Exhibit 10.2
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MASTER LEASE AND DEVELOPMENT AGREEMENT
Dated as of January 30, 1998
between
ASSET XVIII HOLDINGS COMPANY, L.L.C., as Lessor
and
ATRIA COMMUNITIES, INC., as Lessee
_____________________________________________
Lease Financing
for Atria Communities, Inc.
Assisted Living Centers
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TABLE OF CONTENTS
(Master Lease and Development Agreement)
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PRELIMINARY STATEMENT....................................................... 1
ARTICLE I DEFINITIONS; INTERPRETATION................................. 1
ARTICLE II LEASE OF LEASED PROPERTY.................................... 1
SECTION 2.1 Lease of the Property................................. 1
SECTION 2.2 Lease of Improvements................................. 2
SECTION 2.3 Other Property........................................ 3
SECTION 2.4 Nature of Transaction................................. 3
ARTICLE III CONSTRUCTION AND EQUIPPING OF THE IMPROVEMENTS.............. 3
SECTION 3.1 Construction of Improvements.......................... 3
SECTION 3.2 Completion of Construction............................ 3
SECTION 3.3 Permits; Approvals; Storage........................... 4
SECTION 3.4 Inspection............................................ 4
ARTICLE IV RENT........................................................ 4
SECTION 4.1 Basic Rent............................................ 4
SECTION 4.2 Supplemental Rent..................................... 5
SECTION 4.3 Method of Payment..................................... 5
SECTION 4.4 Late Payment.......................................... 6
SECTION 4.5 Net Lease; No Setoff, Etc............................. 6
SECTION 4.6 Lessee to Cooperate with Lessor....................... 7
ARTICLE V CONDITION AND USE OF LEASED PROPERTY........................ 7
ARTICLE VI LIENS; EASEMENTS; PARTIAL CONVEYANCES....................... 8
SECTION 6.1 No Liens.............................................. 8
SECTION 6.2 Easements and Related Conveyances..................... 8
ARTICLE VII MAINTENANCE AND REPAIR; ALTERATIONS;
MODIFICATIONS AND ADDITIONS................................. 9
SECTION 7.1 Maintenance and Repair; Compliance With Law........... 9
SECTION 7.2 Alterations........................................... 10
SECTION 7.3 Title to Alterations.................................. 11
ARTICLE VIII USE......................................................... 11
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ARTICLE IX INSURANCE................................................... 11
SECTION 9.1 Insurance Coverages................................... 11
SECTION 9.2 Liability Insurance................................... 12
SECTION 9.3 Policies.............................................. 12
SECTION 9.4 Loss Payee Provisions................................. 13
SECTION 9.5 Other Insurance....................................... 13
SECTION 9.6 Loss Deductibles...................................... 14
SECTION 9.7 Failure to Maintain Insurance......................... 14
ARTICLE X ASSIGNMENT AND SUBLEASING................................... 14
ARTICLE XI LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE................... 14
SECTION 11.1 Event of Loss......................................... 14
SECTION 11.2 Event of Taking....................................... 15
SECTION 11.3 Casualty.............................................. 16
SECTION 11.4 Condemnation.......................................... 16
SECTION 11.5 Verification of Restoration and Rebuilding............ 17
SECTION 11.6 Application of Payments............................... 17
SECTION 11.7 Prosecution of Awards................................. 18
SECTION 11.8 Application of Certain Payments Not Relating to an
Event of Taking....................................... 19
SECTION 11.9 Other Dispositions.................................... 19
SECTION 11.10 No Rent Abatement..................................... 19
ARTICLE XII INTEREST CONVEYED TO LESSEE................................. 19
ARTICLE XIII EVENTS OF DEFAULT........................................... 20
ARTICLE XIV ENFORCEMENT................................................. 21
SECTION 14.1 Remedies.............................................. 21
SECTION 14.2 Remedies Cumulative; No Waiver; Consents.............. 24
ARTICLE XV SALE, RETURN OR PURCHASE OF LEASED PROPERTY................. 24
SECTION 15.1 Lessee's Option to Purchase........................... 24
SECTION 15.2 Purchase Obligation................................... 25
SECTION 15.3 Acceleration of Purchase Obligation................... 25
SECTION 15.4 Determination of Purchase Price....................... 25
SECTION 15.5 Purchase Procedure.................................... 26
SECTION 15.6 Option to Remarket.................................... 27
SECTION 15.7 Rejection of Sale..................................... 30
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SECTION 15.8 Return of Leased Property............................. 31
SECTION 15.9 Effect of Conveyance to Lessee........................ 31
ARTICLE XVI LESSEE'S EQUIPMENT.......................................... 32
ARTICLE XVII RIGHT TO PERFORM FOR LESSEE................................. 32
ARTICLE XVIII MISCELLANEOUS............................................... 33
SECTION 18.1 Reports............................................... 33
SECTION 18.2 Binding Effect; Successors and Assigns................ 33
SECTION 18.3 Quiet Enjoyment....................................... 33
SECTION 18.4 Notices............................................... 33
SECTION 18.5 Severability.......................................... 33
SECTION 18.6 Amendment; Complete Agreements........................ 33
SECTION 18.7 Construction.......................................... 34
SECTION 18.8 Headings.............................................. 34
SECTION 18.9 Counterparts.......................................... 34
SECTION 18.10 Governing Law......................................... 34
SECTION 18.11 Discharge of Lessee's Obligations by its Affiliates... 34
SECTION 18.12 Liability of Lessor Limited........................... 35
SECTION 18.13 Estoppel Certificates................................. 35
SECTION 18.14 No Joint Venture...................................... 35
SECTION 18.15 No Accord and Satisfaction............................ 35
SECTION 18.16 No Merger............................................. 36
SECTION 18.17 Survival.............................................. 36
SECTION 18.18 Chattel Paper......................................... 36
SECTION 18.19 Time of Essence....................................... 36
SECTION 18.20 Recordation of Lease.................................. 36
SECTION 18.21 Investment of Security Funds.......................... 36
SECTION 18.22 No Illegal Interest to be Charged..................... 37
SECTION 18.23 Submission to Jurisdiction; Waivers................... 37
APPENDIX I Definitions and Interpretation
APPENDIX II Form of Parcel Lease Supplement
APPENDIX III Form of Memorandum of Lease
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MASTER LEASE AND DEVELOPMENT AGREEMENT
THIS MASTER LEASE AND DEVELOPMENT AGREEMENT (this "Lease"), dated as of
January 30, 1998, is between ASSET XVIII HOLDINGS COMPANY, L.L.C., a
Massachusetts limited liability company, as Lessor, and ATRIA COMMUNITIES, INC.,
a Delaware corporation, as Lessee.
PRELIMINARY STATEMENT
In accordance with and subject to the terms and provisions of this Lease
and the other Operative Documents, (i) the Lessor intends to acquire Properties
pursuant to Parcel Lease Supplements as hereinafter provided, (ii) the Lessor
has agreed to lease Properties to the Lessee, (iii) the Lessee has agreed to
develop and construct for the Lessor all Improvements on the Parcels in
accordance with the terms of the Operative Documents, (iv) the Lessor has agreed
to lease and demise the Improvements to the Lessee and the Lessee has agreed to
rent and hire the Improvements from the Lessor as part of the Leased Property,
(v) the Lessor and the Lessee wish to obtain, and the Lender has agreed to
provide, two Loans in an aggregate amount of up to the Loan Commitments for the
payment of Development Costs in connection with the acquisition of the
Properties and the Construction of Improvements thereon, and (vi) Lessor has
agreed to make Contribution Advances from its own equity resources in an amount
up to the Equity Commitment to pay a portion of the Development Costs in
connection with the acquisition of the Properties and the Construction of
Improvements thereon.
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Lease and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix I hereto for
all purposes hereof and the rules of interpretation set forth in Appendix I
hereto shall apply to this Lease.
ARTICLE II
LEASE OF LEASED PROPERTY
SECTION 2.1 Lease of the Property. Prior to the Completion Deadline,
Lessee, as agent for the Lessor, shall identify, purchase and acquire on behalf
and in the name of Lessor, title in fee simple, in and to each Property which
will constitute part of the Leased Property, subject only to Permitted Liens, as
follows:
(a) Lessee shall prepare and submit to the Lessor and the Lender
counterparts of an appropriately completed Parcel Lease Supplement substantially
in the form of Appendix II hereto, with all blanks appropriately completed, for
each such Property, and counterparts of the related Operative Documents or
supplemental Operative Documents for each such Property the execution and
delivery of which are required to satisfy the Parcel Conditions, each duly
signed and acknowledged, where appropriate, by the Lessee, ready for execution.
(b) Lessee shall simultaneously deliver to the Lessor and the Lender
evidence of the satisfaction of (or ability to satisfy) the Parcel Conditions
for such Property in Section 3.2 of the Participation Agreement.
(c) Lessor and the Lender, respectively, shall thereupon cause the Parcel
Lease Supplement and the related Operative Documents and supplemental Operative
Documents for such Property, to which the Lessor or the Lender, are a party, to
be signed by their respective duly authorized officers and, where requested by
the Lessee, to cause such documents to be acknowledged, signed by subscribing
witnesses, or otherwise executed with the formalities necessary for such
documents to be duly recorded in the appropriate land records of the County or
other municipality where such Property is located.
(d) Not less than three Business Days prior to the related Parcel Closing
Date for such Property, Lessee shall submit a Funding Requisition to the Lessor
and the Lender with respect to a Funding to pay for the purchase price and other
costs of acquisition of each such Property, including without limitation, the
cost of recording in the name and on behalf of Lessor the Deed therefor.
(e) Pursuant to each Parcel Lease Supplement, the Lessor shall and hereby
does demise and lease its interest in and to each such Property to the Lessee,
and the Lessee shall, and hereby does, rent and lease each such Property from
the Lessor, upon and subject to the terms and conditions of this Lease, the
Participation Agreement and each of the Operative Documents, including the
supplements thereto.
SECTION 2.2 Lease of Improvements. Lessor hereby demises and leases
Lessor's interest in all Improvements (whether or not the Construction thereof
has been completed) to Lessee, and Lessee hereby rents and leases Lessor's
interest in the Improvements (whether or not the Construction thereof has been
completed) from Lessor, for the Lease Term. The demise and lease of the
Improvements pursuant to this Section shall include any additional right, title
or interest in the Improvements which may at any time be acquired by Lessor,
whether in connection with the Construction of such Improvement on an additional
Parcel of the Land, as the result of an Alteration, or otherwise, the intent
being that all right, title and interest of Lessor in and to all of the
Improvements whenever constructed, and wherever located, shall at all times be
demised and leased hereunder.
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SECTION 2.3 Other Property. Lessee may from time to time own or hold
under lease from Persons other than Lessor furniture, trade fixtures and
equipment located on or about the Leased Property which is not subject to this
Lease.
SECTION 2.4 Nature of Transaction. It is the intent of the parties
hereto that: (a) for Federal, State and local income tax purposes, this Lease
shall be treated as the repayment and security provisions of a loan by Lessor to
Lessee, and that Lessee shall be treated as the legal and beneficial owner
entitled to any and all benefits of ownership of the Leased Property or any part
thereof; and that all payments of Basic Rent during the Lease Term shall be
treated as payments of interest and principal, as the case may be, in respect of
such loan; (b) if a bankruptcy court or other court of competent jurisdiction
shall at any time determine that the transactions represented by this Lease and
the other Operative Documents either (i) do not constitute a true leasing
transaction or (ii) shall be treated as a financing or other transaction, then
in any such event, this Lease shall be treated as a deed of trust and security
agreement, mortgage and security agreement or other similar instrument with a
power of sale from Lessee, as mortgagor to Lessor for the benefit of the Lender,
as mortgagee, encumbering the Leased Property, and the payment by Lessee of the
Basic Rent shall be treated as payments of interest and the payment of Lessee of
any other amounts in respect of the Lease Balance shall be treated as repayments
of principal (all such payments are obligatory and shall, to the fullest extent
permitted by law, have priority over any and all mechanics' liens and other
liens and encumbrances arising after the respective Memorandum of Lease (in the
form attached hereto as Appendix III) is recorded); and (c) the Mortgages upon
each Property, and the Assignment of Lease and Rents will create a lien and
security interest in the Collateral (as defined in the Mortgages) and this
Lease, subject to certain limited exceptions.
ARTICLE III
CONSTRUCTION AND EQUIPPING OF THE IMPROVEMENTS
SECTION 3.1 Construction of Improvements. In the event that
Improvements are to be constructed on a Parcel, Lessee shall, for the benefit of
Lessor, cause the Construction of the Improvements to be commenced on each
Parcel following the Parcel Closing Date, and to cause such Construction to be
performed and completed by the General Contractor therefor pursuant to the
Construction Contract therefor. Until the Construction is completed, the
portions of the Improvements under construction shall, and upon completion of
Construction the completed Improvements shall, be a part of the Leased Property.
SECTION 3.2 Completion of Construction. Lessee shall endeavor to
achieve satisfactory performance from each General Contractor under each
Construction Contract. Lessee shall cause the Construction of all Improvements
to occur on or prior to the Completion Deadline. Lessee may make changes to the
Plans and Specifications, shall review requests for changes, shall negotiate
proposals for changes made by the General Contractor and shall prepare and sign
change orders. Lessee shall develop and implement procedures for the review and
processing of applications by the General Contractor, subcontractors,
materialmen and other
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Persons involved in the Construction for progress and final payments, and shall
provide to Lessor such certifications for payment as are required under the
Participation Agreement. Lessee's obligations under this Section shall not be
diminished or affected by any insufficiency of the proceeds of the Loan, or the
amount of the Contribution, or as the result of the costs of acquisition of the
Land or the Construction of the Improvements or any part thereof exceeding
amounts received as Loan Advances or Contribution Advances from the Lender or
the Lessor. In the event that Development Costs which are due and payable exceed
the aggregate amount of Loan Advances and Contribution Advances, such excess
shall be paid by Lessee from Lessee's own funds.
SECTION 3.3 Permits; Approvals; Storage. Lessee shall be responsible
for obtaining or causing each General Contractor to obtain all applicable
zoning, wetlands, subdivision, building and other permits for the Construction,
and shall also be responsible for obtaining or causing each General Contractor
to obtain all other approvals from authorities having jurisdiction over the
Construction, the Land or the Improvements. Lessee shall monitor the progress
of the Construction. Lessee shall arrange for the delivery and storage,
protection and security of materials, systems and equipment which are to be
incorporated into the Improvements until such items are incorporated into the
Improvements.
