10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on April 28, 2008
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
This
Fifth Amendment to Consolidated Amended and Restated Master Lease (this “Amendment”) is
executed and delivered as of August 10th, 2007 by and between STERLING
ACQUISITION CORP., a Kentucky corporation (“Lessor”), the address
of which is 9690 Deereco Road, Suite 100, Timonium, MD 21093, and DIVERSICARE
LEASING CORP., a Tennessee corporation, the address of which is 1621 Galleria
Boulevard, Brentwood, TN 37027.
RECITALS:
A. Lessee
has executed and delivered to Lessor a Consolidated Amended and Restated Master
Lease dated as of November 8, 2000, but effective as of October 1, 2000, as
amended by a First Amendment to Consolidated Amended and Restated Master Lease
dated as of September 30, 2001, a Second Amendment to Consolidated Amended and
Restated Master Lease dated as of June 15, 2005 (the “Second Amendment”), a
Third Amendment to Consolidated Amended and Restated Master Lease dated as of
October 20, 2006 (the “Third Amendment”),
and a Fourth Amendment to Consolidated Amended and Restated Master Lease dated
as of April 1, 2007 (the “Existing Master
Lease”) pursuant to which Lessee leased from Lessor certain healthcare
facilities.
B. Pursuant
to that certain First Amended Chapter 11 Plan Proposed by the Debtors dated May
17, 2007 and an Operations Transfer Agreement effective as of July 20, 2007
among the Texas Sublessees (as defined below) and Senior Management Services of
America North Texas, Inc., a Texas corporation (“SMSA”), and certain affiliates
of SMSA, the Texas Sublessees are acquiring from SMSA its rights as tenant under
that certain Consolidated Master Lease dated as of June 1, 2005 (the “SMSA Master Lease”)
between SMSA and OHI Asset (TX), LLC, a Delaware limited liability company
(“OHI
Texas”). Pursuant to the SMSA Master Lease, SMSA had leased
the Texas Facilities from OHI Texas.
C. Concurrently
with the execution of this Amendment, (i) OHI Texas and the Texas Sublessees
have terminated the SMSA Master Lease and (ii) OHI Texas has transferred to
Lessor the Texas Facilities to Lessor.
D. Lessee
and Lessor desire to amend the Existing Lease to add the Texas Facilities to the
Existing Master Lease on the terms and conditions of this
Amendment.
NOW THEREFORE, the parties agree as
follows:
1. Definitions.
(a) Any
capitalized term used but not defined in this Amendment will have the meaning
assigned to such term in the Master Lease. From and after the date of
this Amendment, each reference in the Existing Master Leases or the other
Transaction Documents to the “Lease” or “Master Lease” means, as applicable, the
Existing Master Lease or Existing Master Leases as modified by this
Amendment.
(b) In
addition to the other definitions contained herein, when used in this Amendment
the following terms shall have the following meanings:
Asbestos Clean-Up
Costs: means the actual, out of pocket cost of completing a Required
Asbestos Clean-Up, which amount does not include any amounts paid to Lessee or
any Affiliate of Lessee without the written consent of Lessor.
Asbestos Management
Plans: means the Asbestos Management Plans dated March 19, 2004 for
Lessor by ATC Associates, Inc. for the Doctors & Fort Worth
Facilities.
Doctors & Fort Worth
Facilities: means Facilities commonly known as (i) Estates Healthcare
Center located at 201 Sycamore School Road, Fort Worth, Texas 76134, and (ii) as
Doctors Healthcare Center and located at 9009 White Rock Trail, Dallas, Texas
75238.
Existing Asbestos Containing
Materials: means the asbestos containing materials on the Doctors &
Fort Worth Facilities identified in the Asbestos Management Plans.
First Texas Renewal Term
Expiration Date: September 30, 2030.
Humble Facility:
means the Facility commonly known as Oakmont Nursing and Rehabilitation Center
of Humble located in Humble, Texas.
Katy Facility: means
the Facility commonly known as the Oakmont Nursing and Rehabilitation Center of
Katy located in Katy, Texas.
LaSalle: means
LaSalle Bank National Association.
LaSalle Loans: means
the following loans and credit facilities extended by LaSalle to Lessee, the
Sublessees and certain of their Affiliates: (i) certain revolving loans in an
aggregate amount of up to Fifteen Million and No/100 Dollars ($15,000,000.00) to
support working capital needs of Lessee, the Sublessees and certain of their
Affiliates, (ii) certain transition revolving loans in an aggregate amount of up
to Six Million and No/100 Dollars ($6,000,000.00) to support working capital
needs of Lessee, the Sublessees and certain of their Affiliates for the six
months following date of this Amendment (the "Temporary Revolving Loan"), and
(iii) a term loan of Sixteen Million Five Hundred Thousand and No/100 Dollars
($16,500,000.00) (the "Term Loan").
Lien: means any
interest in Property securing an obligation owed to, or a claim by, any Person
(other than the owner of the Property), whether such interest shall be based on
common law, statute, or contract, whether such interest shall be recorded or
perfected, and whether such interest shall be contingent upon the occurrence of
some future event or events or the existence of some future circumstance or
circumstances, including, without limitation, judgment liens, the lien or
security interest arising, from a mortgage, deed of trust, debenture, charge,
guarantee, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
security agreement, loan and security agreement, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes, and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, other
title exceptions and encumbrances affecting any real property and the retained
security title of a conditional vendor or lessor.
Lease Documents:
means the following documents: this Lease, the Guaranty, the Letter of Credit
Agreement, the Security Agreement, the Pledge Agreements, the Subordination
Agreements, Texas Pledge Agreements, Texas Sublessees Guaranty, Texas Sublessee
Security Agreement, the Stock Issuance and Subscription Agreement, the
Subordinated Note, and any security agreements, pledge agreements, letter of
credit agreements, guarantees, notes or other documents which evidence, secure
or otherwise relate to this Lease, or the transactions contemplated by this
Lease; and any and all amendments, modifications, extensions and renewals of any
of the foregoing documents
Letter of Credit
Agreement: means the Letter of Credit Agreement between Lessee and
Lessor.
Master Texas
Sublessee: DIVERSICARE TEXAS I, LLC, Delaware limited
liability company.
