LEASE AGREEMENT
BETWEEN
HCRI RIDGELAND POINTE PROPERTIES, LLC
AND
RIDGELAND ASSISTED LIVING, LLC
SEPTEMBER 29, 2003
SECTION PAGE
- ------- ----
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONS 1
1.1 Leased Property 1
1.2 Term 1
1.3 Definitions 1
ARTICLE 2: RENT 9
2.1 Base Rent 9
2.1.1 Base Rent Adjustment 9
2.2 Additional Rent 9
2.3 Place of Payment of Rent 9
2.4 Net Lease 9
2.5 No Termination, Abatement, Etc. 10
2.6 Transaction Fee 10
ARTICLE 3: IMPOSITIONS AND UTILITIES 10
3.1 Payment of Impositions 10
3.2 Definition of Impositions 11
3.3 Escrow of Impositions 12
3.4 Utilities 12
3.5 Discontinuance of Utilities 13
3.6 Business Expenses 13
3.7 Permitted Contests 13
ARTICLE 4: INSURANCE 13
4.1 Property Insurance 13
4.2 Liability Insurance 14
4.3 Builder's Risk Insurance 15
4.4 Insurance Requirements 15
4.5 Replacement Value 16
4.6 Blanket Policy 16
4.7 No Separate Insurance 16
4.8 Waiver of Subrogation 16
4.9 Mortgages 17
4.10 Escrows 17
ARTICLE 5: INDEMNITY 17
5.1 Tenant's Indemnification 17
5.1.1 Notice of Claim 18
5.1.2 Survival of Covenants 18
5.1.3 Reimbursement of Expenses 18
5.2 Environmental Indemnity; Audits 18
5.3 Limitation of Landlord's Liability 18
ARTICLE 6: USE AND ACCEPTANCE OF PREMISES 19
6.1 Use of Leased Property 19
6.2 Acceptance of Leased Property 19
6.3 Conditions of Use and Occupancy 19
ARTICLE 7: MAINTENANCE AND MECHANICS' LIENS 20
7.1 Maintenance 20
7.2 Required Alterations 20
7.3 Mechanic's Liens 20
7.4 Replacements of Fixtures and Landlord's Personal Property 21
7.5 Lender Maintenance Reserve Escrow 21
ARTICLE 8: DEFAULTS AND REMEDIES 21
8.1 Events of Default 21
8.2 Remedies 23
8.3 Right of Setoff 26
8.4 Performance of Tenant's Covenants 26
8.5 Late Payment Charge 26
8.6 Default Rent 27
8.7 Attorneys' Fees 27
8.8 Escrows and Application of Payments 27
8.9 Remedies Cumulative 27
8.10 Waivers 27
8.11 Obligations Under the Bankruptcy Code 28
ARTICLE 9: DAMAGE AND DESTRUCTION 28
9.1 Notice of Casualty 28
9.2 Substantial Destruction 28
9.3 Partial Destruction 29
9.4 Restoration 29
9.5 Insufficient Proceeds 30
9.6 Not Trust Funds 30
9.7 Landlord's Inspection 30
9.8 Landlord's Costs 30
9.9 No Rent Abatement 31
ARTICLE 10: CONDEMNATION 31
10.1 Total Taking 31
10.2 Partial Taking 31
10.3 Condemnation Proceeds Not Trust Funds 31
ARTICLE 11: TENANT'S PROPERTY 32
11.1 Tenant's Property 32
11.2 Requirements for Tenant's Property 32
ARTICLE 12: RENEWAL OPTIONS 33
12.1 Renewal Options 33
12.2 Effect of Renewal 33
ARTICLE 13: RIGHT OF FIRST OPPORTUNITY 34
13.1 Right of First Opportunity 34
13.2 Closing 35
ARTICLE 14: NEGATIVE COVENANTS 36
14.1 No Debt 36
14.2 No Liens 36
14.3 No Guaranties 36
14.4 No Transfer 36
14.5 No Dissolution 36
14.6 Subordination of Payments to Affiliates 36
14.7 Change of Location or Name 36
ARTICLE 15: AFFIRMATIVE COVENANTS 37
15.1 Perform Obligations 37
15.2 Proceedings to Enjoin or Prevent Construction 37
15.3 Documents and Information 37
15.3.1 Furnish Documents 37
15.3.2 Furnish Information 37
15.3.3 Further Assurances and Information 37
15.3.4 Material Communications 38
15.3.5 Requirements for Financial Statements 38
15.4 Compliance With Laws 38
15.5 Broker's Commission 38
15.6 Existence and Change in Ownership 38
15.7 Financial Covenants 39
15.7.1 Definitions 39
15.7.2 Coverage Ratio 39
15.8 Facility Licensure and Certification 39
15.9 Transfer of License and Facility Operations 39
15.9.1 Licensure 39
15.9.2 Facility Operations 39
15.10 Bed Operating Rights 40
15.11 Power of Attorney 40
15.12 Compliance with Loan Documents 41
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNS 42
16.1 Prohibition on Alterations and Improvements 42
16.2 Approval of Alterations 42
16.3 Permitted Alterations 43
16.4 Requirements for Permitted Alterations 43
16.5 Ownership and Removal of Permitted Alterations 44
16.6 Minimum Qualified Capital Expenditures 44
16.7 Signs 44
ARTICLE 17: RESERVED 44
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY 44
18.1 Prohibition on Assignment and Subletting 44
18.2 Requests for Landlord's Consent to Assignment, Sublease or Management
Agreement 45
18.3 Agreements with Residents 46
18.4 Sale of Leased Property 46
18.5 Assignment by Landlord 46
ARTICLE 19: HOLDOVER AND SURRENDER 46
19.1 Holding Over 46
19.2 Surrender 47
19.3 Indemnity 47
ARTICLE 20: RESERVED 47
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL
CERTIFICATES 47
21.1 Quiet Enjoyment 47
21.2 Subordination 47
21.3 Attornment 48
21.4 Estoppel Certificates 48
ARTICLE 22: REPRESENTATIONS AND WARRANTIES 49
22.1 Organization and Good Standing 49
22.2 Power and Authority 49
22.3 Enforceability 49
22.4 Government Authorizations 49
22.5 Financial Statements 49
22.6 Condition of Facility 50
22.7 Compliance with Laws 50
22.8 No Litigation 50
22.9 Consents 50
22.10 No Violation 51
22.11 Reports and Statements 51
22.12 ERISA 51
22.13 Chief Executive Office 51
22.14 Other Name or Entities 51
22.15 Parties in Possession 51
22.16 Access 52
22.17 Utilities 52
22.18 Condemnation and Assessments 52
22.19 Zoning 52
22.20 Pro Forma Statement 52
22.21 Environmental Matters 52
22.22 Leases and Contracts 53
22.23 No Default 53
22.24 Tax Status 53
ARTICLE 23: RESERVED 53
ARTICLE 24: SECURITY INTEREST 53
24.1 Collateral 53
24.2 Additional Documents 54
24.3 Notice of Sale 54
24.4 Recharacterization 55
24.5 Subordination 55
ARTICLE 25: MISCELLANEOUS 55
25.1 Notices 55
25.2 Advertisement of Leased Property 55
25.3 Entire Agreement 55
25.4 Severability 55
25.5 Captions and Headings 56
25.6 Governing Law 56
25.7 Memorandum of Lease 56
25.8 Waiver 56
25.9 Binding Effect 56
25.10 No Offer 56
25.11 Modification 56
25.12 Landlord's Modification 57
25.13 No Merger 57
25.14 Laches 57
25.15 Limitation on Tenant's Recourse 57
25.16 Construction of Lease 57
25.17 Counterparts 57
25.18 Custody of Escrow Funds 57
25.19 Landlord's Status as a REIT 57
25.20 Exhibits 58
25.21 WAIVER OF JURY TRIAL 58
25.22 CONSENT TO JURISDICTION 58
25.23 Attorney's Fees and Expenses 58
25.24 Survival 59
25.25 Time 59
SCHEDULE 1: INITIAL RENT SCHEDULE
EXHIBIT A: LEGAL DESCRIPTIONS
EXHIBIT B: PERMITTED EXCEPTIONS
EXHIBIT C: FACILITY INFORMATION
EXHIBIT D: LANDLORD'S PERSONAL PROPERTY
EXHIBIT E: DOCUMENTS TO BE DELIVERED
EXHIBIT F: TENANT'S CERTIFICATE AND FACILITY FINANCIAL REPORTS
EXHIBIT G: GOVERNMENT AUTHORIZATIONS TO BE OBTAINED; ZONING PERMITS
EXHIBIT H: PENDING LITIGATION
EXHIBIT I: LIST OF LEASES AND CONTRACTS
EXHIBIT J: WIRE TRANSFER INSTRUCTIONS
EXHIBIT K: BASE PRICE
LEASE AGREEMENT
This Lease Agreement ("Lease") is made effective as of September 29,
2003 (the "Effective Date") between HCRI RIDGELAND POINTE PROPERTIES, LLC, a
limited liability company organized under the laws of the State of Delaware
("Landlord" as further defined in 1.3 below), having its principal office
located at One SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475, and
RIDGELAND ASSISTED LIVING, LLC, a limited liability company organized under the
laws of the State of Washington ("Tenant"), having its chief executive office
located at 3131 Elliott Avenue, Suite 500, Seattle, Washington 98121.
R E C I T A L S
A. As of the date hereof, Landlord acquired the Leased Property (defined
below) from Tenant and paid the Acquisition Payment (defined below) towards the
purchase price for the Leased Property. The amount paid by Tenant for the costs
incurred by Landlord in connection with its acquisition from Tenant of the
Leased Property, if any, shall be considered Tenant's contribution.
B. Landlord desires to lease the Leased Property to Tenant and Tenant
desires to lease the Leased Property from Landlord upon the terms set forth in
this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
ARTICLE 1: LEASED PROPERTY, TERM AND DEFINITIONSLEASED PROPERTY, TERM AND
DEFINITIONS
1.1 Leased PropertyLeased Property. Landlord hereby leases to Tenant and
--------------------------------
Tenant hereby leases from Landlord the Leased Property, subject, however, to the
Permitted Exceptions and subject to the terms and conditions of this Lease.
1.2 TermTerm. The initial term ("Initial Term") of this Lease commences on
--------
the Effective Date and expires at 12:00 Midnight Eastern Time on the day before
the 15th anniversary of the Commencement Date (the "Expiration Date"); provided,
however, that Tenant has one or more options to renew the Lease pursuant to
Article 12.
1.3 DefinitionsDefinitions. Except as otherwise expressly provided, [i] the
----------------------
terms defined in this section have the meanings assigned to them in this
section and include the plural as well as the singular; [ii] all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles as of the time
applicable; and [iii] the words "herein", "hereof" and "hereunder" and similar
words refer to this Lease as a whole and not to any particular section.
"$4,400,000 Note" means the note granted by Guarantor to HCN dated as of
August 28, 2003, as amended or restated.
"Acquisition Payment" means any payment by Landlord to acquire Leased Property.
"ADA" means the federal statute entitled Americans with Disabilities Act, 42
U.S.C. 12101, et seq.
"Additional Rent" has the meaning set forth in 2.2.
"Affiliate" means Guarantor and any person, corporation, partnership, limited
liability company, trust, or other legal entity that, directly or indirectly,
controls, or is controlled by, or is under common control with Tenant or
Guarantor. "Control" (and the correlative meanings of the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity. "Affiliate" includes, without limitation, each Guarantor. An
Affiliate of Tenant shall specifically exclude Columbia Pacific Management, Inc.
or any Affiliate thereof and Holiday Retirement Corporation or any Affiliate
thereof and, prior to the date of its acquisition thereof, Alterra Healthcare
Corporation or any Affiliate thereof.
"Annual Company Budget" means Tenant's projection of its financial statement for
the next fiscal year (or the 12-month rolling forward period, if applicable),
which shall include the balance sheet, statement of income, statement of cash
flows, statement of shareholders' equity and statement of capital expenditures
for the applicable period.
"Annual Financial Statements" means [i] an audited Facility Financial Statement
for the most recent fiscal year; and [ii] for Guarantor, if Guarantor is or
includes a corporation, partnership or limited liability company, an audited
balance sheet and statement of income for the most recent fiscal year.
"Bankruptcy Code" means the United States Bankruptcy Code set forth in 11 U.S.C.
101, et seq., as amended from time to time.
"Base Price" has the meaning set forth on Exhibit K.
"Base Rent" has the meaning set forth in 2.1, as increased from time to time
pursuant to 2.2.
"Business Day" means any day other than a Saturday, Sunday, or national holiday.
"Casualty" has the meaning set forth in 9.1.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
"Closing" means the closing of the lease of the Leased Property to Tenant.
"Collateral" has the meaning set forth in 24.1.
"Commencement Date" means the Effective Date if such date is the first day of a
month, and if it is not, the first day of the first month following the
Effective Date.
"Commitment" means the Commitment Letter for the Lease dated March 5, 2002 as
modified by the letter dated March 31, 2003.
"CPI" means the United States Department of Labor, Bureau of Labor Statistics
Revised Consumer Price Index for All Urban Consumers (1982-84=100), U.S. City
Average, All Items, or, if that index is not available at the time in question,
the index designated by such Department as the successor to such index, and if
there is no index so designated, an index for an area in the United States that
most closely corresponds to the entire United States, published by such
Department, or if none, by any other instrumentality of the United States.
"Default Rent" has the meaning set forth in 8.6.
"Effective Date" means the date of this Lease.
"Environmental Laws" means all federal, state, and local laws, ordinances and
policies the purpose of which is to protect human health and the environment, as
amended from time to time, including, but not limited to, [i] CERCLA; [ii] the
Resource Conservation and Recovery Act; [iii] the Hazardous Materials
Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi] the Toxic
Substances Control Act; [vii] the Occupational Safety and Health Act; [viii] the
Safe Drinking Water Act; and [ix] analogous state laws and regulations.
"Event of Default" has the meaning set forth in 8.1.
"Expiration Date" has the meaning set forth in 1.2.
"Facility" means the Facility located on the Land, including the Facility
Property.
"Facility Cash Flow" has the meaning set forth in 15.7.1.
"Facility Coverage Ratio" has the meaning set forth in 15.7.1.
"Facility Financial Statement" means a financial statement for the Facility
which shall include the balance sheet, statement of income, statement of cash
flows, statement of shareholders' equity, occupancy census data (including payor
mix), statement of capital expenditures and a comparison of the actual financial
data versus the Annual Company Budget for the applicable period.
"Facility Name" means the name under which the Facility has done business during
the Term. The Facility Name in use by the Facility on the Effective Date is set
forth on the attached Exhibit C.
"Facility Property" means the Land on which the Facility is located, the legal
description of which is set forth on Exhibit A, the Improvements on the Land,
the Related Rights, and Landlord's Personal Property.
"Facility State" means the State in which the Facility is located.
"Facility Uses" means the uses relating to the operation of the Facility as a
facility of the type and operating the number of beds and units set forth on
Exhibit C.
"Financial Statements" means [i] the annual, quarterly and year to date
financial statements of Tenant; and [ii] all operating statements for the
Facility, that were submitted to Landlord prior to the Effective Date.
"Fixtures" means all permanently affixed equipment, machinery, fixtures and
other items of real and/or personal property (excluding Landlord's Personal
Property), including all components thereof, now and hereafter located in, on or
used in connection with, and permanently affixed to or incorporated into the
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, built-in oxygen and vacuum systems, towers and other
devices for the transmission of radio, television and other signals, all of
which, to the greatest extent permitted by law, are hereby deemed by the parties
hereto to constitute real estate, together with all replacements, modifications,
alterations and additions thereto.
"Government Authorizations" means all permits, licenses, approvals, consents,
and authorizations required to comply with all Legal Requirements, including,
but not limited to, [i] zoning permits, variances, exceptions, special use
permits, conditional use permits, and consents; [ii] the permits, licenses,
provider agreements and approvals required for licensure and operation of the
Facility in accordance with the Facility Uses and, if applicable, certified as a
provider under the federal Medicare and state Medicaid programs; [iii]
environmental, ecological, coastal, wetlands, air, and water permits, licenses,
and consents; [iv] curb cut, subdivision, land use, and planning permits,
licenses, approvals and consents; [v] building, sign, fire, health, and safety
permits, licenses, approvals, and consents; and [vi] architectural reviews,
approvals, and consents required under restrictive covenants.
"Guarantor" means Emeritus Corporation, a Washington corporation.
"Guaranty" means the Unconditional and Continuing Lease Guaranty entered into by
Guarantor to guarantee payment and performance of the Obligor Group Obligations
and any amendments thereto or substitutions or replacements therefore.
"Hazardous Materials" means any substance [i] the presence of which poses a
hazard to the health or safety of persons on or about the Land, including, but
not limited to, asbestos containing materials; [ii] which requires removal or
remediation under any Environmental Law, including, without limitation, any
substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic, including, but not limited to, any
substance within the meaning of "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance", "regulated substance", "solid waste" or
"pollutant" as defined in any Environmental Law.
"HCN" means Health Care REIT, Inc., a Delaware corporation.
"HIPDB" means the Healthcare Integrity and Protection Data Bank maintained by
the Department of Health and Human Services.
"Impositions" has the meaning set forth in 3.2.
"Improvements" means all buildings, structures, Fixtures and other improvements
of every kind on any portion of the Land, including, but not limited to, alleys,
sidewalks, utility pipes, conduits and lines (on-site and off-site), parking
areas and roadways appurtenant to such buildings and structures, now or
hereafter situated upon any portion of the Land.
"Initial Term" has the meaning set forth in 1.2.
"Investment Amount" is an aggregate concept and means the sum of all Landlord
Payments outstanding at the applicable time.
"Land" means the real property described in Exhibit A attached hereto.
"Landlord" means HCRI Ridgeland Pointe Properties, LLC.
"Landlord Affiliate" means any person, corporation, partnership, limited
liability company, trust, or other legal entity that, directly or indirectly,
controls, or is controlled by, or is under common control with Landlord.
"Control" (and the correlative meanings of the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such entity.
"Landlord Payment" means the Acquisition Payment or any advance by Landlord
under the terms hereof.
"Landlord's Personal Property" means all Personal Property owned by Landlord on
the Effective Date and located at the Facility, including, without limitation,
all personal property listed on the attached Exhibit D, together with any and
all replacements thereof, and all Personal Property that pursuant to the terms
of this Lease becomes the property of Landlord during the Term.
"Lease" means this Lease Agreement, as amended from time to time.
"Lease Documents" means this Lease and all documents executed by Landlord and
Tenant relating to this Lease or the Facility.
"Lease Payments" means the sum of the Base Rent payments (as increased from time
to time) for the applicable period.
"Lease Year" means each consecutive period of 365 or 366 days throughout the
Term. The first Lease Year commences on the Commencement Date and expires on
the day before the first anniversary of the Commencement Date.
"Leased Property" means all of the Land, Improvements, Related Rights and
Landlord's Personal Property.
"Legal Requirements" means all laws, regulations, rules, orders, writs,
injunctions, decrees, certificates, requirements, agreements, conditions of
participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction, condition and operation of the Facility by Tenant for the Facility
Uses, including, but not limited to, [i] zoning, building, fire, health, safety,
sign, and subdivision regulations and codes; [ii] certificate of need laws (if
applicable); [iii] licensure to operate as the Facility in accordance with its
Facility Uses; [iv] Medicare and Medicaid certification requirements (if
applicable); [v] the ADA; [vi] any Environmental Laws; and [vii] requirements,
conditions and standards for participation in third-party payor insurance
programs.
"Lender" means JPMorgan Chase Bank (formerly known as the Chase Manhattan Bank),
trustee for the registered certificateholders of Credit Suisse First Boston
Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series
2000-PS4.
"Letter of Credit" shall mean on the Effective Date the letter of credit
required by Lender in the amount of 5% of the outstanding amount of the loan
assumed by Landlord and any time after the Effective Date shall mean such letter
of credit as required by Lender which may be reduced from time to time as a
result of draws thereunder.
"Loan Documents" as used herein means the Loan Documents, as defined in the
Note, and includes the [i] Assumption Agreement, by and among Landlord, Tenant
and Lender; [ii] the Assumption of Obligations of Guarantor by and among HCN,
Guarantor and Lender; [iii] the Subordination and Standstill Agreement by and
among Tenant, Landlord, HCN, Guarantor and Lender; and [iv] any other documents
executed in connection with the Note Assumption executed by either Tenant,
Guarantor, Landlord and/or HCN.
"Material Obligation" means [i] any indebtedness with respect to any critical
care equipment and for all other equipment any indebtedness in excess of
$250,000.00 at the Facility secured by a security interest in or a lien, deed of
trust or mortgage on any of the Leased Property (or any part thereof, including
any Personal Property) and any agreement relating thereto; [ii] any obligation
or agreement that is material to the construction or operation of the Facility
or that is material to Tenant's business or financial condition and where a
breach thereunder, if not cured within any applicable cure period, would have a
material adverse affect on the financial condition of Tenant or the results of
operations at the Facility; [iii] any unsecured indebtedness or lease of Tenant
that has an outstanding principal balance or obligation of at least $250,000.00
and any agreement relating thereto; and [iv] any indebtedness or lease of
Guarantor, other than this Lease, that has an outstanding principal balance or
obligation of at least $1,000,000.00.
"Mortgage" means the Deed of Trust and Security Agreement dated September 29,
1999 from Tenant in favor of Lender to secure the Note, as assigned to and
assumed by Landlord and as the same may be amended from time to time.
"Negotiation Period" has the meaning set forth in Exhibit K.
"Net Operating Income" means the pre-tax net income of Tenant plus [i] the
amount of the provision for depreciation and amortization; plus [ii] the amount
of the provision for interest and lease payments, if any; plus [iii] the amount
of the provision for Rent payments; plus [iv] the amount of the provision for
management fees.
"Note" means the Fixed Rate Note dated September 29, 1999 in the original
principal amount of $4,330,000.00 from Tenant to Lender as assigned to and
assumed by Landlord and as the same may be amended from time to time.
"Obligor Group Obligations" means all payment and performance obligations of
Tenant or Guarantor to Landlord or any Landlord Affiliate, including, but not
limited to, all obligations under this Lease, any loans extended to Tenant or
Guarantor by Landlord or any Landlord Affiliate and all documents executed by
Tenant or Guarantor in favor of Landlord or any Landlord Affiliate in connection
with this Lease, any loan or any other obligation.
"Offer" has the meaning set forth in 13.1.
"Opportunity Notice" has the meaning set forth in 13.1(a).
"Organization State" means the State in which an entity is organized.
"Organizational Documents" means [i] for a corporation, its Articles of
Incorporation certified by the Secretary of State of the Organization State, as
amended to date, and its Bylaws certified by such entity, as amended to date;
[ii] for a partnership, its Partnership Agreement certified by such entity, as
amended to date, and the Partnership Certificate, certified by the appropriate
authority (if applicable), as amended to date; and [iii] for a limited liability
company, its Articles of Organization certified by the Secretary of State of the
Organization State, as amended to date, and its Operating Agreement certified by
such entity, as amended to date.
"Periodic Financial Statements" means an unaudited Facility Financial Statement
for the most recent month.
"Permitted Exceptions" means all easements, liens, encumbrances, restrictions,
agreements and other title matters existing as of the Effective Date, including,
without limitation, the exceptions to title set forth on Exhibit B attached
hereto, and any sublease of any portion of the Leased Property made in complete
accordance with Article 18.
"Permitted Liens" means [i] liens granted to Landlord; [ii] liens customarily
incurred by Tenant in the ordinary course of business for items not delinquent,
including mechanic's liens and deposits and charges under worker's compensation
laws; [iii] liens for taxes and assessments not yet due and payable; [iv] any
lien, charge, or encumbrance which is being contested in good faith pursuant to
this Lease; [v] the Permitted Exceptions; and [vi] purchase money financing and
capitalized equipment leases for the acquisition of personal property provided,
however, that Landlord obtains a nondisturbance agreement from the purchase
money lender or equipment lessor in form and substance as may be satisfactory to
Landlord if the original cost of the equipment exceeds $250,000.00.
"Personal Property" means all machinery, equipment, furniture, furnishings,
movable walls or partitions, computers (and all associated software), trade
fixtures and other personal property (but excluding consumable inventory and
supplies owned by Tenant) used in connection with the Leased Property, together
with all replacements and alterations thereof and additions thereto, except
items, if any, included within the definition of Fixtures or Improvements.
"Pro Forma Statement" means a financial forecast for the Facility for the next
five-year period prepared in accordance with the standards for forecasts
established by the American Institute of Certified Public Accountants.
"Protected Period" has the meaning set forth in 13.1(a).
"Qualified Capital Expenditures" means the expenditures capitalized on the books
of Tenant for any of the following: replacement of furniture, fixtures and
equipment, including refrigerators, ranges, major appliances, bathroom fixtures,
doors (exterior and interior), central air conditioning and heating systems
(including cooling towers, water chilling units, furnaces, boilers and fuel
storage tanks) and replacement of siding; roof replacements, including
replacements of gutters, downspouts, eaves and soffits; major repairs and
replacements of plumbing and sanitary systems; overhaul of elevator systems;
repaving, resurfacing and sealcoating of sidewalks, parking lots and driveways;
repainting of entire building exterior and normal maintenance and repairs needed
to maintain the quality and condition of the Facility in the market in which it
operates, but excluding Alterations.