SECTION 3.4 Inspection. At any time upon three (3) Business Days prior
notice to Lessee, Lessor, the Lender and their authorized representatives may
inspect the Leased Property and the books and records of Lessee relating to the
Leased Property and make copies and abstracts therefrom. All reasonable and
documented out-of-pocket costs of such inspection incurred by Lessor or Lender
shall be paid by Lessee promptly after receipt by Lessee of a written request
for such payment. No inspection shall unreasonably interfere with Lessee's
operations or the operations of any other occupant of the Leased Property. None
of the inspecting parties shall have any duty to make any such inspection or
inquiry and none of the inspecting parties shall incur any liability or
obligation by reason of not making any such inspection or inquiry. None of the
inspecting parties shall incur any liability or obligation by reason of making
any such inspection or inquiry unless and to the extent such inspecting party,
during the course of such inspection, causes damage to either the Leased
Property, any property of Lessee or any property of any other Person or to a
Person.
ARTICLE IV
RENT
SECTION 4.1 Basic Rent.
(a) Basic Rent. The first Rent Payment Date shall be the first Loan
Payment Date which next follows the first Parcel Closing Date, and beginning on
that date, Lessee shall commence making payments of Basic Rent to Lessor in
installments payable in arrears on each Rent Payment Date and on any date (if
not a Rent Payment Date) which is the Lease Termination Date. On each Rent
Payment Date, Lessee shall pay the installment of Basic Rent
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then due and payable pursuant to this Lease and all Parcel Lease Supplements
then in force. Basic Rent shall equal the sum of all installments of the
Facility Rent and the Index Rent for all Parcel Lease Supplements and shall be
payable in the respective amounts set forth below and therein.
(b) Facility Rent. On each Rent Payment Date, the Lessee shall, until
(i) the Lease Balance shall be paid in full on the Lease Termination Date, or
(ii) the payment by Lessee of the Recourse Deficiency Amount on the Scheduled
Termination Date and the fulfillment of the provisions of clauses (i) through
(xiii) of Section 15.6, pay installments of Facility Rent in arrears with
respect to the period elapsed since, in the case of the first Rent Payment Date,
the initial Closing Date, and in the case of each subsequent Rent Payment Date,
the immediately preceding Rent Payment Date, and each such installment shall be
in an amount which equals the Contribution Return then accrued and unpaid. In
addition, the Lessee shall pay as Facility Rent an amount equal to the Lessor's
Breakage Costs, if any, which at any time shall be payable pursuant to this
Lease or the Operative Documents.
(c) Index Rent. On each Rent Payment Date on which Basic Rent is payable,
the Lessee shall pay as Index Rent an amount equal to the sum of all interest
accrued and unpaid with respect to the Loans and the Notes.
SECTION 4.2 Supplemental Rent. Lessee shall pay to Lessor, or to
whomever shall be entitled thereto as expressly provided herein or in any other
Operative Document or in the Facilitation Agreement dated the date hereof
between the Lessee, the Lessor and JH Management Corporation (the "Facilitation
Agreement"), any and all Supplemental Rent promptly as the same shall become due
and payable. In particular, the Lessee agrees to pay to the Lessor or its
designee as Supplemental Rent (i) on the initial Closing Date and on [May 1st]
of each succeeding year during the Lease Term, the annual Facilitation Fee in
the sum of $5,000, (ii) amounts necessary to reimburse Lessor and Lender for all
legal fees and expenses incurred by them in connection with the transaction
contemplated by the Operative Documents; and (iii) such other amounts as Lessor
and Lessee shall mutually agree upon. In the event of any failure on the part
of Lessee to pay any Supplemental Rent, which failure constitutes an Event of
Default, Lessor shall have all rights, powers and remedies provided for herein
or by law or in equity or otherwise in the case of nonpayment of Basic Rent.
All Supplemental Rent to be paid pursuant to this Section shall be payable in
the type of funds and in the manner set forth in Section 4.3.
SECTION 4.3 Method of Payment. All Basic Rent shall be paid by the
Lessee directly to the Lender. Supplemental Rent (including amounts due under
Article XV hereof) shall be paid to Lessor (or to such Person as may be entitled
thereto) or, in each case, to such Person as Lessor (or such other Person) shall
specify in writing to Lessee, and at such place as Lessor (or such other Person)
shall specify in writing to Lessee, which specifications by Lessor shall be
given by Lessor at least ten (10) Business Days prior to the due date therefor.
Each payment of Rent (including all payments under Article XV hereof) shall be
made by Lessee prior to
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10:00 a.m. Louisville, Kentucky time on the date due, at the place of payment in
funds consisting of lawful currency of the United States of America which shall
be immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day.
SECTION 4.4 Late Payment. If any Rent (other than Supplemental Rent
payable by reason of this Section) shall not be paid when due, Lessee shall pay
to Lessor, as Supplemental Rent, interest (to the maximum extent permitted by
law) on such overdue amount from and including the due date thereof to but
excluding the Business Day of payment thereof at the Overdue Rate.
SECTION 4.5 Net Lease; No Setoff, Etc. This Lease is a net lease and,
notwithstanding any other provision of this Lease, Lessee shall pay all Basic
Rent and Supplemental Rent, and all costs, charges, taxes, assessments and other
expenses (foreseen or unforeseen) for which Lessee or any Indemnitee is or shall
become liable by reason of Lessee's or such Indemnitee's estate, right, title or
interest in the Leased Property, or that are connected with or arise out of the
acquisition, installation, possession, use, occupancy, maintenance, ownership,
leasing, repairs and rebuilding of, or addition to, the Leased Property or any
portion thereof, including, without limitation, the Construction or the
financing of the Construction and any other amounts payable hereunder shall be
paid, without counterclaim, setoff, deduction or defense and without abatement,
suspension, deferment, diminution or reduction, and Lessee's obligation to pay
all such amounts throughout the Lease Term is absolute and unconditional. The
obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including without limitation
(i) any defect in the condition, merchantability, design, quality or fitness for
use of the Leased Property or any part thereof, or the failure of the Leased
Property to comply with all Applicable Law, including any inability to occupy or
use the Leased Property by reason of such non-compliance, (ii) any damage to,
removal, abandonment, salvage, loss, contamination of or Release from, scrapping
or destruction of or any requisition or taking of the Leased Property or any
part thereof, (iii) any restriction, prevention or curtailment of or
interference with any use of the Leased Property or any part thereof including
eviction, (iv) any defect in title to or rights to the Leased Property or any
Lien on such title or rights or on the Leased Property, (v) any change, waiver,
extension, indulgence or other action or omission or breach in respect of any
obligation or liability of any Person requested or consented to by Lessee, (vi)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceedings relating to Lessee, Lessor,
the Lender or any other Person, or any action taken with respect to this Lease
by any trustee or receiver of Lessee, Lessor, the Lender or any other Person, or
by any court, in any such proceeding, (vii) any failure on the part of the
Lessor to perform or comply with any of the terms of this Lease, any other
Operative Document or of any other agreement where such failure was caused by
Lessee's failure to perform its obligations under the Operative Documents,
(viii) any disaffirmance of this Lease or any provision hereof or any of the
other Operative Documents or any provision of any thereof by Lessee, (ix) any
action by any court,
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administrative agency or other Governmental Authority, (x) any restriction,
prevention or curtailment of or interference with the Construction or any use of
the Leased Property or any part thereof or (xi) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not either Lessee
shall have notice or knowledge of any of the foregoing. Except as specifically
set forth in Articles XV or XI of this Lease, this Lease shall be noncancellable
by Lessee for any reason whatsoever and Lessee, to the extent permitted by
Applicable Law, waives all rights now or hereafter conferred by statute or
otherwise to quit, terminate or surrender this Lease, or to any diminution,
abatement or reduction of Rent payable by Lessee hereunder. Lessee assumes the
sole responsibility for the condition, use, operation, maintenance, and
management of the Leased Property and Lessor shall have no responsibility in
respect thereof and shall have no liability for damage to the property of either
Lessee or any subtenant of Lessee on any account or for any reason whatsoever
other than by reason of Lessor's willful misconduct or breach of any of its
express obligations under any Operative Document.
SECTION 4.6 Lessee to Cooperate with Lessor. The Lessee hereby agrees
to use its best efforts to supply Lessor with all such information necessary in
order for Lessor to maintain its books and accounts and prepare all required
federal, state and local tax returns.
ARTICLE V
CONDITION AND USE OF LEASED PROPERTY
During the Lease Term, Lessor's interest in the Improvements (whether or
not completed) and the Land is demised and let by Lessor "AS IS" and that
Lessor's interest is subject to, among other things, (i) the rights of any
parties in possession thereof, (ii) the state of the title thereto existing at
the time Lessor acquired its interest in the Leased Property, (iii) any state of
facts which an accurate survey or physical inspection might show (including each
survey delivered on each Parcel Closing Date), (iv) all Applicable Law and (v)
any violations of Applicable Law which may exist upon or subsequent to the
commencement of the Lease Term. LESSEE ACKNOWLEDGES THAT, ALTHOUGH LESSOR WILL
OWN AND HOLD TITLE TO THE LEASED PROPERTY, LESSEE IS SOLELY RESPONSIBLE FOR THE
DESIGN, DEVELOPMENT, BUDGETING AND CONSTRUCTION OF THE IMPROVEMENTS AND ANY
ALTERATIONS. NEITHER LESSOR NOR THE LENDER HAVE MADE OR SHALL BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO
HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, MERCHANTABILITY, TITLE,
HABITABILITY, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE LEASED
PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY (OR ANY PART
THEREOF), ALL SUCH WARRANTIES BEING HEREBY DISCLAIMED, AND NEITHER LESSOR NOR
THE LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR
THE FAILURE OF THE LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
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APPLICABLE LAW except that Lessor hereby represents and warrants that the Leased
Property shall at all times remain free of Lessor Liens. As between Lessor and
Lessee, Lessee shall be afforded full opportunity to inspect the related Parcel
prior to each Parcel Closing Date, and shall enter into each Parcel Lease
Supplement solely on the basis of the results of its own inspections and all
risks incident to the matters discussed in the two preceding sentences, as
between Lessor or the Lender, on the one hand, and Lessee, on the other, are to
be borne by Lessee. The provisions of this Article have been negotiated and,
except to the extent otherwise expressly stated, the foregoing provisions are
intended to be a complete exclusion and negation of any representations or
warranties by Lessor or the Lender, express or implied, with respect to the
Leased Property that may arise pursuant to any law now or hereafter in effect or
otherwise.
ARTICLE VI
LIENS; EASEMENTS; PARTIAL CONVEYANCES
SECTION 6.1 No Liens. Commencing on the later of (i) each Parcel Closing
Date or (ii) in the event that Improvements are to be Constructed on a Parcel of
Land, each Parcel Completion Date, and continuing thereafter, Lessee shall not
directly or indirectly create, incur or assume, any Lien on or with respect to
the related Parcel of the Leased Property, the Construction, title thereto, or
any interest therein, including any Liens which arise out of the possession,
use, occupancy, construction, repair or rebuilding of the Leased Property or by
reason of labor or materials furnished or claimed to have been furnished to
Lessee, or any of its contractors or agents or by reason of the financing of any
personalty or equipment purchased or leased by Lessee or Alterations constructed
by Lessee, except in all cases Permitted Liens.
SECTION 6.2 Easements and Related Conveyances. Notwithstanding Section
6.1, at the request of Lessee, Lessor shall, from time to time during the Lease
Term and upon reasonable advance written notice from Lessee and receipt of the
materials specified in the next succeeding sentence, consent to and join in any
(i) grant of easements, licenses, rights of way and other rights in the nature
of easements, including, without limitation, utility easements to facilitate
Lessee's use, development and construction of the Leased Property, (ii) release
or termination of easements, licenses, rights of way or other rights in the
nature of easements which are for the benefit of the Land, the Improvements or
any portion thereof, (iii) dedication or transfer of portions of the Land, not
improved with a building, for road, highway or other public purposes, (iv)
execution of agreements for ingress and egress and amendments to any covenants
and restrictions affecting the Land, the Improvements or any portion thereof and
(v) request to any Governmental Authority for platting or subdivision or
replatting or resubdivision approval with respect to the Land or any portion
thereof or any parcel of land of which the Land or any portion thereof forms a
part or a request for any variance from zoning or other governmental
requirements. Lessor's obligations pursuant to the preceding sentence shall be
subject to the requirements that:
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(a) any such action shall be at the sole cost and expense of Lessee,
and Lessee shall pay all reasonable and documented out-of-pocket costs of Lessor
in connection therewith (including, without limitation, the reasonable and
documented fees of attorneys, architects, engineers, planners, appraisers and
other professionals reasonably retained by Lessor in connection with any such
action);
(b) Lessee shall have delivered to Lessor a certificate of a
Responsible Officer of Lessee stating that (1) such action will not cause the
Land, the Improvements or any portion thereof to fail to comply in any respect
with the provisions of this Lease or any other Operative Documents or in any
respect with Applicable Law and (2) such action will not materially reduce the
Fair Market Sales Value of the Land or the Improvements nor Lessor's interest
therein;
(c) all consideration received in connection with such action (net of
all reasonable out-of-pocket expenses incurred by Lessee in connection
therewith) shall be paid to Lender within ten (10) Business Days following
receipt thereof and shall constitute a Qualified Payment (to the extent
consistent with the definition thereof) and be applied to reduce the Loans; and
(d) in the case of any release or conveyance, if Lessor so requests
and to the extent available without undue expense, Lessee will cause to be
issued and delivered to Lessor by the Title Insurance Company an endorsement to
the related Title Policy pursuant to which the Title Insurance Company agrees
that its liability for the payment of any loss or damage under the terms and
provisions of the related Title Policy will not be affected by reason of the
fact that a portion of the real property referred to in Schedule A of the
related Title Policy has been released or conveyed by Lessor.
ARTICLE VII
MAINTENANCE AND REPAIR;
ALTERATIONS; MODIFICATIONS AND ADDITIONS
SECTION 7.1 Maintenance and Repair; Compliance With Law. Lessee, at its
own expense, shall after each Parcel Closing Date with respect to each Parcel
(i) maintain the Leased Property in good repair and condition (subject to
ordinary wear and tear), in accordance with prudent industry standards and, in
any event, in no less a manner as other similar facilities owned or leased by
Lessee, (ii) make all Alterations in accordance with, and maintain (whether or
not such maintenance requires structural modifications or Alterations) and
operate and otherwise keep the Leased Property in material compliance with, all
Applicable Laws and (iii) make all material repairs, replacements and renewals
of the Leased Property or any part thereof which may be required to keep the
Leased Property in the condition required by the preceding clauses (i) and (ii).
Lessee shall perform the foregoing maintenance obligations regardless of whether
the Leased Property is occupied or unoccupied. Lessee waives any right that it
may now have or hereafter acquire to (i) require Lessor to maintain, repair,
replace, alter, remove
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or rebuild all or any part of the Leased Property or (ii) make repairs at the
expense of Lessor pursuant to any Applicable Law or other agreements or
otherwise. Lessor shall not be liable to Lessee or to any contractors,
subcontractors, laborers, materialmen, suppliers or vendors for services
performed or material provided on or in connection with the Leased Property or
any part thereof. Lessor shall not be required to maintain, alter, repair,
rebuild or replace the Leased Property in any way.
