Exhibit 10.21
MASTER LEASE AGREEMENT
DATED AS OF JANUARY __, 1995
BY AND BETWEEN
HEALTH AND RETIREMENT PROPERTIES TRUST,
AS LANDLORD,
AND
VERMONT SUBACUTE CORPORATION
AND
NEW HAMPSHIRE SUBACUTE CORPORATION,
AS TENANTS
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
1.1 "Additional Rent" . . . . . . . . . . . . . . . . . . . 1
1.2 "Additional Charges" . . . . . . . . . . . . . . . . . 2
1.3 "Additional Properties . . . . . . . . . . . . . . . . . 2
1.4 "Adjusted Purchase Price" . . . . . . . . . . . . . . . 2
1.5 "Affiliated Person" . . . . . . . . . . . . . . . . . . 2
1.6 "Agreement" . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Applicable Laws" . . . . . . . . . . . . . . . . . . . 2
1.8 "Award" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 "Base Net Patient Revenues" . . . . . . . . . . . . . . 3
1.11 "Business Day" . . . . . . . . . . . . . . . . . . . . 3
1.12 "Capital Addition" . . . . . . . . . . . . . . . . . . 4
1.13 "Capital Additions Cost" . . . . . . . . . . . . . . . 4
1.14 "Change in Control" . . . . . . . . . . . . . . . . . . 4
1.15 "Code" . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 "Collective Leased Properties" . . . . . . . . . . . . 5
1.17 "Commencement Date" . . . . . . . . . . . . . . . . . . 5
1.18 "Condemnation" . . . . . . . . . . . . . . . . . . . . 5
1.19 "Condemnor" . . . . . . . . . . . . . . . . . . . . . . 5
1.21 "Declaration . . . . . . . . . . . . . . . . . . . . . . 5
1.22 "Default" . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 "Distribution" . . . . . . . . . . . . . . . . . . . . 5
1.24 "Encumbrance" . . . . . . . . . . . . . . . . . . . . . 6
1.25 "Entity . . . . . . . . . . . . . . . . . . . . . . . . 6
1.26 "Environment" . . . . . . . . . . . . . . . . . . . . . 6
1.27 "Environmental Obligation" . . . . . . . . . . . . . . 6
1.28 "Environmental Notice" . . . . . . . . . . . . . . . . 6
1.29 "Environmental Report" . . . . . . . . . . . . . . . . 6
1.30 "Event of Default" . . . . . . . . . . . . . . . . . . 6
1.31 "Excess Net Patient Revenues" . . . . . . . . . . . . . 6
1.32 "Extended Terms" . . . . . . . . . . . . . . . . . . . 6
1.33 "Facility" . . . . . . . . . . . . . . . . . . . . . . 6
1.34 "Facility Mortgage" . . . . . . . . . . . . . . . . . . 6
1.35 "Facility Mortgagee" . . . . . . . . . . . . . . . . . 6
1.36 "Facility Trade Name" . . . . . . . . . . . . . . . . . 6
1.37 "Fair Market Added Value" . . . . . . . . . . . . . . . 7
1.39 "Fair Market Rental" . . . . . . . . . . . . . . . . . 7
1.40 "Fair Market Value" . . . . . . . . . . . . . . . . . . 7
1.41 "Fair Market Value Purchase Price" . . . . . . . . . . 7
1.42 "Financial Officer's Certificate" . . . . . . . . . . . 7
1.43 "Financials" . . . . . . . . . . . . . . . . . . . . . 7
1.44 "Fiscal Year" . . . . . . . . . . . . . . . . . . . . . 8
1.45 "Fixed Term" . . . . . . . . . . . . . . . . . . . . . 8
1.46 "Fixtures" . . . . . . . . . . . . . . . . . . . . . . 8
1.47 "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . 8
1.48 "Government Agencies . . . . . . . . . . . . . . . . . . 8
1.49 "Guarantor" . . . . . . . . . . . . . . . . . . . . . . 8
1.50 "Guaranty" . . . . . . . . . . . . . . . . . . . . . . 8
1.51 "Hazardous Substances" . . . . . . . . . . . . . . . . 8
1.52 "Immediate Family . . . . . . . . . . . . . . . . . . . 9
1.53 "Impositions" . . . . . . . . . . . . . . . . . . . . . 9
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1.54 "Incidental Documents" . . . . . . . . . . . . . . . . 10
1.55 "Indebtedness" . . . . . . . . . . . . . . . . . . . . 10
1.56 "Independent Trustees" . . . . . . . . . . . . . . . . 10
1.57 "Insurance Requirements" . . . . . . . . . . . . . . . 10
1.58 "Investment" . . . . . . . . . . . . . . . . . . . . . 10
1.59 "Land" . . . . . . . . . . . . . . . . . . . . . . . . 11
1.60 "Landlord" . . . . . . . . . . . . . . . . . . . . . . 11
1.61 "Lease Year" . . . . . . . . . . . . . . . . . . . . . 11
1.62 "Leased Improvements" . . . . . . . . . . . . . . . . . 11
1.63 "Leased Personal Property" . . . . . . . . . . . . . . 11
1.64 "Leased Property" . . . . . . . . . . . . . . . . . . . 11
1.65 "Legal Requirements" . . . . . . . . . . . . . . . . . 11
1.66 "Lending Institution" . . . . . . . . . . . . . . . . . 11
1.67 "Lien" . . . . . . . . . . . . . . . . . . . . . . . . 12
1.68 "Management Agreement" . . . . . . . . . . . . . . . . 12
1.69 "Manager" . . . . . . . . . . . . . . . . . . . . . . . 12
1.70 "Market Area . . . . . . . . . . . . . . . . . . . . . . 12
1.71 "Minimum Rent" . . . . . . . . . . . . . . . . . . . . 12
1.72 "Net Patient Revenues" . . . . . . . . . . . . . . . . 12
1.73 "New Hampshire Leased Property . . . . . . . . . . . . . 13
1.74 "New Hampshire Subacute . . . . . . . . . . . . . . . . 13
1.75 "Notice" . . . . . . . . . . . . . . . . . . . . . . . 13
1.76 "Nursing Home Administrator License . . . . . . . . . . 13
1.77 "Officer's Certificate" . . . . . . . . . . . . . . . . 13
1.78 "Option Purchase Price . . . . . . . . . . . . . . . . . 13
1.79 "Overdue Rate" . . . . . . . . . . . . . . . . . . . . 13
1.80 "Parent . . . . . . . . . . . . . . . . . . . . . . . . 13
1.81 "Permitted Encumbrances" . . . . . . . . . . . . . . . 13
1.82 "Person" . . . . . . . . . . . . . . . . . . . . . . . 14
1.83 "Pledge and Security Agreement . . . . . . . . . . . . . 14
1.84 "Purchase Agreement . . . . . . . . . . . . . . . . . . 14
1.85 "Primary Intended Use" . . . . . . . . . . . . . . . . 14
1.86 "Qualified Appraiser . . . . . . . . . . . . . . . . . . 14
1.87 "Records" . . . . . . . . . . . . . . . . . . . . . . . 14
1.88 "Regulated Medical Wastes . . . . . . . . . . . . . . . 14
1.89 "Rent" . . . . . . . . . . . . . . . . . . . . . . . . 14
1.90 "SEC" . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.91 "State" . . . . . . . . . . . . . . . . . . . . . . . . 14
1.92 "Stock Pledge Agreement" . . . . . . . . . . . . . . . 15
1.93 "Subordinated Creditor" . . . . . . . . . . . . . . . . 15
1.94 "Subordination Agreement" . . . . . . . . . . . . . . . 15
1.95 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . 15
1.96 "Tangible Net Worth" . . . . . . . . . . . . . . . . . 15
1.97 "Tenant" . . . . . . . . . . . . . . . . . . . . . . . 15
1.98 "Tenant's Capital Additions" . . . . . . . . . . . . . 15
1.99 "Tenant's Personal Property" . . . . . . . . . . . . . 15
1.100 "Term" . . . . . . . . . . . . . . . . . . . . . . . . 16
1.101 "Trustees" . . . . . . . . . . . . . . . . . . . . . . 16
1.102 "Unsuitable for Its Primary Intended Use" . . . . . . 16
1.103 "Vermont Subacute . . . . . . . . . . . . . . . . . . . 16
1.104 "Work" . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 2 COLLECTIVE LEASED PROPERTIES AND TERM . . . . . . . 16
2.1 Collective Leased Properties . . . . . . . . . . . . . . 16
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2.2 Condition of Collective Leased Properties . . . . . . . . 17
2.3 Fixed Term . . . . . . . . . . . . . . . . . . . . . . . 18
2.4 Extended Term . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 3 RENT . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1.1 Minimum Rent . . . . . . . . . . . . . . . . . . . 19
3.1.2 Additional Rent . . . . . . . . . . . . . . . . . 19
3.1.3 Additional Charges . . . . . . . . . . . . . . . . 22
3.2 Late Payment of Rent . . . . . . . . . . . . . . . . . . 24
3.3 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . 24
3.4 No Termination, Abatement, Etc. . . . . . . . . . . . . . 24
ARTICLE 4 USE OF THE COLLECTIVE LEASED PROPERTIES . . . . . . 25
4.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . 25
4.1.1 Primary Intended Use . . . . . . . . . . . . . . . 25
4.1.2 Necessary Approvals . . . . . . . . . . . . . . . 26
4.1.3 Lawful Use, Etc. . . . . . . . . . . . . . . . . . 26
4.2 Compliance with Legal and Insurance
Requirements, Etc. . . . . . . . . . . . . . . . . . . 27
4.3 Compliance with Medicaid and Medicare
Requirements . . . . . . . . . . . . . . . . . . . . . 27
4.4 Environmental Matters . . . . . . . . . . . . . . . . . . 27
4.4.1 Restriction on Use, Etc. . . . . . . . . . . . . . 27
4.4.2 Environment Report . . . . . . . . . . . . . . . . 28
4.4.4 Survival . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 5 MAINTENANCE AND REPAIRS . . . . . . . . . . . . . . 30
5.1 Maintenance and Repair . . . . . . . . . . . . . . . . . 30
5.1.1 Tenant's Obligations . . . . . . . . . . . . . . . 30
5.1.2 Landlord's Obligations . . . . . . . . . . . . . . 31
5.1.3 Nonresponsibility of Landlord; No Mechanics
Liens . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Tenant's Personal Property . . . . . . . . . . . . . . . 32
5.3 Yield Up . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4 Encroachments, Restrictions, Etc. . . . . . . . . . . . . 33
5.5 Landlord to Grant Easements, Etc. . . . . . . . . . . . . 34
ARTICLE 6 CAPITAL ADDITIONS, ETC. . . . . . . . . . . . . . . 34
6.1 Construction of Capital Additions to the
Leased Property . . . . . . . . . . . . . . . . . . . . 34
6.2 Capital Additions Financed or Paid For by Tenant . . . . 35
6.2.1 Financing of Capital Additions . . . . . . . . . . 35
6.2.2 Purchase by Landlord . . . . . . . . . . . . . . . 35
6.3 Capital Additions Financed by Landlord . . . . . . . . . 37
6.4 Non-Capital Additions . . . . . . . . . . . . . . . . . . 38
6.5 Salvage . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 7 LIENS . . . . . . . . . . . . . . . . . . . . . . . 39
7.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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7.2 Landlord's Lien . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 8 PERMITTED CONTESTS . . . . . . . . . . . . . . . . . 40
ARTICLE 9 INSURANCE AND INDEMNIFICATION . . . . . . . . . . . 41
9.1 General Insurance Requirements . . . . . . . . . . . . . 41
9.2 Replacement Cost . . . . . . . . . . . . . . . . . . . . 42
9.3 Waiver of Subrogation . . . . . . . . . . . . . . . . . . 43
9.4 Form Satisfactory, Etc . . . . . . . . . . . . . . . . . 43
9.5 Blanket Policy . . . . . . . . . . . . . . . . . . . . . 44
9.6 No Separate Insurance . . . . . . . . . . . . . . . . . . 44
9.7 Indemnification of Landlord . . . . . . . . . . . . . . . 44
ARTICLE 10 CASUALTY . . . . . . . . . . . . . . . . . . . . . . 45
10.1 Insurance Proceeds . . . . . . . . . . . . . . . . . . . 45
10.2 Damage or Destruction . . . . . . . . . . . . . . . . . 45
10.2.1 Damage or Destruction of Leased Property . . . . 45
10.2.2 Partial Damage or Destruction . . . . . . . . . . 46
10.2.3 Insufficient Insurance Proceeds . . . . . . . . . 46
10.2.4 Disbursement of Proceeds . . . . . . . . . . . . 46
10.3 Damage Near End of Term . . . . . . . . . . . . . . . . 48
10.4 Tenant's Property . . . . . . . . . . . . . . . . . . . 48
10.5 Restoration of Tenant's Property . . . . . . . . . . . . 48
10.6 No Abatement of Rent . . . . . . . . . . . . . . . . . . 48
10.7 Termination of Option to Purchase . . . . . . . . . . . 49
10.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 11 CONDEMNATION . . . . . . . . . . . . . . . . . . . . 49
11.1 Total Condemnation, Etc . . . . . . . . . . . . . . . . 49
11.2 Partial Condemnation . . . . . . . . . . . . . . . . . . 49
11.3 Abatement of Rent . . . . . . . . . . . . . . . . . . . 50
11.4 Temporary Condemnation . . . . . . . . . . . . . . . . . 51
11.5 Allocation of Award . . . . . . . . . . . . . . . . . . 51
11.6 Termination of Rights of Option to Purchase. . . . . . . 51
ARTICLE 12 DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . 52
12.1 Events of Default . . . . . . . . . . . . . . . . . . . 52
12.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 55
12.3 Tenant's Waiver . . . . . . . . . . . . . . . . . . . . 57
12.4 Application of Funds . . . . . . . . . . . . . . . . . . 58
12.5 Landlord's Right to Cure Tenant's Default . . . . . . . 58
12.6 Trade Names . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 13 HOLDING OVER . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 14 LANDLORD'S DEFAULT . . . . . . . . . . . . . . . . . 59
ARTICLE 15 PURCHASE OF LEASED PROPERTY . . . . . . . . . . . . 60
ARTICLE 16 SUBLETTING AND ASSIGNMENT . . . . . . . . . . . . . 60
16.1 Subletting and Assignment . . . . . . . . . . . . . . . 60
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16.2 Required Sublease Provisions . . . . . . . . . . . . . . 61
16.3 Permitted Sublease . . . . . . . . . . . . . . . . . . . 62
16.4 Sublease Limitation . . . . . . . . . . . . . . . . . . 63
ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL
STATEMENTS . . . . . . . . . . . . . . . . . . . . 63
17.1 Estoppel Certificates . . . . . . . . . . . . . . . . . 63
17.2 Financial Statements . . . . . . . . . . . . . . . . . . 63
17.3 General Operations . . . . . . . . . . . . . . . . . . . 65
17.3.1 Reimbursement, Licensure, Etc . . . . . . . . . . 65
17.3.2 Annual Budgets . . . . . . . . . . . . . . . . . 65
ARTICLE 18 LANDLORD'S RIGHT TO INSPECT . . . . . . . . . . . . 66
ARTICLE 19 APPRAISAL . . . . . . . . . . . . . . . . . . . . . 66
19.1 Appraisal Procedure . . . . . . . . . . . . . . . . . . 66
19.2 Landlord's Right to Appraisal . . . . . . . . . . . . . 68
ARTICLE 20 OPTION TO PURCHASE . . . . . . . . . . . . . . . . . 68
20.1 Landlord's Option to Purchase Tenant's
Personal Property; Transfer of Licenses . . . . . . . 68
20.2 Tenant's Option to Purchase the Leased Property . . . . 69
20.3 First Refusal to Purchase . . . . . . . . . . . . . . . 69
ARTICLE 21 FACILITY MORTGAGES . . . . . . . . . . . . . . . . . 71
21.1 Landlord May Grant Liens . . . . . . . . . . . . . . . . 71
21.2 Subordination of Lease . . . . . . . . . . . . . . . . . 71
21.3 Notice to Mortgagee and Ground Landlord . . . . . . . . 72
ARTICLE 22 ADDITIONAL COVENANTS OF TENANT . . . . . . . . . . . 73
22.1 Prompt Payment of Indebtedness . . . . . . . . . . . . 73
22.2 Conduct of Business . . . . . . . . . . . . . . . . . . 73
22.3 Maintenance of Accounts and Records . . . . . . . . . . 73
22.4 Notice of Change of Name, Administrator, Etc . . . . . 73
22.5 Notice of Litigation, Potential Event
of Default, Etc. . . . . . . . . . . . . . . . . . . 74
22.6 Indebtedness of Tenant . . . . . . . . . . . . . . . . 74
22.7 Distributions, Payments to Affiliated
Persons, Etc . . . . . . . . . . . . . . . . . . . . 75
22.8 Investments . . . . . . . . . . . . . . . . . . . . . . 75
22.9 Prohibited Transactions . . . . . . . . . . . . . . . . 76
22.10 Management of Collective Leased Properties . . . . . . 76
22.11 Liens and Encumbrances . . . . . . . . . . . . . . . . 77
22.12 Merger; Sale of Assets; Etc . . . . . . . . . . . . . . 77
22.13 Guaranties . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE 23 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 78
23.1 Limitation on Payment of Rent . . . . . . . . . . . . . 78
23.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . 78
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23.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . 78
23.4 Severability . . . . . . . . . . . . . . . . . . . . . 78
23.5 Acceptance of Surrender . . . . . . . . . . . . . . . . 79
23.6 No Merger of Title . . . . . . . . . . . . . . . . . . 79
23.7 Conveyance by Landlord . . . . . . . . . . . . . . . . 79
23.8 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . 79
23.9 NON-LIABILITY OF TRUSTEES . . . . . . . . . . . . . . . 80
23.10 Landlord's Consent of Trustees . . . . . . . . . . . . 80
23.11 Memorandum of Lease . . . . . . . . . . . . . . . . . . 80
23.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . 80
23.13 Construction . . . . . . . . . . . . . . . . . . . . . 81
23.14 Counterparts; Headings . . . . . . . . . . . . . . . . 82
23.15 Landlord Financing. . . . . . . . . . . . . . . . . . . 82
23.16 Applicable Law, Etc . . . . . . . . . . . . . . . . . . 82
23.17 Allocation of Minimum Rent . . . . . . . . . . . . . . 83
23.18 Additional Leased Properties. . . . . . . . . . . . . . 83
EXHIBITS
A-1 - A-8 - Legal Descriptions
B - Purchase Price
C Minimum Rent Allocation
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT is entered into as of this ___ day of
January 1995, by and between HEALTH AND RETIREMENT PROPERTIES TRUST, a
Maryland real estate investment trust, having its principal office at
400 Centre Street, Newton, Massachusetts 02158 ("Landlord"), Vermont
Subacute Corporation, a Delaware corporation, having its principal
office at 150 South Champlain Street, Burlington, Vermont 05401
("Vermont Subacute"), and New Hampshire Subacute Corporation, a Delaware
corporation, having its principal office at 40 Whitehall Road,
Rochester, New Hampshire 03867 ("New Hampshire Subacute").
W I T N E S E T H :
WHEREAS, Landlord owns fee simple title to the Collective Leased
Properties (this and other capitalized terms used and not otherwise
defined herein having the meanings ascribed to such terms in Article 1);
and
WHEREAS, Landlord wishes to lease the Collective Leased Properties
to Tenant and Tenant wishes to lease the Collective Leased Properties
from Landlord, all subject to and upon the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt
and legal sufficiency of which are hereby acknowledged, Landlord and
Tenant hereby agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) the terms defined
in this Article shall have the meanings assigned to them in this Article
and include the plural as well as the singular, (ii) all accounting
terms not otherwise defined herein shall have the meanings assigned to
them in accordance with GAAP, (iii) all references in this Agreement to
designated "Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Agreement,
and (iv) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
1.1 "Additional Rent" shall have the meaning given such term in
Section 3.1.2(a).
1.2 "Additional Charges" shall have the meaning given such term in
Section 3.1.3.
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1.3 "Additional Properties" shall have the meaning given such term
in Section 23.18 hereof.
1.4 "Adjusted Purchase Price" shall mean, with respect to any
Leased Property, the Purchase Price of such Leased Property plus any
amounts disbursed or advanced by Landlord to finance, or to reimburse
Tenant for its financing of, any Capital Addition to such Leased
Property less the amount of any Award or the proceeds of any insurance
received by Landlord in connection with a partial Condemnation or a
partial casualty involving the applicable Leased Property as described
in Section 11.2 or 10.2.2, and not applied by Landlord to the
restoration of the applicable Leased Property as provided therein.
1.5 "Affiliated Person" shall mean, with respect to any Person,
(a) in the case of any such Person which is a partnership, any partner
in such partnership, (b) in the case of any such Person which is a
limited liability company, any member of such company, (c) any other
Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with
respect to such Person or to one or more of the Persons referred to in
the preceding clauses (a) and (b), (d) any other Person who is an
officer, director, trustee or employee of, or partner in, such Person or
any Person referred to in the preceding clauses (a), (b) and (c), and
(e) any other Person who is a member of the Immediate Family of such
Person or of any Person referred to in the preceding clauses (a) through
(d).
1.6 "Agreement" shall mean this Master Lease Agreement, including
Exhibits A-1 to A-8, B and C hereto, as it and they may be amended from
time to time as herein provided.
1.7 "Applicable Laws" shall mean all applicable laws, statutes,
regulations, rules, ordinances, codes, licenses, permits and orders
(whether now existing or hereafter enacted or promulgated irrespective
of whether its enactment is foreseeable or contemplated), of all courts
of competent jurisdiction and Government Agencies, and all applicable
judicial and administrative and regulatory decrees, judgments and
orders, including common law rulings and determinations, relating to
injury to, or the protection of, real or personal property or human
health (except those requirements which, by definition, are solely the
responsibility of employers) or the Environment, including, without
limitation, all valid and lawful requirements of courts and other
Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements
(including, without limitation, treatment or storage tanks, or water,
gas or oil wells), or emissions, discharges, releases or threatened
releases of Hazardous Substances, chemical substances, pesticides,
petroleum or petroleum products, pollutants, contaminants or hazardous
or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the Environment, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Substances or Regulated Medical Wastes,
underground improvements (including, without limitation, treatment or
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storage tanks, or water, gas or oil wells), or pollutants, contaminants
or hazardous or toxic substances, materials or wastes, whether solid,
liquid or gaseous in nature.
1.8 "Award" shall mean all compensation, sums or other value
awarded, paid or received by virtue of a total or partial Condemnation
of any of the Collective Leased Properties (after deduction of all
reasonable legal fees and other reasonable costs and expenses,
including, without limitation, expert witness fees, incurred by
Landlord, in connection with obtaining any such award).
1.9 "Base Interest Rate" shall mean the annual floating rate of
interest, determined daily and expressed as a percentage, from time to
time announced by The First National Bank of Boston as its "prime" or
"base" rate, so called, or if at any time The First National Bank of
Boston ceases to announce such a rate, as announced by the largest
national or state chartered banking institution other than The First
National Bank of Boston then having its principal office in the City of
Boston and announcing such a rate.
1.10 "Base Net Patient Revenues" shall mean Net Patient Revenues
for the twelve (12) month period commencing April 1, 1995 and ending on
March 31, 1996; provided, however, that in the event that, with respect
to any Lease Year, or portion thereof, for any reason (including,
without limitation, a taking or casualty with respect to any of the
Collective Leased Properties) there shall be a reduction in the number
of skilled nursing home beds at the Facilities or a change in the
services provided at the Facilities from the number of such beds or the
services provided during such twelve (12) month period, in determining
Additional Rent payable with respect to such Lease Year, Base Net
Patient Revenues shall be reduced on a pro rata basis (which shall mean,
in the case of a change in the services provided at a Facility, Base Net
Patient Revenues shall be reduced based upon the relative percentage
reduction in rate made in connection with such change in services).
