MASTER LEASE, OPEN END MORTGAGE AND PURCHASE OPTION
THIS DOCUMENT SECURES FUTURE ADVANCES
dated as of December 11, 1996
among
ACADEMY NURSING HOME, INC.
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC.
PRESCOTT NURSING HOME, INC.
WILLOW MANOR NURSING HOME, INC.
ADS/MULTICARE, INC.
AND EACH OTHER PERSON AS A LESSEE IDENTIFIED HEREIN
each as a Lessee
and
SELCO SERVICE CORPORATION,
as the Lessor.
This Master Lease, Open End Mortgage and Purchase Option is subject to a lien in
favor of the Collateral Agent for the benefit of each of the Secured Parties.
This Master Lease, Open End Mortgage and Purchase Option has been executed in
several counterparts. To the extent, if any, that this Master Lease, Open
End Mortgage and Purchase Option constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no lien on this Master Lease, Open End Mortgage and Purchase
Option may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed
by NATIONSBANK, N.A., as the Collateral Agent for the Secured Parties, on or
following the signature page hereof.
This counterpart is [not] the original counterpart.
MASTER LEASE, OPEN END MORTGAGE AND PURCHASE OPTION
THIS DOCUMENT SECURES FUTURE ADVANCES
THIS MASTER LEASE, OPEN END MORTGAGE AND PURCHASE OPTION (this "Master
Lease"), dated as of December 11, 1996, between SELCO SERVICE CORPORATION, an
Ohio corporation, as the Lessor, and ACADEMY NURSING HOME, INC., a
Massachusetts corporation, NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC.,
a Massachusetts corporation, PRESCOTT NURSING HOME, INC., a Massachusetts
corporation, WILLOW MANOR NURSING HOME, INC., a Massachusetts corporation,
ADS/MULTICARE, INC., a Delaware corporation, and each other Subsidiary of the
Company that may from time to time become a Lessee under this Master Lease and
the other Operative Documents pursuant to the terms of Section 14.2 of the
Participation Agreement (each as a "Lessee"; and collectively, the
"Lessees").
W I T N E S S E T H:
WHEREAS, pursuant to a Participation Agreement dated as of the date hereof
(as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"), among The MultiCare Companies, Inc., a Delaware
corporation, as the Company, the Lessees, the Lessor, the various financial
institutions (the "Lenders") as are or may from time to time become Lenders
under the Loan Agreement, and NationsBank, N.A. as the Collateral Agent, the
Lessor and the Lenders have agreed to finance the Lessor's acquisition of each
Property and each Equity Interest;
WHEREAS, on each Acquisition Date, the Lessor will purchase a Property or
Properties or the Equity Interest or Equity Interests related thereto, as
described in the relevant Lease Supplement from one or more third parties
designated by the Company as agent for the Lessees;
WHEREAS, the Lessor desires to lease to each Lessee, and each Lessee
desires to lease from the Lessor, the Property described in the Lease Supplement
executed by such Lessee; and
WHEREAS, each Property will be subject to the terms of this Master Lease;
WHEREAS, additional Properties, Equity Interests and Improvements may be
financed from time to time up to the respective Commitments of the Participants;
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Master Lease have the respective meanings specified in
Appendix A to this Master Lease; and the rules of interpretation set forth in
Appendix A to this Master Lease shall apply to this Master Lease.
ARTICLE II
MASTER LEASE
2.1. Acceptance and Lease of Property. Subject to the conditions set
forth in the Participation Agreement, including without limitation the
satisfaction or waiver of the conditions set forth in Article VI thereof, the
Lessor hereby agrees to accept pursuant to the terms of the Participation
Agreement delivery on each Acquisition Date of the Property or Equity
Interest to be delivered by the seller thereof on such Acquisition Date and
simultaneously to demise and lease to the applicable Lessee hereunder and under
the Lease Supplement for the Term, the Lessor's interest in such Property, and
the Lessees hereby agree, expressly for the direct benefit of the Lessor, to
lease from the Lessor for the Term, the Lessor's interest in each Property.
2.2. Acceptance Procedure. Each Lessee hereby agrees that the execution
and delivery by any Lessee on each Acquisition Date of an appropriately
completed Lease Supplement in the form of Exhibit A hereto covering the Property
to be acquired by the Lessor on such Acquisition Date, shall, without further
act, constitute the irrevocable acceptance by such Lessee and all other Lessees
of all of the Property which is the subject of such Lease Supplement for all
purposes of this Master Lease and the other Operative Documents on the terms set
forth therein and herein, and that such Property shall be deemed to be included
in the leasehold estate of this Master Lease and shall be subject to the terms
and conditions of this Master Lease as of such Acquisition Date.
2.3. Term. The Term (the "Term") of this Master Lease with respect to any
Property shall begin on the Acquisition Date therefor and shall end on the fifth
anniversary of the Initial Acquisition Date, unless earlier terminated in
accordance with the provisions of this Master Lease or the Operative Documents.
2.4. Title. Each Property is leased to the respective Lessee without any
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, all Liens other than Lessor Liens) and all applicable Requirements
of Law and Property Legal Requirements. No Lessee shall in any event have any
recourse against the Lessor for any defect in or exception to title to any
Property other than resulting from Lessor Liens.
ARTICLE III
PAYMENT OF RENT
3.1. Rent.
(a) During the Term, the Lessees shall pay in arrears Basic Rent
(Interest/Yield on each Basic Rent Payment Date and on any date on which this
Master Lease shall terminate with respect to a Property leased by it or all
Properties. On each date that Basic Rent (Interest/Yield) is due hereunder,
each Lessee shall pay a portion of the Basic Rent (Interest/Yield) then due
equal to such Lessee's Allocation Percentage multiplied by the amount of Basic
Rent (Interest/Yield) due and owing on such date.
(b) Neither a Lessee's inability or failure to take possession of all or
any portion of a Property when timely delivered by the Lessor, whether or not
attributable to any act or omission of a Lessee or any act or omission of the
Lessor, or for any other reason whatsoever, shall delay or otherwise affect such
Lessee's obligation to pay Rent for such Property in accordance with the terms
of this Master Lease.
3.2. Payment of Rent. Rent shall be paid absolutely net to the Lessor, so
that this Master Lease shall yield to the Lessor the full amount thereof,
without setoff, deduction or reduction; provided, however, that this Section 3.2
shall not affect the Lessees' right to initiate independent legal action, in
equity or at law, to enforce the obligations of the Lessor under this Master
Lease.
3.3. Supplemental Rent. Each Lessee shall pay any and all Supplemental
Rent to (i) the Collateral Agent or the Lease Agent (as specified in Section
3.6), for the benefit of the Person entitled thereto (if the Person entitled to
such Supplemental Rent is a Secured Party) or (ii) directly to the Person
entitled thereto (if such Person is not a Secured Party), promptly as the
same shall become due and payable, and if such Lessee fails to pay any
Supplemental Rent, the Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case of nonpayment
of Basic Rent (Interest/Yield). Receipt of such amount by the Collateral Agent
or the Lease Agent, as applicable, shall be deemed to be receipt by the
Person entitled thereto, whereupon the Lessees shall be relieved of their
obligation to make any further payments to such Person with respect to such
amount of Supplemental Rent. Each Lessee shall pay to the Collateral Agent (or
the Lease Agent, if applicable), as Supplemental Rent, among other things, on
demand, to the extent permitted by applicable Requirements of Law, interest at
the applicable Overdue Rate on any installment of Basic Rent (Interest/Yield)
not paid when due for the period for which the same shall be overdue and on any
payment of Supplemental Rent not paid when due (other than Supplemental Rent
payments due with respect to Sections 13.7, 13.8, 13.9 and 13.10 of the
Participation Agreement which are due within five (5) days of demand by the
Collateral Agent or the Lease Agent, as applicable), for the period from
the due date until the same shall be paid. The expiration or other termination
of such Lessee's obligations to pay Basic Rent (Interest/Yield) hereunder shall
not limit or modify the obligations of such Lessee with respect to indemnity
obligations payable as Supplemental Rent. Unless expressly provided otherwise
in this Master Lease, in the event of any failure on the part of such Lessee to
pay and discharge any Supplemental Rent as and when due, such Lessee shall also
promptly pay and discharge any fine, penalty, interest or cost which may be
assessed or added under any agreement with a third party for nonpayment or late
payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.
3.4. Method of Payment. Each payment of Rent shall be made by the Lessee
to the Collateral Agent, as assignee of the Lessor under the Assignment of Lease
and Rent, until such time as all obligations of the Company and the Subsidiary
Co-Borrowers owing to the Credit Facility Banks under the Credit Facility
Documents have been paid in full and all commitments of the Credit Facility
Banks thereunder have been permanently terminated (at which time such payments
shall be made to the Lease Agent in accordance with Section 3.6), prior to 11:00
a.m., New York City time to the Collateral Agent's (or the Lease Agent's, as the
case may be) account specified on Schedule I to the Participation Agreement in
funds consisting of lawful currency of the United States of America which shall
be immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day. Payments received
after 12:00 p.m., New York City time on the date due shall for the purpose of
Section 16.1 hereof be deemed received on such day; provided, however, that for
the purposes of the second sentence of Section 3.3 hereof, such payments shall
be deemed received on the next succeeding Business Day and, unless the
Collateral Agent (or the Lease Agent, as applicable) is otherwise able to invest
or employ such funds on the date received, subject to interest at the Overdue
Rate as provided in such Section 3.3.
3.5. Payments of Rent Constitute Senior Debt. Each party hereto
acknowledges that each payment of Rent (including without limitation Purchase
Option Rent) hereunder shall constitute "Senior Debt", as such term is used in
the Multicare Subordinated Debentures (as defined in the Credit Agreement).
3.6. Payments After Termination of Credit Agreement, etc. Each of the
parties hereto acknowledges and agrees that, after payment in full of all
obligations of the Company and the Subsidiary Co-Borrowers owing to the Credit
Facility Banks under the Credit Facility Documents and the permanent termination
of all commitments of the Credit Facility Banks thereunder, the assignment of
payments and rights made under the Assignment of Lease and Rent shall inure to
the benefit of the Lease Agent on behalf of the Lenders and, in furtherance of
the foregoing, all payments to be made under this Master Lease or any other
Operative Document to the Collateral Agent shall instead be made to the Lease
Agent.
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1. Quiet Enjoyment. Subject to Sections 2.4, 4.2 and 17.1 and subject
to the rights of the Lessor contained in Articles XV and XVI, each Lessee shall
peaceably and quietly have, hold and enjoy the Property leased by it for the
Term, free of any claim or other action by the Lessor or anyone claiming by,
through or under the Lessor (other than a Lessee). Such right of quiet
enjoyment is independent of, and shall not affect the Lessor's rights otherwise
to initiate legal action to enforce, the obligations of a Lessee under this
Master Lease.