SECTION 7.2 Alterations. The Lessee shall have the right, at any time and
from time to time, to make such Alterations, structural or otherwise, to the
Leased Property as the Lessee shall deem necessary or desirable, subject to the
following conditions:
(a) No Alterations shall be undertaken until the Lessee shall have
procured and paid for, so far as the same may be required from time to
time, all required municipal and other governmental permits and
authorizations of the various municipal departments and governmental
subdivisions having jurisdiction, and the Lessor, at the Lessee's expense,
shall join in the application for such permits or authorizations whenever
such action is necessary;
(b) Any structural Alterations, or any Alterations undertaken as a
single project and involving an estimated cost aggregating more than
$100,000, shall, if requested by the Lender, be conducted under the
supervision of an architect or engineer licensed as such in the State where
the applicable Parcel is located; selected by the Lessee and reasonably
acceptable to the Lender, and no such work shall be undertaken until
preliminary plans and outline specifications and budget estimates therefor,
prepared and approved in writing by such architect or engineer, stating
that the same comply with the provisions of this Article, shall have been
submitted to and approved by the Lessor and the Lender;
(c) All Alterations will comply in all respects with the provisions of
the Operative Documents and shall be of such a character that, when
completed, the Fair Market Sales Value of the Improvements shall be not
less than the Fair Market Sales Value of the Improvements immediately
before any such Alterations.
(d) All work done in connection with any Alterations shall be done in
a good and workmanlike manner and in compliance with applicable building
and zoning laws and with all other Applicable Laws; the cost of any such
Alterations shall be paid in cash or its equivalent, so that the Leased
Property shall at all times be free of Liens for labor and materials
supplied or claimed to have been supplied (other than inchoate liens or
liens bonded off in accordance with Applicable Law and with Lender's
consent); and the work of any Alterations shall be prosecuted with
reasonable dispatch, unavoidable delays excepted; and
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(e) Worker's compensation insurance covering all persons employed in
connection therewith and with respect to whom death or bodily injury claims
could be asserted against the Lessor, the Lender or the Lessee or the
Leased Property and general liability and property damage insurance (which
may be effected by indorsement, if obtainable, on the insurance required to
be carried pursuant to Section 9.2) for the mutual benefit of the Lessor,
the Lender or the Lessee with limits of not less than those required to be
carried pursuant to said Section 9.2 shall be maintained by the Lessee at
all times when any work is in process in connection with any Alterations.
SECTION 7.3 Title to Alterations. Title to all Alterations shall
without further act vest in Lessor (subject to Lessee's right to remove trade
fixtures, personal property and equipment which were not acquired with funds
advanced by Lessor or Lender) and shall be deemed to constitute a part of the
Leased Property and be subject to this Lease.
ARTICLE VIII
USE
Lessee shall use the Leased Property or any part thereof only for the
purpose of operating nursing homes and assisted living centers and uses
ancillary thereto.
ARTICLE IX
INSURANCE
SECTION 9.1 Insurance Coverages. At all times (except as otherwise
indicated) the Lessee, at its sole cost and expense, shall keep the Improvements
insured for the mutual benefit of the Lender, Lessor and Lessee against:
(a) loss or damage by fire, and such other risks as may be included in
the so-called "All Risk" form of insurance providing coverage against all
risks of physical loss, in an amount satisfactory to Lender, but in any
event not less than the then Full Replacement Cost of the Improvements;
(b) loss or damage from leakage of sprinkler systems now or hereafter
installed in the Improvements, in such amount as Lender may reasonably
require;
(c) loss of rental from the Improvements, under a rental value
insurance policy covering risk of loss due to any of the hazards described
in clauses (a) and (b) of this Section 9.1 in an amount not less than the
aggregate requirements for the period of 12 months following the occurrence
of the insured casualty for Basic Rent and Supplemental Rent;
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(d) loss or damage by explosion of high pressure steam boilers, air
conditioning equipment, pressure vessels, motors or similar apparatus, now
or hereafter installed in the Improvements in such limits with respect to
any one accident as may reasonably be required by Lender from time to time,
but not less than $100,000;
(e) flood hazard coverage, if available under any applicable federal
flood insurance program, in an amount reasonably satisfactory to Lender;
(f) during the Construction and at any time during which any part of
the Improvements or any Alteration are under construction, and as to any
part of the Improvements or any Alteration under construction, builder's
risk coverage under a so-called "all risk" non-reporting completed value
form of policy; and
(g) such other hazards and in such amounts as Lender may reasonably
require provided that such insurance is then customarily maintained with
respect to similar properties in the State in which such Improvements are
located.
The term "Full Replacement Cost" shall mean the actual replacement cost of the
Improvements (excluding foundation and excavation costs) without physical
depreciation. Full Replacement Cost shall be determined at the request of
Lender by an architect, appraiser, appraisal company or one of the insurers,
selected and paid by the Lessee and reasonably acceptable to Lender, but such
determination shall not be required to be made more frequently than once every
24 months.
SECTION 9.2 Liability Insurance. The Lessee shall also maintain insurance
for the mutual benefit of the Lessor, the Lender, each other Indemnitee, and the
Lessee against claims for bodily injury or property damage, under a policy of
general public liability insurance, with such limits as may reasonably be
required by the Lessor or the Lender from time to time, but not less than
$3,000,000 combined single limit, with excess umbrella liability coverage of not
less than $10,000,000.
SECTION 9.3 Policies. All insurance provided for under this Lease shall
be effected under valid enforceable policies issued by insurers of recognized
responsibility and acceptable to the Lessor and the Lender. Upon the execution
of this Lease, the Lessee shall deliver to the Lender and the Lessor original
certificates of such insurance and copies of such policies in form reasonably
satisfactory to the Lender. At least thirty (30) days prior to the expiration
date of any policy, a copy of the renewal policy for such insurance shall be
delivered by the Lessee to the Lessor and the Lender, and certificates thereof
in form reasonably satisfactory to the Lender shall be delivered as aforesaid,
together with satisfactory evidence of payment of the premium thereon. All
policies referred to in Section 9.1 shall contain agreements by the insurers
that (i) any loss shall be payable to the Lessor and the Lender, notwithstanding
any act or negligence of the Lessee which might otherwise result in forfeiture
of said insurance, (ii) such policies shall not be canceled except upon thirty
(30) days' prior written notice to each named insured and loss
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payee, (iii) the coverage afforded thereby shall not be affected by the
performance of any work in or about the Leased Property and (iv) waiving all
rights of subrogation against the Lessor, Lender, Lessee and their respective
officers, employees, directors, incorporators, shareholders and agents.
SECTION 9.4 Loss Payee Provisions. The rental value policy referred to in
Section 9.1 (c) shall name Lender as the loss-payee thereunder. Upon the
receipt of same, the Lender shall apply the proceeds of such rental value
insurance paid to it first to the payment of Basic Rent and then to the payment
of taxes, insurance premiums and other items of Supplemental Rent becoming due
during the rebuilding and restoration of the Leased Property, and any balance of
such proceeds after the completion of such rebuilding and restoration shall be
paid to Lessee. Except as provided above in this Section 9.4, all policies of
insurance required herein shall name the Lender, Lessor, and Lessee as the
insureds as their respective interests may appear. Subject to the provisions
and limitations of this Section, all policies referred to in Section 9.1 shall
also provide for any loss to be payable to Lender as its interest may appear,
pursuant to a standard mortgagee clause or endorsement. The loss, if any, under
the policies referred to in Section 9.1 shall be adjusted with the insurance
companies by the Lessee except that no loss shall be adjusted without the prior
written approval of the Lender. The loss, if any, under all policies referred
to in Section 9.1 shall be payable to the Lender. All such policies shall
expressly provide that loss thereunder shall be adjusted and paid as provided in
this Section. Any loss paid to the Lessee under any insurance policy referred
to in Section 9.1 shall be held by the Lessee in trust for application to the
cost of restoring, repairing, replacing or rebuilding the Improvements. Any
loss paid to the Lender shall be disbursed by it in accordance with the
provisions of Section 11.6 of this Lease.
SECTION 9.5 Other Insurance. Nothing in this Article shall prevent the
Lessee from taking out insurance of the kind and in the amounts provided for
under Section 9.1 and 9.2 under a blanket insurance policy or policies which can
cover other properties owned or operated by the Lessee as well as the Leased
Property; provided, however, that any such policy of insurance provided for
under Section 9.1 shall (a) specify therein, or the Lessee shall furnish the
Lessor and the Lender with a written statement from the insurers under such
policies specifying, the amount of the total insurance allocated to the
Improvements, which amount shall be not less than the amount required by said
Section 9.1 to be carried, and (b) not contain any clause which would result in
the insured thereunder being required to carry insurance with respect to the
property covered thereby in an amount equal to a minimum specific percentage of
the value of such property in order to prevent the insured therein named from
becoming a co-insurer of any loss with the insurer under such policy. The
Lessee shall furnish to the Lessor and the Lender, within 30 days after the
filing thereof with any insurance rate-making body, copies of the schedule or
make-up of all property covered by every such policy of blanket insurance.
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SECTION 9.6 Loss Deductibles. All insurance provided for under this
Agreement may contain loss deductible clauses in such maximum amounts as the
Lender shall approve from time to time.
SECTION 9.7 Failure to Maintain Insurance. If Lessee shall fail to
maintain any insurance required to be maintained herein or in any other
Operative Document, then without limiting the application of the provisions of
Article XIII(c) hereof, Lessor or the Lender may, but shall not be required to,
obtain such insurance on behalf of the Lessee. In the event Lessor or Lender
shall obtain such insurance, (a) the Lessee shall pay the costs of obtaining
such insurance as Supplemental Rent within five (5) Business Days of demand
therefor, and (b) the Lessee may provide other insurance conforming to the
requirements of this Lease, in which instance any insurance obtained by the
Lender or the Lessor shall be cancelled at its request. The rights of the
Lessee and Lender under this Section 9.7 shall be in addition to, and not in
place of, any other rights such parties may have under this Lease and the other
Operative Documents.
ARTICLE X
ASSIGNMENT AND SUBLEASING
Except as provided in the next following sentence, Lessee may not assign
any of its right, title or interest in, to or under this Lease. Lessee may
assign or sublease all or any portion of the Leased Property; provided, however,
that (i) all obligations of Lessee (or, in the case of a merger, consolidation
or sale of all or substantially all of Lessee's assets, Lessee's successor if
(A) such successor has a net worth, determined in accordance with GAAP, at least
equal to that of Lessee as of the end of the most recent fiscal quarter of
Lessee, (B) such successor assumes in writing all of Lessee's obligations under
the Operative Documents without qualification or reservation and (C) immediately
after giving effect to such merger, consolidation or sale, no Event of Default
exists) shall continue in full effect as obligations of a principal and not of a
guarantor or surety, as though no assignment or sublease had been made, (ii) any
such sublease shall be expressly subject and subordinate to this Lease, the Loan
Agreement, the Mortgages and the other Operative Documents except to the extent
the Lease remains effective under the applicable Non-Disturbance and Attornment
Agreement and (iii) each such sublease shall terminate on or before the Lease
Termination Date. Lessee may sublet any of the Properties to Atria Health
Centers, Inc., a Delaware corporation and the wholly-owned subsidiary of Lessee
for so long as such corporation shall remain a wholly-owned subsidiary of the
Lessee.
ARTICLE XI
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
SECTION 11.1 Event of Loss. Any event (i) which would otherwise
constitute a Casualty during the Lease Term, (ii) which, in the good-faith
judgement of Lessee, renders repair and restoration of any Property impractical
or uneconomical and (iii) as to which Lessee, within thirty (30) days after the
occurrence of such event, delivers to Lessor and the Lender an
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Officer's Certificate notifying Lessor and the Lender of such event and of such
judgement, shall constitute an "Event of Loss". In the case of any other event
which constitutes a Casualty, Lessee shall restore and rebuild the affected
Property pursuant to Section 11.3. If an Event of Loss other than an Event of
Taking shall occur, Lessee shall pay to Lessor on the next Rent Payment Date
following delivery of the Officer's Certificate pursuant to clause (iii) of the
preceding sentence, in addition to all Basic Rent and Supplement Rent otherwise
due on such date, an amount equal to the sum of the Total Development Cost of
the affected Property, plus the Breakage Costs, if any, applicable to the
consequent prepayment of the Notes pursuant to the Loan Agreement. Upon Lessor's
receipt of such amount on such date, Lessor shall cause Lessor's interest in the
affected Property to be conveyed to Lessee in accordance with and subject to the
provisions of Section 15.5 ("Purchase Procedure") hereof, provided, however,
that (A) such conveyance may be by special warranty deed, but free and clear of
Lessor's Liens and the lien of the related Mortgage, (B) Lessor shall have no
obligation to remove title defects other than Lessor Liens and the lien of the
related Mortgage affecting such Property and (C) Lessee's ability to obtain a
title insurance policy shall not affect Lessee's obligation to purchase Lessor's
interest in the affected Property. Upon completion of such purchase, but not
prior thereto, the affected Property shall be deemed released from this Lease
and all obligations of the Lessee and Lessor with respect to such Property shall
terminate, except with respect to obligations and liabilities hereunder, actual
or contingent, that have arisen or relate to events occurring on or prior to
such date of purchase, or which are expressly stated herein to survive
termination of this Lease. Upon the consummation of the purchase of the Leased
Property pursuant to this Section, any proceeds derived from insurance required
to be maintained by Lessee pursuant to this Lease for Leased Property remaining
after payment of such purchase price shall be paid over to, or retained by,
Lessee or as it may direct, and Lessor shall assign to Lessee, without warranty,
all of Lessor's rights to and interest in insurance required to be maintained by
Lessee pursuant to this Lease.
SECTION 11.2 Event of Taking. Any event (a) which constitutes a taking
of title to any Property or (b) (i) which would otherwise constitute a
Condemnation, (ii) which, in the good-faith judgement of Lessee, renders
restoration and rebuilding of such Property impossible, impractical or
uneconomical and (iii) as to which Lessee, within thirty (30) days after the
occurrence of such event, delivers to Lessor and Lender an Officer's Certificate
notifying Lessor and the Lender of such event, of such judgement and of the date
(or Lessee's best estimate thereof) on which Lessee shall be required to
relinquish possession of the affected Property (or the affected portion
thereof), shall constitute an "Event of Taking". In the case of any other event
which constitutes a Condemnation, Lessee shall restore and rebuild the affected
Property pursuant to Section 11.4. If an Event of Taking shall occur, Lessee
shall pay to the Lender for the account of the Lessor (i) on the next Rent
Payment Date following the occurrence of such Event of Taking, in the case of an
Event of Taking described in clause (a) of the second preceding sentence or (ii)
on the Rent Payment Date next preceding the date on which Lessee is required to
relinquish possession of the Leased Property (or the affected portion thereof),
in the case of an Event of Taking described in clause (b) of the second
preceding sentence, in addition to all Basic Rent and Supplemental Rent
otherwise due on such date, an amount equal
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to the sum of the Total Development Cost of the affected Property plus the
Breakage Costs, if any, applicable to the consequent prepayment of the Notes.