1.11 "Business Day" shall mean any day other than Saturday,
Sunday, or any other day on which banking institutions in The
Commonwealth of Massachusetts or the State are authorized by law or
executive action to close.
1.12 "Capital Addition" shall mean one or more new buildings, or
one or more additional structures annexed to any portion of any of the
Leased Improvements with respect to any of the Collective Leased
Properties, or the material expansion of existing improvements, which
are constructed on any parcel or portion of the Land during the Term,
including the construction of a new wing or new story, the renovation of
existing improvements on any of the Collective Leased Properties in
order to provide a functionally new facility needed to provide services
not previously offered, or any expansion, construction, renovation or
conversion in order to increase the bed capacity of any Facility to
change the purpose for which such beds are utilized or to improve
materially the quality of any Facility.
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1.13 "Capital Additions Cost" shall mean the cost of any Capital
Addition proposed to be made by Tenant at any of the Collective Leased
Properties, whether paid for by Tenant or Landlord. Such cost shall
include (a) the cost of construction of the Capital Addition, including
site preparation and improvement, materials, labor, supervision,
developer and administrative fees, legal fees, and related design,
engineering and architectural services, the cost of any fixtures, the
cost of equipment and other personalty, the cost of construction
financing (including, but not limited to, capitalized interest) and
other miscellaneous costs approved by Landlord, (b) if agreed to by
Landlord in writing, in advance, the cost of any land (including all
related acquisition costs incurred by Tenant) contiguous to the
applicable Leased Property which is to become a part of such Leased
Property purchased for the purpose of placing thereon a Capital Addition
or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same,
(c) the cost of insurance, real estate taxes, water and sewage charges
and other carrying charges for such Capital Addition during
construction, (d) title insurance charges, (e) reasonable attorneys'
fees and expenses, (f) filing, registration and recording taxes and
fees, (g) documentary stamp or transfer taxes, and (h) all actual and
reasonable costs and expenses of Landlord and Tenant and, if agreed to
by Landlord in writing, in advance, any Lending Institution committed to
finance the Capital Addition, including, but not limited to, all (i)
reasonable attorneys' fees and expenses, (ii) printing expenses, (iii)
filing, registration and recording taxes and fees, (iv) documentary
stamp or transfer taxes, (v) title insurance charges and appraisal fees,
(vi) rating agency fees, and (vii) commitment fees charged by any
Lending Institution advancing or offering to advance any portion of any
financing to which Landlord has consented in writing for such Capital
Addition.
1.14 "Change in Control" shall mean the acquisition by any Person,
or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the SEC) of 5% or more, or rights,
options or warrants to acquire 5% or more, of the outstanding shares of
voting stock of Tenant or any Guarantor, as the case may be, or the
merger or consolidation of Tenant or any Guarantor, as the case may be
with or into any other Person or any one or more sales or conveyances to
any Person of all or substantially all of the assets of Tenant or any
Guarantor, as the case may be.
1.15 "Code" shall mean the Internal Revenue Code of 1986 and, to
the extent applicable, the Treasury Regulations promulgated thereunder,
each as from time to time amended.
1.16 "Collective Leased Properties" shall have the meaning given
such term in Section 2.1.
1.17 "Commencement Date" shall mean the date of this Agreement.
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1.18 "Condemnation" shall mean, with respect to any of the
Collective Leased Properties, (a) the exercise of any governmental power
with respect to such Leased Property, whether by legal proceedings or
otherwise, by a Condemnor of its power of condemnation, (b) a voluntary
sale or transfer of such Leased Property by Landlord to any Condemnor,
either under threat of condemnation or while legal proceedings for
condemnation are pending, and (c) a taking or voluntary conveyance of
all or part of such Leased Property, or any interest therein, or right
accruing thereto or use thereof, as the result or in settlement of any
Condemnation or other eminent domain proceeding affecting such Leased
Property, whether or not the same shall have actually been commenced.
1.19 "Condemnor" shall mean any public or quasi-public authority,
or private corporation or individual, having the power of Condemnation.
1.20 "Connecticut Subacute" shall mean Connecticut Subacute
Corporation, a Delaware corporation.
1.21 "CSC-II" shall mean Connecticut Subacute Corporation II, a
Delaware corporation.
1.22 "Declaration" shall mean the Declaration of Trust establishing
Landlord, dated October 9, 1986, as amended.
1.23 "Default" shall mean any event or condition which with the
giving of notice and/or lapse of time may ripen into an Event of
Default.
1.24 "Distribution" shall mean (a) any declaration or payment of
any dividend (except dividends payable in common stock of Tenant) on or
in respect of any shares of any class of capital stock of Tenant, (b)
any purchase, redemption retirement or other acquisition of any shares
of any class of capital stock of a corporation, (c) any other
distribution on or in respect of any shares of any class of capital
stock of a corporation, (d) any return of capital to shareholders, or
(e) any payment with respect to any indebtedness of any Guarantor to any
Affiliated Person of such or any other Guarantor.
1.25 "Encumbrance" shall have the meaning given such term in
Section 21.1.
1.26 "Entity" shall mean any corporation, general or limited
partnership, limited liability company or partnership, stock company or
association, joint venture, association, company, trust, bank, trust
company, land trust, business trust, cooperative, any government or
agency or political subdivision thereof or any other entity.
1.27 "Environment" shall mean soil, surface waters, ground waters,
land, stream, sediments, surface or subsurface strata and ambient air.
1.28 "Environmental Obligation" shall have the meaning given such
term in Section 4.4.1.
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1.29 "Environmental Notice" shall have the meaning given such term
in Section 4.4.1.
1.30 "Environmental Report" shall have the meaning given such term
in Section 4.4.2.
1.31 "Event of Default" shall have the meaning given such term in
Section 12.1.
1.32 "Excess Net Patient Revenues" shall mean, with respect to any
Lease Year, or portion thereof, the amount of Net Patient Revenues for
such Lease Year, or portion thereof, in excess of Base Net Patient
Revenues for the equivalent period.
1.33 "Extended Terms" shall have the meaning given such term in
Section 2.4.
1.34 "Facility" shall mean, with respect to any of the Collective
Leased Properties, the facility offering health care or related services
being operated or proposed to be operated on such Leased Property.
1.35 "Facility Mortgage" shall mean, with respect to any of the
Collective Leased Properties, any Encumbrance placed upon such Leased
Property in accordance with Article 21.
1.36 "Facility Mortgagee" shall mean the holder of any Facility
Mortgage.
1.37 "Facility Trade Name" shall mean, with respect to any
Facility, any name under which Tenant has conducted the business of
operating such Facility at any time during the Term.
1.38 "Fair Market Added Value" shall mean, with respect to any of
the Collective Leased Properties, the Fair Market Value of such Leased
Property (including all Capital Additions) less the Fair Market Value of
such Leased Property determined as if no Tenant's Capital Additions had
been constructed.
1.39 "Fair Market Added Value Percentage" shall mean the percentage
that the Fair Market Added Value bears to the Fair Market Value Purchase
Price.
1.40 "Fair Market Rental" shall mean, with respect to any of the
Collective Leased Properties, the rental which a willing tenant not
compelled to rent would pay a willing landlord not compelled to lease
for the use and occupancy of such Leased Property (including all Capital
Additions other than Tenant's Capital Additions) on the terms and condi-
tions of this Agreement for the term in question, assuming Tenant is not
in default hereunder and determined by agreement between Landlord and
Tenant or, failing agreement, in accordance with the appraisal
procedures set forth in Article 19.
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1.41 "Fair Market Value" shall mean, with respect to any of the
Collective Leased Properties, the price that a willing buyer not
compelled to buy would pay a willing seller not compelled to sell for
such Leased Property (without taking into account any reduction in value
resulting from any indebtedness to which such Leased Property is
subject), assuming the same is unencumbered by this Agreement and
determined by agreement between Landlord and Tenant or, failing
agreement, the appraisal procedures set forth in Article 19.
1.42 "Fair Market Value Purchase Price" shall mean, with respect
to any of the Collective Leased Properties, the Fair Market Value of
such Leased Property less the Fair Market Added Value.
1.43 "Financial Officer's Certificate" shall mean, as to any
Person, a certificate of the chief financial officer of such Person,
duly authorized, accompanying the financial statements required to be
delivered by such Person pursuant to Section 17.2, in which such officer
shall certify (a) that such statements have been properly prepared in
accordance with GAAP and are true, correct and complete in all material
respects and fairly present the financial condition of such Person at
and as of the dates thereof and the results of its and their operations
for the periods covered thereby, and (b) certify that such officer has
reviewed this Agreement and has no knowledge of any Default or Event of
Default hereunder.
1.44 "Financials" shall mean, for any Fiscal Year or other
accounting period of any Tenant or Guarantor, annual audited and
quarterly unaudited financial statements for such Tenant or Guarantor,
including such Tenant's or Guarantor's balance sheet and the related
statements of income and cash flows, all in reasonable detail, and
setting forth in comparative form the corresponding figures for the
corresponding period in the preceding Fiscal Year, and prepared in
accordance with GAAP throughout the periods reflected.
1.45 "Fiscal Year" shall mean the twelve (12) month period from
January 1 to December 31.
1.46 "Fixed Term" shall have the meaning given such term in
Section 2.3.
1.47 "Fixtures" shall have the meaning given such term in Section
2.1(d).
1.48 "GAAP" shall mean generally accepted accounting principles
consistently applied.
1.49 "Government Agencies" shall mean any court, agency,
authority, board (including, without limitation, environmental
protection, planning and zoning), bureau, commission, department, office
or instrumentality of any nature whatsoever of any governmental or
quasi-governmental unit of the United States or the State or any county
or any political subdivision of any of the foregoing, whether now or
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hereafter in existence, having jurisdiction over Tenant or the
Collective Leased Properties or any portion thereof or the Facilities
operated thereon.
1.50 "Guarantor" shall mean, collectively, each and every
guarantor of Tenant's obligations under this Agreement, including,
without limitation, Connecticut Subacute, CSC II and the other
Guarantors specified in Section 22.14 hereof, and each such guarantor's
successors and assigns.
1.51 "Guaranty" shall mean any guaranty agreement executed by a
Guarantor in favor of Landlord, of Tenant's obligations hereunder,
together with all modifications, amendments or supplements thereto.
1.52 "Hazardous Substances" shall mean any substance:
(a) the presence of which requires or may hereafter require
notification, investigation or remediation under any federal, state
or local statute, regulation, rule, ordinance, order, action or
policy; or
(b) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future federal, state or local
statute, regulation, rule or ordinance or amendments thereto
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. et seq.) and
the Resource Conservation and Recovery Act (42 U.S.C. section 6901
et seq.) and the regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is or becomes regulated by any governmental
authority, agency, department, commission, board, agency or
instrumentality of the United States, any state of the United
States, or any political subdivision thereof; or
(d) the presence of which on any of the Collective Leased
Properties causes or threatens to cause a nuisance upon such Leased
Property or to adjacent properties or poses or threatens to pose a
hazard to any of the Collective Leased Properties or to the health
or safety of persons on or about any of the Collective Leased
Properties; or
(e), without limitation, which contains gasoline, diesel fuel
or other petroleum hydrocarbons or volatile organic compounds; or
(f), without limitation, which contains polychlorinated
biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation;
or
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(g), without limitation, which contains or emits radioactive
particles, waves or material; or
(h), without limitation, constitutes Regulated Medical Wastes.
1.53 "Immediate Family" shall mean, with respect to any
individual, such individual's spouse, parents, brothers, sisters,
children (natural or adopted), children-in-law, stepchildren,
grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-
in-law, nephews and nieces.
1.54 "Impositions" shall mean, with respect to any of the
Collective Leased Properties, collectively, all taxes (including,
without limitation, all taxes imposed under the laws of the State, as
such laws may be amended from time to time, and all ad valorem, sales
and use, single business, gross receipts, transaction privilege, rent or
similar taxes as the same relate to or are imposed upon Landlord, Tenant
or the business conducted upon such Leased Property), assessments
(including, without limitation, all assessments for public improvements
or benefit, whether or not commenced or completed prior to the date
hereof and whether or not to be completed within the Term), ground
rents, water, sewer or other rents and charges, excises, tax levies,
fees (including, without limitation, license, permit, inspection,
authorization and similar fees) and all other governmental charges, in
each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of such Leased
Property or the business conducted thereon by Tenant (including all
interest and penalties thereon due to any failure in payment by Tenant),
which at any time prior to, during or in respect of the Term hereof may
be assessed or imposed on or in respect of or be a lien upon (a)
Landlord's interest in such Leased Property, (b) such Leased Property or
any part thereof or any rent therefrom or any estate, right, title or
interest therein, or (c) any occupancy, operation, use or possession of,
or sales from, or activity conducted on, or in connection with such
Leased Property or the leasing or use of such Leased Property or any
part thereof by Tenant; provided, however, that nothing contained herein
shall be construed to require Tenant to pay (i) any tax based on net
income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii)
any transfer fee or other tax imposed with respect to the sale, exchange
or other disposition by Landlord of the applicable Leased Property or
the proceeds thereof (other than in connection with the sale, exchange
or other disposition to, or in connection with a transaction involving,
Tenant), or (iv) any single business, gross receipts (other than a tax
on any rent received by Landlord from Tenant), transaction privilege,
rent or similar taxes as the same relate to or are imposed upon
Landlord, except to the extent that any tax, assessment, tax levy or
charge, which Tenant is obligated to pay pursuant to the first sentence
of this definition and which is in effect at any time during the Term
hereof is totally or partially repealed, and a tax, assessment, tax levy
or charge set forth in clause (i) or (ii) preceding is levied, assessed
or imposed expressly in lieu thereof.
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1.55 "Incidental Documents" shall mean, collectively, the Stock
Pledge Agreement and the Pledge and Security Agreement.
1.56 "Indebtedness" shall mean all obligations, contingent or
otherwise, which in accordance with GAAP should be reflected on the
obligor's balance sheet as liabilities.
1.57 "Independent Trustees" shall mean Trustees who, in their
individual capacity, are not Affiliated Persons as to Tenant and do not
perform any services for Landlord except as Trustees.
1.58 "Insurance Requirements" shall mean all terms of any
insurance policy required by this Agreement and all requirements of the
issuer of any such policy.
1.59 "Investment" shall mean all loans, advances, extensions of
credit (except for accounts and notes receivable for merchandise sold or
services furnished in the ordinary course of business, and amounts paid
in advance on account of the purchase price of merchandise to be
delivered to the payor within one year of the date of the advance), or
purchases of stock, notes, bonds or other securities or evidences of
indebtedness or capital contribution to any Person, whether in cash or
other property. The amount of an Investment shall be its cost (the
amount of cash or the fair market value of other property given in
exchange therefor), whether or not written or charged off or sold or
otherwise disposed of, except to the extent such cost shall have been
paid to Tenant by a Person in which Tenant had no present or prospective
financial interest at the time of such payment.
1.60 "Land" shall have the meaning given such term in Section
2.1(a).
1.61 "Landlord" shall have the meaning given such term in the
preambles to this Agreement.
1.62 "Lease Year" shall mean any calendar year or portion thereof,
commencing with the 1995 calendar year, during the Term.
1.63 "Leased Improvements" shall have the meaning given such term
in Section 2.1(b).
1.64 "Leased Personal Property" shall have the meaning given such
term in Section 2.1(e).
1.65 "Leased Property" shall mean any one of the Collective Leased
Properties.
1.66 "Legal Requirements" shall mean, with respect to any of the
Collective Leased Properties, all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting such Leased
Property or the maintenance, construction, alteration or operation
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thereof, whether now or hereafter enacted or in existence, including,
without limitation, (a) all permits, licenses, certificates of need,
authorizations and regulations necessary to operate such Leased Property
for its Primary Intended Use, and (b) all covenants, agreements,
restrictions and encumbrances contained in any instruments at any time
in force affecting such Leased Property, including those which may (i)
require material repairs, modifications or alterations in or to such
Leased Property or (ii) in any way adversely affect the use and
enjoyment thereof.
1.67 "Lending Institution" shall mean any insurance company,
federally insured commercial or savings bank, national banking
association, savings and loan association, employees' welfare, pension
or retirement fund or system, corporate profit sharing or pension trust,
college or university, or real estate investment trust, including any
corporation qualified to be treated for federal tax purposes as a real
estate investment trust, such trust having a net worth of at least
$100,000,000.
1.68 "Lien" shall mean any mortgage, security interest, pledge,
collateral assignment, or other encumbrance, lien or charge of any kind,
or any transfer any of property or assets for the purpose of subjecting
the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors.
1.69 "Management Agreement" shall mean any agreement whether
written or oral entered into between Tenant and any other party
(including any Affiliated Person as to Tenant) pursuant to which
management services are provided to any Facility, together with all
amendments, modifications or supplements thereto.
1.70 "Manager" shall mean the management party under any
Management Agreement.
1.71 "Market Area" shall mean an area within a (10) mile radius of
the applicable Leased Property.
1.72 "Minimum Rent" shall mean the monthly sum of Three Hundred
Six Thousand Two Hundred Fifty and 00/100 Dollars ($306,250.00).
1.73 "Net Patient Revenues" shall mean all revenues (determined on
an accrual basis in accordance with GAAP) received or receivable from or
by reason of the operation of the Facilities, or any portion thereof, or
any other use of the Collective Leased Properties, or any portion
thereof, including, without limitation, all patient revenues received or
receivable for the use of or otherwise by reason of all rooms, beds and
other facilities provided, meals served, services performed, space or
facilities subleased or goods sold on the Collective Leased Properties,
or any portion thereof, including, without limitation, and except as
provided below, any other arrangements with third parties relating to
the possession or use of any portion of the Collective Leased
Properties; provided, however, that Net Patient Revenues shall not
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include: (a) allowances according to GAAP for uncollectible accounts,
including credit accounts and charity care and other administrative
discounts; (b) revenue from professional fees or charges by physicians
and unaffiliated providers of ancillary services, when and to the extent
such charges are paid over to such physicians or unaffiliated providers
of ancillary services, or are separately billed and not included in
comprehensive fees; (c) non-operating revenues such as interest income
or income from the sale of assets not sold in the ordinary course of
business; (d) revenues attributable to services actually provided
off-site or otherwise away from such Facility, such as home health care,
to persons that are not patients at such Facility; and (e) all revenues
attributable to Tenant's Capital Additions (as such revenues are
calculated in accordance with Section 6.2.2(a)).
1.74 "New Hampshire Leased Property" shall mean the Leased
Property known as and located at Rochester Manor, Rochester, New
Hampshire.
1.75 "New Hampshire Subacute" shall have the meaning given such
term in the preambles to this Agreement.
1.76 "Notice" shall mean a notice given in accordance with Section
23.12.
1.77 "Nursing Home Administrator License" shall mean any and all
licenses, permits and approvals required under Applicable Law to
authorize any individual or individuals to act as administrator of any
Facility.
1.78 "Officer's Certificate" shall mean a certificate signed by an
officer of Tenant duly authorized by the board of directors of Tenant.
1.79 "Option Purchase Price" shall mean, with respect to any of
the Collective Leased Properties the greater of (x) the Fair Market
Value Purchase Price of such Leased Property and (y) the purchase price
for the applicable Leased Property as set forth in Exhibit B plus any
amounts disbursed or advanced by Landlord to finance, or to reimburse
Tenant for its financing of, any Capital Addition to such Leased
Property, less the amount of any Award or the proceeds of any insurance
received by Landlord in connection with a partial Condemnation or a
partial casualty involving such Leased Property as described in Section
11.2 or 10.2.2, and not applied by Landlord to the restoration of such
Leased Property as provided therein.
1.80 "Overdue Rate" shall mean, on any date, a per annum rate of
interest equal to the lesser of eighteen percent (18%) and the maximum
rate then permitted under applicable law.
1.81 "Parent" shall mean, with respect to any Person, any Person
which owns directly, or indirectly through one or more Subsidiaries or
Affiliated Persons, five percent (5%) or more of the voting or
beneficial interest in, or otherwise has the right or power (whether by
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contract, through ownership of securities or otherwise) to control, such
Person.
1.82 "Permitted Encumbrances" shall mean, with respect to any of
the Collective Leased Properties, all rights, restrictions, and
easements of record set forth on Schedule B to the applicable owner's or
leasehold title insurance policy issued to Landlord on the date hereof,
plus any other such encumbrances as may have been consented to in
writing by Landlord from time to time.
1.83 "Person" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns
of such Person where the context so admits.
1.84 "Pledge and Security Agreement" shall mean the Pledge and
Security Agreement, dated as of the date hereof, made by Tenant for the
benefit of Landlord.
1.85 "Purchase Agreement" shall have the meaning given such term
in Section 23.18 hereof.
1.86 "Primary Intended Use" shall have the meaning given such term
in Section 4.1.1.
1.87 "Qualified Appraiser" shall mean an appraiser who is not in
control of, controlled by or under common control with either Landlord
or Tenant and has not been an employee of Landlord or Tenant or any
Affiliated Person with respect to either of Landlord or Tenant at any
time, who is qualified to appraise commercial real estate in the State
and is a member of the American Institute of Real Estate Appraisers (or
any successor association or body of comparable standing if such
Institute is not then in existence) and who has held his or her
certificate as an M.A.I. or its equivalent for a period of not less than
three (3) years, and has been actively engaged in the appraisal of
commercial real estate in such area for a period of not less than five
(5) years, immediately preceding his or her appointment hereunder.
1.88 "Records" shall have the meaning given such term in Section
7.2.
1.89 "Regulated Medical Wastes" shall mean all materials generated
by Tenant, subtenants, patients, occupants or the operators of the
Collective Leased Properties which are now or may hereafter be subject
to regulation pursuant to the Material Waste Tracking Act of 1988, or
any Applicable Laws promulgated by any Government Agencies.
1.90 "Rent" shall mean, collectively, the Minimum Rent, Additional
Rent and Additional Charges.
1.91 "SEC" shall mean the Securities and Exchange Commission.
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1.92 "State" shall mean (i) with respect to the Vermont Leased
Properties, the State of Vermont, and (ii) with respect to the New
Hampshire Leased Property, the State of New Hampshire.
1.93 "Stock Pledge Agreement" shall mean the Stock Pledge and
Security Agreement, dated as of the date hereof, made by Guarantor to
Landlord.
1.94 "Subordinated Creditor" shall mean any creditor of Tenant
which is a party to a Subordination Agreement in favor of Landlord.
1.95 "Subordination Agreement" shall mean any agreement executed
by a Subordinated Creditor pursuant to which the payment and performance
of Tenant's obligations to such Subordinated Creditor are subordinated
to the payment and performance of Tenant's obligations to Landlord under
this Agreement.
1.96 "Subsidiary" shall mean, with respect to any Person, any
Entity (a) in which such Person owns directly, or indirectly through one
or more Subsidiaries, five percent (5%) or more of the voting or
beneficial interest or (b) which such Person otherwise has the right or
power to control (whether by contract, through ownership of securities
or otherwise).
1.97 "Tangible Net Worth" shall mean the excess of total assets
over total liabilities, total assets and total liabilities each to be
determined in accordance with GAAP, excluding, however, from the
determination of total assets: (a) goodwill, organizational expenses,
research and development expenses, trademarks, trade names, copyrights,
patents, patent applications, licenses and rights in any thereof, and
other similar intangibles; (b) all deferred charges or unamortized debt
discount and expense; (c) all reserves carried and not deducted from
assets; (d) treasury stock and capital stock, obligations or other
securities of, or capital contributions to, or investments in, any
Subsidiary; (e) securities which are not readily marketable; (f) any
write-up in the book value of any asset resulting from a revaluation
thereof subsequent to the Commencement Date; and (g) any items not
included in clauses (a) through (g) above that are treated as
intangibles in conformity with GAAP.
