NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:

 

Section 1.               Capitalized Terms .   All capitalized terms used in this Amendment which are not specifically defined herein shall have the respective meanings set forth in the Lease Agreement, and if not defined therein then the respective meanings set forth in the Master Agreement.

 

Section 2.               Amendments .

 

(i)             Section 1.34 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.34  “ Facility ” shall mean, with respect to any Property, the skilled nursing/independent living/assisted living facility being operated or proposed to be operated on such Property.”

 

(ii)            Section. 1.35 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.35   “ Facility Mortgage ” shall mean all of the Loan Documents as defined in the Master Agreement.”

 

(iii)           Section 1.36 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.36   “ Facility Mortgagee ” shall mean Fannie Mae or any subsequent holder of any Facility Mortgage.”

 

(iv)           Section 1.52 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.52   “ Insurance Requirements ” shall mean all terms of any insurance policy required by this Agreement and any Facility Mortgage and all requirements of the issuer of any such policy and all orders, rules and regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon Landlord, Tenant or the Leased Property.”

 

(v)            Section 1.55 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.55       “ Landlord ” shall have the meaning given such term in the preambles to this Agreement, shall also include its successors and assigns including any Facility Mortgagee that forecloses on its Facility Mortgage and becomes a Successor Landlord.”

 

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(vi)           Section 1.65 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.65       Intentionally Deleted.”

 

(vii)          Section 1.66 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.66   Intentionally Deleted.”

 

(viii)         Section 1.73 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.73   “ Permitted Encumbrances ” shall mean, with respect to any Property, all rights, restrictions, and easements of record set forth on Schedule B to the applicable owner’s or leasehold title insurance policy issued to Landlord with respect to such Property, plus any other encumbrances as may have been granted or caused by Landlord or otherwise consented to in writing by Landlord and Facility Mortgagee from time to time.”

 

(ix)            Section 1.76 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.76   Intentionally Deleted.”

 

(x)             Section 1.83 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 1.83   “ Single Purpose ” shall mean, with respect to Tenant at all times since its formation:

 

(a)            has been a duly formed and existing partnership, corporation or limited liability company, as the case may be;

 

(b)            has been duly qualified in each jurisdiction in which such qualification was at such time necessary for the conduct of its business;

 

(c)            has complied with the provisions of its organizational documents and the laws of its jurisdiction of formation in all respects;

 

(d)            has observed all customary formalities regarding its partnership or corporate existence, as the case may be;

 

(e)            has accurately maintained its income and expense statements, accounting records and other partnership or corporate documents separate from those of any other Person;

 

(f)             has not commingled its assets or funds with those of any other Person or if it has commingled assets or funds, its assets and funds are separately accounted for in the books and records of the party in whose name any assets or funds are held;

 

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(g)            has identified itself in all dealings with creditors (other than trade creditors in the ordinary course of business and creditors for the construction of improvements to property on which such Person has a non-contingent contract to purchase such property) under its own name and as a separate and distinct entity;

 

(h)            has been adequately capitalized in light of its contemplated business operations;

 

(i)             has not assumed, guaranteed or become obligated for the liabilities of any other Person (except in connection with the Term Loan or as otherwise contemplated by the Loan Documents or the endorsement of negotiable instruments in the ordinary course of business) or otherwise held out its credit as being available to satisfy the obligations of any other Person;

 

(j)             has not acquired obligations or securities of any other Person;

 

(k)            has not entered into and was not a party to any transaction with any Affiliated Person, except in the ordinary course of business and on terms which are no less favorable to such Affiliated Person than would be obtained in a comparable arm’s-length transaction with an unrelated third party;

 

(l)             has paid the salaries of its own employees, if any, and maintained a sufficient number of employees in light of its contemplated business operations (or has entered into agreements with third parties or Affiliates to provide all required services that would otherwise be provided by such number of employees in a manner consistent with (k) above;

 

(m)           has allocated fairly and reasonably any overhead for shared office space;