Upon the Lessor's receipt of such amount on such date, the Lessor shall cause
the Lessor's interest in the affected Property to be conveyed to Lessee in
accordance with and subject to the provisions of Section 15.5 ("Purchase
Procedure") hereof; provided, however, that (A) such conveyance may be by
special warranty deed, but free and clear of Lessor's Liens and the lien of the
related Mortgage, (B) such conveyance shall be subject to all rights of the
condemning authority, (C) Lessor shall have no obligation to remove title
defects other than Lessor Liens and the lien of the related Mortgage affecting
such Property and (D) Lessee's ability to obtain a title insurance policy shall
not affect Lessee's obligation to purchase Lessor's interest in the affected
Property. Upon completion of such purchase, but not prior thereto, the affected
Property shall be deemed released from this Lease and all obligations of the
Lessee and the Lessor under this Lease with respect to such Property shall
terminate, except with respect to obligations and liabilities hereunder, actual
or contingent, that have arisen or relate to events occurring on or prior to the
date of such purchase, or which are expressly stated herein to survive
termination of this Lease. Upon the consummation of the purchase of the affected
Property pursuant to this Section, all Awards received by Lessor, after
deducting any reasonable and documented costs incurred by Lessor in collecting
such Awards, received or payable on account of an Event of Taking during the
Lease Term shall be paid to Lessee, and all rights of Lessor in Awards not then
received shall be assigned to Lessee by Lessor. If no Event of Default has
occurred and is then continuing, Lessee shall have the right to negotiate with
the condemning authority and receive all Awards, subject to the terms of this
Lease.
SECTION 11.3 Casualty. If a Casualty shall occur, Lessee shall rebuild
and restore the affected Property, will complete the same prior to the Lease
Termination Date and will cause the conditions set forth in Section 3.3 of the
Participation Agreement to be fulfilled with respect to such restoration and
rebuilding prior to the Lease Termination Date; provided, however, that with
respect to any such Casualty occurring after the original satisfaction of the
Construction Conditions, such restoration and rebuilding will be performed, and
the Improvements, as applicable, will be restored and rebuilt, in accordance
with the Plans and Specifications as in existence on the date on which the
certificate of occupancy for the affected Improvements was issued, as such Plans
and Specifications may have been modified in respect of Alterations completed
prior to the occurrence of such Casualty pursuant to Section 7.2, with such
additional modifications to such Plans and Specifications as Lessor shall
consent to in writing, which consent shall not be unreasonably held or delayed.
SECTION 11.4 Condemnation. If a Condemnation shall occur, Lessee shall
rebuild and restore the affected Property to the extent practicable, will
complete the same prior to the Lease Termination Date, and will cause the
conditions set forth in Section 3.3 of the Participation Agreement to be
fulfilled with respect to such restoration and rebuilding prior to the Lease
Termination Date; provided, however, that within sixty (60) days after Lessee's
receipt of any Awards with respect to such Condemnation, Lessee shall pay to the
Lender, which amounts shall be applied as a Qualified Payment to the prepayment
of the Notes, (a) the portion, if any, of
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such Awards which are identified, by the condemner, as being allocable to the
Land or (b) if no such identification is made by the condemner, the portion, if
any, of such Awards which are, in Lessee's good-faith and reasonable judgment,
allocable to the Land; and provided, further, that with respect to any such
Condemnation occurring after the original satisfaction of the Construction
Conditions, such restoration and rebuilding will be performed, and the
Improvements, as applicable, will be restored and rebuilt, in accordance with
the Plans and Specifications as in existence on the date on which the
certificate of occupancy for the affected Improvements, as applicable, was
issued, as such Plans and Specifications may have been modified in respect of
Alterations completed prior to the occurrence of such Casualty pursuant to
Section 7.2 or modified to adjust for a Condemnation of the Leased Property
pursuant to Section 11.3, with such additional modifications to such Plans and
Specifications as Lessor shall consent to in writing, which consent shall not be
unreasonably withheld or delayed.
SECTION 11.5 Verification of Restoration and Rebuilding. Lessee will
promptly notify Lender and Lessor of the completion of the restoration or
rebuilding of the Improvements, as applicable, after a Casualty or Condemnation.
After completion of such restoration and rebuilding and in order to verify
Lessee's compliance with the foregoing Sections 11.3 and 11.4, Lessor, the
Lender and their authorized representatives may, upon three (3) Business Days'
notice to Lessee, inspect the Leased Property and the completion of the
restoration and rebuilding of the Improvements, as applicable. All reasonable
and documented out-of-pocket costs of such inspection incurred by Lessor and the
Lender will be paid by Lessee promptly after written request. No such
inspection shall unreasonably interfere with Lessee's operations or the
operations of any other occupant of the Leased Property. None of the inspecting
parties shall have any duty to make any such inspection or inquiry and none of
the inspecting parties shall incur any liability or obligation by reason of not
making any such inspection or inquiry. None of the inspecting parties shall
incur any liability or obligation by reason of making any such inspection or
inquiry unless and to the extent such inspecting party causes damage to the
Leased Property or any property of Lessee or any other Person during the course
of such inspection.
SECTION 11.6 Application of Payments. (a) All proceeds (except for
payments under insurance policies maintained other than pursuant to Article IX
of this Lease) received at any time by Lessor, Lessee or the Lender from any
Governmental Authority or other Person with respect to any Condemnation or
Casualty to the Leased Property or any part thereof or with respect to an Event
of Loss or an Event of Taking, plus the amount of any payment that would have
been due from an insurer but for Lessee's self-insurance or deductibles ("Loss
Proceeds"), shall (except to the extent Section 11.9 applies) be applied as
follows:
(i) In the event Lessee purchases the affected Property pursuant to
Section 11.1 or Section 11.2, such Loss Proceeds shall be applied as set
forth in Section 11.1 or Section 11.2, as the case may be;
(ii) In the event of a Casualty at such time when or Event of Default
has occurred and is continuing and Lessee is obligated to repair and
rebuild the
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Leased Property pursuant to Section 11.3, Lessee may, in good faith and
subsequent to the date of such Casualty, certify to the Lender and to the
applicable insurer that no Default or Event of Default has occurred, in
which event the applicable insurer shall pay the Loss Proceeds to Lessee
and, if requested by Lessee, the Lender and Lessor shall so direct the
insurer;
(iii) In the event of a Condemnation at such time when or Event of
Default has occurred and is continuing and Lessee is obligated to repair
and rebuild the Leased Property pursuant to Section 11.4, Lessor and Lender
(if required) shall upon Lessee's request assign to Lessee Lessor's and the
Lender's (if applicable) interest in any applicable Awards except for
Awards (or portions thereof) described in Section 11.4(a) or (b); and
(iv) As provided in Section 11.8 if such Section is applicable.
(b) During any period of repair or rebuilding pursuant to this Article,
this Lease will remain in full force and effect and Basic Rent shall continue to
accrue and be payable without abatement or reduction. Lessee shall maintain
records setting forth information relating to the receipt and application of
payments in accordance with this Section. Such records shall be kept on file by
Lessee at its offices and shall be made available to Lessor and the Lender upon
request.
SECTION 11.7 Prosecution of Awards. (a) If, during the continuance
of any Event of Default, any Condemnation shall occur, Lessee shall give to
Lessor and the Lender promptly, but in any event within sixty (60) days after
the occurrence of such Condemnation, written notice of such occurrence and the
date thereof, generally describing the nature and extent of such Condemnation.
With respect to any Event of Taking or any Condemnation, Lessee shall control
the negotiations with the relevant Governmental Authority as to any proceeding
in respect of which Awards are required, under Section 11.6, to be assigned or
released to Lessee; provided, however, that if an Event of Default shall have
occurred and be continuing Lessor shall control such negotiations. Lessee
hereby irrevocably assigns, transfers and sets over to Lessor all rights of
Lessee to any Award made during the continuance of an Event of Default on
account of any Event of Taking or any Condemnation and, if there will not be
separate Awards to the Lessor and the Lessee on account of such Event of Taking
or Condemnation, irrevocably authorizes and empowers Lessor during the
continuance of an Event of Default, with full power of substitution in the name
of Lessee or otherwise (but without limiting the obligations of Lessee under
this Article), to file and prosecute what would otherwise be Lessee's claim for
any such Award and, in the case of Lessor, to collect, receipt for and retain
the same; provided, however, that in any event Lessor may participate in any
such negotiations, and no settlement will be made without Lessor's prior
consent, not to be unreasonably withheld or delayed.
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(b) Notwithstanding the foregoing, Lessee may prosecute, and Lessor shall
have no interest in, any claim with respect to Lessee's trade fixtures, other
personal property and equipment and Lessee's relocation expenses.
SECTION 11.8 Application of Certain Payments Not Relating to an Event of
Taking. In case of a requisition for temporary use of all or a portion of the
Leased Property which is not an Event of Taking, this Lease shall remain in full
force and effect, without any abatement or reduction of Basic Rent, and the
Awards for the Leased Property shall, unless an Event of Default has occurred
and is continuing, be paid to Lessee.
SECTION 11.9 Other Dispositions. Notwithstanding the foregoing
provisions of this Article, so long as an Event of Default shall have occurred
and be continuing, any amount that would otherwise be payable to or for the
account of, or that would otherwise be retained by, Lessee pursuant to this
Article shall be paid to Lessor as security for the obligations of Lessee under
this Lease and, at such time thereafter as no Event of Default shall be
continuing, such amount shall be paid promptly to Lessee to the extent not
previously applied by Lessor in accordance with the terms of this Lease or the
other Operative Documents.
SECTION 11.10 No Rent Abatement. Rent shall not abate hereunder by
reason of any Casualty, any Event of Loss, any Event of Taking or any
Condemnation of the Leased Property, and Lessee shall continue to perform and
fulfill all of Lessee's obligations, covenants and agreements hereunder
notwithstanding such Casualty, Event of Loss, Event of Taking or Condemnation
until the Lease Termination Date. The foregoing notwithstanding, if and to the
extent that, pursuant to the provisions of this Lease and the other Operative
Documents, Loss Proceeds or Awards are paid over to and permanently retained by
the Lender or Lessor, Lessee shall receive as a credit against its obligation to
pay Basic Rent or, as applicable, the Lease Balance, in the amount of any such
Loss Proceeds or Awards.
ARTICLE XII
INTEREST CONVEYED TO LESSEE
If a bankruptcy court or other court of competent jurisdiction determines
that the transaction represented by this Lease will not be enforced as a true
lease, or will be treated as a financing or other transaction, then in such
event it is the intention of the parties hereto (i) that this Lease be treated
as a mortgage and security agreement, deed of trust and security agreement, or
other similar instrument encumbering the Leased Property, (ii) that Lessor shall
have, as a result of such determination, all of the rights, powers and remedies
of a mortgagee or trustee under a deed of trust available under Applicable Law
to take possession of and sell upon the occurrence of an Event of Default
(whether by foreclosure or otherwise) the Leased Property, (iii) that the
effective date of such mortgage and security agreement, deed of trust and
security agreement, or other similar instrument shall be the effective date of
this Lease, (iv) that the recording of this Lease, each Memorandum of Lease, or
any other instrument referencing this provision shall be deemed to be the
recording of such mortgage and security agreement,
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deed of trust and security agreement, or other similar instrument and (v) that
the obligations secured by such mortgage and security agreement, deed of trust
and security agreement, or other similar instrument shall include the payment of
all Basic Rent and Supplemental Rent, the Lease Balance and all other
obligations of and amounts due from Lessee hereunder and under the Operative
Documents but without duplication.
ARTICLE XIII
EVENTS OF DEFAULT
The following events shall constitute Events of Default (whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) Lessee shall fail to make any payment of Basic Rent when due and such
failure shall continue for a period of five (5) days after such failure;
(b) Lessee shall fail to make any payment of Supplemental Rent when due
and such failure shall continue for a period of ten (10) days after Lessee's
receipt of written notice of such failure from Lessor;
(c) Lessee shall fail to pay (i) the amount required for purchase of the
affected Property when due pursuant to Sections 11.1, or 11.2, or (ii) the Lease
Balance when due in connection with the exercise of the Purchase Option pursuant
to Section 15.1, or when due for the purchase of the Leased Property pursuant to
Section 15.2, or (iii) the Recourse Deficiency Amount when required pursuant to
Article XV;
(d) Lessee shall fail to maintain insurance as required by Article IX
hereof;
(e) The occurrence of any breach of the financial covenants set forth in
Section 5.5 of the Participation Agreement and Appendix III thereof;
(f) The occurrence of an "Event of Default" as defined in either or both of
the Guaranty or the Investment Property Security Agreement;
(g) The filing by Lessee of any petition for dissolution or liquidation of
Lessee, or the commencement by Lessee of a voluntary case under any applicable
bankruptcy, insolvency or other similar law for the relief of debtors, foreign
or domestic, now or hereafter in effect, or Lessee shall have consented to the
entry of an order for relief in an involuntary case under any such law, or the
appointment of or taking possession by a receiver, custodian or trustee (or
other similar official) for Lessee or any substantial part of its property, or a
general assignment by Lessee for the benefit of its creditors, or Lessee shall
have taken any corporate action in furtherance of any of the foregoing; or the
filing against Lessee of an involuntary petition in
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bankruptcy which results in an order for relief being entered or,
notwithstanding that an order for relief has not been entered, the petition is
not dismissed within ninety (90) days of the date of the filing of the petition,
or the filing under any law relating to bankruptcy, insolvency or relief of
debtors of any petition against Lessee which either (i) results in a finding or
adjudication of insolvency of Lessee or (ii) is not dismissed within ninety (90)
days of the date of the filing of such petition;
(h) A "default", "event of default" or other similar occurrence shall have
occurred and be continuing under (i) that certain $200,000,000 Credit Agreement
(the "Credit Agreement") dated as of August 15, 1996 among the Lessee as
Borrower, the lending institutions (including the Lender) listed in Annex I
thereto, PNC Bank, National Association as Administrative Agent, PNC Bank,
Kentucky, Inc., as Managing Agent, National City Bank of Kentucky as
Documentation Agent, and each of PNC Bank, National Association, National City
Bank of Kentucky and The Toronto-Dominion Bank, New York Agency, as Syndication
Agents, as the Credit Agreement may have been and as it shall be amended,
supplemented, restated or otherwise modified from time to time; and/or (ii) any
other loan agreement, credit agreement, revolving credit agreement, mortgage,
security agreement, lease agreement, participation agreement or other agreement
evidencing or securing any Indebtedness of Lessee or any one or more of its
Affiliates or by which any of them is bound, and to which Lender is a party or
the assignee of a party or a participant in the interest of a party.
