Exhibit 10.28
EQUIPMENT LEASE AGREEMENT
Between
SELECTION CAPITAL CORPORATION
("Lessor")
and
SELECT MEDICAL CORPORATION
("Lessee")
EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT (this "Lease") is made and entered into
as of the First day of April, 1997, by and between SELECT CAPITAL CORPORATION, a
Pennsylvania corporation having an address at 0000 Xxx Xxxxxxxxxx, Xxxx,
Xxxxxxxxxxxxx, XX 00000 ("Lessor"), and SELECT MEDICAL CORPORATION, a Delaware
corporation having an address at 0000 Xxx Xxxxxxxxxx Xxxx, X.X. Xxx 0000,
Xxxxxxxxxxxxx, XX 00000 ("Lessee").
1. DEFINITIONS. Each reference in this Lease to any of the following
-----------
definitions shall be construed to incorporate the meanings set forth below:
a. Commencement Date: April 1, 1997
b. Equipment: Those certain items, together with all replacements, parts,
repairs, additions and accessories incorporated therein or affixed thereto, more
particularly described on Exhibit "A" attached hereto and made a part hereof.
c. Interest Rate: The lesser of (i) ten percent (10%) per annum; or (iii) the
maximum contract rate of interest that Lessor may charge and then permissible
under applicable law.
d. Premises: Xxxxx 000, 0000 Xxx Xxxxxxxxxx Xxxx, Xxxxxxxxxxxxx, XX.
e. Rent: The annual aggregate amount of Sixty-Two Thousand Four Hundred
Thirty-Six Dollars ($62,436.00), which shall be payable in twelve (12) equal
monthly installments of Five Thousand Two Hundred Three Dollars ($5,203.00).
f. Term. Five (5) years, beginning on the Commencement Date, and ending on
March 31, 2002.
2. LEASE. In consideration of the obligation of Lessee to pay Rent, and in
-----
consideration of the other terms, covenants and considerations of this Lease,
Lessor leases to Lessee, and Lessee leases from Lessor, the Equipment, for the
Term, all upon the terms and conditions set forth in this Lease.
3. TERM. This Lease shall commence on the Commencement Date and shall
----
continue thereafter for the Term, unless extended or sooner terminated as
provided in this Lease.
4. RENTAL. Lessee shall pay to Lessor the Rent, the first monthly installment
------
of which shall be due on the Commencement Date and thereafter on the same day of
each consecutive month. Notwithstanding the foregoing, in the event Lessee takes
possession of the Equipment prior to the Commencement Date, such early
possession shall be subject to all of the provisions of this Lease and Lessee
shall pay Rent and all other charges specified in this Lease for the early
possession period. If any monthly installment of Rent is not paid when due or if
any other sum payable under the Lease is not paid within ten (10) days after
Lessor renders a statement
therefor, Lessee shall pay to Lessor interest at the Interest Rate on any amount
due Lessor from the due date, without grace, until that amount and interest is
paid.
5. MAINTENANCE AND REPAIR. Lessee, at its own cost and expense, shall keep
----------------------
and maintain the Equipment in good repair, condition and working order, and
shall furnish all parts and servicing required thereof. All such parts shall
immediately become the property of Lessor and part of the Equipment for all
purposes hereof. Lessor shall have the right during the normal business hours to
enter upon the Premises for the purpose of inspecting the Equipment to confirm
the condition and proper maintenance thereof. In the event that the Equipment
shall become lost, stolen, or damaged beyond repair, Lessee shall promptly pay
to Lessor the then net book value of the Equipment, whereupon Lessor will
transfer to Lessee, without recourse or warranty, all of Lessor's right, title
and interest in the Equipment, and this Lease shall terminate.
6. TITLE; IDENTIFICATION; PERSONAL PROPERTY. No right, title or interest in
----------------------------------------
the Equipment shall pass to Lessee other than, conditioned upon Lessee's
compliance with and fulfillment of the terms and conditions of this Lease, the
right to maintain possession and use the Equipment for the Term. Lessor may
require markings to be affixed to the Equipment indicating Lessor's interest.
Lessor and Lessee hereby confirm their intent that the Equipment shall always
remain and be deemed personal property even though the Equipment may hereafter
become attached to realty. Lessee agrees not to remove the Equipment from the
Premises without Lessor's prior written consent, which consent Lessor may grant
or withhold at its sole discretion.
7. USE. Lessee will cause the Equipment to be operated in accordance with the
---
applicable operations manual, and for business purposes only.
