST
ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, LOSSES, COSTS,
LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT LIMITATION ATTORNEY'S FEES
AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH BENEFICIARY (IRRESPECTIVE
OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE ACTION FOR WHICH
INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT IS SOUGHT)
ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT
LIABILITY OF ANY SUCH BENEFICIARY.
SECTION 12. MISCELLANEOUS.
12.1.Survival of Agreements.
The representations, warranties, covenants, indemnities and agreements of
the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest of
the Owner Trustee in any Property or any interest of the Holders in the Trust
Estate, the payment of the Notes and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Agreements. Except as otherwise expressly
set forth herein or in other Operative Agreements, the indemnities of the
parties provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
12.2.Notices.
All notices required or permitted to be given under any Operative
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage paid with return receipt requested; by private courier, prepaid;
by telex, facsimile, or other telecommunication device capable of transmitting
or creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Couriered notices
shall be deemed delivered when delivered as addressed, or if the addressee
refuses delivery, when presented for delivery notwithstanding such refusal.
Telex or telecommunicated notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or acknowledged by the
addressee or its office. Personal delivery shall be effective when accomplished.
Unless a party changes its address by giving notice to the other party as
provided herein, notices shall be delivered to the parties at the following
addresses:
If to the Construction Agent or the Lessee, to such entity at the
following address:
Centennial Healthcare Corporation
400 Perimeter Center Terrace, Suite 650
Atlanta, Georgia 30346
Attention: Alan Dahl, Chief Financial Officer
Telephone: (770) 730-1177
Telecopy: (770) 730-1377
If to any Guarantor, to such entity in care of Centennial at the
following address:
Centennial Healthcare Corporation
400 Perimeter Center Terrace, Suite 650
Atlanta, Georgia 30346
Attention: Alan Dahl, Chief Financial Officer
Telephone: (770) 730-1177
Telecopy: (770) 730-1377
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton,
Vice President
Telephone: (801) 246-5300
Telecopy: (801) 246-5053
If to the Holders, to each such Holder at the address set forth for
such Holder on Schedule I of the Trust Agreement.
If to the Syndication Agent, to it at the following address:
First Union Capital Markets, a division of Wheat
First Securities, Inc.
c/o First Union National Bank
301 South College Street
Charlotte, North Carolina 28288
Attention: Matt MacIver, Vice-President
Telephone: (704) 374-4187
Telecopy: (704) 383-9144
If to the Agent, to it at the following address:
NationsBank, N.A.
Atlanta Plaza Building
600 Peachtree Street, NE, 17th Floor
Atlanta, Georgia 30303
Attention: Chris Jones
Telephone: (404) 607-5862
Telecopy: (404) 607-6338
If to any Lender, to it at the address set forth for such Lender in
Schedule 1.1 of the Credit Agreement.
From time to time any party may designate additional parties and/or
another address for notice purposes by notice to each of the other parties
hereto. Each notice hereunder shall be effective upon receipt or refusal
thereof.
12.3.Counterparts.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
12.4.Terminations, Amendments, Waivers, Etc.; Unanimous Vote
Matters.
Each Basic Document may be terminated, amended, supplemented, waived or
modified only by an instrument in writing signed by, subject to Article VIII of
the Trust Agreement regarding termination of the Trust Agreement, the Majority
Secured Parties and each Credit Party (to the extent such Credit Party is a
party to such Basic Document); provided, to the extent no Default or Event of
Default shall have occurred and be continuing, the Majority Secured Parties
shall not amend, supplement, waive or modify any provision of any Basic Document
in such a manner as to adversely affect the rights of any Credit Party without
the prior written consent (not to be unreasonably withheld or delayed) of such
Credit Party. Each Operative Agreement which is not a Basic Document may be
terminated, amended, supplemented, waived or modified only by an instrument in
writing signed by the parties thereto and (without the consent of any other
Financing Party) the Agent. In addition, (a) the Unanimous Vote Matters shall
require the consent of each Lender and each Holder affected by such matter and
(b) any provision of any Operative Agreement incorporated by reference or
otherwise referenced in a second Operative Agreement shall remain, respecting
such second Operative Agreement, in its original form without regard to any such
termination, amendment, supplement, waiver or modification in the first
Operative Agreement except if such has been agreed to by an instrument in
writing signed by, subject to Article VIII of the Trust Agreement regarding
termination of the Trust Agreement, the Majority Secured Parties and each Credit
Party (to the extent such Credit Party is a party to such Operative Agreement).
Notwithstanding the foregoing, no such termination, amendment, supplement,
waiver or modification shall, without the consent of the Agent and, to the
extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) reduce the amount of any Note or any Certificate,
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or Certificate, reduce the
stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post-default increase in interest rates or Holder Yields), modify the
priority of any Lien in favor of the Agent under any Security Document,
subordinate any obligation owed to any Lender or Holder, reduce any Lender
Unused Fees or any Holder Unused Fees payable under this Participation
Agreement, extend the scheduled date of payment of any Lender Unused Fees or any
Holder Unused Fees or increase the amount or extend the expiration date of any
Lender's Lender Commitment or the Holder Commitment of any Holder, or (ii)
terminate, amend, supplement, waive or modify any provision of this Section 12.4
or reduce the percentages specified in the definitions of Majority Lenders,
Majority Holders or Majority Secured Parties, or consent to the assignment or
transfer by the Owner Trustee of any of its rights and obligations under any
Credit Document or release a material portion of the Collateral (except in
accordance with Section 8.8) or release any Credit Party from its obligations
under any Operative Agreement or otherwise alter any payment obligations of any
Credit Party to the Lessor or any Financing Party under the Operative
Agreements, or (iii) terminate, amend, supplement, waive or modify any provision
of Section 7 of the Credit Agreement (which shall also require the consent of
the Agent), or (iv) permit Advances for Work in excess of the Construction
Budget, or (v) eliminate the automatic option under Section 5.3(b) of the Agency
Agreement requiring that the Construction Agent pay certain liquidated damages
in exchange for the conveyance of a Property to the Construction Agent, or (vi)
permit the extension of the Construction Period beyond the date that is two (2)
years from the Initial Closing Date. Any such termination, amendment,
supplement, waiver or modification shall apply equally to each of the Lenders
and the Holders and shall be binding upon all the parties to this Agreement. In
the case of any waiver, each party to this Agreement shall be restored to its
former position and rights under the Operative Agreements, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall continue,
the Defaulting Lender shall (unless the Lessee and the Majority Lenders,
determined as if the Defaulting Lender were not a "Lender", shall otherwise
consent in writing) be deemed for all purposes relating to terminations,
amendments, supplements, waivers or modifications under the Operative Agreements
to have no Loans, shall not be treated as a "Lender" when performing the
computation of Majority Lenders or Majority Secured Parties, and shall have no
rights under this Section 12.4; provided that any action taken pursuant to the
second paragraph of this Section 12.4 shall not be effective as against the
Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority Secured
Parties, and shall have no rights under this Section 12.4; provided that any
action taken pursuant to the second paragraph of this Section 12.4 shall not be
effective as against the Defaulting Holder.
12.5.Headings, etc.
The Table of Contents and headings of the various Articles and Sections of
this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
12.6.Parties in Interest.
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.7.GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action
or proceeding with respect to this Agreement or any other Operative
Agreement may be brought in the courts of the State of North Carolina in
Mecklenburg County or of the United States for the Western District of
North Carolina, and, by execution and delivery of this Agreement, each of
the parties to this Agreement hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. Each of the parties to this Agreement further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at
the address set out for notices pursuant to Section 12.2, such service to
become effective three (3) days after such mailing. Nothing herein shall
affect the right of any party to serve process in any other manner
permitted by Law or to commence legal proceedings or to otherwise proceed
against any party in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO
THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER OPERATIVE
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the parties to this Agreement hereby irrevocably waives
any objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Operative Agreement brought in
the courts referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought
in an inconvenient forum.
12.8.Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9.Liability Limited.
(a) The Lenders, the Agent, the Credit Parties, the Owner Trustee and
the Holders each acknowledge and agree that the Owner Trustee is (except
as otherwise expressly provided herein or therein) entering into this
Agreement and the other Operative Agreements to which it is a party (other
than the Trust Agreement and to the extent otherwise provided in Section
6.1 of this Agreement), solely in its capacity as trustee under the Trust
Agreement and not in its individual capacity and that the Trust Company
shall not be liable or accountable under any circumstances whatsoever in
its individual capacity for or on account of any statements,
representations, warranties, covenants or obligations stated to be those
of the Owner Trustee, except for its own gross negligence or willful
misconduct and as otherwise expressly provided herein or in the other
Operative Agreements.
(b) Anything to the contrary contained in this Agreement, the Credit
Agreement, the Notes or in any other Operative Agreement notwithstanding,
no Exculpated Person shall be personally liable in any respect for any
liability or obligation arising hereunder or in any other Operative
Agreement including without limitation the payment of the principal of, or
interest on, the Notes, or for monetary damages for the breach of
performance of any of the covenants contained in the Credit Agreement, the
Notes, this Agreement, the Security Agreement or any of the other
Operative Agreements. The Lenders, the Holders and the Agent agree that,
in the event any remedies under any Operative Agreement are pursued,
neither the Lenders, the Holders nor the Agent shall have any recourse
against any Exculpated Person, for any deficiency, loss or Claim for
monetary damages or otherwise resulting therefrom and recourse shall be
had solely and exclusively against the Trust Estate (excluding Excepted
Payments) and the Credit Parties (with respect to the Credit Parties'
obligations under the Operative Agreements); but nothing contained herein
shall be taken to prevent recourse against or the enforcement of remedies
against the Trust Estate (excluding Excepted Payments) in respect of any
and all liabilities, obligations and undertakings contained herein and/or
in any other Operative Agreement. Notwithstanding the provisions of this
Section, nothing in any Operative Agreement shall: (i) constitute a
waiver, release or discharge of any indebtedness or obligation evidenced
by the Notes and/or the Certificates arising under any Operative Agreement
or secured by any Operative Agreement, but the same shall continue until
paid or discharged; (ii) relieve any Exculpated Person from liability and
responsibility for (but only to the extent of the damages arising by
reason of): active waste knowingly committed by any Exculpated Person with
respect to any Property, any fraud, gross negligence or willful misconduct
on the part of any Exculpated Person; (iii) relieve any Exculpated Person
from liability and responsibility for (but only to the extent of the
moneys misappropriated, misapplied or not turned over) (A) except for
Excepted Payments, misappropriation or misapplication by the Lessor (i.e.,
application in a manner contrary to any of the Operative Agreements) of
any insurance proceeds or condemnation award paid or delivered to the
Lessor by any Person other than the Agent, (B) except for Excepted
Payments, any deposits or any escrows or amounts owed by the Construction
Agent under the Agency Agreement held by the Lessor or (C) except for
Excepted Payments, any rent or other income received by the Lessor from
any Credit Party that is not turned over to the Agent; or (iv) affect or
in any way limit the Agent's rights and remedies under any Operative
Agreement with respect to the Rents and rights and powers of the Agent
under the Operative Agreements or to obtain a judgment against the
Lessee's interest in the Properties or the Agent's rights and powers to
obtain a judgment against the Lessor or any Credit Party (provided, that
no deficiency judgment or other money judgment shall be enforced against
any Exculpated Person except to the extent of the Lessor's interest in the
Trust Estate (excluding Excepted Payments) or to the extent the Lessor may
be liable as otherwise contemplated in clauses (ii) and (iii) of this
Section 12.9(b)).
12.10. Rights of the Credit Parties.
If at any time all obligations (i) of the Owner Trustee under the Credit
Agreement, the Security Documents and the other Operative Agreements and (ii) of
the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full, then the Credit Parties shall be entitled to
(a) terminate the Lease and guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a), the Lessor shall transfer to
the Lessee all of its right, title and interest free and clear of the Lien of
the Lease, the Lien of the Security Documents and all Lessor Liens in and to any
Properties then subject to the Lease and any amounts or proceeds referred to in
the foregoing clause (b) shall be paid over to the Lessee.
12.11. Further Assurances.
The parties hereto shall promptly cause to be taken, executed,
acknowledged or delivered, at the sole expense of the Lessee, all such further
acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to execute
such instruments of conveyance as may be reasonably required in connection
therewith.
12.12. Calculations under Operative Agreements.
The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Owner Trustee
shall be made by the Agent and that such calculations and determinations shall
be conclusive and binding on the parties hereto in the absence of manifest
error.
12.13. Confidentiality.
Each Financing Party agrees to keep confidential any information furnished
or made available to it by any Credit Party or any of its Subsidiaries pursuant
to this Agreement that is marked confidential; provided that nothing herein
shall prevent any Financing Party from disclosing such information (a) to any
other Financing Party or any Affiliate of any Financing Party, or any officer,
director, employee, agent, or advisor of any Financing Party or Affiliate of any
Financing Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Financing Party other than as a result of a disclosure by any Financing
Party prohibited by this Agreement, (g) in connection with any litigation to
which such Financing Party or any of its Affiliates may be a party, (h) to the
extent necessary in connection with the exercise of any remedy under this
Agreement or any other Operative Agreement, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
12.14. Financial Reporting/Tax Characterization.
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization.
12.15. Set-off.
In addition to any rights now or hereafter granted under applicable Law
and not by way of limitation of any such rights, upon and after the occurrence
of any Event of Default and during the continuation thereof, the Lenders, the
Holders, their respective Affiliates and any assignee or participant of a Lender
or a Holder in accordance with the applicable provisions of the Operative
Agreements are hereby authorized by the Credit Parties at any time or from time
to time, without notice to the Credit Parties or to any other Person, any such
notice being hereby expressly waived, to set-off and to appropriate and to apply
any and all deposits (general or special, time or demand, including without
limitation indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lenders,
the Holders, their respective Affiliates or any assignee or participant of a
Lender or a Holder in accordance with the applicable provisions of the Operative
Agreements to or for the credit or the account of any Credit Party against and
on account of the obligations of any Credit Party under the Operative Agreements
irrespective of whether or not (a) the Lenders or the Holders shall have made
any demand under any Operative Agreement or (b) the Agent shall have declared
any or all of the obligations of any Credit Party under the Operative Agreements
to be due and payable and although such obligations shall be contingent or
unmatured. Notwithstanding the foregoing, neither the Agent nor any other
Financing Party shall exercise, or attempt to exercise, any right of setoff,
banker's lien, or the like, against any deposit account or property of any
Credit Party held by the Agent or any other Financing Party, without the prior
written consent of the Majority Secured Parties, and any Financing Party
violating this provision shall indemnify the Agent and the other Financing
Parties from any and all costs, expenses, liabilities and damages resulting
therefrom. The contractual restriction on the exercise of setoff rights provided
in the foregoing sentence is solely for the benefit of the Agent and the
Financing Parties and may not be enforced by any Credit Party.
[signature pages follow]
<PAGE>
Participation Agreement
Centennial Real Estate Trust 1998-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CONSTRUCTION AGENT
AND LESSEE: CENTENNIAL HEALTHCARE CORPORATION,
as the Construction Agent and as
the Lessee
By: /S/ Alan C
Dahl
Name: Alan C. Dahl
Title: E.V.P.
[Signature Pages Continue]
<PAGE>
GUARANTORS: CENTENNIAL/ASHTON PROPERTIES
CORPORATION, a Georgia corporation
By: /s/ Alan C.
Dahl
Name: Alan C. Dahl
Title: V.P.
CENTENNIAL HEALTHCARE PROPERTIES
CORPORATION, a Georgia corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
CENTENNIAL HEALTHCARE MANAGEMENT
CORPORATION, a Georgia corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
CENTENNIAL ACQUISITION CORPORATION,
a Georgia corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
[Signature Pages Continue]
<PAGE>
CENTENNIAL PROFESSIONAL THERAPY
SERVICES CORPORATION, a Georgia
corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
CENTENNIAL HEALTHCARE INVESTMENT
CORPORATION, a Georgia corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
CENTENNIAL HEALTHCARE HOSPITAL
CORPORATION, a Georgia corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
TRANSITIONAL HEALTH SERVICES, INC.,
a Delaware corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
TRANSITIONAL FINANCIAL SERVICES,
INC., a Delaware corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
[Signature Pages Continue]
PARAGON REHABILITATION, INC., a
Delaware corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
THS PARTNERS I, INC., a Delaware
corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
THS PARTNERS II, INC., a Delaware
corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
TRANSITIONAL HEALTH PARTNERS d/b/a
TRANSITIONAL HEALTH SERVICES, a
Delaware general partnership
By: THS PARTNERS I, INC., its
general partner
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
By: THS PARTNERS II, INC., its
general partner
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
[Signature Pages Continue]
<PAGE>
PARKVIEW PARTNERSHIP, a Delaware
general partnership
By: THS PARTNERS I, INC., its
general partner
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
By: THS PARTNERS II, INC., its
general partner
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
TOTAL CARE CONSOLIDATED, INC., a
North Carolina corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
TOTAL CARE, INC., a North Carolina
corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
TOTAL HEALTH CARE SERVICES, INC., a
North Carolina corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
[Signature Pages Continue]
<PAGE>
TOTAL CARE OF THE CAROLINAS, INC.,
a North Carolina corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
HCC HOME HEALTH OF LOUISIANA, INC.,
a Louisiana corporation
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
[Signature Pages Continue]
<PAGE>
OWNER TRUSTEE AND
LESSOR: FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually,
except as expressly stated herein,
but solely as the Owner Trustee
under the Centennial Real Estate
Trust 1998-1
By: /s/ Val T. Orton
Name: Val T. Orton
Title: V.P.
[Signature Pages Continue]
<PAGE>
SYNDICATION AGENT: FIRST UNION CAPITAL MARKETS, A
DIVISION OF WHEAT FIRST SECURITIES,
INC., as the Syndication Agent
By: /s/ Joseph H. Towell
Name: Joseph H. Towell
Title: Sen. V.P.
[Signature Pages Continue]
<PAGE>
AGENT AND LENDERS: NATIONSBANK, N.A., as an Agent and
as a Lender
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: V.P.
[Signature Pages Continue]
<PAGE>
FIRST UNION NATIONAL BANK, as a
Lender
By: /s/ Joseph H. Towell
Name: Joseph H. Towell
Title: Sen. V.P,
[Signature Pages Continue]
<PAGE>
AMSOUTH BANK, as a Lender
By: /s/ J. Ken
Diafatta
Name: J. Ken Diafatta
Title: Asst. V.P.
[Signature Pages Continue]
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH, as
a Lender
By:/s/ John Oberle
Name:John Oberle
Title: V.P.
[Signature Pages Continue]
<PAGE>
COOPERATIVE CENTRALE
RAIFFEISEN-BOERENLEENBANK, B.A.
"RABOBANK NEDERLAND", NEW YORK
BRANCH, as a Lender
By:/s/ Terrell Boyle; Robert B.
Benoit
Name:Terrell Boyle; Robert B.
Benoit
Title: V.P.; Sen. V.P.
[Signature Pages Continue]
<PAGE>
COMERICA BANK, as a Lender
By: /s/ Craig F. Durno
Name: Craig F. Durno
Title: Account Officer
[Signature Pages Continue]
<PAGE>
NATIONAL CITY BANK OF KENTUCKY, as
a Lender
By: /s/ Charles F. Denny
Name: Charles F. Denny
Title: Sen. V.P.
[Signature Pages Continue]
<PAGE>
WACHOVIA BANK, N.A., as a Lender
By:/s/ Gary C. Gaskill
Name:Gary C. Gaskill
Title: V.P.
[Signature Pages Continue]
<PAGE>
SCOTIABANC INC., as a Lender
By:/s/ William E. Zarrett
Name:William E. Zarrett
Title: Sen. Reationship Mgr.
[Signature Pages Continue]
<PAGE>
HOLDERS: FIRST UNION NATIONAL BANK, as a
Holder
By: /s/ Joseph H. Towell
Name: Joseph H. Towell
Title: Sen. V.P.
[Signature Pages Continue]
<PAGE>
NATIONSBANK, N.A., as a Holder
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: V.P.
[Signature Pages Continue]
<PAGE>
AMSOUTH BANK, as a Holder
By: /s/ J. Ken Difatta
Name: J. Ken Difatta
Title: Asst. V.P.
[Signature Pages Continue]
<PAGE>
WACHOVIA BANK, N.A., as a Holder
By:/s/ Gary C. Gaskill
Name:Gary C. Gaskill
Title: Vice President
[Signature Pages Continue]
<PAGE>
SCOTIABANC INC., as a Holder
By:/s/ William E. Zarrett
Name:William E. Zarrett
Title: Sen Relationship Mgr.
[End of Signatures]
<PAGE>
EXHIBIT A
REQUISITION FORM
(OMITTED)
EXHIBIT B
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(j) of the
Participation Agreement)
OMITTED
EXHIBIT C
OFFICER'S CERTIFICATE
OMITTED
EXHIBIT D
CENTENNIAL HEALTHCARE CORPORATION
SECRETARY'S CERTIFICATE
OMITTED
EXHIBIT E
CENTENNIAL HEALTHCARE CORPORATION
OFFICER'S CERTIFICATE
OMITTED
EXHIBIT F
FIRST SECURITY BANK, NATIONAL ASSOCIATION
SECRETARY'S CERTIFICATE
OMITTED
EXHIBIT G
[Outside Counsel Opinion for the Owner Trustee]
(Pursuant to Section 5.3(ee) of the
Participation Agreement)
OMITTED
EXHIBIT H
[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(ff) of the Participation Agreement)
OMITTED
EXHIBIT I
CENTENNIAL HEALTHCARE CORPORATION
OFFICER'S CERTIFICATE
OMITTED
EXHIBIT K
OMITTED
<PAGE>
EXHIBIT L
OMITTED
<PAGE>
EXHIBIT M
CENTENNIAL HEALTHCARE CORPORATION
OFFICER'S COMPLIANCE CERTIFICATE
OMITTED
EXHIBIT N
[Legal Description of Arkansas Property]
OMITTED
<PAGE>
- - -
Appendix A
- - -------------------------------------------------------------------
Rules of Usage and Definitions
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set forth
herein or in any other document shall be equally applicable to the singular and
plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any document
are solely for convenience of reference and shall not constitute a part of any
such document nor shall they affect the meaning, construction or effect of any
provision thereof.
(d) References to any Person shall include such Person, its successors,
permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended, supplemented, restated
and/or replaced from time to time in accordance with the applicable provisions
thereof.
(f) Except as otherwise expressly provided, references to any law includes
any amendment or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the allocated cost
of in-house counsel.
(j) Each of the parties to the Operative Agreements and their counsel have
reviewed and revised, or requested revisions to, the Operative Agreements, and
the usual rule of construction that any ambiguities are to be resolved against
the drafting party shall be inapplicable in the construing and interpretation of
the Operative Agreements and any amendments or exhibits thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
have the meaning so ascribed to such term in the applicable Operative Agreement.
II. Definitions
"ABR" shall mean, for any day, a rate per annum equal to the greater of
(a) the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate which the Agent
announces from time to time as its prime lending rate as in effect from time to
time. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Any Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate. The Prime Lending Rate shall change automatically and
without notice from time to time as and when the prime lending rate of the Agent
changes. "Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members or the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Lending Rate or the Federal Funds Effective
Rate shall be effective as of the opening of business on the effective day of
such change in the Prime Lending Rate or the Federal Funds Effective Rate,
respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield
based on the ABR.
"ABR Loans" shall mean Loans the rate of interest applicable to which is
based upon the ABR.
"Acceleration" shall have the meaning given to such term in Section 6 of
the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in Section
5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Incorporated Terms" shall have the meaning given to such term
in Section 28.1 of the Lease.
"Adjusted EBITDAR" shall mean EBITDAR for the Lessee and its Consolidated
Subsidiaries for the most-recently ended Rolling Period; provided, that in the
event that any Permitted Acquisition has been consummated during such Rolling
Period and the Credit Parties have delivered to the Lenders and the Holders pro
forma combined historical financial statements in form and substance
satisfactory to the Majority Secured Parties, then for purposes of calculating
Adjusted EBITDAR hereunder, EBITDAR for such Rolling Period shall be calculated
for the Lessee and its Consolidated Subsidiaries including such Permitted
Acquisition, based on such pro forma combined historical financial statements.
"Adjusted Eurodollar Rate" shall mean, for any Interest Period, as applied
to a Eurodollar Loan or a Eurodollar Holder Advance, the rate per annum (
rounded upwards, if necessary, to the next 1/16 of 1%) determined pursuant to
the following formula:
Adjusted Eurodollar Rate = ______Eurodollar
Rate_____
[1 - Reserve Percentage]
"Adjusted Total Debt" shall mean, as of any date of determination, the sum
of (a) all Funded Debt of the Lessee and its Consolidated Subsidiaries as of
such date, plus (b) the amount of all operating leases (other than operating
leases financed through the Operative Agreements), based on the present value of
all payments required under such operating leases calculated using a discount
rate of ten percent (10%) per annum.
"Advance" shall mean a Construction Advance or an
Acquisition Advance.
"Affiliate" shall mean, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"After Tax Basis" shall mean, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient calculated at the then maximum
marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated on or about the
Initial Closing Date between the Construction Agent and the Lessor.
"Agency Agreement Event of Default" shall mean an "Event of Default" as
defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean NationsBank, N.A., as agent for the Lenders pursuant to
the Credit Agreement, or any successor agent appointed in accordance with the
terms of the Credit Agreement and respecting the Security Documents, for the
Lenders and the Holders, to the extent of their interests.
"Applicable Percentage" shall mean for Loans, Holder Advances and the
Unused Fee, the appropriate applicable percentage corresponding to the ratio of
Adjusted Total Debt to Adjusted EBITDAR (the Applicable Percentage being the
lowest applicable percentage per annum as to which the ratio requirement has
been attained): <TABLE> <CAPTION>
Applicable
Applicable Percentage Applicable Applicable Applicable
Percentage Applicable for Percentage Percentage Percentage
Pricing for Percentage Eurodollar for for for
Level Ratio of Eurodollar for ABR Holder ABR Lender Holder
Adjusted Total Loans Loans Advances Holder Unused Unused
Debt/Adjusted Advances Fee Fee
EBITDAR
<S> <C> <C> <C> <C> <C> <C>
Tier I Less than or 0.950% 0.075% 1.450% 0.575% 0.200% 0.200%
equal to 3.50 to
1.00
Tier II Less than or 1.200% 0.075% 1.700% 0.575% 0.250% 0.250%
equal to 4.00 to
1.00 but greater
than 3.50 to 1.00
Tier III Less than or 1.450% 0.075% 1.950% 0.575% 0.250% 0.250%
equal to 4.50 to
1.00 but greater
than 4.00 to 1.00
Tier IV Greater than 1.700% 0.200% 2.200% 0.700% 0.375% 0.375%
4.50 to 1.00
</TABLE>
The initial Applicable Percentage, which shall be applicable commencing on the
Initial Closing Date, shall be based on the Lessee's financial statements for
the fiscal period ended March 31, 1998 and the Officer's Compliance Certificate
delivered pursuant to Paragraph 4.1 of the Lessee Credit Agreement; thereafter,
the Applicable Percentage shall adjust automatically, as appropriate, on the day
following delivery of each Officer's Compliance Certificate provided, that in
the event that an Officer's Compliance Certificate has not been delivered as
required by Section 8.3(1) of the Participation Agreement, then the Applicable
Percentage shall adjust to Level IV provided above as of the date of required
delivery; provided, further, however, the Applicable Percentage shall adjust on
the day after delivery of such delinquent Officer's Compliance Certificate based
on the ratio set forth in such Officer's Compliance Certificate. Notwithstanding
the foregoing, at any time that the default rate of interest or yield, as the
case may be, shall apply in accordance with Section 2.8(b) of the Credit
Agreement and Section 3.2(b) of the Trust Agreement, the Applicable Percentage
shall be the highest margin provided above with respect to ABR Loans, Eurodollar
Loans, ABR Holder Advances and Eurodollar Holder Advances, respectively.
"Appraisal" shall mean, with respect to any Property, an appraisal to be
delivered in connection with the Participation Agreement or in accordance with
the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Approved State" shall mean each state within the continental United
States.
"Appurtenant Rights" shall mean (a) all agreements, easements, rights of
way or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land underlying the Improvements or the Improvements, including without
limitation the use of any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to the Land and (b) all permits,
licenses and rights, whether or not of record, appurtenant to such Land or the
Improvements.
"Assignment and Acceptance" shall mean the Assignment and Acceptance in
the form attached to the Credit Agreement as Exhibit B.
"Available Commitment" shall mean, as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Lender
Commitment over (b) the aggregate principal amount of all Loans made by such
Lender as of such date after giving effect to Section 5.2(d) of the
Participation Agreement (but without giving effect to any other repayments or
prepayments of any Loans hereunder).
"Available Holder Commitments" shall mean an amount equal to the excess,
if any, of (a) the aggregate amount of the Holder Commitments over (b) the
aggregate amount of the Holder Advances made since the Initial Closing Date
after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bankruptcy Code" shall mean Title 11 of the U. S. Code
entitled "Bankruptcy," as now or hereafter in effect or any
successor thereto.
"Basic Documents" shall mean the following: the
Participation Agreement, the Agency Agreement, the Trust
Agreement, the Certificates, the Credit Agreement, the Notes, the
Lease and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Basic Term" shall have the meaning specified in Section 2.2
of the Lease.
"Basic Term Commencement Date" shall have the meaning specified in Section
2.2 of the Lease.
"Basic Term Expiration Date" shall have the meaning specified in Section
2.2 of the Lease.
"Benefitted Lender" shall have the meaning specified in Section 9.10(a) of
the Credit Agreement.
"Bill of Sale" shall mean a Bill of Sale regarding Equipment in form and
substance satisfactory to the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual capacity
but as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans hereunder.
"Budgeted Total Property Cost" shall mean, at any date of determination
with respect to any Construction Period Property, an amount equal to the
aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina, Atlanta, Georgia and
Philadelphia, Pennsylvania or any other states from which the Agent, any Lender
or any Holder funds or engages in administrative activities with respect to the
transactions under the Operative Agreements are authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan or
Eurodollar Holder Advance, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London interbank
market.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
property (whether real, personal, tangible, intangible or mixed of such Person)
by such Person as the lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP.
"Capital Stock" shall mean any nonredeemable capital stock of any Credit
Party or any of its Subsidiaries, whether common or preferred.
"Casualty" shall mean any damage or destruction of all or any portion of
the Property as a result of a fire or other casualty.
"Centennial" shall mean Centennial Healthcare Corporation, a Georgia
corporation, and its successors and permitted assigns.
"Centennial Real Estate Trust 1998-1" shall mean the grantor trust created
pursuant to the terms and conditions of the Trust Agreement.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of each Holder regarding
the Holder Commitment of such Holder issued pursuant to the terms and conditions
of the Trust Agreement in favor of each Holder.
"Chattel Paper" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Claims" shall mean any and all obligations, liabilities, losses, actions,
suits, penalties, claims, demands, costs and expenses (including without
limitation reasonable attorney's fees and expenses) of any nature whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 together with rules
and regulations promulgated thereunder, as amended from time to time, or any
successor statute thereto.
"Collateral" shall mean all assets now owned or hereafter acquired by the
Lessor, the Construction Agent and/or the Lessee upon which a Lien is purported
to be created by one or more of the Security Documents.
"Commitment" shall mean the aggregate of the Holder
Commitment plus the Lender Commitment.
"Commitment Percentage" shall mean, as to any Lender at any time, the
percentage which such Lender's Lender Commitment then constitutes of the
aggregate Lender Commitments (or, at any time after the Lender Commitments shall
have expired or terminated, the percentage which the aggregate principal amount
of such Lender's Loans then outstanding constitutes of the aggregate principal
amount of all of the Loans then outstanding), and such Commitment Percentage
shall take into account both the Lender's Tranche A Commitment and the Lender's
Tranche B Commitment.
"Commitment Period" shall mean the period from and including the Initial
Closing Date to and including the Construction Period Termination Date, or such
earlier date as the Lender Commitments shall terminate as provided in the Credit
Agreement or the Holder Commitment shall terminate as provided in the Trust
Agreement.
"Company Obligations" shall mean the obligations of Centennial, in any and
all capacities under and with respect to the Operative Agreements and each
Property.
"Completion" shall mean, with respect to a Property, such time as the
acquisition, installation, testing and final completion of the Improvements on
such Property has been achieved substantially in accordance with the Plans and
Specifications, the Agency Agreement and/or the Lease, and in compliance with
all Legal Requirements and Insurance Requirements and a certificate of occupancy
has been issued with respect to such Property by the appropriate governmental
entity (except if non-compliance, individually or in the aggregate, shall not
have and could not reasonably be expected to have a Material Adverse Effect). If
(i) the Lessor purchases a Property that includes existing Improvements that are
to be immediately occupied by the Lessee without any improvements financed
pursuant to the Operative Agreements, the date of Completion and the Rent
Commencement Date for such Property shall be the Property Closing Date and (ii)
the Lessor receives an Advance in connection with a Property that is being
purchased pursuant to an Escrowed Closing (as described in Section 5.2(d) of the
Participation Agreement), the date of completion and the Rent Commencement Rate
of such Property shall be the date of the Advance that is placed in such escrow.
"Completion Date" shall mean, with respect to a Property, the earlier of
(a) the date on which Completion for such Property has occurred or (b) the
Construction Period Termination Date.
"Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to any Property or any part thereof, wholly
or partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including without limitation an action by a
Governmental Authority to change the grade of, or widen the streets adjacent to,
any Property or alter the pedestrian or vehicular traffic flow to any Property
so as to result in a change in access to such Property, or by or on account of
an eviction by paramount title or any transfer made in lieu of any such
proceeding or action.
"Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary of
such Person which under the rules of GAAP consistently applied should have its
financial results consolidated with those of such Person for purposes of
financial accounting statements.
"Construction Advance" shall mean an advance of funds to pay Property
Costs pursuant to Section 5.4 of the Participation Agreement.
"Construction Agent" shall mean Centennial, a Georgia corporation, as the
construction agent under the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition, installation,
testing, constructing and developing any Property as determined by the
Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to Improvements,
the date on which construction of such Improvements commences pursuant to the
Agency Agreement.
"Construction Contract" shall mean any contract entered into between the
Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement.
"Construction Period" shall mean, with respect to a Property, the period
commencing on the Construction Commencement Date for such Property and ending on
the Completion Date for such Property.
"Construction Period Property" means, at any date of determination, any
Property as to which the Rent Commencement Date has not occurred on or prior to
such date.
"Construction Period Termination Date" shall mean (a) the earlier of (i)
the date that the Lender Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as may be
agreed to by the Majority Secured Parties.
"Contractor" shall mean each entity with whom the Construction Agent or
the Lessee contracts to construct any Improvements or any portion thereof on the
Property.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Controlling Person" shall have the meaning specified in
Section 17.1(n) of the Lease.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the
Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated on or about the
Initial Closing Date, among the Lessor, the Agent and the Lenders, as specified
therein.
"Credit Agreement Default" shall mean any event or condition which, with
the lapse of time or the giving of notice, or both, would constitute a Credit
Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the Agency
Agreement, the Credit Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the
Lessee and each Guarantor.
"Deed" shall mean a warranty deed regarding the Land and/or Improvements
in form and substance satisfactory to the Agent.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Holder" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Defaulting Lender" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b) of
the Lease Agreement.
"Documents" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws of
any State of the United States or the District of Columbia.
"Early Purchase Cap" shall have the meaning given to such term in Section
20.1 of the Lease.
"EBITDA" shall mean, for any period, Net Income of the Lessee and its
Consolidated Subsidiaries for such period plus (to the extent deducted from
revenue in calculating net income) depreciation, amortization and non-recurring
non-cash charges and expenses associated with a sale of assets or refinancing of
Indebtedness or leases permitted hereunder, taxes and interest expense
(including interest expense on Capitalized Leases) for the Lessee and its
Consolidated Subsidiaries for such period.
"EBITDAR" shall mean for any period, EBITDA of the Lessee and its
Consolidated Subsidiaries for such period plus operating lease expense for the
Lessee and its Consolidated Subsidiaries for such period.
"Escrowed Closing" shall have the meaning given to such term in Section
5.2(d) of the Participation Agreement.
"Election Date" shall have the meaning given to such term in Section 20.1
of the Lease.
"Election Notice" shall have the meaning given to such term in Section
20.1 of the Lease.
"Eligible Assignee" shall mean (i) a Lender or a Holder, as the case may
be; (ii) an Affiliate of a Lender or a Holder, as the case may be; and (iii) any
other Person approved by the Agent and, unless an Event of Default has occurred
and is continuing at the time any assignment is effected in accordance with the
Operative Agreements, the Lessee or the Construction Agent, such approval not to
be unreasonably withheld or delayed by the Lessee or the Construction Agent and
such approval to be deemed given by the Lessee or the Construction Agent if no
objection is received by the assigning Lender or Holder and the Agent from the
Lessee or the Construction Agent within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender or Holder to the
Lessee or the Construction Agent; provided, however, that neither the Lessee or
the Construction Agent nor an Affiliate of the Lessee or the Construction Agent
shall qualify as an Eligible Assignee.