"Receivables" means [i] all of Tenant's rights to receive payment for providing
resident care and services as set forth in any accounts, contract rights, and
instruments, and [ii] those documents, chattel paper, inventory proceeds,
provider agreements, participation agreements, ledger sheets, files, records,
computer programs, tapes, and agreements relating to Tenant's rights to receive
payment for providing resident care services.
"Related Rights" means all easements, rights (including bed operating rights)
and appurtenances relating to the Land and the Improvements.
"Renewal Date" means the first day of each Renewal Term.
"Renewal Option" has the meaning set forth in 12.1.
"Renewal Term" has the meaning set forth in 12.1.
"Rent" means Base Rent, Additional Rent and Default Rent.
"Rent Schedule" means the schedule issued by Landlord to Tenant showing the Base
Rent to be paid by Tenant pursuant to the terms of this Lease, as such schedule
is amended from time to time by Landlord. The initial Rent Schedule is attached
to this Lease as Schedule 1 or, after review and approval by Tenant, will be
attached following Closing if the Rent Schedule cannot be determined until the
day of Closing.
"Replacement Operator" has the meaning set forth in 15.9.1.
"Right of First Opportunity Event" has the meaning set forth in 13.1.
"Secured Party" has the meaning set forth in 24.1.
"Tenant" has the meaning set forth in the introductory paragraph of this Lease.
"Tenant's Property" has the meaning set forth in 11.1.
"Term" means the Initial Term and each Renewal Term.
ARTICLE 2: RENTRENT
2.1 Base RentBase Rent. Tenant shall pay Landlord base rent ("Base Rent")
--------------------
in advance in consecutive monthly installments payable on the first day of each
month during the Term commencing on the Commencement Date. If the Effective
Date is not the first day of a month, Tenant shall pay Landlord Base Rent on the
Effective Date for the partial month, i.e., for the period commencing on
the Effective Date and ending on the day before the Commencement Date. The Base
Rent payable for the Initial Term is as shown on the Rent Schedule, to be
adjusted pursuant to 2.1.1. The Base Rent for each Renewal Term will be
determined in accordance with 12.2.
2.1.1 Base Rent AdjustmentBase Rent Adjustment . In accordance with the
----------------------
terms of the Loan Documents, monthly payments of principal and interest due to
Lender under the Note ("Loan Payment") shall be paid by Tenant. On October 1,
2003, the Base Rent due on October 1, 2003 shall be reduced by an amount equal
to the Loan Payment (as of the Effective Date in the amount of $40,394.42)
divided by 30 times the number of days starting with the Effective Date and
ending on September 30, 2003. On November 1, 2003, and on the first day of each
month thereafter that Tenant makes a Loan Payment, the Base Rent due on
November 1, 2003 and on the first day of each month thereafter, shall be reduced
by an amount equal to the Loan Payment made by Tenant. If Landlord makes a Loan
Payment, the Base Rent for each month thereafter shall not be reduced until such
time as Landlord has been repaid the Loan Payment made by Landlord. Tenant
shall deliver to Landlord written evidence, satisfactory to Landlord, of payment
of the Loan Payment within five Business Days of payment of same, but in any
event prior to the 10th day of each month.
2.2 Additional RentAdditional Rent. In addition to Base Rent, Tenant shall
-------------------------------
pay all other amounts, liabilities, obligations and Impositions which Tenant
assumes or agrees to pay under this Lease including any fine, penalty, interest,
charge and cost which may be added for nonpayment or late payment of such
items (collectively the "Additional Rent").
2.3 Place of Payment of RentPlace of Payment of Rent. Tenant shall make all
------------------------------------------------
payments of Rent to Landlord by electronic wire transfer in accordance with
the wiring instructions set forth in Exhibit J attached hereto, subject to
change in accordance with other written instructions provided by Landlord from
time to time.
2.4 Net LeaseNet Lease. This Lease shall be deemed and construed to be
------------------
an "absolute net lease", and Tenant shall pay all Rent and other charges
and expenses in connection with the Leased Property throughout the Term, without
abatement, deduction, recoupment or setoff. Landlord shall have all legal,
equitable and contractual rights, powers and remedies provided either in this
Lease or by statute or otherwise in the case of nonpayment of the Rent.
2.5 No Termination, Abatement, EtcNo Termination, Abatement, Etc.. Except
---------------------------------------------------------------
as otherwise specifically provided in this Lease, Tenant shall remain bound by
this Lease in accordance with its terms. Tenant shall not, without the consent
of Landlord, modify, surrender or terminate the Lease, nor seek nor be entitled
to any abatement, deduction, deferment or reduction of Rent, or setoff or
recoupment against the Rent. Except as expressly provided in this Lease, the
obligations of Landlord and Tenant shall not be affected by reason of [i] any
damage to, or destruction of, the Leased Property or any part thereof from
whatever cause or any Taking (as hereinafter defined) of the Leased Property or
any part thereof; [ii] the lawful or unlawful prohibition of, or restriction
upon, Tenant's use of the Leased Property, or any part thereof, the interference
with such use by any person, corporation, partnership or other entity, or
by reason of eviction by paramount title; [iii] any claim which Tenant has or
might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties; [iv] any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; or [v] any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided in this Lease, Tenant
hereby specifically waives all rights, arising from any occurrence whatsoever,
which may now or hereafter be conferred upon it by law [a] to modify, surrender
or terminate this Lease or quit or surrender the Leased Property or any portion
thereof; or [b] entitling Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder. The
obligations of Landlord and Tenant hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Tenant
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default. Nothing in this 2.5 shall be construed to limit any right which
Tenant may have to bring a separate action against Landlord for any claim which
Tenant may have or allege to have against Landlord.
2.6 Transaction FeeTransaction Fee. On the Effective Date, Tenant shall pay
------------------------------
a transaction fee to Landlord in an amount equal to 1% of the Investment
Amount.
ARTICLE 3: IMPOSITIONS AND UTILITIESIMPOSITIONS AND UTILITIES
3.1 Payment of ImpositionsPayment of Impositions. Tenant shall pay, as
------------------------------------------------
Additional Rent, all Impositions that may be levied or become a lien on the
Leased Property or any part thereof at any time (whether prior to or during the
Term), without regard to prior ownership of said Leased Property, before any
fine, penalty, interest, or cost is incurred; provided, however, Tenant may
contest any Imposition in accordance with 3.7. Tenant shall deliver to
Landlord [i] not more than five days after the due date of each Imposition,
copies of the invoice for such Imposition and the check delivered for payment
thereof; and [ii] not more than 30 days after the due date of each Imposition, a
copy of the official receipt evidencing such payment or other proof of
payment satisfactory to Landlord. Tenant's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon the Leased Property or any part thereof. Tenant, at its expense, shall
prepare and file all tax returns and reports in respect of any Imposition as may
be required by governmental authorities. Tenant shall be entitled to any refund
due from any taxing authority if no Event of Default shall have occurred
hereunder and be continuing and if Tenant shall have paid all Impositions due
and payable as of the date of the refund. Landlord shall be entitled to any
refund from any taxing authority if an Event of Default has occurred and is
continuing. Any refunds retained by Landlord due to an Event of Default shall
be applied as provided in 8.8. Landlord and Tenant shall, upon request of the
other, provide such data as is maintained by the party to whom the request is
made with respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event governmental authorities classify
any property covered by this Lease as personal property, Tenant shall file all
personal property tax returns in such jurisdictions where it may legally so
file. Landlord, to the extent it possesses the same, and Tenant, to the extent
it possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Landlord is legally required to file personal
property tax returns, Tenant will be provided with copies of assessment notices
indicating a value in excess of the reported value in sufficient time for Tenant
to file a protest. Tenant may, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
reimburse Landlord for all personal property taxes paid by Landlord within 30
days after receipt of billings accompanied by copies of a bill therefore and
payments thereof which identify the personal property with respect to which such
payments are made. Impositions imposed in respect to the tax-fiscal period
during which the Term terminates shall be adjusted and prorated between Landlord
and Tenant as of the termination date, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
3.2 Definition of ImpositionsDefinition of Impositions. "Impositions"
------------------------------------------------------
means, collectively, [i] taxes (including, without limitation, all capital stock
and franchise taxes of Landlord imposed by the Facility State or any
governmental entity in the Facility State due to this lease transaction or
Landlord's ownership of the Leased Property and the income arising therefrom, or
due to Landlord being considered as doing business in the Facility State because
of Landlord's ownership of the Leased Property or lease thereof to Tenant), all
real estate and personal property ad valorem, sales and use, business or
occupation, single business, gross receipts, transaction privilege, rent or
similar taxes; [ii] assessments (including, without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term); [iii]
ground rents, water, sewer or other rents and charges, excises, tax levies, and
fees (including, without limitation, license, permit, inspection, authorization
and similar fees); [iv] all taxes imposed on Tenant's operations of the Leased
Property, including, without limitation, employee withholding taxes, income
taxes and intangible taxes; [v] all taxes imposed by the Facility State or any
governmental entity in the Facility State with respect to the conveyance of the
Leased Property by Landlord to Tenant or Tenant's designee, including, without
limitation, conveyance taxes; and [vi] all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property or any part
thereof and/or the Rent (including all interest and penalties thereon due to any
failure in payment by Tenant), which at any time prior to, during or in respect
of the Term hereof may be assessed or imposed on or in respect of or be a lien
upon [a] Landlord or Landlord's interest in the Leased Property or any part
thereof; [b] the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein; or [c] any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with the Leased Property or the leasing or use by Tenant of the Leased Property
or any part thereof. Tenant shall not, however, be required to pay any capital
gains tax or any tax based on net income imposed on Landlord by any governmental
entity other than the capital stock and franchise taxes described in clause [i]
above.
3.3 Escrow of ImpositionsEscrow of Impositions. Tenant shall deposit with
--------------------------------------------
Landlord on the first day of each month a sum equal to 1/12th of the Impositions
assessed against the Leased Property for the preceding tax year for real
estate taxes, which sums shall be used by Landlord toward payment of such
Impositions. In addition, if an Event of Default occurs and while it remains
uncured, Tenant shall, at Landlord's election, deposit with Landlord on the
first day of each month a sum equal to 1/12th of the Impositions assessed
against the Leased Property for the preceding tax year other than for real
estate taxes, which sums shall be used by Landlord toward payment of such
Impositions. Tenant, on demand, shall pay to Landlord any additional funds
necessary to pay and discharge the obligations of Tenant pursuant to the
provisions of this section. The receipt by Landlord of the payment of such
Impositions by and from Tenant shall only be as an accommodation to Tenant, the
mortgagees, and the taxing authorities, and shall not be construed as rent or
income to Landlord, Landlord serving, if at all, only as a conduit for delivery
purposes. The foregoing provision shall become applicable only at such time as
the escrow of Impositions is not required by Lender, it being understood and
agreed that for so long as Lender requires that the real estate tax portion of
the Imposition be escrowed with Lender, Tenant shall be deemed to have fulfilled
its obligations under this 3.3 with respect to the real estate tax portion of
the Imposition provided Tenant receives notice either from Lender or from
Landlord as required pursuant to 15.12.4 and then Tenant makes the required
escrow payment of the real estate tax portion of the Imposition to Lender as and
when due.
3.4 UtilitiesUtilities. Tenant shall pay, as Additional Rent, all taxes,
------------------
assessments, charges, deposits, and bills for utilities, including, without
limitation, charges for water, gas, oil, sanitary and storm sewer, electricity,
telephone service, and trash collection, which may be charged against the
occupant of the Improvements during the Term. If an Event of Default occurs and
while it remains uncured, Tenant shall, at Landlord's election, deposit
with Landlord on the first day of each month a sum equal to 1/12th of the amount
of the annual utility expenses for the preceding Lease Year, which sums shall be
used by Landlord to pay such utilities. Tenant shall, on demand, pay to
Landlord any additional amount needed to pay such utilities. Landlord's receipt
of such payments shall only be an accommodation to Tenant and the utility
companies and shall not constitute rent or income to Landlord. Absent
circumstances beyond Tenant's reasonable control, Tenant shall at all times
maintain that amount of heat necessary to ensure against the freezing of water
lines. Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any liability or damages to the utility systems and the Leased Property
that may result from Tenant's failure to maintain sufficient heat in the
Improvements absent circumstances beyond Tenant's reasonable control.
3.5 Discontinuance of UtilitiesDiscontinuance of Utilities. Landlord will
--------------------------------------------------------
not be liable for damages to person or property or for injury to, or
interruption of, business for any discontinuance of utilities nor will such
discontinuance in any way be construed as an eviction of Tenant or cause an
abatement of rent or operate to release Tenant from any of Tenant's obligations
under this Lease.
3.6 Business ExpensesBusiness Expenses. Tenant shall promptly pay all
------------------------------------
expenses and costs incurred in connection with the operation of the Facility on
the Leased Property, including, without limitation, employee benefits, employee
vacation and sick pay, consulting fees, and expenses for inventory and supplies.
3.7 Permitted ContestsPermitted Contests. Tenant, on its own or on
--------------------------------------
Landlord's behalf (or in Landlord's name), but at Tenant's expense, may contest,
by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
Imposition or any Legal Requirement or insurance requirement or any lien,
attachment, levy, encumbrance, charge or claim provided that [i] in the case of
an unpaid Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the Leased Property; [ii] neither the Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; [iii] in
the case of a Legal Requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; [iv] in the event that any such contest shall
involve a sum of money or potential loss in excess of $50,000.00, Tenant shall
deliver to Landlord and its counsel an opinion of Tenant's counsel to the effect
set forth in clauses [i], [ii] and [iii], to the extent applicable; [v] in the
case of a Legal Requirement and/or an Imposition, lien, encumbrance or charge,
Tenant shall give such reasonable security as may be demanded by Landlord to
insure ultimate payment of the same and to prevent any sale or forfeiture of the
affected Leased Property or the Rent by reason of such nonpayment or
noncompliance; provided, however, the provisions of this section shall not be
construed to permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition or
the basis for the assertion of any other claim) or any other sums payable by
Tenant to Landlord hereunder; [vi] in the case of an insurance requirement, the
coverage required by Article 4 shall be maintained; and [vii] if such contest be
finally resolved against Landlord or Tenant, Tenant shall, as Additional Rent
due hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or insurance requirement. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations and other documents as may be
reasonably required in any such contest, and, if reasonably requested by Tenant
or if Landlord so desires, Landlord shall join as a party therein. Tenant
hereby agrees to indemnify and save Landlord harmless from and against any
liability, cost or expense of any kind that may be imposed upon Landlord in
connection with any such contest and any loss resulting therefrom.
ARTICLE 4: INSURANCEINSURANCE
4.1 Property InsuranceProperty Insurance. At Tenant's expense, Tenant shall
------------------------------------
maintain in full force and effect a property insurance policy or policies
insuring the Leased Property against the following:
(a) Loss or damage commonly covered by a "All Risk" or "Special Form", as
the case may be, policy insuring against physical loss or damage to the
Improvements and Personal Property, including, but not limited to, risk of loss
from fire and other hazards, collapse, transit coverage, vandalism, malicious
mischief, theft, earthquake (if the Leased Property is in earthquake zone 1 or
2) and sinkholes (if usually recommended in the area of the Leased Property).
The policy shall be in the amount of the full replacement value (as defined in
4.5) of the Improvements and Personal Property and shall contain a deductible
amount acceptable to Landlord. Landlord shall be named as an additional
insured. The policy shall include a stipulated value endorsement or agreed
amount endorsement and endorsements for contingent liability for operations of
building laws, demolition costs, and increased cost of construction.
(b) If applicable, loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed on the Leased
Property, in commercially reasonable amounts acceptable to Landlord.
(c) Consequential loss of rents and income coverage insuring against all
"All Risk" or "Special Form", as the case may be, risk of physical loss or
damage with limits and deductible amounts acceptable to Landlord covering risk
of loss during the course of reconstruction, and containing an endorsement for
extended period of indemnity of at least 90 days, and shall be written with a
stipulated amount of coverage if available at a reasonable premium.
(d) If the Leased Property is located, in whole or in part, in a federally
designated 100-year flood plain area, flood insurance for the Improvements in an
amount equal to the lesser of [i] the full replacement value of the
Improvements; or [ii] the maximum amount of insurance available for the
Improvements under all federal and private flood insurance programs.
(e) Loss or damage caused by the breakage of plate glass in commercially
reasonable amounts acceptable to Landlord.
(f) Loss or damage commonly covered by blanket crime insurance, including
employee dishonesty, loss of money orders or paper currency, depositor's
forgery, and loss of property of patients accepted by Tenant for safekeeping, in
commercially reasonable amounts acceptable to Landlord.
4.2 Liability InsuranceLiability Insurance. At Tenant's expense, Tenant
----------------------------------------
shall maintain liability insurance against the following:
(a) Claims for personal injury or property damage commonly covered by
comprehensive general liability insurance with endorsements for incidental
malpractice, contractual, personal injury, owner's protective liability,
voluntary medical payments, products and completed operations, broad form
property damage, and extended bodily injury, with commercially reasonable
amounts for bodily injury, property damage, and voluntary medical payments
acceptable to Landlord, but with a combined single limit of not less than
$5,000,000.00 per occurrence.
(b) Claims for personal injury and property damage commonly covered by
comprehensive automobile liability insurance, covering all owned and non-owned
automobiles, with commercially reasonable amounts for bodily injury, property
damage, and for automobile medical payments acceptable to Landlord, but with a
combined single limit of not less than $5,000,000.00 per occurrence.
(c) Claims for personal injury commonly covered by medical malpractice and
professional liability insurance in commercially reasonable amounts acceptable
to Landlord.
(d) Claims commonly covered by workers' compensation insurance for all
persons employed by Tenant on the Leased Property. Such workers' compensation
insurance shall be in accordance with the requirements of all applicable local,
state, and federal law.
4.3 Builder's Risk InsuranceBuilder's Risk Insurance. In connection with
----------------------------------------------------
any construction, Tenant shall maintain in full force and effect a builder's
completed value risk coverage ("Builder's Risk Coverage") of insurance in a
nonreporting form insuring against all "All Risk" risk of physical loss or
damage to the Improvements, including, but not limited to, risk of loss from
fire and other hazards, collapse, transit coverage, vandalism, malicious
mischief, theft, earthquake (if Leased Property is in earthquake zone 1 or 2)
and sinkholes (if usually recommended in the area of the Leased Property). The
Builder's Risk Coverage shall include endorsements providing coverage for
building materials and supplies and temporary premises. The Builder's Risk
Coverage shall be in the amount of the full replacement value of the
Improvements and shall contain a deductible amount acceptable to Landlord.
Landlord shall be named as an additional insured. The Builder's Risk Coverage
shall include an endorsement permitting initial occupancy.
4.4 Insurance RequirementsInsurance Requirements. The following provisions
---------------------------------------------
shall apply to all insurance coverages required hereunder:
(a) The form and substance of all policies shall be subject to the approval
of Landlord, which approval will not be unreasonably withheld.
(b) The carriers of all policies shall have a Best's Rating of "A" or better
and a Best's Financial Category of XII or higher and shall be authorized to do
insurance business in the Facility State.
(c) Tenant shall be the "named insured" and Landlord shall be an "additional
insured" on each policy.
(d) Tenant shall deliver to Landlord certificates or policies showing the
required coverages and endorsements. The policies of insurance shall provide
that the policy may not be canceled or not renewed, and no material change or
reduction in coverage may be made, without at least 30 days' prior written
notice to Landlord.
(e) The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or omissions of Tenant or
Landlord will not invalidate the coverage of the other party, and provide that
Landlord shall not be responsible for payment of premiums.
(f) All loss adjustment shall require the written consent of Landlord and
Tenant, as their interests may appear.
(g) At least 30 days prior to the expiration of each insurance policy,
Tenant shall deliver to Landlord a certificate showing renewal of such policy
and payment of the annual premium therefor and a current Certificate of
Compliance (in the form delivered at the time of Closing) completed and signed
by Tenant's insurance agent.
4.5 Replacement ValueReplacement Value. The term "full replacement value"
------------------------------------
means the actual replacement cost thereof from time to time, including increased
cost of construction endorsement, with no reductions or deductions. Tenant
shall, in connection with each annual policy renewal, deliver to Landlord a
redetermination of the full replacement value by the insurer or an endorsement
indicating that the Leased Property is insured for its full replacement value.
If Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement value redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement value was last determined.
4.6 Blanket PolicyBlanket Policy. Notwithstanding anything to the contrary
-----------------------------
contained in this Article 4, Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from
that which would exist under a separate policy meeting all of the requirements
of this Lease.
4.7 No Separate InsuranceNo Separate Insurance. Tenant shall not take out
--------------------------------------------
separate insurance concurrent in form or contributing in the event of loss with
that required in this Article, or increase the amounts of any then existing
insurance, by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including Landlord and any mortgagees, are included therein as additional
insureds or loss payees, the loss is payable under said insurance in the same
manner as losses are payable under this Lease, and such additional insurance is
not prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies.
4.8 Waiver of SubrogationWaiver of Subrogation. Each party hereto hereby
---------------------------------------------
waives any and every claim which arises or may arise in its favor and against
the other party hereto during the Term for any and all loss of, or damage to,
any of its property located within or upon, or constituting a part of, the
Leased Property, which loss or damage is covered by valid and collectible
insurance policies, to the extent that such loss or damage is recoverable under
such policies. Said mutual waiver shall be in addition to, and not in
limitation or derogation of, any other waiver or release contained in this Lease
with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of subrogation (or otherwise) to an insurance company (or any other
person), each party hereto agrees immediately to give each insurance company
which has issued to it policies of insurance, written notice of the terms of
said mutual waivers, and to have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waivers, so long as such endorsement is available at a reasonable cost.
4.9 MortgagesMortgages. The following provisions shall apply if Landlord
------------------
now or hereafter places a mortgage on the Leased Property or any part thereof:
[i] Tenant shall obtain a standard form of lender's loss payable clause insuring
the interest of the mortgagee; [ii] Tenant shall deliver evidence of
insurance to such mortgagee; [iii] loss adjustment shall require the consent of
the mortgagee; and [iv] Tenant shall provide such other information and
documents as may be required by the mortgagee.
4.10 EscrowsEscrows. After an Event of Default occurs hereunder, Tenant
--------------
shall make such periodic payments of insurance premiums in accordance with
Landlord's requirements after receipt of notice thereof from Landlord.
ARTICLE 5: INDEMNITYINDEMNITY
5.1 Tenant's IndemnificationTenant's Indemnification. Tenant hereby
--------------------------------------------------
indemnifies and agrees to hold harmless Landlord and HCN (jointly and severally,
"Indemnified Party"), any successors or assigns of Indemnified Party, and
Indemnified Party's and such successor's and assign's directors, officers,
employees and agents from and against any and all demands, claims, causes of
action, fines, penalties, damages (including consequential damages), losses,
liabilities (including strict liability), judgments, and expenses (including,
without limitation, reasonable attorneys' fees, court costs, and the costs set
forth in 8.7) incurred in connection with or arising from: [i] the use or
occupancy of the Leased Property by Tenant or any persons claiming under Tenant;
[ii] any activity, work, or thing done, or permitted or suffered by Tenant in or
about the Leased Property; [iii] any acts, omissions, or negligence of Tenant or
any person claiming under Tenant, or the contractors, agents, employees,
invitees, or visitors of Tenant or any such person; [iv] any breach, violation,
or nonperformance by Tenant or any person claiming under Tenant or the
employees, agents, contractors, invitees, or visitors of Tenant or of any such
person, of any term, covenant, or provision of this Lease or any law, ordinance,
or governmental requirement of any kind, including, without limitation, any
failure to comply with any applicable requirements under the ADA; [v] any injury
or damage to the person, property or business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon the Leased
Property; [vi] any construction, alterations, changes or demolition of the
Facility performed by or contracted for by Tenant or its employees, agents or
contractors; [vii] any obligations, costs or expenses arising under any
Permitted Exceptions; and [viii] any claim under a Loan Document arising from
the acts or omissions of Tenant or Guarantor, including, but not limited to, (a)
any claim against HCN under an Indemnity Agreement granted by HCN to Lender; and
(b) any applicable make-whole premium payable to Lender as a result of an
acceleration of the Loan. If any action or proceeding is brought against
Landlord, its employees, or agents by reason of any such claim, Tenant, upon
notice from Landlord, will defend the claim at Tenant's expense with counsel
reasonably satisfactory to Landlord. All amounts payable to Landlord under this
section shall be payable on written demand and any such amounts which are not
paid within 10 days after demand therefore by Landlord shall bear interest at
Landlord's rate of return as provided in the Commitment. In case any action,
suit or proceeding is brought against Tenant by reason of any such occurrence,
Tenant shall use its commercially reasonable efforts to defend such action, suit
or proceeding. Nothing in this 5.1 shall be construed as requiring Tenant to
indemnify Landlord with respect to Landlord's own gross negligence or willful
misconduct or with respect to any claim under the Loan Documents arising from
the acts or omissions of Landlord or HCN.
5.1.1 Notice of ClaimNotice of Claim . Landlord shall notify Tenant in
-----------------
writing of any claim or action brought against Landlord in which indemnity may
be sought against Tenant pursuant to this section. Such notice shall be given
in sufficient time to allow Tenant to defend or participate in such claim or
action, but the failure to give such notice in sufficient time shall not
constitute a defense hereunder nor in any way impair the obligations of Tenant
under this section unless the failure to give such notice precludes Tenant's
defense of any such action.
