SECOND AMENDED AND RESTATED MASTER LEASELease Agreement |
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OMEGA HEALTHCARE INVESTORS INC | DELTA INVESTORS I, LLC | DELTA INVESTORS II, LLC | Harborside Healthcare Corporation | Massachusetts Holdings I, LLC | OHI ASSET (CA), LLC | OHI ASSET (CO), LLC | OHI ASSET (ID), LLC | OHI ASSET, LLC | OHIMA, Inc | OMEGA HEALTHCARE INVESTORS, INC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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__________________________________________
SECOND
AMENDED AND RESTATED
MASTER
LEASE AGREEMENT
__________________________________________
Among
OMEGA
HEALTHCARE INVESTORS, INC.
THE
LESSOR ENTITIES IDENTIFIED ON THE SIGNATURE PAGE
HEREOF
THE
LESSEE ENTITIES IDENTIFIED ON THE SIGNATURE PAGE
HEREOF
AND
THE
GUARANTOR ENTITIES IDENTIFIED ON THE SIGNATURE PAGE
HEREOF
Dated
As Of
February
1, 2008
THIS
SECOND AMENDED AND RESTATED MASTER LEASE AGREEMENT (this
“ Master
Lease ”), is made and entered into on this 1
st
day of February, 2008 (the “ Effective
Date ”) by and among the lessor entities
identified on the signature page hereof (collectively, the
“ Lessor
,” and where the context requires, each, a “
Lessor
”), the lessee entities listed on the signature page
hereof (collectively, jointly and severally, the “
Lessee
,” and where the context requires, each, a “
Lessee
”), OMEGA HEALTHCARE INVESTORS, INC., a Maryland
corporation (“ Omega
”), and the guarantor entities identified on the
signature page hereof (each a “ Guarantor
” and collectively, the “ Guarantors
”).
RECITALS
The
circumstances underlying the execution of this Master Lease
are as follows:
A.
Capitalized
terms used in this Master Lease and not otherwise defined herein
are defined in Article II hereof.
B.
Pursuant
to an Amended and Restated Master Lease Agreement dated as of March
1, 2004, but effective as of December 1, 2003, as amended by a
First Amendment to Amended and Restated Master Lease Agreement,
Amended and Restated Security Agreement and Amended and Restated
Guaranty dated as of December 1, 2004 (the “ Original Sun Master
Lease ”), a Second Amendment to Amended and Restated
Master Lease Agreement, Amended and Restated Security Agreement and
Amended and Restated Guaranty dated as of March 16, 2005, a Third
Amendment to Amended and Restated Master Lease Agreement, Amended
and Restated Security Agreement and Amended and Restated Guaranty
dated as of December 9, 2005, and a Fourth Amendment to Amended and
Restated Master Lease Agreement, Amended and Restated Security
Agreement and Amended and Restated Guaranty dated as of March 1,
2006 (collectively, the “ Existing
Sun
Master
Lease ”), among certain of the entities comprising
Lessor, certain of the entities comprising Lessee, Omega and Sun,
Lessee leases from Lessor, as of the Effective Date, thirty-two
(32) long term nursing, rehabilitation hospitals or other health
care facilities.
C.
Pursuant
to an Amended and Restated Guaranty, dated as of as of the 1st day
of March, 2004 (to be effective as of December 1, 2003 (as amended,
supplemented or otherwise modified from time to time, the “
Guaranty
”), Sun agreed to guaranty the obligations of each of the
entities comprising Lessee under the Existing Sun Master
Lease.
D.
Pursuant
to a Master Lease dated as of March 1, 2002, as amended by that
certain First Amendment to Master Lease dated as of February 28,
2007 (as amended, the “ Harborside Master
Lease ”) by and between OHIMA, Inc., a Massachusetts
corporation, as lessor, and Massachusetts Holdings I, LLC, a
Delaware limited liability company (“ Harborside
Lessee ”), as lessee, the Harborside Lessee leased the
Harborside Facilities (as defined below). The Harborside
Lessee subleased such facilities to certain of the entities
comprising Lessee (the “ Harborside
Sublessees ”). Harborside Healthcare
Corporation, a Delaware corporation (“ Harborside
Guarantor ”), has guaranteed the obligations of the
Harborside Lessee under the Harborside Master
Lease. Prior to the Effective Date,
Sun acquired the Harborside Guarantor and, as a result,
the Harborside Guarantor, the Harborside Lessee and the Harborside
Sublessees are, as of the Effective Date, direct or indirect
subsidiaries of Sun.
-1-
E.
Pursuant
to a Master Lease Agreement dated as of October 31, 2002, as
modified by that certain letter dated December 24, 2003, a First
Amendment to Master Lease Agreement dated as of September 19, 2007,
a Second Amendment to Master Lease Agreement dated as of November
30, 2007, a Third Amendment to Master Lease Agreement dated as of
December 31, 2007, and a Fourth Amendment to Master Lease Agreement
dated as of January 31, 2008 (as amended, the “ Litchfield Peak
Lease ”) by and between OHI Asset (CO), LLC, a
Delaware limited liability company, as landlord, and Peak Medical
Colorado No. 2, Inc., a Delaware corporation (the “
Litchfield Peak
Lessee ”), as tenant, the Litchfield Peak Lessee
leased the Litchfield Facilities (as defined
below). Peak Medical Corporation, a Delaware
corporation (the “ Litchfield Peak
Guarantor ”), has guaranteed the obligations of the
Litchfield Peak Lessee under the Litchfield Peak
Lease. Prior to the Effective Date, Sun acquired the
Litchfield Peak Guarantor and, as a result, the Litchfield Peak
Guarantor and the Litchfield Peak Lessee are, as of the Effective
Date, direct or indirect subsidiaries of Sun.
F. Sun,
Lessee, Omega and Lessor have agreed as of the Effective Date
to (i) amend and restate in its entirety the Existing Sun
Master Lease, (ii) incorporate the Litchfield Facilities into
this Master Lease and (iii) terminate the Harborside Master
Lease and incorporate the Harborside Facilities into this
Master Lease.
G. A
list of the forty two (42) facilities covered by this Master
Lease as of the Commencement Date is attached hereto as
Exhibit A
(the “ Facilities
”)
F.
Concurrently
with the execution and delivery of this Master Lease, the Guaranty,
the Existing Security Agreement and the Existing Letter of Credit
Agreement shall be amended and restated as set forth herein and
Sun, the Harborside Guarantor and Litchfield Peak Guarantor shall
jointly and severally guaranty the obligations of Lessee under this
Master Lease.
NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
agree as follows:
ARTICLE
I
1.1
Lease . Upon and subject to the terms and
conditions set forth in this Master Lease, from and after the
Effective Date, Lessor shall continue to lease to Lessee, and
Lessee shall continue to lease from Lessor, the Leased Properties
upon which the forty-two (42) Facilities listed on attached
Exhibit
A (which includes the Future Transition Facilities) are
located, on the terms and conditions set forth herein, it being the
express intention of the parties that the leasehold estates
governed by this Master Lease shall be one and the same as the
leasehold estates created under the Existing Sun Master Lease, the
Harborside Master Lease, and the Litchfield Peak
Lease.
The
term “ Leased
Properties ” as of the Commencement Date means
all of Lessor’s right, title and interest in and to the
real properties described on Exhibit B
to this Master Lease (the “ Land
”) and all of the following:
-2-
In
the event that, at anytime during the Term, this Master Lease,
by its terms, terminates as to any portion of the Leased
Properties, then effective from and after such termination and
without the need by any of the parties to execute any
amendments to this Master Lease, the “Leased
Properties” shall refer to that portion of the Leased
Properties which continues to be subject to the terms of this
Master Lease. The Leased Properties are leased subject to all
covenants, conditions, restrictions, easements and other
matters affecting the Leased Properties as of the Commencement
Date and such subsequent covenants, conditions, restrictions,
easement and other matters as may be agreed to by Lessor or
Lessee in accordance with the terms of this Lease, whether or
not of record, including the Permitted Encumbrances and other
matters which would be disclosed by an inspection or accurate
survey of the Leased Properties. Lessor represents and
warrants to Lessee that as of the Commencement Date it has no
actual knowledge of any covenants, conditions, restrictions,
easement or other matters affecting the Leased Properties
which is not of record.
-3-
1.2
Single, Indivisible Lease . This 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 to Lessee as a single, composite,
inseparable transaction and would have been substantially different
had separate leases or a divisible lease been intended. Except as
expressly provided in this Master Lease for specific, isolated
purposes (and then only to the extent expressly otherwise stated)
and except for the Future Transition Facilities, which
may be transitioned in accordance with the terms of this Master
Lease, all provisions of this Master Lease apply equally and
uniformly to all of the Leased Properties as one unit. An Event of
Default with respect to any Leased Property is an Event of Default
as to all of the Leased Properties. The parties intend that the
provisions of this Master Lease shall at all times be construed,
interpreted and applied so as to carry out their mutual objective
to create an indivisible lease of all of the Leased Properties and,
in particular but without limitation, that, for purposes of any
assumption, rejection or assignment of this Master Lease under 11
U.S.C. Section 365, this is one indivisible and non-severable lease
and executory contract dealing with one legal and economic unit and
that this Master Lease must be assumed, rejected or assigned as a
whole with respect to all (and only as to all) of the Leased
Properties.
1.3
Joint and Several Obligation . Lessee
acknowledges that collectively they are jointly and severally
liable for the payment of all sums payable and for the performance
of all obligations performable, by one or more of the Lessees.
Notwithstanding the foregoing, however, no Lessee shall, by virtue
of this Master Lease, have any rights to, or title or interest in,
the Leased Property or Properties leased by another Lessee or any
obligation to operate the same to the extent it is not licensed to
do so under applicable law.
1.4
Term .
1.4.1
The
initial continued term of this Master Lease (“ Initial Continued
Term ”) shall commence:
(i)
on
December 1, 2003 and end on December 31, 2013 for the Continued
Facilities; and
(ii)
on
the Effective Date and end on December 31, 2013 for the Harborside
Facilities;
in
each case, subject to renewal as set forth in Section 1.5.1
below.
1.4.2
The
initial term of the Master Lease for the Litchfield Facilities (the
“ Initial Litchfield
Term ”) shall commence on the Effective Date and end
on September 30, 2017, subject to renewal as set forth in Section
1.5.2 below.
1.5
Options to Renew .