Non-Texas Base
Rent:
(A) During
the Initial Term, the Non-Texas Base Rent shall be:
(1) For
the first Initial Term (being the period of October 1, 2000 thru September 30,
2006), the amount set forth for such period in the Master Lease as it existed
prior to the Third Amendment;
(2) For
the first (1st) Lease
Year of the first Renewal Term (October 1, 2006 thru September 30, 2007), the
Base Amount plus the Improvement Allowance Adjustment Amount (as adjusted during
such Lease Year);
(3) For
each of the second (2nd)
through twelfth (12th) Lease
Years of the first Renewal Term, the lesser of (i) the Base Amount as of the end
of first (1st) Lease Year of the Renewal Term plus Improvement Allowance
Adjustment Amount, increased by a percentage equal to two (2) times the
percentage increase in the CPI (if positive) from the commencement date of the
first Renewal Term to the Adjustment Date in each of the second (2nd) through
twelfth (12th) Lease
Years, as applicable (the “Adjustment Date”),
and (ii) the product of the Base Amount as of the end of the first Lease Year
plus the Improvement Allowance Adjustment Amount and the following
factor:
|
Lease
Year During
First Renewal Term
|
Applicable Factor
|
|
2
|
1.030
|
|
3
|
1.061
|
|
4
|
1.093
|
|
5
|
1.126
|
|
6
|
1.159
|
|
7
|
1.194
|
|
8
|
1.230
|
|
9
|
1.267
|
|
10
|
1.305
|
|
11
|
1.344
|
|
12
|
1.384
|
Under no
circumstances will the Non-Texas Base Rent in any Lease Year be less than the
Non-Texas Base Rent during the preceding Lease Year.
(B) During
the second Renewal Term, the Non-Texas Base Rent shall be:
(1) For
the first Lease Year of the second Renewal Term, the greater of (a) the
Non-Texas Base Rent during the last Lease Year of the Initial Term and (b) the
Fair Market Rent for the Facilities other than the Texas Facilities on the first
day of such Renewal Term as agreed upon by Lessor and Lessee, or, if prior to
the commencement of the Renewal Term they are unable to agree, as determined by
an appraisal pursuant to Article XXXII of this Lease; provided, however, that the
Non-Texas Base Rent for the first Lease Year of the second Renewal Term shall
not exceed one hundred ten percent (110%) of the Non-Texas Base Rent for the
Lease Year immediately preceding the commencement of the second Renewal Term;
and
(2) For
each of the second (2nd)
through the twelfth (12th) Lease
Years during the second Renewal Term, the lesser of (i) the Non-Texas Base Rent
for the first (1st) Lease Year of the second Renewal Term, increased by a
percentage equal to two (2) times the percentage increase in the CPI (if
positive) from the commencement date of the second Renewal Term to the
Adjustment Date in each of the second (2nd)
through twelfth (12th) Lease
Years, as applicable (the “Adjustment Date”),
and (ii) the product of the Non-Texas Base Rent during the first (1st) Lease
Year of the second Renewal Term and the following factor:
|
Lease
Year During
Second Renewal Term
|
Applicable Factor
|
|
2
|
1.030
|
|
3
|
1.061
|
|
4
|
1.093
|
|
5
|
1.126
|
|
6
|
1.159
|
|
7
|
1.194
|
|
8
|
1.230
|
|
9
|
1.267
|
|
10
|
1.305
|
|
11
|
1.344
|
|
12
|
1.384
|
Under no
circumstances will the Non-Texas Base Rent in any Lease Year during the Renewal
Term be less than the Non-Texas Base Rent during the preceding Lease
Year.
Pre-Existing Hazardous
Substances: means Hazardous Substances located on, under about or with
respect to the Treemont Facility prior to February 1, 2003 or the Katy Facility
prior to July 1, 2003 or the Humble Facility prior to July 1, 2003.
Pre-Existing Environmental
Conditions: means any Contamination or other environmental condition on,
under, about or with respect to the Treemont Facility prior to February 1, 2003
or the Katy Facility prior to July 1, 2003 or the Humble Facility prior to July
1, 2003.
Property: means any
and all real, personal, or mixed property and assets, including, without
limitation, all types of tangible and intangible property.
Second Texas Renewal Term
Expiration Date: May 31, 2035.
Texas Base Rent:
During the Term, the Texas Base Rent shall be:
(1) For
each month during the period from the Commencement Date for the Texas Facilities
until January 31, 2008, Three Hundred Twenty Eight Thousand Five Hundred Ninety
Two and 79/100 Dollars ($328,592.79), which equal an annual Base Rent of Three
Million Nine Hundred Forty Three Thousand One Hundred Thirteen and 48/100
Dollars ($3,943,113.48) (the “Initial Texas Annualized
Base Rent”);
(3) For
period from February 1, 2008 thru January 31, 2009, the Initial Texas Annualized
Base Rent, increased by the product of (i) the Initial Texas Annualized Base
Rent and (ii) the lesser of one (1) times the
change in CPI (expressed as a percentage) and two and one-half percent
(2.5%).
(4) For
the subsequent twelve month period (being February 1, 2009 thru January 31,
2010) and each succeeding twelve month (being February 1 thru January
31) until the end of the Term (including any Renewal Terms), the
Texas Base Rent for the previous Lease Year, increased by the product of (i) the
Texas Base Rent during the immediately preceding Lease Year and (ii) the lesser of one (1) times the
increase, if any, in CPI (expressed as a percentage) and two and one-half
percent (2.5%).
Texas Facilities:
means the Facilities located on the real property described in Exhibits A-1 through A-7 to this
Amendment.
Texas Pledge
Agreements: means the Pledge Agreements dated as of the same
date as this Amendment from the equity owners of the Texas Sublessees in favor
Lessor.
Texas Sublessees:
means the Master Texas Sublessee and DIVERSICARE BALLINGER, LLC, Delaware
limited liability company, DIVERSICARE DOCTORS, LLC, Delaware limited liability
company, DIVERSICARE ESTATES, LLC, Delaware limited liability company,
DIVERSICARE HUMBLE, LLC, Delaware limited liability company, DIVERSICARE KATY,
LLC, Delaware limited liability company, DIVERSICARE NORMANDY
TERRACE, LLC, Delaware limited liability company, and DIVERSICARE TREEMONT, LLC,
Delaware limited liability company.
Texas Sublessees
Guaranty: means the Guaranty dated as of the same date as this Amendment
from the Texas Sublessees in favor Lessor.
Texas Sublessee Security
Agreement: means the Security Agreement dated as of the same date as this
Amendment from the Texas Sublessees in favor of Lessor.
Non-Texas Facilities:
means the Facilities leased pursuant to this Lease other than the Texas
Facilities.
(c) The
following definitions defined in §2.1 of the Existing Master Lease are hereby
amended in their entirety as follows:
Base Rent: means the
sum of (i) the Non-Texas Base Rent and (ii) the Texas Base Rent.
Commencement
Date: October 1, 2000 for the Non-Texas Facilities, and August
11, 2007 for the Texas Facilities.
Expiration Date:
means the First Renewal Term Expiration Date, the Second Renewal Term Expiration
Date, the First Texas Renewal Term Expiration Date, or the Second Texas Renewal
Term Expiration Date, as applicable.
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; all
of which Facilities are collectively listed on Exhibit B to this
Amendment.
Intercreditor
Agreement: means the Subordination and Intercreditor Agreement of even
date herewith by and between Lessor and LaSalle and any replacement
intercreditor agreement between Lessor and any working capital lender to whom a
first priority security interest in accounts receivable from the Facilities has
been granted in accordance with the requirements of Section 39.5 of this
Lease.
Land: The
real property described in listed on attached Exhibit A to the
Existing Master Lease and Exhibit A to this
Amendment.
