Back to top

SECOND AMENDED AND RESTATED MASTER LEASE

Option Agreement

SECOND AMENDED AND RESTATED MASTER LEASE | Document Parties: OMEGA HEALTHCARE INVESTORS INC | GUARDIAN LTC MANAGEMENT, INC You are currently viewing:
This Option Agreement involves

OMEGA HEALTHCARE INVESTORS INC | GUARDIAN LTC MANAGEMENT, INC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: SECOND AMENDED AND RESTATED MASTER LEASE
Governing Law: Maryland     Date: 10/3/2008
Industry: Real Estate Operations     Law Firm: Mintz Levin     Sector: Services

50 of the Top 250 law firms use our Products every day

 

 

 


 

 

 

 

 

SECOND AMENDED AND RESTATED MASTER LEASE

(with Options to Purchase)

 

SINGLE LESSEE

MULTIPLE FACILITIES

 

 

 

OHI ASSET (PA) TRUST

 

AND

 

GUARDIAN LTC MANAGEMENT, INC.

 

DATED: SEPTEMBER 24, 2008

 

EFFECTIVE DATE: SEPTEMBER 30, 2008

 

 

Facilities:                Mulberry Square Elder Care and Rehabilitation Center

Curwensville Nursing Home

Meadow View Senior Living Center

Ivy Woods Manor / Rolling Acres Care Center

Lakeview Senior Care and Living Center

Beaver Elder Care / Guardian Elder Care at Aliquippa

Scenery Hill Manor / North American Medical Centers

Milford Valley Convalescent Home

Bradyview Manor

Jefferson Hills Manor

Scottdale Manor Rehabilitation Center

Minerva Convalescent Center

Carleton Senior Care and Rehabilitation Center

Highlands Care Center

Guardian Elder Care at Nanticoke

Peterson Rehabilitation Hospital and Geriatric Center

Darway Elder Care Rehabilitation Center

Highland View Healthcare

Rolling Hills Manor

Forest Park Health Center

Brookline Village

 

 

 

 


 

 

 

 

TABLE OF CONTENTS

 

 

 

Page

ARTICLE I - LEASE

1

1.1

LEASE.

1

1.2

TERM

2

1.3

OPTION TO RENEW

2

ARTICLE II - DEFINITIONS

3

2.1

DEFINITIONS

3

ARTICLE III - RENT

23

3.1

BASE RENT; MONTHLY INSTALLMENTS

23

3.2

ADDITIONAL CHARGES

23

3.3

LATE CHARGE; INTEREST

23

3.4

NET LEASE.

24

3.5

PAYMENTS IN THE EVENT OF A RENT ADJUSTMENT

24

ARTICLE IV - IMPOSITIONS

24

4.1

PAYMENT OF IMPOSITIONS

24

4.2

ADJUSTMENT OF IMPOSITIONS

25

4.3

UTILITY CHARGES

25

4.4

INSURANCE PREMIUMS

25

ARTICLE V – NO TERMINATION

25

5.1

NO TERMINATION, ABATEMENT, ETC

25

ARTICLE VI – LEASED PROPERTIES

26

6.1

OWNERSHIP OF THE LEASED PROPERTIES

26

6.2

LESSOR’S PERSONAL PROPERTY

26

6.3

LESSEE’S PERSONAL PROPERTY

26

6.4

GRANT OF SECURITY INTEREST IN LESSEE’S PERSONAL PROPERTY AND ACCOUNTS

27

ARTICLE VII – CONDITION OF LEASED PROPERTIES

27

7.1

CONDITION OF THE LEASED PROPERTIES

27

7.2

USE OF THE LEASED PROPERTIES

27

7.3

CERTAIN ENVIRONMENTAL MATTERS

27

ARTICLE VIII - COVENANTS

32

8.1

COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS

32

8.2

LICENSES

32

8.3

CERTAIN COVENANTS

32

8.4

MINIMUM QUALIFIED CAPITAL EXPENDITURES

35

8.5

MANAGEMENT AGREEMENTS

35

8.6

NO OTHER BUSINESS; NO INVESTMENTS

35

8.7

TAX RETURNS

35

8.8

BANK ACCOUNTS

35

ARTICLE IX – MAINTENANCE AND REPAIR

36

9.1

MAINTENANCE AND REPAIR

36

9.2

ENCROACHMENTS, RESTRICTIONS, ETC

37

ARTICLE X – ALTERATIONS AND ADDITIONS

38

10.1

CONSTRUCTION OF ALTERATIONS AND ADDITIONS TO THE LEASED PROPERTIES

38

ARTICLE XI - LIENS

39

11.1

LIENS

39

ARTICLE XII – PERMITTED CONTESTS AND DEPOSITS

39

12.1

PERMITTED CONTESTS

39

12.2

LESSOR’S REQUIREMENT FOR DEPOSITS

40

ARTICLE XIII - INSURANCE

40

13.1

GENERAL INSURANCE REQUIREMENTS

40

13.2

RISKS TO BE INSURED

41

13.3

PAYMENT OF PREMIUMS; COPIES OF POLICIES; CERTIFICATES

42

13.4

UMBRELLA POLICIES

42

13.5

ADDITIONAL INSURANCE

42

13.6

NO LIABILITY; WAIVER OF SUBROGATION

42

13.7

INCREASE IN LIMITS

43

13.8

BLANKET POLICY

43

13.9

NO SEPARATE INSURANCE

43

13.10

MINE SUBSIDENCE INSURANCE

43

ARTICLE XIV - CASUALTY

44

14.1

INSURANCE PROCEEDS

44

14.2

RESTORATION IN THE EVENT OF DAMAGE OR DESTRUCTION

44

14.3

RESTORATION OF LESSEE’S PROPERTY

44

14.4

NO ABATEMENT OF RENT

44

14.5

WAIVER

44

14.6

DISBURSEMENT OF INSURANCE PROCEEDS EQUAL TO OR GREATER THAN THE APPROVAL THRESHOLD

44

14.7

NET PROCEEDS PAID TO FACILITY MORTGAGEE

46

ARTICLE XV - TAKINGS

46

15.1

TOTAL TAKING OR OTHER TAKING WITH LEASED PROPERTY RENDERED UNSUITABLE FOR ITS PRIMARY INTENDED USE

46

15.2

ALLOCATION OF AWARD

47

15.3

PARTIAL TAKING

47

15.4

TEMPORARY TAKING

47

15.5

AWARDS PAID TO FACILITY MORTGAGEE

48

ARTICLE XVI – RIGHTS UPON AN EVENT OF DEFAULT

49

16.1

LESSOR’S RIGHTS UPON AN EVENT OF DEFAULT

49

16.2

CERTAIN REMEDIES

49

16.3

DAMAGES

49

16.4

WAIVER

50

16.5

APPLICATION OF FUNDS

50

16.6

BANKRUPTCY

50

ARTICLE XVII – CURE BY LESSOR

51

17.1

LESSOR’S RIGHT TO CURE LESSEE’S DEFAULT

51

ARTICLE XVIII – HOLDING OVER

51

18.1

HOLDING OVER

51

18.2

INDEMNITY

52

ARTICLE XIX - SUBORDINATION

52

19.1

SUBORDINATION

52

19.2

ATTORNMENT

52

19.3

LESSEE’S CERTIFICATE

53

19.4

NOTICE AND CURE

53

ARTICLE XX – RISK OF LOSS

53

20.1

RISK OF LOSS

53

ARTICLE XXI - INDEMNIFICATION

53

21.1

INDEMNIFICATION

53

21.2

SURVIVAL OF INDEMNIFICATION

54

ARTICLE XXII – PROHIBITION AGAINST TRANSFERS

54

22.1

GENERAL PROHIBITION AGAINST TRANSFERS

54

22.2

SUBORDINATION AND ATTORNMENT

55

22.3

SUBLEASE LIMITATION

56

ARTICLE XXIII – REPORTING REQUIREMENTS

56

23.1

FINANCIAL STATEMENTS AND OTHER REPORTS AND MATERIALS REQUIRED BY LESSOR

56

23.2

PUBLIC OFFERING INFORMATION

58

ARTICLE XXIV – QUIET ENJOYMENT

58

24.1

QUIET ENJOYMENT

58

ARTICLE XXV - NOTICES

59

25.1

NOTICES

59

ARTICLE XXVI - APPRAISAL

60

26.1

APPRAISERS

60

ARTICLE XXVII – TRANSFER OF FACILITIES

61

27.1

FACILITY TRADE NAMES

61

27.2

TRANSFER OF OPERATIONAL CONTROL OF THE FACILITIES

61

27.3

INTANGIBLES AND PERSONAL PROPERTY

61

ARTICLE XXVIII - ARBITRATION

62

28.1

ARBITRATION

62

ARTICLE XXIX – OPTION TO PURCHASE ALL FACILITIES

62

29.1

OPTION TO PURCHASE ALL FACILITIES

62

29.2

OPTION PROPERTY

62

29.3

EXERCISE OF OPTION

63

29.4

OPTION PRICE

63

29.5

CLOSING

63

29.7

LESSEE ACKNOWLEDGMENT

64

29.8

DEFAULT; REMEDIES

66

29.9

ASSIGNMENTS

66

ARTICLE XXX – TERMINATION OF OPTION TO PURCHASE PETERSON FACILITY

66

30.1

TERMINATION OF OPTION TO PURCHASE PETERSON FACILITY

66

ARTICLE XXXI – SECURITY DEPOSIT

66

31.1

SECURITY DEPOSIT

66

31.2

APPLICATION OF SECURITY DEPOSIT

67

31.3

TRANSFER OF SECURITY DEPOSIT

67

ARTICLE XXXII - MISCELLANEOUS

67

32.1

SURVIVAL, CHOICE OF LAW

67

32.2

MUTUAL WAIVER OF RIGHT TO JURY TRIAL

68

32.3

MEMORANDUM OR SHORT FORM OF LEASE

68

32.4

LIMITATION ON RECOVERY

68

32.5

COMMISSIONS

69

32.6

WAIVERS

69

32.7

CONSENTS

69

32.8

LESSEE TO PAY REASONABLE EXPENSES

69

32.9

COUNTERPARTS

69

32.10

OPTIONS PERSONAL

69

32.11

LESSOR’S RIGHT TO INSPECT

70

32.12

NO WAIVER

70

32.13

REMEDIES CUMULATIVE

70

32.14

ACCEPTANCE OF SURRENDER

70

32.15

NO MERGER OF TITLE

70

32.16

NO PARTNERSHIP

70

32.17

CONVEYANCE BY LESSOR

70

32.18

RIGHTS CUMULATIVE

70

32.19

ENTIRE AGREEMENT

70

32.20

AMENDMENTS IN WRITING

71

32.21

SEVERABILITY

71

32.22

TIME OF THE ESSENCE

71

 

 

 

 


 

 

SECOND AMENDED AND RESTATED MASTER LEASE

Multiple Facilities

 

THIS SECOND AMENDED AND RESTATED MASTER LEASE (“ Lease ”) is executed and delivered as of this 24 th day of September, 2008 to be effective as of September 30, 2008, and is entered into by OHI ASSET (PA) TRUST, a Maryland business trust (“ Lesso r”), the address of which is 9690 Deereco Road, Suite 100, Timonium, MD 21093, and GUARDIAN LTC MANAGEMENT, INC., a Pennsylvania corporation (“ Lessee ”), the address of which is Rte. 219, Brockway-DuBois Road, P.O. Box 219, Brockway, PA 15824.

 

RECITALS

 

The circumstances underlying the execution and delivery of this Lease are as follows:

 

A.   Capitalized terms used and not otherwise defined in this Lease have the respective meanings given them in Article II below.

 

B.   Pursuant to that certain Amended and Restated Master Lease dated as of August 24, 2006, and effective as of September 1, 2006 between Lessor and Lessee, Lessee is leasing from Lessor seventeen licensed nursing facilities located in Pennsylvania, Ohio and West Virginia (the “ Existing Lease ”).

 

C.   Lessor has acquired the Leased Properties, including the acquisition of the 2008 Facilities concurrently with the execution of this Lease, from Lessee and the Sublessees pursuant to the Purchase Agreements and other Purchase Documents.