1.98 "Tenant" shall mean (i) with respect to the Vermont Leased
Properties, Vermont Subacute, and (ii) with respect to the New Hampshire
Leased Property, New Hampshire Subacute.
1.99 "Tenant's Capital Additions" shall have the meaning given
such term in Section 6.2.2.
1.100 "Tenant's Personal Property" shall mean all motor vehicles
and consumable inventory and supplies, furniture, furnishings, movable
walls and partitions, equipment and machinery and all other personal
property of Tenant now owned or hereafter acquired by Tenant on and
after the date hereof and located at any of the Collective Leased
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Properties or used in Tenant's business at any of the Collective Leased
Properties and all modifications, replacements, alterations and ad-
ditions to such personal property installed at the expense of Tenant,
other than any items included within the definition of Fixtures or
Leased Personal Property.
1.101 "Term" shall mean, collectively, the Fixed Term and the
Extended Terms, to the extent properly exercised pursuant to the provi-
sions of Section 2.4, unless sooner terminated pursuant to the
provisions of this Agreement.
1.102 "Trustees" shall mean the trustees of Landlord.
1.103 "Unsuitable for Its Primary Intended Use" shall mean, with
respect to any Facility, a state or condition of such Facility such that
(a) following any damage or destruction involving such Leased Property,
such Leased Property cannot reasonably be expected to be restored to
substantially the same condition as existed immediately before such
damage or destruction, and as otherwise required by Section 10.2.4,
within six (6) months following such damage or destruction or such
shorter period of time as to which business interruption insurance is
available to cover Rent and other costs related to such Leased Property
following such damage or destruction, or (b) as the result of a partial
taking by Condemnation, such Facility cannot be operated, in the good
faith judgment of Landlord, on a commercially practicable basis for its
Primary Intended Use taking into account, among other relevant factors,
the number of usable beds, the amount of square footage, or the revenues
affected by such damage or destruction or partial taking.
1.104 "Vermont Subacute" shall have the meaning given such term in
the preambles to this Agreement.
1.105 "Work" shall have the meaning given such term in Section
10.2.4.
ARTICLE 2
COLLECTIVE LEASED PROPERTIES AND TERM
2.1 Collective Leased Properties.
Upon and subject to the terms and conditions hereinafter set forth,
Landlord leases to Tenant and Tenant leases from Landlord all of the
following (collectively, the "Collective Leased Properties"):
(a) those certain tracts, pieces and parcels of land, as more
particularly described in Exhibits A-1 to A-8, attached hereto
and made a part hereof (the "Land");
(b) all buildings, structures, Fixtures and other improvements of
every kind including, but not limited to, alleyways and
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connecting tunnels, sidewalks, utility pipes, conduits and
lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently
situated upon the Land and all Capital Additions other than
Tenant's Capital Additions (collectively, the "Leased Improve-
ments");
(c) all easements, rights and appurtenances relating to the Land
and the Leased Improvements;
(d) all equipment, machinery, fixtures, and other items of
property, now or hereafter permanently affixed to or
incorporated into the Leased Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection
equipment, all of which, to the maximum extent permitted by
law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding
all items included within the category of Tenant's Personal
Property (collectively, the "Fixtures");
(e) all machinery, equipment, furniture, furnishings, moveable
walls or partitions, computers or trade fixtures or other
personal property of any kind or description used or useful in
Tenant's business on or in the Leased Improvements, and
located on or in the Leased Improvements, and all
modifications, replacements, alterations and additions to such
personal property, except items, if any, included within the
category of Fixtures, but specifically excluding all items
included within the category of Tenant's Personal Property
(collectively, the "Leased Personal Property"); and
(f) all leases of space (including any security deposits held by
Tenant pursuant thereto) in the Leased Improvements to tenants
thereof.
2.2 Condition of Collective Leased Properties. Tenant
acknowledges receipt and delivery of possession of the Collective Leased
Properties and Tenant accepts the Collective Leased Properties in their
"as is" condition, subject to the rights of all occupants and parties in
possession, the existing state of title, including all covenants, condi-
tions, restrictions, reservations, mineral leases, easements and other
matters of record or that are visible or apparent on the Collective
Leased Properties, all applicable Legal Requirements, the lien of
financing instruments, mortgages and deeds of trust, and such other
matters which would be disclosed by an inspection of the Collective
Leased Properties and the record title thereto or by an accurate survey
thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE COLLECTIVE LEASED
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PROPERTIES AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF
SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF
LANDLORD OR LANDLORD'S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND
TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE
CONDITION OF THE COLLECTIVE LEASED PROPERTIES. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
COLLECTIVE LEASED PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE
OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY
TENANT. To the maximum extent permitted by law, however, Landlord
hereby assigns to Tenant all of Landlord's rights to proceed against any
predecessor in title for breaches of warranties or representations or
for latent defects in the Collective Leased Properties. Landlord shall
fully cooperate with Tenant in the prosecution of any such claims, in
Landlord's or Tenant's name, all at Tenant's sole cost and expense.
Tenant shall indemnify, defend, and hold harmless Landlord from and
against any loss, cost, damage or liability (including reasonable
attorneys' fees) incurred by Landlord in connection with such
cooperation.
2.3 Fixed Term.
The initial term of this Agreement (the "Fixed Term") shall be
approximately thirteen (13) years, eleven (11) months. The Fixed Term
shall commence on the Commencement Date and shall expire December 31,
2008.
2.4 Extended Term.
Provided that no Default or Event of Default shall have occurred
and be continuing and this Agreement shall be in full force and effect,
Tenant shall have the right to extend the Term for three (3) consecutive
ten (10) year renewal terms (collectively, the "Extended Terms") for
all, and not less than all, of the Collective Leased Properties.
Each Extended Term shall commence on the day succeeding the
expiration of the Fixed Term or the preceding Extended Term, as the case
may be. All of the terms, covenants and provisions of this Agreement
shall apply to each such Extended Term, except that Tenant shall have no
right to extend the Term beyond the expiration of the Extended Terms.
If Tenant shall elect to exercise either of the aforesaid options, it
shall do so by giving Landlord Notice thereof not later than one year
prior to the scheduled expiration of the then current Term of this
Agreement (Fixed or Extended, as the case may be), it being understood
and agreed that time shall be of the essence with respect to the giving
of such Notice. Tenant may not exercise its option for more than one
such Extended Term at a time. If Tenant shall fail to give any such
Notice, this Agreement shall automatically terminate at the end of the
Term then in effect and Tenant shall have no further option to extend
the Term of this Agreement. If Tenant shall give such Notice, the
extension of this Agreement shall be automatically effected without the
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execution of any additional documents; it being understood and agreed,
however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the
same. Notwithstanding the provisions of the foregoing sentence, if,
subsequent to the giving of such Notice, an Event of Default shall
occur, unless Landlord shall otherwise consent in writing, the extension
of this Agreement shall cease to take effect and this Agreement shall
automatically terminate at the end of the Term then in effect and Tenant
shall have no further option to extend the Term of this Agreement.
ARTICLE 3
RENT
3.1 Rent.
Tenant shall pay to Landlord, in lawful money of the United States
of America which shall be legal tender for the payment of public and
private debts, without offset, abatement, demand or deduction, Minimum
Rent, Additional Rent and Additional Charges, during the Term, except as
hereinafter expressly provided. All payments to Landlord shall be made
by wire transfer of immediately available federal funds or by other
means acceptable to Landlord in its sole discretion. Rent for any
partial month shall be prorated on a per diem basis based on a 360 day
year and the actual number of days elapsed.
3.1.1 Minimum Rent. Minimum Rent shall be paid in advance on
the first day of each calendar month; provided, however, that the first
monthly payment of Minimum Rent shall be payable on the Commencement
Date.
3.1.2 Additional Rent:
(a) Amount. For each Lease Year or portion thereof during
the Term, commencing with the Lease Year beginning January 1, 1996,
Tenant shall pay additional rent ("Additional Rent") for each
Leased Property with respect to each such Lease Year equal to the
greater of (i) the lesser of (x) three percent (3%) of Excess Net
Patient Revenues for such Leased Property for such Lease Year and
(y) the product of (A) the purchase price for such Leased Property
as set forth in Exhibit B, multiplied by (B) three percent (3%);
and (ii) Additional Rent payable for the immediately preceding
Lease Year with respect to such Leased Property.
(b) Quarterly Installments. Installments of Additional Rent
for any such Lease Year or portion thereof shall be calculated and
paid quarterly in arrears on or before each April 30, July 31,
October 30 and January 31 during the term based on the amount of
Additional Rent payable for the preceding calendar quarter.
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(c) Date of Payment of Additional Rent. Tenant shall deliver
to Landlord an Officer's Certificate setting forth the calculation
of Additional Rent due and payable for the Collective Leased
Properties for each quarter of any Lease Year. Each quarterly
payment of Additional Rent is due and payable and shall be
delivered to Landlord, together with such Officer's Certificate,
together with the applicable installment of the Minimum Rent and
shall be payable in the manner hereinabove provided for payment of
Minimum Rent.
(d) Reconciliation of Additional Rent. In addition, on or
before March 31, of each year, commencing with March 31, 1996,
Tenant shall deliver to Landlord certified audits of Tenant's
financial operations for the preceding Lease Year, together with a
certificate from Ernst & Young or other certified public
accountants reasonably acceptable to Landlord, in form reasonably
acceptable to Landlord, setting forth the Net Patient Revenues for
such preceding Lease Year and such other matters as Landlord may
from time to time reasonably request.
If the annual Additional Rent for the applicable Leased
Property for such preceding Lease Year as shown in the year-end
certificate exceeds the amount previously paid with respect thereto
by Tenant, Tenant shall pay such excess to Landlord at such time as
the certificate is delivered, together with interest at the Base
Interest Rate, which interest shall accrue from the close of such
preceding Lease Year until the date that such certificate is
required to be delivered, and thereafter such interest shall accrue
at the Overdue Rate, until the amount of such difference shall be
paid or otherwise discharged.
(e) Confirmation of Additional Rent. Tenant shall utilize,
or cause to be utilized, an accounting system for the Collective
Leased Properties in accordance with its usual and customary
practices and in accordance with GAAP, which will accurately record
all Net Patient Revenues, and shall employ independent accountants
reasonably acceptable to Landlord, and Tenant shall retain, for at
least five (5) years after the expiration of each Lease Year,
reasonably adequate records conforming to such accounting system
showing all Net Patient Revenues for such Lease Year. Landlord, at
its own expense except as provided hereinbelow, shall have the
right from time to time by its accountants or representatives to
audit the information set forth in the Officer's Certificate
referred to in subparagraph (c) above or the year-end certificate
referred to in subparagraph (d) above and, in connection with such
audits, to examine Tenant's books and records with respect thereto
(including supporting data and sales and excise tax returns)
subject to any prohibitions or limitations on disclosure of any
such data under applicable law or regulations, including without
limitation any duly enacted "Patients' Bill of Rights" or similar
legislation, including such limitations as may be necessary to
preserve the confidentiality of the facility-patient relationship
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and the physician-patient privilege and/or other similar privilege
or confidentiality obligations. If any such audit discloses a
deficiency in the payment of Additional Rent, and either Tenant
agrees with the result of such audit or the matter is otherwise
compromised with Landlord, Tenant shall forthwith pay to Landlord
the amount of the deficiency, as finally agreed or determined,
together with interest at the Base Interest Rate, from the date
when said payment should have been made to the date of payment
thereof; provided, however, that as to any audit that is commenced
more than two (2) years after the date Net Patient Revenues for any
Lease Year are reported by Tenant to Landlord, the deficiency, if
any, with respect to such Net Patient Revenues shall bear interest
as permitted herein only from the date such determination of
deficiency is made unless such deficiency is the result of gross
negligence or willful misconduct on the part of Tenant. If any
such audit discloses that the Net Patient Revenues actually
received by Tenant for any Lease Year exceed those reported by
Tenant by more than three percent (3%), Tenant shall pay the
reasonable cost of such audit and examination. If any such audit
discloses that Tenant paid more Additional Rent for any Lease Year
than was due hereunder, and either Landlord agrees with the result
of such audit or the matter is otherwise determined, provided no
Default or Event of Default has occurred and is continuing,
Landlord shall grant Tenant a credit equal to the amount of such
overpayment against Additional Rent next coming due in the amount
of such difference, as finally agreed or determined. If such a
credit cannot be made because the Term has expired before the
credit can be effected, Landlord shall pay, by check, the amount of
such difference to Tenant.
Any proprietary information obtained by Landlord pursuant to
the provisions of this Agreement shall be treated as confidential,
except that such information may be used, subject to appropriate
confidentiality safeguards, in any litigation between the parties
and except further that Landlord may disclose such information to
its prospective lenders. The obligations of Tenant contained in
this Section 3.1.2 shall survive the expiration or earlier
termination of this Agreement.
3.1.3 Additional Charges.
In addition to the Minimum Rent and Additional Rent payable
hereunder, Tenant shall pay and discharge as and when due and pay-
able the following (collectively, "Additional Charges"):
(a) Impositions. Subject to Article 8 relating to Permitted
Contests, Tenant shall pay, or cause to be paid, all Impositions
before any fine, penalty, interest or cost (other than any
opportunity cost as a result of a failure to take advantage of any
discount for early payment) may be added for non-payment, such
payments to be made directly to the taxing authorities where
feasible, and shall promptly, upon request, furnish to Landlord
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copies of official receipts or other satisfactory proof evidencing
such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Tenant may
exercise the option to pay the same (and any accrued interest on
the unpaid balance of such Imposition) in installments and, in such
event, shall pay such installments during the Term as the same
become due and before any fine, penalty, premium, further interest
or cost may be added thereto. Landlord, at its expense, shall, to
the extent required or permitted by applicable law, prepare and
file all tax returns in respect of Landlord's net income, gross
receipts, sales and use, single business, transaction privilege,
rent, ad valorem, franchise taxes and taxes on its capital stock,
and Tenant, at its expense, shall, to the extent required or
permitted by applicable laws and regulations, prepare and file all
other tax returns and reports in respect of any Imposition as may
be required by Government Agencies. Provided no Default or Event
of Default shall have occurred and be continuing, if any refund
shall be due from any taxing authority in respect of any Imposition
paid by Tenant, the same shall be paid over to or retained by
Tenant. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request
is made with respect to the Collective Leased Properties as may be
necessary to prepare any required returns and reports. In the
event Government Agencies classify any property covered by this
Agreement as personal property, Tenant shall file all personal
property tax returns in such jurisdictions where it may legally so
file. Each party shall, to the extent it possesses the same,
provide the other, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as
personal property. Where Landlord is legally required to file
personal property tax returns, Landlord shall provide Tenant with
copies of assessment notices in sufficient time for Tenant to file
a protest. All Impositions assessed against such personal property
shall be (irrespective of whether Landlord or Tenant shall file the
relevant return) paid by Tenant not later than the last date on
which the same may be made without interest or penalty. If the
provisions of any Facility Mortgage require deposits on account of
Impositions to be made with such Facility Mortgagee, provided the
Facility Mortgagee has not elected to waive such provision, Tenant
shall either pay Landlord the monthly amounts required at the time
and place that payments of Minimum Rent are required and Landlord
shall transfer such amounts to such Facility Mortgagee or, pursuant
to written direction by Landlord, Tenant shall make such deposits
directly with such Facility Mortgagee.
Landlord shall give prompt Notice to Tenant of all Impositions
payable by Tenant hereunder of which Landlord at any time has
knowledge; provided, however, that Landlord's failure to give any
such notice shall in no way diminish Tenant's obligation hereunder
to pay such Impositions.
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(b) Utility Charges. Tenant shall pay or cause to be paid
all charges for electricity, power, gas, oil, water and other
utilities used in connection with the Collective Leased Properties.
(c) Insurance Premiums. Tenant shall pay or cause to be paid
all premiums for the insurance coverage required to be maintained
pursuant to Article 9.
(d) Other Charges. Tenant shall pay or cause to be paid all
other amounts, liabilities and obligations which Tenant assumes or
agrees to pay under this Agreement, including, without limitation,
all agreements to indemnify Landlord under Sections 4.4 and 9.7.
(e) Reimbursement for Additional Charges. If Tenant pays or
causes to be paid property taxes or similar Additional Charges
attributable to periods after the end of the Term, whether upon
expiration or sooner termination of this Agreement (other than
termination following an Event of Default) and Tenant has not
exercised its right to purchase the Collective Leased Properties as
provided herein, Tenant may, within sixty (60) days of the end of
the Term, provide Notice to Landlord of its estimate of such
amounts. Landlord shall promptly reimburse Tenant for all payments
of such taxes and other similar Additional Charges that are
attributable to any period after the Term of this Agreement (unless
this Agreement shall have been terminated following an Event of
Default).
3.2 Late Payment of Rent.
If any installment of Minimum Rent, Additional Rent or Additional
Charges (but only as to those Additional Charges which are payable
directly to Landlord) shall not be paid on its due date, Tenant shall
pay Landlord, on demand, as Additional Charges, a late charge (to the
extent permitted by law) computed at the Overdue Rate on the amount of
such installment, from the due date of such installment to the date of
payment thereof. To the extent that Tenant pays any Additional Charges
directly to Landlord or any Facility Mortgagee pursuant to any
requirement of this Agreement, Tenant shall be relieved of its
obligation to pay such Additional Charges to the Entity to which they
would otherwise be due.
In the event of any failure by Tenant to pay any Additional Charges
when due, Tenant shall promptly pay and discharge, as Additional
Charges, every fine, penalty, interest and cost which may be added for
non-payment or late payment of such items. Landlord shall have all
legal, equitable and contractual rights, powers and remedies provided
either in this Agreement or by statute or otherwise in the case of non-
payment of the Additional Charges as in the case of non-payment of the
Minimum Rent and Additional Rent.
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3.3 Net Lease.
The Minimum Rent and Additional Rent shall be absolutely net to
Landlord so that this Agreement shall yield to Landlord the full amount
of the installments or amounts of Minimum Rent and Additional Rent
throughout the Term, subject to any other provisions of this Agreement
which expressly provide for adjustment or abatement of such Rent.
3.4 No Termination, Abatement, Etc.
Except as otherwise specifically provided in this Agreement,
Tenant, to the maximum extent permitted by law, shall remain bound by
this Agreement in accordance with its terms and shall neither take any
action without the consent of Landlord to modify, surrender or terminate
this Agreement, nor seek, nor be entitled to any abatement, deduction,
deferment or reduction of the Rent, or set-off against the Rent, nor
shall the respective obligations of Landlord and Tenant be otherwise
affected by reason of (a) any damage to or destruction of any of the
Collective Leased Properties or any portion thereof from whatever cause
or any Condemnation, (b) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of any of the Collective Leased
Properties, or any portion thereof, or the interference with such use by
any Person or by reason of eviction by paramount title; (c) any claim
which Tenant may have against Landlord by reason of any default or
breach of any warranty by Landlord under this Agreement or any other
agreement between Landlord and Tenant, or to which Landlord and Tenant
are parties; (d) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceedings affecting Landlord or any assignee or transferee of
Landlord; or (e) for any other cause whether similar or dissimilar to
any of the foregoing. Tenant hereby waives all rights arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it
by law, to (a) modify, surrender or terminate this Agreement or quit or
surrender any of the Collective Leased Properties or any portion
thereof, or (b) entitle Tenant to any abatement, reduction, suspension
or deferment of the Rent or other sums payable or other obligations to
be performed by Tenant hereunder, except as otherwise specifically
provided in this Agreement. The obligations of Tenant hereunder shall
be separate and independent covenants and agreements, and the Rent and
all other sums payable by Tenant hereunder shall continue to be payable
in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement.
ARTICLE 4
USE OF THE COLLECTIVE LEASED PROPERTIES
4.1 Permitted Use.
4.1.1 Primary Intended Use.
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Tenant shall, at all times during the Term and at any other
time that Tenant shall be in possession of any Leased Property,
continuously use each of the Collective Leased Properties as a
licensed nursing home (or, in the case of the Leased Property known
as Hanson Court, Springfield, Vermont, as a so-called "residential
care facility") and for such other uses as may be incidental or
necessary thereto (such use being hereinafter referred to as such
Leased Property's "Primary Intended Use"). Tenant shall not use
any of the Collective Leased Properties or any portion thereof for
any other use without the prior written consent of Landlord. No
use shall be made or permitted to be made of any of the Collective
Leased Properties and no acts shall be done thereon which will
cause the cancellation of any insurance policy covering any of the
Collective Leased Properties or any part thereof (unless another
adequate policy is available), nor shall Tenant sell or otherwise
provide to residents or patients therein, or permit to be kept,
used or sold in or about any of the Collective Leased Properties
any article which may be prohibited by law or by the standard form
of fire insurance policies, or any other insurance policies
required to be carried hereunder, or fire underwriter's regula-
tions. Tenant shall, at its sole cost, comply with all of the
requirements pertaining to the Collective Leased Properties of any
insurance board, association, organization or company necessary for
the maintenance of insurance, as herein provided, covering the
Collective Leased Properties and Tenant's Personal Property,
including, without limitation, the Insurance Requirements. Tenant
shall not take or omit to take any action, the taking or omission
of which may materially impair the value or the usefulness of any
of the Collective Leased Properties or any part thereof for its
Primary Intended Use.
4.1.2 Necessary Approvals.
Tenant shall proceed with all due diligence and exercise best
efforts to obtain and maintain all approvals necessary to use and
operate, for its Primary Intended Use, each of the Collective
Leased Properties and each Facility located thereon under
applicable law and, without limiting the foregoing, shall use its
best efforts to maintain appropriate certifications for
reimbursement and licensure.
4.1.3 Lawful Use, Etc.
Tenant shall not use or suffer or permit the use of any of the
Collective Leased Properties or Tenant's Personal Property for any
unlawful purpose. Tenant shall not commit or suffer to be
committed any waste on any of the Collective Leased Properties, or
in any Facility, nor shall Tenant cause or permit any nuisance
thereon or therein. Tenant shall neither suffer nor permit any of
the Collective Leased Properties or any portion thereof, including
any Capital Addition, or Tenant's Personal Property, to be used in
such a manner as (i) might reasonably tend to impair Landlord's (or
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Tenant's, as the case may be) title thereto or to any portion
thereof, or (ii) may reasonably make possible a claim or claims for
adverse usage or adverse possession by the public, as such, or of
implied dedication of the applicable Leased Property or any portion
thereof.
4.2 Compliance with Legal and Insurance Requirements, Etc.
Subject to the provisions of Article 8, Tenant, at its sole
expense, shall (i) comply with Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair,
alteration and restoration of all of the Collective Leased Properties,
and (ii) procure, maintain and comply with all appropriate licenses,
certificates of need, permits, provider agreements and other
authorizations and agreements required for any use of the Collective
Leased Properties and Tenant's Personal Property then being made, and
for the proper erection, installation, operation and maintenance of the
Collective Leased Properties or any part thereof, including, without
limitation, any Capital Additions.
4.3 Compliance with Medicaid and Medicare Requirements.
Tenant shall, at its sole cost and expense, make whatever improve-
ments (capital or ordinary) as are required to conform each of the
Collective Leased Properties to such standards as may, from time to
time, be required by Federal Medicare (Title 18) or Medicaid (Title 19)
skilled and/or intermediate care nursing programs, to the extent Tenant
is a participant in such programs, or any other applicable programs or
legislation, or capital improvements required by any other governmental
agency having jurisdiction over such Leased Property as a condition of
the continued operation of such Leased Property for its Primary Intended
Use.