Permitted
Encumbrances: Encumbrances listed on attached Exhibit C to the
Existing Master Lease and Exhibit C to this
Amendment.
(d) The
subparagraphs (m) and (r) of the definition of “Event of Default” set forth in
Section 2.1 of the Existing Master Lease is hereby amended and restated as
follows:
* * *
(n) A
default occurs under the any Texas Sublessee Guaranty, Texas Pledge Agreement,
the Texas Sublessee Security Agreement, or the Letter of Credit Agreement, which
default is not cured within the applicable cure period, if any.
* * *
(r) LaSalle
(or its successors and assigns) or any working capital lender to whom a first
priority security interest in accounts receivable from the Facilities has been
granted in accordance with the requirements of Section 39.5 of this Lease,
declares an event of default under the loan documents evidencing or securing the
LaSalle Loans or Line of Credit Documents, and accelerates any or all of the
indebtedness evidenced and secured thereby, or commences any action against
Lessee or Sublessee to realize on such lender’s interest in the accounts
receivable from the Facilities.
2. Renewal
Options. Section 1.3 of the Existing Master Lease is hereby
amended and restated as follows:
1.3 Options to
Renew.
(a) Lessee
is hereby granted two (2) options to renew this Lease (an “All Facilities
Option”) for an additional, successive period of twelve (12) Lease Years,
for a maximum Term if such options are exercised of thirty (30) Lease Years, on
the following terms and conditions:
(i) the
second option to renew is exercisable only by Notice to Lessor at least three
hundred sixty-five (365) days prior to the expiration of the first Renewal
Term;
(ii) the
absence of any Event of Default both at the time a renewal option is exercised
and at the commencement of a Renewal Term is a condition precedent to any
renewal of the Term;
(iii) during
a Renewal Term, all of the terms and conditions of this Lease shall remain in
full force and effect; and
(iv) Lessee
may exercise its options to renew with respect to all (and no fewer than all) of
the Leased Properties.
Lessee
and Lessor acknowledge and agree that Lessee exercised the first All Facilities
Option pursuant to the Third Amendment such that, as of the date of this
Amendment, the Expiration Date of the current Term of this Lease for all of the
Facilities, including the Texas Facilities, is the First Renewal Term Expiration
Date of September 30, 2018.
(b) Lessee
is also hereby granted two (2) options to renew this Lease with respect to the
Texas Facilities only (the “Texas Options”) until
September 30, 2030, with respect to the first such Texas Option, and May 31,
2035, with respect to the second such Texas Option, on the following terms and
conditions:
(i)
a Texas Option is exercisable only by Notice to Lessor at least three hundred
sixty-five (365) days prior to the expiration of the prior period;
(ii) the
absence of any Event of Default both at the time a Texas Option is exercised and
at the commencement of a Renewal Term is a condition precedent to any renewal of
the Term;
(iii) during
a Renewal Term, all of the terms and conditions of this Lease shall remain in
full force and effect; provided, however, that the Base Rent shall be equal to
the Texas Facilities Base Rent and the Security Deposit shall be reduced to an
amount equal to the Texas Facilities Base Rent divided by four (4) (such that it
is equal to three months Base Rent);
(iv) Lessee
may exercise its options to renew with respect to all (and no fewer than all) of
the Texas Facilities, and as to no other Facilities; and
(v) Lessee
may not exercise a Texas Option for any period with respect to which Lessee
exercises an All Facilities Option (for avoidance of doubt, because an All
Facilities Option is exercised as to all of the Facilities, including the Texas
Facilities, Lessee would not need to exercise a Texas Facilities Option for any
period for which an All Facilities Option has been exercised).
3. Environmental
Amendments. Notwithstanding anything to the contrary in this
Lease, (i) Section 7.3 of the Existing Lease shall not apply to the Texas
Facilities; and (ii) in lieu thereof, Lessee’s environmental obligations with
regard to the Texas Facilities shall be governed by Exhibit D to this
Amendment, which is incorporated herein by this reference.
4. Section
9.1.1 of the Existing Master Lease is hereby amended and restated in its
entirety as follows:
9.1.1 Lessee,
at its expense, will keep the Leased Properties, and all landscaping, private
roadways, sidewalks and curbs appurtenant thereto which 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) or
existing after February 1, 2003 with respect to the Treemont Facility, and July
1, 2003 with respect to the Katy Facility and the Humble Facility; provided,
however, that Lessee shall be permitted to prosecute claims against Lessor’s
predecessor in title for breach of any representation or warranty made to or on
behalf of Lessor, or for latent defects in any Leased
Property. Lessee shall at all times maintain, operate and otherwise
manage the Leased Properties on a quality basis and in a manner consistent with
the standards of the highest quality competing facilities 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, subject to the provisions of Paragraph 9.1.4, below, 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.
5. Section
8.2.1.4 of the Existing Master Lease is hereby amended and restated in its
entirety as follows:
8.2.1.4 Equipment
Financing. The aggregate amount of
principal, interest and lease payments due from Lessee and/or
Sublessee with respect to any equipment leases or financing secured by equipment
utilized in the operation of the Facilities shall not at any time during the
Term exceed $1,000,000.00 in any one Lease Year.
6. The
Existing Master Lease is hereby amended to add the following new Section 8.2.5
as follows:
8.2.5 Indebtedness. Neither
Lessee nor any Sublessee will create, incur or suffer to exist any Debt which is
secured by a Lien in any of the Property with respect to which Lessor has been
granted a Lien in pursuant to the Lease Documents, except:
(i) The
equipment financing permitted under Section 8.2.1.4;
(ii) The
Line of Credit permitted under Section 39.5;
(iii) The
LaSalle Loans; and
(iv) Any
Debt owed to Lessor or any Affiliate of Lessor.
7. Section
8.5 of the Existing Master Lease is hereby amended and restated in its entirety
as follows:
8.5 Other
Facilities. 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 a
ten (10) mile radius of any Facility, other than any Facility which is a Leased
Property under this Lease or which Lessee or any Affiliate of Lessee owns or
operates as of the Commencement Date and set forth on Schedule C attached
hereto.