 

(n)            has not engaged in any business or activity other than the leasing, operation and maintenance of the Leased Property, and activities incidental thereto;

 

(o)            has not acquired, operated or owned any assets other than (A) the Leased Property and (B) such incidental personal property as may be necessary for the operation of the Leased Property;

 

(p)            has maintained its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify it individual assets from those of any other Person;

 

(q)            has not made any loans or advances to any Person;

 

(r)             has not failed to either hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its

 

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own name or fail to correct any known misunderstanding regarding its separate identity;

 

(s)            has not engaged in a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Internal Revenue Code; and

 

(xi)            Section 3.1.1(b) of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“(b)  Allocation of Minimum Rent .  Minimum Rent may be allocated and reallocated among the Properties comprising the Leased Property by agreement among Landlord and Tenant and upon the prior written consent of the Facility Mortgagee; provided , however that in no event shall the Minimum Rent allocated to any Property be less than the monthly amount payable by Landlord on account of any Facility Mortgage and/or ground or master lease with respect to such Property nor shall the aggregate amount of Minimum Rent allocated among the Properties exceed the total amount payable for the Leased Property.

 

(xii)           Section 3.4 of the Lease Agreement is amended such that each of Landlord and Tenant, to the maximum extent permitted by law, shall remain bound by the Lease Agreement in accordance with its terms and shall not take any action without the consent of the other and the prior written consent of the Facility Mortgagee to modify, surrender or terminate the Lease Agreement.

 

(xiii)          Section 4.1.1(a) of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“4.1.1      Permitted Use .  (a)  Tenant shall, at all times during the Term, and at any other time that Tenant shall be in possession of any Property, continuously use and operate, or cause to be used and operated, such Property as a skilled nursing/independent living/assisted living facility as currently operated, and any uses incidental thereto.  Tenant shall not use (and shall not permit any Person to use) any Property, or any portion thereof, for any other use without the prior written consent of Landlord, except as may be permitted by the Master Agreement.  No use shall be made or permitted to be made of any Property and no acts shall be done thereon which will cause the cancellation of any insurance policy covering such Property or any part thereof (unless another adequate policy is available), nor shall Tenant sell or otherwise provide to residents or patients therein, or permit to be kept, used or sold in or about any Property any article which may be prohibited by law or by the standard form of fire insurance policies, or any other insurance policies required to be carried hereunder, or fire underwriter’s regulations.  Tenant shall, at its sole cost (except as expressly provided in Section 5.1.2(b) ), comply or cause to be complied with all Insurance Requirements.  Tenant shall not take or omit to take, or permit to be taken or omitted to be taken, any action, the taking or omission of which materially

 

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impairs the value or the usefulness of any Property or any part thereof for its Permitted Use.”

 

(xiv)         Section 4.1.1(b) of the Lease Agreement is hereby deleted from the Lease Agreement.

 

(xv)          Section 4.1.2 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“4.1.2      Necessary Approvals .  Tenant shall proceed with all due diligence and obtain and maintain, or cause to be obtained and maintained, all approvals necessary to use and operate, for its Permitted Use, each Property and the Facility located thereon under Applicable Laws and, without limiting the foregoing, shall maintain (or cause to be maintained) appropriate certifications for reimbursement and licensure.”

 

(xvi)         Section 4.1.3 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“4.1.3      Lawful Use, Etc.  Tenant shall not, and shall not permit any Person to use or suffer or permit the use of any Property or Tenant’s Personal Property, if any, for any unlawful purpose.  Tenant shall not, and shall not permit any Person to, commit or suffer to be committed any waste on any Property, or in any Facility, nor shall Tenant cause or permit any unlawful nuisance thereon or therein.  Tenant shall not, and shall not permit any Person to, suffer nor permit any Property, or any portion thereof, to be used in such a manner as (a) may adversely impair Landlord’s title thereto or to any portion thereof, or (b) may reasonably allow a claim or claims for adverse usage or adverse possession by the public, as such, or of implied dedication of such Property, or any portion thereof.”

