MASTER LEASE AGREEMENT
DATED JUNE 16, 1997
BY AND BETWEEN
CRESCENT REAL ESTATE FUNDING VII, L.P.
AS LANDLORD,
AND
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC
AND EACH OF THE FACILITY SUBSIDIARIES LISTED ON EXHIBIT B,
AS TENANT
Table of Contents
1 DEFINITIONS 1
1.1 "Additional Charges" 1
1.2 "Additional Rent" 1
1.3 "Affiliated Person" 1
1.4 "Agreement" 2
1.5 "Allowance" 2
1.6 "Applicable Laws" 2
1.7 "Award" 2
1.8 "Business Day" 2
1.9 "Capital Addition" 2
1.10 "Capital Additions Cost" 3
1.11 "Capital Expenditure" 3
1.12 "Change in Control" 3
1.13 "Code" 3
1.14 "Collective Leased Properties" 4
1.15 "Commencement Date" 4
1.16 "Comparable Facility" 4
1.17 "Condemnation" 4
1.18 "Condemnor" 4
1.19 "Contractor" 4
1.20 "Contractor's" 4
1.21 "Default" 4
1.22 "Designated Leased Property" 4
1.23 "Encumbrance" 4
1.24 "Entity" 4
1.25 "Environment" 5
1.26 "Environmental Notice" 5
1.27 "Environmental Obligation" 5
1.28 "Environmental Report" 5
1.29 "Event of Default" 5
1.30 "Extended Terms" 5
1.31 "Facility" 5
1.32 "Facility Mortgage" 5
1.33 "Facility Mortgagee" 5
1.34 "Facility Subsidiaries" 5
1.35 "Facility Trade Name" 5
1.36 "Fair Market Rental" 5
1.37 "Fair Market Value" 5
1.38 "Financial Officer's Certificate". 6
1.39 "Financials" 6
1.40 "Fiscal Year" 6
1.41 "Fixed Term" 6
1.42 "Fixtures" 6
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1.43 "Franchise Agreement" 6
1.44 "Franchise Fees" 6
1.45 "Franchise Subordination Agreement" 6
1.46 "Franchisor" 6
1.47 "GAAP" 6
1.48 "Government Agencies" 6
1.49 "Hazardous Substances" 7
1.50 "Impositions" 7
1.51 "Indebtedness" 8
1.52 "Insurance Requirements" 8
1.53 "Land" 8
1.54 "Landlord" 8
1.55 "Lease Year" 8
1.56 "Leased Improvements" 8
1.57 "Leased Personal Property" 8
1.58 "Leased Property" 9
1.59 "Legal Requirements" 9
1.60 "Lending Institution" 9
1.61 "Lien" 9
1.62 "Management Agreement" 9
1.63 "Manager" 9
1.64 "Minimum Rent" 9
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1.65 "Notice" 10
1.66 "Non-Priority Additional Rent" 10
1.67 "Officer's Certificate" 10
1.68 "OpCo" 10
1.69 "Overdue Rate" 10
1.70 "Parent" 10
1.71 "Permitted Encumbrances" 10
1.72 "Person" 10
1.73 "Philadelphia Facility" 10
1.74 "Primary Intended Use" 10
1.75 "Prime Rate" 11
1.76 "Priority Additional Rent Base Amount" 11
1.77 "Purchase Agreement" 11
1.78 "Qualified Affiliate" 11
1.79 "Qualified Appraiser" 11
1.80 "Regulated Medical Wastes" 12
1.81 "Rent" 12
1.82 "SEC" 12
1.83 "State" 12
1.84 "Subordinated Creditor" 12
1.85 "Subordination Agreement" 12
1.86 "Subsidiary" 12
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1.87 "Substitute Leased Property" 12
1.88 "Substitution Date" 12
1.89 "Tenant" 12
1.90 "Tenant's Personal Property" 12
1.91 "Term" 13
1.92 "Unsuitable for Its Primary Intended Use" 13
1.93 "Work" 13
2 COLLECTIVE LEASED PROPERTIES AND TERM 13
2.1 Collective Leased Properties. 13
2.2 Condition of Collective Leased Properties. 14
2.3 Fixed Term. 15
2.4 Extended Term. 15
2.5 Determination of Minimum Rent for Extended Terms. 16
3 RENT 16
3.1 Rent. 16
3.2 Late Payment of Rent. 18
3.3 Net Lease. 19
3.4 No Termination, Abatement, Etc. 19
3.5 Annual Allowance. 19
4 USE OF THE COLLECTIVE LEASED PROPERTIES 20
4.1 Permitted Use. 20
4.2 Compliance with Legal and Insurance Requirements, Etc. 22
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4.3 Compliance with Medicaid and Medicare Requirements. 22
4.4 Environmental Matters. 22
4.5 Tenant's Right to Close Facilities. 24
5 MAINTENANCE AND REPAIRS 25
5.1 Maintenance and Repair. 25
5.2 Tenant's Personal Property. 26
5.3 Yield Up. 27
5.4 Encroachments, Restrictions, Etc. 28
5.5 Landlord to Grant Easements, Etc. 28
5.6 Philadelphia Facility. 29
6 CAPITAL ADDITIONS, ETC. 29
6.1 Construction of Capital Additions to the Leased Property. 29
6.2 Financing of Capital Additions. 29
6.3 Capital Additions Financed by Landlord. 30
6.4 Non-Capital Additions. 31
6.5 Salvage. 31
6.6 Landlord's Right of First Refusal to Provide Financing for
Capital Additions. 31
7 LIENS 32
7.1 Liens. 32
7.2 Landlord's Lien. 32
8 PERMITTED CONTESTS 33
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9 INSURANCE AND INDEMNIFICATION 34
9.1 General Insurance Requirements. 34
9.2 Replacement Cost. 35
9.3 Waiver of Subrogation. 35
9.4 Form Satisfactory, Etc. 35
9.5 Blanket Policy. 36
9.6 No Separate Insurance. 36
9.7 Indemnification of Landlord. 37
9.8 Independent Contractor. 37
10 CASUALTY 38
10.1 Insurance Proceeds. 38
10.2 Damage or Destruction. 38
10.3 Tenant's Property. 39
10.4 Restoration of Tenant's Property. 39
10.5 No Abatement of Rent. 39
10.6 Waiver. 39
11 CONDEMNATION 40
11.1 Total Condemnation, Etc. 40
11.2 Partial Condemnation. 40
11.3 Abatement of Rent. 41
11.4 Temporary Condemnation. 41
11.5 Allocation of Award. 41
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12 DEFAULTS AND REMEDIES 41
12.1 Events of Default. 41
12.2 Remedies. 44
12.3 Tenant's Waiver. 45
12.4 Application of Funds. 46
12.5 Landlord's Right to Cure Tenant's Default. 46
12.6 Landlord's Right to Assume Contracts. 46
13 HOLDING OVER 47
14 LANDLORD'S DEFAULT 47
15 LANDLORD FINANCING 47
16 SUBLETTING AND ASSIGNMENT 48
16.1 Subletting and Assignment. 48
16.2 Required Sublease Provisions. 48
16.3 Permitted Assignments and Subleases. 49
16.4 Sublease Limitation. 50
16.5 Tenant's Right to Mortgage its Leasehold. 50
17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS 50
17.1 Estoppel Certificates. 50
17.2 Financial Statements. 51
17.3 General Operations. 51
18 LANDLORD'S RIGHT TO INSPECT 52
19 APPRAISAL 53
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20 FACILITY MORTGAGES 55
20.1 Landlord May Grant Liens. 55
20.2 Subordination of Lease. 55
20.3 Notice to Mortgagee and Ground Landlord. 56
21 ADDITIONAL COVENANTS OF TENANT 56
21.1 Conduct of Business. 56
21.2 Maintenance of Accounts and Records. 56
21.3 Payments to Franchisor. 57
21.4 Management of Collective Leased Properties. 57
21.5 Liens and Encumbrances. 57
22 MISCELLANEOUS 58
22.1 Limitation on Payment of Rent. 58
22.2 No Waiver. 58
22.3 Remedies Cumulative. 58
22.4 Severability. 58
22.5 Acceptance of Surrender. 59
22.6 No Merger of Title. 59
22.7 Conveyance by Landlord. 59
22.8 Quiet Enjoyment. 59
22.9 Landlord's Consent. 60
22.10 Memorandum of Lease. 60
22.11 Notices. 60
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22.12 Construction. 61
22.13 Counterparts; Headings. 62
22.14 Applicable Law, Etc. 62
22.15 Substitution of Leased Properties. 62
22.16 No Broker. 64
22.17 Confidentiality. 65
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Exhibits
A The Land/Street Addresses
B Facility Subsidiaries
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT is entered into as of the 16th day of June, 1997, by
and between CRESCENT REAL ESTATE FUNDING VII, L.P., a Delaware limited
partnership, having its principal office at 777 Main Street, Suite 2100, Fort
Worth, Texas 76102 ("Landlord"), CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a
Delaware limited liability company, having its principal office at Suite 900,
3414 Peachtree Rd., N.E., Atlanta, GA 30326 ("OpCo"), and each of the entities
listed on Exhibit B attached hereto.
W I T N E S S E T H :
WHEREAS, Landlord owns fee simple title to the Collective Leased Properties
(this and other capitalized terms used and not otherwise defined herein having
the meanings ascribed to such terms in Article 1); and
WHEREAS, Landlord wishes to lease the Collective Leased Properties to Tenant and
Tenant wishes to lease the Collective Leased Properties from Landlord, all
subject to and upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the mutual receipt and legal sufficiency
of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
shall 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
shall have the meanings assigned to them in accordance with GAAP, (iii) all
references in this Agreement to designated "Articles," "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Agreement, and (iv) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Additional Charges" shall have the meaning given such term in Section
3.1.3.
1.2 "Additional Rent" shall mean the monthly sum of One Million Six Hundred and
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($1,666,667.00).
1.3 "Affiliated Person" shall mean, with respect t any Person, (a) in the case
of any such Person which is a partnership, any partner in such partnership,
(b) in the case of any such
Person which is a limited liability company, any member of such company, and (c)
any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent
with respect to such Person or to one or more of the Persons referred to in the
preceding clauses (a) and (b).
1.4 "Agreement" shall mean this Master Lease Agreement, including Exhibits A and
B hereto, as it and they may be amended from time to time as herein provided.
1.5 "Allowance" shall mean an annual amount with respect to each Lease Year not
to exceed the additional rent for each such Lease Year. The Allowance shall be
paid by Landlord to Tenant pursuant to Section 3.5 hereof.
1.6 "Applicable Laws" shall mean all applicable laws, statutes, regulations,
rules, ordinances, codes, licenses, permits and orders (whether now existing or
hereafter enacted or promulgated irrespective of whether its enactment is
foreseeable or contemplated), of all courts of competent jurisdiction and G
vernment Agencies, and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings, relating to injury
to, or the protection of, real or personal property or human health (except
those requirements which, by definition, are solely the responsibility of
employers) or the Environment, including, without limitation, all valid
requirements of courts and other Government Agencies pertaining to reporting,
licensing, permitting, investigation, remediation and removal of underground
improvements (including, without limitation, treatment or storage tanks, or
water, gas or oil wells), or emissions, discharges, releases or threatened
releases of Hazardous Substances, chemical substances, pesticides, petroleum or
petroleum products, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the
Environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances or
Regulated Medical Wastes, underground improvements (including, without
limitation, treatment or storage tanks, or water, gas or oil wells), or
pollutants, contaminants or hazardous or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature.
1.7 "Award" shall mean all compensation, sums or other value awarded, paid or
received by virtue of a total or partial Condemnation of any of the Collective
Leased Properties (after deduction of all reasonable legal fees and other
reasonable costs and expenses, including, without limitation, expert witness
fees, incurred by Landlord, in connection with obtaining any such award).
1.8 "Business Day" shall mean any day other than Saturday, Sunday, or any other
day on which banking institutions in the states of Texas, Georgia and the State
are authorized by law or executive action to close.
1.9 "Capital Addition" shall mean one or more new buildings, or one or more
additional structures annexed to any portion of any of the Leased Improvements
with respect to any of the Collective Leased Properties, or the material
expansion of existing improvements, which are constructed on any parcel or
portion of the Land during the Term, including the
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construction of a new wing or new story, the renovation of existing improvements
on any of the Collective Leased Properties in order to provide a functionally
new facility needed to provide services not previously offered, or any material
expansion, construction, renovation or conversion in order to increase by more
than 10% the bed capacity of any Facility, to change the purpose for which such
beds are utilized or to improve materially the quality of any Facility.
1.10 "Capital Additions Cost" shall mean the cost of any Capital Addition
proposed to be made by Tenant at any of the Collective Leased Properties,
whether paid for by Tenant or Landlord. Such cost shall include (a) the cost of
construction of the Capital Addition, including site preparation and
improvement, materials, labor, supervision, developer and administrative fees,
legal fees, and related design, engineering and architectural services, the cost
of any fixtures, the cost of equipment and other personalty, the cost of
construction financing (including, but not limited to, capitalized interest) and
other miscellaneous costs approved by Landlord, (b) if agreed to by Landlord in
writing, in advance, the cost of any land (including all related acquisition
costs incurred by Tenant) contiguous to the applicable Leased Property which is
to become a part of such Leased Property purchased for the purpose of placing
thereon a Capital Addition or any portion thereof or for providing means of
access thereto, or parking facilities therefor, including the cost of surveying
the same, (c) the cost of insurance, real estate taxes, water and sewage charges
and other carrying charges for such Capital Addition during construction, (d)
title insurance charges, (e) filing, registration and recording taxes and fees,
(f) documentary stamp or transfer taxes, and (g) all actual and reasonable costs
and expenses of Landlord and Tenant and, if agreed to by Landlord in writing, in
advance, any Lending Institution committed to finance the Capital Addition
relating to financing for the Capital Addition, including, but not limited to,
all (i) reasonable attorneys' fees and expenses, (ii) printing expenses, (iii)
filing, registration and recording taxes and fees, (iv) documentary stamp or
transfer taxes, (v) title insurance charges and appraisal fees, (vi) rating
agency fees, and (vii) commitment fees charged by any Lending Institution
advancing or offering to advance any portion of any financing to which Landlord
has consented in writing for such Capital Addition.
1.11 "Capital Expenditure" shall mean any expenditure with respect to the
Collective Leased Properties that is properly categorized as a capital
expenditure in accordance with GAAP.
1.12 "Change in Control" shall mean the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the SEC) of 50% or more, or rights, options or warrants to acquire
50% or more, of the outstanding shares of voting stock of Tenant or any Facility
Subsidiary, as the case may be, or the merger or consolidation of Tenant or any
Facility Subsidiary (except with OpCo, a Facility Subsidiary or a wholly-owned
Subsidiary of OpCo), as the case may be with or into any other Person or any one
or a series of related sales or conveyances to any Person (except to OpCo, a
Facility Subsidiary or a wholly-owned subsidiary of OpCo) of all or
substantially all of the assets of Tenant or any Facility Subsidiary, as the
case may be. In the case of OpCo, only the following shall constitute a Change
in Control; (i) a sale or conveyance in one or a related series of transactions
of all or substantially all the assets of OpCo to any Person and (ii) a merger
or consolidation in which
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OpCo is not the surviving or resulting entity or of which the holders of the
equity interests of OpCo immediately prior to the merger or consolidation do not
own more than 50% of the equity interests in the surviving or resulting entity
immediately after the merger or consolidation.
1.13 "Code" shall mean the Internal Revenue Code of 1986 and, to the extent
applicable, the Treasury Regulations promulgated thereunder, each as from time
to time amended.
1.14"Collective Leased Properties" shall have the meaning given such term in
Section 2.1.
1.15"Commencement Date" shall mean June 17, 1997.
1.16 "Comparable Facility" shall mean a facility having as its primary use the
Primary Intended Use and which is reasonably acceptable to Landlord, with an
expected future profitability substantially equivalent to or greater than that
of the Designated Leased Property which Tenant proposes that it replace, both
immediately prior to such substitution and as reasonably projected over the term
of this Agreement, taking into account any cash paid or received in connection
with the substitution and any other relevant factors.
1.17 "Condemnation" shall mean, with respect to any of the Collective Leased
Properties, (a) the exercise of any governmental power with respect to such
Leased Property, whether by legal proceedings or otherwise, by a Condemnor of
its power of condemnation, (b) a voluntary sale or transfer of such Leased
Property by Landlord to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending, and (c) a taking or
voluntary conveyance of all or part of such Leased Property, or any interest
therein, or right accruing thereto or use thereof, as the result or in
settlement of any Condemnation or other eminent domain proceeding affecting such
Leased Property, whether or not the same shall have actually been commenced.
1.18 "Condemnor" shall mean any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
1.19 "Contractor" shall have the meaning given such term in Section 9.8.
1.20 "Contractor's" Insurance Certificate" shall have the meaning given such
term in Section 9.8.
1.21 "Default" shall mean any event or condition which with the giving of notice
and/or lapse of time may ripen into an Event of Default.
1.22 "Designated Leased Property" shall mean a property designated by Tenant
pursuant to Section 22.15 on which there exists a Comparable Facility which
Tenant proposes to substitute for a Leased Property.
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1.23 "Encumbrance" shall have the meaning given such term in Section 20.1.
1.24 "Entity" shall mean any corporation, general or limited partnership,
limited liability company or artnership, stock company or association, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, cooperative, any government or agency or political subdivision thereof or
any other entity.
1.25 "Environment" shall mean soil, surface waters, ground waters, land, stream,
sediments, surface or subsurface strata, ambient air, physical structures and
equipment, and where radon gas is present, the interior air of buildings.
1.26 "Environmental Notice" shall have the meaning given such term in Section
4.4.1.
1.27 "Environmental Obligation" shall have the meaning given such term in
Section 4.
1.28 "Environmental Report" shall have the meaning given such term in Section
4.4.2.
1.29 "Event of Default" shall have the meaning given such term in Section 12.1.
1 30 "Extended Terms" shall have the meaning given such term in Section 2.4.
1.31 "Facility" shall mean, with respect to any of the Collective Leased
Properties, the facility offering health care or related services being operated
or proposed to be operated on such Leased Property.
1.32 "Facility Mortgage" shall mean, with respect to any of the Collective
Leased Properties, any Encumbrance placed upon such Leased Property in
accordance with Article 20.
1.33 "Facility Mortgagee" shall mean the holder of any Facility Mortgage.
1.34 "Facility Subsidiaries" shall mean the Entities listed on Exhibit B
attached hereto, each of which is a wholly owned Subsidiary of OpCo.
1.35 "Facility Trade Name" shall mean, with respect to any Facility, any name
under which Tenant has conducted the business of operating such Facility at any
time during the Term.
1.36 "Fair Market Rental" shall mean, with respect to any of the Collective
Leased Properties, the rental which a willing tenant not compelled to rent would
pay a willing landlord not compelled to lease for the use and occupancy of such
Leased Property (including all Capital Additions) on the terms and conditions of
this Agreement or the term in question , assuming Tenant is not in default
hereunder and determined by agreement between Landlord and Tenant or, failing
agreement, in accordance with the appraisal procedures set forth in Article 19.
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1.37 "Fair Market Value" shall mean, with respect to any of the Collective
Leased Properties, the price that a willing buyer not compelled to buy would pay
a willing seller not compelled to sell for such Leased Property (without taking
into account any reduction in value resulting from any indebtedness to which
such Leased Property is subject), assuming the same is unencumbered by this
Agreement and determined by agreement between Landlord and Tenant or, failing
agreement, the appraisal procedures set forth in Article 19.
1.38 "Financial Officer's Certificate" shall mean, as to any Person, a
certificate of the chief financial officer of such Person, duly authorized,
accompanying the financial statements required to be delivered by such Person
pursuant to Section 17.2, in which such officer shall certify (a) that such
statements have been properly prepared in accordance with GAAP and fairly
present in all material respects the financial condition of such Person at and
as of the dates thereof and the results of its and their operations for the
periods covered thereby, (except that, in the case of financial statements
delivered pursuant to Sections 17.2(a) and 17.2(c), the certificate shall state
the extent to which such financial statements are not in accordance with GAAP)
and (b) certify that such officer has reviewed this Agreement and has no
knowledge of any Default or Event of Default hereunder.