"Environmental Claims" shall mean any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Substance, Environmental
Law, or other order of a Tribunal or (d) from any actual or alleged damage,
injury, threat, or harm to health, safety, natural resources, or the
environment.
"Environmental Control Statutes" shall mean all federal, state or local
laws and regulations regarding environmental or pollution concerns including
without limitation the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (as amended, "CERCLA"), the Solid Waste Disposal Act, the
Clean Water Act and the Clean Air Act, the Resource Conservation and Recovery
Act of 1976, the Federal Water Pollution Control Act Amendments of 1972 and the
Occupational Safety and Health Act, each as amended from time to time, and all
regulations, directives, policies or interpretations issued in connection with
any such statute.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or condition
that violates or threatens (if the threat requires remediation under any
Environmental Law and is not remediated during any grace period allowed under
such Environmental Law) to violate or results in or threatens (if the threat
requires remediation under any Environmental Law and is not remediated during
any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements,
including but without limiting the generality of the foregoing, all equipment
described in the Appraisal including without limitation all heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description.
"Equipment Schedule" shall mean (a) each Equipment Schedule attached to
the applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including without limitation basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed on eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a Holder
Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean, as applied to any Eurodollar Loan or
Eurodollar Holder Advance, the rate which appears on Telerate Page 3750 at
approximately 9:00 a.m. (Philadelphia time) two (2) London Business Days prior
to commencement of such Interest Period for the offering to leading banks in the
London Interbank Market of deposits in United States dollars (Eurodollars) or,
if such rate does not appear on the Telerate Page 3750, the rate which appears
(or, if two (2) or more such rates appear, the average rounded up to the nearest
1/16 of 1 % of the rates which appear) on the Reuters Screen LIBO Page as of
9:00 a.m. Philadelphia time two (2) London Business Days prior to the
commencement of the Interest Period, in either case for an amount substantially
equal to such Eurodollar Loan or Eurodollar Holder Advance as to which the
Borrower may elect the Adjusted Eurodollar Rate to be applicable with a maturity
of comparable duration to the Interest Period selected by the Borrower for such
Eurodollar Loan or Eurodollar Holder Advance, as may be adjusted from time to in
accordance with the applicable provisions of the Operative Agreements including
without limitation Section 11.3 of the Participation Agreement.
"Event of Default" shall mean a Lease Event of Default, an Agency
Agreement Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation indemnity
payments made pursuant to Section 11 of the Participation Agreement),
whether made by adjustment to Basic Rent or otherwise, to which the Owner
Trustee, any Holder or any of their respective Affiliates, agents,
officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination Value) payable
under any Operative Agreement to reimburse the Owner Trustee, any Holder
or any of their respective Affiliates (including without limitation the
reasonable expenses of the Owner Trustee, the Trust Company and the
Holders incurred in connection with any such payment) for performing or
complying with any of the obligations of any Credit Party under and as
permitted by any Operative Agreement;
(c) any amount payable to a Holder by any transferee of such interest
of a Holder as the purchase price of such Holder's interest in the Trust
Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies other than
such proceeds or payments payable to the Agent or any Lender;
(e) any insurance proceeds under policies maintained by the Owner
Trustee or any Holder;
(f) Transaction Expenses or other amounts, fees, disbursements or
expenses paid or payable to or for the benefit of the Owner Trustee or any
Holder;
(g) all right, title and interest of any Holder or the Owner Trustee
to any Property or any portion thereof or any other property to the extent
any of the foregoing has been released from the Liens of the Security
Documents and the Lease pursuant to the terms thereof;
(h) upon termination of the Credit Agreement pursuant to the terms
thereof, all remaining property covered by the Lease or Security
Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (i) above; and
(k) any rights of either the Owner Trustee or the Trust Company to
demand, collect, sue for or otherwise receive and enforce payment of any
of the foregoing amounts, provided that such rights shall not include the
right to terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of all
awards, compensation or insurance proceeds payable in connection with a Casualty
or Condemnation over the Termination Value paid by the Lessee pursuant to the
Lease with respect to such Casualty or Condemnation.
"Exculpated Persons" shall mean the Trust Company (except with respect to
the representations and warranties and the other obligations of the Trust
Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to the
Trust Agreement), the Holders (except with respect to the obligations of the
Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their officers,
directors, shareholders and partners.
"Exempt Payments" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Expiration Date" shall mean either (a) the Basic Term Expiration Date or
(b) the last day of the applicable Renewal Term; provided, in no event shall the
Expiration Date be later than the annual anniversary of the Initial Closing Date
occurring in the year 2003, unless such later date has been expressly agreed to
in writing by each of the Lessor, the Lessee, the Agent, the Lenders and the
Holders.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount (determined in accordance with the Appraisal Procedure), which in any
event, shall not be less than zero (0), that would be paid in cash in an
arms-length transaction between an informed and willing purchaser and an
informed and willing seller, neither of whom is under any compulsion to purchase
or sell, respectively, such Property. Fair Market Sales Value of any Property
shall be determined based on the assumption that, except for purposes of Section
17 of the Lease, such Property is in the condition and state of repair required
under Section 10.1 of the Lease and each Credit Party is in compliance with the
other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such term
in the definition of ABR.
"Financing Parties" shall mean the Lessor, the Owner Trustee, in its trust
capacity, the Agent, the Syndication Agent, the Holders and the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements, including
without limitation all components thereof, located in or on the Improvements,
together with all replacements, modifications, alterations and additions
thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including without
limitation strikes, lockouts, adverse soil conditions, acts of God, adverse
weather conditions, inability to obtain labor or materials, governmental
activities, civil commotion and enemy action; but excluding any event, cause or
condition that results from the Construction Agent's financial condition.
"Form 1001" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Form 4224" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Funded Debt" shall mean, as of any date of determination, the sum,
without duplication, of (a) the aggregate amount available to be drawn under
Letters of Credit and the aggregate amount of unreimbursed draws under Letters
of Credit; plus (b) the aggregate principal amount of all Indebtedness for (i)
borrowed money other than trade indebtedness incurred in the normal and ordinary
course of business for value received, (ii) installment purchases of real or
personal property, (iii) Capitalized Leases, and (iv) guaranties of Funded Debt
of others; and plus (c) the aggregate outstanding balance of all Advances under
the Operative Agreements.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the accounting principles board of the
American Institute of Certified Public Accountants, and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, that are applicable to the circumstances as of the
date of determination.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operating of the Property
substantially in accordance with the actual and intended uses by the Lessee or
any other Person using any applicable Property, or portion thereof, by or
through the Lessee.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" shall mean a ground lease (in form and substance
satisfactory to the Agent) respecting any Property (a) owned by any Credit Party
(or a parent corporation or any Subsidiary of any Credit Party) and leased to
the Lessor where such lease has at least a ninety-nine (99) year term and
payments set at no more than $1.00 per year, or (b) where such lease is subject
to such other terms and conditions as are satisfactory to the Agent.
"Guarantors" shall mean the various parties to the Participation Agreement
from time to time, as guarantors of the Construction Agent and the Lessee with
respect to the Operative Agreements and the Properties.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract.
"Hazardous Substance" shall mean any of the following: (a) any petroleum
or petroleum product, explosives, radioactive materials, asbestos, formaldehyde,
polychlorinated biphenyls, lead and radon gas; (b) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste, or pollutant, in each case whether naturally occurring, man-made or the
by-product of any process, that is toxic, harmful or hazardous to the
environment or human health or safety as determined in accordance with any
Environmental Law; or (c) any substance, material, product, derivative, compound
or mixture, mineral, chemical, waste, gas, medical waste or pollutant that would
support the assertion of any claim under any Environmental Law, whether or not
defined as hazardous as such under any Environmental Law.
"HCFA" shall mean the Health Care Financing Administration
of the United States Department of Health and Human Services and
any successor thereto.
"Health Care Facility" shall mean any Nursing Home, Permitted Hospital or
other property or facility which any Credit Party or Subsidiary owns, leases,
operates or manages on or after the date hereof.
"Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of Holder
Advances made by each Holder to the Trust Estate pursuant to Section 2 of the
Participation Agreement and Section 3.1 of the Trust Agreement less any payments
of any Holder Advances received by the Holders pursuant to Section 3.4 of the
Trust Agreement.
"Holder Commitments" shall mean $1,200,000.00, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Holder, the
Holder Commitment of each Holder shall be as set forth in Schedule I to the
Trust Agreement as such amounts may be increased or reduced from time to time in
accordance with the provisions of the Operative Agreements.
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
the outstanding Holder Advances made with respect thereto under the Trust
Agreement.
"Holder Overdue Rate" shall mean the lesser of (a) the then current rate
of Holder Yield respecting the particular amount in question plus two percent
(2%) and (b) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property an amount
equal to the outstanding Holder Advances with respect thereto.
"Holder Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Holder Yield" shall mean with respect to Holder Advances from time to
time either the Eurodollar Rate plus the Applicable Percentage or the ABR plus
the Applicable Percentage as elected by the Owner Trustee from time to time with
respect to such Holder Advances in accordance with the terms of the Trust
Agreement; provided, however, (a) upon delivery of the notice described in
Section 3.7(c) of the Trust Agreement, the outstanding Holder Advances of each
Holder shall bear a yield at the ABR plus the Applicable Percentage applicable
from time to time from and after the dates and during the periods specified in
Section 3.7(c) of the Trust Agreement, and (b) upon the delivery by a Holder of
the notice described in Section 11.3(f) of the Participation Agreement, the
Holder Advances of such Holder shall bear a yield at the ABR plus the Applicable
Percentage applicable from time to time after the dates and during the periods
specified in Section 11.3(f) of the Participation Agreement.
"Holders" shall mean the banks and financial institutions which may be
from time to time holders of Certificates in connection with the Centennial Real
Estate Trust 1998-1.
"Impositions" shall mean any and all liabilities, losses, expenses, costs,
charges and Liens of any kind whatsoever for fees, taxes, levies, imposts,
duties, charges, assessments or withholdings ("Taxes") including but not limited
to (i) real and personal property taxes, including without limitation personal
property taxes on any property covered by the Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) excise taxes;
(iv) real estate transfer taxes, conveyance taxes, stamp taxes and documentary
recording taxes and fees; (v) taxes that are or are in the nature of franchise,
income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including without
limitation all assessments for public Improvements or benefits, whether or not
such improvements are commenced or completed within the Term; and (vii) taxes,
Liens, assessments or charges asserted, imposed or assessed by the PBGC or any
governmental authority succeeding to or performing functions similar to, the
PBGC; and in each case all interest, additions to tax and penalties thereon,
which at any time prior to, during or with respect to the Term or in respect of
any period for which the Lessee shall be obligated to pay Supplemental Rent, may
be levied, assessed or imposed by any Governmental Authority upon or with
respect to (a) any Property or any part thereof or interest therein; (b) the
leasing, financing, refinancing, demolition, construction, substitution,
subleasing, assignment, control, condition, occupancy, servicing, maintenance,
repair, ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, sale, transfer of title, return or other disposition of
such Property or any part thereof or interest therein; (c) the Notes, other
indebtedness with respect to any Property, or the Certificates, or any part
thereof or interest therein; (d) the rentals, receipts or earnings arising from
any Property or any part thereof or interest therein; (e) the Operative
Agreements, the performance thereof, or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to any Property
or any part thereof or interest therein upon the sale or disposition thereof;
(g) any contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; (h) the issuance of the Notes or the Certificates; (i) the Owner
Trustee, the Trust or the Trust Estate; or (j) otherwise in connection with the
transactions contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction, renovations
and/or Modifications on any Land, all buildings, structures, Fixtures, and other
improvements of every kind existing at any time and from time to time on or
under the Land purchased or otherwise acquired using the proceeds of the Loans
or the Holder Advances or which is subject to a Ground Lease, together with any
and all appurtenances to such buildings, structures or improvements, including
without limitation sidewalks, utility pipes, conduits and lines, parking areas
and roadways, and including without limitation all Modifications and other
additions to or changes in the Improvements at any time, including without
limitation (a) any Improvements existing as of the Property Closing Date as such
Improvements may be referenced on the applicable Requisition and (b) any
Improvements made subsequent to such Property Closing Date.
"Incorporated Covenants" shall have the meaning given to such term in
Section 28.1 of the Lease.
"Incorporated Representations and Warranties" shall have the meaning given
to such term in Section 28.1 of the Lease.
"Indebtedness" shall mean, for any Person, all obligations of such Person
which in accordance with GAAP shall be classified on a balance sheet of such
Person as liabilities of such Person and in any event shall include, without
duplication, all (a) obligations of such Person for borrowed money or which have
been incurred in connection with the acquisition of property or assets; (b)
obligations secured by any lien upon property or assets owned by such Person,
notwithstanding that such Person has not assumed or become liable for the
payment of such obligations; (c) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property; (d) Capitalized Leases; (e)
guarantees; and (f) letters of credit and letter of credit reimbursement
obligations.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Trust, the Trust Company, the Agent, the
Holders, the Lenders, the Syndication Agent and their respective successors,
assigns, directors, shareholders, partners, officers, employees, agents and
Affiliates.
"Indemnity Provider" shall mean, respecting each Property,
the Lessee.
"Initial Closing Date" shall mean July 31, 1998.
"Initial Construction Advance" shall mean any initial Advance to pay for:
(a) Property Costs for construction of any Improvements; and (b) the Property
Costs of restoring or repairing any Property which is required to be restored or
repaired in accordance with Section 15.1(e) of the Lease.
"Instruments" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Interest Period" shall mean, as to any Eurodollar Loan or Eurodollar
Holder Advance a period of one (1), two (2), three (3) or six (6) months'
duration, as the Owner Trustee may elect, during which the Adjusted Eurodollar
Rate is applicable; provided, however, that (a) if any Interest Period would
otherwise end on a day which shall not be a London Business Day, such Interest
Period shall be extended to the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day, subject to clause (c) below, (b)
interest shall accrue from and including the first day of each Interest Period
to but excluding the day on which any Interest Period expires, (c) with respect
to an Interest Period which begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of a calendar month, (d) no Interest Period shall extent
beyond the Maturity Date or the Expiration Date, as the case may be, (e) there
shall not be more than four (4) Interest Periods outstanding at any one (1)
time, and (f) respecting each Interest Period which is six (6) months in
duration, interest and/or Holder Yield on the applicable obligation shall be
payable three (3) months after the commencement of such Interest Period and six
(6) months after the commencement of such Interest Period.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Joinder Agreement" shall mean a joinder agreement, in the form of Exhibit
J to the Participation Agreement, executed from time to time between a Domestic
Subsidiary and the Agent.
"Knowledge" shall mean the actual knowledge of any senior officer of any
Credit Party, or knowledge which any senior officers should have possessed in
the ordinary course of managing the business and affairs of any Credit Party in
a manner consistent with the standards of a reasonably prudent business person
in the long-term care industry.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing Date
relating to such parcel and (b) the schedules to each applicable Lease
Supplement executed and delivered in accordance with the requirements of Section
2.4 of the Lease.
"Law" shall mean any statute, law, ordinance, regulation, rule, directive,
order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or
about the Initial Closing Date, between the Lessor and the Lessee, together with
any Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section 17.1
of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in the
form of Exhibit A to the Lease, together with all attachments and schedules
thereto.
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. ss. 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including without limitation all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments which are either of record or known to any Credit Party
affecting any Property or the Appurtenant Rights.
"Lender Commitments" shall mean $38,800,000.00, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Lender, the
Lender Commitment of each Lender shall be as set forth in Schedule 1.1 to the
Credit Agreement as such amounts may be increased or reduced from time to time
in accordance with the provisions of the Operative Agreements.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lender Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Lenders" shall mean the banks and financial institutions which may be
from time to time party to the Participation Agreement and the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessee Credit Agreement" shall mean that certain Third Amended and
Restated Credit Agreement dated as of or about the Initial Closing Date among
the Lessee, the lenders referenced therein, First Union National Bank, as
administrative agent, and NationsBank, N.A. as syndication agent, as such may
hereafter be amended, modified, supplemented, restated and/or replaced from time
to time.
"Lessee Credit Agreement Commitment Amount" shall mean the Commitment as
defined in the Lessee Credit Agreement.
"Lessee Credit Agreement Event of Default" shall mean an Event of Default
as defined in Section 8.1 of the Lessee Credit Agreement.
"Lessor" shall mean the Owner Trustee, not in its individual capacity, but
as the Lessor under the Lease.
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the
Holder Advances on any Scheduled Interest Payment Date pursuant to the Trust
Agreement (but not including interest on (a) any such scheduled Holder Yield due
on the Holder Advances prior to the Rent Commencement Date with respect to the
Property to which such Holder Advances relate or (b) overdue amounts under the
Trust Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or disposition
of title arising as a result of (a) any claim against the Lessor or the Trust
Company, in its individual capacity, not resulting from the transactions
contemplated by the Operative Agreements, (b) any act or omission of the Lessor
or the Trust Company, in its individual capacity, which is not required by the
Operative Agreements or is in violation of any of the terms of the Operative
Agreements, (c) any claim against the Lessor or the Trust Company, in its
individual capacity, with respect to Taxes or Transaction Expenses against which
the Lessee is not required to indemnify the Lessor or the Trust Company, in its
individual capacity, pursuant to Section 11 of the Participation Agreement or
(d) any claim against the Lessor arising out of any transfer by the Lessor of
all or any portion of the interest of the Lessor in the Properties, the Trust
Estate or the Operative Agreements other than the transfer of title to or
possession of any Properties by the Lessor pursuant to and in accordance with
the Lease, the Credit Agreement, the Security Agreement or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Article XVII
of the Lease.
"Letter of Credit" shall have the meaning given to such term in the Lessee
Credit Agreement.
"Licenses" shall mean all licenses, permits or other grants of authority
obtained or required to be obtained by any Credit Party from the United States
government, HCFA or any Local Authority in connection with the ownership or
operation of any Health Care Facility or other business of any Credit Party.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, option or charge of any kind.
"Limited Recourse Amount" shall mean with respect to all the Properties on
an aggregate basis, an amount equal to the sum of the Termination Values with
respect to all the Properties on an aggregate basis on each Payment Date, less
the Maximum Residual Guarantee Amount as of such date with respect to all the
Properties on an aggregate basis.
"Loan Basic Rent" shall mean the scheduled interest due on the Loans on
any Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
with respect to the Property to which such Loan relates or (b) any overdue
amounts under Section 2.8(c) of the Credit Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at any date
of determination, an amount equal to (a) the aggregate principal amount all
Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
aggregate amount of prepayments or repayments as the case may be of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement.
"Loans" shall mean the loans extended pursuant to the Credit Agreement and
shall include both the Tranche A Loans and the Tranche B Loans.
"Local Authorities" shall mean individually and collectively all state and
local governmental authorities and administrative agencies which possess
statutory or regulatory authority over the ownership or operation of any Health
Care Facility or other business of any Credit Party.
"Majority Holders" shall mean at any time, Holders whose Holder Advances
outstanding represent more than fifty percent (50%) of (a) the aggregate Holder
Advances outstanding or (b) to the extent there are no Holder Advances
outstanding, the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders whose Loans outstanding
represent more than fifty percent (50%) of (a) the aggregate Loans outstanding
or (b) to the extent there are no Loans outstanding, the aggregate of the Lender
Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and Holders
whose Loans and Holder Advances outstanding represent more than fifty percent
(50%) of (a) the aggregate Advances outstanding or (b) to the extent there are
no Advances outstanding, the sum of the aggregate Holder Commitments plus the
aggregate Lender Commitments.
"Margin Certificate" shall have the meaning given to such term in Section
8.3(l) of the Participation Agreement.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
"Material Adverse Effect" shall, mean a material adverse effect on (a) the
business, financial condition, assets, or prospects of the Lessee and its
Subsidiaries taken as a whole as a result of any event, condition, circumstance
or contingency, (b) the validity or enforceability of any Operative Agreement or
the rights and remedies of the Agent, the Lenders, the Holders, or the Lessor
thereunder, (c) the validity, priority or enforceability of any Lien on any
Property created by any of the Operative Agreements, or (d) the value, utility
or useful life of any Property or the use, or ability of the Lessee to use, any
Property for the purpose for which it was intended.
"Maturity Date" shall mean the Expiration Date.
"Maximum Residual Guarantee Amount" shall mean an amount equal to the
product of the aggregate Property Cost for all of Properties times eighty-eight
percent (88%).
"Minimum Appraisal Level" shall have the meaning given to such term in
Section 8.3(e) of the Participation Agreement.
"Modifications" shall have the meaning specified in Section
11.1(a) of the Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Owner Trustee and the Lessee (or regarding any
Property subject to a Ground Lease, the applicable Affiliate of the Lessee) in
favor of the Agent (for the benefit of the Lenders and the Holders) and
evidencing a Lien on the Property, in form and substance reasonably acceptable
to the Agent.
"Net Income" shall mean, for any period, the net income (or loss) of the
Lessee and its Consolidated Subsidiaries for such period, as determined in
accordance with GAAP.
"New Facility" shall have the meaning given to such term in Section 28.1
of the Lease.
"1934 Act" shall have the meaning given to such term in Section 17.1(n) of
the Lease.
"Non-Integral Equipment" shall mean Equipment which (a) is personal
property that is readily removable without causing material damage to the
applicable Property and (b) is not integral or necessary, respecting the
applicable Property, for compliance with Section 8.3 of the Lease or otherwise
to the structure thereof, the mechanical operation thereof, the electrical
systems thereof or otherwise with respect to any aspect of the physical plant
thereof.
"Notes" shall mean those notes issued to the Lenders pursuant to the
Credit Agreement and shall include both the Tranche A Notes and the Tranche B
Notes.
"Nursing Home" shall mean individually and "Nursing Homes" shall mean
individually and collectively the nursing homes owned, leased, operated or
managed by any Credit Party on or after the date hereof.
"Obligations" shall have the meaning given to such term in Section 1 of
the Security Agreement.
"Officer's Certificate" with respect to any person shall mean a
certificate executed on behalf of such person by a Responsible Officer who has
made or caused to be made such examination or investigation as is necessary to
enable such Responsible Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.
"Officer's Compliance Certificate" shall have the meaning given to such
term in Section 8.3(l) of the Participation Agreement.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), the Joinder Agreements, the Security Agreement, the Mortgage
Instruments, the other Security Documents, the Ground Leases, the Deeds and the
Bills of Sale and any and all other agreements, documents and instruments
executed in connection with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such term
in Section 5 of Exhibit A to the Lease.
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and any
other amount owed under or with respect to the Credit Agreement or the Security
Documents, the rate specified in Section 2.8(b) of the Credit Agreement, (b)
with respect to the Lessor Basic Rent, the Holder Yield and any other amount
owed under or with respect to the Trust Agreement, the Holder Overdue Rate, and
(c) with respect to any other amount, the amount referred to in clause (y) of
Section 2.8(b) of the Credit Agreement.
"Owner Trustee," "Borrower" or "Lessor" shall mean First Security Bank,
National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, and any successor, replacement and/or
additional Owner Trustee expressly permitted under the Operative Agreements.
"Participant" shall have the meaning given to such term in Section 9.7 of
the Credit Agreement.
"Participation Agreement" shall mean the Participation Agreement dated on
or about the Initial Closing Date, among the Lessee, the Guarantors, the Owner
Trustee, not in its individual capacity except as expressly stated therein, the
Holders, the Lenders and the Agent.
"Payment Date" shall mean any Scheduled Interest Payment Date and any date
on which interest or Holder Yield in connection with a prepayment of principal
on the Loans or of the Holder Advances is due under the Credit Agreement or the
Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Permitted Acquisition" shall mean any acquisition by any Credit Party of
a business, by merger or by purchase of stock or assets, if: (a) such business,
when acquired, would be within the Permitted Lines of Business; and (b) such
transaction otherwise is in compliance with Paragraph 6.8 of the Lessee Credit
Agreement (as such provision is incorporated by reference pursuant to Section
28.1 of the Lease Agreement).
"Permitted Facility" shall mean a health care facility of the type and
size customarily used and operated by the Lessee in its ordinary course of
business as of the Initial Closing Date.
"Permitted Hospital" shall mean a health care facility licensed as a
hospital which (a) is located in a market in which any Credit Party has other
operations within a Permitted Line of Business, (b) has no more than one hundred
twenty-five (125) licensed hospital beds and (c) engages in the provision of
health care services at any acuity level comparable to other operations of any
Credit Party as of the Initial Closing Date.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties
to the Operative Agreements as provided in the Operative
Agreements;
(b) the rights of any sublessee or assignee under a sublease or an
assignment expressly permitted by the terms of the Operative Agreements
for no longer than the duration of the Lease;
(c) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 13.1 of the Lease;
(d) Liens arising by operation of law, materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other
like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than thirty (30) days past
due or are being diligently contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of proceedings to contest Taxes set forth in Section 13.1 of
the Lease;
(e) Liens of any of the types referred to in clause (d) above that
have been bonded for not less than the full amount in dispute (or as to
which other security arrangements satisfactory to the Lessor and the Agent
have been made), which bonding (or arrangements) shall comply with
applicable Legal Requirements, and shall have effectively stayed any
execution or enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long
as such proceedings have the effect of staying the execution of such
judgments or awards and satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 13.1 of the Lease;
(g) Liens in favor of municipalities to the extent agreed to by the
Lessor; and
(h) easements, rights of way, reservations, servitudes and rights of
others against Property to the extent agreed to by the Lessor.
"Permitted Lines of Business" shall mean the provision of nursing care,
home health, speech therapy, occupational therapy, pharmacy, respiratory, pain
and intravenous therapy, enterals and urological therapy or physical therapy
services and products and all other ancillary services related to the operation
of a Nursing Home or Permitted Hospital (subject to the restrictions set forth
in the definition thereof), and the ownership, management, or operation of
facilities related thereto.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or any other entity.
"Plans and Specifications" shall mean, with respect to Improvements, the
plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.
"Property" shall mean, with respect to each Permitted Facility that is (or
is to be) acquired, constructed and/or renovated pursuant to the terms of the
Operative Agreements, the Land and each item of Equipment and the various
Improvements, in each case located on such Land, including without limitation
each Construction Period Property, each Property subject to a Ground Lease and
each Property for which the Basic Term has commenced.
"Property Acquisition Cost" shall mean the cost to the Lessor to purchase
a Property on a Property Closing Date.
"Property Closing Date" shall mean the date on which the Lessor purchases
a Property or, with respect to the first Advance, the date on which the Lessor
seeks reimbursement for Property previously purchased by the Lessor.
"Property Cost" shall mean with respect to a Property the aggregate amount
(and/or the various items and occurrences giving rise to such amounts) of the
Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
and 7.1(b) of the Participation Agreement).
"Purchase Option" shall have the meaning given to such term in Section
20.1 of the Lease.
"Purchasing Lender" shall have the meaning given to such term in Section
9.8(a) of the Credit Agreement.
"Register" shall have the meaning given to such term in Section 9.9(a) of
the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Release" shall mean any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.
"Renewal Term" shall have the meaning specified in Section
2.2 of the Lease.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent,
in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date.
"Requested Funds" shall mean any funds requested by the Lessee or the
Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requisition" shall have the meaning specified in Section
4.2 of the Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the
Board of Directors, the Chairman or Vice Chairman of the Executive Committee of
the Board of Directors, the President, any Senior Vice President or Executive
Vice President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Rolling Period" shall mean a period of four consecutive
fiscal quarters.
"Sale Date" shall have the meaning given to such term in Section 22.1(a)
of the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection with
the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1 of
the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a
sale described in Section 22.1 of the Lease are less than the Limited Recourse
Amount with respect to the Properties if it has been determined that the Fair
Market Sales Value of the Properties at the expiration of the term of the Lease
has been impaired by greater than ordinary wear and tear during the Term of the
Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan
or Eurodollar Holder Advance, the last day of the Interest Period applicable to
such Eurodollar Loan or Eurodollar Holder Advance, (b) as to any ABR Loan or any
ABR Holder Advance, the fifteenth day of each month and (c) as to all Loans and
Holder Advances, the date of any voluntary or involuntary payment, prepayment,
return or redemption, and the Maturity Date or the Expiration Date, as the case
may be.
"Secured Parties" shall have the meaning given to such term in the
Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or about
the Initial Closing Date between the Lessor and the Agent, for the benefit of
the Secured Parties, and accepted and agreed to by the Lessee.
"Security Documents" shall mean the collective reference to the Security
Agreement, the Mortgage Instruments, (to the extent the Lease is construed as a
security instrument) the Lease and all other security documents hereafter
delivered to the Agent granting a lien on any asset or assets of any Person to
secure the obligations and liabilities of the Lessor under the Credit Agreement
and/or under any of the other Credit Documents or to secure any guarantee of any
such obligations and liabilities.
"Soft Costs" shall mean all costs which are ordinarily and reasonably
incurred in relation to the acquisition, development, installation,
construction, improvement and testing of the Properties other than Hard Costs,
including without limitation structuring fees, administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations, title
insurance, document recordation, surveys, environmental site assessments,
geotechnical soil investigations and similar costs and professional fees
customarily associated with a real estate closing, the Lender Unused Fee, the
Holder Unused Fee, fees and expenses of the Owner Trustee payable or
reimbursable under the Operative Agreements and costs and expenses incurred
pursuant to Sections 7.3(a) and 7.3(b) of the Participation Agreement.
"Subsidiary" shall mean, as to any Person, any corporation of which at
least a majority of the outstanding stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person, or by one (1)
or more Subsidiaries, or by such Person and one (1) or more Subsidiaries.
"Substitute Property" shall have the meaning given to such term in Section
5.13 of the Participation Agreement.
"Supplemental Amounts" shall have the meaning given to such term in
Section 9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor,
the Trust Company, the Holders, the Agent, the Lenders or any other Person under
the Lease or under any of the other Operative Agreements including without
limitation payments of the Termination Value and the Maximum Residual Guarantee
Amount and all indemnification amounts, liabilities and obligations.
"Syndication Agent" shall mean First Union Capital Markets,
a division of Wheat First Securities, Inc., a Virginia
corporation.
"Taxes" shall have the meaning specified in the definition
of "Impositions".
"Term" shall mean the Basic Term and each Renewal Term, if
any.
"Terminated Property" shall have the meaning specified in Section 5.13 of
the Participation Agreement.
"Termination Date" shall have the meaning specified in
Section 16.2(a) of the Lease.
"Termination Notice" shall have the meaning specified in
Section 16.1 of the Lease.
"Termination Value" shall mean the sum of (a) either (i) with respect to
all Properties, an amount equal to the aggregate outstanding Property Cost for
all the Properties, in each case as of the last occurring Payment Date, or (ii)
with respect to a particular Property, an amount equal to the Property Cost
allocable to such Property, plus (b) respecting the amounts described in each of
the foregoing subclause (i) or (ii), as applicable, any and all accrued but
unpaid interest on the Loans and any and all Holder Yield on the Holder Advances
related to the applicable Property Cost, plus (c) to the extent the same is not
duplicative of the amounts payable under clause (b) above, all other Rent and
other amounts then due and payable or accrued under the Agency Agreement, Lease
and/or under any other Operative Agreement (including without limitation amounts
under Sections 11.1 and 11.2 of the Participation Agreement and all costs and
expenses referred to in clause FIRST of Section 22.2 of the Lease).
"Tranche A Commitments" shall mean the obligation of the Tranche A Lenders
to make the Tranche A Loans to the Lessor in an aggregate principal amount at
any one (1) time outstanding not to exceed the aggregate of the amounts set
forth opposite each Tranche A Lender's name on Schedule 1.1 to the Credit
Agreement, as such amount may be reduced from time to time in accordance with
the provisions of the Operative Agreements; provided, no Tranche A Lender shall
be obligated to make Tranche A Loans in excess of such Tranche A Lender's share
of the Tranche A Commitments as set forth adjacent to such Tranche A Lender's
name on Schedule 1.1 to Credit Agreement.
"Tranche A Lenders" shall mean the several banks and other financial
institutions from time to time party to the Credit Agreement that commit to make
the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitment.
"Tranche A Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B Lenders
to make the Tranche B Loans to the Lessor in an aggregate principal amount at
any one (1) time outstanding not to exceed the aggregate of the amounts set
forth opposite each Tranche B Lender's name on Schedule 1.1 to the Credit
Agreement, as such amount may be reduced from time to time in accordance with
the provisions of the Operative Agreements; provided, no Tranche B Lender shall
be obligated to make Tranche B Loans in excess of such Tranche B Lender's share
of the Tranche B Commitments as set forth adjacent to such Tranche B Lender's
name on Schedule 1.1 to Credit Agreement.
"Tranche B Lenders" shall mean the several banks and other financial
institutions from time to time party to the Credit Agreement that commit to make
the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitment.
"Tranche B Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Transaction Expenses" shall mean all Soft Costs and all other costs and
expenses incurred in connection with the preparation, execution and delivery of
the Operative Agreements and the transactions contemplated by the Operative
Agreements including without limitation all costs and expenses described in
Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
counsel in negotiating the terms of the Operative Agreements and the other
transaction documents, preparing for the closings under, and rendering
opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of the
types involved in the transactions contemplated by the Operative
Agreements;
(b) the reasonable fees, out-of-pocket expenses and disbursements of
accountants for any Credit Party in connection with the transaction
contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other amounts
payable to the Lenders, the Agent, the Holders, the Owner Trustee or any
broker which arises under any of the Operative Agreements;
(d) any other reasonable fee, out-of-pocket expenses, disbursement or
cost of any party to the Operative Agreements or any of the other
transaction documents; and
(e) any and all Taxes and fees incurred in recording or filing any
Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection with
the transactions contemplated by the Operative Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Trust" shall mean the Centennial Real Estate Trust 1998-1.
"Trust Agreement" shall mean the Trust Agreement dated on or about the
Initial Closing Date between the Holders and the Owner Trustee.
"Trust Company" shall mean First Security Bank, National Association, in
its individual capacity, and any successor owner trustee under the Trust
Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of the
Trust Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan
or a Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section 12.4
of the Participation Agreement.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of the
Agency Agreement.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code
as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean Title 11 of the United States
Code.
"Unused Fee" shall mean, collectively, the Holder Unused Fee and the
Lender Unused Fee.
"Unused Fee Payment Date" shall mean October 1, 1998, and thereafter the
first day of each January, April, July and October, as billed by the Agent and
the last Business Day of the Commitment Period, or such earlier date as the
Lender Commitments shall terminate as provided in the Credit Agreement or the
Holder Commitment shall terminate as provided in the Trust Agreement.
"U.S. Person" shall have the meaning specified in Section
11.2(e) of the Participation Agreement.
"U.S. Taxes" shall have the meaning specified in Section
11.2(e) of the Participation Agreement.
"Wholly-Owned Entity" shall mean a Person all of the shares of capital
stock or other ownership interest of which are owned by Centennial and/or one of
its wholly-owned Subsidiaries or other wholly-owned entities.
"Withholdings" shall have the meaning specified in Section
11.2(e) of the Participation Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
"Year 2000 Compliant" shall have the meaning specified in Section 6.2(x)
of the Participation Agreement.
"Year 2000 Problem" shall mean the risk that computer applications used by
any Credit Party, any Subsidiary of any Credit Party or any supplier, vendor or
customer of any Credit Party or any Subsidiary of any Credit Party may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999.
LEASE AGREEMENT
Dated as of July 29, 1998
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1,
as Lessor
and
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
This Lease Agreement is subject to a security interest in favor of NationsBank,
N.A., as the agent for the Lenders and respecting the Security Documents, as the
agent for the Lenders and the Holders, to the extent of their interests (the
"Agent") under a Security Agreement dated as of July 29, 1998, between First
Security Bank, National Association, not individually, but solely as the Owner
Trustee under the Centennial Real Estate Trust 1998-1, and the Agent, as
amended, modified, extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof. This Lease Agreement
has been executed in several counterparts. To the extent, if any, that this
Lease Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Agreement may be created through the transfer or
possession of any counterpart other than the original counterpart containing the
receipt therefor executed by the Agent on the signature page hereof.