5.1.2 Survival of CovenantsSurvival of Covenants . The covenants of Tenant
----------------------
contained in this section shall remain in full force and effect after the
termination of this Lease until the expiration of the period stated in the
applicable statute of limitations during which a claim or cause of action may be
brought and payment in full or the satisfaction of such claim or cause of
action and of all expenses and charges incurred by Landlord relating to the
enforcement of the provisions herein specified.
5.1.3 Reimbursement of ExpensesReimbursement of Expenses . Unless
---------------------------
prohibited by law, Tenant hereby agrees to pay to Landlord all of the reasonable
fees, charges and reasonable out-of-pocket expenses related to the Facility
and required hereby, or incurred by Landlord in enforcing the provisions of this
Lease.
5.2 Environmental Indemnity; AuditsEnvironmental Indemnity; Audits. Tenant
---------------------------------------------------------------
hereby indemnifies and agrees to hold harmless Landlord, any successors to
Landlord's interest in this Lease, and Landlord's and such successors'
directors, officers, employees and agents from and against any losses, claims,
damages (including consequential damages), penalties, fines, liabilities
(including strict liability), costs (including cleanup and recovery costs), and
expenses (including expenses of litigation and reasonable consultants' and
attorneys' fees) incurred by Landlord or any other indemnitee or assessed
against any portion of the Leased Property by virtue of any claim or lien by any
governmental or quasi-governmental unit, body, or agency, or any third
party, for cleanup costs or other costs pursuant to any Environmental Law.
Tenant's indemnity shall survive the termination of this Lease. Provided,
however, Tenant shall have no indemnity obligation with respect to [i] Hazardous
Materials first introduced to the Leased Property subsequent to the date that
Tenant's occupancy of the Leased Property shall have fully terminated; or [ii]
Hazardous Materials introduced to the Leased Property by Landlord, its agent,
employees, successors or assigns. If at any time during the Term of this Lease
any governmental authority notifies Landlord or Tenant of a violation of any
Environmental Law or Landlord reasonably believes that a Facility may violate
any Environmental Law, Landlord may require one or more environmental audits of
such portion of the Leased Property, in such form, scope and substance as
specified by Landlord, at Tenant's expense. Tenant shall, within 30 days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing any environmental audit, including, without
limitation, reasonable attorneys' fees and costs.
5.3 Limitation of Landlord's LiabilityLimitation of Landlord's Liability.
-----------------------------------------------------------------------
Landlord, its agents, and employees, will not be liable for any loss, injury,
death, or damage (including consequential damages) to persons, property, or
Tenant's business occasioned by theft, act of God, public enemy, injunction,
riot, strike, insurrection, war, court order, requisition, order of governmental
body or authority, fire, explosion, falling objects, steam, water, rain or
snow, leak or flow of water (including water from the elevator system), rain or
snow from the Leased Property or into the Leased Property or from the roof,
street, subsurface or from any other place, or by dampness or from the breakage,
leakage, obstruction, or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, or lighting fixtures of the Leased
Property, or from construction, repair, or alteration of the Leased Property or
from any acts or omissions of any other occupant or visitor of the Leased
Property, or from any other cause beyond Landlord's control.
ARTICLE 6: USE AND ACCEPTANCE OF PREMISESUSE AND ACCEPTANCE OF PREMISES
6.1 Use of Leased PropertyUse of Leased Property. Tenant shall use and
-------------------------------------------------
occupy the Leased Property exclusively for the Facility Uses specified for the
Facility and for all lawful and licensed ancillary uses, including the operation
of an Alzheimer's Memory Loss Unit, provided Tenant complies with all
applicable Legal Requirements and for no other purpose without the prior written
consent of Landlord. Tenant shall obtain and maintain all approvals, licenses,
and consents needed to use and operate the Leased Property as herein permitted.
Tenant shall deliver to Landlord complete copies of surveys, examinations,
certification and licensure inspections, compliance certificates, and other
similar reports issued to Tenant by any governmental agency within 10 days after
Tenant's receipt of each item.
6.2 Acceptance of Leased PropertyAcceptance of Leased Property. Tenant
---------------------------------------------------------------
acknowledges that [i] Tenant and its agents have had an opportunity to inspect
the Leased Property; [ii] Tenant has found the Leased Property fit for Tenant's
use; [iii] Landlord will deliver the Leased Property to Tenant in "as-is"
condition; [iv] Landlord is not obligated to make any improvements or repairs to
the Leased Property; and [v] the roof, walls, foundation, heating,
ventilating, air conditioning, telephone, sewer, electrical, mechanical,
elevator, utility, plumbing, and other portions of the Leased Property are in
good working order. Tenant waives any claim or action against Landlord with
respect to the condition of the Leased Property. LANDLORD MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY
PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY
PARTICULAR USE OR PURPOSE OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE
TO BE BORNE BY TENANT.
6.3 Conditions of Use and OccupancyConditions of Use and Occupancy . Tenant
-------------------------------
agrees that during the Term it shall use and keep the Leased Property in a
careful, safe and proper manner; not commit or suffer waste thereon; not use or
occupy the Leased Property for any unlawful purposes; not use or occupy the
Leased Property or permit the same to be used or occupied, for any purpose or
business deemed extra-hazardous on account of fire or otherwise; keep the Leased
Property in such repair and condition as may be required by the Board of Health,
or other city, state or federal authorities, free of all cost to Landlord; not
permit any acts to be done which will cause the cancellation, invalidation, or
suspension of any insurance policy; and permit Landlord and its agents to enter
upon the Leased Property at all reasonable times to examine the condition
thereof. Landlord shall have the right to have an annual inspection of the
Leased Property performed and Tenant shall pay an inspection fee of the lesser
of $1,500.00 or Landlord's reasonable out-of-pocket expenses within 30 days
after receipt of Landlord's invoice.
ARTICLE 7: MAINTENANCE AND MECHANICS' LIENSMAINTENANCE AND MECHANICS' LIENS
7.1 MaintenanceMaintenance . Tenant shall maintain, repair, and replace the
-----------
Leased Property, including, without limitation, all structural and
nonstructural repairs and replacements to the roof, foundations, exterior walls,
HVAC systems, equipment, parking areas, sidewalks, water, sewer and gas
connections, pipes and mains. Tenant shall pay, as Additional Rent, the full
cost of maintenance, repairs, and replacements. Tenant shall maintain all
drives, sidewalks, parking areas, and lawns on or about the Leased Property in a
clean and orderly condition, free of accumulations of dirt, rubbish, snow and
ice. Tenant shall at all times maintain, operate and otherwise manage the
Leased Property on a basis and in a manner consistent with the standards
currently maintained by Tenant at the Leased Property. All repairs shall, to
the extent reasonably achievable, be at least equivalent in quality to the
original work or the property to be repaired shall be replaced. Tenant will not
take or omit to take any action the taking or omission of which might materially
impair the value or the usefulness of the Leased Property or any parts thereof
for the Facility Uses. Tenant shall permit Landlord to inspect the Leased
Property at all reasonable times and on reasonable advance notice, and if
Landlord has a reasonable basis to believe that there are maintenance problem
areas and gives Tenant written notice thereof setting forth its concerns in
reasonable detail, Tenant shall deliver to Landlord a plan of correction within
10 Business Days after receipt of the notice. Tenant shall diligently pursue
correction of all problem areas within 60 days after receipt of the notice or
such longer period as may be necessary for reasons beyond its reasonable control
such as shortage of materials or delays in securing necessary permits, but not
caused by lack of diligence by Tenant and, upon expiration of the 60-day period,
shall deliver evidence of completion to Landlord or an interim report evidencing
Tenant's diligent progress towards completion and, at the end of the next 60-day
period, evidence of satisfactory completion. Upon completion, Landlord shall
have the right to re-inspect the Facility and Tenant shall pay a re-inspection
fee of $750.00 plus Landlord's reasonable out-of-pocket expenses within 30 days
after receipt of Landlord's invoice. At each inspection of the Leased Property
by Landlord, the Facility employee in charge of maintenance shall be available
to tour the Facility with Landlord and answer questions.
7.2 Required AlterationsRequired Alterations . Tenant shall, at Tenant's
---------------------
sole cost and expense, make any additions, changes, improvements or alterations
to the Leased Property, including structural alterations, which may be required
by any governmental authorities, including those required to maintain licensure
or certification under the Medicare and Medicaid programs (if so certified),
whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatsoever. All such additions, changes,
improvements or alterations shall be deemed to be Permitted Alterations and
shall comply with all laws requiring such alterations and with the provisions of
16.4.
7.3 Mechanic's LiensMechanic's Liens . Tenant shall have no authority to
-----------------
permit or create a lien against Landlord's interest in the Leased Property, and
Tenant shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanic's
liens against the Leased Property by reason of work, labor, services or
materials supplied or claimed to have been supplied on or to the Leased
Property. Subject to Tenant's right to contest the same in accordance with the
terms of this Lease, Tenant shall remove, bond-off, or otherwise obtain the
release of any mechanic's lien filed against the Leased Property within 10 days
after notice of the filing thereof. Tenant shall pay all expenses in connection
therewith, including, without limitation, damages, interest, court costs and
reasonable attorneys' fees.
7.4 Replacements of Fixtures and Landlord's Personal PropertyReplacements of
---------------------------------------------------------
Fixtures and Landlord's Personal Property . Tenant shall not remove
Fixtures and Landlord's Personal Property from the Leased Property except to
replace the Fixtures and Landlord's Personal Property with other similar items
of equal quality and value. Items being replaced by Tenant may be removed and
shall become the property of Tenant and items replacing the same shall be and
remain the property of Landlord. Tenant shall execute, upon written request
from Landlord, any and all documents necessary to evidence Landlord's ownership
of Landlord's Personal Property and replacements therefor. Tenant may finance
replacements for the Fixtures and Landlord's Personal Property by equipment
lease or by a security agreement and financing statement if, with respect to any
financing of critical care equipment and with respect to any other Personal
Property having a value in excess of $250,000.00 [i] Landlord has consented to
the terms and conditions of the equipment lease or security agreement; and [ii]
the equipment lessor or lender has entered into a nondisturbance agreement with
Landlord upon terms and conditions reasonably acceptable to Landlord, including,
without limitation, the following: [a] Landlord shall have the right (but not
the obligation) to assume such security agreement or equipment lease upon the
occurrence of an Event of Default under this Lease; [b] the equipment lessor or
lender shall notify Landlord of any default by Tenant under the equipment lease
or security agreement and give Landlord a reasonable opportunity to cure such
default; and [c] Landlord shall have the right to assign its rights under the
equipment lease, security agreement, or nondisturbance agreement. Tenant shall,
within 30 days after receipt of an invoice from Landlord, reimburse Landlord for
all costs and expenses incurred in reviewing and approving the equipment lease,
security agreement, and nondisturbance agreement, including, without limitation,
reasonable attorneys' fees and costs.
7.5 Lender Maintenance Reserve EscrowLender Maintenance Reserve Escrow.
------------------------------------
Upon request from Tenant, Landlord shall cooperate with Tenant to secure the
release of funds held by Lender in the Lender Maintenance Reserve Escrow to the
extent such funds are available as set forth in the Loan Documents. Tenant's
obligations set forth in this Article 7 shall not be conditioned upon the
release of funds by Lender from the Lender Maintenance Reserve Fund.
ARTICLE 8: DEFAULTS AND REMEDIESDEFAULTS AND REMEDIES
8.1 Events of DefaultEvents of Default . The occurrence of any one or more
------------------
of the following shall be an event of default ("Event of Default") hereunder
without any advance notice to Tenant unless specified herein:
(a) Tenant fails to pay in full any installment of Base Rent, any Additional
Rent or any other monetary obligation payable by Tenant under this Lease
within 10 days after such payment is due.
(b) Tenant or Guarantor (where applicable) fails to comply with any covenant
set forth in Article 14, 15.6, 15.7, 15.8 or 15.12 of this Lease.
(c) Tenant fails to observe and perform any other covenant, condition or
agreement under this Lease to be performed by Tenant and [i] such failure
continues for a period of 30 days after written notice thereof is given to
Tenant by Landlord; or [ii] if, by reason of the nature of such default it
cannot be remedied within 30 days, Tenant fails to proceed with diligence
reasonably satisfactory to Landlord after receipt of the notice to cure the
default or, in any event, fails to cure such default within 60 days after
receipt of the notice. The foregoing notice and cure provisions do not apply to
any Event of Default otherwise specifically described in any other subsection of
8.1.
(d) Tenant abandons or vacates(except during a period of repair or
reconstruction after damage, destruction or a Taking) the Facility Property or
any material part thereof, ceases to operate any Facility, ceases to do business
or ceases to exist for any reason for any one or more days.
(e) [i] The filing by Tenant or Guarantor of a petition under the
Bankruptcy Code or the commencement of a bankruptcy or similar proceeding by
Tenant or Guarantor; [ii] the failure by Tenant or Guarantor within 60 days to
dismiss an involuntary bankruptcy petition or other commencement of a
bankruptcy, reorganization or similar proceeding against such party, or to lift
or stay any execution, garnishment or attachment of such consequence as will
impair its ability to carry on its operation at the Leased Property; [iii] the
entry of an order for relief under the Bankruptcy Code in respect of Tenant or
Guarantor; [iv] any assignment by Tenant or Guarantor for the benefit of its
creditors; [v] the entry by Tenant or Guarantor into an agreement of composition
with its creditors; [vi] the approval by a court of competent jurisdiction of a
petition applicable to Tenant or Guarantor in any proceeding for its
reorganization instituted under the provisions of any state or federal
bankruptcy, insolvency, or similar laws; [vii] appointment by final order,
judgment, or decree of a court of competent jurisdiction of a receiver of a
whole or any substantial part of the properties of Tenant or Guarantor (provided
such receiver shall not have been removed or discharged within 60 days of the
date of his qualification).
(f) [i] Any receiver, administrator, custodian or other person takes
possession or control of any of the Leased Property and continues in possession
for 60 days; [ii] any writ against any of the Leased Property is not released
within 60 days; [iii] any judgment is rendered or proceedings are instituted
against the Leased Property, Tenant which adversely affect the Leased Property
or any part thereof, which is not dismissed for 60 days (except as otherwise
provided in this section); [iv] all or a substantial part of the assets of
Tenant are attached, seized, subjected to a writ or distress warrant, or are
levied upon, or come into the possession of any receiver, trustee, custodian, or
assignee for the benefit of creditors; [v] Tenant is enjoined, restrained, or in
any way prevented by court order, or any proceeding is filed or commenced
seeking to enjoin, restrain or in any way prevent Tenant or Guarantor from
conducting all or a substantial part of its business or affairs; or [vi] except
as otherwise permitted hereunder, a final notice of lien, levy or assessment is
filed of record with respect to all or any part of the Leased Property or any
property of Tenant or Guarantor located at the Leased Property and is not
dismissed, discharged, or bonded-off within 30 days.
(g) Any representation or warranty made by Tenant or Guarantor in this Lease
or any other document executed in connection with this Lease, any guaranty of or
other security for this Lease, or any report, certificate, application,
financial statement or other instrument furnished by Tenant or Guarantor
pursuant hereto or thereto shall prove to be false, misleading or incorrect in
any material respect as of the date made.
(h) Tenant or any Affiliate of Tenant defaults on any indebtedness or
obligation to Landlord or any Landlord Affiliate, any Obligor Group Obligation
or any agreement with Landlord or any Landlord Affiliate, including, without
limitation, any lease with Landlord or any Landlord Affiliate, or the occurrence
of a default under any Material Obligation, and any applicable grace or cure
period with respect to default under such indebtedness or obligation expires
without such default having been cured. This provision applies to all such
indebtedness, obligations and agreements as they may be amended, modified,
extended, or renewed from time to time.
(i) Any guarantor of this Lease dissolves, terminates, is adjudicated
incompetent, files a petition in bankruptcy, or is adjudicated insolvent under
the Bankruptcy Code or any other insolvency law, or fails to comply with any
covenant or requirement of such guarantor set forth in this Lease or in the
guaranty of such guarantor, which is not cured within any applicable cure
period.
(j) The license for the Facility or any other Government Authorization is
canceled, suspended, reduced to provisional or temporary, or otherwise
invalidated, or license revocation or decertification proceedings are commenced
against Tenant, and in each instance, such action is not stayed pending appeal,
or, as a result of the acts or omissions of Tenant, any reduction of more than
5% occurs in the number of licensed beds or units at the Facility, or an
admissions ban is issued for the Facility and remains in effect for a period of
more than 45 days.
8.2 RemediesRemedies . Upon the occurrence of an Event of Default under
--------
this Lease or any Lease Document, and at any time thereafter until Landlord
waives the default in writing or acknowledges cure of the default in writing, at
Landlord's option, without declaration, notice of nonperformance, protest,
notice of protest, notice of default, notice to quit or any other notice or
demand of any kind, Landlord may exercise any and all rights and remedies
provided in this Lease or any Lease Document or otherwise provided under law or
in equity, including, without limitation, any one or more of the following
remedies:
(a) Landlord may re-enter and take possession of the Leased Property without
terminating this Lease, and lease the Leased Property for the account of
Tenant, holding Tenant liable for all costs of Landlord in reletting the Leased
Property and for the difference in the amount received by such reletting and the
amounts payable by Tenant under the Lease.
(b) Landlord may terminate this Lease by written notice to Tenant, exclude
Tenant from possession of the Leased Property and use commercially reasonable
efforts to lease the Leased Property to others, holding Tenant liable for the
difference in the amounts received from such reletting and the amounts payable
by Tenant under this Lease.
(c) Landlord may re-enter the Leased Property and have, repossess and enjoy
the Leased Property as if this Lease had not been made, and in such event,
Tenant and its successors and assigns shall remain liable for any contingent or
unliquidated obligations or sums owing at the time of such repossession.
(d) Landlord may have access to and inspect, examine and make copies of the
books and records and any and all accounts, data and income tax and other
returns of Tenant insofar as they pertain to the Leased Property subject to
landlord's obligation to maintain the confidentiality of any patient or employee
information in accordance with the requirements of applicable State or federal
law.
(e) Landlord may accelerate all of the unpaid Rent hereunder based on the
then current Rent Schedule so that the aggregate Rent for the unexpired term of
this Lease becomes immediately due and payable.
(f) Landlord may take whatever action at law or in equity as may appear
necessary or desirable to collect the Rent and other amounts payable under this
Lease then due and thereafter to become due, or to enforce performance and
observance of any obligations, agreements or covenants of Tenant under this
Lease.
(g) With respect to the Collateral or any portion thereof and Secured
Party's security interest therein, Secured Party may exercise all of its rights
as secured party under Article 9 of the Uniform Commercial Code. Secured Party
may sell the Collateral by public or private sale upon five days notice to
Tenant. Tenant agrees that a commercially reasonable manner of disposition of
the Collateral shall include, without limitation and at the option of Secured
Party, a sale of the Collateral, in whole or in part, concurrently with the sale
of the Leased Property.
(h) Secured Party may obtain control over and collect the Receivables and
apply the proceeds of the collections to satisfaction of the Obligor Group
Obligations unless prohibited by law. Tenant appoints Landlord or its designee
as attorney for Tenant with powers [i] to receive, to endorse, to sign and/or to
deliver, in Tenant's name or Secured Party's name, any and all checks, drafts,
and other instruments for the payment of money relating to the Receivables, and
to waive demand, presentment, notice of dishonor, protest, and any other notice
with respect to any such instrument; [ii] to sign Tenant's name on any invoice
or bill of lading relating to any Receivable, drafts against account debtors,
assignments and verifications of Receivables, and notices to account debtors;
[iii] to send verifications of Receivables to any account debtor; and [iv] to do
all other acts and things necessary to carry out this Lease. Absent gross
negligence or willful misconduct of Secured Party, Secured Party shall not be
liable for any omissions, commissions, errors of judgment, or mistakes in fact
or law made in the exercise of any such powers. At Secured Party's option,
Tenant shall [i] provide Secured Party a full accounting of all amounts received
on account of Receivables with such frequency and in such form as Secured Party
may require, either with or without applying all collections on Receivables in
payment of the Obligor Group Obligations or [ii] deliver to Secured Party on the
day of receipt all such collections in the form received and duly endorsed by
Tenant. At Secured Party's request, Tenant shall institute any action or enter
into any settlement determined by Secured Party to be necessary to obtain
recovery or redress from any account debtor in default of Receivables. Secured
Party may give notice of its security interest in the Receivables to any or all
account debtors with instructions to make all payments on Receivables directly
to Secured Party, thereby terminating Tenant's authority to collect Receivables.
After terminating Tenant's authority to enforce or collect Receivables, Secured
Party shall have the right to take possession of any or all Receivables and
records thereof and is hereby authorized to do so, and only Secured Party shall
have the right to collect and enforce the Receivables. Prior to the occurrence
and during the continuance of an Event of Default, at Tenant's cost and expense,
but on behalf of Secured Party and for Secured Party's account, Tenant shall
collect or otherwise enforce all amounts unpaid on Receivables and hold all such
collections in trust for Secured Party, but Tenant may commingle such
collections with Tenant's own funds, until Tenant's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Secured Party does not assume any of Tenant's
obligations under any Receivable, and Secured Party shall not be responsible in
any way for the performance of any of the terms and conditions thereof by
Tenant.
(i) Without waiving any prior or subsequent Event of Default, Landlord may
waive any Event of Default or, with or without waiving any Event of Default,
remedy any default.
(j) Landlord may terminate its obligation, if any, to disburse any Landlord
Payments.
(k) Landlord may enter and take possession of the Land and the Facility
without terminating this Lease and complete construction and renovation of the
Improvements (or any part thereof) and perform the obligations of Tenant under
the Lease Documents. Without limiting the generality of the foregoing and for
the purposes aforesaid, Tenant hereby appoints Landlord its lawful
attorney-in-fact with full power to do any of the following: [i] complete
construction, renovation and equipping of the Improvements in the name of
Tenant; [ii] use unadvanced funds remaining under the Investment Amount, or
funds that may be reserved, escrowed, or set aside for any purposes hereunder at
any time, or to advance funds in excess of the Investment Amount, to complete
the Improvements; [iii] make changes in the plans and specifications that shall
be necessary or desirable to complete the Improvements in substantially the
manner contemplated by the plans and specifications; [iv] retain or employ new
general contractors, subcontractors, architects, engineers, and inspectors as
shall be required for said purposes; [v] pay, settle, or compromise all existing
bills and claims, which may be liens or security interests, or to avoid such
bills and claims becoming liens against the Facility or security interest
against fixtures or equipment, or as may be necessary or desirable for the
completion of the construction and equipping of the Improvements or for the
clearance of title; [vi] execute all applications and certificates, in the name
of Tenant, that may be required in connection with any construction; [vii] do
any and every act that Tenant might do in its own behalf, to prosecute and
defend all actions or proceedings in connection with the Improvements; and
[viii] to execute, deliver and file all applications and other documents and
take any and all actions necessary to transfer the operations of the Facility to
Secured Party or Secured Party's designee. This power of attorney is a power
coupled with an interest and cannot be revoked.
(l) Landlord may apply, with or without notice to Tenant, for the
appointment of a receiver ("Receiver") for Tenant or Tenant's business or for
the Leased Property. Unless prohibited by law, such appointment may be made
either before or after termination of Tenant's possession of the Leased
Property, without notice, without regard to the solvency or insolvency of Tenant
at the time of application for such Receiver and without regard to the then
value of the Leased Property, and Secured Party may be appointed as Receiver.
After the occurrence and during the continuance of an Event of Default, Landlord
shall be entitled to appointment of a receiver as a matter of right and without
the need to make any showing other than the existence of an Event of Default.
The Receiver shall have the power to collect the rents, income, profits and
Receivables of the Leased Property during the pendency of the receivership and
all other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Leased Property
during the whole of said proceeding. All sums of money received by the Receiver
from such rents and income, after deducting therefrom the reasonable charges and
expenses paid or incurred in connection with the collection and disbursement
thereof, shall be applied to the payment of the Rent or any other monetary
obligation of Tenant under this Lease, including, without limitation, any losses
or damages incurred by Landlord under this Lease. Tenant, if requested to do
so, will consent to the appointment of any such Receiver as aforesaid.
(m) Landlord may terminate any management agreement with respect to any of
the Leased Property and shall have the right to retain one or more managers for
the Leased Property at the expense of Tenant, such manager(s) to serve for such
term and at such compensation as Landlord reasonably determines is necessary
under the circumstances.
8.3 Right of SetoffRight of Setoff . Landlord may, and is hereby authorized
---------------
by Tenant to, at any time and from time to time without advance notice to
Tenant (any such notice being expressly waived by Tenant), setoff or recoup and
apply any and all sums held by Landlord, any indebtedness of Landlord to Tenant,
and any claims by Tenant against Landlord, against any obligations of Tenant
hereunder and against any claims by Landlord against Tenant, whether or not such
obligations or claims of Tenant are matured and whether or not Landlord has
exercised any other remedies hereunder. The rights of Landlord under this
section are in addition to any other rights and remedies Landlord may have
against Tenant.
8.4 Performance of Tenant's CovenantsPerformance of Tenant's Covenants .
------------------------------------
Landlord may perform any obligation of Tenant which Tenant has failed to perform
within five days after Landlord has sent a written notice to Tenant
informing it of its specific failure. Tenant shall reimburse Landlord on
demand, as Additional Rent, for any expenditures thus incurred by Landlord and
shall pay interest thereon at Landlord's rate of return as provided in the
Commitment.