1.39 "Financials" shall mean, for any Fiscal Year or other accounting period of
OpCo, annual audited and quarterly unaudited financial statements for OpCo,
including OpCo's balance sheet and the related statements of income and cash
flows, 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 throughout the periods reflected, except to
the extent GAAP is customarily not complied with by OpCo in preparing quarterly
unaudited financial statements.
1.40 "Fiscal Year" shall mean the twelve (12) month period from October 1 to
September 30.
1.41 "Fixed Term" shall have the meaning given such term in Section 2.3.
1.42 "Fixtures" shall have the meaning given such term in Section 2.1(d).
1.43 "Franchise Agreement" shall mean, collectively, that certain Franchise
Agreement of even date herewith by and between Franchisor, as franchisor, and
OpCo, as franchisee and those certain Franchise Agreements of even date herewith
by and between Franchisor, as franchisor, and each of the Facility Subsidiaries,
as franchisee.
1.44 "Franchise Fees" shall mean all amounts payable by Tenant to Franchisor
under the Franchise Agreement.
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1.45 "Franchise Subordination Agreement" shall mean that certain Subordination
Agreement of even date herewith, as the same may be amended from time to time,
by and among OpCo, Landlord and Franchisor.
1.46 "Franchisor" shall mean, collectively, Magellan Health Services, Inc., a
Delaware corporation, and Charter Franchise Services, LLC, a Delaware limited
liability company.
1.47 "GAAP" shall mean generally accepted accounting principles consistently
applied.
1.48 "Government Agencies" shall mean any court, agency, authority, board
(including, without limitation, environmental p otection, planning and zoning),
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental unit of the United States or the State or any
county or any political subdivision of any of the foregoing, whether now or
hereafter in existence, having jurisdiction over Tenant or the Collective Leased
Properties or any portion thereof or the Facilities operated thereon.
1.49 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter require notification,
investigation or remediation under any federal, state or local statute,
regulation, rule, ordinance, order, action or policy; or
(b) which is or becomes defined as a "hazardous waste," "hazardous
material" or "hazardous substance" or "pollutant" or contaminant" under
any present or future federal, state or local statute, regulation, rule
or ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C, et seq.) and the Resource Con ervation and Recovery Act (42
U.S.C, section 6901 et seq.) and the regulations promulgated
thereunder; or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or
becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, any
state of the United States, or any political subdivision thereof; or
(d) the presence of which on any of the Collective Leased Properties
causes or threatens to cause a nuisance upon such Leased Property or to
adjacent properties or poses or threatens to pose a hazard to any of
the Collective Leased Properties or to the health or safety of persons
on or about any of the Collective Leased Properties; or
(e) without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons or volatile organic compounds; or
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(f) without limitation, which contains polychlorinated biphenyls (PCBs)
or asbestos or urea formaldehyde foam insulation; or
(g) without limitation, which contains or emits radioactive particles,
waves or material; or
1.50 "Impositions" shall mean, with respect to any of the Collective Leased
Properties, collectively, all taxes (including, without limitation, all taxes
imposed under the laws of the State, as such laws may be amended from time to
time, and all ad valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Landlord, Tenant or the business conducted upon such Leased
Property), assessments (including, without limitation, all assessments for
public improvements or benefit, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term), ground
rents, water, sewer or other rents and charges, excises, tax levies, fees
(including, without limitation, license, permit, inspection, authorization and
similar fees) and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of such Leased Property or the business conducted thereon
by Tenant (including all interest and penalties thereon due to any failure in
payment by Tenant), which at any time prior to, during or in respect of the Term
hereof may be assessed or imposed on or in respect of or be a lien upon (a)
Landlord's interest in such Leased Property, (b) such Leased Property or any
part thereof or any rent therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with such Leased Property or the
leasing or use of such Leased Property or any part thereof by Tenant; provided,
however, that nothing contained herein shall be construed to require Tenant to
pay (i) any tax based on net income imposed on Landlord, (ii) any net revenue
tax of Landlord, (iii) any transfer fee or other tax imposed with respect to the
sale, exchange, financing, mortgaging, or other disposition by Landlord of the
applicable Leased Property or the proceeds thereof (other than in connection
with the sale, exchange or other disposition to, or in connection with a
transaction involving, Tenant), or (iv) any single business, franchise fees,
gross receipts (other than a tax on any rent received by Landlord from Tenant),
transaction privilege, rent or similar taxes as the same relate to or are
imposed upon Landlord, except to the extent that any tax, assessment, tax levy
or charge that Tenant is obligated to pay pursuant to the first sentence of this
definition and that is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (i) or (ii) preceding is levied, assessed or imposed expressly in lieu
thereof.
1.51 "Indebtedness" shall mean all obligations, contingent or otherwise, which
in accordance with GAAP should be reflected on the obligor's balance sheet as
debt.
1.52 "Insurance Requirements" shall mean all terms of any insurance policy
required by this Agreement and all requirements of the issuer of any such
policy.
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1.53 "Land" shall have the meaning given such term in Section 2.1(a).
1.54 "Landlord" shall have the meaning given such term in the preamble to this
Agreement.
1.55 "Lease Year" shall mean any consecutive annual period starting on the
Commencement Date and ending on the day prior to the anniversary thereof;
provided that if the Commencement Date is not the first day of a calendar month
then the first (1st) Lease Year shall end on the last day of the calendar month
in which occurs the date which would otherwise be the last day of such Lease
Year.
1.56 "Leased Improvements" shall have the meaning given such term in Section
2.1(b).
1.57 "Leased Personal Property" shall have the meaning given such term in
Section 2.1(e).
1.58 "Leased Property" shall mean any one of the Collective Leased Properties.
1.59 "Legal Requirements" shall mean, with respect to any of the Collective
Leased Properties, all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions af ecting such Leased Property or the maintenance, construction,
alteration or operation thereof, whether now or hereafter enacted or in
existence, including, without limitation, (a) all permits, licenses,
certificates of need, authorizations and regulations necessary to operate such
Leased Property for its Primary Intended Use, and (b) all covenants, agreements,
restrictions and encumbrances contained in any instruments at any time in force
affecting such Leased Property, including those which may (i) require material
repairs, modifications or alterations in or to such Leased Property or (ii) in
any way adversely affect the use and enjoyment thereof.
1.60 "Lending Institution" shall mean any insurance company, federally insured
commercial or savings bank, national banking association, savings and loan
association, employees' welfare, pension or retirement fund or system, syndicat
d lenders' group, commercial finance company, leasing company, corporate profit
sharing or pension trust, college or university, or real estate investment
trust, including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust, such trust having a net worth of at
least $50,000,000.
1.61 "Lien" shall mean any mortgage, security interest, pledge, collate al
assignment, or other encumbrance, lien or charge of any kind, or any transfer of
any property or assets for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
any Person's general creditors.
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1.62 "Management Agreement" shall mean any agreement whether written or oral
entered into between Tenant and any other party (including any Affiliated Person
as to Tenant) pursuant to which management services are provided to all or
substantially all of any Facility, together with all amendments, modifications
or supplements thereto.
1.63 "Manager" shall mean the management party under any Management Agreement
1.64 "Minimum Rent" shall mean the following monthly sums with respect to the
Fixed Term:
Lease Year Minimum Rent Lease Year
1 $3,476,666.67
2 $3,650,500.00
3 $3,833,025.00
4 $4,024,676.25
5 $4,225,910.06
6 $4,437,205.56
7 $4,659,065.84
8 $4,892,019.13
9 $5,136,620.09
10 $5,393,451.09
11 $5,663,123.64
12 $5,946,279.82
With respect to each Extended Term, the Minimum Rent shall be an amount
determined in accordance with Section 2.5.
1.65 "Notice" shall mean a notice given in accordance with Section 22.11.
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1.66 "Non-Priority Additional Rent" shall mean the installments of additional
rent with respect to any Lease Year in excess of the Priority Additional Rent
Base Amount.
1.67 "Officer's Certificate" shall mean a certificate signed by an officer of
Tenant.
1.68 "OpCo" shall have the meaning given such term in the preamble to this
Agreement.
1.69 "Overdue Rate" shall mean, on any date, a per annum rate of interest equal
to the lesser of the Prime Rate plus six (6) percentage points and the maximum
rate then permitted under applicable law.
1.70 "Parent" shall mean, with respect to any Person, any Person which owns
directly, or indirectly through one or more Subsidiaries, more than fifty
percent (50%) of beneficial equity interest in such Person.
1.71 "Permitted Encumbrances" shall mean with respect to any of the Collective
Leased Properties, all rights, restrictions, and easements of record set forth
on Schedule B to the applicable owner's or leasehold title insurance policy
issued to Landlord on the date hereof, plus any other such encumbrances as may
have been consented to in writing by Landlord from time to time, plus items that
constitute Permitted Exceptions under and as that term is defined in the
Purchase Agreement.
1.72 "Person" shall mean any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
1.73 "Philadelphia Facility" shall mean the "Charter Fairmount" Facility
currently under renovation and located in Philadelphia, Pennsylvania.
1.74 "Primary Intended Use" shall have the meaning given such term in Section
4.1.1.
1.75 "Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank (or its successor) as its prime
rate in effect at its principal office in New York City, New York.
1.76 "Priority Additional Rent Base Amount" for any Lease Year shall mean an
amount of Additional Rent equal to Ten Million Dollars ($10,000,000); provided,
however, that if Landlord funds, or makes an irrevocable commitment to fund,
Capital Expenditures for any Lease Year in an amount in excess of Ten Million
Dollars ($10,000,000) at Tenant's request, then the Priority Additional Rent
Base Amount for such Lease Year shall be increased to the amount of Capital
Expenditures funded or committed to be funded by Landlord for such Lease Year.
Notwithstanding the foregoing, in the event that, and for so long as, the
accrued and unpaid Franchise Fees, including interest thereon, if any, equal or
exceed Fifteen Million Dollars
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($15,000,000), then the Priority Additional Rent Base Amount for any such Lease
Year shall be reduced to $0.00; provided, however, that if Landlord funds, or
makes an irrevocable commitment to fund, Capital Expenditures for any Lease Year
in any amount at Tenant's request, then the Priority Additional Rent Base Amount
for such Lease Year shall be increased from $0.00 to the amount of Capital
Expenditures funded or committed to be funded by Landlord for such Lease Year.
The Priority Additional Rent Base Amount shall be computed monthly in advance of
the payment of Rent due hereunder for the next succeeding month. Such
calculation shall be made on the 25th day of the month, unless the 25th day of
the month is not a Business Day, in which event such calculation for such month
shall be made on the first Business Day following such 25th day. Notwithstanding
anything set forth above to the contrary, if any request by Tenant to Landlord
for a disbursement of the Allowance in any Fiscal Year is for an amount in
excess of the amount budgeted for capital expenditures in Tenant's approved
annual budget for such Fiscal Year, then the Priority Additional Rent Base
Amount shall not be increased as provided above to the extent that the amount of
such request is above the budgeted amount unless such request is accompanied by
Franchisor's consent to such requested amount.
1.77 "Purchase Agreement" shall have the meaning given uch term in Section 22.15
hereof.
1.78 "Qualified Affiliate" shall mean any (x) Parent or Subsidiary of OpCo, or
(y) partnership or limited liability company in which OpCo has an ownership
interest of not less than 25%, whether or not such interest is controlling.
1.79 "Qualified Appraiser" shall mean an appraiser who is not in control of,
controlled by or under common control with either Landlord or Tenant and has not
been an employee of Landlord or Tenant or any Affiliated Person with respect to
either of Landlord or Tenant at any time, who is qualified to appraise
commercial real estate in the State and is a member of the American Institute of
Real Estate Appraisers (or any successor association or body of comparable
standin if such Institute is not then in existence) and who has held his or her
certificate as an M.A.I, or its equivalent for a period of not less than three
(3) years, and has been actively engaged in the appraisal of commercial real
estate in such area for a period of not less than five (5) years, immediately
preceding his or her appointment hereunder.
1.80 "Regulated Medical Wastes" shall mean all materials generated by Tenant,
subtenants, patients, occupants or the operators of the Collective Leased
Properties which are now or may hereafter be subject to regulation pursuant to
the Material Waste Tracking Act of 1988, or any Applicable Laws promulgated by
any Government Agencies.
1.81 "Rent" shall mean, collectively, the Minimum Rent, Additional Rent and
Additional Charges.
1.82 "SEC" shall mean the Securities and Exchange Commission.
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1.83 "State" shall mean, as to each Leased Property, the state in which such
Leased Property is located.
1.84 "Subordinated Creditor" shall mean any creditor of Tenant which is a party
to a Subordination Agreement in favor of Landlord.
1.85 "Subordination Agreement" shall mean any agreement executed by a
Subordinated Creditor pursuant to which the payment and performance of Tenant's
obligations to such Subordinated Creditor are subordinated to the payment and
performance of Tenant's obligations to Landlord under this Agreement.
1.86 "Subsidiary" shall mean, with respect to any Person, any Entity in which
such Person owns directly, or indirectly through one or more Subsidiaries, more
than fifty percent (50%) of the beneficial equity interest of such Person.
1.87 "Substitute Leased Property" shall have the meaning given such term in
Section 22.15 hereof.
1.88 "Substitution Date" shall have the meaning given such term in Section 22.15
hereof.
1.89 "Tenant" shall mean OpCo and the Facility Subsidiaries listed in Exhibit B,
jointly and severally.
1.90 "Tenant's Personal Property" shall mean all tangible personal property now
owned or hereafter acquired by Tenant on or after the date hereof and located at
any of the Collective Leased Properties or used in connection with Tenant's
business at any of the Collective Leased Properties, including, without
limitation, all motor vehicles and consumable inventory and supplies, furniture,
furnishings, movable walls and partitions, equipment and machinery and all other
tangible personal property of Tenant, and all modifications, replacements,
alterations and additions to such personal property installed at the expense of
Tenant.
1.91 "Term" shall mean, collectively, the Fixed Term and the Extended Terms, to
the extent properly exercised pursuant to the provisions of Section 2.4, unless
sooner terminated pursuant to the provisions of this Agreement.
1.92 "Unsuitable for Its Primary Intended Use" shall mean, with respect to any
Facility, a state or condition of such Facility such that (a) following any
damage or destruction involving such Leased Property, such Leased Property
cannot reasonably be expected to be restored to substantially the same condition
as existed immediately before such damage or destruction, and as otherwise
required by Section 10.2.3, within six (6) months following such damage or
destruction or such shorter period of time as to which business interruption
insurance
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is available to cover Rent and other costs related to such Leased Property
following such damage or destruction, or (b) as the result of a partial taking
by Condemnation, such Facility cannot be operated, in the good faith judgment of
OpCo, on a commercially practicable basis for its Primary Intended Use taking
into account, among other relevant factors, the number of usable beds, the
amount of square footage, or the revenues affected by such damage or destruction
or partial taking.
1.93 "Work" shall have the meaning given such term in Section 10.2.3.
2
COLLECTIVE LEASED PROPERTIES AND TERM
2.1 Collective Leased Properties.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord leases to Tenant and Tenant leases from Landlord all of the following
(collectively, the "Collective Leased Properties"):
(a) those certain tracts, pieces and parcels of land conveyed to
Landlord pursuant to Deeds dated on or about the date hereof, the
common names and street addresses of which are set forth in Exhibit A
attached hereto (the "Land");
(b) all buildings, structures, Fixtures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and off-site),
parking areas and roadways appurtenant to such buildings and
structures presently situated upon the Land and all Capital Additions
(collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances relating to the Land and
the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of property,
now or hereafter permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment,
all of which, to the maximum extent permitted by law, are hereby deemed
by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto, but
specifically excluding Tenant's Personal Property (collectively, the
"Fixtures");
(e) all machinery, equipment, furniture, furnishings, moveable walls or
partitions, computers or trade fixtures or other personal property of
any kind or descript on used or
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useful in Tenant's business on or in the Leased Improvements, and
located on or in the Leased Improvements, including, without
limitation, all "Personal Property" as defined in the Purchase
Agreement, and all modifications, replacements, alterations and
additions to such personal property, except items, if any, included
within the category of Fixtures, but specifically excluding Tenant's
Personal Property (collectively, the "Leased Personal Property"); and
(f) all leases of space (including any security deposits held by Tenant
pursuant thereto) in the Leased Improvements to tenants thereof.
Landlord hereby assigns to Tenant, and Tenant hereby assumes, all of
the leases described in clause (f) immediately preceding, such assumption being
to the full extent set forth in the Assignment of Leases executed at the closing
pursuant to the Purchase Agreement. In connection therewith, Tenant agrees to
perform any and all covenants of landlord thereunder, past, present and future.
Notwithstanding the foregoing, such leases shall, without the necessity of
further documentation, be deemed reassigned to Landlord upon the expiration or
earlier termination of the Term. In connection with any reassignment thereof
occurring following an Event of Default hereunder, such reassignment shall not
release Tenant from any liability thereunder with respect to the period ending
prior to the expiration of the Term.
2.2 Condition of Collective Leased Properties.
Tenant acknowledges receipt and delivery of possession of the Collective
Leased Properties and Tenant accepts the Collective Leased Properties in their
"as is" condition, subject to the rights of all occupants and parties in
possession, the existing state of title, including all covenants, conditions,
restrictions, reservations, mineral leases, easements and other matters of
record or that are visible or apparent on the Collective Leased Properties, all
applicable Legal Requirements, the lien of financing instruments, mortgages and
deeds of trust, and such other matters which would be disclosed by an inspection
of the Collective Leased Properties and the record title thereto or by an
accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE COLLECTIVE
LEASED PROPERTIES AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR
LANDLORD'S AGENTS OR EMPLOYEES WITH RESPECT THERETO, AND TENANT WAIVES ANY CLAIM
OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE COLLECTIVE LEASED
PROPERTIES. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE COLLECTIVE LEASED PROPERTIES 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 QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT
OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the
maximum extent permitted by law, however, Landlord hereby assigns to Tenant all
of Landlord's rights to proceed against any predecessor in title for breaches of
warranties or representations or for latent defects in the
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Collective Leased Properties. Landlord shall fully cooperate with Tenant in the
prosecution of any such claims, in Landlord's or Tenant's name, all at Tenant's
sole cost and expense. Tenant shall indemnify, defend, and hold harmless
Landlord from and against any loss, cost, damage or liability (including
reasonable attorneys' fees) incurred by Landlord in connection with such
cooperation.
2.3 Fixed Term.
The initial term of this Agreement (the "Fixed Term") shall commence at
12:01 a.m. on the Commencement Date and shall expire at 11:59 p.m. on the last
day of the twelfth (12th) Lease Year.
2.4 Extended Term.
Provided that no Default or Event of Default shall have occurred and be
continuing and this Agreement shall be in full force and effect, Tenant shall,
subject to Section 2.5 below, have the right to extend the Term for each of four
(4) consecutive five (5)-year renewal terms (collectively, the "Extended Terms")
for all, and not less than all, of the Collective Leased Properties.
Each Extended Term shall commence on the day succeeding the expiration of
the Fixed Term or the preceding Extended Term, as the case may be. All of the
terms, covenants and provisions of this Agreement (including but not limited to
those with respect to Additional Rent and payments of the Allowance) shall apply
to each such Extended Term, except that (x) the Minimum Rent for each Extended
Term shall be the Fair Market Rental for such Extended Term and shall be
determined pursuant to Section 2.5 below and (y) Tenant shall have no right to
extend the Term beyond the expiration of the Extended Terms. If Tenant shall
elect to exercise any of the aforesaid options, it shall do so by giving
Landlord Notice thereof not later than one (1) year prior to the scheduled
expiration of the then current Term of this Agreement (Fixed Term or Extended
Term, as the case may be), it being understood and agreed that time shall be of
the essence with respect to the giving of such Notice. Tenant may not exercise
its option for more than one such Extended Term at a time. If Tenant shall fail
to give any such Notice, this Agreement shall automatically terminate at the end
of the Term then in effect and Tenant shall have no further option to extend the
Term of this Agreement. If Tenant shall give such Notice, the extension of this
Agreement shall be automatically effected without the execution of any
additional documents, it being understood and agreed, however, that Tenant and
Landlord shall execute such documents and agreements as either party shall
reasonably require to evidence the same. Notwithstanding the provisions of the
foregoing sentence, if, subsequent to the giving of such Notice, an Event of
Default shall occur and be continuing, unless Landlord shall otherwise consent
in writing, the extension of this Agreement shall cease to take effect and this
Agreement shall automatically terminate at the end of the Term then in effect
and Tenant shall have no further option to extend the Term of this Agreement.