 

D.   Lessor has agreed to lease the Leased Properties to Lessee, and Lessee has agreed to lease the Leased Properties from Lessor, on the terms and conditions set forth in this Lease.

 

E.   In addition, Lessee has requested that Lessor consent to the Approved Reorganization, and Lessor desires to so consent on the terms and conditions of this Agreement.

 

F.   Lessor and Lessee desire to amend and restate the Existing Lease as set forth in this Lease.

 

NOW, THEREFORE, Lessor and Lessee agree to amend and restate the Existing Lease in its entirety as follows:

 

ARTICLE I  - LEASE

 

1.1   Lease.   Upon and subject to the terms and conditions set forth in this Lease, Lessor leases to Lessee, and Lessee leases from Lessor, the Leased Properties. The Leased Properties are leased subject to all covenants, conditions, restrictions, easements and other matters affecting the Leased Property, whether or not of record, including the Permitted Encumbrances and other matters which would be disclosed by an inspection or accurate survey of the Leased Properties.

 

1.1.1   Subleases .  On the Commencement Date, with the approval of Lessor, the Leased Properties are subleased to the Sublessees pursuant to the Subleases.  Lessee hereby assigns the Subleases to Lessor and each Sublessee has jointly and severally with the other Sublessee guaranteed the obligations of Lessee under this Lease, and to secure its guaranty each Sublessee has granted Lessor a security interest in the Collateral owned by it.  Lessee shall not amend or modify the terms of any Sublease without the prior written consent of Lessor, which Lessor may in its sole discretion grant, withhold or condition.  Any Notice given by Lessor to Lessee shall be deemed a Notice given to each Sublessee of a Leased Property.

 

1.1.2   Single, Indivisible Lease .   Notwithstanding Lessor’s approval of the Subleases of the Leased Properties, this Lease constitutes one indivisible lease of the Leased Properties and not separate leases governed by similar terms. The Leased Properties constitute one economic unit, and the Base Rent and all other provisions have been negotiated and agreed to based on a demise of all of the Leased Properties to Lessee as a single, composite, inseparable transaction and would have been substantially different had separate leases or a divisible lease been intended.  Except as expressly provided in this Lease for specific, isolated purposes (and then only to the extent expressly otherwise stated), all provisions of this Lease apply equally and uniformly to all of the Leased Properties as one unit. An Event of Default with respect to any Leased Property is an Event of Default as to all of the Leased Properties. The parties intend that the provisions of this Lease shall at all times be construed, interpreted and applied so as to carry out their mutual objective to create an indivisible lease of all of the Leased Properties and, in particular but without limitation, that, for purposes of any assumption, rejection or assignment of this Lease under 11 U.S.C. 365, this is one indivisible and non-severable lease and executory contract dealing with one legal and economic unit and that this Lease must be assumed, rejected or assigned as a whole with respect to all (and only as to all) of the Leased Properties.

 

1.2   Term .  The initial term of this Lease (“ Initial Term ”) shall be commence on Commencement Date and extend until September 30, 2018.  The Initial Term shall commence on the Commencement Date with respect to all Facilities other than the Peterson Facility, the Darway Facility and the 2008 Facilities.  The Initial Term shall commence as to the Peterson Facility on the Peterson Commencement Date, as to the Darway Facility on the Darway Commencement Date, and as to the 2008 Facilities on the 2008 Commencement Date; provided, however, that the Initial Term shall expire as to all Facilities on the same date.

 

1.3   Option to Renew .  Lessee is hereby granted three (3) successive options to renew this Lease for a period of five (5) Lease Years each, and one (1) successive option to renew for four (4) Lease Years and eleven (11) months for a maximum Term if such options are exercised of twenty nine years (29) Lease Years and eleven (11) months.  Lessee’s options to renew this Lease are subject to the following terms and conditions (which conditions may be waived by Lessor in its sole discretion):

 

(a)   An option to renew is exercisable only by Notice to Lessor at least two hundred seventy (270) days prior to the expiration of the Initial Term (or prior to the expiration of the preceding Renewal Term, as the case may be);

 

(b)   No Event of Default or Unmatured Event of Default shall have occurred and be continuing either at the time a renewal option is exercised or at the commencement of a Renewal Term;

 

(c)   During a Renewal Term, all of the terms and conditions of this Lease shall remain in full force and effect; and

 

(d)   Lessee may exercise its options to renew with respect to all (and no fewer than all) of the Leased Properties.

 

1.4   Consent .  Lessor hereby consents to the Approved Reorganization; provided, however that the Approved Reorganization is completed within twelve (12) months of the date of this Lease.   If for any reason the Approved Reorganization is not consummated within twelve (12)  months of the date of this Lease, this consent shall be null and void.  This consent does not and shall not be deemed to constitute, or be construed as, consent to any future or further or other Transfer.  Concurrently with the execution of this Lease, Guardian Holdings shall execute and deliver to Lessor a Lease Guaranty and a Pledge Agreement in form and substance acceptable to both Lessor and Guardian Holdings.  If (a) the Approved Reorganization is not consummated in whole or in part, (b) the Plan of Reorganization is terminated, and (c) the individual equity owners of Lessee remain the same as they are as of the date of this Lease as described in the Transaction Documents, then effective as of the receipt by Lessor of written certification from Lessee of such facts, then Sections 8.3.2, 8.9, and 8.10 hereof shall have no further force or effect and the obligations of, and restrictions applicable to, Guardian Holdings and its Subsidiaries (which, because the Approved Reorganization was not consummated, would not include Lessee and the Sublessees) under this Lease and the other Transaction Documents (including, but not limited to, the obligations and restrictions related to Guardian Holdings and its Subsidairies under Sections 8.3.5 , 8.3.6 , 8.3.7 , 8.3.8 , 8.10 , and 8.6) shall be automatically terminated and of no further force or effect.  Notwithstanding anything to the contrary contained herein or in any other Transaction Documents, Lessor agrees for the benefit of Lessee, Guardian Holdings, and its Subsidiaries that no Event of Default shall arise hereunder or under any Transaction Document if Guardian Holdings or any of its Subsidiaries are unable to comply with any obligation or covenant applicable to them hereunder or under any other Transaction Document because the Plan of Reorganization has not been completed.

 

ARTICLE II  - DEFINITIONS

 

2.1   Definitions .  For all purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP as at the time applicable; (c) all references in this Lease to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Lease; and (d) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision.

 

2008 Commencement Date : The effective date of this Lease.

 

2008 Facilities :  means the Facilities commonly known as:

 

Highland View Healthcare, 90 Main Street, Brockway, PA 15824,

Rolling Hills Manor, 17350 Old Turnpike Road, Millmont PA 17845

Forest Park Health Center, 700 Walnut Bottom Road, Carlisle PA 17013

Brookline Village, RD #1, Box 463, Mifflintown PA 17059

 

2008 Sublessees : means Guardian Elder Care at Carlisle, LLC, a Pennsylvania limited liability company, Guardian Elder Care at Millmont, LLC, a Pennsylvania limited liability company, Guardian Elder Care at Brockway, LLC, a Pennsylvania limited liability company, and Brookline at Mifflintown, Inc., a Pennsylvania corporation.

 

Additional Charges :  All Impositions and other amounts, liabilities and obligations that Lessee assumes or agrees to pay under this Lease.

 

Affiliate :  Any Person who, directly or indirectly, Controls or is Controlled by or is under common Control with another Person.

 

Approval Threshold : Twenty Five Thousand Dollars ($25,000).

 

Approved Reorganization :  means the conveyance to Guardian Holdings of 100% of the outstanding equity interests in Lessee as contemplated by the Plan of Reorganization.

 

Assessment :  Any governmental assessment on the Leased Properties or any part of any of them for public or private improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term.

 

Award :  All compensation, sums or anything of value awarded, paid or received in connection with a Taking or Partial Taking.

 

Base Amount : means One Hundred Forty Five million Dollars ($145,000,000).

 

Base Rent :  During the Term, the Base Rent shall be:

 

(i)   During the period from November 1, 2004 thru the 2008 Commencement Date, the Base Rent set forth for such period in the Existing Lease;

 

(ii)   During the Lease Year commencing on September 1, 2008, Fifteen Million Seven Hundred Eleven Thousand Six Hundred Eighty Six and 82/100 Dollars ($15,711,686.82);

 

(iii)   For each succeeding Lease Year in the Term, the Base Rent for the previous Lease Year, increased by the product of (a) the Base Rent during the preceding lease year and (b) the lesser of 2 times the increase, if any, in the CPI or two and one half percent (2.5%).  If the CPI does not increase (or if it decreases) from one Lease Year to the next, the Base Rent will not increase during such next Lease Year.

 

Brockway LTC : means BROCKWAY LTC MANAGEMENT, INC., a Pennsylvania corporation.

 

Business Day :  Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which national banks in the City of New York, New York are authorized or obligated, by law or executive order, to close.

 

Capitalization Rate :  Ten and one quarter percent (10.25%).

 

Capitalized Leases : Leases that in accordance with GAAP are required to be capitalized for financial reporting purposes.

 

Cash Acquisition : means the acquisition of some or all of assets of another Person, including, but not limited to, real property, improvements, personal property or intangible assets, by a Subsidiary of Guardian Holdings other than Lessee or a Sublessee with respect to which all of the following conditions apply:

 

(1)           Any Debt is incurred in connection with such acquisition is unsecured; and

 

(2)           None of Guardian Holdings, Lessee, or any Sublessee guaranties or otherwise is or could be liable for any obligations (including any Debt) in connection with such acquisition or the financing of such acquisition.

 

Cash Flow :  For any period, an amount equal to (a) Net Income of Lessee arising solely from the operation of the Facilities for the applicable period; plus (b) the amounts deducted in computing Lessee’s Net Income for the period for (i) depreciation, (ii) amortization, (iii) Base Rent, (iv) interest expense, (v) income taxes (or, if greater, income tax actually paid during the period) and (vi) actual management fees paid; less (c) an imputed management fee equal to 5% of net revenues.

 

Cash Flow to Rent Ratio : For any fiscal period, the ratio of Cash Flow to Base Rent.

 

Citation : Any operational or physical plant deficiency set forth in writing with respect to a Facility by any governmental body or agency, or Medicare intermediary, having regulatory oversight over a Facility, Lessee, any Sublessee or Manager, with respect to which the scope and severity of the potential penalty for such deficiency is one or more of the following: loss of licensure, decertification of a Facility from participation in the Medicare and/or Medicaid programs, appointment of a temporary manager or the continuation for more than forty five (45) consecutive days of either a denial of payment for, or a ban on, new admissions.

 

Clean-Up :  The investigation, removal, restoration, remediation and/or elimination of, or other response to, Contamination, in each case to the satisfaction of all governmental agencies having jurisdiction, in compliance with or as may be required by Environmental Laws.

 

Closing : is defined in Section 29.5 .

 

Closing Date : is defined in Section 29.5 .

 

Code :  The Internal Revenue Code of 1986, as amended.

 

Collateral : means the “Collateral” as defined in the Security Agreements.

 

Commencement Date :  November 1, 2004.

 

Condemnor :  Any public or quasi-public authority, or private corporation or individual, having the power of condemnation.

 

Construction Funds :  The Net Proceeds and such additional funds as may be deposited with Lessor by Lessee pursuant to Section 14.6 for restoration or repair work pursuant to this Lease.

 

Contamination :  The presence, Release or threatened Release of any Hazardous Substance at the Leased Properties in violation of any Environmental Law, or in a quantity that would give rise to any affirmative Clean-Up obligations under an Environmental Law, including, but not limited to, the existence of any injury or potential injury to public health, safety, natural resources or the environment associated therewith, or any other environmental condition at, in, about, under or migrating from or to the Leased Properties.

 

Control (and its corollaries “Controlled by” and “under common Control with”):  Possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, through the ownership of voting securities, partnership interests or other equity interests.

 

CPI :  The United States Department of Labor, Bureau of Labor Statistics Revised Consumer Price Index for All Urban Consumers (1982-84=100), U.S. City Average, All Items, or, if that index is not available at the time in question, the index designated by such Department as the successor to such index, and if there is no index so designated, an index for an area in the United States that most closely corresponds to the entire United States, published by such Department, or if none, by any other instrumentality of the United States.