8. Paragraph
5 of the Second Amended is hereby amended and restated in its entirety as
follows:
5. Insurance.
(a) Lessor
acknowledges that the liability insurance coverage and the malpractice insurance
coverage required pursuant to Sections 13.2.4 and 13.2.5 of the Lease, are
currently unavailable generally in the nursing home industry at commercially
affordable rates and that Lessee currently maintains and has in place for all of
the Facilities general liability and malpractice insurance with single limit
coverage of One Hundred Thousand Dollars ($100,000.00) per occurrence and Five
Hundred Thousand Dollars ($500,000.00) cumulative, with a deductible of Twenty
Five Thousand Dollars ($25,000.00). Lessor hereby agrees that, the
provisions of Sections 13.2.4 and 13.2.5 of the Lease to the contrary
notwithstanding, until such time as the insurance coverage required therein is
generally available in the nursing home industry at commercially affordable
rates, Lessee shall not be required obtain the coverages required therein and
Lessor agrees to accept Lessee’s current coverage in lieu thereof for the
Non-Texas Facilities for the first Renewal Term of the Lease. Lessee
shall not be deemed to be in default of the provisions of Article XIII of the
Lease as a result thereof. Lessee shall provide Lessor, on an annual
basis, information from its insurance carrier and from comparable insurance
carriers of the costs of insurance premiums to meet Lessor’s insurance
requirements. At such time as the premium amounts quoted are
commercially affordable, Lessee shall immediately purchase any and all insurance
policies necessary to meet the requirements of Sections 13.2.4 and 13.2.5 of the
Lease. This provision does not relieve Lessee from its agreement of
indemnity under Article XXI of the Lease nor does it modify the provisions
thereof. Notwithstanding the foregoing, Lessee acknowledges and
agrees that the provisions of this Paragraph 5 shall not be applicable in the
event of any Transfer. Lessee acknowledges and agrees that Lessor
shall have the right to withhold its consent to any proposed Transfer unless,
among other things, the Transferee agrees to provide the insurance coverage
required by the provisions of Sections 13.2.4 and 13.2.5 of the
Lease.
(b) Lessor
hereby agrees that, the provisions of Sections 13.2.4 and 13.2.5 of the Lease to
the contrary notwithstanding Lessee's failure to obtain the coverages required
by Sections 13.2.4 and 13.2.5 for the Texas Facilities shall not be an Event of
Default under this Lease. Lessee shall not be required to obtain the
coverages required therein and Lessor agrees to accept such lesser coverage, if
any, as Lessee elects to maintain for the Texas Facilities for the Term of the
Lease, including any Renewal Term. This provision does not relieve
Lessee from its agreement of indemnity under Article XXI of the Lease nor does
it modify the provisions thereof.
9. Section
39.1 of the Existing Master Lease is hereby amended and restated in its entirety
as follows:
39.1 Security Deposit.
Prior to the date of this Amendment, Lessor was holding as the Security Deposit
the sum of $340,000 in cash. Concurrently with the delivery of this
Amendment, (A) Lessor shall return to Lessee the $340,000 in cash, and (B)
Lessee shall deliver to Lessor a Security Deposit in the amount equal to
$8,116,726.10, 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. If at any time the Security Deposit is in the form
of cash, the Security Deposit shall be deposited by Lessor into an account which
shall earn interest for the benefit of Lessee, which cash shall remain on
deposit as security and be available to Lessor as provided in this
Article. 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. Notwithstanding the foregoing, if at any time the Security
Deposit is in the form of cash, then (i) Lessor shall maintain the Security
Deposit separate and apart from Lessor’s general and/or other funds and (ii)
provided that Lessee is not then in default, Lessor shall disburse to Lessee the
earnings on the Security Deposit on a quarterly basis. The Security
Deposit, less any portion thereof applied as provided in Section 39.3 or
the Letter of Credit Agreement, shall be returned to Lessee within sixty
(60) days following the expiration of the Term or earlier termination of this
Lease.
10. Section
39.5 of the Existing Master Lease is hereby amended and restated in its entirety
as follows:
39.5 Line of Credit; A/R
Replacement Security Deposit.
(a) Line of
Credit. Prior to the date of this Amendment, pursuant to the
Security Agreement, Lessee has granted to Lessor a first priority security
interest in the accounts receivable generated by the
Facilities. LaSalle currently has a security interest in the accounts
receivable from the Facilities to secure the LaSalle Loans. Lessor and LaSalle
have entered into the Intercreditor Agreement pursuant to which Lessor has
agreed to subordinate its security interest in the accounts receivable generated
by the Facilities. If Lessee and/or the Sublessees, or any Affiliate
of Lessee (other than Affiliates who are the operators of the Florida Managed
Facilities, as defined in the Settlement and Restructuring Agreement), obtain,
concurrently with or after the date of this Amendment, a working capital line of
credit (the “Line of
Credit”) from a third-party working capital lender that requires that, in
order to secure the 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, then Lessor will
subordinate its security interest in the accounts receivable from the Facilities
accruing during the Term to the security interest of such working capital
lender, provided that:
(i) The
working capital lender executes and delivers to Lessor an intercreditor
agreement in form and substance reasonably satisfactory to Lessor;
and
(ii) The
lien of Lessor in accounts receivable from the Facilities 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 amount of
$17,400,000.00, plus interest, penalties and other charges under the loan
documents evidencing the Line of Credit (the “Line of Credit
Documents”) with respect to principal amounts advanced;
(iii) Lessee
delivers to Lessor the A/R Replacement Security Deposit and the Letter of Credit
Agreement (as defined below);
(iv) The
LaSalle Loans have been repaid in full or, in the alternative, the Temporary
Revolving Loan and the Term Loan have been repaid, and an amendment to the
Intercreditor Agreement with the holder of the remaining LaSalle Loans is
entered into providing for the priority cap contemplated by sub-paragraph
39(a)(ii) above (the "LaSalle Amendment") in form and substance reasonably
satisfactory to Lessor; and
(v) As
of the date of entry by Lessor into the intercreditor agreement, of the LaSalle
Amendment, no Event of Default has occurred and is continuing.
(b) Lessee
acknowledges and agrees that on the occurrence of a “Default”, “Event of
Default” or similar event or occurrences which causes the lender under the Line
of Credit Documents to accelerate any or all of the indebtedness thereby or to
exercise any rights or remedies under such documents to realize on its interest
in the accounts receivable from the Facilities, or to cease funding under the
Line of Credit, which is not cured within any applicable cure period under the
Line of Credit Documents or any written agreement by lender, shall constitute an
Event of Default under this Lease.
(c) Concurrently
with the delivery of the intercreditor agreement by Lessor pursuant to Section
39.5(a)(i) above or the LaSalle Amendment, Lessee shall deliver to Lessor al
Security Deposit in an amount equal to the sum of (i) six (6) times the monthly
Non-Texas Base Rent (the “Initial Amount”) plus
(ii) three (3) times the monthly Texas Base Rent then payable under this Lease,
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 (“A/R
Replacement 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
August 31, 2008, and each subsequent anniversary of such date thereafter, the
amount of the A/R Replacement Security Deposit required to be maintained by
Lessee on deposit with Lessor shall be reduced by 16.66% (or 1/6) of the Initial
Amount if and only if on the applicable anniversary date (i) Lessee has
maintained a Stressed Coverage Ratio for the trailing twelve months of at least
1.45 and (ii) no Event of Default exists. Notwithstanding the
foregoing, at no time shall the A/R Replacement Security Deposit be less than an
amount equal to three times the monthly Base Rent payable under this Lease on
the date of delivery of the A/R Replacement Security Deposit. Upon
delivery to Lessor of the A/R Replacement Security Deposit and the intercreditor
agreement pursuant to this Section 39.5(a)(i) or the LaSalle Amendment, the
amount of the Security Deposit required under Section 39.1 shall be set equal to
the A/R Replacement Security Deposit.
