8-K: Current report filing
Published on December 21, 2005
MASTER
LEASE
SINGLE
LESSEE
MULTIPLE
FACILITIES
OHI
ASSET
II (OH), LLC
AND
CSC
MSTR
LSCO, LLC
DATED:
December16, 2005
CSC
Transaction
Facilities: Aristocrat
Berea
Candlewood
Park
Falling Water
Grande Pointe Health Care
Greenbrier RC
Greenbrier HC
Ohio Extended Care Facility
Pebble Creek
Pine Grove
Pine Valley Care Center
Wyant Woods
TABLE
OF CONTENTS
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Page |
ARTICLE
I
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1
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1.1 LEASE
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1
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1.2 TERM
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2
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1.3 OPTION
TO RENEW
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2
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ARTICLE
II
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3
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2.1 DEFINITIONS
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3
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ARTICLE
III
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20
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3.1 BASE
RENT; MONTHLY INSTALLMENTS
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20
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3.2 ADDITIONAL
CHARGES
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20
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3.3 LATE
CHARGE; INTEREST.
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20
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3.4 NET
LEASE.
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20
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ARTICLE
IV
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21
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4.1 PAYMENT
OF IMPOSITIONS
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21
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4.2 ADJUSTMENT
OF
IMPOSITIONS
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22
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4.3 UTILITY
CHARGES
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22
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4.4 INSURANCE
PREMIUMS
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22
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ARTICLE
V
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22
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5.1 NO
TERMINATION, ABATEMENT, ETC
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22
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ARTICLE
VI
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23
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6.1 OWNERSHIP
OF
THE LEASED PROPERTIES
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23
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6.2 LESSOR’S
PERSONAL PROPERTY
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23
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6.3 LESSEE’S
PERSONAL PROPERTY
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23
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6.4 GRANT
OF SECURITY INTEREST IN LESSEE’S PERSONAL PROPERTY AND
ACCOUNTS
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24
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ARTICLE
VII
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24
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7.1 CONDITION
OF
THE LEASED PROPERTIES
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24
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7.2 USE
OF
THE LEASED PROPERTIES
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25
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7.3 CERTAIN
ENVIRONMENTAL MATTERS
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25
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ARTICLE
VIII
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29
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8.1 COMPLIANCE
WITH
LEGAL AND INSURANCE REQUIREMENTS
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29
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8.3 MINIMUM
QUALIFIED CAPITAL EXPENDITURES
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31
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8.4 MANAGEMENT
AGREEMENTS AND CONSULTING AGREEMENTS
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31
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8.5 OTHER
FACILITIES
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31
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8.6 NO
OTHER BUSINESS
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31
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ARTICLE
IX
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32
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9.1 MAINTENANCE
AND
REPAIR
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32
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9.2 ENCROACHMENTS,
RESTRICTIONS, ETC.
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33
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ARTICLE
XI
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34
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11.1 LIENS
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34
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ARTICLE
XII
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34
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12.1 PERMITTED
CONTESTS
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34
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12.2 LESSOR’S
REQUIREMENT FOR DEPOSITS
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35
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ARTICLE
XIII
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35
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13.1 GENERAL
INSURANCE REQUIREMENTS
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35
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13.2 RISKS
TO BE INSURED
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36
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13.3 PAYMENT
OF PREMIUMS; COPIES OF POLICIES; CERTIFICATES.
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37
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13.4 UMBRELLA
POLICIES
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38
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13.5 ADDITIONAL
INSURANCE
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38
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13.6 NO
LIABILITY; WAIVER OF SUBROGATION
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38
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13.7 INCREASE
IN
LIMITS
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38
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13.8 BLANKET
POLICY
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38
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ARTICLE
XIV
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39
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14.1 INSURANCE
PROCEEDS
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39
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14.2 RESTORATION
IN
THE EVENT OF DAMAGE OR DESTRUCTION
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39
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14.3 RESTORATION
OF
LESSEE’S PROPERTY
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40
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14.4 NO
ABATEMENT OF RENT
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40
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14.5 WAIVER
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40
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14.6 DISBURSEMENT
OF
INSURANCE PROCEEDS EQUAL TO OR GREATER THAN THE APPROVAL
THRESHOLD
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40
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14.7 NET
PROCEEDS PAID TO FACILITY MORTGAGEE
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41
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ARTICLE
XV
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41
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15.1 TOTAL
TAKING OR OTHER TAKING WITH LEASED PROPERTY RENDERED UNSUITABLE
FOR ITS
PRIMARY INTENDED USE
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41
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15.2 ALLOCATION
OF
AWARD
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42
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15.3 PARTIAL
TAKING
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42
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15.4 TEMPORARY
TAKING
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42
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15.5 AWARDS
PAID TO FACILITY MORTGAGEE
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43
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ARTICLE
XVI
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43
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16.1 LESSOR’S
RIGHTS
UPON AN EVENT OF DEFAULT
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43
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16.2 CERTAIN
REMEDIES
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43
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16.3 DAMAGES
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44
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16.4 WAIVER
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44
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16.5 APPLICATION
OF
FUNDS
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45
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ARTICLE
XVII
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45
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17.1 LESSOR’S
RIGHT
TO CURE LESSEE’S DEFAULT
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45
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17.2 LESSEE’S
AFFILIATES RIGHT TO CURE
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46
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ARTICLE
XVIII
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46
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18.1 HOLDING
OVER
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46
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18.2 INDEMNITY
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46
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ARTICLE
XIX
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46
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19.1 SUBORDINATION
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46
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19.2 ATTORNMENT
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47
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19.3 LESSEE’S
CERTIFICATE
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47
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19.4 NOTICE
AND CURE
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47
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ARTICLE
XX
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48
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20.1 RISK
OF
LOSS
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48
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ARTICLE
XXI
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48
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21.1 INDEMNIFICATION
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48
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21.2 SURVIVAL
OF
INDEMNIFICATION
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49
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ARTICLE
XXII
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49
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22.1 GENERAL
PROHIBITION AGAINST TRANSFERS
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49
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22.2 SUBORDINATION
AND ATTORNMENT
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50
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22.3 SUBLEASE
LIMITATION
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50
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ARTICLE
XXIII
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50
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23.1 FINANCIAL
STATEMENTS AND OTHER REPORTS AND MATERIALS REQUIRED BY
LESSOR
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50
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23.2 PUBLIC
OFFERING INFORMATION
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52
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ARTICLE
XXIV
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53
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24.1 LESSOR’S
RIGHT
TO INSPECT
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53
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ARTICLE
XXV
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53
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25.1 NO
WAIVER
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53
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ARTICLE
XXVI
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53
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26.1 REMEDIES
CUMULATIVE
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53
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ARTICLE
XXVII
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53
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27.1 ACCEPTANCE
OF
SURRENDER
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53
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ARTICLE
XXVIII
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53
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28.1 NO
MERGER OF TITLE
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53
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28.2 NO
PARTNERSHIP
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53
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ARTICLE
XXIX
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54
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29.1 CONVEYANCE
BY
LESSOR
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54
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ARTICLE
XXX
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54
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30.1 QUIET
ENJOYMENT
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54
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ARTICLE
XXXI
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54
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31.1 NOTICES
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54
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ARTICLE
XXXII
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55
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32.1 FAIR
MARKET RENT
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55
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ARTICLE
XXXIII
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56
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33.1 LESSOR’S
OPTION
TO PURCHASE LESSEE’S PERSONAL PROPERTY
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56
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33.2 FACILITY
TRADE
NAMES
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56
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33.3 TRANSFER
OF
OPERATIONAL CONTROL OF THE FACILITIES
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57
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33.4 INTANGIBLES
AND
PERSONAL PROPERTY
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57
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ARTICLE
XXXIV
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58
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34.1 ARBITRATION
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58
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ARTICLE
XXXV
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58
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35.1 COMMISSIONS
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58
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ARTICLE
XXXVI
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58
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36.1 MEMORANDUM
OR
SHORT FORM OF LEASE
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58
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ARTICLE
XXXVII
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58
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37.1 SECURITY
DEPOSIT
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58
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37.2 APPLICATION
OF
SECURITY DEPOSIT
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59
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37.3 TRANSFER
OF
SECURITY DEPOSIT
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59
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ARTICLE
XXXVIII
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59
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38.1 MISCELLANEOUS
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60
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60 |
MASTER
LEASE
Multiple
Facilities
(CSC
Transaction)
THIS
MASTER LEASE (“Lease”)
is
executed and delivered as of this 16th
day of
December, 2005 and is entered into by OHI ASSET II (OH), LLC, a Delaware
limited
liability company (“Lessor”),
the
address of which is 9690 Deereco Road, Suite 100, Timonium, MD 21093, and
CSC
MSTR LSCO, LLC, an Ohio limited liability company (“Lessee”),
the
address of which is 4700 Ashwood Drive, Suite 200, Cincinnati, OH
45241.
RECITALS
The
circumstances underlying the execution and delivery of this Lease are as
follows:
A. Capitalized
terms used and not otherwise defined herein have the respective meanings
given
them in Article II below.
B. Lessor
is
the owner of the Leased Properties.
C. Pursuant
to an Agreement to Lease, and conditioned upon, among other things, the
acquisition of the Facilities by Lessor, Lessor agreed to Lease to Lessee,
and
Lessee agreed to lease from Lessor, the Facilities on the terms and conditions
of this Lease.
D. As
of the
date of this Lease, Lessor has acquired the Acquired Facilities.
NOW,
THEREFORE, Lessor and Lessee agree to amend and restate the Existing Lease
in
its entirety as follows:
ARTICLE
I
1.1 Lease.
Upon
and subject to the terms and conditions set forth in this Lease, Lessor leases
to Lessee, and Lessee leases from Lessor, the Leased Properties. The Leased
Properties are leased subject to all covenants, conditions, restrictions,
easements and other matters affecting the Leased Property, whether or not
of
record, including the Permitted Encumbrances and other matters which would
be
disclosed by an inspection or accurate survey of the Leased
Properties.
1.1.1 Subleases.
On the
Commencement Date, with the approval of Lessor, the Leased Properties are
subleased to the Sublessees pursuant to the Subleases. Lessee has assigned
the
Subleases to Lessor and each Sublessee has jointly and severally with the
other
Sublessee guaranteed the obligations of Lessee hereunder, and to secure its
guaranty each Sublessee has granted Lessor a security interest in the Collateral
with respect to the Facility subleased by it. Lessee shall not amend or modify
the terms of any Sublease without the prior written consent of Lessor, which
Lessor may in its sole discretion grant, withhold or condition. Each Sublessee
under an Sublease has agreed in the Sublease that it assumes and agrees to
be
bound by and perform each and every obligation of the Lessee under this Lease;
provided, however, that obligations of a Sublessee related to the operation,
maintenance and repair of a Facility are assumed only with respect to the
Facility being operated by such Sublessee. Lessee agrees that a default by
a
Sublessee under a Sublease shall be deemed a default by Lessee under this
Lease
which, if not cured within any applicable cure or grace period shall constitute
an Event of Default and entitle Lessor to exercise any and all remedies provided
by this Lease or by law. Any Notice given by Lessor to Lessee shall be deemed
a
Notice given to each Sublessee of a Leased Property.
1.1.2 Single,
Indivisible Lease.
Notwithstanding
Lessor’s approval of the Subleases of the Leased Properties, This Lease
constitutes one indivisible lease of the Leased Properties and not separate
leases governed by similar terms. The Leased Properties constitute one economic
unit, and the Base Rent and all other provisions have been negotiated and
agreed
to based on a demise of all of the Leased Properties to Lessee as a single,
composite, inseparable transaction and would have been substantially different
had separate leases or a divisible lease been intended. Except as expressly
provided in this Lease for specific, isolated purposes (and then only to
the
extent expressly otherwise stated), all provisions of this Lease apply equally
and uniformly to all of the Leased Properties as one unit. An Event of Default
with respect to any Leased Property is an Event of Default as to all of the
Leased Properties. The parties intend that the provisions of this Lease shall
at
all times be construed, interpreted and applied so as to carry out their
mutual
objective to create an indivisible lease of all of the Leased Properties
and, in
particular but without limitation, that, for purposes of any assumption,
rejection or assignment of this Lease under 11 U.S.C. 365, this is one
indivisible and non-severable lease and executory contract dealing with one
legal and economic unit and that this Lease must be assumed, rejected or
assigned as a whole with respect to all (and only as to all) of the Leased
Properties.
1.2 Term.
The
initial term of this Lease (“Initial
Term”)
shall
be December 16, 2005 through December 31, 2015.
1.3 Option
to Renew.
Lessee
is hereby granted two (2) successive options to renew this Lease for a period
of
ten (10) Lease Years each, for a maximum Term if such options are exercised
of
thirty (30) Lease Years. Lessee’s options to renew this Lease are subject to the
following terms and conditions (which conditions may be waived by Lessor
in its
sole discretion):
(a) An
option
to renew is exercisable only by Notice to Lessor at least one hundred and
eighty
(180) days prior to the expiration of the Initial Term (or prior to the
expiration of the preceding Renewal Term, as the case may be);
(b) No
Event
of Default or Unmatured Event of Default shall have occurred and be continuing
either at the time a renewal option is exercised or at the commencement of
a
Renewal Term;
(c) During
a
Renewal Term, all of the terms and conditions of this Lease shall remain
in full
force and effect; and
(d) Lessee
may exercise its options to renew with respect to all (and no fewer than
all) of
the Leased Properties.
ARTICLE
II
2.1 Definitions.
For all
purposes of this Lease, except as otherwise expressly provided or unless
the
context otherwise requires, (a) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well
as the
singular; (b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP as at the time applicable;
(c)
all references in this Lease to designated “Articles,”“Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions
of
this Lease; and (d) the words “herein,”“hereof” and “hereunder” and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision.
Acquisition
Agreements:
means
the Agreement of Purchase and Sale and related documents pursuant to which
Lessor or an Affiliate of Lessor acquired the Acquired Facilities.
Additional
Charges:
All
Impositions and other amounts, liabilities and obligations that Lessee assumes
or agrees to pay under this Lease.
Affiliate:
Any
Person who, directly or indirectly, Controls or is Controlled by or is under
common Control with another Person.
Agreement
to Lease:
means
the Agreement to Enter into Amended and Restated Master Lease dated as of
June
10, 2005 among Lessor, Lessee, the Sublessees, the Guarantors, the Consultants,
and the Managers.
Approval
Threshold:
One
Hundred Thousand Dollars ($100,000).
Assessment:
Any
governmental assessment on the Leased Properties or any part of any of them
for
public or private improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within
the
Term.
Assumed
Indebtedness:
Any
indebtedness or other obligations expressly assumed in writing by Lessor
and
secured by a mortgage, deed of trust or other security agreement to which
Lessor’s title to the Leased Properties is subject.
Award:
All
compensation, sums or anything of value awarded, paid or received in connection
with a Taking or Partial Taking.
Base
Rent:
During
the Term, the Base Rent shall be as follows:
(1) During
the first Lease Year, Eleven Million Five Hundred Fifty Thousand Dollars
($11,550,000);
(2)
For
each
succeeding Lease Year during the Term, the Base Rent for the previous Lease
Year, plus an amount equal to (a) the Base Rent in the previous Lease Year
multiplied by (b) the lesser
of (i)
two (2) times the change in CPI and (ii) two and one half percent
(2.5%).
Subject
to the provisions of Section 1.1.2,
the
Base Rent shall be allocated among the Facilities as set forth on attached
Exhibit
G.
Business
Day:
Each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
national banks in the City of New York, New York are authorized or obligated,
by
law or executive order, to close.
Capitalization
Rate:
Ten
percent (10%).
Cash
Flow:
For any
period, the sum of (a) Net Income of Lessee arising solely from the operation
of
the Facilities for the applicable period, and (b) the amounts deducted in
computing Lessee’s Net Income for the period for (i) depreciation, (ii)
amortization, (iii) Base Rent, (iv) interest (including payments in the nature
of interest under Capitalized Leases and interest on any Purchase Money
Financing), (v) income taxes (or, if greater, income tax actually paid during
the period) and (vi) management fees.
Cash
Flow to Rent Ratio:
For any
fiscal period, the ratio of Cash Flow to Base Rent.
Citation:
Any
operational or physical plant deficiency set forth in writing with respect
to a
Facility by any governmental body or agency, or Medicare intermediary, having
regulatory oversight over a Facility, Lessee, any Sublessee or Manager, with
respect to which the scope and severity of the potential penalty for such
deficiency is one or more of the following: loss of licensure, decertification
of a Facility from participation in the Medicare and/or Medicaid programs,
appointment of a temporary manager or denial of payment for new admissions
which
lasts for thirty (30) days or more.
Clean-Up:
The
investigation, removal, restoration, remediation and/or elimination of, or
other
response to, Contamination, in each case to the satisfaction of all governmental
agencies having jurisdiction, in compliance with or as may be required by
Environmental Laws.
Code:
The
Internal Revenue Code of 1986, as amended.
Commencement
Date:
December 16, 2005.
Condemnor:
Any
public or quasi-public authority, or private corporation or individual, having
the power of condemnation.
Consulting
Agreement:
Any
agreement pursuant to which financial services for a Facility is delegated
by
Lessee or Sublessee to any person not an employee of Lessee or a Sublessee,
or
to any other related or unrelated party.
Consultants:
The
Person to whom the financial services of a Facility is delegated pursuant
to a
Consulting Agreement. As of the date of this Lease, the Consultants are BELMORE
CONSULTING CO., LLC, an Ohio limited liability company, WYANT CONSULTING
CO.,
LLC, an Ohio limited liability company, BRECKSVILLE CONSULTING CO., LLC,
an Ohio
limited liability company, JARVIS CONSULTING CO., LLC, an Ohio limited liability
company, KOLBE CONSULTING CO., LLC, an Ohio limited liability company, PEARL
CONSULTING CO., LLC, an Ohio limited liability company, PEARL II CONSULTING
CO.,
LLC, an Ohio limited liability company, PEARL III CONSULTING CO., LLC, an
Ohio
limited liability company, MERIT CONSULTING CO., LLC, an Ohio limited liability
company, FALLING CONSULTING CO., LLC, an Ohio limited liability company,
and
FRONT CONSULTING CO., LLC, an Ohio limited liability company.
Construction
Funds:
The
Net
Proceeds and
such
additional funds as may be deposited with Lessor by Lessee pursuant to Section
14.6 for restoration or repair work pursuant to this Lease.
Contamination:
The
presence, Release or threatened Release of any Hazardous Substance at the
Leased
Properties in violation of any Environmental Law, or in a quantity that would
give rise to any affirmative Clean-Up obligations under an Environmental
Law,
including, but not limited to, the existence of any injury or potential injury
to public health, safety, natural resources or the environment associated
therewith, or any other environmental condition at, in, about, under or
migrating from or to the Leased Properties.
Control
(and its
corollaries “Controlled by” and “under common Control with”): Possession,
directly or indirectly, of the power to direct or cause the direction of
the
management and policies of a Person, through the ownership of voting securities,
partnership interests or other equity interests.
CPI:
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.
Cross
Default and Cross Collateralization Agreement:
means
the Cross Default and Cross Collateralization Agreement dated as of the date
of
this Lease by Lessee, Guarantors, Sublessees, Consultants, Managers, PARTNERS
IN
HEALTH, INC., an Ohio corporation, PARTNERS OF CITY VIEW, LLC, an Ohio limited
liability company, PARTNERS OF CITY VIEW REAL ESTATE, LLC, an Ohio limited
liability company, OMG MSTR LSCO, LLC, an Ohio limited liability company,
MIDLAND LEASING CO., LLC, an Ohio limited liability company, GARDEN LEASING
CO.,
LLC, an Ohio limited liability company, SKYLINE (PA) LEASING CO., LLC, an
Ohio
limited liability company, OLD LEASING CO., LLC, an Ohio limited liability
company, EMERY LEASING CO., LLC, an Ohio limited liability company, AVIS
LEASING
CO., LLC, an Ohio limited liability company, HERITAGE (OHIO) LEASING CO.,
LLC,
an Ohio limited liability company, CARNEGIE (OHIO) MANAGEMENT CO., LLC, an
Ohio
limited liability company, GARDEN MANAGEMENT CO., LLC, an Ohio limited liability
company, MIDLAND (OHIO) MANAGEMENT CO., LLC, an Ohio limited liability company,
SKYLINE (PA) MGMT CO, LLC, an Ohio limited liability company, HERITAGE (OHIO)
MGMT CO, LLC, an Ohio limited liability company, AVIS (OHIO) MGMT CO, LLC,
an
Ohio limited liability company, SUBURBAN (OHIO) MGMT CO, LLC, an Ohio limited
liability company, OLD MGMT CO, LLC, an Ohio limited liability company, CARNEGIE
(OHIO) CONSULTING CO., LLC, an Ohio limited liability company, GARDEN CONSULTING
CO., LLC, an Ohio limited liability company, MIDLAND CONSULTING CO., LLC,
an
Ohio limited liability company, SKYLINE (PA) CONSULTING CO, LLC, an Ohio
limited
liability company, HERITAGE (OHIO) CONSULTING CO, LLC, an Ohio limited liability
company, AVIS (OHIO) CONSULTING CO, LLC, an Ohio limited liability company,
SUBURBAN (OHIO) CONSULTING CO, LLC, an Ohio limited liability company, OLD
CONSULTING CO, LLC, an Ohio limited liability companyin favor of Lessor and
OHI
Asset (OH) Lender, LLC, a Delaware limited liability company.
Date
of Taking:
The
date on which the Condemnor has the right to possession of the Leased Property
that is the subject of the Taking or Partial Taking.
Distribution:
Any
payment or distribution of cash or any assets of Lessee to one or more
shareholders of Lessee or to any Affiliate of Lessee, whether in the form
of a
dividend, a fee for management in excess of the fee required by the terms
of a
Management Agreement (but in any event not to exceed five percent (5%) of
net
revenues of the Facilities), a payment for services rendered, a reimbursement
for expenditures or overhead incurred on behalf of Lessee or a payment on
any
debt required by this Lease to be subordinated to the rights of Lessor.
Emery
Facilities Lease:
means
the Amended and Restated Master Lease dated as of June 28, 2005 pursuant
to
which an Affiliate of Omega leases to OMG MSTR LSCO, LLC, an Ohio limited
liability company, the skilled nursing facilities commonly known as (i) Baldwin
Health Center, 1717 Skyline Drive, Pittsburgh, PA 15227, (ii) Copley Health
Center, 155 Heritage Woods Drive, Copley, OH 44321, (iii) Hanover House,
435
Avis Avenue NW, Massillon, OH 44646, (iv) Suburban Pavilion, 20265 Emery
Road,
Cleveland, OH 44128, (v) Wexford House, 9850 Old Perry Highway, Wexford ,
PA
15090, (vi) Waterford Commons, 955 Garden Lake Parkway, Toledo, Ohio 43614,
and
(vii) Crestwood Care Center, 225 W. Main Street, Shelby, Ohio 44875, as such
document may be amended, extended, renewed or replaced.