<PAGE>
iii
TABLE OF CONTENTS
ARTICLE I.........................................................1
1.1 Definitions.............................................1
1.2 Interpretation..........................................2
ARTICLE II........................................................2
2.1 Property................................................2
2.2 Lease Term..............................................2
2.3 Title...................................................3
2.4 Lease Supplements.......................................3
ARTICLE III.......................................................3
3.1 Rent....................................................3
3.2 Payment of Basic Rent...................................3
3.3 Supplemental Rent.......................................4
3.4 Performance on a Non-Business Day.......................4
3.5 Rent Payment Provisions.................................4
ARTICLE IV........................................................5
4.1 Taxes; Utility Charges..................................5
ARTICLE V.........................................................5
5.1 Quiet Enjoyment.........................................5
ARTICLE VI........................................................5
6.1 Net Lease...............................................5
6.2 No Termination or Abatement.............................6
ARTICLE VII.......................................................6
7.1 Ownership of the Properties.............................6
ARTICLE VIII......................................................8
8.1 Condition of the Properties.............................8
8.2 Possession and Use of the Properties....................9
8.3 Integrated Properties..................................10
ARTICLE IX.......................................................10
9.1 Compliance With Legal Requirements, Insurance
Requirements and Manufacturer's Specifications and Standards.10
ARTICLE X........................................................10
10.1 Maintenance and Repair; Return........................10
10.2 Environmental Inspection..............................12
ARTICLE XI.......................................................12
11.1 Modifications.........................................12
ARTICLE XII......................................................13
12.1 Warranty of Title.....................................13
ARTICLE XIII.....................................................14
13.1 Permitted Contests Other Than in Respect of Indemnities.14
13.2 Impositions, Utility Charges, Other Matters; Compliance
with Legal Requirements....................................15
ARTICLE XIV......................................................15
14.1 Public Liability and Workers' Compensation Insurance..15
14.2 Permanent Hazard and Other Insurance..................15
14.3 Coverage..............................................16
ARTICLE XV.......................................................17
15.1 Casualty and Condemnation.............................17
15.2 Environmental Matters.................................19
15.3 Notice of Environmental Matters.......................20
ARTICLE XVI......................................................20
16.1 Termination Upon Certain Events.......................20
16.2 Procedures............................................20
ARTICLE XVII.....................................................21
17.1 Lease Events of Default...............................21
17.2 Surrender of Possession...............................24
17.3 Reletting.............................................25
17.4 Damages...............................................25
17.5 Power of Sale.........................................26
17.6 Final Liquidated Damages..............................26
17.7 Environmental Costs...................................26
17.8 Waiver of Certain Rights..............................27
17.9 Assignment of Rights Under Contracts..................27
17.10 Remedies Cumulative..................................27
ARTICLE XVIII....................................................27
18.1 Lessor's Right to Cure Lessee's Lease Defaults........27
ARTICLE XIX......................................................28
19.1 Provisions Relating to Lessee's Exercise of its
Purchase Option............................................28
19.2 No Purchase or Termination With Respect to Less than
All of a Property..........................................28
ARTICLE XX.......................................................28
20.1 Purchase Option or Sale Option-General Provisions.....28
20.2 Lessee Purchase Option................................29
20.3 Third Party Sale Option...............................30
ARTICLE XXI......................................................31
21.1 [Intentionally Omitted]...............................31
ARTICLE XXII.....................................................31
22.1 Sale Procedure........................................31
22.2 Application of Proceeds of Sale.......................33
22.3 Indemnity for Excessive Wear..........................34
22.4 Appraisal Procedure...................................34
22.5 Certain Obligations Continue.........................35
ARTICLE XXIII....................................................35
23.1 Holding Over..........................................35
ARTICLE XXIV.....................................................35
24.1 Risk of Loss..........................................35
ARTICLE XXV......................................................36
25.1 Assignment............................................36
25.2 Subleases.............................................36
ARTICLE XXVI.....................................................37
26.1 No Waiver.............................................37
ARTICLE XXVII....................................................37
27.1 Acceptance of Surrender...............................37
27.2 No Merger of Title....................................37
ARTICLE XXVIII...................................................37
28.1 Incorporation of Covenants............................37
ARTICLE XXIX.....................................................38
29.1 Notices...............................................38
ARTICLE XXX......................................................38
30.1 Miscellaneous.........................................38
30.2 Amendments and Modifications..........................39
30.3 Successors and Assigns................................39
30.4 Headings and Table of Contents........................39
30.5 Counterparts..........................................39
30.6 GOVERNING LAW.........................................39
30.7 Calculation of Rent...................................39
30.8 Memoranda of Lease and Lease Supplements..............39
30.9 Allocations between the Lenders and the Holders.......40
30.10 Limitations on Recourse..............................40
30.11 WAIVERS OF JURY TRIAL................................40
30.12 Exercise of Lessor Rights............................40
30.13 SUBMISSION TO JURISDICTION; VENUE....................41
30.14 USURY SAVINGS PROVISION..............................41
EXHIBITS
EXHIBIT A - Lease Supplement No. ____
EXHIBIT B - Memorandum of Lease and Lease Supplement No. ____
<PAGE>
3
LEASE AGREEMENT
THIS LEASE AGREEMENT dated as of July 29, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, this
"Lease") is between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, having its principal office at 79 South Main Street, Salt
Lake City, Utah 84111, not individually, but solely as the Owner Trustee under
the Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and
CENTENNIAL HEALTHCARE CORPORATION, a Georgia corporation, having its principal
place of business at 400 Perimeter Center Terrace, Suite 650, Atlanta, Georgia,
30346 as lessee (the "Lessee").
W I T N E S S E T H:
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and the Agency Agreement, Lessor will (i) purchase or ground lease
various parcels of real property, some of which will (or may) have existing
Improvements thereon, from one (1) or more third parties designated by Lessee
and (ii) fund the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties by the Construction Agent; and
B. WHEREAS, the Basic Term shall commence with respect to each Property
upon the Property Closing Date with respect thereto; provided, Basic Rent with
respect thereto shall not be payable until the applicable Rent Commencement
Date; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease
from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Definitions.
For purposes of this Lease, capitalized terms used in this Lease and
not otherwise defined herein shall have the meanings assigned to them in
Appendix A to that certain Participation Agreement dated as of July 29, 1998 (as
amended, modified, extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof, the "Participation
Agreement") among Lessee, the various parties thereto from time to time, as the
Guarantors, Lessor, the various banks and other lending institutions which are
parties thereto from time to time, as the Holders, the various banks and other
lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as agent for the Lenders and
respecting the Security Documents, as agent for the Lenders and the Holders, to
the extent of their interests. Unless otherwise indicated, references in this
Lease to articles, sections, paragraphs, clauses, appendices, schedules and
exhibits are to the same contained in this Lease.
1.2 Interpretation.
The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Lease.
ARTICLE II
2.1 Property.
Subject to the terms and conditions hereinafter set forth and
contained in the respective Lease Supplement relating to each Property, Lessor
hereby leases to Lessee, TO HAVE AND TO HOLD, unto Lessee for the term set forth
herein, and Lessee hereby leases from Lessor, each Property.
2.2 Lease Term.
The basic term of this Lease with respect to each Property (the
"Basic Term") shall begin upon the Property Closing Date for such Property (in
each case the "Basic Term Commencement Date") and shall end on the third annual
anniversary of the Initial Closing Date (the "Basic Term Expiration Date"),
unless the Basic Term is earlier terminated or the term of this Lease is renewed
(as described below) in accordance with the provisions of this Lease.
Notwithstanding the foregoing, Lessee shall not be obligated to pay Basic Rent
until the Rent Commencement Date with respect to such Property.
To the extent no Default or Event of Default has occurred and is
continuing, and if Lessee has not provided written notice to Lessor at least one
hundred twenty (120) days prior to the first day of the applicable Renewal Term
of its determination to exercise its purchase option or sale option under
Article XX hereof, the term of this Lease for each Property shall be
automatically extended for up to two (2) additional terms each of one (1) year's
duration from the Basic Term Expiration Date (each, a "Renewal Term"); provided,
that the expiration date for the final Renewal Term for each Property shall not
be later than the fifth annual anniversary of the Initial Closing Date, unless
such later expiration date has been expressly agreed to, at the request of
Lessee, in writing by each of Lessor, the Agent, the Lenders and the Holders in
their sole discretion.
2.3 Title.
Each Property is leased to Lessee without any representation or
warranty, express or implied, by Lessor and subject to the rights of parties in
possession (if any), the existing state of title (including without limitation
the Permitted Liens) and all applicable Legal Requirements. Lessee shall in no
event have any recourse against Lessor for any defect in Lessor's title to any
Property or any interest of Lessee therein other than for Lessor Liens.
2.4 Lease Supplements.
On or prior to each Basic Term Commencement Date, Lessee and Lessor shall
each execute and deliver a Lease Supplement for the Property to be leased
effective as of such Basic Term Commencement Date in substantially the form of
Exhibit A hereto.
ARTICLE III
3.1 Rent.
(a) Lessee shall pay Basic Rent in arrears on each Payment Date, and
on any date on which this Lease shall terminate with respect to any or all
Properties during the Term; provided, however, with respect to each
individual Property Lessee shall have no obligation to pay Basic Rent with
respect to such Property until the Rent Commencement Date with respect to
such Property (notwithstanding that Basic Rent for such Property shall
accrue from and including the Scheduled Interest Payment Date immediately
preceding such Rent Commencement Date).
(b) Basic Rent shall be due and payable in lawful money of the United
States and shall be paid by wire transfer of immediately available funds
on the due date therefor (or within the applicable grace period) to such
account or accounts at such bank or banks as Lessor shall from time to
time direct.
(c) Lessee's inability or failure to take possession of all or any
portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of Lessor, the Construction Agent,
Lessee or any other Person or for any other reason whatsoever, shall not
delay or otherwise affect Lessee's obligation to pay Rent for such
Property in accordance with the terms of this Lease.
(d) Lessee shall make all payments of Rent prior to 12:00 Noon,
Charlotte, North Carolina time, on the applicable date for payment of such
amount.
3.2 Payment of Basic Rent.
Basic Rent shall be paid absolutely net to Lessor or its designee, so
that this Lease shall yield to Lessor the full amount thereof, without setoff,
deduction or reduction.
3.3 Supplemental Rent.
Lessee shall pay to the Person entitled thereto any and all
Supplemental Rent when and as the same shall become due and payable, and if
Lessee fails to pay any Supplemental Rent within three (3) days after the same
is due, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity or otherwise in the case of nonpayment of Basic Rent. All such
payments of Supplemental Rent shall be in the full amount thereof, without
setoff, deduction or reduction. Lessee shall pay to the appropriate Person, as
Supplemental Rent due and owing to such Person, among other things, on demand,
(a) any and all payment obligations (except for amounts payable as Basic Rent)
owing from time to time under the Operative Agreements by any Person to the
Agent, any Lender, any Holder or any other Person, (b) interest at the
applicable Overdue Rate on any installment of Basic Rent not paid when due
(subject to the applicable grace period) for the period for which the same shall
be overdue and on any payment of Supplemental Rent not paid when due or demanded
by the appropriate Person (subject to any applicable grace period) for the
period from the due date or the date of any such demand, as the case may be,
until the same shall be paid and (c) amounts referenced as Supplemental Rent
obligations pursuant to Section 8.3 of the Participation Agreement. It shall be
an additional Supplemental Rent obligation of Lessee to pay to the appropriate
Person all rent and other amounts when such become due and owing from time to
time under each Ground Lease and without the necessity of any notice from Lessor
with regard thereto. The expiration or other termination of Lessee's obligations
to pay Basic Rent hereunder shall not limit or modify the obligations of Lessee
with respect to Supplemental Rent. Unless expressly provided otherwise in this
Lease, in the event of any failure on the part of Lessee to pay and discharge
any Supplemental Rent as and when due, Lessee shall also promptly pay and
discharge any fine, penalty, interest or cost which may be assessed or added for
nonpayment or late payment of such Supplemental Rent, all of which shall also
constitute Supplemental Rent.
3.4 Performance on a Non-Business Day.
If any Basic Rent is required hereunder on a day that is not a
Business Day, then such Basic Rent shall be due on the corresponding Scheduled
Interest Payment Date. If any Supplemental Rent is required hereunder on a day
that is not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
3.5 Rent Payment Provisions.
Lessee shall make payment of all Basic Rent and Supplemental Rent
when due (subject to the applicable grace periods) regardless of whether any of
the Operative Agreements pursuant to which same is calculated and is owing shall
have been rejected, avoided or disavowed in any bankruptcy or insolvency
proceeding involving any of the parties to any of the Operative Agreements. Such
provisions of such Operative Agreements and their related definitions are
incorporated herein by reference and shall survive any termination, amendment or
rejection of any such Operative Agreements.
ARTICLE IV
4.1 Taxes; Utility Charges.
Lessee shall pay or cause to be paid all Impositions with respect to
the Properties and/or the use, occupancy, operation, repair, access, maintenance
or operation thereof and all charges for electricity, power, gas, oil, water,
telephone, sanitary sewer service and all other rents, utilities and operating
expenses of any kind or type used in or on any Property and related real
property during the Term. Upon Lessor's request, Lessee shall provide from time
to time Lessor with evidence of all such payments referenced in the foregoing
sentence. Lessee shall be entitled to receive any credit or refund with respect
to any Imposition or utility charge paid by Lessee. Unless an Event of Default
shall have occurred and be continuing, the amount of any credit or refund
received by Lessor on account of any Imposition or utility charge paid by
Lessee, net of the costs and expenses incurred by Lessor in obtaining such
credit or refund, shall be promptly paid over to Lessee. All charges for
Impositions or utilities imposed with respect to any Property for a period
during which this Lease expires or terminates shall be adjusted and prorated on
a daily basis between Lessor and Lessee, and each party shall pay or reimburse
the other for such party's pro rata share thereof.
ARTICLE V
5.1 Quiet Enjoyment.
Subject to the rights of Lessor contained in Sections 17.2, 17.3 and
20.3 and the other terms of this Lease and the other Operative Agreements and so
long as no Event of Default shall have occurred and be continuing, Lessee shall
peaceably and quietly have, hold and enjoy each Property for the applicable
Term, free of any claim or other action by Lessor or anyone rightfully claiming
by, through or under Lessor (other than Lessee) with respect to any matters
arising from and after the applicable Basic Term Commencement Date.
ARTICLE VI
6.1 Net Lease.
This Lease shall constitute a net lease, and the obligations of
Lessee hereunder are absolute and unconditional. Lessee shall pay all operating
expenses arising out of the use, operation and/or occupancy of each Property.
Any present or future law to the contrary notwithstanding, this Lease shall not
terminate, nor shall Lessee be entitled to any abatement, suspension, deferment,
reduction, setoff, counterclaim, or defense with respect to the Rent, nor shall
the obligations of Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) for any
reason whatsoever, including without limitation by reason of: (a) any damage to
or destruction of any Property or any part thereof; (b) any taking of any
Property or any part thereof or interest therein by Condemnation or otherwise;
(c) any prohibition, limitation, restriction or prevention of Lessee's use,
occupancy or enjoyment of any Property or any part thereof, or any interference
with such use, occupancy or enjoyment by any Person or for any other reason; (d)
any title defect, Lien or any matter affecting title to any Property; (e) any
eviction by paramount title or otherwise; (f) any default by Lessor hereunder;
(g) any action for bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding relating to or affecting the Agent, any Lender,
Lessor, Lessee, any Holder or any Governmental Authority; (h) the impossibility
or illegality of performance by Lessor, Lessee or both; (i) any action of any
Governmental Authority or any other Person; (j) Lessee's acquisition of
ownership of all or part of any Property; (k) breach of any warranty or
representation with respect to any Property or any Operative Agreement; (l) any
defect in the condition, quality or fitness for use of any Property or any part
thereof; or (m) any other cause or circumstance whether similar or dissimilar to
the foregoing and whether or not Lessee shall have notice or knowledge of any of
the foregoing. The parties intend that the obligations of Lessee hereunder shall
be covenants, agreements and obligations that are separate and independent from
any obligations of Lessor hereunder and shall continue unaffected unless such
covenants, agreements and obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Lessor and Lessee
acknowledge and agree that the provisions of this Section 6.1 have been
specifically reviewed and subjected to negotiation.
6.2 No Termination or Abatement.
Lessee shall remain obligated under this Lease in accordance with its
terms and shall not take any action to terminate, rescind or avoid this Lease,
notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting any Person or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
any Person or any Governmental Authority or by any court with respect to any
Person, or any Governmental Authority. Lessee hereby waives all right (a) to
terminate or surrender this Lease (except as permitted under the terms of the
Operative Agreements) or (b) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with its terms and
Lessee hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
ARTICLE VII
7.1 Ownership of the Properties.
(a) Lessor and Lessee intend that for federal and all state and local
income tax purposes, bankruptcy purposes, regulatory purposes, commercial
law and real estate purposes and all other purposes (other than for
accounting purposes) (A) this Lease will be treated as a financing
arrangement and (B) Lessee will be treated as the owner of the Properties
and will be entitled to all tax benefits ordinarily available to owners of
property similar to the Properties for such tax purposes. Notwithstanding
the foregoing, neither party hereto has made, or shall be deemed to have
made, any representation or warranty as to the availability of any of the
foregoing treatments under applicable accounting rules, tax, bankruptcy,
regulatory, commercial or real estate law or under any other set of rules.
Lessee shall claim the cost recovery deductions associated with each
Property, and Lessor shall not, to the extent not prohibited by Law, take
on its tax return a position inconsistent with Lessee's claim of such
deductions.
(b) For all purposes described in Section 7.1(a), Lessor and Lessee
intend this Lease to constitute a finance lease and not a true lease. In
order to secure the obligations of Lessee now existing or hereafter
arising under any and all Operative Agreements, Lessee hereby conveys,
grants, assigns, transfers, hypothecates, mortgages and sets over to
Lessor, for the benefit of all Financing Parties, a first priority
security interest (but subject to the security interest in the assets
granted by Lessee in favor of the Agent in accordance with the Security
Agreement) in and lien on all right, title and interest of Lessee (now
owned or hereafter acquired) in and to all Properties to the extent such
is personal property (except those instances where Lessee's interest is
not assignable by Law but not excluding interests which are unassignable
pursuant to any applicable contract or agreement) and irrevocably grants
and conveys a lien, deed of trust and mortgage on all right, title and
interest of Lessee (now owned or hereafter acquired) in and to all
Properties to the extent such is a real property. Lessor and Lessee
further intend and agree that, for the purpose of securing the obligations
of Lessee and/or the Construction Agent now existing or hereafter arising
under the Operative Agreements, (i) this Lease shall be a security
agreement and financing statement within the meaning of Article 9 of the
Uniform Commercial Code respecting each of the Properties and all proceeds
(including without limitation insurance proceeds thereof) to the extent
such is personal property (except those instances where Lessee's interest
is not assignable by Law but not excluding interests which are
unassignable pursuant to any applicable contract or agreement) and an
irrevocable grant and conveyance of a lien, deed of trust and mortgage on
each of the Properties and all proceeds (including without limitation
insurance proceeds thereof) to the extent such is real property; (ii) the
acquisition of title (or to the extent applicable, a leasehold interest
pursuant to a Ground Lease) in each Property referenced in Article II
constitutes a grant by Lessee to Lessor of a security interest, lien, deed
of trust and mortgage in all of Lessee's right, title and interest in and
to each Property (except those instances where Lessee's interest is not
assignable by Law but not excluding interests which are unassignable
pursuant to any applicable contract or agreement) and all proceeds
(including without limitation insurance proceeds thereof) of the
conversion, voluntary or involuntary, of the foregoing into cash,
investments, securities or other property, whether in the form of cash,
investments, securities or other property, and an assignment of all rents,
profits and income produced by each Property; and (iii) notifications to
Persons holding such property, and acknowledgments, receipts or
confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the purpose
of perfecting such lien, security interest, mortgage lien and deed of
trust under applicable law. Lessee shall promptly take such actions as
Lessor may reasonably request (including without limitation the filing of
Uniform Commercial Code Financing Statements, Uniform Commercial Code
Fixture Filings and memoranda (or short forms) of this Lease and the
various Lease Supplements) to ensure that the lien, security interest,
lien, mortgage lien and deed of trust in each Property and the other items
referenced above will be deemed to be a perfected lien, security interest,
mortgage lien and deed of trust of first priority under applicable law and
will be maintained as such throughout the Term.
ARTICLE VIII
8.1 Condition of the Properties.
LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING EACH PROPERTY
"AS-IS WHERE-IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) BY LESSOR (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR
OF LESSOR LIENS) AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE,
(B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF
FACTS REGARDING ITS PHYSICAL CONDITION OR WHICH AN ACCURATE SURVEY MIGHT SHOW,
(D) ALL APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL REQUIREMENTS
WHICH MAY EXIST ON THE DATE HEREOF AND/OR THE DATE OF THE APPLICABLE LEASE
SUPPLEMENT. NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER HAS MADE
OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) (EXCEPT THAT LESSOR SHALL KEEP EACH PROPERTY FREE AND CLEAR
OF LESSOR LIENS) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE
TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY
OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT
NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR PRIOR TO THE BASIC TERM COMMENCEMENT
DATE WILL HAVE BEEN AFFORDED FULL OPPORTUNITY TO INSPECT EACH PROPERTY AND THE
IMPROVEMENTS THEREON (IF ANY), IS OR WILL BE (INSOFAR AS LESSOR, THE AGENT, EACH
LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH THE RESULTS OF ITS
INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS OF THE RESULTS
OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE
PRECEDING SENTENCE, AS BETWEEN LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS,
ON THE ONE HAND, AND LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
8.2 Possession and Use of the Properties.
(a) At all times during the Term with respect to each Property, such
Property shall be a Permitted Facility and shall be used by Lessee in the
ordinary course of its business. Lessee shall pay, or cause to be paid,
all charges and costs required in connection with the use of the
Properties as contemplated by this Lease. Lessee shall not commit or
permit any waste of the Properties or any part thereof.
(b) The address stated in Section 29.1 of this Lease is the principal
place of business and chief executive office of Lessee (as such terms are
used in Section 9-103(3) of the Uniform Commercial Code of any applicable
jurisdiction), and Lessee will provide Lessor with prior written notice of
any change of location of its principal place of business or chief
executive office. Regarding a particular Property, each Lease Supplement
correctly identifies the initial location of the related Equipment (if
any) and Improvements (if any) and contains an accurate legal description
for the related parcel of Land or a copy of the Ground Lease (if any). The
Equipment and Improvements respecting each particular Property will be
located only at the location identified in the applicable Lease
Supplement.
(c) Lessee will not attach or incorporate any item of Equipment to or
in any other item of equipment or personal property or to or in any real
property in a manner that could give rise to the assertion of any Lien on
such item of Equipment by reason of such attachment or the assertion of a
claim that such item of Equipment has become a fixture and is subject to a
Lien in favor of a third party that is prior to the Liens thereon created
by the Operative Agreements.
(d) On the Basic Term Commencement Date for each Property, Lessor and
Lessee shall execute a Lease Supplement in regard to such Property which
shall contain an Equipment Schedule that has a general description of the
Equipment which shall comprise the Property, an Improvement Schedule that
has a general description of the Improvements which shall comprise the
Property and a legal description of the Land to be leased hereunder (or in
the case of any Property subject to a Ground Lease to be subleased
hereunder) as of such date. Each Property subject to a Ground Lease shall
be deemed to be ground subleased from Lessor to Lessee as of the Basic
Term Commencement Date, and such ground sublease shall be in effect until
this Lease is terminated or expires, in each case in accordance with the
terms and provisions hereof. Lessee shall satisfy and perform all
obligations imposed on Lessor under each Ground Lease. Simultaneously with
the execution and delivery of each Lease Supplement, such Equipment,
Improvements, Land, ground subleasehold interest, all additional Equipment
and all additional Improvements which are financed under the Operative
Agreements after the Basic Term Commencement Date and the remainder of
such Property shall be deemed to have been accepted by Lessee for all
purposes of this Lease and to be subject to this Lease.
(e) At all times during the Term with respect to each Property,
Lessee will comply with all obligations under and (to the extent no Event
of Default exists and provided that such exercise will not impair the
value, utility or remaining useful life of such Property) shall be
permitted to exercise all rights and remedies under, all operation and
easement agreements and related or similar agreements applicable to such
Property.
8.3 Integrated Properties.
On the Rent Commencement Date for each Property, Lessee shall, at its
sole cost and expense, cause such Property and the applicable property subject
to a Ground Lease to constitute (and for the duration of the Term shall continue
to constitute) all of the equipment, facilities, rights, other personal property
and other real property necessary or appropriate to operate, utilize, maintain
and control a Permitted Facility in a commercially reasonable manner.
ARTICLE IX
9.1 Compliance With Legal Requirements, Insurance Requirements and
Manufacturer's Specifications and Standards.
Subject to the terms of Article XIII relating to permitted contests,
Lessee, at its sole cost and expense, shall (a) comply with all applicable Legal
Requirements (including without limitation all Environmental Laws) and all
Insurance Requirements relating to the Properties, (b) procure, maintain and
comply with all licenses, permits, orders, approvals, consents and other
authorizations required for the acquisition, installation, testing, use,
development, construction, material operation, material maintenance, repair,
refurbishment and restoration of the Properties and (c) comply with all
manufacturer's specifications and standards, including without limitation the
acquisition, installation, testing, use, development, construction, operation,
maintenance, repair, refurbishment and restoration of the Properties, whether or
not compliance therewith shall require structural or extraordinary changes in
any Property or interfere with the use and enjoyment of any Property, unless the
failure to procure, maintain and comply with such items identified in
subparagraphs (b) and (c), individually or in the aggregate, shall not have and
could not reasonably be expected to have a Material Adverse Effect. Lessee shall
notify Lessor and the Agent immediately in detail of any actual or alleged
failure to procure, maintain and comply with such items identified in
subparagraphs (a), (b) and/or (c). Lessor agrees to take such actions as may be
reasonably requested by Lessee in connection with the compliance by Lessee of
its obligations under this Section 9.1.
ARTICLE X
10.1 Maintenance and Repair; Return.
(a) Lessee, at its sole cost and expense, shall maintain each
Property in good condition, repair and working order (ordinary wear and
tear excepted) and in the repair and condition as when originally
delivered to Lessor and make all necessary repairs thereto and
replacements thereof, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by
Section 9.1 and on a basis consistent with the operation and maintenance
of properties or equipment comparable in type and function to the
applicable Property, such that such Property is capable of being promptly
utilized by a third party and in compliance with standard industry
practice subject, however, to the provisions of Article XV with respect to
Casualty and Condemnation.
(b) Lessee shall not use or locate any component of any Property
outside of the Approved State therefor. Lessee shall not move or relocate
any component of any Property beyond the boundaries of the Land
(comprising part of such Property) described in the applicable Lease
Supplement, except for the temporary removal of Equipment and other
personal property for repair or replacement.
(c) If any component of any Property becomes worn out, lost,
destroyed, damaged beyond repair or otherwise permanently rendered unfit
for use, Lessee, at its own expense, will within a reasonable time replace
such component with a replacement component which is free and clear of all
Liens (other than Permitted Liens and Lessor Liens) and has a value,
utility and useful life at least equal to the component replaced (assuming
the component replaced had been maintained and repaired in accordance with
the requirements of this Lease). All components which are added to any
Property shall immediately become the property of (and title thereto shall
vest in) Lessor and shall be deemed incorporated in such Property and
subject to the terms of this Lease as if originally leased hereunder.
(d) Lessor and its agents shall have the right from time to time to
conduct inspections of Properties during normal business hours at
reasonable times and, except upon the occurrence and during the
continuation of any Event of Default, without undue disruption of
operations at any such Properties.
(e) [Intentionally Omitted].
(f) Lessor shall under no circumstances be required to build any
improvements or install any equipment on any Property, make any repairs,
replacements, alterations or renewals of any nature or description to any
Property, make any expenditure whatsoever in connection with this Lease or
maintain any Property in any way. Lessor shall not be required to
maintain, repair or rebuild all or any part of any Property, and Lessee
waives the right to (i) require Lessor to maintain, repair, or rebuild all
or any part of any Property, or (ii) make repairs at the expense of Lessor
pursuant to any Legal Requirement, Insurance Requirement, contract,
agreement, covenant, condition or restriction at any time in effect.
(g) Lessee shall, upon the expiration or earlier termination of this
Lease with respect to a Property, if Lessee shall not have exercised its
Purchase Option with respect to such Property and purchased such Property,
surrender such Property (i) pursuant to the exercise of the applicable
remedies upon the occurrence of a Lease Event of Default, to Lessor or
(ii) pursuant to the second paragraph of Section 22.1(a) hereof, to Lessor
or the third party purchaser, as the case may be, subject to Lessee's
obligations under this Lease (including without limitation the obligations
of Lessee at the time of such surrender under Sections 9.1, 10.1(a)
through (f), 10.2, 11.1, 12.1, 22.1 and 23.1).
10.2 Environmental Inspection.
If Lessee has not given notice of exercise of its Purchase Option on
the Expiration Date pursuant to Section 20.1 or for whatever reason Lessee does
not purchase a Property in accordance with the terms of this Lease, then not
more than one hundred twenty (120) days nor less than sixty (60) days prior to
the Expiration Date, Lessee at its expense shall cause to be delivered to Lessor
a Phase I environmental site assessment recently prepared (no more than thirty
(30) days prior to the date of delivery) by an independent recognized
professional reasonably acceptable to Lessor, and in form, scope and content
reasonably satisfactory to Lessor.
ARTICLE XI
11.1 Modifications.
(a) Lessee at its sole cost and expense, at any time and from time to
time without the consent of Lessor may make modifications, alterations,
renovations, improvements and additions to any Property or any part
thereof and substitutions and replacements therefor (collectively,
"Modifications"), and Lessee shall make any and all Modifications required
to be made pursuant to all Legal Requirements, Insurance Requirements and
manufacturer's specifications and standards; provided, that: (i) no
Modification shall materially impair the value, utility or useful life of
any Property from that which existed immediately prior to such
Modification; (ii) each Modification shall be done expeditiously and in a
good and workmanlike manner; (iii) no Modification shall adversely affect
the structural integrity of any Property; (iv) to the extent required by
Section 14.2(a), Lessee shall maintain builders' risk insurance at all
times when a Modification is in progress; (v) subject to the terms of
Article XIII relating to permitted contests, Lessee shall pay all costs
and expenses and discharge any Liens arising with respect to any
Modification; (vi) each Modification shall comply with the requirements of
this Lease (including without limitation Sections 8.2 and 10.1); and (vii)
no Improvement shall be demolished or otherwise rendered unfit for use
unless Lessee shall finance the proposed replacement Modification outside
of this lease facility; provided, further, Lessee shall not make any
Modification (unless required by any Legal Requirement) to the extent any
such Modification, individually or in the aggregate, shall have or could
reasonably be expected to have a Material Adverse Effect. Title to each
Modification shall vest in Lessee to the extent such Modification (t) is
not financed pursuant to the Operative Agreements, (u) is not a fixture or
other real estate interest, (v) is readily removable without causing
material damage to any Property, (w) is not required in order for the
applicable Property to comply with any Legal Requirement, any Insurance
Requirement or any requirement of Section 8.3 of this Lease and (x) is not
necessary to conform to any applicable manufacturer's specification and/or
standard. Title to all other Modifications shall immediately and without
further action upon their incorporation into the applicable Property (1)
become property of Lessor, (2) be subject to this Lease and (3) be titled
in the name of Lessor. Lessee at its sole cost and expense shall repair in
a good and workmanlike manner any and all damage done to any Property due
to the removal, detachment, attempted removal or attempted detachment of
any Modification from a Property and all such repairs shall be completed
by the earlier of (y) thirty (30) days after such removal, detachment,
attempted removal or attempted detachment of the applicable Modification
from the applicable Property and (z) the Expiration Date. Lessee shall not
remove, detach or attempt to remove or detach any Modification from any
Property except in accordance with the provisions of this Section 11.1.
Each Ground Lease for a Property shall expressly provide for the
provisions of the foregoing sentence.
(b) The construction process provided for in the Agency Agreement is
acknowledged by Lessor to be consistent with and in compliance with the
terms and provisions of this Article XI.
ARTICLE XII
12.1 Warranty of Title.
(a) Lessee hereby acknowledges and shall cause title in each Property
(including without limitation all Equipment, all Improvements, all
replacement components to each Property and all Modifications) immediately
and without further action to vest in and become the property of Lessor
and to be subject to the terms of this Lease (provided, respecting each
Property subject to a Ground Lease, Lessor's interest therein is
acknowledged to be a leasehold interest pursuant to such Ground Lease)
from and after the date hereof or such date of incorporation into any
Property. Lessee agrees that, subject to the terms of Article XIII
relating to permitted contests, Lessee shall not directly or indirectly
create or allow to remain, and shall promptly discharge at its sole cost
and expense, any Lien, defect, attachment, levy, title retention agreement
or claim upon any Property, any component thereof or any Modifications or
any Lien, attachment, levy or claim with respect to the Rent or with
respect to any amounts held by Lessor, the Agent, any Lender or any Holder
pursuant to any Operative Agreement, other than Permitted Liens and Lessor
Liens. Lessee shall promptly notify Lessor in the event it receives actual
knowledge that a Lien other than a Permitted Lien or Lessor Lien has
occurred with respect to a Property, the Rent or any other such amounts,
and Lessee represents and warrants to, and covenants with, Lessor that the
Liens in favor of Lessor and/or the Agent created by the Operative
Agreements are (and until the financing parties under the Operative
Agreements have been paid in full shall remain) first priority perfected
Liens subject only to Permitted Liens and Lessor Liens. At all times
subsequent to the Basic Term Commencement Date respecting a Property,
Lessee shall (i) cause a valid, perfected, first priority Lien on each
applicable Property to be in place in favor of the Agent (for the benefit
of the Lenders and the Holders) and (ii) file, or cause to be filed, all
necessary documents under the applicable real property law and Article 9
of the Uniform Commercial Code to perfect such title and Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to or
for the performance by any contractor, mechanic, laborer, materialman,
supplier or vendor of any labor or services or for the furnishing of any
materials for any construction, alteration, addition, repair or demolition
of or to any Property or any part thereof. NOTICE IS HEREBY GIVEN THAT
LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING A PROPERTY OR
ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF LESSOR IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 Permitted Contests Other Than in Respect of Indemnities.
Except to the extent otherwise provided for in Section 11 of the
Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Legal Requirement,
Imposition or utility charge payable pursuant to Section 4.1 or any Lien,
attachment, levy, encumbrance or encroachment, and Lessor agrees not to pay,
settle or otherwise compromise any such item, provided, that (a) the
commencement and continuation of such proceedings shall suspend the collection
of any such contested amount from, and suspend the enforcement thereof against,
the applicable Properties, Lessor, each Holder, the Agent and each Lender; (b)
there shall not be imposed a Lien (other than Permitted Liens and Lessor Liens)
on any Property and no part of any Property nor any Rent would be in any danger
of being sold, forfeited, lost or deferred; (c) at no time during the permitted
contest shall there be a risk of the imposition of criminal liability or
material civil liability on Lessor, any Holder, the Agent or any Lender for
failure to comply therewith; and (d) in the event that, at any time, there shall
be a material risk of extending the application of such item beyond the end of
the Term, then Lessee shall deliver to Lessor an Officer's Certificate
certifying as to the matters set forth in clauses (a), (b) and (c) of this
Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute and
deliver to Lessee such authorizations and other documents as may reasonably be
required in connection with any such contest and, if reasonably requested by
Lessee, shall join as a party therein at Lessee's sole cost and expense.
13.2 Impositions, Utility Charges, Other Matters;
Compliance with Legal Requirements.
Except with respect to Impositions, Legal Requirements, utility
charges and such other matters referenced in Section 13.1 which are the subject
of ongoing proceedings contesting the same in a manner consistent with the
requirements of Section 13.1, Lessee shall cause (a) all Impositions, utility
charges and such other matters to be timely paid, settled or compromised, as
appropriate, with respect to each Property and (b) each Property to comply with
all applicable Legal Requirements.
ARTICLE XIV
14.1 Public Liability and Workers' Compensation Insurance.
During the Term for each Property, Lessee shall procure and carry, at
Lessee's sole cost and expense, commercial general liability and umbrella
liability insurance for claims for injuries or death sustained by persons or
damage to property while on such Property or respecting the Equipment and such
other public liability coverages as are then customarily carried by similarly
situated companies conducting business similar to that conducted by Lessee. Such
insurance shall be on terms and in amounts that are no less favorable than
insurance maintained by Lessee with respect to similar properties and equipment
that it owns and are then carried by similarly situated companies conducting
business similar to that conducted by Lessee, and in no event shall have a
minimum combined single limit per occurrence coverage (i) for commercial general
liability of less than $1,000,000 and (ii) for umbrella liability of less than
$10,000,000. The policies shall name Lessee as the insured and shall be endorsed
to name Lessor, the Holders, the Agent and the Lenders as additional insureds.
The policies shall also specifically provide that such policies shall be
considered primary insurance which shall apply to any loss or claim before any
contribution by any insurance which Lessor, any Holder, the Agent or any Lender
may have in force. In the operation of the Properties, Lessee shall comply with
applicable workers' compensation laws and protect Lessor, each Holder, the Agent
and each Lender against any liability under such laws.
14.2 Permanent Hazard and Other Insurance.
(a) During the Term for each Property, Lessee shall keep such
Property insured against all risk of physical loss or damage by fire and
other risks and shall maintain builders' risk insurance during
construction of any Improvements or Modifications in each case in amounts
no less than the then current replacement value of such Property (assuming
that such Property was in the condition required by the terms of this
Lease immediately prior to such loss) and on terms that (i) are no less
favorable than insurance covering other similar properties owned by Lessee
and (ii) are then carried by similarly situated companies conducting
business similar to that conducted by Lessee. The policies shall name
Lessee as the insured and shall be endorsed to name Lessor and the Agent
(on behalf of the Lenders and the Holders) as a named additional insured
and lender loss payee, to the extent of their respective interests;
provided, so long as no Event of Default exists, any loss payable under
the insurance policies required by this Section for losses up to
$1,000,000 per loss will be paid to Lessee.