1.5.1
Lessee
is hereby granted two (2) successive options to renew this Master
Lease as to the Non-Litchfield Facilities for a period of ten (10)
Lease Years each (each a “ Non-Litchfield Option
to Renew ”), with the first such Non-Litchfield Option
to Renew being for the period from January 1, 2014 through December
31, 2023 and the second such option being for the period from
January 1, 2024 through December 31, 2033. The
Non-Litchfield Options to Renew are subject to the following terms
and conditions (which conditions may be waived by Lessor in its
sole discretion):
-4-
(a)
A
Non-Litchfield Option to Renew is exercisable only by Notice to
Lessor at least three hundred and sixty-five (365) days, and not
more than five hundred forty-five (545), prior to the expiration of
the Initial Continued Term (or prior to the expiration of the
period covered by the preceding Non-Litchfield Option to Renew, as
the case may be);
(b)
No
Event of Default shall have occurred and be continuing either at
the time a Non-Litchfield Option to Renew is exercised or at the
commencement of the period covered by each Non-Litchfield Option to
Renew;
(c)
During
the period covered by each Non-Litchfield Option to Renew, except
as otherwise specifically provided for herein, all of the terms and
conditions of this Master Lease shall remain in full force and
effect; and,
(d)
Lessee
may exercise its Non-Litchfield Facilities Option to Renew with
respect to all (and no fewer than all) of the Non-Litchfield
Facilities which are subject to this Master Lease at the time of
exercise of each Non-Litchfield Option to Renew.
1.5.2
Lessee
is hereby granted two (2) successive options to renew this Master
Lease as to the Litchfield Facilities (each a “ Litchfield Option to
Renew ”), with the first such Litchfield Option
to Renew being for the period from October 1, 2017 through December
31, 2023 and the second such option being for the period from
January 1, 2024 through December 31, 2033. The
Litchfield Options to Renew are subject to the following terms and
conditions (which conditions may be waived by Lessor in its sole
discretion):
(a)
A
Litchfield Option to Renew is exercisable only by Notice to Lessor
at least three hundred and sixty-five (365) days, and not more than
five hundred forty-five (545), prior to the expiration of the
Initial Litchfield Term (or prior to the expiration of the period
covered by the preceding Litchfield Option to Renew, as the case
may be);
(b)
No
Event of Default shall have occurred and be continuing either at
the time a Litchfield Option to Renew is exercised or at the
commencement of each period covered by a Litchfield Option to
Renew;
(c)
Lessee
shall have exercised all Non-Litchfield Options to Renew which can
be exercised as of the date of the applicable Litchfield Option to
Renew;
-5-
(d)
During
the period covered by a Litchfield Option to Renew, except as
otherwise specifically provided for herein, all of the terms and
conditions of this Master Lease shall remain in full force and
effect; and,
(e)
Lessee
may exercise its Litchfield Option to Renew with respect to all
(and no fewer than all) of the Litchfield Facilities which are
subject to this Master Lease at the time of exercise of each
Litchfield Option to Renew.
ARTICLE
II
2.1
Definitions . For all purposes of this Master
Lease, except as otherwise expressly provided or unless the context
otherwise requires, (i) the terms defined in this Article II
include the plural as well as the singular, (ii) all accounting
terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP as at the time applicable, (iii) all
references in this Master Lease to designated
“Articles,” “Sections” and other
subdivisions are to the designated Articles, Sections and other
subdivisions of this Master Lease, and (iv) the words
“herein,” “hereof” and
“hereunder” and other words of similar import refer to
this Master Lease as a whole and not to any particular Article,
Section or other subdivision.
Accounts : All accounts, all rights to payment or
reimbursement for goods sold or leased or services rendered
(including, without limitation, Medicare, Medicaid and other third
party reimbursed receivables) and all accounts receivable, in each
case whether or not evidenced by a contract, document, instrument
or chattel paper and whether or not earned by performance,
including without limitation, the right to payment of management
fees and all proceeds of the foregoing.
Action : Any claim, demand, action or
proceeding.
Additional Charges : As defined in Article
III.
Affiliate : When used with respect to any
corporation, limited liability company, or partnership, the term
“Affiliate” shall mean any person which, directly or
indirectly, controls or is controlled by or is under common control
with such corporation, limited liability company or
partnership. For the purposes of this definition,
“control” (including the correlative meanings of the
terms “controlled by” and “under common control
with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests
or other equity interests.
Allocated Current Rent: As defined in Section
3.9.
Amended Security Agreement: The Second Amended
and Restated Security Agreement dated of even date herewith between
Lessor and Lessee, as may be amended or supplemented from time to
time, which agreement amends and restates the Existing Security
Agreement.
Applicable Rate : A rate of interest per annum
equal to the higher of:
(a) six percent (6%) and (b) 375 basis points
above LIBOR.
-6-
Article XXXVI Default Notice : As defined in Section
36.8.
Assessment : Any assessment on the Leased
Properties or any part of any of them for public improvements or
benefits whether or not commenced or completed prior to the date
hereof and whether or not to be completed within the
Term.
Assumed Indebtedness : Any indebtedness or other
obligations expressly assumed by or taken subject to by Lessor,
existing on the Commencement Date and, secured by a mortgage, deed
of trust or other security agreement in or on the related Leased
Property.
Award : As defined in Article XV.
Base Rent : means the sum of (i) the Non-Litchfield Base
Rent and (ii) the Litchfield Base Rent.
Board : The Board of Directors of
Sun.
Business Day : Any day on which the Common Stock
may be traded on any applicable national securities exchange or via
the NASDAQ automated quotation system, or if not admitted for
trading on any national securities exchange, any day other than a
Saturday, Sunday or holiday on which banks in New York City, New
York are required or permitted to be closed.
Capital Stock : (i) With respect to any Person
that is a corporation, any and all shares, interests,
participations or other equivalents (however designated) of capital
or capital stock of such Person and (ii) with respect to any Person
that is not a corporation, any and all partnership, limited
partnership, limited liability company or other equity interests of
such Person.
Cash : Cash and cash equivalents and all instruments
evidencing the same or any right thereto and all proceeds
thereof.
Code : The Internal Revenue Code of 1986, as
amended.
Collateral : As defined in the Amended Security
Agreement.
Commencement Date : means the Effective Date for
the Harborside Facilities and the Litchfield Facilities, and
December 1, 2003 for all Continued Facilities.
Common Stock: Sun’s common stock, par
value $.01 per share, and any Capital Stock for or into which such
Common Stock hereafter is exchanged, converted, reclassified or
recapitalized by Sun.
Condemnation, Condemnor : As defined in Article
XV.
Continued Facilities : All Facilities other than the
Harborside Facilities and the Litchfield Facilities.
-7-
Conversion Shares : The 760,000 shares of Common
Stock which were issued to Lessor by Sun on April 15, 2004 upon the
conversion of the Deferred Base Rent (as previously defined in the
Existing Sun Master Lease).
CPI : The United States Department of Labor,
Bureau of Labor Statistics Revised Consumer Price Index for All
Urban Consumers (1982-84=100), U.S. City Average, All Items, or, if
that index is not available at the time in question, the index
designated by such Department as the successor to such index, and
if there is no index so designated, an index for an area in the
United States that most closely corresponds to the entire United
States, published by such Department, or if none, by any other
instrumentality of the United States.
Credit Suisse : As defined in the Security
Agreement.
Date of Taking : As defined in Article
XV.
Encumbrance : Any mortgage, deed of trust, lien,
encumbrance or other matter affecting title to any of the Leased
Properties, or any portion thereof or interest
therein.
Event of Default : As defined in Article
XVI.
Exchange Act : The Securities Exchange Act of
1934, as amended.
Excluded Lessee ’
s
Personal
Property : All
vehicles, business office equipment, including computer hardware,
software and peripherals, telephone systems and Specialized Medical
Equipment owned or leased by Lessee and used in connection with the
operation of the Leased Properties.
Executive Officer : Any of the Chairman of the
Board of Directors, the President, the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer, any Vice
President and the Secretary of any corporation, a general partner
of any partnership and a managing member of any limited liability
company upon which service of a Notice is to be made.
Existing Letter of Credit Agreement : The Amended
and Restated Letter of Credit Agreement dated as of December 9,
2005, as amended, among Lessor, Lessee, Omega and Sun.
Existing Security Agreement : The Amended
and Restated Security Agreement dated as of March 1, 2004, and
effective as of December 1, 2003 among Lessor and Lessee, as
amended.
Existing Sun Master
Lease : As defined in Recital
B.
Expiration Date : As to the Non-Litchfield
Facilities, December 31, 2013 if no Renewal Option has been
exercised, December 31, 2023 if the first Renewal Option has been
exercised, or December 31, 2033 if the first and second Renewal
Options have been exercised, and, as to the Litchfield Facilities,
September 30, 2017 if no Renewal Option has been exercised,
December 31, 2023 if the first Renewal Option has been exercised,
or December 31, 2033 if the first and second Renewal Options have
been exercised.
-8-
Facilit(y)(ies) : The licensed nursing homes,
rehabilitation hospitals or other health care facilities being
operated on the Leased Propert(y)(ies).
Facility Mortgage : As defined in Section
13.1.
Facility Mortgagee : As defined in Section
13.1.
Facility Trade Name: As defined in Section
33.2.
Financial Statements
: For
a fiscal year period, statements of Sun’s earnings and
retained earnings and of changes in financial position and profit
and loss for such period and for the period from the beginning of
the respective fiscal year to the end of such period and the
related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in
comparative form the corresponding figures for the corresponding
period in the preceding fiscal year and prepared in accordance with
GAAP and reported on by a “big four” or other
nationally recognized accounting firm approved by Lessor, which
approval will not be unreasonably withheld or delayed from the
beginning of the fiscal year to the end of such
period.
Financials : Unaudited statements of a the financial
performance or condition of any of (i) each Guarantor or the
Guarantors, taken as a whole or (ii) each Facility individually,
and the Facilities, taken as a whole, whether or not fulfilling the
requirements for Financial Statements.
Fiscal
Year : The annual period commencing January
1 and terminating December 31 of each year.
Fixtures : As defined in Section
1.1.
Future Operator Lease : As defined in Section
3.9.
Future Operators : As defined in Section 3.9.
Future Transition Facilities: The Facilities
listed on attached Schedule III
.
Future Transition Facilities Notice : As defined in Section
3.9.
Future Transition Facilities Rent : As defined in Section
3.9.
Future Transition Facilities Rent Shortfall : An amount
equal to 75% of the difference between the Allocated Current Rent
and the Future Transition Facilities Rent.
Future Transition Facilities Rent Shortfall Statement : As
defined in Section 3.9.
GAAP : Generally accepted accounting principles
consistent with those applied in the preparation of financial
statements.
Guarantor or Guarantors
: One, some or all of Sun Healthcare Group, Inc., a
Delaware corporation, Peak Medical Corporation, a Delaware
corporation, Harborside Healthcare Corporation, a Delaware
corporation or any successor entity that guaranties the payment or
collection of all or any portion of the amounts payable by Lessee,
or the performance by Lessee of all or any of its obligations,
under this Master Lease.