4.2. Right to Inspect. During the Term, but not more than once each
calendar month and upon at least 30 days prior written notice from the Lessor
(except that no notice shall be required, and no limitations as to the frequency
of inspections shall apply, if a Lease Event of Default has occurred and is
continuing), each Lessee shall permit the Lessor, the Lenders and their
respective authorized representatives to inspect the Property leased to such
Lessee and subject to this Master Lease during normal business hours, provided
that such inspections shall not unreasonably interfere with such Lessee's
business operations at such Property.
ARTICLE V
NET LEASE, ETC.
5.1. Net Lease. This Master Lease shall constitute a net lease. Any
present or future law to the contrary notwithstanding, this Master Lease shall
not terminate, nor shall the Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of a Lessee hereunder be affected (except as expressly
herein permitted and by performance of the obligations in connection therewith)
by reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of any Property or any part thereof,
or the failure of any Property to comply with all Requirements of Law and
Property Legal Requirements, including any inability to occupy or use any such
Property by reason of such non-compliance; (ii) any damage to, removal,
abandonment, salvage, loss, contamination of or Release from, scrapping or
destruction of or any requisition or taking of any Property or any part thereof;
(iii) any restriction, prevention or curtailment of or interference with any use
of any Property or any part thereof; (iv) any defect in title to or rights to
any Property or any Lien on such title or rights or on any Property (other than
Lessor Liens); (v) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by the
Lessor, any Participant, the Lease Agent or the Collateral Agent; (vi) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to a Lessee, the Lessor, any
Participant, the Lease Agent, the Collateral Agent or any other Person, or any
action taken with respect to this Master Lease by any trustee or receiver
of a Lessee, the Lessor, any Participant, the Lease Agent, the Collateral Agent
or any other Person, or by any court, in any such proceeding; (vii) any claim
that a Lessee has or might have against any Person, including without limitation
the Lessor, any Participant, the Lease Agent, the Collateral Agent or any
vendor, manufacturer, contractor of or for any Property; (viii) any failure on
the part of the Lessor to perform or comply with any of the terms of this Master
Lease (other than performance by Lessor of its obligations set forth in Section
2.1 hereof), of any other Operative Document or of any other agreement; (ix) any
invalidity or unenforceability or illegality or disaffirmance of this Master
Lease against or by a Lessee or any provision hereof or any of the other
Operative Documents or any provision of any thereof; (x) the impossibility or
illegality of performance by a Lessee, the Lessor or both; (xi) any action by
any court, administrative agency or other Governmental Authority; (xii) any
restriction, prevention or curtailment of or interference with the construction
on or any use of any Property or any part thereof; or (xiii) any other cause or
circumstances whether similar or dissimilar to the foregoing and whether or not
a Lessee shall have notice or knowledge of any of the foregoing. Each Lessee's
agreement in the preceding sentence shall not affect any claim, action
or right such Lessee may have against the Lessor, any Participant, the Lease
Agent or theCollateral Agent. The parties intend that the obligations of each
Lessee hereunder shall be covenants and agreements that are separate and
independent from any obligations of the Lessor hereunder or under any other
Operative Documents and the obligations of each Lessee shall continue unaffected
unless such obligations shall have been modified or terminated in accordance
with an express provision of this Master Lease.
5.2. No Termination or Abatement. Each Lessee shall remain obligated
under this Master Lease in accordance with its terms and shall not take any
action to terminate, rescind or avoid this Master Lease (except as provided
herein), notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting the Lessor or any
Participant, or any action with respect to this Master Lease which may be taken
by any trustee, receiver or liquidator of the Lessor or any Participant or by
any court with respect to the Lessor or any Participant. Each Lessee hereby
waives all right (i) to terminate or surrender this Master Lease (except as
provided herein) or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim (other than compulsory counterclaims)
or defense with respect to any Rent. Each Lessee shall remain obligated under
this Master Lease in accordance with its terms and such Lessee hereby waives any
and all rights now or hereafter conferred by statute or otherwise to modify or
to avoid strict compliance with its obligations under this Master Lease.
Notwithstanding any such statute or otherwise, each Lessee shall be bound by all
of the terms and conditions contained in this Master Lease.
5.3. No Bar. The provisions of this Article V shall not affect the
Lessees' right to initiate independent legal action, in equity or at law, to
enforce the obligations of the Lessor under this Master Lease.
ARTICLE VI
SUBLEASES
6.1. Subletting. Each Lessee may sublease any Property leased to it or
any portion thereof to any Person; provided, however, that no sublease or other
relinquishment of possession of any Property shall in any way discharge or
diminish any of such Lessee's obligations to the Lessor hereunder and such
Lessee shall remain directly and primarily liable under this Master Lease as to
the Property, or portion thereof, so sublet. Each sublease of any Property
shall expressly be made subject to and subordinated to this Master Lease and to
the rights of the Lessor hereunder.
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1. Condition of the Properties. EACH LESSEE ACKNOWLEDGES AND AGREES
THAT IT IS LEASING THE PROPERTY DESCRIBED IN THE LEASE SUPPLEMENT EXECUTED BY IT
"AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE
LESSOR, ANY LENDER, THE LEASE AGENT OR THE COLLATERAL AGENT AND IN EACH CASE
SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS), (B) THE
RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN
ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND (D) VIOLATIONS OF
REQUIREMENTS OF LAW AND PROPERTY LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE
HEREOF OR ON THE ACQUISITION DATE FOR SUCH PROPERTY. NONE OF THE LESSOR, ANY
LENDER, THE LEASE AGENT OR THE COLLATERAL AGENT HAS MADE OR SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR
SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR
LESSOR LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND NONE OF THE LESSOR OR THE
LENDERS SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER
THAN FOR LESSOR LIENS) OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO
COMPLY WITH ANY REQUIREMENT OF LAW OR PROPERTY LEGAL REQUIREMENT.
7.2. Risk of Loss. During the Term the risk of loss of or decrease in the
enjoyment and beneficial use of the Properties as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the respective Lessee, and the Lessor shall in no event
be answerable or accountable therefor.
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
8.1. Utility Charges. Each Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and other utilities used in or on the Property leased by it during the
Term. Such Lessee shall be entitled to receive any credit or refund with
respect to any utility charge paid by such Lessee. Any Lessee may, prior to the
payment of any such charges, contest the imposition of such charges if, in its
good faith determination, it has concluded that the payment thereof in the
amounts charged is not required, provided, that such nonpayment shall not
jeopardize such Lessee's ability to use and maintain such Property in accordance
with this Master Lease or impair the value of such Property.
8.2. Possession and Use of the Property. Each Property shall be used as a
long-term or specialized health care facility in a manner not less than the
standards applied by a Lessee and the Company for other comparable properties
owned or leased by such Lessee and the Company. Each Lessee shall pay, or cause
to be paid, all charges and costs required in connection with the use of the
Property leased by it as and to the extent required by this Master Lease. Each
Lessee shall not commit or permit any waste or abandonment of the Property
leased by it or any part thereof.
8.3. Compliance with Requirements of Law, Property Legal Requirements and
Insurance Requirements. Subject to the terms of Article XII relating to
permitted contests, each Lessee, at its sole cost and expense, shall (a) comply
in all material respects with all Requirements of Law (including all
Environmental Laws), Property Legal Requirements and Insurance Requirements
relating to the Property leased by it, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XX, whether or not compliance therewith shall
require structural or extraordinary changes in the Improvements or interfere
with the use and enjoyment of the Properties, and (b) procure, maintain and
comply in all material respects with all licenses, permits, orders, approvals,
consents and other authorizations required for the construction, use,
maintenance and operation of such Property and for the use, operation,
maintenance, repair and restoration of the Improvements. Notwithstanding the
preceding sentence, each Lessee shall be deemed to be in compliance with all
Environmental Laws for purposes of this Master Lease notwithstanding any
Environmental Violation if the severity of such Environmental Violation is less
than Federal, state or local standards requiring remediation or removal or, if
such standards are exceeded, remediation or removal is proceeding in accordance
with all applicable Environmental Laws.
8.4. Assignment by Lessee. No Lessee may assign this Master Lease or any
of its rights or obligations hereunder in whole or in part to any Person, except
that (i) a Lessee may assign its interest hereunder to any of its Affiliates so
long as the Company executes and delivers a confirmation of the Guaranty in form
and substance reasonably satisfactory to the Participants of all of such
Affiliates' obligations hereunder, and (ii) a Lessee may Sublease its Property
or portion thereof as permitted under Section 6.1.
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1. Maintenance and Repair; Return.
(a) Each Lessee, at its sole cost and expense, shall maintain its
Property in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or foreseen
or unforeseen, in each case in all material respects as required by all
Requirements of Law, Property Legal Requirements and Insurance Requirements and
on a basis and in no event less than the standards applied by such Lessee and
its Affiliates in the operation and maintenance of other comparable properties
owned or leased by such Lessee or its Affiliates.
(b) The Lessor shall under no circumstances be required to build any
improvements on any Property, make any repairs, replacements, alterations or
renewals of any nature or description to any Property, make any expenditure
whatsoever in connection with this Master Lease (other than for Advances made in
accordance with and pursuant to the terms of the Participation Agreement) or
maintain any Property in any way. Each Lessee waives any right to (i) require
the Lessor to maintain, repair, or rebuild all or any part of any Property or
(ii) make repairs at the expense of the Lessor pursuant to any Requirement of
Law, Property Legal Requirement, Insurance Requirement, contract, agreement, or
covenant, condition or restriction in effect at any time during the Term.
(c) Each Lessee shall, upon the expiration or earlier termination of
this Master Lease with respect to any Property (other than as a result of such
Lessee's purchase of such Property from the Lessor as provided herein), vacate
and surrender such Property to the Lessor in its then-current, "AS IS"
condition, subject to such Lessee's obligations under Sections 8.3, 9.1(a),
10.1, 11.1, 14.1(d), 14.2 and 20.1.
ARTICLE X
MODIFICATIONS, ETC.
10.1. Modifications, Substitutions and Replacements. During the Term,
each Lessee, at its sole cost and expense, may at any time and from time to time
make alterations, renovations, improvements and additions to the Property leased
by it or any part thereof and substitutions and replacements therefor
(collectively, "Modifications"); provided, however, that:
(i) except for any Modification required to be made pursuant to a
Requirement of Law or Property Legal Requirement (a "Required Modification"), no
Modification shall materially adversely affect the value or useful life of such
Property or any part thereof from that which existed immediately prior to such
Modification;
(ii) the Modification shall be done in a good and workmanlike manner;
(iii) such Lessee shall comply in all material respects with all
Requirements of Law (including all Environmental Laws), Property Legal
Requirements and Insurance Requirements applicable to the Modification,
including the obtaining of all permits and certificates of occupancy; and
(iv) subject to the terms of Article XII relating to permitted contests,
such Lessee shall pay all costs and expenses and shall discharge (or cause to be
insured or bonded over) within sixty (60) days after receiving notice thereof
any Liens arising with respect to the Modification.