8.5 Late Payment ChargeLate Payment Charge . Tenant acknowledges that any
---------------------
default in the payment of any installment of Rent payable hereunder will result
in loss and additional expense to Landlord in servicing any indebtedness of
Landlord secured by the Leased Property, handling such delinquent payments, and
meeting its other financial obligations, and because such loss and additional
expense is extremely difficult and impractical to ascertain, Tenant agrees that
in the event any Rent payable to Landlord hereunder is not paid within 10 days
after the due date, Tenant shall pay a late charge of 5% of the amount of the
overdue payment as a reasonable estimate of such loss and expenses, unless
applicable law requires a lesser charge, in which event the maximum rate
permitted by such law may be charged by Landlord. The 10-day grace period set
forth in this section shall not extend the time for payment of Rent or the
period for curing any default or constitute a waiver of such default.
8.6 Default RentDefault Rent . At Landlord's option at any time after the
-------------
occurrence of an Event of Default and while such Event of Default remains
uncured, the Base Rent payable under this Lease shall be increased to reflect
Landlord's rate of return of 18.5% per annum on the Investment Amount ("Default
Rent"); provided, however, that if a court of competent jurisdiction determines
that any other amounts payable under this Lease are deemed to be interest, the
Default Rent shall be adjusted to ensure that the aggregate interest payable
under this Lease does not accrue at a rate in excess of the maximum legal rate.
8.7 Attorneys' FeesAttorneys' Fees . Tenant shall pay all reasonable costs
----------------
and expenses incurred by Landlord in enforcing or preserving Landlord's rights
under this Lease, whether or not an Event of Default has actually occurred or
has been declared and thereafter cured, including, without limitation, [i] the
fees, expenses, and costs of any litigation, appellate, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; [ii]
reasonable attorney, paralegal, consulting and witness fees and disbursements;
and [iii] the expenses, including, without limitation, lodging, meals, and
transportation, of Landlord and its employees, agents, attorneys, and witnesses
in preparing for litigation, administrative, bankruptcy, insolvency or other
similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. All such reasonable costs, expenses, charges and fees
payable by Tenant shall be deemed to be Additional Rent under this Lease.
8.8 Escrows and Application of PaymentsEscrows and Application of Payments .
-----------------------------------
As security for the performance of the Obligor Group Obligations, Tenant
hereby assigns to Landlord all its right, title, and interest in and to all
monies escrowed with Landlord under this Lease and all deposits with utility
companies, taxing authorities and insurance companies; provided, however, that
Landlord shall not exercise its rights hereunder until an Event of Default has
occurred. Any payments received by Landlord under any provisions of this Lease
during the existence or continuance of an Event of Default shall be applied to
the Obligor Group Obligations in the order which Landlord may determine.
8.9 Remedies CumulativeRemedies Cumulative . The remedies of Landlord
--------------------
herein are cumulative to and not in lieu of any other remedies available to
Landlord at law or in equity. The use of any one remedy shall not be taken to
exclude or waive the right to use any other remedy.
8.10 WaiversWaivers . Tenant waives [i] any notice required by statute or
-------
other law as a condition to bringing an action for possession of, or eviction
from, any of the Leased Property, [ii] any right of re-entry or repossession,
[iii] any right to a trial by jury in any action or proceeding arising out of or
relating to this Lease, [iv] any right of redemption whether pursuant to
statute, at law or in equity, [v] all presentments, demands for performance,
notices of nonperformance, protest, notices of protest, notices of dishonor,
notices to quit and any other notice or demand of any kind other than those
specifically provided for in this Lease, and [vi] all notices of the existence,
creation or incurring of any obligation or advance under this Lease before or
after this date.
8.11 Obligations Under the Bankruptcy CodeObligations Under the Bankruptcy
---------------------------------------
Code . Upon filing of a petition by or against Tenant under the Bankruptcy
Code, Tenant, as debtor and as debtor-in-possession, and any trustee who may be
appointed with respect to the assets of or estate in bankruptcy of Tenant, agree
to pay monthly in advance on the first day of each month, as reasonable
compensation for the use and occupancy of the Leased Property, an amount equal
to all Rent due pursuant to this Lease. Included within and in addition to any
other conditions or obligations imposed upon Tenant or its successor in the
event of the assumption and/or assignment of this Lease are the following: [i]
the cure of any monetary defaults and reimbursement of pecuniary loss within not
more than five Business Days of assumption and/or assignment; [ii] the deposit
of an additional amount equal to not less than three months' Base Rent, which
amount is agreed to be a necessary and appropriate deposit to adequately assure
the future performance under this Lease of the Tenant or its assignee; and [iii]
the continued use of the Leased Property for the Facility Uses. Nothing herein
shall be construed as an agreement by Landlord to any assignment of this Lease
or a waiver of Landlord's right to seek adequate assurance of future performance
in addition to that set forth hereinabove in connection with any proposed
assumption and/or assignment of this Lease.
ARTICLE 9: DAMAGE AND DESTRUCTIONDAMAGE AND DESTRUCTION
9.1 Notice of CasualtyNotice of Casualty . If the Leased Property shall be
-------------------
destroyed, in whole or in part, or damaged by fire, flood, windstorm or other
casualty in excess of $150,000.00 (a "Casualty"), Tenant shall give written
notice thereof to Landlord within two Business Days after the occurrence of the
Casualty. Within 15 days after the occurrence of the Casualty or as soon
thereafter as such information is reasonably available to Tenant, Tenant shall
provide the following information to Landlord: [i] the date of the Casualty;
[ii] the nature of the Casualty; [iii] a description of the damage or
destruction caused by the Casualty, including the type of Leased Property
damaged and the area of the Improvements damaged; [iv] a preliminary estimate of
the cost to repair, rebuild, restore or replace the Leased Property; [v] a
preliminary estimate of the schedule to complete the repair, rebuilding,
restoration or replacement of the Leased Property; [vi] a description of the
anticipated property insurance claim, including the name of the insurer, the
insurance coverage limits, the deductible amount, the expected settlement
amount, and the expected settlement date; and [vii] a description of the
business interruption claim, including the name of the insurer, the insurance
coverage limits, the deductible amount, the expected settlement amount, and the
expected settlement date. Within five days after request from Landlord, Tenant
will provide Landlord with copies of all correspondence to the insurer and any
other information reasonably requested by Landlord.
9.2 Substantial DestructionSubstantial Destruction .
------------------------
9.2.1 If the Facility Improvements are substantially destroyed at any time
other than during the final 18 months of the Initial Term or any Renewal Term,
Tenant shall promptly rebuild and restore such Improvements in accordance with
9.4 and Landlord shall make the insurance proceeds available to Tenant for such
restoration. The term "substantially destroyed" means any casualty resulting in
the loss of use of 50% or more of the licensed beds at any one Facility.
9.2.2 If the Facility Improvements are substantially destroyed during the
final 18 months of the Initial Term or any Renewal Term, Landlord may elect to
terminate this Lease and retain the insurance proceeds unless Tenant exercises
its option to renew as set forth in 9.2.3. If Landlord elects to terminate,
Landlord shall give notice ("Termination Notice") of its election to terminate
this Lease within 30 days after receipt of Tenant's notice of the damage. If
Tenant does not exercise its option to renew under 9.2.3 within 15 days after
delivery of the Termination Notice, this Lease shall terminate on the 15th day
after delivery of the Termination Notice. If this Lease is so terminated,
Tenant shall be liable to Landlord for all Rent and all other obligations
accrued under this Lease through the effective date of termination.
9.2.2.1 If the Facility Improvements are substantially destroyed during the
final 18 months of the Initial Term or the Renewal Term and Landlord gives the
Termination Notice, Tenant shall have the option to renew this Lease. Tenant
shall give Landlord irrevocable notice of Tenant's election to renew within 15
days after delivery of the Termination Notice. If Tenant elects to renew, the
Renewal Term will be in effect for the balance of the then current Term plus a
15-year period. The Renewal Term will commence on the third day following
Landlord's receipt of Tenant's notice of renewal. All other terms of this Lease
for the Renewal Term shall be in accordance with Article 12. The
Improvements will be restored by Tenant in accordance with the provisions of
this Article 9 regarding partial destruction.
9.3 Partial DestructionPartial Destruction . If the Facility Improvements
--------------------
are not substantially destroyed, then Tenant shall comply with the provisions of
9.4 and Landlord shall make the insurance proceeds available to Tenant for
such restoration.
9.4 RestorationRestoration . Subject to any limitations imposed by law with
-----------
respect to the rebuilding of the Leased Premises, Tenant shall promptly
repair, rebuild, or restore the damaged Leased Property, at Tenant's expense, so
as to make the Leased Property at least equal in value to the Leased Property
existing immediately prior to such occurrence and as nearly similar to it in
character as is practicable and reasonable. Before beginning such repairs or
rebuilding with respect to any Casualty, or letting any contracts in connection
with such repairs or rebuilding, Tenant will submit for Landlord's approval,
which approval Landlord will not unreasonably withhold or delay, plans and
specifications meeting the requirements of 16.2 for such repairs or rebuilding.
Promptly after receiving Landlord's approval of the plans and specifications,
Tenant will begin such repairs or rebuilding and will prosecute the repairs and
rebuilding to completion with diligence, subject, however, to strikes, lockouts,
acts of God, embargoes, governmental restrictions, and other causes beyond
Tenant's reasonable control. Landlord will make available to Tenant the net
proceeds of any fire or other casualty insurance paid to Landlord for such
repair or rebuilding as the same progresses, after deduction of any costs of
collection, including reasonable attorneys' fees. Payments will be made against
properly certified vouchers of a competent architect in charge of the work and
approved by Landlord. Payments for deposits for the repairing or rebuilding or
delivery of materials to the Facility will be made upon Landlord's receipt of
evidence satisfactory to Landlord that such payments are required in advance.
With respect to any Casualty, prior to commencing the repairing or rebuilding,
Tenant shall deliver to Landlord for Landlord's approval a schedule setting
forth the estimated monthly draws for such work. Landlord will contribute to
such payments out of the insurance proceeds an amount equal to the proportion
that the total net amount received by Landlord from insurers bears to the total
estimated cost of the rebuilding or repairing, multiplied by the payment by
Tenant on account of such work. Landlord may, however, withhold 10% from each
payment until the work is completed and proof has been furnished to Landlord
that no lien or liability has attached or will attach to the Leased Property or
to Landlord in connection with such repairing or rebuilding. Upon the
completion of rebuilding and the furnishing of such proof, the balance of the
net proceeds of such insurance payable to Tenant on account of such repairing or
rebuilding will be paid to Tenant. If required by law as a result of the nature
or extent of the damage, Tenant will obtain and deliver to Landlord a temporary
or final certificate of occupancy before the damaged Leased Property is
reoccupied for any purpose. Tenant shall complete such repairs or rebuilding
free and clear of mechanic's or other liens, and in accordance with the building
codes and all applicable laws, ordinances, regulations, or orders of any state,
municipal, or other public authority affecting the repairs or rebuilding, and
also in accordance with all requirements of the insurance rating organization,
or similar body. Any remaining proceeds of insurance after such restoration
will be Tenant's property.
9.5 Insufficient ProceedsInsufficient Proceeds . If the proceeds of any
----------------------
insurance settlement are not sufficient to pay the costs of Tenant's repair,
rebuilding or restoration under 9.4 in full, Tenant shall deposit with Landlord
at Landlord's option, and within 10 days of Landlord's request, an amount
sufficient in Landlord's reasonable judgment to complete such repair, rebuilding
or restoration or shall provide Landlord with evidence reasonably satisfactory
to Landlord that Tenant has available the funds needed to complete such repair,
rebuilding or restoration. Tenant shall not, by reason of the deposit or
payment, be entitled to any reimbursement from Landlord or diminution in or
postponement of the payment of the Rent.
9.6 Not Trust FundsNot Trust Funds . Notwithstanding anything herein or at
----------------
law or equity to the contrary, none of the insurance proceeds paid to Landlord
as herein provided shall be deemed trust funds, and Landlord shall be entitled
to dispose of such proceeds as provided in this Article 9. Tenant expressly
assumes all risk of loss, including a decrease in the use, enjoyment or value,
of the Leased Property from any casualty whatsoever, whether or not insurable or
insured against.
9.7 Landlord's InspectionLandlord's Inspection . During the progress of
----------------------
such repairs or rebuilding, Landlord and its architects and engineers may, from
time to time, inspect the Leased Property and will be furnished, if required by
them, with copies of all plans, shop drawings, and specifications relating to
such repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications at the building, and Landlord and its architects and engineers
may examine them at all reasonable times and on reasonable notice. If, during
such repairs or rebuilding, Landlord and its architects and engineers determine
that the repairs or rebuilding are not being done in accordance with the
approved plans and specifications, Landlord will give prompt notice in writing
to Tenant, specifying in detail the particular deficiency, omission, or other
respect in which Landlord claims such repairs or rebuilding do not accord with
the approved plans and specifications. Upon the receipt of any such notice,
Tenant will cause corrections to be made to any deficiencies, omissions, or such
other respect. Tenant's obligations to supply insurance, according to
Article 4, will be applicable to any repairs or rebuilding under this section.
9.8 Landlord's CostsLandlord's Costs . Tenant shall, within 30 days after
-----------------
receipt of an invoice from Landlord, pay the costs, expenses, and fees of any
architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith.
9.9 No Rent AbatementNo Rent Abatement . Rent will not abate pending the
-------------------
repairs or rebuilding of the Leased Property.
ARTICLE 10: CONDEMNATIONCONDEMNATION
10.1.1 Total TakingTotal Taking . If, by exercise of the right of eminent
-------------
domain or by conveyance made in response to the threat of the exercise of such
right ("Taking"), the entire Facility Property is taken, or so much of the
Facility Property is taken that the number of licensed beds/units at the
Facility Property is reduced by more than 25% as a result of such Taking, then
this Lease will end with respect to the Facility Property only on the earlier of
the vesting of title to the Facility Property in the condemning authority
or the taking of possession of the Facility Property by the condemning
authority. All damages awarded for such Taking under the power of eminent
domain shall be the property of Landlord, whether such damages shall be awarded
as compensation for diminution in value of the leasehold or the fee of the
Facility Property, provided, however, nothing herein shall preclude Tenant from
pursuing a separate award for the Taking of its Tenant's Property (as defined
below) or for relocation costs or expenses.
10.2 Partial TakingPartial Taking . If, after a Taking, so much of the
---------------
Facility Property remains that the Facility Property can be used for
substantially the same purposes for which it was used immediately before the
Taking, then [i] this Lease will end as to the part taken on the earlier of the
vesting of title to such Leased Property in the condemning authority or the
taking of possession of the Leased Property by the condemning authority and the
Rent will be adjusted accordingly; [ii] at its cost, Tenant shall restore so
much of the Facility Property as remains to a sound architectural unit
substantially suitable for the purposes for which it was used immediately before
the Taking, using good workmanship and new, first-class materials; [iii]
upon completion of the restoration, Landlord will pay Tenant the lesser of the
net award made to Landlord on the account of the Taking (after deducting from
the total award, reasonable attorneys', appraisers', and other fees and costs
incurred in connection with the obtaining of the award and amounts paid to the
holders of mortgages secured by the Facility Property), or Tenant's actual
out-of-pocket costs of restoring the Facility Property; and [iv] Landlord shall
be entitled to the balance of the net award except to the extent specifically
allocated to the value of Tenant's Property or any relocation costs or expenses
incurred by Tenant as a result of such partial Taking. The restoration shall be
completed in accordance with 9.4, 9.5, 9.7, 9.8 and 9.9 with such provisions
deemed to apply to condemnation instead of casualty.
10.3 Condemnation Proceeds Not Trust FundsCondemnation Proceeds Not Trust
----------------------------------------
Funds . Notwithstanding anything in this Lease or at law or equity to the
contrary, none of the condemnation award paid to Landlord shall be deemed trust
funds, and Landlord shall be entitled to dispose of such proceeds as provided in
this Article 10. Tenant expressly assumes all risk of loss, including a
decrease in the use, enjoyment, or value, of the Leased Property from any
Taking.
ARTICLE 11: TENANT'S PROPERTYTENANT'S PROPERTY
11.1 Tenant's PropertyTenant's Property . Tenant shall have the right to
------------------
install, place, and use on the Leased Property such fixtures, furniture,
equipment, inventory and other personal property in addition to Landlord's
Personal Property as may be required or as Tenant may, from time to time, deem
necessary or useful to operate the Leased Property for its permitted purposes.
All fixtures, furniture, equipment, inventory, and other personal property
installed, placed, or used on the Leased Property which is owned by Tenant or
leased by Tenant from third parties is hereinafter referred to as "Tenant's
Property".
11.2 Requirements for Tenant's PropertyRequirements for Tenant's Property .
-----------------------------------
Tenant shall comply with all of the following requirements in connection
with Tenant's Property:
(a) Tenant shall, at Tenant's sole cost and expense, maintain, repair, and
replace Tenant's Property.
(b) Tenant shall, at Tenant's sole cost and expense, keep Tenant's Property
insured against loss or damage by fire, vandalism and malicious mischief,
sprinkler leakage, earthquake, and other physical loss perils commonly covered
by fire and extended coverage, boiler and machinery, and difference in
conditions insurance in an amount not less than 90% of the then full replacement
cost thereof. Tenant shall use the proceeds from any such policy for the repair
and replacement of Tenant's Property. The insurance shall meet the requirements
of 4.3.
(c) Tenant shall pay all taxes applicable to Tenant's Property.
(d) If Tenant's Property is damaged or destroyed by fire or any other cause,
Tenant shall have the right, but not the obligation, to repair or replace
Tenant's Property (unless the same is required for the operation of the Leased
Property in compliance with applicable Legal Requirements, in which case Tenant
shall be required to promptly repair or replace the same) unless Landlord elects
to terminate this Lease pursuant to 9.2.2.
(e) Unless an Event of Default or any event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default has occurred,
Tenant may remove Tenant's Property from the Leased Property from time to time
provided that [i] the items removed are not required to operate the Leased
Property for the Facility Uses (unless such items are being replaced by Tenant);
and [ii] Tenant repairs any damage to the Leased Property resulting from the
removal of Tenant's Property.
(f) Tenant shall not, without the prior written consent of Landlord or as
otherwise provided in this Lease, remove any Tenant's Property or Leased
Property. Tenant shall, at Landlord's option, remove Tenant's Property upon the
termination or expiration of this Lease and shall repair any damage to the
Leased Property resulting from the removal of Tenant's Property. If Tenant
fails to remove Tenant's Property within 30 days after request by Landlord, then
Tenant shall be deemed to have abandoned Tenant's Property, Tenant's Property
shall become the property of Landlord, and Landlord may remove, store and
dispose of Tenant's Property. In such event, Tenant shall have no claim or
right against Landlord for such property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay Landlord, upon demand, all
expenses incurred by Landlord in removing, storing, and disposing of Tenant's
Property and repairing any damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration of this Lease.
(g) Tenant shall perform its obligations under any equipment lease or
security agreement for Tenant's Property. For equipment loans or leases for
critical care equipment and for all other equipment having an original cost in
excess of $250,000.00, Tenant shall cause such equipment lessor or lender to
enter into a nondisturbance agreement with Landlord upon terms and conditions
acceptable to Landlord, including, without limitation, the following: [i]
Landlord shall have the right (but not the obligation) to assume such equipment
lease or security agreement upon the occurrence of an Event of Default by Tenant
hereunder; [ii] such equipment lessor or lender shall notify Landlord of any
default by Tenant under the equipment lease or security agreement and give
Landlord a reasonable opportunity to cure such default; and [iii] Landlord shall
have the right to assign its interest in the equipment lease or security
agreement and nondisturbance agreement. Tenant shall, within 30 days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement and nondisturbance agreement, including, without limitation,
reasonable attorneys' fees and costs.
ARTICLE 12: RENEWAL OPTIONSRENEWAL OPTIONS
12.1 Renewal OptionsRenewal Options . Tenant has the option to renew
----------------
("Renewal Option") this Lease for one 15-year renewal term ("Renewal Term").
Tenant can exercise the Renewal Option only upon satisfaction of the following
conditions:
(a) There shall be no uncured Event of Default, or any event which with the
passage of time or giving of notice would constitute an Event of Default, at the
time Tenant exercises its Renewal Option nor on the date the Renewal Term
is to commence.
(b) Tenant shall give Landlord irrevocable written notice of renewal no
later than the date which is [i] 90 days prior to the expiration date of the
Initial Term; or [ii] 15 days after Landlord's delivery of the Termination
Notice as set forth in 9.2.3.
12.2 Effect of RenewalEffect of Renewal . The following terms and
-------------------
conditions will be applicable if Tenant renews the Lease:
(a) Effective Date. Except as otherwise provided in 9.2.3, the effective
---------------
date of any Renewal Term will be the first day after the expiration date of the
Term. The first day of the Renewal Term is also referred to as the Renewal
Date.
(b) Investment Amount. Effective as of the Renewal Date, a single
------------------
Investment Amount will be computed by summing all Landlord Payments made to
-
date.
(c) Rent Adjustment. Effective as of the Renewal Date, Landlord shall
----------------
calculate Base Rent for the Renewal Term in accordance with 2.1(c)(2) of the
Commitment and shall issue a new Rent Schedule reflecting the Base Rent
adjustment. Until Tenant receives a revised Rent Schedule from Landlord, Tenant
shall for each month [i] continue to make installments of Base Rent according to
the Rent Schedule in effect on the day before the Renewal Date; and [ii] within
10 days following Landlord's issuance of an invoice, pay the difference between
the installment of Base Rent paid to Landlord for such month and the installment
of Base Rent actually due for such month as a result of the renewal of the
Lease.
(d) Other Terms and Conditions. Except for the modifications set forth in
----------------------------
this 12.2, all other terms and conditions of the Lease will remain the same for
the Renewal Term.
ARTICLE 13: RIGHT OF FIRST OPPORTUNITYRIGHT OF FIRST OPPORTUNITY
13.1 Right of First OpportunityRight of First Opportunity . In the event at
--------------------------
any time during the Term either [i] Landlord elects to seek a purchaser of
the Leased Property (the "Right of First Opportunity Event") or [ii] Landlord
receives a bona fide offer from a third party (the "Offer") setting forth the
terms and conditions upon which it proposes to purchase the Leased Property
which it is interested in accepting, but in no event shall Landlord be obligated
to accept (the "Right of First Refusal Event"), the following provisions shall
apply:
(a) In the event of the occurrence of the Right of First Opportunity Event,
Landlord shall provide Tenant with written notice of its intent to sell the
Leased Property and its proposed terms with respect thereto (the "Opportunity
Notice"). Landlord and Tenant shall have a period of 30 days after Tenant's
receipt of the Opportunity Notice (the "Protected Period") to negotiate in good
faith with respect to the terms and conditions under which such transaction
shall occur provided that in no event shall the purchase price be less than the
Base Price and shall occur on the terms and conditions set forth in the
Transaction Documents (as defined below) (the "Opportunity Transaction"). In
the event Landlord and Tenant are unable to reach agreement within the Protected
Period with respect to the terms of the Opportunity Transaction, then
Landlord shall be free to enter into negotiations with respect to the
Opportunity Transaction with any other person or entity; provided, however, that
Landlord shall not be permitted to consummate a transaction with any other
person or entity on terms which are less favorable to Landlord than those
offered to Tenant during the Protected Period without first offering Tenant the
opportunity on written notice setting forth such terms to consummate the
Opportunity Transaction on such alternative terms and conditions (the "Modified
Opportunity Notice"); provided, however, that Tenant shall be deemed to have
waived its right to proceed with such revised Opportunity Transaction in the
event it does not advise Landlord of its election to proceed within 10 days
after its receipt of the Modified Opportunity Notice.
(b) In the event of the occurrence of a Right of First Refusal Event,
Landlord shall provide Tenant with a true and correct copy of the Offer (the
"Right of First Refusal Notice"). Tenant shall have 20 days from its receipt of
the Right of First Refusal Notice to advise Landlord in writing whether it is
prepared to purchase the Leased Property on the same terms and conditions as set
forth in the Offer. Tenant's failure to so advise Landlord within such 20 day
period shall be deemed to be a determination by Tenant not to exercise the right
of first refusal provided for herein, at which time Landlord shall be free to
consummate the transaction which was the subject of the Offer; provided,
however, that Landlord shall not be permitted to modify the terms specified in
the Offer in an manner more favorable to the third party than those reflected in
the original Offer (the "Modified Offer") without first again offering Tenant
the opportunity to consummate a transaction on the terms set forth in the
Modified Offer; provided, however, that Tenant shall be deemed to have waived
its right to proceed with such a transaction in the event it does not advise
Landlord of its election to proceed within 10 days after its receipt of the
Modified Offer.
(c) In the event Landlord does not consummate a transaction on the terms
provided for in the Offer or the Modified Offer, as applicable, within 90 days
after the date thereof, Landlord shall not be permitted to sell the Leased
Property to the Offeror or to any other party, whether on the terms set forth in
the Offer or the Modified Offer, as applicable, or pursuant to a new Offer
without again first offering Tenant an option to consummate a transaction on the
terms specified in the Offer, the Modified Offer or any new Offer, as
applicable; provided, however, that Tenant shall be deemed to have waived its
rights hereunder in the event it does not advise Landlord of its election to
proceed within 10 days after its receipt of another copy of the Offer or of the
Modified Offer or the new Offer, as applicable.