2.5 Determination of Minimum Rent for Extended Terms.
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The Minimum Rent for each Extended Term shall be equal to the amount set
forth in clause (x) in Section 2.4 above and shall be determined by the mutual
greement of Landlord and Tenant within thirty (30) days after Landlord receives
Tenant's Notice exercising its option to extend with respect to such Extended
Term, but in no event earlier than twelve (12) months prior to the commencement
of the applicable Extended Term. In the event Landlord and Tenant are unable to
agree on the Minimum Rent for such Extended Term within such period, such
Minimum Rent shall be determined pursuant to appraisal in accordance with
Article 19.
3
RENT
3.1 Rent.
Tenant shall pay to Landlord, in lawful money of the United States of
America which shall be legal tender for the payment of public and private debts,
without offset, abatement, demand or deduction, Minimum Rent, Additional Rent
and Additional Charges, during the Term, except as hereinafter expressly
provided. All payments to Landlord shall be made by wire transfer of immediately
available federal funds or by other means acceptable to Landlord and Tenant,
each in its sole discretion. Rent for any partial month shall be prorated on a
per diem basis based on a 365-day year and the actual number of days elapsed.
3.1.1 Minimum Rent.
Minimum Rent shall be paid in advance on the first day of each calendar
month; provided, however, that the first monthly installment of Minimum Rent
shall be payable on the Commencement Date.
3.1.2 Additional Rent.
Additional Rent shall be paid in advance on the first day of each calendar
month; provided, however, that the first monthly installment of Additional Rent
shall be payable on the Commencement Date. Except as otherwise set forth in
Section 12.1(a) hereof, Tenant's failure to pay Additional Rent shall not
constitute a Default or Event of Default hereunder.
3.1.3 Additional Charges.
In addition to the Minimum Rent and Additional Rent payable hereunder,
Tenant shall pay and discharge as and when due and payable the following
(collectively, "Additional Charges"):
(a) Impositions. Subject to Article 8 relating to Permitted Contests,
Tenant shall pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost (other
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than any opportunity cost as a result of a failure to take advantage of any
discount for early payment) may be added for non-payment, such payments to
be made directly to the taxing authorities where feasible, and shall
promptly, upon request, furnish to Landlord copies of official receipts or
other satisfactory proof evidencing such payments. If any such Imposition
may, at the option of the taxpayer, lawfully be paid in installments
(whether or not interest shall accrue on the unpaid balance of such
Imposition), Tenant may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in installments
and, in such event, shall pay such installments during the Term as the same
become due and before any fine, penalty, premium, further interest or cost
may be added thereto. Landlord, at its expense, shall, to the extent
required or permitted by applicable law, prepare and file all tax returns
in respect of Landlord's net income, gross receipts, sales and use, single
business, transaction privilege, rent, ad valorem, franchise taxes and
taxes on its capital stock, and Tenant, at its expense, shall, to the
extent required or permitted by applicable laws and regulations, prepare
and file all other tax returns and reports in respect of any Imposition as
may be required by any government or Government Agency. Provided no Default
or Event of Default shall have occurred and be continuing, if any refund
shall be due from any taxing authority in respect of any Imposition paid by
Tenant, the same shall be paid over to or retained by Tenant. Landlord and
Tenant shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to the Collective
Leased Properties as may be necessary to prepare any required returns and
reports. In the event Government Agencies classify any property covered by
this Agreement as personal property, Tenant shall file all personal
property tax returns in such jurisdictions where it may legally so file.
Each party shall, to the extent it possesses the same, provide the other,
upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal property. Where Landlord
is legally required to file personal property tax returns, Landlord shall
provide Tenant with copies of assessment notices in sufficient time for
Tenant to file a protest. All Impositions assessed against such personal
property shall be (irrespective of whether Landlord or Tenant shall file
the relevant return) paid by Tenant not later than the last date on which
the same may be made without interest or penalty. If the provisions of any
Facility Mortgage require deposits on account of Impositions to be made
with such Facility Mortgagee, provided the Facility Mortgagee has not
elected to waive such provision, Tenant shall either pay Landlord the
monthly amounts required at the time and place that payments of Minimum
Rent are required and Landlord shall transfer such amounts to such Facility
Mortgagee or, pursuant to written direction by Landlord, Tenant shall make
such deposits directly with such Facility Mortgagee. Landlord shall,
however, use commercially reasonable best efforts to cause any Facility
Mortgagee not to impose such obligation on Tenant.
Landlord shall give prompt Notice to Tenant of all Impositions payable
by Tenant hereunder of which Landlord at any time has knowledge; provided,
however, that Landlord's failure to give any such Notice shall in no way
diminish Tenant's obligation hereunder to pay such Impositions, except that
Landlord shall (unless Tenant itself knew, or should have known,
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about the existence of such Impositions obligation) pay all penalties, fines and
other expenses arising out of Landlord's failure to give such Notice.
(b) Utility Charges. Tenant shall pay or cause to be paid all charges for
electricity, power, gas, oil, water and other utilities used in connection
with the Collective Leased Properties.
(c) Insurance Premiums. Tenant shall pay or cause to be paid all premiums
for the insurance coverage required to be maintained pursuant to Article 9.
(d) Other Charges. Tenant shall pay or cause to be paid all other amounts,
liabilities and obligations which Tenant assumes or agrees to pay under
this Agreement, including, without limitation, all agreements to indemnify
Landlord under Sections 4.4 and 9.7.
(e) Prorations. Tenant shall pay or cause to be paid all amounts required
to be paid by OpCo under Section 10.4 of the Purchase Agreement.
(f) Reimbursement for Additional Charges. If Tenant pays or causes to be
paid property taxes or similar Additional Charges attributable to periods
after the end of the Term, whether upon expiration or sooner termination of
this Agreement (other than termination following an Event of Default),
Tenant may, within sixty (60) days of the end of the Term, provide Notice
to Landlord of its estimate of such amounts. Landlord shall promptly
reimburse Tenant for all payments of such taxes and other similar
Additional Charges that are attributable to any period after the Term of
this Agreement (unless this Agreement shall have been terminated following
an Event of Default). Tenant acknowledges that it has no claims against
Landlord for Additional Charges attributable to the periods prior to the
first day of the Term.
3.2 Late Payment of Rent.
If any installment of (i) Minimum Rent, (ii) Additional Rent (with respect
to which Landlord has made a disbursement of the Allowance) or (iii) Additional
Charges (but only as to those Additional Charges which are payable directly to
Landlord) shall not be paid on its due date, Tenant shall pay Landlord, on
demand, as Additional Charges, a late charge (to the extent permitted by law)
computed at the Overdue Rate on the amount of such installment, from the due
date of such installment to the date of payment thereof. To the extent that
Tenant pays any Additional Charges directly to Landlord or any Facility
Mortgagee pursuant to any requirement of this Agreement, Tenant shall be
relieved of its obligation to pay such Additional Charges to the Entity to which
they would otherwise be due.
In the event of any failure by Tenant to pay any Additional Charges when
due, Tenant shall promptly pay and discharge, as Additional Charges, every fine,
penalty, interest and cost which may be added for non-payment or late payment of
such items. Landlord shall have all legal, equitable and contractual rights,
powers and remedies provided either in this Agreement or by statute or otherwise
in the case of non-payment of the Additional Charges as in the case of
non-payment of
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the Minimum Rent and Additional Rent, except as otherwise specifically provided
in this Agreement.
3.3 Net Lease.
The Minimum Rent shall be absolutely net to Landlord so that this Agreement
shall yield to Landlord the full amount of the installments or amounts of
Minimum Rent throughout the Term, subject to any other provisions of this
Agreement which expressly provide for adjustment of such Minimum Rent.
3.4 No Termination, Abatement, Etc.
Except as otherwise specifically provided in this Agreement, Tenant, to the
maximum extent permitted by law, shall remain bound by this Agreement in
accordance with its terms and shall neither take any action without the consent
of Landlord to modify, surrender or terminate this Agreement, nor seek, nor be
entitled to any abatement, deduction, deferment or reduction of the Rent, or
set-off against the Rent, nor shall the respective obligations of Landlord and
Tenant be otherwise affected by reason of (a) any damage to or destruction of
any of the Collective Leased Properties or any portion thereof from whatever
cause or any Condemnation; (b) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of any of the Collective Leased Properties, or
any portion thereof, or the interference with such use by any Person or by
reason of eviction by paramount title; (c) any claim which Tenant may have
against Landlord by reason of any default or breach of any warranty by Landlord
under this Agreement or any other agreement between Landlord and Tenant, or to
which Landlord and Tenant are parties; (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee or transferee of
Landlord; or (e) for any other cause whether similar or dissimilar to any of the
foregoing. Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law, to (i)
modify, surrender or terminate this Agreement or quit or surrender any of the
Collective Leased Properties or any portion thereof, or (ii) entitle Tenant to
any abatement, reduction, suspension or deferment of the Rent or other sums
payable or other obligations to be performed by Tenant hereunder, except as
otherwise specifically provided in this Agreement. The obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and the
Rent and all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement.
3.5 Annual Allowance.
Provided no Default or Event of Default pursuant to Section 12.1(a) hereof
has occurred and is continuing and this Agreement shall be in full force and
effect, Landlord shall pay the Allowance to, or at the direction of, Tenant
during each Lease Year of the Term. At least Ten Million Dollars ($10,000,000)
of the Allowance shall be used to pay for Capital Expenditures made during such
Lease Year. At Tenant's election, Tenant shall have the right to use up to Ten
Million Dollars ($10,000,000) of the Allowance to pay for Impositions, premiums
for insurance required pursuant
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to Article 9 hereof and franchise fees due and owing under the Franchise
Agreement. Anything in this Agreement to the contrary notwithstanding, any and
all assets paid for (or which are the subject of reimbursements to Tenant) by
disbursements of the Allowance with respect to Capital Expenditures shall
immediately be the property of Landlord and constitute part of the Collective
Leased Properties. Any portion of the Allowance not utilized in a particular
Lease Year shall, subject to the sentence immediately following, remain
available for use in subsequent Lease Years. Notwithstanding the foregoing (x)
in the event less than $10,000,000 of the Allowance for any Lease Year is used
to pay for Capital Expenditures, then a portion of any amount remaining to be
used in subsequent Lease Years shall be used only for Capital Expenditures, such
portion being equal to the amount by which Capital Expenditures funded with the
Allowance for such Lease Year were less than $10,000,000 and (y) in the event
any portion of the Allowance (including amounts accrued from prior Lease Years)
is not utilized as of the last day of the Term, such amount shall be deemed
forfeited and Tenant will receive no payment or credit with respect thereto.
In order to receive a disbursement of the Allowance, Tenant shall submit to
Landlord (but not more often than twice monthly) a statement, certified pursuant
to an Officer's Certificate transmitted therewith, setting forth in reasonable
detail a description of the Capital Expenditures, impositions, premiums for
insurance required pursuant to Article 9 hereof, and Franchise Fees incurred or
owing during such Lease Year and for which an Allowance disbursement is sought.
Such Officer's Certificate shall certify that the expenditures for which
reimbursement is sought are either within Tenant's approved annual budget or
have been approved by Franchisor. Within five (5) Business Days after receipt
thereof, Landlord shall reimburse to Tenant (or, upon Tenant's written
direction, included along with such certified statement, pay third-party
contractors or vendors identified therein) appropriate amounts requested. Upon
two (2) Business Days prior Notice Landlord shall have the right to audit
Tenant's books and records to confirm the accuracy of any such statement.
The foregoing provision hereof notwithstanding, in no event shall Landlord
be obligated (x) to make disbursements in any Lease Year in excess of Ten
Million Dollars ($10,000,000) with respect to impositions, premiums for
insurance required pursuant to Article 9 hereof, and Franchise Fees, except to
the extent that any amounts carry over from previous years pursuant to the first
paragraph of Section 3.5, (y) to make disbursements with respect to any Lease
Year in excess of the Additional Rent theretofore paid for such Lease Year,
except to the extent that any amounts carry over from previous years pursuant to
the first paragraph of Section 3.5 or (z) to make any disbursements of the
Allowance if Tenant has failed to pay any monthly installments of Additional
Rent at least equal to such disbursements.
4
USE OF THE COLLECTIVE LEASED PROPERTIES
4.1 Permitted Use.
4.1.1 Primary Intended Use.
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Tenant shall, at all times during the Term and at any other time that
Tenant shall be in possession of any Leased Property, subject to Section 4.5
hereof, continuously use each of the Collective Leased Properties for the
operation of a licensed acute or chronic care psychiatric hospital; licensed
residential treatment center; licensed subacute hospital; licensed substance
abuse, neurological, geriatric, correctional, juvenile justice or other
healthcare service facility providing inpatient care; outpatient facility; or
any combination of the foregoing; and the healthcare services provided by or at
a Leased Property may include inpatient hospitalization, partial hospitalization
programs, outpatient therapy, intensive outpatient therapy, ambulatory
detoxification, behavioral modification programs and related services (provided
such related services constitutes services intended to be provided as part of
the "Franchised Business," as such term is defined in the Franchise Agreement),
and for such other uses as may be incidental or necessary thereto, including the
operation of any medical office buildings located on any such Leased Property
(such use being hereinafter referred to as such Leased Property's "Primary
Intended Use"). Tenant shall not use any of the Collective Leased Properties or
any portion thereof for any other use without the prior written consent of
Landlord. No use shall be made or permitted to be made of any of the Collective
Leased Properties and no acts shall be done thereon which will cause the
cancellation of any insurance policy covering any of the Collective Leased
Properties or any part thereof (unless another adequate policy is available),
nor shall Tenant sell or otherwise provide to residents or patients therein, or
permit to be kept, used or sold in or about any of the Collective Leased
Properties any article which may be prohibited by law or by the standard form of
fire insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriter's regulations. Tenant shall, at its sole cost,
comply with all of the requirements pertaining to the Collective Leased
Properties of any insurance board, association, organization or company
necessary for the maintenance of insurance, as herein provided, covering the
Collective Leased Properties and Tenant's Personal Property, including, without
limitation, the Insurance Requirements. Tenant shall not take or omit to take
any action, the taking or omission of which materially impairs the value or the
usefulness of any of the Collective Leased Properties or any part thereof for
its Primary Intended Use.
4.1.2 Necessary Approvals.
Tenant shall proceed with all due diligence and exercise best efforts to
obtain and maintain all approvals necessary to use and operate, for its Primary
Intended Use, each o the Collective Leased Properties and each Facility located
thereon under applicable law and, without limiting the foregoing, shall use its
commercially reasonable best efforts to maintain appropriate licensure and
participation in those reimbursement programs for which a Facility is eligible
and in which management of the Facility desires to participate.
4.1.3 Lawful Use, Etc.
Tenant shall not use or suffer or permit the use of any of the Collective
Leased Properties or Tenant's Personal Property for any unlawful purpose. Tenant
shall not commit or suffer to be committed any waste on any of the Collective
Leased Properties, or in any Facility, nor shall Tenant cause or permit any
nuisance thereon or therein. Tenant shall neither suffer nor permit
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any of the Collective Leased Properties or any portion thereof, including any
Capital Addition or Tenant's Personal Property, to be used in such a manner as
(i) might reasonably tend to impair Landlord's (or Tenant's, as the case may be)
title thereto or to any portion thereof, or (ii) may reasonably make possible a
claim or claims for adverse usage or adverse possession by the public, as such,
or of implied dedication of the applicable Leased Property or any portion
thereof.
4.2 Compliance with Legal and Insurance Requirements, Etc.
Subject to the provisions of Article 8, Tenant, at its sole expense, shall
(i) comply in all material respects with Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair, alteration
and restoration of all of the Collective Leased Properties, and (ii) procure,
maintain and comply in all material respects with all appropriate licenses,
certificates of need, permits, and other authorizations and agreements required
for any use of the Collective Leased Properties and Tenant's Personal Property
then being made, and for the proper erection, installation, operation and
maintenance of the Collective Leased Properties or any part thereof, including,
without limitation, any Capital Additions.
4.3 Compliance with Medicaid and Medicare Requirements.
Tenant shall, at its sole cost and expense, make whatever improvements (capital
or ordinary) as are required to conform each of the Collective Leased Properties
to such standards as may, from time to time, be required by Federal Medicare
(Title 18) or Medicaid (Title 19), to the extent Tenant is a participant in such
programs or any other applicable programs or legislation, or capital
improvements required by any other governmental agency having jurisdiction over
such Leased Property as a condition of the continued operation of such Leased
Property for its Primary Intended Use.
4.4 Environmental Matters.
4.4.1 Restriction on Use, Etc.
Tenant shall not store, spill upon, dispose of or transfer to or from the
Collective Leased Properties any Hazardous Substance, except that Tenant may
store, transfer and dispose of Hazardous Substances in compliance with all
Applicable Laws. Tenant shall maintain the Collective Leased Properties at all
times free of any Hazardous Substance (except such Hazardous Substan es as are
maintained in compliance with all Applicable Laws). Tenant shall promptly: (a)
notify Landlord in writing of any material change in the nature or extent of
Hazardous Substances at any of the Collective Leased Properties, (b) transmit to
Landlord a copy of any Community Right to Know report which is required to be
filed by Tenant with respect to any of the Collective Leased Properties pursuant
to SARA Title III or any other Applicable Law, (c) transmit to Landlord copies
of any demand letters, complaints or other documents initiating legal action,
citations, orders, notices or other material communications asserting claims by
private parties or government agencies with respect to Hazardous Substances
received by Tenant or its agents or representatives (collectively,
"Environmental Notice"), which Environmental Notice requires a written response
or any action
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to be taken and/or if such Environmental Notice gives notice of and/or could
give rise to a material violation of any Applicable Law and/or could give rise
to any material cost, expense, loss or damage (an "Environmental Obligation"),
(d) observe and comply with all Applicable Laws relating to the use, maintenance
and disposal of Hazardous Substances and all orders or directives from any
official, court or agency of competent jurisdiction relating to the use or
maintenance or requiring the removal, treatment, containment or other
disposition thereof, and (e) pay or otherwise dispose of any fine, charge or
Imposition related thereto, unless Tenant shall contest the same in good faith
and by appropriate proceedings and the right to use and the value of any of the
Collective Leased Properties is not materially and adversely affected thereby.
If at any time Hazardous Substances are discovered in violation of
Applicable Laws on any of the Collective Leased Properties, Tenant shall take
all actions and incur any and all expenses, as may be necessary or as may be
required by any Government Agency, (i) to clean up and remove from and about
such Leased Properties all Hazardous Substances thereon, (ii) to contain and
prevent any further release or threat of release of Hazardous Substances on or
about such Leased Properties and (iii) to use good faith efforts to eliminate
any further release or threat of release of Hazardous Substances on or about
such Leased Properties.
4.4.2 Environment Report.
Six (6) months prior to expiration of the Term, Tenant shall designate a
qualified environmental engineer, satisfactory to Landlord in its sole
discretion, which engineer shall conduct an environmental investigation of the
Collective Leased Properties and prepare an environmental site assessment report
(the "Environmental Report") with respect thereto. The scope of such
Environmental Report shall include, without limitation, review of relevant
records, interviews with persons knowledgeable about the Collective Leased
Properties and relevant governmental agencies, a site inspection of the
Collective Leased Properties, any buildings, the fencelines of the Collective
Leased Properties and adjoining properties (Phase I) and shall otherwise be
reasonably satisfactory in form and substance to Landlord. If such
investigation, in the opinion of the performing engineer, indicates that any of
the Collective Leased Properties are not environmentally sound and free from
oil, asbestos, radon and other Hazardous Substances (except in compliance with
Applicable Laws), such investigation shall also include a more detailed physical
site inspection, appropriate testing, subsurface and otherwise, and review of
historical records (Phase II) to demonstrate the compliance of such of the
Collective Leased Properties with Applicable Laws and the absence of Hazardous
Substances except in compliance with Applicable Laws.