4.4 Environmental Matters.
4.4.1 Restriction on Use, Etc.
Tenant shall not store, spill upon, dispose of or transfer to
or from the Collective Leased Properties any Hazardous Substance,
except that Tenant may store, transfer and dispose of Hazardous
Substances in compliance with all Applicable Laws. Tenant shall
maintain the Collective Leased Properties at all times free of any
Hazardous Substance (except such Hazardous Substances as are
maintained in compliance with all Applicable Laws). Tenant shall
promptly: (a) notify Landlord in writing of any change in the
nature or extent of Hazardous Substances at any of the Collective
Leased Properties, (b) transmit to Landlord a copy of any Community
Right to Know report which is required to be filed by Tenant with
respect to any of the Collective Leased Properties pursuant to SARA
Title III or any other Applicable Law, (c) transmit to Landlord
copies of any citations, orders, notices or other governmental com-
munications received by Tenant or its agents or representatives
with respect thereto (collectively, "Environmental Notice"), which
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Environmental Notice requires a written response or any action to
be taken and/or if such Environmental Notice gives notice of and/or
could give rise to a violation of any Applicable Law and/or could
give rise to any cost, expense, loss or damage (an "Environmental
Obligation"), (d) observe and comply with all Applicable Laws
relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any official, court or
agency of competent jurisdiction relating to the use or maintenance
or requiring the removal, treatment, containment or other
disposition thereof, and (e) pay or otherwise dispose of any fine,
charge or Imposition related thereto, unless Tenant shall contest
the same in good faith and by appropriate proceedings and the right
to use and the value of any of the Collective Leased Properties is
not materially and adversely affected thereby.
If, at any time prior to the termination of this Agreement,
Hazardous Substances are discovered on any of the Collective Leased
Properties, Tenant shall take all actions and incur any and all
expenses, as may be reasonably necessary and as may be required by any
Government Agency, (i) to clean up and remove from and about the
Collective Leased Properties all Hazardous Substances thereon, (ii) to
contain and prevent any further release or threat of release of
Hazardous Substances on or about the Collective Leased Properties and
(iii) to use good faith efforts to eliminate any further release or
threat of release of Hazardous Substances on or about the Collective
Leased Properties.
4.4.2 Environment Report.
Six (6) months prior to expiration of the Term, Tenant, at its
sole cost and expense, shall designate a qualified environmental
engineer, satisfactory to Landlord in its sole discretion, which
engineer shall conduct an environmental investigation of the
Collective Leased Properties and prepare an environmental site
assessment report (the "Environmental Report") with respect
thereto. The scope of such Environmental Report shall include,
without limitation, review of relevant records, interviews with
persons knowledgeable about the Collective Leased Properties and
relevant governmental agencies, a site inspection of the Collective
Leased Properties, any buildings, the fencelines of the Collective
Leased Properties and adjoining properties (Phase I) and shall
otherwise be satisfactory in form and substance to Landlord. If
such investigation, in the opinion of the performing engineer,
indicates that any of the Collective Leased Properties are not
environmentally sound and free from oil, asbestos, radon and other
Hazardous Substances (except in compliance with Applicable Laws),
such investigation shall also include a more detailed physical site
inspection, appropriate testing, subsurface and otherwise, and
review of historical records (Phase II) to demonstrate the
compliance of such of the Collective Leased Properties with
Applicable Laws and the absence of Hazardous Substances.
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All preliminary drafts of the Environmental Report, and supplements
and amendments thereto, shall be provided to Landlord contemporaneously
with delivery thereof to Tenant. With respect to any recommendations
contained in the Environmental Report, violations of Applicable Laws
and/or the existence of any conditions at any of the Collective Leased
Properties which could give rise to an Environmental Obligation, Tenant
shall promptly give Notice thereof to Landlord, together with a
description, setting forth in reasonable detail, all actions Tenant
proposes to take in connection therewith and Tenant shall promptly take
all actions, and incur any and all expenses, as may be reasonably
necessary and as may be required by any Government Agency and as may be
required by Landlord, (i) to clean up, remove or remediate from and
about the Collective Leased Properties all Hazardous Substances thereon,
(ii) to contain, prevent and eliminate any further release or threat of
release of Hazardous Substances on or about the Collective Leased
Properties, and (iii) otherwise to eliminate such violation or condition
from the Collective Leased Properties to the reasonable satisfaction of
Landlord.
4.4.3 Indemnification of Landlord.
Tenant shall protect, indemnify and hold harmless Landlord and
each Facility Mortgagee, their trustees, officers, agents,
employees and beneficiaries, and any of their respective successors
or assigns (hereafter the "Indemnitees," and when referred to
singly, an "Indemnitee") for, from and against any and all debts,
liens, claims, causes of action, administrative orders or notices,
costs, fines, penalties or expenses (including, without limitation,
attorney's fees and expenses) imposed upon, incurred by or asserted
against any Indemnitee resulting from, either directly or
indirectly, the presence in, upon or under the soil or ground water
of any of the Collective Leased Properties or any properties
surrounding any of the Collective Leased Properties of any
Hazardous Substances in violation of any Applicable Law or
otherwise by reason of any failure by Tenant or any Person to
perform or comply with any of the terms of this Section 4.4.
Tenant's duty herein includes, but is not limited to, costs
associated with personal injury or property damage claims as a
result of the presence of Hazardous Substances in, upon or under
the soil or ground water of any of the Collective Leased Properties
in violation of any Applicable Law. Upon Notice from Landlord,
Tenant shall undertake the defense, at Tenant's sole cost and
expense, of any indemnification duties set forth herein.
Tenant shall, upon demand, pay to Landlord, as an Additional
Charge, any cost, expense, loss or damage (including, without
limitation, reasonable attorneys' fees) incurred by Landlord and arising
from a failure of Tenant strictly to observe and perform the foregoing
requirements, which amounts shall bear interest from the date incurred
until paid by Tenant to Landlord at the Overdue Rate.
4.4.4 Survival
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The provisions of this Section 4.4 shall survive the
expiration or sooner termination of this Agreement.
ARTICLE 5
MAINTENANCE AND REPAIRS
5.1 Maintenance and Repair.
5.1.1 Tenant's Obligations.
Tenant shall, at its sole cost and expense, keep each of the
Collective Leased Properties and all private roadways, sidewalks
and curbs appurtenant thereto (and Tenant's Personal Property) in
good order and repair, reasonable wear and tear excepted (whether
or not the need for such repairs occurs as a result of Tenant's
use, any prior use, the elements or the age of the Collective
Leased Properties or Tenant's Personal Property, or any portion
thereof), and shall promptly make all necessary and appropriate
repairs and replacements thereto of every kind and nature, whether
interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen or arising by reason of a
condition existing prior to the commencement of the Term (concealed
or otherwise); provided, however, that Tenant shall be permitted to
prosecute claims against Landlord's predecessors in title for
breach of any representation or warranty made to or on behalf of
Landlord or for any latent defects in the Collective Leased
Properties. All repairs shall be made in a good, workmanlike and
first-class manner, in accordance with all applicable federal,
state and local statutes, ordinances, by-laws, codes, rules and
regulations relating to any such work. Tenant shall not take or
omit to take any action, the taking or omission of which would
materially impair the value or the usefulness of any of the
Collective Leased Properties or any part thereof for its respective
Primary Intended Use. Tenant's obligations under this Section
5.1.1 as to any of the Collective Leased Properties shall be
limited, in the event of any casualty or Condemnation involving
such Leased Property, as set forth in Sections 10.2 and 11.2.
Notwithstanding any provisions of this Section 5.1 to the contrary,
Tenant's obligations with respect to Hazardous Substances are as
set forth in Section 4.4.
5.1.2 Landlord's Obligations.
Landlord shall not, under any circumstances, be required to
build or rebuild any improvement on the Collective Leased
Properties, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the
Collective Leased Properties, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any
expenditure whatsoever with respect thereto, or to maintain the
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Collective Leased Properties in any way, except as specifically
provided herein. Tenant hereby waives, to the maximum extent
permitted by law, the right to make repairs at the expense of
Landlord pursuant to any law in effect on the date hereof or
hereafter enacted. Landlord shall have the right to give, record
and post, as appropriate, notices of nonresponsibility under any
mechanic's lien laws now or hereafter existing.
5.1.3 Nonresponsibility of Landlord; No Mechanics
Liens.
Landlord's interest in the Collective Leased Properties shall
not be subject to liens for Capital Additions made by Tenant and
Tenant shall have no power or authority to create any lien or
permit any lien to attach to any of the Collective Leased
Properties or the present estate, reversion or other estate of
Landlord in the Collective Leased Properties or on the building or
other improvements thereon as a result of Capital Additions made by
Tenant or for any other cause or reason. All materialmen,
contractors, artisans, mechanics and laborers and other persons
contracting with Tenant with respect to the Collective Leased
Properties, or any part thereof, are hereby charged with notice
that such liens are expressly prohibited and that they must look
solely to Tenant to secure payment for any work done or material
furnished for Capital Additions by Tenant or for any other purpose
during the term of this Agreement.
Nothing contained in this Agreement shall be deemed or
construed in any way as constituting the consent or request of
Landlord, express or implied, by inference or otherwise, to any
contractor, subcontractor, laborer or materialmen for the
performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to any of the
Collective Leased Properties or any part thereof or as giving
Tenant any right, power or authority to contract for or permit the
rendering of any services or the furnishing of any materials that
would give rise to the filing of any lien against any of the
Collective Leased Properties or any part thereof nor to subject
Landlord's estate in any of the Collective Leased Properties or any
part thereof to liability under any Mechanic's Lien Law of the
State in any way, it being expressly understood Landlord's estate
shall not be subject to any such liability.
5.2 Tenant's Personal Property.
Tenant may (and shall as provided hereinbelow), at its expense,
install, affix or assemble or place on any parcels of the Land or in any
of the Leased Improvements, any items of Tenant's Personal Property, and
Tenant may, subject to the conditions set forth below, remove the same
at any time, provided that no Default or Event of Default has occurred
and is continuing. Tenant shall provide and maintain throughout the
Term all such Tenant's Personal Property as shall be necessary in order
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to operate all of the Facilities located at the Collective Leased
Properties in compliance with all applicable licensure and certification
requirements, in compliance with applicable Legal Requirements and
Insurance Requirements and otherwise in accordance with customary
practice in the industry for such Primary Intended Use. All of Tenant's
Personal Property not removed by Tenant on or prior to the expiration or
earlier termination of this Agreement shall be considered abandoned by
Tenant and may be appropriated, sold, destroyed or otherwise disposed of
by Landlord without the necessity of first giving notice thereof to
Tenant, without any payment to Tenant and without any obligation to ac-
count therefor. Tenant shall, at its expense, restore each of the
Collective Leased Properties to the condition required by Section 5.3,
including repair of all damage to the Collective Leased Properties
caused by the removal of Tenant's Personal Property, whether effected by
Tenant or Landlord.
If Tenant uses any item of tangible personal property (other than
motor vehicles) on, or in connection with, any Leased Property which
belongs to anyone other than Tenant, Tenant shall use its best efforts
to require the agreement permitting such use to provide that Landlord or
its designee may assume Tenant's rights under such agreement upon
management or operation of the applicable Facility by Landlord or its
designee.
5.3 Yield Up.
Upon the expiration or sooner termination of this Agreement, Tenant
shall vacate and surrender each of the Collective Leased Properties to
Landlord in the condition in which each of the Collective Leased
Properties was in on the Commencement Date, except as repaired, rebuilt,
restored, altered or added to as permitted or required by the provisions
of this Agreement, reasonable wear and tear excepted (and casualty
damage and Condemnation, in the event that this Agreement is terminated
with respect to any of the Collective Leased Properties following a
casualty or total Condemnation in accordance with Article 10 or Article
11).
In addition, upon the expiration or earlier termination of this
Agreement, Tenant shall, at Landlord's sole cost and expense, use its
best efforts to transfer to and cooperate with Landlord or Landlord's
nominee in connection with the processing of all applications for
licenses, operating permits and other governmental authorizations and
all contracts, including contracts with governmental or quasi-
governmental entities which may be necessary for the operation of the
Facilities located on the Collective Leased Properties. If requested by
Landlord, Tenant will continue to manage any such Facility after the
expiration of the Term and for as long thereafter as is necessary to
obtain all necessary licenses, operating permits and other governmental
authorizations, on such reasonable terms (which shall include an
agreement to reimburse Tenant for its reasonable out-of-pocket costs and
expenses, and reasonable administrative costs) as Landlord shall
request.
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5.4 Encroachments, Restrictions, Etc.
If any of the Leased Improvements shall, at any time, encroach upon
any property, street or right-of-way adjacent to the affected Leased
Property, or shall violate the agreements or conditions contained in any
lawful restrictive covenant or other agreement affecting any of the
Collective Leased Properties, or any part thereof, or shall impair the
rights of others under any easement or right-of-way to which any of the
Collective Leased Properties is subject, upon the request of Landlord
(but only as to any encroachment, violation or impairment that is not a
Permitted Encumbrance) or of any Person affected by any such
encroachment, violation or impairment, Tenant shall, at its sole cost
and expense, subject to its right to contest the existence of any
encroachment, violation or impairment in accordance with the provisions
of Article 8, either (a) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each
such encroachment, violation or impairment, whether the same shall
affect Landlord or Tenant, or (b) make such changes in the Leased
Improvements and take such other actions, as are reasonably practicable
to remove such encroachment and to end such violation or impairment,
including, if necessary, the alteration of any of the Leased
Improvements and, in any event, take all such actions as may be
necessary in order to ensure the continued operation of the affected
Leased Improvements for their respective Primary Intended Use
substantially in the manner and to the extent such Leased Improvements
were operated prior to the assertion of such violation, impairment or
encroachment. Any such alteration shall be made in conformity with the
applicable requirements of this Article 5. Tenant's obligations under
this Section 5.4 shall be in addition to and shall in no way discharge
or diminish any obligation of any insurer under any policy of title or
other insurance.
5.5 Landlord to Grant Easements, Etc.
Landlord shall from time to time, so long as no Default or Event of
Default shall have occurred and be continuing, at the request of Tenant
and at Tenant's sole cost and expense, (a) grant easements and other
rights in the nature of easements with respect to any of the Collective
Leased Properties to third parties, (b) release existing easements or
other rights in the nature of easements which are for the benefit of any
of the Collective Leased Properties, (c) dedicate or transfer unimproved
portions of any of the Collective Leased Properties for road, highway or
other public purposes, (d) execute petitions to have any of the
Collective Leased Properties annexed to any municipal corporation or
utility district, (e) execute amendments to any covenants and restric-
tions affecting any of the Collective Leased Properties and (f) execute
and deliver to any Person any instrument appropriate to confirm or
effect such grants, release, dedications, transfers, petitions and
amendments (to the extent of its interests in such Leased Property);
provided, however, that Landlord shall have first determined that such
grant, release, dedication, transfer, petition or amendment is not
detrimental to the operation of the applicable Leased Property for its
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Primary Intended Use and does not materially reduce the value of such
Leased Property, and Landlord shall have received an Officer's
Certificate confirming such determination, together with such additional
information as Landlord may request.
ARTICLE 6
CAPITAL ADDITIONS, ETC.
6.1 Construction of Capital Additions to the Leased
Property.
Tenant shall not construct or install Capital Additions on any of
the Collective Leased Properties without obtaining Landlord's prior
written consent, provided that no consent shall be required for any
Capital Addition so long as (a) the Capital Additions Costs for such
Capital Addition are less than $100,000, (b) such construction or
installation would not adversely affect or violate any Legal Requirement
or Insurance Requirement applicable to the applicable Leased Property
and (c) Landlord shall have received an Officer's Certificate certifying
as to the satisfaction of the conditions set out in clauses (a) and (b)
above. If Landlord's consent is required, prior to commencing construc-
tion of any Capital Addition, Tenant shall submit to Landlord, in
writing, a proposal setting forth, in reasonable detail, any proposed
Capital Addition and shall provide to Landlord such plans and
specifications, permits, licenses, contracts and other information
concerning the proposed Capital Addition as Landlord may request.
Landlord shall have thirty (30) days to review all materials submitted
to Landlord in connection with any such proposal. Failure of Landlord
to respond to Tenant's proposal within thirty-five (35) days after
receipt of all information and materials requested by Landlord in
connection with the proposed Capital Addition shall be deemed to
constitute approval of such proposed Capital Addition. Without limiting
the generality of the foregoing, such proposal shall indicate the
approximate projected cost of constructing such Capital Addition and the
use or uses to which it will be put. No Capital Addition shall be made
which would tie in or connect any Leased Improvement on the applicable
Leased Property with any other improvements on property adjacent to such
Leased Property (and not part of the Land) including, without
limitation, tie-ins of buildings or other structures or utilities.
Tenant shall not finance the cost of any construction of any Capital
Addition without the prior written consent of Landlord, which consent
may be withheld by Landlord in Landlord's sole discretion. Any Capital
Additions (including Tenant's Capital Additions) shall, upon the
expiration or sooner termination of this Agreement, pass to and become
the property of Landlord, free and clear of all encumbrances other than
Permitted Encumbrances but subject to Landlord's obligation to
compensate Tenant for Tenant's Capital Additions as provided below.
6.2 Capital Additions Financed or Paid For by Tenant.
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6.2.1 Financing of Capital Additions.
Provided that Tenant has obtained the prior written consent of
Landlord in each instance, Tenant may arrange for financing for
Capital Additions from a Lending Institution; provided, however,
that (i) the terms and conditions of any such financing shall be
subject to the prior approval of Landlord; and (ii) if Landlord
consents to the grant thereof, which consent may be given or
withheld in the sole discretion of Landlord, any security interests
in any property of Tenant, including, without limitation, the
applicable Leased Property, shall be expressly and fully
subordinated to this Agreement and to the interest of Landlord in
the applicable Leased Property and to the rights of any Facility
Mortgagee.
6.2.2 Purchase by Landlord.
If, pursuant to the provisions of this Agreement, Tenant
either pays for or arranges financing (to the extent permitted in
Section 6.2.1) to pay for the costs of construction or installation
of any Capital Addition ("Tenant's Capital Additions") (but
excluding, in any event, any Capital Addition financed by or
through Landlord) upon the expiration or earlier termination of
this Agreement (but if this Agreement is terminated by reason of an
Event of Default, only after Landlord is fully compensated for all
damages resulting therefrom), Landlord shall compensate Tenant for
all Tenant's Capital Additions in any of the following ways
determined in Landlord's sole discretion:
(a) By purchasing such Tenant's Capital Additions from Tenant
for cash in the amount of the then Fair Market Added Value of such
Tenant's Capital Additions; or
(b) By purchasing such Tenant's Capital Additions from Tenant
by delivering to Tenant Landlord's purchase money promissory note
in the amount of the Fair Market Added Value, which note shall be
on then commercially reasonable terms and secured by a mortgage or
deed of trust on the applicable Leased Property and such Tenant's
Capital Additions subject to all existing mortgages and
encumbrances on such Leased Property and such Tenant's Capital
Additions at the time of such purchase; or
(c) Upon termination of this Agreement by reason of an Event
of Default, by assigning to Tenant the right to receive an amount
equal to the Fair Market Added Value Percentage (determined as of
the date of such termination of this Agreement) of all rent and
other consideration receivable by Landlord under any re-letting or
other disposition of the applicable Leased Property and such
Tenant's Capital Additions, after deducting from such rent all
costs and expenses incurred by Landlord in connection with such
reletting or other disposition of the Collective Leased Properties
and such Tenant's Capital Additions and all costs and expenses of
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operating and maintaining the Collective Leased Properties and such
Tenant's Capital Additions during the term of any such new lease
which are not borne by the tenant thereunder, with the provisions
of this Section 6.2.2 to remain in effect until the sale or other
final disposition of the applicable Leased Property and such
Tenant's Capital Additions, at which time the Fair Market Added
Value of such Tenant's Capital Addition shall be immediately due
and payable, such obligation to be secured by a mortgage on the
applicable Leased Property and such Tenant's Capital Additions,
subject to all existing mortgages and encumbrances on the Leased
Property at the time of such purchase and assignment; or
(d) By making such other arrangement regarding such
compensation as shall be mutually acceptable to Landlord and
Tenant.
6.3 Capital Additions Financed by Landlord.
If Landlord shall, at the request of Tenant and in Landlord's sole
discretion, elect to finance any proposed Capital Addition, Tenant shall
provide Landlord with such information as Landlord may from time to time
request, including, without limitation, the following:
(a) Evidence that such Capital Addition will be, and, upon
completion, has been, completed in compliance with the applicable
requirements of State and federal law with respect to capital
expenditures for health care facilities;
(b) Copies of all building, zoning and land use permits and
approvals and upon completion of such Capital Addition, a copy of
the certificate of occupancy for such Capital Addition, if
required;
(c) Such information, certificates, licenses, permits or
other documents necessary to confirm that Tenant will be able to
use the Capital Addition upon completion thereof in accordance with
the Primary Intended Use, including all required federal, State or
local government licenses and approvals;
(d) An Officer's Certificate and a certificate from Tenant's
architect setting forth, in reasonable detail, the projected (or
actual, if available) Capital Additions Cost and invoices and lien
waivers from Tenant's contractors for such work;
(e) A deed conveying to Landlord title to any land acquired
for the purpose of constructing the Capital Addition free and clear
of any liens or encumbrances, except those approved by Landlord,
and, upon completion of the Capital Addition, a final as-built
survey thereof reasonably satisfactory to Landlord;
(f) Endorsements to any outstanding policy of title insurance
covering the applicable Leased Property or commitments therefor,
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satisfactory in form and substance to Landlord, (i) updating the
same without any additional exceptions except as approved by
Landlord, and (ii) increasing the coverage thereof by an amount
equal to the Fair Market Value of the Capital Addition (except to
the extent covered by the owner's policy of title insurance
referred to in subparagraph (g) below);
(g) If appropriate, (i) an owner's policy of title insurance
insuring fee simple title to any land conveyed to Landlord pursuant
to subparagraph (e) above, free and clear of all liens and
encumbrances, except those approved by Landlord, and (ii) a
lender's policy of title insurance, reasonably satisfactory in form
and substance to Landlord and any Facility Mortgagee;
(h) An appraisal of the applicable Leased Property by a
Qualified Appraiser, acceptable to Landlord, and/or an Officer's
Certificate stating that the value of the applicable Leased
Property upon completion of the Capital Addition exceeds the Fair
Market Value thereof prior to the commencement of such Capital
Addition by an amount not less than 80% of the Capital Additions
Cost; and
(i) Prints of architectural and engineering drawings relating
to such Capital Addition and such other certificates, documents,
opinions of counsel, appraisals, surveys, certified copies of duly
adopted resolutions of the board of directors of Tenant authorizing
the execution and delivery of any lease amendment or other
instruments required by Landlord, any Facility Mortgagee and any
Lending Institution advancing or reimbursing Landlord or Tenant for
any portion of the Capital Additions Cost.
If Landlord shall finance the proposed Capital Addition, (i)
Landlord may elect to obtain repayment of amounts so financed by an
increase in the Rent payable hereunder, and (ii) Tenant shall pay to
Landlord all reasonable costs and expenses paid or incurred by Landlord
and any Facility Mortgagee or Lending Institution which has committed to
finance such Capital Addition in connection therewith, including, but
not limited to, (a) the reasonable attorneys' fees and expenses, (b) all
printing expenses, (c) all filing, registration and recording taxes and
fees, (d) documentary stamp taxes, (e) title insurance charges,
appraisal fees, and rating agency fees, and (f) commitment fees.
