FIRST SUPPLEMENTAL AGREEMENT
FIRST SUPPLEMENTAL AGREEMENT ("Agreement") made as of May 31, 1996 between
CHRYSLER PROPERTIES INC, formerly known as ▇▇▇▇▇ Properties Inc, a
California corporation having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Landlord") and MERIT BEHAVIORAL CARE CORPORATION, a
Delaware Corporation having an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ("Tenant").
W I T N E S S E T H
WHEREAS:
A. Landlord and Tenant's predecessor-in-interest, Empire Blue
Cross Blue Shield ("Empire"), heretofore entered into a certain lease dated as
of August 14, 1991 ("Lease") with respect to a portion of the 6th floor and the
entire 5th floor as more particularly described in the Lease ("Demised
Premises") in the building known as The Kent Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Building"); and
B. By an assignment and assumption of lease of even date
herewith ("Assignment"), Empire assigned all of its right, title and interest in
and to the Lease to Tenant, and Tenant assumed the performance and observance of
all of the obligations on the tenant's part to be performed and observed under
the Lease for the period from and after the effective date of the Assignment;
and
C. The parties hereto desire to modify the Lease to provide for,
among other things, (i) an extension of the term of Lease, (ii) a change in the
rent payable under the Lease, and (iii) an addition to the Demised Premises, all
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. All terms contained in this Agreement, unless otherwise
defined herein, shall, for the purposes hereof, have the same meaning ascribed
to them in the Lease.
2. All of the terms, covenants and provisions of this Agreement
shall be effective June 1, 1996 ("Effective Date").
3. The Expiration Date of the Lease shall mean March 31,
2008.
4. Section 1.2 of the Lease is hereby modified to provide that
the Demised Premises shall include the following additional space in the
Building:
The portion of the 6th floor containing approximately twenty two
thousand six hundred eighty (22,680) square feet, substantially
as shown hatched on the floor plan annexed hereto as Exhibit "A"
("First Added Space").
Tenant acknowledges that Tenant has examined the First Added
Space and accepts the First Added Space "as is", in the condition and state of
repair existing on the date hereof subject to normal wear and tear. Tenant
acknowledges that no work is to be performed, or materials supplied by Landlord
in connection therewith, except for (i) the "Tenant's Construction Work" as
hereinafter defined) and (ii) that Landlord shall provide to Tenant an ACP-5
form for filing with respect to the Tenant's Construction Work to the First
Added Space.
5. Section 1.4(a) of the Lease is hereby modified to provide
that the annual fixed rent payable pursuant to the Lease shall be as follows:
a) for the period June 1, 1996 through August 31,
1997, two million nine thousand nine hundred forty
dollars and no cents ($2,009,940.00) per annum;
b) for the period September 1, 1997 through October
31, 2002, one million eight hundred twenty four
thousand dollars and no cents ($1,824,000.00) per
annum; and
c) for the period from November 1, 2002 through the
Expiration Date, two million sixteen thousand
dollars and no cents ($2,016,000.00) per annum.
6. Article 5 and Exhibit C of the Lease are hereby
modified to provide that:
a) the Operation Year pursuant to Section 5.1(b)
shall mean the calendar year 1997; and
b) "Tenants' Proportionate Share" as set forth in
subsection 5.1(c) and paragraph B. 3. in Exhibit C
shall mean .1401; and
c) the Real Estate Tax Base pursuant to Section
5.1(g) shall mean the Real Estate Taxes for the
calendar year 1997; and
d) the Base Year pursuant to paragraph B. 4 in
Exhibit C shall be the calendar year 1997.
7. The amount "$123,960.00" in Section 16.3(a) and in Section
16.4 for the Electric Charge are changed to $160,000.00, and the date of August
1, 1991 in Section 16.3 shall be changed to June 1, 1996.
8. Section 5.7 of the Lease is hereby deleted and the
following new Section 5.7 shall be substituted:
"5.7. Payments shall be made pursuant to this Article 5
notwithstanding the fact that an Escalation Statement is
furnished to Tenant after the expiration of the term of this
Lease. Any Escalation Statement furnished by Landlord to Tenant
pursuant to this Article 5 shall be conclusively binding upon
Tenant unless within sixty (60) days after such Statement is
sent, Tenant shall send a written notice to Landlord objecting
to such Statement and specifying the respects in which such
Statement is disputed. Notwithstanding the foregoing, pending
the resolution of any such dispute, Tenant shall pay to Landlord
when due the amount of any such Escalation Statement, as
provided in Article 5 hereof."
9. Article 10 of the Lease is hereby modified by adding
the following new Section 10.4:
"10.4. Supplementing the provisions of Section 10.1,
Tenant, at Tenant's expense, shall be responsible for ensuring
that both the structure and layout of the Demised Premises, as
well as Tenant's activities within the Demised Premises, are and
continue to be in compliance with the Americans with
Disabilities Act of 1990 and local law #58, as well as all rules
and regulations promulgated pursuant to either the Act or local
law #58, or both."