-9-
Guarantor Lender : As defined in the Security
Agreement.
Guaranty: Any guaranty executed by a Guarantor
in favor of Lessor, as the same may be amended or supplemented from
time to time.
Harborside Facilities : means the Facilities commonly known
as:
Hazardous Substances : As defined in Section
7.3.
Impositions : Collectively, all taxes (including,
without limitation, all capital stock and franchise taxes of
Lessor, all ad valorem, sales and use, single business, gross
receipts, transaction privilege, rent or similar taxes),
assessments (including Assessments as herein defined), ground
rents, water, sewer or other rents and charges, excises, tax
levies, fees (including, without limitation, license, permit,
inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Leased Properties or the business
conducted thereon by Lessee and/or the Rent (including all interest
and penalties thereon due to any failure of payment by Lessee)
applicable to periods of time commencing on the Possession Date
(unless any Tenant’s obligations for any portion of such
period has been discharged as a matter of law) and ending on the
expiration of the Term hereof which at any time during or in
respect of such period hereof may be assessed or imposed on or in
respect of or be a lien upon (i) Lessor or Lessor’s interest
in the Leased Properties, (ii) the Leased Properties or any part
thereof or any rent therefrom or any estate, right, title or
interest therein, or (iii) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in
connection with the Leased Properties or the leasing or use of the
Leased Properties or any part thereof or (iv) the
Rent. The term “Imposition” shall not
include: (a) any tax based on gross or net income
(whether denominated as a franchise or capital stock or other tax)
imposed on Lessor generally and not specifically arising in
connection with the Leased Properties, but Lessee shall pay any tax
hereafter specifically imposed on Rent received by Lessor from
Lessee, or (b) any net revenue tax of Lessor or any other
person, or (c) any tax imposed with respect to the sale, exchange
or other disposition by Lessor of the Leased Properties or the
proceeds thereof or (d) any principal or interest on any Assumed
Indebtedness on the Leased Properties or any other indebtedness of
Lessor, except to the extent that any tax, assessment, tax levy or
charge, which Lessee is obligated to pay pursuant to the first
sentence of this definition and which is in effect at any time
during the Term hereof is totally or partially repealed, and a tax,
assessment, tax levy or charge set forth in clause (a) or (b) is
levied, assessed or imposed in lieu thereof.
-10-
Initial Continued Term : As defined in Section
1.4.1.
Initial Litchfield Term : As defined in Section
1.4.2.
Insurance Requirements : All terms of any
insurance policy required by this Master Lease and all requirements
of the issuer of any such policy.
Judgment Date : The date on which a judgment is
entered against a Lessee that establishes, without the possibility
of appeal, the amount of liquidated damages to which Lessor is
entitled under this Master Lease.
Land : As defined in Section 1.1.
Lease Year : January 1 through the following December 31
during the Term. If this Master Lease is terminated
before the end of any Lease Year, the final Lease Year for purposes
of such terminated lease will be January 1 through the date of
termination thereof.
Leased Properties : As defined in Section
1.1.
Legal Requirements : As to the Leased Properties,
all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Properties or
the construction, use or alteration thereof, whether now or
hereafter enacted and in force, including any which may (i) require
repairs, modifications or alterations in or to any of the Leased
Properties or (ii) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses and authorizations and
regulations relating thereto including, but not limited to, those
relating to existing healthcare licenses, those authorizing the
current number of licensed beds and the level of services delivered
from the Leased Properties, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either
of record or known to Lessee at any time in force affecting any
Leased Property (other than covenants, agreements, restrictions and
encumbrances created by Lessor with the consent of Lessee, which
consent shall not be unreasonably withheld or delayed, providing
that such covenants, agreements, restrictions and encumbrances will
not materially and adversely affect Lessee’s leasehold rights
hereunder).
Lessee Encumbrances : All real estate taxes, assessments,
water charges, requirements of municipal or other governmental
authorities, or other covenants, agreements, matters or things
which are the obligation of Lessee or its Affiliates to pay, comply
with, conform to or discharge under the provisions of this Master
Lease, the Litchfield Peak Lease, or the Harborside Master Lease;
and all liens, encumbrances, violations, charges or conditions that
are due to any act or omission of Lessee.
Lessee ’
s
Leasehold Award : As defined in Section 15.4.
Lessee’s Personal Property: Personal
Property owned or leased by Lessee that is not included within the
definition of the term “Lessor’s Personal
Property” but is used by Lessee in the operation of the
Facilities, including, but not limited to, the Excluded
Lessee’s Personal Property and any Personal Property
hereinafter provided by Lessee in compliance with Section 6.3
hereof, but specifically excluding Cash and Accounts.
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Lessee ’
s
Personal Property Award : As defined in Section
15.4.
Lessor Indemnified Party : Lessor and each of
Lessor’s officers, directors, employees, agents and
affiliates and each person that controls (within the meaning of
Section 20 of the Exchange Act) any of the foregoing
persons.
Lessor’s Personal Property : As defined in
Section 1.1.
Letter of Credit Agreement : An agreement Lessor,
Lessee and Guarantor, as the same may be amended, modified,
replaced or restated from time to time, providing for a letter of
credit to be delivered to Lessor as the Security
Deposit.
Litchfield Base Rent:
(A) During
the Initial Litchfield Term, the Litchfield Base Rent shall
be:
(i) For
the period from the Effective Date through September 30, 2008,
the annual sum of Five Million Seven Hundred Thousand and
00/100 Dollars ($5,700,000);
(ii) For
each period from October 1 through September 30 thereafter,
the Litchfield Base Rent for the previous twelve month period,
increased by an amount equal to the Litchfield Base Rent for
the previous twelve month period multiplied by the lesser of (x) 235
basis points over the ten year treasury securities constant
maturity rate in effect for the month of December immediately
prior to each such increase and (y) two and one-half percent
(2.5%).
Litchfield Facilities : means the Facilities commonly known
as:
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Material Capital Improvement : Any repair, replacement,
modification or addition to any of the Remaining Transition
Facilities, including any of the Personal Property located therein,
which has or is reasonably estimated to have a useful life in
excess of twenty four (24) months.
Minimum Purchase Price
: The Purchase Price for each Leased Property as set forth in
Exhibit
C hereto.
NASD : The National Association of Securities
Dealers.
Net Proceeds : As defined in Section 14.1.
Non-Litchfield Base Rent:
(A) During
the Initial Continued Term, the Non-Litchfield Base Rent shall
be:
(i) For
the period prior to the Effective Date, the amounts set forth
in the Existing Sun Master Lease;
(ii) For
the period from February 1, 2008 through December 31, 2008,
the monthly sum of Two Million Eighty Five Thousand One
Hundred Seventy Five and 44/100 Dollars ($2,085,175.44), which
on an annualized basis is Twenty Five Million Twenty Two
Thousand One Hundred Five and 19/100 Dollars ($25,022,105.19)
(the “ 200
8
Annualized
Non-Litchfield Base Rent ”);
(iii) For
Lease Year commencing January 1, 2009, the 2008 Annualized
Non-Litchfield Base Rent, increased by an amount equal to the
2008 Annualized Non-Litchfield Base Rent multiplied by the
lesser of (x) 235
basis points over the ten year treasury securities constant
maturity rate in effect for the month of December immediately
prior to each such increase and (y) two and one-half percent
(2.5%);
(iv) For
each Lease Year following 2009, the Non-Litchfield Base Rent
for the previous Lease Year, increased by an amount equal to
the Non-Litchfield Base Rent for the previous Lease Year
multiplied by the lesser of (x) 235
basis points over the ten year treasury securities constant
maturity rate in effect for the month of December immediately
prior to each such increase and (y) two and one-half percent
(2.5%).
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Notice : A notice given in accordance with
Article XXXI.
Officer’s Certificate : A certificate of
Lessee signed by one or more Executive Officers of
Lessee.
Omega: Omega Healthcare Investors, Inc., a
Maryland corporation.
Omega Lenders : As defined in Section 8.2(f).
Original Master Leases: The Master Lease
Agreements identified on Schedule
I attached hereto.
Original Security Agreements : Those certain
security agreements between Lessor and any applicable Lessee
executed pursuant to any facility lease, the Existing Sun Master
Lease or Original Master Leases, as amended, supplemented or
otherwise modified from time to time prior to the Effective
Date.
OTA : As defined in Section 3.7.
Overdue Rate : On any date, a rate equal to five
(5) percentage points above the Prime Rate, but in no event greater
than the maximum rate then permitted under applicable
law.
Payment Date : The due date for the payment of
the installments of Base Rent, Additional Charges, or any other
sums payable under this Master Lease.
Peak Idaho
Facilities :
means the Facilities commonly known as:
Permitted Encumbrances : The Permitted
Encumbrances described in Exhibit D
hereto.
Permitted Personal Property Leases or
Liens : Liens
or other exceptions to title granted to, or leases entered into
with, a third party in connection with the acquisition of new
Personal Property.
Person : An individual or a corporation,
partnership, trust, incorporated or unincorporated association,
limited liability company, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other
entity of any kind.
Personal Property : All machinery, equipment,
furniture, furnishings, movable walls or partitions, computers (and
all associated software and peripheral equipment), trade fixtures
and other tangible personal property (but excluding consumable
inventory and supplies owned by Lessee, Cash and Accounts),
together with all replacements, modifications, alterations and
additions thereto, except items, if any, included within the
definition of Fixtures or Leased Improvements. The term
“Personal Property” shall exclude personal property
leased from third parties.
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Possession Date : As to each Facility, the date that a
Lessee first took possession of such Facility, which, in the case
of the Harborside Facilities, means March 1, 2002, in the case of
the Litchfield Facilities, means November 1, 2002, in the case of
the Peak Idaho Facilities, means March 26, 1999, in the case of the
Continuing Facilities which are the subject of the Delta I Master
Lease or the Delta II Master Lease (as those terms are defined in
Schedule I), means October 7, 1997, in the case of the Continuing
Facilities which are the subject of the Regency North Carolina
Master Lease (as that term is defined in Schedule I) means February
1, 1996 and in the case of the Continuing Facilities which are the
subject of the Qualicorp Master Lease (as that term is defined in
Schedule I) means June 1, 1997.
Primary Intended Use : As defined in Section
7.2.2.
Prime Rate : On any date, a rate equal to the
annual rate on such date publicly announced by Citibank, N.A. to be
its prime rate for 90-day unsecured loans to its corporate
borrowers of the highest credit standing, but in no event greater
than the maximum rate then permitted under applicable
law.
Reconstruction Period : Two hundred forty days
(240) following damage, destruction or Condemnation, as applicable,
subject to extension to the extent required by Unavoidable
Delay.