All Modifications shall remain part of the realty and shall be subject to this
Master Lease and title thereto shall immediately vest in the Lessor; provided,
however, that Modifications that (x) are not Required Modifications, (y)
were not financed by the Lessor and (z) are readily removable without impairing
the value, utility or remaining useful life of the applicable Property, shall be
the property of the respective Lessee and shall not be subject to this Master
Lease. So long as no Lease Event of Default has occurred and is continuing,
each Lessee may place upon its Property any trade fixtures, machinery,
equipment, inventory or other property belonging to such Lessee or third parties
and may remove the same at any time during the Term, subject, however, to the
terms of Section 9.1(a); provided, however, that such trade fixtures, machinery,
equipment, inventory or other property do not impair the value or useful life of
the applicable Property.
10.2. Notice to the Lessor. If any Lessee reasonably expects the cost of
any Modification to its Property to exceed $1,000,000, such Lessee shall deliver
to the Lessor a brief written narrative of the work to be performed in
connection with such Modification prior to making such Modification.
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
11.1. Warrant of Title.
(a) Each Lessee agrees that except as otherwise provided herein and
subject to the terms of Article XII relating to permitted contests, such Lessee
shall not directly or indirectly create or allow to remain, and shall, within
sixty (60) days of receiving notice of same, discharge at its sole cost and
expense, any Lien (other than any Lessor Lien or Agent Lien), defect,
attachment, levy, title retention agreement or claim upon its Property or any
Lien, attachment, levy or claim not created by the Lessor with respect to the
Rent or with respect to any Lien or Agent Lien), defect, attachment, levy, title
retention agreement or claim upon its Property or any Lien, attachment, levy or
claim not created by the Lessor with respect to the Rent or with respect to any
or with respect to any amounts held by the Lessor, any other Participant, the
Lease Agent or the Collateral Agent pursuant to the Loan Agreement or the other
Operative Documents, other than Permitted Property Liens.
(b) Nothing contained in this Master Lease shall be construed as
constituting the consent or request of the Lessor, expressed or implied, to or
for the performance by any contractor, mechanic, laborer, materialman, supplier
or vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to any
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NONE OF THE LESSOR OR
THE LENDERS IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING A PROPERTY OR ANY PART
THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR
ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
THE LESSOR OR ANY LENDER IN AND TO ANY PROPERTY.
11.2. Grants and Releases of Easements; Lessor's Waivers. Provided that
no Lease Event of Default shall have occurred and be continuing and subject to
the provisions of Articles VII, IX and X and Section 8.3, the Lessor hereby
consents in each instance to the following actions by each Lessee, in the name
and stead of the Lessor, but at such Lessee's sole cost and expense: (a) the
granting of easements, licenses, rights-of-way and other rights and privileges
in the nature of easements reasonably necessary or desirable for the use,
repair, or maintenance of its Property as herein provided; (b) the release of
existing easements or other rights in the nature of easements which are for the
benefit of its Property; (c) if required by applicable Governmental Authority,
the dedication or transfer of unimproved portions of its Property for road,
highway or other public purposes; (d) the execution of amendments to any
covenants and restrictions affecting its Property; (e) such Lessee's obtaining
all necessary Governmental Actions or third party agreements necessary for the
performance and completion of any Modifications; and (f) such Lessee's taking
any other action or entering into any other agreement with respect to its
Property that such Lessee deems necessary or desirable; provided, however, that
in each case (i) such grant, release, dedication, transfer or amendment does not
materially impair the value or remaining useful life of the applicable Property,
(ii) such grant, release, dedication, transfer or amendment in such Lessee's
judgment is reasonably necessary or desirable in connection with the use,
maintenance, alteration or improvement of the applicable Property, (iii) such
grant, release, dedication, transfer or amendment will not cause the applicable
Property or any portion thereof to fail to comply in any material respect with
the provisions of this Master Lease or any other Operative Documents and all
Property Legal Requirements (including, without limitation, all applicable
zoning, planning, building and subdivision ordinances, all applicable
restrictive covenants and all applicable architectural approval requirements),
(iv) all governmental consents or approvals required prior to such grant,
release, dedication, transfer, annexation or amendment have been obtained, and
all filings required prior to such action have been made, (v) such Lessee shall
remain obligated under this Master Lease and under any instrument executed by
such Lessee consenting to the assignment of the Lessor's interest in this Master
Lease as security for indebtedness, in each such case in accordance with their
terms, as though such grant, release, dedication, transfer or amendment had not
been effected except to the extent that such Lessee's obligations hereunder
are obviated with respect to such grant, release, dedication, transfer or
amendment and (vi) such Lessee shall pay and perform any obligations of the
Lessor under such grant, release, dedication, transfer or amendment. The Lessor
acknowledges each Lessee's right to finance and to secure under the Uniform
Commercial Code, inventory, furnishings, furniture, equipment, machinery,
leasehold improvements and other personal property located at the Property
leased by it, and the Lessor agrees to execute Lessor waiver forms and release
of Lessor's Liens in favor of any purchase money seller, lessor or lender which
has financed or may finance in the future such items. Without limiting the
effectiveness of the foregoing, provided that no Lease Event of Default shall
have occurred and be continuing, the Lessor shall, upon the request of such
Lessee, and at such Lessee's sole cost and expense, execute and deliver any
instruments, and shall take such other action reasonably requested by such
Lessee as may be necessary or appropriate to confirm or effect any such grant,
release, dedication, transfer, annexation or amendment to any Person or other
action permitted under this Section 11.2 including landlord waivers with respect
to any of the foregoing.
ARTICLE XII
PERMITTED CONTESTS
12.1. Permitted Contests in Respect of Applicable Law; Liens; Property
Taxes. If, to the extent and for so long as (a) a test, challenge, appeal or
proceeding for review of any Applicable Law, Lien or any Imposition described in
clauses (i) and (vi) of the first paragraph of the definition thereof (a
"Property Tax") relating to any Property shall be prosecuted diligently and in
good faith in appropriate proceedings by a Lessee or (b) compliance with such
Applicable Law or payment of such Property Tax shall have been excused or
exempted by a valid nonconforming use, variance permit, waiver, extension or
forbearance, the Lessee shall not be required to comply with such Applicable
Law, promptly discharge such Lien or pay such Property Tax, but only if and so
long as any such test, challenge, appeal, proceeding, waiver, extension,
forbearance, noncompliance, non-payment or non-discharge shall not reasonably
involve (A) any risk of criminal liability being imposed on the Lessor or any
Lender or (B) any risk of (1) imminent foreclosure, forfeiture or loss of such
Property, or any material part thereof, or (2) the nonpayment of Rent or (C)
any substantial risk of (1) the imminent sale of, or the creation of any Lien
(other than a Permitted Property Lien) on, any part of such Property,
(2) civil liability being imposed on the Lessor, any Lender or such Property, or
(3) enjoinment of, or interference with, the use, possession or disposition of
such Property in any material respect.
The Lessor will not be required to join in any proceedings pursuant to this
Section 12.1 unless a provision of any Applicable Law requires that such
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) the Lessee has not elected the
Remarketing Option and (ii) the Lessee pays all related expenses and indemnifies
the Lessor, the Participants and the other Indemnitees with respect to such
proceedings.
ARTICLE XIII
INSURANCE
13.1. Public Liability and Workers' Compensation Insurance.
(a) During the Term, each Lessee shall procure and carry, or cause to be
procured and carried, at such Lessee's sole cost and expense, commercial general
liability insurance for claims for injuries or death sustained by persons or
damage to property while on its Property and such other public liability
coverages as are ordinarily procured by such Lessee or its Affiliates who own or
operate similar properties, but in any case shall provide liability coverage of
at least $1,000,000 per occurrence and $2,000,000 in aggregate. Such insurance
shall be on terms and in amounts that are no less favorable than insurance
maintained by such Lessee or such Affiliates with respect to similar properties
that they own and that are in accordance with normal industry practice. The
policy shall be endorsed to name the Lessor, each Participant, the Lease Agent
and the Collateral Agent as additional insureds. The policy shall also
specifically provide that the policy shall be considered primary insurance which
shall apply to any loss or claim before any contribution by any insurance which
the Lessor or any Participant may have in force.
(b) Each Lessee shall, in the construction of any Improvements on any
Property (including in connection with any Modifications thereof) and the
operation of the Properties, comply with the applicable workers' compensation
laws.
13.2. Hazard and Other Insurance. During the Term, each Lessee shall
keep, or cause to be kept, its Property insured against loss or damage by fire,
earthquake, flood and other risks on terms and in amounts that are no less
favorable than insurance covering other similar properties owned by such Lessee
or its Affiliates and that are in accordance with normal industry practices.
All insurance proceeds in respect of any loss or occurrence for which the
proceeds related thereto, in the absence of the occurrence and continuance of an
Event of Default and (if applicable) upon certification by such Lessee that the
applicable Property can be restored in accordance with the terms and conditions
of this Lease, are payable to a Lessee shall be adjusted by and paid to such
Lessee for application toward the reconstruction, repair or refurbishment of the
applicable Property, and if an Event of Default has occurred and is continuing
or (if applicable) such Lessee has not timely made such certification, such
proceeds shall be adjusted solely by the Collateral Agent and held by the
Collateral Agent for application in accordance with Article XIV (or, if all
obligations owing to the Credit Facility Banks under the Credit Facility
Documents have been paid in full and all commitments of the Credit Facility
Banks thereunder have been permanently terminated, such proceeds shall be
adjusted solely by the Lease Agent and held by the Lease Agent for application
in accordance with Article XIV). In addition, each Lessee shall at all times
during the Term maintain business interruption insurance covering, for a period
of no less than thirty (30) days, actual losses for any period during which the
earnings of such Lessee are impaired as a result of any property damage or other
casualty.
13.3. Insurance Coverage.
(a) Each Lessee shall furnish or cause to be furnished to the Lessor and
the Lenders certificates showing the insurance required under Sections 13.1 and
13.2 to be in effect and naming the Lessor, the Lenders, the Lease Agent and the
Collateral Agent as additional insureds with respect to liability coverage
(excluding worker's compensation insurance), naming the Collateral Agent and
such Lessee as their interests may appear with respect to casualty coverage, and
naming the Collateral Agent as loss payee with respect to casualty coverage, and
showing the mortgagee endorsement required by Section 13.3(c) with respect to
such coverage. All such insurance shall be at the cost and expense of such
Lessee. Such certificates shall include a provision for no less than thirty
(30) days' advance written notice by the insurer to the Collateral Agent in the
event of cancellation or reduction of such insurance.
(b) Each Lessee agrees that the insurance policy or policies required by
Section 13.2 shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should such Lessee waive, in
writing, prior to a loss, any or all rights of recovery against any party for
losses covered by such policy, and that the insurance in favor of the Lessor and
the Collateral Agent and their respective rights under and interests in said
policies shall not be invalidated or reduced by any act or omission (including
breach of warranty) or negligence of such Lessee or any other Person having any
interest in its Property other than the Lessor and the Collateral Agent. The
Lessee hereby waives any and all such rights against the Lessor and the
Collateral Agent to the extent of payments made under such policies.
