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Exhibit 10.19
LEASE AGREEMENT
THIS AGREEMENT made and entered into this 15th day of May, 1986, by and
between Fort Xxxxxx Community Hospital Association (the "Hospital Association")
and Brim Hospitals Inc., a wholly-owned subsidiary of Brim & Associates, Inc.
("BHI").
WHEREAS, Hospital Association is the owner of a 40-bed acute care facility
known as Fort Xxxxxx Community Hospital, Fort Xxxxxx, Colorado (the "Hospital");
and
WHEREAS, Hospital Association, Holding Company and BHI have entered into an
Operating Agreement of even date herewith whereby BHI will operate the Hospital
(the "Operating Agreement"); and
WHEREAS, to achieve the goals of the parties hereto as stated in the
Operating Agreement, Hospital Association desires to lease to BHI the real
property on which the Hospital is located and the furniture, fixtures and
equipment located in and on the Hospital (the "Leased Property") and any and all
other real property currently owned or acquired during the lease term by the
Hospital Association.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants of the parties set forth herein, it is hereby agreed as follows:
1. Subject Property. Hospital Association, in consideration of the payment
to be made and of the covenants to be kept and performed by BHI hereunder,
hereby demises and offers to BHI, and BHI hereby hires and takes from Hospital
Association, the real estate located in the Town of Fort Xxxxxx, County of
Xxxxxx, State of Colorado, legally described in Exhibit A attached hereto (the
"Real Property"), and the improvements constructed thereon that constitute the
40-bed acute care facility commonly known as Fort Xxxxxx Community Hospital (the
"Hospital") and all furniture, fixtures, and equipment and other tangible
personal property owned and/or leased by Hospital Association and located
thereon or therein, also included in subject property any and all real property,
equipment, furniture, fixtures, and building improvements acquired by the
Hospital Association during the lease term (hereinafter collectively called the
"Personal Property"). (Hereinafter the Real Property, the Hospital and Personal
Property are collectively referred to as the "Leased Property.") Within ten (10)
days after execution of this Agreement, BHI and Hospital Association shall
jointly compile two schedules: Schedule A shall identify the Personal Property
owned by Hospital Association and the current book value of said property (the
"Owned Personal Property"); and Schedule B shall identify the Personal Property
leased by Hospital Association, the name of the Lessor, the date of the Lease,
the Lease Term and the rental payments owing under
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the Lease (the "Leased Personal Property"). The Schedules shall be attached
hereto as Exhibits B-1 and B-2.
BHI does hereby covenant to take all steps necessary to assume any leases
entered into by Hospital Association prior to the Commencement Date which relate
to the Leased Personal Property and Holding Company shall not be liable for any
damage or injury which BHI or any patient of the Hospital may incur as a result
of BHI's failure to do so.
2. Term. The term of this Agreement shall commence on June 1, 1986 (the
"Commencement Date"), and shall expire on May 31, 2006, unless earlier
terminated as provided hereinafter in Sections 5, 13, 14 and 15. Any termination
of this Agreement will result in an automatic rescission of the Purchase
Agreement.
3. Use.
3.1 BHI shall use and operate the Leased Property as a general acute care
facility and, subject to Hospital Association's approval, which approval shall
not be unreasonably withheld, for health care and health care related purposes,
such as a home health care program, wellness program, long-term care and
physician's offices. BHI shall use and operate the Leased Property in compliance
with all applicable laws and regulations of the City of Fort Xxxxxx, the State
of Colorado, the Medicare and Medicaid Programs, and any other applicable state,
federal and local laws, provided that BHI shall have the right to contest the
validity or applicability of any such laws and regulations by appropriate legal
proceedings upon furnishing Hospital Association with such security as may be
reasonably demanded by Hospital Association.
3.2 After the Commencement Date, BHI shall neither use nor permit to be
used the Leased Property or any part thereof for any purpose which would cause
the cancellation of any insurance policy covering the Hospital or any part
thereof, nor shall BHI sell or permit to be kept, used or sold in or about the
Leased Property any article which may be prohibited by the standard form of fire
insurance policies. BHI shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property of any insurance organization or
company necessary for the maintenance of said insurance.
3.3 BHI shall not commit or suffer to be committed any waste on the Leased
Property nor shall BHI cause or permit any nuisance thereon.
3.4 BHI shall neither suffer nor permit the Leased Property or any portion
thereof to be used in such a manner as (i) might reasonably tend to impair
Hospital Association's
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title thereto, or (ii) may reasonably make possible a claim or claims of adverse
usage or adverse possession by the public, as such, or of implied dedication
thereof.
4. Rent.
4.1 As consideration for the use of the Leased Property, BHI shall pay to
Hospital Association the amount of One and No/100 Dollars ($1.00) annually (the
"Base Rent"). The Base Rent shall be due and owing on the first day of each
Lease Year and may be paid to Hospital Association in advance at the address
stated in Section 19, below.
4.2 This Lease is intended to be net to Hospital Association. Hospital
Association or Holding Company shall not be required to make any payment of any
kind with respect to the Leased Property except as may be expressly set forth
herein. Accordingly, BHI agrees to pay all additional expenses described herein
as they become due and payable. Said additional expenses shall include all real
estate taxes, general and special assessments, and other public charges which
are assessed, levied, confirmed, or imposed upon the Leased Property, (other
than Hospital Association's income taxes, if any) during the Lease Term, all
charges for water, electricity, gas, sewerage, waste, trash and garbage
disposal, telephone, cable television, and other services furnished to the
Leased Property. Forthwith upon payment by BHI of any taxes or assessments
required to be paid by it, upon request BHI shall submit to Hospital Association
the official receipt or receipts, or photostatic copies thereof, evidencing
payment of such taxes or assessments.
4.3 BHI may contest, in its own name or in the name of Hospital
Association, with Hospital Association's cooperation which Hospital Association
agrees to give, the legality or validity of any such tax or assessment or of any
law under which the same shall be imposed. This must be done in good faith, with
due diligence, and at BHI's own expense. If BHI does so contest such tax or
assessment beyond the time limit for payment thereof by BHI, BHI shall do one of
the following: BHI may pay such amount under protest; procure and maintain a
stay of all proceedings to enforce collection of such tax or assessment; or
deposit with Hospital Association reasonable security for the payment of all
contested sums. Once such action is taken by BHI, BHI shall not be considered to
be in default on any of the contested additional expense provisions hereof.
4.4 BHI shall have, and Hospital Association hereby irrevocably grants to
BHI, the power and authority, at BHI's cost to make, file and prosecute any
statement or report or claim for refund which may be required or permitted by
law, as
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the basis of or in connection with the assessment, determination, equalization,
reduction or payment of any and every tax or assessment or license or charge
which BHI is required to pay or discharge hereunder.
4.5 BHI shall be entitled to pay the Base Rent and any additional expenses,
out of all revenues and cash collections received by BHI on Hospital
Association's behalf on and after the Commencement Date from any tenants,
private pay patients and third-party payors, including Medicare, Medicaid and
private insurance.
5. Termination.
5.1 Both Hospital Association and BHI shall be entitled to terminate this
Agreement at any time after the first year of the Lease Term for any reason. The
termination shall be effective 120 days after receipt of written notice from the
terminating party (the "Termination Date").
5.2 Upon termination by either party or upon expiration of the Lease Term,
Hospital Association shall be obligated to purchase any BHI Personal Property,
as defined in Section 6.3, below. The purchase price for the BHI Personal
Property shall be the depreciated book value of such property as of the
Termination Date and shall be paid in cash. [or by execution and delivery to BHI
of a promissory note in such amount bearing interest at the Prime Rate as
announced by First Interstate Bank of Oregon as it may vary from time to time.
Principal and interest shall be amortized and payable over a five-year period
with principal and interest payment due monthly commencing one month after the
Termination Date.]
5.3 The termination of this Agreement under this Section 5 or Sections 13,
14 and 15 shall result in the rescission of the Purchase Agreement, which
rescission shall be in accordance with the terms and conditions set forth in the
Operating Agreement.
6. Maintenance, Repair, Alterations and Utilities. Throughout the Lease
Term:
6.1 BHI shall, at its own cost, and without expense to Hospital
Association, keep and maintain the Leased Property, including all sidewalks,
buildings, surface parking lots and improvements of any kind which may be a part
thereof, in good, sanitary and neat order, condition and repair, ordinary wear
and tear and obsolescence in spite of repair and acts of God excepted.
6.2 BHI shall have the right to make alterations, additions and
improvements to the Leased Property provided that
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(a) such work does not adversely affect the structural integrity of the Hospital
or diminish the value thereof, (b) any such work is performed in a good and
workmanlike manner and in conformance with all applicable building codes, and
(c) any such work that is a capital requirement, as defined below in Section
6.7, shall have been submitted to Hospital Association.
6.2.1 BHI shall have the right to replace the existing Personal Property
provided that any such purchase that is a capital requirement shall have been
submitted to Holding Company and Hospital Association for approval.
6.2.2 BHI shall also have the right to acquire any additional Personal
Property which in its judgment is needed to meet the needs of the patients of
the Hospital (the "BHI Personal Property"), provided that any such acquisition
that is a capital requirement shall have been submitted to Hospital Association
for approval.
6.3 BHI shall submit on an annual basis all planned capital requirements to
Holding Company for its review and approval.
6.4 In the event that BHI and Hospital Association agree to make
substantial alterations, additions or improvements to the Hospital, Hospital
Association agrees to undertake reasonable efforts in securing the necessary
capital financing through reasonable and available means.
6.5 The success of Hospital Association in securing capital financing shall
result in an additional expense payable by BHI under the Operating Agreement.
The additional expense shall be equal to the amount which Hospital Association
is required to pay annually to amortize the debt secured by Hospital
Association.
6.6 All such debt financing shall be in the name of Hospital Association,
although BHI shall provide Hospital Association with whatever assistance it may
need in connection therewith. Upon termination of this Agreement, Hospital
Association will be solely responsible for the continued satisfaction of any
such debt, unless the necessary financing was provided by BHI in which case
Hospital Association shall reimburse BHI for the cost of all such improvements
at their then depreciated book value.