(b) If, during the Term with respect to a Property the area in which
such Property is located is designated a "flood-prone" area pursuant to
the Flood Disaster Protection Act of 1973, or any amendments or
supplements thereto or is in a zone designated A or V, then Lessee shall
comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973. In addition, Lessee will fully comply
with the requirements of the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973, as each may be amended from time to
time, and with any other Legal Requirement, concerning flood insurance to
the extent that it applies to any such Property. During the Term, Lessee
shall, in the operation and use of each Property, maintain workers'
compensation insurance consistent with that carried by similarly situated
companies conducting business similar to that conducted by Lessee and
containing minimum liability limits of no less than $100,000. In the
operation of each Property, Lessee shall comply with workers' compensation
laws applicable to Lessee, and protect Lessor, each Holder, the Agent and
each Lender against any liability under such laws.
14.3 Coverage.
(a) As of the date of this Lease and annually thereafter during the
Term, Lessee shall furnish the Agent (on behalf of Lessor and the other
beneficiaries of such insurance coverage) with certificates prepared by
the insurers or insurance broker of Lessee showing the insurance required
under Sections 14.1 and 14.2 to be in effect, naming (to the extent of
their respective interests) Lessor, the Holders, the Agent and the Lenders
as additional insureds and loss payees and evidencing the other
requirements of this Article XIV. All such insurance shall be at the cost
and expense of Lessee and provided by nationally recognized, financially
sound insurance companies having an A+ or better rating by A.M. Best's Key
Rating Guide. Lessee shall cause such certificates to include a provision
for thirty (30) days' advance written notice by the insurer to the Agent
(on behalf of Lessor and the other beneficiaries of such insurance
coverage) in the event of cancellation or material alteration of such
insurance. If an Event of Default has occurred and is continuing and the
Agent (on behalf of Lessor and the other beneficiaries of such insurance
coverage) so requests, Lessee shall deliver to the Agent (on behalf of
Lessor and the other beneficiaries of such insurance coverage) copies of
all insurance policies required by Sections 14.1 and 14.2.
(b) Lessee agrees that the insurance policy or policies required by
Sections 14.1, 14.2(a) and 14.2(b) shall include an appropriate clause
pursuant to which any such policy shall provide that it will not be
invalidated should Lessee or any Contractor, as the case may be, waive, at
any time, any or all rights of recovery against any party for losses
covered by such policy or due to any breach of warranty, fraud, action,
inaction or misrepresentation by Lessee or any Person acting on behalf of
Lessee. Lessee hereby waives any and all such rights against Lessor, the
Holders, the Agent and the Lenders to the extent of payments made to any
such Person under any such policy.
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Article XIV, except that Lessor may carry
separate liability insurance at Lessor's sole cost so long as (i) Lessee's
insurance is designated as primary and in no event excess or contributory
to any insurance Lessor may have in force which would apply to a loss
covered under Lessee's policy and (ii) each such insurance policy will not
cause Lessee's insurance required under this Article XIV to be subject to
a coinsurance exception of any kind.
(d) Lessee shall pay as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, shall renew or
replace each policy prior to the expiration date thereof or otherwise
maintain the coverage required by such Sections without any lapse in
coverage.
ARTICLE XV
15.1 Casualty and Condemnation.
(a) Subject to the provisions of the Agency Agreement and this
Article XV and Article XVI (in the event Lessee delivers, or is obligated
to deliver or is deemed to have delivered, a Termination Notice), and
prior to the occurrence and continuation of a Default or an Event of
Default, Lessee shall be entitled to receive (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and interest
in) any condemnation proceeds, award, compensation or insurance proceeds
under Sections 14.2(a) or 14.2(b) hereof to which Lessee or Lessor may
become entitled by reason of their respective interests in a Property (i)
if all or a portion of such Property is damaged or destroyed in whole or
in part by a Casualty or (ii) if the use, access, occupancy, easement
rights or title to such Property or any part thereof is the subject of a
Condemnation; provided, however, if a Default or an Event of Default shall
have occurred and be continuing or if such award, compensation or
insurance proceeds shall exceed $1,000,000, then such award, compensation
or insurance proceeds shall be paid directly to Lessor or, if received by
Lessee, shall be held in trust for Lessor, and shall be paid over by
Lessee to Lessor and held in accordance with the terms of this Article XV.
All amounts held by Lessor hereunder on account of any award, compensation
or insurance proceeds either paid directly to Lessor or turned over to
Lessor shall be held as security for the performance of Lessee's
obligations hereunder and under the other Operative Agreements and when
all such obligations of Lessee with respect to such matters (and all other
obligations of Lessee which should have been satisfied pursuant to the
Operative Agreements as of such date) have been satisfied, all amounts so
held by Lessor shall be paid over to Lessee.
(b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or
insurance payment on account of any such Casualty or Condemnation and
shall pay all expenses thereof. At Lessee's reasonable request, and at
Lessee's sole cost and expense, Lessor and the Agent shall participate in
any such proceeding, action, negotiation, prosecution or adjustment.
Lessor and Lessee agree that this Lease shall control the rights of Lessor
and Lessee in and to any such award, compensation or insurance payment.
(c) If Lessee shall receive notice of a Casualty or a Condemnation of
a Property or any interest therein where damage to the affected Property
is estimated to equal or exceed twenty-five percent (25%) of the Property
Cost of such Property, Lessee shall give notice thereof to Lessor promptly
after Lessee's receipt of such notice. In the event such a Casualty or
Condemnation occurs (regardless of whether Lessee gives notice thereof),
then Lessee shall be deemed to have delivered a Termination Notice to
Lessor and the provisions of Sections 16.1 and 16.2 shall apply.
(d) In the event of a Casualty or a Condemnation (regardless of
whether notice thereof must be given pursuant to paragraph (c)), this
Lease shall terminate with respect to the applicable Property in
accordance with Section 16.1 if Lessee, within thirty (30) days after such
occurrence, delivers to Lessor a notice to such effect.
(e) If pursuant to this Section 15.1 this Lease shall continue in
full force and effect following a Casualty or Condemnation with respect to
the affected Property, Lessee shall, at its sole cost and expense (subject
to reimbursement in accordance with Section 15.1(a)) promptly and
diligently repair any damage to the applicable Property caused by such
Casualty or Condemnation in conformity with the requirements of Sections
10.1 and 11.1, using the as-built Plans and Specifications or
manufacturer's specifications for the applicable Improvements, Equipment
or other components of the applicable Property (as modified to give effect
to any subsequent Modifications, any Condemnation affecting the applicable
Property and all applicable Legal Requirements), so as to restore the
applicable Property to the same or a greater remaining economic value,
useful life, utility, condition, operation and function as existed
immediately prior to such Casualty or Condemnation (assuming all
maintenance and repair standards have been satisfied). In such event,
title to the applicable Property shall remain with Lessor.
(f) In no event shall a Casualty or Condemnation affect Lessee's
obligations to pay Rent pursuant to Article III.
(g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term with respect to a Property
a Casualty occurs with respect to such Property or Lessee receives notice
of a Condemnation with respect to such Property, and following such
Casualty or Condemnation, the applicable Property cannot reasonably be
restored, repaired or replaced on or before the day one hundred eighty
(180) days prior to the Expiration Date or the date nine (9) months after
the occurrence of such Casualty or Condemnation (if such Casualty or
Condemnation occurs during the Term) to the same or a greater remaining
economic value, useful life, utility, condition, operation and function as
existed immediately prior to such Casualty or Condemnation (assuming all
maintenance and repair standards have been satisfied) or on or before such
day such Property is not in fact so restored, repaired or replaced, then
Lessee shall be required to exercise its Purchase Option for such Property
on the next Payment Date (notwithstanding the limits on such exercise
contained in Section 20.2) and pay Lessor the Termination Value for such
Property; provided, if any Default or Event of Default has occurred and is
continuing, Lessee shall also promptly (and in any event within three (3)
Business Days) pay Lessor any award, compensation or insurance proceeds
received on account of any Casualty or Condemnation with respect to any
Property; provided, further, that if no Default or Event of Default has
occurred and is continuing, any Excess Proceeds shall be paid to Lessee.
If a Default or an Event of Default has occurred and is continuing and any
Loans, Holder Advances or other amounts are owing with respect thereto,
then any Excess Proceeds (to the extent of any such Loans, Holder Advances
or other amounts owing with respect thereto) shall be paid to Lessor, held
as security for the performance of Lessee's obligations hereunder and
under the other Operative Agreements and applied to such obligations upon
the exercise of remedies in connection with the occurrence of an Event of
Default, with the remainder of such Excess Proceeds in excess of such
Loans, Holder Advances and other amounts owing with respect thereto being
distributed to the Lessee.
15.2 Environmental Matters.
Promptly upon Lessee's actual knowledge of the presence of Hazardous
Substances in any portion of any Property or Properties in concentrations and
conditions that constitute an Environmental Violation and which, in the
reasonable opinion of Lessee, the cost to undertake any legally required
response, clean up, remedial or other action will or might result in a cost to
Lessee of more than $50,000, Lessee shall notify Lessor in writing of such
condition. In the event of any Environmental Violation (regardless of whether
notice thereof must be given), Lessee shall, not later than thirty (30) days
after Lessee has actual knowledge of such Environmental Violation, either
deliver to Lessor a Termination Notice with respect to the applicable Property
or Properties pursuant to Section 16.1, if applicable, or, at Lessee's sole cost
and expense, promptly and diligently undertake and diligently complete any
response, clean up, remedial or other action (including without limitation the
pursuit by Lessee of appropriate action against any off-site or third party
source for contamination) necessary to remove, cleanup or remediate the
Environmental Violation in accordance with all Environmental Laws. Any such
undertaking shall be timely completed in accordance with prudent industry
standards. If Lessee does not deliver a Termination Notice with respect to such
Property pursuant to Section 16.1, Lessee shall, upon completion of remedial
action by Lessee, cause to be prepared by a reputable environmental consultant
acceptable to Lessor a report describing the Environmental Violation and the
actions taken by Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that the Environmental Violation
has been remedied in full compliance with applicable Environmental Law. Not less
than sixty (60) days prior to any time that Lessee elects to cease operations
with respect to any Property or to remarket any Property pursuant to Section
20.1 hereof or any other provision of any Operative Agreement, Lessee at its
expense shall cause to be delivered to Lessor a Phase I environmental site
assessment respecting such Property recently prepared (no more than thirty (30)
days prior to the date of delivery) by an independent recognized professional
acceptable to Lessor in its reasonable discretion and in form, scope and content
satisfactory to Lessor in its reasonable discretion. Notwithstanding any other
provision of any Operative Agreement, if Lessee fails to comply with the
foregoing obligation regarding the Phase I environmental site assessment, Lessee
shall be obligated to purchase such Property for its Termination Value and shall
not be permitted to exercise (and Lessor shall have no obligation to honor any
such exercise) any rights under any Operative Agreement regarding a sale of such
Property to a Person other than Lessee.
15.3 Notice of Environmental Matters.
Promptly, but in any event within five (5) Business Days from the
date Lessee has actual knowledge thereof, Lessee shall provide to Lessor written
notice of any pending or threatened claim, action or proceeding involving any
Environmental Law or any Release on or in connection with any Property or
Properties. All such notices shall describe in reasonable detail the nature of
the claim, action or proceeding and Lessee's proposed response thereto. In
addition, Lessee shall provide to Lessor, within five (5) Business Days of
receipt, copies of all material written communications with any Governmental
Authority relating to any Environmental Law in connection with any Property.
Lessee shall also promptly provide such detailed reports of any such material
environmental claims as may reasonably be requested by Lessor.
ARTICLE XVI
16.1 Termination Upon Certain Events.
If Lessee has delivered, or is deemed to have delivered, written
notice of a termination of this Lease with respect to the applicable Property to
Lessor in the form described in Section 16.2(a) (a "Termination Notice")
pursuant to the provisions of this Lease, then following the applicable
Casualty, Condemnation or Environmental Violation, this Lease shall terminate
with respect to the affected Property on the applicable Termination Date.
16.2 Procedures.
(a) A Termination Notice shall contain: (i) notice of termination of
this Lease with respect to the affected Property on a Payment Date not
more than sixty (60) days after Lessor's receipt of such Termination
Notice (the "Termination Date"); and (ii) a binding and irrevocable
agreement of Lessee to pay the Termination Value for the applicable
Property and purchase such Property on such Termination Date.
(b) On each Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, and Lessor shall convey
such Property or the remaining portion thereof, if any, to Lessee (or
Lessee's designee), all in accordance with Section 20.2.
ARTICLE XVII
17.1 Lease Events of Default.
If any one (1) or more of the following events (each a "Lease Event
of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent (except
as set forth in clause (ii)) within three (3) days after the same has
become due and payable or (ii) any Termination Value, on the date any such
payment is due and payable, or any payment of Basic Rent or Supplemental
Rent due on the due date of any such payment of Termination Value, or any
amount due on the Expiration Date;
(b) Lessee shall fail to make payment of any Supplemental Rent (other
than Supplemental Rent referred to in Section 17.1(a)(ii)) or any other
Credit Party shall fail to make any payment of any amount under any
Operative Agreement which has become due and payable within three (3) days
after receipt of notice that such payment is due;
(c) Lessee shall fail to maintain insurance as required by Article
XIV of this Lease or to deliver any requisite annual certificate with
respect thereto within ten (10) days of the date such certificate is due
under the terms hereof;
(d) (i) Lessee shall fail to observe or perform any term, covenant,
obligation or condition of Lessee under this Lease (including without
limitation the Incorporated Covenants) or any other Operative Agreement to
which Lessee is a party other than those set forth in Sections 17.1(a),
(b) or (c) hereof, or any other Credit Party shall fail to observe or
perform any term, covenant, obligation or condition of such Credit Party
under any Operative Agreement other than those set forth in Section
17.1(b) hereof and such failure shall continue for twenty (20) days (or
with respect to the Incorporated Covenants, the grace period, if any,
applicable thereto) after notice thereof to the Lessee or such Credit
Party, or (ii) any representation or warranty made by Lessee or any other
Credit Party set forth in this Lease (including without limitation the
Incorporated Representation and Warranties) or in any other Operative
Agreement or in any document entered into in connection herewith or
therewith or in any document, certificate or financial or other statement
delivered in connection herewith or therewith shall be false or inaccurate
in any material way when made;
(e) An Agency Agreement Event of Default shall have occurred and be
continuing;
(f) The default of any Credit Party in the payment or performance of
any terms of (i) any lease of a Health Care Facility or Indebtedness
secured by real property, whether now or hereafter entered into, or (ii)
any other obligation or indebtedness to another of Five Hundred Thousand
Dollars ($500,000) or more, whether now or hereafter incurred;
(g) [Intentionally Omitted];
(h) [Intentionally Omitted];
(i) [Intentionally Omitted];
(j) [Intentionally Omitted];
(k) Any report, certificate, financial statement or other instrument
delivered to Lessor by or on behalf of any Credit Party pursuant to the
terms of this Lease or any other Operative Agreement is false or
misleading in any material respect when made or delivered;
(l) Any Lessee Credit Agreement Event of Default shall have occurred
and be continuing and shall not have been waived;
(m) If any Credit Party becomes insolvent, bankrupt or generally
fails to pay its debts as such debts become due; or is adjudicated
insolvent or bankrupt; or admits in writing its inability to pay its
debts; or shall suffer a custodian, receiver or trustee for it or
substantially all of its property to be appointed and if appointed without
its consent, not be discharged within thirty (30) days; or makes an
assignment for the benefit of creditors; or suffers proceedings under any
law related to bankruptcy, insolvency, liquidation or the reorganization,
readjustment or the relief of debtors to be instituted against it and if
contested by it not dismissed or stayed within thirty (30) days; or if
proceedings under any law related to bankruptcy, insolvency, liquidation,
or the reorganization, readjustment or the relief of debtors is instituted
or commenced by any Credit Party; of if any order for relief is entered
relating to any of the foregoing proceedings; or if any Credit Party shall
call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; or if any Credit Party shall by any act or
failure to act indicate its consent to, approval of or acquiescence in any
of the foregoing;
(n) If (i) any person or group within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act") and
the rules and regulations promulgated thereunder (other that (x) J.
Stephen Eaton and members of his immediate family or trust for the benefit
of such family members, (y) South Atlantic Venture Fund II, Limited
Partnership and South Atlantic Venture Fund III, Limited Partnership, and
(z) Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Capital Partners II,
L.P., WCAS Health Care Partners, L.P. and CID Equity Capital III, L.P.)
shall have beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act), directly or indirectly, of securities of Lessee (or other
securities convertible into such securities within the time specified in
Rule 13d-3 of the 1934 Act) representing ten percent (10%) or more of the
combined voting power of all securities of Lessee entitled to vote in the
election of directors (hereinafter called a "Controlling Person"); or (ii)
a majority of the board of directors of Lessee shall cease for any reason
to consist of (A) individuals who on the date hereof were serving as
directors of any Credit Party and (B) individuals who subsequently become
members of the Board if such individuals' nominations for election or
elections to the Board are recommended or approved by a majority of the
Board of Directors of Lessee. For purposes of clause (i) above, a person
or group shall not be a Controlling Person if such person or group holds
voting power in good faith, and not for the purpose of circumventing this
Paragraph 17.1 (n) as an agent, bank, broker, nominee, trustee, or holder
of revocable proxies given in response to a solicitation pursuant to the
1934 Act, for one or more beneficial owners who do not individually, or if
they are a group acting in concert, as a group, have the voting power
specified in clause (i) above;
(o) If J. Stephen Eaton shall cease to be Chief Executive Officer of
Lessee, provided that if such cessation of service is as a result of death
or permanent disability then there shall be no Lease Event of Default
under this Section 17.1(o) if a replacement is named within thirty (30)
days of such death or permanent disability and Majority Secured Parties
have not given written notice to Lessee of their objection to such
replacement within fifteen (15) days after such naming;
(p) Any Operative Agreement shall cease to be in full force and
effect;
(q) Except as to any Credit Party which is released in connection
with the Operative Agreements, the guaranty given by any Guarantor under
the Participation Agreement or any material provision thereof shall cease
to be in full force and effect, or any Guarantor or any Person acting by
or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under such guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any guaranty;
(r) If any Credit Party shall default in or fail to observe at any
test date the covenants set forth in Paragraph 5.9(a)(ii), Paragraphs 5.15
through 5.17 of the Lessee Credit Agreement or Section Six of the Lessee
Credit Agreement (in each case as such have been incorporated by reference
into this Lease pursuant to Section 28.1);
(s) If Lessee shall cease to own directly or indirectly one hundred
percent (100%) of each other Credit Party;
(t) If custody or control of any substantial part of the property of
any Credit Party shall be assumed by any governmental agency or any court
of competent jurisdiction at the instance of any governmental agency; if
any License to operate a Health Care Facility or any other material
License shall be suspended, revoked, not renewed at expiration or
otherwise terminated (other than suspensions of Licenses that do not and
are not reasonably expected to prevent the legal operation of the affected
Health Care Facility, affect the ability of the Credit Parties to receive
reimbursement with respect to such operations, or otherwise have a
Material Adverse Effect); or if any governmental regulatory authority or
judicial body shall make any other final non-appealable determination
which, in any of the foregoing instances, might reasonably be expected to
have a Material Adverse Effect;
(u) If judgment, writ, warrant or attachment or execution or similar
process which calls for payment or presents liability in excess of Five
Hundred Thousand Dollars ($500,000) shall be rendered, issued or levied
against any Credit Party or its respective property and such process shall
not be paid, waived, stayed, vacated, discharged, settled, satisfied or
fully bonded within sixty (60) days after its issuance or levy;
(v) If any event or condition shall occur or exist with respect to
any activity or substance regulated under the Environmental Control
Statutes and as a result of such event or condition, Credit Parties (or
any of them) have incurred or in the opinion of the Majority Secured
Parties are reasonably likely to incur a liability or liabilities in
excess of Five Hundred Thousand Dollars ($500,000) during any consecutive
twelve (12) month period;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination (provided,
notwithstanding the foregoing, this Lease shall be deemed to be automatically
terminated without the giving of notice upon the occurrence of a Lease Event of
Default under Sections 17.1(g), (h) or (i)), and this Lease shall terminate, and
all rights of Lessee under this Lease shall cease. Lessee shall, to the fullest
extent permitted by law, pay as Supplemental Rent all costs and expenses
incurred by or on behalf of Lessor or any other Financing Party, including
without limitation reasonable fees and expenses of counsel, as a result of any
Lease Event of Default hereunder.
A POWER OF SALE HAS BEEN GRANTED IN THIS LEASE. A POWER OF SALE MAY ALLOW
LESSOR TO TAKE THE PROPERTIES AND SELL THE PROPERTIES WITHOUT GOING TO COURT IN
A FORECLOSURE ACTION UPON THE OCCURRENCE OF A LEASE EVENT OF DEFAULT.
17.2 Surrender of Possession.
If a Lease Event of Default shall have occurred and be continuing,
and whether or not this Lease shall have been terminated pursuant to Section
17.1, Lessee shall, upon thirty (30) days written notice, surrender to Lessor
possession of the Properties. Lessor may enter upon and repossess the Properties
by such means as are available at law or in equity, and may remove Lessee and
all other Persons and any and all personal property and Lessee's equipment and
personalty and severable Modifications from the Properties. Lessor shall have no
liability by reason of any such entry, repossession or removal performed in
accordance with applicable law. Upon the written demand of Lessor, Lessee shall
return the Properties promptly to Lessor, in the manner and condition required
by, and otherwise in accordance with the provisions of, Section 22.1(c) hereof.
17.3 Reletting.
If a Lease Event of Default shall have occurred and be continuing,
and whether or not this Lease shall have been terminated pursuant to Section
17.1, Lessor may, but shall be under no obligation to, relet any or all of the
Properties, for the account of Lessee or otherwise, for such term or terms
(which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Lessor may determine, and
Lessor may collect, receive and retain the rents resulting from such reletting.
Lessor shall not be liable to Lessee for any failure to relet any Property or
for any failure to collect any rent due upon such reletting.
17.4 Damages.
Neither (a) the termination of this Lease as to all or any of the
Properties pursuant to Section 17.1; (b) the repossession of all or any of the
Properties; nor (c) the failure of Lessor to relet all or any of the Properties,
the reletting of all or any portion thereof, nor the failure of Lessor to
collect or receive any rentals due upon any such reletting, shall relieve Lessee
of its liabilities and obligations hereunder, all of which shall survive any
such termination, repossession or reletting. If any Lease Event of Default shall
have occurred and be continuing and notwithstanding any termination of this
Lease pursuant to Section 17.1, Lessee shall forthwith pay to Lessor all Rent
and other sums due and payable hereunder to and including without limitation the
date of such termination. Thereafter, on the days on which the Basic Rent or
Supplemental Rent, as applicable, are payable under this Lease or would have
been payable under this Lease if the same had not been terminated pursuant to
Section 17.1 and until the end of the Term hereof or what would have been the
Term in the absence of such termination, Lessee shall pay Lessor, as current
liquidated damages (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the Basic Rent and Supplemental
Rent that are payable under this Lease or would have been payable by Lessee
hereunder if this Lease had not been terminated pursuant to Section 17.1, less
the net proceeds, if any, which are actually received by Lessor with respect to
the period in question of any reletting of any Property or any portion thereof;
provided, that Lessee's obligation to make payments of Basic Rent and
Supplemental Rent under this Section 17.4 shall continue only so long as Lessor
shall not have received the amounts specified in Section 17.6. In calculating
the amount of such net proceeds from reletting, there shall be deducted all of
Lessor's, any Holder's, the Agent's and any Lender's reasonable expenses in
connection therewith, including without limitation repossession costs, brokerage
or sales commissions, fees and expenses for counsel and any necessary repair or
alteration costs and expenses incurred in preparation for such reletting. To the
extent Lessor receives any damages pursuant to this Section 17.4, such amounts
shall be regarded as amounts paid on account of Rent. Lessee specifically
acknowledges and agrees that its obligations under this Section 17.4 shall be
absolute and unconditional under any and all circumstances and shall be paid
and/or performed, as the case may be, without notice or demand and without any
abatement, reduction, diminution, setoff, defense, counterclaim or recoupment
whatsoever.
17.5 Power of Sale.
Without limiting any other remedies set forth in this Lease, in the
event that a court of competent jurisdiction rules that this Lease constitutes a
mortgage, deed of trust or other secured financing as is the intent of the
parties, then Lessor and Lessee agree that Lessee has granted, pursuant to
Section 7.1(b) hereof and each Lease Supplement, a Lien against the Properties
WITH POWER OF SALE, and that, upon the occurrence and during the continuance of
any Lease Event of Default, Lessor shall have the power and authority, to the
extent provided by law, after prior notice and lapse of such time as may be
required by law, to foreclose its interest (or cause such interest to be
foreclosed) in all or any part of the Properties.
17.6 Final Liquidated Damages.
If a Lease Event of Default shall have occurred and be continuing,
whether or not this Lease shall have been terminated pursuant to Section 17.1
and whether or not Lessor shall have collected any current liquidated damages
pursuant to Section 17.4, Lessor shall have the right to recover, by demand to
Lessee and at Lessor's election, and Lessee shall pay to Lessor, as and for
final liquidated damages, but exclusive of the indemnities payable under Section
11 of the Participation Agreement (which, if requested, shall be paid
concurrently), and in lieu of all current liquidated damages beyond the date of
such demand (it being agreed that it would be impossible accurately to determine
actual damages) the Termination Value. Upon payment of the amount specified
pursuant to the first sentence of this Section 17.6, Lessee shall be entitled to
receive from Lessor, either at Lessee's request or upon Lessor's election, in
either case at Lessee's cost, an assignment of Lessor's entire right, title and
interest in and to the Properties, Improvements, Fixtures, Modifications,
Equipment and all components thereof, in each case in recordable form and
otherwise in conformity with local custom and free and clear of the Lien of this
Lease (including without limitation the release of any memoranda of Lease and/or
the Lease Supplement recorded in connection therewith) and any Lessor Liens. The
Properties shall be conveyed to Lessee "AS-IS, WHERE-IS" and in their then
present physical condition. If any statute or rule of law shall limit the amount
of such final liquidated damages to less than the amount agreed upon, Lessor
shall be entitled to the maximum amount allowable under such statute or rule of
law; provided, however, Lessee shall not be entitled to receive an assignment of
Lessor's interest in the Properties, the Improvements, Fixtures, Modifications,
Equipment or the components thereof unless Lessee shall have paid in full the
Termination Value. Lessee specifically acknowledges and agrees that its
obligations under this Section 17.6 shall be absolute and unconditional under
any and all circumstances and shall be paid and/or performed, as the case may
be, without notice or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever.
17.7 Environmental Costs.
If a Lease Event of Default shall have occurred and be continuing,
and whether or not this Lease shall have been terminated pursuant to Section
17.1, Lessee shall pay directly to any third party (or at Lessor's election,
reimburse Lessor) for the cost of any environmental testing and/or remediation
work undertaken respecting any Property, as such testing or work is deemed
appropriate in the reasonable judgment of Lessor. Lessee shall pay all amounts
referenced in the immediately preceding sentence within ten (10) days of any
request by Lessor for such payment. The provisions of this Section 17.7 shall
not limit the obligations of Lessee under any Operative Agreement regarding
indemnification obligations, environmental testing, remediation and/or work.
17.8 Waiver of Certain Rights.
If this Lease shall be terminated pursuant to Section 17.1, Lessee
waives, to the fullest extent permitted by Law, (a) any notice of re-entry or
the institution of legal proceedings to obtain re-entry or possession; (b) any
right of redemption, re-entry or possession; (c) the benefit of any laws now or
hereafter in force exempting property from liability for rent or for debt; and
(d) any other rights which might otherwise limit or modify any of Lessor's
rights or remedies under this Article XVII.
17.9 Assignment of Rights Under Contracts.
If a Lease Event of Default shall have occurred and be continuing,
and whether or not this Lease shall have been terminated pursuant to Section
17.1, Lessee shall upon Lessor's demand immediately assign, transfer and set
over to Lessor all of Lessee's right, title and interest in and to each
agreement executed by Lessee in connection with the acquisition, installation,
testing, use, development, construction, operation, maintenance, repair,
refurbishment and restoration of the Properties (including without limitation
all right, title and interest of Lessee with respect to all warranty,
performance, service and indemnity provisions), as and to the extent that the
same relate to the acquisition, installation, testing, use, development,
construction, operation, maintenance, repair, refurbishment and restoration of
the Properties or any of them.
17.10Remedies Cumulative.
The remedies herein provided shall be cumulative and in addition to
(and not in limitation of) any other remedies available at law, equity or
otherwise, including without limitation any mortgage foreclosure remedies.
ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Lease Defaults.
Lessor, without waiving or releasing any obligation or Lease Event of
Default, may (but shall be under no obligation to) remedy any Lease Event of
Default for the account and at the sole cost and expense of Lessee, including
without limitation the failure by Lessee to maintain the insurance required by
Article XIV, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of Lessee, enter upon any
Property, and take all such action thereon as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of any lessee. All
out-of-pocket costs and expenses so incurred (including without limitation fees
and expenses of counsel), together with interest thereon at the Overdue Rate
from the date on which such sums or expenses are paid by Lessor, shall be paid
by Lessee to Lessor on demand.
ARTICLE XIX
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option.
Subject to Section 19.2, in connection with any termination of this
Lease with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option, upon the date on which
this Lease is to terminate with respect to any Property, and upon tender by
Lessee of the amounts set forth in Sections 16.2(b) or 20.2, as applicable,
Lessor shall execute and deliver to Lessee (or to Lessee's designee) at Lessee's
cost and expense an assignment (by deed or other appropriate instrument) of
Lessor's entire interest in such Property, in each case in recordable form and
otherwise in conformity with local custom and free and clear of any Lessor Liens
attributable to Lessor but without any other warranties (of title or otherwise)
from Lessor. Such Property shall be conveyed to Lessee "AS-IS, "WHERE-IS" and in
then present physical condition.
19.2 No Purchase or Termination With Respect to Less than
All of a Property.
Lessee shall not be entitled to exercise its Purchase Option or the Sale
Option separately with respect to a portion of any Property consisting of Land,
Equipment, Improvements and/or any interest pursuant to a Ground Lease but shall
be required to exercise its Purchase Option or the Sale Option with respect to
an entire Property.
ARTICLE XX
20.1 Purchase Option or Sale Option-General Provisions.
Not less than one hundred twenty (120) days and no more than one
hundred eighty (180) days prior to the Expiration Date or (respecting the
Purchase Option only) any Payment Date (such Expiration Date or, respecting the
Purchase Option only, any such Payment Date being hereinafter referred to as the
"Election Date"), Lessee may give Lessor irrevocable written notice (the
"Election Notice") that Lessee is electing to exercise either (a) with respect
to an Election Notice given in connection with any Payment Date prior to the
Expiration Date only, the option to purchase one or more Properties; provided,
Lessee may not make the election under this Section 20.1(a) unless (i) no
Default or Event of Default shall have occurred and be continuing, either at the
date any such election is made or at the applicable Election Date (other than
those that will be cured by the payment of the Termination Value for all the
Properties) and (ii) the aggregate Property Cost of all Properties to be
purchased on the applicable Election Date plus the aggregate Property Cost of
all Properties previously purchased by Lessee and/or the Construction Agent from
Lessor shall not exceed an amount (the "Early Purchase Cap") equal to the
product of (A) the aggregate Property Cost (up to and including the date any
such Election Date is specified by Lessee) for all Properties then subject to
this Lease and all properties which were previously Properties subject to this
Lease (including without limitation any and all Properties previously purchased
by Lessee and/or the Construction Agent) multiplied by (B) twenty-five percent
(25%), (b) with respect to an Election Notice given in connection with the
Expiration Date only, the option to purchase all, but not less than all, the
Properties on the Expiration Date or (c) with respect to an Election Notice
given in connection with the Expiration Date only, the option to remarket all,
but not less than all, the Properties to a Person other than Lessee or any
Affiliate of Lessee and cause a sale of such Properties to occur on the
Expiration Date pursuant to the terms of Section 22.1 (the "Sale Option"). If
Lessee does not give an Election Notice indicating the Purchase Option or the
Sale Option within the allotted period of time prior to the Expiration Date
specified above in this Section 20.1, then unless such Expiration Date is the
final Expiration Date to which the Term may be extended, the term of this Lease
shall be extended in accordance with Section 2.2 hereof; if such Expiration Date
is the final Expiration Date, then Lessee shall be deemed to have elected the
Purchase Option. If Lessee shall either (i) elect (or be deemed to have elected)
to exercise the Purchase Option or (ii) elect the Sale Option and fail to cause
all, but not less than all, the Properties to be sold in accordance with the
terms of Section 22.1 on the Expiration Date, then in either case, Lessee shall
pay to Lessor on the applicable Election Date an amount equal to the Termination
Value for all, but not less than all, the Properties (which the parties do not
intend to be a "bargain" purchase) and, upon receipt of such amounts and
satisfaction of such obligations, Lessor shall transfer to Lessee all of
Lessor's right, title and interest in and to all, but not less than all, the
Properties in accordance with Section 20.2.
If Lessor, in its sole discretion, permits Lessee to purchase one or
more Properties prior to the Expiration Date in excess of the Early Purchase
Cap, then such purchase shall occur on an Election Date. On or prior to the
applicable Election Date, Lessee shall provide to Lessor and the Agent
Appraisals for Properties which remain subject to this Lease after such Election
Date evidencing an aggregate appraised value of such Properties equal to or in
excess of seventy-five percent (75%) of the aggregate Property Cost.
20.2 Lessee Purchase Option.
Provided, no Default or Event of Default shall have occurred and be
continuing (other than those that will be cured by the payment of the
Termination Value for all the Properties) and provided, that the Election Notice
has been appropriately given specifying the Purchase Option, Lessee shall
purchase (x) (in the case of Lessee's election of the Purchase Option on a date
prior to the Expiration Date) the Properties designated for purchase in such
election and (y) (in the case of Lessee's election of the Purchase Option on the
Expiration Date) all the Properties on the Expiration Date at a price equal to
the Termination Value for all the Properties (which the parties do not intend to
be a "bargain" purchase price).
Subject to Section 19.2, in connection with any termination of this
Lease with respect to any Property pursuant to the terms of Section 16.2, or in
connection with Lessee's exercise of its Purchase Option, upon the date on which
this Lease is to terminate with respect to a Property or all of the Properties,
and upon tender by Lessee of the amounts set forth in Section 16.2(b) or this
Section 20.2, as applicable, Lessor shall execute, acknowledge (where required)
and deliver to Lessee, at Lessee's cost and expense, each of the following: (a)
a termination or assignment (as requested by the Lessee) of each applicable
Ground Lease and special or limited warranty Deeds conveying each Property (to
the extent it is real property not subject to a Ground Lease) to Lessee free and
clear of the Lien of this Lease, the Lien of the Credit Documents and any Lessor
Liens; (b) a Bill of Sale conveying each Property (to the extent it is personal
property) to Lessee free and clear of the Lien of this Lease, the Lien of the
Credit Documents and any Lessor Liens; (c) any real estate tax affidavit or
other document required by law to be executed and filed in order to record the
applicable Deed and/or the applicable Ground Lease termination; and (d) FIRPTA
affidavits. All of the foregoing documentation must be in form and substance
reasonably satisfactory to Lessor. The applicable Property shall be conveyed to
Lessee "AS-IS, WHERE-IS" and in then present physical condition.
If any Property is the subject of remediation efforts respecting
Hazardous Substances at the applicable Election Date which could materially and
adversely impact the Fair Market Sales Value of such Property (with materiality
determined in Lessor's discretion), then Lessee shall be obligated to repurchase
each such Property pursuant to Section 20.2.
On the applicable Election Date on which Lessee has elected to
exercise its Purchase Option, Lessee shall pay (or cause to be paid) to Lessor,
the Agent and all other parties, as appropriate, the sum of all costs and
expenses incurred by any such party in connection with the election by Lessee to
exercise its Purchase Option and all Rent and all other amounts then due and
payable or accrued under this Lease and/or any other Operative Agreement.
20.3 Third Party Sale Option.
(a) Provided, that (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Election Notice has been
appropriately given specifying the Sale Option, Lessee shall undertake to
cause a sale of the Properties on the Expiration Date (all as specified in
the Election Notice) in accordance with the provisions of Section 22.1
hereof.
(b) In the event Lessee exercises the Sale Option then, as soon as
practicable and in all events not less than sixty (60) days prior to the
Expiration Date, Lessee at its expense shall cause to be delivered to
Lessor a Phase I environmental site assessment for each of the Properties
recently prepared (no more than thirty (30) days old prior to the Sale
Date) by an independent recognized professional reasonably acceptable to
Lessor and in form, scope and content reasonably satisfactory to Lessor.