Relinquished Lessee ’
s
Personal Property : All of the Lessee’s Personal
Property other than the Excluded Lessee’s Personal
Property.
Renewal Term : A period for which the Term is renewed in
accordance with Section 1.5.
Rent : Collectively, the Base Rent and Additional
Charges.
Replacement Property : As defined in Section
9.1.6.
SEC : The United States Securities and Exchange
Commission.
SEC Filing : As defined in Section
8.1(i).
Securities Act : The Securities Act of 1933, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.
Security Deposit : As defined in Section 40.1.
Self-Administered Amount : One Hundred and Fifty
Thousand ($150,000.00) Dollars.
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Specialized Medical Equipment : Any non-affixed equipment
(i) which is owned or leased by Lessee, and (ii) which is used by
Lessee for lifting or transferring, or providing therapeutic
interventions or other specialized medical services to,
residents/patients.
State : With respect to each Facility, the state
in which such Facility is located
Sun: Sun Healthcare Group, Inc., a Delaware
corporation.
Taking : As defined in Section
15.1.1.
Term : Collectively, the Initial Continued Term
and the Initial Litchfield Term plus the Renewal Term or Renewal
Terms, if any.
Transfer : As defined in Section
22.1.
Unavoidable Delays : Delays due to strikes,
lock-outs, inability to procure materials, power failure, acts of
God, governmental restrictions, enemy action, civil commotion,
fire, unavoidable casualty or other causes beyond the control of
the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the
control of a party.
Unsuitable for Its Primary Intended Use : A state
or condition of any Facility such that by reason of damage or
destruction, or a partial taking by Condemnation, such Facility
cannot be operated on a commercially practicable basis for its
Primary Intended Use, taking into account, among other relevant
factors, the number of useable beds, the amount of square footage
and the estimated revenue affected by such damage or
destruction.
ARTICLE
III
3.1
Rent . During the Term, Lessee will pay to Lessor
the Base Rent and Additional Charges in lawful money of the United
States of America and legal tender for the payment of public and
private debts, in the manner provided in Section 3.5. The Base Rent
during any Lease Year is payable in advance in consecutive monthly
installments on the third day of each calendar month during that
Lease Year. Unless otherwise agreed by the parties, Base
Rent and Additional Charges shall be prorated as to any partial
months at the beginning and end of the Term.
3.2
Additional Charges . In addition to the Base
Rent, Lessee will also pay and discharge as and when due and
payable all Impositions as provided in Section 4.1, any Future
Transition Facilities Rent Shortfall, and all other amounts,
liabilities, obligations and Impositions which Lessee assumes or
agrees to pay under this Master Lease. In the event of
any failure on the part of Lessee to pay any of those items
referred to in the previous sentence, Lessee will also promptly pay
and discharge every fine, penalty, interest and cost which may be
added for non-payment or late payment of such items referred to in
this sentence and the previous sentence. Collectively,
the items referred to in the first two sentences of this Section
3.3 are referred to as the “ Additional
Charges ” and shall also constitute Rent.
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3.3
Late Charge . If any installment of Base Rent, or
Additional Charges owing by Lessee to Lessor shall not be paid by
its due date, Lessee shall pay Lessor on demand, as an Additional
Charge, a late charge equal to the greater of (i) five percent (5%)
on the amount of such installment or (ii) all charges, expenses,
fees or penalties imposed on Lessor by the Facility Mortgagee for
late payment.
3.4
Method of Payment of Rent . Rent to be paid to
Lessor shall be paid by electronic funds transfer debit
transactions through wire transfer of immediately available funds
and shall be initiated by Lessee for settlement on or before the
due date each calendar month; provided, however, if the due date is
not a Business Day, then settlement shall be made on the next
succeeding day which is a Business Day. Lessor shall
provide Lessee with appropriate wire transfer information in a
Notice from Lessor to Lessee. Lessee shall inform Lessor
of payment by sending a facsimile transmission of Lessee’s
wire transfer confirmation not later than noon, Eastern Standard or
Daylight Savings time on each payment date. If Lessor directs
Lessee to pay any Base Rent to any party other than Lessor, Lessee
shall send to Lessor, simultaneously with such payment, a copy of
the transmittal letter or invoice and a check whereby such payment
is made or such other evidence of payment as Lessor may reasonably
require.
3.5
Net Lease .
3.5.1
The
Rent shall be paid absolutely net to Lessor, so that this Master
Lease shall yield to Lessor the full amount of the installments of
Base Rent and Additional Charges payable thereunder throughout the
Term, subject only to any other provisions of this Master Lease
which expressly provide for adjustment or abatement of Rent or
other charges. This Master Lease is and shall be a
“pure-net” or “triple-net” lease, as such
terms are commonly used in the real estate industry, it being
intended that Lessee shall pay all costs, expenses, and charges
arising out of the use, occupancy and operation of the Leased
Properties.
3.5.2
Lessor
shall not be required to furnish any services whatsoever to the
Leased Properties, or make any payment of any kind
whatsoever. Lessee hereby assumes the full and
sole responsibility for the condition, operation, repair,
alteration, improvement, replacement, maintenance and management of
the Leased Properties. Lessor shall not be responsible
for any loss or damage to any property of Lessee or any sub-tenant,
concessionaire, or other user or occupant of any part of the Leased
Properties, absent the gross negligence or willful misconduct of
Lessor, its employees or agents.
3.6
Limitation on Counterclaim . If Lessor commences
any proceedings for non-payment of Rent, Lessee will not interpose
any counterclaim or cross complaint or similar pleading of any
nature or description in such proceedings unless Lessee would lose
or waive such claim by the failure to assert it. This
shall not, however, be construed as a waiver of Lessee’s
rights to assert such claims in a separate action brought by
Lessee. The covenants to pay rent and other amounts
hereunder are independent covenants, and Lessee shall have no right
to hold back, offset or fail to pay any such amounts for default by
Lessor or for any other reason whatsoever.
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3.7
Future Transition of Certain Additional Facilities
.
3.7.1
If
as a consequence of actions taken by the State of California or any
instrumentality thereof or of any political subdivision thereof,
including without limitation the California Department of Health
Services or Department of Justice, any County Department of Mental
Health or the California Bureau of Medi-Cal Fraud and Elder Abuse,
whether under the Superseding Permanent Injunction and Final
Judgment filed on September 14, 2005 in the Superior Court of the
State of California for the County of San Diego, Central Division
in People
v. Sun Healthcare Group, Inc., et al (San Diego Superior
Court Case No. GIC853861) (the “ PIFJ ”)
or otherwise (i) the cash flow of the Future Transition
Facilities taken as a whole (inclusive of all overhead,
administrative and other costs allocable to those facilities) is
negative and in the reasonable opinion of Sun is likely to remain
negative under the then current circumstances for more than two (2)
years, or (ii) Sun and Omega otherwise jointly agree (in the
exercise of their respective good faith reasonable business
judgment) that it is no longer economically feasible for the
applicable Lessee to continue to operate the Future Transition
Facilities, Lessee is permitted as to all, but not fewer than all,
of the Future Transition Facilities on written notice to Lessor
(the “ Future Transition
Facilities Notice ”) to (A) transition, in one or more
transactions the Future Transition Facilities to one or more new
operators acceptable to Omega in its reasonable business discretion
(the “ Future
Operators ”) and/or (B) with respect to any of the
Future Transition Facilities which have not been transitioned to
Future Operators within a period of one (1) year after the delivery
to Lessor of the Future Facilities Transition Notice, to close any
of the Future Transition Facilities in accordance with the laws of
the State, it being understood and agreed that in the event Lessee
delivers the Future Facilities Transition Notice to Lessor, then
Lessee shall be required to use its commercially reasonable efforts
for a period of one (1) year thereafter to transition to Future
Operators all, but not less than all, of the Future Transition
Facilities.
3.7.2 The
affected Lessee shall negotiate an Operations Transfer Agreement
(“ OTA ”)
in good faith, provided that such OTA shall be substantially in the
form of Exhibit E
. Omega shall negotiate in good faith the terms of a new Lease
with the Future Operators (the “ Future Operator
Lease ”) provided that the Future Operator Lease shall
be in substantially the same form as Omega’s standard form
lease for similar size transactions.
3.7.3
Prior
to the Effective Date, Lessor has entered into a Term Sheet
proposing the sale (the “ Proposed Sale
”) of the Future Transition Facilities to Vibra Healthcare, LLC, a
Delaware limited liability company, or an entity owned or
controlled by or under common control therewith
. Lessee has agreed to cooperate in such sale and shall
negotiate in good faith the terms of an OTA with the proposed
purchaser thereof. Lessee hereby agrees to pay all of
Lessor’s reasonable attorneys fees and reasonable expenses of
Lessor’s attorneys incurred in connection with the Proposed
Sale, up to a maximum of Fifty Thousand and no/100 Dollars
($50,000).
3.7.4
Upon
completion of the transition of any or all of the Future Transition
Facilities pursuant to Section 3.7.1 ,
(i) upon the effective date of the applicable Future Operator
Lease, this Master Lease shall terminate as to the applicable
Future Transition Facility(ies), (ii) upon the effective date
of the applicable Future Operator Lease, the
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Base
Rent under this Master Lease shall be reduced by the Allocated
Current Rent with respect to the applicable Future Transition
Facility(ies) and (iii) from and after the effective date of the
applicable Future Operator Lease and throughout the remainder of
the Initial Continued Term or the then applicable Renewal Term (if
the transition or closure occurs during a Renewal Term), Lessor
shall deliver to Lessee on a quarterly basis a statement (the
“ Future Transition
Facilities Rent Shortfall Statement ”) setting forth
in reasonable detail (A) the amount of the Base Rent actually
received by Lessor, on an aggregate basis, during the preceding
quarter from the Future Operators of the Future Transition
Facilities (the “ Future Transition
Facilities Rent ”) and (B) the amount due from Lessee,
if any, with respect to the Future Transition Facilities Rent
Shortfall, it being understood and agreed that during any quarter
when the Future Transition Facilities Rent is equal to or greater
than the Allocated Current Rent, Lessee shall have no Future
Transition Facilities Rent Shortfall obligation to Lessor. The
Future Transition Facilities Rent Shortfall shall be due and
payable within ten (10) Business Days after Lessee’s receipt
from Lessor of the Future Transition Facilities Rent Shortfall
Statement. Lessee shall have the right on reasonable
notice to Lessor and during normal business hours to review the
books and records of Lessor in order to verify the accuracy of the
information and calculations contained in the Future Transition
Facilities Rent Shortfall Statement and the cost thereof shall be
borne by Lessee unless the same discloses that Lessor overbilled
Lessee for the Future Transition Facilities Rent Shortfall by five
percent (5%) or more, in which case the cost of such review shall
be borne by Lessor.