Encumbrance:
Any
mortgage, deed of trust, lien, encumbrance or other matter affecting title
to
the Leased Properties, or any portion thereof or interest therein, securing
any
borrowing or other means of financing or refinancing.
Environmental
Audit:
A
written certificate that (a) is in form and substance satisfactory to Lessor,
(b) is from an environmental consulting or engineering firm acceptable to
Lessor
and (c) states that there is no Contamination on the Leased Properties and
that
the Leased Properties are otherwise in strict compliance with Environmental
Laws.
Environmental
Documents:
Each
and every (a) document received by Lessee or any Affiliate from, or submitted
by
Lessee or any Affiliate to, the United States Environmental Protection Agency
and/or any other federal, state, county or municipal agency responsible for
enforcing or implementing Environmental Laws with respect to the condition
of
the Leased Properties, or Lessee’s operations at the Leased Properties; and (b)
review, audit, report, or other analysis data pertaining to environmental
conditions, including, but not limited to, the presence or absence of
Contamination, at, in, under or with respect to the Leased Properties that
have
been prepared by, for or on behalf of Lessee.
Environmental
Laws:
All
federal, state and local laws (including, without limitation, common law),
statutes, codes, ordinances, regulations, rules, orders, permits or decrees
now
or at any time in effect and relating to (a) the introduction, emission,
discharge or release of Hazardous Substances into the indoor or outdoor
environment (including without limitation, air, surface water, groundwater,
land
or soil), (b) the manufacture, processing, distribution, use, treatment,
storage, transportation or disposal of Hazardous Substances or (c) the Clean-Up
of Contamination.
Event
of Default:
The
occurrence of any of the following:
(a) Lessee
fails to pay or cause to be paid the Rent when due and payable;
(b) Lessee,
any Sublessee or any Guarantor, on a petition in bankruptcy filed against
it, is
adjudicated a bankrupt or has an order for relief thereunder entered against
it,
or a court of competent jurisdiction enters an order or decree appointing
a
receiver of Lessee, a Sublessee or any Guarantor or of the whole or
substantially all of its property, or approving a petition filed against
Lessee,
a Sublessee or any Guarantor seeking reorganization or arrangement of Lessee,
a
Sublessee or such Guarantor under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof,
and such judgment, order or decree is not vacated or set aside or stayed
within
sixty (60) days from the date of the entry thereof, subject to the applicable
provisions of the Bankruptcy Code (11 USC § 101 et. seq.) and to the provisions
of Section 16.6 below;
(c) Lessee,
a
Sublessee or any Guarantor: (i) Admits in writing its inability to pay its
debts
generally as they become due; (ii) files a petition in bankruptcy or a petition
to take advantage of any insolvency law; (iii) makes a general assignment
for
the benefit of its creditors; (iv) consents to the appointment of a receiver
of
itself or of the whole or any substantial part of its property; or (v) files
a
petition or answer seeking reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute of the United States
of
America or any state thereof, subject to the applicable provisions of the
Bankruptcy Code (11 USC § 101 et. seq.) and to the provisions of Section 16.6
below;
(d) Lessee,
a
Sublessee or any Guarantor is liquidated or dissolved, or begins proceedings
toward liquidation or dissolution, or has filed against it a petition or
other
proceeding to cause it to be liquidated or dissolved and the proceeding is
not
dismissed within thirty (30) days thereafter, or Lessee, a Sublessee or any
Guarantor in any manner permits the sale or divestiture of all or substantially
all of its assets;
(e) The
estate or interest of Lessee or any Sublessee in the Leased Properties or
any
part thereof is levied upon or attached in any proceeding and the same is
not
vacated or discharged within thirty (30) days thereafter (unless Lessee is
in
the process of contesting such lien or attachment in good faith in accordance
with Article XII hereof);
(f) Lessee
ceases operation of any Facility for a period in excess of five (5) Business
Days except upon prior Notice to, and with the express prior written consent
of,
Lessor (which consent Lessor may withhold in its absolute discretion), or
as the
unavoidable consequence of damage or destruction as a result of a casualty,
or a
Partial or total Taking;
(g) Any
representation or warranty made by Lessee, a Sublessee, a Guarantor or any
Affiliate of Lessee in the Lease, any Transaction Document or in any
certificates delivered in connection with this Lease or the Transaction
Documents proves to be untrue when made in any material respect, Lessor is
materially and adversely affected thereby and Lessee, a Sublessee, a Guarantor
or any Affiliate, as the case may be, fails within twenty (20) days after
Notice
from Lessor or Omega, as the case may be, to cure such condition by terminating
such adverse effect and making Lessor or Omega, as the case may be, whole
for
any damage suffered therefrom, or, if with due diligence such cure cannot
be
effected within twenty (20) days, if Lessee, a Sublessee, a Guarantor or
any
Affiliate, as the case may be, has failed to commence to cure the same within
the twenty (20) days or failed thereafter to proceed promptly and with due
diligence to cure such condition and complete such cure prior to the time
that
such condition causes a default in any Facility Mortgage and prior to the
time
that the same results in civil or criminal penalties to Lessor, Lessee, a
Sublessee, a Guarantor, any Affiliates of any of them or the Leased
Properties;
(h) Lessee
(or, if applicable, any Sublessee or Manager):
(i) has
any
license, permit, approval, certificate of need, certificate of reimbursement
or
other authorization necessary to operate any Facility as a provider of health
care services in accordance with its Primary Intended Use suspended or revoked,
or its right to so operate a Facility or to accept patients suspended for
a
period in excess of thirty (30) days, and Lessee fails to remedy any condition
causing such revocation or suspension within any cure period allowed therefor
by
the applicable agency or authority or, if no such cure period is allowed
or
specified by the applicable agency or authority, Lessee fails to remedy the
condition promptly and diligently following Lessee’s receipt of notice of such
condition and, in any event, prior to the final, nonappealable revocation
or
suspension of any such license, permit, approval, certificate of need,
certificate of reimbursement, other authorization or right to operate the
Facility in question or to accept patients at the Facility in question;
or
(ii) receives
a Citation with respect to a Facility and fails to cure the condition that
is
the subject of the Citation within the period of time required for such cure
by
the issuer of the Citation or, but in any event prior to the final,
nonappealable revocation or suspension of any license, permit, approval,
certificate of need, certificate of reimbursement or other authorization
necessary to operate a Facility as a provider of health care services in
accordance with its Primary Intended Use or to receive Medicare or Medicaid
payments with respect to residents of any Facility, or prior to the appointment
of a temporary manager, as the case may be; or
(iii) fails
to
give Lessor Notice that any event set forth in clauses (i) and (ii) above
has
occurred, as required pursuant to Section 23.1(h) below.
(i) A
Transfer occurs without the prior written consent of Lessor;
(j) A
default
occurs under any Transaction Document and such default is not cured within
any
applicable cure period provided in such Transaction Document;
(k) A
default
occurs under any other material contract affecting any Facility,
Lessee,
or any Affiliate
of
Lessee;
(l) An
Event
of Default occurs under the Emery Facilities Lease;
(m) Lessee
breaches any of the financial covenants set forth in Article VIII hereof,
the
breach is capable of cure and the breach is not cured within a period of
the
shorter of (i) forty-five (45) days after the Notice
thereof
from Lessor, and (ii) twenty (20) days following the date of delivery of
a
certificate pursuant to Section
23.1(i) or 23.1(ii);
(n) Lessee
or
an Affiliate
of
Lessee defaults beyond any applicable grace period in the payment of any
amount
or the performance of any material act required of Lessee or such Affiliate
by the
terms of any other lease or other agreement between Lessee or such Affiliate
and
Lessor or any Affiliate
of
Lessor; or
(o) Lessee
fails to observe or perform any other term, covenant or condition of this
Lease
or any other Transaction Document and the failure is not cured by Lessee
within
a period of thirty (30) days after Notice thereof from Lessor, unless the
failure cannot with due diligence be cured within a period of thirty (30)
days,
in which case such failure shall not be deemed an Event of Default if and
for so
long as Lessee proceeds promptly and with due diligence to cure the failure
and
completes the cure prior to the time that the same causes a Material Adverse
Effect, a default in any Facility Mortgage and prior to the time that the
same
results in civil or criminal penalties to Lessor, Lessee, any Affiliates
of
either or to the Leased Properties.
Executive
Officer:
Any of
the Chairman of the Board of Directors, the President, the Chief Executive
Officer, the Chief Operating Officer, the Chief Financial Officer, any Vice
President and the Secretary of any corporation, a general partner of any
partnership and a managing member of any limited liability company upon which
service of a Notice is to be made.
Expiration
Date:
means
December 31, 2015 if the first Renewal Option has not been exercised, or
December 31, 2025, if the first Renewal Option has been exercised but not
the
second Renewal Option, or December 31, 2035, if the second Renewal Option
has
been exercised.
Facilit(y)(ies):
Each
health care facility on the Land, including the Leased Property associated
with
such Facility, and together, all such facilities on the Leased
Properties.
Facility
Mortgage:
Any
mortgage, deed of trust or other security agreement that with the express,
prior, written consent of Lessor is a lien upon any or all of the Leased
Properties, whether such lien secures an Assumed Indebtedness or another
obligation or obligations.
Facility
Mortgagee:
The
secured party to a Facility Mortgage, its successors and assigns, any servicer
acting on behalf of a Facility Mortgagee with respect to a Facility Mortgage
and, if any Facility Mortgage is deposited with a trust, then the trustee
acting
on behalf of the certificate holders of such trust.
Facility
Trade Names:
The
name(s) under which the Facilities have done business during the Term. The
Facility Trade Names in use by the Facilities on the Commencement Date are
set
forth on attached Exhibit
A.
Fair
Market Rent:
The
rent that, at the relevant time, a Facility would most probably command in
the
open market, under a lease on substantially the same terms and conditions
as are
set forth in this Lease with a lessee unrelated to Lessor having experience
and
a reputation in the health care industry and a credit standing reasonably
equivalent to that of Lessee, and, if this Lease is guaranteed, with such
lease
being guaranteed by guarantors having a net worth at least equal to that
of
Guarantors, with evidence of such rent being the rent that is being asked
and
agreed to at such time under any leases of facilities comparable to such
Facility being entered into at such time in which the lessees and lease
guarantors meet the qualifications set forth in this sentence. Fair Market
Rent
shall be determined in accordance with the appraisal procedure set forth
in
Article XXXII or in such other manner as may be mutually acceptable to Lessor
and Lessee.
Financial
Statement:
(A) For
each
quarter during Lessee’s fiscal year, on a consolidated basis for Lessee, (i) a
statement of earnings for the current period and fiscal year to the end of
such
period, with a comparison to the corresponding figures for the corresponding
period in the preceding fiscal year from the beginning of the fiscal year
to the
end of such period, and (ii) a balance sheet as of the end of the period,
and
after the first Lease Year, with a comparison to the corresponding figures
for
the corresponding period in the preceding fiscal year from the beginning
of the
fiscal year to the end of such period; and
(B) For
Lessee’s and Guarantor’s fiscal year, a compilation financial report on a
consolidated basis, prepared by an accounting firm or any other firm of
independent certified public accountants reasonably acceptable to Lessor,
containing Lessee’s balance sheet as of the end of that year, its related profit
and loss, a statement of shareholder’s equity for that year, a statement of cash
flows for that year, any management letter prepared by the certified public
accountants, such comments and financial details as customarily are included
in
reports of like character. Lessor may, at its own expense, cause any Financial
Statement to be audited by a certified public accountant selected by Lessor
and
reasonably acceptable to Lessee. Lessor consents to the use of the firm of
Mellott & Mellott, P.L.L. (Cincinnati, Ohio) to prepare such
reports.
Fixtures:
Collectively, all permanently affixed equipment, machinery, fixtures, and
other
items of real and/or personal property (excluding Lessor’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 Leased
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling
and
air-conditioning systems and apparatus (other than individual units), 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.
Force
Majeure:
An
event or condition beyond the control of a Person, including without limitation
a flood, earthquake, or other Act of God; a fire or other casualty resulting
in
a complete or partial destruction of the Facility in question; a war,
revolution, riot, civil insurrection or commotion, terrorism, or vandalism;
unusual governmental action, delay, restriction or regulation not reasonably
to
be expected; a contractor or supplier delay or failure in performance (not
arising from a failure to pay any undisputed amount due), or a delay in the
delivery of essential equipment or materials; bankruptcy or other insolvency
of
a contractor, subcontractor or construction manager (not an Affiliate of
the
party claiming Force Majeure); a strike, slowdown or other similar labor
action;
or any other similar event or condition beyond the reasonable control of
the
party claiming that Force Majeure is delaying or preventing such party from
timely and fully performing its obligations under this Lease; provided that
in
any such event, the party claiming the existence of Force Majeure shall have
given the other party Notice of such claim within fifteen (15) days after
becoming aware thereof, and if the party claiming Force Majeure shall fail
to
give such Notice, then the event or condition shall not be considered Force
Majeure for any period preceding the date such Notice shall be given. No
lack of
funds shall be construed as Force Majeure.
GAAP:
Generally accepted accounting principles in effect at the time in
question.
Ground
Lease:
Any
lease of any of the Leased Properties pursuant to which Lessor is the
lessee.
Ground
Lessor:
The
lessor under any Ground Lease.
Guarantors:
CommuniCare Health Services, Inc., an Ohio corporation, Resident Care Consulting
Co., LLC, an Ohio limited liability company, and Health Care Facility
Management, LLC, an Ohio limited liability company.
Guaranties:
means
each Lease Guaranty from a Guarantor and each Sublessee.
Hazardous
Substance:
Dangerous, toxic or hazardous material, substance, pollutant, contaminant,
chemical, waste (including medical waste), including petroleum products,
asbestos and PCBs defined, listed or described as such under any Environmental
Law.
Indebtedness:
of a
Person means such Person’s (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of property or services (other than
accounts payable arising in the ordinary course of such Person’s business
payable on terms customary in the trade), (iii) obligations, whether or not
assumed, secured by liens or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments, (v) obligations
of such Person to purchase securities or other property arising out of or
in
connection with the sale of the same or substantially similar securities
or
property, (vi) leases that in accordance with GAAP are required to be
capitalized for financial reporting purposes, and (vii) any other obligation
for
borrowed money or other financial accommodation which in accordance with
GAAP
would be shown as a liability on the consolidated balance sheet of such
Person.
Impositions:
Collectively, all taxes (excluding all income taxes, but including, without
limitation, all capital stock and franchise taxes of Lessor and all ad valorem,
sales and use, single business, gross receipts, business privilege, transaction
privilege, rent or similar taxes to the extent the same are assessed against
Lessor in whole or in part on the basis of the value of the Leased Properties,
the privilege of doing business in the State or States or any political
subdivision or subdivisions of the State or States, or any combination thereof),
assessments (including Assessments), ground rents, water, sewer or other
rents
and charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary,
or
foreseen or unforeseen, of every character that at any time prior to, during
or
in respect of the Term are assessed or imposed on or in respect of, or
constitute a lien upon (a) Lessor or Lessor’s interest in the Leased Properties;
(b) the Leased Properties or any part thereof or any rent therefrom or any
estate, right, title or interest therein; (c) any occupancy, operation, use
or
possession of, or sales from, or activity conducted on or in connection with
the
Leased Properties or the leasing or use of the Leased Properties or any part
thereof; or (d) Rent, but excluding any transfer or other tax imposed with
respect to the sale, exchange or other disposition by Lessor of the Leased
Properties or any part thereof or the proceeds thereof (other than with respect
to the transactions contemplated by the Acquisition Agreements).
Initial
Term:
As
defined in Section 1.2.
Insurance
Requirements:
All
terms of any insurance policy required by this Lease and all requirements
of the
issuer of any such policy.
Intangible
Assets:
The
amount of (a) unamortized debt discounts and expenses, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights,
organizational and developmental expenses, unamortized operating rights,
unamortized licenses, unamortized leasehold rights, computer software
development costs, start-up costs, pre-opening costs, prepaid pension costs
and
other intangible assets, including (a) any write-up resulting from a reversal
of
a reserve for bad debts or depreciation and any write-up resulting from a
change
in methods of accounting or inventory and (b) the amount of any investment
in
any Affiliate.
Investigation:
Soil
and chemical tests or any other environmental investigations, examinations
or
analyses.
Judgment
Date:
The
date on which a judgment is entered against Lessee that establishes, without
the
possibility of appeal, the amount of liquidated damages to which Lessor is
entitled under this Lease.
Land: The
real
property described in attached Exhibits
B-1 through
B-10.
Lease:
As
defined in the Preamble.
Lease
Year:
Each
period from and including December 1 through November 30 during the Term
of this
Lease. If this Lease is terminated before the end of any Lease Year, the
final
Lease Year shall be December 1 through the date of termination.
Leased
Improvements:
Collectively, all buildings, structures, Fixtures and other improvements
of
every kind on the Land, including, but not limited to, alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site),
parking areas and roadways appurtenant to such buildings and
structures.
Leased
Property:
The
parcel of the Land on which a Facility is located, the Leased Improvements
on
such parcel of the Land, the Related Rights with respect to such parcel of
the
Land, and Lessor’s Personal Property with respect to such Facility.
Leased
Properties:
All of
the Land, Leased Improvements, Related Rights and Lessor’s Personal
Property.
Legal
Requirements:
All
federal, state, county, municipal and other governmental statutes, laws,
rules,
orders, waivers, regulations, ordinances, judgments, decrees and injunctions
affecting the Leased Properties or any portion thereof, Lessee’s Personal
Property or the construction, use or alteration of the Leased Properties
(including but not limited to the Americans with Disabilities Act), whether
enacted and in force before, after or on the Commencement Date, and including
any that may (a) require repairs, modifications, alterations or additions
in or
to any portion or all of the Facilities, or (b) in any way adversely affect
the
use and enjoyment thereof, and all permits, licenses and authorizations and
regulations relating thereto, including, but not limited to, (i) those relating
to existing health care licenses, (ii) those authorizing the current number
of
licensed beds and the level of services delivered from the Leased Properties
and
(iii) all covenants, agreements, restrictions and encumbrances contained
in any
instruments, either of record or known to Lessee (other than encumbrances
created by Lessor without the consent of Lessee) and in force at any time
during
the Term.
Lessee’s
Certificate:
A
statement in writing in substantially the form of Exhibit
C
attached
hereto (with such changes thereto as may reasonably be requested by the person
relying on such certificate).
Lessee’s
Personal Property:
Personal Property owned or leased by Lessee that is not included within the
definition of the term “Lessor’s Personal Property” but is used by Lessee in the
operation of the Facilities, including Personal Property provided by Lessee
in
compliance with Section 6.3 hereof.
Lessor’s
Future Rent Loss:
An
amount equal to the Rent that would have been payable by Lessee from and
after
the Judgment Date through the Expiration Date had the Lease not been terminated,
plus such additional amount as may be necessary in order to compensate Lessor
for all other damages that are proximately caused by, and in the ordinary
course
of things would be likely to result from, Lessee’s failure to perform its
obligations under this Lease.
Lessor’s
Interim Rent Loss:
An
amount equal to the Rent that would have been payable by Lessee from the
Termination Date through the Judgment Date had the Lease not been terminated
(including interest and late charges determined on the basis of the date
or
dates on which Lessor’s Interim Rent Loss is actually paid by Lessee), plus such
additional amount as may be necessary in order to compensate Lessor for all
other damages that are proximately caused by, and in the ordinary course
of
things would be likely to result from, Lessee’s failure to perform its
obligations under this Lease.
Lessor’s
Monthly Rent Loss:
For any
month, an amount equal to the installment of Rent that would have been due
in
such month under the Lease if it had not been terminated, plus, if such amount
is not paid on or before the day of the month on which such installment of
Rent
would have been due, the amount of interest and late charges thereon that
also
would have been due under the Lease, plus such additional amount as may be
necessary in order to compensate Lessor for all other damages that are
proximately caused by, and in the ordinary course of things would be likely
to
result from, Lessee’s failure to perform its obligations under this
Lease.
Lessor’s
Personal Property:
All
Personal Property and intangibles, if any, owned by Lessor and leased to
Lessee
on the Commencement Date, together with any and all replacements thereof,
and
all Personal Property that pursuant to the terms of the Lease becomes the
property of Lessor during the Term. Notwithstanding any other provision of
this
Lease, Lessor’s Personal Property shall not include goodwill nor shall it
include any other intangible personal property that is severable from Lessor’s
“interests in real property” within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto.
Letter
of Credit Agreement:
An
agreement between Lessor and Lessee providing for a letter of credit to be
delivered to Lessor as the Security Deposit.
Management
Agreement:
Any
agreement pursuant to which management of a Facility is delegated by Lessee
to
any person not an employee of Lessee or to any other related or unrelated
party.
Manager:
The
Person to whom management of the operation of a Facility is delegated pursuant
to a Management Agreement. As of the date of this Lease, the Managers are
BELMORE MGT CO., LLC, an Ohio limited liability company, WYANT MGT CO., LLC,
an
Ohio limited liability company, BRECKSVILLE MGT CO., LLC, an Ohio limited
liability company, JARVIS MGT CO., LLC, an Ohio limited liability company,
KOLBE
MGT CO., LLC, an Ohio limited liability company, PEARL (OHIO) MGT CO., LLC,
an
Ohio limited liability company, PEARL II MGT CO., LLC, an Ohio limited liability
company, PEARL III MGT CO., LLC, an Ohio limited liability company, MERIT
(OHIO)
MGT CO., LLC, an Ohio limited liability company, FALLING MGT CO., LLC, an
Ohio
limited liability company, and FRONT MGT CO., LLC, an Ohio limited liability
company.
Material
Adverse Effect:
means
any material adverse effect whatsoever upon (a) the validity, performance
or
enforceability of any Transaction Document, (b) the properties, contracts,
business operations, profits or condition (financial or otherwise) of Lessee,
a
Sublessee or any Guarantor, or (c) the ability of Lessee, a Sublessee, any
Guarantor or any of their Affiliates to fulfill its obligations under the
Transaction Documents.
Maximum
Principal Amount:
During
the Term, the Maximum Principal Amount shall be:
(1) For
the
first Lease Year, Eleven Million Two Hundred Fifty Thousand Dollars
($11,250,000); and
(2)
For
each
succeeding Lease Year in the Term, the Maximum Principal Amount for the previous
Lease Year, plus an amount equal to (a) the Maximum Principal Amount in the
previous Lease Year multiplied by (b) the lesser
of (i)
two (2) times the change in CPI and (ii) two and one half percent
(2.5%).