11. Single, indivisible
Lease. The Master 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 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 herein for specific, isolated purposes
(and then only to the extent expressly otherwise stated), all provisions of this
Lease apply equally and uniformly to all 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 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 which must be assumed, rejected or assigned as a whole
with respect to all (and only all) the Leased Properties covered
hereby.
12. Representations and
Warranties of Lessee. Lessee hereby represents and warrants to
Lessor that (i) it has the right and power and is duly authorized to enter into
this Agreement; and (ii) the execution of this Agreement does not and will not
constitute a breach of any provision contained in any agreement or instrument to
which Lessee is or may become a party or by which Lessee is or may be bound or
affected
13. Execution and
Counterparts. This Amendment may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but when taken together shall constitute one and the same
Amendment.
14. Headings. Section
headings used in this Amendment are for reference only and shall not affect the
construction of the Amendment.
15. Enforceability. Except
as expressly and specifically set forth herein, the Existing Master Lease
remains unmodified and in full force and effect. In the event of any
discrepancy between the Existing Master Lease and this Amendment, the terms and
conditions of this Amendment will control and the Existing Master Lease is
deemed amended to conform hereto.
[SIGNATURE
PAGES, ACKNOWLEDGEMENTS, AND JOINDER FOLLOW]
Signature
Page to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
LESSOR:
STERLING
ACQUISITION CORP., a Kentucky corporation
By: /s/ Daniel J.
Booth
Name: Daniel J.
Booth
Title: Chief
Operating Officer
STATE OF
MARYLAND )
) ss.
COUNTY OF
BALTIMORE )
This
instrument was acknowledged before me on the 9th day
of August, 2007, by Daniel J.
Booth
, the of
STERLING ACQUISITION CORP., a Kentucky corporation, on behalf of said
company.
Judith A.
Jacobs
Notary
Public, Baltimore
County, Maryland
My commission expires: May 1,
2008
Signature
Page to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
LESSEE:
DIVERSICARE
LEASING CORP., a Tennessee corporation
By: /s/ Glynn
Riddle
Name: Glynn
Riddle
Title: EVP
& CFO
STATE
OF Tennessee )
)
SS
COUNTY OF
Williamson )
This instrument was acknowledged before
me on the
9th day of August, 2007,
by Glynn
Riddle
, the EVP
&CFO
of DIVERSICARE LEASING CORP., a Tennessee corporation, on behalf of
said company
Brenda
Wimsatt
Notary Public, Williamson County, TN
My commission expires:
07/25/2009
Acknowledgement
to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
The undersigned hereby consent to the
transactions contemplated by this Fifth Amendment to Consolidated Amended and
Restated Master Lease (the “Fifth Amendment”),
ratify and affirm their respective Guaranties, Pledge Agreements, Security
Agreements, Subordination Agreements and other Transaction Documents, and
acknowledge and agree that the performance of the Master Lease and
obligations described therein are secured by their Guaranties, Pledge
Agreements, Security Agreement, Subordination Agreement and other Transaction
Documents on the same terms and conditions in effect prior to this
Amendment.
ADVOCAT,
INC. a Delaware corporation
By: /s/ Glynn
Riddle
Name: Glynn
Riddle
Title: EVP
& CFO
STATE
OF Tennessee )
)
SS
COUNTY OF
Williamson )
This foregoing instrument was
acknowledged before me on the
9th day of August, 2007,
by Glynn
Riddle
, the EVP
&CFO
of ADVOCAT, INC. a Delaware corporation, on behalf of the
corporation, who acknowledged the same to be his or her free act and deed and
the free act and deed of the corporation.
Brenda
Wimsatt
Notary Public, Williamson County, TN
My commission expires:
07/25/2009
Acknowledgement
– Page 1 of 4
Acknowledgement
to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
DIVERSICARE
MANAGEMENT SERVICES CO., a Tennessee corporation
By: /s/ Glynn
Riddle
Name: Glynn
Riddle
Title: EVP
& CFO
STATE
OF Tennessee )
)
SS
COUNTY OF
Williamson )
This foregoing instrument was
acknowledged before me on the
9th day of August, 2007,
by Glynn
Riddle
, the EVP
&CFO
of DIVERSICARE MANAGEMENT SERVICES CO., a Tennessee
corporation, on behalf of the corporation, who acknowledged the same to be his
or her free act and deed and the free act and deed of the
corporation.
Brenda
Wimsatt
Notary Public, Williamson County, TN
My commission expires:
07/25/2009
Acknowledgement
– Page 2 of 4
Acknowledgement
to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
ADVOCAT
FINANCE INC., a Delaware corporation
By: /s/ Glynn
Riddle
Name: Glynn
Riddle
Title: EVP
& CFO
STATE
OF Tennessee )
)
SS
COUNTY OF
Williamson )
This foregoing instrument was
acknowledged before me on the
9th day of August, 2007,
by Glynn
Riddle
, the EVP
&CFO
of ADVOCAT FINANCE INC., a Delaware corporation, on behalf of
the corporation, who acknowledged the same to be his or her free act and deed
and the free act and deed of the corporation.
Brenda
Wimsatt
Notary Public, Williamson County, TN
My commission expires:
07/25/2009
Acknowledgement
– Page 3 of 4
Acknowledgement
to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
STERLING
HEALTH CARE MANAGEMENT, INC., a Kentucky corporation
By: /s/ Glynn
Riddle
Name: Glynn
Riddle
Title: EVP
& CFO
STATE
OF Tennessee )
)
SS
COUNTY OF
Williamson )
This foregoing instrument was
acknowledged before me on the
9th day of August, 2007,
by Glynn
Riddle
, the EVP
&CFO
of STERLING HEALTH CARE MANAGEMENT, INC., a Kentucky
corporation, on behalf of the corporation, who acknowledged the same to be his
or her free act and deed and the free act and deed of the
corporation.
Brenda
Wimsatt
Notary Public, Williamson County, TN
My commission expires:
07/25/2009
:
Acknowledgement
– Page 4 of 4
List
of Exhibits and Schedules to
FIFTH
AMENDMENT TO CONSOLIDATED
AMENDED
AND RESTATED MASTER LEASE
Exhibit
A Legal
Description of Texas Facilities
Exhibit
B List
of Facilities and Facility Trade Names
Exhibit
C Permitted
Encumbrances for Texas Facilities
Exhibit
D Texas
Environmental Matters
Schedule
C Excepted
Facilities to Radius Requirements
Page 1 of
1
EXHIBIT
A
Legal
description of the real property for the following facilities:
A-1 Treemont
A-2 Doctors
Healthcare Center
A-3 Estate’s
Healthcare Center
A-4 Katy
Facility
A-5 Humble
Facility
A-6 Normandy
Terrace Southeast
A-7 Heritage
Oaks Estate
Exhibit A
- - Page 1 of 1
EXHIBIT
B
|
1.
|
Arbor
Oaks Health & Rehab Center (Stillmeadow)
|
105
Russellville Road, Route 2, Highway 67 South
|
Malvern
|
Hot
Spring
|
AR
|
72104
|
|
2.