(d) In the event Tenant exercises its right of first refusal or right of
first opportunity provided for herein, Tenant and Landlord shall have a period
of 30 days in which to enter into one or more written agreements outlining the
terms and conditions, in addition to those set forth in the Offer or the
Modified Offer, if applicable, on which the sale will occur (the "Transaction
Documents"). In the event Landlord and Tenant fail to execute the Transaction
Documents within said 30 day period, then Tenant shall be deemed to have
forfeited its rights hereunder with respect to such transaction; provided,
however, that Landlord shall not be permitted to sell the Leased Property to any
other person or entity on terms which are less favorable to Landlord than those
offered to Tenant during the Protected Period or beyond the expiration of the 90
day period provided for in clause (c), without first complying with the terms of
this 13.1 unless Landlord and Tenant failed to execute the Transaction
Documents as a result of Tenant's bad faith in the negotiation of the terms of
such Transaction Documents, in which case Landlord shall be permitted to sell
the Leased Property to any other person or entity regardless of the terms of
such transaction.
(e) Any sale of the Lease Property by Landlord pursuant to this 13, other
than to Tenant, shall be subject to the rights of Tenant under this Lease,
including, but not limited to, its rights under this 13.
(f) At the time of the acquisition of the Leased Property by Tenant, the
then outstanding amount of principal and accrued and unpaid interest, if any,
due under the $4,400,000 Note shall be due and payable in full or if said
$4,400,000 Note is consolidated, then the lesser of $4,400,000.00 or the then
outstanding principal and accrued and unpaid interest of said consolidated note.
13.2 ClosingClosing . Any closing pursuant to, and the consequences to
-------
Tenant of failing to close after exercising its rights under 13.1 shall be in
accordance with the terms set forth in the Offer or Modified Offer and in the
Transaction Documents executed pursuant to the terms of this Article 13.
ARTICLE 14: NEGATIVE COVENANTSNEGATIVE COVENANTS
Until the Obligor Group Obligations shall have been performed in full,
Tenant and Guarantor covenant and agree that Tenant (and Guarantor where
applicable) shall not do any of the following without the prior written consent
of Landlord:
14.1 No DebtNo Debt . Tenant shall not create, incur, assume, or permit to
--------
exist any indebtedness with respect to the Leased Property other than [i] trade
debt incurred in the ordinary course of business; [ii] indebtedness for Facility
working capital purposes; and [iii] indebtedness that is secured by any
Permitted Lien.
14.2 No LiensNo Liens . Tenant shall not create, incur, or permit to exist
---------
any lien, charge, encumbrance, easement or restriction upon the Leased Property
or any lien upon or pledge of any interest in Tenant, except for Permitted
Liens.
14.3 No GuarantiesNo Guaranties . Tenant shall not create, incur, assume,
--------------
or permit to exist any guarantee of any loan or other indebtedness with respect
to the Leased Property except for the endorsement of negotiable instruments for
collection in the ordinary course of business.
14.4 No TransferNo Transfer . Tenant shall not sell, lease, sublease,
------------
mortgage, convey, assign or otherwise transfer any legal or equitable interest
in the Leased Property or any part thereof, except for transfers made in
connection with any Permitted Lien or leases to the residents of the Leased
Property or commercial leases with respect to a portion of the leased Property
comprising in the aggregate less than 2,500 square feet provided such commercial
leases shall be for services that are an integral part of the Facility.
14.5 No DissolutionNo Dissolution . Tenant shall not dissolve, liquidate,
---------------
merge, consolidate or terminate its existence or sell, other than in a
sale/leaseback or sale/manage back transaction, assign, lease, or otherwise
transfer (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired)
unless, in the case of a merger or consolidation by Tenant, the surviving entity
in such merger has a net worth immediately after the merger or
consolidation at least equal to that of the Tenant immediately prior thereto.
Tenant shall maintain its organizational structure as a special purpose,
bankruptcy remote entity as required under the Loan Documents.
14.6 Subordination of Payments to AffiliatesSubordination of Payments to
-------------------------------------------
Affiliates . After the occurrence of an Event of Default and until such Event
of Default is cured (or waived in writing), Tenant and Guarantor shall not make
any payments or distributions (including, without limitation, salary, bonuses,
fees, principal, interest, dividends, liquidating distributions, management
fees, cash flow distributions or lease payments but specifically excluding
salary paid to employees of the Facility or employees of Tenant or Guarantor in
the ordinary course of business) to Guarantor or any shareholder, member or
partner of Tenant or Guarantor.
14.7 Change of Location or NameChange of Location or Name . Tenant shall
-----------------------------
not, without providing Landlord with 30 days prior notice thereof, change any of
the following: [i] the location of the principal place of business or
chief executive office of Tenant, or any office where any of Tenant's books and
records are maintained; [ii] the name under which Tenant conducts any of its
business or operations; or [iii] reorganize or otherwise change its Organization
State.
ARTICLE 15: AFFIRMATIVE COVENANTSAFFIRMATIVE COVENANTS
15.1 Perform ObligationsPerform Obligations . Tenant shall perform all of
--------------------
its obligations under this Lease, the Government Authorizations, the Permitted
Exceptions, and all Legal Requirements.
15.2 Proceedings to Enjoin or Prevent ConstructionProceedings to Enjoin or
-----------------------------------------------
Prevent Construction . If any proceedings are filed seeking to enjoin or
otherwise prevent or declare invalid or unlawful Tenant's construction,
occupancy, maintenance, or operation of the Facility or any portion thereof,
Tenant will cause such proceedings to be vigorously contested in good faith, and
in the event of an adverse ruling or decision, prosecute all allowable
appeals therefrom, and will, without limiting the generality of the foregoing,
resist the entry or seek the stay of any temporary or permanent injunction that
may be entered, and use its best commercially reasonable efforts to bring about
a favorable and speedy disposition of all such proceedings and any other
proceedings.
15.3 Documents and InformationDocuments and Information .
---------------------------
15.3.1 Furnish DocumentsFurnish Documents . Tenant shall periodically
------------------
during the term of the Lease deliver to Landlord the Annual Financial
Statements, Periodic Financial Statements, Annual Company Budget and all other
documents, reports, schedules and copies described on Exhibit E within the
specified time periods. With each delivery of Annual Financial Statements and
Periodic Financial Statements (other than the monthly Facility Financial
Statement) to Landlord, Tenant shall also deliver to Landlord a certificate
signed by the Chief Financial Officer or managing member (as applicable) of
Tenant, an Annual Facility Financial Report or Quarterly Facility Financial
Report, as applicable, and a Quarterly Facility Accounts Receivable Aging Report
all in the form of Exhibit F. In addition, Tenant shall deliver to
Landlord the applicable Annual Facility Financial Report and the applicable
Quarterly Facility Accounts Receivable Aging Report (based upon internal
financial statements) within 60 days after the end of each fiscal year. After
the occurrence of an Event of Default and receipt of Landlord's written request,
Tenant shall deliver to Landlord an updated Annual Company Budget (based on a
12-month rolling forward period) within 10 Business Days after receipt of
Landlord's request.
15.3.2 Furnish InformationFurnish Information . Tenant and Guarantor shall
--------------------
[i] promptly supply Landlord with such information concerning its financial
condition, affairs and property, as Landlord may reasonably request from time to
time hereafter; [ii] promptly notify Landlord in writing of any condition
or event that constitutes a breach or event of default of any term, condition,
warranty, representation, or provisions of this Lease or any other agreement,
and of any material adverse change in its financial condition; [iii] maintain a
standard and modern system of accounting; [iv] permit Landlord or any of its
agent or representatives to have access to and to examine all of its books and
records regarding the financial condition of the Facility at any time or times
hereafter during business hours and after reasonable oral or written notice; and
[v] permit Landlord to copy and make abstracts from any and all of said books
and records subject to any limitations imposed by State or federal law with
respect to the confidentiality of patient and employee records.
15.3.3 Further Assurances and InformationFurther Assurances and Information
-----------------------------------
.. Tenant shall, on request of Landlord from time to time, execute, deliver, and
furnish documents as may be necessary to fully consummate the transactions
contemplated under this Lease. Within 15 days after a request from Landlord,
Tenant shall provide to Landlord such additional information regarding Tenant,
Tenant's financial condition, or the Facility as Landlord, or any existing or
proposed creditor of Landlord, or any auditor or underwriter of Landlord, may
reasonably require from time to time, including, without limitation, a current
Tenant's Certificate and Facility Financial Report in the form of Exhibit F.
From and after and during the continuance of an Event of Default, Landlord shall
have the right to require Tenant to provide to Landlord, at Tenant's expense, an
appraisal prepared by an MAI appraiser setting forth the current fair market
value of the Leased Property.
15.3.4 Material CommunicationsMaterial Communications . Tenant shall
------------------------
transmit to Landlord, within five days after receipt thereof, any material
communication affecting a Facility, this Lease, the Legal Requirements or the
Government Authorizations, and Tenant will promptly respond to Landlord's
inquiry with respect to such information. Tenant shall notify Landlord in
writing within five days after Tenant has knowledge of any potential, threatened
or existing litigation or proceeding against, or investigation of, Tenant,
Guarantor or the Facility that would reasonably be expected to adversely affect
the right to operate the Facility or Landlord's title to the Facility or
Tenant's interest therein.
15.3.5 Requirements for Financial StatementsRequirements for Financial
----------------------------------------
Statements . Tenant shall meet the following requirements in connection with
the preparation of the financial statements: [i] all audited financial
statements shall be prepared in accordance with general accepted accounting
principles consistently applied; [ii] all unaudited financial statements shall
be prepared in a manner substantially consistent with prior audited and
unaudited financial statements submitted to Landlord; [iii] all financial
statements shall fairly present the financial condition and performance for the
relevant period in all material respects; [iv] the audited financial statements
shall include all notes to the financial statements and a complete schedule of
contingent liabilities and transactions with Affiliates; and [v] the audited
financial statements shall contain an unqualified opinion.
15.4 Compliance With LawsCompliance With Laws. Tenant shall comply with all
----------------------------------------
Legal Requirements and keep all Government Authorizations in full force and
effect. Subject to Tenant's right to contest the same in accordance with the
terms of this Lease, Tenant shall pay when due all taxes and governmental
charges of every kind and nature that are assessed or imposed upon Tenant at any
time during the term of the Lease, including, without limitation, all income,
franchise, capital stock, property, sales and use, business, intangible,
employee withholding, and all taxes and charges relating to Tenant's business
and operations at the Leased Property. Tenant shall be solely responsible for
compliance with all Legal Requirements, including the ADA, and Landlord shall
have no responsibility for such compliance.
15.5 Broker's CommissionBroker's Commission. Tenant shall indemnify
----------------------------------------
Landlord from claims of brokers arising by the execution hereof or the
consummation of the transactions contemplated hereby and from expenses incurred
by Landlord in connection with any such claims (including reasonable attorneys'
fees).
15.6 Existence and Change in OwnershipExistence and Change in Ownership.
----------------------------------------------------------------------
Except as otherwise specifically provided herein, Tenant and Guarantor shall
maintain its existence throughout the term of this Lease and any change in the
ownership of Tenant, directly or indirectly, shall require Landlord's prior
written consent.
15.7 Financial CovenantsFinancial Covenants. The defined terms used in this
--------------------------------------
section are defined in 15.7.1. The method of valuing assets shall be
consistent with the Financial Statements. The following financial covenants
shall be met throughout the term of this Lease:
15.7.1 DefinitionsDefinitions .
-----------
(a) "Facility Cash Flow" means the net income of Tenant arising from the
Facility as reflected on the Facility Financial Statement plus [i] the amount of
the provision for depreciation and amortization; plus [ii] the amount of
the provision for management fees; plus [iii] the amount of the provision for
income taxes; plus [iv] the amount of the provision for Base Rent payments and
interest and equipment lease payments, if any; minus [v] an imputed management
fee equal to 5% of gross revenues (net of contractual allowances); and minus
[vi] an imputed replacement reserve of $250 per licensed unit at the Facility,
per year.
(b) "Facility Coverage Ratio" is the ratio of [i] Facility Cash Flow for
each applicable period; to [ii] the Base Rent payments and all debt service and
equipment lease payments relating for the applicable period.
15.7.2 Coverage RatioCoverage Ratio . Tenant shall maintain for each fiscal
--------------
quarter a Facility Coverage Ratio for the Facility of not less than 1.00 to
1.00 for the third and fourth quarter of 2003 and the first quarter of 2004 and
a Facility Coverage Ratio of not less than 1.25 to 1.00 for each quarter
thereafter.
15.8 Facility Licensure and CertificationFacility Licensure and
---------------------------------------
Certification . Tenant shall [i] give written notice to Landlord within five
---
days after an inspection of the Facility with respect to health care licensure
or certification has occurred; and [ii] deliver to Landlord copies of each of
the reports, notices, correspondence and all other items and documents listed
under item no. 18 of Exhibit E within five days after receipt thereof. Tenant
acknowledges that it has reviewed Exhibit E and agrees to the foregoing
obligation. If Tenant receives a Facility survey or inspection report with
material deficiencies, notice of failure to comply with a plan of correction or
an HIPDB adverse action report, Tenant shall cure all deficiencies and implement
all corrective actions by the date required by the regulatory authority and
shall deliver evidence of same to Landlord.
15.9 Transfer of License and Facility OperationsTransfer of License and
------------------------------------------------
Facility Operations . If this Lease is terminated due to expiration of the
Term, pursuant to an Event of Default or for any reason other than Tenant's
purchase of the Leased Property, or if Tenant vacates the Leased Property (or
any part thereof) without termination of this Lease (other than during periods
of repair or reconstruction after damage, destruction or a Taking), the
following provisions shall be immediately effective:
15.9.1 LicensureLicensure . Tenant shall execute, deliver and file all
---------
documents and statements requested by Landlord to effect the transfer of the
Facility license and Government Authorizations to a replacement operator
designated by Landlord ("Replacement Operator"), subject to any required
approval of governmental regulatory authorities, and Tenant shall provide to
Landlord all information and records required by Landlord in connection with the
transfer of the license and Government Authorizations.
15.9.2 Facility OperationsFacility Operations . In order to facilitate a
--------------------
responsible and efficient transfer of the operations of the Facility, Tenant
shall, if and to the extent requested by Landlord, [i] deliver to Landlord the
most recent updated reports, notices, schedules and documents listed under item
nos. 17, 18, 19, 20 and 21 of Exhibit E; [ii] assuming Tenant has not already
vacated the Leased Property, continue and maintain the operation of the Facility
in the ordinary course of business, including using its commercially
reasonable efforts to retain the residents at the Facility to the fullest extent
practicable and consistent with applicable laws and regulations, until transfer
of the Facility operations to the Replacement Operator is completed; [iii] enter
into such management agreements, operations transfer agreements and other types
of agreements that may be reasonably requested by Landlord or the Replacement
Operator, provided, however, in no event shall Tenant be required to permit the
Replacement Operator to operate the Leased Property under their licenses unless
they receive confirmation that doing so will not violate applicable Legal
Requirements and they get appropriate indemnities from the Replacement Operator
in form and substance reasonably acceptable to Tenant; and [iv] provide
reasonable access during normal business hours and on reasonable advance notice
for Landlord and its agents to show the Facility to potential replacement
operators. Tenant consents to the distribution by Landlord to potential
replacement operators of Facility financial statements, licensure reports,
financial and property due diligence materials and other documents, materials
and information relating to the Facility. The provisions of this section do not
create or establish any rights in Tenant or any third party and Landlord
reserves all rights and remedies relating to termination of this Lease.
15.10 Bed Operating RightsBed Operating Rights . Tenant acknowledges and
----------------------
agrees that the rights to operate the beds located at the Facility as set forth
on Exhibit C under the law of the Facility State, to relocate such bed operating
rights to another location or locations, and to transfer such bed operating
rights to third parties, are property of the Landlord and are an integral part
of the real and personal property that constitutes the Leased Property. Tenant
has only the right to use of such rights during the term of this Lease and
subject to its terms and conditions. Subject to applicable law and to the
extent permitted by law, all operating rights shall automatically revert to
Landlord or Landlord's designee upon the expiration or termination of this Lease
for any reason whatsoever (other than Tenant's purchase of the Leased Property)
without any requirement of a transfer or the payment of additional
consideration.
15.11 Power of AttorneyPower of Attorney . Effective upon [i] the
-------------------
occurrence and during the continuance of an Event of Default, or [ii]
termination of this Lease for any reason other than Tenant's purchase of the
Leased Property, Tenant hereby irrevocably and unconditionally appoints
Landlord, or Landlord's authorized officer, agent, employee or designee, as
Tenant's true and lawful attorney-in-fact, to act for Tenant in Tenant's name,
place, and stead, to execute, deliver and file all applications and any and all
other necessary documents and statements to effect the issuance, transfer,
reinstatement, renewal and/or extension of the Facility license and all
Governmental Authorizations issued to Tenant or applied for by Tenant in
connection with Tenant's operation of the Facility, to permit any designee of
Landlord or any other transferee to operate the Facility under the Governmental
Authorizations, and to do any and all other acts incidental to any of the
foregoing, but only in the event Tenant fails to take such actions or execute
such documents after a request from Landlord. Tenant irrevocably and
unconditionally grants to Landlord as its attorney-in-fact full power and
authority to do and perform every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as Tenant might or could do if
personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to Tenant's purchase of the Leased Property. Landlord shall
provide Tenant with copies of any documents filed and/or with a summary of any
action taken pursuant to this power of attorney.
15.12 Compliance with Loan DocumentsCompliance with Loan Documents . Tenant
------------------------------
and Guarantor acknowledge that [i] Landlord is acquiring the Leased
Property subject to the Mortgage; [ii] Landlord and HCN will assume the
obligations set forth in the Mortgage and Loan Documents; and [iii] Landlord and
HCN would not have assumed the obligations set forth in the Mortgage or the Loan
Documents without Tenant and Guarantor's agreement to comply with the terms and
conditions set forth in the Loan Documents as hereinafter set forth. Tenant and
Guarantor have each reviewed the Loan Documents and are familiar with the terms
and conditions thereof. Tenant and Guarantor agree to comply with the terms and
conditions set forth in the Loan Documents to the extent such terms and
conditions apply to Tenant or Guarantor, or the operation of the Facility
including, but not limited to, satisfying all insurance requirements,
maintaining required reserves and escrow accounts, making payments due
thereunder other than regularly scheduled payments of principal and interest,
and granting access to the Property to the Lenders as set forth in the Loan
Documents. Neither Tenant nor Guarantor shall, in connection with either
Tenant's or Guarantor's compliance with the terms and conditions of the Loan
Documents and the operation of the Facility, create or permit any third party
(other than Landlord for which neither Tenant nor Guarantor assumes any
responsibility hereunder) to create any condition that would cause an Event of
Default, as defined in any such Loan Documents. Tenant's or Guarantor's failure
to comply with the Loan Documents to the extent such terms and conditions apply
to Tenant or Guarantor, or the operation of the Facility and to cure same within
any applicable cure period provided for in the Loan Documents shall be an Event
of Default under this Lease.
15.12.1 Tenant acknowledges that under the terms of Landlord's assumption
of the Loan Documents, Lender has required the Letter of Credit. Tenant agrees,
at Tenant's sole cost and expense, to deliver the Letter of Credit to
Lender and, except as otherwise provided herein, to maintain the Letter of
Credit in effect for so long as required by Lender. In the event of a draw upon
the Letter of Credit or upon the expiration of the Letter of Credit, Tenant
shall be responsible, at Tenant's sole cost and expense, to provide a
replacement Letter of Credit satisfactory to Lender unless the draw on the
Letter of Credit is caused by a Landlord Default as defined in 15.12.2.
15.12.2 In the event of a Landlord Default, as hereinafter defined,
Landlord shall (i) upon demand by Tenant, reimburse Tenant for any amounts drawn
by Lender under the Letter of Credit and for any other costs and expenses
incurred by Tenant as a result thereof, including but not limited to, reasonable
attorney fees; (ii) thereafter be obligated, at Landlord's sole cost and
expense, to provide and continuously maintain a replacement Letter of Credit
satisfactory to Lender unless a subsequent draw is caused by a Tenant Default as
defined in 15.12.3, in which case 15.12.1 shall apply; and (iii) indemnify,
defend and hold harmless Tenant and Guarantor from and against any and all
demands, claims, causes of action, fines, penalties, damages (including
consequential damages), losses, liabilities (including strict liability),
judgments and expenses (including, without limitation, reasonable attorneys'
fees, court costs and the costs described in 8.7) to the extent incurred by
Tenant as a result of the Landlord Default including, but not limited to, as a
result of the foreclosure by Lender with respect to any of the collateral
provided by Tenant or Guarantor under the Loan Documents or the taking of any
other action by the Lender against Tenant or Guarantor under the terms of the
Loan Documents. Landlord Default shall mean an Event of Default under the Loan
Document caused solely by the acts or omissions of Landlord or HCN and is not an
Event of Default under a Loan Document arising due to Tenant's or Guarantor's
failure to comply with the terms and conditions of a Loan Document as agreed to
by Tenant and Guarantor pursuant to 15.12 ("Landlord Defaults").
15.12.3 Upon the occurrence of an Event of Default under the Loan
Documents caused by Tenant ("Tenant Default"), Tenant or Guarantor shall (i)
upon demand by Landlord or HCN, reimburse Landlord or HCN for any amounts drawn
by Lender under the Letter of Credit and for any other costs and expenses
incurred by Landlord or HCN as a result thereof, including but not limited to,
reasonable attorney fees; provided, however, this clause (i) shall only apply if
the Tenant Default occurs after the occurrence of a Landlord Default and at a
time when the Letter of Credit has been posted by Landlord pursuant to 15.12.2;
(ii) thereafter be obligated, at Tenant's sole cost and expense, to provide and
continuously maintain a replacement Letter of Credit satisfactory to Lender
unless a subsequent draw is caused by a Landlord Default, in which case 15.12.2
shall apply; and (iii) indemnify, defend and hold harmless Landlord and HCN from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments and expenses (including, without limitation, reasonable
attorneys' fees, court costs and the costs described in 8.7) to the extent
incurred by Landlord or HCN as a result of the Tenant Default including, but not
limited to, as a result of the foreclosure by Lender with respect to any of the
collateral provided by Landlord or HCN under the Loan Documents or the taking of
any other action by the Lender against Landlord or HCN under the terms of the
Loan Documents.
15.12.4 Landlord shall, within five Business Days after receipt thereof
from Lender, deliver to Tenant all notices received by Landlord from Lender.
Tenant shall, within five Business Days after receipt thereof from Lender,
deliver to Landlord all notices received by Tenant from Lender. Landlord
further acknowledges and agrees that Tenant shall not be in default of its
obligations under this 15.12 in the event Tenant fails to fulfill the
obligations imposed under a Loan Document as and when due solely as a result of
the failure of Landlord to remit any such Lender notice within the time period
specified herein and that in the event of a draw by Lender on the Letter of
Credit as a result thereof, the same shall be deemed to be a Landlord Default.
ARTICLE 16: ALTERATIONS, CAPITAL IMPROVEMENTS, AND SIGNSALTERATIONS, CAPITAL
IMPROVEMENTS, AND SIGNS
16.1 Prohibition on Alterations and ImprovementsProhibition on Alterations
-----------------------------------------------------------------------
and Improvements. Except for Permitted Alterations (as hereinafter defined),
----------------
Tenant shall not make any structural or nonstructural changes, alterations,
-
additions and/or improvements (hereinafter collectively referred to as
-
"Alterations") to the Leased Property.
-
16.2 Approval of AlterationsApproval of Alterations. If Tenant desires to
------------------------------------------------
perform any Permitted Alterations, Tenant shall deliver to Landlord plans,
specifications, drawings, and such other information as may be reasonably
requested by Landlord (collectively the "Plans and Specifications") showing in
reasonable detail the scope and nature of the Alterations that Tenant desires to
perform. It is the intent of the parties hereto that the level of detail
shall be comparable to that which is referred to in the architectural profession
as "design development drawings" as opposed to working or biddable drawings.
Landlord agrees not to unreasonably delay its review of the Plans and
Specifications. Within 30 days after receipt of an invoice, Tenant shall
reimburse Landlord for all costs and expenses incurred by Landlord in reviewing
and, if required, approving or disapproving the Plans and Specifications,
inspecting the Leased Property, and otherwise monitoring compliance with the
terms of this Article 16. Tenant shall comply with the requirements of 16.4 in
making any Permitted Alterations.
16.3 Permitted AlterationsPermitted Alterations. Permitted Alterations
--------------------------------------------
means any one of the following: [i] Alterations approved by Landlord; [ii]
Alterations required under 7.2; [iii] Alterations affecting the structure of
the Leased Property and having a total cost of less than $250,000.00
individually or in the aggregate; [iv] repairs, rebuilding and restoration
required or undertaken pursuant to 9.4 or [v] non-structural Alterations such
as painting, landscaping, wallpapering, installing new floor coverings, etc.
without regard to the cost thereof.
16.4 Requirements for Permitted AlterationsRequirements for Permitted
---------------------------------------------------------------------
Alterations. Tenant shall comply with all of the following requirements in
-----
connection with any Permitted Alterations:
(a) The Permitted Alterations shall be made in accordance with the approved
Plans and Specifications.
(b) The Permitted Alterations and the installation thereof shall comply with
all applicable legal requirements and insurance requirements.
(c) The Permitted Alterations shall be done in a good and workmanlike
manner, shall not impair the value or the structural integrity of the Leased
Property, and shall be free and clear of all mechanic's liens.