6.7 As used in this Section 6, capital requirement shall mean alterations,
additions, improvements, equipment or personal property with a cost of over
$5,000.00 and three years or more life expectancy.
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6.8 BHI shall also maintain the Hospital grounds in a good and sightly
appearance, including regular mowing, pruning, fertilizing, and other
appropriate care of all grass, plants, and trees.
7. Liens Against the Property.
7.1 Aside from the permitted encumbrances listed in Exhibit B, BHI will not
permit the Leased Property to become subject to any lien, charge, or
encumbrance. BHI shall maintain the Leased Property free from all orders,
notices, and violations filed or entered by any public or quasi-public
authorities. Notwithstanding the foregoing, BHI may contest any such liens,
charges, encumbrances, orders, notices or violations. This must be done in good
faith, and with due diligence.
7.2 Should a judgment on any lien, charge, encumbrance, order, notice or
violation by rendered against the Leased Property, and should BHI fail to
discharge such judgment or take action to protest such judgment, Hospital
Association shall have the right but not the obligation to discharge said
judgment. If Hospital Association exercises that option, any amount paid by
Hospital Association shall be due from BHI as additional rent. Such additional
rent shall be due and payable immediately upon BHI's receipt of notice from
Hospital Association that the expense was incurred.
8. Indemnification.
8.1 BHI hereby agrees to indemnify and to hold Hospital Association and
Holding Company harmless from and against any and all claims and demands for
injury or death to persons and damage to property occurring on the Leased
Property during the Lease Term, and will defend Hospital Association and
Holding Company from any claim of liability on account thereof; provided,
however, that BHI shall have no obligation with respect to any claims resulting
from the negligent or willful misconduct of Hospital Association or Holding
Company or their officers, directors, agents or employees, or any claims
arising prior to the Commencement Date which relate to the ownership of the
Leased Property or the operation of the Hospital.
8.2 Hospital Association hereby agrees to indemnify and to hold BHI
harmless from and against any and all claims and demands for injury or death to
persons and damage to property occurring prior to the Commencement Date, and
will defend BHI from any claim of liability on account thereof. In addition,
Hospital Association agrees to indemnify and to hold BHI harmless with respect
to any claims resulting from the negligent or willful misconduct of Hospital
Association or Holding Company or their officers, directors, agents or
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employees, and any claims which relate to the ownership of the Leased Property
arising prior to the Commencement Date or during the Lease Term.
9. Quiet Enjoyment. Hospital Association warrants that BHI upon paying the
Base Rent and the additional expenses as provided for in this Agreement and upon
performing all other requirements hereof, shall quietly have, hold, and enjoy
the Leased Property during the Lease Term. Notwithstanding the foregoing,
Hospital Association shall have the right, during normal business hours, to
enter upon the Leased Property and to examine and inspect the same, provided
said inspection does not interfere with the rendering of patient care at the
Hospital.
10. Insurance.
10.1 Throughout the Lease Term BHI shall, at its expense, maintain the
following insurance:
a) Insurance against loss or damage by fire and such other risks as
may be included in the broadest form of extended coverage from time to
time; and
b) Insurance against loss or damage by explosion of steam boilers,
pressure vessels, or any similar apparatus now or hereafter installed on
the Leased Property in an amount not less than 90% of the insurable value
of the Leased Property from time to time; and
c) Insurance against claims for personal injury and property damage
occurring on the Leased Property under a comprehensive professional and
general hospital liability policy with limits of not less than One Million
Dollars ($1,000,000.00) per claim/incident, Five Million Dollars
($5,000,000.00) in the aggregate and One Million Dollars ($1,000,000.00)
for property damage arising out of any single occurrence.
d) Loss of rents under a rental value insurance policy covering risk
of loss during the first six months due to the occurrence of any of the
hazards described in a) or b) in an amount sufficient to prevent Hospital
Association or Holding Company from becoming a co-insurer.
e) Such other hazards and in such amounts as may be customary for
comparable properties in the area and is of the type available from
reputable insurance companies.
10.2 The term "insurable value" of improvements as used herein, shall mean
the actual replacement cost thereof from time to time, less exclusions provided
in the normal fire insurance policy. In the event either party believes that the
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insurable value (the then replacement cost less exclusions) has increased or
decreased, it shall have the right, but only, except as provided below, at
intervals of not less than five years to have such insurable value re-determined
by the fire insurance company which is then carrying the largest amount of fire
insurance carried on the Leased Property, hereinafter referred to as an
"impartial appraiser". The party desiring to have the insurable value so
re-determined shall forthwith, on receipt of such determination by such
impartial appraiser, give written notice thereof to the other party hereto. The
determination of such impartial appraiser shall be final and binding on the
parties hereto, and BHI shall forthwith increase, or may decrease, the amount of
the insurance carried pursuant to this Section 10, as the case may be, to the
amount so determined by the impartial appraiser. The party desiring the
redetermination shall pay the fee, if any, of the impartial appraiser. If,
during any such five-year period BHI or Hospital Association shall have made
improvements to the Leased Property, Hospital Association may at its own cost
have such insurance value re-determined at any time after such improvements are
made, regardless of when the insurable value was last determined.
10.3 All insurance policies carried by either party covering the Leased
Property, including without limitation thereto, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party. The parties hereto agree that their policies
will include such waiver clause or endorsement so long as the same are
obtainable without extra cost, and in the event of such an extra charge, the
other party, at its election, may pay the same but shall not be obligated to do
so.
10.4 To the extent that either Hospital Association or BHI may have claims
against the other for fire or casualty damage to the Leased Property (including
business interruption caused thereby), which claims are covered by insurance
payable to and protecting the claiming party, the claiming party hereby agrees
to exhaust all claims under such insurance before asserting any claims against
the other party. The foregoing shall apply to claims for damage whether such
damage is caused, wholly or partially, by the negligence or other fault of the
other party or its agent, employees, subtenants, licensees, or assignees.
10.5 All of the policies of insurance referred to in this Section shall
name Hospital Association as an additional insured, shall be written in form
satisfactory to Hospital Association and by insurance companies satisfactory to
Hospital Association. Hospital Association agrees that it will not unreasonably
withhold its approval as to the form of or to the insurance companies selected
by BHI. BHI shall pay all of the premiums therefor, and deliver such policies or
certificates
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thereof to Hospital Association prior to their effective date (and, with respect
to any renewal policy), at least five days prior to the expiration of the
existing policy, and in the event of the failure of BHI either to effect such
insurance in the names herein called for, to pay the premiums therefor, or to
deliver such policies or certificates thereof to Hospital Association at the
time required, Hospital Association shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, which
premiums shall be repayable to Hospital Association upon written demand
therefor, and failure to repay the same shall carry with it the same consequence
as failure to pay any installment of Base Rent or additional expenses. Each
insurer mentioned in this Section shall agree, by endorsement on the policy or
policies issued by it, or by independent instrument furnished to Hospital
Association, that it will give to Hospital Association ten days written notice
before the policy or policies in question shall be altered or cancelled.
10.6 In the event that either party shall at any time deem the limits of
the personal injury or property damage public liability insurance then carried
to be either excessive or insufficient, the parties shall endeavor to agree on
the proper and reasonable limits for such insurance to be carried; and such
insurance shall thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Section. If the parties shall
be unable to agree thereon, the proper and reasonable limits for such insurance
to be carried shall be determined by an impartial third party selected by the
parties.
10.7 Notwithstanding anything to the contrary contained in this Section,
BHI's obligations to carry the insurance provided for herein may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by BHI or its parent, provided, however, that the
coverage afforded Hospital Association will not be reduced or diminished or
otherwise be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the use of such
blanket policy of insurance, and provided further that the requirements of this
Section 10 are otherwise satisfied.
11. Damage and Destruction.
11.1 All proceeds payable by reason of any physical loss of any of the
improvements comprising the Leased Property and insured under any policies of
insurance required by this Lease shall be held in trust by BHI and subject to
Section 11.2 shall be available for the reconstruction or repair, as the case
may be, of any damage to or destruction of the Property, the Hospital and the
Personal Property and shall be paid out by BHI
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from time to time for the reasonable cost of such work. Any excess of money
received from insurance remaining with BHI after the restoration or
reconstruction of the Leased Property shall be retained by BHI free and clear
upon completion or restoration or construction or upon the expiration of thirty
days after Hospital Association's notice as provided for in Section 11.3, as the
case may be. All salvage resulting from any such loss covered by insurance shall
belong to Hospital Association.
11.2 In the event any improvements comprising the Leased Property are
damaged by peril covered by insurance, BHI shall commence to rebuild the same
within sixty days after the proceeds of any insurance become available unless:
11.2.1 Repair or reconstruction of the damage cannot be made under the
existing laws, ordinances, statutes or regulations of any governmental authority
applicable thereto, in which event there shall be no obligation to rebuild, and
all such insurance proceeds shall be remitted to Hospital Association.
11.2.2 The damage or loss occurs within three years of the end of the Lease
Term and Hospital Association elects not to rebuild, in which case all insurance
proceeds shall be remitted to Hospital Association;
11.2.3 The damage is thirty percent (30%) or more of the sum of (i) the
then current reconstruction cost of the Real Property and the Hospital, and (ii)
the replacement cost of all Personal Property as determined by an insurance
survey and Hospital Association elects not to rebuild, in which case all
insurance proceeds shall be remitted to Hospital Association;
11.2.4 The loss renders the Hospital unsuitable for use as an acute care
facility and Hospital Association elects not to rebuild, in which case all
insurance proceeds shall be remitted to Hospital Association.
11.3 The Hospital Association's election to rebuild or not (pursuant to
Sections 11.2.2, 11.2.3 or 11.2.4 above) shall be by written notice to BHI
within sixty days after the damage occurs and shall result in an automatic
termination of this Lease upon BHI's receipt of said notice. Hospital
Association's inability to rebuild under Section 11.2.1 shall also trigger a
termination of this Lease effective sixty days after the damage occurs.