(c) All such insurance shall be written by reputable insurance companies
that are financially sound and solvent and otherwise reasonably appropriate
considering the amount and type of insurance being provided by such companies.
Any insurance company selected by a Lessee which is rated in Best's Insurance
Guide or any successor thereto (or if there be none, an organization having a
similar national reputation) shall have a general policyholder rating of "A" and
a financial rating of at least "12" or be otherwise acceptable to the Lenders.
All insurance policies required by Section 13.2 shall include a standard form
mortgagee endorsement in favor of the Collateral Agent.
(d) The Lessor shall not carry separate insurance concurrent in kind or
form or contributing in the event of loss with any insurance required under this
Article XIII except that the Lessor may, at the Lessor's expense, carry separate
liability insurance so long as (i) a Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance the Lessor may have in
force which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause such Lessee's insurance required under
this Article XIII to be subject to a coinsurance exception of any kind.
(e) Each Lessee shall pay as they become due all premiums for the
insurance required by Section 13.1 and Section 13.2, and shall renew or replace
each policy prior to the expiration date thereof. Throughout the Term, at the
time each of such Lessee's insurance policies is renewed (but in no event less
frequently than once each year), such Lessee shall deliver to the Lessor and the
Collateral Agent certificates of insurance evidencing that all insurance
required by this Article XIII is being maintained by the Lessee and is in
effect.
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
14.1. Casualty and Condemnation.
(a) Subject to the provisions of this Article XIV, if all or a
portion of a Property is damaged or destroyed in whole or in part by a Casualty
or if the use, access, occupancy, easement rights or title to a Property or any
part thereof, is the subject of a Condemnation, then in either case (i) if the
cost of restoration of such Property is, in the reasonable judgment of the
Lessor, less than or equal to $3,000,000, all awards, compensation or insurance
proceeds in respect of such Casualty or Condemnation, in the absence of the
occurrence and continuance of an Event of Default, shall be paid over to the
Lessee of the affected Property for application toward the reconstruction,
repair or refurbishment of such Property, and (ii) if the cost of restoration of
such Property is, in the reasonable judgment of the Collateral Agent (or, if all
obligations owing to the Credit Facility Banks under the Credit Facility
Documents have been paid in full and all commitments of the Credit Facility
Banks thereunder have been permanently terminated, the Lease Agent), more than
$3,000,000, then all awards, compensation or insurance proceeds in respect of
such Casualty or Condemnation, in the absence of the occurrence and continuance
of an Event of Default, shall be held by the Collateral Agent (or the Lease
Agent, as applicable) in trust for the Lessee of the affected Property and, only
upon certification by such Lessee that the applicable Property can be restored
in accordance with the terms and conditions of this Lease, shall be adjusted by
and paid in a lump sum to such Lessee for application toward the reconstruction,
repair or refurbishment of the applicable Property, and if such Lessee has not
timely made such certification, such proceeds shall be adjusted solely by the
Collateral Agent (or the Lease Agent, as applicable) and held by the Collateral
Agent (or the Lease Agent, as applicable) for application in the reasonable
discretion of the Lenders and the Lessor to the restoration of such Property or
toward the payment of the Lease Balance; provided, however, that, in any case,
if a Lease Event of Default shall have occurred and be continuing, such award,
compensation or insurance proceeds shall be paid directly to the Collateral
Agent (or the Lease Agent, as applicable) for the benefit of the Secured Parties
or, if received by such Lessee, shall be held in trust for the Secured Parties,
and shall be paid over by such Lessee to the Collateral Agent (or the Lease
Agent, as applicable) to be distributed by the Collateral Agent (or the Lease
Agent) in accordance with Section 7.7 of the Participation Agreement. All
amounts held by the Collateral Agent or the Lease Agent during the continuation
of a Lease Event of Default on account of any award, compensation or insurance
proceeds either paid directly to the Collateral Agent or the Lease Agent or
turned over to the Collateral Agent or the Lease Agent shall be applied in
accordance with Section 7.7 of the Participation Agreement and at the option of
the Lessor either be (i) paid to the Lessee of the affected Property for the
repair of damage caused by such Casualty or Condemnation in accordance with
clause (d) of this Section 14.1, or (ii) applied to the purchase price of the
related Property on the Termination Date with respect to such Property in
accordance with Article XV, with any Excess Casualty/Condemnation Proceeds being
payable to such Lessee.
(b) Each Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof. At such Lessee's reasonable request, and at each Lessee's
sole cost and expense, the Lessor and the Lenders shall participate in any such
proceeding, action, negotiation, prosecution or adjustment. The Lessor and each
Lessee agree that this Master Lease shall control the rights of the Lessor and
such Lessee in and to any such award, compensation or insurance payment.
(c) If the Lessor or any Lessee shall receive notice of a Casualty for
which the reasonable anticipated cost of restoration equals or exceeds $500,000
or of an actual, pending or threatened Condemnation of any Property or any
interest therein, the Lessor or such Lessee, as the case may be, shall give
notice thereof to the other and to the Lenders promptly after the receipt of
such notice.
(d) If pursuant to this Section 14.1 and Section 15.1 this Master Lease
shall continue in full force and effect following a Casualty or Condemnation
with respect to any Property, the Lessee thereof shall, at its sole cost and
expense (and, if any award, compensation or insurance payment is not sufficient
to restore such Property in accordance with this clause (d), such Lessee shall
pay the shortfall), promptly and diligently repair any damage to such Property
caused by such Casualty or Condemnation in conformity with the requirements of
Sections 9.1 and 10.1 so as to restore such Property as close as is reasonably
practicable to its condition, operation, function and value as existed
immediately prior to such Casualty or Condemnation with such Modifications as
such Lessee may elect in accordance with Section 10.1 and such change in
operation and function as is not prohibited under this Master Lease. In such
event, title to such Property shall remain with the Lessor subject to the terms
of this Master Lease. Upon completion of such restoration, such Lessee shall
furnish the Lessor an architect's certificate of substantial completion and a
Responsible Officer's Certificate confirming that such restoration has been
completed pursuant to this Master Lease.
(e) In no event shall a Casualty or Condemnation affect the Lessee's
obligations to pay Rent pursuant to Section 3.1 or to perform its obligations
and pay any amounts due on the Expiration Date or pursuant to Articles XVIII and
XXI.
(f) Any Excess Casualty/Condemnation Proceeds received by the Lessor, the
Lenders, the Collateral Agent or Lease Agent in respect of a Casualty or
Condemnation shall be turned over to the Lessee of the affected Property.
14.2. Environmental Matters. Promptly upon each Lessee's acquiring actual
knowledge of the existence of a material Environmental Violation with respect to
its Property, such Lesseeshall notify the Lessor in writing of such
Environmental Violation. If the Lessor elects not to terminate this Master
Lease with respect to such Property pursuant to Section 15.1, at such
Lessee's sole cost and expense, such Lessee shall promptly and diligently
commence any response, clean up, remedial or other action necessary to remove,
clean up or remediate the Environmental Violation in accordance with the terms
of Section 8.3 (including the last sentence thereof). Such Lessee shall provide
to the Lessor all material and relevant reports, assessments, sampling
results and correspondence with Governmental Authorities concerning the
Environmental Violation and shall, upon completion of remedial action by such
Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to the Lessor a statement by the consultant that the Environmental
Violation has been remedied in compliance in all material respects with
applicable Environmental Laws. Each such Environmental Violation shall be
remedied prior to the Expiration Date unless each Property with respect to which
an Environmental Violation has occurred but has not been remedied has been
purchased by the Lessee in accordance with Section 18.1 or 18.2. Nothing in
this Article XIV shall reduce or limit such Lessee's obligations under Sections
13.1, 13.2 or 13.3 of the Participation Agreement.
14.3. Notice of Environmental Matters. Promptly, but in any event within
sixty (60) Business Days from the date a Lessee has actual knowledge thereof,
such Lessee shall provide to the Lessor written notice of any pending or
threatened claim of which such Lessee has received written notice, action or
proceeding involving any Environmental Laws or any Release on or in connection
with the Property leased by it which, if determined adversely to the Lessee,
could (i) have a Material Adverse Effect or (ii) result in an obligation to
remediate the cost of which would exceed $1,000,000. All such notices shall
describe in reasonable detail the nature of the claim, action or proceeding and
such Lessee's proposed response thereto. In addition, such Lessee shall provide
to the Lessor, within sixty (60) Business Days of receipt, copies of all written
communications with any Governmental Authority relating to any Environmental
Violation in connection with such Property. Such Lessee shall also promptly
provide such detailed reports of any Material environmental claims as may
reasonably be requested by the Lessor or the Lenders.
ARTICLE XV
TERMINATION OF LEASE
15.1. Partial Termination upon Certain Events. If any of the following
occurs with respect to any Property:
(i) a Significant Condemnation occurs; or
(ii) a Significant Casualty occurs; or
(iii) an Environmental Violation occurs or is discovered the cost
of remediation of which would exceed $5,000,000,
and the Lessor shall have given written notice (a "Termination Notice") to the
applicable Lessee that, as a consequence of such event, (x) the Lease Supplement
relating to such Property is to be terminated and (y) this Master Lease is to be
terminated with respect to such Property, then such Lessee shall be obligated to
purchase the Lessor's interest in such affected Property on or prior to the next
Basic Rent Payment Date occurring not less than twenty (20) days after the
giving of such Termination Notice, by paying the Lessor an amount equal to the
Property Balance for such affected Property.
15.2. Termination Procedures. On the date of the payment by a Lessee of
the Property Balance with respect to the Property leased by it in accordance
with Section 15.1 (such date, the "Termination Date"), the Lease Supplement
relating to each affected Property shall terminate and this Master Lease shall
terminate with respect to each such Property and, concurrent with the Lessor's
receipt of such payment,
(a) the Lessor shall take the actions described in Section 21.1(a)
hereof; and
(b) in the case of a termination pursuant to clause (i) or (ii) of Section
15.1, the Lessor shall convey, or direct the Lease Agent or Collateral Agent to
convey, to such Lessee any Net Proceeds with respect to the Casualty or
Condemnation giving rise to the termination of this Master Lease with respect to
such Property theretofore received by the Lessor, Lease Agent or Collateral
Agent or at the request of such Lessee, such amounts shall be applied against
sums due hereunder.