|
Ash
Flat Nursing & Rehab Center
|
66
Ozbirn Lane
|
Ash
Flat
|
Sharp
|
AR
|
72513
|
|
3.
|
Best
Care, Inc.
|
2159
Dogwood Ridge
|
Wheelersburg
|
Scioto
|
OH
|
45694
|
|
4.
|
Boone
Health Care Center, Inc.
|
Lick
Creek Road, P.O. Box 605
|
Danville
|
Boone
|
WV
|
25053
|
|
5.
|
Boyd
Nursing and Rehab Center
|
12800
Princeland Drive
|
Ashland
|
Boyd
|
KY
|
41102
|
|
6.
|
Canterbury
Health Center
|
1720
Knowles Road
|
Phenix
City
|
Russell
|
AL
|
36867
|
|
7.
|
Carter
Nursing & Rehab Center
|
250
McDavid Boulevard, P.O. Box 904
|
Grayson
|
Carter
|
KY
|
41143
|
|
8.
|
Conway
Health & Rehab Center (Faulkner)
|
2603
Dave Ward Drive
|
Conway
|
Faulkner
|
AR
|
72032
|
|
9.
|
Des
Arc Nursing & Rehab Center
|
2216
West Main, P.O. box 143B
|
Des
Arc
|
Prairie
|
AR
|
72040
|
|
10.
|
Elliott
Nursing & Rehab Center
|
Howard
Creek Road, P.O. Box 694, Route 32 East
|
Sandy
Hook
|
Elliott
|
KY
|
41171
|
|
11.
|
Garland
Nursing & Rehab Center and Apts.
|
610
Carpenter Dam Road
|
Hot
Springs
|
Garland
|
AR
|
71901
|
|
12.
|
Hardee
Manor Care Center
|
401
Orange Place
|
Wauchula
|
Hardee
|
FL
|
33873
|
|
13.
|
Laurel
Manor Health Center
|
902
Buchanan Road, P.O. Box 505
|
New
Tazewell
|
Claiborne
|
TN
|
37825
|
|
14.
|
Laurel
Nursing & Rehab Center
|
HC
75, Box 153, Clinic Road
|
Ivydale
|
Clay
|
WV
|
25113
|
|
15.
|
Lynwood
Nursing Home
|
4164
Halls Mill Road
|
Mobile
|
Mobile
|
AL
|
36693
|
|
16.
|
Manor
House of Dover
|
537
Spring Street, P.O. Box 399
|
Dover
|
Stewart
|
TN
|
37058
|
|
17.
|
Mayfield
Rehab and Special Care Center
|
200
Mayfield Drive
|
Smyrna
|
Rutherford
|
TN
|
37167
|
|
18.
|
Northside
Health Care
|
700
Hutchins Ave
|
Gadsden
|
Etowah
|
AL
|
35901
|
|
19.
|
Ouachita
Nursing /Pine Manor Apts.
|
1411
Country Club Road
|
Camden
|
Ouachita
|
AR
|
71701
|
|
20.
|
Pocahontas
Nursing & Rehab Center
|
105
Country Club Road
|
Pocahontas
|
Randolph
|
AR
|
72455
|
|
21.
|
Rich
Mountain Nursing & Rehab Center
|
306
Hornbeck
|
Mena
|
Polk
|
AR
|
71953
|
|
22.
|
Sheridan
Nursing & Rehab Center
|
113
South Briarwood Drive
|
Sheridan
|
Grant
|
AR
|
72150
|
|
23.
|
South
Shore Nursing & Rehab Center
|
James
Hannah Drive, P.O. box 489
|
South
Shore
|
Greenup
|
KY
|
41175
|
|
24.
|
The
Pines Nursing & Rehab Center
|
524
Carpenter Dam Road
|
Hot
Springs
|
Garland
|
AR
|
71901
|
|
25.
|
Walnut
Ridge Nursing & Rehab Center
|
1500
West Main
|
Walnut
Ridge
|
Lawrence
|
AR
|
72476
|
|
26.
|
West
Liberty Nursing & Rehab Center
|
774
Liberty Road, P.O. Box 219, Route 5 Wells Hill
|
West
Liberty
|
Morgan
|
KY
|
41472
|
|
27.
|
Westside
Health Care Center
|
4320
Judith Lane
|
Huntsville
|
Madison
|
AL
|
35805
|
|
28.
|
Wurtland
Nursing & Rehab Center
|
100
Wurtland Avenue, P.O. Box 677
|
Wurtland
|
Greenup
|
KY
|
41144
|
|
29.
|
Doctors
Healthcare
|
9009
White Rock Trail
|
Dallas
|
Dallas
|
TX
|
75238
|
|
30.
|
Estates
at Ft. Worth
|
201
Sycamore School Road
|
Fort
Worth
|
Tarrant
|
TX
|
76134
|
|
31.
|
Heritage
Oaks Estates
|
2001
N. 6th Street
|
Ballinger
|
Runnels
|
TX
|
76821
|
|
32.
|
Humble
|
8450
Will Clayton Parkway
|
Humble
|
Harris
|
TX
|
77338
|
|
33.
|
IHS
of Dallas at Treemont
|
5550
Harvest Hill Road
|
Dallas
|
Dallas
|
TX
|
75230
|
|
34.
|
Katy
|
1525
Tull Drive
|
Katy
|
Harris
|
TX
|
77499
|
|
35.
|
Normandy
Terrace
|
841
Rice Road
|
San
Antonio
|
Bexar
|
TX
|
78220
|
Exhibit B
- - Page 1 of 1
EXHIBIT
C
(Treemont)
1. The
following, all according to plat recorded in Volume 72249, Page 69, of the Map
Records of Dallas county, Texas:
|
|
A.
|
Sanitary
sewer easement ten (10) feet in width along the south property
line(s),
|
|
|
B.
|
Lone
Star Gas line easement forth (40) feet in width located north of and
adjacent to the sanitary sewer easement described above,
and
|
|
|
C.
|
Lone
Star Gas line easement twenty (20) feet in width along the southerly west
property line(s)
|
2. Right-of-Way
Easement executed by Daniel P. Robinowitz to Lone Star Gas Company, dated
October 17, 1972, recorded in Volume 72221, Page 3214, Deed Records of Dallas
County, Texas.
3. Right-of-Way
Easement executed by Daniel P. Robinowitz, Trustee to Dallas Power and Light
Company and Southwestern Bell Telephone Company, dated November 21, 1973,
recorded in Volume 74003, Page 1466, Deed Records of Dallas County,
Texas.
4. Sanitary
sewer pipeline easement to Milton H. friend, Jr., dated July 2, 1976, executed
by L&N Consultants, Inc., recorded in Volume 76129, Page 2511, of the Deed
Records of Dallas County, Texas.
5. Right
of Way Easement to the City of Dallas for sanitary sewer mains, dated April 29,
1977, executed by Tri-South Mortgage Investors, recorded in Volume 77138, Page
511, of the Deed Records of Dallas County, Texas.