(i) A "default", "event of default" or other similar occurrence shall have
occurred and be continuing under any other loan agreement, credit agreement,
revolving credit agreement, mortgage, security agreement, lease agreement,
participation agreement or other agreement between Lessee, or any Affiliate of
Lessee, and Lender or between Lessee, or any Affiliate of Lessee, and Lessor, or
any Affiliate of Lessor, evidencing or securing any Indebtedness of Lessee or
any one or more of its Affiliates in excess of $1,000,000;
(j) Any representation or warranty by Lessee in any Operative Document or
in any certificate or document delivered to Lessor pursuant to any Operative
Document shall have been incorrect in any material respect when made and has
resulted in a Material Adverse Effect on Lessee; or
(k) Lessee shall fail in any material respect to timely perform or observe
any covenant, condition or agreement (not included in clause (a), (b), (c), (d),
(e), (f), (g), (h), (i) or (j) of this Article) to be performed or observed by
it hereunder or under the other Operative Documents and such failure shall
continue for a period of 30 days after the earlier to occur of a Responsible
Officer becoming aware of such failure or the Lessee's receipt of written notice
thereof from Lessor (provided, however, if such failure is other than the
payment of money and is of such nature that it can be corrected but not within
the applicable period, then that failure shall not constitute an Event of
Default so long as Lessee institutes curative action within the applicable
period and diligently pursues that action to completion).
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ARTICLE XIV
ENFORCEMENT
SECTION 14.1 Remedies. Upon the occurrence of any Event of Default and
at any time thereafter, Lessor may, so long as such Event of Default is
continuing, do one or more of the following as Lessor in its sole discretion
shall determine, without limiting any other right or remedy Lessor may have on
account of such Event of Default (including, without limitation, the obligation
of Lessee to purchase the Leased Property as set forth in Sections 15.2 and
15.3):
(a) Lessor may, by notice to Lessee, rescind or terminate this Lease as of
the date specified in such notice; provided, however, that (i) no reletting,
reentry or taking of possession of the Leased Property by Lessor will be
construed as an election on Lessor's part to terminate this Lease unless written
notice of such intention is given to Lessee, (ii) notwithstanding any reletting,
reentry or taking of possession, Lessor may at any time thereafter elect to
terminate this Lease for a continuing Event of Default, (iii) no act or thing
done by Lessor or any of its agents, representatives or employees and no
agreement accepting a surrender of the Leased Property shall be valid unless the
same be made in writing and executed by Lessor, and (iv) Lessor shall be under
no obligation whatsoever to mitigate its damages hereunder but shall be entitled
to maintain an action for the payment in full of all amounts due hereunder
(including but not limited to payment of the Recourse Deficiency Amount, but
subject to the terms and provisions of this Section 14.1), except as may be
required by Applicable Law.
(b) Lessor may (i) demand that Lessee, and Lessee shall upon the written
demand of Lessor, return the Leased Property promptly to Lessor in the manner
and condition required by, and otherwise in accordance with all of the
provisions of, Articles VII and XV hereof as if the Leased Property were being
returned at the end of the Lease Term, and Lessor shall not be liable for the
reimbursement of Lessee for any costs and expenses incurred by Lessee in
connection therewith and (ii) without prejudice to any other remedy which Lessor
may have for possession of the Leased Property, and to the extent and in the
manner permitted by Applicable Law, enter upon the Leased Property and take
immediate possession of (to the exclusion of Lessee) the Leased Property or any
part thereof and expel or remove Lessee and any other Person who may be
occupying the Leased Property, by summary proceedings or otherwise, all without
liability to Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise and, in addition to Lessor's other damages, Lessee shall be
responsible for the reasonable and documented costs and expenses of reletting,
including brokers fees and the reasonable and documented costs of any
alterations or repairs made by Lessor.
(c) Lessor may (i) sell all or any part of the Leased Property at public
or private sale, as Lessor may determine, free and clear of any rights of Lessee
and without any duty to account to Lessee with respect to such action or
inaction or any proceeds with respect thereto (except to the extent required by
clause (ii) of this subsection if Lessor shall elect to exercise its rights
thereunder) in which event Lessee's obligation to pay Basic Rent hereunder for
periods
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commencing after the date of such sale shall be terminated or proportionately
reduced, as the case may be and (ii) if Lessor shall so elect, demand that
Lessee pay to Lessor, and Lessee shall pay to Lessor, on the date of such sale,
as liquidated damages for loss of a bargain and not as a penalty (the parties
agreeing that Lessor's actual damages would be difficult to predict, but the
aforementioned liquidated damages represent a reasonable approximation of such
amount) (in lieu of Basic Rent due for periods commencing on or after the Rent
Payment Date coinciding with such date of sale (or, if the sale date is not a
Rent Payment Date, the Rent Payment Date next preceding the date of such sale)),
an amount equal to (A) the excess, if any, of (1) the sum of all Rent due and
unpaid to and including such Rent Payment Date plus an amount equal to the Lease
Balance as of the date of sale (or, if the Event of Default occurs prior to the
Completion Date, an amount equal to the sum of the principal of and all interest
accrued on, and Breakage Costs, if any, in respect of, the Notes plus an amount
equal to the outstanding balance of the Contribution plus all accrued and unpaid
Contribution Returns) over (2) the net proceeds of such sale (that is, after
deducting all costs and expenses incurred by Lessor incident to such conveyance
(including, without limitation, all costs, expenses, fees, premiums and taxes
described in Section 15.5(b)), plus (B) interest at the Overdue Rate on the
foregoing amount from such Rent Payment Date until the date of payment. Any
amounts so collected pursuant to this subsection shall be applied (after first
deducting amounts expended by Lessor in connection with the Leased Property and
the Operative Documents and not then reimbursed) to reduce the Lease Balance.
Lessor agrees, upon Lessee's written request and at Lessee's sole expense, to
provide Lessee with an accounting showing in reasonable detail the application
of amounts collected pursuant to this subsection.
(d) Lessor may, at its option, elect not to terminate the Lease, and
continue to collect all Basic Rent, Supplemental Rent and all other amounts due
Lessor (together with all costs of collection) and enforce Lessee's obligations
under this Lease as and when the same become due, or are to be performed, and at
the option of Lessor, upon any abandonment of the Leased Property by Lessee and
re-entry of same by Lessor, Lessor may, in its sole and absolute discretion,
elect not to terminate this Lease and may make such reasonable alterations and
necessary repairs in order to relet the Leased Property, and relet the Leased
Property or any part thereof for such term or terms (which may be for a long
term extending beyond the term of this Lease) and at such rental or rentals and
upon such other terms and conditions as Lessor in its reasonable discretion may
deem advisable. Upon each such reletting, all rentals actually received by
Lessor from such reletting shall be applied to Lessee's obligations hereunder in
such order, proportion and priority as Lessor may elect in Lessor's sole and
absolute discretion, and if such rentals received from such reletting during any
Rent Period are less than the Rent to be paid during that Rent Period by Lessee
hereunder, Lessee shall pay any deficiency, as calculated by Lessor, to Lessor
on the Rent Payment Date in such Rent Period.
(e) If the Leased Property has not been sold, the Lessor may, whether or
not the Lessor shall have exercised or shall thereafter at any time exercise any
of its rights under paragraph (b), (c) or (d) of this Section with respect to
the Leased Property, demand, by written notice to the Lessee specifying a date
(the "Final Rent Payment Date") not earlier than ten (10)
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days after the date of such notice, that the Lessee purchase, on the Final Rent
Payment Date, the Leased Property in accordance with the provisions of Sections
15.2, 15.4 and 15.5; provided, however, that (i) such purchase shall occur on
the date set forth in such notice, notwithstanding the provision in Section 15.3
calling for such purchase to occur on the Lease Termination Date and (ii) the
Lessor's obligations under Section 15.5(a) shall be limited to delivery of a
deed without warranty and bill of sale without warranty of the Leased Property,
without recourse or warranty, but free and clear of the Lessor's Liens.
(f) To the extent not inconsistent with subsection (e), Lessor may
exercise any other right or remedy that may be available to it under Applicable
Law, or proceed by appropriate court action (legal or equitable) to enforce the
terms hereof or to recover damages for the breach hereof. Separate suits may be
brought to collect any such damages for any Rent Period(s), and such suits shall
not in any manner prejudice Lessor's right to collect any such damages for any
subsequent Rent Period(s), or Lessor may defer any such suit until after the
expiration of the Lease Term, in which event such suit shall be deemed not to
have accrued until the expiration of the Lease Term.
(g) Lessor may retain and apply against Lessor's damages all sums which
Lessor would, absent such Event of Default, be required to pay, or turn over, to
Lessee pursuant to the terms of this Lease.
SECTION 14.2 Remedies Cumulative; No Waiver; Consents. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Law
(subject in all events to Section 14.1(e) hereof), each and every right, power
and remedy herein specifically given to Lessor or otherwise in this Lease shall
be cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Lessor, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any right, power
or remedy. No delay or omission by Lessor in the exercise of any right, power
or remedy or in the pursuit of any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Lessee or to
be an acquiescence therein. Lessor's consent to any request made by Lessee
shall not be deemed to constitute or preclude the necessity for obtaining
Lessor's consent, in the future, to all similar requests. No express or implied
waiver by Lessor of any Event of Default shall in any way be, or be construed to
be, a waiver of any future Event of Default. To the extent permitted by
Applicable Law, Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise that may require Lessor to sell, lease or otherwise use the
Leased Property or part thereof in mitigation of Lessor's damages upon the
occurrence of an Event of Default or that may otherwise limit or modify any of
Lessor's rights or remedies under this Article.
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ARTICLE XV
SALE, RETURN OR PURCHASE OF LEASED PROPERTY
SECTION 15.1 Lessee's Option to Purchase. Subject to the terms and
conditions and provisions set forth in this Article, Lessee shall have the
option (the "Purchase Option"), exercisable at any time during the Lease Term on
or prior to the 120th day next preceding the Lease Termination Date, to purchase
from Lessor, Lessor's entire interest in all, but not less than all, of the
Leased Property at the purchase price equal to the Purchase Option Price. Such
option must be exercised by written notice to the Lessor and the Lender, which
exercise shall be irrevocable, and such notice shall specify the closing date
for Lessee's purchase of all of the Leased Property, which date shall be (i) not
less than sixty (60) days or more than ninety (90) calendar days following the
Lessor's receipt of such notice and (ii) in any event not later the Lease
Termination Date. If the Purchase Option is exercised pursuant to the
foregoing, then, subject to the provisions set forth in this Article, on such
closing date, Lessor shall convey to Lessee, and Lessee shall purchase from
Lessor, Lessor's interest in all, but not less than all, of the Leased Property.
If Lessee fails to exercise the Purchase Option in a timely manner, then the
Purchase Option shall thereupon automatically terminate without any further
action of Lessor, and the Purchase Option shall thereafter be of no force or
effect. The Purchase Option granted to Lessee pursuant to this Section is
exclusive of the purchase option provided to Lessee pursuant to Section 14.1(e).
SECTION 15.2 Purchase Obligation. Unless (i) the Lessee and the Lessor
shall have extended the Lease Term pursuant to a supplement to this Lease
containing conditions and terms mutually agreeable to the Lessee and the Lessor
and approved by the Lender, (ii) Lessee shall have properly exercised the
Purchase Option and purchased the Leased Property pursuant thereto, (iii) Lessee
shall have properly exercised the Remarketing Option and shall have fulfilled
the conditions of Section 15.6 hereof and Lessor shall have sold its entire
interest in the Leased Property pursuant thereto or (iv) Lessee shall have
properly exercised the Remarketing Option and shall have fulfilled the
conditions of Section 15.6 hereof but the Lessor shall have rejected such sale
pursuant to Section 15.6(xi) and Lessee shall then have timely fulfilled all of
its obligations under Section 15.7 and 15.8 hereof, then, subject to the terms,
conditions and provisions set forth in this Article, Lessee shall purchase from
Lessor, and Lessor shall convey to Lessee, on the Lease Termination Date
Lessor's entire interest in all, but not less than all, of the Leased Property.
Lessee may designate, in a notice given to Lessor not less than ten (10)
Business Days prior to the closing of such purchase (time being of the essence),
the transferee to whom the conveyance shall be made (if other than to Lessee),
in which case such conveyance shall (subject to the terms and conditions set
forth herein) be made to such designee; provided, however, that such designation
of a transferee shall not cause Lessee to be released, fully or partially, from
any of its obligations under this Lease.
SECTION 15.3 Acceleration of Purchase Obligation. Lessee shall be
obligated to purchase Lessor's entire interest in all, but not less than all, of
the Leased Property immediately, automatically and without notice upon the
occurrence of any Event of Default specified in clause
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(g) of Article XIII; provided, however, that (without affecting any of Lessee's
obligations under Section 15.5 or otherwise) Lessor's obligations under Section
15.5 (a) shall be limited to delivery of a quit claim deed of the Leased
Property.
SECTION 15.4 Determination of Purchase Price. Upon the purchase by
Lessee of the Leased Property pursuant to Sections 15.2 or 15.3, the purchase
price therefor shall be an amount equal to the Lease Balance as of the closing
date therefor.
SECTION 15.5 Purchase Procedure.
(a) If Lessee shall purchase Lessor's interest in the Leased Property
pursuant to any provision of this Lease (other than as provided in Section
15.3), (i) Lessee shall accept from Lessor, and Lessor shall convey to Lessee,
such Leased Property by one or more duly executed and acknowledged special
warranty deeds of such Leased Property in recordable form, (ii) upon the date
fixed for any purchase of Lessor's interest in such Leased Property hereunder,
Lessee shall pay to the order of Lessor the Lease Balance by wire transfer of
federal funds and (iii) Lessor shall convey to Lessee Lessor's entire interest
in all of the Leased Property via the special warranty deed or deeds described
above and Lessor will execute and deliver to Lessee such other documents as may
be legally required in order to effect such conveyance, and such other documents
as may be required by any escrow agent in order to close escrow in connection
with such conveyance and issue to Lessee an ALTA owner's title policy subject
only to (A) the exceptions set forth on Schedule B of the Title Policy for each
Property other than the Mortgage(s) therefor and the Assignment of Lease and
Rents, (B) such exceptions created or caused by Lessee, or otherwise resulting
from any act or failure to act by Lessee, or consented to by Lessee and (C)
taxes and assessments not yet due and payable.