In the event that Lessor shall not have received such environmental site
assessment by the date sixty (60) days prior to the Expiration Date or in
the event that such environmental assessment shall reveal the existence of
any material violation of Environmental Laws, other material Environmental
Violation or potential material Environmental Violation (with materiality
determined in each case by Lessor in its reasonable discretion), then
Lessee on the Expiration Date shall pay to Lessor an amount equal to the
Termination Value for all the Properties and any and all other amounts due
and owing hereunder. Upon receipt of such payment and all other amounts
due under the Operative Agreements, Lessor shall transfer to Lessee all of
Lessor's right, title and interest in and to all the Properties in
accordance with Section 19.1.
ARTICLE XXI
21.1 [Intentionally Omitted].
ARTICLE XXII
22.1 Sale Procedure.
(a) During the Marketing Period, Lessee, on behalf of Lessor, shall
obtain bids for the cash purchase of all the Properties in connection with
a sale to one (1) or more third party purchasers to be consummated on the
Expiration Date or such earlier date as is acceptable to the Agent and the
Lessee (the "Sale Date") for the highest price available, shall notify
Lessor promptly of the name and address of each prospective purchaser and
the cash price which each prospective purchaser shall have offered to pay
for each such Property and shall provide Lessor with such additional
information about the bids and the bid solicitation procedure as Lessor
may reasonably request from time to time. All such prospective purchasers
must be Persons other than Lessee or any Affiliate of Lessee. On the Sale
Date, Lessee shall pay (or cause to be paid) to Lessor and all other
parties, as appropriate, the sum of all costs and expenses incurred by
Lessor and/or the Agent (as the case may be) in connection with such sale
of one or more Properties, all Rent and all other amounts then due and
payable or accrued under this Lease and/or any other Operative Agreement.
Lessor may reject any and all bids and may solicit and obtain bids by
giving Lessee written notice to that effect; provided, however, that
notwithstanding the foregoing, Lessor may not reject the bids submitted by
Lessee if such bids, in the aggregate, are greater than or equal to the
sum of the Limited Recourse Amount for all the Properties, and represent
bona fide offers from one (1) or more third party purchasers. If the
highest price which a prospective purchaser or the prospective purchasers
shall have offered to pay for all the Properties on the Sale Date is less
than the sum of the Limited Recourse Amount for all the Properties or if
such bids do not represent bona fide offers from one (1) or more third
parties or if there are no bids, Lessor may elect to retain one or more of
the Properties by giving Lessee prior written notice of Lessor's election
to retain the same, and promptly upon receipt of such notice, Lessee shall
surrender, or cause to be surrendered, each of the Properties specified in
such notice in accordance with the terms and conditions of Section 10.1.
Upon acceptance of any bid, Lessor agrees, at Lessee's request and
expense, to execute a contract of sale with respect to such sale, so long
as the same is consistent with the terms of this Article 22 and provides
by its terms that it is nonrecourse to Lessor.
Unless Lessor shall have elected to retain one or more of the
Properties pursuant to the provisions of the preceding paragraph, Lessee
shall arrange for Lessor to sell all the Properties free and clear of the
Lien of this Lease and any Lessor Liens attributable to Lessor, without
recourse or warranty (of title or otherwise), for cash on the Sale Date to
the purchaser or purchasers offering the highest cash sales price, as
identified by Lessee or Lessor, as the case may be; provided, however,
solely as to Lessor or the Trust Company, in its individual capacity, any
Lessor Lien shall not constitute a Lessor Lien so long as Lessor or the
Trust Company, in its individual capacity, is diligently and in good faith
contesting, at the cost and expense of Lessor or the Trust Company, in its
individual capacity, such Lessor Lien by appropriate proceedings in which
event the applicable Sale Date, all without penalty or cost to Lessee,
shall be delayed for the period of such contest. To effect such transfer
and assignment, Lessor shall execute, acknowledge (where required) and
deliver to the appropriate purchaser each of the following: (a) special or
limited warranty Deeds conveying each such Property (to the extent it is
real property titled to Lessor) and an assignment of the Ground Lease
conveying the leasehold interest of Lessor in each such Property (to the
extent it is real property and subject to a Ground Lease) to the
appropriate purchaser free and clear of the Lien of this Lease, the Lien
of the Credit Documents and any Lessor Liens; (b) a Bill of Sale conveying
each such Property (to the extent it is personal property) titled to
Lessor to the appropriate purchaser free and clear of the Lien of this
Lease, the Lien of the Credit Documents and any Lessor Liens; (c) any real
estate tax affidavit or other document required by law to be executed and
filed in order to record each Deed and/or each Ground Lease assignment;
and (d) FIRPTA affidavits, as appropriate. All of the foregoing
documentation must be in form and substance reasonably satisfactory to
Lessor. Lessee shall surrender the Properties so sold or subject to such
documents to each purchaser in the condition specified in Section 10.1, or
in such other condition as may be agreed between Lessee and such
purchaser. Lessee shall not take or fail to take any action which would
have the effect of unreasonably discouraging bona fide third party bids
for any Property. If each of the Properties is not either (i) sold on the
Sale Date in accordance with the terms of this Section 22.1, or (ii)
retained by Lessor pursuant to an affirmative election made by Lessor
pursuant to the second sentence of the second paragraph of this Section
22.1(a), then (x) Lessee shall be obligated to pay Lessor on the Sale Date
an amount equal to the aggregate Termination Value for all the Properties
less any sales proceeds received by the Lessor, and (y) Lessor shall
transfer each applicable Property to Lessee in accordance with Section
20.2.
(b) If the Properties are sold on a Sale Date to one (1) or more
third party purchasers in accordance with the terms of Section 22.1(a) and
the aggregate purchase price paid for all the Properties is less than the
sum of the aggregate Property Cost for all the Properties (hereinafter
such difference shall be referred to as the "Deficiency Balance"), then
Lessee hereby unconditionally promises to pay to Lessor on the Sale Date
the lesser of (i) the Deficiency Balance, or (ii) the Maximum Residual
Guarantee Amount for all the Properties. On a Sale Date if (x) Lessor
receives the aggregate Termination Value for all the Properties from one
(1) or more third party purchasers, (y) Lessor and such other parties
receive all other amounts specified in the last sentence of the first
paragraph of Section 22.1(a) and (z) the aggregate purchase price paid for
all the Properties on such date exceeds the sum of the aggregate Property
Cost for all the Properties, then Lessee may retain such excess. If one or
more of the Properties are retained by Lessor pursuant to an affirmative
election made by Lessor pursuant to the provisions of Section 22.1(a),
then Lessee hereby unconditionally promises to pay to Lessor on the Sale
Date an amount equal to the Maximum Residual Guarantee Amount for the
Properties so retained. Any payment of the foregoing amounts described in
this Section 22.1(b) shall be made together with a payment of all other
amounts referenced in the last sentence of the first paragraph of Section
22.1(a).
(c) In the event that all the Properties are either sold to one (1)
or more third party purchasers on the Sale Date or retained by Lessor in
connection with an affirmative election made by Lessor pursuant to the
provisions of Section 22.1(a), then in either case on the applicable Sale
Date Lessee shall provide Lessor or such third party purchaser (unless
otherwise agreed by such third party purchaser) with (i) all permits,
certificates of occupancy, governmental licenses and authorizations
necessary to use, operate, repair, access and maintain each such Property
for the purpose it is being used by Lessee, and (ii) such manuals,
permits, easements, licenses, intellectual property, know-how,
rights-of-way and other rights and privileges in the nature of an easement
as are reasonably necessary or desirable in connection with the use,
operation, repair, access to or maintenance of each such Property for its
intended purpose or otherwise as Lessor or such third party purchaser(s)
shall reasonably request (and a royalty-free license or similar agreement
to effectuate the foregoing on terms reasonably agreeable to Lessor or
such third party purchaser(s), as applicable). All assignments, licenses,
easements, agreements and other deliveries required by clauses (i) and
(ii) of this paragraph (c) shall be in form reasonably satisfactory to
Lessor or such third party purchaser(s), as applicable, and shall be fully
assignable (including without limitation both primary assignments and
assignments given in the nature of security) without payment of any fee,
cost or other charge. Lessee shall also execute any documentation
requested by Lessor or such third party purchaser(s), as applicable,
evidencing the continuation or assignment of each Ground Lease.
22.2 Application of Proceeds of Sale.
In the event Lessee receives any proceeds of sale of any Property,
such proceeds shall be deemed to have been received in trust on behalf of Lessor
and Lessee shall promptly remit such proceeds to Lessor. Lessor shall apply the
proceeds of sale of any Property in the following order of priority:
(a) FIRST, to pay or to reimburse Lessor (and/or the Agent, as the
case may be) for the payment of all reasonable costs and expenses incurred
by Lessor (and/or the Agent, as the case may be) in connection with the
sale (to the extent Lessee has not satisfied its obligation to pay such
costs and expenses);
(b) SECOND, so long as the Credit Agreement is in effect and any
Loans or Holder Advances or any amount is owing to the Financing Parties
under any Operative Agreement, to the Agent to be applied pursuant to
intercreditor provisions among Lessor, the Lenders and the Holders
contained in the Operative Agreements; and
(c) THIRD, to Lessee.
22.3 Indemnity for Excessive Wear.
If the proceeds of the sale described in Section 22.1 with respect to
the Properties shall be less than the Limited Recourse Amount with respect to
the Properties, and at the time of such sale it shall have been reasonably
determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Properties shall have been impaired by greater than expected wear
and tear during the term of the Lease, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Sale Proceeds Shortfall, whichever amount is less.
22.4 Appraisal Procedure.
For determining the Fair Market Sales Value of the Properties or any
other amount which may, pursuant to any provision of any Operative Agreement, be
determined by an appraisal procedure, Lessor and Lessee shall use the following
procedure (the "Appraisal Procedure"). Lessor and Lessee shall endeavor to reach
a mutual agreement as to such amount for a period of ten (10) days from
commencement of the Appraisal Procedure under the applicable section of the
Lease, and if they cannot agree within ten (10) days, then two (2) qualified
appraisers, one (1) chosen by Lessee and one (1) chosen by Lessor, shall
mutually agree thereupon, but if either party shall fail to choose an appraiser
within twenty (20) days after notice from the other party of the selection of
its appraiser, then the appraisal by such appointed appraiser shall be binding
on Lessee and Lessor. If the two (2) appraisers cannot agree within twenty (20)
days after both shall have been appointed, then a third appraiser shall be
selected by the two (2) appraisers or, failing agreement as to such third
appraiser within thirty (30) days after both shall have been appointed, by the
American Arbitration Association. The decisions of the three (3) appraisers
shall be given within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of the other
two (2) shall be discarded and such average shall be binding on Lessor and
Lessee; provided, that if the highest appraisal and the lowest appraisal are
equidistant from the third appraisal, the third appraisal shall be binding on
Lessor and Lessee. The fees and expenses of the appraiser appointed by Lessee
shall be paid by Lessee; the fees and expenses of the appraiser appointed by
Lessor shall be paid by Lessor (such fees and expenses not being indemnified
pursuant to Section 13 of the Participation Agreement); and the fees and
expenses of the third appraiser shall be divided equally between Lessee and
Lessor.
22.5 Certain Obligations Continue.
During the Marketing Period, the obligation of Lessee to pay Rent
with respect to the Properties (including without limitation the installment of
Basic Rent due on the Expiration Date) shall continue undiminished until payment
in full to Lessor of the sale proceeds, if any, the Maximum Residual Guarantee
Amount, the amount due under Section 22.3, if any, and all other amounts due to
Lessor or any other Person with respect to all Properties or any Operative
Agreement. Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take
action in connection with any such sale, other than as expressly provided in
this Article XXII.
ARTICLE XXIII
23.1 Holding Over.
If Lessee shall for any reason remain in possession of a Property
after the expiration or earlier termination of this Lease as to such Property
(unless such Property is conveyed to Lessee), such possession shall be as a
tenancy at sufferance during which time Lessee shall continue to pay
Supplemental Rent that would be payable by Lessee hereunder were the Lease then
in full force and effect with respect to such Property and Lessee shall continue
to pay Basic Rent at the lesser of the highest lawful rate and one hundred ten
percent (110%) of the last payment of Basic Rent due with respect to such
Property prior to such expiration or earlier termination of this Lease. Such
Basic Rent shall be payable from time to time upon demand by Lessor and such
additional amount of Basic Rent shall be applied by Lessor ratably to the
Lenders and the Holders based on their relative amounts of the then outstanding
aggregate Property Cost for all Properties. During any period of tenancy at
sufferance, Lessee shall, subject to the second preceding sentence, be obligated
to perform and observe all of the terms, covenants and conditions of this Lease,
but shall have no rights hereunder other than the right, to the extent given by
law to tenants at sufferance, to continue its occupancy and use of such
Property. Nothing contained in this Article XXIII shall constitute the consent,
express or implied, of Lessor to the holding over of Lessee after the expiration
or earlier termination of this Lease as to any Property (unless such Property is
conveyed to Lessee) and nothing contained herein shall be read or construed as
preventing Lessor from maintaining a suit for possession of such Property or
exercising any other remedy available to Lessor at law or in equity.
ARTICLE XXIV
24.1 Risk of Loss.
During the Term, unless Lessee shall not be in actual possession of
any Property in question solely by reason of Lessor's exercise of its remedies
of dispossession under Article XVII, the risk of loss or decrease in the
enjoyment and beneficial use of such Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be answerable or
accountable therefor.
ARTICLE XXV
25.1 Assignment.
(a) Lessee may not assign this Lease or any of its rights or
obligations hereunder or with respect to any Property in whole or in part
to any Person without the prior written consent of the Agent, the Lenders,
the Holders and Lessor.
(b) No assignment by Lessee (referenced in this Section 25.1 or
otherwise) or other relinquishment of possession to any Property shall in
any way discharge or diminish any of the obligations of Lessee to Lessor
hereunder and Lessee shall remain directly and primarily liable under the
Operative Agreements as to any rights or obligations assigned by Lessee or
regarding any Property in which rights or obligations have been assigned
or otherwise transferred.
25.2 Subleases.
(a) Promptly, but in any event within five (5) Business Days,
following the execution and delivery of any sublease permitted by this
Article XXV, Lessee shall notify Lessor of the execution of such sublease.
As of the date of each Lease Supplement, Lessee shall lease the respective
Properties described in such Lease Supplement from Lessor, and any
existing tenant respecting such Property shall automatically be deemed to
be a subtenant of Lessee and not a tenant of Lessor.
(b) Without the prior written consent of the Agent, any Lender, any
Holder or Lessor and subject to the other provisions of this Section 25.2,
Lessee may sublet any Property or portion thereof to any Affiliate of any
Credit Party. Except as referenced in the immediately preceding sentence,
no other subleases shall be permitted unless consented to in writing by
each Financing Party, which consent may be given or withheld in the sole
discretion of each such party. All subleasing shall be done on market
terms and shall in no way diminish the fair market value or useful life of
any applicable Property.
(c) No sublease (referenced in this Section 25.2 or otherwise) or
other relinquishment of possession to any Property shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder and
Lessee shall remain directly and primarily liable under this Lease as to
such Property, or portion thereof, so sublet. During the Basic Term, the
term of any such sublease shall not extend beyond the Basic Term. During
any Renewal Term, the term of any such sublease shall not extend beyond
such Renewal Term. Each sublease shall be expressly subject and
subordinate to this Lease.
ARTICLE XXVI
26.1 No Waiver.
No failure by Lessor or Lessee to insist upon the strict performance
of any term hereof or to exercise any right, power or remedy upon a default
hereunder, and no acceptance of full or partial payment of Rent during the
continuance of any such default, shall constitute a waiver of any such default
or of any such term. To the fullest extent permitted by law, no waiver of any
default shall affect or alter this Lease, and this Lease shall continue in full
force and effect with respect to any other then existing or subsequent default.
ARTICLE XXVII
27.1 Acceptance of Surrender.
No surrender to Lessor of this Lease or of all or any portion of any
Property or of any part of any thereof or of any interest therein shall be valid
or effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or the Agent or any representative or agent of Lessor or the Agent, other
than a written acceptance, shall constitute an acceptance of any such surrender.
27.2 No Merger of Title.
There shall be no merger of this Lease or of the leasehold estate
created hereby by reason of the fact that the same Person may acquire, own or
hold, directly or indirectly, in whole or in part, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, (b) any right, title or interest in any Property, (c) any Notes, or (d)
a beneficial interest in Lessor.
ARTICLE XXVIII
28.1 Incorporation of Covenants.
Reference is made to the Lessee Credit Agreement and the
representations and warranties of Lessee contained in Section 3 of the Lessee
Credit Agreement (hereinafter referred to as the "Incorporated Representations
and Warranties") and the covenants contained in Sections 5 and 6 of the Lessee
Credit Agreement (hereinafter referred to as the "Incorporated Covenants").
Lessee agrees with Lessor that the Incorporated Representations and Warranties
and the Incorporated Covenants (and all other relevant provisions of the Lessee
Credit Agreement related thereto, including without limitation the defined terms
contained in Section 1 thereof which are used in the Incorporated
Representations and Warranties and the Incorporated Covenants, hereinafter
referred to as the "Additional Incorporated Terms") are hereby incorporated by
reference into this Lease to the same extent and with the same effect as if set
forth fully herein and shall inure to the benefit of Lessor as if Lessor were
expressly referenced therein as a beneficiary of each such provision, without
giving effect to any waiver, amendment, modification or replacement of the
Lessee Credit Agreement or any term or provision of the Incorporated
Representations and Warranties or the Incorporated Covenants occurring
subsequent to the date of this Lease, except to the extent otherwise
specifically provided in the following provisions of this paragraph. In the
event a waiver is granted under the Lessee Credit Agreement or an amendment or
modification is executed with respect to the Lessee Credit Agreement, and such
waiver, amendment and/or modification affects the Incorporated Representations
and Warranties, the Incorporated Covenants or the Additional Incorporated Terms,
then such waiver, amendment or modification shall be effective with respect to
the Incorporated Representations and Warranties, the Incorporated Covenants and
the Additional Incorporated Terms as incorporated by reference into this Lease
only if consented to in writing by the Agent (acting upon the direction of the
Majority Secured Parties). In the event of any replacement of the Lessee Credit
Agreement with a similar credit facility (the "New Facility") the
representations and warranties, covenants and additional terms contained in the
New Facility which correspond to the representations and warranties, covenants
contained in Section 3 and Sections 5 and 6, respectively, and such additional
terms (each of the foregoing contained in the Lessee Credit Agreement) shall
become the Incorporated Representations and Warranties, the Incorporated
Covenants and the Additional Incorporated Terms only if consented to in writing
by the Agent (acting upon the direction of the Majority Secured Parties) and, if
such consent is not granted or if the Lessee Credit Agreement is terminated and
not replaced, then the representations and warranties and covenants contained in
Section 3 and Sections 5 and 6, respectively, and such additional terms (each of
the foregoing contained in the Lessee Credit Agreement (together with any
modifications or amendments approved in accordance with this paragraph)) shall
continue to be the Incorporated Representations and Warranties, the Incorporated
Covenants and the Additional Incorporated Terms hereunder.
ARTICLE XXIX
29.1 Notices.
All notices required or permitted to be given under this Lease shall
be in writing and delivered as provided in the Participation Agreement.
ARTICLE XXX
30.1 Miscellaneous.
Anything contained in this Lease to the contrary notwithstanding, all
claims against and liabilities of Lessee or Lessor arising from events
commencing prior to the expiration or earlier termination of this Lease shall
survive such expiration or earlier termination. If any provision of this Lease
shall be held to be unenforceable in any jurisdiction, such unenforceability
shall not affect the enforceability of any other provision of this Lease and
such jurisdiction or of such provision or of any other provision hereof in any
other jurisdiction.
30.2 Amendments and Modifications.
Neither this Lease nor any Lease Supplement may be amended, waived,
discharged or terminated except in accordance with the provisions of Section
12.4 of the Participation Agreement.
30.3 Successors and Assigns.
All the terms and provisions of this Lease shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
30.4 Headings and Table of Contents.
The headings and table of contents in this Lease are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
30.5 Counterparts.
This Lease may be executed in any number of counterparts, each of
which shall be an original, but all of which shall together constitute one (1)
and the same instrument.
30.6 GOVERNING LAW.
THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, EXCEPT TO
THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR PROPERTY IS LOCATED ARE
REQUIRED TO APPLY.
30.7 Calculation of Rent.
All calculation of Rent payable hereunder shall be computed based on
the actual number of days elapsed over a year of three hundred sixty (360) days
or, to the extent such Rent is based on the Prime Lending Rate, three hundred
sixty-five (365) (or three hundred sixty-six (366), as applicable) days.
30.8 Memoranda of Lease and Lease Supplements.
This Lease shall not be recorded; provided, Lessor and Lessee shall
promptly record (a) a memorandum of this Lease and the applicable Lease
Supplement (in substantially the form of Exhibit B attached hereto) or a short
form lease (in form and substance reasonably satisfactory to Lessor) regarding
each Property promptly after the acquisition thereof in the local filing office
with respect thereto, in all cases at Lessee's cost and expense, and as required
under applicable law to sufficiently evidence this Lease and any such Lease
Supplement in the applicable real estate filing records.
30.9 Allocations between the Lenders and the Holders.
Notwithstanding any other term or provision of this Lease to the
contrary, the allocations of the proceeds of the Properties and any and all
other Rent and other amounts received hereunder shall be subject to the
inter-creditor provisions between the Lenders and the Holders contained in the
Operative Agreements (or as otherwise agreed among the Lenders and the Holders
from time to time).
30.10Limitations on Recourse.
Notwithstanding anything contained in this Lease to the contrary,
Lessee agrees to look solely to Lessor's estate and interest in the Properties
(and in no circumstance to the Agent, the Lenders, the Holders or otherwise to
Lessor) for the collection of any judgment requiring the payment of money by
Lessor in the event of liability by Lessor, and no other property or assets of
Lessor or any shareholder, owner or partner (direct or indirect) in or of
Lessor, or any director, officer, employee, beneficiary or Affiliate of any of
the foregoing shall be subject to levy, execution or other enforcement procedure
for the satisfaction of the remedies of Lessee under or with respect to this
Lease, the relationship of Lessor and Lessee hereunder or Lessee's use of the
Properties or any other liability of Lessor to Lessee. Nothing in this Section
shall be interpreted so as to limit the terms of Sections 6.1 or 6.2 or the
provisions of Section 12.9 of the Participation Agreement.
30.11WAIVERS OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE
FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LEASE AND FOR ANY COUNTERCLAIM
THEREIN.
30.12Exercise of Lessor Rights.
Lessee hereby acknowledges and agrees that the rights and powers of
Lessor under this Lease have been assigned to the Agent pursuant to the terms of
the Security Agreement and the other Operative Agreements. Lessor and Lessee
hereby acknowledge and agree that (a) the Agent shall, in its discretion, direct
and/or act on behalf of Lessor pursuant to the provisions of Sections 8.2(h) and
8.6 of the Participation Agreement, (b) all notices to be given to Lessor shall
be given to the Agent and (c) all notices to be given by Lessor may be given by
the Agent, at its election.
30.13SUBMISSION TO JURISDICTION; VENUE.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING
TO SUBMISSION TO JURISDICTION, VENUE ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
30.14USURY SAVINGS PROVISION.
IT IS THE INTENT OF THE PARTIES HERETO TO CONFORM TO AND CONTRACT IN
STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. TO THE
EXTENT ANY RENT OR PAYMENTS HEREUNDER ARE HEREINAFTER CHARACTERIZED BY ANY COURT
OF COMPETENT JURISDICTION AS THE REPAYMENT OF PRINCIPAL AND INTEREST THEREON,
THIS SECTION 30.14 SHALL APPLY. ANY SUCH RENT OR PAYMENTS SO CHARACTERIZED AS
INTEREST MAY BE REFERRED TO HEREIN AS "INTEREST." ALL AGREEMENTS AMONG THE
PARTIES HERETO ARE HEREBY LIMITED BY THE PROVISIONS OF THIS PARAGRAPH WHICH
SHALL OVERRIDE AND CONTROL ALL SUCH AGREEMENTS, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WRITTEN OR ORAL. IN NO WAY, NOR IN ANY EVENT OR
CONTINGENCY (INCLUDING WITHOUT LIMITATION PREPAYMENT OR ACCELERATION OF THE
MATURITY OF ANY OBLIGATION), SHALL ANY INTEREST TAKEN, RESERVED, CONTRACTED FOR,
CHARGED, OR RECEIVED UNDER THIS LEASE OR OTHERWISE, EXCEED THE MAXIMUM
NONUSURIOUS AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY POSSIBLE
CONSTRUCTION OF ANY OF THE OPERATIVE AGREEMENTS OR ANY OTHER DOCUMENT OR
AGREEMENT, INTEREST WOULD OTHERWISE BE PAYABLE IN EXCESS OF THE MAXIMUM
NONUSURIOUS AMOUNT, ANY SUCH CONSTRUCTION SHALL BE SUBJECT TO THE PROVISIONS OF
THIS PARAGRAPH AND SUCH AMOUNTS UNDER SUCH DOCUMENTS OR AGREEMENTS SHALL BE
AUTOMATICALLY REDUCED TO THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED UNDER
APPLICABLE LAW, WITHOUT THE NECESSITY OF EXECUTION OF ANY AMENDMENT OR NEW
DOCUMENT OR AGREEMENT. IF LESSOR SHALL EVER RECEIVE ANYTHING OF VALUE WHICH IS
CHARACTERIZED AS INTEREST WITH RESPECT TO THE OBLIGATIONS OWED HEREUNDER OR
UNDER APPLICABLE LAW AND WHICH WOULD, APART FROM THIS PROVISION, BE IN EXCESS OF
THE MAXIMUM LAWFUL AMOUNT, AN AMOUNT EQUAL TO THE AMOUNT WHICH WOULD HAVE BEEN
EXCESSIVE INTEREST SHALL, WITHOUT PENALTY, BE APPLIED TO THE REDUCTION OF THE
COMPONENT OF PAYMENTS DEEMED TO BE PRINCIPAL AND NOT TO THE PAYMENT OF INTEREST,
OR REFUNDED TO LESSEE OR ANY OTHER PAYOR THEREOF, IF AND TO THE EXTENT SUCH
AMOUNT WHICH WOULD HAVE BEEN EXCESSIVE EXCEEDS THE COMPONENT OF PAYMENTS DEEMED
TO BE PRINCIPAL. THE RIGHT TO DEMAND PAYMENT OF ANY AMOUNTS EVIDENCED BY ANY OF
THE OPERATIVE AGREEMENTS DOES NOT INCLUDE THE RIGHT TO RECEIVE ANY INTEREST
WHICH HAS NOT OTHERWISE ACCRUED ON THE DATE OF SUCH DEMAND, AND LESSOR DOES NOT
INTEND TO CHARGE OR RECEIVE ANY UNEARNED INTEREST IN THE EVENT OF SUCH DEMAND.
ALL INTEREST PAID OR AGREED TO BE PAID TO LESSOR SHALL, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BE AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE
FULL STATED TERM (INCLUDING WITHOUT LIMITATION ANY RENEWAL OR EXTENSION) OF THIS
LEASE SO THAT THE AMOUNT OF INTEREST ON ACCOUNT OF SUCH PAYMENTS DOES NOT EXCEED
THE MAXIMUM NONUSURIOUS AMOUNT PERMITTED BY APPLICABLE LAW.
[signature page follows]
<PAGE>
Lease Agreement
Centennial Real Estate Trust 1998-1
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By:/s/ Val T. Orton
Name: Val T. Orton
Title: V.P.
CENTENNIAL HEALTHCARE CORPORATION,
as the Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: E.V.P.
Receipt of this original
counterpart of the foregoing
Lease is hereby acknowledged
as the date hereof
NATIONSBANK, N.A.,
as the Agent
By:/d/ J. Walter Bland
Name: J.W. Bland
Title: V.P.
<PAGE>
EXHIBIT A TO THE LEASE
LEASE SUPPLEMENT NO. ___
THIS LEASE SUPPLEMENT NO. ___ (this "Lease Supplement") dated as of
[________________] between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and [a
legal description of the Land / a copy of the Ground Lease] attached hereto as
Schedule 1-C. Effective upon the execution and delivery of this Lease Supplement
by Lessor and Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease. Without further action, any and all additional
Equipment funded under the Operative Agreements and any and all additional
Improvements made to the Land shall be deemed to be titled to the Lessor and
subject to the terms and conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By:
Name:
Title:
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By:
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By:
Name:
Title:
<PAGE>
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the undersigned
Notary Public, in the County of _________________ this _____ day of
______________, by ________________, as __________________ of FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not individually,
but solely as the Owner Trustee under the Centennial Real Estate Trust 1998-1,
on behalf of the Owner Trustee.
[Notarial Seal]
Notary Public
My commission expires:____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the undersigned
Notary Public, in the County of _________________ this _____ day of
______________, by ________________, as __________________ of CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, on behalf of the corporation.
[Notarial Seal]
Notary Public
My commission expires:____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the undersigned
Notary Public, in the County of ________________ this ____ day of ___________,
by _____________, as __________________ of NATIONSBANK, N.A., a national banking
association, as the Agent.
[Notarial Seal]
Notary Public
My commission expires:____________
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. ____
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. ____
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. ____
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. ____
[(Land)/
(Ground Lease)]
<PAGE>
B-5
EXHIBIT B TO THE LEASE
[MODIFY OR SUBSTITUTE SHORT FORM LEASE AS
NECESSARY FOR LOCAL LAW REQUIREMENTS]
Recordation requested by:
Moore & Van Allen, PLLC
After recordation return to:
Moore & Van Allen, PLLC (WMA)
100 North Tryon Street, Floor 47
Charlotte, NC 28202-4003
Space above this line
for Recorder's use
MEMORANDUM OF LEASE AGREEMENT
AND
LEASE SUPPLEMENT NO. _____________
THIS MEMORANDUM OF LEASE AGREEMENT AND LEASE SUPPLEMENT NO. ____________
("Memorandum"), dated as of _____________, 1998, is by and between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually, but solely as the Owner Trustee under the Centennial Real Estate
Trust 1998-1, with an office at 79 South Main Street, Salt Lake City, Utah 84111
(hereinafter referred to as "Lessor") and CENTENNIAL HEALTHCARE CORPORATION, a
Georgia corporation, with an office at 400 Perimeter Center Terrace, Suite 650,
Atlanta, Georgia, 30346 (hereinafter referred to as "Lessee").
WITNESSETH:
That for value received, Lessor and Lessee do hereby covenant, promise and
agree as follows:
1. Demised Premises and Date of Lease. Lessor has leased to Lessee, and
Lessee has leased from Lessor, for the Term (as hereinafter defined), certain
real property and other property located in ________________, which is described
in the attached Schedule 1 (the "Property"), pursuant to the terms of a Lease
Agreement between Lessor and Lessee dated as of July 29, 1998 (as such may be
amended, modified, extended, supplemented, restated and/or replaced from time to
time, "Lease") and a Lease Supplement No. _____ between Lessor and Lessee dated
as of ______________ (the "Lease Supplement").
2. Term, Renewal, Extension and Purchase Option. The term of the Lease for
the Property ("Term") commenced as of __________, 19__ and shall end as of
_________, 19__, unless the Term is extended or earlier terminated in accordance
with the provisions of the Lease. The Lease contains provisions for renewal and
extension. The tenant has a purchase option under the Lease.
3. Tax Payer Numbers.
Lessor's tax payer number: __________________.
Lessee's tax payer number: ____________________.
4. Mortgage; Power of Sale. Without limiting any other remedies set forth
in the Lease, in the event that a court of competent jurisdiction rules that the
Lease constitutes a mortgage, deed of trust or other secured financing as is the
intent of the parties, then Lessor and Lessee agree that Lessee has granted,
pursuant to the terms of the Lease and the Lease Supplement, a Lien against the
Property WITH POWER OF SALE, and that, upon the occurrence and during the
continuance of any Lease Event of Default, Lessor shall have the power and
authority, to the extent provided by law, after prior notice and lapse of such
time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Property.
5. Effect of Memorandum. The purpose of this instrument is to give notice
of the Lease and the Lease Supplement and their respective terms, covenants and
conditions to the same extent as if the Lease and the Lease Supplement were
fully set forth herein. This Memorandum shall not modify in any manner the
terms, conditions or intent of the Lease or the Lease Supplement and the parties
agree that this Memorandum is not intended nor shall it be used to interpret the
Lease or the Lease Supplement or determine the intent of the parties under the
Lease or the Lease Supplement.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this instrument
as of the day and year first written.
LESSOR:
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust
1998-1
By:
Name:
Title:
LESSEE:
CENTENNIAL HEALTHCARE CORPORATION
By:
Name:
Title:
<PAGE>
SCHEDULE 1
(Description of Property)
<PAGE>
[CONFORM TO STATE LAW REQUIREMENTS]
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Memorandum of Lease Agreement and Lease Supplement No. _____
was acknowledged before me, the undersigned Notary Public, in the County of
_________________ this _____ day of ______________, by ________________, as
__________________ of FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, on behalf of the Owner Trustee.
[Notarial Seal]
Notary Public
My commission expires:____________
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
The foregoing Memorandum of Lease Agreement and Lease Supplement No. _____
was acknowledged before me, the undersigned Notary Public, in the County of
_________________ this _____ day of ______________, by ________________, as
__________________ of CENTENNIAL HEALTHCARE CORPORATION, a Georgia corporation,
on behalf of the corporation.
[Notarial Seal]
Notary Public
My commission expires:____________
AGENCY AGREEMENT
Dated as of July 29, 1998
between
CENTENNIAL HEALTHCARE CORPORATION,
as the Construction Agent
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1,
as the Lessor
<PAGE>
i
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; RULES OF USAGE............................2
1.1 Definitions.............................................2
1.2 Interpretation..........................................2
ARTICLE II APPOINTMENT OF THE CONSTRUCTION AGENT.................2
2.1 Appointment.............................................2
2.2 Acceptance and Undertaking..............................3
2.3 Term....................................................3
2.4 Scope of Authority......................................3
2.5 Delegation of Duties....................................4
2.6 Covenants of the Construction Agent.....................4
ARTICLE III THE PROPERTIES.......................................6
3.1 Construction............................................6
3.2 Amendments; Modifications...............................6
3.3 Failure to Complete Construction Period Properties and
Purchase Obligation......................................7
ARTICLE IV PAYMENT OF FUNDS......................................8
4.1 Right to Receive Construction Cost......................8
ARTICLE V EVENTS OF DEFAULT......................................8
5.1 Events of Default.......................................8
5.2 Damages.................................................9
5.3 Remedies; Remedies Cumulative...........................9
ARTICLE VI THE LESSOR'S RIGHTS..................................11
6.1 Exercise of the Lessor's Rights........................11
6.2 The Lessor's Right to Cure the Construction Agent's
Defaults................................................11
ARTICLE VII MISCELLANEOUS.......................................11
7.1 Notices................................................11
7.2 Successors and Assigns.................................11
7.3 GOVERNING LAW..........................................12
7.4 SUBMISSION TO JURISDICTION; VENUE; WAIVERS.............12
7.5 Amendments and Waivers.................................12
7.6 Counterparts...........................................12
7.7 Severability...........................................12
7.8 Headings and Table of Contents.........................12
7.9 WAIVER OF JURY TRIAL...................................12
<PAGE>
AGENCY AGREEMENT
THIS AGENCY AGREEMENT, dated as of July 29, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, the
"Agreement"), between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association ("FSB"), not individually, but solely as Owner Trustee under
the Centennial Real Estate Trust 1998-1 (the "Lessor") and CENTENNIAL HEALTHCARE
CORPORATION, a Georgia corporation (the "Construction Agent").
PRELIMINARY STATEMENT
A. The Lessor and the Construction Agent are parties to that certain Lease
Agreement dated as of even date herewith (as amended, modified, extended,
supplemented, restated and/or replaced from time to time, the "Lease"), pursuant
to which the Construction Agent, as lessee (in such capacity, the "Lessee") has
agreed to lease certain Land, Improvements and Equipment and/or to sublease a
ground leasehold in certain Properties subject to one (1) or more Ground Leases
from the Lessor.