3.7.5
Upon
completion of the transition of any or all of the Future Transition
Facilities pursuant to the Proposed Sale (but not otherwise) (i)
upon the effective date of the sale of the Future Transition
Facilities this Master Lease shall terminate as to the applicable
Future Transition Facility(ies), and (ii) upon the closing of the
sale of the Future Transition Facilities pursuant to Proposed Sale,
the Non-Litchfield Base Rent shall be reduced at the time of the
closing of the Proposed Sale by an amount equal to 5.862% of the
gross purchase price for the Future Transition Facilities, it being
understood and agreed that the Proposed Sale currently contemplates
a purchase price of $29,000,000 and that in such event the Base
Rent shall be reduced by One Million Seven Hundred Thousand and
no/100 Dollars ($1,700,000) concurrently with the closing of the
sale of such Future Transitioned Facilities.
3.7.6
For
purposes of applying the provisions of this Section 3.7, as of
January 1, 2007, the Allocated Current Rent for the Future
Transition Facilities shall, in the aggregate, be One Hundred
Thirty Four Thousand Eight Hundred Forty Two and 27/100 Dollars
($134,842.27) per month and shall be allocated among the Future
Transition Facilities in the manner set forth in Schedule
II. The Allocated Current Rent shall increase by 2.5% on
January 1, 2008 and on each January 1 thereafter.
ARTICLE
IV
4.1
Payment of Impositions . Subject to Section 12.1
relating to permitted contests, Lessee will pay, or cause to be
paid, all Impositions before any fine, penalty, interest or cost
may be added for non-payment, such payments to be made directly to
the taxing authorities where feasible, and will promptly, upon
request, furnish to Lessor copies of official receipts or
other
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satisfactory
proof evidencing such payments. If any such Imposition
may, at the option of the taxpayer, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Lessee may exercise the option to pay
the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and in such event, shall pay such
installments during the Term hereof (subject to Lessee’s
right of contest pursuant to the provisions of Section 12.1) as the
same respectively become due and before any fine, penalty, premium,
further interest or cost may be added thereto. If any
provision of any Facility Mortgage requires deposits for payment of
real estate taxes or other Impositions to be made with such
Facility Mortgagee, Lessee shall either pay to Lessor monthly the
amounts required and Lessor shall transfer the amounts to such
Facility Mortgagee, or, pursuant to written direction by Lessor,
Lessee shall make such deposits directly with such Facility
Mortgagee. Lessor, at its expense, shall, to the extent
required or permitted by applicable law, prepare and file all tax
returns and reports as may be required by governmental authorities
in respect of Lessor’s net income, gross receipts, sales and
use, single business, transaction privilege, rent, ad valorem,
franchise taxes and taxes on its capital stock, and Lessee, at its
expense, shall, to the extent required or permitted by applicable
laws and regulations, prepare and file all other tax returns and
reports in respect of any Imposition as may be required by
governmental authorities. If any refund is due from any
taxing authority in respect of any Imposition paid by Lessee, the
same shall be paid over to or retained by Lessee if no Event of
Default has occurred hereunder and is continuing. Any
such funds retained by Lessor due to an Event of Default shall be
applied as provided in Article XVI. Lessor and Lessee
shall, upon request of the other, provide such data as is
maintained by the party to whom the request is made with respect to
the Leased Properties as may be necessary to prepare any required
returns and reports. In the event governmental
authorities classify any property covered by this Master Lease as
personal property, Lessee shall file all required personal property
tax returns. Lessor, to the extent it possesses the
same, and Lessee, to the extent it possesses the same, will provide
the other party, upon request, with cost and depreciation records
necessary for filing returns for any property classified as
personal property. Lessee may, upon Notice to and with
the consent of Lessor (which consent shall not be unreasonably
withheld), at Lessee’s sole cost and expense, protest,
appeal, or institute such other proceedings as Lessee may deem
appropriate to effect a reduction of real estate or personal
property assessments and Lessor, at Lessee’s expense as
aforesaid, shall cooperate with Lessee in such protest, appeal, or
other action. Lessee shall reimburse Lessor for Lessor’s
direct costs of cooperating with Lessee for such protest, appeal or
other action. Billings for reimbursement by Lessee to
Lessor of personal property taxes shall be accompanied by copies of
a bill therefor and payments thereof which identify the personal
property with respect to which such payments are
made. Unless otherwise agreed by Lessor and Lessee,
notwithstanding the foregoing, upon the expiration or earlier
termination of the Term, all Impositions applicable to the final
Lease Year of the Term (if a partial calendar year) shall be
prorated between Lessee and Lessor as set forth in Section 4.3
hereof.
4.2
Notice of Impositions . Lessor shall give prompt
Notice to Lessee of all Impositions payable by Lessee hereunder of
which Lessor at any time has knowledge, but Lessor’s failure
to give any such Notice shall in no way diminish Lessee’s
obligation hereunder to pay such Impositions, but such failure
shall obviate any default hereunder for a reasonable time after
Lessee receives Notice of any Imposition which it is obligated to
pay.
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4.3
Adjustment of Impositions . Impositions imposed
in respect of the tax-fiscal period during which the Term
terminates or expires shall be adjusted and prorated between Lessor
and Lessee, whether or not such Imposition is imposed before or
after termination or expiration, and Lessee’s obligation to
pay its prorated share thereof if the same becomes due after such
termination or expiration shall survive such termination or
expiration.
4.4
Utility Charges . Lessee will pay or cause to be
paid when due all charges for electricity, power, gas, oil, water
and other utilities used in the Leased Properties during the
Term.
4.5
Insurance Premiums . Lessee will pay or cause to
be paid when due all premiums for the insurance coverage required
to be maintained pursuant to Article XIII during the
Term.
ARTICLE
V
5.1
No Termination, Abatement, etc . Except as
otherwise specifically provided in this Master Lease, Lessee shall
remain bound by this Master Lease in accordance with its terms and
shall not take any action without the consent of Lessor to modify,
surrender or terminate the same, and shall not seek or be entitled
to any abatement, deduction, deferment or reduction of Rent, or
setoff against the Rent. Except as expressly set forth
herein, the respective obligations of Lessor and Lessee shall not
be affected by reason of (i) any damage to, or destruction of, any
of the Leased Properties or any portion of any Leased Property from
whatever cause or any Taking of any Leased Property or any portion
thereof, (ii) the lawful or unlawful prohibition of, or restriction
upon, Lessee’s use of any Leased Property, or any portion
thereof, or the interference with such use by any person,
corporation, partnership or other entity, or the eviction of Lessee
by paramount title; (iii) any claim which Lessee has or might
have against Lessor or by reason of any default or breach of any
warranty by Lessor under this Master Lease or any other agreement
between Lessor and Lessee, or to which Lessor and Lessee are
parties, (iv) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or
other proceedings affecting Lessor or any assignee or transferee of
Lessor, or (v) for any other cause whether similar or dissimilar to
any of the foregoing other than a discharge of Lessee from any such
obligations as a matter of law. Lessee hereby
specifically waives all rights, arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law
to (a) modify, surrender or terminate this Master Lease or quit or
surrender the Leased Properties or any portion thereof, or
(b) entitle Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Lessee hereunder
except as otherwise specifically provided herein. The
obligations of Lessor and Lessee hereunder shall be separate and
independent covenants and agreements and the Rent and all other
sums payable by Lessee hereunder shall continue to be payable in
all events unless the obligations to pay the same are terminated
pursuant to the express provisions of this Master
Lease.
ARTICLE
VI
6.1
Ownership of the Leased Properties . Lessor
warrants and represents that it has the right to lease the Leased
Properties to Lessee, and, if Lessor acquired the Leased Properties
from anyone other than Lessee or an Affiliate of Lessee, Lessor
warrants and represents it has good and marketable fee simple title
to the Leased Properties, subject only to the Permitted
Encumbrances and any Lessee Encumbrances. Lessee
acknowledges that the Leased Properties are the property of Lessor
and that Lessee has only the right to the possession and use of the
Leased Properties upon the terms and conditions of this Master
Lease. Lessee will not, at any time during the
Term: (i) file any income tax return or other associated
documents; (ii) file any other document with or submit any document
to any governmental body or authority; (iii) enter into any written
contractual arrangement with any Person; or (iv) release any
financial statements of Lessee, in each case that takes a position
other than that Lessor is the owner of the Leased Properties for
federal, state and local income tax purposes and that this Master
Lease is a “true lease.” If Lessee should
reasonably conclude that GAAP or the SEC require treatment
different from that set forth in the subsections (i), (ii), (iii)
and (iv) of the previous sentence, then Lessee (y) shall give
prior Notice to Lessor, and (z) notwithstanding the prior sentence,
Lessee may comply with such requirements.
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6.2
Lessor ’
s
Personal Property . Lessee hereby acknowledges
and agrees that, as of the Commencement Date, all Personal Property
located on the Land or in the Leased Improvements on the Effective
Date is the Personal Property of Lessor, except for the Excluded
Lessee’s Personal Property. Lessee shall, during
the entire Term, maintain all of Lessor’s Personal Property
in good order, condition and repair as shall be necessary in order
to operate the Facilities for the Primary Intended Use in
compliance with all applicable licensure and certification
requirements, all applicable Legal Requirements and Insurance
Requirements, and customary industry practice for the Primary
Intended Use, reasonable wear and tear and obsolescence
excepted. If any of Lessor’s Personal Property
requires replacement in order to comply with the foregoing, Lessee
shall replace it with similar property of the same or better
quality at Lessee’s sole cost and expense, and when such
replacement property is placed in service with respect to any
Leased Property it shall become Lessor’s Personal
Property. At the expiration or earlier termination of
this Master Lease, all of Lessor’s Personal Property shall be
surrendered to Lessor with the Leased Properties at or before the
time of the surrender of the Leased Properties in good operating
condition.