 

Current Assets :  At any date, all assets of a Person that in conformity with GAAP should be classified as current assets on the balance sheet of such Person at such date.

 

Current Liabilities :  At any date, all liabilities of a Person on a consolidated basis that in conformity with GAAP should be carried as current liabilities on the balance sheet of such Person at such date.

 

Current Ratio :  At any date, the ratio of Current Assets to Current Liabilities.

 

Darway Commencement Date : September 1, 2006.

 

Darway Facility :  means the Facility commonly known as Darway Elder Care Rehabilitation Center, RR #1, Box 1116, Forksville Pennsylvania 18616.

 

Darway Sublessee : means Guardian Elder Care at Forksville, LLC, a Pennsylvania limited liability company.

 

Date of Taking :  The date on which the Condemnor has the right to possession of the Leased Property that is the subject of the Taking or Partial Taking.

 

Debt : As of any date, all (a) obligations of a Person, whether current or long-term, that in accordance with GAAP should be included as liabilities on such Person’s balance sheet; (b) obligations for borrowed money or installment obligations; (c) obligations of such person under leases that in accordance with GAAP are required to be capitalized for financial reporting purposes; (c) obligations of others for which that Person is liable directly or indirectly, by way of guaranty (whether by direct guaranty, suretyship, discount, endorsement, take-or-pay agreement, agreement to purchase or advance or keep in funds or other agreement having the effect of a guaranty) or otherwise; (d) liabilities and obligations secured by liens of any assets of that Person, whether or not those liabilities or obligations are recourse to that Person; (e) liabilities of that Person, direct or contingent, with respect to letters of credit issued for the account of that Person or others or with respect to bankers acceptances created for that Person; (f) obligations which are evidenced by notes, acceptances, or other instruments; and (f) obligations of such Person to purchase securities or other property arising out of or in connection with the sale of the same or substantially similar securities or property.  For purposes of this definition, the sale of any accounts receivable shall be deemed the incurring of debt for borrowed money.

 

Distribution : Any payment or distribution of cash or any assets of Lessee to one or more equity owners of Lessee or to any Affiliate of Lessee, whether in the form of a dividend or other return of or on capital, a fee for management in excess of the fee required by the terms of a Management Agreement (but in any event not to exceed five percent (5%) of net revenues of the Facilities), a payment for services rendered or goods delivered, a reimbursement for expenditures or overhead incurred on behalf of Lessee or a payment on any debt required by this Lease to be subordinated to the rights of Lessor.

 

Encumbrance :  Any mortgage, deed of trust, lien, encumbrance or other matter affecting title to the Leased Properties, or any portion thereof or interest therein, securing any borrowing or other means of financing or refinancing.

 

Environmental Audit : A written certificate that (a) is in form and substance reasonably satisfactory to Lessor, (b) is from an environmental consulting or engineering firm reasonably acceptable to Lessor and (c) states whether there is Contamination on the Leased Properties and whether the Leased Properties are otherwise in compliance with Environmental Laws.

 

Environmental Documents :  Each and every (a) document received by Lessee or any Affiliate from, or submitted by Lessee or any Affiliate to, the United States Environmental Protection Agency and/or any other federal, state, county or municipal agency responsible for enforcing or implementing Environmental Laws with respect to the condition of the Leased Properties, or Lessee’s operations at the Leased Properties; and (b) review, audit, report, or other analysis data pertaining to environmental conditions, including, but not limited to, the presence or absence of Contamination, at, in, under or with respect to the Leased Properties that have been prepared by, for or on behalf of Lessee.

 

Environmental Laws : All federal, state and local laws (including, without limitation, common law), statutes, codes, ordinances, regulations, rules, orders, permits or decrees now or at any time in effect and relating to (a) the introduction, emission, discharge or release of Hazardous Substances into the indoor or outdoor environment (including without limitation, air, surface water, groundwater, land or soil), (b) the manufacture, processing, distribution, use, treatment, storage, transportation or disposal of Hazardous Substances or (c) the Clean-Up of Contamination.

 

Event of Default :  The occurrence of any of the following:

 

(a)   Lessee fails to pay or cause to be paid the Base Rent when due and payable, or to restore the Security Deposit if and as required by Section 31.2 of this Lease, and such failure is not cured within a period of three (3) days after such obligation first came due and payable;

 

(b)   Lessee fails to make or cause to be made payment of any Rent (other than Base Rent or the restoration of the Security Deposit) within a period of five (5) Business Days after Notice of such failure;

 

(c)   Lessee, any Sublessee or any Guarantor, on a petition in bankruptcy filed against it, is adjudicated a bankrupt or has an order for relief thereunder entered against it, or a court of competent jurisdiction enters an order or decree appointing a receiver of Lessee, a Sublessee or any Guarantor or of the whole or substantially all of its property, or approving a petition filed against Lessee, a Sublessee or any Guarantor seeking reorganization or arrangement of Lessee, a Sublessee or such Guarantor under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof, and such judgment, order or decree is not vacated or set aside or stayed within forty-five (45) days from the date of the entry thereof, subject to the applicable provisions of the Bankruptcy Code (11 USC § 101 et. seq.) and to the provisions of Section 16.6 below;

 

(d)   Lessee, a Sublessee or any Guarantor:  (i) admits in writing its inability to pay its debts generally as they become due; (ii) files a petition in bankruptcy or a petition to take advantage of any insolvency law; (iii) makes a general assignment for the benefit of its creditors; (iv) consents to the appointment of a receiver of itself or of the whole or any substantial part of its property; or (v) files a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof, subject to the applicable provisions of the Bankruptcy Code (11 USC § 101 et. seq.) and to the provisions of Section 16.6 below;

 

(e)   Lessee, a Sublessee or any Guarantor is liquidated or dissolved, or begins proceedings toward liquidation or dissolution, or has filed against it a petition or other proceeding to cause it to be liquidated or dissolved and the proceeding is not dismissed within forty-five (45) days thereafter, or Lessee, a Sublessee or any Guarantor in any manner permits the sale or divestiture of all or substantially all of its assets;

 

(f)   The estate or interest of Lessee or any Sublessee in the Leased Properties or any part thereof is levied upon or attached in any proceeding and the same is not vacated or discharged of the earlier of (i) within thirty (30) days of the date Lessee has actual notice of such levy or attachment (unless Lessee is in the process of contesting such lien or attachment in good faith in accordance with ARTICLE XII of this Lease) or (ii) the date such levy or attachment is no longer subject to being vacated or discharged;

 

(g)   Lessee ceases operation of any Facility for a period in excess of five (5) Business Days except upon prior Notice to, and with the express prior written consent of, Lessor (which consent Lessor may withhold in its reasonable discretion), or as the unavoidable consequence of damage or destruction as a result of a casualty, or a Partial or total Taking or Force Majeure;

 

(h)   Any representation or warranty made by Lessee, a Sublessee, a Guarantor or any Affiliate of Lessee in the Lease, any Transaction Document or in any certificates delivered in connection with this Lease or the Transaction Documents proves to be untrue when made in any material respect and causes a Material Adverse Effect and Lessee, a Sublessee, a Guarantor or any Affiliate, as the case may be, fails within twenty (20) days after Notice from Lessor or Omega, as the case may be, to cure such condition by terminating such adverse effect and making Lessor or Omega, as the case may be, whole for any damage suffered therefrom; provided, however, if the untrue statement is contained in a certificate signed or delivered by a Person other than Lessee, Guarantors, Sublessees or their Affiliates, then it shall only constitute an Event of Default if any of Lessee, Guarantors or their Affiliates had knowledge of such untrue statement and did not inform in writing Lessor of same within ten (10) days of first acquiring such knowledge;

 

(i)   Lessee (or, if applicable, any Sublessee or Manager):

 

(i)   has any license, permit, approval, certificate of need, certificate of reimbursement or other authorization necessary to operate any Facility as a provider of health care services in accordance with its Primary Intended Use suspended or revoked, or its right to so operate a Facility or to accept patients suspended, and Lessee fails to remedy any condition causing such revocation or suspension within any cure period allowed therefor by the applicable agency or authority or, if no such cure period is allowed or specified by the applicable agency or authority, Lessee fails to remedy the condition promptly and diligently following Lessee’s receipt of notice of such condition and, in any event, prior to the denial of any application for, or the revocation or suspension of, any such license, permit, approval, certificate of need, certificate of reimbursement, other authorization or right to operate the Facility in question or to accept patients at the Facility in question; or

 

(ii)   receives a Citation with respect to a Facility and fails to cure the condition that is the subject of the Citation within the period of time required for such cure by the issuer of the Citation or, but in any event prior to the denial of any application for, or the revocation or suspension of, any license, permit, approval, certificate of need, certificate of reimbursement or other authorization necessary to operate a Facility as a provider of health care services in accordance with its Primary Intended Use or to receive Medicare or Medicaid payments with respect to residents of any Facility, or prior to the appointment of a temporary manager, as the case may be; or

 

(iii)   fails to give Lessor Notice that any event set forth in clauses (i) and (ii) above has occurred, as required pursuant to Section 23.1(h) below.

 

(j)   A Transfer requiring the consent of Lessor under this Lease occurs without the prior written consent of Lessor;

 

(k)   A default occurs under any Transaction Document and such default is not cured within any applicable cure period provided in such Transaction Document;

 

(l)   A default occurs under any other material contract with aggregate obligations in excess of Five Hundred Thousand Dollars ($500,000) affecting any Facility, Lessee, or any Affiliate of Lessee involved in the operation of the Facilities and such default is not cured within any applicable cure period provided in such contract;

 

(m)   Lessee breaches any of the financial covenants set forth in Section 8.3 of this Lease;

 

(n)   An “Event of Default” under the terms of any other lease or other agreement between Lessee or Affiliate of Lessee and Lessor or any Affiliate of Lessor; or

 

(o)   Reserved; or

 

(p)   Lessee fails to observe or perform any other term, covenant or condition of this Lease or any other Transaction Document and the failure is not cured by Lessee within a period of thirty (30) days after Notice thereof from Lessor, unless the failure cannot with due diligence be cured within a period of thirty (30) days, in which case such failure shall not be deemed an Event of Default if and for so long as Lessee proceeds promptly and with due diligence to cure the failure and completes the cure prior to the time that the same causes a Material Adverse Effect and prior to the time that the same results in civil or criminal penalties to Lessor, Lessee, any Affiliates of either or to the Leased Properties; or

 

(q)   A default occurs under the Line of Credit Documents and such default continues beyond any applicable grace or cure period provided for in the Line of Credit Documents.

 

Executive Officer :  Any of the Chairman of the Board of Directors, the President, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, any Vice President and the Secretary of any corporation, a general partner of any partnership and a managing member of any limited liability company upon which service of a Notice is to be made.

 

Expiration Date : means September 30, 2018 if the first Renewal Option has not been exercised, or September 30, 2023, if the first Renewal Option has been exercised, but not the second Renewal Option, or September 30, 2028, if the first and second Renewal Options have been exercised, but not the third Renewal Option, or September 30, 2033, if the first, second and third Renewal Options have been exercised, but not the fourth Renewal Option, or August 31, 2038, if the all of the Renewal Options have been exercised. !

 

Facilit(y)(ies) : Each health care facility on the Land, including the Leased Property associated with such Facility, and together, all such facilities on the Leased Properties.

 

Facility Mortgage : Any mortgage, deed of trust or other security agreement that with the express, prior, written consent of Lessor is a lien upon any or all of the Leased Properties, whether such lien secures an obligation or obligations of Lessor or its Affiliates.

 

Facility Mortgagee : The secured party to a Facility Mortgage, its successors and assigns, any servicer acting on behalf of a Facility Mortgagee with respect to a Facility Mortgage and, if any Facility Mortgage is deposited with a trust, then the trustee acting on behalf of the certificate holders of such trust.

 

Facility Trade Names : The name(s) under which the Facilities do business during the Term. The Facility Trade Names in use by the Facilities on the Commencement Date are set forth on attached Exhibit A .