(b) In the event that Lessee exercises the Remarketing Option pursuant to
Section 15.6 and fulfills all of the conditions set forth in clauses (i) through
(xiii) thereof, and if Lessor does not reject the purchase offer for the Leased
Property as provided in Section 15.6 (xi), then upon payment of the purchase
price and the satisfaction by such purchaser of all of the applicable closing
conditions, Lessor shall convey to such purchaser Lessor's interest in the
Leased Property by a duly executed special warranty deed or deeds in recordable
form, and Lessor will execute and deliver to such purchaser (or the Lessee, as
appropriate) such other documents as may be legally required in order to effect
such conveyance, and such other documents as may be required by such purchaser's
title insurance company in order to issue to such purchaser an ALTA owner's
title insurance policy subject only to (i) the exceptions set forth on Schedule
B of the Title Policy, other than the Mortgage(s) therefor and the Assignment of
Lease and Rents, (ii) such exceptions created or caused by Lessee, or otherwise
resulting from any act or failure to act by the Lessee, or consented to by the
Lessee and (iii) taxes and assessments not yet due and payable.
(c) Lessee shall, at Lessee's sole cost and expense, obtain all required
governmental and regulatory approval and consents and shall make such filings as
required by Applicable Law.
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In the event that Lessor is required by Applicable Law to take any action in
connection with such purchase and sale, Lessee shall pay all costs incurred by
Lessor in connection therewith. In addition, all charges incident to such
conveyance, including, without limitation, Lessee's attorneys' fees, Lessor's
reasonable attorneys' fees, commissions, Lessee's and Lessor's escrow fees,
recording fees, title insurance premiums and all applicable documentary transfer
or other transfer taxes and other taxes required to be paid in order to record
the transfer documents that might be imposed by reason of such conveyance and
the delivery of such deed shall be borne entirely and paid by Lessee.
(d) Upon expiration or termination of this Lease resulting in conveyance
of Lessor's interest in the title to the Leased Property to Lessee, there shall
be no apportionment of taxes, insurance, utility charges or other charges
payable with respect to the Leased Property, all of such taxes, insurance,
utility or other charges due and payable with respect to the Leased Property
prior to termination being payable by Lessee hereunder and all due after such
time being payable by Lessee as the then owner of the Leased Property.
SECTION 15.6 Option to Remarket. Subject to the fulfillment of each of
the conditions set forth in this Section, Lessee shall have the option (the
"Remarketing Option") to market all, but not less than all, of the Leased
Property and to procure a purchaser therefor. Lessee's effective exercise and
consummation of the Remarketing Option shall be subject to the due and timely
fulfillment of each of the following provisions, the failure of any of which
shall render the Remarketing Option and Lessee's exercise thereof null and void,
in which event, Lessee shall remain obligated to perform all of its obligations
under Section 15.2 (the "Purchase Obligation"):
(i) Not later than three (3) months before the Scheduled Termination
Date, Lessee shall give to Lessor written notice of Lessee's exercise of
the Remarketing Option, which exercise shall be irrevocable unless
otherwise agreed in writing by the Lender.
(ii) Not later than thirty (30) Business Days prior to the Scheduled
Termination Date, Lessee shall deliver to Lessor an environmental
assessment of each Parcel of the Leased Property dated not later than
forty-five (45) days prior to the Scheduled Termination Date. Each such
environmental assessment shall be prepared by an environmental consultant
selected by Lessee and reasonably acceptable to Lessor and the Lender,
shall be in form, detail and substance reasonably acceptable to Lessor and
the Lender, and shall otherwise indicate the environmental condition of the
Leased Property to be the same as described in the Environmental Audit
delivered pursuant to Section 3.2 of the Participation Agreement.
(iii) On the date of Lessee's notice to Lessor of Lessee's exercise
of the Remarketing Option, each of the Construction Conditions shall have
been timely satisfied and no Event of Default shall exist, and thereafter,
no Event of Default shall exist under this Lease.
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(iv) Lessee shall have completed all Alterations, restoration and
rebuilding of the Leased Property pursuant to Sections 7.2, 11.3 and 11.4
(as the case may be) and shall have fulfilled all of the conditions and
requirements in connection therewith pursuant to said Sections, in each
case by the date on which Lessor receives Lessee's notice of Lessee's
exercise of the Remarketing Option (time being of the essence), regardless
of whether the same shall be within Lessee's control.
(v) Once Lessee has exercised the Remarketing Option as provided in
clause (i) hereof, Lessee shall, as nonexclusive agent for Lessor, use
commercially reasonable efforts to sell Lessor's interest in each Parcel of
the Leased Property and will attempt to obtain the highest purchase price
therefor. Lessee will be responsible for hiring brokers and making the
Leased Property available for inspection by prospective purchasers. Lessee
shall promptly provide any maintenance records relating to each Parcel of
the Leased Property to Lessor and any potential purchaser thereof upon
request, and shall otherwise do all things necessary to sell and deliver
possession of each Parcel of the Leased Property to the purchaser thereof.
All such marketing of the Leased Property shall be at Lessee's sole
expense. Lessee shall allow Lessor, the Lender and any potential qualified
purchaser access to each Parcel of the Leased Property for the purpose of
inspecting the same.
(vi) Lessee shall submit all bids to Lessor and the Lender and Lessor
and the Lender will have the right to review the same and the right to
submit any one or more bids. All bids shall be on an "all-cash" basis (at
least up to the Lease Balance amount). Lessee shall procure bids from one
or more bona fide prospective purchasers of any Parcel of the Leased
Property and shall deliver to Lessor and the Lender not less than ninety
(90) days prior to the Lease Termination Date a binding written irrevocable
offer by such purchaser offering (subject to customary conditions which do
not violate the provisions of clause viii, below) the highest "all-cash"
bid to purchase the Leased Property. Such purchaser shall not be Lessee or
any Subsidiary or Affiliate of Lessee. The written offer must specify the
Lease Termination Date as the closing date.
(vii) On the Lease Termination Date, Lessee shall surrender the
Leased Property in accordance with Section 15.8 hereof.
(viii) In connection with any such sale of the Leased Property,
Lessee may provide to the purchaser any such customary "seller's"
indemnities, representations and warranties regarding title, absence of
Liens (except Lessor's Liens) and the condition of the Leased Property,
including, without limitation, an environmental indemnity, as Lessee may
determine to provide in the exercise of its business judgment and sole
discretion, provided, however, that no such indemnities, representations or
warranties shall be binding on Lessor, nor shall they create liabilities,
charges, offsets or Claims, contingent or otherwise, which could diminish,
offset or impose a lien upon the amount of the cash proceeds payable to
Lessor under such purchase offer, nor shall Lessor be
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under any obligation to join in or become obligated for the same, except
that Lessor shall fulfill all of the requirements set forth in clause (b)
of Section 15.5, and such requirements are incorporated herein by
reference. As to Lessor, any such sale shall be made on an "as is, with all
faults" basis without representation or warranty by Lessor other than the
absence of Lessor's Liens.
(ix) Lessor shall pay from the sale proceeds, all prorations, credits,
costs and expenses of the sale of the Leased Property, including without
limitation the cost of all title insurance, surveys, environmental reports,
appraisals, transfer taxes, Lessor's reasonable attorneys' fees,
commissions, escrow fees, recording fees, and all applicable documentary
and other transfer taxes.
(x) Lessee shall pay to the Lender on the Lease Termination Date (or
to such other Person as Lessor shall notify Lessee in writing or, in the
case of Supplemental Rent, to the Person entitled thereto) an amount equal
to the Recourse Deficiency Amount in the type of funds specified in Section
4.3 hereof.
(xi) If the aggregate selling price (net of closing costs and
prorations and other amounts payable by Lessor under clause (ix) above, as
reasonably estimated by Lessor) for all Parcels plus the Recourse
Deficiency Amount is less than the Lease Balance, then Lessor may, by
notice to Lessee and in Lessor's sole and absolute discretion, reject such
offer to purchase, in which event the parties will proceed according to the
provisions of Section 15.7 "Rejection of Sale" hereof.
(xii) If Lessor does not reject such purchase offer as provided
above, the closing of such purchase of the Leased Property by such
purchaser must occur on the Lease Termination Date, contemporaneously with
Lessee's surrender of the Leased Property in accordance with Section 15.8
hereof.
(xiii) If Lessor does not reject the purchase offer as provided
above, then the purchase shall be consummated on the Lease Termination Date
and the gross proceeds of the sale (i.e., without deduction for any
marketing, closing or other costs, prorations or commissions) shall be paid
directly to Lessor; provided, however, that if the sum of the gross
proceeds from such sale plus the Recourse Deficiency Amount exceeds the
Lease Balance, as of such date, then the excess shall be paid to Lessee on
the Lease Termination Date.
If one or more of the foregoing provisions shall not be fulfilled as of the
Lease Termination Date or if the Leased Property is not purchased as aforesaid
for any other reason whatsoever other than solely due to rejection by Lessor of
such sale pursuant to subsection (xi) above, then Lessor may, at Lessor's option
and in Lessor's sole discretion, (i) declare by written notice to Lessee the
Remarketing Option to be null and void (whether or not it has been theretofore
exercised by Lessee), in which event all of Lessee's rights under this Section
shall immediately terminate and
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Lessee shall be obligated to purchase the Leased Property pursuant to Section
15.2 on the Lease Termination Date or (ii) permit and require Lessee on behalf
of Lessor to consummate the sale of the Leased Property to such purchaser, in
which event the gross proceeds shall be paid as set forth in Section 15.6(xiii)
above and all of Lessor's rights and remedies set forth herein, in the other
Operative Documents, at law or in equity or otherwise shall be preserved as set
forth in Section 14.2 hereof. If the prospective purchaser breaches its offer to
purchase, then Lessor may, in Lessor's sole discretion, declare the Remarketing
Option to be null and void, in which event all of Lessee's rights under this
Section shall immediately terminate and Lessee shall be obligated to purchase
the Leased Property pursuant to Section 15.2. The Lessee shall have no right,
power or authority to bind the Lessor in connection with any proposed sale of
the Leased Property.
SECTION 15.7 Rejection of Sale. (a) Notwithstanding anything contained
herein to the contrary, if Lessor rejects the purchase offer(s) for the Leased
Property as provided in Section 15.6(a)(xi) then (i) Lessee shall pay to the
Lender (or to such other person as Lessor shall direct) the Recourse Deficiency
Amount pursuant to Section 15.6(xi), (ii) Lessor shall retain title to the
Leased Property and (iii) in addition to Lessee's other obligations hereunder,
Lessee will reimburse Lessor within ten (10) Business Days after written
request, for all reasonable costs and expenses incurred by Lessor, during the
period ending on the first anniversary of the Remarketing Date in connection
with the marketing, sale, closing or transfer of the Leased Property which
obligation shall survive the Lease Termination Date and the termination or
expiration of this Lease with respect thereto.
(b) Following any rejection by the Lessor of the purchase offer(s) for
the Leased Property pursuant to the provisions of Section 15.6(xi), subject to
the condition that Lessee shall have:
(i) timely paid the Recourse Deficiency Amount to Lessor on
or before the Lease Termination Date,
(ii) duly and timely fulfilled each of the other provisions of
clauses (i) through (xiii) of Section 15.6 on or before the Lease
Termination Date, and
(iii) on and after the Lease Termination Date, timely fulfilled
each and every obligation of the Lessee under the Lease, the
Participation Agreement and the other Operative Documents on its part
to be performed, and no Event of Default shall have occurred,
then,
upon the subsequent sale of all, but not less than all, of the Leased Property
by Lessor to one or more third parties, Lessor shall pay to Lessee an amount
equal to the Lessor's gain (if any)
- 30 -
on the sales, computed taking into account Lessor's total investment in the
Leased Property (including, without limitation, the unpaid balance of the Loan,
if any, and the unrecovered balance of the Contribution) plus all of Lessor's
unreimbursed costs and expenses (capital or otherwise) relating to the Leased
Property, plus an annual return thereon for up to twelve (12) months following
the Lease Termination Date (but not thereafter) computed at the Overdue Rate,
less the net avails of any reletting of such Leased Property or any part
thereof. To the extent that Lessor shall receive payment in the form of
purchase-money indebtedness in connection with any such sale, Lessor's duty to
account to Lessee pursuant to this Section 15.7(b) shall be suspended until such
time as Lessor receives payment thereon.
SECTION 15.8 Return of Leased Property. If Lessor retains title to the
Leased Property pursuant to Section 15.7 hereof, then Lessee shall, on the Lease
Termination Date, and at its own expense, return possession of the Leased
Property to Lessor for retention by Lessor. If Lessee properly exercises the
Remarketing Option and fulfills all of the conditions of Section 15.6 hereof and
the Lessor does not reject such purchase offers pursuant to Section 15.6(xi),
then Lessee shall (unless by agreement with the purchaser Lessee is to remain in
possession of the Leased Property), on the Lease Termination Date and at its own
cost, transfer possession of the Leased Property to the independent purchaser
thereof, in each case by surrendering the same into the possession of Lessor or
such purchaser, as the case may be, free and clear of all Liens other than
Lessor Liens, Liens for Taxes not yet payable and Liens described in clause (vi)
of the definition of Permitted Liens, in as good condition as it was on the
Completion Date (as modified by Alterations permitted by this Lease), ordinary
wear and tear excepted, and in compliance with Applicable Law. Lessee shall, on
and within a reasonable time before and after the Lease Termination Date,
cooperate with Lessor and the independent purchaser of the Leased Property in
order to facilitate the ownership and operation by such purchaser of the Leased
Property after the Lease Termination Date, which cooperation shall include the
following, all of which Lessee shall do on or before the Lease Termination Date
or as soon thereafter as is reasonably practicable: providing all books and
records regarding the maintenance and ownership of the Leased Property and all
know-how, data and technical information relating thereto to the extent in
Lessee's possession, providing a current copy of the Plans and Specifications
for the Leased Property, assigning all licenses necessary for the operation and
maintenance of the Leased Property to the extent Lessee has the legal right to
do so and cooperating in seeking and obtaining all necessary Governmental Action
relating to occupancy but not special use by the purchaser thereof. Lessee
shall have also paid the cost of all Alterations with respect to the Leased
Property commenced prior to the Lease Termination Date. The obligation of
Lessee under this Article shall survive the expiration or termination of this
Lease.
SECTION 15.9 Effect of Conveyance to Lessee. Upon conveyance of the
Leased Property after the exercise by Lessee of any of its rights to purchase
the Leased Property, including its rights under Section 14.1(e), or after
exercise of the Remarketing Option and the fulfillment of the applicable
conditions of clauses (i) through (x) of Section 15.6, this Lease shall
automatically terminate unless Lessee otherwise elects in writing.