6.4 Non-Capital Additions.
Tenant shall have the right, at Tenant's sole cost and expense, to
make additions, modifications or improvements to the Collective Leased
Properties which are not Capital Additions ("Non-Capital Additions")
from time to time as Tenant, in its discretion, may deem desirable for
the applicable Primary Intended Use provided that any such Non-Capital
Addition will not materially alter the character or purpose or
materially detract from the value, operating efficiency or
revenue-producing capability of the applicable Leased Property or
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adversely affect the ability of Tenant to comply with the provisions of
this Agreement, and, without limiting the foregoing, will not adversely
affect or violate any Legal Requirement or Insurance Requirement
applicable to the applicable Leased Property. All such Non-Capital
Additions shall, upon expiration or earlier termination of this
Agreement, pass to and become the property of Landlord, free and clear
of all liens and encumbrances, other than Permitted Encumbrances.
6.5 Salvage.
All materials which are scrapped or removed in connection with the
making of either Capital Additions or Non-Capital Additions or repairs
required by Article 5 shall be or become the property of the party that
paid for such work.
ARTICLE 7
LIENS
7.1 Liens.
Subject to Article 8, Tenant shall not, directly or indirectly,
create or allow to remain and shall promptly discharge, at its expense,
any lien, encumbrance, attachment, title retention agreement or claim
upon the Collective Leased Properties or Tenant's leasehold interest
therein or any attachment, levy, claim or encumbrance in respect of the
Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and
other encumbrances which are consented to in writing by Landlord, (c)
liens for those taxes of Landlord which Tenant is not required to pay
hereunder, (d) subleases permitted by Article 17, (e) liens for
Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (i) the same are not yet payable, or (ii) are
being contested in accordance with Article 8, (f) liens of mechanics,
laborers, materialmen, suppliers or vendors incurred in the ordinary
course of business that are not yet due and payable or are for sums that
are being contested in accordance with Article 8, and (g) any Facility
Mortgages or other liens which are the responsibility of Landlord
pursuant to the provisions of Article 22.
7.2 Landlord's Lien.
In addition to any statutory landlord's lien and in order to secure
payment of the Rent and all other sums payable hereunder by Tenant, and
to secure payment of any loss, cost or damage which Landlord may suffer
by reason of Tenant's breach of this Agreement, Tenant hereby grants
unto Landlord a security interest in and an express contractual lien
upon Tenant's Personal Property (except motor vehicles), and all ledger
sheets, files, records, documents and instruments (including, without
limitation, computer programs, tapes and related electronic data
processing) relating to the operation of the Facilities (the "Records")
and all proceeds therefrom, subject to any Permitted Encumbrances; and
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such Tenant's Personal Property shall not be removed from the Collective
Leased Properties at any time when a Default or an Event of Default has
occurred and is continuing.
Upon Landlord's request, Tenant shall execute and deliver to
Landlord financing statements in form sufficient to perfect the security
interest of Landlord in Tenant's Personal Property and the proceeds
thereof in accordance with the provisions of the applicable laws of the
State. Tenant hereby grants Landlord an irrevocable limited power of
attorney, coupled with an interest, to execute all such financing
statements in Tenant's name, place and stead. The security interest
herein granted is in addition to any statutory lien for the Rent.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the right to contest the amount or validity of
any Imposition, Legal Requirement, Insurance Requirement, lien,
attachment, levy, encumbrance, charge or claim (collectively, "Claims")
as to any of the Collective Leased Properties, by appropriate legal
proceedings, conducted in good faith and with due diligence, provided
that (a) the foregoing shall in no way be construed as relieving,
modifying or extending Tenant's obligation to pay any Claims as finally
determined, (b) such contest shall not cause Landlord or Tenant to be in
default under any mortgage or deed of trust encumbering such Leased
Property or any interest therein or result in or reasonably be expected
to result in a lien attaching to such Leased Property, (c) no part of
such Leased Property nor any Rent therefrom shall be in any immediate
danger of sale, forfeiture, attachment or loss, and (d) Tenant shall
indemnify and hold harmless Landlord from and against any cost, claim,
damage, penalty or reasonable expense, including reasonable attorneys'
fees, incurred by Landlord in connection therewith or as a result
thereof. Upon Landlord's request, Tenant shall either (i) provide a
bond or other assurance reasonably satisfactory to Landlord that all
Claims which may be assessed against any of the Collective Leased
Properties, together with all interest and penalties thereon will be
paid, or (ii) deposit within the time otherwise required for payment
with a bank or trust company, as trustee, as security for the payment of
such Claims, an amount sufficient to pay the same, together with
interest and penalties in connection therewith and all Claims which may
be assessed against or become a Claim on any of the Collective Leased
Properties, or any part thereof, in connection with any such contest.
Tenant shall furnish Landlord and any Facility Mortgagee with reasonable
evidence of such deposit within five (5) days after request therefor.
Landlord agrees to join in any such proceedings if required legally to
prosecute such contest, provided that Landlord shall not thereby be
subjected to any liability therefor (including, without limitation, for
the payment of any costs or expenses in connection therewith). Tenant
shall be entitled to any refund of any Claims and such charges and
penalties or interest thereon which have been paid by Tenant or paid by
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Landlord and for which Landlord has been fully reimbursed by Tenant. If
Tenant shall fail (x) to pay any Claims when finally determined, (y) to
provide security therefor as provided in this Article 8, or (z) to
prosecute any such contest diligently and in good faith, Landlord may,
upon reasonable notice to Tenant (which notice may be oral and shall not
be required if Landlord shall reasonably determine that the same is not
practicable), pay such charges, together with interest and penalties due
with respect thereto, and Tenant shall reimburse Landlord therefor, upon
demand, as Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1 General Insurance Requirements.
Tenant shall, at all times during the Term and at any other time
Tenant shall be in possession of any of the Collective Leased
Properties, keep each of the Collective Leased Properties and all
property located therein or thereon, including Tenant's Personal
Property, insured against the risks and in the amounts as follows and
shall maintain the following insurance:
(a) "All-risk" property insurance, including insurance
against loss or damage by fire, vandalism and malicious mischief,
explosion of steamboilers, pressure vessels or other similar
apparatus, now or hereafter installed in the Facility located at
such Leased Property, extended coverage perils, earthquake and all
physical loss perils insurance, including, but not limited to,
sprinkler leakage, in an amount equal to one hundred percent (100%)
of the then full Replacement Cost thereof (as defined in Section
9.2) with the usual extended coverage endorsements, including a
Replacement Cost Endorsement and Builder's Risk Coverage during the
continuance of any construction at such Leased Property;
(b) Business interruption and blanket earnings plus extra
expense under a rental value insurance policy covering risk of loss
during the lesser of the first twelve (12) months of reconstruction
or the actual reconstruction period necessitated by the occurrence
of any of the hazards described in subparagraphs (a) and (b) above,
in such amounts as may be customary for comparable properties in
the area and in an amount sufficient to prevent Landlord or Tenant
from becoming a co-insurer;
(c) Comprehensive general liability insurance, including
bodily injury and property damage (on an occurrence basis and on a
1988 1SO CGL form or its equivalent or otherwise in the broadest
form available, including, without limitation, broad form
contractual liability, fire legal liability independent
contractor's hazard and completed operations coverage) and, with
respect to the Collective Leased Properties, claims arising out of
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malpractice in an amount not less than Five Million Dollars
($5,000,000) per occurrence, Ten Million Dollars ($10,000,000) in
the aggregate and umbrella coverage of all such claims in an amount
not less than Twenty Million Dollars ($20,000,000);
(d) Flood (when the applicable Leased Property is located in
whole or in part within an area identified as an area having
special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968, as
amended, or the Flood Disaster Protection Act of 1973, as amended
(or any successor acts thereto)) and such other hazards and in such
amounts as may be customary for comparable properties in the area;
(e) Worker's compensation insurance coverage for all persons
employed by Tenant on the applicable Leased Property with statutory
limits and otherwise with limits of and provisions in accordance
with the requirements of applicable local, State and federal law,
and employer's liability insurance in such amounts as Landlord and
any Facility Mortgagee shall reasonably require; and
(f) Such additional insurance as may be reasonably required,
from time to time, by Landlord or any Facility Mortgagee.
9.2 Replacement Cost.
"Replacement Cost" as used herein, shall mean the actual
replacement cost of the property requiring replacement from time to
time, including an increased cost of construction endorsement, less
exclusions provided in the standard form of fire insurance policy. In
the event either party believes that the then full Replacement Cost has
increased or decreased at any time during the Term, such party, at its
own cost, shall have the right to have such full Replacement Cost
redetermined by an accredited appraiser approved by the other, which
approval shall not be unreasonably withheld or delayed. The party
desiring to have the full Replacement Cost so redetermined shall
forthwith, on receipt of such determination by such appraiser, give
written notice thereof to the other. The determination of such
appraiser shall be final and binding on the parties hereto, and Tenant
shall forthwith conform the amount of the insurance carried to the
amount so determined by the appraiser.
9.3 Waiver of Subrogation.
Landlord and Tenant agree that (insofar as and to the extent that
such agreement may be effective without invalidating or making it
impossible to secure insurance coverage from responsible insurance
companies doing business in the State) with respect to any property loss
which is covered by insurance then being carried by Landlord or Tenant,
respectively, the party carrying such insurance and suffering said loss
releases the other of and from any and all claims with respect to such
loss; and they further agree that their respective insurance companies
shall have no right of subrogation against the other on account thereof,
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even though extra premium may result therefrom. In the event that any
extra premium is payable by Tenant as a result of this provision,
Landlord shall not be liable for reimbursement to Tenant for such extra
premium.
9.4 Form Satisfactory, Etc.
All insurance policies and endorsements required pursuant to this
Article 9 shall be fully paid for, nonassessable and shall contain such
provisions and expiration dates and be in such form and amounts and
issued by insurance carriers authorized to do business in the State,
having a general policy holder's rating of A or A+ in Best's latest
rating guide, and as otherwise shall be approved by Landlord. Without
limiting the foregoing, such policies shall include no deductible and,
with the exception of the insurance described in Section 9.1(f), shall
name Landlord and any Facility Mortgagee as additional insureds, as
their interests may appear. All losses shall be payable to Landlord,
any Facility Mortgagee or Tenant as provided in Article 10. Any loss
adjustment shall require the prior written consent of Landlord, Tenant,
and each Facility Mortgagee. Tenant shall pay all insurance premiums
and deliver policies or certificates thereof to Landlord prior to their
effective date (and, with respect to any renewal policy, thirty (30)
days prior to the expiration of the existing policy) and, in the event
Tenant shall fail to effect such insurance as herein required, to pay
the premiums therefor or to deliver such policies or certificates to
Landlord or any Facility Mortgagee at the times required, Landlord shall
have the right, but not the obligation, to acquire such insurance and
pay the premiums therefor, which amounts shall be payable to Landlord,
upon demand, as Additional Charges, together with interest accrued
thereon at the Overdue Rate from the date such payment is made until the
date repaid. All such policies shall provide Landlord (and any Facility
Mortgagee, if required by the same) thirty (30) days' prior written
notice of any modification, expiration or cancellation of such policy.
9.5 Blanket Policy.
Notwithstanding anything to the contrary contained in this Article
9, Tenant's obligation to maintain the insurance herein required may be
brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Tenant, provided, that (a) the
coverage thereby afforded will not be reduced or diminished from that
which would exist under a separate policy meeting all other requirements
of this Agreement, and (b) the requirements of this Article 9 are
otherwise satisfied. Without limiting the foregoing, the amounts of
insurance that are required to be maintained pursuant to Section 9.1
shall be on a Facility by Facility basis, and shall not be subject to an
aggregate limit.
9.6 No Separate Insurance.
Tenant shall not take out separate insurance, concurrent in form or
contributing in the event of loss with that required by this Article 9,
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or increase the amount of any existing insurance by securing an
additional policy or additional policies, unless all parties having an
insurable interest in the subject matter of such insurance, including
Landlord and all Facility Mortgagees, are included therein as additional
insureds and the loss is payable under such insurance in the same manner
as losses are payable under this Agreement. In the event Tenant shall
take out any such separate insurance or increase any of the amounts of
the then existing insurance, Tenant shall give Landlord prompt Notice
thereof.
9.7 Indemnification of Landlord.
Notwithstanding the existence of any insurance provided for herein
and without regard to the policy limits of any such insurance, Tenant
shall protect, indemnify and hold harmless Landlord for, from and
against all liabilities, obligations, claims, damages, penalties, causes
of action, costs and reasonable expenses (including, without limitation,
reasonable attorneys' fees), to the maximum extent permitted by law,
imposed upon or incurred by or asserted against Landlord by reason of:
(a) any accident, injury to or death of persons or loss of or damage to
property occurring on or about the Collective Leased Properties or
adjoining sidewalks or rights of way, including, without limitation, any
claims of malpractice, (b) any past, present or future use, misuse,
non-use, condition, management, maintenance or repair by Tenant or
anyone claiming under Tenant of the Collective Leased Properties or
Tenant's Personal Property or any litigation, proceeding or claim by
governmental entities or other third parties to which Landlord is made a
party or participant relating to the Collective Leased Properties or
Tenant's Personal Property or such use, misuse, non-use, condition,
management, maintenance, or repair thereof including, failure to perform
obligations (other than Condemnation proceedings) to which Landlord is
made a party, (c) any Impositions (which are the obligations of Tenant
to pay pursuant to the applicable provisions of this Agreement), and (d)
any failure on the part of Tenant or anyone claiming under Tenant to
perform or comply with any of the terms of this Agreement. Tenant shall
pay all amounts payable under this Section 9.7 within ten (10) days
after demand therefor and, if not timely paid, such amounts shall bear
interest at the Overdue Rate from the date of determination to the date
of payment. Tenant, at its expense, shall contest, resist and defend
any such claim, action or proceeding asserted or instituted against
Landlord or may compromise or otherwise dispose of the same, with
Landlord's prior written consent (which consent may not be unreasonably
withheld or delayed). The obligations of Tenant under this Section 9.7
are in addition to the obligations set forth in Section 4.4 and shall
survive the termination of this Agreement.
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ARTICLE 10
CASUALTY
10.1 Insurance Proceeds.
All proceeds payable by reason of any loss or damage to the
Collective Leased Properties, or any portion thereof, and insured under
any policy of insurance required by Article 9 (including, without
limitation, proceeds of any business interruption insurance) shall be
paid directly to Landlord and retained by Landlord (subject to the
provisions of Section 10.2). If Tenant is required to reconstruct or
repair any of the Collective Leased Properties as provided herein, such
proceeds shall be paid out by Landlord from time to time for the
reasonable costs of reconstruction or repair of such Leased Property
necessitated by such damage or destruction, subject to the provisions of
Section 10.2.4. Provided no Default or Event of Default has occurred
and is continuing, any excess proceeds of insurance remaining after the
completion of the restoration shall be paid to Tenant. In the event
that the provisions of Section 10.2.1 are applicable, the insurance
proceeds shall be retained by the party entitled thereto pursuant to
Section 10.2.1. All salvage resulting from any risk covered by insur-
ance shall belong to Landlord, except any salvage related to Tenant's
Capital Additions and Tenant's Personal Property shall belong to Tenant.
10.2 Damage or Destruction.
10.2.1 Damage or Destruction of Leased Property.
If, during the Term, any of the Collective Leased Properties
shall be totally or partially destroyed and the Facility located
thereon is thereby rendered Unsuitable for Its Primary Intended
Use, Tenant shall, unless Landlord shall otherwise elect, purchase
such Leased Property from Landlord for a purchase price equal to
the greater of (i) the Adjusted Purchase Price of such Leased
Property and (ii) the Fair Market Value Purchase Price of such
Leased Property immediately prior to such damage or destruction.
In the event Tenant purchases such Leased Property as provided in
this Section 10.2.1, the insurance proceeds payable on account of
such damage shall be paid to Tenant. If Tenant purchases the
applicable Leased Property as provided herein, the closing with
respect thereto shall occur on a date designated by Landlord by
Notice to Tenant (but in no event prior to thirty (30) days after
such Notice), this Agreement shall terminate as to the applicable
Leased Property upon payment of the purchase price therefor, and
Landlord shall remit to Tenant all insurance proceeds pertaining to
the applicable Leased Property then held by Landlord. Upon
termination of this Agreement with respect to such Leased Property
as hereinabove provided, the Minimum Rent thereafter payable
hereunder shall be reduced by an amount reasonably determined by
Landlord to be that portion of the Minimum Rent allocable to such
Leased Property.
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10.2.2 Partial Damage or Destruction.
If, during the Term, any of the Collective Leased Properties
shall be totally or partially destroyed but the Facility located
thereon is not rendered Unsuitable for Its Primary Intended Use,
Tenant shall promptly restore such Facility as provided in Section
10.2.4.
10.2.3 Insufficient Insurance Proceeds.
If the cost of the repair or restoration of the applicable
Leased Property exceeds the amount of insurance proceeds received
by Landlord pursuant to Article 9, upon the demand of Landlord,
Tenant shall contribute any excess amounts needed to restore such
Leased Property. Such difference shall be paid by Tenant to
Landlord and held by Landlord, together with any other insurance
proceeds, for application to the cost of repair and restoration.
10.2.4 Disbursement of Proceeds.
In the event Tenant is required to restore the applicable
Leased Property pursuant to Section 10.2, Tenant shall, at its sole
cost and expense, commence promptly and continue diligently to
perform the repair and restoration of such Leased Property
(hereinafter called the "Work"), or shall cause the same to be
done, so as to restore such Leased Property in full compliance with
all Legal Requirements and so that such Leased Property shall be at
least equal in value and general utility to its general utility and
value immediately prior to such damage or destruction. Subject to
the terms hereof, Landlord shall advance the insurance proceeds
(other than proceeds of business interruption insurance which shall
be advanced as provided below) and the amounts paid to it pursuant
to Section 10.2.3 to Tenant regularly during the repair and
restoration period so as to permit payment for the cost of any such
restoration and repair. Any such advances shall be for not less
than $100,000 (or such lesser amount as equals the entire balance
of the repair and restoration) and Tenant shall submit to Landlord
a written requisition and substantiation therefor on AIA Forms G702
and G703 (or on such other form or forms as may be acceptable to
Landlord). Landlord may, at its option, condition advancement of
said insurance proceeds and other amounts on (i) the absence of any
Default or Event of Default, (ii) its approval of plans and
specifications of an architect satisfactory to Landlord, (iii)
general contractors' estimates, (iv) architect's certificates, (v)
unconditional lien waivers of general contractors, (vi) evidence of
approval by all governmental authorities and other regulatory
bodies whose approval is required and (vii) such other certificates
as Landlord may, from time to time, reasonably require. Except as
provided in the following sentence and provided no Default or Event
of Default has occurred and is continuing, on the first day of each
calendar month during which proceeds of business interruption
insurance are disbursed to Landlord under the policy of business
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interruption insurance maintained pursuant to Article 9, Landlord
shall disburse proceeds of business interruption insurance received
by it to Tenant upon Notice from Tenant accompanied by a
certification from Tenant that such moneys will be used for costs
or expenses of owning or operating the applicable Leased Property.
Proceeds of business interruption insurance shall be applied by
Landlord, on the first day of the calendar month following such
disbursement, first to the payment of all Minimum Rent, Additional
Rent and Additional Charges then due and payable and to become due
and payable for the period for which such proceeds have been paid
by the insurance provider, and the balance, if any, to Tenant as
provided in the preceding sentence. If, at any time, the amount of
such proceeds will be insufficient to pay all Minimum Rent,
Additional Rent and Additional Charges due or to come due during
such period, Landlord may, in its sole discretion, suspend
disbursement of any proceeds to Tenant.
Landlord's obligation to disburse insurance proceeds under
this Article 10 shall be subject to the release of such proceeds by
the applicable Facility Mortgagee to Landlord.
Tenant's obligation to restore the applicable Leased Property
pursuant to this Article 10 shall be subject to the release of
available insurance proceeds by the applicable Facility Mortgagee
to Landlord.
10.3 Damage Near End of Term.
Notwithstanding any provisions of Section 10.1 or 10.2 to the
contrary, if damage to or destruction of any of the Collective Leased
Properties occurs during the last twelve (12) months of the second
Extended Term and if such damage or destruction cannot reasonably be
expected to be fully repaired and restored prior to the date that is six
(6) months prior to the end of such Extended Term, the provisions of
Section 10.2.1 shall apply as if such Leased Property had been totally
or partially destroyed and the Facility located thereon rendered
Unsuitable for its Primary Intended Use.
10.4 Tenant's Property.
All insurance proceeds payable by reason of any loss of or damage
to any of Tenant's Personal Property or Tenant's Capital Additions shall
be paid to Tenant and, to the extent necessary to repair or replace
Tenant's Capital Additions or Tenant's Personal Property in accordance
with Section 10.5, Tenant shall hold such proceeds in trust to pay the
cost of repairing or replacing damaged Tenant's Personal Property or
Tenant's Capital Additions.
10.5 Restoration of Tenant's Property.
If Tenant is required to restore the applicable Leased Property as
hereinabove provided, Tenant shall either (a) restore all alterations
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and improvements made by Tenant, Tenant's Personal Property and all
Tenant's Capital Additions, or (b) replace such alterations and
improvements, Tenant's Personal Property, and/or Tenant's Capital
Additions with improvements or items of the same or better quality and
utility in the operation of such Leased Property.
10.6 No Abatement of Rent.
This Agreement shall remain in full force and effect and Tenant's
obligation to make all payments of Rent and to pay all other charges as
and when required under this Agreement shall, except as otherwise
provided in Section 10.2.1, remain unabated during the Term
notwithstanding any damage involving any of the Collective Leased
Properties (provided that Landlord shall credit against such payments
any amounts paid to Landlord as a consequence of such damage under any
business interruption insurance obtained by Tenant hereunder). The
provisions of this Article 10 shall be considered an express agreement
governing any cause of damage or destruction to the applicable Leased
Property and, to the maximum extent permitted by law, no local or State
statute, laws, rules, regulation or ordinance in effect during the Term
which provide for such a contingency shall have any application in such
case.
10.7 Termination of Option to Purchase.
Any termination of this Agreement with respect to one or more of
the Collective Leased Properties pursuant to this Article 10 shall cause
any options to purchase granted to Tenant under this Agreement with
respect thereto to be terminated and to be without further force or
effect.
10.8 Waiver.
Tenant hereby waives any statutory rights of termination which may
arise by reason of any damage or destruction of any of the Collective
Leased Properties.
ARTICLE 11
CONDEMNATION
11.1 Total Condemnation, Etc.
If either (i) the whole of any of the Collective Leased Properties
shall be taken by Condemnation or (ii) a Condemnation of less than the
whole of any of the Collective Leased Properties renders such Leased
Property Unsuitable for Its Primary Intended Use, this Agreement shall
terminate with respect to such Leased Property, Tenant and Landlord
shall seek the Award for their interests in such Leased Property as
provided in Section 11.5 and the Minimum Rent thereafter payable shall
be reduced by an amount reasonably determined by Landlord to be that
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portion of the Minimum Rent allocable to such Leased Property. If the
Award received by Landlord for Landlord's interest in such Leased
Property is less than the greater of (x) the Adjusted Purchase Price or
(y) the Fair Market Value Purchase Price of such Leased Property
immediately prior to such Condemnation, Tenant shall contribute and pay
to Landlord the amount of such shortfall.