 

Fair Market Rent : The rent that, at the relevant time, a Facility would most probably command in the open market, under a lease on substantially the same terms and conditions as are set forth in this Lease with a lessee unrelated to Lessor having experience and a reputation in the health care industry and a credit standing reasonably equivalent to that of Lessee, and, if this Lease is guaranteed, with such lease being guaranteed by guarantors having a net worth at least equal to that of Guarantors, with evidence of such rent being the rent that is being asked and agreed to at such time under any leases of facilities comparable to such Facility being entered into at such time in which the lessees and lease guarantors meet the qualifications set forth in this sentence. Fair Market Rent shall be determined in accordance with the appraisal procedure set forth in ARTICLE XXVI or in such other manner as may be mutually acceptable to Lessor and Lessee.

 

Fair Market Value :  The value that, at the relevant time, the Option Property would most probably command in the open market, in a sale transaction between a willing buyer and a willing seller. Fair Market Value shall be determined in accordance with the appraisal procedure set forth in ARTICLE XXVI or in such other manner as may be mutually acceptable to Lessor and Lessee.

 

Financial Statement :

 

(r)   For each quarter during Lessee’s fiscal year, on a consolidated basis for Lessee and the Sublessees, (i) a statement of earnings for the current period and fiscal year to the end of such period, with a comparison to the corresponding figures for the corresponding period in the preceding fiscal year from the beginning of the fiscal year to the end of such period, and (ii) a balance sheet as of the end of the period, with a comparison to the corresponding figures for the corresponding period in the preceding fiscal year from the beginning of the fiscal year to the end of such period; and

 

(s)   For Lessee’s fiscal year, an audited financial report for Lessee on a consolidated basis for Lessee and the Sublessees, prepared by a “big four” accounting firm or any other firm of independent certified public accountants reasonably acceptable to Lessor, containing Lessee’s balance sheet as of the end of that year, its related profit and loss, a statement of owner’s equity for that year, a statement of cash flows for that year, any management letter prepared by the certified public accountants, such comments and financial details as customarily are included in reports of like character and the unqualified opinion of the certified public accountants as to the fairness of the statements therein.

 

Fixtures : Collectively, all permanently affixed equipment, machinery, fixtures, and other items of real and/or personal property (excluding Lessor’s Personal Property), including all components thereof, now and hereafter located in, on or used in connection with, and permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus (other than individual units), sprinkler systems and fire and theft protection equipment, built-in oxygen and vacuum systems, towers and other devices for the transmission of radio, television and other signals, all of which, to the greatest extent permitted by law, are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto.

 

Force Majeure : The occurrence of any of the following events or conditions: a flood, earthquake, or other Act of God; a fire or other casualty resulting in a complete or partial destruction of the Facility in question; a war, revolution, riot, civil insurrection or commotion, terrorism, or vandalism; a contractor or supplier delay or failure in performance (not arising from a failure to pay any undisputed amount due), or a delay in the delivery of essential equipment or materials; bankruptcy or other insolvency of a contractor, subcontractor or construction manager (not an Affiliate of the party claiming Force Majeure); a strike, slowdown or other similar labor action; provided that in any such event, the party claiming the existence of Force Majeure shall have given the other party Notice of such claim within fifteen (15) days after becoming aware thereof, and if the party claiming Force Majeure shall fail to give such Notice, then the event or condition shall not be considered Force Majeure for any period preceding the date such Notice shall be given.  No lack of funds on the part of Lessee and its Affiliates shall be construed as Force Majeure.

 

GAAP :  Generally accepted accounting principles in effect at the time in question.

 

Guarantor : means any Person which guaranties the obligations of Lessee under this Lease.

 

Guaranties : means (1) the Lease Guaranty dated as of October 28, 2004, and effective as of November 1, 2004 from the Sublessees, (2) the Limited Recourse Guaranty dated as of October 28, 2004, and effective as of November 1, 2004 from Guardian Elder Care, (3) the Lease Guaranty dated as of February 24, 2006 from Brockway LTC, and (4) the Lease Guaranty from Guardian Holdings dated as of the date of this Lease.

 

Guardian Elder Care : means Guardian Elder Care, LLC, a Pennsylvania limited liability company.

 

Guardian Holdings : means Guardian Elder Care Holdings, Inc., a Pennsylvania corporation.

 

Hazardous Substance :  Dangerous, toxic or hazardous material, substance, pollutant, contaminant, chemical, waste (including medical waste), including petroleum products, asbestos and PCBs defined, listed or described as such under any Environmental Law.

 

Impositions :  Collectively, all taxes (including, without limitation, all ad valorem, sales and use, single business, gross receipts, business privilege, transaction privilege, rent or similar taxes to the extent the same are assessed against Lessor in whole or in part on the basis of, the value of the Leased Properties), assessments (including Assessments), ground rents, water, sewer or other rents and charges, excises, tax levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character that at any time prior to, during or in respect of the Term are assessed or imposed on or in respect of, or constitute a lien upon (a) Lessor or Lessor’s interest in the Leased Properties; (b) the Leased Properties or any part thereof or any rent therefrom or any estate, right, title or interest therein; (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on or in connection with the Leased Properties or the leasing or use of the Leased Properties or any part thereof; or (d) Rent, but excluding any transfer or other tax imposed with respect to the sale, exchange or other disposition by Lessor of the Leased Properties or any part thereof or the proceeds thereof; provided, however, that Impositions do not include any taxes payable on the net income of Lessor or any capital stock or franchise taxes of Lessor.

 

Initial Term :  is defined in Section 1.2 .

 

Insurance Requirements :  All terms of any insurance policy required by this Lease and all requirements of the issuer of any such policy.

 

Intangible Assets : The amount of unamortized debt discounts and expenses, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, organizational and developmental expenses, unamortized operating rights, unamortized licenses, unamortized leasehold rights, computer software development costs, start-up costs, pre-opening costs, prepaid pension costs and other intangible assets, including (a) any write-up resulting from a reversal of a reserve for bad debts or depreciation and any write-up resulting from a change in methods of accounting or inventory and (b) the amount of any Investment in any Affiliate.

 

Investigation : Soil and chemical tests or any other environmental investigations, examinations or analyses.

 

Investments : of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person.

 

Joinder Agreements : means (1) the Joinder Agreement and Amendment to Transaction Documents among Lessor, Lessee, and Darway Sublessee dated as of August 24, 2006, and (2) the Joinder Agreement and Amendment to Transaction Documents among Lessor, Lessee and the 2008 Sublessees dated as of the date of this Lease.

 

Judgment Date :  The date on which a judgment is entered against Lessee that establishes, without the possibility of appeal, the amount of liquidated damages to which Lessor is entitled under this Lease.

 

Land :                      The real property described in attached Exhibits B -1 through B- 17 .

 

Lease :  As defined in the Preamble.

 

Lease Year :  Each period from and including September 1 through August 31 during the Term of this Lease.  If this Lease is terminated before the end of any Lease Year, the final Lease Year shall be September 1 through the date of termination.

 

Leased Improvements : Collectively, all buildings, structures, Fixtures and other improvements of every kind on the Land, including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures.

 

Leased Property:   The parcel or parcels of the Land on which a Facility is located, the Leased Improvements on such parcel of the Land, the Related Rights with respect to such parcel of the Land, and Lessor’s Personal Property with respect to such Facility.

 

Leased Properties :  All of the Land, Leased Improvements, Related Rights and Lessor’s Personal Property.

 

Legal Requirements :  All federal, state, county, municipal and other governmental statutes, laws, rules, orders, waivers, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Properties or any portion thereof, Lessee’s Personal Property or the construction, use or alteration of the Leased Properties (including but not limited to the Americans with Disabilities Act), whether enacted and in force before, after or on the Commencement Date, and including any that may (a) require repairs, modifications, alterations or additions in or to any portion or all of the Facilities, or (b) in any way adversely affect the use and enjoyment thereof, and all permits, licenses and authorizations and regulations relating thereto, including, but not limited to, (i) those relating to existing health care licenses, (ii) those authorizing the current number of licensed beds and the level of services delivered from the Leased Properties and (iii) all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Lessee (other than encumbrances created by Lessor without the consent of Lessee) and in force at any time during the Term.

 

Lessee’s Certificate :  A statement in writing in substantially the form of Exhibit C attached hereto (with such changes thereto as may reasonably be requested by the person relying on such certificate).

 

Lessee’s Personal Property :  Personal Property owned or leased by Lessee that is not included within the definition of the term “Lessor’s Personal Property” but is used by Lessee in the operation of the Facilities, including Personal Property provided by Lessee in compliance with Section 6.3 of this Lease.

 

Lessor’s Future Rent Loss :  An amount equal to the Rent that would have been payable by Lessee from and after the Judgment Date through the Expiration Date had the Lease not been terminated, plus such additional amount as may be necessary in order to compensate Lessor for all other damages that are proximately caused by, and in the ordinary course of things would be likely to result from, Lessee’s failure to perform its obligations under this Lease.

 

Lessor’s Interim Rent Loss :  An amount equal to the Rent that would have been payable by Lessee from the Termination Date through the Judgment Date had the Lease not been terminated (including interest and late charges determined on the basis of the date or dates on which Lessor’s Interim Rent Loss is actually paid by Lessee), plus such additional amount as may be necessary in order to compensate Lessor for all other damages that are proximately caused by, and in the ordinary course of things would be likely to result from, Lessee’s failure to perform its obligations under this Lease.

 

Lessor’s Monthly Rent Loss :  For any month, an amount equal to the installment of Rent that would have been due in such month under the Lease if it had not been terminated, plus, if such amount is not paid on or before the day of the month on which such installment of Rent would have been due, the amount of interest and late charges thereon that also would have been due under the Lease, plus such additional amount as may be necessary in order to compensate Lessor for all other damages that are proximately caused by, and in the ordinary course of things would be likely to result from, Lessee’s failure to perform its obligations under this Lease.

 

Lessor’s Personal Property :  All Personal Property and intangibles, if any, owned by Lessor and leased to Lessee on the Commencement Date, together with any and all replacements thereof, and all Personal Property that pursuant to the terms of the Lease becomes the property of Lessor during the Term.  Notwithstanding any other provision of this Lease, Lessor’s Personal Property shall not include goodwill nor shall it include any other intangible personal property that is severable from Lessor’s “interests in real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto.

 

Letter of Credit Agreement :  An agreement between Lessor and Lessee providing for a letter of credit to be delivered to Lessor as the Security Deposit.

 

Line of Credit : A working capital line of credit from Public Credit, LLC, a Pennsylvania limited liability company, or such other lender as Lessor may approve in writing.

 

Line of Credit Documents : The documents which evidence the Line of Credit.

 

Management Agreement :  Any agreement pursuant to which management of a Facility is delegated by Lessee to any Person not an employee of Lessee or to any other related or unrelated party.

 

Manager :  The Person to whom management of the operation of a Facility is delegated pursuant to a Management Agreement.

 

Material Adverse Effect : means any material adverse effect whatsoever upon (a) the validity, performance or enforceability of any Transaction Document, (b) the properties, contracts, business operations, profits or condition (financial or otherwise) of Lessee, a Sublessee or any Guarantor, or (c) the ability of Lessee, a Sublessee, any Guarantor or any of their Affiliates to fulfill its obligations under the Transaction Documents.

 

Maximum Principal Amount : means for the first Lease Year, Five Million Dollars ($5,000,000), and for each succeeding Lease Year in the Term, the Maximum Principal Amount for the previous Lease Year, increased by the product of (a) the Maximum Principal Amount during the preceding lease year and (b) the increase, if any, in the CPI.  If the CPI does not increase (or if it decreases) from one Lease Year to the next, the Maximum Principal Amount will not increase during such next Lease Year.

 

Net Income :  For any period, Lessee’s net income (or loss) for such period attributable to the operation of the Facilities, determined in accordance with GAAP; provided, however, that Lessee’s Net Income shall not include any extraordinary gains (or losses) or nonrecurring gains (or losses).

 

Net Proceeds :  All proceeds, net of any costs incurred by Lessor in obtaining such proceeds, payable under any policy of insurance required by ARTICLE XIII of this Lease (including any proceeds with respect to Lessee’s Personal Property that Lessee is required or elects to restore or replace pursuant to Section 14.3 ) or paid by a Condemnor for a Taking or Partial Taking of a Leased Property.

 

Net Reletting Proceeds : Proceeds of the reletting of any portion of the Leased Property received by Lessor, net of Reletting Costs.