B. In connection with the execution and delivery of the Participation
Agreement, the Lease and the other Operative Agreements, and subject to the
terms and conditions hereof, (i) the Lessor desires to appoint the Construction
Agent as its sole and exclusive agent in connection with the identification and
acquisition or ground lease of the Properties (provided, title to the Properties
shall be held in the name of the Lessor, except that the interest of the Lessor
in certain of the Properties shall be a ground leasehold interest pursuant to
one (1) or more Ground Leases, if requested by the Construction Agent) and the
development, acquisition, installation, construction and testing of the
Improvements and the Equipment in accordance with the Plans and Specifications
and (ii) the Construction Agent desires, for the benefit of the Lessor, to
identify and acquire or ground lease the Properties and to cause the
development, acquisition, installation, construction and testing of the
Improvements, the Equipment and the other components of the Properties in
accordance with the Plans and Specifications and to undertake such other
liabilities and obligations as are herein set forth.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS; RULES OF USAGE
1.1 Definitions.
For purposes of this Agreement, capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned to
them in Appendix A to that certain Participation Agreement dated as of July 29,
1998 (as amended, modified, extended, supplemented, restated and/or replaced
from time to time in accordance with the applicable provisions thereof, the
"Participation Agreement") among the Construction Agent, the various parties
thereto from time to time, as Guarantors, the Lessor, the various banks and
lending institutions parties thereto from time to time, as Holders, the various
banks and lending institutions parties thereto from time to time, as Lenders,
First Union Capital Markets, a division of Wheat First Securities, Inc., as
Syndication Agent, and NationsBank, N.A., as agent for the Lenders and
respecting the Security Documents, as agent for the Lenders and the Holders, to
the extent of their interests. Unless otherwise indicated, references in this
Agreement to articles, sections, paragraphs, clauses, appendices, schedules and
exhibits are to the same contained in this Agreement.
1.2 Interpretation.
The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Agreement.
ARTICLE II
APPOINTMENT OF THE CONSTRUCTION AGENT
2.1 Appointment.
Subject to the terms and conditions hereof, the Lessor hereby irrevocably
designates and appoints the Construction Agent as its exclusive agent, and the
Construction Agent accepts such appointment, in connection with the
identification and acquisition from time to time of the Properties (provided,
title to the Properties shall be held in the name of the Lessor, except that the
interest of the Lessor in certain Properties shall be a ground leasehold
interest pursuant to one (1) or more Ground Leases if requested by the
Construction Agent) and the development, acquisition, installation, construction
and testing of the Improvements, the Equipment and the other components of the
Properties in accordance with the Plans and Specifications on the Land, and
pursuant to the terms of the Operative Agreements. Notwithstanding any
provisions hereof or in any other Operative Agreement to the contrary, the
Construction Agent acknowledges and agrees that the Lessor shall advance no more
than the sum of the aggregate Lender Commitment of the Lenders plus the
aggregate amount of the Holder Commitments of the Holders in regard to the
Properties (including without limitation for any and all Advances in the
aggregate from the Lenders under the Credit Agreement and from the Holders under
the Trust Agreement).
2.2 Acceptance and Undertaking.
The Construction Agent hereby unconditionally accepts the agency
appointment and undertakes, for the benefit of the Lessor, to identify and
acquire certain Properties (provided, title to the Properties shall be held in
the name of the Lessor, except that the interest of the Lessor in certain
Properties shall be a ground leasehold interest pursuant to one (1) or more
Ground Leases if requested by the Construction Agent) and the development,
acquisition, installation, construction and testing of the Improvements, the
Equipment and the other components of the Properties in accordance with the
Plans and Specifications and the Operative Agreements.
2.3 Term.
This Agreement shall commence on the date hereof and shall terminate on
the Construction Period Termination Date.
2.4 Scope of Authority.
(a) The Lessor hereby expressly authorizes the Construction Agent, or
any agent or contractor of the Construction Agent, and the Construction
Agent unconditionally agrees for the benefit of the Lessor, subject to
Section 2.4(b), to take all action necessary or desirable for the
performance and satisfaction of any and all of the Lessor's obligations
under any construction agreement and to fulfill all of the obligations of
the Construction Agent including without limitation:
(i) the identification and assistance with the acquisition of
Properties in accordance with the terms and conditions of the
Participation Agreement;
(ii) all design and supervisory functions relating to the
development, acquisition, installation, construction and testing of
the related Improvements, Equipment and other components of the
applicable Property and performing all engineering work related
thereto;
(iii)(A) negotiating, entering into, performing and enforcing
all contracts and arrangements to acquire or ground lease the
Properties and to procure the equipment necessary to construct the
Properties and (B) negotiating, executing, performing and enforcing
all contracts and arrangements to develop, acquire, install,
construct and test the Improvements, the Equipment and the other
components of the Properties on such terms and conditions as are
customary and reasonable in light of local and national standards and
practices and the businesses in which the Lessee is engaged;
(iv) obtaining all necessary permits, licenses, consents,
approvals, entitlements and other authorizations, including without
limitation all of the foregoing required for the Properties and the
use and occupancy thereof and those required under applicable Law
(including without limitation Environmental Laws), from all
Governmental Authorities in connection with the development,
acquisition, installation, construction and testing of the
Improvements, the Equipment and the other components of the
Properties in accordance with the Plans and Specifications;
(v) maintaining all books and records with respect to the
Properties and the construction, operation and management thereof;
and
(vi) performing any other acts necessary in connection with the
identification and acquisition or ground leasing of the Properties
and the development, acquisition, installation, construction and
testing of the related Improvements, Equipment and all other
additional components of the Properties in accordance with the Plans
and Specifications.
(b) Neither the Construction Agent nor any of its Affiliates or
agents shall enter into any contract or consent to any contract in the
name of the Lessor without the Lessor's prior written consent, such
consent to be given or withheld in the exercise of the Lessor's reasonable
discretion; provided, however, that (i) no such contract will increase the
obligations of the Lessor beyond the obligations of the Lessor as are
expressly set forth in the Operative Agreements and (ii) each such
contract shall be expressly non-recourse to the Lessor on terms and
conditions that are reasonably acceptable to the Lessor.
(c) Subject to the terms and conditions of this Agreement and the
other Operative Agreements, the Construction Agent shall have sole
management and control over the installation, construction and testing
means, methods, sequences and procedures with respect to the Properties.
2.5 Delegation of Duties
The Construction Agent may execute any of its duties under this Agreement
by or through agents, contractors, employees or attorneys-in-fact; provided,
however, that no such delegation shall limit or reduce in any way the
Construction Agent's duties and obligations under this Agreement.
2.6 Covenants of the Construction Agent.
The Construction Agent hereby covenants and agrees that it will:
(a) following the Construction Commencement Date for each Property,
cause the development, acquisition, installation, construction and testing
of such Property to be prosecuted in a good and workmanlike manner, and
respecting each Property in substantial accordance with the applicable
Plans and Specifications, the Construction Budget, the applicable
contracts relating to the Improvements, the Equipment, other components of
such Property and procurement of construction materials, the applicable
construction contracts, the applicable construction schedule, prevalent
industry practices and otherwise in accordance with Section 3.1 hereof;
(b) not commence construction with respect to any Improvements
budgeted to exceed $500,000 on a date that is within six (6) months prior
to the Construction Period Termination Date;
(c) cause the Completion Date for any Improvements to occur on or
before the earlier of (i) the date that is twelve (12) months after the
initial Construction Advance made in connection with such Improvements or
(ii) the Construction Period Termination Date, in each case free and clear
(by removal or bonding) of Liens (other than Permitted Liens and Lessor
Liens) or claims for materials supplied or labor or services performed in
connection with the development, acquisition, installation, construction
or testing thereof;
(d) cause all outstanding punch list items with respect to such
Improvements to be completed by the Completion Date;
(e) at all times subsequent to the initial Advance respecting a
Property (i) cause good and marketable title to the applicable Property to
vest in the Owner Trustee (except that the interest of the Lessor in
certain Properties shall be a ground leasehold interest pursuant to one
(1) or more Ground Leases if requested by the Construction Agent) (ii)
cause a valid, perfected, first priority Lien (other than Permitted Liens
and Lessor Liens) on the applicable Property to be in place in favor of
the Agent (for the benefit of the Lenders and the Holders), (iii) file all
necessary documents under the applicable real property law and Article 9
of the Uniform Commercial Code to perfect such title and Liens and (iv)
not permit Liens (other than Permitted Liens and Lessor Liens) to be filed
or maintained respecting the applicable Property;
(f) no less than five (5) Business Days prior to the scheduled date
for the initial Construction Advance to be made in connection with any
Property, the Construction Agent shall deliver to the Agent (for the
benefit of the Lessor) true, complete and correct copies of the
Construction Budget therefor. Thereafter, the Construction Agent, on a
monthly basis, shall deliver to the Lessor true, correct and complete
copies of any material modifications of the Construction Budget and
progress reports regarding the development, acquisition, installation,
construction and testing of the Properties;
(g) procure insurance for the Properties during the Construction
Period in accordance with the provisions of Article XIV of the Lease; and
(h) on or before the Construction Period Termination Date, cause the
Rent Commencement Date to occur with respect to all Properties or purchase
any such Properties for an amount equal to the sum referenced in Section
5.3(b) hereof and otherwise in compliance with the other terms and
provisions of the Operative Agreements.
ARTICLE III
THE PROPERTIES
3.1 Construction.
The Construction Agent shall cause the Improvements, the Equipment and all
other components of the Properties to be developed, acquired, installed,
constructed and tested in compliance with all Legal Requirements, all Insurance
Requirements, all manufacturer's specifications and standards and the standards
maintained by the Construction Agent for similar properties owned or operated by
the Construction Agent, unless non-compliance, individually or in the aggregate,
shall not have and could not be reasonably expected to have a Material Adverse
Effect.
3.2 Amendments; Modifications.
(a) The Construction Agent may at any time revise, amend or modify
(i) the Plans and Specifications without the consent of the Lessor;
provided, that any such amendment to the Plans and Specifications does not
(x) result in the Completion Date of the Improvements occurring on or
after the Construction Period Termination Date or (y) result in the cost
of all Improvements exceeding the amount specified in the Construction
Budget, as amended from time to time, or an amount equal to the sum of the
then Available Commitments plus the then Available Holder Commitments
(reduced by the amount, if any, necessary to pay for the cost of
construction and development of Improvements on other Properties which are
currently under construction but have not yet been completed (such amount
the "Unfunded Amount")), and (ii) the Construction Budget and enter into
any related amendments, modifications or supplements without the consent
of the Lessor; provided, that such revisions, amendments or modifications
to the Plans and Specifications or related amendments, modifications or
supplements to the Construction Budget do not result in any increase in
total Property Costs greater than the amount specified in the Construction
Budget, as amended from time to time, or the then Available Commitments
and Available Holder Commitment (reduced by the Unfunded Amount).
(b) The Construction Agent agrees that it will not implement any
revision, amendment or modification to the Plans and Specifications for
any Property if the aggregate effect of such revision, amendment or
modification, when taken together with any previous or contemporaneous
revision, amendment or modification to the Plans and Specifications for
any Property, would cause a material reduction in value in excess of the
cost reduction of such revision, amendment or modification of the Property
when completed, unless such revision, amendment or modification is
required by Legal Requirements.
3.3 Failure to Complete Construction Period Properties and
Purchase Obligation.
If at any time prior to the Completion Date with respect to any
Construction Period Property (a) there occurs a Casualty, or Condemnation, the
proceeds from which exceed or are expected to exceed twenty-five percent (25%)
of the aggregate Construction Budget for such Construction Period Property or
that will prevent such Construction Period Property from being completed by the
Construction Period Termination Date, (b) there shall occur any Environmental
Violation which the Lessor deems, in its reasonable discretion, reasonably
likely to have a Material Adverse Effect (c) there shall occur a Force Majeure
Event which lasts beyond three (3) months or (d) the Construction Agent shall
abandon or permanently discontinue the construction and development of such
Construction Period Property (which abandonment or permanent discontinuance
shall be deemed to have occurred if no work at such Construction Period Property
site is undertaken or completed during a period of (i) thirty (30) days or more
for reasons other than a Force Majeure Event and (ii) three (3) months or more
if such is due to a Force Majeure Event), then the Construction Agent shall pay
to Lessor, on a date designated by the Lessor, an aggregate amount equal to the
liquidated damages amount referenced in Section 5.3(b) of this Agreement
regarding such Construction Period Property and on such date Lessor shall
transfer and convey to the Construction Agent all right, title and interest of
Lessor in and to such Construction Period Property. At the cost and expense of
the Construction Agent, the Lessor shall convey such Construction Period
Property "AS-IS, WHERE-IS" and in its then present physical condition to the
Construction Agent or its designee free and clear of Lessor Liens. If the
Construction Agent is not required to pay such liquidated damages, it shall
promptly and diligently complete the development, acquisition, refinancing,
installation, construction and testing of such Construction Period Property in
accordance with the Plans and Specifications and with the terms hereof and cause
the Completion Date with respect to such Construction Period Property to occur
on or prior to the Construction Period Termination Date. Any determination that
an Environmental Violation is immaterial for purposes of this Agreement shall
not limit the obligations of Lessee respecting such Environmental Violation
under the Lease.
ARTICLE IV
PAYMENT OF FUNDS
4.1 Right to Receive Construction Cost.
(a) In connection with the development, acquisition, installation,
construction and testing of any Property and during the course of the
construction of the Improvements on any Property, the Construction Agent
may request that the Lessor advance funds for the payment of Property
Acquisition Costs or other Property Costs, and the Lessor will comply with
such request to the extent provided for under the Participation Agreement.
The Construction Agent and the Lessor acknowledge and agree that the
Construction Agent's right to request such funds and the Lessor's
obligation to advance such funds for the payment of Property Acquisition
Costs or other Property Costs is subject in all respects to the terms and
conditions of the Participation Agreement and each of the other Operative
Agreements. Without limiting the generality of the foregoing it is
specifically understood and agreed that in no event shall the aggregate
amounts advanced by the Lenders and the Holders for Property Acquisition
Costs or other Property Costs and any other amounts due and owing
hereunder or under any of the other Operative Agreements exceed the sum of
the aggregate Lender Commitments plus the aggregate Holder Commitments,
including without limitation such amounts owing for (i) development,
acquisition, installation, construction and testing of the Properties,
(ii) additional amounts which accrue or become due and owing under the
Credit Agreement or Trust Agreement as obligations of the Lessor prior to
any Completion Date or (iii) any other purpose.
(b) The proceeds of any funds made available to the Lessor to pay
Property Acquisition Costs or other Property Costs shall be made available
to the Construction Agent in accordance with the Requisition relating
thereto and the terms of the Participation Agreement. The Construction
Agent will use such proceeds only to pay the Property Acquisition Costs or
other Property Costs set forth in the Requisition relating to such funds.
ARTICLE V
EVENTS OF DEFAULT
5.1 Events of Default.
If any one (1) or more of the following events (each an "Event of
Default") shall occur:
(a) the Construction Agent fails to apply any funds paid by the
Lessor to the Construction Agent in a manner consistent with the
requirements of the Operative Agreements and consistent with the
applicable Requisition for the development, acquisition, installation,
construction and testing of the Properties and related Improvements and
Equipment or otherwise respecting the Properties to the payment of
Property Acquisition Costs or other Property Costs;
(b) the Completion Date with respect to any Property shall fail to
occur for any reason on or prior to the Construction Period Termination
Date;
(c) any Event of Default (as such term is defined in Appendix A to
the Participation Agreement) shall have occurred and not be cured within
any cure period expressly permitted under the terms of the applicable
Operative Agreement; and
(d) any representation or warranty made by the Construction Agent or
any other Credit Party set forth in this Agreement (including without
limitation the Incorporated Representations and Warranties) or in any
other Operative Agreement or in any document entered into in connection
herewith or therewith or in any document, certificate or financial or
other statement delivered in connection herewith or therewith shall be
false or inaccurate in any material way when made; or Construction Agent
or any other Credit Party shall fail to observe or perform any term,
covenant or condition of any Operative Agreement other than as set forth
in paragraphs (a), (b) or (c) of this Section 5.1 and such failure to
observe or perform any such term, covenant or condition shall continue for
more than twenty (20) days after notice thereof to the Construction Agent;
then, in any such event, the Lessor may, in addition to the other rights and
remedies provided for in this Agreement, terminate this Agreement by giving the
Construction Agent written notice of such termination and upon the expiration of
the time fixed in such notice and the payment of all amounts owing by the
Construction Agent hereunder (including without limitation any amounts specified
under Section 5.3 hereof), this Agreement shall terminate. The Construction
Agent shall pay all costs and expenses incurred by or on behalf of the Lessor,
including without limitation reasonable fees and expenses of outside counsel, as
a result of any Event of Default hereunder.
5.2 Damages.
The termination of this Agreement pursuant to Section 5.1 shall in no
event relieve the Construction Agent of its liability and obligations hereunder,
all of which shall survive any such termination.
5.3 Remedies; Remedies Cumulative.
(a) If an Event of Default shall have occurred and be continuing, the
Lessor shall have all rights available to the Lessor under the Lease and
the other Operative Agreements and all other rights otherwise available at
law, equity or otherwise.
(b) Upon the occurrence of an Event of Default, the Lessor shall have
(in addition to its rights otherwise described in this Agreement or
existing at law, equity or otherwise) the option (and shall be deemed
automatically, and without any further action, to have exercised such
option upon the occurrence of any Lease Event of Default arising under
Sections 17.1(g), (h) or (i) of the Lease) to transfer and convey to the
Construction Agent upon a date designated by the Lessor all right, title
and interest of the Lessor in and to any Property or Properties (including
without limitation any Land and/or any Improvements, any interest in any
Improvements, any Equipment and any Property then under construction) for
which the Rent Commencement Date has not yet occurred (a "Construction
Period Property"). On any transfer and conveyance date specified by the
Lessor pursuant to this Section 5.3(b), (i) the Lessor shall transfer and
convey (at the cost of the Construction Agent) all right, title and
interest of the Lessor in and to any or all such Construction Period
Properties free and clear of the Lien of the Lease and all Lessor Liens,
(ii) the Construction Agent hereby covenants and agrees that it will
accept such transfer and conveyance of right, title and interest in and to
the respective Construction Period Property or Construction Period
Properties and (iii) the Construction Agent hereby promises to pay to the
Lessor, as liquidated damages (it being agreed that it would be impossible
accurately to determine actual damages), an aggregate amount equal to the
Termination Value of any or all such Construction Period Properties. The
Construction Agent specifically acknowledges and agrees that its
obligations under this Section 5.3(b), including without limitation its
obligations to accept the transfer and conveyance of Construction Period
Properties and its payment obligations described in subparagraph (iii) of
this Section 5.3(b), shall be absolute and unconditional under any and all
circumstances and shall be performed and/or paid, as the case may be,
without notice or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever. Notwithstanding
the foregoing provisions of this Section 5.3(b), the Lessor shall have the
right in its sole discretion to rescind any exercise of its option under
this Section 5.3(b) upon the giving of its written confirmation of such
rescission to the Construction Agent on or prior to the earlier to occur
of (a) the actual date of transfer and (b) the date one hundred and twenty
(120) days after the date the Lessor has given notice of its intent to
transfer and convey any Property to the Construction Agent as referenced
above in this Section 5.3(b).
(c) The Construction Agent shall have the right to cure an Event of
Default hereunder with respect to any given Property by purchasing such
Property from the Lessor (to the extent such Event of Default is no longer
continuing with respect to any other Property remaining subject to this
Agreement after such purchase) for an amount equal to the liquidated
damages amount set forth in Section 5.3(b) of this Agreement.
(d) No failure to exercise and no delay in exercising, on the part of
the Lessor, any right, remedy, power or privilege under this Agreement or
under the other Operative Agreements shall operate as a waiver thereof;
nor shall any single or partial exercise of any right remedy, power or
privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
ARTICLE VI
THE LESSOR'S RIGHTS
6.1 Exercise of the Lessor's Rights.
Subject to the Excepted Payments, the Construction Agent and the Lessor
hereby acknowledge and agree that, subject to and in accordance with the terms
of the Security Agreement made by the Lessor in favor of the Agent, the rights
and powers of the Lessor under this Agreement have been assigned to the Agent.
6.2 The Lessor's Right to Cure the Construction Agent's
Defaults.
The Lessor, without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) remedy any Event of Default
for the account of and at the sole cost and expense of the Construction Agent.
All out-of-pocket costs and expenses so incurred (including without limitation
fees and expenses of counsel), together with interest thereon at the Overdue
Rate from the date on which such sums or expenses are paid by the Lessor, shall
be paid by the Construction Agent to the Lessor on demand.
ARTICLE VII
MISCELLANEOUS
7.1 Notices.
All notices required or permitted to be given under this Agreement shall
be in writing and delivered as provided in Section 12.2 of the Participation
Agreement.
7.2 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
Lessor, the Construction Agent and their respective successors and the assigns
of the Lessor. The Construction Agent may not assign this Agreement or any of
its rights or obligations hereunder or with respect to any Property in whole or
in part to any Person without the prior written consent of the Agent, the
Lenders, the Holders and the Lessor.
7.3 GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
7.4 SUBMISSION TO JURISDICTION; VENUE; WAIVERS.
THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
7.5 Amendments and Waivers.
This Agreement may not be terminated, amended, supplemented, waived or
modified except in accordance with the provisions of Section 12.4 of the
Participation Agreement.
7.6 Counterparts.
This Agreement may be executed in any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one (1)
and the same instrument.
7.7 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
7.8 Headings and Table of Contents.
The headings and table of contents contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7.9 WAIVER OF JURY TRIAL.
TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, THE LESSOR AND THE
CONSTRUCTION AGENT IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND ANY COUNTERCLAIM
THEREUNDER.
[signature page follows]
<PAGE>
Agency Agreement
Centennial Real Estate Trust 1998-1
Agency Agreement
Centennial Real Estate Trust 1998-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
CENTENNIAL HEALTHCARE CORPORATION,
as the Construction Agent
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: V.P.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as Owner Trustee under
the Centennial Real Estate Trust 1998-1, as the
Lessor
By:/s/ Val T. Orton
Name:Val T. Orton
Title: V.P.
SECURITY AGREEMENT
Dated as of July 29, 1998
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, but solely as the Owner Trustee under
the Centennial Real Estate Trust 1998-1
and
NATIONSBANK, N.A.,
as the Agent for the Lenders and the Holders
and accepted and agreed to by
CENTENNIAL HEALTHCARE CORPORATION
<PAGE>
TABLE OF CONTENTS
1. Definitions..............................................2
2. Grant of Security Interest...............................3
3. Payment of Obligations...................................6
4. Other Covenants..........................................6
5. Default; Remedies........................................6
6. Remedies Not Exclusive...................................7
7. Performance by the Agent of the Borrower's Obligations...7
8. Duty of the Agent........................................7
9. Powers Coupled with an Interest..........................8
10. Execution of Financing Statements.......................8
11. Security Agreement Under Uniform Commercial Code........8
12. Authority of the Agent..................................9
13. Notices.................................................9
14. Severability............................................9
15. Amendment in Writing; No Waivers; Cumulative Remedies..10
16. Section Headings.......................................10
17. Successors and Assigns.................................10
18. The Borrower's Waiver of Rights........................10
19. GOVERNING LAW..........................................11
20. Obligations Are Without Recourse.......................11
21. Partial Release; Full Release..........................11
22. Miscellaneous..........................................11
23. Conflicts with Participation Agreement.................12
24. LESSEE AS A PARTY......................................12
<PAGE>
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of July 29, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, this
"Security Agreement"), is made between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not individually, but solely as
Owner Trustee under the Centennial Real Estate Trust 1998-1 (the "Borrower"),
and NATIONSBANK, N.A., a national banking association ("Bank"), as agent for (a)
the Lenders (hereinafter defined) under the Credit Agreement dated as of July
29, 1998 (as amended, modified, extended, supplemented, restated and/or replaced
from time to time, the "Credit Agreement") by and among the Borrower, the
lending institutions from time to time parties thereto (the "Lenders") and Bank
as the agent for the Lenders and (b) the holders of the certificates issued
pursuant to the Trust Agreement dated as of July 29, 1998 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, the "Trust
Agreement") among the holders from time to time parties thereto (the "Holders")
and the Borrower, in its individual capacity thereunder and in its capacity as
Owner Trustee thereunder. The Lenders and the Holders, together with their
successors and permitted assigns, are collectively referred to hereinafter as
the "Secured Parties." Bank, in its capacity as agent for the Secured Parties is
referred to hereinafter as the "Agent", and this Security Agreement is accepted
and agreed to by CENTENNIAL HEALTHCARE CORPORATION, a Georgia corporation.
Preliminary Statement
Pursuant to the Credit Agreement, the Lenders have severally agreed to
make Loans to the Borrower in an aggregate amount not to exceed $38,800,000
(subject to increase or decrease in accordance with the terms of the Operative
Agreements) upon the terms and subject to the conditions set forth therein, to
be evidenced by the Notes issued by the Borrower under the Credit Agreement.
Pursuant to the Trust Agreement, the Holders have agreed to purchase the
ownership interests of the Trust created thereby in an aggregate amount not to
exceed $1,200,000 (subject to increase or decrease in accordance with the terms
of the Operative Agreements) upon the terms and subject to the conditions set
forth therein, to be evidenced by the Certificates issued by the Borrower under
the Trust Agreement. The Borrower is, or shall be upon the date of the initial
Advance with respect to each Property, the legal and beneficial owner of such
Property (except the Borrower may have a ground leasehold interest in certain
Properties pursuant to one (1) or more Ground Leases).
It is a condition, among others, to the obligation of the Lenders to make
their respective Loans to the Borrower under the Credit Agreement and the
Holders to make their respective Holder Advances under the Trust Agreement that
the Borrower shall have executed and delivered this Security Agreement to the
Agent, for the benefit of the Lenders and the Holders.
NOW, THEREFORE, in consideration of the premises and to induce the Lenders
to make their respective Loans under the Credit Agreement and to induce the
Holders to make their respective Holder Advances under the Trust Agreement, the
Borrower hereby agrees with the Agent, for the benefit of the Lenders and the
Holders, as follows:
1. Definitions.
(a) As used herein, the following terms shall have the following
respective meanings:
"Accounts" shall mean all "accounts," as such term is defined in the
Uniform Commercial Code, now owned or hereafter acquired by the Borrower,
including without limitation (i) all accounts receivable, other
receivables, book debts and other forms of obligations now owned or
hereafter received or acquired by or belonging or owing to the Borrower,
whether arising out of goods sold or leased or services rendered by it or
from any other transaction (including without limitation any such
obligations which may be characterized as an account under the Uniform
Commercial Code), (ii) all of the Borrower's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for
goods or services, (iii) all of the Borrower's rights to any goods
represented by any of the foregoing (including without limitation unpaid
sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (iv) all
monies due or to become due to the Borrower under all purchase orders and
contracts for the sale or lease of goods or the performance of services or
both by the Borrower (whether or not yet earned by performance on the part
of the Borrower now) or hereafter in existence, including without
limitation the right to receive the proceeds of said purchase orders and
contracts, and (v) all collateral security and guarantees of any kind, now
or hereafter in existence, given by any Person with respect to any of the
foregoing.
"Chattel Paper" shall mean any and all "chattel paper," as such term
is defined in the Uniform Commercial Code, now owned or hereafter acquired
by the Borrower, wherever located.
"Documents" shall mean any and all "documents", as such term is
defined in the Uniform Commercial Code, now owned or hereafter acquired by
the Borrower, wherever located, including without limitation each bill of
lading, dock warrant, dock receipt, warehouse receipt or order for the
delivery of goods, and also any other document which in the regular course
of business or financing is treated as adequately evidencing that the
person in possession of it is entitled to receive, hold and dispose of the
document and the goods it covers.
"General Intangibles" shall mean any and all "general intangibles,"
as such term is defined in the Uniform Commercial Code, now owned or
hereafter acquired by the Borrower, including without limitation all
contracts, undertakings, or agreements in or under which the Borrower may
now or hereafter have any right (other than any right evidenced by Chattel
Paper, Documents or Instruments), title or interest, including without
limitation any agreements relating to the terms of payment or the terms of
performance of any Account.
"Holders" shall have the meaning specified in the first paragraph of
this Security Agreement.
"Instruments" shall mean any and all "instruments", as such term is
defined in the Uniform Commercial Code, now owned or hereafter acquired by
the Borrower, wherever located, including without limitation all
certificated securities, all certificates of deposit, and all notes and
other, without limitation, evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Investment Property" shall mean any and all "investment property,"
as such term is defined in the Uniform Commercial Code, now owned or
hereafter acquired by the Borrower, wherever located.
"Lenders" shall have the meaning specified in the first paragraph of
this Security Agreement.
"Lessee" shall mean Centennial Healthcare Corporation, a Georgia
corporation, its successors, permitted assigns and permitted transferees.
"Obligations" shall mean any and all obligations of the Borrower, now
existing or hereafter arising under the Credit Agreement, the Notes, the
Trust Agreement, the Certificates
and/or any other Operative Agreement.
(b) Capitalized terms used but not otherwise defined in this Security
Agreement shall have the respective meanings specified in the Credit
Agreement or Appendix A to the Participation Agreement dated as of July
29, 1998 (as amended, modified, extended, supplemented, restated and/or
replaced from time to time in accordance with the applicable provisions
thereof, the "Participation Agreement") among Lessee, the various parties
thereto from time to time, as guarantors, the Borrower, the Holders, the
Lenders, First Union Capital Markets, a division of Wheat First
Securities, Inc., as Syndication Agent, and NationsBank, N.A., as agent
for the Lenders and respecting the Security Documents, as agent for the
Lenders and the Holders, to the extent of their interests.
(c) The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Agreement.
2. Grant of Security Interest.
To secure payment of all the amounts advanced under the Credit Agreement
in connection with the Notes, all the amounts advanced or contributed under the
Trust Agreement in connection with the Certificates and all other amounts now or
hereafter owing to the Lenders, the Holders or the Agent thereunder or under any
other Operative Agreement, THE BORROWER HEREBY CONVEYS, GRANTS, ASSIGNS,
TRANSFERS, HYPOTHECATES, MORTGAGES AND SETS OVER TO THE AGENT FOR THE BENEFIT OF
THE SECURED PARTIES, A FIRST PRIORITY SECURITY INTEREST IN AND LIEN ON THE TRUST
ESTATE, WHETHER NOW EXISTING OR HEREAFTER ACQUIRED INCLUDING WITHOUT LIMITATION
THE FOLLOWING:
(a) all right, title and interest of the Borrower in and to the
Operative Agreements now existing or hereafter acquired by the
Borrower (including without limitation all rights to payment and
indemnity rights of the Borrower under the Participation Agreement)
(all of the foregoing in this paragraph (a) being referred to as the
"Rights in Operative Agreements");
(b) all right, title and interest of the Borrower
in and to all of the Equipment;
(c) all right, title and interest of the Borrower
in and to all of the Fixtures;
(d) all the estate, right, title, claim or demand whatsoever of
the Borrower, in possession or expectancy, in and to each Property,
Fixture or Equipment or any part thereof;
(e) all right, title and interest of the Borrower in and to all
substitutes, modifications and replacements of, and all additions,
accessions and improvements to, the Fixtures and Equipment,
subsequently acquired or leased by the Borrower or constructed,
assembled or placed by the Borrower on any Property, immediately upon
such acquisition, lease, construction, assembling or placement, and
in each such case, without any further conveyance, assignment or
other act by the Borrower;
(f) all right, title and interest of the Borrower in, to and
under books and records relating to or used in connection with the
operation of one (1) or more Properties or any part thereof; all
rights of the Borrower to the payment of money and all property; and
all rights in and to any causes of action or choses in action now or
hereafter existing in favor of the Borrower and all rights to any
recoveries therefrom;
(g) all right, title and interest of the Borrower in and to all
unearned premiums under insurance policies now held or subsequently
obtained by the Lessee relating to one (1) or more Properties and the
Borrower's interest in and to all proceeds of any insurance policies
maintained by or for the benefit of the Borrower, including without
limitation any right to collect and receive such proceeds; and all
awards and other compensation, including without limitation the
interest payable thereon and any right to collect and receive the
same, made to the present or any subsequent owner of any Property for
the taking by eminent domain, condemnation or otherwise, of all or
any part of any Property or any easement or other right therein;
(h) all right, title and interest of the Borrower in and to (i)
all consents, licenses, certificates and other governmental approvals
relating to construction, completion, use or operation of any
Property or any part thereof and (ii) all Plans and Specifications
relating to any Property;
(i) all right, title and interest of the Borrower in and to all
Rent and all other rents, payments, purchase prices, receipts,
revenues, issues and profits payable under the Lease or pursuant to
any other lease with respect to any Property;
(j) all right, title and interest of the Borrower in and to all
Instruments and Documents;
(k) all right, title and interest of the Borrower in and to all
General Intangibles;
(l) all right, title and interest of the Borrower in and to all
Chattel Paper (including without limitation all rights under the
Lease) and each Ground Lease;
(m) all right, title and interest of the Borrower in and to all
money, cash or cash equivalent and bank accounts (including
specifically without limitation any amounts held by the Agent or any
escrow agent on behalf of the Borrower as referred to in Section
5.2(d) of the Participation Agreement);
(n) all right, title and interest of the Borrower
in and to all Accounts;
(o) all right, title and interest of the Borrower in and to all
proceeds of letters of credit issued in favor of the Borrower in
connection with any Property; and
(p) all right, title and interest of the Borrower in and to all
proceeds, both cash and noncash, of any of the foregoing.
(All of the foregoing property and rights and interests now owned or held
or subsequently acquired by the Borrower and described in the foregoing clauses
(a) through (p) are collectively referred to as the "Trust Property").
TO HAVE AND TO HOLD the Trust Property and the rights and privileges
hereby granted unto the Agent (for the benefit of the Lenders and the Holders)
its successors and assigns for the uses and purposes set forth, until all of the
obligations of the Borrower under the Operative Agreements are paid in full;
provided, that EXCLUDED from the Trust Property at all times and in all respects
shall be all Excepted Payments.
3. Payment of Obligations.
The Borrower shall pay all Obligations in accordance with the terms of the
Credit Agreement, the Notes, the Trust Agreement, the Certificates and the other
Operative Agreements and perform each term to be performed by it under the
Credit Agreement, the Notes, the Trust Agreement, the Certificates and the other
Operative Agreements.
4. Other Covenants.
At any time and from time to time, upon the written request of the Agent,
and at the expense of the Borrower (with funds provided by the Lessee for such
purpose), the Borrower will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent reasonably
may request for the purposes of obtaining or preserving the full benefits of
this Security Agreement and of the rights and powers granted by this Security
Agreement.
5. Default; Remedies.
(a) If a Credit Agreement Event of Default has occurred and is
continuing:
(i) the Agent, in addition to all other remedies available
at law or in equity, shall have the right forthwith to enter upon any
Property (or any other place where any component of any Property is
located at such time) without charge, and take possession of all or
any portion of the Trust Property, and to re-let the Trust Property
and receive the rents, issues and profits thereof, to make repairs
and to apply said rentals and profits, after payment of all necessary
or proper charges and expenses, on account of the amounts hereby
secured (subject to the Excepted Payments); and
(ii) the Agent, shall, as a matter of right, be entitled to
the appointment of a receiver for the Trust Property, and the
Borrower hereby consents to such appointment and waives notice of any
application therefor.
(b) If a Credit Agreement Event of Default has occurred and is
continuing, the Agent may proceed by an action at law, suit in equity or
other appropriate proceeding, to protect and enforce its rights, whether
for the foreclosure of the Lien of this Security Agreement, or for the
specific performance of any agreement contained herein or for an
injunction against the violation of any of the terms hereof. The proceeds
of any sale of any of the Trust Property shall be applied pursuant to
Section 8.7 of the Participation Agreement. In addition, the Agent may
proceed under Section 11 hereof.
(c) To the extent permitted by Law, the Borrower hereby waives the
benefit of all appraisement, valuation, stay, extension and redemption
laws now or hereafter in force and all rights of marshalling in the event
of any sale of the Trust Property or any portion thereof or interest
therein.
6. Remedies Not Exclusive.
The Agent shall be entitled to enforce payment of the indebtedness and
performance of the Obligations and to exercise all rights and powers under this
Security Agreement or under any of the other Operative Agreements or other
agreements or any laws now or hereafter in force, notwithstanding some or all of
the Obligations may now or hereafter be otherwise secured, whether by deed of
trust, mortgage, security agreement, pledge, Lien, assignment or otherwise.
Neither the acceptance of this Security Agreement nor its enforcement, shall
prejudice or in any manner affect the Agent's right to realize upon or enforce
any other security now or hereafter held by the Agent, it being agreed that the
Agent shall be entitled to enforce this Security Agreement and any other
security now or hereafter held by the Agent in such order and manner as the
Agent may determine in its absolute discretion. No remedy conferred hereunder or
under any other Operative Agreement upon or reserved to the Agent is intended to
be exclusive of any other remedy herein or therein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or thereunder or now or hereafter existing at law or in
equity or by statute. Every power or remedy given by any of the Operative
Agreements to the Agent or to which it may otherwise be entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by the Agent. In no event shall the Agent, in the exercise
of the remedies provided in this Security Agreement (including without
limitation in connection with the assignment of Rents to the Agent, or the
appointment of a receiver and the entry of such receiver onto all or any part of
the Land), be deemed a "mortgagee in possession" or a "pledgee in possession",
and the Agent shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.
7. Performance by the Agent of the Borrower's Obligations.
If the Borrower fails to perform or comply with any of its agreements
contained herein the Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement. The expenses of the Agent incurred in connection with actions
undertaken as provided in this Section 7, together with interest thereon at a
rate per annum equal to the Overdue Rate, from the date of payment by the Agent
to the date reimbursed by the Borrower, shall be payable by the Borrower (with
funds provided by the Lessee for such purpose) to the Agent on demand and
constitutes part of the Obligations secured hereby.