11.2 Partial Condemnation.
In the event of a Condemnation of less than the whole of any of the
Collective Leased Properties such that such Leased Property is still
suitable for its Primary Intended Use, Tenant shall, at its sole cost
and expense, commence promptly and continue diligently to restore the
untaken portion of the Leased Improvements on such Leased Property so
that such Leased Improvements shall constitute a complete architectural
unit of the same general character and condition (as nearly as may be
possible under the circumstances) as the Leased Improvements existing
immediately prior to such Condemnation, in full compliance with all
Legal Requirements. Subject to the terms hereof, Landlord shall
contribute to the cost of restoration that part of the Award necessary
to complete such repair or restoration, together with severance and
other damages awarded for the taken Leased Improvements, to Tenant
regularly during the restoration period so as to permit payment for the
cost of such repair or restoration. Landlord may, at its option, condi-
tion advancement of such Award and other amounts on (i) the absence of
any Default or Event of Default, (ii) its approval of plans and
specifications of an architect satisfactory to Landlord (which approval
shall not be unreasonably withheld or delayed), (iii) general contrac-
tors' estimates, (iv) architect's certificates, (v) unconditional lien
waivers of general contractors, (vi) evidence of approval by all
governmental authorities and other regulatory bodies whose approval is
required and (vii) such other certificates as Landlord may, from time to
time, reasonably require. Landlord's obligation under this Section 11.2
to disburse the Award and such other amounts shall be subject to (x) the
collection thereof by Landlord and (y) the satisfaction of any
applicable requirements of any Facility Mortgage, and the release of
such Award by the applicable Facility Mortgagee. Tenant's obligation to
restore the applicable Leased Property shall be subject to the release
of the Award by the applicable Facility Mortgagee to Landlord. If the
cost of the restoration of the applicable Leased Property exceeds that
part of the Award necessary to complete such restoration, together with
severance and other damages awarded for the taken Leased Improvements,
Tenant shall contribute upon the demand of Landlord any excess amounts
needed to restore such Leased Property. Such difference shall be paid
by Tenant to Landlord and held by Landlord, together with such part of
the Award and such severance and other damages, for application to the
cost of restoration.
11.3 Abatement of Rent.
Other than as specifically provided in this Agreement, this
Agreement shall remain in full force and effect and Tenant's obligation
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to make all payments of Rent and to pay all other charges as and when
required under this Agreement shall remain unabated during the Term
notwithstanding any Condemnation involving the Collective Leased
Properties. The provisions of this Article 11 shall be considered an
express agreement governing any Condemnation involving any or all of the
Collective Leased Properties and, to the maximum extent permitted by
law, no local or State statute, law, rule, regulation or ordinance in
effect during the Term which provides for such a contingency shall have
any application in such case.
11.4 Temporary Condemnation.
In the event of any temporary Condemnation of all or any part of
the Collective Leased Properties or Tenant's interest therein, this
Agreement shall continue in full force and effect, and Tenant shall
continue to pay, in the manner and on the terms herein specified, the
full amount of the Rent. Tenant shall continue to perform and observe
all of the other terms and conditions this Agreement on the part of the
Tenant to be performed and observed. Provided no Default or Event of
Default has occurred and is continuing, the entire amount of any Award
made for such temporary Condemnation allocable to the Term, whether paid
by way of damages, rent or otherwise, shall be paid to Tenant. Tenant
shall, promptly upon the termination of any such period of temporary
Condemnation, at its sole cost and expense, restore such Leased Property
to the condition that existed immediately prior to such Condemnation, in
full compliance with all Legal Requirements, unless such period of
temporary Condemnation shall extend beyond the expiration of the Term,
in which event Tenant shall not be required to make such restoration.
For purposes of this Section 11.4, a Condemnation shall be deemed to be
temporary if the period of such Condemnation is not expected to, and
does not, exceed twenty-four (24) months.
11.5 Allocation of Award.
Except as provided in the second sentence of this Section 11.5, the
total Award shall be solely the property of and payable to Landlord.
Any portion of the Award made for the taking of Tenant's leasehold
interest in the applicable Leased Property, Tenant's Capital Additions,
loss of business during the remainder of the Term, the taking of
Tenant's Personal Property, or Tenant's removal and relocation expenses
shall be the sole property of and payable to Tenant (subject to the
provisions of Section 11.2). In any Condemnation proceedings, Landlord
and Tenant shall each seek its own Award in conformity herewith, at its
own expense.
11.6 Termination of Rights of Option to Purchase.
Any termination of this Agreement with respect to any of the
Collective Leased Properties pursuant to this Article 11 shall cause any
options to purchase granted to Tenant with respect thereto to be
terminated and to be without further force or effect.
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ARTICLE 12
DEFAULTS AND REMEDIES
12.1 Events of Default.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(a) should Tenant shall fail to make any payment of the Rent
or any other sum (including, but not limited to, payment of the
purchase price for any of the Collective Leased Properties which
Tenant shall be obligated or elects to purchase pursuant to the
terms of this Agreement) payable hereunder when due and such
failure shall continue for a period of ten (10) days after the date
due; or
(b) should Tenant shall fail to maintain the insurance
coverages required under Article 9; or
(c) should Tenant default in the due observance or
performance of any of the terms, covenants or agreements contained
herein to be performed or observed by it (other than as specified
in clauses (a) and (b) above) or should any Guarantor default in
the due observance or performance of any of the terms, covenants or
agreements contained in any Guaranty or other Incidental Document,
and, in either case, such default shall continue for a period of
fifteen (15) days after Notice thereof from Landlord to Tenant
(provided that no such notice shall be required if Landlord shall
reasonably determine immediate action is necessary to protect
person or property); provided, however, that if such default is
susceptible of cure but such cure cannot be accomplished with due
diligence within such period of time and if, in addition, Tenant or
such Guarantor commences to cure such default within fifteen (15)
days after Notice thereof from Landlord and thereafter prosecutes
the curing of such default with all due diligence, such period of
time shall be extended to such period of time (not to exceed an
additional thirty (30) days in the aggregate) as may be necessary
to cure such default with all due diligence; or
(d) should any obligation of Tenant or any Guarantor, or of
any Affiliated Person as to either of them, in respect of any
Indebtedness for money borrowed or for the deferred purchase price
of any material property or services, or any guaranty relating
thereto, be declared to be or become due and payable prior to the
stated maturity thereof, or should there occur and be continuing
with respect to any such Indebtedness or deferred purchase price
any default under any instrument or agreement evidencing or
securing the same, the effect of which is to permit the holder or
holders of such instrument or agreement or a trustee, agent or
other representative on behalf of such holder or holders, to cause
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such any such obligations to become due prior to its stated
maturity; or
(e) should a default or event of default occur and be
continuing beyond the expiration of any applicable cure period
under any Guaranty or any of the Incidental Documents; or
(f) should there occur a final unappealable determination by
applicable State authorities of the revocation or limitation of any
license, permit, certification or approval required for the lawful
operation of any of the Facilities in accordance with its Primary
Intended Use or the loss or limitation of any license, permit,
certification or approval under any other circumstances under which
Tenant is required to cease its operation of such Facility in
accordance with its Primary Intended Use at the time of such loss
or limitation; or
(g) should any representation or warranty made by or on
behalf of Tenant or any other Person under or in connection with
this Agreement, any Guaranty, any Incidental Document or in any
document, certificate or agreement delivered in connection herewith
or therewith prove to have been false or misleading in any material
respect on the date when made or deemed made; or
(h) should Tenant, any Guarantor or any Affiliated Person as
to either of them generally not be paying its debts as they become
due, or should Tenant, any Guarantor or any Affiliated Person as to
either of them, make a general assignment for the benefit of
creditors; or
(i) should any petition be filed by or against Tenant, any
Guarantor or any Affiliated Person as to either of them under the
Federal bankruptcy laws, or should any other proceeding be
instituted by or against Tenant, such Guarantor or Affiliated
Person seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for Tenant, such Guarantor or
Affiliated Person, or for any substantial part of the property of
Tenant, such Guarantor or Affiliated Person, and such proceeding is
not dismissed within ninety (90) days after institution thereof, or
should Tenant, such Guarantor or Affiliated Person take any action
to authorize or effect any of the actions set forth above in this
paragraph; or
(j) should Tenant, any Guarantor or any Affiliated Person as
to either of them cause or institute any proceeding for its
dissolution or termination; or
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(k) should Tenant voluntarily cease operation of any of the
Collective Leased Properties for its Primary Intended Use for a
period in excess of thirty (30) consecutive days, except as a
result of damage, destruction or partial or complete Condemnation;
or
(l) should a default shall occur under any mortgage which is
secured by Tenant's leasehold interest hereunder or the mortgagee
under any such mortgage accelerates the indebtedness secured
thereby or commence a foreclosure action in connection with said
mortgage; or
(m) should the estate or interest of Tenant in any of the
Collective Leased Properties or any part thereof be levied upon or
attached in any proceeding and the same shall not be vacated or
discharged within the later of (x) one hundred and twenty (120)
days after commencement thereof, unless the amount in dispute is
less than $10,000, in which case Tenant shall give notice to
Landlord of the dispute but Tenant may defend in any suitable way,
and (y) thirty (30) days after receipt by Tenant of Notice thereof
from Landlord (unless Tenant shall be contesting such lien or
attachment in good faith in accordance with Article 8); or
(n) should any Provider Agreement material to the operation
or financial condition of Tenant or any Facility be terminated
prior to the stated expiration of the term thereof or, without the
prior written consent of Landlord in each instance (which consent
may be withheld in Landlord's sole and absolute discretion), not be
renewed or extended or replaced upon the expiration of the stated
term thereof and such termination may have a material adverse
effect upon the operations, business prospects, property, or assets
of, liabilities, or the condition of, revenues generated by, the
applicable Facility or Tenant; or
(o) should a final unappealable determination shall be made
by any Government Agencies that Tenant has failed to comply with
applicable Medicare and/or Medicaid regulations in the operation of
any Facility, as a result of which failure Tenant is declared
ineligible to receive reimbursements under the Medicare and/or
Medicaid programs with respect to one or more of the Facilities; or
(p) should there occur any Change in Control of Tenant or any
Guarantor;
then, and in any such event, Landlord, in addition to all other remedies
available to it, may terminate this Agreement with respect to any or all
of the Collective Leased Properties by giving Notice thereof to Tenant
and upon the expiration of the time, if any, fixed in such Notice, this
Agreement shall terminate and all rights of Tenant under this Agreement
shall cease with respect to such of the Collective Leased Properties as
shall have been identified in such Notice. Landlord shall have and may
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exercise all rights and remedies available at law and in equity to
Landlord as a result of Tenant's breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in
addition to any other remedies provided herein, enter upon the
Collective Leased Properties or any portion thereof and take possession
of any and all of Tenant's Personal Property and the Records (subject to
any prohibitions or limitations to disclosure of any such data as
described in Section 3.1.2(e)) on any such Leased Property, without
liability for trespass or conversion (Tenant hereby waiving any right to
notice or hearing prior to such taking of possession by Landlord) and
sell the same at public or private sale, after giving Tenant reasonable
Notice of the time and place of any public or private sale, at which
sale Landlord or its assigns may purchase all or any portion of Tenant's
Personal Property unless otherwise prohibited by law. Unless otherwise
provided by law and without intending to exclude any other manner of
giving Tenant reasonable notice, the requirement of reasonable Notice
shall be met if such Notice is given at least five (5) days before the
date of sale. The proceeds from any such disposition, less all expenses
incurred in connection with the taking of possession, holding and
selling of such property (including, reasonable attorneys' fees) shall
be applied as a credit against the indebtedness which is secured by the
security interest granted in Section 7.2. Any surplus shall be paid to
Tenant or as otherwise required by law and Tenant shall pay any
deficiency to Landlord, as Additional Charges, upon demand.
12.2 Remedies.
None of (a) the termination of this Agreement with respect to any
or all of the Collective Leased Properties pursuant to Section 12.1, (b)
the repossession of any or all of the Collective Leased Properties or
any portion thereof, (c) the failure of Landlord to re-let any or all of
the Collective Leased Properties or any portion thereof, nor (d) the
reletting of all or any of portion of the Collective Leased Properties,
shall relieve Tenant of its liability and obligations hereunder, all of
which shall survive any such termination, repossession or re-letting.
In the event of any such termination, Tenant shall forthwith pay to
Landlord all Rent due and payable with respect to the any of the
Collective Leased Properties as to which this Agreement is so terminated
through and including the date of such termination and, if this
Agreement shall be terminated with respect to less than all of the
Collective Leased Properties, the allocation of the Rent with respect to
the Collective Leased Properties as to which this Agreement shall have
been terminated shall be made in such manner as Landlord, in Landlord's
sole and absolute discretion, shall determine. Thereafter, Tenant,
until the end of what would have been the Term of this Agreement in the
absence of such termination, and whether or not any of the Collective
Leased Properties as to which this Agreement is so terminated or any
portion thereof shall have been re-let, shall be liable to Landlord for,
and shall pay to Landlord, as current damages, the Rent and other
charges which would be payable hereunder for the remainder of the Term
had such termination not occurred, less the net proceeds, if any, of any
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re-letting of the applicable Leased Property, after deducting all
expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising, expenses of employees,
alteration costs and expenses of preparation for such reletting, and, if
this Agreement shall be terminated with respect to less than all of the
Collective Leased Properties, the allocation of the Rent with respect to
the Collective Leased Properties as to which this Agreement shall have
been terminated shall be made in such manner as Landlord, in Landlord's
sole and absolute discretion, shall determine. Tenant shall pay such
current damages to Landlord monthly on the days on which the Minimum
Rent would have been payable hereunder if this Agreement had not been so
terminated with respect to such of the Collective Leased Properties.
At any time after such termination, whether or not Landlord shall
have collected any such current damages, as liquidated final damages
beyond the date of such termination, at Landlord's election, Tenant
shall pay to Landlord either (a) an amount equal to the excess, if any,
of the Rent and other charges which would be payable hereunder from the
date of such termination (assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Impositions would be
the same as payments required for the immediately preceding twelve
calendar months, or if less than twelve calendar months have expired
since the Commencement Date, the payments required for such lesser
period projected to an annual amount) for what would be the then
unexpired term of this Agreement if the same remained in effect, over
the Fair Market Rental for the same period, or (b) an amount equal to
the lesser of (i) the Rent and other charges that would have been
payable for the balance of the Term had it not been terminated, and (ii)
the aggregate of the Rent and other charges accrued in the twelve (12)
months ended next prior to such termination (without reduction for any
free rent or other concession or abatement); provided, however, that if
this Agreement shall have been terminated with respect to less than all
of the Collective Leased Properties, the allocation of the Rent with
respect to the Collective Leased Properties as to which this Agreement
shall have been terminated shall be made in such manner as Landlord, in
Landlord's sole and absolute discretion, shall determine. In the event
this Agreement is so terminated prior to the expiration of the first
full year of the Term, the liquidated damages which Landlord may elect
to recover pursuant to clause (b) (ii) of this paragraph shall be
calculated as if such termination had occurred on the first anniversary
of the Commencement Date. Nothing contained in this Agreement shall,
however, limit or prejudice the right of Landlord to prove and obtain in
proceedings for bankruptcy or insolvency an amount equal to the maximum
allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved,
whether or not the amount be greater than, equal to, or less than the
amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and
dispossession by summary proceedings or otherwise, Landlord may (a)
relet any of the Collective Leased Properties as to which this Agreement
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is so terminated or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms which may at Landlord's
option, be equal to, less than or exceed the period which would
otherwise have constituted the balance of the Term and may grant
concessions or free rent to the extent that Landlord considers advisable
and necessary to relet the same, and (b) may make such reasonable
alterations, repairs and decorations in any applicable Leased Property
or any portion thereof as Landlord, in its sole and absolute discretion,
considers advisable and necessary for the purpose of reletting any such
Leased Property; and the making of such alterations, repairs and
decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be liable
in any way whatsoever for any failure to relet all or any portion of the
Collective Leased Properties, or, in the event that any of the
Collective Leased Properties is relet, for failure to collect the rent
under such reletting. To the maximum extent permitted by law, Tenant
hereby expressly waives any and all rights of redemption granted under
any present or future laws in the event of Tenant being evicted or
dispossessed, or in the event of Landlord obtaining possession of any of
the Collective Leased Properties, by reason of the violation by Tenant
of any of the covenants and conditions of this Agreement.
12.3 Tenant's Waiver.
IF THIS AGREEMENT IS TERMINATED WITH RESPECT TO ANY OF THE
COLLECTIVE LEASED PROPERTIES PURSUANT TO SECTION 12.1 OR 12.2, TENANT
WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN
THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE
EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.
12.4 Application of Funds.
Any payments received by Landlord under any of the provisions of
this Agreement during the existence or continuance of any Default or
Event of Default (and any payment made to Landlord rather than Tenant
due to the existence of any Default or Event of Default) shall be
applied to Tenant's obligations under this Agreement in such order as
Landlord may determine or as may be prescribed by the laws of the State.
12.5 Landlord's Right to Cure Tenant's Default.
If an Event of Default shall have occurred and be continuing,
Landlord, after Notice to Tenant (which Notice shall not be required if
Landlord shall reasonably determine immediate action is necessary to
protect person or property), without waiving or releasing any obligation
of Tenant and without waiving or releasing any Event of Default, may
(but shall not be obligated to), at any time thereafter, make such
payment or perform such act for the account and at the expense of
Tenant, and may, to the maximum extent permitted by law, enter upon any
of the Collective Leased Properties or any portion thereof for such
purpose and take all such action thereon as, in Landlord's sole and
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absolute discretion, may be necessary or appropriate therefor, including
the management of the Facility located thereon by Landlord or its
designee, and Tenant hereby irrevocably appoints, in the event of such
election by Landlord, Landlord or its designee as manager of any such
Facility and its attorney in fact for such purpose, irrevocably and
coupled with an interest, in the name, place and stead of Tenant. No
such entry shall be deemed an eviction of Tenant. All reasonable costs
and expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord in connection therewith, together with interest
thereon (to the extent permitted by law) at the Overdue Rate from the
date such sums are paid by Landlord until repaid, shall be paid by
Tenant to Landlord, on demand.
12.6 Trade Names.
If this Agreement is terminated with respect to any of the
Collective Leased Properties for any reason, Tenant shall not use a
Facility Trade Name in the same market in which the Facility located
thereon is located in connection with any business that competes with
such Facility.
ARTICLE 13
HOLDING OVER
Any holding over by Tenant after the expiration or sooner
termination of this Agreement shall be treated as a daily tenancy at
sufferance at a rate equal to two (2) times the Minimum Rent and the
Additional Rent then in effect plus Additional Charges and other charges
herein provided (prorated on a daily basis). Tenant shall also pay to
Landlord all damages (direct or indirect) sustained by reason of any
such holding over. Otherwise, such holding over shall be on the terms
and conditions set forth in this Agreement, to the extent applicable.
Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration
or earlier termination of this Agreement.
ARTICLE 14
LANDLORD'S DEFAULT
If Landlord shall default in the performance or observance of any
of its covenants or obligations set forth in this Agreement and such
default shall continue for a period of thirty (30) days after Notice
thereof from Tenant to Landlord and any applicable Facility Mortgagee,
or such additional period as may be reasonably required to correct the
same, Tenant may declare the occurrence of a "Landlord Default" by a
second Notice to Landlord and to such Facility Mortgagee. Thereafter,
Tenant may forthwith cure the same and, subject to the provisions of the
following paragraph, invoice Landlord for costs and expenses (including
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reasonable attorneys' fees and court costs) incurred by Tenant in curing
the same, together with interest thereon from the date Landlord receives
Tenant's invoice, at the Overdue Rate. Tenant shall have no right to
terminate this Agreement for any default by Landlord hereunder and no
right, for any such default, to offset or counterclaim against any Rent
or other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any
Landlord Default and Landlord, before the expiration of the applicable
cure period, shall give Notice thereof to Tenant, setting forth, in
reasonable detail, the basis therefor, no Landlord Default shall be
deemed to have occurred and Landlord shall have no obligation with
respect thereto until final adverse determination thereof. If Tenant
and Landlord shall fail, in good faith, to resolve any such dispute
within ten (10) days after Landlord's Notice of dispute, either may
submit the matter for resolution to a court of competent jurisdiction.
ARTICLE 15
PURCHASE OF LEASED PROPERTY
In the event Tenant shall purchase any of the Collective Leased
Properties from Landlord pursuant to the terms of this Agreement,
Landlord shall, upon receipt from Tenant of the applicable purchase
price, together with full payment of any unpaid Rent and other charges
due and payable with respect to any period ending on or before the date
of the purchase, and so long as no Default or Event of Default shall
have occurred and be continuing at such time, deliver to Tenant an
appropriate deed or other instruments, conveying the entire interest of
Landlord in and to such Leased Property to Tenant, free and clear of all
encumbrances created through the act or omission of Landlord other than
(i) Permitted Encumbrances and such other liens, if any, which Tenant
has agreed in writing to accept and take title subject to, and (ii)
encumbrances imposed on such Leased Property under Section 5.5. The
difference between the applicable purchase price and the total cost of
discharging the encumbrances described in clause (i) preceding shall be
paid to Landlord or as Landlord may direct, by wire transfer of im-
mediately available federal funds. Such Leased Property shall be
conveyed to Tenant on an "as is" basis and in its "as-is" physical
condition. The closing of any such sale shall be subject to all terms
and conditions with respect thereto set forth in this Agreement and
shall, unless waived by Tenant, be contingent upon and subject to
Tenant's obtaining all required governmental consents and approvals for
such transfer. All expenses of such conveyance, including, without
limitation, all transfer and sales taxes, documentary fees, the fees and
expenses of counsel to Landlord and the cost of any title examination or
title insurance, shall be paid by Tenant.
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ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1 Subletting and Assignment.
Except as provided in Section 16.3 below, Tenant shall not, without
the prior written consent of a majority of the Independent Trustees and
a majority of the Trustees (which consent may be given or withheld in
their sole and absolute discretion), assign, mortgage, pledge,
hypothecate, encumber or otherwise transfer this Agreement or sublease
(which term shall be deemed to include the granting of concessions,
licenses and the like), all or any part of the Collective Leased
Properties or suffer or permit this Agreement or the leasehold estate
created hereby or any other rights arising under this Agreement to be
assigned, transferred, mortgaged, pledged, hypothecated or encumbered,
in whole or in part, whether voluntarily, involuntarily or by operation
of law, or permit the use or occupancy of any of the Collective Leased
Properties by anyone other than Tenant, or any of the Collective Leased
Properties to be offered or advertised for assignment or subletting.
For purposes of this Section 16.1, an assignment of this Agreement shall
be deemed to include any Change in Control of Tenant or any transaction
pursuant to which Tenant is merged or consolidated with another entity
or pursuant to which all or substantially all of Tenant's assets are
transferred to any other entity, as if such Change in Control or
transaction were an assignment of this Agreement.
If this Agreement is assigned or if any of the Collective Leased
Properties or any part thereof are sublet (or occupied by anybody other
than Tenant and its employees) Landlord may collect the rents from such
assignee, subtenant or occupant, as the case may be, and apply the net
amount collected to the Rent herein reserved, but no such collection
shall be deemed a waiver of the provisions set forth in the first
paragraph of this Section 16.1, the acceptance by Landlord of such
assignee, subtenant or occupant, as the case may be, as a tenant, or a
release of Tenant from the future performance by Tenant of its
covenants, agreements or obligations contained in this Agreement.
No subletting or assignment shall in any way impair the continuing
primary liability of Tenant hereunder, and no consent to any subletting
or assignment in a particular instance shall be deemed to be a waiver of
the prohibition set forth in this Section 16.1. No assignment,
subletting or occupancy shall affect any Primary Intended Use. Any
subletting, assignment or other transfer of Tenant's interest under this
Agreement in contravention of this Section 16.1 shall be voidable at
Landlord's option.