11.4 In the event any loss occurs which renders the Hospital unsuitable for
use and there is not insurance coverage with respect to such loss, Hospital
Association may, at its election, either terminate this Lease or elect to
rebuild or
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repair the damage so incurred provided that unless Hospital Association notifies
BHI in writing sixty days after such damage as to which election it makes, it
shall be deemed to have elected to rebuild or repair. Any such replacement or
repairs shall be commenced within sixty days of the date of election by Hospital
Association, but not later than one hundred twenty days after the loss. In the
event Hospital Association does not elect to rebuild or repair, this Lease shall
automatically terminate as provided in Section 11.3, above.
11.5 For the purposes of this Section 11, the Hospital shall be deemed to
have been rendered unsuitable for use as an acute care facility if in the good
faith judgment of BHI, reasonably exercised, after any such loss the Hospital
cannot be operated on a commercial practicable basis as an acute care facility
of the type and quality existing and licensed immediately prior to such loss
taking into account, among other relevant factors, the number of usable beds
affected by such loss.
11.6 This Lease shall remain in full force and effect and BHI's obligation
to make rental payments and to pay all other charges required by this Lease
shall remain in full force and effect during the period of repair and/or
reconstruction.
12. Condemnation
12.1 If, during the term of this Lease, the whole or any portion of the
Leased Property is taken or condemned in fee for a public or quasi-public use,
then BHI shall have the option to terminate this Lease.
12.2 Damages for Taking. In the event of either a partial or a total taking
or condemnation, all damages awarded in connection with the taking of the
Property, the Hospital or the Personal Property shall vest in Hospital
Association, and any damages awarded in connection with the taking of the
leasehold estate, or BHI Personal Property shall vest in BHI.
13. Default by BHI. In the event BHI shall fail to observe, perform or
comply with any of the terms, covenants, agreements or conditions contained in
this Lease and such failure shall continue for thirty days after Hospital
Association has given BHI notice of such failure, Hospital Association shall
have the right to terminate this Lease effective sixty days thereafter and to
take immediate possession of the Leased Property; BHI shall be obligated to pay
all rent owing to the date of termination; and Hospital Association shall be
obligated to acquire any BHI Personal Property as provided in Section 5.2.
Thereafter, neither party shall have any further rights or obligations
hereunder.
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Notwithstanding the foregoing, if BHI has promptly commenced and diligently
pursued remedial action within said thirty-day period, said thirty day period
shall be extended for the minimum time reasonably required for the completion of
BHI's remedial action.
14. Default by Hospital Association. In the event (i) Hospital
Association defaults in the performance of or compliance with any of its
obligations hereunder for a period of thirty days after written notice thereof
from BHI except for any default not susceptible of being cured within thirty
days were Hospital Association is proceeding with reasonable diligence to cure
the same or (ii) laws or regulations are enacted or promulgated which, in the
reasonable opinion of BHI, severely restrict or increase the cost of operating
the Hospital for the purpose contemplated hereby, BHI shall have the right to
terminate this Lease effective sixty days thereafter, subject to BHI's
obligation to pay any rent or additional expenses owing to the date of
termination and to Hospital Association obligations under Section 5.2
15. Termination by a Third Party. In the event this Lease is terminated
by a third party over which neither BHI nor Hospital Association has any
control, both BHI and Hospital Association shall be entitled to receive whatever
compensation is owing to them under this Lease to the date of termination. BHI
and Hospital Association agree in the event of such a termination to work
together toward an orderly lease termination.
16. Assumption of Contracts. In the event that this Agreement is
terminated by either party or not renewed at the expiration of the Lease Term,
Hospital Association will assume liability for the performance, from and after
said termination/expiration date, of any contracts relating to the Leased
Property entered into or assumed by BHI which extend past the term of this
Agreement.
17. Assignment. BHI may not assign its rights or obligations under this
Agreement or sublet the Property or any part thereof to any unrelated
organization without obtaining the prior written consent of Hospital
Association. Such consent shall not be unreasonably withheld. BHI may assign to
a related party upon prior written notice to the Hospital Association. In the
event a party other than Hospital Association becomes the owner of the
Hospital's assets, the new owner shall take title subject to Hospital
Association's obligations and BHI's rights hereunder including, but not limited
to, BHI's right of first refusal referred to in Section 22 below.
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18. Arbitration.
18.1 In the event there are any matters affecting the interpretation of
this Agreement that cannot be resolved by mutual agreement of the parties,
either party shall have the right to demand that such disputed matter be
submitted to arbitration by a Board of Arbitrators composed of three members.
Each party shall appoint one arbitrator and the two so appointed shall select a
third. Their decision on any disputed matter shall be final. Either party
demanding arbitration shall notify the other in writing of its demand for
arbitration specifying the matter to be submitted to arbitration and the name of
the arbitrator selected by it.
18.2 Upon receipt of such written notice, the other party shall have
ten days within which to select its arbitrator and to notify the other party in
writing of such selection and the two so selected shall have fifteen days in
which to select a third arbitrator. In the event the third arbitrator is not
selected within said fifteen days, then such third arbitrator shall be appointed
by the Circuit Court with jurisdiction over Xxxxxx County upon application by
either party after at least five days' written notice to the other party of the
hearing of such application.
18.3 The appointees to the Arbitration Board shall have sufficient
knowledge of hospital matters so that reasonable judgments can be made. No
arbitrator shall have the right to change or alter the terms of this Agreement.
The provisions of the Uniform Arbitration Act shall apply unless expressly in
conflict with any provision in this Agreement.
18.4 All expenses incurred in connection with the arbitration shall be
shared equally by the parties to the dispute.
19. Notices. Any notice permitted or required hereunder shall be in
writing and shall be deemed received three business days after the date on which
it is deposited in the United States mail, certified or registered mail, postage
prepaid and addressed as follows:
If to Hospital Association: Fort Xxxxxx Community
Hospital Association
0000 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: President, Fort Xxxxxx
Community Hospital
Association
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If to BHI: c/o Brim & Associates, Inc.
000 XX 000 Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxx Xxxxxxxx
Such addresses may be changed by either party by ten days prior written notice
to the other party.
20. Prior Agreements. Hospital Association warrants that, to the best
of its knowledge, this Agreement does not breach or conflict with any
commitments or responsibilities under any prior agreements to which Hospital
Association may be a party or any law by which Hospital Association may be
bound. Hospital Association warrants that it has full authority to permit the
use of the Leased Property by BHI under the terms and conditions set out in this
Agreement. BHI shall be held harmless from any claims, liabilities, and expenses
arising from agreements to which Hospital Association is or was a party on or
before the Commencement Date, except to the extent that such agreements are
assumed by BHI in writing.
21. Contractual Obligations. To the best knowledge of Hospital
Association, attached hereto as Exhibit C is a Schedule of Material Contracts to
which Hospital Association is party or is bound or will be bound as of the
Commencement Date, and which affect or relate to the Leased Property The
Contracts listed are intended to include:
a) All leases, rental agreements and other contracts affecting the
ownership or leasing of, title to, use of, or any interest in the
Leased Property; and
b) Any contract or commitment, sales order or purchase order,
whether in the ordinary course of business or not, which involves
future payments, performance of services or delivery of goods and/or
materials, to or by Hospital Association of an amount or value in excess of
Five Thousand Dollars ($5,000.00).
Except as may be stated in Exhibit C, all such Material Contracts are to the
best knowledge of Hospital Association valid and binding obligations of the
parties thereto in accordance with their respective terms and there have been no
unlisted amendments or modifications to any Material Contract. Furthermore,
Hospital Association will endeavor to disclose and explain any additional
nonmaterial contracts or agreements which impose any duty, obligation, or
liability upon the Hospital Association. To the extent required by law, BHI
agrees to perform, discharge or otherwise satisfy the legal responsibility of
Hospital Association required after the Closing Date in and under all of the
listed current Material Contracts and Agreements which are assumed by BHI
pursuant to
-14-
15
this Section 21. Notwithstanding the foregoing, BHI shall retain the right to
terminate, modify, and/or renegotiate said contracts, provided Hospital
Association incurs no liability as a result thereof. Hospital Association
agrees, upon the request of BHI,, to exercise any rights or options which may
belong to the Hospital Association, which BHI may by contract be prevented from
exercising, provided any cost associated with such exercise will be borne by
BHI.
22. Right of First Refusal.
22.1 If at any time during the Lease Term Hospital Association should
offer to sell or receive an offer to buy all of the Leased Property, BHI shall
have a right of first refusal to acquire the same. Hospital Association shall
give BHI written notice of its intention to so sell, transfer or convey and BHI
shall have the option, exercisable within thirty days after receipt of such not
ice, to purchase the Leased Property on the same terms as submitted by offeror
to Hospital Association or as offered by Hospital Association in such notice.
22.2 In the event BHI exercises its option under this Section, closing
of BHI's purchase shall occur within ninety days thereafter at the offices of
Hospital Association's attorneys. At closing, Hospital Association shall execute
and deliver such instruments as reasonably may be appropriate to assign and
convey the Leased Property to BHI. Hospital Association shall cause all holders
of encumbrances on the Leased Property to release their encumbrances at closing
unless BHI elects to assume some or all of the same in which case the principal
balances of the assumed encumbrances shall be offset against the cash due at
closing. The purchase price for the Leased Property shall be paid to Hospital
Association at closing by cashiers check or by wire transfer to Hospital
Association's bank account.
22.2.1 In the event the sale of the Leased Property to BHI requires the
approval of any governmental agency, the sale shall be contingent upon the
granting of such approval. Hospital Association and BHI shall execute and
deliver to any such governmental agency such instruments as may be required by
the' agency in connection with the approval of the sale. If such approval is not
secured by the date of closing, the closing shall be postponed to the first day
of the first month after the month in which such approval is secured. Pending
such approval, the terms of this Lease shall apply to the extent practicable. If
such approval is denied, the Lease shall remain in effect in accordance with its
terms; provided, however, that Hospital Association shall thereafter be entitled
to sell the Leased Property to a third party, if such sale is closed within one
hundred eighty days after the governmental agency's denial of approval of the
sale to BHI.