(d) For any Permitted Alterations having a total cost of $100,000.00 or
more, Tenant shall deliver to Landlord a payment and performance bond, with a
surety acceptable to Landlord, in an amount equal to the estimated cost of the
Permitted Alterations, guaranteeing the completion of the work free and clear of
liens and in accordance with the approved Plans and Specifications, and naming
Landlord and any mortgagee of Landlord as joint obligees on such bond.
(e) Tenant shall, at Tenant's expense, obtain a builder's completed value
risk policy of insurance insuring against all risks of physical loss, including
collapse and transit coverage, in a nonreporting form, covering the total value
of the work performed, and equipment, supplies, and materials, and insuring
initial occupancy. Landlord and any mortgagee of Landlord shall be additional
insureds of such policy. Landlord shall have the right to approve the form and
substance of such policy.
(f) Tenant shall pay the premiums required to increase the amount of the
insurance coverages required by Article 4 to reflect the increased value of the
Improvements resulting from installation of the Permitted Alterations, and shall
deliver to Landlord a certificate evidencing the increase in coverage.
(g) Tenant shall, not later than 60 days after completion of the Permitted
Alterations, deliver to Landlord a revised "as-built" survey of the Facility if
the Permitted Alterations altered the Land or "footprint" of the Improvements
and an "as-built" set of Plans and Specifications for the Permitted Alterations
in form and substance satisfactory to Landlord.
(h) Tenant shall, not later than 30 days after Landlord sends an invoice,
reimburse Landlord for any reasonable costs and expenses, including attorneys'
fees and architects' and engineers' fees, incurred in connection with reviewing
and approving the Permitted Alterations and ensuring Tenant's compliance with
the requirements of this section. The daily fee for Landlord's consulting
engineer is $750.00.
16.5 Ownership and Removal of Permitted AlterationsOwnership and Removal of
-----------------------------------------------
Permitted Alterations 2. The Permitted Alterations shall become a part of the
Leased Property, owned by Landlord, and leased to Tenant subject to the terms
and conditions of this Lease. Tenant shall not be required or permitted to
remove any Permitted Alterations.
16.6 Minimum Qualified Capital ExpendituresMinimum Qualified Capital
-----------------------------------------
Expenditures . During each calendar year of the Term, Tenant shall expend at
least $300.00 per unit for Qualified Capital Expenditures to improve the
Facility. Thereafter throughout the Term, Tenant shall expend such amount each
calendar year, increased annually in proportion to increases in the CPI. At
least annually, at the request of Landlord, Landlord and Tenant shall review
capital expenditures budgets and agree on modifications, if any, required by
changed circumstances and the changed conditions of the Leased Property. Upon
request from Tenant, Landlord shall cooperate with Tenant to secure the release
of funds held by Lender in the Lender Maintenance Reserve Escrow to the extent
such funds are available as set forth in the Loan Documents. Tenant's
obligations set forth in this 16.6 shall not be conditioned upon the release of
funds by Lender from the Lender Maintenance Reserve Fund.
16.7 SignsSigns. Tenant may, at its own expense, erect and maintain
----------
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the termination or expiration of
this Lease (other than as a result of the exercise by Tenant of its purchase
rights), Tenant shall, within 30 days after notice from Landlord, remove the
signs and restore the Leased Property to its original condition.
ARTICLE 17: RESERVEDRESERVED
--------
ARTICLE 18: ASSIGNMENT AND SALE OF LEASED PROPERTY ASSIGNMENT AND SALE OF
LEASED PROPERTY
18.1 Prohibition on Assignment and SublettingProhibition on Assignment and
-----------------------------------------------------------------------
Subletting. Tenant acknowledges that Landlord has entered into this Lease in
---------
reliance on the personal services and business expertise of Tenant. Tenant may
-
not assign, sublet, mortgage, hypothecate, pledge, grant a right of first
refusal or transfer any interest in this Lease, or in the Leased Property, in
whole or in part, without the prior written consent of Landlord, which Landlord
may withhold in its sole and absolute discretion. The following transactions
will be deemed an assignment or sublease requiring Landlord's prior written
consent: [i] an assignment by operation of law; [ii] an imposition (whether or
not consensual) of a lien, mortgage, or encumbrance upon Tenant's interest in
the Lease; [iii] except as otherwise permitted by 14.4 and 18.3, an
arrangement (including, but not limited to, management agreements, concessions,
licenses, and easements) which allows the use or occupancy of all or part of the
Leased Property by anyone other than Tenant; and [iv] a material change of
ownership of Tenant other than changes resulting from the trading of Tenant's or
Guarantor's stock on a national stock exchange. Landlord's consent to any
assignment, right of first refusal or sublease will not release Tenant (or any
guarantor) from its payment and performance obligations under this Lease, but
rather Tenant, any guarantor, and Tenant's assignee or sublessee will be jointly
and severally liable for such payment and performance. An assignment, right of
first refusal or sublease without the prior written consent of Landlord will be
void at Landlord's option. Landlord's consent to one assignment, right of first
refusal or sublease will not waive the requirement of its consent to any
subsequent assignment or sublease. Notwithstanding the foregoing, Tenant may
enter into a Management Agreement with Guarantor.
18.2 Requests for Landlord's Consent to Assignment, Sublease or Management
-----------------------------------------------------------------------
AgreementRequests for Landlord's Consent to Assignment, Sublease or Management
-------------------------------------------------------------------------------
Agreement. If Tenant is required to obtain Landlord's consent to a specific
--------
assignment, sublease, or management agreement, Tenant shall give Landlord [i]
--
the name and address of the proposed assignee, subtenant or manager; [ii] a copy
-
of the proposed assignment, sublease or management agreement; [iii]
reasonably satisfactory information about the nature, business and business
history of the proposed assignee, subtenant, or manager and its proposed use of
the Leased Property; and [iv] banking, financial, and other credit information,
and references about the proposed assignee, subtenant or manager sufficient to
enable Landlord to determine the financial responsibility and character of the
proposed assignee, subtenant or manager. Any assignment, sublease or management
agreement shall contain provisions to the effect that [a] such assignment,
sublease or management agreement is subject and subordinate to all of the terms
and provisions of this Lease and to the rights of Landlord and that the
assignee, subtenant or manager shall comply with all applicable provisions of
this Lease; [b] such assignment, sublease or management agreement may not be
modified without the prior written consent of Landlord not to be unreasonably
withheld or delayed; [c] if this Lease shall terminate before the expiration of
such assignment, sublease or management agreement, the assignee, subtenant or
manager thereunder will, solely at Landlord's option and only upon the express
written notice of attornment from Landlord, attorn to Landlord and waive any
right the assignee, subtenant or manager may have to terminate the assignment,
sublease or management agreement or surrender possession thereunder as a result
of the termination of this Lease; and [d] if the assignee, subtenant or manager
receives a written notice from Landlord stating that Tenant is in default under
this Lease, the assignee, subtenant or manager shall thereafter pay all rentals
or payments under the assignment, sublease or management agreement directly to
Landlord until such default has been cured. Any attempt or offer by an
assignee, subtenant or manager to attorn to Landlord shall not be binding or
effective without the express written consent of Landlord. Tenant hereby
collaterally assigns to Landlord, as security for the performance of its
obligations hereunder, all of Tenant's right, title, and interest in and to any
assignment, sublease or management agreement now or hereafter existing for all
or part of the Leased Property. Tenant shall, at the request of Landlord,
execute such other instruments or documents as Landlord may request to evidence
this collateral assignment. If Landlord, in its sole and absolute discretion,
consents to such assignment, sublease, or management agreement, such consent
shall not be effective until [i] a fully executed copy of the instrument of
assignment, sublease or management agreement has been delivered to Landlord;
[ii] in the case of an assignment, Landlord has received a written instrument in
which the assignee has assumed and agreed to perform all of Tenant's obligations
under the Lease; and [iii] Tenant has paid to Landlord a fee in the amount equal
to the lesser of Landlord's actual out-of-pocket costs and expenses and
$2,500.00 (applies only to consent requests after the Closing); and [iv]
Landlord has received reimbursement from Tenant or the assignee for all
attorneys' fees and expenses and all other reasonable out-of-pocket expenses
incurred in connection with determining whether to give its consent, giving its
consent and all matters relating to the assignment (applies only to consent
requests after the Closing).
18.3 Agreements with ResidentsAgreements with Residents. Notwithstanding
-----------------------------------------------------
18.1, Tenant may enter into an occupancy agreement with residents of the Leased
Property without the prior written consent of Landlord provided that [i] the
agreement does not provide for lifecare services; [ii] the agreement does not
contain any type of rate lock provision or rate guaranty for more than one
calendar year; [iii] the agreement does not provide for any rent reduction or
waiver other than for an introductory period not to exceed six months; [iv]
Tenant may not collect rent for more than one month in advance, other than one
month of rent collected to be held as security for the performance of the
resident's obligation to Tenant; and [v] all residents of the Leased Property
are accurately shown in accounting records for the Facility. Without the prior
written consent of Landlord and Tenant shall not change the form of resident
occupancy agreement that was submitted to Landlord prior to the Effective Date.
18.4 Sale of Leased PropertySale of Leased Property. If Landlord or any
--------------------------------------------------
subsequent owner of the Leased Property sells the Leased Property, its liability
for the performance of its agreements in this Lease will end on the date of
the sale of the Leased Property, and Tenant will look solely to the purchaser
for the performance of those agreements. For purposes of this section, any
holder of a mortgage or security agreement which affects the Leased Property at
any time, and any landlord under any lease to which this Lease is subordinate at
any time, will be a subsequent owner of the Leased Property when it succeeds to
the interest of Landlord or any subsequent owner of the Leased Property.
18.5 Assignment by LandlordAssignment by Landlord . Landlord may transfer,
-----------------------
assign, mortgage, collaterally assign, or otherwise dispose of Landlord's
interest in this Lease or the Leased Property.
ARTICLE 19: HOLDOVER AND SURRENDERHOLDOVER AND SURRENDER
19.1 Holding OverHolding Over . If Tenant, with or without the express or
-------------
implied consent of Landlord, continues to hold and occupy the Leased Property
(or any part thereof) after the expiration of the Term or earlier termination of
this Lease (other than pursuant to Tenant's purchase of the Leased
Property), such holding over beyond the Term and the acceptance or collection of
Rent in the amount specified below by Landlord shall operate and be construed as
creating a tenancy from month to month and not for any other term whatsoever.
Said month-to-month tenancy may be terminated by Landlord by giving Tenant five
days written notice, and at any time thereafter Landlord may re-enter and take
possession of the Leased Property. If without Landlord's consent or at
Landlord's request, Tenant continues after the expiration of the Term or earlier
termination of this Lease to hold and occupy the Leased Property whether as a
month-to-month tenant or a tenant at sufferance or otherwise, Tenant shall pay
Rent for each month in an amount equal to the sum of [i] one and one-half (1 )
times the Base Rent payable during the month in which such expiration or
termination occurs, plus [ii] all Additional Rent accruing during the month,
plus [iii] any and all other sums payable by Tenant pursuant to this Lease.
During any continued tenancy after the expiration of the Term or earlier
termination of this Lease, Tenant shall be obligated to perform and observe all
of the terms, covenants and conditions of this Lease, but shall have no rights
hereunder other than the right, to the extent given by applicable law, to
continue its occupancy and use of the Leased Property until the tenancy is
terminated. Nothing contained herein shall constitute the consent, express or
implied, of Landlord to the holding over of Tenant after the expiration or
earlier termination of this Lease.
19.2 SurrenderSurrender. Except for [i] Permitted Alterations; [ii] normal
------------------
and reasonable wear and tear (subject to the obligation of Tenant to maintain
the Leased Property in good order and repair during the Term); and [iii] damage
and destruction not required to be repaired by Tenant, Tenant shall surrender
and deliver up the Leased Property at the expiration or termination of the Term
in as good order and condition as of the Commencement Date. The provisions of
this 19.2 shall not apply in the event of the termination of this Lease upon
the purchase of the Leased Property by Tenant.
19.3 IndemnityIndemnity . If Tenant fails to surrender the entire Leased
---------
Property or any part thereof upon the expiration or termination of this Lease in
a timely manner and in accordance with the provisions of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
defend, indemnify and hold Landlord, its principals, officers, directors,
agents, and employees harmless from loss or liability resulting from such
failure, including, without limiting the generality of the foregoing, loss of
rental with respect to any new lease in which the rental payable thereunder
exceeds the Rent collected by Landlord pursuant to this Lease during Tenant's
holdover and any claims by any proposed new tenant founded on Tenant's failure
to surrender the Leased Property. The provisions of this Article 19 shall
survive the expiration or termination of this Lease. The provisions of this
19.3 shall not apply in the event of the termination of this Lease upon the
purchase of the Leased Property by Tenant.
ARTICLE 20: [RESERVED]RESERVED
ARTICLE 21: QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL
CERTIFICATESQUIET ENJOYMENT, SUBORDINATION, ATTORNMENT AND ESTOPPEL CERTIFICATES
21.1 Quiet EnjoymentQuiet Enjoyment. So long as Tenant performs all of its
-------------------------------
obligations under this Lease, Tenant's possession of the Leased Property will
not be disturbed by Landlord or any party claiming by, through or under
Landlord.
21.2 SubordinationSubordination. Subject to the terms and conditions of
--------------------------
this section, this Lease and Tenant's rights under this Lease are subordinate to
any ground lease or underlying lease, first mortgage, first deed of trust,
or other first lien against the Leased Property, together with any renewal,
consolidation, extension, modification or replacement thereof, which now or at
any subsequent time affects the Leased Property or any interest of Landlord in
the Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior. The foregoing subordination provision is
expressly conditioned upon any lessor or mortgagee being obligated and bound to
recognize Tenant as the tenant under this Lease, and such lessor or mortgagee
shall have no right to disturb Tenant's possession, use and occupancy of the
Leased Property or Tenant's enjoyment of its rights under this Lease unless and
until an Event of Default occurs hereunder. Any foreclosure action or
proceeding by any mortgagee with respect to the Leased Property shall not affect
Tenant's rights under this Lease and shall not terminate this Lease unless and
until an Event of Default occurs hereunder. The foregoing provisions will be
self-operative, and no further instrument will be required in order to effect
them. However, Tenant shall execute, acknowledge and deliver to Landlord, at
any time and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this section, to confirm or effect any such
subordination, provided that any such document shall include a nondisturbance
provision as set forth in this section satisfactory to Tenant. Any mortgagee of
the Leased Property shall be deemed to be bound by the nondisturbance provision
set forth in this section. If Tenant fails or refuses to execute, acknowledge,
and deliver any such document within 20 days after written demand, Landlord may
execute acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
section. This power of attorney is coupled with an interest and is irrevocable.
21.3 AttornmentAttornment. If any holder of any mortgage, indenture, deed
--------------------
of trust, or other similar instrument described in 21.2 succeeds to Landlord's
interest in the Leased Property, Tenant will pay to such holder all Rent
subsequently payable under this Lease. Tenant shall, upon request of anyone
succeeding to the interest of Landlord, automatically become the tenant of, and
attorn to, such successor in interest without changing this Lease. The
successor in interest will not be bound by [i] any payment of Rent for more than
one month in advance unless actually received by the successor; [ii] any
amendment or modification of this Lease thereafter made without its consent as
provided in this Lease; [iii] any claim against Landlord arising prior to the
date on which the successor succeeded to Landlord's interest; or [iv] any claim
or offset of Rent against Landlord. Upon request by Landlord or such successor
in interest and without cost to Landlord or such successor in interest, Tenant
will execute, acknowledge and deliver an instrument or instruments confirming
the attornment. If Tenant fails or refuses to execute, acknowledge, and deliver
any such instrument within 20 days after written demand, then Landlord or such
successor in interest will be entitled to execute, acknowledge, and deliver any
document on behalf of Tenant as Tenant's attorney-in-fact. Tenant hereby
constitutes and irrevocably appoints Landlord, its successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on behalf of
Tenant any such document. This power of attorney is coupled with an interest
and is irrevocable.
21.4 Estoppel CertificatesEstoppel Certificates. At the request of Landlord
------------------------------------------
or any mortgagee or purchaser of the Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Landlord or any mortgagee or purchaser of the Leased Property certifying the
following: [i] that the Lease is unmodified and in full force and effect, or if
there have been modifications that the same is in full force and effect as
modified and stating the modifications; [ii] the date to which Rent and other
charges have been paid; [iii] whether Tenant or Landlord is in default or
whether there is any fact or condition known to Landlord or Tenant which, with
notice or lapse of time, or both, would constitute a default, and specifying any
existing default, if any; [iv] that Tenant has accepted and occupies the Leased
Property; [v] that Tenant has no defenses, setoffs, deductions, credits, or
counterclaims against Landlord, if that be the case, or specifying such that
exist; and [vi] such other information as may reasonably be requested by
Landlord or any mortgagee or purchaser. Any purchaser or mortgagee may rely on
this estoppel certificate. If Tenant fails to deliver the estoppel certificates
to Landlord within 10 days after the request of Landlord, then Tenant shall be
deemed to have certified that [a] the Lease is in full force and effect and has
not been modified, or that the Lease has been modified as set forth in the
certificate delivered to Tenant; [b] Tenant has not prepaid any Rent or other
charges except for the current month; [c] Tenant has accepted and occupies the
Leased Property; [d] neither Tenant nor Landlord is in default nor is there any
fact or condition which, with notice or lapse of time, or both, would constitute
a default; and [e] Tenant has no defenses, setoffs, deductions, credits, or
counterclaims against Landlord. Tenant hereby irrevocably appoints Landlord as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on Tenant's
behalf any estoppel certificate to which Tenant does not object within 10 days
after Landlord sends the certificate to Tenant. This power of attorney is
coupled with an interest and is irrevocable.
ARTICLE 22: REPRESENTATIONS AND WARRANTIESREPRESENTATIONS AND WARRANTIES
Tenant hereby makes the following representations and warranties, as of the
Effective Date, to Landlord and acknowledge that Landlord is granting the Lease
in reliance upon such representations and warranties. Tenant's representations
and warranties shall survive the Closing and, except to the extent made as of a
specific date, shall continue in full force and effect until the Obligor Group
Obligations have been performed in full.
22.1 Organization and Good StandingOrganization and Good Standing. Tenant
--------------------------------------------------------------
is a limited liability company, duly organized, validly existing and in good
standing under the laws of its Organization State. Tenant is qualified to do
business in and is in good standing under the laws of the Facility State.
22.2 Power and AuthorityPower and Authority. Tenant has the power and
------------------------------------------
authority to execute, deliver and perform this Lease. Tenant has taken all
requisite action necessary to authorize the execution, delivery and performance
of its obligations under this Lease.
22.3 EnforceabilityEnforceability. This Lease constitutes a legal, valid,
----------------------------
and binding obligation of Tenant, enforceable in accordance with its terms,
except as such enforceability may be limited by creditors rights laws and
general principles of equity.
22.4 Government AuthorizationsGovernment Authorizations. The Facility is in
--------------------------------------------------
compliance with all Legal Requirements. All Government Authorizations are
in full force and effect. Except as otherwise noted in Exhibit G, Tenant holds
all Government Authorizations necessary for the operation of the Facility in
accordance with the Facility Uses. No prior notice to or approval from any
licensure authority is required in connection with the Lease or the transfer of
the fee interest in the Leased Property to Landlord other than those notices
which have been given or approval which have been obtained prior to the
Commencement Date.
22.5 Financial StatementsFinancial Statements. Tenant has furnished
------------------------------------------
Landlord with true, correct and complete copies of the Financial Statements
described on Exhibit C. The Financial Statements fairly present the financial
position of Tenant, Guarantor and the Facility, as applicable, as of the
respective dates and the results of operations for the periods then ended in
conformance with generally accepted accounting principles applied on a basis
consistent with prior periods. The Financial Statements and other information
furnished to Landlord are true, complete and correct and, as of the Effective
Date, no material adverse change has occurred since the furnishing of such
statements and information. As of the Effective Date, the Financial Statements
and other information do not contain any untrue statement or omission of a
material fact and are not misleading in any material respect. Tenant and
Guarantor are solvent, and no bankruptcy, insolvency, or similar proceeding is
pending or contemplated by or, to the knowledge of Tenant, against Tenant or
Guarantor.
22.6 Condition of FacilityCondition of Facility. To the best of Tenant's
---------------------------------------------
knowledge and except as otherwise disclosed in writing by Tenant to Landlord
prior to the Effective Date, all of the mechanical and electrical systems,
heating and air-conditioning systems, plumbing, water and sewer systems, and all
other items of mechanical equipment or appliances are in good working
order, condition and repair, are of sufficient size and capacity to service the
Facility for the Facility Uses and conform with all applicable ordinances and
regulations, and with all building, zoning, fire, safety, and other codes, laws
and orders. The Improvements, including the roof and foundation, are
structurally sound and free from leaks and other defects.
22.7 Compliance with LawsCompliance with Laws. To the best of Tenant's
--------------------------------------------
knowledge, there is no violation of, or noncompliance with, [i] any laws,
orders, rules or regulations, ordinances or codes of any kind or nature
whatsoever relating to the Facility or the ownership or operation thereof
(including, without limitation, building, fire, health, occupational safety and
health, zoning and land use, planning and environmental laws, orders, rules and
regulations); [ii] any covenants, conditions, restrictions or agreements
affecting or relating to the ownership, use or occupancy of the Facility; or
[iii] any order, writ, regulation or decree relating to any matter referred to
in [i] or [ii] above.
22.8 No LitigationNo Litigation. As of the Effective Date and except as
----------------------------
disclosed on Exhibit H, [i] there are no actions or suits, or any proceedings or
investigations by any governmental agency or regulatory body pending
against Tenant with respect to its operation at the Facility or against the
Facility; [ii] no HIPDB adverse action reports have been issued to Tenant,
Guarantor or the Facility; [iii] Tenant has not received notice of any
threatened actions, suits, proceedings or investigations against Tenant or with
respect to its operation at the Facility or against the Facility at law or in
equity, or before any governmental board, agency or authority which, if
determined adversely to Tenant or Guarantor, would materially and adversely
affect the Facility or title to the Facility (or any part thereof), the right to
operate the Facility as presently operated, or the financial condition of Tenant
or Guarantor; [iv] there are no unsatisfied or outstanding judgments against
Tenant with respect to its operations at the Facility or against the Facility;
[v] there is no labor dispute materially and adversely affecting the operation
or business conducted by Tenant at the Facility; and [vi] Tenant does not have
knowledge of any facts or circumstances which might reasonably form the basis
for any such action, suit, or proceeding.
22.9 ConsentsConsents. The execution, delivery and performance of this
----------------
Lease will not require any consent, approval, authorization, order, or
declaration of, or any filing or registration with, any court, any federal,
state, or local governmental or regulatory authority, or any other person or
entity, the absence of which would materially impair the ability of Tenant to
operate the Facility for the Facility Uses except for the post-acquisition
filing for licensure of the Facility.
22.10 No ViolationNo Violation. The execution, delivery and performance of
-------------------------
this Lease [i] do not and will not conflict with, and do not and will not result
in a breach of Tenant's Organizational Documents; [ii] do not and will not
conflict with, and do not and will not result in a breach of, and do not and
will not constitute a default under (or an event which, with or without notice
or lapse of time, or both, would constitute a default under), any of the terms,
conditions or provisions of any agreement or other instrument or obligation to
which Tenant is a party or by which its assets are bound; and [iii] do not and
will not violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Tenant or the Facility.
22.11 Reports and StatementsReports and Statements. All reports,
------------------------------------------------
statements, certificates and other data furnished by or on behalf of Tenant or
Guarantor to Landlord in connection with this Lease, and all representations and
warranties made herein or in any certificate or other instrument delivered
in connection herewith and therewith, are true and correct in all material
respects and do not omit to state any material fact or circumstance necessary to
make the statements contained herein or therein, in light of the circumstances
under which they are made, not misleading as of the date of such report,
statement, certificate or other data. The copies of all agreements and
instruments submitted to Landlord, including, without limitation, all agreements
relating to management of the Facility and Tenant's working capital are true,
correct and complete copies in all material respects and include all material
amendments and modifications of such agreements.
22.12 ERISAERISA. All plans (as defined in 4021(a) of the Employee
----------
Retirement Income Security Act of 1974, as amended or supplemented from time to
time ("ERISA")) for which Tenant is an "employer" or a "substantial employer"
(as defined in 3(5) and 4001(a)(2) of ERISA, respectively) are in compliance
with ERISA and the regulations and published interpretations thereunder. To the
extent Tenant maintains a qualified defined benefit pension plan: [i]
there exists no accumulated funding deficiency; [ii] no reportable event and no
prohibited transaction has occurred; [iii] no lien has been filed or threatened
to be filed by the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA; and [iv] Tenant has not been deemed to be a
substantial employer.
22.13 Chief Executive OfficeChief Executive Office. Tenant maintains its
-----------------------------------------------
chief executive office and its books and records at Tenant's address set forth
in the introductory paragraph of this Lease. Tenant does not conduct any
business or operations other than at Tenant's chief executive office and at the
Facility.
22.14 Other Name or EntitiesOther Name or Entities. Except as disclosed
------------------------------------------------
herein, none of Tenant's business is conducted through any subsidiary,
unincorporated association or other entity and Tenant has not, within the six
years preceding the date of this Lease [i] changed its name, [ii] used any name
other than the name stated at the beginning of this Lease, or [iii] merged or
consolidated with, or acquired any of the assets of, any corporation or other
business.