Net
Income:
For
any
period, Lessee’s net income (or loss) for such period attributable to the
operation of the Facilities, determined in accordance with GAAP; provided,
however, that Lessee’s Net Income shall not include any extraordinary gains (or
losses) or nonrecurring gains (or losses).
Net
Proceeds:
All
proceeds, net of any costs incurred by Lessor in obtaining such proceeds,
payable under any policy of insurance required by Article XIII of this Lease
(including any proceeds with respect to Lessee’s Personal Property that Lessee
is required or elects to restore or replace pursuant to Section 14.3) or
paid by
a Condemnor for a Taking or Partial Taking of a Leased Property.
Net
Reletting Proceeds:
Proceeds of the reletting of any portion of the Leased Property received
by
Lessor, net of Reletting Costs.
Notice:
A
notice given in accordance with Article XXXI hereof.
Notice
of Termination:
A
Notice from Lessor that it is terminating this Lease by reason of an Event
of
Default.
Officer’s
Certificate:
A
certificate signed by an Executive Officer.
Omega:
Omega
Healthcare Investors, Inc., a Maryland corporation.
Overdue
Rate:
The
rate of twelve percent (12%).
Partial
Taking:
A
taking of less than the entire fee of a Leased Property that either (a) does
not
render the Leased Property Unsuitable for its Primary Use, or (b) renders
a
Leased Property Unsuitable for its Primary Intended Use, but neither Lessor
nor
Lessee elects pursuant to Section 15.1 hereof to terminate this
Lease.
Payment
Date:
Any due
date for the payment of the installments of Base Rent or for the payment
of
Additional Charges or any other amount required to be paid by Lessee
hereunder.
Permitted
Encumbrances:
Encumbrances listed on attached Exhibit
D.
Person:
Any
natural person, trust, partnership, corporation, joint venture, limited
liability company or other legal entity.
Personal
Property:
All
machinery, equipment, furniture, furnishings, movable walls or partitions,
computers (and all associated software), trade fixtures and other tangible
personal property (but excluding consumable inventory and supplies owned
by
Lessee) used in connection with the Leased Properties, together with all
replacements and alterations thereof and additions thereto, except items,
if
any, included within the definition of Fixtures or Leased
Improvements.
Pledge
Agreement:
The
Pledge Agreement between Lessor, as creditor, and Lessee, as
debtor.
Present
Value:
The
value of future payments, determined by discounting each such payment at
a rate
equal to the yield on the specified date on securities issued by the United
States Treasury (bills, notes and bonds) maturing on the date closest to
December 31 in the year in which such future payment would have been
due.
Primary
Intended Use:
Licensed skilled nursing facilities.
Prime
Rate:
On any
date, an interest rate equal to the prime rate published by the Wall Street
Journal, but in no event greater than the maximum rate then permitted under
applicable law. If the Wall Street Journal ceases to be in existence, or
for any
reason no longer publishes such prime rate, the Prime Rate shall be the rate
announced as its prime rate by Fleet Bank or other financial institution
that is
the agent for the banks under Omega’s revolving credit agreement, and if such
bank no longer exists or does not announce a prime rate at such time, the
Prime
Rate shall be the rate of interest announced as its prime rate by a national
bank selected by Lessor.
Proceeding:
Any
action, proposal or investigation by any agency or entity, or any complaint
to
such agency or entity.
Purchase
Money Financing: Any
financing provided by a Person to Lessee or a Sublessee in connection with
the
acquisition of Personal Property used in connection with the operation of
a
Facility, whether by way of installment sale or otherwise.
Qualified
Capital Expenditures:
Expenditures capitalized on the books of Lessee for alterations, renovations,
repairs and replacements to the Facilities, including without limitation
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
major replacement of siding; major roof replacements, including major
replacements of gutters, downspouts, eaves and soffits; major repairs and
replacements of plumbing and sanitary systems; overhaul of elevator systems;
major repaving, resurfacing and sealcoating of sidewalks, parking lots and
driveways; repainting of entire building exterior; but excluding major
alterations, renovations, additions (consisting of expansions of any Facility,
including construction of a new wing or a new story on any Facility), normal
maintenance and repairs.
Regulatory
Actions:
Any
claim, demand, notice, action or proceeding brought, threatened or initiated
by
any governmental authority in connection with any Environmental Law, including,
without limitation, civil, criminal and administrative proceedings, whether
or
not the remedy sought is costs, damages, equitable remedies, penalties or
expenses.
Related
Rights:
All
easements, rights and appurtenances relating to the Land and the Leased
Improvements.
Release:
The
intentional or unintentional spilling, leaking, dumping, pouring, emptying,
seeping, disposing, discharging, emitting, depositing, injecting, leaching,
escaping, abandoning, or any other release or threatened release, however
defined, of any Hazardous Substance.
Reletting
Costs:
Expenses incurred by Lessor in connection with the reletting of the Leased
Properties in whole or in part after an Event of Default, including without
limitation attorneys’ fees and expenses, brokerage fees and expenses, marketing
expenses and the cost of repairs and renovations reasonably required for
such
reletting.
Renewal
Term:
A
period for which the Term is renewed in accordance with Section
1.3.
Rent:
Collectively, Base Rent and Additional Charges.
Replacement
Cost:
The
actual replacement cost of the Leased Properties, including an increased
cost of
construction endorsement, less exclusions provided in the standard form of
fire
insurance policy. In all events Replacement Cost shall be an amount sufficient
that neither Lessor nor Lessee is deemed to be a co-insurer of the Leased
Property in question.
SEC:
Securities and Exchange Commission.
Security
Agreements:
The
Security Agreements between Lessor, as secured party, and Lessee, each
Sublessee, each Manager, each Consultant, and each Guarantor, as
debtors.
Security
Deposit:
As
defined in ARTICLE
XXXVII
hereof.
Special
Default:
The
occurrence of any of the following: (a) Lessee fails to pay or cause to be
paid
the Rent when due and payable; (b) Lessee or any of its Affiliates fails
to pay
when due any amount required to be paid pursuant to any of the other Transaction
Documents; or (c) commencing in the second Lease Year, Lessee and the Sublessees
on a consolidated basis fail to maintain a Cash Flow to Rent Ratio of 1.0
or
more.
Special
Risk Insurance:
The
insurance that Lessee is required to maintain pursuant to Section 13.2.1
of this
Lease.
State:
The
State in which the Leased Properties are located.
Subleases:
The
subleases dated as of the date of this Lease with the following subsidiaries
of
Lessee: WYANT LEASING CO., LLC, an Ohio limited liability company, BRECKSVILLE
LEASING CO., LLC, an Ohio limited liability company, JARVIS LEASING CO.,
LLC, an
Ohio limited liability company, KOLBE LEASING CO., LLC, an Ohio limited
liability company, PEARL LEASING CO., LLC, an Ohio limited liability company,
PEARL II LEASING CO., LLC, an Ohio limited liability company, PEARL III LEASING
CO., LLC, an Ohio limited liability company, MERIT LEASING CO., LLC, an Ohio
limited liability company, FALLING LEASING CO., LLC, an Ohio limited liability
company, and FRONT LEASING CO., LLC, , an Ohio limited liability company;
and
such other Subleases expressly approved in writing by Lessor prior to execution
by Lessee.
Sublessees:
The
sublessees under the Subleases.
Subordination
Agreement:
The
Subordination Agreement from Lessee, the Sublessees, and Guarantor in favor
of
Lessor, the Subordination of Management Agreement from Lessee, the Sublessees,
and Managers, and the Subordination of Financial Services Agreement from
Lessee,
the Sublessees and Consultants in favor of Lessor.
Taken:
Conveyed pursuant to a Taking or Partial Taking.
Taking:
A
taking or voluntary conveyance during the Term of all of a Leased Property,
or
any interest therein or right accruing thereto or use thereof, as the result
of,
or in settlement of any condemnation or other eminent domain proceeding
affecting the Leased Property, whether or not the proceeding actually has
been
commenced.
Tangible
Net Worth:
At any
date, the net worth of Lessee as determined in conformity with GAAP, less
Intangible Assets, as determined as of such date.
Tax
Distributions:
A
distribution by Lessee to the equity owners of Lessee in an amount not in
excess
of the actual income tax liability of each such equity owner attributable
to
such equity owner’s allocated share of the taxable income of Lessee.
Term:
Collectively, the Initial
Term
plus the
Renewal Term or Renewal Terms, if any.
Termination
Date:
The
date on which a Notice of Termination is given.
Third
Party Claims:
Any
claims, actions, demands or proceedings (other than Regulatory Actions)
howsoever based (including without limitation those based on negligence,
trespass, strict liability, nuisance, toxic tort or detriment to health welfare
or property) due to Contamination, whether or not the remedy sought is costs,
damages, penalties or expenses, brought by any person or entity other than
a
governmental agency.
Transaction
Documents:
means
the following documents: this Lease, the Guaranties, the Letter of Credit
Agreement, the Security Agreements, the Pledge Agreements, the Subordination
Agreements, the Working Capital Loan Agreement, the Working Capital Note,
the
Cross Default and Cross Collateralization Agreement, the Agreement to Lease,
and
any security agreements, pledge agreements, letter of credit agreements,
guarantees, notes or other documents which evidence, secure or otherwise
relate
to this Lease, the Working Capital Loan Agreement, the Agreement to Lease
or the
transactions contemplated by this Lease, the Agreement to Lease, or the Working
Capital Loan Agreement; and any and all amendments, modifications, extensions
and renewals of any of the foregoing documents.
Transfer:
The (a)
assignment, mortgaging or other encumbering of all or any part of Lessee’s
interest in this Lease or in the Leased Properties; (b) subletting of the
whole
or any part of any Leased Property (except to Sublessees pursuant to the
Subleases); (c) entering into of any Management Agreement or Consulting
Agreement or other arrangement under which any Facility is operated by or
licensed to be operated by an entity other than Lessee or Borrower; (d) merger,
consolidation or reorganization of a corporate Lessee, corporate Sublessee
or
corporate Manager, or corporate Consultant, or the sale, issuance, transfer
and/or redemption, cumulatively or in one transaction, of any voting stock
by
Lessee, any Sublessee or Manager or Consultant or by Persons who are
stockholders of record of Lessee, any Sublessee or Manager or Consultant,
if
such event or events result(s) in a change of Control of Lessee, any Sublessee
or Manager or Consultant; or (e) sale, issuance, transfer or redemption,
cumulatively or in one transaction, of any interest, or the termination of
any
interest, in Lessee, any Sublessee or Manager or Consultant, if Lessee, such
Sublessee or such Manager or such Consultant is a joint venture, partnership,
limited liability company or other association and such sale, issuance,
transfer, redemption or termination of interest results in a change of Control
of such joint venture, partnership, limited liability company or other
association.
Transferee:
An
assignee, subtenant or other occupant of a Leased Property pursuant to a
Transfer.
Unmatured
Event of Default:
means
the occurrence of an event which upon its occurrence, or with the giving
of
notice, the passage of time, or both, would constitute an Event of
Default.
Unsuitable
for Its Primary Intended Use:
A state
or condition of a Facility such that by reason of a Partial Taking, the Facility
cannot be operated on a commercially practicable basis for its Primary Intended
Use, taking into account, among other relevant factors, the number of usable
beds permitted by applicable law and regulation in the Facility after the
Partial Taking, the square footage Taken and the estimated revenue impact
of
such Partial Taking.
Working
Capital Loan Agreement:
means
the Working Capital Loan Agreement dated as of the same date as this Lease
between Lessee and the Sublessees, as borrowers, and Lessor, as
lender.
Working
Capital Note:
means
the Secured Working Capital Promissory Note dated as of the same date as
this
Lease in the state principal amount of $12,500,000 from Lessee and the
Sublessees in favor of Lessor.
ARTICLE
III
3.1 Base
Rent; Monthly Installments.
In
addition to all other payments to be made by Lessee under this Lease, Lessee
shall pay Lessor the Base Rent in lawful money of the United States of America
which is legal tender for the payment of public and private debts, Lessee
shall
pay the Base Rent in advance. Base Rent shall be paid in equal, consecutive
monthly installments, each of which shall be in an amount equal to one-twelfth
(1/12) of the Base Rent payable for the Lease Year in which such installment
is
payable; provided, however, that if the Commencement Date is not the first
day
of the month, then the first month’s payment of Base Rent shall be prorated
based upon the number of days in the month from and after the Commencement
Date.
Thereafter, installments of Base Rent shall be payable on the fifteenth
(15th)
day of
each calendar month. Base Rent shall be paid to Lessor, or to such other
Person
as Lessor from time to time may designate by Notice to Lessee, by wire transfer
of immediately available federal funds to the bank account designated in
writing
by Lessor. If Lessor directs Lessee to pay any Base Rent or Additional Charges
to any Person other than Lessor, Lessee shall send to Lessor, simultaneously
with payment of the Base Rent or Additional Charges, a copy of the transmittal
letter or invoice and check evidencing such, or such other evidence of payment
as Lessor requires.
3.2 Additional
Charges.
In
addition to the Base
Rent,
Lessee
also will pay as and when due all Additional
Charges.
3.3 Late
Charge; Interest.
If any
Rent payable to Lessor is not paid when due, Lessee shall pay Lessor on demand,
as an Additional Charge, a late charge equal to the greater of (a) five percent
(5%) of the amount not paid when due and (b) any and all charges, expenses,
fees
or penalties imposed on Lessor by a Facility Mortgagee for late payment,
and, in
addition, if such Rent (including the late charge) is not paid within thirty
(30) days of the date on which such Rent was due, interest thereon at the
Overdue Rate from the date when due until such Rent (including the late charge
and interest) is paid in full.
3.4 Net
Lease.
3.4.1 The
Rent
shall be paid absolutely net to Lessor, so that this Lease shall yield to
Lessor
the full amount of the Rent payable to Lessor under this Lease throughout
the
Term.
3.4.2 If
Lessor
commences any proceedings for non-payment of Rent, Lessee will not interpose
any
counterclaim or cross complaint or similar pleading of any nature or description
in such proceedings unless Lessee would lose or waive such claim by the failure
to assert it, but Lessee does not waive any rights to assert such claim in
a
separate action brought by Lessee. The covenants to pay Rent are independent
covenants, and Lessee shall have no right to hold back, offset or fail to
pay
any Rent because of any alleged default by Lessor or for any other
reason.
3.5 Payments
In The Event of a Rent Adjustment.
3.5.1 Upon
the
adjustment, pursuant to Section (A)(4) or Section (B) of the definition of
the
term “Base Rent,” in the Base Rent payable pursuant to this Lease with respect
to any Lease Year, the adjustment shall be effective as of the first payment
of
Base Rent due in the Lease Year as to which such adjustment pertains. Because
it
may not be possible to determine the adjusted Base Rent prior to the effective
date of such adjustment, Lessee shall continue to pay the Base Rent at the
rate
in effect prior to the adjustment until Lessor gives Lessee Notice of its
determination of the adjusted Base Rent. Upon such determination, the Base
Rent
shall be adjusted retroactively as of the effective date of such adjustment
On
or before the second (2nd)
payment
date for Base Rent following receipt by Lessee of Lessor’s Notice of the
adjustment, Lessee shall make an additional payment of Base Rent in such
amount
as will bring the Base Rent, as adjusted, current on or before such second
(2nd)
payment
date, and thereafter Lessee shall pay the adjusted Base Rent in correspondingly
adjusted monthly installments until the Base Rent is next adjusted or reset
as
required under this Lease.
3.5.2 This
Section 3.5 shall survive the expiration or earlier termination of this Lease
with respect to any adjustment or reset that is not known or fully paid as
of
the date of expiration or earlier termination of this Lease.
ARTICLE
IV
4.1 Payment
of Impositions.
Subject
to Section 12.1 and Section 12.2, Lessee will pay all Impositions before
any
fine, penalty, interest or cost is added for non-payment, and will promptly,
upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. Subject to Section 12.2, if
at the
option of the taxpayer any Imposition may be paid in installments, Lessee
may
pay the same in the required installments provided it also pays any and all
interest due thereon as and when due.
Lessee
shall prepare and file as and when required all tax returns and reports required
by governmental authorities with respect to all Impositions. Lessor and Lessee
shall each, upon request, provide the other with such data, including without
limitation cost and depreciation records, as is maintained by the party to
whom
the request is made as is necessary to prepare any required returns and
reports.
Lessee
shall be entitled to receive and retain any refund from a taxing authority
in
respect of an Imposition paid by Lessee if at the time of the refund no Event
of
Default has occurred, but if an Event of Default has occurred at the time
of the
refund, Lessee shall not be entitled to receive or retain such refund, and
if
and when received by Lessor such refund shall be applied as provided in Article
XVI.
Lessee
may, upon Notice to and with the consent of Lessor (which consent shall not
be
withheld unreasonably), at Lessee’s sole cost and expense, protest, appeal or
institute such other proceedings as Lessee deems appropriate to effect a
reduction of real estate or personal property assessments and Lessor, at
Lessee’s expense as aforesaid, shall cooperate with Lessee in such protest,
appeal or other action. Lessee shall reimburse Lessor for Lessor’s direct costs
of cooperating with Lessee for such protest, appeal or other
action.
4.2 Adjustment
of Impositions.
Impositions imposed in respect of the tax fiscal period during which the
Term
ends shall be adjusted and prorated between Lessor and Lessee, whether or
not
imposed before or after the expiration or earlier termination of the Term
, and
Lessee’s obligation to pay its prorated share thereof shall survive the
expiration or earlier termination of the Term.
4.3 Utility
Charges.
Lessee
will pay or cause to be paid when due all charges for electricity, power,
gas,
oil, water and other utilities imposed upon the Leased Properties or upon
Lessor
or Lessee with respect to the Leased Properties.
4.4 Insurance
Premiums.
Lessee
shall pay or cause to be paid when due all premiums for the insurance coverage
required to be maintained pursuant to Article XIII during the Term. Lessee
shall
deposit with Lessor the premiums for such insurance in accordance with the
provisions of Section 12.2 of this Lease.
ARTICLE
V
5.1 No
Termination, Abatement, etc.
Lessee
shall not take any action without the consent of Lessor and any Facility
Mortgagee to modify, surrender or terminate this Lease, and shall not seek
or be
entitled to any abatement, deduction, deferment or reduction of Rent, or
setoff
against Rent. The respective obligations of Lessor and Lessee shall not be
affected by reason of (a) any damage to, or destruction of, the Leased
Properties or any portion thereof from whatever cause or any Taking or Partial
Taking of the Leased Properties, except as expressly set forth herein; (b)
the
lawful or unlawful prohibition of, or restriction upon, Lessee’s use of the
Leased Properties, or any portion thereof, or the interference with such
use by
any Person or by reason of eviction by paramount title; (c) any claim that
Lessee has or might have against Lessor or by reason of any default or breach
of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties; (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor; or (e) any other cause, whether similar or dissimilar to any of
the
foregoing, other than a discharge of Lessee from any such obligations as
a
matter of law. Lessee hereby specifically waives all rights, arising from
any
occurrence whatsoever, that now or hereafter may be conferred upon it by
law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Properties or any portion thereof, or (b) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder.
ARTICLE
VI
6.1 Ownership
of the Leased Properties.
Lessee
acknowledges that the Leased Properties are the property of Lessor and that
Lessee has only the right to the possession and use of the Leased Properties
upon the terms and conditions of this Lease. Lessee will not (a) file any
income
tax return or other associated documents, (b) file any other document with
or
submit any document to any governmental body or authority, (c) enter into
any
written contractual arrangement with any Person or (d) release any financial
statements of Lessee, in any case that take any position other than that
throughout the Term Lessor is the owner of the Leased Properties for federal,
state and local income tax purposes and this Lease is a “true lease,” and an
“operating lease” and not a “capital lease.”
6.2 Lessor’s
Personal Property.
Lessee
shall, during the entire Term, maintain all of Lessor’s Personal Property in
good order, condition and repair as shall be necessary in order to operate
the
Facilities for the Primary Intended Use in compliance with all applicable
licensure and certification requirements, all applicable Legal Requirements
and
Insurance Requirements, and customary industry practice for the Primary Intended
Use. If any of Lessor’s Personal Property requires replacement in order to
comply with the foregoing, Lessee shall replace it with similar property
of the
same or better quality at Lessee’s sole cost and expense, and it shall become
Lessor’s Personal Property without payment of additional consideration at the
expiration or earlier termination of the Lease. Lessee shall not permit or
suffer Lessor’s Personal Property to be subject to any lien, charge,
encumbrance, financing statement, contract of sale, equipment lessor’s interest
or the like, except for any purchase money security interest or equipment
lessor’s interest expressly approved in advance, in writing, by Lessor. At the
expiration or earlier termination of this Lease, all of Lessor’s Personal
Property shall be surrendered to Lessor with the Leased Properties at or
before
the time of the surrender of the Leased Property in at least as good a condition
as at the Commencement Date (or, as to replacements, in at least as good
a
condition as when placed in service at the Facilities) except for ordinary
wear
and tear.
6.3 Lessee’s
Personal Property.
Lessee
shall provide and maintain during the Term such Personal Property, in addition
to Lessor’s Personal Property, as shall be necessary and appropriate in order to
operate the Facilities for the Primary Intended Use in compliance with all
licensure and certification requirements, in compliance with all applicable
Legal Requirements and Insurance Requirements and otherwise in accordance
with
customary practice in the industry for the Primary Intended Use. Without
the
prior written consent of Lessor, except as permitted under Section 8.2.6,
Lessee
shall not permit or suffer Lessee’s Personal Property to be subject to any lien,
charge, encumbrance, financing statement or contract of sale or the like.
Upon
the expiration of the Term or the earlier termination of this Lease, without
the
payment of any additional consideration by Lessor, Lessee shall be deemed
to
have sold, assigned, transferred and conveyed to Lessor all of Lessee’s right,
title and interest in and to any of Lessee’s Personal Property that, in Lessor’s
reasonable judgment, is integral to the Primary Intended Use of the Facilities
(or if some other use thereof has been approved by Lessor as required herein,
such other use as is then being made by Lessee) and, as provided in Section
33.1
hereof,
Lessor shall have the option to purchase any of Lessee’s Personal Property that
is not then integral to such use. Without Lessor’s prior written consent, Lessee
shall not remove Lessee’s Personal Property that is in use at the expiration or
earlier termination of the Term from the Leased Properties until such option
to
purchase has expired or been waived in writing by Lessor. Any of Lessee’s
Personal Property that is not integral to the use of the Facilities being
made
by Lessee and is not purchased by Lessor pursuant to Section 33.1
may be
removed by Lessee upon the expiration or earlier termination of this Lease,
and,
if not removed within twenty (20) days following the expiration or earlier
termination of this Lease, shall be considered abandoned by Lessee and may
be
appropriated, sold, destroyed or otherwise disposed of by Lessor without
giving
notice thereof to Lessee and without any payment to Lessee or any obligation
to
account therefor. Lessee shall reimburse Lessor for any and all expense incurred
by Lessor in disposing of any of Lessee’s Personal Property that Lessee may
remove but within such twenty (20) day period fails to remove, and shall
either
at its own expense restore the Leased Properties to the condition required
by
Section 9.1.5, including repair of all damage to the Leased Properties caused
by
the removal of any of Lessee’s Personal Property, or reimburse Lessor for any
and all expense incurred by Lessor for such restoration and repair.