All Environmental Reports, and supplements and amendments thereto, shall be
provided to Landlord contemporaneously with delivery thereof to Tenant. With
respect to any recommendations contained in the Environmental Report, violations
of Applicable Laws and/or the existence of any conditions at any of the
Collective Leased Properties which could give rise to an Environmental
Obligation, Tenant shall promptly give Notice thereof to Landlord, together with
a description, setting forth in reasonable detail, all actions Tenant proposes
to take in connection therewith and Tenant shall promptly take all actions, and
incur any and all expenses, as may be required by Applicable Law or by any
Government Agency or, in the case of conditions that could give rise to
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an Environmental Obligation, as may be reasonably required by Landlord, (i) to
clean up, remove or remediate from and about the Collective Leased Properties
all Hazardous Substances thereon, (ii) to contain, prevent and eliminate any
further release or threat of release of Hazardous Substances on or about the
Collective Leased Properties, and (iii) otherwise to eliminate such violation or
condition from the Collective Leased Properties in accordance with Applicable
Law .
Landlord shall, provided no Event of Default has occurred and is
continuing, Landlord shall, upon receipt of a bill, along with reasonable
substantiation thereof, promptly reimburse Tenant for the reasonable
out-of-pocket costs incurred in the preparation of the Phase I Environmental
Report. In no event shall Landlord be obligated to pay or reimburse Tenant for
the costs incurred in connection with any Phase II Report or in connection with
any actions taken or proposed to be taken by Tenant as described in the
immediately preceding paragraph.
4.4.3 Indemnification of Landlord.
Tenant shall protect, indemnify and hold harmless Landlord and each
Facility Mortgagee, their trustees, officers, agents, employees and
beneficiaries, and any of their respective successors or assigns (hereafter the
"Indemnities," and when referred to singly, an "Indemnitee") for, from and
against any and all debts, liens, claims, causes of action, administrative
orders or notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon, incurred by
or asserted against any Indemnitee resulting from, either directly or
indirectly, the presence in, the Environment or any properties surrounding any
of the Collective Leased Properties of any Hazardous Substances. Tenant's duty
herein includes, but is not limited to, indemnification for costs associated
with personal injury or property damage claims as a result of the presence of
Hazardous Substances in, upon or under the soil or ground water of any of the
Collective Leased Properties in violation of any Applicable Law. Upon Notice
from Landlord, Tenant shall undertake the defense, at Tenant's sole cost and
expense, of any indemnification duties set forth herein. The foregoing
provisions hereof notwithstanding, Tenant's indemnification of any Facility
Mortgagee pursuant to this Section 4.4.3 shall not extend to or include the
investigation and defense expenses (including, but not limited to, legal and
consulting fees and expenses) incurred by such Facility Mortgagee.
Tenant shall, upon demand, pay to Landlord, as an Additional Charge, any
cost, expense, loss or damage (including, without limitation, reasonable
attorneys' fees) incurred by Landlord in asserting any right under this Section
4.4, including without limitation any right of indemnity under this Section
4.4.3 or otherwise arising from a failure of Tenant strictly to observe and
perform the foregoing requirements, which amounts shall bear interest from the
date incurred until paid by Tenant to Landlord at the Overdue Rate.
4.4.4 Survival.
The provisions of this Section 4.4 shall survive the expiration or sooner
termination of this Agreement.
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4.5 Tenant's Right to Close Facilities.
Provided that no Default or Event of Default (except pursuant to Section
12.1(e)) shall have occurred and be continuing, Tenant shall have the right at
any time and from time to time, to cease its operations in any or all of the
Facilities. Nothing herein shall entitle Tenant to any reduction in Rent or
diminish any of Tenant's other obligations, including without limitation
obligations to (x) maintain and insure any and all facilities, and (y) surrender
each Facility upon expiration or sooner termination of the Term with all
Tenant's Personal Property in place.
5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's Obligations.
Tenant shall, at its sole cost and expense, keep each of the Collective
Leased Properties and all private roadways, sidewalks and curbs appurtenant
thereto (and Tenant's Personal Property) in good order and repair, reasonable
wear and tear excepted (whether or not the need for such repairs occurs as a
result of Tenant's use, any prior use, the elements or the age of the Collective
Leased Properties or Tenant's Personal Property, or any portion thereof), and
shall promptly make all necessary and appropriate repairs and replacements
thereto of every kind and nature, 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 of the Term necessary
for the Primary Intended Use (concealed or otherwise); provided, however, that
Tenant shall be permitted to prosecute claims against Landlord's predecessors in
title for breach of any representation or warranty made to or on behalf of
Landlord or for any latent defects in the Collective Leased Properties. All
repairs shall be made in a good, workmanlike and first-class manner, in
accordance with all applicable federal, state and local statutes, ordinances,
by-laws, codes, rules and regulations relating to any such work. Except as
permitted by Section 4.5, Tenant shall not take or omit to take any action, the
taking or omission of which materially impairs the value or the usefulness of
any of the Collective Leased Properties or any part thereof for its respective
Primary Intended Use. Tenant's obligations under this Section 5.1.1 as to any of
the Collective Leased Properties shall be limited, in the event of any casualty
or Condemnation involving such Leased Property, as set forth in Sections 10.2
and 11.2. Notwithstanding any provisions of this Section 5.1 to the contrary,
Tenant's obligations with respect to Hazardous Substances are as set forth in
Section 4.4.
5.1.2 Landlord's Obligations.
Landlord shall not, under any circumstances, be required to build or
rebuild any improvement on the Collective Leased Properties, or to make any
repairs, replacements, alterations, restorations or renewals of any nature or
description to the Collective Leased Properties, whether ordinary or
extraordinary, structural or nonstructural, foreseen or unforeseen, or to make
any
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expenditure whatsoever with respect thereto, or to maintain the Collective
Leased Properties in any way, except as specifically provided herein. Tenant
hereby waives, to the maximum extent permitted by law, the right to make repairs
at the expense of Landlord pursuant to any law in effect on the date hereof or
hereafter enacted. Landlord shall have the right to give, record and post, as
appropriate, notices of nonresponsibility under any mechanic's lien laws now or
hereafter existing.
5.1.3 Nonresponsibility of Landlord; No Mechanics Liens.
Landlord's interest in the Collective Leased Properties shall not be
subject to liens for Capital Additions made by Tenant, and Tenant shall have no
power or authority to create any lien or permit any lien to attach to any of the
Collective Leased Properties or the present estate, reversion or other estate of
Landlord in the Collective Leased Properties or on the building or other
improvements thereon as a result of Capital Additions made by Tenant or for any
other cause or reason. All materialmen, contractors, artisans, mechanics and
laborers and other persons contracting with Tenant with respect to the
Collective Leased Properties, or any part thereof, are hereby charged with
notice that such liens are expressly prohibited and that they must look solely
to Tenant to secure payment for any work done or material furnished for Capital
Additions by Tenant or for any other purpose during the term of this Agreement.
Nothing contained in this Agreement shall be deemed or construed in any way
as constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any contractor, subcontractor, laborer or materialmen
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to any of the Collective Leased
Properties or any part thereof or as giving Tenant any right, power or authority
to contract for or permit the rendering of any services or the furnishing of any
materials that would give rise to the filing of any lien against any of the
Collective Leased Properties or any part thereof nor to subject Landlord's
estate in any of the Collective Leased Properties or any part thereof to
liability under any Mechanic's Lien Law of the State in any way, it being
expressly understood that Landlord's estate shall not be subject to any such
liability.
5.2 Tenant's Personal Property.
Tenant may (and shall as provided hereinbelow), at its expense, install,
affix or assemble or place on any parcels of the Land or in any of the Leased
Improvements any items of Tenant's Personal Property, and Tenant may, subject to
Section 7.2 and the conditions set forth below, remove and replace the same at
any time in the ordinary course of business, provided that no Default or Event
of Default has occurred and is continuing. Tenant shall provide and maintain
throughout the Term all such Tenant's Personal Property as shall be necessary in
order to operate all of the Facilities located at the Collective Leased
Properties in compliance in all material respects with all applicable licensure
and certification requirements, in compliance with applicable Legal Requirements
and Insurance Requirements and otherwise in accordance with customary practice
in the industry for such Primary Intended Use. All of Tenant's Personal Property
(except that removed and replaced in the ordinary course of business as
permitted above, but including supplies and inventory that are equivalent, on an
aggregate basis, in amount and value similar to that reasonably established for
use
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by the Facilities in the immediately preceding Lease Year) shall remain at the
Collective Leased Properties at the expiration or earlier termination of this
Agreement without the necessity of any payment by Landlord to Tenant and without
any obligation to account therefor.
If Tenant uses any material item of tangible personal property on, or in
connection with, any Leased Property which belongs to anyone other than Tenant,
Tenant shall use its commercially reasonable best efforts to require the
agreement permitting such use to provide that Landlord or its designee may
assume Tenant's rights under such agreement upon management or operation of the
applicable Facility by Landlord or its designee.
5.3 Yield Up.
Upon the expiration or sooner termination of this Agreement, Tenant shall
vacate and surrender each of the Collective Leased Properties to Landlord in the
condition in which each of the Collective Leased Properties was in on the
Commencement Date, except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Agreement, reasonable wear and
tear excepted (and Condemnation, in the event that this Agreement is terminated
with respect to any of the Collective Leased Properties following a Condemnation
in accordance with Article 11). Rents, real estate taxes and utilities shall be
prorated in the same manner as set forth in Section 10.4 of the Purchase
Agreement. Along therewith Tenant shall surrender to Landlord any and all
records and documents related to the Collective Leased Properties and Tenant's
Personal Property (i.e., but not, subject to Section 12.6 hereof, documents
primarily related to Tenant's business operated therein) including documents and
records obtained by Tenant pursuant to Section 10.2 of the Purchase Agreement.
Landlord (or its designee) shall have the right, but not the obligation, to
assume any or all contracts relating to the Collective Leased Properties and
Tenant's Personal Property (i.e., contracts not primarily related to the
business operated therein). In no event shall Landlord (or its designee) have
any liability under such contracts for obligations or liabilities accruing under
such contracts prior to the date of such assumption by such party. Tenant shall
deliver to Landlord keys and security deposits (for assumed leases) in the same
fashion as described in Sections 10.2(e) and 10.4(d) of the Purchase Agreement.
In addition, upon the expiration or earlier termination of this Agreement,
Tenant shall, at Landlord's sole cost and expense, use its commercially
reasonable best efforts to transfer to and cooperate with Landlord or Landlord's
nominee in connection with the processing of all applications for licenses,
operating permits and other governmental authorizations and all contracts,
including contracts with governmental or quasi-governmental entities which may
be necessary for the operation of the Facilities located on the Collective
Leased Properties. If requested by Landlord, Tenant will continue to manage any
such Facility after the expiration or sooner termination of the Term and for as
long thereafter as is necessary (but not to exceed six (6) months following the
date of such expiration or sooner termination) to obtain all necessary licenses,
operating permits and other governmental authorizations, on such reasonable
terms as Landlord shall request, but in any event Landlord shall pay to Tenant a
management fee equal to the sum of (i) reasonable out-of-pocket costs and
expenses of Tenant in providing management services, (ii) reasonable allocated
internal costs of Tenant in providing management services (including but not
limited to a reasonably
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allocated portion of the salaries and benefits costs of Tenant personnel who
provide such services), and (iii) 10% of the sum of (i) and (ii). In connection
with any such management arrangement, Tenant will, use its commercially
reasonable best efforts to the extent reasonable necessary, maintain in effect
during the period of its management arrangement, those contracts, including (for
sixty (60) days after such expiration or sooner termination, but after sixty
(60) days, only if the Franchise Agreement has been assumed pursuant to Section
12.6) the Franchise Agreement, necessary for the performance of such management
responsibilities and for the operation of the Facilities for the Primary
Intended Use.
5.4 Encroachments, Restrictions, Etc.
If any of the Leased Improvements shall, at any time, encroach upon any
property, street or right-of-way adjacent to the affected Leased Property, or
shall violate the agreements or conditions contained in any lawful restrictive
covenant or other agreement affecting any of the Collective Leased Properties,
or any part thereof, or shall impair the rights of others under any easement or
right-of-way to which any of the Collective Leased Properties is subject, upon
the request of Landlord (but only as to any encroachment, violation or
impairment that is not a Permitted Encumbrance) or of any Person affected by any
such encroachment, violation or impairment, Tenant shall, at its sole cost and
expense, subject to its right to contest the existence of any encroachment,
violation or impairment in accordance with the provisions of Article 8, either
(a) obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Landlord or Tenant, or (b) make such changes in
the Leased Improvements and take such other actions as are reasonably
practicable to remove such encroachment and to end such violation or impairment,
including, if necessary, the alteration of any of the Leased Improvements and,
in any event, take all such actions as may be necessary in order to ensure the
continued operation of the affected Leased Improvements for their respective
Primary Intended Use substantially in the manner and to the extent such Leased
Improvements were operated prior to the assertion of such violation, impairment
or encroachment. Any such alteration shall be made in conformity with the
applicable requirements of this Article 5. Tenant's obligations under this
Section 5.4 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.
5.5 Landlord to Grant Easements, Etc.
Landlord shall from time to time, so long as no Default or Event of Default
shall have occurred and be continuing, at the request of Tenant and at Tenant's
sole cost and expense, (a) grant easements and other rights in the nature of
easements with respect to any of the Collective Leased Properties to third pa
ties, (b) release existing easements or other rights in the nature of easements
which are for the benefit of any of the Collective Leased Properties, (c)
dedicate or transfer unimproved portions of any of the Collective Leased
Properties for road, highway or other public purposes, (d) execute petitions to
have any of the Collective Leased Properties annexed to any municipal
corporation or utility district, (e) execute amendments to any covenants and
restrictions affecting any of the Collective Leased Properties and (f) execute
and deliver to any Person any instrument appropriate to confirm or effect such
grants, release, dedications, transfers, petitions and
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amendments (to the extent of its interests in such Leased Property); provided,
however, that Landlord shall have first determined that such grant, release,
dedication, transfer, petition or amendment is not detrimental to the operation
of the applicable Leased Property for its Primary Intended Use and does not
materially reduce the value of such Leased Property, and Landlord shall have
received an Officer's Certificate confirming such determination, together with
such additional information as Landlord may request.
5.6 Philadelphia Facility.
In the event Franchisor does not complete the renovation/reconstruction of
the Philadelphia Facility in a timely manner as required by the Purchase
Agreement for any reason (whether or not such failure constitutes a breach of
covenant by Franchisor pursuant to Section 7.1(q) of the Purchase Agreement),
Tenant shall promptly do so at its sole cost. Tenant shall permit Franchisor to
have access to the property on which the Philadelphia Facility is to be
constructed for the purpose of performing such obligation.
6
CAPITAL ADDITIONS, ETC.
6.1 Construction of Capital Additions to the Leased Property.
Tenant shall not construct or install Capital Additions on any of the
Collective Leased Properties without obtaining Landlord's prior written consent,
which consent shall not be unreasonably withheld, provided that no consent shall
be required for any Capital Addition so long as (a) the Capital Additions Costs
for such Capital Addition are less than $1,000,000, (b) such construction or
installation would not adversely affect or violate any Legal Requirement or
Insurance Requirement applicable to the applicable Leased Property and (c)
Landlord shall have received an Officer's Certificate certifying as to the
satisfaction of the conditions set out in clauses (a) and (b) above. If
Landlord's consent is required, prior to commencing construction of any Capital
Addition, Tenant shall submit to Landlord, in writing, a proposal setting forth,
in reasonable detail, any proposed Capital Addition and shall provide to
Landlord such plans and specifications, permits, licenses, contracts and other
information concerning the proposed Capital Addition as Landlord may reasonably
request. Landlord shall have thirty (30) days to review all materials submitted
to Landlord in connection with any such proposal. Failure of Landlord to respond
to Tenant's proposal within thirty (30) days after receipt of all information
and materials requested by Landlord in connection with the proposed Capital
Addition shall be deemed to constitute approval of such proposed Capital
Addition. Without limiting the generality of the foregoing, such proposal shall
indicate the approximate projected cost of constructing such Capital Addition
and the use or uses to which it will be put. No Capital Addition shall be made
which would tie in or connect any Leased Improvement on the applicable Leased
Property with any other improvements on property adjacent to such Leased
Property (and not part of the Land) including, without limitation, tie-ins of
buildings or other structures or utilities. Any Capital Additions shall, upon
the expiration or sooner termination of this Agreement, pass to and become the
property of Landlord, free and clear of all
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encumbrances other than Permitted Encumbrances.
6.2 Financing of Capital Additions.
Tenant may arrange for financing for Capital Additions from a Lending
Institution; provided, however, that (i) any security interests in any property
of Tenant, including, without limitation, Tenant's leasehold interest in the
Collective Leased Properties, shall be expressly and fully subordinated to this
Agreement and to the interest of Landlord in the Collective Leased Properties
and to the rights of any then or thereafter existing Facility Mortgagee; and
(ii) Landlord shall have a right of first refusal to provide financing for
Capital Additions in accordance with Section 6.6.
6.3 Capital Additions Financed by Landlord.
If Landlord shall, (i) at the request of Tenant and in Landlord's sole
discretion, or (ii) in the exercise of its rights of first refusal to provide
financing pursuant to Section 6.6 hereof, elect to finance any proposed Capital
Addition, Tenant shall provide Landlord with such information as Landlord may
from time to time request, including, without limitation, the following:
(a) Evidence that such Capital Addition will be and, upon completion, has
been, completed in compliance with the applicable requirements of State
and federal law with respect to capital expenditures for health care
facilities;
(b) Copies of all building, zoning and land use permits and approvals
and, upon completion of such Capital Addition, a copy of the
certificate of occupancy for such Capital Addition, if required;
(c) Such information, certificates, licenses, permits or other
documents necessary to confirm that Tenant will be able to use the
Capital Addition upon completion thereof in accordance with the Primary
Intended Use, including all required federal, State or local government
licenses and approvals;
(d) An Officer's Certificate and a certificate from Tenant's architect
setting forth, in reasonable detail, the projected (or actual, if
available) Capital Additions Cost, and invoices and lien waivers from
Tenant's contractors for such work;
(e) A deed conveying to Landlord title to any land acquired for the
purpose of onstructing the Capital Addition free and clear of any
liens or encumbrances, except those
approved by Landlord, and, upon completion of the Capital Addition, a
final as-built survey thereof reasonably satisfactory to Landlord;
(f) Endorsements to any outstanding policy of title insurance covering
the applicable Leased Property, or a commitment therefor, satisfactory
in form and substance to Landlord, (i) updating such policy without any
additional exceptions except as approved by Landlord, and (ii)
increasing the coverage thereof by an amount equal to the Fair Market
Value of the
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Capital Addition (except to the extent covered by the owner's policy of
title insurance referred to in subparagraph (g) below);
(g) If appropriate, (i) an owner's policy of title insurance insuring
fee simple title to any land conveyed to Landlord pursuant to
subparagraph (e) above, free and clear of all liens and encumbrances,
except those approved by Landlord, and (ii) a lender's policy of title
insurance, reasonably satisfactory in form and substance to Landlord
and any Facility Mortgagee;
(h) An appraisal of the applicable Leased Property by a Qualified
Appraiser, acceptable to Landlord, and/or an Officer's Certificate
stating that the value of the applicable Leased Property upon
completion of the Capital Addition exceeds the Fair Market Value
thereof prior to the commencement of such Capital Addition by an amount
not less than 80% of the Capital Additions Cost; and
(1) Prints of architectural and engineering drawings relating to such
Capital Addition and such other certificates, documents, opinions of
counsel, appraisals, surveys, certified copies of duly adopted
resolutions of the board of directors of Tenant authorizing the
execution and delivery of any lease amendment, or other instruments as
may be reasonably required by Landlord, any Facility Mortgagee and any
Lending Institution advancing or reimbursing Landlord or Tenant for
any portion of the Capital Additions Cost.
If Landlord shall finance the proposed Capital Addition, Landlord may
elect (with Tenant's consent, such consent not to be unreasonably withheld) to
obtain repayment of amounts so financed by an increase in the Rent payable
hereunder.
6.4 Non-Capital Additions.
Tenant shall have the right, at Tenant's sole cost and expense, to make
additions, modifications or improvements to the Collective Leased Properties
which are not Capital Additions ("Non-Capital Additions") from time to time as
Tenant, in its discretion, may deem desirable for the applicable Primary
Intended Use, provided that any such Non-Capital Addition will not materially
detract from the value, operating efficiency or revenue-producing capability of
the applicable Leased Property or adversely affect the ability of Tenant to
comply with the provisions of this Agreement, and, without limiting the
foregoing, will not violate any Legal Requirement or Insurance Requirement
applicable to the applicable Leased Property. All such Non-Capital Additions
shall, upon expiration or earlier termination of this Agreement, pass to and
become the property of Landlord, free and clear of all liens and encumbrances,
other than Permitted Encumbrances.