 

Notice :  A notice given in accordance with Section 25.1 of this Lease.

 

Notice of Termination :  A Notice from Lessor that it is terminating this Lease by reason of an Event of Default.

 

Objections : is defined in Section 29.6 .

 

Off-Balance Sheet Liability : of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any liability under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person.

 

Officer’s Certificate : A certificate signed by an Executive Officer.

 

Omega :  Omega Healthcare Investors, Inc., a Maryland corporation.

 

Option : is defined in Section 29.1 .

 

Option Deposit : is defined in Section 29.3 .

 

Option Period : is defined in Section 29.3 .

 

Option Property : is defined in Section 29.2 .

 

Overdue Rate :  On any date, the interest rate that is equal to three percent (3%)  (three hundred (300) basis points) above the Prime Rate, but in no event greater than the maximum rate then permitted under applicable law.

 

Partial Taking :  A taking of less than the entire fee of a Leased Property that either (a) does not render the Leased Property Unsuitable for its Primary Use, or (b) renders a Leased Property Unsuitable for its Primary Intended Use, but neither Lessor nor Lessee elects pursuant to Section 15.1 hereof to terminate this Lease.

 

Payment Date :  Any due date for the payment of the installments of Base Rent or for the payment of Additional Charges or any other amount required to be paid by Lessee hereunder.

 

Permitted Encumbrances : Encumbrances listed on attached Exhibit D .

 

Permitted Investments : The following Investments are permitted:

 

(a)           The ownership of 100% of the outstanding equity securities by Guardian Holdings in the following entities:

 

 

(1)

Guardian Elder Care;

 

 

(2)

Guardian Rehabilitation Services, Inc., a Pennsylvania corporation;

 

 

(3)

Guardian LTC Pharmacy, Inc., a Pennsylvania corporation;

 

 

(4)

Guardian Home & Community Services, Inc., a Pennsylvania corporation;

 

 

(5)

Guardian Elder Care Management, Inc., a Pennsylvania corporation;

 

 

(7)

Lessee; and

 

(b)           The ownership of 99% or more of the outstanding equity securities by Lessee in the Sublessees; and

 

(c)           The ownership of 1% of the outstanding equity securities by Brockway LTC in certain of the Sublessees;

 

(d)           A Cash Acquisition;

 

(e)           Investments by Guardian Holdings in any Subsidiary of Guardian Holdings and Investments by Subsidiaries of Guardian Holdings (other than Lessee and the Sublessees) in other Subsidiaries of Guardian Holdings, provided that if such Investment is in Lessee, Brockway LTC, or any Sublessee, any rights to repayment or any return on such Investment are subordinated to the rights of Lessor pursuant to a written subordination agreement in form and substance acceptable to Lessor in its commercially reasonable discretion;

 

(f)           Investments among Lessee and the Sublessees; and

 

(f)           Such other Investments as may be consented to in writing by Lessor, which consent will not unreasonably withheld by Lessor.

 

Person :  Any natural person, trust, partnership, corporation, joint venture, limited liability company or other legal entity.

 

Personal Property :  All machinery, equipment, furniture, furnishings, movable walls or partitions, computers (and all associated software), trade fixtures and other tangible personal property (but excluding consumable inventory and supplies owned by Lessee) used in connection with the Leased Properties, together with all replacements  and alterations thereof and additions thereto, except items, if any, included within the definition of Fixtures or Leased Improvements.

 

Peterson Option : means the option to purchase the Peterson Facility granted by Lessor to Lessee which was being terminated pursuant to the Existing Lease.

 

Plan of Reorganization : The Plan of Reorganization of Guardian Elder Care dated as of the date of this Lease.

 

Pledge Agreements : means (i) the Pledge Agreement dated as of October 28, 2004 and effective as of November 1, 2004, between Lessor, as creditor, and the Lessee, as debtor, (ii) the Pledge Agreement dated as of February 24, 2004 between Lessor, as creditor, and Brockway LTC, as debtor, each as amended by the Joinder Agreements, and (iii) the Pledge Agreement dated as of the date of this Lease between Lessor, as creditor, and Guardian Holdings, as debtor.

 

Present Value : The value of future payments, determined by discounting each such payment at a rate equal to the yield on the specified date on securities issued by the United States Treasury (bills, notes and bonds) maturing on the date closest to December 31 in the year in which such future payment would have been due.

 

Primary Intended Use : Licensed skilled nursing facilities, assisted living facilities and independent living facilities.

 

Prime Rate :  On any date, an interest rate equal to the prime rate published by the Wall Street Journal, but in no event greater than the maximum rate then permitted under applicable law. If the Wall Street Journal ceases to be in existence, or for any reason no longer publishes such prime rate, the Prime Rate shall be the rate announced as its prime rate by the financial institution that is the agent for the banks under Omega’s senior credit agreement, and if such bank no longer exists or does not announce a prime rate at such time, the Prime Rate shall be the rate of interest announced as its prime rate by a national bank selected by Lessor.

 

Principals : Raymond L. Calhoun, Peter C. Varischetti, Frank A. Varischetti, Steven R. Varischetti and Nicholas D. Varischetti.

 

Proceeding : Any action, proposal or investigation by any agency or entity, or any complaint to such agency or entity.

 

Purchase Agreements : means (i) the Purchase Agreement dated as of October 28, 2004, and effective as of November 1, 2004 among Lessor, as purchaser, and Lessee and the Sublessees (other than the Darway Sublessee and the 2008 Sublessees), as sellers, (ii) the Purchase Agreement dated as of August 24, 2006, and effective as of September 1, 2006, among Lessor, as purchaser, and Lessee, the Darway Sublessee and GUARDIAN ELDER CARE AT FORKSVILLE, LP, a Pennsylvania limited partnership, as sellers, and (iii) the Purchase Agreement dated as of the date of this Lease, among Lessor, as purchaser, and Lessee, the 2008 Sublessees and certain of their Affiliates, as sellers.

 

Purchase Documents : As defined in the Purchase Agreements.

 

Purchase Money Financing :   Any financing provided by a Person to Lessee or a Sublessee in connection with the acquisition of Personal Property used in connection with the operation of a Facility, whether by way of installment sale, equipment lease or otherwise.

 

Purchase Price : is defined in Section 29.4 .

 

Qualified Capital Expenditures :  Expenditures capitalized on the books of Lessee for alterations, renovations, repairs and replacements to the Facilities, including without limitation any of the following:   Replacement of furniture, fixtures and equipment, including refrigerators, ranges, major appliances, bathroom fixtures, doors (exterior and interior), central air conditioning and heating systems (including cooling towers, water chilling units, furnaces, boilers and fuel storage tanks) and major replacement of siding; major roof replacements, including major replacements of gutters, downspouts, eaves and soffits; major repairs and replacements of plumbing and sanitary systems; overhaul of elevator systems; major repaving, resurfacing and sealcoating of sidewalks, parking lots and driveways; repainting of entire building exterior; but excluding major alterations, renovations, additions (consisting of expansions of any Facility, including construction of a new wing or a new story on any Facility), normal maintenance and repairs.

 

Reasonable Expenses : is defined in Section 32.8 .

 

Regulatory Actions :  Any claim, demand, notice, action or proceeding brought, threatened or initiated by any governmental authority in connection with any Environmental Law, including, without limitation, civil, criminal and administrative proceedings, whether or not the remedy sought is costs, damages, equitable remedies, penalties or expenses.

 

Related Rights :  All easements, rights and appurtenances relating to the Land and the Leased Improvements.

 

Release :  The intentional or unintentional spilling, leaking, dumping, pouring, emptying, seeping, disposing, discharging, emitting, depositing, injecting, leaching, escaping, abandoning, or any other release or threatened release, however defined, of any Hazardous Substance.

 

Reletting Costs : Expenses incurred by Lessor in connection with the reletting of the Leased Properties in whole or in part after an Event of Default, including without limitation reasonable attorneys’ fees and expenses, brokerage fees and expenses, marketing expenses and the cost of repairs and renovations reasonably required for such reletting.

 

Renewal Term : A period for which the Term is renewed in accordance with Section 1.3 .

 

Rent :  Collectively, Base Rent and Additional Charges.

 

Replacement Cost :  The actual replacement cost of the Leased Properties, including an increased cost of construction endorsement, less exclusions provided in the standard form of fire insurance policy.  In all events Replacement Cost shall be an amount sufficient that neither Lessor nor Lessee is deemed to be a co-insurer of the Leased Property in question.

 

Sale and Leaseback Transaction : means any sale or other transfer of real or personal property by any Person with the intent to lease such property as lessee.

 

SEC :  Securities and Exchange Commission.

 

Security Agreements : means (1) the Security Agreement dated as of October 28, 2004, and effective as of November 1, 2004 between Lessor, as secured party, and Lessee and the Sublessees, as debtors, and (2) the Security Agreement dated as of October 28, 2004, and effective as of November 1, 2004between Lessor, as secured party, and Guardian Elder Care, as debtor, in each case as amended by the Joinder Agreements.

 

Security Deposit : As defined in Section 31.1 of this Lease.

 

Special Risk Insurance :  The insurance that Lessee is required to maintain pursuant to Section 13.2.1 of this Lease.

 

State : The State or States in which the Leased Properties are located.

 

Subleases :  The Subleases dated the same date as this Agreement with the Sublessees listed on attached Exhibit E for the corresponding Facility listed on Exhibit E , and such other Subleases expressly approved in writing by Lessor prior to execution of any sublease by Lessee.

 

Sublessees :  The sublessees under the Subleases.

 

Subordination Agreement : The Subordination Agreement dated as of October 28, 2004, and effective as of November 1, 2004 from Lessee, the Sublessees, and Guarantors in favor of Lessor, as amended by the Joinder Agreements.

 

Subsidiary : of a Person means (i) any corporation with respect to which any of the outstanding securities having ordinary voting power shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization with respect to which any of the ownership interests having ordinary voting power shall at the time be so owned or controlled.  Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of Lessee or any Sublessee.

 

Taken : Conveyed pursuant to a Taking or Partial Taking.

 

Taking :  A taking or voluntary conveyance during the Term of all of a Leased Property, or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of any condemnation or other eminent domain proceeding affecting the Leased Property, whether or not the proceeding actually has been commenced.

 

Tangible Net Worth : At any date, the net worth of a Person as determined in conformity with GAAP, less Intangible Assets, as determined as of such date.

 

Term :  Collectively, the Initial Term plus the Renewal Term or Renewal Terms, if any.

 

Termination Date :  The date on which a Notice of Termination is given.

 

Third Party Claims :  Any claims, actions, demands or proceedings (other than Regulatory Actions) howsoever based (including without limitation those based on negligence, trespass, strict liability, nuisance, toxic tort or detriment to health welfare or property) due to Contamination, whether or not the remedy sought is costs, damages, penalties or expenses, brought by any person or entity other than a governmental agency.

 

Title Commitments : is defined in Section 29.6 .

 

Title Policies : is defined in Section 29.6 .

 

Transaction Documents: means the following documents: this Lease, the Purchase Agreements, the Purchase Documents, the Guaranties, the Letter of Credit Agreement, the Security Agreements, the Pledge Agreements, the Subordination Agreements, the Joinder Agreements, and any security agreements, pledge agreements, letter of credit agreements, guarantees, notes or other documents which evidence, secure or otherwise relate to this Lease or the Purchase Agreements, or the transactions contemplated by this Lease and the Purchase Agreements and to which Lessee, a Sublessee, a Guarantor or another Affiliate of Lessee is a party; and any and all amendments, modifications, extensions and renewals of any of the foregoing documents.