6.4 Grant
of Security Interest in Lessee’s Personal Property and Accounts.
Lessee
has concurrently granted to Lessor a security interest in the Collateral
as
defined in the Security Agreement, which includes, without limitation, the
Personal Property as defined herein and Lessee’s and Sublessee’s Accounts as
defined in the Security Agreement. If Lessee and/or the Sublessees obtain,
concurrently with or after the Commencement Date, a working capital line
of
credit (the “Working
Capital Loan”)
from a
third-party working capital lender that requires that, in order to secure
the
working capital line of credit, Lessee and/or the Sublessees must grant to
the
working capital lender a first priority security interest in the accounts
receivable from the Facilities accruing during the Term, if applicable,
then
Lessor
will subordinate its security interest in the accounts receivable from the
Facilities accruing during the Term, provided
that:
(a) The
working capital lender executes and delivers to Lessor an intercreditor
agreement in form and substance reasonably satisfactory to Lessor;
and
(b) The
lien
of Lessor in accounts receivable from each Facility shall be subordinated
to the
lien of the working capital lender therein only to the extent of amounts
advanced from time to time by the working capital lender to Lessee and/or
the
Sublessees with respect to the Facilities and only in the maximum principal
amount of the Maximum Principal Amount, plus interest, penalties and other
charges under the loan documents with respect to principal amounts advanced;
(c) All
amounts owed the lender under the Working Capital Loan Agreement and Working
Capital Note are paid in full.
ARTICLE
VII
7.1 Condition
of the Leased Properties.
Lessee
acknowledges that it has inspected and otherwise has knowledge of the condition
of the Leased Properties prior to the execution and delivery of this Lease
and
has found the same to be in good order and repair and satisfactory for its
purposes hereunder. Lessee is leasing the Leased Properties “as is” in their
condition on the Commencement Date. Lessee waives any claim or action against
Lessor in respect of the condition of the Leased Properties. LESSOR MAKES
NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF ANY LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE AS TO THE QUALITY
OF
THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT
ALL
SUCH RISKS ARE TO BE BORNE BY LESSEE. Lessee further acknowledges that
throughout the Term Lessee is solely responsible for the condition of the
Leased
Properties.
7.2 Use
of
the Leased Properties.
Throughout the Term Lessee shall use the Leased Properties continuously for
the
Primary Intended Use and uses incidental thereto. Lessee shall not use the
Leased Properties or any portion thereof for any other use without the prior
written consent of Lessor. No use shall be made or permitted to be made of,
or
allowed in, the Leased Properties, and no acts shall be done, which will
cause
the cancellation of, or be prohibited by, any insurance policy covering the
Leased Properties or any part thereof, nor shall the Leased Properties or
Lessee’s Personal Property be used for any unlawful purpose. Lessee shall not
commit or suffer to be committed any waste on the Leased Properties, or cause
or
permit any nuisance thereon, or suffer or permit the Leased Properties or
any
portion thereof, or Lessee’s Personal Property, to be used in such a manner as
(a) might reasonably tend to impair Lessor’s (or Lessee’s, as the case may be)
title thereto or to any portion thereof, or (b) may reasonably make possible
a
claim or claims of adverse usage or adverse possession by the public, as
such,
or of implied dedication of the Leased Properties or any portion
thereof.
7.3 Certain
Environmental Matters.
(a) Prohibition
Against Use of Hazardous Substances.
Lessee
shall not permit, conduct or allow the generation, introduction, presence,
maintenance, use, receipt, acceptance, treatment, manufacture, production,
installation, management, storage, disposal or release of any Hazardous
Substance on the Leased Properties, except for those types and quantities
of
Hazardous Substances necessary for and ordinarily associated with the conduct
of
Lessee’s business and used in full compliance with all Environmental
Laws.
(b) Notice
of Environmental Claims, Actions or Contaminations.
Lessee
shall notify Lessor, in writing, immediately upon learning of any existing,
pending or threatened: (i) investigation, inquiry, claim or action by any
governmental authority in connection with any Environmental Laws, (ii) Third
Party Claims, (iii) Regulatory Actions, and/or (iv) Contamination of any
portion
of the Leased Properties
(c) Costs
of Remedial Actions with Respect to Environmental Matters.
If any
investigation and/or Clean-Up of any Hazardous Substance or other environmental
condition on, under, about or with respect to a Leased Property is required
by
any Environmental Law, Lessee shall complete, at its own expense, such
investigation and/or Clean-Up or cause any other Person who may be legally
responsible to complete such investigation and/or Clean-Up.
(d) Delivery
of Environmental Documents.
Lessee
shall deliver to Lessor complete copies of any and all Environmental Documents
that may now be in, or at any time hereafter come into, the possession of
Lessee.
(e) Environmental
Audit.
At
Lessee’s expense, Lessee shall, upon and within thirty (30) days of a written
request therefor from Lessor or any Facility Mortgagee, deliver an Environmental
Audit to Lessor and the Facility Mortgagee, if any. All tests and samplings
shall be conducted using generally accepted and scientifically valid technology
and methodologies. Lessee shall give the engineer or environmental consultant
conducting the Environmental Audit reasonable and complete access to the
Leased
Properties and to all records in the possession of Lessee that may indicate
the
presence (whether current or past) of a Release or threatened Release of
any
Hazardous Substances on, in, under, about and adjacent to any Leased Property.
Lessee also shall provide the engineer or environmental consultant full access
to and the opportunity to interview such persons as may be employed in
connection with the Leased Properties as the engineer or consultant deems
appropriate. However, neither Lessor nor any Facility Mortgagee shall be
entitled to request an Environmental Audit from Lessee unless (i) after the
Commencement Date there have been changes, modifications or additions to
Environmental Laws as applied to or affecting any of the Leased Properties;
(ii)
Lessor has a reasonable belief that there has been a significant change in
the
condition of any of the Leased Properties; or (iii) there are fewer than
six (6)
months remaining in the Term. If the Environmental Audit discloses the presence
of Contamination or any noncompliance with Environmental Laws, Lessee shall
immediately perform all of Lessee’s obligations under this Lease with respect to
such Hazardous Substances or noncompliance.
(f) Entry
onto Leased Properties for Environmental Matters.
If
Lessee fails to provide an Environmental Audit as and when required by
Subparagraph (e) above, in addition to Lessor’s other remedies Lessee shall
permit Lessor and any Facility Mortgagee from time to time, by its employees,
agents, contractors or representatives, to enter upon the Leased Properties
for
the purpose of conducting such Investigations as Lessor may desire, the expense
of which shall be paid or reimbursed promptly by Lessee as an Additional
Charge.
Lessor, any Facility Mortgagee exercising such right of entry and the employees,
agents, contractors, consultants and/or representatives thereof, shall conduct
any such Investigation in a manner that does not unreasonably interfere with
Lessee’s use of and operations on the Leased Properties (however, reasonable
temporary interference with such use and operations is permissible if the
investigation cannot otherwise be reasonably and inexpensively conducted).
Other
than in an emergency, Lessor and any Facility Mortgagee exercising such right
of
entry shall provide Lessee with prior notice before entering any of the Leased
Properties to conduct such Investigation, and shall provide copies of any
reports or results to Lessee, and Lessee shall cooperate fully in such
Investigation.
(g) Environmental
Matters Upon Termination of the Lease or Expiration of Term.
Upon
the expiration or earlier termination of the Term, Lessee shall cause the
Leased
Properties to be delivered free of any and all Regulatory Actions and Third
Party Claims and otherwise in compliance with all Environmental Laws with
respect thereto, and in a manner and condition that is reasonably required
to
ensure that the then present use, operation, leasing, development, construction,
alteration, refinancing or sale of the Leased Property shall not be restricted
by any environmental condition existing as of the date of such expiration
or
earlier termination of the Term.
(h) Compliance
with Environmental Laws.
Lessee
shall comply with, and cause its agents, servants and employees to comply
with,
and shall use reasonable efforts to cause each occupant and user of any of
the
Leased Properties, and the agents, servants and employees of such occupants
and
users to comply with, each and every Environmental Law applicable to Lessee,
the
Leased Properties and each such occupant or user with respect to the Leased
Properties. Specifically, but without limitation:
(i) Maintenance
of Licenses and Permits.
Lessee
shall obtain and maintain (and Lessee shall use reasonable efforts to cause
each
tenant, occupant and user to obtain and maintain) all permits, certificates,
licenses and other consents and approvals required by any applicable
Environmental Law from time to time with respect to Lessee, each and every
part
of the Leased Properties and/or the conduct of any business at a Facility
or
related thereto;
(ii) Contamination.
Lessee
shall not cause, suffer or permit any Contamination;
(iii) Clean-Up.
If a
Contamination occurs, Lessee promptly shall Clean-Up and remove any Hazardous
Substance or cause the Clean-Up and the removal of any Hazardous Substance
and
in any such case such Clean-Up and removal of the Hazardous Substance shall
be
effected to Lessor’s reasonable satisfaction and in any event in strict
compliance with applicable Environmental Laws;
(iv) Discharge
of Lien.
Within
twenty (20) days of the date any lien is imposed against the Leased Properties
or any part thereof under any Environmental Law, Lessee shall cause such
lien to
be discharged (by payment, by bond or otherwise to Lessor’s absolute
satisfaction);
(v) Notification
of Lessor.
Within
three (3) Business Days after receipt by Lessee of Notice or discovery by
Lessee
of any fact or circumstance that might result in a breach or violation of
any
covenant or agreement, Lessee shall give Lessor Notice of such fact or
circumstance; and
(vi) Requests,
Orders and Notices.
Within
three (3) Business Days after receipt of any request, order or other notice
relating to the Leased Properties under any Environmental Law, Lessee shall
forward a copy thereof to Lessor.
(i) Environmental
Related Remedies.
In the
event of a breach by Lessee beyond any applicable notice and/or grace period
of
its covenants with respect to environmental matters, Lessor may, in its sole
discretion, do any one or more of the following (the exercise of one right
or
remedy hereunder not precluding the simultaneous or subsequent exercise of
any
other right or remedy hereunder):
(i) Cause
a Clean-Up.
Cause
the Clean-Up of any Hazardous Substance or other environmental condition
on or
under the Leased Properties, or both, at Lessee’s cost and expense;
or
(ii) Payment
of Regulatory Damages.
Pay on
behalf of Lessee any damages, costs, fines or penalties imposed on Lessee
or
Lessor as a result of any Regulatory Actions; or
(iii) Payments
to Discharge Liens.
On
behalf of Lessee, make any payment or perform any other act or cause any
act to
be performed that will prevent a lien in favor of any federal, state or local
governmental authority from attaching to the Leased Properties or that will
cause the discharge of any lien then attached to the Leased Properties;
or
(iv) Payment
of Third Party Damages.
Pay, on
behalf of Lessee, any damages, cost, fines or penalties imposed on Lessee
as a
result of any Third Party Claims; or
(v) Demand
of Payment.
Demand
that Lessee make immediate payment of all of the costs of such Clean-Up and/or
exercise of the remedies set forth in this Section 7.2 incurred by Lessor
and
not paid by Lessee as of the date of such demand.
(j) Environmental
Indemnification.
Lessee
shall and does hereby indemnify, and shall defend and hold harmless, Lessor,
each Facility Mortgagee and the principals, officers, directors, agents and
employees of Lessor and each Facility Mortgagee, from each and every incurred
and potential claim, cause of action, damage, demand, obligation, fine,
laboratory fee, liability, loss, penalty, imposition settlement, levy, lien
removal, litigation, judgment, proceeding, disbursement, expense and/or cost
(including without linmitation the cost of each and every Clean-Up), however
defined and of whatever kind or nature, known or unknown, foreseeable or
unforeseeable, contingent, incidental, consequential or otherwise (including,
but not limited to, attorneys’ fees, consultants’ fees, experts’ fees and
related expenses, capital, operating and maintenance costs, incurred in
connection with (i) any Investigation or monitoring of site conditions, and
(ii)
any Clean-Up required or performed by any federal, state or local governmental
entity or performed by any other entity or person because of the presence
of any
Hazardous Substance, Release, threatened Release or any Contamination on,
in,
under or about any of the Leased Properties) that may be asserted against,
imposed on, suffered or incurred by, each and every indemnitee arising out
of or
in any way related to, or allegedly arising out of or due to any environmental
matter including, but not limited to, any one or more of the
following:
(i) Release
Damage or Liability.
The
presence of Contamination in, on, at, under or near a Leased Property or
migrating to a Leased Property from another location;
(ii) Injuries.
All
injuries to health or safety (including wrongful death), or to the environment,
by reason of environmental matters relating to the condition of or activities
past or present on, at, in or under a Leased Property;
(iii) Violations
of Law.
All
violations, and alleged violations, of any Environmental Law relating to
a
Leased Property or any activity on, in, at or under a Leased
Property;
(iv) Misrepresentation.
All
material misrepresentations relating to environmental matters in any documents
or materials furnished by Lessee to Lessor and/or its representatives in
connection with the Lease;
(v) Event
of Default.
Each
and every Event of Default relating to environmental matters;
(vi) Lawsuits.
Any and
all lawsuits brought or threatened, settlements reached and governmental
orders
relating to any Hazardous Substances at, on, in or under a Leased Property,
and
all demands of governmental authorities, and all policies and requirements
of
Lessor’s, based upon or in any way related to any Hazardous Substances at, on,
in or under a Leased Property; and
(vii) Presence
of Liens.
All
liens imposed upon any of the Leased Properties in favor of any governmental
entity or any person as a result of the presence, disposal, release or threat
of
release of Hazardous Substances at, on, in, from or under a Leased
Property.
(k) Rights
Cumulative and Survival.
The
rights granted Lessor under this Section are in addition to and not in
limitation of any other rights or remedies available to Lessor under this
Lease
or allowed at law or in equity or rights of indemnification provided to Lessor
in any agreement pursuant to which Lessor purchased any of the Leased Property.
The payment and indemnification obligations set forth in this Section 7.3
shall
survive the expiration or earlier termination of the Term.
ARTICLE
VIII
8.1 Compliance
with Legal and Insurance Requirements.
In its
use, maintenance, operation and any alteration of the Leased Properties,
Lessee,
at its expense, promptly will (a) comply with all Legal Requirements and
Insurance Requirements, whether or not compliance with them requires structural
changes in any of the Leased Improvements (which structural changes shall
be
subject to Lessor’s prior written approval, which Lessor shall not unreasonably
withhold or delay) or interferes with or prevents the use and enjoyment of
the
Leased Properties, and (b) procure, maintain and comply with all licenses,
certificates of need, provider agreements and other authorizations required
for
the use of the Leased Properties and Lessee’s Personal Property for the Primary
Intended Use, and for the proper erection, installation, operation and
maintenance of the Leased Properties or any part thereof. The judgment of
any
court of competent jurisdiction, or the admission of Lessee in any action
or
proceeding against Lessee, whether or not Lessor is a party thereto, that
Lessee
has violated any such Legal Requirements or Insurance Requirements shall
be
conclusive of that fact as between Lessor and Lessee.
8.2 Certain
Covenants.
8.2.1 Tangible
Net Worth.
At all
times during the Term Guarantor shall maintain a positive Tangible Net Worth,
and if at any time Guarantor’s Tangible Net Worth is not positive, within thirty
(30) days Guarantor shall cause its shareholders to contribute to Lessee
sufficient equity capital in the form of cash to cause Guarantor’s Tangible Net
Worth to become positive. For purposes of this Section, Tangible Net Worth
includes the amount of any cash Security Deposit.
8.2.2 Cash
Flow to Rent Ratio.
Lessee
and the Sublessees on a consolidated basis shall maintain a Cash Flow to
Rent
Ratio as determined quarterly on a cumulative basis for each calendar year
during the Term of:
During
the first Lease Year 1.1
or
more
During
the second Lease Year 1.20
or
more
Thereafter 1.25
or
more.
8.2.3 Limitation
of Distributions.
In or
with respect to any Lease Year, Lessee shall not make any Distributions to
the
holders of its equity securities or any Affiliate if, as of the date of such
Distribution or upon giving effect to such Distribution, (a) an Event of
Default
has occurred and is continuing or (b) an Unmatured Event of Default has occurred
and is continuing; provided, however, that so long as, as of the date of
such
Distribution or upon giving effect to such Distribution, no Special Default
has
occurred and is continuing, Lessee may make Tax Distributions.
8.2.4 Indebtedness.
Neither
Lessee nor any Sublessee will create, incur or suffer to exist any Indebtedness,
except:
(i) The
equipment financing permitted under Section 8.2.6;
and
(ii) The
Working Capital Loan permitted under Section 6.4.
8.2.5 Guarantees
Prohibited.
Except
for guaranties of the Indebtedness permitted under Section 8.2.4
and
guaranties and assumption of obligations in favor of Lessor and its Affiliates
under the Agreement to Lease, neither Lessee nor any Sublessee shall guarantee
any Indebtedness of any Affiliate or other third party.
8.2.6 Equipment
Financing.The
annual aggregate amount of principal, interest and lease payments due from
Lessee on any equipment financing shall not exceed an amount equal to (i)
Twenty
Five Thousand Dollars ($25,000) multiplied
by
(ii) the
number of Facilities.
8.2.7 Loans
from Affiliates.
Neither
Lessee nor any Sublessee shall borrow money from any Affiliate unless the
obligations of Lessee or such Sublessee and the rights of its Affiliates
with
respect to any such loan are subordinated to the rights of Lessor pursuant
to a
written subordination agreement in form and substance acceptable to
Lessor.
8.3 Minimum
Qualified Capital Expenditures.
Each
Lease Year Lessee shall expend with respect to each Facility at least Three
Hundred Dollars ($300) per-licensed-bed for Qualified Capital Expenditures
to
improve the Facilities, which amount shall be increased each Lease Year,
beginning with the second Lease Year, by the lesser of (i) the proportionate
to
increases in the CPI (expressed as a percentage) or (ii) two and one half
percent (2.5%).
8.4 Management
Agreements and Consulting Agreements.
Neither
Lessee nor any Sublessee shall enter into or terminate any Management Agreement
or Consulting Agreement without the prior written consent of Lessor and any
Facility Mortgagee as to the identity of the Manager or Consultant, as
applicable, and the terms of such agreement, and shall not amend, modify,
or
otherwise change the terms of any Management Agreement or Consulting Agreement
without the prior written consent of Lessor and, in addition, as to any
amendment, modification or other change that directly or indirectly increases
the compensation of the Manager or Consultant or allows a change in the identity
of the Manager or Consultant, without the consent of any Facility Mortgagee,
which consent Lessor and such Facility Mortgagee may withhold in its or their
sole discretion, and in no event without the execution by Lessee, Manager
or
Consultant and Lessor of an agreement, in form and substance satisfactory
to
Lessor and any Facility Mortgagee, pursuant to which Manager’s or Consultant’s
right to receive its management or consulting fee is subordinated to the
obligation of Lessee to pay the Rent as and when required under this Lease.
Notwithstanding the foregoing, Lessee or any Sublessee may enter into a
Management Agreement or Consulting Agreement with an Affiliate of Lessee
without
the written consent of Lessor provided that: (1) such Management Agreement
or
Consulting Agreement is subordinated to the rights of Lessor as provided
for in
this Section; and (2) Lessee provides Lessor prior Notice of the entry into
such
Management Agreement or Consulting Agreement and a copy of such agreement;
provided, however, that if such entity ceases to be an Affiliate of Lessee,
then
Lessee must acquire Lessor’s written consent to such Management Agreement or
Consulting Agreement (which consent may then be withheld in Lessor’s sole
discretion).
8.5 Other
Facilities.
Except
for (a) the City View Nursing and Rehabilitation Center, 6606 Carnegie Avenue,
Cleveland, Ohio 44103 and (b) the Greens of Lyndhurst, Lynhurst, Ohio, neither
Lessee nor any Affiliate shall own, operate or manage any nursing home, rest
home, assisted living facility, subacute facility, retirement center or similar
health care facility within (i) one half mile radius of the Waterford Facility,
(ii) ten (10) mile radius of the Crestwood Facility, and (iii) within a two
(2)
mile radius of any of the other Facilities.
8.6 No
Other Business.
Lessee
and the Sublessees only (but not any of their Affiliates) shall not engage
in
any business other than the operation of the Facilities.
ARTICLE
IX
9.1 Maintenance
and Repair.
9.1.1 Lessee,
at its expense, will keep the Leased Properties, and all appurtenant
landscaping, private roadways, sidewalks and curbs that are under Lessee’s
control and Lessee’s Personal Property in good order and repair, whether or not
the need for such repairs arises out of Lessee’s use, any prior use, the
elements or the age of the Leased Property or any portion thereof, or any
cause
whatsoever except the act or negligence of Lessor, and with reasonable
promptness shall make all necessary and appropriate repairs thereto of every
kind and nature, whether interior or exterior, structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen, or arising by reason of
a
condition existing prior to the Commencement Date (concealed or otherwise).
Lessee shall maintain, operate and otherwise manage the Leased Properties
at all
times on a basis and in a manner consistent with the standards of competing
facilities of comparable age in the market areas served by the Leased
Properties. 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. Lessee 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 Properties or any parts thereof for the Primary Intended
Use.
9.1.2 Lessor
shall not under any circumstances be required to maintain, build or rebuild
any
improvements on the Leased Properties (or any private roadways, sidewalks
or
curbs appurtenant thereto), or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Properties,
whether ordinary or extraordinary, structural or non-structural, foreseen
or
unforeseen, or upon any adjoining property, whether to provide lateral or
other
support or abate a nuisance, or otherwise, or to make any expenditure whatsoever
with respect thereto, in connection with this Lease. Lessee hereby waives,
to
the extent permitted by law, the right to make repairs at the expense of
Lessor
pursuant to any law in effect at the time of the execution of this Lease
or
hereafter enacted.
9.1.3 Nothing
contained in this Lease shall be construed as (a) constituting the consent
or
request of Lessor, expressed or implied, to any contractor, subcontractor,
laborer, materialmen or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to any Leased
Property or any part thereof, or (b) giving Lessee any right, power or
permission to contract for or permit the performance of any labor or services
or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Lessor in respect thereof or to make
any
agreement that may create, or in any way be the basis for, any right, title,
interest, lien, claim or other encumbrance upon the estate of Lessor in the
Leased Properties or any portion thereof. Lessor shall have the right to
give,
record and post, as appropriate, notices of non-responsibility under any
mechanics’ and construction lien laws now or hereafter existing.