-15-
16
22.2.2 If title to the Leased Property is transferred to a corporation
which is affiliated with Hospital Association and by virtue of a subsequent
change in the beneficial ownership of said affiliate, the affiliate ceases to be
affiliated with Hospital Association, BHI shall have the option to purchase the
Leased Property for their Fair Market Value or the pro rata value paid by the
purchaser of the affiliate, whichever is less, in the manner prescribed in
Section 22.2.1.
22.2.3 This Lease shall terminate upon closing of the sale of the
Leased Property to BHI.
23. Hospital Association's Right to Perform BHI's Covenants.
23.1.1 If BHI defaults in the making of any of the payments, or the
performance of any of the obligations provided for in this Lease, Hospital
Association may, at its option and on behalf of BHI, make any such payments or
perform any such obligations.
23.1.2 Before exercising that option, however, Hospital Association
must give BHI written notice of BHI's default, and of Hospital Association's
intention to correct that default. If after thirty days BHI has not corrected
such default, Hospital Association may exercise its rights under this Section
23.
23.1.3 In the event Hospital Association performs any obligation on
BHI's behalf, BHI shall reimburse Hospital Association for any amounts
reasonably paid or expended. This reimbursement shall be due and payable
immediately after BHI's receipt of notice from Hospital Association that the
expense was incurred. Hospital Association shall not be held liable or in any
way responsible for any loss, inconvenience, annoyance or damage resulting to
BHI on account of such performance by Hospital Association, unless Hospital
Association is found to have been negligent in its performance. All amounts
payable to BHI to Hospital Association under any of the provisions of this
Lease, if not paid when the same become due as in this Lease provided, shall
bear interest from the date they become due until paid at the prime rate of
interest then in effect at First Interstate Bank of Portland, Oregon. In the
event First Interstate of Portland, Oregon ceases or fails to publish or
announce a prime rate, regardless of the reason therefor, interest shall accrue
at the prime rate announced by the bank designated by Hospital Association,
provided such bank is among the top twenty-five banks in the United States in
terms of deposits.
-16-
17
24. Miscellaneous.
24.1 This Agreement and the Purchase Agreement constitute the entire
agreement between the parties with respect to the Leased Property and the
operation of the Hospital. No subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon Hospital Association or BHI
unless reduced to writing and executed by the parties.
24.2 This Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado.
24.3 If any term, covenant or condition of this Agreement, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term, covenant or condition to other persons and circumstances shall be
valid and enforceable to the fullest extent permitted by law.
24.4 Subject to the limitations on assignment set forth above, the
terms, covenants and conditions hereof shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
successors and assigns.
IN WITNESS WHEREOF, Hospital Association and BHI have caused this Lease
Agreement to be duly executed as of the date first above written:
FORT XXXXXX COMMUNITY
HOSPITAL ASSOCIATION
By: /s/ Xxx Xxxxxx
--------------------------------
Its: President
-------------------------------
By:
--------------------------------
Its:
-------------------------------
BRIM HOSPITALS, INC.
By: /s/
--------------------------------
Its: AUTHORIZED REPRESENTATIVE
-------------------------------
By:
--------------------------------
Its:
-------------------------------
-17-
18
STATE OF COLORADO )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 15th day of May,
1986, by Xxx Xxxxxx and ______________________, respectively the President
and ___________________________of Fort Xxxxxx Community Hospital Association on
behalf of the company.
/s/ Xxxx Xxxxx
--------------------------------
Notary Public
My Commission Expires: 4/20/89
STATE OF OREGON )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this 15th day of May,
1986, by Xxxx Xxxxxx and ____________________________, respectively the Vice
President and Representative of Brim Hospitals, Inc. on behalf of the
corporation.
/s/ Xxxxxxxxxx X. Xxxxxxx
--------------------------------
Notary Public
My Commission Expires: 01/09/88
-18-
19
AMENDMENT TO LEASE AGREEMENT
This Amendment is made and entered into this 26th day of August, 1986,
by and between Fort Xxxxxx Community Hospital Association (the "Hospital
Association") and Brim Hospitals, Inc. ("BHI").
WHEREAS, the parties entered into a Lease Agreement dated May 15, 1986
(the "Lease") whereby BHI agreed to lease certain real property, improvements
located thereon and personal property located therein that constitute the Fort
Xxxxxx Community Hospital, Fort Xxxxxx, Colorado (the "Hospital"); and
WHEREAS, The parties desire to amend the definition of the Leased
Property as presently set forth in the Lease;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, it is hereby agreed as
follows:
1. The parties hereby agree to amend Paragraph 1 of the Lease so that
the description of the Leased Property shall exclude the following assets
currently leased by the Hospital Association:
1. House located at 0000 Xxxxx, Xxxx Xxxxxx, Colorado;
2. Dupont Chemical Analyzer; and
3. Specialty Physician Clinic Building, Fort Xxxxx, Colorado.
2. The parties shall negotiate and execute separate agreements for the
leasehold rights to each of the above-named assets.
3. This Amendment shall be governed by and construed in accordance
with the laws of the State of Colorado.
4. Except as hereby amended, all other terms and conditions of the
Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first above written.
FORT XXXXXX COMMUNITY HOSPITAL
ASSOCIATION
BY: /s/ Xxx X. Xxxxxx
------------------------------
ITS: President
-----------------------------
BRIM HOSPITALS, INC.
BY: /s/
------------------------------
ITS: Vice President
-----------------------------
Authorized Representative
20
Amendment to Lease Agreement
This amendment is made and entered into this 16th day of February 1987 by and
between Fort Xxxxxx Community Hospital Association (the "Hospital Association")
and Brim Hospital, Inc. ("BHI").
Whereas, the parties entered into a lease agreement dated May 15, 1986 (the
"Lease") whereby these capital requirement shall mean alteration, addition,
improvement, equipment or personal property with a cost of over $5,000 and
three years or more of life expectancy, shall have been submitted to the
Hospitals Association and Holding Company for approval.
Whereas, the parties desire to amend the amount of capital requirement to be
approved as presently set forth in the lease.
Now, therefore, it is hereby agreed as follows:
1. The parties hereby agree to amended paragraph 6.7 of the lease so
that the amount of capital requirements shall read:
6.7 As used in the Section 6, capital requirements shall mean
alterations, additions, improvement equipment or personal
property with a cost of over $25,000 and three years or more of
life expectancy.
2. This amendment shall be governed by and conserved in accordance
with the laws of the State of Colorado.
3. Except as hereby amended, all other terms and conditions of the
lease shall remain in full force and effect.
In witness hereof, the parties have caused this amendment to be duly executed as
of the date first above written.
Fort Xxxxxx Community Hospital Association
by: /s/ Xxxx X. Xxxxxxxxxx, President
---------------------------------------
Xxxx X. Xxxxxxxxxx
it's: President
--------------------------------------
Brim Hospitals, Inc.
by: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
it's: Vice President, Authorized Representative
-------------------------------------------
21
AMENDMENT TO LEASE AGREEMENT
This Amendment is made and entered into this 26th day of August, 1986,
by and between Fort Xxxxxx Community Hospital Association (the "Hospital
Association") and Brim Hospitals, Inc. ("BHI").
WHEREAS, the parties entered into a Lease Agreement dated May 15, 1986
(the "Lease") whereby BHI agreed to lease certain real property, improvements
located thereon and personal property located therein that constitute the Fort
Xxxxxx Community Hospital, Fort Xxxxxx, Colorado (the "Hospital"); and
WHEREAS, the parties desire to amend the definition of the Leased
Property as presently set forth in the Lease;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, it is hereby agreed as
follows:
1. The parties hereby agree to amend Paragraph 1 of the Lease so that
the description of the Leased Property shall exclude the following assets
currently lease by the Hospital Association:
1. House located at 0000 Xxxxx, Xxxx Xxxxxx, Colorado;
2. Dupont Chemical Analyzer; and
3. Specialty Physician Clinic Building, Fort Xxxxxx, Colorado.
2. The parties shall negotiate and execute separate agreements for the
leasehold rights to each of the above-named assets.
3. This Amendment shall be governed by and construed in accordance
with the laws of the State of Colorado.
4. Except as hereby amended, all other terms and conditions of the
Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first above written.
FORT XXXXXX COMMUNITY HOSPITAL
ASSOCIATION
BY: /s/ Xxx X. Xxxxxx
--------------------------
ITS: President
--------------------------
BRIM HOSPITALS, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
--------------------------
ITS: VICE PRESIDENT
--------------------------
AUTHORIZED REPRESENTATIVE
22
ADDENDUM TO FORT XXXXXX
OPERATING AGREEMENT
DATED MAY 15, 1986
This Addendum is made and entered into this 26th day of August, 1986,
by and between Fort Xxxxxx Community Hospital Holding Company (the "Holding
Company"), Fort Xxxxxx Community Hospital Association (the "Hospital
Association"), Brim Hospitals, Inc. ("BHI") and Brim & Associates, Inc.
("Brim").
WHEREAS, the parties hereto entered in an Operating Agreement dated May
15, 1985 (the "Agreement") whereby BHI assumed all of Hospital Association's
and Holding Company's rights and obligations with respect to operating expenses
and accounts receivable of Fort Xxxxxx Community Hospital, Fort Xxxxxx,
Colorado (the "Hospital"); and
WHEREAS, pursuant to the terms of the Agreement, Hospital Association
was obligated to bring the working capital balance to a positive amount of
$1,000.00 within (thirty) 30 days of completion of a working capital audit,
which audit was conducted on May 31, 1986; and
WHEREAS, Hospital Association desires to extend payment of such
obligation over a period of twelve (12) months and BHI is willing to permit
such extension of payment;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, it is hereby agreed as
follows:
1. BHI and Brim hereby consent to the extension of time for
payment of the amount needed to bring the working capital balance to a positive
amount of $1,000.00 for a period of twelve (12) months commencing June 30,
1986.
2. Hospital Association hereby agrees to pay to BHI the amount
necessary to bring the working capital balance to a positive amount of
$1,000.00 by paying such sum in twelve (12) equal monthly installments
commencing June 30, 1986.
3. The amount owed to BHI by Hospital Association shall be as
determined by the working capital audit conducted by Touche Xxxx on May 31,
1986.
4. This Addendum shall be governed by and construed in accordance
with the laws of the State of Colorado.