22.15 Parties in PossessionParties in Possession. Except as disclosed on
---------------------------------------------
Exhibit B, there are no parties in possession of any Leased Property or any
portion thereof as managers, lessees, tenants at sufferance, or trespassers.
22.16 AccessAccess. Except as otherwise disclosed in writing by Tenant to
------------
Landlord prior to the Effective Date, access to the Land is directly from a
dedicated public right-of-way without any easement. To the knowledge of Tenant,
there is no fact or condition which would result in the termination or
reduction of the current access to and from the Land to such right-of-way.
22.17 UtilitiesUtilities. There are available at the Land gas, municipal
------------------
water, and sanitary sewer lines, storm sewers, electrical and telephone services
in operating condition which are adequate for the operation of the Facility
at a reasonable cost. Except as otherwise disclosed in writing by Tenant to
Landlord prior to the Effective Date, the Land has direct access to utility
lines located in a dedicated public right-of-way without any easement. As of
the Effective Date, there is no pending or, to the knowledge of Tenant,
threatened governmental or third party proceeding which would impair or result
in the termination of such utility availability.
22.18 Condemnation and AssessmentsCondemnation and Assessments. As of the
----------------------------------------------------------
Effective Date, Tenant has not received notice of, and there are no pending or,
to the best of Tenant's knowledge, threatened, condemnation, assessment (except
as otherwise disclosed in writing by Tenant to Landlord prior to the Effective
Date), or similar proceedings affecting or relating to the Facility, or any
portion thereof, or any utilities, sewers, roadways or other public improvements
serving the Facility.
22.19 ZoningZoning. As of the Effective Date, [i] the use and operation of
------------
the Facility for the Facility Uses is a permitted use under the applicable
zoning code; [ii] except as disclosed on Exhibit G hereto, no special use
permits, conditional use permits, variances, or exceptions have been granted or
are needed for such use of the Facility; [iii] the Land is not located in any
special districts such as historical districts or overlay districts; and [iv]
the Facility has been constructed in accordance with and complies with all
zoning laws in effect at the time of its construction, including, but not
limited to, dimensional, parking, setback, screening, landscaping, sign and curb
cut requirements or the Facility obtained required waivers or variances
from such requirements.
22.20 Pro Forma StatementPro Forma Statement. Tenant has delivered to
------------------------------------------
Landlord a true, correct and complete copy of the Pro Forma Statement. The Pro
Forma Statement shows Tenant's reasonable expectation based on the facts and
circumstances known to Tenant, of the most likely results of Facility operations
for the next five-year period. By its execution of this Lease, Landlord
acknowledges and agrees that the Pro Forma Statement has been reviewed by
Landlord and that Tenant shall not be in default of its obligations under this
Lease in the event the actual results of Facility operations for the next
five-year period differ from those set forth in the Pro Forma Statement.
22.21 Environmental MattersEnvironmental Matters. During the period of
--------------------------------------------
Tenant's ownership or possession of the Leased Property and, to the best of
Tenant's knowledge after diligent inquiry, for the period prior to Tenant's
ownership or possession of the Leased Property, [i] the Leased Property is in
compliance with all Environmental Laws; [ii] there were no releases or
threatened releases of Hazardous Materials on, from, or under the Leased
Property, except in compliance with all Environmental Laws; [iii] no Hazardous
Materials have been, are or will be used, generated, stored, or disposed of at
the Leased Property, except in compliance with all Environmental Laws; [iv]
asbestos has not been and will not be used in the construction of any
Improvements; [v] no permit is or has been required from the Environmental
Protection Agency or any similar agency or department of any state or local
government for the use or maintenance of any Improvements; [vi] underground
storage tanks on or under the Land, if any, have been and currently are being
operated in compliance with all applicable Environmental Laws; [vii] any
closure, abandonment in place or removal of an underground storage tank on or
from the Land was performed in compliance with applicable Environmental Laws and
any such tank had no release contaminating the Leased Property or, if there
had been a release, the release was remediated in compliance with applicable
Environmental Laws to the satisfaction of regulatory authorities; [viii] no
summons, citation or inquiry has been made by any such environmental unit, body
or agency or a third party demanding any right of recovery for payment or
reimbursement for costs incurred under CERCLA or any other Environmental Laws
and the Land is not subject to the lien of any such agency; and [ix] to the best
of Tenant's knowledge, the environmental assessment of the Facility (and all
follow-up reports, supplements and amendments) that was delivered to Landlord by
Tenant in connection with the closing of this Lease is true, complete and
accurate. "Disposal" and "release" shall have the meanings set forth in CERCLA.
22.22 Leases and ContractsLeases and Contracts. As of the Effective Date
-------------------------------------------
and except as disclosed on Exhibit I, there are no leases or contracts
(including, but not limited to, insurance contracts, maintenance contracts,
construction contracts, employee benefit plans, employment contracts, equipment
leases, security agreements, architect agreements, and management contracts) to
which Tenant or Guarantor is a party relating to any part of the ownership,
operation, possession, construction, management or administration of the Land or
the Facility.
22.23 No DefaultNo Default. As of the Effective Date, [i] there is no
----------------------
existing Event of Default under this Lease; and [ii] no event has occurred
which, with the giving of notice or the passage of time, or both, would
constitute or result in such an Event of Default.
22.24 Tax StatusTax Status. If Tenant is a limited liability company, it is
--------------------
taxable as a partnership under the Internal Revenue Code and all applicable
facility state tax laws.
ARTICLE 23: [RESERVED] RESERVED
ARTICLE 24: SECURITY INTERESTSECURITY INTEREST
24.1 CollateralCollateral. Tenant hereby grants to Landlord and HCN
--------------------
(individually and collectively called "Secured Party") a security interest in
the following described property, whether now owned or hereafter acquired by
Tenant (the "Collateral"), to secure the payment and performance of the Obligor
Group Obligations:
(a) All machinery, furniture, equipment, trade fixtures, appliances,
inventory and all other goods (as "equipment", "inventory" and "goods" are
defined for purposes of Article 9 ("Article 9") of the Uniform Commercial Code
as adopted in Mississippi) and any leasehold interest of Tenant in any of the
foregoing, including, without limitation, those items which are to become
fixtures or which are building supplies and materials to be incorporated into
any improvement or fixture.
(b) All accounts, contract rights, general intangibles, instruments,
documents, and chattel paper [as "accounts", "contract rights", "general
intangibles", "instruments", "documents" and "chattel paper" are defined for
purposes of Article 9] now or hereafter arising.
(c) All franchises, permits, licenses, operating rights, certifications,
approvals, consents, authorizations and other general intangibles, including,
without limitation, certificates of need, state health care facility licenses,
and Medicare and Medicaid provider agreements, to the extent permitted by law.
(d) Unless expressly prohibited by the terms thereof, all contracts,
agreements, contract rights and materials relating to the design, construction,
operation or management of any improvements, including, but not limited to,
plans, specifications, drawings, blueprints, models, mock-ups, brochures,
flyers, advertising and promotional materials and mailing lists.
(e) All subleases, occupancy agreements, license agreements and concession
agreements, written or unwritten, of any nature, now or hereafter entered into,
and all right, title and interest of Tenant thereunder, and including, without
limitation, Tenant's right, if any, to cash or securities deposited thereunder
whether or not the same was deposited to secure performance by the subtenants,
occupants, licensees and concessionaires of their obligations thereunder,
including the right to receive and collect the rents, revenues, and other
charges thereunder.
(f) All ledger sheets, files, records, computer programs, tapes, other
electronic data processing materials, and other documentation.
(g) The products and proceeds of the preceding listed property, including,
without limitation, cash and non-cash proceeds, proceeds of proceeds, and
insurance proceeds.
24.2 Additional DocumentsAdditional Documents. At the request of Landlord,
-----------------------------------------
Tenant shall execute additional security agreements, financing statements, and
such other documents as may be requested by Landlord to maintain and perfect
such security interest. Tenant hereby irrevocably appoints Landlord, its
successors and assigns, as Tenant's attorney-in-fact to execute, acknowledge,
deliver and file such documents on behalf of Tenant. This power of attorney is
coupled with an interest and is irrevocable. Tenant authorizes Landlord to file
financing statements describing the Collateral to perfect and maintain the
security interest granted hereunder without the signature or any further
authorization of Tenant.
24.3 Notice of SaleNotice of Sale. With respect to any sale or other
--------------------------------
disposition of any of the Collateral after the occurrence of an Event of
Default, Landlord, Tenant agrees that the giving of five days' notice by
Landlord, sent by overnight delivery, postage prepaid, to Tenant's notice
address designating the time and place of any public sale or the time after
which any private sale or other intended disposition of such Collateral is to be
made, shall be deemed to be reasonable notice thereof and Tenant waives any
other notice with respect thereto.
24.4 RecharacterizationRecharacterization. Landlord and Tenant intend this
------------------------------------
Lease to be a true lease. However, if despite the parties' intent, it is
determined or adjudged by a court for any reason that this Lease is not a true
lease or if this Lease is recharacterized as a financing arrangement, then this
Lease shall be considered a secured financing agreement and Landlord's title to
the Leased Property shall constitute a perfected first priority lien in
Landlord's favor on the Leased Property to secure the payment and performance of
all the Obligor Group Obligations.
24.5 SubordinationSubordination Landlord acknowledges and agrees that the
--------------------------
liens and rights granted to Landlord under this Article 24 are and shall be
subordinate to any liens and rights granted by Tenant in favor of Lender with
respect to the Collateral.
ARTICLE 25: MISCELLANEOUSMISCELLANEOUS
25.1 NoticesNotices. Landlord and Tenant hereby agree that all notices,
--------------
demands, requests, and consents (hereinafter "notices") required to be given
pursuant to the terms of this Lease shall be in writing, shall be addressed to
the addresses set forth in the introductory paragraph of this Lease, and shall
be served by [i] personal delivery; [ii] certified mail, return receipt
requested, postage prepaid; or [iii] nationally recognized overnight courier.
Notwithstanding the foregoing, any notice received by Landlord from Lender may
be sent to Tenant by facsimile at 206/301-4500 and deemed sent upon receipt of
successful transmission. Notwithstanding the foregoing, any notice received by
Tenant from Lender may be sent to Landlord, Attn: Erin C. Ibele, by facsimile
at 419/247-2826 and deemed sent upon receipt of successful transmission. All
notices shall be deemed to be given upon the earlier of actual receipt or three
Business Days after mailing, or one Business Day after deposit with the
overnight courier. Any notices meeting the requirements of this section shall
be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
notice of such change.
25.2 Advertisement of Leased PropertyAdvertisement of Leased Property. In
------------------------------------------------------------------
the event Tenant fails to exercise its option to renew within the time period
set forth in 12.1 or in the event, the parties hereto have not executed a
renewal Lease within 120 days prior to the expiration of this Lease, or Tenant
has not exercised its Right of First Opportunity, then Landlord or its agent
shall have the right to enter the Leased Property at all reasonable times for
the purpose of exhibiting the Leased Property to others and to place upon the
Leased Property for and during the period commencing 120 days prior to the
expiration of this Lease, "for sale" or "for rent" notices or signs.
25.3 Entire AgreementEntire Agreement. This Lease contains the entire
----------------------------------
agreement between Landlord and Tenant with respect to the subject matter hereof.
No representations, warranties, and agreements have been made by Landlord
except as set forth in this Lease. No oral agreements or understandings between
Landlord and Tenant shall survive execution of this Lease.
25.4 SeverabilitySeverability. If any term or provision of this Lease is
------------------------
held or deemed by Landlord to be invalid or unenforceable, such holding shall
not affect the remainder of this Lease and the same shall remain in full force
and effect, unless such holding substantially deprives Tenant of the use of the
Leased Property or Landlord of the rents herein reserved, in which event this
Lease shall forthwith terminate as if by expiration of the Term.
25.5 Captions and HeadingsCaptions and Headings. The captions and headings
-------------------------------------------
are inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope of this Lease or the intent of any provision
hereof.
25.6 Governing LawGoverning Law. This Lease shall be governed by and
----------------------------
construed in accordance with the laws of the State of Mississippi, except as to
matters under applicable procedural conflicts of laws rules which require the
application of laws of another state, in which case the laws or conflicts of
laws rules, as the case may be, of such state shall govern to the extent
required.
25.7 Memorandum of LeaseMemorandum of Lease. Tenant shall not record this
----------------------------------------
Lease. Tenant shall, however, record a memorandum of lease approved by Landlord
upon Landlord's request.
25.8 WaiverWaiver. No waiver by Landlord of any condition or covenant
------------
herein contained, or of any breach of any such condition or covenant, shall be
held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such existing default.
25.9 Binding EffectBinding Effect. This Lease will be binding upon and
------------------------------
inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
25.10 No OfferNo Offer. Landlord's submission of this Lease to Tenant is
------------------
not an offer to lease the Leased Property, or an agreement by Landlord to
reserve the Leased Property for Tenant. Landlord will not be bound to Tenant
until Tenant has duly executed and delivered duplicate original leases to
Landlord, and Landlord has duly executed and delivered one of these duplicate
original leases to Tenant.
25.11 ModificationModification. This Lease may only be modified by a
------------------------
writing signed by both Landlord and Tenant. All references to this Lease,
whether in this Lease or in any other document or instrument, shall be deemed to
incorporate all amendments, modifications and renewals of this Lease, made
after the date hereof. If Tenant requests Landlord's consent to any change in
ownership, merger or consolidation of Tenant or Guarantor, any assumption of the
Lease, or any modification of the Lease, Tenant shall provide Landlord all
relevant information and documents sufficient to enable Landlord to evaluate the
request. In connection with any such request, Tenant shall pay to Landlord a
fee in the amount equal to the lesser of $2,500.00 and Landlord's actual
reasonable attorney's fees and expenses and other reasonable out-of-pocket
expenses incurred in connection with Landlord's evaluation of Tenant's request,
the preparation of any documents and amendments, the subsequent amendment of any
documents between Landlord and its collateral pool lenders (if applicable), and
all related matters.
25.12 Landlord's ModificationLandlord's Modification. Tenant acknowledges
------------------------------------------------
that, provided Lender consents or the Lender has been paid in full, Landlord may
mortgage the Leased Property or use the Leased Property as collateral for
collateralized mortgage obligations or Real Estate Mortgage Investment Companies
(REMICS). If any mortgage lender of Landlord desires any modification of this
Lease, Tenant agrees to consider such modification in good faith and to execute
an amendment of this Lease if Tenant finds such modification acceptable.
Landlord shall not do anything in connection with its financing of the Leased
Property which would limit the rights granted Tenant hereunder.
25.13 No MergerNo Merger. The surrender of this Lease by Tenant or the
--------------------
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant's default will not work a merger,
and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of the Leased
Property.
25.14 LachesLaches. No delay or omission by either party hereto to exercise
------------
any right or power accruing upon any noncompliance or default by the other
party with respect to any of the terms hereof shall impair any such right or
power or be construed to be a waiver thereof.
25.15 Limitation on Tenant's RecourseLimitation on Tenant's Recourse.
--------------------------------------------------------------------
Tenant's sole recourse against Landlord, and any successor to the interest of
Landlord in the Leased Property, is to the interest of Landlord, and any such
successor, in the Leased Property. Tenant will not have any right to satisfy
any judgment which it may have against Landlord, or any such successor, from any
other assets of Landlord, or any such successor. In this section, the
terms "Landlord" and "successor" include the shareholders, venturers, and
partners of "Landlord" and "successor" and the officers, directors, and
employees of the same. The provisions of this section are not intended to limit
Tenant's right to seek injunctive relief or specific performance.
25.16 Construction of LeaseConstruction of Lease. This Lease has been
----------------------------------------------
prepared by Landlord and its professional advisors and reviewed by Tenant and
its professional advisors. Landlord, Tenant, and their advisors believe that
this Lease is the product of all their efforts, that it expresses their
agreement, and agree that it shall not be interpreted in favor of either
Landlord or Tenant or against either Landlord or Tenant merely because of their
efforts in preparing it.
25.17 CounterpartsCounterparts. This Lease may be executed in multiple
------------------------
counterparts, each of which shall be deemed an original hereof.
25.18 Custody of Escrow FundsCustody of Escrow Funds . Any funds paid to
--------------------------
Landlord in escrow hereunder may be held by Landlord or, at Landlord's election,
by a financial institution, the deposits or accounts of which are insured
or guaranteed by a federal or state agency. The funds shall not be deemed to be
held in trust, may be commingled with the general funds of Landlord or such
other institution, and shall not bear interest.
25.19 Landlord's Status as a REITLandlord's Status as a REIT . Tenant
-------------------------------
acknowledges that Landlord (or a Landlord Affiliate) has elected and may
hereafter elect to be taxed as a real estate investment trust ("REIT") under the
Internal Revenue Code.
25.20 ExhibitsExhibits . All of the exhibits referenced in this Lease are
--------
attached hereto and incorporated herein.
25.21 WAIVER OF JURY TRIALWAIVER OF JURY TRIAL . LANDLORD AND TENANT WAIVE
---------------------
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THEM
AGAINST THE OTHER ON ALL MATTERS ARISING OUT OF THIS LEASE OR THE USE AND
OCCUPANCY OF THE LEASED PROPERTY (EXCEPT CLAIMS FOR PERSONAL INJURY OR PROPERTY
DAMAGE). IF LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT,
TENANT WILL NOT INTERPOSE, AND WAIVES THE RIGHT TO INTERPOSE, ANY COUNTERCLAIM
IN ANY SUCH PROCEEDING.
25.22 CONSENT TO JURISDICTIONCONSENT TO JURISDICTION . TENANT HEREBY
-------------------------
IRREVOCABLY SUBMITS AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF
ANY STATE OR FEDERAL COURT HAVING JURISDICTION OVER LUCAS COUNTY, OHIO OR ANY
COUNTY IN WHICH A FACILITY IS LOCATED FOR ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO [I] THE COMMITMENT; [II] THIS
LEASE; OR [III] ANY DOCUMENT EXECUTED BY TENANT IN CONNECTION WITH THIS LEASE.
TENANT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT TENANT MAY EFFECTIVELY
DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH
ACTION OR PROCEEDING. TENANT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
TENANT AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST
LANDLORD OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT OR PROPERTY OF LANDLORD,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THE COMMITMENT, THIS LEASE
OR ANY RELATED DOCUMENT IN ANY COURT OTHER THAN A STATE OR FEDERAL COURT HAVING
JURISDICTION OVER LUCAS COUNTY, OHIO UNLESS SUCH COURT LACKS IN PERSONAM OR
SUBJECT MATTER JURISDICTION IN WHICH CASE TENANT SHALL HAVE THE RIGHT TO
INSTITUTE SUCH ACTION OR PROCEEDING BEFORE ANY COURT HAVING SUCH JURISDICTION.
TENANT HEREBY CONSENTS TO SERVICE OF PROCESS BY LANDLORD IN ANY MANNER AND IN
ANY JURISDICTION PERMITTED BY LAW. NOTHING HEREIN SHALL AFFECT OR IMPAIR
LANDLORD'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR
LANDLORD'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST TENANT OR THE
PROPERTY OF TENANT IN THE COURTS OF ANY OTHER JURISDICTION.
25.23 Attorney's Fees and ExpensesAttorney's Fees and Expenses . Tenant
-------------------------------
shall pay to Landlord all reasonable costs and expenses incurred by Landlord in
administering this Lease and the security for this Lease, enforcing or
preserving Landlord's rights under this Lease and the security for this Lease,
and in all matters of collection, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, including, but not
limited to, [a] reasonable attorney's and paralegal's fees and disbursements;
[b] the fees and expenses of any litigation, administrative, bankruptcy,
insolvency, receivership and any other similar proceeding; [c] court costs; [d]
the expenses of Landlord, its employees, agents, attorneys and witnesses in
preparing for litigation, administrative, bankruptcy, insolvency and other
proceedings and for lodging, travel, and attendance at meetings, hearings,
depositions, and trials; and [e] consulting and witness fees and expenses
incurred by Landlord in connection with any litigation or other proceeding;
provided, however, Landlord's internal bookkeeping and routine lease servicing
costs are not payable by Tenant.
25.24 SurvivalSurvival . The following provisions shall survive termination
--------
of the Lease: Article 8 (Defaults and Remedies); Article 9 (Damage and
Destruction); Article 10 (Condemnation); 15.9 (Transfer of License and Facility
Operations); 15.10 (Bed Operating Rights); 18.2 (Assignment or Sublease);
Article 19 (Holdover and Surrender); Article 24 (Security Interest) and 25.24
(Survival).
25.25 TimeTime . Time is of the essence in the performance of this Lease.
----
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
Signed and acknowledged in the presence of:
HCRI RIDGELAND POINTE PROPERTIES, LLC
By: Health Care REIT, Inc.
Signature Rita J. Rogge Its: Sole Member
Print Name Rita J. Rogge
By: Erin C. Ibele
Signature Kathleen A. Sullivan
Print Name Kathleen A. Sullivan Title: Vice President and Corporate
Secretary
RIDGELAND ASSISTED LIVING, LLC
By: Emeritus Properties XI, LLC
Its: Managing Member
By: Emeritus Corporation
Its: Sole Member
Signature By: William M. Shorten
Print Name
Title: Director of Real Estate Finance
Signature
Print Name Tax I.D. No.:91-1941412
STATE OF OHIO )
) SS:
COUNTY OF LUCAS )
The foregoing instrument was acknowledged before me this ___ day of
September, 2003 by _________________________, the _________________________ of
Health Care REIT, Inc., a Delaware corporation, the sole member of HCRI
Ridgeland Pointe Properties, LLC, a Delaware limited liability company, on
behalf of the company.
Notary Public
My Commission Expires: [SEAL]
STATE OF WASHINGTON )
) SS:
COUNTY OF KING )
The foregoing instrument was acknowledged before me this ___ day of
September, 2003 by _________________________, the _________________________ of
Emeritus Corporation, a Washington corporation, the sole member of Emeritus
Properties XI, LLC, the managing member of Ridgeland Assisted Living, LLC, a
Washington limited liability company, on behalf of the limited liability
company.
Notary Public
My Commission Expires: [SEAL]
THIS INSTRUMENT PREPARED BY:
OKSANA M. LUDD, ESQ.
SHUMAKER, LOOP & KENDRICK, LLP
1000 JACKSON STREET
TOLEDO, OHIO 43624-1573
SCHEDULE 1: INITIAL RENT SCHEDULE
EMERITUS CORPORATION - RIDGELAND, MS
- ----------------------------------------
HEALTH CARE REIT, INC.
EFFECTIVE DATE 09/29/03
INITIAL TERM DATE 10/01/03
INITIAL TERM 15 Yrs
INITIAL TERM EXPIRATION DATE 09/30/18
INITIAL INVESTMENT AMOUNT 8,200,000
RATE OF RETURN N/A
(365/360 BASIS)
INITIAL RATE OF RETURN 10.00%
------
INCREASER (*) ANNUAL RENT INCREASER IS EQUAL TO THE LESSER OF THREE TIMES
CPI OR 25 BASIS POINTS. THIS SCHEDULE WAS PREPARED USING THE CPI FOR THE PERIOD
JULY, 2002 TO JULY, 2003 AND ASSUMED AS SUCH GOING FORWARD. ACTUAL INCREASERS
WILL BE REVIEWED ANNUALLY.
INITIAL MONTHLY RENT 68,333.33
ANNUAL INCREASER AMOUNT 0.00
LEASE YEAR DATES ACTUAL CPI INCREASER (BP) (LESSER OF 3 TIMES THE
CPI INCREASE OVER PRIOR YEAR OR 25 BP) BEGINNING RENT RATE OF RETURN
MONTHLY RENT AMOUNT ANNUAL RENT AMOUNT
FROM TO
09/29/03 09/30/03 10.00% 4,493.15
1 10/01/03 09/30/04 N/A N/A 10.00% 68,333.33
819,999.96
2 10/01/04 09/30/05 2.10% 0.25% 10.25% 70,041.67
840,500.00
3 10/01/05 09/30/06 2.10% 0.25% 10.50% 71,750.00
861,000.00
4 10/01/06 09/30/07 2.10% 0.25% 10.75% 73,458.33
881,500.00
5 10/01/07 09/30/08 2.10% 0.25% 11.00% 75,166.67
902,000.00
6 10/01/08 09/30/09 2.10% 0.25% 11.25% 76,875.00
922,500.00
7 10/01/09 09/30/10 2.10% 0.25% 11.50% 78,583.33
943,000.00
8 10/01/10 09/30/11 2.10% 0.25% 11.75% 80,291.67
963,500.00
9 10/01/11 09/30/12 2.10% 0.25% 12.00% 82,000.00
984,000.00
10 10/01/12 09/30/13 2.10% 0.25% 12.25% 83,708.33
1,004,500.00
11 10/01/13 09/30/14 2.10% 0.25% 12.50% 85,416.67
1,025,000.00
12 10/01/14 09/30/15 2.10% 0.25% 12.75% 87,125.00
1,045,500.00
13 10/01/15 09/30/16 2.10% 0.25% 13.00% 88,833.33
1,066,000.00
14 10/01/16 09/30/17 2.10% 0.25% 13.25% 90,541.67
1,086,500.00
15 10/01/17 09/30/18 2.10% 0.25% 13.50% 92,250.00
1,107,000.00
EXHIBIT A: LEGAL DESCRIPTION
A Lot or parcel of land lying and being situated in the County of Madison, State
of Mississippi, and being more particularly described as follows, to wit:
Lots 7, 8, and 9 Orchard Park, a subdivision according to a map or plat thereof
which is on file and of record in the office of the Chancery Clerk of Madison
County, Mississippi, in Plat Cabinet B at slot 67, reference to which is made in
aid of and as a part of this description.