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ARTICLE XVI
LESSEE'S EQUIPMENT
After any repossession of the Leased Property (whether or not this Lease
has been terminated), Lessee, at its expense and so long as such removal of such
Alteration shall not result in a violation of Applicable Law, shall, within a
reasonable time after such repossession or within sixty (60) days after Lessee's
receipt of Lessor's written request (whichever shall first occur), remove all of
Lessee's trade fixtures, personal property and equipment from the Leased
Property (to the extent that the same can be readily removed from the Leased
Property without causing material damage to or materially impairing the value of
the Leased Property); provided, however, that Lessee shall not remove any
fixture, equipment or personal property which constitutes part of the Leased
Property. Any of Lessee's trade fixtures, personal property and equipment not
so removed by Lessee within such period shall be considered abandoned by Lessee,
and title thereto shall without further act vest to Lessor, and may be
appropriated, sold, destroyed or otherwise disposed of by Lessor without notice
to Lessee and without obligation to account therefor and Lessee will pay Lessor,
upon written demand, all reasonable and documented costs and expenses incurred
by Lessor in removing, storing or disposing of the same and all costs and
expenses incurred by Lessor to repair any damage to the Leased Property caused
by such removal. Lessee will immediately repair at its expense all damage to
the Leased Property caused by any such removal (unless such removal is effected
by Lessor, in which event Lessee shall pay all reasonable costs and expenses
incurred by Lessor for such repairs). Lessor shall have no liability in
exercising Lessor's rights under this Article, nor shall Lessor be responsible
for any loss of or damage to Lessee's personal property and equipment in
connection therewith.
ARTICLE XVII
RIGHT TO PERFORM FOR LESSEE
If Lessee shall fail to perform or comply with any of its agreements
contained herein Lessor may, on thirty (30) days' prior notice (or such lesser
period afforded by Applicable Law or any third party, except that no notice
shall be required in the case of a default in the observance of the obligations
to maintain insurance pursuant to Article IX, or in the event of emergency) to
Lessee, perform or comply with such agreement, and Lessor shall not thereby be
deemed to have waived any default caused by such failure, and the amount of such
payment and the amount of the expenses of Lessor (including reasonable
attorney's fees and expenses) incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, shall be
deemed Supplemental Rent, payable by Lessee to Lessor within ten (10) days'
after written demand therefor.
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ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 Reports. To the extent required under Applicable Law and
to the extent it is reasonably practical for Lessee to do so, Lessee shall
prepare and file in timely fashion, or, where such filing is required to be made
by Lessor or it is otherwise not reasonably practical for Lessee to make such
filing, Lessee shall prepare and deliver to Lessor (with a copy to the Lender)
within a reasonable time prior to the date for filing and Lessor shall file, any
material reports with respect to the condition or operation of the Leased
Property that shall be required to be filed with any Governmental Authority.
SECTION 18.2 Binding Effect; Successors and Assigns; Survival. The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor and Lessee, shall be binding upon their respective
successors, legal representatives and assigns (including, in the case of Lessor,
any Person to whom Lessor may transfer the Leased Property or any interest
therein in accordance with the provisions of the Operative Documents), and inure
to the benefit of their respective permitted successors and assigns, and the
rights hereunder of the Lender shall inure (subject to such conditions as are
contained herein) to the benefit of the Lender's permitted successors and
assigns.
SECTION 18.3 Quiet Enjoyment. Lessor covenants that, so long as no
Event of Default has occurred and is continuing, it will not interfere in
Lessee's or any of its sublessees' quiet enjoyment of the Leased Property in
accordance with this Lease during the Lease Term.
SECTION 18.4 Notices. Unless otherwise specified herein, all notices,
offers, acceptances, rejections, consents, requests, demands or other
communications to or upon the respective parties hereto shall be in accordance
with Section 8.2 of the Participation Agreement.
SECTION 18.5 Severability. Any provision of this Lease that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and Lessee shall remain
liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Law, the parties hereby
waive any provision of law that renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 18.6 Amendment; Complete Agreements. Neither this Lease nor any
of the terms hereof may be terminated, amended, supplemented, waived or modified
orally, except by an instrument in writing signed by Lessor and the Lessee in
accordance with the provisions of Section 8.4 of the Participation Agreement.
This Lease, together with the other Operative Documents, is intended by the
parties as a final expression of their lease agreement and as a complete and
exclusive statement of the terms thereof, all negotiations, considerations and
- 33 -
representations between the parties having been incorporated herein and therein.
No course of prior dealings between the parties or their officers, employees,
agents or Affiliates shall be relevant or admissible to supplement, explain, or
vary any of the terms of this Lease or any other Operative Document. Acceptance
of, or acquiescence in, a course of performance rendered under this or any prior
agreement between the parties or their Affiliates shall not be relevant or
admissible to determine the meaning of any of the terms of this Lease or any
other Operative Document. No representations, undertakings, or agreements have
been made or relied upon in the making of this Lease other than those
specifically set forth in the Operative Documents.
SECTION 18.7 Construction. This Lease shall not be construed more
strictly against any one party, it being recognized that both of the parties
hereto have contributed substantially and materially to the preparation and
negotiation of this Lease.
SECTION 18.8 Headings. The Table of Contents and headings of the
various Articles and Sections of this Lease are for convenience of reference
only and shall not modify, define or limit any of the terms or provisions
hereof.
SECTION 18.9 Counterparts. This Lease may be executed in any number of
counterparts as may be convenient or necessary, and it shall not be necessary
that the signatures of all parties hereto or thereto be contained on any one
counterpart hereof or thereof. Additionally, the parties hereto agree that for
purposes of facilitating the execution of this lease, (a) the signature pages
taken from the separate individually executed counterparts of this lease may be
combined to form multiple fully executed counterparts and (b) a facsimile
transmission shall be deemed to be an original signature for all purposes. All
executed counterparts of this Lease shall be deemed to be originals, but all
such counterparts taken together or collectively, as the case may be, shall
constitute one and the same agreement.
SECTION 18.10 Governing Law. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
KENTUCKY EXCEPT, WITH RESPECT TO LEASED PROPERTY LOCATED IN ANY STATE OTHER THAN
KENTUCKY, FOR ISSUES WHICH ARE MANDATORILY SUBJECT TO THE LAWS OF THE STATE IN
WHICH ANY PART THE LEASED PROPERTY IS LOCATED, WHICH ISSUES SHALL BE
INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE IN
WHICH SUCH PART OF THE LEASED PROPERTY IS LOCATED.
SECTION 18.11 Discharge of Lessee's Obligations by its Affiliates.
Lessor agrees that performance of any of Lessee's obligations hereunder by one
or more of Lessee's Affiliates or one or more of Lessee's sublessees of the
Leased Property or any part thereof shall constitute performance by Lessee of
such obligations to the same extent and with the same effect hereunder as if
such obligations were performed by Lessee, but no such performance shall excuse
Lessee from any obligation not performed by it or on its behalf under the
Operative Documents.
- 34 -
SECTION 18.12 Liability of Lessor Limited. Except as otherwise expressly
provided below in this Section, it is expressly understood and agreed by and
between Lessee, Lessor and their respective successors and assigns that nothing
herein contained shall be construed as creating any personal liability of Lessor
or any of its constituent members or other Affiliates, or JH Management
Corporation, or any of their respective incorporators, stockholders, officers,
directors, employees or agents, individually or personally, to perform any
covenant, either express or implied, contained herein, all such personal
liability, if any, being expressly waived by Lessee and by each and every Person
now or hereafter claiming by, through or under Lessee, and that, so far as
Lessor or any of its constituent members or other Affiliates, or JH Management
Corporation, or any of their respective incorporators, stockholders, officers,
directors, employees or agents, individually or personally, is concerned, Lessee
and any Person claiming by, through or under Lessee shall look solely to, and
the liability of Lessor hereunder shall be limited to, the right, title and
interest of Lessor in the Leased Property, any proceeds from Lessor's sale or
encumbrance thereof, and any Awards or Loss Proceeds (provided, however, that
Lessee shall not be entitled to any double recovery) for the performance of any
obligation under this Lease and under the Operative Documents and the
satisfaction of any liability arising therefrom.
SECTION 18.13 Estoppel Certificates. Each party hereto agrees that at
any time and from time to time during the Lease Term, it will promptly, but in
no event later than thirty (30) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to the Lender, any
prospective purchaser (if such prospective purchaser has signed a commitment or
letter of intent to purchase the Leased Property or any part thereof), assignee
or mortgagee or third party designated by such other party, a certificate
stating (i) that this Lease is unmodified and in force and effect (or if there
have been modifications, that this Lease is in force and effect as modified, and
identifying the modification agreements), (ii) the date to which Basic Rent has
been paid, (iii) whether or not there is any existing default by Lessee in the
payment of Basic Rent or any Supplemental Rent, and whether or not there is any
other existing default by either party with respect to which a notice of default
has been served, and, if there is any such default, specifying the nature and
extent thereof, (iv) whether or not, to the knowledge of the signer, there are
any setoffs, defenses or counterclaims against enforcement of the obligations to
be performed hereunder existing in favor of the party executing such certificate
and (v) other matters concerning the status of this Lease and of any of the
Operative Documents to which the Lessee is a party that may be reasonably
requested; provided, however, that no such certificate may be requested unless
the requesting party has a good faith reason for such request.
SECTION 18.14 No Joint Venture. Any intention to create a joint venture
or partnership relation between Lessor and Lessee is hereby expressly
disclaimed.
SECTION 18.15 No Accord and Satisfaction. The acceptance by Lessor of
any sums from Lessee (whether as Basic Rent or otherwise) in amounts which are
less than the amounts due and payable by Lessee hereunder is not intended, nor
shall any such acceptance be
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construed, to constitute an accord and satisfaction of any dispute between
Lessor and Lessee regarding sums due and payable by Lessee hereunder, unless
Lessor specifically deems it as such in writing.
SECTION 18.16 No Merger. In no event shall the leasehold interests,
estates or rights of Lessee hereunder merge with any interests, estates or
rights of Lessor in or to the Leased Property, it being understood that such
leasehold interests, estates and rights of Lessee hereunder shall be deemed to
be separate and distinct from Lessor's interests, estates and rights in or to
the Leased Property, notwithstanding that any such interests, estates or rights
shall at any time or times be held by or vested in the same person, corporation
or other entity.
SECTION 18.17 Survival. The obligations of Lessee to be performed under
this Lease prior to the Lease Termination Date and the obligations of Lessee
pursuant to Articles IV, XI, XII, XIV, Sections 15.2, 15.3, 15.4, 15.5 and 15.8,
Articles XVI, XVII, and Sections 18.09 and 18.11 shall survive the expiration or
termination of this Lease. The extension of any applicable statute of
limitations by Lessor, Lessee, the Lender or any Indemnitee shall not affect
such survival.
SECTION 18.18 Chattel Paper. To the extent that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code in any
applicable jurisdiction), no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the original
counterpart, which shall be identified as the original counterpart by the
receipt of Lessor on its signature page.
SECTION 18.19 Time of Essence. Time is of the essence of this Lease.
SECTION 18.20 Recordation of Lease. Lessee will, at its expense, cause
either the Lease or each Memorandum of Lease to be recorded in the proper office
or offices in the State and the municipality in which the Land is located.
SECTION 18.21 Investment of Security Funds. Any amounts not payable to
Lessee (which amounts shall be paid to or retained by Lessor), pursuant to any
provision of Article IX, XI or XV or this Section solely because an Event of
Default shall have occurred and be continuing, shall be held by the Lender, on
behalf of Lessee, as security for the obligations of Lessee under this Lease and
the Participation Agreement. At such time as no Event of Default shall be
continuing, such amounts, net of any amounts previously applied to Lessee's
obligations hereunder or under the Participation Agreement, shall be paid to
Lessee or such sublessee or transferee, as the case may be. Any such amounts
which are held by the Lender pending payment to Lessee or such sublessee or
transferee, as the case may be, shall until paid to Lessee or such sublessee or
transferee, as the case may be, as provided hereunder or, as long as the Loan
Agreement is in effect, until applied against Lessee's obligations herein and
under the Participation Agreement and distributed as provided in Section 3 of
the Loan Agreement or (after the Loan Agreement is no longer in effect) in
connection with any exercise of remedies
- 36 -
hereunder, be invested by the Lender as directed from time to time in writing by
Lessee (provided, however, if an Event of Default has occurred and is continuing
such investment will be directed by Lessor) and at the expense and risk of
Lessee, in investments reasonably approved by the Lender. Any gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other expenses, if any, incurred in connection with such
investment) shall be applied in the same manner as the principal invested.
SECTION 18.22 No Illegal Interest to be Charged. All agreements between
the Lessee and the Lessee under this Lease or the Participation Agreement are
expressly limited so that in no contingency or event whatsoever shall the amount
paid or agreed to be paid to the Lessor or its successors or assigns for the
use, forbearance or detention of the money to be advanced to the Lessee exceed
the highest rate permissible under law applicable thereto by a court of
competent jurisdiction. If, from any circumstances whatever, fulfillment of any
provisions of this Lease or any of the Operative Documents at the time
performance of such provision shall be due, shall involve payment of interest at
a rate that exceeds the highest lawful rate as so determined, then ipso facto
the obligation to be fulfilled shall be reduced to such highest lawful rate. If
from any circumstances whatsoever, the Lessor or its successors or assigns shall
ever receive interest, the amount of which would exceed such highest lawful
rate, the portion thereof that would be excessive interest shall be applied to
the reduction of the unpaid Scheduled Rent; provided, however, that nothing
contained herein, in the Participation Agreement, this Lease or any of the
Operative Documents shall be deemed to create a defense, contractual or
otherwise, to any sums due or to become due or coming due under this Lease, the
Participation Agreement or any of the Operative Documents where no such defense
exists at law, as for example, where corporations are barred from asserting the
defense of usury or in a case wherein no limit exists upon the rate of interest
that may be charged.
SECTION 18.23 Submission to Jurisdiction; Waivers. Each party hereto
hereby irrevocably and unconditionally (i) submits for itself and its property
in any legal action or proceeding relating to this Lease or any other Operative
Document, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of
Kentucky, the courts of the United States of America for the Western District of
Kentucky and appellate courts from any thereof, (ii) consents that any such
action or proceedings may be brought to such courts, and waives any objection
that it may now or hereafter have to the venue of any such action or proceeding
in any court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same, (iii) agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such party at its address set forth in Section 8.2 of
the Participation Agreement or such other address of which the other parties
hereto shall have been notified pursuant to said Section 8.2 and (iv) agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law. Each party, to the extent permitted by law,
hereby irrevocably and unconditionally waives any right to have a jury
participate in resolving any dispute, whether sounding in contract, tort, or
otherwise, among or between the parties
- 37 -
hereto arising out of, in connection with, related to, or incidental to the
relationship established among the parties in connection with this Lease, any
other Operative Document or any other document executed or delivered in
connection herewith or the transactions related hereto. This waiver shall not in
any way affect, waive, limit, amend or modify the Lessor's ability to pursue any
remedies contained in this Lease, the other Operative Documents or any other
agreement or document related hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease and
Development Agreement to be executed by their respective duly authorized
officers as of the day and year first above written.