10. Provided that Tenant shall not then be in default of any of
the terms and conditions of the Lease, Tenant shall receive a rental credit of
(i) $154,161.67 per month for the months of June, July, August, September and
October of 1996; (ii) a rental credit of $49,140.00 per month for the period
from November 1, 1996 through May 31, 1997; (iii) a rental credit of $49,140.00
per month for the months of December of 1997, January and February of 1998; (iv)
a rental credit of $154,666.67 per month for the months of November and December
of 2002 and January, February and March of 2003; and (v) a rental credit of
$54,810.00 per month for the months of April, May, June, July, August, September
and October of 2003.
Tenant acknowledges that Landlord's agreement to
provide to Tenant the rent credit provided in this paragraph 10 has been granted
to Tenant as a material part of the consideration for Tenant's entering into
this Agreement, timely paying the rentals reserved in the Lease and otherwise
timely performing and observing the terms and conditions to be performed and
observed by Tenant under the Lease. Accordingly, if after having received the
benefit of all or any part of this rent credit, Tenant shall default in
performing and observing the terms and conditions to be performed and observed
by Tenant under the Lease, Landlord may, in addition to any other remedies
Landlord may have under this Lease, at its option, elect that Tenant shall
immediately become obligated to pay to Landlord all rent theretofore credited to
Tenant pursuant to this paragraph 10. In addition, if this Lease shall be
terminated pursuant to the provisions of Article 25 or Article 26, all rent
credited to Tenant pursuant to this paragraph 10 and including the date of
termination, shall, at Landlord's option, be deemed immediately due and payable.
11. Tenant acknowledges that Landlord has entered into an
agreement with ▇▇▇▇▇▇▇ Corporate Real Estate ("▇▇▇▇▇▇▇"), one of the brokers
identified in paragraph 17 of this Agreement, which provides, among other
things, that at the request of Landlord and ▇▇▇▇▇▇▇, one or more installments of
the brokerage commission payable by Landlord to ▇▇▇▇▇▇▇ shall be paid by Tenant,
in consideration of which Tenant shall receive a rent credit in the amount of
the payment made by Tenant to ▇▇▇▇▇▇▇ on Landlord's behalf. Tenant agrees that
if Landlord and ▇▇▇▇▇▇▇ shall so request payment by Tenant of commissions
payable by Landlord to ▇▇▇▇▇▇▇, Tenant shall make the requested payment and upon
such payment shall be entitled to an unconditional and automatic rent credit
equal to the amount of such payment, such credit to be provided to Tenant with
respect to the rent installment payable for the month in which the payment by
Tenant to ▇▇▇▇▇▇▇ shall have been made.
12. Landlord agrees that it shall cause the improvements to the
First Added Space to be constructed in accordance with detailed plans and
specifications (walls, doors, ceiling, lighting, paint, carpet, HVAC,
electrical, millwork, class E devices, etc., but excluding furniture,
furnishings, office equipment, telephone equipment, etc.) prepared by and at the
expense of Tenant in accordance with Article 13 of the Lease (the construction
of such improvements herein, the "Tenant's Construction Work"); provided,
however, that Landlord shall not be obligated to fund any part of the cost of
the Tenant's Construction Work in excess of nine hundred thousand dollars and no
cents ($900,000.00)("Tenant Improvement Allowance"). Tenant shall submit
complete, detailed architectural and mechanical drawings to Landlord within
thirty (30) days of the execution of this Agreement for Landlord's review and
comment as provided in Section 13.1. Tenant's architect shall be subject to
Landlord's reasonable approval. Upon Landlord's approval of the detailed plans
and specifications, Landlord shall seek competitive bids on the Tenant's
Construction Work from reputable, responsible general contractors who shall
comply with the requirements of the Lease, including the provisions of Section
13.3. Within five (5) days after receipt of the bids, Landlord and Tenant shall
select for the performance of Tenant's Construction Work, the single qualified
contractor which shall have submitted the lowest bid ("Bid"). If the total cost
of the Tenant's Construction Work, based upon the accepted Bid exceeds the
amount of the Tenant Improvement Allowance, then in such event, Tenant shall,
within five (5) days of receipt of the bid, either pay the amount of the overage
to Landlord ("Tenant Improvement Payment"), or revise the scope of the Tenant's
Construction Work to achieve a cost less than the Tenant Improvement Allowance
by revising the detailed plans and specifications so that Landlord may seek
revised pricing from the acceptable contractor, which will be presented once
more to Tenant for Tenant's reasonable acceptance of price. Notwithstanding that
the amount of the Bid may be less than the amount of the Tenant Improvement
Allowance, the Tenant Improvement Allowance shall remain at the amount of nine
hundred thousand dollars and no cents ($900,000.00). The difference between the
amount of the Bid and the Tenant Improvement Allowance shall be deemed to be a
fund which shall be the first sums used to pay for any additional Tenant
Improvements requested by Tenant.