6.5 Salvage.
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All materials which are scrapped or removed in connection with the making
of either Capital Additions or Non-Capital Additions or repairs required by
Article 5 shall be the property of the Landlord.
6.6 Landlord's Right of First Refusal to Provide Financing for Capital
Additions.
In the event that at any time during the Term Tenant shall elect to obtain
construction financing in excess of $1,000,000 for any Capital Additions, Tenant
shall give Notice thereof to Landlord, which notice shall set forth in
reasonable detail the terms of such financing, shall identify the source thereof
and shall include a copy of a final form of commitment letter therefor. Landlord
shall have the right, exercisable by the giving of Notice to Tenant within
thirty (30) days after such notice from Tenant, to provide a final form of
commitment for such financing on the same terms and conditions as described in
the Notice given to Landlord. In the event that Landlord shall exercise such
option, Tenant shall be obligated to obtain such financing from Landlord on the
terms and conditions set forth in the Notice to Landlord. In the event that
Landlord shall decline to provide such financing or shall fail to give such
notice to Tenant, Tenant shall be free to obtain such financing from the party
identified in, and on the terms and conditions set forth in, the Notice given to
Landlord with respect thereto.
7
LIENS
7.1 Liens.
Subject to Article 8 and Section 16.5, Tenant shall not, directly or
indirectly, create or allow to remain and shall promptly discharge, at its
expense, any lien, encumbrance, attachment, title retention agreement or claim
up on the Collective Leased Properties or a non-consensual lien against Tenant's
leasehold interest therein or any attachment, levy, claim or encumbrance in
respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions,
liens and other encumbrances which are consented to in writing by Landlord, (c)
liens for those taxes of Landlord which Tenant is not required to pay hereunder,
(d) subleases permitted by Article 16, (e) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (i) the same are
not yet payable, or (ii) are being contested in accordance with Article 8, (f)
liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the
ordinary course of business that are not yet due and payable or are for sums
that are being contested in accordance with Article 8, and (g) any Facility
Mortgages or other liens which are the responsibility of Landlord pursuant to
the provisions of Article 20.
7.2 Landlord's Lien.
In addition to any statutory landlord's lien and in order to secure payment
of the Rent and all other sums payable hereunder by Tenant and the performance
of all of Tenant's other obligations hereunder, and to secure payment of any
loss, cost or damage which Landlord may suffer by reason of Tenant's breach of
this Agreement, Tenant hereby grants unto Landlord a security interest in and
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an express contractual lien upon Tenant's Personal Property, and all proceeds
therefrom, subject to any Permitted Encumbrances; and such Tenant's Personal
Property shall not be removed from the Collective Leased Properties at any time
when a Default or an Event of Default has occurred and is continuing as
otherwise permitted pursuant to Section 5.2. In addition, Tenant hereby grants
unto Landlord a security interest in those contracts described in Section 12.6
hereof.
Upon Landlord's request, Tenant shall execute and deliver to Landlord
financing statements in form sufficient to perfect the security interest of
Landlord in (x) Tenant's Personal Property and the proceeds thereof, and (y) the
contracts described in Section 12.6 hereof, in accordance with the provisions of
the applicable laws of the State. The security interest herein granted is in
addition to any statutory lien for the Rent.
8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim (collec ively, "Claims") as to any of the
Collective Leased Properties, by appropriate legal proceedings, conducted in
good faith and with due diligence, provided that (a) the foregoing shall in no
way be construed as relieving, modifying or extending Tenant's obligation to pay
any Claims as finally determined, (b) such contest shall not cause Landlord or
Tenant to be in default under any mortgage or deed of trust (except with respect
to any Facility Mortgage, the terms of which have not been fully disclosed to
Tenant) encumbering such Leased Property or any interest therein or result in or
reasonably be expected to result in a lien attaching to such Leased Property,
(c) no part of such Leased Property nor any Rent therefrom shall be in any
immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall
indemnify and hold harmless Landlord from and against any cost, claim, damage,
penalty or reasonable expense, including reasonable attorneys' fees, incurred by
Landlord in connection therewith or as a result thereof. Upon Landlord's request
made as a result of a requirement of any Facility Mortgagee, Tenant shall either
(i) provide a bond or other assurance reasonably satisfactory to Landlord that
all Claims which may be assessed against any of the Collective Leased
Properties, together with all interest and penalties thereon will be paid, or
(ii) deposit within the time otherwise required for payment with a bank or trust
company, as trustee, as security for the payment of such Claims, an amount
sufficient to pay the same, together with interest and penalties in connection
therewith and all Claims which may be assessed against or become a Claim on any
of the Collective Leased Properties, or any part thereof, in connection with any
such contest. Tenant shall furnish Landlord and any Facility Mortgagee with
reasonable evidence of such deposit within five (5) days after request therefor.
Landlord agrees, however, to use commercially reasonable best efforts to cause
any Facility Mortgagee not to require any bond or deposit by Tenant as
hereinabove provided. Landlord agrees to join in any such proceedings if
required legally to prosecute such contest, provided that Landlord shall not
thereby be subjected to any liability therefor (including, without limitation,
for the payment of any costs or expenses in connection therewith). Tenant shall
be entitled to any refund of any Claims and such charges and penalties or
interest thereon which have been paid by Tenant or paid by Landlord and for
which Landlord has been fully
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reimbursed by Tenant. If Tenant shall fail (x) to pay any Claims when finally
determined, (y) to provide security therefor as provided in this Article 8, or
(z) to prosecute any such contest diligently and in good faith, Landlord may,
upon reasonable notice to Tenant (which notice may be oral and shall not be
required if Landlord shall reasonably determine that the same is not
practicable), pay such charges, together with interest and penalties due with
respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as
Additional Charges.
9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements.
Tenant shall, at all times during the Term and at any other time Tenant
shall be in possession of any of the Collective Leased Properties, keep each of
the Collective Leased Properties and Tenant's Personal Property insured against
the risks and in the amounts as follows and shall maintain (for so long as such
insurance is commercially available) the following insurance:
(a) "All-risk" property insurance, including insurance against loss or damage by
fire, vandalism and malicious mischief, explosion of steamboilers, pressure
vessels or other similar apparatus, now or hereafter installed in the Facility
located at such Leased Property, extended coverage perils, earthquake (providing
annual aggregate limits of One Hundred Million Dollars ($100,000,0 0) as to all
locations outside of California and annual aggregate limits of Fifty Million
Dollars ($50,000,000) as to all locations within California) and all physical
loss perils insurance, including, but not limited to, sprinkler leakage, in an
amount (subject to Section 9.5) equal to one hundred percent (100%) of the then
full Replacement Cost thereof (as defined in Section 9.2), with the usual
extended coverage endorsements, including a Replacement Cost Endorsement and
Builder's Risk Coverage during the continuance of any construction at such
Leased Property;
(b) Business interruption and blanket earnings plus extra expense under a rental
value insurance policy covering risk of loss during the lesser of the first
twelve (12) months of reconstruction or the actual reconstruction period
necessitated by the occurrence of any of the hazards described in subparagraphs
(a) and (b) above in such amounts as may be customary for comparable properties
in the area and in an amount sufficient to prevent Landlord or Tenant from
becoming a co-insurer;
(c) Comprehensive general liability insurance, including bodily injury and
property damage (on the broadest form available, including broad form
contractual liability, fire legal liability and completed operations coverage)
having policy limits as to claims with respect to the Collective Leased
Properties of at least One Million Dollars ($1,000,000) per occurrence, Three
Million Dollars ($3,000,000) aggregate per location, subject to a Five Million
Dollar ($5,000,000) aggregate limit as to all locations, and with respect to
claims arising out of malpractice in an amount not less than One Million Dollars
($1,000,000) per occurrence, subject to a Five Million Dollars ($5,000,000)
aggregate limit as to all Facilities, provided that such limits shall be
modified to conform to any required underlying statutory coverage, such as State
Patient Compensation Funds, or the like, and Umbrella coverage shall be provided
having limits of Twenty Million Dollars ($20,000,000) per occurrence and in the
aggregate and attaching in excess of policy limits as to general liability,
malpractice, Patient Compensation Fund programs, where applicable, and
employer's liability coverage;
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(d) Flood (when the applicable Leased Property is located in whole or in part
within an area identified as an area having special flood hazards and in which
flood insurance has been made available under the National Flood Insurance Act
of 1968, as amended, or the Flood Disaster Protection Act of 1973, as amended
(or any successor acts thereto)) and such other hazards and in such amounts as
may be customary for comparable properties in the area, said coverage to be in
an amount equal to the lesser of the full Replacement Cost of the applicable
Leased Property or the maximum amount available;
(e) Worker's compensation insurance coverage for all persons employed by Tenant
on the applicable Leased Property with statutory limits and otherwise with
limits of and provisions in accordance with the requirements of applicable
local, State and federal law, and employer's liability insurance having a limit
of $1,000,000; and
(f) Such additional insurance and endorsements (and/or increased amounts of
insurance hereinabove required) as may be reasonably required, from time to
time, by Landlord.
9.2 Replacement Cost.
"Replacement Cost" as used herein, shall mean the actual replacement cost
of the property requiring replacement from time to time, including an increased
cost of construction endorsement, less exclusions provided in the standard form
of fire insurance policy. In the event either party believes that the then full
Replacement Cost has increased or decreased at any time during the Term, such
party, at its own cost, shall have the right to have such full Replacement Cost
redetermined by an accredited appraiser approved by the other, which approval
shall not be unreasonably withheld or delayed. The party desiring to have the
full Replacement Cost so redetermined shall forthwith, on receipt of such
determination by such appraiser, give written notice thereof to the other. The
determination of such appraiser shall be final and binding on the parties
hereto, and Tenant shall forthwith conform the amount of the insurance carried
to the amount so determined by the appraiser.
9.3 Waiver of Subrogation.
Landlord and Tenant agree that (insofar as and to the extent that such
agreement may be effective without invalidating or making it impossible to
secure insurance coverage from responsible insurance companies doing business in
the State) with respect to any property loss which is covered by insurance then
being carried by Landlord or Tenant, respectively, the party carrying such
insurance and suffering said loss releases the other of and from any and all
claims with respect to such loss; and they further agree that their respective
insurance companies shall have no right of subrogation against the other on
account thereof, even though extra premium may result therefrom. In the event
that any extra premium is payable by Tenant as a result of this provision,
Landlord shall not be liable for reimbursement to Tenant for such extra premium.
9.4 Form Satisfactory, Etc.
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All insurance policies and endorsements required pursuant to this Article 9
shall be fully paid for, nonassessable and shall contain such provisions and
expiration dates and be in such form and amounts and issued by insurance
carriers authorized to do business in the State, having a general policy
holder's rating f at least A-in Best's latest rating guide (or such other
comparable rating or such other customarily used rating agency as may be
required by any Facility Mortgagee), and otherwise as shall be approved by
Landlord. Without limiting the foregoing, such policies shall include only
deductibles reasonably approved by Landlord and shall name Landlord and any
Facility Mortgagee as additional insureds. All losses shall be payable to
Landlord or Tenant as provided in Article 10. Any loss adjustment shall require
the prior written consent of Landlord and Tenant. Tenant shall pay all insurance
premiums and deliver policies or certificates thereof to Landlord prior to their
effective date (and, with respect to any renewal policy, thirty (30) days prior
to the expiration of the existing policy), and, in the event Tenant shall fail
to effect such insurance as herein required, to pay the premiums therefor or to
deliver such policies or certificates to Landlord or any Facility Mortgagee at
the times required, Landlord shall have the right, but not the obligation, to
acquire such insurance and pay the premiums therefor, which amounts shall be
payable to Landlord, upon demand, as Additional Charges, together with interest
accrued thereon at the Overdue Rate from the date such payment is made until the
date repaid. All such policies shall provide Landlord (and any Facility
Mortgagee, if required by the same) thirty (30) days' prior written notice of
any material modification, expiration or cancellation of such policy. Tenant may
satisfy its insurance obligations through the use of (i) a risk retention group
or purchasing group or captive insurance company with a capital structure
reasonably approved by Landlord or (ii) a self insurance program with retention
limits reasonably approved by Landlord and an excess policy or policies provided
by an insurer meeting the requirements of this Agreement.
9.5 Blanket Policy.
Notwithstanding anything to the contrary contained in this Article 9,
Tenant's obligation to maintain the insurance herein required may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by Tenant, provided that (a) the coverage thereby
afforded will not be reduced or diminished from that which would exist under a
separate policy meeting all other requirements of this Agreement, except that
the blanket all-risk policy may provide coverage as to the Collective Leased
Properties to a limit of Two Hundred Million Dollars ($200,000,000) per
occurrence and (b) the requirements of this Article 9 are otherwise satisfied.
9.6 No Separate Insurance.
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Tenant shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required by this Article 9, or
increase the amount of any existing insurance by securing an additional policy
or additional policies, unless all parties having an insurable interest in the
subject matter of such insurance, including Landlord and all Facility
Mortgagees, are included therein as additional insureds and the loss is payable
under such insurance in the same manner as losses are payable under the
insurance required to be carried pursuant to this Agreement. In the event Tenant
shall take out any such separate insurance or increase any of the amounts of the
then existing insurance, Tenant shall give Landlord prompt Notice thereof.
9.7 Indemnification of Landlord.
Notwithstanding the existence of any insurance provided for herein and
without regard to the policy limits of any such insurance, Tenant shall protect,
indemnify and hold harmless Landlord for, from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and reasonable
expenses (including, without limitation, reasonable attorneys' fees), to the
maximum extent permitted by law, imposed upon or incurred by or asserted against
Landlord by reason of: (a) any accident, injury to or death of persons or loss
of or damage to property occurring on or about the Collective Leased Properties
or adjoining sidewalks or rights of way, including, without limitation, any
claims of malpractice, (b) any past, present or future use, misuse, non-use,
condition, management, maintenance or repair of the Collective Leased Properties
or Tenant's Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which Landlord is made a party
or participant relating to the Collective Leased Properties or Tenant's Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof, including failure to perform obligations (other than
Condemnation proceedings), to which Landlord is made a party, (c) any
Impositions (which are the obligations of Tenant to pay pursuant to the
applicable provisions of this Agreement), and (d) any failure on the part of
Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement. Tenant shall pay all amounts payable under this Section
9.7 within ten (10) days after demand therefor and, if not timely paid, such
amounts shall bear interest at the Overdue Rate from the date of determination
to the date of payment. Tenant, at its expense, shall contest, resist and defend
any such claim, action or proceeding asserted or instituted against Landlord or
may compromise or otherwise dispose of the same, with Landlord's prior written
consent (which consent may not be unreasonably withheld or delayed). The
obligations of Tenant under this Section 9.7 are in addition to the obligations
set forth in Section 4.4 and shall survive the termination of this Agreement.
9.8 Independent Contractor.
Tenant shall cause any person or company (each a "Contractor") entering
upon any of the Collective Leased Properties to provide any installation,
construction or repair which x) constitutes a Capital Addition or (y) has an
anticipated cost in excess of $250,000 to: (a) have in full force and effect
Contractor's Liability Coverage (hereafter defined) effective throughout the
period said Contractor is upon said Leased Property and (b) deliver a
certificate ("Contractor's Insurance Certificate") evidencing compliance with
subpart (a) to Tenant prior to the Contractor's first entry upon said Leased
Property. As used herein the term Contractor's Liability Coverage means a
comprehensive general liability insurance policy meeting the requirements of
this Article 9 (as if
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required to be provided by Tenant) except the minimum policy limit shall be
$500,000 per occurrence and $1,000,000 in the aggregate. Within thirty (30) days
after delivery of Landlord's written request, Tenant shall deliver copies of all
Contractor's Certificates to Landlord.
10
CASUALTY
10.1 Insurance Proceeds.
All proceeds payable by reason of any loss or damage to the Collective
Leased Properties, or any portion thereof, and insured under any policy of
property or casualty insurance required by Article 9 (other than proceeds of
business interruption insurance) in excess of $1,000,000 shall be paid directly
to Landlord and retained by Landlord (subject to the provisions of Section
10.2). If Tenant is required to reconstruct or repair any of the Collective
Leased Properties as provided herein, such proceeds shall be paid out by
Landlord from time to time for the reasonable costs of reconstruction or repair
of such Leased Property necessitated by such damage or destruction, subject to
the provisions of Section 10.2.3. Provided no Default or Event of Default has
occurred and is continuing, any excess proceeds of insurance remaining after the
completion of the restoration shall be paid to Tenant. All salvage resulting
from any risk covered by insurance shall belong to Landlord.
10.2 Damage or Destruction.
10.2.1 Obligation to Restore. If, during the Term, any of the Collective Leased
Properties shall be totally or partially destroyed Tenant shall promptly restore
such Facility as provided in Section 10.2.3.
10.2.2 Insufficient Insurance Proceeds. If the cost of the repair or restoration
of the applicable Leased Property exceeds the amount of insurance proceeds
received by Landlord pursuant to Article 10, upon the demand of Landlord, Tenant
shall contribute any excess amounts needed to restore such Leased Property. Such
difference shall be paid by Tenant to Landlord and held by Landlord, together
with any other insurance proceeds, for application to the cost of repair and
restoration.
10.2.3 Disbursement of Proceeds. Tenant shall, at its sole cost and expense,
commence promptly and continue diligently to perform the repair and restoration
of such Leased Property (hereinafter called the "Work"), or shall cause the same
to be done, so as to restore such Leased Property in full compliance with all
Legal Requirements and so that such Leased Property shall be at least equal in
value and general utility to its general utility and value immediately prior to
such damage or destruction. Subject to the terms hereof, Landlord shall advance
such property and casualty insurance proceeds and the amounts paid to it
pursuant to Section 10.2.2 to Tenant regularly during the repair and restoration
period so as to permit payment for the cost of any such restoration and repair.
Any such advances shall be for not less than $100,000 (or such lesser amount
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as equals the entire balance of the repair and restoration) and Tenant shall
submit to Landlord a written requisition and substantiation therefor on such
form or forms as may be reasonably acceptable to Landlord. Landlord may, at its
option, condition advancement of said insurance proceeds and other amounts on
(i) the absence of any Default or Event of Default, (ii) its approval of plans
and specifications of an architect satisfactory to Landlord, (iii) general
contractors' estimates, (iv) architect's certificates, (v) unconditional lien
waivers of general contractors, (vi) evidence of approval by all governmental
authorities and other regulatory bodies whose approval is required and (vii)
such other certificates as Landlord may, from time to time, reasonably require.
Landlord's obligation to disburse insurance proceeds under this Article 10
shall be subject to the release of such proceeds by the applicable Facility
Mortgagee to Landlord.
Tenant's obligation to restore the applicable Leased Property pursuant to
this Article 10 shall be subject to the release of available insurance proceeds
by the applicable Facility Mortgagee to Landlord; provided, however, that Tenant
shall be entitled to cease operations at such Facility pursuant to and in
accordance with Section 4.5 above. In the event Tenant elects to close such
Facility as aforesaid, Tenant shall, as Additional Charges, pay to Landlord all
property or casualty insurance proceeds received in connection therewith, along
with any deductible or retention, but in no event shall Tenant pay to Landlord
less than the full Replacement Cost of such Facility, including Tenant's
Personal Property.
10.3 Tenant's Property.
All insurance proceeds payable by reason of any loss of or damage to any of
Tenant's Personal Property shall be paid to Tenant, and, to the extent necessary
to repair or replace Tenant's Personal Property in accordance with Section 10.4,
Tenant shall hold such proceeds in trust to pay the cost of repairing or
replacing damaged Tenant's Personal Property.
10.4 Restoration of Tenant's Property.
If Tenant is required to restore the applicable Leased Property as
hereinabove provided, Tenant shall either (a) restore all alterations and
improvements made by Tenant and Tenant's Personal Property, or (b) replace such
alterations and improvements and Tenant's Personal Property with improvements or
items of the same or better quality and utility in the operation of such Leased
Property.
10.5 No Abatement of Rent.
This Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any damage involving any of the Collective Leased Properties
(provided that Landlord shall credit against such payments any amounts paid to
Landlord as a consequence of such damage under any business interruption
insurance obtained by Tenant hereunder). The provisions of this Article 10 shall
be considered an express agreement governing any cause of damage or destruction
to the applicable Leased Property and, to the
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maximum extent permitted by law, no local or State statute, laws, rules,
regulation or ordinance in effect during the Term which provide for such a
contingency shall have any application in such case.