WITNESSES: ASSET XVIII HOLDINGS COMPANY,
L.L.C., as Lessor
__________________________________ By: Asset Holdings Corporation I, as
Print Name:_______________________ Managing Member
__________________________________ By:____________________________________
Print Name:_______________________ Anne Brennan, Secretary
ATRIA COMMUNITIES, INC.,
as Lessee
__________________________________ By:____________________________________
Print Name:_______________________ J. Timothy Wesley,
Chief Financial Officer
__________________________________
Print Name:_______________________
- 39 -
COMMONWEALTH OF MASSACHUSETTS )
) ss:
COUNTY OF SUFFOLK )
The foregoing instrument was acknowledged before me this _____ day of
_______________________, 1998, by Anne Brennan, Secretary of Asset Holdings
Corporation I, a Delaware corporation, on behalf of Asset XVIII Holdings
Company, L.L.C., as such person's and its free act and deed.
(SEAL) __________________________________
Notary Public
My commission expires:
__________________________
STATE OF KENTUCKY )
) ss:
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this _____ day of
______________________, 1998, by J. Timothy Wesley, Chief Financial Officer, of
Atria Communities, Inc., a Delaware corporation, on behalf of the corporation,
as each such person's and its free act and deed.
(SEAL) __________________________________
Notary Public
My commission expires:
- 40 -
APPENDIX I
TO
MASTER PARTICIPATION AGREEMENT, MASTER LEASE AND
DEVELOPMENT AGREEMENT AND MASTER TRUST INDENTURE
------------------------------------------------
DEFINITIONS AND INTERPRETATION
[See separate text]
APPENDIX II
Form of Parcel Lease Supplement
-------------------------------
PARCEL ______ LEASE SUPPLEMENT
------------------------------
THIS PARCEL _____ LEASE SUPPLEMENT dated as of __________________, 199__
(this "Parcel Lease Supplement"), between ASSET XVIII HOLDINGS COMPANY, L.L.C.,
a Massachusetts limited liability company, as Lessor, and ATRIA COMMUNITIES,
INC., a Delaware corporation, as Lessee. Unless the context shall otherwise
require, capitalized terms used and not defined herein shall have the meanings
assigned thereto in the Lease for all purposes hereof and the rules of
interpretation set forth in Appendix I to the Lease shall apply to this Parcel
Lease Supplement.
Preliminary Statement
---------------------
In accordance with and subject to the terms and provisions of the Lease and
the other Operative Documents (i) the Lessor agreed, inter alia, to acquire
certain Properties, (ii) the Lessor has agreed to lease such Properties to the
Lessee pursuant to the Lease and Parcel Lease Supplements, (iii) [if applicable]
the Lessee has agreed to construct on behalf of and as the agent for the Lessor
all Improvements on the Parcels in accordance with the terms of the Operative
Documents, (iv) [if applicable] Lessor has agreed to lease and demise such
Improvements to Lessee and Lessee has agreed to rent and hire the same from the
Lessor as part of the Leased Property, (v) the Lender, in order to finance the
cost of the acquisition of such Properties [and Construction of such
Improvements], has agreed to lend up to $47,750,000 to the Lessor pursuant to
the Loan Agreement, and (vi) the Lessee has identified, on behalf of the Lessor,
Property ___, consisting of Parcel __ of the Land and the Improvements thereon
described on Appendix I hereto, [and upon which Lessee intends to construct
certain additional Improvements,] which Property, together with such additional
Improvements, the parties hereto desire to become part of the Leased Property.
Agreement
---------
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Parcel Lease Supplement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Definitions. As used herein:
"Lease" means that certain Master Lease and Development Agreement, dated as
of January 30, 1998, between the Lessor and the Lessee, as amended by [previous
Lease Supplements and] this Parcel Lease Supplement, which may be further
amended, supplemented or restated from time to time.
"Lease Term" means, with respect to Property ________, the period
commencing on the Parcel __ Closing Date and ending on the Scheduled Termination
Date.
"Parcel______" means the Parcel located in ______________, a description of
which is attached hereto as Appendix I.
"Parcel ___ Closing Date" means ___________ __, 19__, being the date as of
which this Parcel Lease Supplement is executed and delivered.
"Parcel _____ Completion Date" means the Parcel Completion Date for
Parcel ____.
"Parcel ______ Improvements" means those Improvements located on Parcel
____ on the Parcel Closing Date together with the additional Improvements to be
Constructed pursuant to the provisions of Section 4, below.
"Parcel Lease Supplement" means this Parcel ______ Lease Supplement.
-----------------------
"Participation Agreement" means the Master Participation Agreement dated as
of January 30, 1998 among the Lender, the Lessor and the Lessee, together with
all amendments and supplements thereto.
SECTION 2. Lease of Parcel _______. In accordance with and subject to the
terms and provisions of this Parcel Lease Supplement, the Lease (in particular
Section 2.3 thereof), and the other Operative Documents, Lessor does hereby
demise and lease Lessor's interest in Parcel ____ to Lessee, and Lessee hereby
rents and leases Lessor's interest in Parcel ___ from Lessor, for the Lease
Term.
SECTION 3. Lease of Parcel _______ Improvements. Lessor hereby demises
and leases Lessor's interest in the Parcel _______ Improvements (whether or not
the Construction thereof has been completed) to Lessee and Lessee hereby rents
and leases Lessor's interest in the Parcel _______ Improvements (whether or not
the Construction thereof has been completed) from Lessor, for the Lease Term.
The demise and lease of the Parcel _______ Improvements pursuant to this Section
3 shall include any additional right, title and interest in the Parcel _______
Improvements which may at any time may be acquired by Lessor, whether in
connection with the Construction of such Improvements on an additional Parcel of
the Land, as the result of an Alteration, or otherwise, the intent being that
all right, title and interest of Lessor in and to all of the Parcel _____
Improvements, whenever constructed, and wherever located, shall at all times be
demised and leased hereunder.
SECTION 4. Construction of Parcel _______ Improvements. [if applicable]
(a) Lessee shall, for the benefit of Lessor, cause the Construction of
additional Parcel _______ Improvements to be commenced following the later of
the Commencement Date, or the closing of the acquisition of Parcel ______, and
to cause such Construction to be performed and completed in accordance with the
Plans and Specifications pursuant to the provisions of subsection (b) below.
Until such Construction is completed, the portions of the Parcel ________
Improvements under Construction, and upon completion of such Construction, the
completed Parcel _______ Improvements, shall be a part of Property ______ and
the Leased Property.
(b) Lessee shall cause the Construction of the Parcel _______ Improvements
to be completed on or prior to the Completion Deadline. Lessee's obligations
under this Section 4 shall not be diminished or affected by any insufficiency of
the proceeds of the Loans, or as the result of the costs of acquisition of the
Land or the Construction of the Improvements or any part thereof exceeding
amounts received from the sale of the Notes. In the event that the cost of
acquisition of the Land and the Construction of the Improvements, or any part
thereof, exceeds the proceeds of the Loans, such excess shall be paid by Lessee
from Lessee's own funds.
SECTION 5 Payment of Rent.
5.1 Basic Rent. Lessee shall pay Basic Rent in accordance with the Lease.
[If applicable, add provisions for capitalization of interest during
construction period, it being understood and agreed that any such provisions
shall remain subject to agreement of the parties at the time of execution of
each Parcel Lease Supplement.]
5.2 Supplemental Rent. Lessee shall pay Supplemental Rent in accordance
with the provisions of Section 4.2 of the Lease.
SECTION 6. Condition of Parcel ________. Lessee acknowledges that (as of
the Commencement Date), Parcel ______ is [vacant and unimproved and no part of
the [parcel] Improvements has been constructed thereon, nor has such
Construction commenced] [improved]. During the Lease Term, Lessor's interest in
the Parcel _______ Improvements (whether or not completed) and Parcel _____ is
demised and let by Lessor "AS IS" subject to (i) the rights of any parties in
possession thereof, (ii) the state of the title thereto existing at the time
Lessor acquired its interest in Parcel ______, (iii) any state of facts which an
accurate survey or physical inspection might show (including the survey
delivered on the Commencement Date), (iv) all applicable law and (v) any
violations of Applicable Law which may exist upon or subsequent to the
commencement of the Lease Term. LESSEE ACKNOWLEDGES THAT, ALTHOUGH LESSOR WILL
OWN AND HOLD TITLE TO PARCEL _______ PROPERTY, LESSEE IS SOLELY RESPONSIBLE FOR
THE DESIGN, DEVELOPMENT, BUDGETING AND CONSTRUCTION OF THE IMPROVEMENTS AND ANY
ALTERATIONS. NEITHER LESSOR NOR THE TRUSTEE HAVE MADE OR SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED
TO HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, MERCHANTABILITY, TITLE,
HABITABILITY, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF PROPERTY
_______ (OR ANY PART THEREOF) OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO PROPERTY _______ (OR ANY PART
THEREOF), ALL SUCH WARRANTIES BEING HEREBY DISCLAIMED, AND NEITHER LESSOR NOR
THE TRUSTEE SHALL BE LIABLE FOR ANY LATENT, HIDDEN OR PATENT DEFECT THEREIN OR
THE FAILURE OF PROPERTY ________, OR ANY PART THEREOF, TO COMPLY WITH ANY
APPLICABLE LAW except that Lessor hereby represents and warrants Property
________ is and shall at all times remain free of Lessor Liens. As between
Lessor and Lessee, Lessee has been afforded full opportunity to inspect Parcel
_____, is satisfied with the results of its inspections of Parcel _____ and is
entering into this Parcel Lease Supplement solely on the basis of the results of
its own inspections and all risks incident to the matters discussed in the two
preceding sentences, as between Lessor, on the one hand, and Lessee, on the
other, are to be borne by Lessee. The provisions of this Section 6 have been
negotiated and, except to the extent otherwise expressly stated, the foregoing
provisions are intended to be a complete exclusion and negation of any
representations or warranties by Lessor or the Trustee, express or implied, with
respect to Property ________ that may arise pursuant to any law now or hereafter
in effect or otherwise.
SECTION 7. Relationship of Lease and Parcel Lease Supplement. This Parcel
Lease Supplement shall form a part of the Lease. All terms and conditions
contained in this Parcel Lease Supplement shall be deemed to be a part of the
terms and conditions of the Lease for any and all purposes. Property _______
shall be deemed to be demised and leased under and subject to the burdens and
benefits of the Lease.
SECTION 8. Binding Effect. This Parcel Lease Supplement shall inure to
the benefit of and shall be binding upon the Lessor and Lessee and their
respective successors and assigns, subject, however to the limitations set forth
in the Lease and other Operative Documents.
SECTION 9. Counterparts. This Parcel Lease Supplement may be executed in
any number of counterparts as may be convenient or necessary, and it shall not
be necessary that the signatures of all parties hereto or thereto be contained
on any one counterpart hereof or thereof. Additionally, the parties hereto
agree that for purposes of facilitating the execution of this Parcel Lease
Supplement, (a) the signature pages taken from the separate individually
executed counterparts of this Parcel Lease Supplement may be combined to form
multiple fully executed counterparts and (b) a facsimile transmission shall be
deemed to be an original signature for all purposes. All executed counterparts
of this Parcel Lease Supplement shall be deemed to be originals, but all such
counterparts taken together or collectively, as the case may be, shall
constitute one and the same Parcel Lease Supplement.
SECTION 10. Severability. Any provision of this Parcel Lease Supplement
that shall be prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction, and Lessee shall
remain liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Law, the parties hereby
waive any provision of law that renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 11. Amendment; Complete Agreements. Neither this Parcel Lease
Supplement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, except by an instrument in writing signed by Lessor
and Lessee in accordance with the provisions of Section 8.4 of the Participation
Agreement. This Parcel Lease Supplement, together with the other Operative
Documents, is intended by the parties as a final expression of their lease
agreement in respect of Property _________ and as a complete and exclusive
statement of the terms thereof, all negotiations, considerations and
representations between the parties having been incorporated herein and therein.
No course of prior dealings between the parties or their officers, employees,
agents or Affiliates shall be relevant or admissible to supplement, explain, or
vary any of the terms of the Lease or any other Operative Document. Acceptance
of, or acquiescence in, a course of performance rendered under this or any prior
agreement between the parties or their Affiliates shall not be relevant or
admissible to determine the meaning of any of the terms of this Lease or any
other Operative Document. No representations, undertakings, or agreements have
been made or relied upon in the making of this Parcel Lease Supplement other
than those specifically set forth in the Operative Documents.
SECTION 12. Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS, EXCEPT, WITH RESPECT TO LEASED PROPERTY LOCATED IN ANY OTHER STATE THAN
KENTUCKY, FOR ISSUES THAT ARE MANDATORILY SUBJECT TO THE LAWS OF THE STATE IN
WHICH ANY PART OF THE LEASED PROPERTY IS LOCATED, WHICH ISSUES SHALL BE
INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE IN
WHICH SUCH PART OF THE LEASED PROPERTY IS LOCATED.
SECTION 13. Memorandum of Lease. A Memorandum of Lease (substantially in
the form of Exhibit ____ to the Participation Agreement) relating to this Parcel
Lease Supplement shall be recorded in the office of the ___________________ of
___________ County, ______________.
SECTION 14. Recourse Deficiency Amount. From and after the Parcel __
Closing Date, the Recourse Deficiency Amount shall be $ , subject to
adjustment in accordance with the terms and provisions of Appendix I to the
Lease.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Parcel _____ Lease
Supplement to be executed by their respective duly authorized officers as of the
day and year first above written.
WITNESSES: ASSET XVIII HOLDINGS COMPANY, L.L.C.,
as Lessor
__________________________________ By: Asset Holdings Corporation I, as
Print Name:_______________________ Managing Member
__________________________________ By:____________________________________
Print Name:_______________________ Name:
Title:
ATRIA COMMUNITIES, INC.,
as Lessee
__________________________________ By:____________________________________
Print Name:_______________________ Name:
Title:
__________________________________
Print Name:_______________________
COMMONWEALTH OF MASSACHUSETTS )
) ss:
COUNTY OF SUFFOLK )
The foregoing instrument was acknowledged before me this _____ day of
_______________, 199_, by ____________________________, the
______________________ of Asset Holdings Corporation I, a Delaware corporation,
on behalf of Asset XVIII Holdings Company, L.L.C., as such person's and its free
act and deed.
(SEAL)
Notary Public
My commission expires:
STATE OF TEXAS )
) ss:
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this _____ day of
_______________, 199__, by _______________________, the __________________, of
Atria Communications, Inc., a Delaware corporation, on behalf of the
corporation, as each such person's and its free act and deed.
(SEAL) Notary Public
My commission expires:
APPENDIX I
A. Description of Parcel________ Land.
B. Description of Parcel ______ Improvements acquired on Parcel ____ Closing
Date.
[C. Description of Parcel ______ Improvements to be Constructed after the
Parcel ____ Closing Date with Financing Proceeds.]
APPENDIX III
Form of Memorandum of Lease
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