8. Duty of the Agent.
The Agent's sole duty with respect to the custody, safekeeping and
physical preservation of any Trust Property in its possession, under Section
9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in
the same manner as the Agent deals with similar property for its own account.
Neither the Agent, any Lender, any Holder nor any of their respective directors,
officers, employees, shareholders, partners or agents shall be liable for
failure to demand, collect or realize upon any of the Trust Property or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Trust Property upon the request of the Borrower or any other Person or to
take any other action whatsoever with regard to the Trust Property or any part
thereof.
9. Powers Coupled with an Interest.
All powers, authorizations and agencies contained in this Security
Agreement are coupled with an interest and are irrevocable until this Security
Agreement is terminated and the Liens created hereby are released.
10. Execution of Financing Statements.
Pursuant to Section 9-402 of the Uniform Commercial Code, the Borrower
authorizes the Agent at the expense of the Borrower (such amounts to be paid
with funds provided by the Lessee for such purpose) to file financing statements
with respect to the Trust Property under this Security Agreement without the
signature of the Borrower in such form and in such filing offices as the Agent
reasonably determines appropriate to perfect the security interests of the Agent
under this Security Agreement. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement for filing
in any jurisdiction. For purposes of such financing statement, the Borrower
shall be deemed to be the debtor, and the Agent shall be deemed to be the
secured party. The address of the Borrower is 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Val T. Orton, Vice President, and the address of
the Agent is Atlanta Plaza Building, 600 Peachtree Street, NE, 17th Floor,
Atlanta, Georgia 30303, Attention: Chris Jones.
11. Security Agreement Under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this Security
Agreement as it relates to matters of the grant, perfection and priority
of security interests the subject hereof, shall constitute a security
agreement within the meaning of the Uniform Commercial Code of the States
in which the Trust Property is located. If a Credit Agreement Event of
Default shall occur and be continuing, then in addition to having any
other right or remedy available at law or in equity, the Agent may proceed
under the applicable Uniform Commercial Code and exercise such rights and
remedies as may be provided to a secured party by such Uniform Commercial
Code with respect to all or any portion of the Trust Property which is
personal property (including without limitation taking possession of and
selling such property). If the Agent shall elect to proceed under the
Uniform Commercial Code, then fifteen (15) days' notice of sale of the
personal property shall be deemed reasonable notice and the reasonable
expenses of retaking, holding, preparing for sale, selling and the like
incurred by the Agent shall include, but not be limited to, attorneys'
fees and legal expenses. At the Agent's request, the Borrower shall
assemble such personal property and make it available to the Agent at a
place designated by the Agent which is reasonably convenient to both
parties.
(b) The Borrower, upon reasonable request by the Agent from time to
time, shall execute, acknowledge and deliver to the Agent one (1) or more
separate security agreements, in form reasonably satisfactory to the
Agent, covering all or any part of the Trust Property and will further
execute, acknowledge and deliver, or cause to be executed, acknowledged
and delivered, any financing statement, affidavit, continuation statement
or certificate or other document as the Agent may reasonably request in
order to perfect, preserve, maintain, continue or extend the security
interest under, and the priority of the Liens granted by, this Security
Agreement and such security instrument. The Borrower further agrees to pay
to the Agent (with funds provided by the Lessee for such purpose) on
demand all costs and expenses incurred by the Agent in connection with the
preparation, execution, recording, filing and re-filing of any such
document and all reasonable costs and expenses of any record searches for
financing statements the Agent shall reasonably require. The filing of any
financing or continuation statements in the records relating to personal
property or chattels shall not be construed as in any way impairing the
right of the Agent to proceed against any property encumbered by this
Security Agreement.
12. Authority of the Agent.
The Borrower acknowledges that the rights and responsibilities of the
Agent under this Security Agreement with respect to any action taken by the
Agent or the exercise or non-exercise by the Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall be governed by the Credit Agreement
and Section 8.6 of the Participation Agreement and by such other agreements with
respect thereto as may exist from time to time (until such time as all amounts
due and owing to the Secured Parties and the Agent under the Operative
Agreements have been paid in full), but the Agent shall be conclusively presumed
to be acting as agent for the Secured Parties with full and valid authority so
to act or refrain from acting, and the Borrower shall be under no obligation, or
entitlement, to make any inquiry respecting such authority.
13. Notices.
All notices required or permitted to be given under this Security
Agreement shall be in writing and delivered as provided in Section 12.2 of the
Participation Agreement.
14. Severability.
Any provision of this Security Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
15. Amendment in Writing; No Waivers; Cumulative Remedies.
(a) None of the terms or provisions of this Security Agreement may be
waived, amended, supplemented or otherwise modified except in accordance
with the terms of Section 12.4 of the Participation Agreement.
(b) No failure to exercise, nor any delay in exercising, on the part
of the Agent, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the
Agent of any right or remedy hereunder on any one (1) occasion shall not
be construed as a bar to any right or remedy which the Agent would
otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
16. Section Headings.
The section headings used in this Security Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
17. Successors and Assigns.
This Security Agreement shall be binding upon the successors of the
Borrower, and the Borrower shall not assign any of its rights or obligations
hereunder or with respect to any of the Trust Property without the prior written
consent of the Agent. This Security Agreement shall inure to the benefit of the
Agent, the Lenders, the Holders and their respective successors and assigns, in
accordance with their respective interest herein.
18. The Borrower's Waiver of Rights.
Except as otherwise set forth herein or in any other Operative Agreement,
to the fullest extent permitted by law, the Borrower waives the benefit of all
laws now existing or that may subsequently be enacted providing for (a) any
appraisement before sale of any portion of the Trust Property, (b) any extension
of the time for the enforcement of the collection of the indebtedness or the
creation or extension of a period of redemption from any sale made in collecting
such debt and (c) exemption of any portion of the Trust Property from
attachment, levy or sale under execution or exemption from civil process. Except
as otherwise set forth herein, to the fullest extent the Borrower may do so, the
Borrower agrees that the Borrower will not at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any appraisement, valuation, stay, exemption, extension or redemption, or
requiring foreclosure of this Security Agreement before exercising any other
remedy granted hereunder and the Borrower, for the Borrower and its successors
and assigns, and for any and all Persons ever claiming any interest in the Trust
Property, to the extent permitted by law, hereby waives and releases all rights
of redemption, valuation, appraisement, stay of execution, notice of election to
mature or declare due the whole of the Obligations and marshalling in the event
of foreclosure of the Liens hereby created.
19. GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 11(a)
HEREOF, THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NORTH CAROLINA.
20. Obligations Are Without Recourse.
The provisions of the Participation Agreement relating to limitations on
liability are hereby incorporated by reference herein, Mutatis Mutandis.
21. Partial Release; Full Release.
The Agent may release for such consideration as it may require any portion
of the Trust Property without (as to the remainder of the Trust Property) in any
way impairing or affecting the Lien, security interest and priority herein
provided for the Agent compared to any other Lien holder or secured party.
Further, the Agent shall execute and deliver to the Borrower such documents and
instruments as may be required to release the Lien and security interest created
by this Security Agreement with respect to the Properties as provided in Section
8.8 of the Participation Agreement or to grant the easements and permit the
other matters provided for in Section 8.5 of the Participation Agreement.
22. Miscellaneous.
(a) This Security Agreement is one (1) of the documents which create
Liens and security interests that secure payment and performance of the
Obligations. The Agent, at its election, may commence or consolidate in a
single action all proceedings to realize upon all such Liens and security
interests. The Borrower hereby waives (i) any objections to the
commencement or continuation of an action to foreclose the Lien of this
Security Agreement or exercise of any other remedies hereunder based on
any action being prosecuted or any judgment entered with respect to the
Obligations or any Liens or security interests that secure payment and
performance of the Obligations and (ii) any objections to the commencement
of, continuation of, or entry of a judgment in any such other action based
on any action or judgment connected to this Security Agreement. In case of
a foreclosure sale, the Trust Property may be sold, at the Agent's
election, in one (1) parcel or in more than one (1) parcel and the Agent
is specifically empowered (without being required to do so, and in its
sole and absolute discretion) to cause successive sales of portions of the
Trust Property to be held.
(b) This Security Agreement may not be amended, waived, discharged or
terminated except in accordance with Section 12.4 of the Participation
Agreement. Upon the prior written consent of the Majority Secured Parties
and unless such matter is a Unanimous Vote Matter, the Agent may release
any portion of the Trust Property or any other security, and grant such
extensions and indulgences in relation to the Obligations secured hereby
without in any manner affecting the priority of the Lien hereof on any
part of the Trust Property.
(c) THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE ARE HEREBY INCORPORATED BY REFERENCE
HEREIN, MUTATIS MUTANDIS.
23. Conflicts with Participation Agreement.
Notwithstanding any other provision hereof, in the event of any conflict
between the terms of this Security Agreement and the Participation Agreement,
the terms of the Participation Agreement shall govern.
24. LESSEE AS A PARTY.
LESSEE HAS EXECUTED THIS SECURITY AGREEMENT FOR THE PURPOSE OF SUBJECTING
TO THE SECURITY INTERESTS GRANTED HEREUNDER ALL OF ITS RIGHT, TITLE, ESTATE AND
INTEREST, IF ANY, IN AND TO THE TRUST PROPERTY TO SECURE ALL OBLIGATIONS OF ALL
CREDIT PARTIES UNDER THE OPERATIVE AGREEMENTS. ACCORDINGLY, LESSEE HEREBY GRANTS
TO THE AGENT (FOR THE BENEFIT OF THE LENDERS AND THE HOLDERS) A SECURITY
INTEREST IN AND TO ALL OF ITS RIGHT, TITLE, ESTATE AND INTEREST, IF ANY, IN AND
TO THE TRUST PROPERTY (TO THE EXTENT LESSEE HAS ANY RIGHT, TITLE OR INTEREST
THEREIN AND WITHOUT REGARD TO ANY LANGUAGE IN SECTION 2 OR THE DEFINITION OF
"TRUST PROPERTY' OR ANY DEFINITION OF ANY ITEM CONSTITUTING THE TRUST PROPERTY
WHICH OTHERWISE WOULD LIMIT THE TRUST PROPERTY TO THE RIGHT, TITLE AND INTEREST
OF THE BORROWER THEREIN) TO SECURE ALL OBLIGATIONS OF ALL CREDIT PARTIES UNDER
THE OPERATIVE AGREEMENTS. LESSEE ACKNOWLEDGES AND AGREES THAT, UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT, THE AGENT SHALL HAVE THE RIGHT TO EXERCISE
ANY OR ALL OF ITS REMEDIES HEREUNDER AS AGAINST ANY SUCH RIGHT, TITLE, ESTATE OR
INTEREST OF LESSEE IN OR TO THE TRUST PROPERTY.
[signature page follows]
<PAGE>
Security Agreement
Centennial Real Estate Trust 1998-1
CHAR1\WMA\BANK\400940_ 9
Centennial Real Estate Trust 1998-1
IN WITNESS WHEREOF, each of the undersigned have caused the Security
Agreement to be duly executed and delivered as of the date first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust
1998-1
By:/s/ Val T. Orton
Name: Val T. Orton
Title:V.P.
NATIONSBANK, N.A., as the Agent for
the Lenders and the Holders
By:/s/ J. Walter Bland
Name: J.W. Bland
Title: V.P.
Accepted and Agreed to:
CENTENNIAL HEALTHCARE CORPORATION
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title: E.V.P.
LEASE SUPPLEMENT NO. 1 (Ft. Smith, Arkansas)
THIS LEASE SUPPLEMENT NO. 1 (this "Lease Supplement") dated as of August
5, 1998 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a
legal description of the Land attached hereto as Schedule 1-C. Effective upon
the execution and delivery of this Lease Supplement by Lessor and Lessee, the
Leased Property shall be subject to the terms and provisions of the Lease.
Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title:
Executive Vice President
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: Vice President
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. 1
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. 1
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. 1
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. 1
(Land)
LEASE SUPPLEMENT NO. 2 (Meridian, Mississippi)
THIS LEASE SUPPLEMENT NO. 2 (this "Lease Supplement") dated as of July 31,
1998 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a
legal description of the Land attached hereto as Schedule 1-C. Effective upon
the execution and delivery of this Lease Supplement by Lessor and Lessee, the
Leased Property shall be subject to the terms and provisions of the Lease.
Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title:
Executive Vice President
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: Vice President
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. 2
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. 2
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. 2
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. 2
(Land)
LEASE SUPPLEMENT NO. 3 (Olathe, Kanasas)
THIS LEASE SUPPLEMENT NO. 3 (this "Lease Supplement") dated as of August
5, 1998 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a
legal description of the Land attached hereto as Schedule 1-C. Effective upon
the execution and delivery of this Lease Supplement by Lessor and Lessee, the
Leased Property shall be subject to the terms and provisions of the Lease.
Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title:
Executive Vice President
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: Vice President
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. 3
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. 3
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. 3
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. 3
(Land)
LEASE SUPPLEMENT NO. 4 (Fort Wayne, Indiana)
THIS LEASE SUPPLEMENT NO. 4 (this "Lease Supplement") dated as of October
16, 1998 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a
legal description of the Land attached hereto as Schedule 1-C. Effective upon
the execution and delivery of this Lease Supplement by Lessor and Lessee, the
Leased Property shall be subject to the terms and provisions of the Lease.
Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title:
Executive Vice President
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: Vice President
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. 4
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. 4
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. 4
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. 4
(Land)
LEASE SUPPLEMENT NO. 5 (Connersville, Indiana)
THIS LEASE SUPPLEMENT NO. 5 (this "Lease Supplement") dated as of October
16, 1998 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a
legal description of the Land attached hereto as Schedule 1-C. Effective upon
the execution and delivery of this Lease Supplement by Lessor and Lessee, the
Leased Property shall be subject to the terms and provisions of the Lease.
Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title:
Executive Vice President
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: Vice President
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. 5
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. 5
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. 5
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. 5
(Land)
LEASE SUPPLEMENT NO. 6 (Sheridan, Indiana)
THIS LEASE SUPPLEMENT NO. 6 (this "Lease Supplement") dated as of October
16, 1998 between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not individually, but solely as the Owner Trustee under the
Centennial Real Estate Trust 1998-1, as lessor (the "Lessor"), and CENTENNIAL
HEALTHCARE CORPORATION, a Georgia corporation, as lessee (the "Lessee").
WHEREAS, Lessor is the owner or will be the owner of the Property
described on Schedule 1 hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Participation Agreement,
dated as of July 29, 1998, among Lessee, Lessor, not individually, except as
expressly stated therein, but solely as the Owner Trustee under the Centennial
Real Estate Trust 1998-1, the various banks and other lending institutions which
are parties thereto from time to time, as the Holders, the various banks and
other lending institutions which are parties thereto from time to time, as the
Lenders, First Union Capital Markets, a division of Wheat First Securities,
Inc., as Syndication Agent, and NationsBank, N.A., as the Agent for the Lenders
and respecting the Security Documents, as the Agent for the Lenders and Holders,
to the extent of their interests, as such may be amended, modified, extended,
supplemented, restated and/or replaced from time to time.
SECTION 2. The Properties. Attached hereto as Schedule 1 is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule 1-A, an Improvement Schedule attached hereto as Schedule 1-B and a
legal description of the Land attached hereto as Schedule 1-C. Effective upon
the execution and delivery of this Lease Supplement by Lessor and Lessee, the
Leased Property shall be subject to the terms and provisions of the Lease.
Without further action, any and all additional Equipment funded under the
Operative Agreements and any and all additional Improvements made to the Land
shall be deemed to be titled to the Lessor and subject to the terms and
conditions of the Lease and this Lease Supplement.
SECTION 3. Use of Property. At all times during the Term with respect to
each Property, Lessee will comply with all obligations under and (to the extent
no Event of Default exists and provided, that such exercise will not impair the
value of such Property) shall be permitted to exercise all rights and remedies
under, all operation and easement agreements and related or similar agreements
applicable to such Property.
SECTION 4. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease and the
Operative Agreements are hereby ratified and confirmed and remain in full force
and effect. The Lease is hereby incorporated herein by reference as though
restated herein in its entirety.
SECTION 5. Original Lease Supplement. The single executed original of this
Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART"
on the signature page thereof and containing the receipt of the Agent therefor
on or following the signature page thereof shall be the original executed
counterpart of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel paper, as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction, no security interest in this Lease Supplement may be created
through the transfer or possession of any counterpart other than the Original
Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE WHERE A PARTICULAR
PROPERTY IS LOCATED ARE REQUIRED TO APPLY.
SECTION 7. Mortgage; Power of Sale. Without limiting any other remedies
set forth in the Lease, in the event that a court of competent jurisdiction
rules that the Lease constitutes a mortgage, deed of trust or other secured
financing as is the intent of the parties, then Lessor and Lessee agree that
Lessee hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence of any Lease Event of Default, Lessor shall have the
power and authority, to the extent provided by law, after prior notice and lapse
of such time as may be required by law, to foreclose its interest (or cause such
interest to be foreclosed) in all or any part of the Leased Property.
SECTION 8. Counterpart Execution. This Lease Supplement may be executed in
any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one (1) and the
same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as the Owner Trustee
under the Centennial Real Estate Trust 1998-1, as
Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
CENTENNIAL HEALTHCARE CORPORATION,
as Lessee
By: /s/ Alan C. Dahl
Name: Alan C. Dahl
Title:
Executive Vice President
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, N.A., as the Agent
By: /s/ J. Walter Bland
Name: J. Walter Bland
Title: Vice President
<PAGE>
SCHEDULE 1
TO LEASE SUPPLEMENT NO. 6
(Description of the Leased Property)
<PAGE>
SCHEDULE 1-A
TO LEASE SUPPLEMENT NO. 6
(Equipment)
<PAGE>
SCHEDULE 1-B
TO LEASE SUPPLEMENT NO. 6
(Improvements)
<PAGE>
SCHEDULE 1-C
TO LEASE SUPPLEMENT NO. 6
(Land)
SECOND AMENDED AND RESTATED LEASE AGREEMENT
(Clearwater Health & Rehabilitation)
THIS SECOND AMENDED AND RESTATED LEASE AGREEMENT (the "Lease") is made and
entered into as of the 1st day of October 1, 1998, effective as of the
Commencement Date, by and between EBT Healthcare Properties, L.P., a Delaware
limited partnership (hereinafter referred to as the "Lessor") and Centennial
HealthCare Properties Corporation, a Georgia corporation, formerly known as
WelCare International Properties Corporation, a Georgia corporation (hereinafter
referred to as the "Lessee").
W I T N E S S E T H :
WHEREAS, Lessor is the owner of that certain real property, more
particularly described on Exhibit "A" attached hereto and incorporated herein by
reference, improved with a 60-bed nursing home facility known as Clearwater
Health & Rehabilitation (the "Facility"), together with Lessor's easements and
appurtenances in adjoining and adjacent land, highways, roads, streets, lanes,
whether public or private, reasonably required for the installation,
maintenance, operation and service of sewer, water, gas, power, and other
utility lines and for driveways and approaches to and from abutting highways for
the use and benefit of the above-described parcel of real estate, together with
that certain personal property, fixtures, equipment and supplies used in
connection with such real estate and improvements (the "Premises");
WHEREAS, Lessor and Lessee entered into that certain Lease Agreement dated
as of October 1, 1993, whereby Lessor agreed to lease to Lessee the Premises
(the "Original Lease"); and
WHEREAS, Lessor and Lessee entered into that certain Amended and Restated
Lease Agreement dated as of July 6, 1994, whereby Lessor and Lessee agreed to
amend and restate the Original Lease in its entirety; and
WHEREAS, Lessor and Lessee desire to amend and restate the Amended and
Restated Lease Agreement in its entirety as provided in this Lease.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid by
each party to the other, the mutual promises herein contained and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties do hereby agree as follows:
1. Ownership. Lessor is the owner of the Facility which is located on the
Premises.
2. Term. The term of this Lease shall be deemed to have commenced on the 1st day
of October, 1993 (the "Commencement Date"), and shall end on the 30th day of
September, 2006 unless sooner terminated, and Lessee is hereby granted an option
to extend this Lease for two (2) additional five (5) year periods on the same
terms as provided in this Lease; provided, however, that at the time of such
election to extend, unless Lessee and Lessor shall have otherwise agreed in
writing upon the rent to be paid during the extension term(s), Lessee shall
provide Lessor with a letter from a third-party appraiser reasonably acceptable
to Lessor stating that the Base Rent (as hereinafter defined) and any other sums
payable under this Lease constitute a fair market rental rate for the Premises
(the "Fair Rental Rate"). Lessee shall pay the reasonable fees and charges of
such appraiser. If the Fair Rental Rate is greater than or less than the Base
Rent at the time of the extension of this Lease, then the Lessee can either (i)
elect not to extend this Lease, or (ii) pay as Base Rent an amount equal to the
Fair Rental Rate. Lessee must notify the Lessor in writing of its election to
exercise any of the renewal extensions at least three (3) months prior to the
expiration of the then current lease term. Lessor and Lessee agree that they
both shall be bound by the appraiser's determination of the Fair Rental Rate to
the extent herein indicated.
<PAGE>
3. Rental Payments.
A. Base Rent. Lessee shall pay to Lessor the amounts set forth on Exhibit "B" as
rent for the Premises in arrears upon the last day of each and every month
during the term of this Lease (the "Base Rent").
B. Additional Rent. Lessee shall pay to Lessor, monthly in arrears,
$127.00 for each 1/8% that the LIBOR Rate (as hereinafter defined) exceeds
7.475% as additional rent (the "Additional Rent"). Further, the Base Rent shall
be reduced $127.00 for each 1/8% that the LIBOR Rate decreases below 7.475% (the
"Base Rent Reduction"). The Additional Rent and the Base Rent Reduction shall be
calculated based on the LIBOR Rate on the first calendar day of each month
during the Lease Term (the "Rate Adjustment Date"). The LIBOR Rate shall mean
the average of London Interbank Offered Rates for a term of one month (the "One
Month LIBOR"), as reasonably determined by Lessor or its Mortgagee as of each
Rate Adjustment Date. The One Month LIBOR (in U.S. dollar deposits) will be
obtained from the appropriate Bloomberg display page available at the close of
business announced on the last business day of the month, for every month
covered by the Lease Term. In the event that Bloomberg ceases publication, or
ceases to publish the One Month LIBOR, Lessor or its Mortgagee shall select a
comparable publication to determine the One Month LIBOR.
C. Payment of Rent. Lessor and Lessee acknowledge and agree that this Lease and
all Base Rent, Base Rent Reduction, and Additional Rent (together, the "Rent")
payable hereunder may be assigned as additional collateral for a mortgage loan
or loans to Lessor. In such event, Lessor and Lessee mutually agree that, if
required by the lender (the "Mortgagee") pursuant to such mortgage loan (the
"Mortgage"), all payments of Rent shall be made to a lockbox or another account
designated by Mortgagee (a "Lockbox Account") and Mortgagee is hereby authorized
by Lessor and Lessee to debit such account each month for the amount equal to
the monthly debt service payments due pursuant to the promissory note secured by
the Mortgage. Payments so made by the Lessee shall be credited as payments of
Rent made under this Lease and shall satisfy the obligations of Lessee
hereunder, to the extent so paid. If payments of Rent are not made a Lockbox
Account for the benefit of Mortgagee, then such payments shall be made to Lessor
at Lessor's address as provided in Section 31 of this Lease or such other
address as Lessor shall specify pursuant to Section 31 at least thirty (30) days
prior to a payment date.
D. Debt Service Reserve Fund. No security deposit is required of Lessee pursuant
to this Lease except as follows. If required by Mortgagee, pursuant to the terms
of the Mortgage and this Lease, Lessor shall deposit into an account with
Mortgagee pursuant to a Debt Service reserve Escrow and Security Agreement (the
"Deposit Agreement") an amount equal to two months debt service on the Premises
to serve as a debt service reserve fund, which may increase if debt service
payments increase (the "Debt Service Reserve Fund"). The Debt Service Reserve
Fund shall be governed by the terms of the Deposit Agreement. Notwithstanding
the foregoing, if Lessee provides Lessor with additional funds to enable the
deposit of additional debt service reserves as contemplated by the Deposit
Agreement, then amounts pledged to Mortgagee as a Debt Service Reserve Fund
shall, upon repayment in full of the Mortgage or upon any release of the Debt
Service Reserve Fund (or any portion thereof) by the Mortgagee (the "Release
Date"), be deemed a security deposit of Lessee and shall be refunded to Lessee
to the extent Lessee funded such amounts.
4. Net Lease. This Lease is intended to be a net lease in that it is the
intention of the parties hereto that the Rent payable to Lessor shall not be
reduced by any cost or charge whatsoever and that all expenses and charges
related to the ownership and operation of the Premises after the date of this
Lease, whether for upkeep, maintenance; compliance with environmental, health
and safety laws (including the Americans with Disabilities Act); insurance;
taxes; utilities; federal, state and municipal requirements; and other charges
of a like nature or type or otherwise shall be paid by Lessee, subject to the
other terms of this Lease. This provision is not in derogation of specific
provisions herein, but in expansion thereof and as an indication of the general
intentions of the parties hereto.
5. Taxes and Assessments. Lessee hereby agrees to pay to the public authorities
charged with collection thereof, promptly as the same become due and payable,
all taxes, assessments, and other public charges levied upon or assessed against
the Premises and/or any building, structure, fixture or improvements now or
hereafter located thereon, or arising in respect of the occupance, use or
possession of the Premises, and which become due and payable.
6. Fuel, Utility Services. Lessee hereby agrees to pay for all fuel,
electricity, heat or power, gas and water, or any other utility charges incurred
upon the Premises after the date of this Lease.
7. Compliance with Laws. Lessee covenants that in the use and occupation of the
Premises and the buildings, structures, fixtures and improvements thereon, and
the sidewalks adjacent thereto, Lessee will comply in all material respects with
all authorities in any manner affecting the Premises or any building,
structures, fixtures and improvements thereon or the use thereof and the terms
of the Mortgage. Lessee further agrees that it will not permit any unlawful
occupation, business or trade to be conducted on the Premises, or any use to be
made thereof contrary to any law, ordinance or regulation with respect thereto.
8. Repairs, Alterations and Additions.
A. General. Lessee shall be further obliged to pay from the Gross Revenues of
the Premises any expense for repairing any improvements upon the Premises,
including, without limitation, extermination and landscaping, and Lessee shall
make all reasonable repairs and replacements necessary to maintain the Premises
and all furniture and fixtures in a reasonably good, tenantable and wholesome
condition, complying in all material respects with all applicable laws,
regulations, ordinances, licenses and requirements of all authorities having
jurisdiction over the Premises. Lessor, however, is not hereby relieved of
responsibility of maintenance assumed by it pursuant to the Mortgage. For
purposes of this Lease, "Gross Revenues" shall mean the amount equal to the sum
of all revenues received or receivable from the operation of the Facility less
contractual allowances for billings not paid or received from applicable
governmental agencies or other third party payors as determined during each
calendar year.
9. Insurance. Lessee shall maintain insurance as follows:
(a) Professional liability insurance in at least the amount of $1,000,000 per
occurrence, $2,000,000 aggregate with a $10,000,000 umbrella. All such liability
insurance shall name each of Lessor and Mortgagee as an additional insured;
(b) Liability insurance in an amount equal to at least $1,000,000 per
occurrence, $2,000,000 aggregate, with a $10,000,000 umbrella. All such
liability insurance shall name each of Lessor and Mortgagee as an additional
insured;
(c) "All-risk" coverage on the Facility, including all improvements, equipment
and inventory, in an amount not less than the replacement cost thereof, insuring
against such potential causes of loss as shall be required by Lessor, including
but not limited to loss or damage from wind, fire, ice, subsidence and, if
requested by Lessor, earthquake;
(d) Business income insurance (including rental value if the Facility is leased
in whole or part) equal to not less than twelve (12) months estimated gross
revenues less expenses not ordinarily incurred during the period of business
interruption; and
(e) Workers compensation insurance as required by the laws of the State where
the Facility is located.
Each of the policies described in (c) and (d) shall name Lessor (or, if
directed by Lessor, Mortgagee) as mortgagee and loss payee under a standard
non-contributory mortgagee and lender loss payable clause, and shall provide
that Lessor and Mortgagee shall receive not less than thirty (30) days written
notice prior to cancellation. The proceeds of either of the policies described
in (c) and (d) shall be payable by check jointly payable to Lessee and to Lessor
(or, if directed by Lessor, Mortgagee) and delivered to Lessor (or, if directed
by Lessor, Mortgagee).
Lessee appoints Lessor and Mortgagee as Lessee's attorney-in-fact to cause
the issuance of or an endorsement of any policy to bring Lessee into compliance
herewith and, at the sole option of Lessor and Mortgagee, to make any claim for,
receive payment for, and execute and endorse any documents, checks or other
instruments in payment for loss, theft, or damage covered under any such
insurance policy; however, in no event will Lessor or Mortgagee be liable for
failure to collect any amounts payable under any insurance policy. Lessee agrees
and acknowledges that the application of insurance proceeds shall be governed by
Section 4.4 of that certain Loan Agreement of even date herewith between
Mortgagee and Lessor.
If Lessor shall in any manner resume possession of the Premises, Lessor
shall thereupon become, subject to the terms of the Mortgage, the sole owner of
all insurance policies held by or required hereunder to be delivered to Lessor,
with the sole right to collect and retain all unearned premiums and dividends
thereon, and Lessee shall only be entitled to a credit, in reduction of the then
outstanding indebtedness secured hereby, in the amount of the cancellation
refund.
10. Other Operating Expenses. Lessee agrees to pay all other operational
expenses of the Premises not heretofore mentioned.
11. Surrender. Lessee agrees that, upon termination by lapse of time or
otherwise of the term hereby created, or any extension thereto, it will deliver
and surrender up to the Lessor said Premises in reasonably good condition and
repair; any damage, deterioration or destruction resulting from ordinary wear
and tear, loss by fire, casualty and causes beyond Lessee's control are
excepted.
12. Liens. Lessee will not permit any mechanic's, laborer's, or materialmen's
liens to stand against the Premises for any labor or material furnished to
Lessee or claimed to have been furnished to Lessee in connection with work of
any character performed or claimed to have been performed on the Premises by or
at the direction or sufferance of Lessee, but nothing herein contained shall in
any way prejudice the rights of Lessee to contest to final judgment or decree
any such lien. In the event of failure of Lessee to procure the discharge of any
such lien or contest such lien as above provided, by bond or any other method,
Lessor may, without further notice, procure the discharge thereof by bonding,
payment or otherwise, and all costs and expenses incurred by Lessor in obtaining
such discharge shall become due as additional Rent upon the next payment of
Rent. Lessor shall not cause any mortgage or lien other than the Mortgage and
security interests related thereto to stand against or attach to the Premises.
13. No Abatement of Rent. The partial destruction of any building on the
Premises by fire or natural elements shall not in any manner affect this Lease
or the rights and obligations of Lessee hereunder and the Rent shall not abate,
diminish or cease during reconstruction. The Rent shall not abate upon
foreclosure under the Mortgage. However, should the Lessor fail to undertake to
repair, rebuild or replace any such damage or destruction within thirty (30)
days after such fire or other casualty, or shall fail to complete such work
within six (6) months, then the terms of this Lease shall expire at the option
of Lessee, after ten (10) days written notice to Lessor.
14. Damage or Destruction. If the Premises covered hereby, or any part thereof,
shall be damaged by fire or other hazard against which insurance is held, the
amounts paid by any insurance company in pursuance of the contract of insurance
to the extent of the indebtedness then remaining unpaid, shall be paid, subject
to the terms of the Mortgage, to Lessor and released only for the repairing or
rebuilding of the Premises.
15. Condemnation. If the Premises shall be condemned or taken in its entirety
for a public or quasi-public use, all compensation therefore shall be paid to
Mortgagee to be used to pay the Mortgage as provided in the Mortgage and any
remaining funds will be divided between Lessor and Lessee, and this Lease and
all obligations hereunder shall terminate as of the date of taking. If only a
portion of the Premises shall be condemned or taken for a public or quasi-public
use, any and all awards or compensation arising from such condemnation or taking
shall be paid to Mortgagee subject to the terms of the Mortgage, and this Lease
shall continue without modification, unless and except that if so much or such
portion of the Premises be taken that the taking shall materially interfere with
the efficient operation of its business by Lessee on the Premises, the judgment
of Lessee as to the materiality of such interference being conclusive, then at
any time within sixty (60) days after the taking of such portion of the
Premises, Lessee may terminate this Lease by serving upon Lessor written notice
of its intention to do so. In the event this Lease is so terminated, then any
and all awards or compensation arising from such condemnation or taking shall be
paid jointly to Lessor and Lessee subject to the terms of the Mortgage, and all
obligations hereunder shall cease as of the date of such termination and any
funds remaining after the payment of the Mortgage shall be divided between the
Lessor and Lessee. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning authority in
such condemnation proceedings for loss of business, or depreciation to, damage
to, or cost of removal of, or for the value of its leasehold interest, stock,
trade fixtures, furniture and other personal property belonging to Lessee.
16. Assignment and Subletting. Lessee may not assign or encumber this Lease or
its rights hereunder except to Mortgagee without first obtaining the written
consent of Lessor which will not be unreasonably withheld; provided, however,
that Lessee's assignment of this Lease to an affiliate of Lessee shall be valid
and binding on Lessor without Lessor's prior written consent. In such event,
Lessee shall remain liable for the payment of all Rent required to be paid
hereunder and for the performance of all terms, covenants and conditions herein
undertaken by Lessee. Lessee shall have the right to enter into subleases with
respect to the operation of the Premises or any portion thereof, at any time
during the term of this Lease without the consent of Lessor, which subleases
shall not be deemed to create a tenancy in the Premises; provided, however, that
Lessee shall remain liable for the payment of all Rent required to be paid
hereunder and for the performance of all terms, covenants, and conditions herein
undertaken by Lessee. Lessor shall not assign or encumber this Lease or its
rights hereunder without first obtaining the written consent of Lessee and
providing Lessee with a written agreement from the assignee that it will abide
by all of the terms of this Lease.
17. Holding Over. In the event Lessee continues to occupy the Premises after the
last day of the term hereby created, or after the last day of any extension of
said term, and Lessor elects to accept rent thereafter, a tenancy from month to
month only shall be created and not for any longer period without the written
concurrence of Lessor.
18. Abandonment and Reletting. If Lessee shall abandon or vacate the Premises,
except as permitted hereunder, the same may be re-let by Lessor for such rent,
and upon such terms as to it may seem fit and in accordance with Lessor's
Partnership Agreement and the Mortgage. If a sufficient sum shall not be thus
realized monthly after paying the expense of such re-letting and collecting, to
satisfy the Rent, Lessee agrees to satisfy and pay all deficiencies during each
month of the remaining period of this Lease.
19. Subrogation and Waiver. Lessor hereby waives any and all claims against
Lessee, its assignees or sub-lessee for damage or destruction of any
improvements on the Premises (whether or not resulting from the fault or
negligence of Lessee, its assignees or sub-lessee or their agents or employees)
which improvements are covered by insurance obtained by Lessee and the parties
agree that any policies of insurance obtained by Lessor will recognize this
waiver of Lessor by a good and sufficient waiver of subrogation provision;
provided, however, that nothing herein shall be construed as waiving Lessor's
right to any insurance proceeds under policies obtained by Lessee, but paid for
by Lessor.
20. Default, Termination and Damages.
A. Lessee's Default For Nonpayment of Rent. Except as otherwise provided in this
Lease, Lessee shall be in default under this Lease if it fails to pay the Rent
owed to Lessor hereunder for a period of sixty (60) days (a "Monetary Default").
B. Lessee Default For Other Than Nonpayment of Rent. Lessee shall be in default
under this Lease if it defaults on any of the covenants herein contained to be
kept by Lessee, except the payment of Rent, and such default shall continue
after written notice for a period of ninety (90) days (a "Non-monetary
Default").
C. Right to Re-enter Facility. If a Monetary Default or Non-monetary Default
shall occur and continue, Lessor shall have the immediate right, whether or not
the term of this Lease shall have been terminated to re-enter and repossess the
Premises by summary proceedings, ejectment, any other legal action or in any
lawful manner Lessor determines to be necessary or desirable. No such re-entry
or repossession of the Premises shall be construed as an election by Lessor to
terminate the term of this Lease.
D. Duty to Mitigate. At any time or from time to time after the re-entry or
repossession of the Premises pursuant to Section 20.C. hereof, whether or not
the term of this Lease shall have been terminated, Lessor, in the name of Lessee
or Lessor or otherwise and upon notice to Lessee, shall, to the extent required
by applicable state law pertaining to the duty to mitigate damages upon breach
of a lease or other contract, use such efforts to relet the Premises as is
required by such law, Lessor may collect and receive any rents payable by reason
of such reletting consistent with Section 18 hereof.