 

(xvii)        Section 4.4 of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“ 4.4         Environmental Matters.

 

4.4.1        Restriction on Use, Etc.  During the Term and any other time that Tenant shall be in possession of any Property, Tenant shall not, and shall not permit any Person to, store, spill upon, dispose of or transfer to or from such Property any Hazardous Substance, except in compliance with all Applicable Laws.  During the Term and any other time that Tenant shall be in possession of any Property, Tenant shall maintain (or shall cause to be maintained) such Property at all times free of any Hazardous Substance (except in compliance with all Applicable Laws).  Tenant shall promptly:  (a) upon receipt of notice or knowledge, notify Landlord in writing of any material change in the nature or extent of Hazardous Substances at any Property, (b) transmit to Landlord a copy of any report which is required to be filed by Tenant with respect to any Property pursuant to SARA Title III or any other Applicable Laws, (c) transmit to Landlord copies of any citations, orders, notices or other governmental communications

 

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received by Tenant or its respective agents or representatives with respect thereto (collectively, “ Environmental Notice ”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Applicable Laws and/or presents a material risk of any material cost, expense, loss or damage (an “ Environmental Obligation ”), (d) observe and comply with (or cause to be observed and complied with) all Applicable Laws relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment or other disposition thereof, and (e) pay or otherwise dispose (or cause to be paid or otherwise disposed) of any fine, charge or Imposition related thereto, unless Tenant shall contest the same in good faith and by appropriate proceedings and the right to use and the value of any of the Leased Property is not affected thereby.

 

If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property, subject to Tenant’s right to contest the same in accordance with Article 8 , Tenant shall take (and shall cause to be taken) all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Laws, (x) to clean up and remove from and about such Property all Hazardous Substances thereon, (y) to contain and prevent any further release or threat of release of Hazardous Substances on or about such Property and (z) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.

 

4.4.2        Indemnification of Landlord .  Tenant shall protect, indemnify and hold harmless Landlord and each Facility Mortgagee, their trustees, officers, agents, employees and beneficiaries, and any of their respective successors or assigns with respect to this Agreement (collectively, the “ Indemnitees ” and, individually, an “ Indemnitee ”) for, from and against any and all debts, liens, claims, liabilities, damages, causes of action, administrative orders or notices, costs, fines, penalties or expenses (including, without limitation, reasonable attorney’s fees and expenses) imposed upon, incurred by or asserted against any Indemnitee resulting from, either directly or indirectly, the presence in, upon or under the soil or ground water of any Property or any properties surrounding such Property of any Hazardous Substances in violation of any Applicable Laws, except to the extent the same arise from the gross negligence or willful misconduct of Landlord or any other Indemnitee or during any period that Landlord or a Person designated by Landlord (other than Tenant) is in possession of such Property from and after the Commencement Date for such Property.  Tenant’s duty herein includes, but is not limited to, costs associated with personal injury or property damage claims as a result of the presence prior to the expiration or sooner termination of the Term and the surrender of such Property to Landlord in accordance with the terms of this Agreement of Hazardous Substances in, upon or under the soil or ground water of such Property in violation of any Applicable

 

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Laws.  Upon Notice from Landlord and any other of the Indemnitees, Tenant shall undertake the defense, at Tenant’s sole cost and expense, of any indemnification duties set forth herein, in which event, Tenant shall not be liable for payment of any duplicative attorneys’ fees incurred by any Indemnitee

 

Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys’ fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.4 , which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.”