 

Transfer:   The (a) assignment, mortgaging or other encumbering of all or any part of Lessee’s interest in this Lease or in the Leased Properties; (b) subletting of the whole or any part of any Leased Property (except to Sublessees pursuant to the Subleases); (c) entering into of any Management Agreement or other arrangement under which any Facility is operated by or licensed to be operated by an entity other than Lessee or a Sublessee; (d) merger, consolidation or reorganization of a corporate Lessee, corporate Sublessee, corporate Manager, or Guardian Holdings, or the sale, issuance, transfer and/or redemption, cumulatively or in one transaction, of any voting stock by Lessee, any Sublessee or Manager, or Guardian Holdings or by Persons who are stockholders of record or beneficially of Lessee, any Sublessee or Manager, or Guardian Holdings, if such event or events result(s) in a change of Control of Lessee, any Sublessee or Manager, or Guardian Holdings; or (e) sale, issuance, transfer or redemption, cumulatively or in one transaction, of any interest, or the termination of any interest, whether held directly or indirectly, in Lessee, any Sublessee or Manager, or Guardian Holdings if Lessee, such Sublessee, such Manager or Guardian Holdings is a joint venture, partnership, limited liability company or other association and such sale, issuance, transfer, redemption or termination of interest results in a change of Control of such joint venture, partnership, limited liability company or other association.

 

Transferee : An assignee, subtenant or other occupant of a Leased Property pursuant to a Transfer.

 

Unmatured Event of Default : means the occurrence of an event which upon its occurrence, or with the giving of notice, the passage of time, or both, would constitute an Event of Default.

 

Unsuitable for Its Primary Intended Use :  A state or condition of a Facility such that by reason of a Partial Taking, the Facility cannot be operated on a commercially practicable basis for its Primary Intended Use, taking into account, among other relevant factors, the number of usable beds permitted by applicable law and regulation in the Facility after the Partial Taking, the square footage Taken and the estimated revenue impact of such Partial Taking.

 

ARTICLE III  - RENT

 

3.1   Base Rent; Monthly Installments . In addition to all other payments to be made by Lessee under this Lease, Lessee shall pay Lessor the Base Rent in lawful money of the United States of America which is legal tender for the payment of public and private debts, Lessee shall pay the Base Rent in advance, (i) during the first Lease Year, in monthly installments in an amount equal to the amount set forth in the definition of Base Rent and (ii) each year thereafter, in equal, consecutive monthly installments, each of which shall be in an amount equal to one-twelfth (1/12) of the Base Rent payable for the Lease Year in which such installment is payable. The first installment of Base Rent shall be payable on the Commencement Date, together with a prorated amount of Base Rent for the period from the Commencement Date until the last day of the first full calendar month of the Term.  Thereafter, installments of Base Rent shall be payable on the first (1 st ) day of each calendar month.  Base Rent shall be paid to Lessor, or to such other Person as Lessor from time to time may designate by Notice to Lessee, by wire transfer of immediately available federal funds to the bank account designated in writing by Lessor. If Lessor directs Lessee to pay any Base Rent or Additional Charges to any Person other than Lessor, Lessee shall send to Lessor, simultaneously with payment of the Base Rent or Additional Charges, a copy of the transmittal letter or invoice and check evidencing such, or such other evidence of payment as Lessor requires.

 

3.2   Additional Charges .   In addition to the Base Rent, Lessee also will pay as and when due all Additional Charges.

 

3.3   Late Charge; Interest .  If any Rent payable to Lessor is not paid when due, Lessee shall pay Lessor on demand, as an Additional Charge, a late charge equal to five percent (5%) of the amount not paid when due, and, in addition, if such Rent (including the late charge) is not paid within thirty (30) days of the date on which such Rent was due, interest thereon at the Overdue Rate from the date when due until such Rent (including the late charge and interest) is paid in full.

 

3.4   Net Lease.

 

3.4.1   The Rent shall be paid absolutely net to Lessor, so that this Lease shall yield to Lessor the full amount of the Rent payable to Lessor under this Lease throughout the Term.

 

3.4.2   If Lessor commences any proceedings for non-payment of Rent, Lessee will not interpose any counterclaim or cross complaint or similar pleading of any nature or description in such proceedings unless Lessee would lose or waive such claim by the failure to assert it, but Lessee does not waive any rights to assert such claim in a separate action brought by Lessee.  The covenants to pay Rent are independent covenants, and Lessee shall have no right to hold back, offset or fail to pay any Rent because of any alleged default by Lessor or for any other reason.

 

3.5   Payments In The Event of a Rent Adjustment.

 

3.5.1   Upon the adjustment, pursuant to the definition of the term “Base Rent,” in the Base Rent payable pursuant to this Lease with respect to any Lease Year, the adjustment shall be effective as of the first payment of Base Rent due in the Lease Year as to which such adjustment pertains.  Because it may not be possible to determine the adjusted Base Rent prior to the effective date of such adjustment, Lessee shall continue to pay the Base Rent at the rate in effect prior to the adjustment until Lessor gives Lessee Notice of its determination of the adjusted Base Rent. Upon such determination, the Base Rent shall be adjusted retroactively as of the effective date of such adjustment.  On or before the second (2 nd ) payment date for Base Rent following receipt by Lessee of Lessor’s Notice of the adjustment, Lessee shall make an additional payment of Base Rent in such amount as will bring the Base Rent, as adjusted, current on or before such second (2 nd ) payment date, and thereafter Lessee shall pay the adjusted Base Rent in correspondingly adjusted monthly installments until the Base Rent is next adjusted or reset as required under this Lease.

 

3.5.2   This Section 3.5 shall survive the expiration or earlier termination of this Lease with respect to any adjustment or reset that is not known or fully paid as of the date of expiration or earlier termination of this Lease.

 

ARTICLE IV - IMPOSITIONS

 

4.1   Payment of Impositions .  Subject to Sections 12.1 and 12.2 , Lessee will pay all Impositions before any fine, penalty, interest or cost is added for non-payment, and will promptly, upon request, furnish to Lessor copies of official receipts or other satisfactory proof evidencing such payments.  Subject to Section 12.2 , if at the option of the taxpayer any Imposition may be paid in installments, Lessee may pay the same in the required installments provided it also pays any and all interest due thereon as and when due.  Lessee shall prepare and file as and when required all tax returns and reports required by governmental authorities with respect to all Impositions.  Lessor and Lessee shall each, upon request, provide the other with such data, including without limitation cost and depreciation records, as is maintained by the party to whom the request is made as is necessary to prepare any required returns and reports.  Lessee shall be entitled to receive and retain any refund from a taxing authority in respect of an Imposition paid by Lessee if at the time of the refund no Event of Default has occurred, but if an Event of Default has occurred at the time of the refund, Lessee shall not be entitled to receive or retain such refund, and if and when received by Lessor such refund shall be applied as provided in ARTICLE XVI .  Lessee may, upon Notice to and with the consent of Lessor (which consent shall not be withheld unreasonably), at Lessee’s sole cost and expense, protest, appeal or institute such other proceedings as Lessee deems appropriate to effect a reduction of real estate or personal property assessments and Lessor, at Lessee’s expense as aforesaid, shall cooperate with Lessee in such protest, appeal or other action.  Lessee shall reimburse Lessor for Lessor’s direct costs of cooperating with Lessee for such protest, appeal or other action.

 

4.2   Adjustment of Impositions .  Impositions imposed in respect of the tax fiscal period during which the Term ends shall be adjusted and prorated between Lessor and Lessee, whether or not imposed before or after the expiration or earlier termination of the Term, and Lessee’s obligation to pay its prorated share thereof shall survive the expiration or earlier termination of the Term.

 

4.3   Utility Charges .  Lessee will pay or cause to be paid when due all charges for electricity, power, gas, oil, water and other utilities imposed upon the Leased Properties or upon Lessor or Lessee with respect to the Leased Properties.

 

4.4   Insurance Premiums . Lessee shall pay or cause to be paid when due all premiums for the insurance coverage required to be maintained pursuant to ARTICLE XIII during the Term.  Lessee shall deposit with Lessor the premiums for such insurance in accordance with the provisions of Section 12.2 of this Lease.

 

ARTICLE V  – NO TERMINATION

 

5.1   No Termination, Abatement, etc .  Lessee shall not take any action without the consent of Lessor to modify, surrender or terminate this Lease (other than as expressly permitted under this Lease), and shall not seek or be entitled to any abatement, deduction, deferment or reduction of Rent, or setoff against Rent.  The respective obligations of Lessor and Lessee shall not be affected by reason of (a) any damage to, or destruction of, the Leased Properties or any portion thereof from whatever cause or any Taking or Partial Taking of the Leased Properties, except as expressly set forth herein; (b) the lawful or unlawful prohibition of, or restriction upon, Lessee’s use of the Leased Properties, or any portion thereof, or the interference with such use by any Person or by reason of eviction by paramount title; (c) any claim that Lessee has or might have against Lessor or by reason of any default or breach of any warranty by Lessor under this Lease or any other agreement between Lessor and Lessee, or to which Lessor and Lessee are parties; (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Lessor or any assignee or transferee of Lessor; or (e) any other cause, whether similar or dissimilar to any of the foregoing, other than a discharge of Lessee from any such obligations as a matter of law.  Lessee hereby specifically waives all rights, arising from any occurrence whatsoever, that now or hereafter may be conferred upon it by law to (a) modify, surrender or terminate this Lease or quit or surrender the Leased Properties or any portion thereof, or (b) entitle Lessee to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Lessee hereunder.

 

ARTICLE VI  – LEASED PROPERTIES

 

6.1   Ownership of the Leased Properties .  Lessee acknowledges that the Leased Properties are the property of Lessor and that Lessee has only the right to the possession and use of the Leased Properties upon the terms and conditions of this Lease.  Lessee will not (a) file any income tax return or other associated documents, (b) file any other document with or submit any document to any governmental body or authority, (c) enter into any written contractual arrangement with any Person or (d) release any financial statements of Lessee, in any case that take any position other than that throughout the Term Lessor is the owner of the Leased Properties for federal, state and local income tax purposes and this Lease is a “true lease,” and an “operating lease” and not a “capital lease.”

 

6.2   Lessor’s Personal Property .  Lessee shall, during the entire Term, maintain all of Lessor’s Personal Property in good order, condition and repair as shall be necessary in order to operate the Facilities for the Primary Intended Use in compliance with all applicable licensure and certification requirements, all applicable Legal Requirements and Insurance Requirements, and customary industry practice for the Primary Intended Use.  If any of Lessor’s Personal Property requires replacement in order to comply with the foregoing, Lessee shall replace it with similar property of the same or better quality at Lessee’s sole cost and expense, and when such replacement property is placed in service with respect to the Leased Property it shall become Lessor’s Personal Property.  Lessee shall not permit or suffer Lessor’s Personal Property to be subject to any lien, charge, encumbrance, financing statement, contract of sale, equipment lessor’s interest or the like, except for any purchase money security interest or equipment lessor’s interest expressly securing Debt permitted pursuant to Section 8.3.9 or otherwise approved in advance, in writing, by Lessor.  At the expiration or earlier termination of this Lease (except if the Closing occurs after the exercise of the Option as provided for below), all of Lessor’s Personal Property shall be surrendered to Lessor with the Leased Properties at or before the time of the surrender of the Leased Property in at least as good a condition as at the Commencement Date (or, as to replacements, in at least as good a condition as when placed in service at the Facilities) except for ordinary wear and tear.

 

6.3   Lessee’s Personal Property .  Lessee shall provide and maintain during the Term such Personal Property, in addition to Lessor’s Personal Property, as shall be necessary and appropriate in order to operate the Facilities for the Primary Intended Use in compliance with all licensure and certification requirements, in compliance with all applicable Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Primary Intended Use. Upon the expiration of the Term or the earlier termination of this Lease (except if the Closing occurs after the exercise of the Option as provided for below), without the payment of any additional consideration by Lessor, Lessee shall be deemed to have sold, assigned, transferred and conveyed to Lessor all of Lessee’s right, title and interest in and to any and all of Lessee’s Personal Property whether or not integral to the Primary Intended Use of the Facilities and wherever located; provided, however, that Lessee shall not be obligated to transfer its computers and proprietary software.  Lessee shall not remove any of Lessee’s Personal Property that is in use at the expiration or earlier termination of the Lease from the Leased Properties.

 

6.4   Grant of Security Interest in Lessee’s Personal Property and Accounts .  Lessee and the Sublessees have concurrently granted to Lessor a security interest in the Collateral, which includes, without limitation, the Personal Property as defined herein and Lessee’s and Sublessees’ Accounts as defined in the Security Agreement.