10.6 Waiver.
Tenant hereby waives any statutory rights of termination which may arise by
reason of any damage or destruction of any of the Collective Leased Properties.
11
CONDEMNATION
11.1 Total Condemnation, Etc.
If either (i) the whole of any of the Collective Leased Properties shall be
taken by Condemnation or (ii) a Condemnation of less than the whole of any of
the Collective Leased Properties renders such Leased Property Unsuitable for Its
Primary Intended Use, this Agreement shall terminate with respect to such Leased
Property, Tenant and Landlord shall seek the Award for their interests in such
Leased Property as provided in Section 11.5 and the Minimum Rent thereafter
payable shall be reduced by one-twelfth (1/12th) of the product of (x) ten
percent (10%), and (y) the Award received by Landlord with respect to such
Leased Property, net of all expenses incurred by Landlord in obtaining the same,
including reasonable attorneys' fees.
11.2 Partial Condemnation.
In the event of a Condemnation of less than the whole of any of the
Collective Leased Properties such that such Leased Property is still suitable
for its Primary Intended Use, Tenant shall, at its sole cost and expense,
commence promptly and continue diligently to restore the untaken portion of the
Leased Improvements on such Leased Property so that such Leased Improvements
shall constitute a complete architectural unit of the same general character and
condition (as nearly as may be possible under the circumstances) as the Leased
Improvements existing immediately prior to such Condemnation, in full compliance
with all Legal Requirements. Subject to the terms hereof, Landlord shall
contribute to the cost of restoration that part of the Award necessary to
complete such repair or restoration, together with severance and other damages
awarded for the taken Leased Improvements, to Tenant regularly during the
restoration period so as to permit payment for the cost of such repair or
restoration. Landlord may, at its option, condition advancement of such Award
and other amounts on (i) the absence of any continuing Event of Default, (ii)
its approval of plans and specifications of an architect satisfactory to
Landlord (which approval shall not be unreasonably withheld or delayed), (iii)
general contractors' estimates, (iv) architect's certificates, (v) unconditional
lien waivers of general contractors, (vi) evidence of approval by all
governmental authorities and other regulatory bodies whose approval is required
and (vii) such other certificates as Landlord may, from time to time, reasonably
require. Landlord's obligation under this Section 11.2 to disburse the Award and
such other amounts shall be subject to (x) the collection thereof by Landlord
and (y) the satisfaction of any applicable requirements of any Facility
Mortgage, and the release of such Award
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by the applicable Facility Mortgagee. Tenant's obligation to restore the
applicable Leased Property shall be subject to the release of the Award by the
applicable Facility Mortgagee to Landlord. If the cost of the restoration of the
applicable Leased Property exceeds that part of the Award necessary to complete
such restoration, together with severance and other damages awarded for the
taken Leased Improvements, Tenant shall contribute upon the demand of Landlord
any excess amounts needed to restore such Leased Property. Such difference shall
be paid by Tenant to Landlord and held by Landlord, together with such part of
the Award and such severance and other damages, for application to the cost of
restoration.
11.3 Abatement of Rent.
Other than as specifically provided in this Agreement, this Agreement shall
remain in full force and effect and Tenant's obligation to make all payments of
Rent and to pay all other charges as and when required under this Agreement
shall remain unabated during the Term notwithstanding any Condemnation involving
the Collective Leased Properties. The provisions of this Article 11 shall be
considered an express agreement governing any Condemnation involving any or all
of the Collective Leased Properties and, to the maximum extent permitted by law,
no local or State statute, law, rule, regulation or ordinance in effect during
the Term which provides for such a contingency shall have any application in
such case.
11.4 Temporary Condemnation.
In the event of any temporary Condemnation of all or any part of the
Collective Leased Properties or Tenant's interest therein, this Agreement shall
continue in full force and effect, and Tenant shall continue to pay, in the
manner and on the terms herein specified, the full amount of the Rent. Tenant
shall continue to perform and observe all of the other terms and conditions of
this Agreement on the part of Tenant to be performed and observed. Provided no
Default or Event of Default has occurred and is continuing, the entire amount of
any Award made for such temporary Condemnation allocable to the Term, whether
paid by way of damages, rent or otherwise, shall be paid to Tenant. Tenant
shall, promptly upon the termination of any such period of temporary
Condemnation, at its sole cost and expense, restore such Leased Property to the
condition that existed immediately prior to such Condemnation, in full
compliance with all Legal Requirements, unless such period of temporary
Condemnation shall extend beyond the expiration of the Term, in which event
Tenant shall not be required to make such restoration. For purposes of this
Section 11.4, a Condemnation shall be deemed to be temporary if the period of
such Condemnation is not expected to, and does not, exceed twenty-four (24)
months.
11.5 Allocation of Award.
Except as provided in the second sentence of this Section 11.5, the total
Award shall be solely the property of and payable to Landlord. Any portion of
the Award made for the taking of Tenant's leasehold interest in the applicable
Leased Property, loss of business during the remainder of the Term, or Tenant's
removal and relocation expe ses shall be the sole property of and payable to
Tenant (subject to the provisions of Section 11.2). In any Condemnation
proceedings, Landlord
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and Tenant shall each seek its own Award in conformity herewith, at its own
expense.
12
DEFAULTS AND REMEDIES
12.1 Events of Default.
The occurrence of any one or more of the following events shall constitute
an "Event of Default" hereunder:
(a) Tenant fails (i) to make any payment of the Rent payable hereunder when
due and such failure continues for a period of ten (10) days after the date
due, or (ii) to make any required payments of real estate taxes by the
earlier of (a) ten (10) days following Notice from Landlord that such
payment is due and owing and unpaid, and (b) the date which is 30 days
prior to the date on which a Government Authority has the right to sell or
initiate the process for selling the applicable Leased Property due to a
failure to pay the real estate taxes. The foregoing provisions hereof
notwithstanding, (x) Tenant's failure to pay Additional Rent shall not
constitute an Event of Default, except if Tenant fails to pay Additional
Rent in at least the amount of the Allowance disbursed to date by Landlord,
and (y) with respect to the failure to pay Additional Charges that are
amounts owed to third parties (other than real estate taxes), the failure
to pay such amounts shall not constitute an Event of Default under this
Section 12.1(a) if Tenant pays the same in full, along with all interest,
penalties and late charges due and owing to such third parties, no later
than ten (10) days following Notice from Landlord that such sum is due and
owing. In the event Landlord gives Notice of such circumstances to Tenant
twice in any Lease Year, then on each subsequent occasion for the remainder
of such Lease Year when Landlord gives Tenant any such Notice, Tenant shall
pay to Landlord, as Additional Charges (whether or not Tenant pays such
third party within ten (10) days as aforesaid), the sum of One Thousand
Five Hundred Dollars ($1,500).
(b) Tenant fails to maintain the insurance coverages required under Article
9 within five (5) days after Notice thereof from Landlord.
(c) Tenant defaults in the due observance or performance of any of the
terms, covenants or agreements contained herein to be performed or observed
by it (other than as specified in clauses (a) and (b) above), and, in
either case, such default continues for a period of thirty (30) days after
Notice thereof from Landlord to Tenant (provid d that no such Notice shall
be required if Landlord reasonably determines that immediate action is
necessary to protect person or property); provided, however, that if such
default is susceptible of cure but such cure cannot be accomplished with
due diligence within such period of time and if, in addition, Tenant
commences to cure such default within thirty (30) days after Notice thereof
from Landlord and thereafter prosecutes the curing of such default with all
due diligence, such period of time shall be extended to such period of time
(not to exceed an additional one hundred eighty (180) days in the
aggregate) as may be necessary
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to cure such default with all due diligence.
(d) Any obligation of Tenant in respect of any Indebtedness in a principal
amount in excess of $10,000,000 for money borrowed or for the deferred
purchase price of any material property or services, is declared to be, or
is a result of acceleration becomes, due and payable prior to the stated
maturity thereof.
(e) There occurs a final unappealable determination by applicable federal
or State authorities of the revocation or limitation of any license,
permit, certification, certificate of need or approval required for the
lawful operation of any of the Facilities in accordance with its Primary
Intended Use or the loss or limitation of any license, permit,
certification, certificate of need or approval under any other
circumstances under which Tenant is required to cease its operation of such
Facility in accordance with its Primary Intended Use at the time of such
loss or limitation, provided, however, that if Tenant ceases its operations
in such Facility pursuant to and in accordance with its right to do so
under Section 4.5 hereof, the closing thereof shall cause such Event of
Default to be deemed no longer continuing.
(f) Any representation or warranty made by or on behalf of Tenant under or
in connection with this Agreement, or in any document, certificate, or
agreement delivered in connection herewith proves to have been false or
misleading in any material respect on the date when made or deemed made.
(g) Tenant is generally not paying its debts as they become due, or Tenant
makes a general assignment for the benefit of creditors.
(h) Any petition is filed by or against Tenant under the Federal bankruptcy
laws, or any other proceeding is instituted by or against Tenant seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bank uptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
Tenant or for any substantial part of the property of Tenant and such
proceeding is not dismissed within ninety (90) days after institution
thereof, or Tenant takes any action to authorize or effect any of the
actions set forth above in this paragraph.
(i) Tenant causes or institutes any proceeding for its dissolution or
termination.
(j) subject to Section 4.5 hereof, Tenant voluntarily ceases operation of
any of the Collective Leased Properties for its Primary Intended Use for a
period in excess of thirty (30) consecutive days, except as a result of
damage, destruction or partial or complete Condemnation.
(k) The estate or interest of Tenant in any of the Collective Leased
Properties or any
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part thereof is levied upon or attached in any proceeding and the same is
not vacated or discharged within the later of (x) one hundred and twenty
(120) days after commencement thereof, unless the amount in dispute is less
than $100,000 in which case Tenant shall give notice to Landlord of the
dispute but Tenant may defend in any suitable way, and (y) thirty (30) days
after receipt by Tenant of Notice thereof from Landlord (unless Tenant
shall be contesting such lien or attachment in good faith in accordance
with Article 8).
(l) Any Change in Control of Tenant occurs.
In any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement with respect to all but not less
than all of the Collective Leased Properties by giving Notice thereof to Tenant
and upon the expiration of the time, if any, fixed in such Notice, this
Agreement shall terminate and all rights of Tenant under this Agreement shall
cease. Landlord shall have and may exercise all rights and remedies available at
law and in equity to Landlord as a result of Tenant's breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to
any other remedies provided herein, enter upon the Collective Leased Properties
and take possession of, and either (i) retain any and all of Tenant's Personal
Property on any such Leased Property, without liability for trespass or
conversion (Tenant hereby waiving any right to Notice or hearing prior to such
taking of possession by Landlord) or (ii) sell the same at public or private
sale, after giving Tenant reasonable Notice of the time and place of any public
or private sale, at which sale Tenant or its assigns may purchase all or any
portion of Tenant's Personal Property. Unless otherwise provided by law and
without intending to exclude any other manner of giving Tenant reasonable
notice, the requirement of reasonable Notice shall be met if such Notice is
given at least five (5) days before the date of sale. The proceeds from any such
disposition shall belong to Landlord and shall not be applied as a credit
against the indebtedness which is secured by the security interest granted in
Section 7.2.
The foregoing provisions hereof notwithstanding, Landlord shall have no
right to assert any remedy hereunder, and an Event of Default shall be deemed to
no longer exist, if Tenant cures an Event of Default (A) under Section 12.1(a)
prior to the earlier of (x) the commencement by Landlord of the exercise of any
remedy under this Agreement by Landlord or (y) Landlord's Notice to Tenant
stating that an Event of Default exists and further stating Landlord's intention
to assert one or more remedies hereunder; and (B) under any of Section
12.(b)-(l), prior to the commencement by Landlord of the exercise of any remedy
under this Agreement by Landlord.
12.2 Remedies.
None of (a) the termination of this Agreement pursuant to Section 12.1, (b)
the repossession of the Collective Leased Properties, (c) the failure of
Landlord to re-let any or all of the Collective Leased Properties, or (d) the
reletting of any or all of the Collective Leased Properties, shall relieve
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Tenant of its liability and obligations hereunder, all of which shall survive
any such termination, repossession or re-letting. In the event of any such
termination, Tenant shall forthwith pay to Landlord all Rent due and payable
with respect to the Collective Leased Properties through and including the date
of such termination. Thereafter, Tenant, until the end of what would have been
the Term of this Agreement in the absence of such termination, and whether or
not any of the Collective Leased Properties or any portion thereof shall have
been re-let, shall be liable to Landlord for, and shall pay to Landlord, as
current damages, the Rent and other charges which would be payable hereunder for
the remainder of the Term had such termination not occurred, less the net
proceeds, if any, of any re-letting of the Collective Leased Properties, after
deducting all expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
attorneys' fees, advertising, expenses of employees, alteration costs and
expenses of preparation for such reletting. Tenant shall pay such current
damages to Landlord monthly on the days on which the Minimum Rent would have
been payable hereunder if this Agreement had not been so terminated.
At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages beyond the date
of such termination, at Landlord's election, Tenant shall pay to Landlord either
(a) an amount equal to the excess, if any, of the Rent and other charges which
would be payable hereunder from the date of such termination (assuming that, for
the purposes of this paragraph, annual payments by Tenant on account of
Impositions would be the same as payments required for the immediately preceding
twelve calendar months, or if less than twelve calendar months have expired
since the Commencement Date, the payments required for such lesser period
projected to an annual amount) for what would be the then unexpired term of this
Agreement if the same remained in effect, over the Fair Market Rental for the
same period, or (b) an amount equal to the lesser of (i) the Rent and other
charges that would have been payable for the balance of the Term had it not been
terminated, and (ii) the aggregate of the Rent and other charges accrued in the
twelve (12) months ended next prior to such termination (without reduction for
any free rent or other concession or abatement). In the event this Agreement is
so terminated prior to the expiration of the first full year of the Term, the
liquidated damages which Landlord may elect to recover pursuant to clause
(b)(ii) of this paragraph shall be calculated as if such termination had
occurred on the first anniversary of the Commencement Date. Nothing contained in
this Agreement shall, however, limit or prejudice the right of Landlord to prove
and obtain in proceedings for bankruptcy or insolvency an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater than, equal to, or less than the amount of the loss or
damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by
summary proceedings or otherwise, Landlord may (a) relet any of the Collective
Leased Properties or any part or parts thereof, either in the name of Landlord
or otherwise, for a term or terms which may, at Landlord's option, be equal to,
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant concessions or free rent to the extent that
Landlord considers advisable and necessary to relet the same, and (b) may make
such reasonable alterations, repairs and decorations in any applicable Leased
Property or any portion thereof as
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Landlord, in its sole and absolute discretion, considers advisable and necessary
for the purpose of reletting any such Leased Property; and the making of such
alterations, repairs and decorations shall not operate or be construed to
release Tenant from liability hereunder as aforesaid. Landlord shall in no event
be liable in any way whatsoever for any failure to relet all or any portion of
the Collective Leased Properties, or, in the event that any of the Collective
Leased Properties is relet, for failure to collect the rent under such
reletting. To the maximum extent permitted by law, Tenant hereby expressly
waives any and all rights of redemption granted under any present or future laws
in the event of Tenant being evicted or dispossessed, or in the event of
Landlord obtaining possession of any of the Collective Leased Properties, by
reason of the violation by Tenant of any of the covenants and conditions of this
Agreement.
12.3 Tenant's Waiver.
IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANT
WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE
EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE
12 AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM
LIABILITY FOR RENT OR FOR DEBT.
12.4 Application of Funds.
Any payments received by Landlord under any of the provisions of this
Agreement during the existence or continuance of any Default or Event of Default
(and any payment made to Landlord rather than Tenant due to the existence o any
Default or Event of Default) shall be applied to Tenant's obligations under this
Agreement in such order as Landlord may determine or as may be prescribed by the
laws of the State.
12.5 Landlord's Right to Cure Tenant's Default.
If an Event of Default shall have occurred and be continuing, Landlord,
after Notice to Tenant (which Notice shall not be required if Landlord shall
reasonably determine immediate action is necessary to protect person or
property), without waiving or releasing any obligation of Tenant and without
waiving or releasing any Event of Default, may (but shall not be obligated to),
at any time thereafter, make such payment or perform such act for the account
and at the expense of Tenant, and may, to the maximum extent permitted by law,
enter upon any of the Collective Leased Properties or any portion thereof for
such purpose and take all such action thereon as, in Landlord's sole and
absolute discretion, may be necessary or appropriate therefor, including the
management of the Facility located thereon by Landlord or its designee, and
Tenant hereby irrevocably appoints, in the event of such election by Landlord,
Landlord or its designee as manager of any such Facility and its attorney in
fact for such purpose, irrevocably and coupled with an interest, in the name,
place and stead of Tenant. No such entry shall be deemed an eviction of Tenant.
All reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Landlord in connection therewith, together with
interest thereon (to the extent permitted by law) at the Overdue Rate from the
date such sums are paid by Landlord until repaid, shall be paid by Tenant to
Landlord,
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on demand.
12.6 Landlord's Right to Assume Contracts.
In the event Landlord elects to terminate this Agreement or otherwise
obtains possession of the Collective Leased Properties following an Event of
Default, Landlord (or its designee) shall have the right, at its sole and
absolute discretion, upon Notice to Tenant within sixty (60) days after Landlord
terminates this Agreement or otherwise obtains possession following an Event of
Default, to assume all (but not less than all) of the contracts utilized by
Tenant in the operation of its business, including the Franchise Agreement, and
Tenant will cooperate in effecting such assumption. In no event will Landlord
(or its designee) have any liability under such contracts for obligations or
liabilities accruing under such contracts prior to the date of such assumption
by such party.
13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner termination of
this Agreement shall be treated as a daily tenancy at sufferance at a rate equal
to two (2) times the Minimum Rent the in effect plus Additional Charges and
other charges herein provided (prorated on a daily basis). Tenant shall also pay
to Landlord all damages (direct or indirect) sustained by reason of any such
holding over. Otherwise, such holding over shall be on the terms and conditions
set forth in this Agreement, to the extent applicable. Nothing contained herein
shall constitute the consent, express or implied, of Landlord to the holding
over of Tenant after the expiration or earlier termination of this Agreement.
14
LANDLORD'S DEFAULT
If Landlord shall default in the performance or observance of any of its
covenants or obligations set forth in this Agreement and such default shall
continue for a period of thirty (30) ays after Notice thereof from Tenant to
Landlord and any applicable Facility Mortgagee, or such additional period as may
be reasonably required to correct the same, Tenant may declare the occurrence of
a "Landlord Default" by a second Notice to Landlord and to such Facility
Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the
provisions of the following paragraph, invoice Landlord for costs and expenses
(including reasonable attorneys' fees and court costs) incurred by Tenant in
curing the same, together with interest thereon from the date Landlord receives
Tenant's invoice, at the Overdue Rate. Tenant shall have no right to terminate
this Agreement for any default by Landlord hereunder and no right, for any such
default, to offset or counterclaim against any Rent or other charges due
hereunder.
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If Landlord shall in good faith dispute the occurrence of any Landlord Default
and Landlord, before the expiration of the applicable cure period, shall give
Notice thereof to Tenant, setting forth, in reasonable detail, the basis
therefor, no Landlord Default shall be deemed to have occurred and Landlord
shall have no obligation with respect thereto until final adverse determination
thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such
dispute within ten (10) days after Landlord's Notice of dispute, either may
submit the matter for resolution to a court of competent jurisdiction.
15
LANDLORD FINANCING
In the event that at any time during the Term, OpCo, or any Subsidiary of OpCo,
shall elect to obtain financing for any health care related facilities owned or
leased or to be owned or leased by OpCo, or such subsidiary, OpCo shall give (or
cause such Subsidiary to give, as the case may be) Notice thereof to Landlord,
which notice shall set forth in reasonable detail the terms of such financing,
shall identify the source thereof and shall include a copy of an applicable
commitment letter. Landlord shall have the right, exercisable by the giving of
Notice to OpCo (or such Subsidiary, as the case may be) within thirty (30) days
after such Notice from OpCo (or such Subsidiary, as the case may be), to provide
such financing on the same terms and conditions as described in the Notice given
to Landlord. In the event that Landlord shall exercise such option, OpCo (or
such Subsidiary, as the case may be) shall be obligated to obtain such financing
from Landlord on the terms and conditions set forth in the Notice to Landlord.