5. Except as hereby amended, all other terms and conditions of the
Agreement shall remain in full force and effect.
23
IN WITNESS WHEREOF, the parties have caused this Addendum to be duly
executed as of the date first above written.
FORT XXXXXX COMMUNITY HOSPITAL
HOLDING COMPANY
BY: /s/ Xxxxx
-------------------------
ITS: President
-------------------------
FORT XXXXXX COMMUNITY HOSPITAL
ASSOCIATION
BY: /s/ Xxx X. Xxxxxx
-------------------------
ITS: President
-------------------------
BRIM HOSPITALS, INC.
BY: /s/
-------------------------
ITS: Authorized Representative
-------------------------
BRIM & ASSOCIATES, INC.
BY: /s/
-------------------------
ITS: Vice President
Authorized Representative
-------------------------
24
AMENDMENT TO LEASE AGREEMENT AND
TERMINATION OF OPERATING AGREEMENT
THIS AGREEMENT is made and entered into this 23rd day of May, 1994 by
and between Fort Xxxxxx Community Hospital Association (the "Hospital
Association") and Brim Hospitals, Inc. ("BHI").
RECITALS
A. The Hospital Association is the owner of that 40 bed acute care
facility known as Colorado Plains Medical Center, Fort Xxxxxx, Colorado (the
"Hospital").
B. By Lease Agreement dated May 15, 1986, as amended by Amendments
dated August 26, 1986 and February 16, 1987 (collectively, the "Lease"), the
Hospital Association leased the Hospital to BHI.
C. Concurrently with the execution of the lease, BHI and the
Hospital Association, along with Fort Xxxxxx Community Hospital Holding Company
(the "Holding Company") and Brim & Associates, Inc. (now known as Brim, Inc.)
entered into an Operating Agreement, as amended by Addendum dated August 26,
1986 (the "Operating Agreement").
D. Since the execution of the Operating Agreement the Holding
Company has been dissolved and the material obligations of BHI and Brim and the
Hospital Association provided for therein have been performed.
E. BHI and the Hospital Association have agreed to terminate the
Operating Agreement and to incorporate into the Lease any provisions thereof
with continuing applicability to the relationship between the parties.
F. BHI and the Hospital Association have further agreed to amend
the Lease to reflect certain changes in the rights and obligations of the
parties thereunder resulting from a proposed remodeling and expansion of the
Hospital which will be financed in part through an increase in the rent due
under the Lease.
G. BHI and the Hospital Association want to document the terms and
conditions under which the Operating Agreement will be terminated and the Lease
will be amended.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS
FOLLOWS:
AGREEMENT
1. TERMINATION OF OPERATING AGREEMENT. Effective as of May 1, 1994 (the
"Effective Date") the Operating Agreement shall be terminated and the parties
shall have no further rights or obligations thereunder.
2. AMENDMENT OF LEASE. As of the Effective Date, the Lease is hereby
amended as follows:
2.1 Section 2 is hereby deleted in its entirety and the
following inserted instead:
The initial term of this Agreement (the "Initial Term") shall
commence on May 1, 1986 (the "Commencement Date") and shall expire on
April 30, 1994. This Agreement shall automatically renew at the end of
the Initial Term for a renewal term (the "First Renewal Term") of 20
years commencing on May 1, 1994 and terminating on April 30, 2014. BHI
shall have the right to extend the term of the Agreement beyond the
First Renewal Term for one additional renewal term of five (5) years
(the "Additional Renewal Term") by written notice to the Hospital
Association delivered no less than sixty (60) days prior to the end of
the First Renewal Term. Nothing herein shall be deemed to
25
preclude the termination of this Agreement prior to the end of the
First Renewal Term or any Additional Renewal Term in accordance with the
provisions of Sections 13, 14, and 15 of this Agreement. In the event BHI
exercises its rights with respect to the Additional Renewal Term, prior to
the expiration thereof, BHI and Hospital Association shall negotiate in
good faith with respect to the extension of the term of the Lease for an
additional five year renewal term (the "Second Additional Renewal Term")
which shall be effective upon the expiration of the Additional Renewal Term
and which shall be on such terms and conditions as may be mutually
acceptable to the parties.
2.2. Section 4.1 is hereby deleted in its entirety and the following
inserted instead:
4.1 As consideration of the use of the Leased Property, BHI shall pay to
the Hospital Association the following amounts:
(i) During the Initial Term an amount equal to One and no/100
Dollars ($1.00) annually, which shall be due and owing on the first
day of each Lease Year of the Initial Term and may be paid to the
Hospital Association in advance at the address stated in Section 19.
(ii) During the First Renewal Term, an amount equal to the sum of
(i) the amount specified in Attachment I plus (ii) all principal and
interest due on the New Debt (as defined below).
(iii) During the Additional Renewal Terms, an amount equal to the
principal and interest due on the New Debt.
For purposes of this Section 4.1, the term "New Debt" shall mean that
$2,500,000 mortgage to be entered into by the Hospital Association and
secured by the Leased Property in connection with the financing of the
remodeling and expansion of the Hospital (the "Remodeling") which is
described more fully in Attachment II.
2.3 The following is added to Section 4 as new Section 4.6:
4.6 In addition to the rent provided for above, as consideration
for the use of the Leased Property, during the first five years of the
First Renewal Term, BHI shall contribute to the Hospital Association's
designee, the Fort Xxxxxx Community Hospital Foundation, an amount equal to
ten (10%) percent of the Hospital's net profits before tax, as determined
in accordance with generally accepted accounting principles; provided,
however, that BHI's obligations to make such payments shall terminate upon
commencement of the construction of the Remodeling and shall not be
reinstated until the sixth year of the First Renewal Term, at which time
BHI shall contribute to the Hospital Association's designee an amount equal
to a percentage of the Hospital's net profits before tax as specified
below:
Year in First Renewal Term Percentage of Profits
-------------------------- ---------------------
or Additional Renewal Terms
--------------------------
6 6%
7 7%
8 8%
9 9%
10-25 10%
2.4 Section 5 is hereby deleted in its entirety.
2.5 Section 6.2.2 is hereby deleted in its entirety and the following
inserted instead:
6.2.2 BHI shall use its best efforts to acquire additional Personal
Property which in its
26
judgement is needed to meet the needs of the patients of the Hospital
and is keeping with the equipment routinely provided by a 40 bed non-urban
hospital (the "BHI Personal Property"); provided, however, that any such
acquisition that would be treated as a capital expenditure, rather than an
operating expense, under generally accepted accounting principles shall be
subject to the prior approval of the Hospital Association, which approval
shall not be unreasonably withheld.
2.6 Section 6.4 is hereby amended by inserting the following at the
end thereof:
6.4 ; provided, however, that in the event the Hospital Association
advises BHI that it is unable to secure sufficient funds to finance the
cost thereof, BHI may fund the cost thereof and the annual depreciation and
interest associated therewith shall be deducted from the net profits before
tax of the Hospital and reduce the contributions due to the Association's
designee pursuant to Section 4.6 For purposes hereof an alteration,
addition or improvement to the Leased Property shall be deemed to be
substantial in the event the cost thereof exceeds $100,000.
2.7 The last sentence of Section 22.2 is hereby deleted in its entirety
and the following inserted to instead:
The purchase price for the Leased Property shall be paid to the
Hospital Association at closing by cashiers check or by wire transfer to
Hospital Association's bank account; provided, however, that in the event
said sale occurs during the First Renewal Term, BHI shall receive a credit
against the cash due at closing in an amount equal to $1,000,000.
2.8 The following is added to Section 22 as new Section 22.3:
In the event BHI fails to exercise its right of first refusal provided
for herein and the Leased Property is sold to a third party, BHI shall be
entitled to the first $1,000,000 of the proceeds of the said sale in the
event said sale occurs during the First Renewal Term.
2.9 The following are added to Section 24 as new Sections 24.5,
24.6 and 24.7:
24.5 Upon expiration of the Term of this Leases, the following shall
occur:
24.5.1 The Hospital Association shall have the option of
purchasing from BHI the net working capital of the Hospital. For
purposes hereof, the term net working capital shall be defined as
the excess of the Hospital's current assets over its current
liabilities, all as determined in accordance with generally
accepted accounting principles. A preliminary settlement of the
amount due hereunder shall be made at the end of the lease term and
a final statement shall be made within 60 days thereafter. Payment
for the working capital shall be due based on the amount reflected
in the preliminary settlement, with an adjusted payment made to or
form the Hospital Association when the final settlement is due. BHI
shall hire an independent certified public accountant to perform an
audit of the working capital and to prepare the preliminary and
final settlements.
24.5.2. The Hospital Association shall be required to purchase
the BHI Personal Property (as defined in Section 6.2.2). The
purchase price for the BHI Personal Property shall be equal to the
depreciated book value thereof as of the date on which the Term of
this Lease expires. The purchase price shall be payable at the
Hospital Association's option in cash or by execution and delivery
to BHI of the Hospital Association's promissory note in the face
amount thereof, bearing interest at the Prime Rate (as announced by
US National Bank of Oregon) as it may vary from time to time, with
principal and interest payable in equal monthly installments based
on a 5 year amortization schedule and with the first such payment
due one month after the date on which the Term of this Lease
expires.
24.6 Subject to the authority of Governing Board set forth in Section
24.7, Brim shall have
27
exclusive control of and responsibility for the operations of the
Hospital. The day to day operation shall be the responsibility of the
executive director and the director of finance of the Hospital (both
of whom shall be selected by and shall be employees of Brim). In
consideration for its management services,, Brim shall receive an
annual management fee in an amount approved by the Governing Board,
which approval shall not be unreasonably withheld, which shall be due
and payable in equal monthly installments on the fifth day of each
month; provided, however that the payment of the management fee shall
be subordinate to the payment of the rent due hereunder.
24.7 The Governing Board of the Hospital shall consist of
seven members approved by BHI, one of whom shall be an officer or
director of the Hospital Association, two of whom shall be employees
or officers of BHI, two of whom shall be members of the Fort Xxxxxx
Community, one of whom shall be a member of the Fort Xxxxxx Community
Hospital Foundation and one of whom shall be a staff physician at the
Hospital. In addition, the Hospital's chief of staff shall be an ex
officio member of the Governing Board. If any nominated member is not
approved by BHI, the Hospital Association shall nominate an alternate
member until the full Governing Board has been nominated and approved.