9.1.4 Lessee
promptly shall replace any of the Leased Improvements or Lessor’s Personal
Property that becomes worn out, obsolete or unusable or unavailable for the
purpose for which intended. All replacements shall have a value and utility
at
least equal to that of the items replaced and shall become part of the Leased
Properties immediately upon their acquisition by Lessee. Upon Lessor’s request,
Lessee promptly shall execute and deliver to Lessor a bill of sale or other
instrument establishing Lessor’s lien-free ownership of such replacements.
Lessee promptly shall repair all damage to a Leased Property incurred in
the
course of such replacement.
9.1.5 Lessee
will, upon the expiration or earlier termination of the Term, vacate and
surrender the Leased Properties to Lessor in the condition in which they
were
originally received from Lessor, in good operating condition, ordinary wear
and
tear excepted, except as repaired, rebuilt, restored, altered or added to
as
permitted or required by the provisions of this Lease.
9.2 Encroachments,
Restrictions, etc.
If, at
any time, any of the Leased Improvements are alleged to encroach upon any
property, street or right of way adjacent to a Leased Property, or to violate
any restrictive covenant, or to impair the rights of others under any easement
or right of way, Lessee promptly shall settle such allegations or take such
other lawful action as may be necessary in order to be able to continue the
use
of a Leased Property for the Primary Intended Use substantially in the manner
and to the extent such Leased Property was being used at the time of the
assertion of such violation, impairment or encroachment; provided, however,
that
no such action shall violate any other provision of this Lease, and any
alteration of a Leased Property must be made in conformity with the applicable
requirements of Article X. Lessee shall not have any claim against Lessor
or
offset against any of Lessee’s obligations under this Lease with respect to any
such violation, impairment or encroachment.
ARTICLE
X
10.1 Construction
of Alterations and Additions to the Leased Properties.
10.1.1 Lessee
shall not (a) make or permit to be made any structural alterations, improvements
or additions of or to the Leased Properties or any part thereof, or (b)
materially alter the plumbing, HVAC or electrical systems thereon or (c)
make
any other alterations, improvements or additions the cost of which exceeds
(i)
One Hundred Thousand ($100,000.00) Dollars per alteration, improvement or
addition, or (ii) One Hundred Thousand ($100,000.00) Dollars in any Lease
Year,
unless and until Lessee has (x) caused complete plans and specifications
therefor to have been prepared and submitted to Lessor at least thirty (30)
days
before the planned start of construction thereof, (y) obtained Lessor’s written
approval thereof and the approval of any Facility Mortgagee and (z), if required
to do so by Lessor, provided Lessor with reasonable assurance of the payment
of
the cost of any such alterations, improvements or additions, in the form
of a
bond, letter of credit, cash deposit or adequate evidence of financing for
the
alteration, improvement or addition. If Lessor requires a deposit, Lessor
shall
retain and disburse the amount deposited in the same manner as is provided
for
insurance proceeds in Section 14.6. If the deposit is reasonably determined
by
Lessor at any time to be insufficient for the completion of the alteration,
improvement or addition, Lessee immediately shall increase the deposit to
the
amount reasonably required by Lessor. Lessee shall be responsible for the
completion of such improvements in accordance with the plans and specifications
approved by Lessor, and promptly shall correct any failure with respect
thereto.
10.1.2 Alterations
and improvements not falling within the categories described in the first
sentence of Section 10.1.1 may be made by Lessee without the prior approval
of
Lessor, but Lessee shall give Lessor at least thirty (30) days prior written
Notice of any such alterations and improvements.
10.1.3 All
alterations, improvements and additions shall (a) be constructed in a first
class, workmanlike, manner, in compliance with all Insurance Requirements
and
Legal Requirements, (b) be in keeping with the character of the Leased
Properties and the area in which the Leased Property in question is located
and
(c) be designed and constructed so that the value of the Leased Properties
will
not be diminished and the Primary Intended Use of the Leased Properties will
not
be changed. All improvements, alterations and additions immediately shall
become
a part of the Leased Properties.
10.1.4 Lessee
shall have no claim against Lessor at any time in respect of the cost or
value
of any improvement, alteration or addition. There shall be no adjustment
in the
Rent by reason of any such improvement, alteration or addition. With Lessor’s
consent, expenditures made by Lessee pursuant to this Article X may be included
as capital expenditures for purposes of inclusion in the capital expenditures
budget for the Facilities and for measuring compliance with the obligations
of
Lessee set forth in Section 8.3 of this Lease.
10.1.5 In
connection with any alteration that involves the removal, demolition or
disturbance of any asbestos-containing material, Lessee shall cause to be
prepared at its expense a full asbestos assessment applicable to such alteration
and shall carry out such asbestos monitoring and maintenance program as
reasonably shall be required thereafter in light of the results of such
assessment.
ARTICLE
XI
11.1 Liens.
Without
the consent of Lessor or as expressly permitted elsewhere herein, Lessee
will
not directly or indirectly create or allow to remain and will promptly discharge
at its expense any lien, encumbrance, attachment, title retention agreement
or
claim upon the Leased Properties, and any attachment, levy, claim or encumbrance
in respect of the Rent, except for (a) Permitted Encumbrances, (b) liens
of
mechanics, laborers, materialmen, suppliers or vendors for sums not yet due,
and
(c) liens created by the malfeasance or negligence of Lessor.
ARTICLE
XII
12.1 Permitted
Contests.
Lessee,
on its own or on Lessor’s behalf (or in Lessor’s name), but at Lessee’s sole
cost and expense, shall have the right to contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity of any real or personal property assessment, Imposition, Legal
Requirement or Insurance Requirement, or any lien, attachment, levy,
encumbrance, charge or claim or any encroachment or restriction burdening
the
Leased Property, provided: (a) prior Notice of such contest is given to Lessor;
(b) the Leased Properties would not be in any danger of being sold, forfeited
or
attached as a result of such contest, and there is no risk to Lessor of a
loss
of or interruption in the payment of Rent; (c) in the case of an unpaid
Imposition or other lien, attachment, levy, encumbrance, charge or claim,
collection thereof is suspended during the pendency of such contest; (d)
in the
case of a contest of a Legal Requirement, compliance may legally be delayed
pending such contest and pending such contest no license, permit, approval,
certificate of need, certificate of reimbursement or other authorization
necessary to operate any Facility as a provider of health care services in
accordance with its Primary Intended Use may be irrevocably suspended or
revoked, or its right to so operate a Facility or to accept patients irrevocably
suspended. Upon request of Lessor, after the occurrence of an Event of Default
or Unmatured Event of Default, and while it continues, Lessee shall deposit
funds or assure Lessor in some other manner reasonably satisfactory to Lessor
that the amount to be paid by Lessee that is the subject of a contested
Imposition, Legal Requirement, Insurance Requirement or Claim, together with
interest and penalties, if any, thereon, and any and all costs for which
Lessee
is responsible will be paid if and when required upon the conclusion of such
contest. Lessee shall defend, indemnify and save harmless Lessor from all
costs
or expenses arising out of or in connection with any such contest, including
but
not limited to attorneys’ fees. If at any time Lessor reasonably determines that
payment of any Imposition or other lien, attachment, levy, encumbrance, charge
or claim, or compliance with any Legal or Insurance Requirement being contested
by Lessee is necessary in order to prevent loss of any of the Leased Properties
or Rent or civil or criminal penalties or other damage (including revocation
or
suspension of any license, permit, approval, certificate of need, certificate
of
reimbursement or other authorization necessary to operate any Facility as
a
provider of health care services in accordance with its Primary Intended
Use or
suspension of any right to accept patients), upon such prior Notice to Lessee
as
is reasonable in the circumstances Lessor may pay such amount, require Lessee
to
comply with such Legal or Insurance Requirement or take such other action
as it
may deem necessary to prevent such loss or damage. If reasonably necessary,
upon
Lessee’s written request, Lessor, at Lessee’s expense, shall cooperate with
Lessee in a permitted contest, provided Lessee upon demand makes arrangements
satisfactory to Lessor to assure the reimbursement of any and all Lessor’s costs
incurred in cooperating with Lessee in such contest.
12.2 Lessor’s
Requirement for Deposits.
After
an Event of Default or Unmatured Event of Default and while it continues,
Lessee
shall deposit with Lessor monthly, at the time of its payments of Base Rent,
a
pro rata portion of the amounts required to comply with Insurance Requirements,
Impositions, Legal Requirements and Lessee’s obligations under Section 8.3 of
this Lease, and when such obligations become due, Lessor shall pay them (to
the
extent of the deposit) upon Notice from Lessee requesting such payment. If
sufficient funds have not been deposited to cover the amount of the obligations
due at least thirty (30) days in advance of the due date, Lessee immediately
shall deposit the same with Lessor upon Notice from Lessor. Lessor shall
not be
obligated to segregate such deposited funds from its other funds or to pay
Lessee any interest on any deposit held by Lessor. Upon an Event of Default,
any
of the funds remaining on deposit may be applied under this Lease in any
manner
and in such priority as Lessor may determine in its sole
discretion.
ARTICLE
XIII
13.1 General
Insurance Requirements.
Lessee
shall keep the Leased Properties, and all property located in or on the Leased
Properties, including Lessor’s Personal Property and Lessee’s Personal Property,
insured with insurance meeting the following requirements: (a) all insurance
shall be written by companies authorized to do insurance business in the
applicable States and having a rating classification of not less than A-
and a
financial size category of “Class X”, according to the then most recent issue of
Best’s Key Rating Guide; (b) all policies must name Lessor as an additional
insured, and name as an additional insured any Facility Mortgagee by way
of a
standard form of mortgagee’s loss payable endorsement in use in the applicable
States and in accordance with any such other requirements as may be established
by such Facility Mortgagee. However, if requested by Lessor and available
on a
commercially reasonable basis, all public liability and property damage
insurance shall contain a provision that Lessor, although named as an insured,
nevertheless shall be entitled to recovery for loss, damage or injury to
Lessor,
its servants, agents and employees by reason of the negligence of Lessee
or
Lessor; (c) losses must be payable to Lessor or Lessee as provided in Article
XIV, and loss adjustments shall require the written consent of Lessor, any
Facility Mortgagee and, provided it is not then in default, Lessee, which
consent shall not be unreasonably withheld by either Lessor or Lessee; (d)
each
insurer must agree that it will give Lessor and any Facility Mortgagee at
least
sixty (60) days’ written Notice before its policy shall be altered, allowed to
expire or canceled; (e) the amount of any deductible or retention must be
approved by Lessor prior to the issuance of any policy; and (f) the form
of all
policies shall be approved by Lessor, whose approval shall not unreasonably
be
withheld, and by any Facility Mortgagee.
13.2 Risks
to be Insured.
The
policies covering the Leased Properties and Lessee’s Personal Property shall
insure against the following risks:
13.2.1 Loss
or
damage by fire, vandalism and malicious mischief, earthquake, extended coverage
perils commonly known as “Special Risk,” and all physical loss perils normally
included in such Special Risk insurance, including but not limited to sprinkler
leakage, in an amount not less than one hundred percent (100%) of Replacement
Cost (provided that Lessor shall have the right from time to time, but no
more
frequently than once in any period of three (3) consecutive Lease Years,
to have
Replacement Cost reasonably redetermined by the fire insurance company then
carrying the largest amount of fire insurance on the Leased Properties (Lessee
hereby agreeing to pay the fee, if any, for such insurer), which determination
shall be final and binding on the parties hereto, and upon such determination
Lessee immediately shall increase, but not decrease, the amount of the insurance
carried pursuant to this Section 13.2.1 to the amount so determined, subject
to
the approval of any Facility Mortgagee;
13.2.2 Broad
form comprehensive boiler and machinery insurance on a blanket repair and
replace basis, with limits for each accident in an amount not less than one
hundred percent (100%) of Replacement Cost;
13.2.3 Loss
of
rental under a rental value insurance policy covering risk of loss during
reconstruction necessitated by the occurrence of any of the hazards described
in
Sections 13.2.1 or 13.2.2 (but in no event for a period less than twelve
(12)
months) in an amount sufficient to prevent Lessor and Lessee from becoming
a
co-insurer;
13.2.4 Claims
for bodily injury (including resulting death), personal injury or property
damage under a policy of commercial general public liability insurance with
a
combined single limit per occurrence in respect of bodily injury and death
and
property damage of One Million Dollars ($1,000,000), and an aggregate limitation
of Three Million Dollars ($3,000,000), which insurance shall insure Lessee’s
contractual liability to Lessor under the indemnity provisions of this Lease
and, if written on a “claims-made” basis, Lessee also shall provide continuous
liability coverage for claims arising during the Term either by obtaining
an
endorsement providing for an extended reporting period reasonably acceptable
to
Lessor in the event such policy is canceled or not renewed for any reason
whatsoever, or by obtaining “tail” insurance coverage converting the policies to
“occurrence” basis policies providing coverage for a period of at least three
(3) years beyond the expiration of the Term;
13.2.5 Claims
arising out of malpractice in an amount not less than One Million Dollars
($1,000,000) for each person and for each occurrence and, if written on a
“claims-made” basis, Lessee also shall provide continuous liability coverage for
claims arising during the Term either by obtaining an endorsement providing
for
an extended reporting period reasonably acceptable to Lessor in the event
such
policy is canceled or not renewed for any reason whatsoever, or by obtaining
“tail” insurance coverage converting the policies to “occurrence” basis policies
providing coverage for a period of at least three (3) years beyond the
expiration of the Term;
13.2.6 Flood
(with respect to any portions of the Leased Properties located in whole or
in
part within a designated flood plain area) and such other hazards and in
such
amounts as may be customary for comparable properties in the area;
13.2.7 During
such time as Lessee is constructing any improvements, (a) worker’s compensation
insurance and employers’ liability insurance covering all persons employed in
connection with the improvements in statutory limits, (b) a completed operations
endorsement to the commercial general liability and property damage insurance
policies referred to above, (c) builder’s risk insurance, completed value form,
covering all physical loss, in an amount satisfactory to Lessor, and (d)
such
other insurance, in such amounts, as Lessor deems necessary to protect Lessor’s
interest in the Leased Properties from any act or omission of Lessee’s
contractors or subcontractors, and certificates of insurance evidencing such
coverage, in form satisfactory to Lessor, shall be presented to Lessor prior
to
the commencement of construction of such improvements;
13.2.8 Primary
automobile liability insurance with limits of One Million Dollars
($1,000,000.00) per occurrence each for owned and non-owned and hired
vehicles;
13.2.9 Loss
or
damage commonly covered by blanket crime insurance including dishonesty,
loss of
money orders or paper currency and depositor’s forgery, with a limit of not less
than Five Hundred Thousand Dollars ($500,000.00).
13.3 Payment
of Premiums; Copies of Policies; Certificates.
Subject
to Section 12.2 of this Lease, Lessee shall pay when due all of the premiums
for
the insurance required by this Lease, and shall deliver to Lessor and to
any
Facility Mortgagee requesting such evidence, certificates of insurance in
form
satisfactory to Lessor and such Facility Mortgagee. Copies of the policies
of
insurance required by this Lease shall be delivered to Lessor within sixty
(60)
days of their effective date and
certificates thereof shall be delivered to Lessor on or before their effective
date (and, with respect to any renewal policy prior to the expiration of
the
existing policy), and in the event of the failure of Lessee either to carry
the
required insurance or pay the premiums therefor, or to deliver copies of
policies or certificates to Lessor as required, Lessor shall be entitled,
but
shall have no obligation, to obtain such insurance and pay the premiums therefor
when due, in which event Lessee shall repay to Lessor the premiums upon written
demand therefor as Additional Charges.
13.4 Umbrella
Policies.
If
Lessee chooses to carry umbrella liability coverage to obtain the limits
of
liability required under this Lease, the umbrella policies must provide coverage
in the same manner as the primary commercial general liability policy and
must
contain no exclusions in addition to, or limitations materially different
than,
those of the primary policy.
13.5 Additional
Insurance.
In
addition to the insurance described above, Lessee shall maintain such insurance
as may be required from time to time by any Facility Mortgagee and shall
at all
times comply with all Legal Requirements with respect to worker’s compensation
insurance coverage.
13.6 No
Liability; Waiver of Subrogation.
Lessor
shall have no liability to Lessee, and, provided Lessee provides the insurance
required of it by this Lease, Lessee shall have no liability to Lessor,
regardless of the cause, for any loss or expense resulting from or in connection
with damage to or the destruction or other loss of any Leased Property or
Lessee’s Personal Property, and neither party will have any right or claim
against the other for any such loss or expense by way of subrogation. Each
insurance policy carried by either party covering any of the Leased Properties
and Lessee’s Personal Property, including without limitation, contents, fire and
casualty insurance, shall contain an express waiver of any right of subrogation
on the part of the insurer against the other party. Lessee shall pay any
additional costs or charges for obtaining such waiver.
13.7 Increase
in Limits.
If an
independent study prepared by a third party with a knowledge of the long
term
care insurance industry in the State of Ohio or Pennsylvania which is reasonably
acceptable to Lessor and Lessee determines that the limits of the personal
injury or property damage - public liability insurance in such state then
being
carried are insufficient, and that such increased coverages are available
in the
marketplace at commercially reasonable rates, then upon Notice from Lessor,
Lessee shall cause such limits to be increased to the level specified in
such
Notice until further increase pursuant to the provisions of this Section.
Any
such independent study shall be paid for by Lessor.
13.8 Blanket
Policy.
Any
insurance required by this Lease may be provided by so-called blanket policies
of insurance carried by Lessee; provided, however, that the coverage afforded
Lessor thereby may not be less than or materially different from that which
would be provided by separate policies meeting the requirements of this Lease,
and provided further that such policies meet the requirements of all Facility
Mortgages.
13.9 No
Separate Insurance.
13.9.1 Lessee
shall not, on its own initiative or pursuant to the request or requirement
of
any third party, take out separate insurance concurrent in form or contributing
in the event of loss with that required by this Lease, to be furnished by,
or
that may reasonably be required to be furnished by, Lessee, or increase the
amount 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 in all cases Lessor and all Facility
Mortgagees, are named therein as additional insureds, and losses are payable
thereunder in the same manner as losses are payable under this
Lease.
13.9.2 Nothing
herein shall prohibit Lessee, upon Notice to Lessor, from (a) securing insurance
required to be carried hereby with higher limits of liability than required
in
this Lease, or (b) securing insurance against risks not required to be insured
pursuant to this Lease, and as to such insurance, Lessor and any Facility
Mortgagee need not be included therein as additional insureds, nor must losses
thereunder be payable in the same manner as losses are payable under this
Lease,
except to the extent required to avoid a default under a Facility Mortgage
or
any other encumbrance.
13.10 Captive
Insurance.
Lessor
consents to Lessee insuring the coverages required by Sections 13.2.4
and
13.2.5
through
a pure captive under common control with Lessee, which may not meet the AmBest
rating requirement set forth in Section 13.1,
provided that (a) such captive will be licensed in the State of Ohio to the
extent required by law, (b) the organization and capitalization of such captive
is reasonably acceptable to Lessor, and (c) the insurance coverages otherwise
comply with this Article. If at any time Lessee is providing the coverages
required by Sections 13.2.4
and
13.2.5
through
a captive insurance company, Lessor shall be entitled (but not required)
to
appoint one member to the advisory board of such captive insurance
company.
ARTICLE
XIV
14.1 Insurance
Proceeds.
Net
Proceeds shall be paid to Lessor and held, disbursed or retained by Lessor
as
provided herein. If the Net Proceeds are less than the Approval Threshold,
and
no Event of Default has occurred and is continuing, Lessor shall pay the
Net
Proceeds to Lessee promptly upon Lessee’s completion of the restoration of the
damaged or destroyed Leased Property. If the Net Proceeds equal or exceed
the
Approval Threshold, and no Event of Default has occurred and is continuing,
the
Net Proceeds shall be made available for restoration or repair as provided
in
Section 14.6. Within fifteen (15) days of the receipt of the Net Proceeds
of
Special Risk Insurance, Lessor and Lessee shall agree as to the portion thereof,
if any, attributable to the Lessee’s Personal Property that Lessee is not
required and does not elect to restore or replace, and if they cannot agree
they
shall submit the matter to arbitration pursuant to Article XXXV hereof, and
the
portion of the proceeds of such Special Risk Insurance agreed or determined
by
arbitration to be attributable to the Lessee’s Personal Property that Lessee is
not required and does not elect to restore or replace shall be paid to
Lessee.
14.2 Restoration
in the Event of Damage or Destruction.If
all or
any portion of a Leased Property is damaged by fire or other casualty, Lessee
shall: (a) give Lessor Notice of such damage or destruction within five (5)
Business Days of the occurrence thereof; (b) within thirty (30) Business
Days of
the occurrence commence the restoration of such Leased Property; and (c)
thereafter proceed diligently to complete such restoration as quickly as
reasonably possible, but in any event within one hundred eighty (180) days
of
the occurrence, to the end that the Leased Property is in substantially the
same
(or better) condition as the Leased Property was in immediately prior to
the
damage or destruction. Regardless of the anticipated cost thereof, if the
restoration of a Leased Property requires any modification of structural
elements, prior to commencing such modification Lessee shall obtain Lessor’s
written approval of the plans and specifications therefor.
14.3 Restoration
of Lessee’s Property.
If
Lessee is required to restore a Leased Property, Lessee also concurrently
shall
restore any of Lessee’s Personal Property that is integral to the Primary
Intended Use of such Leased Property at the time of the damage or
destruction.
14.4 No
Abatement of Rent.
There
shall be no abatement of Rent by reason of any damage to or the partial or
total
destruction of any Leased Property.
14.5 Waiver.
Except
as provided elsewhere in this Lease, Lessee hereby waives any statutory or
common law rights of termination that may arise by reason of any damage to
or
destruction of a Leased Property.
14.6 Disbursement
of Insurance Proceeds Equal to or Greater Than The Approval
Threshold.
If
Lessee restores or repairs a Leased Property pursuant to this Article XIV,
and
if the Net Proceeds equal or exceed the Approval Threshold, the restoration
or
repair and disbursement of funds to Lessee shall be in accordance with the
following procedures:
(a) The
restoration or repair work shall be done pursuant to plans and specifications
approved by Lessor and a certified construction cost statement, to be obtained
by Lessee from a contractor reasonably acceptable to Lessor, showing the
total
cost of the restoration or repair; to the extent the cost exceeds the Net
Proceeds, Lessee shall deposit with Lessor the amount of the excess cost,
and
Lessor shall disburse the funds so deposited in payment of the costs of
restoration or repair before any disbursement of Net Proceeds.