Upon final acceptance of the Bid either at a price which does
not exceed the Tenant Improvement Allowance, or upon revision of the scope of
work or the payment of the Tenant Improvement Payment, as appropriate, Landlord
will enter in to a contract or contracts with the contractor or contractors
awarded the Tenant's Construction Work. Thereafter, work will commence under the
direction of Landlord and Tenant's architect. Tenant agrees to cooperate with
Landlord in causing the Tenant's Construction Work to be completed
expeditiously.
Landlord and Tenant recognize that during the course of
construction of the Tenant's Construction Work, Tenant may desire to amend or
revise the plans and specifications and scope of the work. If such amendments or
revisions cause an increase in the project cost in excess of the Tenant
Improvement Allowance (as same may have been supplemented by the Tenant
Improvement Payment), then the increase shall be payable by Tenant to Landlord
upon Tenant's request to Landlord to issue a change order to the contractor for
the revised scope of work. Landlord shall not be obligated to issue a change
order until the payment for the cost thereof is received by Landlord.
Upon the completion of Tenant's Construction Work, in the event
the cost is less than the Tenant Improvement Allowance, Landlord will credit the
difference to Tenant in the form of a rent credit, in a monthly amount not
exceeding the monthly rent due hereunder, until the difference between the
actual cost of the Tenant's Construction Work and the Tenant Improvement
Allowance is met, once all invoices have been submitted to Landlord and paid and
Landlord has been provided general releases and waivers of lien from all
contractors, subcontractors and materialmen involved in the performance of
Tenant's Construction Work and the materials furnished in connection therewith,
and a certificate from Tenant's architect certifying that (i) in his or her
opinion, Tenant's Construction Work has been completed in a good and workmanlike
manner and completed in accordance with the final detailed plans and
specifications as approved by Landlord, and (ii) all contractors, subcontractors
and materialmen have been paid in full.
13. Landlord agrees that upon execution of this Agreement,
Landlord shall request the holder of the existing superior mortgage, to enter in
to a non-disturbance and attornment agreement with Tenant, which agreement shall
be substantially in the form of the agreement annexed in the Lease as Schedule
1, ("Non-Disturbance Agreement"). If after sixty (60) days from the Landlord's
request for a Non-Disturbance Agreement, such agreement is not obtained, then
Landlord shall have no liability to Tenant for its failure to obtain such
Non-Disturbance Agreement and Tenant's obligations under this Lease shall not be
affected by reason of such failure to obtain such Non-Disturbance Agreement.
14. Section 13.2 and all references to "Tenant's Initial
Alterations", Articles 42, 43 and 44 and Schedule 2 shall be deleted in their
entirety from the Lease. In addition, Exhibit B thereto is supplemented by
adding thereto Exhibit A to this Agreement.
15. Simultaneously with the execution of this Agreement, Tenant
shall pay to Landlord as additional rent, nine hundred thousand dollars and no
cents ($900,000.00).
16. If, on both the "Exercise Date" (hereinafter defined) and on
the "Early Termination Date" (hereinafter defined), the Lease shall be in full
force and effect and Tenant is not in violation of any covenant, agreement,
term, provision or condition of this Lease on Tenant's part to be performed and
observed following required notice, if any, and the expiration of any applicable
cure period, then Tenant shall have the option to terminate this Lease effective
as of October 31, 2002 ("Early Termination Date"), provided that Tenant has
given Landlord written notice of its election to so terminate the Lease prior to
October 31, 2001 (the date such notice is given being the "Exercise Date"). If
Tenant elects to terminate the Lease, then the Early Termination Date shall have
the same meaning as the Expiration Date of the Lease and Tenant shall continue
to pay, and will owe, all fixed rent and additional rent, and will continue to
perform and observe all of the covenants, agreements, terms, provisions and
conditions of this Lease on Tenant's part to be performed and observed up to and
including the Early Termination Date.
17. Tenant covenants, represents and warrants that Tenant has
had no dealings or negotiations with any broker or agent other than ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Inc and ▇▇▇▇▇▇▇ Corporate Real Estate, in connection with the
consummation of this Agreement and Tenant covenants and agrees to pay, hold
harmless and indemnify Landlord and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Inc, from and against
any and all cost, expense (including reasonable attorneys' fees) or liability
for any compensation, commissions or charges claimed by any other broker or
agent other than ▇▇▇▇▇▇▇ & Wakefield, Inc and ▇▇▇▇▇▇▇ Corporate Real Estate,
with respect to this Agreement or the negotiation thereof.
18. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against which enforcement of any
waiver, change, modification or discharge is sought.
19. Except as modified by this Agreement, the Lease and all
covenants, agreements, terms and conditions thereof shall remain in full force
and effect and are hereby in all respects ratified and confirmed.
20. The covenants, agreements, terms and conditions contained in
this Agreement shall bind and inure to the benefit of the parties hereto and
their respective successors and, except as otherwise provided in the Lease as
hereby supplemented, their respective assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LANDLORD:
CHRYSLER PROPERTIES INC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
TENANT:
MERIT BEHAVIORAL CARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, EVP & CFO
print name and title
EXHIBIT A
Floor Plan
All areas, dimensions and conditions are approximate.
[Diagram -- Floor Plan]