Less and except therefrom a portion of Lot 7, Orchard Park, a subdivision
according to a map or plat thereof which is on file and of record in the office
of the Chancery Clerk of Madison County, Mississippi, in Plat Cabinet B at slot
67, reference to which is made in aid of and as a part of this description,
being five feet (5') off the Southwesterly side of Lot 7 and being more
particularly described by metes and bounds as follows, to wit:
Commencing at the Westernmost corner of said Lot 7 and run Southeasterly along
the line between Lots 6 and 7 a distance of 253.6 feet to the Southwest corner
of said Lot 7; thence North 89 degrees 48 minutes 21 seconds East along the
south line of said Lot 7 a distance of 6.38 feet; thence left through a
deflection angle of 128 degrees 22 minutes 41 seconds and run Northerly parallel
with the common line between Lots 6 and 7 and 5 feet (5') Easterly thereof, for
a distance of 256.41 feet to a point in the Western line of Lot 7 and the
Southerly right of way of Orchard Park; thence Westerly along the arc of a curve
bearing to the right having a 50 foot radius, and along the said Westerly line
of Lot 7 for an arc distance of 5.13 feet to the Point of Beginning, containing
1,274.8 square feet, more or less.
The entire tract herein described is also described as follows (Survey
Description):
A parcel of land situated in the Southwest Quarter of Section 32, Township 7
North, Range 2 East of Madison County, Mississippi, being Lots 8 and 9 and a
part of Lot 7 of Orchard Park, according to the plat of record in the office of
the Chancery Clerk of Madison County, Mississippi, in Plat Cabinet B at Slot 67,
and being more particularly described as follows:
Begin at an iron rod marking the Northwest corner of said Lot No. 9 and run
thence North 89 56'48" East along the North Line of Orchard Park for a distance
of 506.44 feet to an iron rod at the Northeast corner of said Lot No. 8; thence
South 00 02'35" East for a distance of 292.57 feet to an iron pin at the
Southeast corner of said Lot No. 8; thence North 89 33'14" West along the South
line of said Lot No. 8 for a distance of 151.29 feet to the Northeast corner of
said Lot No. 7 for a distance of 128.27 feet to the Southwest corner of said Lot
No. 7; thence South 00 11'06" East along the East line of said Lot No. 7 for a
distance of 200.00 feet to the Southeast corner of said Lot No. 7; thence South
89 48'21" West along the South line of said Lot No. 7 for a distance of 128.27
feet to the southwest corner of said Lot No. 7; thence North 38 34'20" West for
a distance of 256.41 feet to an iron pin; thence along the right of way of
Orchard Park (cul-de-sac with 50.00 feet radius); following a counterclockwise
circular curve for an arc distance of 184.56 feet, the curve having a radius of
50.00 feet and a chord bearing and distance of North 44 17'44" West for 184.56
feet to the Southwest corner of said Lot No. 9; thence North 00 10'15" along the
West line of said Lot No. 9 for a distance of 222.00 feet to the Point of
Beginning at the Northwest corner of said Lot No. 9.
EXHIBIT B: PERMITTED EXCEPTIONS
1. 2003 ad valorem taxes for City of Ridgeland and Madison County, MS, which
became a lien upon the above-described property on January 1, 2003, but are not
yet due and payable; and taxes, special assessments, and other governmental
charges not shown as existing liens by the public records.
2. Title to all minerals within and underlying the premises, together with
all mining rights and other rights, privileges and immunities relating thereto.
3. Deed of Trust and Security Agreement between Ridgeland Assisted Living,
LLC, and Amresco Capital, LP, dated September 29, 1999, filed September 30, 1999
at 3:00 p.m., and recorded in Book 1199 at page 160 in the office of the
Chancery Clerk of Madison County, MS.
4. Assignment of Leases and Rents between Ridgeland Assisted Living, LLC,
and Amresco Capital, L.P., dated September 29, 1999, filed September 30, 1999 at
3:00 p.m., and recorded in Book 1199 at page 220 in the office of the Chancery
Clerk of Madison County, MS.
5. Assignment of Mortgage and Assignment of Leases and Rents between Amresco
Capital L.P., and Credit Suisse First Boston Mortgage Capital LLC, dated
September 29, 1999, filed September 30, 1999 at 3:00 p.m., and recorded in Book
1199 at page 242 in the office of the Chancery Clerk of Madison County, MS.
6. UCC-1 Financing Statement No. 990414 executed by Ridgeland Assisted
Living, LLC, to Amresco Capital, L.P., filed for record on September 30, 1999 at
3:00 p.m., and recorded in Book 1199 at page 234 in the office of the Chancery
Clerk of Madison County, MS.
7. UCC-3 Assignment of Financing Statement executed by Ridgeland Assisted
Living, LLC, to Credit Suisse First Boston Mortgage Capital, filed for record on
May 11, 2001 at 9:00 a.m., and recorded in Book 1305 at page 256 in the office
of the Chancery Clerk of Madison County, MS, assigning UCC-1 No. 990414.
8. That certain Disclaimer and Boundary Line Agreement by and between
Countryside Associates, B. E. Hutto and John Howard Shows, of record in Book 196
at page 715 in the office of the Chancery Clerk of Madison County, MS, affecting
only Lots 7 and 8, Orchard Park, per the plat thereof of record in Plat Cabinet
B at Slot 67 in the office of the Chancery Clerk of Madison County, as shown on
survey dated November 24, 1998, revised December 11, 1998 and last revised
August 26, 1999, prepared by Jack N. Starr, R.P.S. No. 2623.
9. The following items reflected on the plat of survey of Jack N. Starr,
Registered Public Surveyor No. 2623, identified as Project No. 045-98-001, dated
November 24, 1998, revised December 11, 1998, and last revised June 23, 2003:
A. Five (5) foot utility easement along the North line of Lots 8 and 9 as
shown on the Subdivision Plat of Orchard Park of record in Plat Cabinet B at
Slot 67 in the office of the Chancery Clerk of Madison County, MS.
B. Fifteen (15) foot utility easement along the South and East lines of Lot
7 shown on the Subdivision Plat of Orchard Park of Record in Plat Cabinet B at
Slot 67 in the office of the Chancery Clerk of Madison County, MS.
C. Ten (10) foot utility easement along part of the North line of Lot 7 and
part of the South line of Lots 8 and 9 as shown on the Subdivision Plat of
Orchard Park of record in Plat Cabinet B at Slot 67 in the office of the
Chancery Clerk of Madison County, MS, a portion of which easement has been
closed and vacated pursuant to Ordinance recorded in Book 378 at Page 387 in the
office of the Chancery Clerk aforesaid.
D. Twenty (20) foot utility easement along the South line of Lot 8 as shown
on the Subdivision Plat of Orchard Park of record in Plat Cabinet B at Slot 67
in the office of the Chancery Clerk of Madison County, MS.
E. Five (5) utility easement along the front of Lots 7 and 9 as shown on the
Subdivision Plat of Orchard Park of record in Plat Cabinet B at Slot 67 in the
office of the Chancery Clerk of Madison County, MS.
F. Encroachment of 1.5 feet of retaining wall for subject property onto
adjoining property to the North, located in the Northwest corner of the subject
property as shown on Subdivision Plat of Orchard Park of Record in Plat Cabinet
B at Slot 67 in the office of the Chancery Clerk of Madison County, MS. Company
insures the insured against loss or damage which the insured may sustain by
reason of an unappealable final decree by a court of competent jurisdiction
ordering the enforced removable of said encroachments.
G. Drainage ditch in Southeast corner of Lot 8 as shown on the Subdivision
Plat of Orchard Park of record in Plat Cabinet B at Slot 67 in the office of the
Chancery Clerk of Madison County, MS.
H. Drainage ditch in Northeast corner of Lot 8 as shown on the Subdivision
Plat of Orchard Park of record in Plat Cabinet B at Slot 67 in the office of the
Chancery Clerk of Madison County, MS.
I. Setback restrictions around the entire perimeter of property, being 10
feet on West, North, most Southerly, and Southwest sides, 25 feet on the East
line, and 30 feet around the cul-de-sac, as shown on the Subdivision Plat of
Orchard Park of record in Plat Cabinet B at Slot 67 in the office of the
Chancery Clerk of Madison County, MS.
J. Utility easement through Lot 7 of record in Book 378 at Page 86 in the
office of the Chancery Clerk of Madison County, MS.
EXHIBIT C: FACILITY INFORMATION
STREET ADDRESS FACILITY TYPE (PER LICENSE)
FACILITY NAME COUNTY BEDS/UNITS INVESTMENT AMOUNT
Assisted Living
410 Orchard Park ___ licensed beds
Ridgeland, MS 39157 ___ operating beds
Ridgeland Pointe County: Madison 75 units $8,200,000
---------------- ---------------- -------- ----------
EXHIBIT D: LANDLORD'S PERSONAL PROPERTY
[Tenant to provide]
EXHIBIT E: DOCUMENTS TO BE DELIVERED
Tenant shall deliver each of the following documents to Landlord no
later than the date specified for each document:
1. Annual Financial Statement of Tenant (audited) - within 90 days after the
end of each fiscal year.
2. Annual Company Budget not later than 60 days prior to the beginning of
the next fiscal year.
3. Quarterly Variance Report for the Facility, including occupancy, census,
capital expenditures and operating revenues and expenses by line item with a
detailed explanation of the cause of all material variances from the Annual
Company Budget (i.e., more than 10% for that line item) and a description of
Tenant's plans for eliminating all material variances - within 45 days after the
end of each quarter.
4. Quarterly Update to Annual Company Budget (on a 12-month rolling forward
period) - within 45 days after the end of each quarter.
5. Quarterly Healthcare Integrity and Protection Data Bank (HIPDB) Report
(dated not earlier than the end of the quarter) - within 45 days after the end
of each quarter.
6. Quarterly Updates to Operator Profile of Tenant, including a review of
the Profile prepared by Landlord and identification of all changes to the
Profile to reflect the current situation - within 45 days after the end of each
quarter.
7. Monthly Facility Financial Statement - within 30 days after the end of
each month.
8. Tenant's Certificate and Annual or Quarterly Facility Financial Report
(Exhibit F) - with each delivery of Tenant's financial statements.
9. Annual Facility Financial Report (based upon internal financial records)
- - within 60 days after the end of each fiscal year.
10. Annual Financial Statement (audited) of Guarantor - within 90 days after
the end of each fiscal year.
11. Periodic Financial Statement of Guarantor - within 45 days after the end
of each quarter.
12. Guarantor's certificate - with each delivery of Guarantor's financial
statements.
13. Federal tax returns of Guarantor, which shall include on a consolidated
basis, Tenant - within 15 days after the filing of the return. If the filing
date is extended, also provide a copy of the extension application within 15
days after filing.
14. If applicable, Medicaid cost reports for the Facility - within five days
after filing of the report with the State agency.
15. State and federal health care survey and inspection reports, inspector
exit interview notes and report (if delivered to Tenant), plans of correction,
re-survey reports, evidence of annual license renewal within 30 days after
receipt by Tenant, HIPDB adverse action report, notice of any investigation,
inspection or survey by licensing authorities, notice of licensure deficiencies
or commencement of licensure revocation or decertification proceeding, notice of
admissions ban, issuance of a provisional or temporary license and all
correspondence regarding any of the foregoing for the Facility - within five
days after receipt by Tenant.
16. Real estate taxes
(a) Copy of invoice and check - within five days after the due date; and
(b) Copy of official receipt or other satisfactory evidence of payment -
within 30 days after the due date.
17. Certificate of insurance renewal, current Certificate of Compliance from
insurance agent and evidence of payment of premium - at least 30 days prior
to the expiration of each policy.
18. Facility information: [i] a security deposit report, including resident
name, date of move-in, security deposit, and corresponding security deposit
bank account balance, with a monthly update of any changes; [ii] a report
accounting for all resident trust funds, including corresponding trust fund
deposit bank accounts; [iii] a schedule and copies of any equipment leases and
financings, including vendor, equipment descriptions, monthly payment, rate and
maturity, with a monthly update of any changes and the required nondisturbance
agreement if the original cost of the equipment exceeds $50,000.00; [iv] a
schedule of all utility providers and utility deposits; [v] a list of all rent
concessions, including, but not limited to, free rent, rent reduction, community
fee waivers, rate locks, rate guaranties and waivers of security deposits; [vi]
a copy of each private pay resident's occupancy agreement and the Facility's
form of agreement; [vii] a schedule of all employee vacation and sick days; and
[viii] employee policies and procedures handbook, including employee benefits -
current and annually updated reports, schedules and copies to be delivered upon
request.
EXHIBIT F: TENANT'S CERTIFICATE
AND FACILITY FINANCIAL REPORTS
Report Period: Commencing _______________ and ending _______________
Lease: Lease made by HCRI Ridgeland Pointe Properties, LLC ("Landlord") to
Ridgeland Assisted Living, LLC ("Tenant")
Tenant hereby certifies to Landlord to the best of its knowledge as
follows:
1. The attached [specify audited or unaudited and annual or quarterly, and
------- --------- ------ ---------
if consolidated, so state] financial statements of Tenant [i] have been prepared
------------
in accordance with generally accepted accounting principles consistently
applied; [ii] have been prepared in a manner substantially consistent with prior
financial statements submitted to Landlord; and [iii] fairly present the
financial condition and performance of Tenant in all material respects.
2. The attached [Annual or Quarterly] Facility Financial Report and Facility
Accounts Receivable Aging Report for the Report Period is complete, true
and accurate and has been prepared in a manner substantially consistent with
prior schedules submitted to Landlord. As set forth in the [Annual or
Quarterly] Facility Financial Report, Tenant has maintained the Facility
Coverage Ratio [*IF APPLICABLE: and the Current Ratio/Debt to Equity Ratio] for
the Report Period as required under the Lease between Tenant and Landlord.
3. To the best of its knowledge, Tenant was in compliance with all of the
provisions of the Lease and all other documents executed by Tenant in connection
with the Lease at all times during the Report Period, and no default, or
any event which with the passage of time or the giving of notice or both would
constitute a default, has occurred under the Lease.
Executed this ___ day of _______________, _____.
Name:
Title:
ANNUAL FACILITY FINANCIAL REPORT
FACILITY NAME:
FACILITY ADDRESS:
REPORT PERIOD: Twelve (12) months beginning _______________ and ending
_______________. All information reported should be for this period only.
% RESIDENT
OCCUPANCY DATA CENSUS DATA DAYS % REVENUES
-------------- ----------- ---- ----------
Total Beds/Units: _______ Medicaid: _______% _______%
----------------- ------- --------- -------- --------
Total Available Days: _______ Medicare: _______% _______%
Total Occupied Days: _______ Private and Other: _______%
_______%
Occupancy Percentage: _______% Total: _______% _______%
OPERATING DATA
1. Gross Revenues $
2. Contractual Allowances $
3. Net Revenues $
4. Operating Expenses(before interest, lease/rent, depreciation,
amortization and management fees) $
---
5. Net Operating Income $
6. Interest Expense $
7. Lease/Rent Expense $
8. Depreciation Expense $
9. Amortization Expense $
10. Management Fees $
11. Management Fees (as a percent of Gross Revenues) %
12. Overhead Allocation (if applicable) $
13. Other (identify) $
14. Income Taxes $
15. Net Income (amount should agree with the facility's financial
statements) $
FINANCING DATA
(Note: This data breaks out Items 6 and 7 above.)
Related to HCN All Other Leases and/or Debt Total
Lease Payments _________ _________ ________
----------- ----------- ----------
Interest Payments _________ _________ ________
Principal Payments (if any) _________ _________ ________
$ $ $
= = =
COVERAGE RATIO
1. Net Operating Income $______________
2. Less Imputed Management Fee
( _____% of gross revenues) (______________)
3. Less Imputed Replacement Reserve for period
($_________ per bed [or unit] per year) (______________)
4. Adjusted Net Operating Income $______________
5. Loan/Lease Payments to HCN $______________
6. Actual Coverage Ratio (Line 4 Line 5) ______________
7. Minimum Coverage Ratio (per Lease Agreement) ______________
CURRENT RATIO
[*DELETE IF NOT APPLICABLE]
1. Current Assets $______________
2. Current Liabilities $______________
3. Actual Current Ratio (Line 1 Line 2) ______________
4. Minimum Current Ratio (per Lease Agreement) ______________
I certify that the foregoing is true and accurate.
Date:
Name: Phone Number:
Title:
QUARTERLY FACILITY FINANCIAL REPORT
FACILITY NAME:
FACILITY ADDRESS:
REPORT PERIOD: Three (3) months beginning _______________ and ending
_______________. All information reported should be for this period only.
% RESIDENT
OCCUPANCY DATA CENSUS DATA DAYS % REVENUES
----------
Total Beds/Units: _______ Medicaid: _______% _______%
----------------- ------- --------- -------- --------
Total Available Days: _______ Medicare: _______% _______%
Total Occupied Days: _______ Private & Other: _______% _______%
Occupancy Percentage: _______% Total: _______% _______%
OPERATING DATA
1. Gross Revenues $
2. Contractual Allowances $
3. Net Revenues $
4. Operating Expenses (before interest, lease/rent, depreciation,
amortization and management fees) $
---
5. Net Operating Income $
6. Interest Expense $
7. Lease/Rent Expense $
8. Depreciation Expense $
9. Amortization Expense $
10. Management Fees $
11. Management Fees (as a percent of Gross Revenues) %
12. Overhead Allocation (if applicable) $
13. Other (identify) $
14. Income Taxes $
15. Net Income (amount should agree with the facility's financial
statements) $
------
FINANCING DATA
(Note: This data breaks out Items 6 and 7 above.)
Related to HCN All Other Leases and/or Debt Total
Lease Payments _________ _________ ________
----------- ----------- ----------
Interest Payments _________ _________ ________
Principal Payments (if any) _________ _________ ________
$ $ $
= = =
COVERAGE RATIO
1. Net Operating Income $______________
2. Less Imputed Management Fee
( _____% of gross revenues) (______________)
3. Less Imputed Replacement Reserve for period
($_________ per bed [or unit] per year) (______________)
4. Adjusted Net Operating Income $______________
5. Loan/Lease Payments to HCN $______________
6. Actual Coverage Ratio (Line 4 Line 5) ______________
7. Minimum Coverage Ratio (per Lease Agreement) ______________
CURRENT RATIO
[*DELETE IF NOT APPLICABLE]
1. Current Assets $______________
2. Current Liabilities $______________
3. Actual Current Ratio (Line 1 Line 2) ______________
4. Minimum Current Ratio (per Lease Agreement) ______________
I certify that the foregoing is true and accurate.
Date:
Name: Phone Number:
Title:
- ------
QUARTERLY FACILITY ACCOUNTS RECEIVABLE AGING REPORT
FACILITY NAME:
FACILITY ADDRESS:
ACCOUNTS RECEIVABLE AGING AS OF ____________ (MOST RECENT QUARTER ENDED)
PAYOR 0-30 DAYS % 31-60 DAYS % 61-90 DAYS % OVER 90 DAYS %
TOTALS %
Medicaid $__________ ____% $__________ ____% $__________ ____%
$__________ ____% $__________ ____%
Medicare $__________ ____% $__________ ____% $__________ ____%
$__________ ____% $__________ ____%
Commercial Insurance $__________ ____% $__________ ____%
$__________ ____% $__________ ____% $__________ ____%
Other -_____________ $__________ ____% $__________ ____%
$__________ ____% $__________ ____% $__________ ____%
TOTALS $__________ 100% $__________ 100% $__________ 100%
$__________ 100% $__________ 100%
% OF TOTALS $ ___________% ___________% ___________%
___________% 100%
ACCOUNTS RECEIVABLE AGING AS OF ____________ (2ND RECENT QUARTER ENDED)
PAYOR 0-30 DAYS % 31-60 DAYS % 61-90 DAYS % OVER 90 DAYS %
TOTALS %
Medicaid $__________ ____% $__________ ____% $__________ ____%
$__________ ____% $__________ ____%
Medicare $__________ ____% $__________ ____% $__________ ____%
$__________ ____% $__________ ____%
Commercial Insurance $__________ ____% $__________ ____%
$__________ ____% $__________ ____% $__________ ____%
Other -_____________ $__________ ____% $__________ ____%
$__________ ____% $__________ ____% $__________ ____%
TOTALS $__________ 100% $__________ 100% $__________ 100%
$__________ 100% $__________ 100%
% OF TOTALS $ ___________% ___________% ___________%
___________% 100%
EXHIBIT G: GOVERNMENT AUTHORIZATIONS
TO BE OBTAINED; ZONING PERMITS
The letter dated May 16, 2003 from Jonathon Smith, City Planner, City of
Ridgeland, Community Development Department, 304 Highway 51, P.O. Box 217,
Ridgeland, Mississippi 39158 addressed to Health Care REIT, Inc.; HCRI
Massachusetts Properties Trust II; and HCRI Mississippi Properties, Inc., One
SeaGate, Suite 1500, P.O. Box 1475, Toledo, Ohio 43603-1475 regarding Zoning
Certificate for Ridgeland Pointe, 410 Orchard Park, Ridgeland, Mississippi
39157, describes any and all special use permits, conditional use permits,
variances and exceptions which have been granted or are needed in connection
with the use of Ridgeland Pointe.
EXHIBIT H: PENDING LITIGATION
NONE
EXHIBIT I: LIST OF LEASES AND CONTRACTS
1. Schindler Elevator Corporation Elevator Maintenance Agreement;
2. Simplex Emergency Call Monitoring Service Agreement;
3. Smith's Lawn Service (invoice no contract);
4. Dependable Pest Service;
5. Beauty Salon Agreement with Brenda Steele; and
6. Therapy Services Agreement with the Weston Group, Inc.
EXHIBIT J: WIRE TRANSFER INSTRUCTIONS
HEALTH CARE REIT, INC.
WIRE TRANSFER INSTRUCTIONS
KeyBank
BANK: Cleveland, Ohio
ABA NUMBER: 041001039
ACCOUNT NAME: Health Care REIT, Inc.
ACCOUNT NUMBER: 353321001011
NOTIFY: Michael A. Crabtree
PHONE: (419) 247-2800
EXHIBIT K: BASE PRICE
(A) The base price ("Base Price") for the Leased Property will be an amount
equal to the greater of [i] the Investment Amount; or [ii] the sum of [a] the
Investment Amount plus [b] 50% of the difference between the Fair Market Value
at the time of the acquisition and the sum of [I] the Investment Amount and [II]
$1,100,000.00.
(B) Fair Market Value. The fair market value (the "Fair Market Value") of
-------------------
the Leased Property shall be determined as follows:
The parties shall attempt to determine the Fair Market Value by mutual
agreement within 15 days after giving the Termination Notice (the "Negotiation
Period"). However, if the parties do not agree on the Fair Market Value during
the Negotiation Period, the following provisions shall apply:
Landlord and Tenant shall each give the other party notice of the name of
an acceptable appraiser five Business Days after the end of the Negotiation
Period. The two appraisers will then select a third appraiser within an
additional five days. Each appraiser must demonstrate to the reasonable
satisfaction of both Landlord and Tenant that it has significant experience in
appraising properties similar to the Leased Property. Within five days after
designation, each appraiser shall submit a resume to Landlord and Tenant setting
forth such appraiser's qualifications, including education and experience with
similar properties. A notice of objections to the qualifications of any
appraiser shall be given within 10 days after receipt of such resume. If a
party fails to timely object to the qualifications of an appraiser, then the
appraiser shall be conclusively deemed satisfactory. If a party gives a timely
notice of objection to the qualifications of an appraiser, then the disqualified
appraiser shall be replaced by an appraiser selected by the qualified appraisers
or, if all appraisers are disqualified, then by an appraiser selected by a
commercial arbitrator acceptable to Landlord and Tenant.
The Fair Market Value shall be determined by the appraisers within 60 days
thereafter as follows. Each of the appraisers shall be instructed to prepare an
appraisal of the Leased Property in accordance with the following instructions:
The Leased Property is to be valued upon the three conventional approaches
to estimate value known as the Income, Sales Comparison and Cost Approaches.
Once the approaches are completed, the appraiser correlates the individual
approaches into a final value conclusion.
The three approaches to estimate value are summarized as follows:
INCOME APPROACH: This valuation approach recognizes that the value of the
operating tangible and intangible assets can be represented by the expected
economic viability of the business giving returns on and of the assets.
SALES COMPARISON APPROACH: This valuation approach is based upon the principle
of substitution. When a facility is replaceable in the market, the market
approach assumes that value tends to be set at the price of acquiring an equally
desirable substitute facility. Since healthcare market conditions change and
frequently are subject to regulatory and financing environments, adjustments
need to be considered. These adjustments also consider the operating
differences such as services and demographics.
COST APPROACH: This valuation approach estimates the value of the tangible
assets only. Value is represented by the market value of the land plus the
depreciated reproduction cost of all improvements and equipment.
In general, the Income and Sales Comparison Approaches are considered the best
representation of value because they cover both tangible and intangible assets,
consider the operating characteristics of the business and have the most
significant influence on attracting potential investors.
The appraised values submitted by the three appraisers shall be ranked from
highest value to middle value to lowest value, the appraised value (highest or
lowest) which is furthest from the middle appraised value shall be discarded,
and the remaining two appraised values shall be averaged to arrive at the Fair
Market Value.