(b) Construction
Funds shall be made available, subject to a ten percent (10%) holdback, to
Lessee upon request, but no more frequently than monthly, as the restoration
and
repair work progresses pursuant to certificates, in form and substance
reasonably acceptable to Lessor, of an architect selected by Lessee and
reasonably acceptable to Lessor (such architect to be, in the reasonable
judgment of Lessor, highly qualified in the design and construction of the
type
of facility being repaired).
(c) After
the
first disbursement to Lessee, sworn statements and lien waivers in an amount
at
least equal to the amount of Construction Funds previously paid to Lessee
shall
be delivered to Lessor from all contractors, subcontractors and material
suppliers covering all labor and materials furnished through the date of
the
previous disbursement.
(d) Lessee
shall deliver to Lessor such other evidence as Lessor reasonably may request,
from time to time during the course of the restoration and repair, as to
the
progress of the work, compliance with the approved plans and specifications,
the
cost of restoration and repair and the total amount needed to complete the
restoration and repair, and showing that there are no liens against the Leased
Property arising in connection with the restoration and repair and that the
cost
of the restoration and repair at least equals the total amount of Construction
Funds then disbursed to Lessee hereunder.
(e) If
the
Construction Funds are at any time determined by Lessor to be inadequate
for
payment in full of all labor and materials for the restoration and repair,
Lessee immediately shall pay the amount of the deficiency to Lessor to be
held
and disbursed as Construction Funds prior to the disbursement of any other
Construction Funds then held by Lessor.
(f) The
Construction Funds may be disbursed by Lessor to Lessee or to the persons
entitled to receive payment thereof from Lessee, and such disbursement in
either
case may be made directly or through a third party escrow agent, such as,
but
not limited to, a title insurance company, or its agent, all as Lessor may
determine in its sole discretion. Provided Lessee is not in default hereunder,
any excess Construction Funds shall be paid to Lessee upon completion of
the
restoration or repair.
(g) If
Lessee
at any time fails to perform promptly and fully the conditions and covenants
set
forth in subparagraphs (a) through (f) above, and the failure is not corrected
within ten (10) days of written Notice thereof, or if during the restoration
or
repair an Event of Default occurs, Lessor may, at its option, immediately
cease
making any further payments to Lessee for the restoration and
repair.
(h) Lessor
may reimburse itself out of the Construction Funds for its reasonable expenses
incurred in administering the Construction Funds and inspecting the restoration
and repair work, including without limitation attorneys’ and other professional
fees and escrow fees and expenses.
14.7 Net
Proceeds Paid to Facility Mortgagee.
Notwithstanding anything in this Lease to the contrary, if any Facility
Mortgagee is entitled to any Net Proceeds or any portion thereof under the
terms
of any Facility Mortgage, the Net Proceeds shall be applied, held and/or
disbursed in accordance with the terms of the Facility Mortgage. Lessor shall
make commercially reasonable efforts to cause the Net Proceeds to be applied
to
the restoration of the Leased Property.
ARTICLE
XV
15.1 Total
Taking or Other Taking with Leased Property Rendered Unsuitable for Its Primary
Intended Use.
If
title to the fee of the whole of a Leased Property is Taken, this Lease shall
cease and terminate as to the Leased Property Taken as of the Date of Taking
by
the Condemnor, and Rent shall be apportioned as of the termination date.
If
title to the fee of less than the whole of a Leased Property is Taken, but
such
Leased Property is rendered Unsuitable for Its Primary Intended Use as a
result
of the Partial Taking, each of Lessee and Lessor shall have the option, which
shall be exercisable by written Notice to the other at any time prior to
the
first to occur of the taking of possession by, or the date of vesting of
title
in, the Condemnor, to terminate this Lease with respect to such Leased Property
as of the date so determined, in which event this Lease shall so cease and
terminate with respect to that Leased Property as of the earlier of the date
specified in the Notice or the date on which possession is taken by the
Condemnor. If this Lease is so terminated as to a Leased Property, Rent shall
be
apportioned as of the termination date.
15.2 Allocation
of Award.
The
total Award made with respect to all or any portion of a Leased Property
or for
loss of Rent, or for loss of business, shall be solely the property of and
payable to Lessor or, if so provided in a Facility Mortgage, to the Facility
Mortgagee. Nothing contained in this lease will be deemed to create any
additional interest in Lessee, or entitle Lessee to any payment based on
the
value of the unexpired term or so-called “bonus value” to Lessee of this Lease.
Any Award made for the taking of Lessee’s Personal Property or for removal and
relocation expenses of Lessee in any such proceedings, shall be payable to
Lessee. In any proceedings with respect to an Award, each of Lessor and Lessee
shall seek its own Award in conformity herewith, at its own expense.
Notwithstanding the foregoing, Lessee may pursue a claim for loss of its
business, provided that under the laws of the State, such claim will not
diminish the Award to Lessor.
15.3 Partial
Taking.
In the
event of a Partial Taking, Lessee, at its own cost and expense, shall, within
sixty (60) days of the first to occur of the taking of possession by, or
the
date of vesting of title in, the Condemnor, commence the restoration of the
affected Leased Property to a complete architectural unit of the same general
character and condition (as nearly as may be possible under the circumstances)
as existed immediately prior to the Partial Taking, and complete such
restoration with all reasonable dispatch, but in any event within one hundred
eighty (180) days of the date on which such Notice is given. Lessor shall
contribute to the cost of restoration only such portion of the Award as is
made
therefor. As long as no Event of Default has occurred and is continuing,
if such
portion of the Award is in an amount less than the Approval Threshold, Lessor
shall pay the same to Lessee upon completion of such restoration. As long
as no
Event of Default has occurred and is continuing, if such portion of the Award
is
in an amount equal to or greater than the Approval Threshold, Lessor shall
make
such portion of the Award available to Lessee in the manner provided in Section
14.6 with respect to Net Proceeds in excess of the Approval Threshold.
Notwithstanding anything to the contrary in this Lease, if the Fair Market
Rent
of the affected Leased Property is reduced by reason of the Partial Taking,
from
and after the date on which possession is taken by the Condemnor the annualized
Base Rent shall be reduced by an amount determined by dividing the portion
of
the Award made to Lessor expressly for such reduction in Fair Market Rent
by the
Capitalization Rate.
15.4 Temporary
Taking.
If
there is a Partial Taking of possession or the use of all or part of a Leased
Property, but the fee of such Leased Property is not Taken in whole or in
part,
until such Partial Taking of possession or use continues for more than six
(6)
months, all the provisions of this Lease shall remain in full force and effect
and the entire amount of any Award made for such Partial Taking shall be
paid to
Lessee provided there is then no Event of Default. Upon the termination of
any
such period of temporary use or occupancy, Lessee at its sole cost and expense
shall restore the affected Leased Property, as nearly as may be reasonably
possible, to the condition existing immediately prior to such Partial Taking.
If
any such Partial Taking continues for longer than six (6) months, and fifty
percent (50%) or more of the patient capacity of the affected Facility is
thereby rendered Unsuitable for Its Primary Use, this Lease shall cease and
terminate as to the affected Leased Property only as of the last day of the
sixth (6th)
month,
but if less than fifty percent (50%) of the patient capacity of such Facility
is
thereby rendered Unsuitable for Its Primary Use, each of Lessee and Lessor
shall
have the option, which shall be exercisable by giving written Notice to the
other at least sixty (60) days prior written Notice to the other, at any
time
prior to the end of the temporary Partial Taking, to terminate this Lease
as to
the affected Leased Property of the date set forth in such Notice, and Lessee
shall be entitled to any Award made for the period of such temporary Partial
Taking prior to the date of termination of the Lease. Rent shall not abate
during the period of any temporary Partial Taking.
15.5 Awards
Paid to Facility Mortgagee.
Notwithstanding anything herein to the contrary, if any Facility Mortgagee
is
entitled to any Award or any portion thereof under the terms of any Facility
Mortgage, such Award shall be applied, held and/or disbursed in accordance
with
the terms of the Facility Mortgage. If the Facility Mortgagee elects to apply
the Award to the indebtedness secured by the Facility Mortgage and the Award
represents an Award for Partial Taking as described in Section 15.3 above,
Lessee shall restore the affected Facility as nearly as possible under the
circumstances to a complete architectural unit of the same general character
and
condition as that of the Facility existing immediately prior to such Taking.
In
any such restoration, Lessee shall receive full credit for any portion of
any
award retained by Lessor and the Facility Mortgagee.
ARTICLE
XVI
16.1 Lessor’s
Rights Upon an Event of Default.
If an
Event of Default occurs and while it continues, Lessor may terminate this
Lease
by giving Lessee a Notice of Termination, and in such event the Term shall
end
and all rights of Lessee under this Lease shall cease on the Termination
Date.
The Notice of Termination shall be in lieu of and not in addition to any
notice
required by the laws of any State as a condition to bringing an action for
possession of the Leased Premises or to recover damages under this Lease.
In
addition to Lessor’s right to terminate this Lease, Lessor shall have all other
rights set forth in this Lease and all remedies available at law and in
equity.
Lessee
shall, to the extent permitted by law, pay as Additional Charges all costs
and
expenses incurred by or on behalf of Lessor, including, without limitation,
reasonable attorneys’ fees and expenses (whether or not litigation is commenced,
and if litigation is commenced, including fees and expenses incurred in appeals
and post-judgment proceedings) as a result of any default of Lessee
hereunder.
No
Event
of Default (other than a failure to make payment of money) shall be deemed
to
exist if and for so long as Lessee is unable to prevent such Event of Default
because of Force Majeure, provided that, upon the cessation of the Force
Majeure, Lessee immediately shall proceed to remedy the action or condition
giving rise to the Event of Default within the applicable cure period as
extended by the Force Majeure.
16.2 Certain
Remedies.
If an
Event of Default occurs, whether or not this Lease has been terminated pursuant
to Section 16.1, if required to do so by Lessor Lessee immediately shall
surrender the Leased Properties to Lessor in the condition required by Section
9.1.5 and quit the same, and Lessor may enter upon and repossess the Leased
Properties by reasonable force, summary proceedings, ejectment or otherwise,
and
may remove Lessee and all other persons and any and all personal properties
from
the Leased Properties, subject to rights of any residents or patients and
to any
Legal Requirements. In addition to all other remedies set forth or referred
to
in this Article XVI, Lessor shall have the right to suspend any Management
Agreement as to one or more or all Facilities and to retain a manager of
the
affected Facility or all Facilities at the expense of Lessee, such manager
to
serve for such term and at such compensation as Lessor reasonably determines
is
necessary under the circumstances.
16.3 Damages.
None of
(a) the termination of this Lease pursuant to Section 16.1, (b) the repossession
of the Leased Properties, (c) the failure of Lessor to relet the Leased
Properties, (d) the reletting of all or any portion thereof, or (v) the failure
of Lessor to collect or receive any rentals due upon such any reletting,
shall
relieve Lessee of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If this Lease is
terminated by Lessor, Lessee immediately shall pay to Lessor all Rent due
and
payable with respect to the Leased Properties to and including the Termination
Date, including without limitation all interest and late charges payable
under
Section 3.3 hereof with respect to any late payment of such Rent. Lessee
also
shall pay to Lessor, as liquidated damages, at Lessor’s option,
either:
(A) The
sum
of:
(i) Lessor’s
Interim Rent Loss, minus Net Reletting Proceeds for such period, and minus
the
portion of Lessor’s Interim Rent Loss, if any, that Lessee proves reasonably
could have been mitigated by Lessor, plus
(ii) the
Present Value on the Judgment Date of Lessor’s Future Rent Loss, assuming the
CPI were to increase two and one half (2.5) percentage points per Lease Year
from the Judgment Date through the Expiration Date, minus the Present Value
on
the Termination Date of the portion of Lessor’s Future Rent Loss that Lessee
proves reasonably could be mitigated by Lessor;
or
(B) Each
month between the Termination Date and the Expiration Date, Lessor’s Monthly
Rent Loss, minus the Net Reletting Proceeds for such month, and minus the
portion, if any, of Lessor’s Monthly Rent Loss that Lessee proves reasonably
could have been avoided. Any suit brought to recover liquidated damages payable
under this subsection (B) shall not prejudice Lessor’s right to collect
liquidated damages for subsequent months in a similar proceeding.
16.4 Waiver.
If this
Lease is terminated pursuant to Section 16.1, Lessee waives, to the extent
permitted by applicable law, (a) any right of reentry, repossession or
redesignation, (b) any right to a trial by jury in the event of summary
proceedings to enforce the remedies set forth in this Article XVI, and (c)
the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt. Acceptance of Rent at any time does not prejudice or
remove any right of Lessor as to any right or remedy. No course of conduct
shall
be held to bar Lessor from literal enforcement of the terms of this
Lease.
16.5 Application
of Funds.
Any
payments received by Lessor under any of the provisions of this Lease during
the
existence or continuance of any Event of Default shall be applied to Lessee’s
obligations in the order that Lessor determines in its sole discretion or
as may
be prescribed by law.
16.6 Bankruptcy.
(a) None
of
Lessee’s interest in this Lease, any estate hereby created in Lessee’s interest
or any interest herein or therein shall pass to any trustee or receiver or
assignee for the benefit of creditors or otherwise by operation of law, except
as specifically may be provided pursuant to the Bankruptcy Code (11 USC § 101
et. seq.), as the same may be amended from time to time.
(b) Rights
and Obligations Under the Bankruptcy Code.
(i) Upon
filing of a petition by or against Lessee under the Bankruptcy Code, Lessee,
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 Lessee, agree to pay
monthly
in advance, on the first day of each month, as reasonable compensation for
the
use and occupancy of the Leased Premises, an amount equal to all Rent due
pursuant to this Lease.
(ii) Included
within and in addition to any other conditions or obligations imposed upon
Lessee or its successor in the event of the assumption and/or assignment
of the
Lease are the following: (A) the cure of any monetary defaults and reimbursement
of pecuniary loss within not more than thirty (30) days of the assumption
and/or
assignment; (B) the deposit of an additional amount equal to not less than
three
(3) months’ Base Rent, which amount is agreed to be a necessary and appropriate
deposit to secure the future performance under the Lease of Lessee or its
assignee; (C) the continued use of the Leased Premises for the Primary Intended
Use; and (D) the prior written consent of any Facility Mortgagee.
ARTICLE
XVII
17.1 Lessor’s
Right to Cure Lessee’s Default.
If
Lessee fails to make any payment or perform any act required to be made or
performed under this Lease, and fails to cure the same within any grace or
cure
period applicable thereto, upon such Notice as may be expressly required
herein
(or, if Lessor reasonably determines that the giving of Notice would risk
loss
to the Leased Properties or cause damage to Lessor, upon such Notice as is
practical under the circumstances), and without waiving or releasing any
obligation of Lessee, Lessor may make such payment or perform such act for
the
account and at the expense of Lessee, and may, to the extent permitted by
law,
enter upon the Leased Properties for such purpose and take all such action
thereon as, in Lessor’s sole opinion, may be necessary or appropriate. No such
entry shall be deemed an eviction of Lessee. All amounts so paid by Lessor
and
all costs and expenses (including, without limitation, reasonable attorneys’
fees and expenses) so incurred, together with the late charge and interest
provided for in Section 3.3 thereon, shall be paid by Lessee to Lessor on
demand. The obligations of Lessee and rights of Lessor contained in this
Article
shall survive the expiration or earlier termination of this Lease.
17.2 Lessee’s
Affiliates Right to Cure.
If
Lessee fails to perform any acts or obligation required to be made or performed
under this Lease, and fails to cure the same within any applicable grace
period
set forth in this Lease, then Lessor shall grant to Guarantor or any Guarantor
Affiliate the right to cure such failure by Lessee under this Lease and,
at
Guarantor’s option, become a substitute Lessee pursuant to Section 22.1.
ARTICLE
XVIII
18.1 Holding
Over.
If
Lessee remains in possession of all or any of the Leased Properties after
the
expiration of the Term or earlier termination of this Lease, such possession
shall be as a month-to-month tenant, and throughout the period of such
possession Lessee shall pay as Rent for each month one and one half (1.5)
times
the sum of: (a) one-twelfth (1/12th)
of the
Base Rent payable during the Lease Year in which such expiration or termination
occurs, plus (b) all Additional Charges accruing during the month, plus (c)
any
and all other sums payable by Lessee pursuant to this Lease. During such
period
of month-to-month tenancy, Lessee 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
month-to-month tenancies, to continue its occupancy and use of the Leased
Properties until the month-to-month tenancy is terminated. Nothing contained
herein shall constitute the consent, express or implied, of Lessor to the
holding over of Lessee after the expiration or earlier termination of this
Lease.
18.2 Indemnity.
If
Lessee fails to surrender the Leased Properties in a timely manner and in
accordance with the provisions of Section 9.1.5 upon the expiration or
termination of this Lease, in addition to any other liabilities to Lessor
accruing therefrom, Lessee shall defend, indemnify and hold Lessor, 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 paid by Lessee pursuant
to
this Lease during Lessee’s hold-over and any claims by any proposed new tenant
founded on such failure. The provisions of this Section 18.2 shall survive
the
expiration or earlier termination of the Term.
ARTICLE
XIX
19.1 Subordination.
This
Lease is subject and subordinate to any Facility Mortgage and to any Ground
Lease, to all advances made or hereafter to be made thereunder and to all
renewals, modifications, consolidations, replacements and extensions thereof
and
substitutions therefore. This clause shall be self-operative and no further
instrument of subordination need be required by any Facility Mortgagee or
Ground
Lessor; provided, however, that Lessor or any Facility Mortgagee may elect
to
make this Lease superior to a Facility Mortgage at any time by Notice to
Lessee.
As to any Facility Mortgage or Ground Lease to which this Lease is subordinate,
Lessor shall provide Lessee with a “non-disturbance agreement” reasonably
acceptable to Lessee and such Facility Mortgagee or Ground Lessor providing
that, if such Facility Mortgagee acquires the Leased Properties by way of
foreclosure or deed in lieu of foreclosure, or if the Ground Lease is
terminated, such Facility Mortgagee or Ground Lessor will not disturb Lessee’s
possession under this Lease and will recognize Lessee’s rights hereunder if and
for so long as no Event of Default has occurred under this Lease and is
continuing. Lessee agrees that it shall not withhold or delay its consent
unreasonably to any amendment of this Lease reasonably required by a Facility
Mortgagee or Ground Lessor, and Lessee shall be deemed to have withheld or
delayed its consent unreasonably if Lessee has received the non-disturbance
agreement provided for above and the requested amendment does not materially
(a)
alter the economic terms of this Lease, (b) diminish the rights of Lessee
under
this Lease or (c) increase the obligations of Lessee under this
Lease.
19.2 Attornment.
If a
Facility Mortgagee or Ground Lessor enforces the remedies provided for by
law or
by a Facility Mortgage or Ground Lease, Lessee shall, at the option of the
party
succeeding to the interest of Lessor as a result of such enforcement or as
a
result of a deed or delivery of possession of the Leased Properties in lieu
of
such enforcement, attorn to such successor and recognize such successor as
Lessor under this Lease; provided, however, that such successor in interest
shall not (a) be bound by any payment of Rent for more than one (1) month
in
advance, except for any such advance payments as may be expressly required
by
this Lease; (b) be bound by any modification of this Lease made without the
written consent of the Facility Mortgagee or Ground Lessor or successor in
interest; (c) be liable for any act or omission of Lessor; or (d) be subject
to
any offset or defense arising prior to the date such successor in interest
acquired title to the Leased Properties or, in the case of a Ground Lessor,
the
date on which the Ground Lessor recovered or was given possession of the
Leased
Properties. Upon request, Lessee shall execute and deliver an instrument
or
instruments confirming the attornment provided for herein.
19.3 Lessee’s
Certificate.
Lessee
shall, upon not less than ten (10) days prior Notice from Lessor, execute,
acknowledge and deliver to Lessor Lessee’s Certificate containing then-current
facts. It is intended that any Lessee’s Certificate delivered pursuant hereto
may be relied upon by Lessor, any prospective tenant or purchaser of the
Leased
Properties, any mortgagee or prospective mortgagee and any other party who
reasonably may rely on such statement. Lessee’s failure to deliver the Lessee’s
Certificate within such time shall constitute an Event of Default. In addition,
if Lessee fails to deliver the Lessee’s Certificate within the ten (10) day
period referred to above, Lessee hereby authorizes Lessor to execute and
deliver
a certificate to the effect (if true) that Lessee represents and warrants
that
(a) this Lease is in full force and effect without modification, and (b)
Lessor
is not in breach or default of any of its obligations under this
Lease.
19.4 Notice
and Cure.
If a
Facility Mortgagee acquires title to one or more of the Leased Properties
by way
of foreclosure or deed in lieu of foreclosure, then commencing on the date
the
Facility Mortgagee acquires title, the Facility Mortgagee shall have thirty
(30)
days within which to cure any default by Lessor under this Lease existing
on
such date. If the defaults by Lessor are cured during such period, then this
Lease shall remain in full force and effect and Lessee shall have no right
to
terminate this Lease so long as the Facility Mortgagee performs all of the
Lessor’s subsequent obligations under this Lease. The foregoing rights to cure a
Lessor default shall be exercisable in the sole discretion of the Facility
Mortgagee, and, the Facility Mortgagee shall have no obligation to cure any
default by Lessor.
ARTICLE
XX
20.1 Risk
of Loss.
During
the Term, the risk of loss or of decrease in the enjoyment and beneficial
use of
the Leased Properties in consequence of the damage or destruction thereof
by
fire, the elements, casualties, thefts, riots, wars or otherwise, or in
consequence of foreclosures, attachments, levies or executions (other than
those
caused by Lessor and those claiming from, through or under Lessor) is assumed
by
Lessee, and, in the absence of gross negligence, willful misconduct or material
breach of this Lease by Lessor, Lessor in no event shall be answerable or
accountable therefor nor shall any of the events mentioned in this Section
entitle Lessee to any abatement of Rent.