 

ARTICLE VII – CONDITION OF LEASED PROPERTIES

 

7.1   Condition of the Leased Properties .  Lessee acknowledges that it has inspected and otherwise has knowledge of the condition of the Leased Properties prior to the execution and delivery of this Lease and has found the same to be in good order and repair and satisfactory for its purposes hereunder.  Lessee is leasing the Leased Properties “as is” in their condition on the Commencement Date.  Lessee waives any claim or action against Lessor in respect of the condition of the Leased Properties.  LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF ANY LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.  Lessee further acknowledges that throughout the Term Lessee is solely responsible for the condition of the Leased Properties.

 

7.2   Use of the Leased Properties .  Throughout the Term Lessee shall use the Leased Properties continuously for the Primary Intended Use and uses incidental thereto. Lessee shall not use the Leased Properties or any portion thereof for any other use without the prior written consent of Lessor.  No use shall be made or permitted to be made of, or allowed in, the Leased Properties, and no acts shall be done, which will cause the cancellation of, or be prohibited by, any insurance policy covering the Leased Properties or any part thereof, nor shall the Leased Properties or Lessee’s Personal Property be used for any unlawful purpose. Lessee shall not commit or suffer to be committed any waste on the Leased Properties, or cause or permit any nuisance thereon, or suffer or permit the Leased Properties or any portion thereof, or Lessee’s Personal Property, to be used in such a manner as (a) might reasonably tend to impair Lessor’s (or Lessee’s, as the case may be) title thereto or to any portion thereof, or (b) may reasonably make possible a claim or claims of adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Properties or any portion thereof.

 

7.3   Certain Environmental Matters .

 

(a)   Prohibition Against Use of Hazardous Substances .  Lessee shall not permit, conduct or allow the generation, introduction, presence, maintenance, use, receipt, acceptance, treatment, manufacture, production, installation, management, storage, disposal or release of any Hazardous Substance on the Leased Properties, except for those types and quantities of Hazardous Substances necessary for and ordinarily associated with the conduct of Lessee’s business and used in full compliance with all Environmental Laws.

 

(b)   Notice of Environmental Claims, Actions or Contaminations .  Lessee shall notify Lessor, in writing, timely (based upon the circumstances) upon learning of any existing, pending or threatened: (i) investigation, inquiry, claim or action by any governmental authority in connection with any Environmental Laws, (ii) Third Party Claims, (iii) Regulatory Actions, and/or (iv) Contamination of any portion of the Leased Properties

 

(c)   Costs of Remedial Actions with Respect to Environmental Matters .  If any investigation and/or Clean-Up of any Hazardous Substance or other environmental condition on, under, about or with respect to a Leased Property is required by any Environmental Law, Lessee shall complete, at its own expense, such investigation and/or Clean-Up or cause any other Person who may be legally responsible to complete such investigation and/or Clean-Up.

 

(d)   Delivery of Environmental Documents .  Lessee shall deliver to Lessor complete copies of any and all Environmental Documents that may now be in, or at any time hereafter come into, the possession of Lessee.

 

(e)   Environmental Audit .  At Lessee’s expense, Lessee shall, upon and within forty-five (45) days of a written request therefor from Lessor (or within such shorter timeframe as is reasonable in the event of an emergency), deliver an Environmental Audit to Lessor.  All tests and samplings shall be conducted using generally accepted and scientifically valid technology and methodologies.  Lessee shall give the engineer or environmental consultant conducting the Environmental Audit reasonable and complete access to the Leased Properties and to all records in the possession of Lessee that may indicate the presence (whether current or past) of a Release or threatened Release of any Hazardous Substances on, in, under, about and adjacent to any Leased Property.  Lessee also shall provide the engineer or environmental consultant full access to and the opportunity to interview such persons as may be employed in connection with the Leased Properties as the engineer or consultant deems appropriate.  However, Lessor shall not be entitled to request an Environmental Audit from Lessee unless (i) after the Commencement Date there have been material changes, modifications or additions to Environmental Laws as applied to or affecting any of the Leased Properties; (ii) a significant change in the condition of any of the Leased Properties has occurred; (iii) there are fewer than six (6) months remaining in the Term; or (iv)  Lessor has another good reason for requesting such certificate or certificates.  If the Environmental Audit discloses the presence of Contamination or any noncompliance with Environmental Laws, Lessee shall immediately perform all of Lessee’s obligations under this Lease with respect to such Hazardous Substances or noncompliance.

 

(f)   Entry onto Leased Properties for Environmental Matters .  If Lessee fails to provide an Environmental Audit as and when required by Subparagraph (e) above, in addition to Lessor’s other remedies Lessee shall permit Lessor from time to time, and upon prior written notice to Lessee at least five (5) days in advance (except in the case of emergency circumstances when no prior notice is required), by its employees, agents, contractors or representatives, to enter upon the Leased Properties for the purpose of conducting such Investigations as Lessor may desire, the reasonable expense of which shall be paid or reimbursed promptly by Lessee as an Additional Charge.  Lessor and its employees, agents, contractors, consultants and/or representatives, shall conduct any such Investigation in a manner that does not unreasonably interfere with Lessee’s use of and operations on the Leased Properties (however, reasonable temporary interference with such use and operations is permissible if the investigation cannot otherwise be reasonably and inexpensively conducted).  Other than in an emergency, Lessor shall provide Lessee with prior written notice before entering any of the Leased Properties to conduct such Investigation, and shall provide copies of any reports or results to Lessee, and Lessee shall cooperate fully in such Investigation.

 

(g)   Environmental Matters Upon Termination of the Lease or Expiration of Term .  Upon the expiration or earlier termination of the Term, Lessee shall cause the Leased Properties to be delivered free of any and all Regulatory Actions and Third Party Claims and otherwise in compliance with all Environmental Laws with respect thereto, and in a manner and condition that is reasonably required to ensure that the then present use, operation, leasing, development, construction, alteration, refinancing or sale of the Leased Property shall not be restricted by any environmental condition existing as of the date of such expiration or earlier termination of the Term.

 

(h)   Compliance with Environmental Laws .  Lessee shall comply with, and cause its agents, servants and employees to comply with, and shall use reasonable efforts to cause each occupant and user of any of the Leased Properties, and the agents, servants and employees of such occupants and users to comply with, each and every Environmental Law applicable to Lessee, the Leased Properties and each such occupant or user with respect to the Leased Properties.  Specifically, but without limitation:

 

(i)   Maintenance of Licenses and Permits .  Lessee shall obtain and maintain (and Lessee shall use reasonable efforts to cause each tenant, occupant and user to obtain and maintain) all permits, certificates, licenses and other consents and approvals required by any applicable Environmental Law from time to time with respect to Lessee, each and every part of the Leased Properties and/or the conduct of any business at a Facility or related thereto;

 

(ii)   Contamination .  Lessee shall not cause, suffer or permit any Contamination;

 

(iii)   Clean-Up .  If a Contamination occurs, Lessee promptly shall Clean-Up and remove any Hazardous Substance or cause the Clean-Up and the removal of any Hazardous Substance and in any such case such Clean-Up and removal of the Hazardous Substance shall be effected in compliance with applicable Environmental Laws;

 

(iv)   Discharge of Lien .  Within twenty (20) days of the date any lien is imposed against the Leased Properties or any part thereof under any Environmental Law, Lessee shall cause such lien to be discharged (by payment, by bond or otherwise to Lessor’s absolute satisfaction);

 

(v)   Notification of Lessor .  Within three (3) Business Days after receipt by Lessee of Notice or discovery by Lessee of any fact or circumstance that might result in a breach or violation of any covenant or agreement, Lessee shall give Lessor Notice of such fact or circumstance; and

 

(vi)   Requests, Orders and Notices .  Within three (3) Business Days after receipt of any request, order or other notice relating to the Leased Properties under any Environmental Law, Lessee shall forward a copy thereof to Lessor.

 

(i)   Environmental Related Remedies .  In the event of a breach by Lessee beyond any applicable notice and/or grace period of its covenants with respect to environmental matters, Lessor may, in its sole discretion, do any one or more of the following (the exercise of one right or remedy hereunder not precluding the simultaneous or subsequent exercise of any other right or remedy hereunder):

 

(i)   Cause a Clean-Up .  Cause the Clean-Up of any Hazardous Substance or other environmental condition on or under the Leased Properties, or both, at Lessee’s cost and expense; or

 

(ii)   Payment of Regulatory Damages .  Pay on behalf of Lessee any damages, costs, fines or penalties imposed on Lessee or Lessor as a result of any Regulatory Actions; or

 

(iii)   Payments to Discharge Liens .  On behalf of Lessee, make any payment or perform any other act or cause any act to be performed that will prevent a lien in favor of any federal, state or local governmental authority from attaching to the Leased Properties or that will cause the discharge of any lien then attached to the Leased Properties; or

 

(iv)   Payment of Third Party Damages .  Pay, on behalf of Lessee, any damages, cost, fines or penalties imposed on Lessee as a result of any Third Party Claims; or

 

(v)   Demand of Payment .  Demand that Lessee make immediate payment of all of the costs of such Clean-Up and/or exercise of the remedies set forth in this Section 7.3 incurred by Lessor and not paid by Lessee as of the date of such demand.

 

(j)   Environmental Indemnification .  Lessee shall and does hereby indemnify, and shall defend and hold harmless, Lessor, each Facility Mortgagee and the principals, officers, directors, agents and employees of Lessor and each Facility Mortgagee, from each and every incurred and potential claim, cause of action, damage, demand, obligation, fine, laboratory fee, liability, loss, penalty, imposition settlement, levy, lien removal, litigation, judgment, proceeding, disbursement, expense and/or cost (including without 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, reasonable attorneys’ fees, consultants’ fees, experts’ fees and related expenses, capital, operating and maintenance costs, incurred in connection with (i) any Investigation or monitoring of site conditions, and (ii) any Clean-Up required or performed by any federal, state or local governmental entity or performed by any other entity or person because of the presence of any Hazardous Substance, Release, threatened Release or any Contamination on, in, under or about any of the Leased Properties) that may be asserted against, imposed on, suffered or incurred by, each and every indemnitee arising out of or in any way related to, or allegedly arising out of or due to any environmental matter including, but not limited to, any one or more of the following:

 

(i)   Release Damage or Liability .  The presence of Contamination in, on, at, under or near a Leased Property or migrating to a Leased Property from another location;

 

(ii)   Injuries .  All injuries to persons (including wrongful death) by reason of environmental matters relating to the condition of or activities past or present on, at, in or under a Leased Property;

 

(iii)   Violations of Law .  All violations, and alleged violations, of any Environmental Law relating to a Leased Property or any activity on, in, at or under a Leased Property;

 

(iv)   Misrepresentation .  All material misrepresentations relating to environmental matters made by Lessee or its Affiliates;

 

(v)   Event of Default .  Each and every Event of Default relating to environmental matters;

 

(vi)   Lawsuits .  Any and all lawsuits brought or threatened, settlements reached and governmental orders relating to any Hazardous Substances at, on, in or under a Leased Property, and all demands of governmental authorities, and all policies and requirements of Lessor’s, based upon or in any way related to any Hazardous Substances at, on, in or under a Leased Property; and

 

(vii)   Presence of Liens .  All liens imposed upon any of the Leased Properties in favor of any governmental entity or any person as a result of the presence, disposal, release or threat of release of Hazardous Substances at, on, in, from or under a Leased Property.

 

Notwithstanding the foregoing, nothing in this Section shall be construed as indemnifying Lessor against its own grossly negligent acts or omissions or willful misconduct.

 

(k)   Rights Cumulative and Survival .  The rights granted Lessor under this Section are in addition to and not in limitation of any other rights or remedies available to Lessor under this Lease or allowed at law or in equity or rights of indemnification provided to Lessor in any agreement pursuant to which Lessor purchased any of the Leased Property.  The payment and indemnification obligations set forth in this Section 7.3 shall survive the expiration or earlier termination of the Term with respect to all indemnification, Clean-Up obligations under this Section 7.3 arising out of acts, omissions or conditions occurring or existing on or before the later of (i) the expiration of the Term (without taking into account any early termination) and (ii) the date Lessee delivers possession to Lessor or Lessor’s designee.