8. LESSEE'S DEFAULT. Lessee shall be in default hereunder if Lessee (i) fails
----------------
to pay any installment of Rent or other payment required hereunder when due and
such failure continues unremedied for five (5) days thereafter; or (ii) fails to
perform or observe any other covenant or agreement to be performed or observed
by it hereunder, or breaches any representation, and such failure or breach
shall continue unremedied for ten (10) days after written notice is sent by
Lessor; (iii) attempts to sell, encumber, or sublet the Equipment; or (iv)
removes or attempts to remove the Equipment from the Premises without Lessor's
prior written consent.
9. REMEDIES. Upon the occurrence of any event of default by Lessee and at any
--------
time thereafter Lessor may, in its sole discretion, do any one or more of the
following: (i) upon notice to Lessee, terminate this Lease; (ii) demand that
Lessee return the equipment to Lessor in the same condition as when delivered,
ordinary wear and tear excepted, at such location as Lessor shall designate;
(iii) enter the Premises where the equipment is located and take immediate
possession of an remove the same; (iv) sell the Equipment at public or private
sale, with or without notice to Lessee or advertisement, or otherwise dispose
of, lease to others or keep idle the Equipment, all free and clear of any rights
of Lessee; or (v) exercise any other right or remedy which may be available to
Lessor under the Uniform Commercial Code or any other applicable law, or proceed
by court action to enforce the terms hereof to recover damages for the breach
hereof. In addition, Lessee shall be liable for all legal fees and other costs
and expenses
2
resulting from the foregoing defaults or the exercise of Lessor's remedies. No
remedy referred to in this paragraph is intended to be exclusive, but each shall
be cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity. To the extent permitted by law, Lessee
hereby waives any rights now or hereafter conferred by statute or otherwise
which may require Lessor to sell, lease or otherwise use the Equipment in
mitigation of Lessor's damages as set forth in this paragraph or which may
otherwise limit or modify any of Lessor's rights or remedies under this
paragraph.
Lessee hereby appoints Lessor as Lessee's irrevocable agent and
attorney-in-fact to execute all documents which Lessor deems necessary to
release, terminate and void Lessee's interest in the Equipment and to file said
documents for recordation with appropriate agencies, if necessary, provided that
an event of default has occurred.
10. NOTICES. Any notice to be given to Lessor under the terms of this Lease
-------
shall be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid, addressed to Lessor at 0000 Xxx
Xxxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000. Any notice to be given to
Lessee under the terms of this Lease shall be in writing and shall be personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
addressed to Lessee at the address set forth n the caption of this Lease. Either
party may, from time to time, upon ten (10) days advance written notice to the
other party, specify another or additional address to which subsequent notices
shall be sent.
11. INSURANCE. Lessee shall obtain and maintain during Term, and shall deliver
---------
to Lessor satisfactory evidence of, property damage and liability insurance and
insurance against loss or damage to the Equipment including, without limitation,
loss by fire, theft, collision and such other risks of loss as are customarily
insured against on the type of Equipment leased hereunder and by the business in
which Lessee is engaged, in such amounts, in such form and with such insurers as
shall be reasonably satisfactory to Lessor; provided, however, that the amount
of insurance against loss or damage to the Equipment shall not be less than the
installments of rent then remaining unpaid hereunder. Each insurance policy will
name Lessor as an insured and Lessor shall be given at least ten (10) days prior
written notice of any reduction in coverage under, or termination of, such
policy. Lessee further agrees to give Lessor prompt notice of any damage to, or
loss of, the Equipment, or any part thereof. At all times during the Term,
Lessee assumes the entire risk of (i) the actual or constructive total loss of
the Equipment, (ii) the occurrence of any event which renders the Equipment
unfit for its intended use; (iii) the condemnation, confiscation or seizure of,
or requisition of title to or use of the Equipment, or (iv) the termination, for
any reason whatsoever, of this Lease by operation of law.
12. END OF TERM OPTIONS. In the event that Lessee is not in default, at the
-------------------
end of the Term (the "Option Date"), Lessee shall have the option to either:
a. Extend the Term of this Lease for an additional one (1) year period under
the same terms and conditions contained herein, exercisable by written notice of
such election by Lessee to Lessor not less than thirty (30) days prior to the
date upon which the Term would otherwise expire; or
3
b. Return the Equipment to Lessor, with freight and insurance prepaid, to a
destination by Lessor. Lessee will permit access to the Equipment by Lessor, or
Lessor's representative, prior to such loading and shipping in order that Lessor
can inspect the Equipment; or
c. Purchase the Equipment for the purchase price of Fifty-Five Thousand Seven
Hundred Fifty-Five Dollars ($55,755.00).