In the event that Landlord shall decline to provide such financing or shall fail
to give such Notice to OpCo (or such Subsidiary, as the case may be), OpCo (or
such Subsidiary, as the case may be) shall be free to obtain such financing from
the party identified in, and on the terms and conditions set forth in, the
Notice given to Landlord with respect thereto. Notices to OpCo and any
Subsidiary shall be given as if a Notice to Tenant.
16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment.
Except as provided in Sections 16.3 and 16.5 below, Tenant shall not,
without the prior written consent of Landlord (which consent may be given or
withheld in its sole and absolute discretion), assign, mortgage, pledge,
hypothecate, encumber or otherwise transfer this Agreement or sublease (which
term shall be deemed to include the granting of concessions, licenses and the
like), all or any part of the Collective Leased Properties or suffer or permit
this Agreement or the leasehold estate created hereby or any other rights
arising under this Agreement to be assigned, transferred, mortgaged, pledged,
hypothecated or encumbered, in whole or in part, whether voluntarily,
involuntarily or by operation of law, or permit the use or occupancy of any of
the
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Collective Leased Properties by anyone other than Tenant, or any of the
Collective Leased Properties to be offered or advertised for assignment or
subletting. For purposes of this Section 16.1, an assignment of this Agreement
shall be deemed to include any Change in Control of Tenant.
If this Agreement is assigned or if any of the Collective Leased Properties
or any part thereof are sublet (or occupied by anybody other than Tenant and its
employees) in contravention of this Agreement, Landlord may collect the rents
from such assignee, subtenant or occupant, as the case may be, and apply the net
amount collected to the Rent herein reserved, but no such collection shall be
deemed a waiver of the provisions set forth in the first paragraph of this
Section 16.1, the acceptance by Landlord of such assignee, subtenant or
occupant, as the case may be, as a tenant, or a release of Tenant from the
future performance by Tenant of its covenants, agreements or obligations
contained in this Agreement.
No subletting or assignment shall in any way impair the continuing primary
liability of Tenant hereunder, and no consent to any subletting or assignment in
a particular instance shall be deemed to be a waiver of the prohibition set
forth in this Section 16.1. No assignment, subletting or occupancy shall affect
any Primary Intended Use. Any subletting, assignment or other transfer of
Tenant's interest under this Agreement in contravention of this Section 16.1
shall be voidable at Landlord's option.
16.2 Required Sublease Provisions.
Any sublease of all or any portion of any of the Collective Leased
Properties shall provide (a) that it is subject and subordinate to this
Agreement and to the matters to which this Agreement is or shall be subject or
subordinate; (b) that in the event of termination of this Agreement or reentry
or dispossession of Tenant by Landlord under this Agreement, Landlord may, at
its option, terminate such sublease or take over all of the right, title and
interest of Tenant, as sublessor under such sublease, and such subtenant shall,
at Landlord's option, attorn to Landlord pursuant to the then executory
provisions of such sublease, except that neither Landlord nor any Facility
Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such
mortgagee succeeds to that position, shall (i) be liable for any act or omission
of Tenant under such sublease, (ii) be subject to any credit, counterclaim,
offset or defense which theretofore accrued to such subtenant against Tenant,
(iii) be bound by any previous modification of such sublease not consented to in
writing by Landlord or by any previous prepayment of more than one (1) month's
Rent, (iv) be bound by any covenant of Tenant to undertake or complete any
construction of such Leased Property or any portion thereof, (v) be required to
account for any security deposit of the subtenant other than any security
deposit actually delivered to Landlord by Tenant, (vi) be bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease that are to be performed after the date of such attornment, (vii) be
responsible for any monies owing by Tenant to the credit of such subtenant, or
(viii) be required to remove any Person occupying any portion of the Collective
Leased Properties; and (c), in the event that such subtenant receives a written
Notice from Landlord or any Facility Mortgagee stating that an Event of Default
has occurred and is continuing, such subtenant shall thereafter be obligated to
pay all rentals accruing under such sublease directly to the party giving such
Notice or
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as such party may direct. All rentals received from such subtenant by Landlord
or the Facility Mortgagee, as the case may be, shall be credited against the
amounts owing by Tenant under this Agreement and such sublease shall provide
that the subtenant thereunder shall, at the request of Landlord, execute a
suitable instrument in confirmation of such agreement to attorn. An original
counterpart of each such sublease and assignment and assumption, duly executed
by Tenant and such subtenant or assignee, as the case may be, in form and
substance reasonably satisfactory to Landlord, shall be delivered promptly to
Landlord upon request and (a) in the case of an assignment, the assignee shall
assume in writing and agree to keep and perform all of the terms of this
Agreement on the part of Tenant to be kept and performed and shall be, and
become, jointly and severally liable with Tenant for the performance thereof and
(b) in case of either an assignment or subletting, Tenant shall remain primarily
liable, as principal rather than as surety, for the prompt payment of the Rent
and for the performance and observance of all of the covenants and conditions to
be performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of the
provisions set forth in the first paragraph of Section 16.1.
16.3 Permitted Assignments and Subleases.
Notwithstanding the requirements set forth in Section 16.1 that Landlord's
prior written consent be obtained in connection with any assignment, mortgage,
pledge, encumbrance or other transfer of this Lease or any sublease of all or
any part of the Collective Leased Properties, but subject to the provisions of
Section 16.4 and any other express conditions or limitations set forth in this
Article 16, Tenant may, in each instance, (x) after Notice to Landlord, sublease
any or all of the Collective Leased Properties, or assign this Agreement, to any
Qualified Affiliate and (y) sublease space at any of the Collective Leased
Properties for laundry, commissary, child care or medical office or other
purposes in furtherance of the applicable Primary Intended Use, so long as such
sublease will not violate or affect any Legal Requirement or Insurance
Requirement, and Tenant shall provide such additional insurance coverage
applicable to the activities to be conducted in such subleased space as Landlord
may require. In connection with any sublease of any Leased Property, or
assignment of this Agreement, any and all Facilities affected by or the subject
of such transaction shall continue to be operated under and pursuant to the
Franchise Agreement, and Tenant shall provide to Landlord, upon request,
documentation confirming that the operation thereof, in such manner, has the
approval and consent of Franchisor.
16.4 Sublease Limitation.
Anything contained in this Agreement to the contrary notwithstanding,
Tenant shall not sublet any of the Collective Leased Properties on any basis
such that all or any part of the Rent would fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the Code, o any similar or
successor provision thereto. This limitation shall include, but not be limited
to, situations where (a) the rental to be paid by any sublessee thereunder would
be based, in whole or in part, on the income or profits derived by the business
activities of such sublessee, or (b) the sublessee would have a relationship to
Crescent Real Estate Equities, Inc., described in Section
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856(d)(2)(B) of the Code, or any similar or successor provision thereto.
16.5 Tenant's Right to Mortgage its Leasehold.
Tenant may, subject to Article 15 and Section 6.6 hereof, assign its
interest in this Agreement to a Lending Institution as collateral for
Indebtedness, provided, however, any security interests in any property of
Tenant, including without limitation Tenant's leasehold interest in the
Collective Leased Properties, shall be expressly and fully subordinated to this
Agreement and to the interest of Landlord in the Collective Leased Properties
and to the rights of any then or thereafter existing Facility Mortgagee.
17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates.
At any time and from time to time, upon not less than ten (10) days prior
Notice by Landlord, Tenant shall furnish to Landlord an Officer's Certificate
certifying that this Agreement is unmodified and in full force and effect (or
that this Agreement is in full force and effect as modified and setting forth
the modifications), the date to which the Rent has been paid, that no Default or
an Event of Default has occurred and is continuing or, if a Default or an Event
of Default shall exist, specifying in reasonable detail the nature thereof, and
the steps being taken to remedy the same, and such additional information as
Landlord may reasonably request. Any such certificate furnished pursuant to this
Section 17.1 may be relied upon by Landlord, any Facility Mortgagee and any
prospective purchaser or mortgagee of any of the Collective Leased Properties.
17.2 Financial Statements.
OpCo shall furnish the following statements to Landlord:
(a) within forty-five (45) days after each of the first three quarters of
any Fiscal Year, the most recent Financials and the most recent unaudited
financial statements of OpCo accompanied by the Financial Officer's
Certificate;
(b) within one hundred twenty (120) days after the end of each Fiscal Year,
the most recent Financials for such Fiscal Year, including the most recent
financial statements of OpCo audited and reported upon by an independent
certified publi accountant reasonably satisfactory to Landlord and
accompanied by a Financial Officer's Certificate;
(c) within thirty (30) days after the end of each calendar month, an
unaudited statement of income of OpCo, accompanied by a Financial Officer's
Certificate;
(d) promptly after the sending or filing thereof, copies of all periodic
reports which
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OpCo files with the SEC or any stock exchange on which its shares are
listed or traded;
(e) promptly after the delivery thereof to OpCo, a copy of any management
letter or written report prepared by the certified public accountants with
respect to the financial condition, operations, business or prospects of
OpCo, as the case may be; and
(f) at the expense of Landlord, at any time and from time to time upon not
less than forty-five (45) days Notice from Landlord, any Financials or any
other financial reporting information required to be filed by Landlord with
any securities and exchange commission, the SEC or any successor agency, or
any other governmental authority, or required pursuant to any order issued
by any court, governmental authority or arbitrator in any litigation to
which Lan lord is a party, for purposes of compliance therewith, promptly,
upon Notice from Landlord, such other information concerning the business,
financial condition and affairs of Tenant as Landlord may reasonably
request from time to time.
Landlord may at any time, and from time to time, provide any Facility
Mortgagee with copies of any of the foregoing statements, provided that such
Facility Mortgagee has executed and delivered a confidentiality agreement
reasonably satisfactory to Tenant.
17.3 General Operations.
Tenant covenants and agrees to furnish to Landlord within thirty (30) days after
written request therefor:
17.3.1 Reimbursement, Licensure, Etc.
Within thirty (30) days after receipt or modification thereof :
(a) copies of all material licenses and certificates of need authorizing
Tenant to operate each Facility for its Primary Intended Use;
(b) a list of all Medicare and Medicaid certifications and all related
participating provider agreements; and
(c) copies of all reports of surveys, statements of deficiencies, plans of
correction, and all material correspondence relating thereto, including,
without limitation, all reports and material correspondence concerning
compliance with or enforcement of l censure, Medicare/Medicaid, and
accreditation requirements, including physical environment and Life Safety
Code survey reports (excluding, however, correspondence which may be
subject to any attorney-client privilege).
Upon Notice from Landlord from time to time, Tenant shall make
available for inspection and copying by Landlord, where such records are kept
and maintained in the normal course of business:
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(d) all Medicare and Medicaid certifications, together with all
participating provider agreements and all material correspondence relating
thereto with respect to each Facility (excluding, however, correspondence
which may be subject to any attorney-client privilege); and
(e) such other confirmation as to the licensure and Medicare and Medicaid
participation of Tenant as Landlord may reasonably request from time to
time.
17.3.2 Annual Budgets.
Not less than sixty (60) days after the commencement of any Fiscal Year,
proposed annual income and ordinary expense and capital improvement budgets
setting forth projected income and costs and expenses projected to be incurred
by Tenant in managing, owning, maintaining and operating the Facilities during
the next succeeding Fiscal Year.
18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to inspect
the Collective Leased Properties during usual business hours upon not less than
twenty-four (24) hours' notice (provided that no such notice shall be required
if Landlord shall reasonably determine immediate action is necessary to protect
person or property), and to make such repairs as Landlord is permitted or
required to make pursuant to the terms of this Agreement, provided that any
inspection or repair by Landlord or its representatives will not unreasonably
interfere with Tenant's use and operation of the applicable Leased Property and
further provided that in the event of an emergency, as determined by Landlord in
its sole discretion, prior Notice shall not be necessary.
19
APPRAISAL
In the event that it becomes necessary to determine the Fair Market Value
or Fair Market Rental of any of the Collective Leased Properties for any purpose
of this Agreement and the parties cannot agree thereon, such Fair Market Value
or Fair Market Rental, as the case may be, shall be determined upon the written
demand of either party in accordance with the following procedure.
The party requesting an appraisal, by Notice given to the other, shall
propose and unilaterally approve a Qualified Appraiser. The other party, by
Notice given within fifteen (15) days after receipt of such Notice appointing
the first Qualified Appraiser, may appoint a second Qualified Appraiser. If the
other party fails to appoint the second Qualified Appraiser within such fifteen
(15)-day period, such party shall have waived its right to appoint a Qualified
Appraiser, the first Qualified Appraiser shall appoint a second Qualified
Appraiser within fifteen (15) days thereafter,
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and the Fair Market Value or Fair Market Rental, as the case may be, shall be
determined by the Qualified Appraisers as set forth below.
The two Qualified Appraisers shall thereupon endeavor to agree upon the
Fair Market Value or Fair Market Rental, as the case may be. If the two
Qualified Appraisers so named cannot agree upon such value or rental, as the
case may be, within thirty (30) days after the designation of the second such
appraiser, each such appraiser shall, within five (5) days after the expiration
of such thirty (30)-day period, submit his appraisal of fair market value to the
other appraiser in writing, and if the fair market values set forth in such
appraisals vary by five percent (5%) or less of the greater value, the fair
market value shall be determined by calculating the average of the two fair
market values determined by the two appraisers.
If the fair market values set forth in the two appraisals vary by more than
five percent (5%) of the greater value, the two Qualified Appraisers shall
select a third Qualified Appraiser within an additional fifteen (15) days
following the expiration of the aforesaid five (5)-day period. If the two
appraisers are unable to agree upon the appointment of a third appraiser within
such fifteen (15)-day period, either party may, upon written notice to the
other, request that such appointment be made by the then President (or
equivalent officer) of the State's Chapter of the American Institute of Real
Estate Appraisers, or his or her designee or, if there is no such organization
or if such individual declines to make such appointment, by any state or Federal
court of competent jurisdiction for the State.
In the event that all three of the appraisers cannot agree upon Fair Market
Value or Fair Market Rental, as the case may be, within twenty (20) days
following the selection of the third appraiser, each appraiser shall, within ten
(10) days thereafter, submit his appraisal of fair market value to the other two
appraisers in writing, and the fair market value shall be determined by
calculating the average of the two numerically closest values (or, if the values
are equidistant, the average of all three values) determined by the three
appraisers.
In the event that any appraiser appointed hereunder does not or is unable
to perform his or her obligation hereunder, then the party or the appraisers
appointing such appraiser shall have the right to propose and approve
unilaterally a substitute Qualified Appraiser, but if the party or the
appraisers who have the right to appoint a substitute Qualified Appraiser fail
to do so within ten (10) days after written notice from the other party (or
either party in the event such appraiser was appointed by the other appraisers),
either party may, upon written notice to the party having the right to appoint a
substitute Qualified Appraiser, request that such appointment be made by such
officer of the American Institute of Real Estate Appraisers or court of
competent jurisdiction as described above; provided, however, that a party who
has the right to appoint an appraiser or a substitute appraiser shall have the
right to make such appointment only up until the time such appointment is made
by such officer or court.
In connection with the appraisal process, Tenant shall provide the
appraisers full access during normal business hours to examine the applicable
Leased Property, the books, records and files of Tenant and all agreements,
leases and other operating agreements relating to the applicable Leased
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Property.
The costs (other than Landlord's counsel fees) of each such appraisal shall
be borne by Tenant and shall be included as part of the Additional Charges. Upon
determining such value, the appraisers shall promptly notify Landlord and Tenant
in writing of such determination. If any party shall fail to appear at the
hearings appointed by the appraisers, the appraisers may act in the absence of
such party.
The determination of the Qualified Appraisers made in accordance with the
foregoing provisions shall be final and binding upon the parties, such
determination may be entered as an award in arbitration in a court of competent
jurisdiction, and judgment thereon may be entered.
Notwithstanding anything in this Agreement to the contrary, (x) the parties
agree that the Minimum Rent for the Fixed Term provided for in Section 1.64
hereof shall not be evidence of the Fair Market Rental for any Extended Term,
and (y) if Minimum Rent for any Extended Term as determined by appraisal
pursuant to this Article 19 is not satisfactory to Landlord, in Landlord's sole
discretion, or Franchisor elects to void Tenant's extension of the Franchise
Agreement with respect to such Extended Term pursuant to the Franchise
Agreement, then Landlord shall have the right to render void Tenant's election
to extend the Term with respect to such Extended Term upon Notice given to
Tenant no later than thirty (30) days following the later of the determination
of the Minimum Rent pursuant to this Article 19, or Franchisor's election to
render void the extension of the Franchise Agreement pursuant to the Franchise
Agreement, in which event this Agreement shall expire on the last day of the
Fixed Term or the then current Extended Term, as applicable.
20
FACILITY MORTGAGES
20.1 Landlord May Grant Liens.
Without the consent of Tenant, Landlord may, subject to the terms and
conditions set forth in this Section 20.1, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrance or title
retention agreement ("Encumbrance") upon any of the Collective Leased
Properties, or any portion thereof or interest therein, whether to secure any
borrowing or other means of financing or refinancing. Any such Encumbrance shall
include the right to prepay (whether or not subject to a prepayment penalty) and
shall provide (subject to Section 20.2 below) that it is subject to the rights
of Tenant under this Agreement.
20.2 Subordination of Lease.
Subject to Section 20.1, this Agreement, any and all rights of Tenant
hereunder, are and shall be subject and subordinate to any ground or master
lease, and all renewals, extensions, modifications and replacements thereof, and
to all mortgages and deeds of trust, which may now or her after affect the
Collective Leased Properties, or any of them, or any improvements thereon and/or
any of such
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leases, whether or not such mortgages or deeds of trust shall also cover other
lands and/or buildings and/or leases, to each and every advance made or
hereafter to be made under such mortgages and deeds of trust, and to all
renewals, modifications, replacements and extensions of such leases and such
mortgages and deeds of trust and all consolidations of such mortgages and deeds
of trust. This section shall be self-operative and no further instrument of
subordination shall be required. In confirmation of such subordination, (i)
Tenant shall promptly execute, acknowledge and deliver any instrument that
Landlord, the lessor under any such lease or the holder of any such mortgage or
the trustee or beneficiary of any deed of trust or any of their respective
successors in interest may reasonably request to evidence such subordination,
and (ii) the lessor under any such lease or the holder of any such mortgage or
the trustee or beneficiary of any such deed of trust shall execute and deliver
to Tenant a Non-Disturbance Agreement reasonably satisfactory to Tenant (taking
into account, however, the reasonable requirements of the lessor or lender,
including a lender becoming such in connection with a non-recourse securitized
loan), including provisions with respect to insurance and casualty matters.
Any lease to which this Agreement is, at the time referred to, subject and
subordinate is herein called "Superior Lease" and the lessor of a Superior Lease
or its successor in interest at the time referred to, is herein called "Superior
Landlord" and any mortgage or deed of trust to which this Agreement is, at the
time referred to, subject and subordinate, is herein called "Superior Mortgage"
and the holder, trustee or beneficiary of a Superior Mortgage is herein called
"Superior Mortgagee."
If any Superior Landlord or Superior Mortgagee or the nominee or designee
of any Superior Landlord or Superior Mortgagee shall succeed to the rights of
Landlord under this Agreement with respect to one or more of the Collective
Leased Properties, whether through possession or foreclosure action or delivery
of a new lease or deed, or otherwise, then at the request of such party so
succeeding to Landlord's rights (herein called "Successor Landlord") and upon
such Successor Landlord's written agreement to accept Tenant's attornment,
Tenant shall attorn to and recognize such Successor Landlord as Tenant's
landlord under this Agreement with respect to one or more of the Collective
Leased Properties, and shall promptly execute and deliver any instrument that
such Successor Landlord may reasonably request to evidence such attornment. Upon
such attornment, this Agreement shall continue in full force and effect as a
direct lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Agreement, except that the
Successor Landlord (unless formerly the landlord under this Agreement or its
nominee or designee) shall not be (a) liable in any way to Tenant for any act or
omission, neglect or default on the part of Landlord under this Agreement, (b)
responsible for any monies owing by or on deposit with Landlord to the credit of
Tenant, (c) subject to any counterclaim or setoff which theretofore accrued to
Tenant against Landlord, (d) bound by any modification of this Agreement
subsequent to such Superior Lease or Mortgage, or by any previous prepayment of
Minimum Rent or Additional Rent for more than one (1) month, which was not
approved in writing by the Superior Landlord or the Superior Mortgagee thereto,
(e) liable to Tenant beyond the Successor Landlord's interest in the applicable
Leased Property and the rents, income, receipts, revenues, issues and profits
issuing from such Leased Property, (f) responsible for the performance of any
work to be done by the Landlord under this Agreement to render the applicable
Leased
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Property ready for occupancy by Tenant, or (g) required to remove any Person
occupying the applicable Leased Property or any part thereof, except if such
person claims by, through or under the Successor Landlord. Tenant agrees at any
time and from time to time to execute a suitable instrument in confirmation of
Tenant's agreement to attorn, as aforesaid.