16.2 Required Sublease Provisions.
Any sublease of all or any portion of any of the Collective Leased
Properties shall provide (a) that it is subject and subordinate to this
Agreement and to the matters to which this Agreement is or shall be
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subject or subordinate; (b) that in the event of termination of this
Agreement or reentry or dispossession of Tenant by Landlord under this
Agreement, Landlord may, at its option, terminate such sublease or take
over all of the right, title and interest of Tenant, as sublessor under
such sublease, and such subtenant shall, at Landlord's option, attorn to
Landlord pursuant to the then executory provisions of such sublease,
except that neither Landlord nor any Facility Mortgagee, as holder of a
mortgage or as Landlord under this Agreement, if such mortgagee succeeds
to that position, shall (i) be liable for any act or omission of Tenant
under such sublease, (ii) be subject to any credit, counterclaim, offset
or defense which theretofore accrued to such subtenant against Tenant,
(iii) be bound by any previous modification of such sublease not
consented to in writing by Landlord or by any previous prepayment of
more than one (1) month's Rent, (iv) be bound by any covenant of Tenant
to undertake or complete any construction of such Leased Property or any
portion thereof, (v) be required to account for any security deposit of
the subtenant other than any security deposit actually delivered to
Landlord by Tenant, (vi) be bound by any obligation to make any payment
to such subtenant or grant any credits, except for services, repairs,
maintenance and restoration provided for under the sublease that are
performed after the date of such attornment, (vii) be responsible for
any monies owing by Tenant to the credit of such subtenant, or (viii) be
required to remove any Person occupying any portion of the Collective
Leased Properties; and (c), in the event that such subtenant receives a
written Notice from Landlord or any Facility Mortgagee stating that an
Event of Default has occurred and is continuing, such subtenant shall
thereafter be obligated to pay all rentals accruing under such sublease
directly to the party giving such Notice or as such party may direct.
All rentals received from such subtenant by Landlord or the Facility
Mortgagee, as the case may be, shall be credited against the amounts
owing by Tenant under this Agreement and such sublease shall provide
that the subtenant thereunder shall, at the request of Landlord, execute
a suitable instrument in confirmation of such agreement to attorn. An
original counterpart of each such sublease and assignment and
assumption, duly executed by Tenant and such subtenant or assignee, as
the case may be, in form and substance reasonably satisfactory to
Landlord, shall be delivered promptly to Landlord and (a) in the case of
an assignment, the assignee shall assume in writing and agree to keep
and perform all of the terms of this Agreement on the part of Tenant to
be kept and performed and shall be, and become, jointly and severally
liable with Tenant for the performance thereof and (b) in case of either
an assignment or subletting, Tenant shall remain primarily liable, as
principal rather than as surety, for the prompt payment of the Rent and
for the performance and observance of all of the covenants and condi-
tions to be performed by Tenant hereunder.
The provisions of this Section 16.2 shall not be deemed a waiver of
the provisions set forth in the first paragraph of Section 16.1.
16.3 Permitted Sublease.
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Notwithstanding the foregoing, but subject to the provisions of
Section 16.4 and any other express conditions or limitations set forth
herein, Tenant may, in each instance after Notice to Landlord, sublease
space at any of the Collective Leased Properties for laundry, commissary
or child care purposes or similar concessions in furtherance of the
applicable Primary Intended Use, so long as such sublease will not
reduce the number of licensed beds at the applicable Facility, will not
violate or affect any Legal Requirement or Insurance Requirement, and
Tenant shall provide such additional insurance coverage applicable to
the activities to be conducted in such subleased space as Landlord and
any Facility Mortgagee may require.
16.4 Sublease Limitation.
Anything contained in this Agreement to the contrary
notwithstanding, Tenant shall not sublet any of the Collective Leased
Properties on any basis such that the rental to be paid by any sublessee
thereunder would be based, in whole or in part, on either (a) the income
or profits derived by the business activities of such sublessee, or (b)
any other formula such that any portion of such sublease rental would
fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or any similar or successor provision
thereto.
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1 Estoppel Certificates
At any time and from time to time, upon not less than ten (10) days
prior Notice by Landlord, Tenant shall furnish to Landlord an Officer's
Certificate certifying that this Agreement is unmodified and in full
force and effect (or that this Agreement is in full force and effect as
modified and setting forth the modifications), the date to which the
Rent has been paid, that no Default or an Event of Default has occurred
and is continuing or, if a Default or an Event of Default shall exist,
specifying in reasonable detail the nature thereof, and the steps being
taken to remedy the same, and such additional information as Landlord
may reasonably request. Any such certificate furnished pursuant to this
Section 17.1 may be relied upon by Landlord, any Facility Mortgagee and
any prospective purchaser or mortgagee of any of the Collective Leased
Properties.
17.2 Financial Statements.
Tenant shall furnish the following statements to Landlord:
(a) within forty-five (45) days after each of the first three
quarters of any Fiscal Year, the most recent Financials and the
most recent unaudited financial statements of Tenant and Guarantor
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prepared, in the case of Tenant on a Facility by Facility basis,
and in each case accompanied by the Financial Officer's
Certificate;
(b) within one hundred twenty (120) days after the end of
each Fiscal Year, the most recent Financials for such Fiscal Year,
including the most recent financial statements of Tenant and
Guarantor, prepared, in the case of Tenant, on a Facility by
Facility basis, and in each case certified by an independent
certified public accountant reasonably satisfactory to Landlord and
accompanied by a Financial Officer's Certificate;
(c) within thirty (30) days after the end of each calendar
month, an unaudited statement of income prepared on a Facility by
Facility basis, including occupancy percentages and payor mix,
accompanied by a Financial Officer's Certificate;
[(d) promptly after the sending or filing thereof, copies of
all reports which Tenant and/or any Guarantor sends to its security
holders generally, and copies of all periodic reports which Tenant
and/or any Guarantor files with the SEC or any stock exchange on
which its shares are listed or traded;]
(e) promptly after the delivery thereof to Tenant or any
Guarantor, or either of their management, a copy of any management
letter or written report prepared by the certified public
accountants with respect to the financial condition, operations,
business or prospects of Tenant or such Guarantor, as the case may
be;
(f) at any time and from time to time upon not less than
twenty (20) days Notice from Landlord, any Financials or any other
financial reporting information required to be filed by Landlord
with any securities and exchange commission, the SEC or any
successor agency, or any other governmental authority, or required
pursuant to any order issued by any court, governmental authority
or arbitrator in any litigation to which Landlord is a party, for
purposes of compliance therewith;
(g) Within forty-five (45) days after each quarter of each
Fiscal Year, an occupancy and rate report with respect to each of
the Facilities, together with an Officer's Certificate certifying
to the accuracy of such occupancy and rate reports; and
(h) promptly, upon Notice from Landlord, such other
information concerning the business, financial condition and
affairs of Tenant and any Guarantor as Landlord may request from
time to time.
Landlord may at any time, and from time to time, provide any Facility
Mortgagee with copies of any of the foregoing statements.
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17.3 General Operations.
Tenant covenants and agrees to furnish to Landlord:
17.3.1 Reimbursement, Licensure, Etc.
Within thirty (30) days after receipt or modification thereof,
copies of
(a) all licenses authorizing Tenant to operate each Facility
for its Primary Intended Use;
(b) all Medicare and Medicaid certifications, together with
provider agreements and all material correspondence relating
thereto with respect to each Facility (excluding, however,
correspondence which may be subject to any attorney-client
privilege);
(c) a Nursing Home Administrator License for the individual
employed in such capacity with respect to each Facility;
(d) all reports of surveys, statements of deficiencies, plans
of correction, and all material correspondence relating thereto,
including, without limitation, all reports and material
correspondence concerning compliance with or enforcement of
licensure, Medicare/Medicaid, and accreditation requirements,
including physical environment and Life Safety Code survey reports
(excluding, however, correspondence which may be subject to any
attorney-client privilege); and
(e) with reasonable promptness, such other confirmation as to
the licensure and Medicare and Medicaid participation of Tenant as
Landlord may reasonably request from time to time.
17.3.2 Annual Budgets.
Not less than thirty (30) days prior to commencement of any
Fiscal Year, proposed annual income and ordinary expense and
capital improvement budgets setting forth projected income and
costs and expenses projected to be incurred by Tenant in managing,
owning, maintaining and operating the Facilities during the next
succeeding Fiscal Year.
ARTICLE 18
LANDLORD'S RIGHT TO INSPECT
Tenant shall permit Landlord and its authorized representatives to
inspect the Collective Leased Properties during usual business hours
upon not less than twenty-four (24) hours' notice (provided that no such
notice shall be required if Landlord shall reasonably determine
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immediate action is necessary to protect person or property), and to
make such repairs as Landlord is permitted or required to make pursuant
to the terms of this Agreement, provided that any inspection or repair
by Landlord or its representatives will not unreasonably interfere with
Tenant's use and operation of the applicable Leased Property and further
provided that in the event of an emergency, as determined by Landlord in
its sole discretion, prior Notice shall not be necessary.
ARTICLE 19
APPRAISAL
19.1 Appraisal Procedure.
In the event that it becomes necessary to determine the Fair Market
Value or Fair Market Rental of any of the Collective Leased Properties
for any purpose of this Agreement and the parties cannot agree thereon,
such Fair Market Value or Fair Market Rental, as the case may be, shall
be determined upon the written demand of either party in accordance with
the following procedure.
The party requesting an appraisal, by Notice given to the other,
shall propose and unilaterally approve a Qualified Appraiser. The other
party, by Notice given within fifteen (15) days after receipt of such
Notice appointing the first Qualified Appraiser, may appoint a second
Qualified Appraiser. If the other party fails to appoint the second
Qualified Appraiser within such fifteen (15) day period, such party
shall have waived its right to appoint a Qualified Appraiser, the first
Qualified Appraiser shall appoint a second Qualified Appraiser within
fifteen (15) days thereafter and the Fair Market Value or Fair Market
Rental, as the case may be, shall be determined by the Qualified
Appraisers as set forth below.
The two Qualified Appraisers shall thereupon endeavor to agree upon
the Fair Market Value or Fair Market Rental, as the case may be. If the
two Qualified Appraisers so named cannot agree upon such value or
rental, as the case may be, within thirty (30) days after the
designation of the second such appraiser, each such appraiser shall,
within five (5) days after the expiration of such thirty (30) day
period, submit his appraisal of fair market value to the other appraiser
in writing, and if the fair market values set forth in such appraisals
vary by five percent (5%) or less of the greater value, the fair market
value shall be determined by calculating the average of the two fair
market values determined by the two appraisers.
If the fair market values set forth in the two appraisals vary by
more than five percent (5%) of the greater value, the two Qualified
Appraisers shall select a third Qualified Appraiser within an additional
fifteen (15) days following the expiration of the aforesaid five (5) day
period. If the two appraisers are unable to agree upon the appointment
of a third appraiser within such fifteen (15) day period, either party
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may, upon written notice to the other, request that such appointment be
made by the then President (or equivalent officer) of the State's
Chapter of the American Institute of Real Estate Appraisers, or his or
her designee or, if there is no such organization or if such individual
declines to make such appointment, by any state or Federal court of
competent jurisdiction for the State.
In the event that all three of the appraisers cannot agree upon
Fair Market Value or Fair Market Rental, as the case may be, within
twenty (20) days following the selection of the third appraiser, each
appraiser shall, within ten (10) days thereafter, submit his appraisal
of fair market value to the other two appraisers in writing, and the
fair market value shall be determined by calculating the average of the
two numerically closest values (or, if the values are equidistant, the
average of all three values) determined by the three appraisers.
In the event that any appraiser appointed hereunder does not or is
unable to perform his or her obligation hereunder, then the party or the
appraisers appointing such appraiser shall have the right to propose and
approve unilaterally a substitute Qualified Appraiser, but if the party
or the appraisers who have the right to appoint a substitute Qualified
Appraiser fail to do so within ten (10) days after written notice from
the other party (or either party in the event such appraiser was
appointed by the other appraisers) either party may, upon written notice
to the party having the right to appoint a substitute Qualified
Appraiser, request that such appointment be made by such officer of the
American Institute of Real Estate Appraisers or court of competent
jurisdiction as described above; provided, however, that a party who has
the right to appoint an appraiser or a substitute appraiser shall have
the right to make such appointment only up until the time such
appointment is made by such officer or court.
In connection with the appraisal process, Tenant shall provide the
appraisers full access during normal business hours to examine the
applicable Leased Property, the books, records and files of Tenant and
all agreements, leases and other operating agreements relating to the
applicable Leased Property.
The costs (other than Landlord's counsel fees) of each such ap-
praisal shall be borne by Tenant and shall be included as part of the
Additional Charges. Upon determining such value, the appraisers shall
promptly notify Landlord and Tenant in writing of such determination.
If any party shall fail to appear at the hearings appointed by the
appraisers, the appraisers may act in the absence of such party.
The determination of the Qualified Appraisers made in accordance
with the foregoing provisions shall be final and binding upon the
parties, such determination may be entered as an award in arbitration in
a court of competent jurisdiction, and judgment thereon may be entered.
19.2 Landlord's Right to Appraisal.
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Landlord shall have the right, exercisable twice at any time during
the Term, to appoint a Qualified Appraiser to perform a complete
appraisal of any or all of the Collective Leased Properties, (each such
appraisal to include complete valuations of any such Leased Property
based upon (a) the "Cost Approach", (b) the "Market Approach" and (c)
the "Income Approach"), which appraisal shall meet all requirements of
any state or Federal bank regulatory authority that Landlord considers
relevant or any Facility Mortgagee. The costs of each such appraisal
shall be borne by Tenant and shall be included as part of the Additional
Charges.
ARTICLE 20
OPTION TO PURCHASE
20.1 Landlord's Option to Purchase Tenant's Personal Property;
Transfer of Licenses.
Effective on not less than fifteen (15) days' prior Notice given at
least sixty (60) days prior to expiration of the Term (or such shorter
period as shall be appropriate if this Agreement is terminated with
respect to any of the Collective Leased Properties prior to its
expiration date), Landlord shall have the option to purchase all or any
portion of Tenant's Personal Property with respect to any of the
Collective Leased Properties, at the expiration or sooner termination of
this Agreement with respect to such Leased Property, for an amount equal
to Tenant's net book value thereof, subject to, and with appropriate
price adjustments for, all equipment leases, conditional sale contracts,
security interests and other encumbrances to which such Tenant's
Personal Property is subject. Tenant's Personal Property shall be
conveyed to Landlord on an "as-is" basis, in its then current condition
and state of repair. Tenant shall provide Landlord with warranties of
title, reflecting no encumbrances as to which adjustments to the
purchase price thereof, as required by the previous sentence, have not
been made. Failure of Landlord to notify Tenant of its election to
purchase Tenant's Personal Property at any of the Collective Leased
Properties by the fifteenth (15th) day prior to the expiration of this
Agreement (or such shorter period as may be appropriate if this
Agreement is terminated with respect to any of the Collective Leased
Properties prior to its expiration date) shall be deemed to constitute a
waiver of Landlord's right to purchase Tenant's Personal Property with
respect to such Leased Property. Upon the expiration or sooner
termination of this Agreement, or upon management of any Facility by
Landlord or its designee, Tenant shall use all reasonable efforts to
transfer and assign to Landlord or its designee, or assist Landlord or
its designee in obtaining, any contracts, licenses, and certificates
required for the then operation of such Facility.
20.2 Tenant's Option to Purchase the Leased Property.
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Provided, no Default or Event of Default has occurred and is
continuing at the time of exercise of the purchase option provided for
in this Section 20.2 or at the time of payment of the purchase price
provided for in this Section 20.2 and this Agreement shall be in full
force and effect, Tenant shall have the option to purchase all, but not
less than all, of the Collective Leased Properties for a purchase price
equal to the sum of the Option Purchase Prices for all of the Collective
Leased Properties. If Tenant wishes to exercise the aforesaid option,
it shall do so by giving Landlord Notice thereof not less than one (1)
year prior to the expiration of the then current term of this Agreement
(Fixed or Extended, as the case may be). Such Notice shall be
accompanied by a nonrefundable deposit made by certified check payable
to the order of Landlord in an amount equal to five percent (5%) of the
Option Purchase Price. It is expressly understood and agreed that time
shall be of the essence with respect to the giving of such Notice and
the making of such deposit and the failure of Tenant to give such Notice
or deliver such deposit within the time and in the manner hereinabove
provided shall be a waiver of Tenant's right to purchase the Collective
Leased Properties pursuant to this Section 20.2. Any purchase of the
Collective Leased Properties by Tenant shall be made in accordance with
the provisions of Article 15 and the closing date for such purchase
shall be the date of expiration of the then current term of this
Agreement (Fixed or Extended, as the case may be).
20.3 First Refusal to Purchase.
Provided, no Default or Event of Default has occurred and is
continuing at the time of exercise of the first refusal to purchase
provided for in this Section 20.3 or at the time of payment of the
purchase price provided for in this Section 20.3 and this Agreement
shall be in full force and effect, Tenant shall have a right of first
refusal to purchase all, but not less than all, of the Collective Leased
Properties as Landlord shall propose to sell upon the same price, terms
and conditions as Landlord shall propose to sell such Collective Leased
Properties, or upon the same price, terms and conditions of any written
offer from a third party to purchase such Collective Leased Properties
which Landlord intends to accept (or has accepted subject to Tenant's
right of first refusal herein provided). If, during the Term or any
Extended Term hereof, Landlord reaches such agreement with a third party
or proposes to offer all or any portion of the Collective Leased
Properties for sale, Landlord shall promptly give Notice to Tenant of
the purchase price and all other material terms and conditions of such
agreement or proposed sale and Tenant shall have thirty (30) days
thereafter to exercise Tenant's right of first refusal to purchase by
Notice to Landlord thereof. Such Notice shall be accompanied by a
nonrefundable deposit made by certified check payable to the order of
Landlord in an amount equal to five percent (5%) of the purchase price
provided for in such proposal, offer or agreement. It is expressly
understood and agreed that time shall be of the essence with respect to
the giving of such Notice and the making of such deposit and the failure
of Tenant to give such Notice or deliver such deposit within the time
and in the manner hereinabove provided shall be a waiver of Tenant's
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right of first refusal to purchase the Collective Leased Properties
pursuant to this Section 20.3. If Tenant exercises its right of first
refusal, the sale to Tenant shall be consummated upon the same terms and
conditions as contained in such proposal, offer or agreement (including
all terms certain in such agreement or Notice relating to any security
deposit or fee, and the date of closing). Such sale to Tenant shall be
made in accordance with the provisions of Article 15 no later than the
closing date specified in such proposal, offer or agreement (or, if no
closing date is so specified, thirty (30) days after Tenant exercises
its right of first refusal). If Tenant shall not exercise its right of
first refusal within the time period and in the manner above provided,
Landlord shall be free to sell such Leased Property to any third party
at a price and upon terms substantially similar and in any event no less
favorable to Landlord than those offered to Tenant. Tenant shall be
entitled to exercise its right of first refusal as provided in this
Section 20.3 as to any subsequent or proposed sale during the Term or
any Extended Term.
ARTICLE 21
FACILITY MORTGAGES
21.1 Landlord May Grant Liens.
Without the consent of Tenant, Landlord may, subject to the terms
and conditions set forth in this Section 21.1, from time to time,
directly or indirectly, create or otherwise cause to exist any lien,
encumbrance or title retention agreement ("Encumbrance") upon any of the
Collective Leased Properties, or any portion thereof or interest
therein, whether to secure any borrowing or other means of financing or
refinancing. Any such Encumbrance shall include the right to prepay
(whether or not subject to a prepayment penalty) and shall provide
(subject to Section 21.2 below) that it is subject to the rights of
Tenant under this Agreement, including the rights of Tenant to acquire
the Collective Leased Properties pursuant to the applicable provisions
of this Agreement.
21.2 Subordination of Lease.
Subject to Section 21.1, this Agreement, any and all rights of
Tenant hereunder, are and shall be subject and subordinate to any ground
or master lease, and all renewals, extensions, modifications and
replacements thereof, and to all mortgages and deeds of trust, which may
now or hereafter affect the Collective Leased Properties, or any of
them, or any improvements thereon and/or any of such leases, whether or
not such mortgages or deeds of trust shall also cover other lands and/or
buildings and/or leases, to each and every advance made or hereafter to
be made under such mortgages and deeds of trust, and to all renewals,
modifications, replacements and extensions of such leases and such
mortgages and deeds of trust and all consolidations of such mortgages
and deeds of trust. This section shall be self-operative and no further
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instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall promptly execute, acknowledge and deliver
any instrument that Landlord, the lessor under any such lease or the
holder of any such mortgage or the trustee or beneficiary of any deed of
trust or any of their respective successors in interest may reasonably
request to evidence such subordination. Any lease to which this
Agreement is, at the time referred to, subject and subordinate is herein
called "Superior Lease" and the lessor of a Superior Lease or its
successor in interest at the time referred to, is herein called
"Superior Landlord" and any mortgage or deed of trust to which this
Agreement is, at the time referred to, subject and subordinate, is
herein called "Superior Mortgage" and the holder, trustee or beneficiary
of a Superior Mortgage is herein called "Superior Mortgagee".
If any Superior Landlord or Superior Mortgagee or the nominee or
designee of any Superior Landlord or Superior Mortgagee shall succeed to
the rights of Landlord under this Agreement with respect to one or more
of the Collective Leased Properties, whether through possession or
foreclosure action or delivery of a new lease or deed, or otherwise,
then at the request of such party so succeeding to Landlord's rights
(herein called "Successor Landlord") and upon such Successor Landlord's
written agreement to accept Tenant's attornment, Tenant shall attorn to
and recognize such Successor Landlord as Tenant's landlord under this
Agreement with respect to one or more of the Collective Leased
Properties, and shall promptly execute and deliver any instrument that
such Successor Landlord may reasonably request to evidence such
attornment. Upon such attornment, this Agreement shall continue in full
force and effect as a direct lease between the Successor Landlord and
Tenant upon all of the terms, conditions and covenants as are set forth
in this Agreement, except that the Successor Landlord (unless formerly
the landlord under this Agreement or its nominee or designee) shall not
be (a) liable in any way to Tenant for any act or omission, neglect or
default on the part of Landlord under this Agreement, (b) responsible
for any monies owing by or on deposit with Landlord to the credit of
Tenant, (c) subject to any counterclaim or setoff which theretofore
accrued to Tenant against Landlord, (d) bound by any modification of
this Agreement subsequent to such Superior Lease or Mortgage, or by any
previous prepayment of Minimum Rent or Additional Rent for more than one
(1) month, which was not approved in writing by the Superior Landlord or
the Superior Mortgagee thereto, (e) liable to Tenant beyond the
Successor Landlord's interest in the applicable Leased Property and the
rents, income, receipts, revenues, issues and profits issuing from such
Leased Property, (f) responsible for the performance of any work to be
done by the Landlord under this Agreement to render the applicable
Leased Property ready for occupancy by Tenant, or (g) required to remove
any Person occupying the applicable Leased Property or any part thereof,
except if such person claims by, through or under the Successor
Landlord. Tenant agrees at any time and from time to time to execute a
suitable instrument in confirmation of Tenant's agreement to attorn, as
aforesaid.
21.3 Notice to Mortgagee and Ground Landlord.
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Subsequent to the receipt by Tenant of notice from any Person that
it is a Facility Mortgagee or that it is the ground lessor under a lease
with Landlord, as ground lessee, which includes the applicable Leased
Property as part of the demised premises, no notice from Tenant to
Landlord as to the applicable Leased Property shall be effective unless
and until a copy of the same is given to such Facility Mortgagee or
ground lessor, and the curing of any of Landlord's defaults by such
Facility Mortgagee or ground lessor shall be treated as performance by
Landlord.