ARTICLE XVI
EVENTS OF DEFAULT
16.1. Lease Events of Default. The occurrence and continuance of any one
or more of the following events shall constitute a "Lease Event of Default":
(a) (i) any Lessee shall fail to make payment of (X) any Basic Rent
(Interest/Yield) within five (5) Business Days after the same has become due
and payable, or (Y) any Property Balance, Purchase Option Rent, Loan Balance,
Lease Recourse Amount or Lease Balance, including, without limitation, amounts
due pursuant to Section 15.1, 18.1, 18.2, or 20.1, on the date due therefor
under the Master Lease, or (ii) the Company or any Subsidiary Guarantor shall
have failed to make any payment due under the Multicare Guaranty after the same
has become due and payable; or
(b) any Lessee shall fail to make payment of any Supplemental Rent due
with respect to Sections 13.7, 13.8, 13.9 and 13.10 of the Participation
Agreement within five (5) Business Days after receipt of notice thereof or any
Lessee shall fail to make payment of any other Supplemental Rent within five (5)
Business Days after the expiration of thirty (30) days from the date of receipt
of notice by the Lessees or the Company that such Supplemental Rent is due and
payable; or
(c) any Event of Default (as defined in the Credit Agreement) shall have
occurred and be continuing; or
(d) any Lessee shall fail to maintain insurance as required by Article
XIII of this Master Lease and such failure shall continue for ten (10) days; or
(e) any Lessee or the Company, as the case may be, shall fail to observe
or perform any term, covenant or condition of such Lessee or the Company, as the
case may be, under this Master Lease or the Operative Documents to which it is
party other than those described in Section 16.1(a), (b), or (d) hereof, and, in
each such case, such failure shall have continued for thirty (30) days after the
earlier of (i) delivery to such Lessee or the Company, as applicable, of written
notice thereof from the Lessor or (ii) a Responsible Officer of such Lessee or
the Company, as the case may be, shall have actual knowledge of such failure;
provided, however, that if such failure is capable of cure but cannot be cured
by the payment of money or cannot be cured by diligent efforts within such
thirty (30) day period but such diligent efforts shall be properly commenced
within the cure period and the applicable Lessee or the Company is diligently
pursuing, and shall continue to pursue diligently, remedy of such failure, the
cure period shall be extended for an additional period of time as may be
necessary to cure, not to exceed an additional ninety (90) days and not to
extend beyond the Expiration Date; provided further, that failure by the
applicable Lessee to fully comply with the requirements of Section 20.1 hereof
shall not be subject to any cure period; or
(f) any representation or warranty made by any Lessee or the Company, as
the case may be, in any of the Operative Documents to which it is a party shall
prove to have been inaccurate at the time made, and if such inaccuracy can be
cured, it shall not have been cured within forty-five (45) days after the
earlier of (i) delivery to such Lessee or the Company, as the case may be, of
written notice thereof from the Lessor or (ii) a Responsible Officer of such
Lessee or the Company, as the case may be, shall have actualknowledge of such
inaccuracy; or
(g) any Lessee or Consolidated Entity (i) shall be unable to, or shall
admit in writing its inability to, pay its debts as such debts become due; or
(ii) shall make an assignment for the benefit of creditors, petition or apply to
any tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) shall have had any such petition or application filed or any
such proceeding shall have been commenced, against it, in which an adjudication
or appointment is made or order for relief is entered, or which petition,
application or proceeding remains undismissed for a period of 60 days or more;
or shall be the subject of any proceeding under which its assets may be subject
to seizure, forfeiture or divestiture (other than a proceeding in respect of a
Lien permitted under Section 8.3(b) of the Credit Agreement); or (v) by any act
or omission shall indicate its consent to, approval of or acquiescence in any
such petition, application or proceeding or order for relief or the appointment
of a custodian, receiver or trustee for all or any substantial part of its
Property; or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of 30 days or more; or
(h) any Lien granted by any Obligor to the Lessor, the Collateral Agent or
the Lease Agent under any Operative Document shall, in whole or in part,
terminate, cease to be effective against, or cease to be the legal, valid,
binding and enforceable obligation of, such Obligor; or
(i) any Obligor shall directly or indirectly contest the validity (as
opposed to the interpretation of the terms) of any Operative Document in any
manner in any court of competent jurisdiction or any lien granted by any
Operative Document; or
(j) any Lessee shall cease to be 100% owned (directly or indirectly)
Subsidiary of the Company; or
(k) there shall be a breach of the STATUTORY CONDITION.
16.2. Remedies. During the continuance of any Lease Event of Default, the
Lessor may do one or more of the following as the Lessor in its sole discretion
shall determine, without limiting any other right or remedy the Lessor may have
on account of such Lease Event of Default:
(a) The Lessor may, by notice to the Lessees, rescind or terminate this
Master Lease as to any Property or all of the Properties as of the date
specified in such notice; however, (i) no reletting, reentry or taking of
possession of any Property (or any portion thereof) by the Lessor will be
construed as an election on the Lessor's part to terminate this Master Lease
unless a written notice of such intention is given to the applicable Lessee,
(ii) notwithstanding any reletting, reentry or taking of possession, the Lessor
may at any time thereafter elect to terminate this Master Lease for a continuing
Lease Event of Default and (iii) no act or thing done by the Lessor or any of
its agents, representatives or employees and no agreement accepting a surrender
of the Properties shall be valid unless the same be made in writing and executed
by the Lessor;
(b) The Lessor may (i) demand that any Lessee, and each Lessee shall upon
the written demand of the Lessor, return any Property promptly to the Lessor in
the manner and condition required by, and otherwise in accordance with all of
the provisions of, Articles VII and IX and Section 8.3 hereof as if such
Property were being returned at the end of the Term, and the Lessor shall not be
liable for the reimbursement of any Lessee for any costs and expenses incurred
by such Lessee in connection therewith and (ii) without prejudice to any other
remedy which the Lessor may have for possession of any Property, and to the
extent and in the manner permitted by Applicable Law, enter upon such Property
and take immediate possession of (to the exclusion of such Lessee) such Property
or any part thereof and expel or remove such Lessee and any other Person who may
be occupying such Property, by summary proceedings or otherwise, all without
liability to such Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise and, in addition to the Lessor's other damages, such Lessee shall be
responsible for all costs and expenses incurred by the Lessor and/or the Lenders
in connection with any reletting, including, reasonable brokers' fees and all
costs of any alterations or repairs reasonably made by the Lessor;
(c) The Lessor may (i) sell all or any part of any one or more Properties
at public or private sale, as the Lessor may determine, free and clear of any
rights of any Lessee (except that Excess Sales Proceeds are payable to and shall
be paid to the Company as agent for the Lessees) with respect thereto (except to
the extent required by clause (ii) below if the Lessor shall elect to exercise
its rights thereunder) in which event the applicable Lessee's obligation to pay
Basic Rent (Interest/Yield) hereunder for periods commencing after the date of
such sale shall be terminated or proportionately reduced, as the case may be;
and (ii) if the Lessor shall so elect, demand that such Lessee pay to the
Lessor, and such Lessee shall pay to the Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (the parties
agreeing that the Lessor's actual damages would be difficult to predict, but the
aforementioned liquidated damages represent a reasonable approximation of such
amount) (in lieu of Basic Rent (Interest/Yield) due for periods commencing on or
after the Basic Rent Payment Date coinciding with such date of sale (or, if the
sale date is not a Basic Rent Payment Date, the Basic Rent Payment Date next
preceding the date of such sale)), an amount equal to (A) the excess, if any, of
(1) the Lease Balance calculated as of such Basic Rent Payment Date (including
all Rent due and unpaid to and including such Basic Rent Payment Date), over (2)
the net proceeds of such sale (that is, after deducting all reasonable costs and
expenses incurred by the Lessor or any Lender incident to such conveyance,
including, without limitation, repossession costs, brokerage commissions,
prorations, transfer taxes, fees and expenses for counsel, title insurance fees,
survey costs, recording fees, and any repair costs); plus (B) interest at the
Overdue Rate on the foregoing amount from such Basic Rent Payment Date until the
date of payment;
(d) The Lessor may, at its option, elect not to terminate this Master
Lease with respect to any Property or all of the Properties and continue to
collect all Basic Rent (Interest/Yield), Supplemental Rent, and all other
amounts due the Lessor (together with all costs of collection) and enforce a
Lessee's obligations under this Master Lease as and when the same become due,
or are to be performed, and at the option of the Lessor, upon any abandonment of
any Property by a Lessee or re-entry of same by the Lessor, the Lessor may, in
its sole and absolute discretion, elect not to terminate this Master Lease and
may make the necessary repairs in order to relet such Property, and relet such
Property or any part thereof for such term or terms (which may be for a long
term extending beyond the Term of this Master Lease) and at such rental or
rentals and upon such other terms and conditions as the Lessor in its reasonable
discretion may deem advisable; and upon each such reletting all rentals actually
received by the Lessor from such reletting shall be applied to such Lessee's
obligations hereunder and the other Operative Documents in such order,
proportion and priority as the Lessor may elect in the Lessor's sole and
absolute discretion. If such rentals received from such reletting during any
period are less than the Rent with respect to such Property to be paid during
that period by the applicable Lessee hereunder, such Lessee shall pay such
deficiency, to the Lessor on the next Basic Rent Payment Date;
(e) Unless all of the Properties have been sold in their entirety, the
Lessor may, whether or not the Lessor shall have exercised or shall thereafter
at any time exercise any of its rights under clause (b), (c) or (d) of this
Section 16.2 with respect to any Properties or any portions thereof, demand, by
written notice to each Lessee specifying a date (a "Termination Date") not
earlier than twenty (20) days after the date of such notice, that the Lessees
purchase, on such Termination Date, all unsold Properties and all unsold
portions of Properties in accordance with the provisions of Section 18.2;
(f) The Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate court action
(legal or equitable) to enforce the terms hereof or to recover damages for the
breach hereof. Separate suits may be brought to collect any such damages for
any period(s), and such suits shall not in any manner prejudice the Lessor's
right to collect any such damages for any subsequent period(s), or the Lessor
may defer any such suit until after the expiration of the Term, in which event
such suit shall be deemed not to have accrued until the expiration of the Term;
(g) The Lessor may retain and apply against the Lease Balance all sums
which the Lessor would, absent such Lease Event of Default, be required to pay
to, or turn over to, any Lessee pursuant to the terms of this Master Lease;
(h) The Lessor shall have the STATUTORY POWER OF SALE;
(i) The Lessor, to the extent permitted by Applicable Law, as a matter of
right and with notice to the Lessee, shall have the right to apply to any court
having jurisdiction to appoint a receiver or receivers of any Property, and
each Lessee hereby irrevocably consents to any such appointment. Any such
receiver(s) shall have all of the usual powers and duties of receivers in like
or similar cases and all of the powers and duties of the Lessor in case of
entry, and shall continue as such and exercise such powers until the date of
confirmation of the sale of such Property unless such receivership is sooner
terminated;
(j) To the maximum extent permitted by law, each Lessee hereby waives the
benefit of any appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of marshalling in the
event of any sale of any Property or any interest therein; or
(k) The Lessor shall be entitled to enforce payment and performance of the
obligations secured hereby and to exercise all rights and powers under this
instrument or under any of the other Operative Documents or other agreement or
any laws now or hereafter in force, notwithstanding some or all of the
obligations secured hereby may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise. Neither
the acceptance of this instrument nor its enforcement, shall prejudice or in any
manner affect the Lessor's right to realize upon or enforce any other security
now or hereafter held by the Lessor, it being agreed that the Lessor shall
be entitled to enforce this instrument and any other security now or hereafter
held by the Lessor in such order and manner as the Lessor may determine in its
absolute discretion. No remedy herein conferred upon or reserved to the Lessor
is intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Operative Documents to the
Lessor or to which it may otherwise be entitled, may be exercised, concurrently
or independently, from time to time and as often as may be deemed expedient by
the Lessor. In no event shall the Lessor, in the exercise of the remedies
provided in this instrument (including, without limitation, in connection with
the assignment of rents to Lessor, or the appointment of a receiver and the
entry of such receiver onto all or any part of the Properties), be deemed a
"mortgagee in possession", as to a specific Property unless the Lessor shall
have taken possession of such Property, or any substantial portion thereof, and
the Lessor shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies so long
as the Lessor shall have acted in good faith and without gross negligence or
willful misconduct.