 

ARTICLE VIII  - COVENANTS

 

8.1   Compliance with Legal and Insurance Requirements .  In its use, maintenance, operation and any alteration of the Leased Properties, Lessee, at its expense, promptly will (a) comply with all Legal Requirements and Insurance Requirements, whether or not compliance with them requires structural changes in any of the Leased Improvements (which structural changes shall be subject to Lessor’s prior written approval, which Lessor shall not unreasonably withhold or delay) or interferes with or prevents the use and enjoyment of the Leased Properties, and (b) procure, maintain and comply with all licenses, certificates of need, provider agreements and other authorizations required for the use of the Leased Properties and Lessee’s Personal Property for the Primary Intended Use, and for the proper erection, installation, operation and maintenance of the Leased Properties or any part thereof. The judgment of any court of competent jurisdiction, or the admission of Lessee in any action or proceeding against Lessee, whether or not Lessor is a party thereto, that Lessee has violated any such Legal Requirements or Insurance Requirements shall be conclusive of that fact as between Lessor and Lessee.

 

8.2   Licenses .  Lessee represents and warrants that Lessee and the Sublessees have received and presently hold all necessary certificates of need approvals/exemptions and license and certification approvals with respect to the operation of the Facilities for their Primary Intended Use.  Lessee and the Sublessees shall acquire and maintain, or cause to be acquired and maintained, all licenses, certificates, permits, provider agreements and other authorizations and approvals needed to operate the Facilities or any of them in their customary manner for the Primary Intended Use and any other use conducted on the Facilities as may be permitted from time to time under this Lease.  Without limiting the generality of the foregoing, the Lessee and the Sublessees will maintain in effect all licenses, permits, certificates of need, Section 1122 approvals, facility certifications, provider agreements, consents and other authorizations from all federal, state, municipal and other governmental agencies or authorities as are necessary to lawfully operate all beds contained in the Facilities as nursing home beds, that are duly certified to provide licensed nursing services, and to receive payment therefor under the Medicare and applicable state Medicaid programs.

 

8.3   Certain Covenants .

 

8.3.1   Lessee Tangible Net Worth .  During the Term, Lessee and the Sublessees shall maintain on a consolidated basis a minimum Tangible Net Worth of Three Million Dollars ($3,000,000), and if at any time Lessee’s and the Sublessees’ Tangible Net Worth is less than the requirement set forth in the preceding clause, within thirty (30) days Lessee shall cause its equity owners to contribute to Lessee sufficient equity capital in the form of cash to cause Lessee’s Tangible Net Worth to equal or exceed such requirement.  For purposes of this Section, Tangible Net Worth includes the amount of any cash Security Deposit.

 

8.3.2   Guardian Holdings Tangible Net Worth .  During the Term, Lessee and the Sublessees shall maintain a positive Tangible Net Worth, and if at any time Guardian Holdings’ Tangible Net Worth is not positive, within thirty (30) days Guardian Holdings shall cause its equity owners to contribute to Guardian Holdings sufficient equity capital in the form of cash to cause Guardian Holdings’ Tangible Net Worth to be positive.

 

8.3.3   Cash Flow to Rent Ratio . During the Term, Lessee and the Sublessees on a consolidated basis shall maintain a Cash Flow to Rent Ratio of 1.3 or more.  The Cash Flow to Rent Ratio is tested quarterly on a trailing twelve months basis.  During the Lease Year commencing on September 1, 2008, a pro forma Base Rent of Fifteen Million Seven Hundred Eleven Thousand Six Hundred Eighty Six and 82/100 Dollars ($15,711,686.82) shall be used.

 

8.3.4   Current Ratio . During the Term, Lessee and the Sublessees on a consolidated basis shall maintain a Current Ratio of 1.0 or more.  The Current Ratio is tested as of the last day of each calendar quarter.

 

8.3.5   Debt .  During the Term, none of the Lessee nor any Sublessee will, or will they permit any Subsidiary to, create, incur or suffer to exist any Debt, except equipment financing permitted pursuant to Section 8.3.9 and the Line of Credit permitted pursuant to Section 8.3.11 .  During the Term, without the prior written consent of Lessor, neither Brockway LTC or Guardian Holdings will create, incur or suffer to exist any Debt; provided, however, that Lessor shall not unreasonably withhold consent to the incurrence of any Debt by Guardian Holdings.

 

8.3.6   Off-Balance Sheet Liabilities .  Other than transactions with Lessor, during the Term, without the prior written consent of Lessor, none of the Lessee, Brockway LTC, Guardian Holdings or any Sublessee will, or will it permit any Subsidiary to, enter into or suffer to exist any (i) Sale and Leaseback Transaction or (ii) any other transaction pursuant to which it incurs or has incurred Off-Balance Sheet Liabilities; provided, however, that Lessor shall not unreasonably withhold its consent to such transactions if they do not involve Brockway LTC, Lessee or any Sublessee in any manner.

 

8.3.7   Limitation of Distributions .  During the Term, none of Brockway LTC, Guardian Holdings, Lessee nor any Sublessee shall make any Distributions to the holders of its equity securities (other than Lessee in the case of the Sublessees) or any Affiliate if, as of the date of such Distribution or upon giving effect to such Distribution, (a) an Event of Default has occurred and is continuing or (b) an Unmatured Event of Default has occurred and is continuing.   During the Term, none of Guardian Holdings, Lessee or the Sublessees shall enter into any contracts or agreements with any Affiliates of Guardian Holdings, Lessee or a Sublessee to provide goods or services to the Facilities unless such contracts or agreements are on commercially reasonable terms competitive in the marketplace and no more favorable to the provider of goods or services as is available to nursing home operators of comparable size in the States in which the Facilities are located.  Notwithstanding the provisions of this Section 8.3.7 , after the occurrence of an Event of Default or an Unmatured Event of Default and while it continues, Guardian Holdings, Lessee and the Sublessees may make payments in the ordinary course of business required by contracts or agreements entered into prior to the date of such Event of Default or Unmatured Event of Default with their Affiliates for goods and services which are reasonably necessary to the continued operation of the Facilities; provided, however, that Guardian Holdings, Lessee and the Sublessees may not make any such payments with respect to amounts which are more than forty five (45) days past due and Lessee must provide Lessor copies of the contracts or agreements and Notice of such payments on or before the date made.

 

8.3.8   Guarantees Prohibited . During the Term, without the prior written consent of Lessor, none of Brockway LTC, Guardian Holdings, Lessee, any Sublessee nor any Subsidiary of Guardian Holdings shall guarantee any indebtedness of any Affiliate or other third party; provided however, that Lessor shall not unreasonably withhold its consent to a guaranty by Guardian Holdings or any Subsidiary of Guardian Holdings other than Lessee or any Sublessee.

 

8.3.9   Equipment Financing .                                                        During the Term, the aggregate amount of principal, interest and lease payments due from Lessee and the Sublessees on any equipment financing shall not exceed Twenty Five Thousand Dollars ($25,000) annually per Facility.

 

8.3.10   Loans from Affiliates . None of Brockway LTC, Guardian Holdings, Lessee nor any Sublessee shall borrow money from any Affiliate unless the obligations of Brockway LTC, Guardian Holdings, Lessee or such Sublessee and the rights of its Affiliates with respect to any such loan are subordinated to the rights of Lessor pursuant to a written subordination agreement in form and substance acceptable to Lessor in its commercially reasonable discretion.

 

8.3.11   Line of Credit .  During the Term, Lessee and the Sublessees may obtain a Line of Credit provided that:

 

(a)   The working capital lender executes and delivers to Lender an subordination agreement in form and substance satisfactory to Lender in its sole discretion, providing that, among other things, (i) the Line of Credit is subordinated in right of payment to the payment and performance of all obligations owed to Lessor by Lessee, the Sublessees and Guarantors, (ii) the working capital lender would not pursue any remedies with regard to the Line of Credit until such time as all obligations owed to Lessor by Lessee, the Sublessees and Guarantors have been paid and performed in full, and (iii) the maximum principal amount advanced, or available for advance, under the Line of Credit does not exceed the Maximum Principal Amount;

 

(b)   Lessee and the Sublessees shall use the Line of Credit for the sole purpose of financing the working capital at the Facilities;

 

(c)   The Line of Credit is unsecured; and

 

(d)   The aggregate amount of interest, points, fees and other amounts payable on the Line of Credit does not exceed an effective annual interest rate equal to the Prime Rate plus two percent (2%).

 

8.4   Minimum Qualified Capital Expenditures .  Each Lease Year Lessee shall expend with respect to each Facility at least Four Hundred Dollars ($400) per-licensed-bed for Qualified Capital Expenditures to improve the Facilities, which amount shall be increased each Lease Year, beginning with the second Lease Year, in proportion to increases in the CPI.  At least annually, at the request of Lessor, Lessor and Lessee shall review capital expenditures budgets and agree on modifications, if any, required by changed circumstances and the changed conditions of the Leased Properties.

 

8.5   Management Agreements .  Neither Lessee nor any Sublessee shall enter into or terminate any Management Agreement without the prior written consent of Lessor as to the identity of the Manager and the terms of such agreement, and shall not amend, modify, or otherwise change the terms of any Management Agreement without the prior written consent of Lessor and, in addition, as to any amendment, modification or other change that directly or indirectly increases the compensation of the Manager or allows a change in the identity of the Manager, without the consent of Lessor, which consent Lessor may withhold in its reasonable discretion, and in no event without the execution by Lessee, Manager and Lessor of an agreement, in form and substance satisfactory to Lessor, pursuant to which Manager’s right to receive its management fee is subordinated to the obligation of Lessee to pay the Rent as and when required under this Lease.

 

8.6   No Other Business; No Investments .  None of Lessee or any Sublessee shall engage in any business other than the operation of the Facilities.  Except for the Permitted Investments, none of Guardian Holdings, Brockway LTC, Lessee or any Sublessee will, or will they permit any Subsidiary to, make or suffer to exist any Investments by such entities (including without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor, nor, except in connection with Permitted Investments, shall they create any Subsidiary or become or remain a partner in any partnership or joint venture, or to make any acquisition of any Person.

 

8.7   Tax Returns .  During the Term, the Lessee, Guarantor and the Sublessees shall timely file, or cause to be timely filed, all required tax returns for the operation of their business and shall pay all taxes required to be paid in connection such returns, including but not limited to, employee withholding taxes, before any penalty or interest for failure to file arises.

 

8.8   Bank Accounts .  During the Term, the Lessee and the Sublessees shall maintain separate bank accounts from any other Person other than Lessee or a Sublessee.  None of the Lessee nor any Sublessee shall permit its or their assets, including cash, cash equivalents, and the cash proceeds arising out of the operation of the Facilities, to be commingled with the assets of any Person (other than other than Lessee or a Sublessee).

 

8.9   Existence; No Fundamental Change.  Lessee, the Sublessees, Brockway LTC and Guardian Holdings shall preserve and maintain their legal existence and such of their rights, licenses and privileges as are material to their business and operations; and qualify and remain qualified to do business in each jurisdiction in which such qualification is material to their business and operations or the ownership of their properties.  Except for the Approved Reorganization, or with the prior written approval of Lessor, which may be withheld in Lessor’s sole and absolute discretion, none of Lessee, the Sublessees, Brockway LTC and Guardian Holdings will fundamentally change the nature of its business, enter into any amalgamation, merger, consolidation, reorganization or recapitalization, or reclassify its capital stock or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, assign, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business, property or assets, whether now owned or hereafter acquired, or acquire by purchase or otherwise all or substantially all the business, property or assets, of any Person or any shares of stock or other equity securities of any Person.

 

8.10   Liens .  Subject to the provisions of Section 12.1 relating to permitted contests, none of Lessee, the Sublessees, Brockway LTC, Guardian Holdings, and any Subsidiary of Guardian Holdings shall directly or indirectly create or allow to remain, and shall promptly discharge at their expense, any lien, encumbrance, attachment, title retention agreement or claim upon any assets of such entity, excluding, however, (a) the liens and security interests in favor of Lessor and its Affiliates, (b) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet payable, or (ii) such liens are in the process of being contested as permitted by Section 12.1 , (c) liens of mechanics, laborers, materialmen, suppliers or vendors for sums either disputed or not yet due, provided that any such liens are in the process of being contested as permitted by Section 12.1 , (d) liens consented to by Lessor in connection with (i) Deb


SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window