13. FURTHER ASSURANCES. Lessee will promptly execute and deliver to Lessor
------------------
such further documents and take such further action as Lessor may request in
order to more effectively carry out the intent and purpose of this Lease. Lessee
represents and warrants that all credit and financial information submitted to
Lessor herewith or at any other time is true and correct.
14. NONCANCELLABLE LEASE, LESSEE'S OBLIGATIONS UNCONDITIONAL. This Lease
--------------------------------------------------------
cannot be canceled or terminated except as expressly provided herein. Lessee
hereby agrees that Lessee's obligation to pay Rent and any other amounts owing
hereunder shall be absolute and unconditional and that all payments are non-
refundable.
15. ASSIGNMENT AND SUBLEASE BY LESSEE. Without the prior written consent of
---------------------------------
Lessor, Lessee shall not (a) assign, transfer, pledge or hypothecate this Lease,
the Equipment or any part thereof, or any interest therein, (b) sublet the
Equipment or any part thereof, or (c) permit the Equipment or any part thereof
to be operated by anyone other than Lessee or Lessee's employees. Any assignment
or sublease with the prior written consent of Lessor shall not relieve Lessee of
any of its obligations under this Lease. Any sublease, assignment, transfer,
pledge or hypothecation without Lessor's consent shall be void.
16. ASSIGNMENT BY LESSOR. Lessee acknowledges that Lessor may sell and/or
--------------------
assign its interest in the Equipment and/or this Lease. Lessee agrees that upon
notice of such assignment it shall pay directly to Lessor's assignee all amounts
which become due hereunder. Lessee agrees to settle all mechanical, service or
other claims with respect to the Equipment directly with Lessor's assignee. Upon
the assignment of this Lease, Lessor's assignee shall have and be entitled to
exercise any and all discretions, rights and remedies of Lessor hereunder, and
all references herein to Lessor shall include Lessor's assignee, except that
said assignee shall not be chargeable with any obligations or liabilities of
Lessor hereunder or with respect thereof.
17. COSTS OF SUIT. In the event of any action at law or suit in equity
-------------
concerning this Lease, the prevailing party shall be entitled to a reasonable
sum for its attorneys' fees and costs of suit.
18. NO REFERRALS. Lessor and Lessee agree that the payment of Rent to Lessor
------------
and the provision of Equipment to Lessee hereunder do not require, are not
payment for, and are not in any way contingent upon the referral, admission, or
any other arrangement for the provision of any item or service offered by Lessor
to the patients of Lessee in any facility, hospital, skilled nursing facility,
or health care service operated, controlled, or managed by Lessor.
4
19. WARRANTIES. Lessor makes not warranties, expressed or implied, including
----------
those of merchantability or fitness for a particular use, with respect to the
Equipment and disclaims any such warranties.
20. INDEMNITY. Lessee agrees to comply with all laws, regulations and orders
---------
relating to this Lease and to assume the risk of liability arising from or
pertaining to the possession, operation or use of the Equipment. Lessee does
hereby agree to indemnify, hold safe and harmless from and covenants to defend
Lessor against any and all claims, costs, expenses, damages and liability
arising from or pertaining to the use, possession, operation or transportation
of the Equipment. The indemnities contained in this paragraph shall survive the
expiration of earlier termination of this Lease.
21. MISCELLANEOUS. This Lease may not be amended except in writing and shall
-------------
be binding upon and inure to the benefit of the parties hereto, their permitted
successors and assigns. This Lease represents the entire agreement between the
parties, and there are no prior or contemporaneous oral or written agreements
between the parties pertaining to the subject matter of this Lease. Any
provision of this Lease which is unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Time is of the
essence with respect to this Lease. The captions in this Lease are for
convenience only and shall not define or limit any of the terms hereof. This
Lease shall be governed by and construed in accordance with the laws of the
state in which the Equipment is located.
To the extent any provisions of this Lease are in conflict with the
provisions contained in federal statutes, rules or regulations relating to the
Medicare program, this Lease shall be deemed to have been amended in order to
bring it into conformity with the provisions contained in the Medicare statutes,
rules or regulations.
5
IN WITNESS WHEREOF, this Lease is hereby executed as of the day and year
first above written.
SELECT CAPITAL CORPORATION,
a Pennsylvania corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx, Vice President
SELECT MEDICAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx, Vice President
6