6. Right
of Way Easement to the city of Dallas for water mains, dated October 18, 1995,
executed by Cambridge Group of Texas, Inc., recorded in Volume 95212, Page 1978,
of the Deed Records of Dallas County, Texas.
7. Right
of Entry Agreement to Warner Amex Cable Communications, Inc., dated December 3,
1981, recorded in Volume 82013, Page 2153, of the Deed Records of Dallas County,
Texas.
8. Rights
and remedies of co-tenants, contractual or otherwise, including but not limited
to, terms, conditions, covenants, options, restrictions, by-laws, and easements
contained in the Condominium Declaration executed by Cambridge Group of Texas,
Inc., dated June 7, 1996, recorded in Volume 96160, Page 1556, of the
condominium Records of Dallas County, Texas.
Exhibit C - Page 1 of 5
9. Annual
maintenance charge and/or current assessments as set out in instrument dated
June 7, 1996, and recorded in Volume 96160, Page 1556 of the Deed Records of
Dallas County, Texas.
10. Memorandum
of easement to TCI Cablevision of Dallas, Inc., dated August 11, 2000, executed
by Treemont Retirement Community, recorded in Volume 2000186, Page 5906, of the
Deed Records of Dallas County, Texas
(Doctors
Healthcare Center)
1. Easement
granted by Doctors Hospital Foundation, Inc. to the City of Dallas, dated
06/21/1963, filed 07/11/1963, recorded in Volume 104, Page 1204, Deed Records of
Dallas County, Texas.
2. Terms,
conditions and stipulations of that certain Boundary Line Agreement by and
between Richardson Independent School District and IHS Acquisition No. 128,
Inc., dated 05/07/1998, filed 07/01/1998, recorded in Volume 98127, Page 358,
Deed Records, Dallas County, Texas.
3. Terms,
conditions and stipulations of that certain Utility and Retaining Wall Easement
Agreement by and between IHS Doctors and Lake White Rock Limited Partnership,
dated 11/18/1998, filed 12/11/1998, recorded in Volume 98241, Page 1293, Deed
Records, Dallas County, Texas.
(Estates
Healthcare Center)
1. Encroachment
of payment and fencing along the west property line as shown on ALTA/ACSM Land
Title Survey prepared by Charles F. Stark, RPLS No. 5084, dated November 30,
1998, last revised January 4, 1999.
2. Location
of sign into the right-of-way of Sycamore Road along the north property line as
shown on ALTA/ACSM Land Title Survey prepared by Charles F. Stark, RPLS No.
5084, dated November 30, 1998, last revised January 4, 1999.
3. Public
open space easement in the northeast corner as shown on the plat recorded in
volume 388-101, Page 22, Map of records of Tarrant County, Texas.
4. Easement
along the south and west sides of property as shown on the plat recorded in
volume 388-101, Page 22, Map of records of Tarrant County, Texas.
5. Easement
granted by American Care Center, Inc. to Texas Electric Service company, dated
January 1, 1977, filed April 21, 1977, recorded in Volume 6218 Page 234, Deed
Records of Tarrant County, Texas.
Exhibit C - Page 2 of 5
(Katy)
|
(1)
|
The
following restrictive covenants of record itemized below, but the Company
insures that any such restrictive covenants have not been violated so as
to affect, and that future violation thereof will not affect, the validity
or priority of the mortgage hereby insured (insert specific recording date
or delete this exception):
|
Restrictive
Covenants as set out in Volume 336, Page 107 of the Map Records ofHarris County,
Texas. (As to Tract 1)
|
(2)
|
An
easement 8 feet wide along the northerly property line, and an aerial
easement 5 feet wide from a plane 20 feet above the ground upward, located
adjacent thereto for the use of public utilities as reflected by plat
recorded in Volume 304, Page 27 of the Map Record of Harris County,
Texas. (As to Tracts 1 and
2)
|
|
(3)
|
An
easement 40 feet wide along the west property line granted to
Missouri-Kansas-Texas Railroad Company by instrument recorded under
Clerk’s File No. E520271 of the Real Property Records of Harris County,
Texas. (As to Tract 1)
|
|
(4)
|
Provisions
of Agreement recorded under clerk’s File No. E538369 of the Real Property
Records of Harris County, Texas, relating to use of above described
railroad easement. (As to Tract
1)
|
|
(5)
|
Sanitary
sewer easement 8 feet wide along the northerly property line as evidenced
by instrument recorded under Clerk’s File No. G636760 of the Real Property
Records, and as shown on the recorded plat. (As to Tracts 1 and
2)
|
|
(6)
|
Easements
10 and 5 feet in width, together with adjoining aerial easements 10 feet
wide from a plane 16 feet above the ground upward located adjacent
thereto, as granted to Houston Lighting & Power Company by instrument
recorded under Clerk’s File No. K123137 of the Real Property Records of
Harris County, Texas, and located as shown on sketch attached
thereto. (As to Tract 1)
|
|
(7)
|
A
water meter easement 10 feet by 20 feet located in the northerly portion
as reflected by the recorded plat. (As to Tract
1)
|
|
(8)
|
½
of all the oil, gas and other minerals, the royalties, bonuses, rentals
and all other rights in connection with same are excepted herefrom as the
same are set forth in instrument recorded under Clerk’s File No. D726377
of the Real Property Records of Harris County, Texas. Leasing
rights waived therein. (As to Tracts 1 and
2)
|
|
(9)
|
Building
line 10 feet from Tull Road as reflected by the recorded
plat. (As to Tract 1)
|
Exhibit C
- - Page 3 of 5
(Humble)
|
(1)
|
Easement
5 feet in width, together with adjoining aerial easement 10 feet wide from
a plane 16 feet above the ground upward located adjacent thereto, as
granted to Houston Lighting & Power Company by instrument recorded
under Clerk’s File No. J713687 of the Real Property Records of Harris
County, Texas, and located as shown on sketch attached
thereto.
|
|
(2)
|
Easement
6 feet in width, together with adjoining aerial easements 2 feet
6 inches wide from a plane 14 feet above the ground upward
located adjacent thereto, as granted to Houston Lighting & Power
Company by instrument recorded under Clerk’s File No. R782989 of the Real
Property Records of Harris County, Texas, and located as shown on sketch
attached thereto.
|
|
(3)
|
½
of all the oil, gas and other minerals, the royalties, bonuses, rentals
and all other rights in connection with same are expected herefrom as the
same are set forth in instrument recorded in Volume 5448, Page 421 of the
Deed Records of Harris County, Texas. Leasing rights waived
therein.
|
|
(4)
|
Subject
to the restrictions and regulations imposed by Ordinances of the City of
Houston, recorded in Volume 5448, Page 421 of the Deed Records of Harris
County, Texas, as amended under Clerk’s File No. J-040968 of the Real
Property Records of Harris County, Texas, regarding the Houston
Intercontinental Airport.
|
(Normandy Terrace
Southeast)
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(1)
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Restrictive
covenants described in instrument recorded in Volume 1259, Page 505, Deed
Records of Bexar County, Texas, as noted on survey. (As to Lots
40, 41, 42 and 59, NCB 10755) Any covenant, condition or
restriction indicating a preference, limitation or discrimination based on
race, color, religion, sex, handicap, familial status, or national origin
to the extent such covenants, conditions or restrictions violate 42 USC
3604(c), is deleted.