The Governing Board shall have the duties and responsibilities with
respect to the operations of the Hospital as provided for in Article
VII of the BHI By-Laws as previously adopted by the Governing Board.
2.10 Any and all references to the Holding Company shall be deemed
to be references to the Hospital Association.
3. REPRESENTATIONS AND WARRANTIES.
3.1 The Hospital Association hereby represents and warrants that it
has all necessary corporate power and authority to own the Hospital, to enter
into this Agreement and to execute all documents and instruments referred to
herein or contemplated hereby and all necessary action has been taken to
authorize the individual executing this Agreement to do so. This Agreement has
been duly and validly executed and delivered by the Hospital Association and is
enforceable against the Hospital Association in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, regulations and
authorities affecting the rights or creditors generally and by general
principles of equity, and does not require the consent of or approval by any
governmental authority.
3.2 In connection with the Remodeling, the Hospital Association
acknowledges and agrees that the cost of the Remodeling will be approximately
$4,500,000 of which $2,500,000 will be paid through the New Debt, approximately
$1 million of which will be paid from rent due under Section 4.1, and the
balance of which shall be paid through community contributions. Accordingly,
the Hospital Association hereby represents and warrants that it will:
3.2.1 Develop and carry out a community fund raising campaign
(the "Campaign") designed to raise not less than $1,000,000 to be
applied to the cost of the Remodeling; provided however, that BHI
shall provide such assistance with respect to the Campaign as may
be reasonably requested by the Hospital Association;
3.2.2 Prior to the successful completion of the Campaign, secure a
loan for $1,000,000 (the "Interim Loan"), which Interim Loan shall
(i) provide that interest only is due prior to the maturity date
thereof and (ii) be due and payable in full from the proceeds of
the Campaign; and
3.2.3 For so long as the Interim Loan is outstanding, (i) cause
the Fort Xxxxxx Community Hospital Foundation to donate the
interest earnings from its Trust Fund to the Hospital Association
and (ii) use the same to pay the interest due on the Interim Loan
prior to the repayment thereof in accordance with the provisions of
Section 3.2.2.
3.3 Brim hereby represents and warrants that it has all necessary
corporate power and authority to enter
28
into this Agreement and to execute all documents and instruments referred to
herein or contemplated hereby and all necessary action has been taken to
authorize the individual executing this Agreement to do so. This Agreement has
been duly and validly executed and delivered by Brim and is enforceable
against Brim and its affiliates in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, regulations and authorities
affecting the rights of creditors generally and by general principles of
equity.
4. GENERAL PROVISIONS
4.1 Each of the parties hereto agrees to execute and deliver any
and all further agreements, documents or instruments reasonably necessary to
effectuate this Agreement and the transactions referred to herein or
contemplated hereby or reasonably requested by the other party to perfect or
evidence their rights hereunder.
4.2 All notices to be given by either party to this Agreement to
the other party hereto shall be in writing, and shall be given
and received in the manner and at the addresses provided for in the lease.
4.3 Each party hereto shall bear its own legal, accounting and
other expenses incurred in connection with the preparation and negotiation of
this Agreement.
4.4 This Agreement, together with the lease, constitutes the entire
understanding between the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussion and preliminary agreements. In
the event of any conflict between the terms of this Agreement and any of the
terms of the asset Agreement, the terms of this Agreement will control. This
Agreement may not be modified or amended except in writing signed by the
parties hereto. No waiver of any term, provision or condition of this
Agreement in any one or more instances, shall be deemed to be or be construed
as a further or continuing waiver of any such term, provision or condition of
this Agreement. No failure to act shall be construed as a waiver of any term,
provision, condition or rights granted hereunder.
4.5 The section headings contained herein are for convenience only
and shall not be considered or referred in resolving questions of
interpretation.
4.6 This agreement may be executed in one or more counterparts and
all such counterparts taken together shall constitute a single original
Agreement.
4.7 This agreement shall be governed in accordance with the laws of
the state of Colorado.
IN WITNESS WHEREOF,the parties hereby execute this agreement as of the
day and year first set forth above.
BRIM HOSPITALS, INC.
BY: /s/
-------------------
ITS: BHI Board Director
-------------------
FORT XXXXXX COMMUNITY HOSPITAL ASSOCIATION
BY: /s/
-------------------
ITS: Chairman, Fort Xxxxxx Community Hospital Association
----------------------------------------------------
29
ATTACHMENT 1
During the First Renewal Term, BHI shall be obligated to pay rent in an amount
equal to One Million and no/100 Dollars ($1,000,000) which shall be payable in
full at the commencement of the First Renewal Term (the "Prepaid Rent") and
shall be amortized over the First Renewal Term at the rate of $50,000 per lease
year. Notwithstanding the foregoing, BHI's obligation to pay the Prepaid rent
shall be subjected to the occurrence of all of the following:
1. The Hospital Association shall have secured the New Debt (as defined in
Section 4.1 of the lease) on terms acceptable to BHI.
2. The Hospital Association shall have secured the Interim Loan (as
defined in Section 3.2.2. of the attached Lease Amendment) and the
Hospital Foundation shall have pledged its interest on the Interim Loan
(as described more fully in Section 3.2.3 of the attached Lease
Amendment).
30
ATTACHMENT 2
The Hospital Association, in conjunction with BHI, shall undertake a $4.5
million expansion/remodeling of the Hospital. This project will include work
described in Attachment 2A.
31
ATTACHMENT 2A
The Colorado Plains Medical Center Remodel and Expansion will consist of an
expansion of the surgery and recovery area, increasing the number of surgeries
from two to four, and providing substantial increase in the number of patients
than can be treated in the Recovery area.
In addition, expansion will also occur in the Emergency Room which will expand
to be a full Trauma Center. Radiology will be doubled in size as will the
Laboratory. New treatment space will be provided to Cardia Rehab, Respiratory
Therapy, and other Ancillary Departments such as Nuclear Medicine, EKG, EEG.
On the upper level, a centralized nurse administration area will be remodeled.
Rooms currently occupied by ancillary services will be returned to patient
rooms. A new administrative area will be completed, which will house Medical
Records, the Business Office, Conference rooms, and Office Space.
Finally, major circulation corridors will be renovated as well as a relocation
of the front entrance from the southern exposure to the northern orientation
on the building. Site improvement will include additional paved parking, a new
drive-through front entry to both the hospital and Trauma/Emergency Room
services unit, and other general exterior improvements.
32
AMENDMENT TO LEASE AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of November, 1994
by and between Fort Xxxxxx Community Hospital Association (the "Hospital
Association") and Brim Hospitals, Inc. ("BHI").
RECITALS
A. The Hospital Association is the owner of that 40 bed acute care
facility known as Colorado Plains Medical Center, Fort Xxxxxx, Colorado (the
"Hospital").
B. Under the terms of its Certificate of Incorporation, the
Association was organized for the purpose of establishing and maintaining a
hospital for the care of all person who are suffering from any illness or
disability which requires that the patient receive hospital care.
C. Prior to 1986 the Association carried out the foregoing purpose
through its own operations at the Hospital. However, in 1986 the Hospital was
suffering serious financial difficulties and the Association determined that it
would further the purpose for which it was organized and best meet the needs of
the community served by it if it leased the Hospital to a third party which had
the management expertise and financial resources to ensure the continued
operation of the Hospital.
D. By Lease Agreement dated May 15, 1986, as amended by Amendments
dated August 26, 1986 the Hospital Association leased the Hospital to BHI.
E. Since entering into the Lease BHI has resolved the financial
problems facing the Hospital, has provided a significant amount of charity care
to the residents of the community served by the hospital and has invested a
significant amount of its resources into the improvement of the physical plant
of the Hospital, all of which have served to improve access to and the quality
of the care provided to the residents of the community served by the Hospital
and to further the tax exempt purpose for which the Association was organized.
F. The Lease was amended by amendments dated August 26, 1986 (the
"First Amendment"), February 16, 1987 (the "Second Amendment") and May 23, 1994
(the "Third Amendment").
G. The principal purpose of the Third Amendment was to reflect the
terms and conditions under which the Hospital would be operated after the
further expansion and renovation thereof pursuant to a capital improvement
program developed and financed in part by BHI and approved by the Association.
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33
H. Since the execution of the Third Amendment, BHI and the Association
have agreed to make certain other changes to the Lease in order to confirm
certain obligations undertaken by BHI in connection with its prior operation of
the Hospital.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS
FOLLOWS:
AGREEMENT
1. Section 3 is hereby amended by adding the following:
3.5. In connection with its operations at the Hospital and in
furtherance of the non profit purpose of the Association, BHI shall
continue to provide charity care to residents of the community served
by the Hospital at levels and in a manner consistent with charity care
provided by BHI at the Hospital since the inception of the Lease and
BHI shall continue as a participant in the Colorado Indigent Care
Program.
2. Section 4.1 (as reflected in the Third Amendment) is hereby amended
by inserting the following:
(iv) During the First Renewal Term and any Additional Renewal Terms, an
amount equal to the principal and interest due on that $1,000,000 loan
(the "Interim Loan") entered into between the Hospital Association and
Xxxxxx County Federal Savings & Loan Association ("Xxxxxx County") if
and to the extent the same has not been paid in full on or before the
fifth anniversary of the date thereof or the principal and interest on
the Interim Loan is not being paid by the Foundation.
3. Section 4.1 (as reflected in the Third Amendment) is hereby further
amended by changing the reference to $2,500,000 in the last paragraph to
$3,000,000 and by reflecting that the New Debt shall be provided by Xxxxxx
County.