ARTICLE 22
ADDITIONAL COVENANTS OF TENANT
22.1 Prompt Payment of Indebtedness.
Tenant shall (a) pay or cause to be paid when due all payments of
principal of and premium and interest on Indebtedness for money borrowed
and shall not permit or suffer any such Indebtedness to become or remain
in default beyond any applicable grace or cure period, (b) pay or cause
to be paid when due all lawful claims for labor and rents, (c) pay or
cause to be paid when due all trade payables and (d) pay or cause to be
paid when due all other Indebtedness upon which it is or becomes
obligated, except, in each case, other than that referred to in clause
(a), to the extent payment is being contested in good faith by
appropriate proceedings in accordance with Article 8 and if Tenant shall
have set aside on its books adequate reserves with respect thereto in
accordance with GAAP or unless and until foreclosure, distraint sale or
other similar proceedings shall have been commenced.
22.2 Conduct of Business.
Tenant shall not engage in any business other than the ownership
and operation of the Collective Leased Properties and shall do or cause
to be done all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and its
rights and licenses necessary to conduct such business.
22.3 Maintenance of Accounts and Records.
Tenant shall keep true records and books of account in which full,
true and correct entries will be made of dealings and transactions in
relation to the business and affairs of Tenant in accordance with GAAP.
Tenant shall apply accounting principles in the preparation of the
financial statements of Tenant which, in the judgment of and the opinion
of its independent public accountants, are in accordance with GAAP,
except for changes approved by such independent public accountants.
Tenant shall provide to Landlord either in a footnote to the financial
statements delivered under Section 17.2 which relate to the period in
which such change occurs, or in separate schedules to such financial
statements, information sufficient to show the effect of any such
changes on such financial statements.
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22.4 Notice of Change of Name, Administrator, Etc.
Tenant shall give prompt Notice to Landlord of any change in (a)
the name (operating or otherwise) of Tenant or any Facility, (b) the
individual licensed as administrator of any Facility, (c) the number of
beds in any bed category for which any Facility is licensed or the
number of beds in any bed category available for use at any Facility,
and (d) the patient and/or child care services that are offered at any
Facility.
22.5 Notice of Litigation, Potential Event of Default, Etc.
Tenant shall give prompt Notice to Landlord of any litigation or
any administrative proceeding to which it or any Guarantor may hereafter
become a party which involves a potential liability equal to or greater
than Ten Thousand Dollars ($10,000) or which may otherwise result in any
material adverse change in the business, operations, property,
prospects, results of operation or condition, financial or other, of
Tenant or such Guarantor. Forthwith upon Tenant obtaining knowledge of
any Default, Event of Default or any default or event of default under
any agreement relating to Indebtedness for money borrowed in an
aggregate amount exceeding, at any one time, Ten Thousand Dollars
($10,000), or any event or condition that would be required to be
disclosed in a current report filed by Tenant or any Guarantor on Form
8-K or in Part II of a quarterly report on Form 10-Q if Tenant or any
Guarantor were required to file such reports under the Securities
Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to
Landlord specifying the nature and period of existence thereof and what
action Tenant has taken or is taking or proposes to take with respect
thereto.
22.6 Indebtedness of Tenant.
Tenant shall not create, incur, assume or guarantee, or permit to
exist, or become or remain liable directly or indirectly upon, any
Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for taxes, assessments,
governmental charges or levies, to the extent that payment thereof
shall not at the time be required to be made in accordance with the
provisions of Article 8;
(c) Indebtedness of Tenant in respect of judgments or awards
(i) which have been in force for less than the applicable appeal
period and in respect of which execution thereof shall have been
stayed pending such appeal or review, or (ii) which are fully
covered by insurance payable to Tenant, or (iii) which are for an
amount not in excess of $10,000 in the aggregate at any one time
outstanding and (x) which have been in force for not longer than
the applicable appeal period, so long as execution is not levied
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thereunder or (y) in respect of which an appeal or proceedings for
review shall at the time be prosecuted in good faith in accordance
with the provisions of Article 8, and in respect of which execution
thereof shall have been stayed pending such appeal or review;
(d) unsecured borrowings of Tenant from its Affiliated
Persons which are by their terms expressly subordinate pursuant to
a Subordination Agreement to the payment and performance of
Tenant's obligations under this Agreement; or
(e) Indebtedness for purchase money financing.
22.7 Distributions, Payments to Affiliated Persons, Etc. All
payments by any Guarantor and/or Tenant to any Affiliated Person shall
be subordinated to payments due to Landlord and neither any Guarantor
nor Tenant shall declare, order, pay or make, directly or indirectly,
any Distributions or any payment to any Affiliated Person of either of
them (including payments in the ordinary course of business and
reasonable payments pursuant to management agreements with any such
Affiliated Person) or set apart any sum or property therefor, or agree
to do so, if, at the time of such proposed action, or immediately after
giving effect thereto, any Default or an Event of Default shall exist.
22.8 Investments.
Tenant shall not make, or permit to remain outstanding, at any time
any Investment (including without limitation, the formation of or
investment in any Subsidiary or the acquisition of any business) except
the following:
(a) Marketable direct full faith and credit obligations of,
and marketable obligations guaranteed by, the United States of
America, or any agency or instrumentality thereof, which mature
within one year from the date of acquisition thereof;
(b) Marketable direct full faith and credit obligations of
any state of the United States of America, or any county, city,
town, township or other governmental subdivision of any such state,
which mature within one year from the date of acquisition thereof,
provided, that such obligations are accorded a rating within one of
the three highest grades by Moody's Investors Service, Inc. or
Standard & Poor's Corporation;
(c) Commercial paper maturing no more than two hundred and
seventy (270) days from the date of issue, provided that such paper
is accorded a rating within the highest category by Moody's
Investors Service, Inc. or Standard & Poor's Corporation;
(d) Certificates of deposit which have a remaining term to
maturity at the time of purchase of no more than one year (or which
are subject to a repurchase agreement with one of the banks or
trust companies described in this paragraph (d) exercisable within
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one year from the time of purchase) issued by banks or trust
companies organized under the laws of the United States of America
or a State thereof and which are member banks of the Federal
Reserve System, and have aggregate capital, surplus and undivided
profits of at least $100,000,000 and the long term obligations of
which carry a rating of "A" or better by Moody's Investors Service,
Inc. or Standard & Poor's Corporation; and
(e) Bonds or debentures which have a remaining term to
maturity at the time of purchase of no more than one year, issued
by a Person, other than an Affiliated Person as to Tenant or any
Guarantor, organized under the laws of a State of the United States
or the District of Columbia; provided, that such obligations carry
a rating of "A" or better by Moody's Investors Service, Inc. or
Standard & Poor's Corporation.
22.9 Prohibited Transactions.
Tenant shall not permit to exist or enter into any agreement or
arrangement whereby it engages in a transaction of any kind with any
Affiliated Person as to Tenant or any Guarantor, except on terms and
conditions which are not less favorable to Tenant than those on which
similar transactions between unaffiliated parties could fairly be
expected to be entered into on an arms-length basis.
22.10 Management of Collective Leased Properties.
Tenant shall not enter into any Management Agreement unless the
terms thereof have been previously approved in writing by Landlord,
which approval may be given or withheld in Landlord's sole and absolute
discretion. All management fees, payments in connection with any
extension of credit and fees for services provided in connection with
the operation of the applicable Leased Property, payable by Tenant to
any Guarantor (or any Affiliated Person as to Tenant or such Guarantor),
shall be subordinated to all of the obligations of Tenant due under this
Agreement pursuant to a Subordination Agreement. Tenant shall not agree
to any change in the Manager of any of the Collective Leased Properties
and/or any Facility, to any change in any Management Agreement,
terminate any Management Agreement or permit any Manager to assign any
Management Agreement without the prior written approval of Landlord in
each instance, which approval may be given or withheld in Landlord's
sole and absolute discretion. Any Management Agreement shall provide
that Landlord shall be provided notice of any defaults thereunder and,
at Landlord's option, an opportunity to cure such defaults and shall
otherwise be in form and substance satisfactory to Landlord in its sole
and absolute discretion. If Landlord shall cure any of Tenant's
defaults under any Management Agreement, the cost of such cure shall be
payable upon demand by Tenant to Landlord with interest accruing from
the demand date at the Overdue Rate and Landlord shall have the same
rights and remedies for failure to pay such costs on demand as for
Tenant's failure to pay Minimum Rent. Tenant shall deliver to Landlord
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any instrument requested by Landlord to implement the intent of the
foregoing provision.
22.11 Liens and Encumbrances. Except as permitted by Section 7.1,
Tenant shall not create or incur or suffer to be created or incurred or
to exist any Lien on this Agreement, Tenant's Personal Property or any
of its other respective assets, properties, rights or income, or any of
its interest therein, now or at any time hereafter owned, other than:
(a) Security interests securing the purchase price of
equipment or personal property acquired after the Commencement
Date; provided, however, that (i) such Lien shall at all times be
confined solely to the asset in question, (ii) the aggregate
principal amount of Indebtedness secured by any such Lien shall not
exceed the cost of acquisition or construction of the property
subject thereto; and (iii) the aggregate principal amount of
Indebtedness secured by any such Lien in favor of a single vendor
shall not exceed $250,000 at any one time outstanding; and
(b) Permitted Encumbrances.
22.12 Merger; Sale of Assets; Etc. Tenant shall not (i) sell,
lease (as lessor or sublessor), transfer or otherwise dispose of, or
abandon, all or any material portion of its assets (including capital
stock) or business to any Person, (ii) merge into or with or consolidate
with any other Entity, or (iii) sell, lease (as lessor or sublessor),
transfer or otherwise dispose of, or abandon, any personal property or
fixtures or any real property; provided, however, that, notwithstanding
the provisions of clause (iii) preceding, Tenant may dispose of
equipment or fixtures which have become inadequate, obsolete, worn-out,
unsuitable, undesirable or unnecessary, provided substitute equipment or
fixtures having equal or greater value and utility (but not necessarily
having the same function) have been provided.
22.13 Guaranties. Upon the execution hereof and from time to time
during the Term and any Extended Term hereof, Tenant shall cause
Connecticut Subacute, CSC II, any corporate Parent of, or corporate
successor to, Tenant, and any other Entity that is an Affiliated Person
of Tenant that conducts business on any of the Collective Leased
Properties, to execute a Guaranty, in favor of Landlord.
ARTICLE 23
MISCELLANEOUS
23.1 Limitation on Payment of Rent. All agreements between
Landlord and Tenant herein are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of
Rent, or otherwise, shall the Rent or any other amounts payable to
Landlord under this Agreement exceed the maximum permissible under
applicable law, the benefit of which may be asserted by Tenant as a
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defense, and if, from any circumstance whatsoever, fulfillment of any
provision of this Agreement, at the time performance of such provision
shall be due, shall involve transcending the limit of validity
prescribed by law, or if from any circumstances Landlord should ever
receive as fulfillment of such provision such an excessive amount, then,
ipso facto, the amount which would be excessive shall be applied to the
reduction of the installment(s) of Minimum Rent next due and not to the
payment of such excessive amount. This provision shall control every
other provision of this Agreement and any other agreements between
Landlord and Tenant.
23.2 No Waiver. No failure by Landlord to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial
payment of Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of any such term. To the
maximum extent permitted by law, no waiver of any breach shall affect or
alter this Agreement, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.
23.3 Remedies Cumulative. To the maximum extent permitted by law,
each legal, equitable or contractual right, power and remedy of
Landlord, now or hereafter provided either in this Agreement or by
statute or otherwise, shall be cumulative and concurrent and shall be in
addition to every other right, power and remedy and the exercise or
beginning of the exercise by Landlord of any one or more of such rights,
powers and remedies shall not preclude the simultaneous or subsequent
exercise by Landlord of any or all of such other rights, powers and
remedies.
23.4 Severability. Any clause, sentence, paragraph, section or
provision of this Agreement held by a court of competent jurisdiction to
be invalid, illegal or ineffective shall not impair, invalidate or
nullify the remainder of this Agreement, but rather the effect thereof
shall be confined to the clause, sentence, paragraph, section or
provision so held to be invalid, illegal or ineffective, and this
Agreement shall be construed as if such invalid, illegal or ineffective
provisions had never been contained therein.
23.5 Acceptance of Surrender. No surrender to Landlord of this
Agreement or of any of the Collective Leased Properties or any part
thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Landlord and no act by Landlord or
any representative or agent of Landlord, other than such a written
acceptance by Landlord, shall constitute an acceptance of any such
surrender.
23.6 No Merger of Title. It is expressly acknowledged and agreed
that it is the intent of the parties that there shall be no merger of
this Agreement or of the leasehold estate created hereby by reason of
the fact that the same Person may acquire, own or hold, directly or
indirectly this Agreement or the leasehold estate created hereby and the
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fee estate or ground landlord's interest in any of the Collective Leased
Properties.
23.7 Conveyance by Landlord. If Landlord or any successor owner
of all or any portion of any of the Collective Leased Properties shall
convey all or any portion of the Collective Leased Properties in
accordance with the terms hereof other than as security for a debt, and
the grantee or transferee of such of the Collective Leased Properties
shall expressly assume all obligations of Landlord hereunder arising or
accruing from and after the date of such conveyance or transfer,
Landlord or such successor owner, as the case may be, shall thereupon be
released from all future liabilities and obligations of Landlord under
this Agreement with respect to such of the Collective Leased Properties
arising or accruing from and after the date of such conveyance or other
transfer and all such future liabilities and obligations shall thereupon
be binding upon the new owner.
23.8 Quiet Enjoyment. So long as Tenant shall pay the Rent as the
same becomes due and shall comply with all of the terms of this
Agreement, Tenant shall peaceably and quietly have, hold and enjoy the
Collective Leased Properties for the Term, free of hindrance or
molestation by Landlord or anyone claiming by, through or under
Landlord, but subject to (a) any Encumbrance permitted under Article 21
or otherwise permitted to be created by Landlord hereunder, (b) all
Permitted Encumbrances, (c) liens as to obligations of Landlord that are
either not yet due or which are being contested in good faith and by
proper proceedings, and (d) liens that have been consented to in writing
by Tenant. Except as otherwise provided in this Agreement, no failure
by Landlord to comply with the foregoing covenant shall give Tenant any
right to cancel or terminate this Agreement or abate, reduce or make a
deduction from or offset against the Rent or any other sum payable under
this Agreement, or to fail to perform any other obligation of Tenant
hereunder.
23.9 NON-LIABILITY OF TRUSTEES. THE DECLARATION, A COPY OF WHICH
IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE
STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT
PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT
NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF LANDLORD SHALL BE
HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION
OF, OR CLAIM AGAINST, LANDLORD. ALL PERSONS DEALING WITH LANDLORD, IN
ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF LANDLORD FOR THE PAYMENT OF
ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
23.10 Landlord's Consent of Trustees. Where provision is made in
this Agreement for Landlord's consent and Landlord shall fail or refuse
to give such consent, Tenant shall not be entitled to any damages for
any withholding by Landlord of its consent, it being intended that
Tenant's sole remedy shall be an action for specific performance or
injunction, and that such remedy shall be available only in those cases
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where Landlord has expressly agreed in writing not unreasonably to
withhold its consent.
23.11 Memorandum of Lease. Neither Landlord nor Tenant shall
record this Agreement. However, Landlord and Tenant shall promptly,
upon the request of the other, enter into a short form memorandum of
this Agreement, in form suitable for recording under the laws of the
State in which reference to this Agreement, and all options contained
herein, shall be made. Tenant shall pay all costs and expenses of
recording such memorandum.
23.12 Notices.
(a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted
under this Agreement shall be deemed adequately given if in writing
and the same shall be delivered either in hand, by telecopier with
written acknowledgment of receipt, or by mail or Federal Express or
similar expedited commercial carrier, addressed to the recipient of
the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid
(if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder
shall be deemed to have been given for all purposes of this
Agreement upon the date of acknowledged receipt, in the case of a
notice by telecopier, and, in all other cases, upon the date of
receipt or refusal, except that whenever under this Agreement a
notice is either received on a day which is not a Business Day or
is required to be delivered on or before a specific day which is
not a Business Day, the day of receipt or required delivery shall
automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord to:
Health and Retirement Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attn: Mr. David J. Hegarty and
Mr. John G. Murray
[Telecopier No. (617) 332-2261]
with a copy to:
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Attn: Lena G. Goldberg, Esq.
[Telecopier No. (617) 338-2880]
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if to Vermont Subacute to:
Vermont Subacute Corporation
150 South Champlain Street
Burlington, Vermont 05401
Attn: Mark J. Finkelstein
if to New Hampshire Subacute to:
New Hampshire Subacute Corporation
40 Whitehall Road
Rochester, New Hampshire 03867
Attn: Mark J. Finkelstein
(d) By notice given as herein provided, the parties hereto
and their respective successor and assigns shall have the right
from time to time and at any time during the term of this Agreement
to change their respective addresses effective upon receipt by the
other parties of such notice and each shall have the right to
specify as its address any other address within the United States
of America.
23.13 Construction. Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant
or Landlord arising prior to any date of termination or expiration of
this Agreement with respect to any of the Collective Leased Properties
shall survive such termination or expiration. In no event shall
Landlord be liable for any consequential damages suffered by Tenant as
the result of a breach of this Agreement by Landlord. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party to be
charged. All the terms and provisions of this Agreement shall be bind-
ing upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Each term or provision of this
Agreement to be performed by Tenant shall be construed as an independent
covenant and condition. Time is of the essence with respect to the
exercise of any rights of Tenant under this Agreement. Except as
otherwise set forth in this Agreement, any obligations of Tenant
(including without limitation, any monetary, repair and indemnification
obligations) shall survive the expiration or sooner termination of this
Agreement.
23.14 Counterparts; Headings. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original,
but which, when taken together, shall constitute but one instrument and
shall become effective as of the date hereof when copies hereof, which,
when taken together, bear the signatures of each of the parties hereto
shall have been signed. Headings in this Agreement are for purposes of
reference only and shall not limit or affect the meaning of the
provisions hereof.
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23.15 Landlord Financing. In the event that at any time during
the Term, Tenant, any Guarantor or any Entity that is an Affiliated
Person of Tenant or any Guarantor shall elect to obtain sale, lease or
mortgage financing for any health care related facilities owned, leased,
operated or to be owned, leased or operated by Tenant, any Guarantor or
such Entity within the Market Area of any of the Collective Leased
Properties, Tenant shall give (or cause such Guarantor or such Entity to
give, as the case may be) Notice thereof to Landlord, which notice shall
set forth in reasonable detail the terms of such financing, shall
identify the source thereof and shall include a copy of any applicable
term sheet, letter of intent or commitment letter. Landlord shall have
the right, exercisable by the giving of Notice to Tenant (or such
Guarantor or Entity, as the case may be) within ten (10) Business Days
after such notice from Tenant (or such other Guarantor or Entity, as the
case may be), to provide such financing on the same terms and conditions
as described in the Notice given to Landlord. In the event that
Landlord shall exercise such option, Tenant (or such Guarantor or
Entity, as the case may be) shall be obligated to obtain such financing
from Landlord on the terms and conditions set forth in the Notice to
Landlord. In the event that Landlord shall decline to provide such
financing or shall fail to give such notice to Tenant (or such Guarantor
or Entity, as the case may be), Tenant (or such Guarantor or Entity, as
the case may be) shall be free to obtain such financing from the party
identified in, and on the terms and conditions set forth in, the Notice
given to Landlord with respect thereto.
23.16 Applicable Law, Etc. Except as to matters regarding the
internal affairs of Landlord and issues of or limitations on any
personal liability of the shareholders and trustees of Landlord for
obligations of Landlord, as to which the laws of the State of Maryland
shall govern, this Agreement shall be interpreted, construed, applied
and enforced in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts between residents of Massachusetts
which are to be performed entirely within Massachusetts, regardless of
(i) where this Agreement is executed or delivered; or (ii) where any
payment or other performance required by this Agreement is made or
required to be made; or (iii) where any breach of any provision of this
Agreement occurs, or any cause of action otherwise accrues; or (iv)
where any action or other proceeding is instituted or pending; or (v)
the nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi)
whether the laws of the forum jurisdiction otherwise would apply the
laws of a jurisdiction other than The Commonwealth of Massachusetts; or
(vii) any combination of the foregoing. Notwithstanding the foregoing,
the laws of the State shall apply to the perfection and priority of
liens upon and the disposition of and disposition with respect to any of
the Collective Leased Properties.
To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the
provisions of this Agreement may be brought and prosecuted in such court
or courts located in The Commonwealth of Massachusetts as is provided by
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law; and the parties consent to the jurisdiction of said court or courts
located in The Commonwealth of Massachusetts and to service of process
by registered mail, return receipt requested, or by any other manner
provided by law.
23.17 Allocation of Minimum Rent. Landlord and Tenant, by the
execution hereof, agree that Minimum Rent shall be allocated among the
Facilities as set forth in Exhibit C.
23.18 Additional Leased Properties. Landlord and Tenant
acknowledge and agree that, concurrently herewith, Landlord is entering
into a Purchase and Sale Agreement, dated of even date herewith (the
"Purchase Agreement"), between Landlord, as purchaser, and John F.
Chapple, III, as seller, to purchase certain land, with related
improvements and personal property (collectively, the "Additional
Properties"), to be used in connection with the operation of certain of
the Collective Leased Properties, as further described in the Purchase
Agreement. Landlord and Tenant further acknowledge and agree that, upon
Landlord's purchase of the Additonal Properties, Landlord and Tenant
shall enter into an amendment to this Agreement pursuant to which
Landlord shall lease to Vermont Subacute, and Vermont Subacute shall
lease from Landlord, the Additonal Properties, upon and subject to the
terms and conditions herein set forth (but including an increase in the
Minimum Rent payable hereunder by the amount of Five Thousand Nine
Hundred Six and 25/100 ($5,906.25)), provided, however, that nothing
herein shall be construed to require Landlord to acquire the Additional
Properties and Landlord shall have the right, but not the obligation, to
acquire the Additional Properties on such terms and conditions as
Landlord, in its sole discretion, shall determine. In the event that
Landlord shall, in its sole discretion, determine not to acquire the
Additional Properties, Landlord's and Tenant's obligations under this
Section 23.18 shall terminate. Landlord shall provide Tenant with
copies of all purchase and other agreements entered into by Landlord
with respect to the Additonal Properties and all diligence and other
information provided to or obtained by Landlord in connection therewith.
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IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date above first written.
LANDLORD:
HEALTH AND RETIREMENT
PROPERTIES TRUST
By: /s/ David J. Hegarty
Its: Executive Vice President
and Chief Financial
Officer
VERMONT SUBACUTE:
VERMONT SUBACUTE CORPORATION
By: /s/ Mark J. Finkelstein
Its (Vice) President
NEW HAMPSHIRE SUBACUTE:
NEW HAMPSHIRE SUBACUTE
CORPORATION
By: /s/ Mark J. Finkelstein
Its (Vice) President
EXHIBITS A-1 TO A-8
The Land
[See attached copies.]
EXHIBIT B
Purchase Prices
Burlington $7,253,686
Bennington 4,822,930
Springfield 4,027,146
Berlin 5,121,951
St. Johnsbury 3,718,479
Rowan 4,167,011
Redstone 926,002
Hanson 868,127
Vermont Total 30,905,333
Rochester 4,094,667
Total 35,000,000
EXHIBIT C
Minimum Rent Allocation
Burlington $761,637.03
Bennington 506,407.65
Springfield 422,850.33
Berlin 537,804.85
St. Johnsbury 390,440.29
Rowan 437,536.15
Redstone 97,230.21
Hanson 91,153.33
Rochester 429,904.04
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