 

(xviii)       Section 6.1 of the Lease Agreement is hereby deleted from the Lease Agreement and replaced in its entirety with the following:

 

“6.1          Improvements to the Leased Property .  Tenant shall not make, construct or install (or permit to be made, constructed or installed) any Capital Additions without, in each instance, obtaining Successor Landlord’s prior written consent, which consent shall be provided or not provided pursuant to the terms of the Facility Mortgage; provided , however , that no such consent shall be required in the event immediate action is required to prevent imminent harm to person or property and no consent shall be required if it would not have been required by the Facility Mortgage.  Prior to commencing construction of any Capital Addition for which consent is required, Tenant shall submit to Successor Landlord, in writing, a proposal setting forth, in reasonable detail, any such proposed improvement and shall provide to Successor Landlord such plans and specifications, and such permits, licenses, contracts and such other information concerning the same as Successor Landlord may reasonably request.  Successor Landlord shall have thirty (30) days to review all materials submitted to Successor Landlord in connection with any such proposal.  Failure of Successor Landlord to respond to Tenant’s proposal within thirty (30) days after receipt of all information and materials requested by Successor Landlord in connection with the proposed improvement shall be deemed to constitute rejection of the same.  Without limiting the generality of the foregoing, such proposal shall indicate the approximate projected cost of constructing such proposed improvement and the use or uses to which it will be put.  No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to any Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities.  Except as permitted herein, Tenant shall not finance the cost of any construction of such improvement by the granting of a lien on or security interest in the Leased Property or such improvement, or Tenant’s interest therein, without the prior written consent of Successor Landlord, which consent may be withheld by Successor Landlord in Successor Landlord’s sole discretion.  Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass to and become

 

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the property of Successor Landlord, free and clear of all encumbrances other than Permitted Encumbrances.”

 

(xix)          Article 7 (entitled “ Liens ”) of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“Subject to Article 8 , Tenant shall not, directly or indirectly, create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenant’s leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord and Facility Mortgagee, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16 , (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Article 8 , (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8 , (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of Article 20 and (h) Landlord Liens and any other voluntary liens created by Landlord.”

 

(xx)           Article 8 (entitled “ Permitted Contests ”) of the Lease Agreement is hereby deleted and replaced in its entirety with the following:

 

“Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement (other than insurance premiums), Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, “ Claims ”) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenant’s obligation to pay (or cause to be paid) any Claims as finally determined, (b) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, (c) Landlord (or any Facility Mortgagee) shall not be susceptible of being subject to imprisonment or susceptible of being subject to prosecution for a crime, nor shall the Leased Property or any part thereof be subject to being condemned or vacated, nor shall the certificate of occupancy for the Leased Property be suspended or threatened to be suspended by reason of non-compliance or by reason of such contest; (d) before the commencement of such contest, if Landlord or any Facility Mortgagee may be subject to any civil fines or penalties or other criminal penalties or if Landlord may be liable to any independent third party as a result of such noncompliance, Tenant shall furnish to Landlord either (i) a bond of a surety company satisfactory to Landlord, in form and substance reasonably satisfactory to Landlord, and in an amount equal to one hundred twenty percent (120%) of the

 

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sum of (1) the cost of such compliance, (2) the criminal or civil penalties or fines that may accrue by reason of such non-compliance (as reasonably estimated by Landlord), and (3) the amount of such liability to independent third parties (as reasonably estimated by Landlord), and shall indemnify Landlord (and any Facility Mortgagee) against the cost of such compliance and liability resulting from or incurred in connection with such contest or non-compliance (except that Tenant shall not be required to furnish such bond to Landlord if Tenant has otherwise furnished any similar bond required by law to the appropriate Governmental Agency and has named Landlord as a beneficiary thereunder), or (ii) other security reasonably satisfactory in all respects to Landlord; (e) such non-compliance or contest shall not constitute or result in a violation (either with the giving of notice or the passage of time or both) of the terms of any mortgage or deed of trust, or if such deed of trust or mortgage shall condition such non-compliance or contest upon the taking of action or furnishing of security by Landlord, such action shall be taken or such security shall be furnished at the expense of Tenant; and (f) Tenant shall keep Landlord regularly advised as to the status of such proceedings.

 

Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same.  Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant.  If Te