ARTICLE
XXI
21.1 Indemnification.
Notwithstanding the existence of any insurance or self-insurance provided
for in
Article XIII, and without regard to the policy limits of any such insurance
or
self-insurance, Lessee shall protect, indemnify, save harmless and defend
Lessor
and any Facility Mortgagee, and the principals, officers, directors and agents
and employees of Lessor and of any Facility Mortgagee, from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, reasonable attorneys’ fees and
expenses) (collectively, “Losses”),
to
the extent permitted by law, imposed upon or incurred by or asserted against
Lessor or any Facility Mortgagee by reason of: (a) any accident, injury to
or
death of persons or loss of or damage to property occurring on or about the
Leased Properties or adjoining sidewalks, including without limitation any
claims of malpractice; (b) any use, misuse, non-use, condition, maintenance
or
repair by Lessee of the Leased Properties; (c) the failure to pay any
Impositions; (d) any failure on the part of Lessee to perform or comply with
any
of the terms of this Lease; (e)
the
management and operation of the Facilities from and after November 1, 1999;
(f)
the
nonperformance of any contractual obligation, express or implied, assumed
or
undertaken by Lessee or any party in privity with Lessee with respect to
the
Leased Properties or any business or other activity carried on with respect
to
the Leased Properties during the Term or thereafter during any time in which
Lessee or any such other party is in possession of the Leased Properties
or
thereafter to the extent that any conduct by Lessee or any such person (or
failure of such conduct thereby if the same should have been undertaken during
such time of possession and leads to such damage or loss) causes such loss
or
claim. Any amounts that become payable by Lessee under this Section shall
be
paid within ten (10) days after liability therefor on the part of Lessee
is
determined by litigation or otherwise, and, if not timely paid, shall bear
interest (to the extent permitted by law) at the Overdue Rate from the date
of
such determination to the date of payment. Nothing herein shall be construed
as
indemnifying either Lessor or any Facility Mortgagee against its own grossly
negligent acts or omissions or willful misconduct. At the request and expense
of
Lessee, Lessor agrees to use commercially reasonable efforts to pursue any
claim
it may have against the sellers under the Acquisition Agreements the successful
pursuit of which may result, directly or indirectly, in a financial benefit
to
Lessee. At the request and expense of Lessor, Lessee agrees to use commercially
reasonable efforts to assist Lessor in pursuing any claim it may have against
the sellers under the Acquisition Agreements.
21.2 Survival
of Indemnification.
Lessee’s liability under this Article shall survive the expiration or any
earlier termination of this Lease.
ARTICLE
XXII
22.1 General
Prohibition against Transfers.
Lessee
acknowledges that a significant inducement to Lessor to enter into this Lease
with Lessee on the terms set forth herein is the combination of financial
strength, experience, skill and reputation possessed by Lessee, the Person
or
Persons in Control of Lessee and the Manager of the Facilities on the
Commencement Date, together with Lessee’s assurance that Lessor shall have the
unrestricted right to approve or disapprove any proposed Transfer. Therefore,
there shall be no Transfer except as specifically permitted by this Lease
or
consented to in advance by Lessor in writing. Lessee agrees that Lessor shall
have the right to withhold its consent to any proposed Transfer on the basis
of
Lessor’s judgment as to the effect the proposed Transfer may have on the
Facilities and the future performance of the obligations of the Lessee under
this Lease, whether or not Lessee agrees with such judgment. Any attempted
Transfer that is not specifically permitted by this Lease or consented to
by
Lessor in advance in writing shall be null and void and of no force and effect
whatsoever. In the event of a Transfer, Lessor may collect Rent and other
charges from the Transferee and apply the amounts collected to the Rent and
other charges herein reserved, but no Transfer or collection of Rent and
other
charges shall be deemed to be a waiver of Lessor’s rights to enforce Lessee’s
covenants or an acceptance of the Transferee as Lessee, or a release of the
Lessee named herein from the performance of its covenants. Notwithstanding
any
Transfer, Lessee shall remain fully liable for the performance of all terms,
covenants and provisions of this Lease. Any violation of this Lease by any
Transferee shall be deemed to be a violation of this Lease by Lessee.
Notwithstanding
the foregoing, a Transfer to an Affiliate of Lessee will not require the
consent
of Lessor and is permitted under this Lease provided: (a) such transferee
assumes all obligations under this Lease in writing and grants (and its equity
owners grant) equivalent (in both assets covered and priority of lien) security
interests in the assets and equity of such transferee concurrently with such
Transfer; and (b) each of the other Transaction Documents are ratified and
affirmed by the applicable Lessee Affiliates as being in full force and effect
after giving effect to the proposed Transfer. Notwithstanding
the foregoing, the following transfers are permitted and will not require
the
consent of Lessor and are permitted under this Lease:
(a) a
Transfer to an Affiliate of Lessee provided that: (a) such transferee assumes
all obligations under this Lease in writing and grants (and its equity owners
grant) equivalent (in both assets covered and priority of lien) security
interests in the assets and equity of such transferee concurrently with such
Transfer; and (b) each of the other Transaction Documents are ratified and
affirmed by the applicable Lessee Affiliates as being in full force and effect
after giving effect to the proposed Transfer;
(b)
a
Transfer upon the death of any equity owner of Lessee to his or her spouse,
children, parents, heirs, lineal descendents or relatives through marriage
or
otherwise (or to any one or more of them);
(c) the
transfer, by gift or sale for estate planning purposes, by an equity owner
of
Lessee of all or any portion of his or her equity interest in Lessee to (i)
his
or her spouse, children, parents or other heirs (or to any one or more of
them)
upon such equity owner’s death, or (ii) a revocable grantor trust of which such
equity owner is the sole trustee and settlor, (iii) a “Mallinckrodt” trust, (iv)
any trust where such equity owner or his or her spouse is the beneficiary
during
his or her lifetime, or either of their descendents or some combination thereof
are the beneficiaries of such trust after such equity owner’s death, (v) a trust
where such equity owner is the trustee of such trust, (vi) a trust where
the
trust assets will revert back to such equity owner, (vii) a trust where such
equity owner, as permitted by the trust document, may regain ownership of
the
assets in such trust, (viii) a trust where the ownership of such trust may
be
transferred to such equity owner or his or her spouse (or widow) or either
of
their descendents, (ix) to a trust where such ownership in the trust may
be
transferred into a corporation or limited liability company of which such
trust
is a controlling owner of such entity, (x) a corporation or limited liability
company of which a person set forth above is a controlling owner of such
entity,
shall be deemed a permitted Transfer under this Agreement, or (xi) to a
“defective grantor trust”; provided, however, that Lessee shall provide Lessor
with Notice of such Transfer and such information about such Transfer as
Lessor
may reasonably request.
22.2 Subordination
and Attornment.
Lessee
shall insert in any sublease permitted by Lessor provisions to the effect
that
(a) such sublease is subject and subordinate to all of the terms and provisions
of this Lease and to the rights of Lessor hereunder, (b) if this Lease
terminates before the expiration of such sublease, the sublessee thereunder
will, at Lessor’s option, attorn to Lessor and waive any right the sublessee may
have to terminate the sublease or to surrender possession thereunder, as
a
result of the termination of this Lease, and (c) if the sublessee receives
a
written Notice from Lessor or Lessor’s assignee, if any, stating that Lessee is
in default under this Lease, the sublessee thereafter shall be obligated
to pay
all rentals accruing under the sublease directly to the party giving such
Notice, or as such party may direct, and such payments shall be credited
against
the amounts owing by Lessee under this Lease.
22.3 Sublease
Limitation.
Anything contained in this Lease to the contrary notwithstanding, even if
a
sublease of a Leased Property is permitted, Lessee shall not sublet such
Leased
Property on any basis such that the rental to be paid by the sublessee
thereunder would be based, in whole or in part, on either (a) the income
or
profits derived by the business activities of the sublessee, or (b) any other
formula such that any portion of the sublease rental received by Lessor would
fail to qualify as “rents from real property” within the meaning of Section
856(d) of the Code, or any similar or successor provision thereto. The parties
agree that this Section shall not be deemed waived or modified by implication,
but may be waived or modified only by an instrument in writing explicitly
referring to this Section by number.
ARTICLE
XXIII
23.1 Financial
Statements and Other Reports and Materials Required by Lessor.
Lessee
shall furnish to Lessor, in paper form and by electronic means satisfactory
to
Lessor:
(a) Within
ninety (90) days after the end of each of Lessee’s fiscal years: (i) Lessee’s
Financial Statements; (ii) separate financial statements for each of the
Facilities that are prepared in accordance with GAAP, except for principles
of
consolidation; (iii) a variance report comparing actual items of income and
expenses to such items as budgeted, together with an explanation of the reason
or reasons for each variance of more than five percent (5%); and (iv) an
Officer’s Certificate stating that Lessee is not in default in the performance
or observance of any of the terms of this Lease, or if Lessee is in default,
specifying all such defaults, the nature thereof, and the steps being taken
to
remedy the same;
(b) Within
thirty five (35) days after the end of each of Lessee’s quarters, quarterly
consolidated Financial Statements of Lessee, together with an Officer’s
Certificate stating that (i) Lessee is not in default of any covenant set
forth
in Section 8 of this Lease, or if Lessee is in default, specifying all such
defaults, the nature thereof, and the steps being taken to remedy the same;
(ii)
each Facility that participates in the Medicare program is in compliance
with
the terms of its Medicare provider agreement and in good standing with the
Medicare program; (iii) each Facility that participates in the Medicaid program
is in compliance with the terms of its Medicaid provider agreement and in
good
standing with the Medicaid program; and (iv) the then-current number of licensed
and operating beds at each Facility;
(c) Within
thirty (30) days after the end of each month, monthly financial reports for
each
Facility, including detailed statements of income and expense and detailed
operational statistics regarding occupancy rates, patient mix and patient
rates
by type for the Facility, including a rent roll and an aged accounts receivables
report in sufficient detail to show amounts due from each class of patient
mix
(i.e., private, Medicare, Medicaid and Veterans Administration) by the account
age classifications of 30 days, 60 days, 90 days, 120 days and over 120
days;
(d) Within
fifteen (15) days of filing a copy of each cost report filed with a governmental
agency for any Facility;
(e) Within
fifteen (15) days of Lessee’s or Manager’s receipt thereof, copies of Medicare
and Medicaid Rate Letters and correspondence;
(f) Within
fifteen (15) days after they are required to be filed with the SEC, copies
of
any annual or quarterly report and of information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC may by rules
and
regulations prescribe) that Lessee or Manager is required to file with the
SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934;
(g) Within
thirty (30) days of Lessee’s or Manager’s receipt thereof, copies of surveys
performed by the appropriate governmental agencies for licensing or
certification purposes, including, without limitation, annual surveys, revisits
and complaint surveys, copies of any plans of correction and all related
correspondence;
(h) Immediate
Notice to Lessor of any action, proposal or investigation by any agency or
entity, or complaint to such agency or entity, known to Lessee, the result
of
which could be to (i) modify in a way adverse to Lessee or revoke or suspend
or
terminate, or fail to renew or fully continue in effect, any license or
certificate or operating authority pursuant to which Lessee carries on any
part
of the Primary Intended Use of the Facilities, or (ii) suspend, terminate,
adversely modify, or fail to renew or fully continue in effect any cost
reimbursement or cost sharing program by any state or federal governmental
agency, including but not limited to Medicaid or Medicare or any successor
or
substitute therefor, or seek return of or reimbursement for any funds previously
advanced or paid pursuant to any such program, or (iii) impose any bed hold,
limitation on patient admission or similar restriction on any Leased Property,
or (iv) prosecute any party with respect to the operation of any activity
on the
Facilities or enjoin any party or seek any civil penalty in excess of One
Thousand Dollars ($1,000.00) in respect thereof;
(i) As
soon
as it is prepared in each Lease Year, but not later than the last day of
the
second (2nd)
month
in each Lease Year (i) a capital and operating budget for the Facilities
for
that Lease Year, which budget shall be subject to Lessor’s reasonable approval;
and (ii) a marketing plan for that Lease Year;
(j) With
reasonable promptness, such other information respecting the financial condition
and affairs of Lessee and the Facilities as Lessor reasonably may request
from
time to time, including, without limitation, any such other information as
may
be available to the administration of the Leased Properties;
(k) Upon
Lessor’s request from time to time, such additional information and unaudited
quarterly financial information concerning the Leased Properties and Lessee
as
Lessor may require for its on-going filings with the Securities and Exchange
Commission, under both the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, including, but not limited to,
10-Q
Quarterly Reports, 10-K Annual Reports and registration statements to be
filed
by Lessor during the Term of this Lease; and
(l) At
least
fifteen (15) Business Days after the expiration of each license and permit
required for the operation of the Facilities for the Primary Intended Use,
evidence satisfactory to Lessor that such license or permit has been
unconditionally renewed by the issuer thereof.
23.2 Public
Offering Information.
Lessee
specifically agrees that Lessor may include financial information and
information concerning the operation of the Facilities that does not violate
the
confidentiality of the facility-patient relationship and the physician-patient
privilege under applicable laws, in offering memoranda or prospectus, or
similar
publications in connection with syndications or public offerings of Lessor’s
securities or interests, and any other reporting requirements under applicable
Federal and State Laws, including those of any successor to Lessor. Lessee
agrees to provide such other reasonable information necessary with respect
to
Lessee and the Leased Properties to facilitate a public offering or to satisfy
SEC or regulatory disclosure requirements. Upon request of Lessor, Lessee
shall
notify Lessor of any necessary corrections to information Lessor proposes
to
publish within a reasonable period of time (not to exceed three (3) days)
after
being informed thereof by Lessor.
ARTICLE
XXIV
24.1 Lessor’s
Right to Inspect.
Lessee
shall permit Lessor and its authorized representatives to inspect the Leased
Properties and Lessee’s books and records pertaining thereto during normal
business hours upon twenty-four hours Notice.
ARTICLE
XXV
25.1 No
Waiver.
No
failure by Lessor to insist upon the strict performance of any term hereof
or to
exercise any right, power or remedy consequent upon a breach hereof, and
no
acceptance of full or partial payment of Rent during the continuance of any
such
breach, shall constitute a waiver of any such breach or of any such term.
No
waiver of any breach shall affect or alter this Lease, which shall continue
in
full force and effect with respect to any other then existing or subsequent
breach.
ARTICLE
XXVI
26.1 Remedies
Cumulative.
To the
extent permitted by law, each legal, equitable or contractual right, power
and
remedy of Lessor now or hereafter provided either in this Lease or by statute
or
otherwise shall be cumulative and concurrent and shall be in addition to
every
other right, power and remedy, and the exercise or beginning of the exercise
by
Lessor of any one or more of such rights, powers and remedies shall not preclude
the simultaneous or subsequent exercise by Lessor of any or all of such other
rights, powers and remedies.
ARTICLE
XXVII
27.1 Acceptance
of Surrender.
No
surrender to Lessor of this Lease or of the Leased Properties or any part
thereof, or of any interest therein, shall be valid or effective unless agreed
to and accepted in writing by Lessor, and no act by Lessor or any representative
or agent of Lessor, other than such a written acceptance by Lessor, shall
constitute an acceptance of any such surrender.
ARTICLE
XXVIII
28.1 No
Merger of Title.
There
shall be no merger of this Lease or of the leasehold estate created hereby
by
reason of the fact that the same person, firm, corporation or other entity
may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created hereby or any interest in this Lease or such leasehold estate,
and (b) the fee estate in the Leased Properties.
28.2 No
Partnership.
Nothing
contained in this Lease will be deemed or construed to create a partnership
or
joint venture between Lessor and Lessee or to cause either party to be
responsible in any way for the debts or obligations of the other or any other
party, it being the intention of the parties that the only relationship
hereunder is that of Lessor and Lessee.
ARTICLE
XXIX
29.1 Conveyance
by Lessor.
If
Lessor or any successor owner of the Leased Properties conveys the Leased
Properties other than as security for a debt, Lessor or such successor owner,
as
the case may be, shall be released from all future liabilities and obligations
of Lessor under this Lease arising or accruing from and after the date of
such
conveyance or other transfer, and all such future liabilities and obligations
shall be binding upon the new owner.
ARTICLE
XXX
30.1 Quiet
Enjoyment.
So long
as Lessee pays all Rent as it becomes due and complies with all of the terms
of
this Lease and performs its obligations hereunder, Lessee shall peaceably
and
quietly have, hold and enjoy the Leased Properties for the Term, free of
any
claim or other action by Lessor or anyone claiming by, through or under Lessor,
but subject to all liens and encumbrances of record as of the date hereof
or
hereafter provided for in this Lease or consented to by Lessee. Except as
otherwise provided in this Lease, no failure by Lessor to comply with the
foregoing covenant will give Lessee any right to cancel or terminate this
Lease
or abate, reduce or make a deduction from or offset against the Rent or any
other sum payable under this Lease, or to fail to perform any other obligation
of Lessee. Lessee shall, however, have the right, by separate and independent
action, to pursue any claim it may have against Lessor as a result of a breach
by Lessor of the covenant of quiet enjoyment contained in this
Section.
ARTICLE
XXXI
31.1 Notices.
Any
notice, request or other communication to be given by any party hereunder
shall
be in writing and shall be sent by registered or certified mail, postage
prepaid, or by hand delivery or facsimile transmission to the following
address:
To
Lessee: CSC
MSTR
LSCO, LLC
c/o
CommuniCare Health Services
4700
Ashwood Drive, Suite 200
Cincinnati,
OH 45241
Attn:
Stephen L. Rosedale
Telephone
No.: (513) 489 - 7100
Facsimile
No.: (513) 489-7199
With
copy
to Benesch,
Friedlander, Coplan & Aronoff LLP
(which
shall not 2300
BP
Tower
constitute
notice): 200
Public Square
Cleveland,
OH 44114-2378
Attn: Harry
M.
Brown
Phone:
(216) 363-4606
Fax:
(216) 363-4588
To
Lessor: OHI
ASSET
II (OH), LLC
c/o
Omega
Healthcare Investors, Inc.
9690
Deereco Road, Suite 100
Timonium,
MD 21093
Attn.:
Daniel J. Booth
Telephone
No.: (410) 427-1700
Facsimile
No.: (410) 427-8800
And
with
copy to Myers
Nelson Dillon & Shierk, PLLC
(which
shall not 125
Ottawa Ave., N.W., Suite 270
constitute
notice):
|
Grand
Rapids, Michigan 49503
|
Attn:
Mark E. Derwent
|
Telephone
No.: (616) 233-9640
Facsimile
No.: (616) 233-9642
or
to
such other address as either party may hereafter designate. Notice shall
be
deemed to have been given on the date of delivery if such delivery is made
on a
Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery
was
first attempted. Notice sent by facsimile transmission shall be deemed given
upon confirmation that such Notice was received at the number specified above
or
in a Notice to the sender. If Lessee has vacated the Leased Properties, Lessor’s
Notice may be posted on the door of a Leased Property.
ARTICLE
XXXII
32.1 Fair
Market Rent.
If it
becomes necessary to determine Fair Market Rent for any purpose under this
Lease, the party required or permitted to give Notice of such required
determination shall include in the Notice the name of a person selected to
act
as appraiser on its behalf. Within ten (10) days after such Notice, the party
receiving such Notice shall give Notice to the other party of its selection
of a
person to act as appraiser on its behalf. The appraisers thus appointed,
each of
whom must be a member of the Appraisal Institute (or any successor organization
thereto) and experienced in appraising facilities used for purposes similar
to
the Primary Intended Use of the Facilities, shall, within forty-five (45)
days
after the date of the Notice appointing the first appraiser, proceed to appraise
the Leased Property or Leased Properties, as the case may be, to determine
the
Fair Market Rent thereof as of the relevant date (giving effect to the impact,
if any, of inflation between the date of their decision and the relevant
date);
provided, however, that if only one appraiser has been so appointed, or if
two
appraisers have been so appointed but only one such appraiser has made such
determination within fifty (50) days after the date of the Notice appointing
the
first appraiser, then the determination of such appraiser shall be final
and
binding upon the parties. To the extent consistent with sound appraisal practice
at the time of any such appraisal, such appraisal shall be made on a basis
consistent with the basis on which the Leased Property or Leased Properties
were
appraised for purposes of determining its fair market value at the time of
Lessor’s acquisition thereof. If two appraisers have been appointed and have
made their determinations within the respective requisite periods set forth
above, and if the difference between the amounts so determined does not exceed
ten percent (10%) of the lesser of such amounts, then the Fair Market Rent
shall
be an amount equal to fifty percent (50%) of the sum of the amounts so
determined. If the difference between the amounts so determined exceeds ten
percent (10%) of the lesser of such amounts, then such two appraisers shall
within twenty (20) days appoint a third appraiser. If no such appraiser is
appointed within such twenty (20) days or within ninety (90) days of the
date of
the Notice appointing the first appraiser, whichever is earlier, either Lessor
or Lessee may apply to any court having jurisdiction to have such appointment
made by such court. Any appraiser appointed by the original appraisers or
by
such court shall be instructed to determine the Fair Market Rent within
forty-five (45) days after appointment of such appraiser. The determination
of
the appraiser which differs most in terms of dollar amount from the
determinations of the other two appraisers shall be excluded, and the average
of
the remaining two determinations shall be final and binding upon Lessor and
Lessee as the Fair Market Rent of the Leased Property or Leased Properties,
as
the case may be. If the Fair Market Rent is being determined for more than
one
year, the Fair Market Rent may include such annual increases, if any, as
the
appraisers determine to be in accordance with the terms of this
Lease.
ARTICLE
XXXIII
33.1 Lessor’s
Option to Purchase Lessee’s Personal Property.
At the
expiration or termination of this Lease, at Lessor’s option Lessee shall be
deemed to have sold, assigned, transferred and conveyed all of Lessee’s Personal
Property not integral to the Primary Intended Use, or such portion thereof
as
may be designated by Lessor in its exercise of its option, to Lessor pursuant
to
Section 6.3 hereof for an amount equal to the fair market value of such Personal
Property as determined pursuant to an appraisal, subject to, and with
appropriate credits for, any obligations owing from Lessee to Lessor and
for the
then outstanding balances owing on all equipment leases, conditional sale
contracts and any other encumbrances to which such Personal Property is subject.
Lessor’s option shall be exercised by Notice to Lessee no more than one hundred
eighty (180) days, nor less than ninety (90) days, before the expiration
of the
Initial Term or, if the Term is renewed as provided herein, before the
expiration of the last Renewal Term, unless this Lease is terminated prior
to
its expiration date by reason of an Event of Default, in which event Lessor’s
option shall be exercised not more than ninety (90) days after the Termination
Date. If Lessee does not receive Lessor’s Notice exercising its option before
the expiration of the relevant time period, Lessee shall give Lessor Notice
thereof, and Lessor’s option shall continue in full force and effect for a
period of thirty (30) days after such Notice from Lessee. If Lessor exercises
its option, Lessee shall, in exchange for Lessor’s payment of the purchase
price, deliver the purchased Lessee’s Personal Property to Lessor, together with
a bill of sale and such other documents as Lessor reasonably may request
in
order to carry out the purchase, and the purchase shall be closed by such
delivery and such payment on the date set by Lessor in its Notice of exercise.
33.2 Facility
Trade Names.