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(2)
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The
following easements and/or building lines, all according to the plats
recorded in Volume 4080, Page 220, Volume 5140, Page 208, Volume 5940,
Page 67, Volume 6600, Page 52, and Volume 6700, Page 161, Deed and Plat
Records, Bexar County, Texas, as shown on
survey.
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(3)
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Encroachment
of improvements over the 30′ setback line along Rice Road (as to Tract
A).
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(4)
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Location
of the fence along the North and South property lines of Tract
B.
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(Heritage Oaks)
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(1)
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Right
of Way Easement from Milton Bryan to North Runnels Water Supply Corp.,
dated 08/26/76 recorded in Volume 458, Page 146, Deed Records of Runnels
County, Texas, as noted on survey.
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(2)
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Fifteen
Foot (15′) Electrical Utility Easement and Right-of-Way executed by
Dorothea Spencer to West Texas Utilities Company dated 10/12/92, recorded
in Volume 77, Page 292, Real Property Records of Runnels County, Texas, as
shown on survey.
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Exhibit C
- - Page 4 of 5
EXHIBIT
D
7.3B Texas Environmental
Matters.
7.3B.1 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 (i) 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 and (ii) Pre-Existing
Hazardous Substances.
7.3B.2 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.
7.3B.3 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 (other than Pre-Existing Hazardous Substances or Pre-Existing
Environmental Conditions), 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.
7.3B.4 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.
7.3B.5 Environmental
Audit. Upon the reasonable request of Lessor, but no more than
three (3) times during (i) the Initial Term or (ii) a Renewal Term, unless a
prior audit or Lessor’s or Lessee’s records 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 in which case Lessor
may request more than three such Environmental Audits during a given period,
Lessee shall, at Lessee’s expense, upon and within thirty (30) days of a written
request therefor from Lessor, deliver an Environmental Audit to
Lessor. Lessee shall not be responsible for any costs or expenses of
an audit requested by Lessor solely in connection with a sale or financing of
such Leased Property by Lessor. 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) a significant change in the condition of any of
the Leased Properties has occurred; (iii) there are fewer than six (6) months
remaining in the Term; or (iv) Lessor or a Facility Mortgagee has another good
reason for requesting such certificate or certificates. 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.
Exhibit D - Page 1 of
7
7.3B.6 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.
7.3B.7 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 Leased Properties may then be used for their Primary Intended
Use without being restricted by any environmental condition existing as of the
date of such expiration or earlier termination of the Term; provided, that
Lessee shall not be required to take any of the foregoing actions with respect
to Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions.
Exhibit D - Page 2 of
7
7.3B.8 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 (other than with respect to
or resulting from Pre-Existing Hazardous Substances or Pre-Existing
Environmental Conditions);
(iii) Clean
Up. If a Contamination occurs (other than to the extent it
arise out of Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions), 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
(other than a lien to the extent it arises out of Pre-Existing Hazardous
Substances or Pre-Existing Environmental Conditions), 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 Environmental Law, 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.
Exhibit D - Page 3 of
7
7.3B.9 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 (except to
the extent such Clean-Up relates to Pre-Existing Hazardous Substances or
Pre-Existing Environmental Conditions), 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. Subject to Section 12.1, 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.
7.3B.10 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 limitation 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 (except to the extent it
arises out of Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions) including, but not limited to, any one or more of the
following:
Exhibit D - Page 4 of
7
(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, other than with respect
to or resulting from Pre-Existing Hazardous Substances or Pre-Existing
Environmental Conditions;
(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, other than with respect to or resulting from
Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions;
(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, other than with respect to or
resulting from Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions; 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, other than with respect to or resulting from
Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions.
Exhibit D - Page 5 of
7
7.3B.11 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 7.3B shall survive the expiration or
earlier termination of the Term.
7.4 Exculpation. Notwithstanding
anything to the contrary in this Lease, Lessee shall not be liable for any
costs, loss, liability, damage or expense arising from or in connection with the
Clean-Up of any Pre-Existing Hazardous Substances or Pre-Existing Environmental
Conditions. If any Clean-Up is required to be performed by any
federal, state or local governmental entity solely because of the presence of
any Pre-Existing Hazardous Substances or Pre-Existing Environmental Conditions
and if the Treemont Facility, the Katy Facility or the Humble Facility will no
longer be permitted under applicable law to operate for their Primary Intended
Use unless such Clean-Up is performed (a “Required Clean-Up”),
then Lessee shall promptly notify Lessor of such Required
Clean-Up. If Lessor elects in writing not to perform such Required
Clean-Up, then Lessee may elect within thirty (30) days of such determination to
terminate this Lease as to such Facility only. If Lessor elects to
perform such Required Clean-Up, then Lessor shall promptly undertake and
diligently pursue the remediation of the applicable Pre-Existing Hazardous
Substances or Pre-Existing Environmental Conditions.
7.5 Asbestos
Remediation. If any Clean-Up of any Existing Asbestos
Containing Materials is required to be performed by any federal, state or local
governmental entity and if the Doctors & Fort Worth Facilities will no
longer be permitted under applicable law to operate for their Primary Intended
Use unless such Clean-Up is performed (a “Required Asbestos
Clean-Up”), then Lessee shall promptly notify Lessor of such Required
Asbestos Clean-Up. Within thirty (30) days of the determination that
a Required Asbestos Clean-Up must be done, Lessee shall provide Lessor with an
estimate of the Asbestos Clean-Up Cost. Lessor shall fund one half of
the Asbestos Clean-Up Cost (which funding may be in the form of an agreement to
abate Base Rent for a period of time commencing on the date that Lessee
commences the Required Asbestos Clean-Up). Lessee shall promptly
undertake and diligently perform such Required Asbestos Clean-Up and, upon
completion, shall provide Lessor with an accounting of all Asbestos Clean-Up
Costs, including adequate evidence of payment by Lessee of such
costs. Notwithstanding the foregoing, if such Required Asbestos
Clean-Up would not have been required by, or otherwise come to the attention of,
any governmental entity, but for the renovations or alterations of the Facility
occurring after the Commencement Date or as a result of the actions or omissions
of Lessee, a Sublessee, a Manager or other agent of Lessee, including the
failure to abide by Asbestos Management Plans, then Lessor shall have no
obligation to fund any portion of the Asbestos Clean-Up Costs and Lessee shall
be solely responsible for such Required Asbestos Clean-Up. Lessee
acknowledges receipt of copies of the Asbestos Management
Plans.
Exhibit D
- - Page 6 of 7
SCHEDULE
C
Excepted Facilities to
Radius Restriction
Alabama Westside
Healthcare Huntsville,
Alabama
Windsor
House Huntsville,
Alabama
Florida Golfview
Nursing
Home St.
Petersburg, Florida
SCHEDULE
C - Page 1 of 1