E. Continuing Duty of Lessee. No expiration or termination of the term of this
Lease pursuant to this Section or and no expiration of the term pursuant to
Section 18 hereof, by operation of law or otherwise, and no re-entry,
repossession or reletting of the Premises pursuant to Section 18 hereof or
otherwise, shall relieve Lessee of its liabilities and obligations hereunder,
all of which shall survive such expiration, termination, re-entry, repossession
or reletting.
21. Remedies Cumulative. The remedies conferred by this Lease upon Lessor and
Lessee are not intended to be exclusive, but are cumulative and in addition to
all remedies otherwise afforded by law.
22. Successors. This Lease and all covenants and agreements herein contained
shall be binding upon, apply and inure to the respective successors and assigns
of all parties to this Lease.
23. Lessor's Title. Subject to the terms of this Lease, Lessor's title is, and
always shall be, paramount to the title and interest of Lessee, and nothing
herein contained shall empower Lessee to do any act which can or shall encumber
the title of the Lessor. Provided the holder of any mortgage now or hereafter
encumbering the Premises shall provide Lessee with a non-disturbance agreement
reasonably satisfactory to Lessee, Lessee agrees to subordinate its interest in
this Lease to the Mortgage that encumbers the Premises. Nothing contained herein
shall relieve the Lessor of any obligations under the Mortgage.
24. Books and Financial Statements. Lessee shall deliver to Lessor at the end of
each fiscal year, or more often as reasonably requested by Lessor, the books of
its operations of the Facility. Lessee shall provide to Lessor the financial
statements required by the Mortgage.
25. License. Lessee at all times shall maintain in force and effect a license
from the state in which the Facility is located to operate a nursing home, and
shall at all times employ a duly qualified administrator to operate the
Facility.
26. Employees. Lessee shall have direct responsibility for recruiting, hiring,
training, promoting, assigning and discharging all operating and service
personnel necessary for the proper operation and maintenance of the Premises or
shall have direct responsibility for leasing employees for the Premises. All
employees shall be employees of the Lessee and the Premises or leased by the
Lessee and shall not be employees of the Lessor.
27. Notice of Action Against License. Notwithstanding any other provision of
this Lease to the contrary, Lessee shall inform Lessor immediately by hand
delivery, telephone, telecopy (receipt confirmed) or telegraph of any action
taken, commenced or instituted by any state or federal authority having
jurisdiction over the Premises as a health care facility to terminate or revoke
any license certification of Lessee. Such notice shall be given to Lessor at the
address set forth in Paragraph 30.A. below.
28. Surrender of Possession. Lessee shall, on or before the last day of the term
of this Lease, surrender possession of the Premises to Lessor, free and clear of
sub-tenancies not specifically agreed upon by Lessor, reasonably clean and in
reasonably good condition and repair, ordinary wear and tear excepted.
29. Quiet Enjoyment. If and so long as Lessee is not in default hereunder,
Lessor agrees that it will not interfere with the peaceful and quiet occupation
and enjoyment of the Premises by Lessee.
30. Inspection of Books and Records. Lessor and Mortgagee shall have the right,
upon reasonable notice and at reasonable times, to inspect the books and records
and accounts relating to the Facility.
31. Miscellaneous Provisions.
A. Notices. Any notice or other communication by either party to the other shall
be in writing and shall be given, and be deemed to have been duly given, if
either delivered personally or mailed, postage prepaid, by registered or
certified mail, or reputable overnight delivery service addressed as follows:
TO LESSOR:
EBT Healthcare Properties, L.P.
3005 Mountain Ash Ct.
Garland, Texas 75044
Attention: Roland A. Belanger
WITH A COPY TO:
Cashin, Morton & Mullins
Two Midtown Plaza, Suite 1900
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: James D. Spratt, Jr.
TO LESSEE:
Centennial HealthCare Properties Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, Georgia 30346
Attention: Alan C. Dahl
WITH A COPY TO:
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza - Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Jeffrey N. Plowman
or to such other address and to the attention of such other person or officer as
either party may from time to time designate.
B. Change of Address. Lessor and Lessee may change their address for purposes of
this Lease by giving notice thereof in accordance with the provisions set forth
for notices above.
C. Understanding and Agreements. This Lease constitutes all of the
understandings and agreements of whatever nature or kind existing between the
parties with respect to the subject matter hereof.
D. Headings. The paragraph headings contained herein are for convenience
of reference only and are not intended to define, limit or describe the scope
or intent of any provisions of this Lease.
E. Approval or Consent. Whenever, under any provision of this Lease, the
approval or consent of either party is required, the decision thereon shall be
promptly given, and such approval or consent shall not be unreasonably withheld.
F. Severability. Should any part of this Lease be declared invalid for any
reason, such decision shall not affect or impair the validity of the remaining
part or parts hereof, and this Lease shall remain in full force and effect as to
all parts not declared invalid or unenforceable as if the same had been executed
with the invalid or unenforceable portion(s) thereof eliminated.
G. Applicable Law. This Lease shall be governed by, and construed and
enforced in accordance with, the laws of Idaho (without regard to its rules
of conflicts of laws).
H. Further Assurances. Lessee shall, upon the request of Lessor, execute and
deliver any and all further documents which may be required, contemplated or
desired by Lessor in furtherance of the transactions contemplated by this Lease.
I. Amendment or Modifications. This Lease shall not be amended or
modified without the prior written consent of the parties hereto.
J. Time. Time is of the essence of this Lease.
K. Binding. This Lease shall be binding upon, and inure to the benefit
of, the parties hereto, their estates, heirs, personal representatives,
successors in interest and assigns.
L. Counterparts. This Lease may be executed in one of more counterparts, each of
which shall constitute one and the same instrument.
32. Lease Memorandum. The Original Lease is evidenced in the Records of
Clearwater County, State of Idaho, by the filing of that certain Memorandum of
Lease recorded on October 22, 1993, as Instrument Number 163900. The aforesaid
Memorandum of Lease shall continue in full force and effect (as modified hereby)
and shall memorialize and provide constructive notice of the right, title and
interest of Lessee in the Premises.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the
date first set forth above.
LESSOR:
EBT HEALTHCARE PROPERTIES, L.P.,
a Delaware limited partnership
By: EBT Healthcare, Inc.,
Its General Partner
By: /S/ Roland A. Belanger
-----------------------------
Roland A. Belanger, President
LESSEE:
CENTENNIAL HEALTHCARE PROPERTIES
CORPORATION, a Georgia corporation
By: /S/ Alan C. Dahl
----------------------------
Alan C. Dahl, Vice President
<PAGE>
Exhibit B
Annual Lease Payments Monthly Lease Payments
Year 1 $182,178.00 $15,182.00
Year 2 $182,178.00 $15,182.00
Year 3 $182,178.00 $15,182.00
Year 4 $182,178.00 $15,182.00
Year 5 $182,178.00 $15,182.00
Year 6 $103,968.00 $8,664.00
Year 7 $103,968.00 $8,664.00
Year 8 $103,968.00 $8,664.00
Year 9 $103,968.00 $8,664.00
Year 10 $103,968.00 $8,664.00
Year 11 $103,968.00 $8,664.00
Year 12 $103,968.00 $8,664.00
Year 13 $103,968.00 $8,664.00
<PAGE>
SCHEDULE 10.13
CHPC has entered into lease agreements substantially identical to
Exhibit
10.13 as follows:
1. Second Amended and Restated Lease Agreement dated October 1, 1998 with
EBT Healthcare Properties, L.P. ("EBT") for Ft. Worth, Texas facility. Material
details in which this agreement differs from Exhibit 10.13 are that the base
rent per year is $247,365 for the remaining term of this agreement, and the
"Additional Rent" payment is $317 for each 1/8% that the LIBOR Rate established
by Bloomberg exceeds 7.475% (the "Percentage Amount"). Furthermore, the Base
Rent shall be reduced $137 for each 1/8% that the LIBOR Rate decreases below
7.475%.
2. Second Amended and Restated Lease Agreement dated October 1, 1998 with
EBT for Libby, Montana facility. Material details in which this agreement
differs from Exhibit 10.13 are that the base rent per year is $108,525 for the
remaining term of this agreement, and the "Additional Rent" payment is $137 for
each 1/8% that the LIBOR Rate established by Bloomberg exceeds 5.625% (the
"Percentage Amount"). Furthermore, the Base Rent shall be reduced $137 for each
1/8% that the LIBOR Rate decreases below 5.625%.
3. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Pinewood, Idaho facility. Material details in which this agreement differs from
Exhibit 10.13 are that the base rent per year is $279,032 for the remaining term
of this agreement, and the "Additional Rent" payment is $359 for each 1/8% that
the LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage
Amount"). Furthermore, the Base Rent shall be reduced $359 for each 1/8% that
the LIBOR Rate decreases below 5.625%.
4. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Union, Mississippi facility. Material details in which this agreement differs
from Exhibit 10.13 are that the base rent per year is $285,259 for the remaining
term of this agreement, and the "Additional Rent" payment is $370 for each 1/8%
that the LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage
Amount"). Furthermore, the Base Rent shall be reduced $370 for each 1/8% that
the LIBOR Rate decreases below 5.625%.
5. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Natchez, Mississippi facility. Material details in which this agreement differs
from Exhibit 10.13 are that the base rent per year is $348,310 for the remaining
term of this agreement, and the "Additional Rent" payment is $444 for each 1/8%
that the LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage
Amount"). Furthermore, the Base Rent shall be reduced $444 for each 1/8% that
the LIBOR Rate decreases below 5.625%.
6. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Winona, Mississippi facility. Material details in which this agreement differs
from Exhibit 10.13 are that the base rent per year is $441,677 for the remaining
term of this agreement, and the "Additional Rent" payment is $560 for each 1/8%
that the LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage
Amount"). Furthermore, the Base Rent shall be reduced $560 for each 1/8% that
the LIBOR Rate decreases below 5.625%.
7. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Franklinton, Louisiana facility. Material details in which this agreement
differs from Exhibit 10.13 are that the term of this agreement terminates on
September 30, 2004, base rent per year is $420,234 for the remaining term of
this agreement, and the "Additional Rent" payment is $522 for each 1/8% that the
LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage Amount").
Furthermore, the Base Rent shall be reduced $522 for each 1/8% that the LIBOR
Rate decreases below 5.625%.
8. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Bossier City, Louisiana facility. Material details in which this agreement
differs from Exhibit 10.13 are that the term of this agreement terminates on
September 30, 2004, base rent per year is $100,946 for the remaining term of
this agreement, and the "Additional Rent" payment is $127 for each 1/8% that the
LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage Amount").
Furthermore, the Base Rent shall be reduced $127 for each 1/8% that the LIBOR
Rate decreases below 5.625%.
14
<PAGE>
9. Amended and Restated Lease Agreement dated October 1, 1998 with EBT for
Ferriday, Louisiana facility. Material details in which this agreement differs
from Exhibit 10.13 are that the term of this agreement terminates on September
30, 2004, base rent per year is $250,648 for the remaining term of this
agreement, and the "Additional Rent" payment is $317 for each 1/8% that the
LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage Amount").
Furthermore, the Base Rent shall be reduced $317 for each 1/8% that the LIBOR
Rate decreases below 5.625%.
10. Amended and Restated Lease Agreement dated October 1, 1998 with EBT
for McComb, Mississippi facility. Material details in which this agreement
differs from Exhibit 10.13 are that the term of this agreement terminates on
March 31, 2004, base rent per year is $479,572 for the remaining term of this
agreement, and the "Additional Rent" payment is $613 for each 1/8% that the
LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage Amount").
Furthermore, the Base Rent shall be reduced $613 for each 1/8% that the LIBOR
Rate decreases below 5.625%.
11. Amended and Restated Lease Agreement dated October 1, 1998 with EBT
for Starkville, Mississippi facility. Material details in which this agreement
differs from Exhibit 10.13 are that the term of this agreement terminates on
September 30, 2004, base rent per year is $431,067 for the remaining term of
this agreement, and the "Additional Rent" payment is $545 for each 1/8% that the
LIBOR Rate established by Bloomberg exceeds 5.625% (the "Percentage Amount").
Furthermore, the Base Rent shall be reduced $545 for each 1/8% that the LIBOR
Rate decreases below 5.625%.
LEASE GUARANTY AGREEMENT
(Clearwater Guaranty)
THIS LEASE GUARANTY AGREEMENT (this "Guaranty"), made as of the 1st day
of October, 1998, by CENTENNIAL HEALTHCARE CORPORATION, a Georgia corporation
(the "Guarantor") in favor of EBT HEALTHCARE PROPERTIES, L.P., a Delaware
limited partnership (the "Lessor").
RECITALS:
Pursuant to the Lease Agreement described on Exhibit A hereto between
the Lessor and Centennial HealthCare Properties Corporation, a Georgia
corporation (the "Lessee") (the "Lease"), Lessee leases from Lessor certain real
estate and the nursing home facility situated thereon (the "Nursing Home")
located in Clearwater County, Idaho (such real estate and Nursing Home being
more particularly described in the Lease and collectively referred to herein as
the "Property").
NOW, THEREFORE, in consideration of the recitals, Ten Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and as security for the payment of all rent, all
expenses, charges and other amounts from time to time owing to Lessor pursuant
to the Lease, and for the performance of all covenants, agreements and other
obligations from time to time owing to, or for the benefit of, Lessor pursuant
to the Lease (collectively referred to herein the "Lease Obligations"), the
Guarantor agrees and covenants with Lessor and represents and warrants to Lessor
as follows:
1. Guarantee of Lease Obligations. The Guarantor hereby unconditionally
guarantees to the Lessor the due, regular, and punctual payment and performance
of the Lease Obligations. Upon the failure of the Lessee timely to pay or
perform any of the Lease Obligations, the Guarantor further guarantees timely to
pay or perform any of the Lease Obligations and the payment of all reasonable
costs and expenses actually incurred by Lessor in paying or performing such
Lease Obligations (but Lessor shall not be required to pay or perform such Lease
Obligations). Further, the Guarantor guarantees the payment of all reasonable
costs, attorneys' fees, and expenses that are actually incurred by the Lessor by
reason of a default under the Lease (as defined in Section 20 of the Lease,
hereinafter "Event of Default") by the Lessee, including reasonable fees and
expenses in any appellate or bankruptcy proceedings.
Upon any Event of Default (as therein defined) pursuant to the Lease,
the Guarantor unconditionally promises to pay to the Lessor such amounts as are
necessary to cure the Event of Default, or at the option of the Lessor, the
Guarantor agrees to pay the outstanding Lease Obligations (including, without
limitation, any accelerated rental due upon such Event of Default) in full.
This Guaranty is unconditional, and the Guarantor agrees that the
Lessor, upon the occurrence of an Event of Default pursuant to the Lease, shall
not be required to assert any claim or cause of action against Lessee before
asserting any claim or cause of action against the Guarantor under this
Guaranty. Furthermore, the Guarantor agrees that the Lessor shall not be
required to pursue or foreclose on any collateral that it may receive from the
Lessee, the Guarantor, or others as security for any of the Lease Obligations
before making a claim or asserting a cause of action against the Guarantor under
this Guaranty.
The failure of the Lessor to perfect its security interest in any
collateral now or hereafter securing all or any part of the Lease Obligations
shall not release the Guarantor from its liabilities and obligations hereunder.
Notice of acceptance of this Guaranty is hereby waived by the
Guarantor. Presentment, protest, demand, and notice of protest and demand, and
notice of receipt of any and all collateral, and of the exercise of possessory
remedies or foreclosure on any and all collateral received by the Lessor from
the Lessee or the Guarantor are hereby waived. All settlements, compromises,
compositions, accounts stated, and agreed balances in good faith between any
primary or secondary obligors on any accounts received as collateral shall be
binding upon the Guarantor.
This Guaranty shall not be affected, modified, or impaired by the
voluntary or Involuntary liquidation, dissolution, sale, or other disposition of
all or substantially all of the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangements, composition with creditors or readjustment of, or
other similar proceedings affecting the Lessee or the Guarantor, or any of the
assets belonging to either of them, nor shall this Guaranty be affected,
modified, or impaired by the invalidity of the Lease.
Without notice to the Guarantor, without the consent of the Guarantor,
and without affecting or limiting the Guarantor's liability hereunder, the
Lessor may:
(a) grant the Lessee extensions of time for payment of the Lease
Obligations or any part hereof;
(b) renew any of the Lease Obligations;
(c) grant the Lessee extensions of time for performance of agreements or
other indulgences;
(d) at any time release any or all of the collateral, or any mortgage, deed
of trust or security interest in any collateral, that now or hereafter
secures any of the Lease Obligations;
(e) compromise, settle, release, or terminate any or all of the
obligations, covenants, or agreements of the Lessee under the Lease; and
(f) with the Lessee's written consent, modify or amend any obligation,
covenant, or agreement of Lessee as set forth in the Lease (and such
amendments shall nevertheless be binding upon Guarantor).
This Guaranty shall continue to be effective, or be reinstated, as the
case may be, if at any time any whole or partial payment or performance of any
Lease Obligations is or is sought to be rescinded or must otherwise be restored
or returned by the Lessor upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Lessee or upon or as a result of the
appointment of a receiver, intervenor, or conservator of, or trustee or similar
officer for, the Lessee or of or for any substantial part of its property, or
otherwise, all as though such payments and performance had not been made.
2. Representations and Warranties of the Guarantor. Guarantor
represents and warrants as follows:
(a) Existence, Power and Qualification. Guarantor is a corporation duly
organized and validly existing under the laws of the state of its formation as
set forth in' the heading of this Guaranty, has the corporate power to own its
properties and to carry on. its business as is now being conducted, and is duly
qualified to do business and is in good standing in every jurisdiction in which
the character of the properties owned by it or in which the transaction of its
business makes its qualification necessary.
(b) Power and Authority . Guarantor has full power and authority to incur
the obligations provided for herein, all of which have been authorized by
all proper and necessary corporate action.
(c) Enforceability. This Guaranty constitutes a valid and legally binding
obligation of the Guarantor, enforceable in accordance with its respective
terms and does not violate, conflict with, or constitute any default under
any law, government regulation, decree, judgment, Guarantor's articles of
incorporation or by-laws or any other agreement or instrument binding upon
Guarantor.
(d) Pending Matters. No action or investigation is pending or, to the best
of its knowledge, threatened before or by any state or federal court or
administrative agency which in Guarantor's reasonable opinion has a
substantial likelihood of resulting in a material adverse change in the
financial condition, operations or prospects of the Guarantor. To the best
of Guarantor's knowledge, Guarantor is not in violation of any agreement,
the violation of which might reasonably be expected to have a materially
adverse effect on its business or assets, nor is Guarantor in violation of
any order, judgment, or decree of any state or federal court, or any
statute or governmental regulation to which it is subject, the violation of
which might reasonably be expected to have a material adverse effect on its
business or assets.
(e) Financial Statements Accurate. All financial statements of the
Guarantor heretofore provided are, and all financial statements hereafter
to be provided will be, true and complete in all material respects as of
their respective dates and fairly and will fairly present the financial
condition of the Guarantor, and there are no liabilities, direct or
indirect, fixed or contingent, as of the respective dates of such
statements which are not reflected therein or in the notes thereto as
presented in accordance with GAAP or in a written certificate delivered
with such statements. The financial statements of the Guarantor have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"). There has been no material adverse change in
the financial condition, operations, or prospects of the Guarantor since
the dates of such statements except as fully disclosed in writing with the
delivery of such statements.
(f) No Defaults or Restrictions. There is no declared default under any
agreement or instrument nor does there exist any restriction in the
organizational documents of the Guarantor that causes or would cause a
material adverse effect on the business, properties, operations or
condition, financial or otherwise, of Guarantor.
(g) Payment of Taxes. Guarantor has filed all federal, state, and local tax
returns which are required to be filed and has paid, or made adequate
provision for the payment of, all taxes which have or may become due
pursuant to said returns or to assessments received by Guarantor.
(h) ERISA. To the best of Guarantor's knowledge, Guarantor is in compliance
with all applicable provisions of the Employee Retirement Income Act of
1974, as amended ("ERISA").
(i) Disclosure. To the best of Guarantor's knowledge, neither this Guaranty
nor any other document, financial statement, credit information,
certificate or statement required herein to be furnished to Lessor by
Guarantor in connection with this Guaranty contains any untrue, incorrect
or misleading statement of material fact, and all of these documents taken
as a whole do not omit to state a fact material to this Guaranty, to
Lessor's decision to enter into this Guaranty or to the transactions
contemplated hereunder. All representations and warranties made herein or
any certificate or other document delivered to Lessor by or on behalf of
Guarantor pursuant to or in connection with this Guaranty, shall be deemed
to have been relied upon by Lessor notwithstanding any investigation
heretofore or hereafter made by Lessor or on its behalf.
3. Affirmative Covenants of the Guarantor. The Guarantor covenants and
agrees that so long as the Lease Obligations are outstanding, it shall
comply with each of the following affirmative covenants: (a) Payment of
Rent/Performance of Lease Obligations. Within five (5) business days of
Lessor's demand thereof, duly and punctually pay or cause to be paid all
rent and other charges due under the Lease in accordance with its terms and
duly and punctually pay or cause to be paid or performed all Lease
Obligations.
(b) Maintenance of Existence. Preserve and maintain its existence and, in
each jurisdiction in which the character of the properties owned by it or
in which the transaction of its business makes qualification necessary,
maintain such qualification and good standing.
(c) Payment of Taxes. Pay and discharge all taxes, assessments, and
governmental charges or levies imposed upon it, including, without
limitation, all current tax liabilities of all kinds, all required
withholdings of income taxes of employees, all required old age and
unemployment contributions, and all so-called provider taxes.
(d) Annual Audited Reporting Requirements. Furnish to Lessor, as soon as
available and in any event within ninety (120) days after the end of each
fiscal year of Guarantor, annual financial statements of the Guarantor,
which shall be audited and certified by an independent certified public
accountant reasonably acceptable to Lessor as (i) fairly presenting the
financial condition of Guarantor as at the end of such fiscal year and the
results of the operations of Guarantor for such period and (ii) having been
prepared in accordance with GAAP. In addition, Guarantor will furnish to
the Lessor such other financial information of the Guarantor as the Lessor
shall deem reasonably necessary. All financial statements shall be in form
and detail as the Lessor shall from time to time reasonably request.
Guarantor agrees that all financial statements will be true and correct as
of their respective dates in all material respects and will fairly present
the financial condition of the Guarantor and such financial statements (or
the notes thereto) will not omit any liabilities, direct or indirect, fixed
or contingent, of a material nature.
(e) Examination and Visitation By Lessor. At any reasonable time and from
time to time during normal business hours, permit Lessor or its
representatives to examine and make copies and abstracts from the records
and books of account of, and visit the properties of the Guarantor, and to
discuss the affairs, finances and accounts of the Guarantor with any of
Lessor's respective officers, directors or employees.
(f) Accounting Records. Keep adequate records and books of account, with
complete entries made in accordance with GAAP consistently applied,
reflecting its financial transactions.
(g) Conduct of Business. Cause Lessee to conduct the operation of the
Nursing Home at all times in compliance with applicable laws and
regulations relating thereto and cause all licenses, permits, certificates
of need, Medicaid and Medicare agreements and any other agreements
necessary for the use and operation of the Nursing Home or as may be
necessary for participation in the Medicaid and Medicare programs to remain
in effect without reduction in the number of licensed beds or beds
authorized for use in the Medicaid or Medicare programs (to the extent the
Nursing Home is currently participating in such programs).
(h) Comply with Laws. Comply and cause the Lessee to comply with all
applicable statutes and governmental regulations; pay and cause the Lessee
to pay, all taxes, assessments, charges, claims for labor, supplies, rent,
and other obligations prior to the date the same become overdue, provided
that Guarantor (or Lessee, as applicable) shall have the right to contest
the validity or amount of such taxes, assessments, charges or claims
provided (a) such contest is in good faith, (b) Guarantor provides Lessor
written notice of such contest, (c) if requested by Lessor, Guarantor
either pays the amount due or claimed to be due prior to such contest or
deposits an amount (together with any interest and penalties that may
accrue during the period of such contest) with Lessor which, together with
any bond provided under part (d), will be adequate for payment in the event
such contest is unsuccessful, and (d) no lien is imposed on the Property
or, if imposed, such lien is promptly bonded off or otherwise removed.
4. Events of Default. The Guarantor's failure to properly and timely
perform or observe any covenant or condition set forth in this Guaranty
which is not cured with any. applicable cure period as set forth herein or,
if no cure period is specified therefor, is not cured within thirty (30)
days of Lessor's notice to Guarantor of such default, or the filing by or
against the Guarantor of any proceeding under bankruptcy or insolvency
laws, shall constitute an "Event of Default" hereunder and under the Lease.
5. Waiver of Subrogation. The Guarantor hereby irrevocably waives and
relinquishes as against Lessor any right of subrogation or other right of
reimbursement from the Lessee and any other right to payment from the
Lessee arising out of or on account of any sums paid or agreed to be paid
by the Guarantor under this Guaranty, whether any such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured. The provisions of this
subparagraph are made for the express benefit of the Lessee as well as the
Lessor and may be enforced independently by the Lessee.
6. Successors and Assigns. This Guaranty shall be binding upon, and inure
to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors, and assigns. Specifically, Guarantor
acknowledges and agrees that this Guaranty may be assigned by the Lessor as
collateral security for a loan or loans encumbering the Property, and, upon
such assignment, the assignee shall possess all rights and interests of
Lessor hereunder.
7. Severability. In the event that any provision hereof is deemed to be
invalid by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Guaranty shall be
construed as not containing such provisions, and the invalidity of such
provisions shall not affect other provisions hereof which are otherwise
lawful and valid and shall remain in full force and effect.
8. Notices. Any notice or other communication required or permitted to be
given pursuant to this Guaranty or by applicable law shall be in writing
and shall be deemed received on the date delivered, if delivered in person
to the person or department specified below, or three (3) days after
depositing the same in the U.S. Mail, certified or registered, with return
receipt requested, or one (1) day following the date deposited with Federal
Express or other national overnight carrier, and in each case addressed as
follows:
If to the Guarantor to:
Centennial HealthCare Corporation
400 Perimeter Center Terrace
Suite 650
Atlanta, GA 30346
Attn: Mr. Alan C. Dahl
If to the Lessor to:
EBT Healthcare Properties, L.P.
3005 Mountain Ash Court
Garland, Texas 75044
Attn: Mr. Roland A. Belanger
Any party may change its address to another single address by notice given
as herein provided, except that any change of address must be actually
received in order to be effective. 9. Waiver. The failure by the Lessor at
any time or times hereafter to require strict performance by the Guarantor
of any of the provisions, warranties, terms, and conditions contained
herein or in any other agreement, document, or instrument now or hereafter
executed by the Guarantor and delivered to the Lessor shall not waive,
affect, or diminish any right of the Lessor hereafter to demand strict
compliance or performance therewith and with respect to any other
provisions, warranties, terms, and conditions contained in such agreements,
documents, and instruments, and any waiver of any Default shall not waive
or affect any other Default, whether prior or subsequent thereto and
whether of the same or a different type. None of the warranties,
conditions, provisions, and terms contained in this Guaranty or in any
agreement, document, or instrument now or hereafter executed by the
Guarantor and delivered to the Lessor shall be deemed to have been waived
by any act or knowledge of the Lessor, its agents, officers, or employees,
but only by an instrument in writing, signed by an officer of the Lessor,
and directed to the Guarantor specifying such waiver.
10. Expenses. If, at any time or times hereafter, the Lessor employs
counsel to advise or provide other representation with respect to this
Guaranty or any other agreement, document, or instrument heretofore, now,
or hereafter executed by the Guarantor and delivered to the Lessor with
respect to the Lessee or the Lease Obligations, or to commence, defend, or
intervene, file a petition, complaint, answer, motion, or any other
pleading or to take any other action in or with respect to any suit or
proceeding relating to this Guaranty or any other agreement, instrument, or
document heretofore, now, or hereafter executed by the Guarantor and
delivered to the Lessor with respect to the Lessee or the Lease
Obligations, or to represent the Lessor in any litigation with respect to
the affairs of the Guarantor or to enforce any rights of the Lessor or
obligations of the Guarantor or any other person, firm, or corporation that
may be obligated to the Lessor by virtue of this Guaranty, or any other
agreement, document, or instrument heretofore or hereafter delivered to the
Lessor by or for the benefit of the Guarantor with respect to the Lessee or
the Lease Obligations, then in any such events, all of the reasonable
attorneys' fees arising from such services, including fees in any appellate
or bankruptcy proceedings, and any other reasonable expenses, costs, and
charges relating to this Guaranty, the Lessee or the Lease Obligations,
shall constitute additional obligations of the Guarantor payable on demand.
11. Singular and Plural. Singular terms shall include the plural forms, and
vice versa.
12. Entire Agreement. This Guaranty constitutes the entire agreement and
supersedes all prior agreements and understandings both oral and written,
between the parties with respect to the subject matter hereof, including,
without limitation, that prior Lease Guaranty Agreement from Guarantor to
Lessor dated July 6, 1994 relating to the Lease.
13. THE VALIDITY, INTERPRETATION, ENFORCEMENT, AND EFFECT OF THIS GUARANTY
SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
GEORGIA.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
properly executed as of the day and year first above written.
CENTENNIAL HEALTHCARE CORPORATION,
a Georgia corporation
By: /s/ Alan C. Dahl
-----------------------------
Alan C. Dahl
Its Vice President
<PAGE>
EXHIBIT A
Description of Lease
(Clearwater)
Second Amended and Restated Lease Agreement by and between EBT
Healthcare Properties, L.P. and Centennial HealthCare Properties Corporation for
the nursing home facility known as Clearwater Health & Rehabilitation, dated as
of October 1, 1998.
<PAGE>
SCHEDULE 10.14
CHPC has entered into lease guarantee agreements substantially identical
to Exhibit 10.14 as follows:
1. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Ft. Worth, Texas facility.
2. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Libby, Montana facility.
3. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Libby, Montana facility.
4. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Union, Mississippi facility.
5. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Natchez, Mississippi facility.
6. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Winona, Mississippi facility.
7. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Franklinton, Louisiana facility.
8. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Bossier City, Louisiana facility.
14
<PAGE>
9. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Ferriday, Louisiana facility.
10. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the McComb, Mississippi facility.
11. Lease Guarantee Agreement dated October 1, 1998 with EBT Healthcare
Properties, L.P. for the Starkville, Mississippi facility.
<PAGE>
<PAGE>
EXHIBIT 11.1
CENTENNIAL HEALTHCARE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
------- ------- ------- ------
<S> <C> <C> <C> <C>
Income (loss) before dividends and accretion on
preferred stock.......................................... $(6,432) $ 3,383 $ 1,228 $6,508
Dividends and accretion on preferred stock................. - (4,654) - (5,873)
------- -------- ------- ------
Income (loss) applicable to common stock before
extraordinary loss....................................... (6,432) (1,271) 1,228 635
Extraordinary loss on extinguishment of debt
(net of tax)............................................. - (537) - (537)
------- -------- ------- ------
Income (loss) applicable to common stock................... $(6,432) $ (1,808) $ 1,228 $ 98
Weighted average common shares outstanding................. 11,924 11,579 11,900 7,084
Basic earnings (loss) per common share:
Income (loss) applicable to common stock
before extraordinary loss................................ $ (0.54) $ (0.11) $ 0.10 $ 0.09
Extraordinary loss on extinguishment of debt............... - (0.05) - (0.08)
------- -------- ------- ------
Basic Earnings (Loss) Per Common Share..................... $ (0.54) $ (0.16) $ 0.10 $ 0.01
======= ======== ======= ======
Income (loss) applicable to common stock
before extraordinary loss................................ $(6,432) $ (1,271) $ 1,228 $ 635
Interest savings on convertible debt
(net of tax)............................................. - 24 - 41
Extraordinary loss on extinguishment of
debt (net of tax)........................................ - (537) (537)
------- -------- ------- ------
Income (loss) applicable to common stock................... $(6,432) $ (1,784) $ 1,228 $ 139
Weighted average common shares outstanding................. 11,924 11,579 11,900 7,084
Dilutive effect of stock options........................... 18 166 223 80
Conversion of convertible debt............................. - 125 - 42
------- -------- ------- ------
Average diluted common shares outstanding.................. 11,942 11,870 12,123 7,206
Diluted earnings (loss) per common share:
Income (loss) applicable to common stock before
extraordinary loss....................................... $ (0.54) $ (0.10) $ 0.10 $ 0.09
Extraordinary loss on extinguishment of debt............... - (0.05) - (0.07)
------- -------- ------- ------
Diluted Earnings (Loss) Per Common Share................... $ (0.54) $ (0.15) $ 0.10 $ 0.02
======= ======= ======= ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 7,164
<SECURITIES> 0
<RECEIVABLES> 120,828
<ALLOWANCES> (3,600)
<INVENTORY> 0
<CURRENT-ASSETS> 129,204
<PP&E> 90,169
<DEPRECIATION> (18,316)
<TOTAL-ASSETS> 273,203
<CURRENT-LIABILITIES> (54,293)
<BONDS> (101,641)
0
0
<COMMON> (119)
<OTHER-SE> (115,035)
<TOTAL-LIABILITY-AND-EQUITY> (273,303)
<SALES> 0
<TOTAL-REVENUES> (264,557)
<CGS> 0
<TOTAL-COSTS> 255,783
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,144
<INTEREST-EXPENSE> 6,728
<INCOME-PRETAX> (2,363)
<INCOME-TAX> 921
<INCOME-CONTINUING> (1,442)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,228)
<EPS-PRIMARY> (0.10)<F1>
<EPS-DILUTED> (0.10)<F2>
<FN>
<F1>The EPS-Primary tag represents basic EPS under SFAS No. 128.
<F2>The EPS-Diluted tag represents diluted EPS under SFAS No. 128.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.1
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q, including information set forth under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" constitute "Forward-Looking Statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "1933 Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "1934 Act").
The Company desires to take advantage of certain "safe harbor" provisions of the
1933 Act and 1934 Act and is including this reference to enable the Company to
do so. Forward-looking statements included in this Form 10-Q or in documents
incorporated by reference, or hereafter included in other publicly available
documents filed with the Securities and Exchange Commission, reports to the
Company's stockholders and other publicly available statements issued or
released by the Company involve known and unknown risks, uncertainties, and
other factors which could cause the Company's actual results, performance
(financial or operating) or achievements to differ materially from the future
results, performance (financial or operating) or achievements expressed or
implied by such forward-looking statements. The Company believes the following
risks, uncertainties and other factors could cause such material differences to
occur:
1. The Company's ability to continue to grow through the acquisition and
development of long-term care facilities or the acquisition of ancillary
businesses.
2. The Company's ability to identify suitable acquisition candidates or to
profitably operate or successfully integrate acquired operations into the
Company's other operations.
3. The occurrence of changes in the mix of payment sources utilized by the
Company's patients to pay for the Company's services.
4. The adoption of cost containment measures by private pay sources such as
commercial insurers and managed care organizations, as well as efforts by
governmental reimbursement sources to impose cost containment measures.
5. Changes in the United States health care system, including the Balanced
Budget Act of 1997, changes in reimbursement levels under Medicaid and Medicare,
and other changes in applicable government regulations that might affect the
profitability of the Company.
6. The Company's continued ability to operate in a heavily regulated
environment and to satisfy regulatory authorities, thereby avoiding a number of
potentially adverse consequences, such as the imposition of fines, temporary
suspension of admission of patients, restrictions on the ability to acquire new
facilities, suspension or decertification from Medicaid or Medicare programs,
and in extreme cases, revocation of a facility's license or the closure of a
facility, including as a result of unauthorized activities by employees.
<PAGE>
7. The Company's ability to secure the capital and the related cost of such
capital necessary to fund its future growth through acquisition and development,
as well as internal growth.
8. Changes in certificate of need laws that might increase competition in the
Company's industry, including, particularly, in the states in which the Company
currently operates or anticipates operating in the future.
9. Changes in federal or state legislation or budgetary controls that may
negatively impact the amount and method of Medicaid payments, especially in
North Carolina, Michigan and Indiana, in which states a majority of the
Company's facilities are located.
10. The Company's ability to staff its facilities appropriately with qualified
health care personnel (including administrators), including in times of
shortages of such personnel and to maintain a satisfactory relationship with
labor unions.
11. The level of competition in the Company's industry, including without
limitation, increased competition from acute care hospitals, providers of
assisted and independent living and providers of home health care and changes in
the regulatory system in the states in which the Company operates that
facilitate such competition.
12. The continued availability of insurance for the inherent risks of liability
of providing services in the health care industry.
13. Price increases in medical supplies, durable medical equipment and other
items.
14. The Company's reputation for delivering high-quality care and its ability
to attract and retain patients, including patients with relatively high acuity
levels.
15. Changes in general economic conditions, including changes that pressure
governmental reimbursement sources to reduce the amount and scope of health care
coverage.
The foregoing review of significant factors should not be construed as
exhaustive or as an admission regarding the adequacy of disclosures previously
made by the Company.