If this
Lease is terminated pursuant to Section 16.1 or Lessor exercises its option
to
purchase Lessee’s Personal Property pursuant to Section 34.1, Lessee shall be
deemed to have assigned to Lessor the exclusive right to use the Facility
Trade
Names (except for the names “CommuniCare”, any variants thereof, and any trade
name which is commonly used as part of a long term marketing program among
multiple facilities by Affiliates of Lessee) in perpetuity in the markets
in
which the Facilities are located, and Lessee shall not after any such
termination use the Facility Trade Names in any business that competes with
the
Facilities.
33.3 Transfer
of Operational Control of the Facilities.
33.3.1 Lessee
acknowledges and agrees that, subject to applicable law, the certificates
of
need and licenses necessary to operate the Leased Properties for the Primary
Intended Use are appurtenant to the Leased Properties, both during and following
the expiration or earlier termination of the Term. If the certificates of
need
or licenses to operate the Leased Properties for the Primary Intended Use
are
issued to Lessee, the Sublessees or the Manager, Lessee agrees that it will
cooperate with Lessor to turn over to Lessor or its designee, upon the
expiration or earlier termination of the Term, all of Lessee’s rights in
connection with the certificate of need and/or licenses.
33.3.2 Upon
the
expiration or earlier termination of the Term, Lessee shall cooperate fully
in
transferring operational control of the Facilities to Lessor or Lessor’s nominee
and shall use its best efforts to cause the business conducted at the Facilities
to continue without interruption. To that end, pending completion of the
transfer of the operational control of the Facilities to Lessor or its
nominee:
(a) Lessee
will not terminate the employment of any employees without just cause, or
change
any salaries; provided, however, that without the advance written consent
of
Lessor Lessee may grant pre-announced wage increases of which Lessor has
knowledge, increases required by written employment agreements and normal
raises
to non-officers at regular review dates; and Lessee will not hire any additional
employees except in good faith in the ordinary course of business;
and
(b) Lessee
will provide all necessary information requested by Lessor or its nominee
for
the preparation and filing of any and all necessary applications or
notifications of any federal or state governmental authority having jurisdiction
over a change in the operational control of the Facilities, and any other
information reasonably required to effect an orderly transfer of the Facilities,
and Lessee will use its best efforts to cause all operating health care licenses
to be transferred to Lessor or to Lessor’s nominee; and
(c) Lessee,
Lessor and any new operator will enter into an operations transfer agreement
substantially in the form of Exhibit
E
to this
Lease.
33.4 Intangibles
and Personal Property.
Notwithstanding any other provision of this Lease, but subject to Section
6.4
relating to the security interest in favor of Lessor, Lessor’s Personal Property
shall not include goodwill nor shall it include any other intangible personal
property that is severable from Lessor’s “interests in real property” within the
meaning of Section 856(d) of the Code, or any similar or successor provision
thereto.
ARTICLE
XXXIV
34.1 Arbitration.
Except
with respect to the payment of Rent under this Lease, the determination of
Fair
Market Rent (which shall be determined solely in accordance with Section
32.1),
and
any proceedings to recover possession of one or more of the Leased Properties,
if any controversy arises between the parties hereto as to any of the provisions
of this Lease or the performance thereof, and if the parties are unable to
settle the controversy by agreement or as otherwise provided herein, the
controversy shall be decided by arbitration. The arbitration shall be conducted
by three arbitrators selected in accordance with the rules and procedures
of the
American Arbitration Association. The decision of the arbitrators shall be
final
and binding, and judgment may be entered thereon in any court of competent
jurisdiction. The decision shall set forth in writing the basis for the
decision. In rendering the decision and award, the arbitrators shall not
add to,
subtract from or otherwise modify the provisions of this Lease. The expense
of
the arbitration shall be divided between Lessor and Lessee unless otherwise
specified in the award. Each party in interest shall pay the fees and expenses
of its own counsel. The arbitration shall be conducted in Cleveland, Ohio.
In
any arbitration, the parties shall be entitled to conduct discovery in the
same
manner as permitted under Federal Rules of Civil Procedure 26 through 37,
as
amended. No provision in this Article shall limit the right of any party
to this
Agreement to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after or during the pendency of any arbitration, and
the
exercise of such remedies does not constitute a waiver of the right of either
party to arbitration.
ARTICLE
XXXV
35.1 Commissions.
Lessee
represents and warrants to Lessor that no real estate commission, finder’s fee
or the like is due and owing to any person in connection with this Lease.
Lessee
agrees to save, indemnify and hold Lessor harmless from and against any and
all
claims, liabilities or obligations for brokerage, finder’s fees or the like in
connection with this Lease or the transactions contemplated hereby, asserted
by
any person on the basis of any statement or act alleged to have been made
or
taken by Lessee.
ARTICLE
XXXVI
36.1 Memorandum
or Short Form of Lease.
Lessor
and Lessee shall, promptly upon the request of either, enter into a Memorandum
or Short Form of this Lease, substantially in the form of attached Exhibit
F,
with
such modifications as may be appropriate under the laws and customs of the
States and in the customary form suitable for recording under the laws of
each
of the States. Lessee shall pay all costs and expenses of recording such
memorandum or short form of this Lease.
ARTICLE
XXXVII
37.1 Security
Deposit.
Concurrently
with Lessee’s execution of this Lease, Lessee shall deliver to Lessor a security
deposit in the amount of Nine Hundred Sixty Thousand Five Hundred Dollars
($962,500), in the form of an absolute, unconditional site draft letter of
credit for a term of one (1) year (renewable automatically) issued by an
“A”
rated financial institution (“Security
Deposit”),
which
Lessor shall hold as security for the full and faithful performance by Lessee
of
each and every term, provision, covenant and condition of this Lease in
accordance with, and subject to, the terms and conditions of the Letter of
Credit Agreement. On the first day of the sixth and twelfth month of the
Initial
Term, Lessee shall increase the Security Deposit by depositing with Lessor
Nine
Hundred Sixty Thousand Five Hundred Dollars ($962,500) until the Security
Deposit equals of Two Million Eight Hundred Eighty Seven Thousand Five Hundred
Dollars ($2,887,500), at which time Lessee shall cause to be issued to Lessor
a
new letter of credit in the amount of Two Million Eight Hundred Eighty Seven
Thousand Five Hundred Dollars ($2,887,500), upon the receipt of which Lessor
shall return to Lessee the Letter of Credit for Nine Hundred Sixty Thousand
Five
Hundred Dollars ($962,500) and the cash so deposited. If at any time the
Security Deposit is in the form of cash, it shall be deposited by Lessor
into an
interest-bearing account and the account will be identified as consisting
of the
Security Deposit under this Lease, and the interest shall be added to and
become
part of the Security Deposit. The Security Deposit shall not be considered
an
advance payment of Rent (or of any other sum payable to Lessee under this
Lease)
or a measure of Lessor’s damages in case of a default by Lessee. The Security
Deposit shall not be considered a trust fund, and Lessee expressly acknowledges
and agrees that Lessor is not acting as a trustee or in any fiduciary capacity
in controlling or using the Security Deposit. Lessor shall have no obligation
to
maintain the Security Deposit separate and apart from Lessor’s general and/or
other funds. The Security Deposit, less any portion thereof applied as provided
in the Letter of Credit Agreement or Section 37.2, shall be returned to Lessee
within sixty (60) days following the expiration of the Term.
37.2 Application
of Security Deposit.
If
Lessee defaults in respect of any of the terms, provisions, covenants and
conditions of this Lease or of any agreement or instrument with which this
Lease
is cross-defaulted), including, but not limited to, payment of any Rent and
other sums of money payable by Lessee, Lessor may, but shall not be required
to,
in addition to and not in lieu of any other rights and remedies available
to
Lessor, apply all or any part of the Security Deposit to the payment of any
sum
in default, or any other sum that Lessor may expend or be required to expend
by
reason of Lessee’s default, including but not limited to, any damages or
deficiency in reletting the Leased Properties,. Whenever, and as often as,
Lessor has applied any portion of the Security Deposit to cure Lessee’s default
hereunder or under any agreement with which this Lease is cross-defaulted,
Lessee shall, within ten (10) days after Notice from Lessor, deliver a new
letter of credit meeting the requirements of the Letter of Credit Agreement
to
Lessor (or, at Lessor’s option, deposit additional money with Lessor) sufficient
to restore the Security Deposit to the full amount then required to be deposited
with Lessor pursuant to Section 37.1 above, and Lessee’s failure to do so shall
constitute an Event of Default without any further Notice.
37.3 Transfer
of Security Deposit.
If
Lessor transfers its interest under this Lease, Lessor shall assign the Security
Deposit to the new lessor and thereafter Lessor shall have no further liability
for the return of the Security Deposit, and Lessee agrees to look solely
to the
new lessor for the return of the Security Deposit. The provisions of the
preceding sentence shall apply to every transfer or assignment of Lessor’s
interest under this Lease. Lessee agrees that it will not assign or encumber
or
attempt to assign or encumber the Security Deposit and that Lessor, its
successors and assigns may return the Security Deposit to the last Lessee
in
possession at the last address for which Notice has given by such Lessee
and
that Lessor thereafter shall be relieved of any liability therefor, regardless
of one or more assignments of this Lease or any such actual or attempted
assignment or encumbrances of the Security Deposit.
ARTICLE
XXXVIII
38.1 Miscellaneous.
38.1.1 Survival,
Choice of law.
Anything contained in this Lease to the contrary notwithstanding, all claims
against, and liabilities of, Lessee or Lessor arising prior to the date of
expiration or termination of this Lease shall survive such expiration or
termination. If any term or provision of this Lease or any application thereof
is held invalid or unenforceable, the remainder of this Lease and any other
application of such term or provisions shall not be affected thereby. Neither
this Lease nor any provision hereof may be changed, waived, discharged or
terminated except by an instrument in writing and in recordable form signed
by
Lessor, any Facility Mortgagee and Lessee. All the terms and provisions of
this
Lease shall be binding upon and inure to the benefit of the parties hereto
and
their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Lease shall be governed by and construed in accordance
with
the laws of the state of Ohio, except as to matters which, under applicable
procedural conflicts of laws rules require the application of laws of another
State.
LESSEE
CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL COURTS
OF THE
STATES OF MARYLAND, OHIO, AND PENNSYLVANIA AND AGREES THAT ALL DISPUTES
CONCERNING THIS AGREEMENT BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED
IN
THE STATES OF MARYLAND OR EACH STATE IN WHICH A FACILITY IS LOCATED. LESSEE
AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER ANY METHOD
PERMISSIBLE UNDER THE LAWS OF THE STATES OF MARYLAND, OHIO, AND PENNSYLVANIA
AND
IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS
OF THE
STATES OF MARYLAND, OHIO, OR PENNSYLVANIA.
38.1.2 Limitation
on Recovery.
Lessee
specifically agrees to look solely to Lessor’s interest in the Leased Properties
for recovery of any judgment from Lessor, it being specifically agreed that
no
constituent shareholder, officer or director of Lessor shall ever be personally
liable for any such judgment or for the payment of any monetary obligation
to
Lessee. Furthermore, Lessor (original or successor) shall never be liable
to
Lessee for any indirect or consequential damages suffered by Lessee from
whatever cause.
38.1.3 Waivers.
Lessee
waives any defense by reason of any disability of Lessee, and waives any
other
defense based on the termination of Lessee’s (including Lessee’s successor’s)
liability from any cause.
38.1.4 Consents.
Whenever the consent or approval of Lessor is required hereunder, Lessor
may in
its sole discretion and without reason withhold that consent or approval
unless
otherwise specifically provided.
38.1.5 Counterparts.
This
Lease may be executed in separate counterparts, each of which shall be
considered an original when each party has executed and delivered to the
other
one or more copies of this Lease.
38.1.6 Options
Personal.
The
renewal options granted to Lessee in this Lease are granted solely to Lessee
and
are not assignable or transferable except in connection with a Transfer
permitted in Article XXII.
38.1.7 Rights
Cumulative.
Except
as provided herein to the contrary, the respective rights and remedies of
the
parties specified in this Lease shall be cumulative and in addition to any
rights and remedies not specified in this Lease.
38.1.8 Entire
Agreement.
There
are no oral or written agreements or representations between the parties
hereto
affecting this Lease. This Lease supersedes and cancels any and all previous
negotiations, arrangements, representations, brochures, agreements and
understandings, if any, between Lessor and Lessee.
38.1.9 Amendments
in Writing.
No
provision of this Lease may be amended except by an agreement in writing
signed
by Lessor, any Facility Mortgagee and Lessee.
38.1.10 Lessee
to Pay Reasonable Expenses.
Lessee
shall pay or reimburse Lessor for all reasonable out-of-pocket costs and
expenses incurred by Lessor in connection with or relating in any way to
the
administration of this Lease, including without limitation, search costs,
audit
fees, appraisal fees, attorneys’ fees, and other costs paid or incurred by
Lessor in the analysis, administration and enforcement of this Lease and
the
other Transaction Documents, the protection and defense of the rights of
Lessor
in and to the Leased Properties, the Collateral and the other Transaction
Documents, or as otherwise referred to in this Lease or in the other Transaction
Documents, and all costs and expenses relating to extensions, amendments,
waivers, or consents requested by Lessee, pursuant to this Lease or any other
Transaction Document or any agreements with other parties or termination
of this
Lease (collectively, “Reasonable
Expenses”);
provided, however that shall Lessee not be liable for payment or reimbursement
of Reasonable Expenses incurred in connection with the initial documentation
and
closing of the Acquisition Agreements, the Working Capital Loan Agreement
and
this Lease to the extent they are included in the Investment Amount as defined
in the Agreement to Lease. All such Reasonable Expenses shall be due on demand;
provided, however, that so long as no Event of Default has occurred hereunder,
Reasonable Expenses incurred after the date of this Lease which are unrelated
to
the closing on the Acquired Facilities shall be paid on or before the earlier
of
(i) 30 days following written notice thereof to Lessee or (ii) the date of
expiration or earlier termination of this Lease. Any Reasonable Expenses
not
paid when due shall bear interest at the Overdue Rate.
Notwithstanding the foregoing, unless Lessor has a reasonable basis to conclude
that the value of one or more of the Facilities has diminished in any material
respect, Lessee shall not be obligated to pay: (i) any appraisal fees incurred
in connection with Lessor’s financing activities or corporate compliance
requirements, or (ii) for more than one appraisal per Facility during any
four
year period.
38.1.11 Severability.
If any
provision of this Lease or the application of such provision to any person,
entity or circumstance is found invalid or unenforceable by a court of competent
jurisdiction, such determination shall not affect the other provisions of
this
Lease and all other provisions of this Lease shall be deemed valid and
enforceable.
38.1.12 Time
of the Essence.
Except
for the delivery of possession of the Facilities to Lessee, time is of the
essence with respect to all provisions of this Lease of which time is an
element.
SIGNATURE
PAGES FOLLOW
LESSOR:
OHI
ASSET
II (OH), LLC
By: Omega
Healthcare Investors, a Maryland
corporation,
its sole member
By: /s/
Daniel J. Booth
Name: Daniel
J.
Booth
Title: Chief
Operating Officer
THE
STATE
OF OHIO )
)
COUNTY
OF
CUYAHOGA )
This
instrument was acknowledged before me on the 14th day of December, 2005,
by
Daniel J. Booth, the Chief Operating Officer of Omega Healthcare Investors,
Inc., a Maryland corporation, the sole member of OHI Asset II (OH), LLC,
a
Delaware limited liability company, on behalf of said limited liability
company.
Notary
Public
/s/
Donna Fuller
Signature
Page of
2
Signature
Page to
MASTER
LEASE
Multiple
Facilities
(CSC
Transaction)
LESSEE:
CSC
MSTR
LSCO, LLC
By: HEALTH
CARE HOLDINGS, LLC,
its
Sole
Member
By: /s/
Charles R. Stoltz
Name: Charles
R. Stolz
Title: Treasurer
THE
STATE
OF OHIO )
)
COUNTY
OF
CUYAHOGA )
This
instrument was acknowledged before me on the 14th day of December, 2005,
by
Charles R. Stolz, the Treasurer of HEALTH CARE HOLDINGS, LLC, a Michigan
limited
liability company, the sole member of CSC MSTR LSCO, LLC, an Ohio limited
liability company, on behalf of said company.
Notary
Public
/s/
Donna Fuller
Signature
Page of
2
Signature Page to MASTER LEASEMultiple
Facilities(CSC Transaction)
LIST
OF EXHIBITS TO LEASE
Exhibits
A
-
Facility
Trade Names
Exhibits
B-1 through B-11
-
Description
of Land
Exhibit
C
-
Form
of
Lessee’s Certificate
Exhibit
D
-
Permitted
Encumbrances
Exhibit
E
-
Form
of
Operations Transfer Agreement
Exhibit
F
-
Form
of
Memorandum and Short Form of Lease
Exhibit
G - Allocation
of Base Rent
A-
EXHIBIT
A
FACILITY
TRADE NAMES
EXHIBITS
B-1 THROUGH B-11
DESCRIPTION
OF LAND
B-
EXHIBIT
C
FORM
OF LESSEE’S CERTIFICATE
The
undersigned (“Lessee”) under that certain Lease (the “Lease”) dated , 20 and
made with, a (“Lessor”), hereby certifies:
1. That
it
is Lessee under the Lease; that attached hereto as Exhibit
“A”
is a
true and correct copy of the Lease; that the Lease is now in full force and
effect and has not been amended, modified or assigned except as disclosed
or
included in Exhibit
“A”;
and
that the Lease constitutes the entire agreement between Lessor and
Lessee.
2. That
there exist no defenses or offsets to enforcement of the Lease; that there
are,
as of the date hereof, no breaches or uncured defaults on the part of Lessee
or
Lessor thereunder; and that Lessee has no notice or knowledge of any prior
assignment, hypothecation, subletting or other transfer of Lessor’s interest in
the Lease.
3. That
the
Base Rent for the first Lease Year under this Lease is $_____________.
All
Rent which is due has been paid, and there are no unpaid Additional Charges
owing by Lessee under the Lease as of the date hereof. No Base Rent or other
items (including without limitation security deposit and any impound account
or
funds) have been paid by Lessee in advance under the Lease except for the
security deposit held by Lessor [in the form of an irrevocable letter of
credit]
in the amount of $ and the monthly installment of Base Rent that became due
on
.
4. That
Lessee has no claim against Lessor for any security deposit, impound account
or
prepaid Rent except as provided in paragraph 3 of this Certificate.
5. That
there are no actions, whether voluntary or otherwise, pending against the
undersigned under the bankruptcy laws of the United States or any state thereof,
nor has Lessee nor, to the best of Lessee’s knowledge has Lessor begun any
action, or given or received any notice for the purpose of termination of
the
Lease.
6. That
there are, as of the date hereof, no breaches or uncured defaults on the
part of
Lessee under any other agreement executed in connection with the
Lease.
7. This
Certificate has been requested by Lessor pursuant to Section 19.3 of this
Lease
and for the benefit of __________________________________(“Relying Party”). The
Relying Party is entitled to rely on the statements of Lessee contained in
this
certificate.
8. All
capitalized terms used herein and not defined herein shall have the meanings
for
such terms set forth in the Lease.
Dated: _____,
20__ LESSEE:
By:
C-
EXHIBIT
D
PERMITTED
ENCUMBRANCES
D-
EXHIBIT
E
FORM
OF OPERATIONS TRANSFER AGREEMENT
An
Operations Transfer Agreement substantially in the form of the MASTER LEASE
AMENDMENT, SUBLEASE TERMINATION AND OPERATIONS TRANSFER AGREEMENT made and
entered into as of November 7, 2003, among OMEGA HEALTHCARE INVESTORS, INC.,
a
Maryland corporation, CLAREMONT HEALTH CARE HOLDINGS, INC., a Delaware
corporation, IHS ACQUISITION NO. 123, INC., a Delaware corporation, INTEGRATED
HEALTH OF WATERFORD COMMONS, INC., a Pennsylvania corporation, OMG MSTR LSCO,
LLC, an Ohio limited liability company, MIDLAND LEASING CO., LLC, an Ohio
limited liability company, and GARDEN LEASING CO., LLC, an Ohio limited
liability company.
E-
EXHIBIT
F
MEMORANDUM
OR SHORT FORM OF LEASE
THIS
INSTRUMENT PREPARED BY:
Mark
E.
Derwent
Myers
Nelson Dillon & Shierk PLLC
125
Ottawa Ave., N.W., Suite 270
Grand
Rapids, Michigan 49503
Telephone:
616.233.9640
THIS
LEASE, made and entered into as of _____________, 20__, by and between
___________ __________________________________, having its principal office
at
9690 Deereco Road, Suite 100, Timonium, MD 21093,
as
Lessor, and __________________ Inc., a ___________________, having its principal
office at ___________________________, as Lessee with respect to the real
property identified in Exhibit(s)
““
attached
hereto and located in ________________________________________.
WITNESSETH:
1. For
and
in consideration of the rents reserved and the other covenants contained
in that
certain Lease made by and between the parties hereto and dated the date hereof
(“Lease”), Lessor has and does hereby lease to Lessee, and Lessee has and does
hereby take and rent from Lessor, all of Lessor’s rights and interest in and to
the parcel of real property described in Exhibit(s)
““
and all
fixtures and improvements thereto, and certain personal and other property
as
set forth in the Lease.
2. The
Initial Term of the Lease is approximately ____________ (_____) years,
commencing _____________, 200__ and ending on _________________,
200__.
3. As
more
particularly provided in the Lease, Lessee may elect to renew the original
term
for ___ (_) ___ (_) year optional renewal periods for a maximum term, if
exercised, of_______ (__) years after the Commencement Date.
4. This
instrument is executed and recorded for the purpose of giving notice of Lessee’s
interest in the property covered by the Lease and giving notice of the existence
of the Lease, to which reference is made for a full statement of the terms
and
conditions thereof. The respective addresses of the parties hereto
are:
Lessee:
Attn:
Lessor:
Attn:
IN
WITNESS WHEREOF, the parties have caused this instrument to be executed by
their
duly authorized [officer or officers] and [general partners] [managing
partners], as applicable, all as of the day and date first above
written.
LESSOR:
___________________________,
a
By:
Name:
Title:
LESSEE:
______________________________
a
Name:
Title:
STATE
OF MARYLAND
|
)
|
)
SS
|
|
COUNTY
OF_______________
|
)
|
This
instrument was acknowledged before me on the ____ day of _____________, 200__,
by ___ __________________________, the ________________ of ___________________,
a __________________________, on behalf of said _______________.
Notary
Public
STATE
OF MARYLAND
|
)
|
)
SS
|
|
COUNTY
OF_______________
|
)
|
This
instrument was acknowledged before me on the ____ day of _____________, 200__,
by ___ __________________________, the ________________ of ___________________,
a __________________________, on behalf of said _______________.
Notary
Public
F-
EXHIBIT
G
ALLOCATION
OF BASE RENT