20.3 Notice to Mortgagee and Ground Landlord.
Subsequent to the receipt by Tenant of notice from any Person that it is a
Facility Mortgagee or that it is the ground lessor under a lease with Landlord,
as ground lessee, which includes the applicable Leased Property as part of the
demised premises, no notice from Tenant to Landlord as to the applicable Leased
Property shall be effective unless and until a copy of the same is given to such
Facility Mortgagee or ground lessor, and the curing of any of Landlord's
defaults by such Facility Mortgagee or ground lessor shall be treated as
performance by Landlord.
21
ADDITIONAL COVENANTS OF TENANT
21.1 Conduct of Business.
Tenant shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect and in good standing its corporate existence
and its rights and licenses necessary to conduct such business.
21.2 Maintenance of Accounts and Records.
Tenant shall keep records and books of account in which full, true and
correct entries in all material respects will be made of dealings and
transactions in relation o the business and affairs of Tenant.
21.3 Payments to Franchisor.
All payments by Tenant of Franchise Fees under the Franchise Agreement
shall be subordinated to payments of Rent (other than Non-Priority Additional
Rent) due to Landlord to the extent and on the terms provided in the Franchise
Subordination Agreement, and Tenant shall not make any payment of the Franchise
Fees, directly or indirectly, or set apart any sum or property therefor, or
agree to do so, other than as permitted in and by the Franchise Subordination
Agreement.
21.4 Management of Collective Leased Properties.
Tenant shall not enter into any Management Agreement unless the terms
thereof have been previously approved in writing by Landlord, which approval may
be given or withheld in Landlord's sole and absolute discretion, except for
Management Agreements between OpCo and a Facility
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Subsidiary. All management fees, payments in connection with any extension of
credit and fees for services provided in connection with the operation of the
applicable Leased Property, payable by Tenant or any Affiliated Person as to
Tenant shall be subordinated to all of the obligations of Tenant due under this
Agreement pursuant to a Subordination Agreement. Tenant shall not agree to any
change in the Manager of any of the Collective Leased Properties and/or any
Facility, to any change in any Management Agreement, terminate any Management
Agreement or permit any Manager to assign any Management Agreement without the
prior written approval of Landlord in each instance, which approval may be given
or withheld in Landlord's sole and absolute discretion. Any Management Agreement
shall provide that Landlord shall be provided notice of any defaults thereunder
and, at Landlord's option, an opportunity to cure such defaults and shall
otherwise be in form and substance satisfactory to Landlord in its sole and
absolute discretion. If Landlord shall cure any of Tenant's defaults under any
Management Agreement, the cost of such cure shall be payable upon demand by
Tenant to Landlord with interest accruing from the demand date at the Overdue
Rate and Landlord shall have the same rights and remedies for failure to pay
such costs on demand as for Tenant's failure to pay Minimum Rent. Tenant shall
deliver to Landlord any instrument requested by Landlord to implement the intent
of the foregoing provision.
21.5 Liens and Encumbrances.
Except as permitted by Sections 7.1 and 16.5, Tenant shall not create or
incur or suffer to be created or incurred or to exist any Lien on this Agreement
or Tenant's ersonal Property now or at any time hereafter owned, other than:
(a) Security interests securing the purchase price of equipment or personal
property acquired after the Commencement Date; provided, however, that (i)
such Lien shall at all times be confined solely to the asset in question;
and (ii) the aggregate principal amount of Indebtedness secured by any such
Lien shall not excee the cost of acquisition or construction of the
property subject thereto; and
(b) Permitted Encumbrances.
22
MISCELLANEOUS
22.1 Limitation on Payment of Rent.
All agreements between Landlord and Tenant herein are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of Rent, or otherwise, shall the Rent or any other amounts payable
to Landlord under this Agreement exceed the maximum permissible under applicable
law, the benefit of which may be asserted by Tenant as a defense, and if, from
any circumstance whatsoever, fulfillment of any provision of this Agreement, at
the time performance of such provision shall be due, shall involve transcending
the limit of validity prescribed by law, or if from any circumstances Landlord
should ever receive as fulfillment of such provision such an excessive amount,
then, ipso facto, the amount which would be excessive shall
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be applied to the reduction of the installment(s) of Minimum Rent next due and
not to the payment of such excessive amount. This provision shall control every
other provision of this Agreement and any other agreements between Landlord and
Tenant.
22.2 No Waiver.
No failure by Landlord to insist upon the strict performance of any term
hereof or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
of any such term. To the maximum extent permitted by law, no waiver of any
breach shall affect or alter this Agreement, which shall continue in full force
and effect with respect to any other then existing or subsequent breach.
22.3 Remedies Cumulative.
To the maximum extent permitted by law, each legal, equitable or
contractual right, power and remedy of Landlord, now or hereafter provided
either in this Agreement 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 Landlord of any one or more of such
rights, powers and remedies shall not preclude the simultaneous or subsequent
exercise by Landlord of any or all of such other rights, powers and remedies.
22.4 Severability.
Any clause, sentence, paragraph, section or provision of this Agreement
held by a court of competent jurisdiction to be invalid, illegal or ineffective
shall not impair, invalidate or nullify the remainder of this Agreement, but
rather the effect thereof shall be confined to the clause, sentence, paragraph,
section or provision so held to be invalid, illegal or ineffective, and this
Agreement shall be construed as if such invalid, illegal or ineffective
provisions had never been contained therein.
22.5 Acceptance of Surrender.
No surrender to Landlord of this Agreement or of any of the Collective
Leased Properties or any part thereof, or of any interest therein, shall be
valid or effective unless agreed to and accepted in writing by Landlord and no
act by Landlord or any representative or agent of Landlord, other than such a
written acceptance by Landlord, shall constitute an acceptance of any such
surrender.
22.6 No Merger of Title.
It is expressly acknowledged and agreed that it is the intent of the
parties that there shall be no merger of this Agreement or of the leasehold
estate created hereby by reason of the fact that the same Person may acquire,
own or hold, directly or indirectly this Agreement or the leasehold estate
created her by and the fee estate or ground landlord's interest in any of the
Collective Leased Properties.
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22.7 Conveyance by Landlord.
If Landlord or any successor owner of all or any portion of any of the
Collective Leased Properties shall convey all or any portion of the Collective
Leased Properties in accordance with the terms hereof other than as security for
a debt, and the grantee or transferee of such of the Collective Leased
Properties shall expressly assume all obligations of Landlord hereunder arising
or accruing from and after the date of such conveyance or transfer, Landlord or
such successor owner, as the case may be, shall thereupon be released from all
future liabilities and obligations of Landlord under this Agreement with respect
to such of the Collective Leased Properties arising or accruing from and after
the date of such conveyance or other transfer and all such future liabilities
and obligations shall thereupon be binding upon the new owner.
22.8 Quiet Enjoyment.
So long as Tenant shall pay the Rent as the same becomes due and shall
comply with all of the terms of this Agreement, Tenant shall peaceably and
quietly have, hold and enjoy the Collective Leased Properties for the Term, free
of hindrance or molestation by Landlord or anyone claiming by, through or under
Landlord, but subject to (a) any Encumbrance permitted under Article 20 or
otherwise permitted to be created by Landlord hereunder, (b) all Permitted
Encumbrances, (c) liens as to obligations of Landlord that are either not yet
due or which are being contested in good faith and by proper proceedings, and
(d) liens that have been consented to in writing by Tenant. Except as otherwise
provided in this Agreement, no failure by Landlord to comply with the foregoing
covenant shall give Tenant any right to cancel or terminate this Agreement or
abate, reduce or make a deduction from or offset against the Rent or any other
sum payable under this Agreement, or to fail to perform any other obligation of
Tenant hereunder.
22.9 Landlord's Consent.
Where provision is made in this Agreement for Landlord's consent and
Landlord shall fail or refuse to give such consent, Tenant shall not be entitled
to any damages for any withholding by Landlord of its consent, it being intended
that Tenant's sole remedy shall be an action for specific performance or
injunction, and that such remedy shall be available only in those cases where
Landlord has expressly agreed in writing not unreasonably to withhold its
consent.
22.10 Memorandum of Lease.
Neither Landlord nor Tenant shall record this Agreement. However, Landlord
and Tenant shall promptly, upon the request of the other, enter into a short
form memorandum of this Agreement, in form suitable for recording under the laws
of the State in which reference to this Agreement, and all options contained
herein, shall be made. Tenant shall pay all costs and expenses of recording such
memorandum.
22.11 Notices.
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(a) Any and all notices, demands, consents, approvals, offers, elections
and other communications required or permitted under this Agreement shall
be deemed adequately given if in writing and the same shall be delivered
either in hand, by telecopier with written acknowledgment of receipt, or by
mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with
return receipt requested (if by mail), or with all freight charges prepaid
(if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be deemed
to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all
other cases, upon the date of receipt or refusal, except that whenever
under this Agreement a notice is either received on a day which is not a
Business Day or is required to be delivered on or before a specific day
which is not a Business Day, the day of receipt or required delivery shall
automatically be extended to the next Business Day.
(c) All such notices shall be addressed:
if to Landlord to:
Gerald W. Haddock, Esq.
Chief Executive Officer and President
CRE Management VII Corp.
777 Main Street
Suite 2100
Forth Worth, Texas 76102
Facsimile: (817) 878-0429
with copies to:
David M. Dean, Esq.
Senior Vice President, Law
CRE Management VII Corp.
777 Main Street
Suite 2100
Forth Worth, Texas 76102
Facsimile: (817) 878-0429
and
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Wendelin A. White, Esq.
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, DC 20037
Facsimile: (202) 663-8007
If to Tenant to:
Steve J. Davis, Esq.
Executive Vice President,
Administrative Services and General Counsel
3414 Peachtree Road, N.E.
Suite 1400
Atlanta, Georgia 30326
Facsimile: (404) 814-5793
with a copy to:
Robert W. Miller, Esq.
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Facsimile: (404) 572-5100
(d)By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right from time to time and
at any time during the term of this Agreement to change their respective
addresses effective upon receipt by the other parties of such notice and
each shall have the right to specify as its address any other address
within the United States of America.
22.12 Construction.
Anything contained in this Agreement to the contrary notwithstanding, all
claims against, and liabilities of, Tenant or Landlord arising prior to any date
of termination or expiration of this Agreement with respect to any of the
Collective Leased Properties shall survive such termination or expiration. In no
event shall Landlord be liable for any consequential damages suffered by Tenant
as the result of a breach of this Agreement by Landlord. Neither this Agreement
nor any provision hereof may be changed, waived, discharged or terminated except
by an instrument in writing signed by the party to be charged. All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Each term or
provision of this Agreement to be performed by Tenant shall be construed as an
independent covenant and condition. Time is of the essence with respect to the
exercise of any rights of Tenant under this Agreement. Except as otherwise set
forth in this Agreement, any obligations of Tenant and Landlord (including
without limitation, any monetary, repair and indemnification obligations)
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shall survive the expiration or sooner termination of this Agreement.
22.13 Counterparts; Headings.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but which, when taken together, shall constitute
but one instrument and shall become effective as of the date hereof when copies
hereof, which, when taken together, bear the signatures of each of the parties
hereto shall have been signed. Headings in this Agreement are for purposes of
reference only and shall not limit or affect the meaning of the provisions
hereof.
22.14 Law, Etc.
This Agreement shall be interpreted, construed, applied and enforced in
accordance with the laws of the State of Delaware applicable to contracts
between residents of Delaware which are to be performed entirely within
Delaware, regardless of (i) where this Agreement is executed or delivered; or
(ii) where any payment or other performance required by this Agreement is made
or required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv) where any
action or other proceeding is instituted or pending; or (v) the nationality,
citizenship, domicile, principal place of business, or jurisdiction of
organization or domestication of any party; or (vi) whether the laws of the
forum jurisdiction otherwise would apply the laws of a jurisdiction other than
the State of Delaware; or (vii) any combination of the foregoing.
Notwithstanding the foregoing, the laws of the State shall apply to the
perfection and priority of liens upon and the disposition of and disposition
with respect to any of the Collective Leased Properties.
To the maximum extent permitted by applicable law, any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in such court or courts located in the
State of Delaware as is provided by law; and the parties consent to the
jurisdiction of said court or courts located in the State of Delaware and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
22.15 of Leased Properties.
Provided no Default or Event of Default has occurred and is continuing at
the time of exercise of the right provided for in this Section 22.15, Tenant
shall have the right, from time to time, to substitute for a Designated Leased
Property another parcel of improved real property meeting criteria hereinafter
set forth and otherwise acceptable to Landlord (the "Substitute Leased
Property"). If Tenant makes such election, Tenant shall give Notice to Landlord
of Tenant's intention proposing a substitution closing date (the "Substitution
Date") not less than sixty (60) days or more than one-hundred twenty (120) days
from the date of such Notice and offering to Landlord a proposed Substitute
Leased Property meeting the following criteria: the Substitute Leased Property
shall be improved with a Comparable Facility; shall have a total value equal to
or greater than the total value of the Designated Leased Property to Landlord
(each as reasonably determined by Landlord); shall be freely transferable to
Landlord unencumbered by any existing lease, mortgage, or other encumbrance; and
shall be subject to no other exceptions to title except
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those approved by Landlord, which approval shall not be unreasonably withheld.
Tenant shall convey the Substitute Leased Property to Landlord in exchange for
the Designated Leased Property, Landlord shall simultaneously exchange the
Designated Leased Property, for the Substitute Leased Property, and the parties
shall simultaneously execute and deliver an amendment to this Lease. The
Landlord shall have thirty (30) days following receipt of such Notice within
which to accept or reject such offer; provided, however, that Landlord shall
have at least ten (10) days following receipt of any appraisal of the Substitute
Leased Property or the Designated Leased Property (or both) requested by
Landlord within which to accept or reject such offer. If Landlord accepts the
proposed Substitute Leased Property, the substitution shall proceed in a manner
(a) intended to qualify such substitution as a "like-kind" exchange within the
meaning of Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code") with respect to Landlord, and (b) which will satisfy Landlord's
requirements related to taxation as a real estate investment trust. Landlord may
demand, at Tenant's expense, a reasonably acceptable opinion of counsel or
private letter ruling from the Internal Revenue Service indicating that the
substitution will have no material adverse tax consequences to Landlord. After
closing, the Substitute Leased Property shall be deemed a Leased Property for
all purposes. Substitution hereunder and the closing shall be made on the
following terms and shall be subject to the following conditions:
(a) the Substitution Date, Tenant shall execute, acknowledge and deliver to
Landlord a warranty deed in the customary form for the relevant
jurisdiction conveying to Landlord, free and clear of any title exceptions
except those approved by Landlord as set forth above, title to the
Substitute Leased Property, and Landlord shall simultaneously execute,
acknowledge and deliver to Tenant a warranty deed conveying to Tenant, free
and clear of title exceptions, except Permitted Encumbrances and those
approved by Tenant (based on the same criteria for approval as for
Landlord), title to the Designated Leased Property; provided, however, that
in no event shall Landlord have any obligation to cure or remove title
exceptions affecting the Designated Leased Property, Tenant's only recourse
being to designate an alternative Designated Leased Property for
substitution or to rescind its Notice of election to substitute a
Substitute Leased Property.
(b) or prior to the Substitution Date, Landlord and Tenant shall have
executed, acknowledged and delivered an amendment to this Lease (the
"Amendment to Lease") (the Lease, as amended, herein referred to as the
"Amended Lease") which shall provide for the deletion of the legal
description of the Designated Leased Property and the substitution of the
legal description of the Substitute Leased Property therefor.
(c) shall have provided Landlord, at Tenant's sole cost, with a title
insurance policy satisfactory in form and substance to Landlord, effective
on the date of exchange, covering the Substitute Leased Property and
containing no exceptions to title to the Substitute Leased Property other
than encumbrances approved by Landlord as provided herein, and having such
affirmative insurance and endorsements as may be required by Landlord.
(d) shall have provided Landlord with representations and warranties with
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respect to the Substitute Leased Property reasonably satisfactory to
Landlord (unless otherwise reasonably required, generally similar to the
representations and warranties contained in Section 6.1 of that certain
Real Estate Purchase and Sale Agreement dated as of January 29, 1997, as
amended through the date hereof by and between Magellan Health Services,
Inc., as seller, and Crescent Real Estate Equities Limited Partnership,
predecessor in interest of Landlord, as purchaser (the "Purchase
Agreement")), such representations and warranties shall survive the closing
and Landlord shall have the same remedies for breach thereof as are
provided for in the Purchase Agreement.
(e) shall provide Landlord with documentation satisfactory to Landlord
confirming that Tenant has the right to operate the Substitute Leased
Property in accordance with the Primary Intended Use and under and pursuant
to the Franchise Agreement.
(f) shall reimburse Landlord, as Additional Charges, for any and all costs
and expenses incurred by Landlord, including Landlord's reasonable
attorneys' fees, in effecting the substitution proposed (whether or not
closing occurs).
Landlord and Tenant hereby covenant that once the Notice of intent to
substitute a Substitute Leased Property for the Designated Leased Property
described therein has been delivered and Landlord accepts the Substitute Leased
Property identified therein, each party will promptly perform all acts and
deliver all documents required on its part to be delivered or to satisfy the
conditions of closing set forth herein. In the event that the Substitute Leased
Property has not been exchanged for the Designated Leased Property within thirty
(30) days after the Substitution Date specified in Tenant's Notice of its
intention to substitute by reason of the acts or omissions of one party, then
the other party shall have the right to elect not to proceed with the
substitution.
Tenant covenants that, following the closing of the exchange of the
Substitute Leased Property, neither it nor any of its Affiliated Persons will
use the Designated Leased Property as a facility having as its primary use the
Primary Intended Use for at least one year after the Substitution Date.
22.16 Broker.
Each party hereby represents and warrants to the other that it has not
engaged, dealt with or otherwise discussed this transaction with any broker,
agent or finder. Each party agrees to indemnify and hold the other harmless from
and against any claim arising out of a breach of the foregoing agreement and
representation and warranty.
22.17 Confidentiality.
Landlord shall maintain the confidentiality of information provided by
Tenant pursuant to Sections 17.2 and 17.3 hereof or otherwise under this
Agreement. Landlord may, however, disclose such information to its attorneys,
consultants, partners, directors, officers and employees, and lenders and
purchasers (actual and potential). As a condition of such disclosure to any
lender or purchaser
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(actual or potential), such lender or purchaser shall be obligated to execute a
Confidentiality Agreement reasonably satisfactory to Tenant. The provisions of
this Section 22.18 shall not be applicable to disclosure of information required
by applicable law, rule or regulation or the order of any court.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
LANDLORD:
Crescent Real Estate FUNDING VII, L.P.
Attest: By: CRE Management VII Corp.
\s\ Sylvia M. Mahaffey By: \s\ David M. Dean
- ------------------------------ ----------------------------
Name: Sylvia M. Mahaffey David M. Dean
Title: Assistant Secretary Senior Vice President, Law
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TENANT:
Attest: CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC
\s\ Jay P. Moran By:\s\ Mark Ford
- ------------------------ ---------------------------------------
Name: Jay P. Moran Name: Mark Ford
Title: Title: Vice President, General Counsel
and Secretary
Attest: FACILITY SUBSIDIARIES
\s\ Jay P. Moran By: \s\ John R. Hamilton III
- ------------------------ --------------------------------------
Name:John R. Hamilton IIITitle:
Executive Vice President of each of the Limited
Liability Companies and of each Sole General
Partner of each of the Limited Partnerships
listed on Exhibit B attached hereto, on behalf
of each of the said Limited Liability Companies
and Limited Partnerships