6.3
Lessee ’
s
Personal Property . Lessee shall provide and
maintain during the Term such Personal Property, in addition to
Lessor’s Personal Property, as shall be reasonably necessary
and appropriate in order to operate the Facilities for the Primary
Intended Use in compliance with all licensure and certification
requirements and in compliance with all applicable Legal
Requirements and Insurance Requirements. Upon the expiration or
earlier termination of this Master Lease as to any or all of the
Leased Properties other than as a result of Lessee’s purchase
of the Leased Properties or any portion thereof in accordance with
the terms of this Master Lease (i) Lessee shall have the right, at
its sole cost and expense, to remove from the Leased Properties or
the Leased Property(ies) as to which this Master Lease has
terminated, as applicable, the Excluded Lessee’s Personal
Property unless there is then outstanding an Event of Default
hereunder and Lessor elects to exercise its rights with respect to
the Excluded Lessee’s Personal Property in accordance with
the terms of the Amended Security Agreement and (ii) the
Relinquished Lessee’s Property shall be and remain the
property of Lessor and Lessee shall, upon request, execute such
documents as may be reasonably necessary to convey to Lessor all of
Lessee’s right, title and interest therein free and clear of
all liens, claims, charges and encumbrances. Any of the Excluded
Lessee’s Personal Property which Lessee fails to remove from
the affected Leased Property(ies) within twenty (20) days following
the expiration or earlier termination of this Master Lease shall be
considered abandoned by Lessee and may be appropriated, sold,
destroyed or otherwise disposed of by Lessor without giving notice
thereof to Lessee and without any payment to Lessee or any
obligation to account therefore. Lessee shall reimburse
Lessor for any and all expenses reasonably incurred by Lessor in
disposing of any of the Excluded Lessee’s Personal Property
in accordance with the immediately preceding sentence and shall
either at its own expense restore the Leased Properties to the
condition required by Section 9.1.7, including repair of all
damages to the Leased Properties caused by the removal of any of
the Excluded Lessee’s Personal Property, or reimburse Lessor
for any and all expense reasonably incurred by Lessor for such
restoration and repair.
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6.4
Grant of Security Interest in Lessee’s Personal
Property . Lessee has concurrently granted to
Lessor a security interest in the “Collateral” (as
defined in the Amended Security Agreement), as more particularly
described in the Amended Security Agreement.
ARTICLE
VII
7.1
Condition of the Leased Properties . Lessee has
been and currently is in possession of the Leased Properties and
otherwise has knowledge of the condition of the Leased Properties
and has found the same to be in good order and repair and
satisfactory for its purposes hereunder. Lessee
continues to lease the Leased Properties “as is” in
their condition at the time this Master Lease is entered
into. Lessee waives any claim or action against Lessor
in respect of the condition of any Leased
Property. LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, TO LESSEE OR TO ANY PARTY WITH WHICH LESSEE
ENTERS INTO A MANAGEMENT CONTRACT, IN RESPECT OF ANY LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE,
AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR
PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY
LESSEE. LESSEE ACKNOWLEDGES THAT EACH LEASED PROPERTY
HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO
LESSEE. Lessee further acknowledges that Lessee is
solely responsible for the condition of the Leased Properties from
and after the Commencement Date. Unless any Leased
Property was acquired from Lessee, and to the extent permitted by
law, Lessor hereby assigns to Lessee, all of Lessor’s rights,
if any, to proceed against any predecessor in title for breaches of
warranties or representations, or for latent defects in such Leased
Property and Lessee agrees to fully prosecute any and all such
claims. Lessor shall cooperate with Lessee in the
prosecution of any such claims, in Lessor’s or Lessee’s
name, all at Lessee’s sole cost and expense.
7.2
Use of Leased Properties .
7.2.1
Lessee
covenants that it will obtain and maintain all approvals, licenses
and permits needed to use and operate the Leased Properties and the
Facilities under applicable local, state and federal law,
including, but not limited to, licensure as a licensed nursing home
or other applicable designation, such as rehabilitation hospital,
and Medicare or Medicaid certification, to the extent applicable
to the operation of each Facility from time to time.
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7.2.2
After
the Commencement Date and during the entire Term, Lessee shall use
or cause each Leased Property to be used as the applicable Facility
thereon is currently licensed, and for such other uses as may be
necessary or incidental to such use (the particular such use is
herein referred to as the “ Primary Intended
Use ”). Lessee shall not use any Leased
Property or any portion thereof for any other use without the prior
written consent of Lessor. No use shall be made or
permitted to be made by Lessee, its agents and employees of any
Leased Properties, and no acts shall be done by Lessee, its agents
and employees, which will cause the cancellation of any insurance
policy covering any Leased Property or any part thereof, nor shall
Lessee sell or otherwise provide to residents or patients therein,
or permit to be kept, used or sold in or about any Leased 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.
7.2.3
Lessee
covenants and agrees that during the Term it will continuously
operate the Facilities on the Leased Properties as providers of
health care services in accordance with the Primary Intended Use
and that it will maintain its certification for reimbursement and
licensure and its accreditation, if applicable.
7.2.4
Lessee
shall not commit or suffer to be committed any waste on any Leased
Property nor shall Lessee cause or permit any nuisance
thereon.
7.2.5
Lessee
shall neither suffer nor permit any Leased Property or any portion
thereof, or Lessee’s Personal Property, to be used in such a
manner as (i) might reasonably tend to impair Lessor’s (or
Lessee’s, as the case may be) title thereto or to any portion
thereof, or (ii) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of
implied dedication of such Leased Property or any portion
thereof.
7.3
Certain Environmental Matters .
7.3.1
Definitions . The terms defined in this Section
have the meanings assigned to them in this Section and include the
plural as well as the singular:
(a)
Clean-Up : The investigation, removal,
restoration, remediation and/or elimination of, or other response
to, Contamination (as hereinafter defined) to the satisfaction of
all governmental agencies having jurisdiction, in compliance with
or as may be required by Environmental Laws (as hereinafter
defined).
(b)
Contamination. The presence, Release or
threatened Release of any Hazardous Substance at any Leased
Property in violation of any Environmental Law, or in a quantity
that would give rise to any affirmative Clean-Up obligation under
an Environmental Law, including, but not limited to, the existence
of any injury or potential injury to public health, safety, natural
resources or the environment associated therewith, or any other
environmental condition at, in, about, under or migrating from or
to such Leased Property.
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(c)
Environmental Documents : Each and every (i)
document received by Lessee or any Affiliate from, or submitted by
Lessee or any Affiliate to, the United States Environmental
Protection Agency and/or any other federal, state, county or
municipal agency responsible for enforcing or implementing
Environmental Laws with respect to the condition of a Leased
Property, or Lessee’s operations at a Leased Property; and
(ii) review, audit, report, or other analysis data pertaining to
environmental conditions, including, but not limited to, the
presence or absence of Contamination, at, in, or under or with
respect to a Leased Property that have been prepared by, for or on
behalf of Lessee.
(d)
Environmental Laws : All federal, state and local laws
(including, without limitation, common law), statutes, codes,
ordinances, regulations, rules, orders, permits or decrees relating
to the introduction, emission, discharge or release
of Hazardous Substances into the indoor or outdoor
environment (including, without limitation, air, surface water,
groundwater, land or soil) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
transportation or disposal of Hazardous Substances; or the Cleanup
of Contamination, all as are now or may hereinafter be in
effect.
(e)
Environmental Report : The environmental review,
audit and/or report relating to any Leased Property provided to
Lessor in connection with Lessor’s acquisition of such Leased
Property.
(f)
Hazardous Substances : Any and all dangerous,
toxic or hazardous material, substance, pollutant, contaminant,
chemical, waste (including medical waste), or substance including
petroleum products, asbestos and PCB’s defined, listed or
described as such under any Environmental Law.
(g)
Regulatory Actions : With respect to any Leased
Property, any claim, demand, notice, action or proceeding brought,
threatened or initiated by any governmental authority in connection
with any Environmental Law, including, without limitation, civil,
criminal and/or administrative proceedings, and whether or not
seeking costs, damages, equitable remedies, penalties or
expenses.
(h)
Release : The intentional or unintentional
spilling, leaking, dumping, pouring, emptying, seeping, disposing,
discharging, emitting, depositing, injecting, leaching, escaping,
abandoning, or any other release or threatened release, however
defined, of any Hazardous Substance.
(i)
Third Party Claims : Any claims, actions, demands
or proceedings (other than Regulatory Actions) howsoever based
(including without limitation those based on negligence, trespass,
strict liability, nuisance, toxic tort or detriment to health
welfare or property) due to Contamination, and whether or not
seeking costs, damages, penalties or expenses, brought by any
person or entity other than a governmental agency.
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7.3.2
Prohibition Against Use of Hazardous Substances
. Lessee shall not permit, conduct or allow on any
Leased Property, the generation, introduction, presence,
maintenance, use, receipt, acceptance, treatment, manufacture,
production, installation, management, storage, disposal or release
of any Hazardous Substance except for those types and quantities of
Hazardous Substances necessary for and ordinarily associated with
the conduct of Lessee’s business and in full compliance with
all Environmental Laws.
7.3.3
Notice of Environmental Claims, Actions or Contaminations
. Lessee will notify Lessor, in writing, promptly upon
learning of any existing, pending or threatened: (i) investigation,
inquiry, claim or action by any governmental authority with respect
to any Leased Property in connection with any Environmental Law,
(ii) Third Party Claims, (iii) Regulatory Actions, and/or (d)
Contamination of any Leased Property.
7.3.4
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 any Leased Property is required by any
Environmental Law, then Lessee shall complete, at its own expense,
such investigation and/or Clean-Up or cause each such other person
as may be responsible for any of the foregoing to conduct such
investigation and/or Clean-Up.
7.3.5
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.
7.3.6
Environmental Audit . At Lessee’s expense,
Lessee shall from time to time, after Lessor’s request
therefor, provide to Lessor a written certificate, in form and
substance satisfactory to Lessor, from an environmental firm
acceptable to Lessor, which states that there is no Contamination
on the Leased Property identified by Landlord in such request and
that such Leased Property is otherwise in strict compliance with
Environmental Laws (the “ Environmental
Audit ”). All tests and samplings shall be
conducted using generally accepted and scientifically valid
technology and methodologies. Lessee shall give the
engineer or environmental consultant reasonable access to such
Leased Property and to all records in the possession of Lessee that
may indicate the presence (whether current or past) or a Release or
threatened Release of any Hazardous Substances on, in, under or
about such Leased Property. Lessee shall also provide
the engineer or environmental consultant an opportunity to
interview such persons employed in connection with such Leased
Property as the engineer or consultant deems
appropriate. However, Lessor shall not be entitled to
request such certificate or certificates from Lessee unless (i)
there have been any changes, modifications or additions to any
Environmental Laws as applied to or affecting such Leased Property;
(ii) a significant change in the condition of any Leased Property
has occurred; or (iii) Lessor 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 hereunder with respect to
such Hazardous Substances or noncompliance.
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7.3.7
Entry onto Leased Property for Environmental Matters
. If Lessee fails to provide the Environmental Audit
contemplated by Section 7.3.6 hereof, Lessee shall permit Lessor
from time to time, by its employees, agents, contractors or
representatives, to enter upon such Leased Property for the
purposes of conducting such soil and chemical tests or any other
environmental investigations, examinations, or analyses (hereafter
collectively referred to as “Investigation”) as Lessor
may desire. Lessor, and its employees, agents,
contractors, consultants and/or representatives, shall conduct any
such investigation in a manner which does not unreasonably
interfere with Lessee’s use of and operations on any Leased
Property (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 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.