4. Section 4.6 (as reflected in the Third Amendment) is hereby deleted
in its entirety and the following inserted instead:
4.6. In addition to the rent provided for above, as consideration for
the use of the Leased Property, during the first five years of the
First Renewal Term, BHI shall contribute to the Hospital Association's
designee, the Fort Xxxxxx Community Hospital Foundation, an amount
equal to one (1%) percent of the Hospital's net revenues, as determined
in accordance with generally accepted accounting principles; provided
however, that BHI's obligation to make such payments shall terminate
upon commencement of the construction of the Remodeling and shall not
be reinstated until the sixth year of the First Renewal Term, at which
time
Substitute page to Amendment
to Lease Agreement executed
Nov. 8, 1994
/s/ Xxxx X. Xxxxxx
------------------------------
/s/ Xxxxx X. Xxxx
------------------------------
2
34
H. Since the execution of the Third Amendment, BHI and the Association
have agreed to make certain other changes to the Lease in order to confirm
certain obligations undertaken by BHI in connection with its prior operation of
the Hospital.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS
FOLLOWS:
AGREEMENT
1. Section 3 is hereby amended by adding the following:
3.5. In connection with its operations at the Hospital and in
furtherance of the non profit purpose of the Association, BHI shall
continue to provide charity care to residents of the community served
by the Hospital at levels and in a manner consistent with charity care
provided by BHI at the Hospital since the inception of the Lease and
BHI shall continue as a participant in the Colorado Indigent Care
Program.
2. Section 4.1 (as reflected in the Third Amendment) is hereby
amended by inserting the following:
(iv) During the First Renewal Term and any Additional Renewal Terms, an
amount equal to the principal and interest due on that $1,000,000 loan
(the "Interim Loan") entered into between the Hospital Association and
Xxxxxx County Federal Savings & Loan Association ("Xxxxxx County") if
and to the extent the same has not been paid in full on or before the
fifth anniversary of the date thereof or the principal and interest on
the Interim Loan is not being paid by the Foundation.
3. Section 4.1 (as reflected in the Third Amendment) is hereby further
amended by changing the reference to $2,500, 000 in the last paragraph to
$3,000,000 and by reflecting that the New Debt shall be provided by Xxxxxx
County.
4. Section 4.6 (as reflected in the Third Amendment) is hereby deleted
in its entirety and the following inserted instead:
4.6. In addition to the rent provided for above, as consideration for
the use of the Leased Property, during the first five years of the
First Renewal Term, BHI shall contribute to the Hospital Association or
its designee an amount equal to one (1%) percent of the Hospital's net
revenues, as determined in accordance with generally accepted
accounting principles; provided however, that BHI's obligation to make
such payments shall terminate upon commencement of the construction of
the Remodeling and shall not be reinstated until the sixth year of the
First Renewal Term, at which time
2
35
BHI shall contribute to the Hospital Association or its designee an
amount equal to a percentage of the Hospital's net revenues as
specified below:
Year in First Renewal Term
or Additional Renewal Terms Percentage of Net Revenues
--------------------------- --------------------------
6 .6%
7 .7%
8 .8%
9 .9%
10-25 1.0%
Any payments made by BHI prior to the date of this Fourth Amendment
pursuant to this Section 4.6 as currently written or as previously
written shall be deemed to have satisfied the requirements of Section
4.6 as reflected in this Fourth Amendment.
5. Section 6.1 is hereby amended by adding the following to the end
thereof:
During the first year of the First Renewal Term of the Lease, BHI
shall, at its sole cost and expense, undertake the repairs and
alterations (as Tenant Improvements) described in Exhibit A hereto. The
estimated cost of said Tenant Improvements is approximately $1,500,000.
BHI shall ensure that the same are undertaken in a good and workmanlike
manner and are of such quality as will xxxxxx the provision of quality
care by the Hospital to the patients served by it.
6. Section 22 (as reflected in the Third Amendment) is hereby amended
by adding the following:
provided, however, that BHI's right to the proceeds of said sale shall
be subject and subordinate to any interest in the Leased Property which
Xxxxxx County may have under the terms of the documents evidencing or
securing the Interim Debt or the new Debt and no such payment shall be
made without the prior written consent of Xxxxxx County.
7. The last sentence of Section 24.1 is hereby deleted in its
entirety and the following inserted instead:
This Lease may not be amended or modified except by written instrument
signed by the parties hereto and approved in writing by Xxxxxx County.
8. This Amendment shall be effective as of May 1, 1994.
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36
9. Except as specifically set forth herein, the Lease as originally
executed and amended to date, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first set forth above.
BRIM HOSPITALS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Its: President
-----------------------------------------
FORT XXXXXX COMMUNITY HOSPITAL
ASSOCIATION
By: /s/ Xxxxx X. Xxxx
------------------------------------------
Its: Pres.
-----------------------------------------
LENDER CONSENT
The undersigned, being a duly authorized officer of Xxxxxx County
Federal Savings & Loan Association does hereby consent to the Amendments to
Lease set forth above.
XXXXXX COUNTY FEDERAL SAVINGS & LOAN
ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Its: President
-----------------------------------------
4
37
EXHIBIT A
TENANT IMPROVEMENTS
As a component part of the expansion of Colorado Plains Medical Center, certain
tenant improvements will be made which primarily focus on building systems.
These improvements include certain general improvements to mechanical systems in
the building, the replacement of boilers and the upgrading of the hot water
heating system in the existing building. In addition, the existing domestic
water supply system will be replaced, a secondary domestic water service will be
attached, and chases to distribute the replacement hot water heating system and
the domestic water supply system will be provided. The existing non-friable
asbestos located in areas where equipment is to be replaced will be removed.
The $1,500,000 tenant improvement package also includes related architectural
and engineering, mechanical engineering and electrical engineering to complete
this work.
38
FIFTH AMENDMENT TO LEASE AGREEMENT
THIS FIFTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into this _____ day of March, 1995 by and between FORT XXXXXX COMMUNITY
HOSPITAL ASSOCIATION (the "Hospital Association") and BRIM HOSPITALS, INC.
("BHI").
RECITALS
A. The Hospital Association and BHI are parties to that certain Lease
Agreement dated May 15, 1986 (the "Lease Agreement"), pursuant to which BHI
leases from the Hospital Association that certain real property located in Fort
Xxxxxx, Colorado as improved with that certain 40 bed acute care hospital
commonly known as "Colorado Plains Medical Center" (the "Facility").
B. The Lease Agreement has been previously amended by those certain
lease amendments (collectively, the "Prior Amendments") dated August 26, 1986,
February 16, 1987, May 23, 1994 and November 8, 1994 (the "Fourth Amendment").
The Lease Agreement as amended by the Prior Amendments is referred to herein as
the "Lease".
C. The Hospital Association and BHI are working together in an effort
to expand and renovate the Facility. In contemplation of future growth, the
Hospital Association acquired, subsequent to the execution of the Lease
Agreement, title to parcels of real property situated adjacent to the Facility
and intends to acquire additional land in the near future.
D. It is the original intent of the parties that all such additional
parcels of real property be included as part of the land subject to the Lease.
E. The purpose of this Amendment is to amend the description of the
"Leased Property" subject to the Lease and to modify the Lease in certain other
particulars as provided below.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS
FOLLOWS:
AGREEMENT
1. SUBJECT PROPERTY
Section "1. Subject Property." of the Lease is hereby amended
by deleting in its entirety Exhibit A attached to the Lease which sets forth the
description of the Real Property included as part of the Leased Property and
substituting in its place Revised Exhibit A attached hereto and incorporated
into the Lease by this reference. The Hospital Association and BHI acknowledge
that the Hospital Association is currently attempting to acquire fee title to
those certain additional parcels of real property described on Schedule 1
attached hereto and incorporated herein by this reference (the "Additional
Land"). It is the intent of the parties that at such time that the Hospital
Association
1
39
acquires a fee title interest to any portion of the Additional Land that such
portion be included as part of the Leased Property. Accordingly, as a matter of
administrative convenience for the parties, BHI and the Hospital Association
hereby agree that at such time as the Hospital Association acquires fee title
interest to any portion of the Additional Land, the portion so acquired shall
automatically be deemed a part of the Real Property subject to the Lease without
the requirement of the parties executing a further amendment to the Lease.
2. RENT DURING FIRST RENEWAL TERM
Attachment 1 to the Third Amendment to the Lease Agreement is
hereby amended to provide that the payment of the Prepaid Rent in the amount of
One Million Dollars ($1,000,000.00) shall not be required to be paid in full at
the commencement of the First Renewal Term and, in lieu thereof, said amount
shall be paid in accordance with the following schedule:
Upon the closing of the loan to be
made by Xxxxxx County Federal
Savings & Loan Association,
representing the New Debt: $450,000.00
April 1, 1995 $100,000.00
May 1, 1995 $225,000.00
June 1, 1995 $225,000.00
Except as expressly modified above, the obligation of BHI to
pay the Prepaid Rent shall remain subject to all of the conditions set forth in
Attachment 1 to the Third Amendment.
3. NEW DEBT
BHI and the Hospital Association acknowledge that there is
currently outstanding loans from Xxxxxx'x State Bank to the Hospital Association
in the total collective amount of approximately One Hundred Eighty Thousand
($180,000.00) (the "Old Loan"), the repayment of which is secured by certain of
the assets comprising the Leased Property. In order to repay in full the
outstanding balance of the Old Loan and to provide additional financing to the
Hospital Association for the purchase of the Additional Land, the amount of the
loan from Xxxxxx County Federal Savings & Loan Association to the Hospital
Association has been increased by an amount not to exceed Three Hundred Thirty
Thousand Dollars ($330,000). Accordingly, Section 4.1 of the Lease, as set forth
in the Third Amendment and as subsequently amended by the Fourth Amendment, is
hereby further amended by increasing the amount of $3,000,000.00 referenced in
the last paragraph of Section 4.1 to an amount not to exceed $3,330,000.00.
Section 4.1 is hereby further amended to provide that the payment by BHI of all
principal and interest due under the New Debt shall be paid to the Hospital
Association by deposit of the required amount into a separate account to be
maintained in the name of the Hospital Association at Xxxxxx County Federal
Savings & Loan
2
40
Association ("Lender"). Promptly following the execution of this Amendment, the
Hospital Association covenants and agrees to open said account with Lender and
to make the necessary arrangements with Lender in order to (i) permit Lender to
make automatic withdrawals from said account for payment of the monthly
installments of principal and interest due under the New Debt and (ii) to
restrict access to the account by the Hospital Association so as to assure that
all amounts deposited by BHI pursuant to the Lease shall be applied to the
principal and interest payments due pursuant to the New Debt.