If, pursuant to the exercise by the Lessor of its remedies pursuant to this
Section 16.2, the Lease Balance and all other amounts due and owing from the
Lessees under this Master Lease and the other Operative Documents have been paid
in full, then the Lessor, the Collateral Agent or the Lease Agent, as the case
may be, shall remit to the Company, as agent for the Lessees, any excess amounts
received by the Lessor.
16.3. Waiver of Certain Rights. If this Master Lease shall be terminated
pursuant to Section 16.2, each Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XVI.
ARTICLE XVII
LESSOR'S RIGHT TO CURE
17.1. The Lessor's Right to Cure a Lessee's Lease Defaults. The Lessor,
without waiving or releasing any obligation or Lease Event of Default, may (but
shall be under no obligation to) remedy any Lease Event of Default for the
account and at the sole cost and expense of the applicable Lessee, including the
failure by such Lessee to maintain the insurance required by Article XIII, and
may, to the fullest extent permitted by law, and notwithstanding any right of
quiet enjoyment in favor of such Lessee, enter upon any Property for such
purpose and take all such action thereon as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of such Lessee. All
reasonable out-of-pocket costs and expenses so incurred (including reasonable
fees and expenses of counsel), together with interest thereon at the Overdue
Rate from the date on which such sums or expenses are paid by the Lessor, shall
be paid by such Lessee to the Lessor as Supplemental Rent.
ARTICLE XVIII
PURCHASE PROVISIONS
18.1. Optional Purchase of the Properties.
(a) Purchase of All of the Properties. Subject to the conditions
contained herein, and without limitation of the Lessees' purchase obligation
pursuant to Section 18.2, the Lessees, jointly and not severally, shall have the
irrevocable option on any Business Day to purchase all, but not less than all,
of the Properties subject to this Master Lease at a price equal to the Lease
Balance on the date of such purchase. The exercise by the Lessees of their
option pursuant to this Section 18.1(a) shall be subject to the following
conditions:
(i) no Lease Event of Default shall have occurred and be continuing;
(ii) the Lessees (or the Company acting as agent for all of the Lessees)
shall have delivered a Purchase Notice to the Lessor not less than
thirty (30) days prior to such purchase, specifying the date of such
purchase; and
(iii) no Lessee (or the Company acting as their agent) shall have given
notice of its intention to exercise the Remarketing Option.
(b) Purchase of Individual Properties. Subject to the conditions
contained herein, and without limitation of the Lessees' purchase obligation
pursuant to Section 18.2, each Lessee shall have the irrevocable option on any
Business Day to purchase the particular Property that is leased to it hereunder
at a price equal to the Property Balance for such Property on the date of such
purchase. The exercise by any Lessee of its option pursuant to this Section
18.1(b) shall be subject to the following conditions:
(i) No Lease Event of Default shall have occurred and be continuing;
(ii) the applicable Lessee shall have delivered a Purchase Notice to the
Lessor not less than thirty (30) days prior to such purchase,
specifying the date of such purchase and certifying that either (v)
such Property or all of the capital stock or other equity interests of
the Lessee leasing such Property is to be transferred on the date of
such purchase to a third party that is not an Affiliate of any Lessee
or the Company and, at all times after such transfer, neither the
applicable Lessee, the Company nor any Affiliate of such Lessee or the
Company will manage or maintain any other involvement with such
Property, (w) such Property is to cease operation as a long-term or
specialized health care facility within one hundred and eighty (180)
days of such purchase, (x) failure to purchase such Property would
cause a violation of a Requirement of Law related to operation of the
Property as a long-term or specialized healthcare facility, (y)
Lessor's continued ownership of the Property and the lease thereof to
the applicable Lessee would cause a Rate Setting Commission Trigger
Event to occur or (z) an Environmental Violation, the cost of which
would exceed $1,000,000, has occurred with respect to such Property,
and in each case a Responsible Officer of the Company shall have
certified to the Lessor that the foregoing conditions have been
satisfied;
(iii) after giving effect to any such purchase, no less than three
Propertie shall remain subject to this Master Lease; and
(iv) no Lessee (or the Company acting as their agent) shall have given
notice of its intention to exercise the Remarketing Option.
(c) Transfer Procedures. If the Lessees exercise their Purchase Option
pursuant to Section 18.1(a) or if any Lessee exercises its Purchase Option
pursuant to Section 18.1(b) then, upon the Lessor's receipt of all amounts due
in connection therewith, the Lessor shall transfer to the Lessees or such
Lessee, as applicable, or their/its designee(s) or any other Person which, with
the consent of the Lessor, has been assigned the right to purchase the
Properties, all of the Lessor's right, title and interest in and to all of the
Properties in accordance with the procedures set forth in Section 21.1(a),
such transfer to be effective as of the date specified in the Purchase Notice.
The Lessees or such Lessee, as applicable, may designate, in a notice given to
the Lessor not less than ten (10) Business Days prior to the closing of such
purchase (time being of the essence), the transferee or transferees to whom the
conveyance shall be made (if other than to the Lessees of the respective
Properties), in which case such conveyance shall (subject to the terms and
conditions set forth herein) be made to such designee or designees); provided,
however, that such designation of a transferee or transferees shall not cause
any Lessee to be released, fully or partially, from any of its obligations under
this Master Lease, including the obligation to pay the Lessor the Lease Balance
on such date.
18.2. Expiration Date Purchase Obligation. Unless (a) the Lessees shall
have properly exercised their Purchase Option pursuant to Section 18.1(a) and
purchased all of the Properties pursuant thereto, or (b) the Lessees shall have
properly exercised the Remarketing Option and shall have fulfilled all of the
conditions of clauses (a) through (l) of Section 20.1 hereof and the Lessor
shall have sold its interest in all of the Properties pursuant thereto, then,
subject to the terms, conditions and provisions set forth in this Article, and
in accordance with the terms of Section 21.1(a), each Lessee shall purchase from
the Lessor, and the Lessor shall convey to the applicable Lessee, on the
Expiration Date all of the Lessor's interest in the Property (including all of
the Lessor's interest in this Master Lease to the extent relating to such
Property) leased by such Lessee for an amount equal to the Lease Balance with
respect to such Property. The applicable Lessee may designate, in a notice
given to the Lessor not less than ten (10) Business Days prior to the closing of
such purchase (time being of the essence), the transferee or transferees to whom
the conveyance shall be made (if other than to the Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; provided, however, that such designation of a transferee or
transferees shall not cause the applicable Lessee to be released, fully or
partially, from any of its obligations under this Master Lease, including,
without limitation, the obligation to pay the Lessor the Lease Balance relating
to such Property on such Expiration Date.
ARTICLE XIX
INTENTIONALLY OMITTED
ARTICLE XX
REMARKETING OPTION
20.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 20.1, each Lessee shall have the option
(the "Remarketing Option") to market and complete the sale of all of the
Properties for the Lessor.
The effective exercise and consummation of the Remarketing Option shall be
subject to the due and timely fulfillment of each of the following provisions as
to each of the Properties as of the dates set forth below.
(a) Not later than one year prior to the Expiration Date, the Lessees
shall give to the Lessor written notice of the exercise of the Remarketing
Option, which exercise shall be irrevocable. Failure by a Lessee to give timely
notice shall be deemed to be an election without further act thereby, of the
Purchase Option.
(b) Not later than one hundred and twenty (120) days prior to the
Expiration Date, the Lessees shall deliver to the Lessor an Environmental Audit
for each of the Properties. Such Environmental Audit shall be prepared by an
environmental consultant selected by the Lessor in the Lessor's reasonable
discretion and shall contain conclusions reasonably satisfactory to the Lessor
as to the environmental status of the Properties. If any such Environmental
Audit indicates any exceptions, the applicable Lessee shall have also delivered
prior to the Expiration Date a Phase Two environmental assessment by such
environmental consultant and a written statement by such environmental
consultant indicating that all such exceptions have been remedied in compliance
with Applicable Law.
(c) On the date of the notice to the Lessor of the exercise of the
Remarketing Option, no Lease Event of Default or Lease Default shall exist.
(d) The Lessees shall have completed in all material respects all
Modification (other than Modifications first required by a Governmental
Authority after the date that s one year prior to the Expiration Date, which
Modifications shall be completed not later than 180 days after the Expiration
Date), restoration and rebuilding of the affected Properties pursuant to
Sections 10.1 and 14.1 (as the case may be) and shall have fulfilled in all
material respects all of the conditions and requirements in connection
therewith pursuant to said Sections, in each case prior to the date on which the
Lessor receives notice of the Lessee's intention to exercise the Remarketing
Option (time being of the essence), regardless of whether the same shall be
within the Lessee's control. The Lessee shall have also paid the cost of or
completed all Modifications commenced prior to the Expiration Date. The Lessee
shall not have been excused pursuant to Section 12.1 from complying with any
Applicable Law, discharge of Lien (other than Lessor Liens and Agent Liens) or
payment of Property Tax that involved the extension of the ultimate imposition
of such Applicable Law, discharge of Lien or payment of Property Tax beyond the
Expiration of the Term. Any Permitted Property Liens (other than Lessor Liens
and other Liens attributable to the other parties to the Operative Documents)
on any Property that were contested by the Lessee shall have been removed prior
to the Expiration Date.
(e) During the Marketing Period, the Lessees shall, as nonexclusive agents
for the Lessor, use commercially reasonable best efforts to sell the Lessor's
interest in the Properties and will attempt to obtain the highest purchase price
therefor and for not less than the Fair Market Sales Value. The Lessees will be
responsible for hiring brokers and making the Properties available for
inspection by prospective purchasers. During the Marketing Period the Lessees
shall promptly upon reasonable notice and during regular business hours permit
inspection of any Property and any maintenance records relating to any Property
by the Lessor to the extent such inspection does not cause material interruption
of the Lessees' business activities, the Lenders and any potential purchasers,
and shall otherwise do all things necessary to sell and deliver possession of
the Properties to any purchaser. All such marketing of the Properties shall be
at the Lessees' sole expense. During the Marketing Period the Lessees shall
allow the Lessor and any potential qualified purchaser reasonable access to the
Properties for the purpose of inspecting the same.
(f) No such purchaser shall be a Lessee or any Subsidiary or Affiliate of
a Lessee.
(g) All bids shall be submitted to the Lessor and the Lenders, and the
Lessor will have the right to submit any one or more bids. Any sale shall be
for the highest cash bid submitted to the Lessor. The determination of the
highest bid shall be made by the Lessor and the Tranche B Lenders prior to the
end of the Marketing Period, but in any event, the Lessor shall have no
obligation to approve any bid for any Property unless each highest bid for each
of the respective Properties, in the aggregate, equal or exceed the Lease
Balance. All bids shall be on an all-cash basis unless the Lessor and the
Tranche B Lenders shall otherwise agree in their sole discretion.
(h) In connection with any such sale of any Property, the applicable
Lessee will provide to the purchaser all customary "seller's" indemnities,
representations and warranties regarding title, absence of Liens (except Lessor
Liens and Agent Liens) and the condition of such Property, including an
environmental indemnity, in each case to the extent the same are reasonably
required by the purchaser. The applicable Lessee shall have obtained, at its
cost and expense, all required governmental and regulatory consents and
approvals and shall have made all filings as required by Applicable Law in order
to carry out and complete the transfer of each of the Properties but shall grant
or assign all assignable licenses necessary for the operation and maintenance of
such Property and cooperate reasonably in seeking or obtaining all necessary
Governmental Action to enable the purchaser to operate the Property to the
extent any such cooperation is required to lawfully effect a transfer of
operating rights. As to the Lessor, any such sale shall be made on an "as is,
with all faults" basis without representation or warranty by the Lessor other
than as to the absence of Lessor Liens. Any agreement as to such sale shall be
made subject to the Lessor's rights hereunder.
(i) The Lessees shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of the sale of the Properties, whether
incurred by the Lessor or the Lessees, including, without limitation, the cost
of all title insurance, surveys, environmental reports, appraisals, transfer
taxes, the Lessor's reasonable attorneys' fees, the Lessees' attorneys' fees,
commissions, escrow fees, recording fees, and all applicable documentary and
other transfer taxes.
(j) The Lessees shall pay to the Lessor on or prior to the Expiration Date
(or in the case of Supplemental Rent, to the Person entitled thereto) an amount
equal to the Lease Recourse Amount plus all accrued and unpaid Rent (including
accrued and unpaid Supplemental Rent, if any) and all other amounts hereunder
which have accrued or will accrue prior to or as of the Expiration Date, in the
type of funds specified in Section 3.1(b) hereof.
(k) The Lessees shall pay to the Lessor on or prior to the Expiration Date
the amounts, if any, required to be paid pursuant to Section 13.2 of the
Participation Agreement.
(l) The gross proceeds of the sale of the Properties (less any marketing,
closing or other costs, prorations or commissions incurred by the Collateral
Agent, the Lease Agent or the Lessor in connection therewith) (the "Gross
Remarketing Proceeds") shall be paid directly to the Lessor; provided, however,
that if the sum of (x) the Gross Remarketing Proceeds from such sale plus (y)
the Lease Recourse Amount and other amounts received by the Collateral Agent or
the Lease Agent, as applicable, pursuant to this Section 20.1 exceeds the Lease
Balance as of such date, then the excess shall be paid to the Company as agent
for the Lessees on the Expiration Date.
If one or more of the foregoing provisions shall not be fulfilled as of the
applicable date set forth above with respect to any Property, then the Lessor
shall declare by written notice to the Lessees the Remarketing Option to be null
and void (whether or not it has been theretofore exercised by any Lessee) as to
all of the Properties, in which event all of each Lessee's rights under this
Section 20.1 shall immediately terminate and the Lessees shall be obligated to
purchase all of the Properties pursuant to Section 18.2 on the Expiration Date.
In the event that the sale of all of the Properties is not consummated on
the Expiration Date, but such sale is consummated any time thereafter, the
Lessor shall remit to the Company, as agent for the Lessees, promptly after the
consummation of the sale of the last Property, any excess remaining after
deducting the then outstanding Lease Balance plus the Imputed Equity Return
thereon plus an amount equivalent to the Overdue Rate thereon accruing from and
after the Expiration Date from the Gross Remarketing Proceeds.
If the Lessee effectively elects the Remarketing Option and no sale of any
Property is consummated prior to the end of the Marketing Period, each Lessee
shall, in addition to making the payment required pursuant to Section 20.1(j)
above, do each of the following:
(i) execute and deliver to Lessor and the Lessor's title insurance company
at its own cost and expense an affidavit as to the absence of any
Liens (other than Permitted Property Liens of the type described in
clause (i), (viii) or (x) of the definition thereof), and shall
execute and deliver to the Lessor a statement of termination of this
Master Lease to the extent relating to such Property; and
(ii) for a period of up to one year after the Expiration Date (the
"Extended Marketing Period"), cooperate reasonably with the Lessor
and/or any Person designated by the Lessor to receive such Property,
which cooperation shall include reasonable efforts with respect to the
following, all of which the Lessees shall do at their own cost and
expense on or before the Expiration Date for such Property or as soon
thereafter as is reasonably practicable: providing copies of all
books and records regarding the maintenance and ownership of such
Property and all know-how, data and technical information relating
thereto; granting or assigning all assignable licenses necessary for
the operation and maintenance of such Property; and cooperating
reasonably, at the Lessee's or a purchaser's expense, in the Lessor's
or a purchaser's efforts to obtain the necessary Governmental Action
to operate the Property. The obligations of the Lessees under this
paragraph shall survive the expiration or termination of this Master
Lease.
Except as expressly set forth herein, the Lessees shall have no right,
power or authority to bind the Lessor in connection with any proposed sale of
any Property.
20.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessees to pay Rent with respect to each Property (including
the installment of Rent due on the Expiration Date) shall continue undiminished
until payment in full of the Lease Recourse Amount and all other amounts due to
the Lessor with respect to the Properties under the Operative Documents to which
each Lessee is a party. The Lessor and the Tranche B Lenders shall have the
right, but shall be under no duty, to solicit bids, to inquire into the efforts
of the Lessees to obtain bids or otherwise to take action in connection with any
such sale, other than as expressly provided in this Article XX.
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
21.1. Provisions Relating to the Exercise of Purchase Option or Obligation
and Conveyance Upon Remarketing and Conveyance Upon Certain Other Events.
(a) In connection with any termination of this Master Lease with respect
to any Property pursuant to the terms of Article XV, in connection with any
purchase or in connection with the purchase of any Property in accordance with
Section 18.1 or in connection with the Expiration Date Purchase Obligation or
obligations under Section 16.2(e), then, upon the date on which this Master
Lease is to terminate with respect to the applicable Property and upon tender of
the amounts set forth in Article XV, Section 16.2(e), 18.1 or 18.2, as
applicable:
(i) the Lessor shall execute and deliver to the applicable Lessee
(or to the Lessee's designee) at such Lessee's cost and expense a
quitclaim deed with respect to such Property or Properties containing
representations and warranties of grantor to such Lessee regarding
Lessor Liens and an assignment of the Lessor's entire interest in such
Property or Properties (which shall include an assignment of all of
the Lessor's right, title and interest in and to any Net Proceeds with
respect to such Property or Properties not previously received by the
Lessor and an assignment of leases of the Properties), in each case in
recordable form and otherwise in conformity with local custom and free
and clear of the Lien of the applicable Lease Facility Mortgage and
any Lessor Liens and any Liens created by the Operative Documents
attributable to it;
(ii) such Property or Properties shall be conveyed to such Lessee (or its
designee) "AS IS" and in its then present physical condition; and
(iii) the Lessor shall execute and deliver to such Lessee and such Lessee's
title insurance company (or to the designee of the Lessee and its
title insurance company) an affidavit in customary form as to the
Lessor's title and Lessor Liens and a FIRPTA affidavit and shall
execute and deliver to Lessee a statement of termination of this
Master Lease and a termination of the Assignment of Lease and
Rent, in each case to the extent such Operative Documents relate to
such Property or Properties.
(b) If the Lessees properly exercises the Remarketing Option, then the
Lessees shall, on the Expiration Date, and at their own cost, surrender
possession of all of the Properties to the Lessor or the independent purchaser
(s) thereof, in each case by surrendering the same into the possession of the
Lessor or such purchaser(s), as the case may be, free and clear of all Liens
other than Lessor Liens and the lien of the applicable Lease Facility Mortgage,
in the condition required under this Master Lease (as modified by Modifications
permitted by this Master Lease), ordinary wear and tear excepted, and in
compliance with Applicable Law.
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1. Estoppel Certificates. At any time and from time to time upon not
less than ten (10) Business Days' prior request by the Lessor or any Lessee
(the "Requesting Party"), the other party (whichever party shall have received
such request, the "Certifying Party") shall furnish to the Requesting Party a
certificate signed by an individual having the office of vice president or
higher in the Certifying Party certifying that this Master Lease is in full
force and effect (or that this Master Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
(Interest/Yield) and Supplemental Rent have been paid; to the best knowledge of
the signer of such certificate, whether or not the Requesting Party is in
default under any of its obligations hereunder (and, if so, the nature of such
alleged default); and such other matters under this Master Lease as the
Requesting Party may reasonably request. Any such certificate furnished
pursuant to this Article XXII may be relied upon by the Requesting Party, and
any existing or prospective mortgagee, purchaser or lender, and any accountant
or auditor, of, from or to the Requesting Party (or any Affiliate thereof).
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
23.1. Acceptance of Surrender. No surrender to the Lessor of this Master
Lease or of all or any of the Properties or of any part of any thereof or of any
interest therein shall be valid or effective unless agreed to and accepted in
writing by the Lessor and, prior to the payment or performance of all
obligations under the Loan Agreement and termination of the Commitments, the
Lenders, and no act by the Lessor or any Lender or any representative or agent
of the Lessor or any Lender, other than a written acceptance, shall constitute
an acceptance of any such surrender.
ARTICLE XXIV
NO MERGER OF TITLE
24.1. No Merger of Title. There shall be no merger of this Master Lease
or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Master Lease or the leasehold estate created hereby or any interest in
this Master Lease or such leasehold estate, (b) the fee or ground leasehold
estate in any Property, except as may expressly be stated in a written
instrument duly executed and delivered by the appropriate Person and/or (c) a
beneficial interest in the Lessor.
ARTICLE XXV
INTENT OF THE PARTIES
25.1. Nature of Transaction.
(a) It is the intent of the parties that: (a) the Lease constitutes an
operating lease from Lessor to the Lessees for purposes of the Lessees'
financial reporting, (b) the Lease and other transactions contemplated hereby
preserve ownership in the Properties in the Lessees for Federal and state income
tax and bankruptcy purposes, (c) each Lease Supplement grants to the Collateral
Agent, for the benefit of the Participants and the other Secured Parties, a Lien
on the Property covered thereby, and (d) the obligations of the Lessees to pay
Basic Rent (Interest/Yield) and any part of the Property Balance (other than
accrued and unpaid interest and Yield related thereto) shall be treated as
payments of interest and principal, respectively, for Federal and state income
tax and bankruptcy purposes. The Collateral Agent shall be deemed to have a
valid and binding security interest in and Lien on the Properties, free and
clear of all Liens other than Permitted Property Liens, as security for the
obligations of the Lessees under the Operative Documents (it being understood
and agreed that the Lessees do hereby grant a Lien, and convey, transfer,
assign, mortgage and warrant, WITH MORTGAGE COVENANTS, to the Collateral Agent
and its successors, transferees and assigns, for the benefit of the Participants
and the other Secured Parties and its successors, transferees and assigns, the
Properties and any proceeds or products thereof, to have and hold the same as
collateral security for the payment and performance of the obligations of the
Lessees under the Operative Documents), and each of the parties hereto agrees
that it will not, nor will it permit any Affiliate to at any time, take any
action or fail to take any action with respect to the preparation or filing of
any income tax return, including an amended income tax return, to the extent
that such action or such failure to take action would be inconsistent with the
intention of the parties expressed in this Section 25.1. This mortgage is
granted upon the STATUTORY CONDITION, for any breach of which Lessor shall have
the STATUTORY POWER OF SALE.
(b) Specifically, without limiting the generality of clause (a) of this
Section 25.1, the parties hereto intend and agree that in the event of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting a Lessee, the
Company, the Lessor, any Participant or any collection actions, the transactions
evidenced by the Operative Documents shall be regarded as loans made by the
Participants to the Lessees.
ARTICLE XXVI
MISCELLANEOUS
26.1. Survival; Severability; Etc. Anything contained in this Master
Lease to the contrary notwithstanding, all claims against and liabilities of the
Lessees or the Lessor arising from events commencing prior to the expiration or
earlier termination of this Master Lease shall survive such expiration or
earlier termination for a period of one year except as to indemnification which
shall continue to survive. If any term or provision of this Master Lease or any
application thereof shall be declared invalid or unenforceable, the remainder of
this Master Lease and any other application of such term or provision shall, to
the full extent permitted law, not be affected thereby. If any right or option
of the Lessees provided in this Master Lease, including any right or option
described in Article XIV, XV, XVIII or XX, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the descendants of Franklin D. Roosevelt, the former
President of the United States, Henry Ford, the deceased automobile
manufacturer, and John D. Rockefeller, the founder of the Standard Oil Company,
known to be alive on the date of the execution, acknowledgement and delivery of
this Master Lease.
26.2. Amendments and Modifications. Subject to the requirements,
restrictions and conditions set forth herein and in the Participation Agreement,
neither this Master Lease nor any provision hereof may be amended, waived,
discharged or terminated except by an instrument in writing in recordable form
signed by the Lessor and the Lessees.
26.3. No Waiver. No failure by the Lessor or the Lessees to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law,
no waiver of any default shall affect or alter this Master Lease, and this
Master Lease shall continue in full force and effect with respect to any other
then existing or subsequent default.
26.4. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and directed to the address
described in, and deemed received in accordance with the provisions of, Section
14.3 of the Participation Agreement.
26.5. Successors and Assigns. All the terms and provisions of this Master
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
26.6. Headings and Table of Contents. The headings and table of contents
in this Master Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
26.7. Counterparts. This Master Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
26.8. GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO
THE CREATION AND PERFECTION OF THE LEASEHOLD ESTATES HEREUNDER AND THE EXERCISE
OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH ESTATES ARE
LOCATED. WITHOUT LIMITING THE FOREGOING, IN THE EVENT THAT THIS MASTER LEASE IS
DEEMED TO CONSTITUTE A FINANCING, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL GOVERN THE CREATION, TERMS AND
PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY, BUT THE LIEN CREATED HEREBY AND
THE CREATION, PERFECTION AND THE ENFORCEMENT OF SAID LIEN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH
ESTATES ARE LOCATED.
26.9. Limitations on Recourse. The parties hereto agree that except as
specifically set forth in the Lease or in any other Operative Document, the
Lessor shall have no personal liability whatsoever to the Lessees or their
respective successors and assigns for any claim based on or in respect of this
Master Lease or any of the other Operative Documents or arising in any way from
the transactions contemplated hereby or thereby and the recourse shall be solely
had against the Lessor's interest in the Properties or Equity Interests and any
and all proceeds thereof; provided, however, that the Lessor shall be liable in
its individual capacity (a) for its own willful misconduct or gross negligence
(or negligence in the handling of funds), (b) breach of any of its
representations, warranties or covenants under the Operative Documents, or (c)
for any Tax based on or measured by any fees, commission or compensation
received by it for acting as the Lessor as contemplated by the Operative
Documents. It is understood and agreed
that, except as provided in the preceding sentence: (i) the Lessor shall have
no personal liability under any of the Operative Documents as a result of acting
pursuant to and consistent with any of the Operative Documents; (ii) all
obligations of the Lessor to the Lessees are solely nonrecourse obligations
except to the extent that it has received payment from others; and (iii) all
such personal liability of the Lessor is expressly waived and released as a
condition of, and as consideration for, the execution and delivery of the
Operative Documents by the Lessor.
26.10. Original Lease. The single executed original of this Master Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt thereof of NationsBank, N.A., as
Collateral Agent for the Secured Parties therefor on or following the signature
page thereof shall be the Original Executed Counterpart of this Master Lease
(the "Original Executed Counterpart"). To the extent that this Master Lease
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Master Lease may be created through the transfer or possession of any
counterpart other than the Original Executed Counterpart.
IN WITNESS WHEREOF, the parties have caused this Master Lease be duly executed
and delivered as of the date first above written.
ACADEMY NURSING HOME, INC.,
as Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC., as
Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
PRESCOTT NURSING HOME, INC., as Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
WILLOW MANOR NURSING HOME, INC., as Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
ADS/MULTICARE, INC., as Lessee
By BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
SELCO SERVICE CORPORATION, as Lessor
By
Name:
Title:
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of thebdate hereof.
NATIONSBANK, N.A., as Collateral Agent for the Secured
Parties
By
Name:
Title:
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.1. Definitions; Interpretation . . . . . . . . . . . . . . . 2
ARTICLE II
MASTER LEASE
2.1. Acceptance and Lease of Property. . . . . . . . . . . . 2
2.2. Acceptance Procedure. . . . . . . . . . . . . . . . . . 2
2.3. Term. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Title . . . .. . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
PAYMENT OF RENT
3.1. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. Payment of Rent . . . . . . . . . . . . . . . . . . . . 3
3.3. Supplemental Rent . . . . . . . . . . . . . . . . . . . 4
3.4. Method of Payment . . . . . . . . . . . . . . . . . . . 4
3.5. Payments of Rent Constitute Senior Debt .. . . . . . . . 5
3.6. Payments After Termination of Credit Agreement, etc . . 5
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . 5
4.2. Right to Inspect. . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
NET LEASE, ETC.
5.1. Net Lease . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. No Termination or Abatement . . . . . . . . . . . . . . 7
5.3. No Bar. . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
SUBLEASES
6.1. Subletting. . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1. Condition of the Properties . . . .. . . . . . . . . . . . . . 8
7.2. Risk of Loss. . . . . . . . . . . .. . . . . . . . . . . . . . 9
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
8.1. Utility Charges . . . . . . . . . . . . . . . . . . . . . . . 9
8.2. Possession and Use of the Property.. . . . . . . . . . . . . . 9
8.3. Compliance with Requirements of Law, Property Legal
Requirements an Insurance Requirements . .. . . . . . . . . . 10
8.4. Assignment by Lessee. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1. Maintenance and Repair; Return. . . . . . . . . . . . . . . . 10
ARTICLE X
MODIFICATIONS, ETC.
10.1. Modifications, Substitutions and Replacements. . .. . . . . . 11
10.2. Notice to the Lessor . . . . . . . . . . . . . . .. . . . . . 12
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
11.1. Warrant of Title . . . . . . . . . . . . . . . . .. . . . . . 12
11.2. Grants and Releases of Easements; Lessor's Waivers. . . . . . 13
ARTICLE XII
PERMITTED CONTESTS
12.1. Permitted Contests in Respect of Applicable Law; Liens;
Property Taxes 14
ARTICLE XIII
INSURANCE
13.1. Public Liability and Workers' Compensation Insurance . . . . 15
13.2. Hazard and Other Insurance . . . . . . . . . . . . . . . . . 16
13.3. Insurance Coverage . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
14.1. Casualty and Condemnation. . . . . . . .. . . . . . . . . . . 18
14.2. Environmental Matters. . . . . . . . . .. . . . . . . . . . . 20
14.3. Notice of Environmental Matters. . . . .. . . . . . . . . . . 21
ARTICLE XV
TERMINATION OF LEASE
15.1. Partial Termination upon Certain Events. . .. . . . . . . . . 21
15.2. Termination Procedures . . . . . . . . . . .. . . . . . . . . 22
ARTICLE XVI
EVENTS OF DEFAULT
16.1. Lease Events of Default. . . . . . . . . . . . . . . . . . . 22
16.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16.3. Waiver of Certain Rights . . . . . . . . . . . . . . . . . . 29
ARTICLE XVII
LESSOR'S RIGHT TO CURE
17.1. The Lessor's Right to Cure a Lessee's Lease Defaults . .. . . 29
ARTICLE XVIII
PURCHASE PROVISIONS
18.1. Optional Purchase of the Properties. . . .. . . . . . . . . . 30
(a) Purchase of All of the Properties. . . . . .. . . . . . . . . . 30
(b) Purchase of Individual Properties.. 30
(c) Transfer Procedures. . . . . . . .. 31
18.2. Expiration Date Purchase Obligation. . . . . . . . . . . . . 32
ARTICLE XIX
INTENTIONALLY OMITTED
ARTICLE XX
REMARKETING OPTION
20.1. Option to Remarket . . . . . . .. . . . . . . . . . . . . . . 32
20.2. Certain Obligations Continue . .. . . . . . . . . . . . . . . 37
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
21.1. Provisions Relating to the Exercise of Purchase Option or
Obligation and Conveyance Upon Remarketing and Conveyance
Upon Certain Other Events 37
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1. Estoppel Certificates. . . . . . . . . . . . . . . . . . . . 39
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
23.1. Acceptance of Surrender. . . . . . . . . . . . . . . . . . . 39
ARTICLE XXIV
NO MERGER OF TITLE
24.1. No Merger of Title . . .. . . . . . . . . . . . . . . . . . . 39
ARTICLE XXV
INTENT OF THE PARTIES
25.1. Nature of Transaction. . . . . . . . . . . . . . . . . . . . 40
ARTICLE XXVI
MISCELLANEOUS
26.1. Survival; Severability; Etc. . . . . . . . . . . . . . . . . 41
26.2. Amendments and Modifications . . . . . . . . . . . . . . . . 41
26.3. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 42
26.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
26.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . 42
26.6. Headings and Table of Contents . . . . . . . . . . . . . . . 42
26.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 42
26.8. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 42
26.9. Limitations on Recourse. . . . . . . . . . . . . . . . . . . 43
26.10. Original Lease. . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBIT A Form of Lease Supplement