7.3.8
Environmental Matters Upon Termination or Expiration of Term of
This Master Lease . Upon the termination of the
Term or the expiration of the Term of this Master Lease, Lessee
shall cause the Leased Properties to be delivered free of any and
all Contamination, Regulatory Actions and Third Party Claims and
otherwise in strict compliance with all Environmental Laws with
respect thereto.
7.3.9
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 tenant
and other occupant and user of each Leased Property, and the
agents, servants and employees of such tenants, occupants and
users, to comply with each and every Environmental Law applicable
to Lessee and each such tenant, occupant or user with respect to
each Leased Property. Specifically, but without
limitation:
(a)
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 the Facilities or related
thereto;
(b)
Contamination . Lessee shall not cause, suffer or
permit any Contamination;
(c)
Clean-Up . If a Contamination occurs, Lessee
promptly shall 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 in strict compliance with and
in accordance with the provisions of the applicable Environmental
Laws;
(d)
Discharge of Lien . Within twenty (20) days of
the date any lien is imposed against any Leased Property or any
part thereof under any Environmental Law (or, in the event that
under the applicable Environmental Law, Lessee is unable, acting
diligently, to do so within twenty (20) days, then within such
period as is required for Lessee, acting diligently, to do so),
Lessee shall cause such lien to be discharged (by payment, by bond
or otherwise to Lessor’s absolute satisfaction);
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(e)
Notification of Lessor . Promptly upon receipt by
Lessee of notice or discovery by Lessee of any fact or circumstance
which might result in a breach or violation of any covenant or
agreement, Lessee shall notify Lessor in writing of such fact or
circumstance; and
(f)
Requests, Orders and Notices . Promptly upon
receipt of any request, order or other notice relating to any
Leased Property under any Environmental Law, Lessee shall forward a
copy thereof to Lessor.
7.3.10
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 taking of any other right
hereunder):
(a)
Cause a Clean-Up . Cause the Clean-Up of any
Hazardous Substance or other environmental condition on or under
any Leased Property, or both, at Lessee’s cost and expense;
or
(b)
Payment of Regulatory Damages . Pay on behalf of
Lessee any damages, costs, fines or penalties imposed on Lessee as
a result of any Regulatory Actions; or
(c)
Payments to Discharge Liens . Make any payment on
behalf of Lessee or perform any other act or cause any act to be
performed which will prevent a lien in favor of any federal, state
or local governmental authority from attaching to any Leased
Property or which will cause the discharge of any lien then
attached to such Leased Property; or
(d)
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
(e)
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 7.3 incurred by
Lessor and not theretofore paid by Lessee as of the date of such
demand, whether or not such costs exceed the amount of Rent and
Additional Charges that are otherwise to be paid pursuant to this
Master Lease, and whether or not any court has ordered the
Clean-Up, and payment of said costs shall become immediately due,
without notice.
7.3.11
Environmental Indemnification . Lessee shall and
does hereby agree to defend Lessor, its principals, officers,
directors, agents and employees (hereinafter, all “
Indemnitees
”)
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from
and against each and every incurred and potential claim, cause of
action, demand or proceeding, and does hereby agree to indemnify,
defend and hold harmless Indemnitees from and against each and
every obligation, fine, laboratory fee, liability, loss, penalty,
imposition, settlement, levy, lien removal, litigation, judgment,
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 at any Leased
Property, 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) which may be asserted
against, imposed on, suffered or incurred by, each and every
Indemnitee arising out of or in any way related to, or allegedly
arising out of or due to any environmental matter including, but
not limited to, any one or more of the following:
(a)
Release Damage or Liability . The presence of
Contamination in, on, at, under, or near any Leased Property or
migrating to any Leased Property from another
location;
(b)
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 any Leased
Property;
(c)
Violations of Law . All violations, and alleged
violations, of any Environmental Law relating to any Leased
Property or any activity on, in, at, under or near any Leased
Property;
(d)
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 this Master Lease;
(e)
Event of Default . Each and every Event of
Default hereunder relating to environmental matters;
(f)
Lawsuits . Any and all lawsuits brought or
threatened against any one or more of the Indemnitees, settlements
reached and governmental orders relating to any Hazardous
Substances at, on, in, under or near any 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 any Leased Property;
and
(g)
Presence of Liens . All liens imposed upon any
Leased Property and charges imposed on any Indemnitee 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 any Leased Property.
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7.3.12
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
hereunder or allowed at law or in equity. The
obligations of Lessee to defend, indemnify and hold Lessor
harmless, as set forth in this Section 7.3, arising as a result of
an act, omission, condition or other matter occurring or existing
during the Term, whether or not the act, omission, condition or
matter as to which such obligations relate is discovered during the
Term, shall survive the expiration or earlier termination of the
Term of this Master Lease.
ARTICLE
VIII
8.1
Representations and Warranties of Lessee and Sun.
Each of Lessee and Sun hereby represents and warrants
to Lessor as of the Effective Date (except as otherwise set forth
below) as follows:
(a)
Good Standing; Due Authorization . Sun is duly
incorporated and is validly existing in good standing under the
laws of the State of Delaware. Each of the Lessees has
been duly formed or organized and is validly existing in good
standing under the laws of the state or jurisdiction of its
organization or formation. The execution, delivery and
performance of this Master Lease (including the authorization,
sale, issuance and delivery of the Common Stock) by Sun and each
Lessee have been duly authorized by all requisite corporate action
and no further consent or authorization of any Lessee, Sun, the
Board or Sun’s shareholders is required.
(b)
Enforceability . This Master Lease has been duly
executed and delivered by each of Sun and each Lessee and, when
this Master Lease is duly authorized, executed and delivered by
Lessor, will be a valid and binding agreement enforceable against
Sun and Lessee in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The
issuance of the Common Stock was not be subject to any preemptive
or similar rights.
(c)
Authority . Each of Lessee and Sun has full
corporate power and authority necessary to (i) own and operate its
properties and assets, execute and deliver this Master Lease, (ii)
perform its obligations hereunder (including, but not limited to,
the issuance of the Common Stock) and (iii) carry on its business
as presently conducted and as presently proposed to be
conducted. Each Lessee is duly qualified and authorized
to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its
properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so
would not have a material adverse effect on the business affairs,
assets or results of operations of Sun and its subsidiaries, taken
as a whole.
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(d)
Consents . No consent, approval, authorization or
order of any court, governmental agency or other body is required
for execution and delivery by Sun or any Lessee of this Master
Lease or the performance by Sun or any Lessee of any of its
obligations hereunder to be performed on or before the Effective
Date other than such as may already have been
received.
(e)
No Conflicts . Neither the execution and delivery
by Sun or any Lessee of this Master Lease nor the performance by
Sun or any Lessee of any of its obligations hereunder:
(i)
violates,
conflicts with, results in a breach of, or constitutes a default
(or an event which with the giving of notice or the lapse of time
or both would be reasonably likely to constitute a default) or
creates any rights in respect of any person under (A) the
certificates of incorporation, by-laws or other organizational
documents of Sun or any of its subsidiaries, including Lessee, (B)
any decree, judgment, order, or determination of any court,
governmental agency or body, or arbitrator having jurisdiction over
Sun or any Lessee or any of their subsidiaries or any of their
respective properties or assets or any material law, treaty, rule
or regulation, (C) the terms of any bond, debenture, note,
indenture, credit agreement or any other evidence of indebtedness,
or any material agreement, stock option or other similar plan,
lease, mortgage, deed of trust or other instrument to which Sun,
any Lessee or any of their subsidiaries is a party, by which Sun,
any Lessee or any of its subsidiaries is bound, or to which any of
the properties or assets of Sun, any Lessee or any of its
subsidiaries is subject; or
(ii)
results
in the creation or imposition of any material lien, charge or
encumbrance upon any of the properties or assets of Sun, any Lessee
or any of its subsidiaries.
(f)
Proceedings . There is no pending or, to the best knowledge
of Sun or any Lessee, threatened action, suit, proceeding or
investigation before any court, governmental agency or body or
arbitrator having jurisdiction over Sun, any Lessee or any of their
Affiliates that would materially affect the execution by Sun or any
Lessee of this Master Lease.
8.2
Representations and
Warranties of Lessor . Lessor hereby represents
and warrants to Sun as of the Effective Date (except as otherwise
set forth below) as follows:
(a)
Good Standing; Due Authorization . Omega is duly
incorporated and validly existing in good standing under the laws
of the State of Maryland. Each of the entities
comprising Lessor has been duly formed or organized and is validly
existing in good standing under the laws of the state or
jurisdiction of its organization or formation. The
principal place of business of Omega and each Lessor is in the
State of Maryland. The execution, delivery and performance of this
Master Lease and the acquisition of the Conversion Shares in
accordance with the terms of the Existing Sun Master Lease by each
Lessor have been duly authorized by all requisite corporate action
and no further consent or authorization of any Lessor, Omega, the
Board or Omega’s shareholders is required.
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(b)
Enforceability . This Master Lease has been duly
executed and delivered by each of Omega and each Lessor and, when
this Master Lease is duly authorized, executed and delivered by
Lessee, will be a valid and binding agreement enforceable against
Omega and each Lessor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors’
rights generally and to general principles of equity.
(c)
Authority . Each of each Lessor and Omega has
full corporate power and authority necessary to (i) own and operate
its properties and assets, execute and deliver this Master Lease,
(ii) perform its obligations hereunder and (iii) carry on its
business as presently conducted and as presently proposed to be
conducted.
(d)
Consents . No consent, approval, authorization or
order of any court, governmental agency or other body is required
for execution and delivery by Omega or any Lessor of this Master
Lease or the performance by Omega or any Lessor of any of its
obligations hereunder other than such as may already have been
received. In furtherance and not in limitation of the foregoing,
Omega and Lessor (i) represent and warrant that (A) all of the
amendments, modifications and waivers to the Existing Sun Master
Lease provided for herein, have been consented to under the terms
of that certain Credit Agreement dated as of March 31, 2006 among
Bank of America, NA (“ BofA ”)
and the other financial institutions who are or thereafter become
parties thereto (the “ Omega Lenders
”), as Lender and Lessor and certain affiliates of Lessor, as
Borrowers (the “ BofA Credit
Agreement ”) and (B) in particular that the
requirements of Section 7.08 of the BofA Credit Agreement will be
satisfied after the execution by Omega, Lessor and Lessee of this
Master Lease.
(e)
No Conflicts . Neither the execution and delivery
by Omega or any Lessor of this Master Lease nor the performance by
Omega or any Lessor of any of its obligations hereunder violates,
conflicts with, results in a breach of, or constitutes a default
(or an event which with the giving of notice or the lapse of time
or both would be reasonably likely to constitute a default) or
creates any rights in respect of any person under (A) the
certificates of incorporation, by-laws or other organization
documents of Omega or any of its subsidiaries, including Lessor,
(B) any decree, judgment, order, or determination of any court,
governmental agency or body, or arbitrator having jurisdiction over
Omega or any Lessor or any of their subsidiaries or any of their
respective properties or assets or any material law, treaty, rule
or regulation, (C) the terms of any bond, debenture, note,
indenture, credit agreement or any other evidence of indebtedness,
or any material agreement, stock option or other similar plan,
lease, mortgage, deed of trust or other instrument to which Omega,
any Lessor or any of their subsidiaries is a party, by which Omega,
any Lessor or any of its subsidiaries is bound, or to which any of
the properties or assets of Omega, any Lessor or any of its
subsidiaries is subject, or (D) any material rule or regulation of
the quotation services or any markets where Omega’s
securities are publicly traded or quoted, applicable either to
Omega or the transactions contemplated hereby.
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8.3
Limitation on Remedies . Notwithstanding any
provision of this Master Lease to the contrary, with respect to any
breach as of the Effective Date of the representations and
warranties set forth in Sections 8.1 and 8.2, each of the parties
shall have any and all rights or remedies available at law or in
equity, other than the right (i) to recover incidental and
consequential damages or (ii) to seek any remedy designed to result
in a termination of Lessee’s leasehold rights hereunder or
(iii) to enforce the remedies specified in Article XVI
hereof.
8.4
Compliance with Legal and Insurance Requirements
. Subject to Section 12.1 relating to permitted
contests, Lessee, at its expense, will promptly (i) comply with all
applicable Legal Requirements and Insurance Requirements in respect
of the use, operation, maintenance, repair and restoration of the
Leased Properties and Lessee’s Personal Property, whether or
not compliance therewith requires structural changes in any of the
Leased Improvements (any such structural changes, nevertheless,
being subject to Lessor’s prior written approval, which
approval shall not be unreasonably withheld or unreasonably
delayed) or interferes with the use and enjoyment of the Leased
Properties including such expenditures as are required to conform
the Leased Properties to such standards as may from time to time be
required by Federal Medicare (Title 18) or Medicaid
(Title 19) Skilled Care Nursing Programs, if applicable, or any
other applicable programs or legislation, or capital improvements
required by any other governmental agency having jurisdiction over
any Leased Property as a condition to the continued operation of
such Leased Property, approved for Medicare, Medicaid or similar
programs, pursuant to present or future laws or governmental
regulation and (ii) procure, maintain and comply with all licenses,
certificates of need, provider agreements and other authorizations
required for any use of any Leased Property and Lessee’s
Personal Property then being made, and for the proper erection,
installation, operation and maintenance of any Leased Property or
any part thereof.
8.5
Legal Requirement Covenants . Lessee covenants
and agrees that the Leased Properties and Lessee’s Personal
Property shall not be used for any unlawful
purpose. Lessee further covenants and agrees that
Lessee’s use of the Leased Properties and maintenance,
alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable local, state, and federal
laws, ordinances, rules, and regulations (including but not limited
to the Americans with Disabilities Act) unless the same are held by
a court of competent jurisdiction to be unlawful. Lessee
may, however, upon prior written Notice to Lessor, contest the
legality or applicability of any such law, ordinance, rule or
regulation, or any licensure or certification decision as provided
in Section 12.1. The judgment of any court of competent
jurisdiction or the admission of Lessee in any action or proceeding
against Lessee, whether Lessor is a party thereto or not, that
Lessee has violated any such Legal Requirements or Insurance
Requirements shall be conclusive of that fact as between Lessor and
Lessee.
8.6
Certain Covenants Regarding
Management .
8.6.1
Limitation of Management Fees . A condition to
the effectiveness of the Term with respect to this Master Lease
shall be the disclosure to Lessor of the terms of any management
agreement between Lessee and any other entity affecting the
operational control of any Facility, and Lessor’s approval,
which shall not be unreasonably withheld, of such terms and of such
other entity. Each manager shall subordinate its right to receive
any management fee from any Facility to Lessee’s obligation
to pay Lessor the Base Rent and Additional Charges for such
Facility.
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8.6.2
Management Agreements . Lessee covenants that
during the Term of this Lease it shall neither (i) enter into any
management agreement with respect to a Facility without
Lessor’s approval, which Lessor shall not unreasonably
withhold (provided the proposed manager does not fail to
meet the criteria set forth in paragraphs 2 and 3 set forth on
Exhibit
G which would be applicable to it if it were a proposed
“Transferee” and it is not proposed that the use of the
affected Leased Property change from the Primary Intended Use or
violate any other agreement affecting the affected Leased
Property), or (ii) amend, modify, renew, replace or otherwise
change the terms of any existing management agreement for a
Facility without the prior written consent of Lessor, which Lessor
may not unreasonably withhold, and, in either case, without a
satisfactory subordination by such manager of its right to
receive its management fee to the obligation of Lessee to pay the
Base Rent and Additional Charges to Lessor.
ARTICLE
IX
9.1
Maintenance and Repair .
9.1.1
Lessee,
at its expense, will keep the Leased Properties and all fixtures
thereon and all landscaping, private roadways, sidewalks and curbs
appurtenant thereto and which are under Lessee’s control and
Lessee’s Personal Property in good order and repair (whether
or not the need for such repairs occurs as a result of
Lessee’s use, the elements or the age of the Leased
Properties or any portion thereof, or any cause whatever except the
failure of Lessor to make any payment or to perform any act
expressly required under this Master Lease or any willful
misconduct of Lessor), and, except as otherwise provided in Article
XIV, with reasonable promptness, 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 whether
or not existing prior to the commencement of the Term (concealed or
otherwise). Lessee shall not make any changes or
alterations to any Leased Property, except as permitted pursuant to
Article X.
9.1.2
Lessee
shall do or cause others to do all shoring of any Leased Property
or adjoining property (whether or not owned by Lessor) or of the
foundations and walls of the Leased Improvements, and every other
act necessary or appropriate for the preservation and safety
thereof, by reason of or in connection with any subsidence,
settling or excavation or other building operation upon any of the
Leased Properties or adjoining property, whether or not Lessor
shall, by any Legal Requirements, be required to take such action
or be liable for the failure to do so. All repairs
shall, to the extent reasonably achievable, be at least equivalent
in quality to the original work, and, subject to the provisions of
paragraph 9.1.6, where, by reason of age or condition, such repairs
cannot be made to the quality of the original work, the property to
be repaired shall be replaced.
9.1.3
It
is the intention of these provisions that the level of maintenance
of the Leased Properties shall be not less than the standard
applied by Lessee in its operation of other similar licensed health
care facilities it owns and/or operates. At all times Lessee shall
maintain, operate and otherwise manage the Leased Properties on a
quality basis and in a manner consistent with the standards of
other facilities in the market area for the Leased
Properties.
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9.1.4
Lessor
shall not under any circumstances be required to build or rebuild
any improvements on any Leased Property, or to make any repairs,
replacements, alterations, restorations or renewals of any nature
or description to any Leased Property, whether ordinary or
extraordinary, structural or non-structural, foreseen or
unforeseen, or upon any adjoining property, whether to provide
lateral or other support for any Leased Property or abate a
nuisance affecting any Leased Property, or otherwise, or to make
any expenditure whatsoever with respect thereto, in connection with
this Master Lease, or to maintain any Leased Property in any
way. Lessee hereby waives, to the extent permitted by
law, the right to make repairs at the expense of Lessor pursuant to
any law in effect at the time of the execution of this Master Lease
or hereafter enacted.
9.1.5
Nothing
contained in this Master Lease, and no action or inaction by
Lessor, shall be construed for the benefit of any contractor,
subcontractor, laborer, materialman or vendor as (i) constituting
the consent or request of Lessor, expressed or implied, to or for
the performance of any labor or services or the furnishing of any
materials or other property for the construction, alteration,
addition, repair or demolition of or to any Leased Property or any
part thereof, or (ii) subject to the provisions of Section 12.1 ,
giving Lessee any right, power or permission to contract for or
permit the performance of any labor or services or the furnishing
of any materials or other property in such fashion as would permit
the making of any claim against Lessor in respect thereof or to
make any agreement that may create, or in any way be the basis for
any right, title, interest, lien, claim or other encumbrance upon
the estate of Lessor in any Leased Property, or any portion
thereof. Lessor shall have the right to give, record and
post, as appropriate, notices of non-responsibility under any
mechanics’ lien laws now or hereafter existing.
9.1.6
Lessee
shall, from time to time, replace with other operational equipment
or parts or property (the “ Replacement
Property ”) any of the Fixtures or Lessor’s
Personal Property (the “ Replaced
Property ”) which shall have (i) become worn out,
obsolete or unusable for the purpose for which it is intended, (ii)
been taken by Condemnation, in which event Lessee shall be entitled
to that portion of any Award made therefor, or (iii) been lost,
stolen, damaged or destroyed; provided, however, that the
Replacement Property shall (1) be in good operating condition, (2)
have a then value (as adjusted for inflation) and useful life at
least equal to the value and estimated useful life of the Replaced
Property as of the date hereof for Replaced Property specified in
Subparagraph 9.1.6(i), or have a value and useful life at least
equal to the value and estimated useful life of the Replaced
Property immediately prior to the time that the Replaced Property
specified in Subparagraphs 9.1.6 (ii) and 9.1.6 (iii) had become so
taken or so lost, stolen, damaged or destroyed, and (3) be suitable
for a use which is the same or similar to that of the Replaced
Property. Lessee shall repair at its sole cost and
expense all damage to the Leased Properties caused by the removal
of Replaced Property or other personal property of Lessee or the
installation of Replacement Property. All Replacement
Property shall become the property of Lessor and shall become a
part of the Fixtures or Lessor’s Personal Property, as the
case may be, to the same extent as the
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Replaced
Property had been. Lessee shall promptly advise Lessor
of all such Replacement Property, and if so requested by Lessor in
writing, Lessee shall promptly cause to be executed and delivered
to Lessor an invoice, bill of sale or other appropriate instrument
evidencing the transfer or assignment to Lessor of all estate,
right, title and interest (other than the leasehold estate created
hereby) of Lessee or any other Person in and to the Replacement
Property, free from all liens and other exceptions to title, and
Lessee shall pay all taxes, fees, costs and other expenses that may
become payable as a result thereof. At the expiration of
the Term or the sooner termination of this Master Lease, the Leased
Properties covered by this Master Lease, including all Leased
Improvements, Fixtures and Personal Property shall be
in
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