4. FINANCIAL STATEMENTS
BHI shall, from time to time upon not less than 10 days prior
written notice from the Hospital Association, furnish to the Hospital
Association and/or its lender a current financial statement which accurately
reflects BHI's then financial condition.
5. EFFECT OF AMENDMENT
Except as specifically set forth herein, the Lease as originally
executed and amended to date, shall remain in full force and effect.
6. DEFINED TERMS
Any term used herein which commences with an initial capital letter
and is not otherwise defined herein shall have the same meaning in this
Amendment as such term has in the Lease.
7. COUNTERPARTS
This Amendment may be executed in two or more counterparts each of
which shall be deemed an original for all purposes and all of which, when taken
together, shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereby execute this Amendment as of the
day and year first set forth above.
BRIM HOSPITALS, INC. FORT XXXXXX COMMUNITY HOSPITAL
ASSOCIATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxx
--------------------------- --------------------------------
Its: President Its: Chairman
-------------------------- -------------------------------
3
41
LENDER'S CONSENT
The undersigned, being a duly authorized officer of Xxxxxx County
Federal Savings & Loan Association, does hereby consent to the foregoing Fifth
Amendment to Lease.
XXXXXX COUNTY FEDERAL SAVINGS & LOAN
ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Its: President
------------------------------------
4
42
REVISED EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
PARCEL I:
Lots 1 through 22, inclusive, Block 7,
OLD FORT ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
PARCEL II:
Xxx 0, Xxxxxx xx Xxxxx 0,
XXX XXXX ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
PARCEL III:
Xxxx 0, 0, xxx 0, Xxxxxx xx Xxxxx 8,
OLD FORT ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
PARCEL IV:
Xxx 0, XXXXXX XX XXXXX 0,
XXX XXXX ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
PARCEL V:
Xxx 0, Xxxxxx xx Xxxxx 0,
XXX XXXX ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
PARCEL VI:
Xxx 0, Xxxxxx xx Xxxxx 0,
XXX XXXX ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
PARCEL VII:
Xxx 0, Xxxxxx xx Xxxxx 0,
XXX XXXX ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
5
43
SCHEDULE I
DESCRIPTION OF ADDITIONAL LAND
Lots 2 and 10, Replat of Block 8,
OLD FORT ADDITION TO THE CITY OF FORT XXXXXX,
according to the recorded plat thereof,
Xxxxxx County, Colorado.
6
44
SIXTH AMENDMENT TO LEASE AGREEMENT
THIS SIXTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into the ______ day of ______________, 1996 by and between FORT XXXXXX
COMMUNITY HOSPITAL ASSOCIATION (the "Hospital Association") and BRIM HOSPITALS,
INC. ("BHI")
RECITALS
A. The Hospital Association and BHI are parties to that certain Lease
Agreement dated May 15, 1986 (the "Lease Agreement"), pursuant to which BHI
leases from the Hospital Association that certain real property located in Fort
Xxxxxx, Colorado as improved with that certain 40 bed acute care hospital
commonly known as "Colorado Plains Medical Center") (the "Facility").
B. The Lease Agreement has been previously amended by those certain
lease amendments (collectively, the "Prior Amendments") dated August 26, 1986,
February 16, 1987, May 23, 1994 (the "Third Amendment"), November 8, 1994 (the
"Fourth Amendment") and March _____, 1995 (the "Fifth Amendment"). The Lease
Agreement as amended by the Prior Amendments is referred to herein as the
"Lease".
C. The Hospital Association and BHI are working together in an effort
to expand and renovate the Facility.
D. In order to facilitate that expansion, the Hospital Association has
entered into a Loan Agreement with Xxxxxx County Federal Savings & Loan
Association (the "Lender") which has agreed to finance a portion of the costs
thereof (the "Loan").
E. The cost of the expansion has exceeded the original estimate of the
parties. In order to finance the additional costs required to complete the
expansion, the Hospital Association has agreed to increase the amount to be
raised by its community funding raising campaign, the Lender has agreed to
increase the principal balance of the Loan and BHI has agreed to increase the
amount of its Prepaid Rent.
X. Xxxx and the Hospital Association now desire to amend the Lease to
reflect such sources of additional financing and the additional rent obligation
imposed on Brim as a result of the increase in the principal amount of the
Loan.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants of the parties set forth herein, IT IS HEREBY AGREED AS
FOLLOWS:
-1-
45
AGREEMENT
1. NEW DEBT
Section 4.1 is hereby amended to reflect that the "New Debt" as
referenced therein shall be the amount of the loan from Xxxxxx County Federal
Savings & Loan Association to the Hospital Association in an amount not to
exceed $3,680,000.00.
2. PREPAID RENT
The amount of Prepaid Rent as set forth in Attachment 1 to the
Third Amendment to the Purchase Agreement is hereby amended by increasing said
amount from $1,000,000 to an amount equal to $1,350,000. After all of the
proceeds of the Loan and the proceeds of the Hospital Association's "Campaign"
(as that term is defined below) have been disbursed and applied toward the cost
of the expansion of the Facility, the $350,000 of additional Prepaid Rent shall
be paid by BHI in increments as jointly determined by BHI and the Hospital
Association to pay for the final costs of construction; provided, however, in
no event shall said $350,000 be paid later than April 1, 1997.
3. CAMPAIGN
The amount to be raised by the Hospital Association pursuant to its
Community fund raising campaign (the "Campaign"), as provided for in the Third
Amendment, is hereby increased from $1,000,000 to an amount equal to
$1,350,000, all of which shall be applied by the Hospital Association toward
the cost of constructing the expansion of the Facility.
4. EFFECT OF AMENDMENT
Except as specifically set forth herein, the Lease as originally
executed and amended to date, shall remain in full force and effect.
5. DEFINED TERMS
Any term used herein which commences with an initial capital letter
and is not otherwise defined herein shall have the same meaning in this
Amendment as such term has in the Lease.
6. COUNTERPARTS
This Amendment may be executed in two or more counterparts each of
which shall be deemed an original for all purposes and all of which, when taken
together, shall constitute one agreement.
-2-
46
IN WITNESS WHEREOF, the parties hereby execute this Amendment as of the
day and year first set forth above.
BRIM HOSPITALS, INC. FORT XXXXXX COMMUNITY HOSPITAL
ASSOCIATION
By: _______________________ By: __________________________
Its: _______________________ Its: __________________________
LENDER'S CONSENT
The undersigned, being a duly authorized officer of Xxxxxx County
Federal Savings & Loan Association, does hereby consent to the foregoing Fifth
Amendment to Lease.
XXXXXX COUNTY FEDERAL SAVINGS & LOAN
ASSOCIATION
By: __________________________
Its: __________________________
-3-
47
[NATIONWIDE HEALTH PROPERTIES, INC. LETTERHEAD]
September 18, 1996
Via Facsimile
Xxxxx Xxxxxxxxx, Esq.
The Xxxxxxxxx Group
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
RE: NATIONWIDE HEALTH PROPERTIES, INC. TRANSACTIONS WITH BRIM, INC. ("BRIM")
AND BRIM SENIOR LIVING, INC. ("BSL")
Dear Xxxxx:
This letter is in response to your Memorandum dated August 28, 1996
(the "Memorandum") regarding the sale of Brim's stock (the "Stock Transaction")
and the merger of BSL (the "Merger Transaction"). Please be advised that
Nationwide Health Properties, Inc. ("NHP") is agreeable to the proposed
transactions subject to the following provisions.
As provided herein, NHP is willing to consent to the proposed
transactions and waive its right under the Leases (as hereinafter defined) to
"put" the facilities to the tenant thereunder as a result of the Stock
Transaction and/or the Merger Transaction. As used herein, "Leases" shall mean
those certain leases between NHP, as landlord, and Brim subsidiaries, as
tenant, with respect to those facilities commonly known as Ojai Valley
Community Hospital, in Ojai, California, The Retirement Inn at Quail Ridge, in
Oklahoma City, Oklahoma. The Retirement Inn at Forest Lane, in Dallas, Texas
and Mesa Senior Village, in Mesa, Arizona. The aforementioned waiver shall be
limited to NHP's put rights as a result of the Stock Transaction and the Merger
Transaction. NHP's willingness to consent to the assignments under the Leases
as a result of such transactions shall not, however, be deemed or construed as a
consent and/or waiver of its put rights with respect to any other transfer or
assignment in violation of the terms of any of the Leases.
The Leases and other documents executed in connection therewith
(collectively, the "NHP Documents") shall be appropriately modified to reflect
the Stock Transaction and the Merger Transaction and the newly formed LLC shall
fully assume all obligations of BSL to NHP. Except as set forth in such
amendments and assumption agreements, all terms and conditions of the NHP
Documents shall remain in full force and effect. NHP shall have also received
appropriate reaffirmations form any guarantors of obligations under the NHP
Documents.
48
Xxxxx Xxxxxxxxx, Esq.
Page 2
Prior to the closing of the Stock Transaction and the Merger
Transaction, NHP shall have completed and approved its due diligence,
including, without limitation, satisfaction by NHP of the material terms and
conditions of the proposed transactions; satisfaction by NHP with the final
organization of and structure of the newly formed LLC and the purchaser of the
Brim stock; receipt and approval by NHP of the then current financial
statements of the purchaser of the Brim stock and the LLC; receipt and approval
by NHP of evidence as to the due formation, power and authority of all parties
to each transaction and the enforceability of all documents and agreements
contemplated thereunder, receipt and approval of evidence of all governmental
authorizations and approvals as are necessary for the continued operation of
the leased facilities following the Stock Transaction and/or the Merger
Transaction; and all necessary consents and/or amendments to the material
contracts for the Mesa development project. Brim shall reimburse expenses
incurred by NHP in connection with the above, including legal fees and expenses.
Sincerely,
/s/ Xxxx X. Xxxxx
------------------
Xxxx X. Xxxxx
vice President and General Counsel
GES:pb
cc: T. Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxx
