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EXHIBIT 10.23
AMENDMENT TO COMPLETE RESTATEMENT OF
LEASE AMENDMENTS AND AMENDMENT TO BUILDING LEASE
THIS FIRST AMENDMENT TO COMPLETE RESTATEMENT OF LEASE AMENDMENTS AND
AMENDMENT TO BUILDING LEASE (the "Amendment") is made and entered into as of the
24th day of July, 1996, by and between X. X. XXXXXXXXXX & SONS, a California
general partnership ("Landlord"), and APRIA HEALTHCARE GROUP INC., a Delaware
corporation ("Tenant"), with respect to the following:
RECITALS
A. Landlord is the landlord and Tenant is the last and current assignee
of the tenant's interest pursuant to that certain written Building Lease dated
December 1, 1988 (the "Original Lease"), between Landlord, as landlord, and
Abbey Medical, Inc., a Delaware corporation ("Original Tenant"), as tenant, as
amended by that certain Complete Restatement of Lease Amendments and Amendment
to Building Lease dated as of July 21, 1995 (the "Restatement") between
Landlord, as landlord, and Apria Healthcare, Inc., a Delaware corporation
("Second Tenant"), as the immediately prior tenant, and that certain letter
agreement dated as of October 12, 1995, between Landlord and Second Tenant (the
"Letter Agreement"). The Original Lease together with the Restatement and Letter
Agreement is referred to herein, collectively, as the "Lease." The Lease covers
certain premises (the "Premises") in the Harbor Gateway Business Center, Costa
Mesa, California (the "Center") as more particularly described in the Lease. The
Original Lease was assigned from Original Tenant to Second Tenant pursuant to
that certain Assignment, Assumption and Consent Re Lease executed as of July 24,
1995, among Landlord, Original Tenant and Second Tenant. Pursuant to Article 14
of the Original Lease and Section 13(k)(vi) of the Restatement, Second Tenant
assigned its interest in the Lease to Tenant pursuant to that certain Assignment
and Assumption of Lease entered into as of January 1, 1996, between Second
Tenant and Tenant.
B. Landlord and Tenant desire to enter into this Amendment to effect the
following purposes:
(i) To add to the Premises upon the terms and conditions set forth
herein the following additional premises in the Center:
(A) Those certain premises consisting of 3,150 square feet of
Rentable Area commonly known as Suite B (the "Suite B Premises") in that certain
building commonly known as Multi-Tenant Building No. 3, located at 0000 Xxxxxx
Xxxxxxx Xxxxx in the Center (the "MT3 Building"); and
(B) Those certain premises consisting of 924 square feet of
Rentable Area commonly known as Suite C-2 (the "Suite C-2 Premises") in the MT3
Building; and
(ii) To provide that Landlord shall upon the terms and conditions set
forth herein maintain certain insurance currently required to be maintained by
Tenant pursuant to the Lease.
The Suite B and Suite C-2 Premises shall sometimes be referred to in this
Amendment, individually and collectively, as the "New Premises." The New
Premises are shown cross-hatched on Exhibit "A" attached hereto.
AGREEMENT
IN CONSIDERATION OF the foregoing recitals and the mutual promises and
covenants contained herein, the parties hereto agree as follows:
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1. Leasing of New Premises. Landlord hereby leases to Tenant, and Tenant
hereby hires from Landlord, the New Premises upon all of the terms and
conditions of the Lease, as hereby amended. Tenant shall hold and occupy the New
Premises as part of the Premises upon all the terms and conditions of the Lease,
as hereby amended, except that:
(a) The commencement date of the Lease with respect to the Suite B
Premises (the "Suite B Premises Commencement Date") shall be August 1, 1996,
notwithstanding any later execution and delivery hereof by Landlord and Tenant.
By Tenant's execution and delivery hereof, Tenant acknowledges that since the
Suite B Premises Commencement Date (i) Tenant is and has been in possession of
the Suite B Premises and (ii) Tenant has and shall continue to hold and occupy
the Suite B Premises as part of the Premises upon all of the terms and
conditions of the Lease, as hereby amended, and shall perform and observe all
obligations of the tenant under the Lease, as hereby amended, with respect to
the Suite B Premises, including the payment of all monthly basic rent and
Tenant's Proportionate Share of Total Operating Expenses (including HVAC
maintenance expenses) and real property taxes with respect to the Suite B
Premises as herein provided. Since the Suite B Premises Commencement Date, (A)
the term of the Lease with respect to the Suite B Premises has been and shall
continue to be co-terminous with the term of the Lease for the balance of the
Premises and (B) the term "Premises" as used herein and in the Lease shall mean
and include the Suite B Premises.
(b) The commencement date of the Lease with respect to the Suite C-2
Premises (the "Suite C-2 Premises Commencement Date") shall be June 1, 1996,
notwithstanding any later execution and delivery hereof by Landlord and Tenant.
By Tenant's execution and delivery hereof, Tenant acknowledges that since the
Suite C-2 Premises Commencement Date (i) Tenant is and has been in possession of
the Suite C-2 Premises and (ii) Tenant has and shall continue to hold and occupy
the Suite C-2 Premises as part of the Premises upon all the terms and conditions
of the Lease, as hereby amended, and shall otherwise perform or observe all
obligations of the tenant under the Lease, as hereby amended, with respect to
the Suite C-2 Premises, including the payment of all monthly basic rent and
Tenant's Proportionate Share of Total Operating Expenses (including HVAC
maintenance expenses) and real property taxes with respect to the Suite C-2
Premises as herein provided. Since the Suite C-2 Premises Commencement Date (A)
the term of the Lease with respect to the Suite C-2 Premises has been and shall
be co-terminous with the term of the Lease for the balance of the Premises and
(B) the term "Premises" as used herein and in the Lease shall mean and include
the Suite C-2 Premises.
(c) From and after the Suite B Premises Commencement Date and Suite
C-2 Premises Commencement Date, respectively, Tenant shall pay monthly basic
rent for the applicable New Premises in accordance with the provisions of
Paragraph 3 below. In addition, Tenant shall pay at the times and in the manner
provided in the Lease, Tenant's Proportionate Share of Total Operating Expenses
(including HVAC maintenance expenses) and all real property taxes with respect
to and based upon the Rentable Area of the applicable New Premises, as well as
all other charges and additional rent provided for in the Lease with respect to
the applicable New Premises. Tenant's payment obligations on account of Tenant's
Proportionate Share of Total Operating Expenses and all real property taxes with
respect to the applicable New Premises shall be subject to the limitations
provided for in Paragraph 4 below.
(d) The provisions of Paragraphs 2, 3, 4, 6, 7 (except for those
provisions incorporated herein with respect to the New Premises as provided in
Paragraph 4 below), 9, 10, 12, 16 and 17 of the Restatement, the first three
sentences of Paragraph 14 of the Restatement, Exhibit "D" attached to the
Restatement and the Letter Agreement shall have no application with respect to
the New Premises.
(e) Those provisions of the Lease superseded or modified by the
provisions of this Amendment shall have no application (if superseded) or shall
apply only as modified (if modified) with respect to the New Premises.
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2. Improvement of the New Premises. Landlord shall deliver the New
Premises to Tenant "AS IS," and shall have no responsibility either as to
performance or payment of costs, to improve the New Premises for Tenant. Any
work of remodeling or improvement of the New Premises by Tenant following the
Suite B Premises Commencement Date and Suite C-2 Premises Commencement Date, as
applicable, shall be the sole responsibility of Tenant and shall be in
accordance with the applicable provisions of the Lease.
3. Monthly Basic Rent. Tenant shall pay monthly basic rent for the New
Premises in accordance with the following:
(a) Suite B Premises. For the period from the Suite B Premises
Commencement Date through and including the day prior to the first (1st)
anniversary thereof, monthly basic rent for the Suite B Premises shall be the
sum of $2,394.00 (i.e., $0.76 per square foot of Rentable Area per month). For
the period from the first (1st) anniversary of the Suite B Premises Commencement
Date through and including the day prior to the second (2nd) anniversary
thereof, monthly basic rent for the Suite B Premises shall be the sum of
$2,551.50 (i.e., $0.81 per square foot of Rentable Area per month). For the
balance of the Initial Term (as defined in the Restatement), monthly basic rent
for the Suite B Premises shall be the sum of $2,709.00 (i.e., $0.86 per square
foot of Rentable Area per month).
(b) Suite C-2 Premises. For the period from the Suite C-2 Premises
Commencement Date through and including the expiration of the Initial Term,
monthly basic rent for the Suite C-2 Premises shall be the sum of $332.64 (i.e.,
$0.36 per square foot of Rentable Area per month).
All such monthly basic rent for the New Premises shall be paid at the time and
in the manner provided in Section 3.1 of the Original Lease.
4. Additional Rent and Other Charges.
(a) From and after the Suite B Premises Commencement Date and the
Suite C-2 Premises Commencement Date, as applicable, and in addition to monthly
basic rent, Tenant shall pay at the times and in the manner provided in the
Lease Tenant's Proportionate Share of Total Operating Expenses (including HVAC
maintenance expenses) and real property taxes and all other charges and
additional rent provided for in the Lease with respect to the applicable New
Premises and based upon the Rentable Area thereof.
(b) For purposes of determining Tenant's payment obligations on
account of Total Operating Expenses (including HVAC maintenance expenses) and
real property taxes, the provisions of clause (ii) of Paragraph 7(b) of the
Restatement shall apply with respect to the New Premises.
5. Tenant's Allocated Parking Spaces. Notwithstanding anything to the
contrary in the Lease, as hereby amended, Tenant's Allocated Parking Spaces for
the New Premises shall be eleven (11) parking spaces. The provisions of
Paragraph 9 of the Restatement shall not apply with respect to the New Premises.
6. Insurance and Related Matters.
(a) Insurance on Buildings. Notwithstanding anything to the contrary
in the Original Lease, and without limiting the provisions of clause (ii) of
Paragraph 13(l) of the Restatement, Landlord shall maintain the insurance
described in clauses (a) and (d) of Section 15.2 of the Original Lease with
respect to each Premises and Building (including any Premises constituting only
a portion of an entire Building). Such insurance may be maintained as part of
Landlord's blanket property insurance. The actual cost of maintaining such
insurance with respect to each Building (appropriately allocated and segregated
in Landlord's reasonable determination if carried as part of Landlord's blanket
property coverage) shall be included in Total Operating Expenses for such
Building as to which Tenant shall pay, as additional rent, Tenant's
Proportionate Share thereof in accordance with the
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provisions of Exhibit "B" attached to the Original Lease, as amended by the
Restatement; provided, however, that in no event shall Tenant be responsible for
any portion of the cost of maintaining earthquake coverage or for the cost of
insurance coverage pursuant to clause (a) of Section 15.2 in excess of full
replacement cost as determined by Landlord in its sole, but reasonable
discretion; provided, further, that in no event shall the limitations on the
amount of Additional Rent payable by Tenant for the applicable Premises as
provided in Paragraph 7 of the Restatement apply with respect to any amount
included in Total Operating Expenses pursuant to this Paragraph 6. In other
words, Tenant shall pay its Proportionate Share of the cost of the insurance
specified herein, notwithstanding the limitations provided for in such Paragraph
7 of the Restatement. As used in such Section 15.2 of the Original Lease, the
term "All Risk" shall include fire insurance with an extended coverage
endorsement.
(b) Tenant's Liability Insurance. The last sentence of Section
15.1(b) of the Original Lease, as amended by clause (i) of Paragraph 13(l) of
the Restatement, is hereby deleted. As a matter of clarification in the
Restatement, it is acknowledged and agreed that the phrases "second unnumbered
paragraph" and "last unnumbered paragraph" as used in Paragraph 13(l) of the
Restatement shall mean, respectively, "the paragraph appearing directly below
Section 15.1(b) of the Original Lease" and the "last full paragraph of Section
15.1 of the Original Lease."
(c) Insurance Company Qualifications; Certificates of Insurance.
Section 15.3 of the Lease, as amended by clause (iii) of Paragraph 13(1) of the
Restatement, is hereby deleted in its entirety and replaced with the following:
"15.3 All insurance required to be carried by Landlord or Tenant
shall be with companies rated A:VII or better in the then most recent
version of Best's Insurance Guide. Tenant shall use reasonable efforts to
deliver to Landlord at least ten (10) days prior to the expiration or
renewal date of any policy of insurance required to be maintained by Tenant
hereunder, but in any event prior to the lapse of coverage under any such
policy, copies of the policies or certificates evidencing such insurance.
At the written request of Tenant, Landlord shall provide to Tenant a copy
of the certificate evidencing the insurance required to be maintained by
Landlord hereunder. All policies and certificates maintained and delivered,
as applicable, pursuant to this Article shall contain liability limits not
less than those set forth herein, shall list the additional insureds and
shall specify all endorsements and special coverages required. Each policy
of insurance required to be maintained by Tenant hereunder shall contain a
provision requiring not less than thirty (30) days' written notice to
Landlord prior to any cancellation, non-renewal or material amendment
thereof. For the purposes of this Article, "term" and "term of this Lease"
shall mean the period from the Commencement Date through the later of the
expiration or termination of the Lease term or the date Tenant surrenders
possession of the Premises to Landlord. All policies of insurance required
to be carried hereunder shall be primary, and shall not contain a
co-insurance or contribution provision. For purposes of Section 15.3 of the
Lease, if the rating of any of Landlord's or Tenant's insurance carriers on
any insurance policy(ies) required to be maintained under the Lease drops
below A:VII, the party maintaining such insurance shall not be required to
replace such insurance carrier until the renewal date of the policy(ies),
unless such rating drops below B:VII, in which event such insurance carrier
shall be replaced with a carrier meeting the A:VII rating requirement
within ninety (90) days after the occurrence thereof."
(d) Landlord's Liability Insurance. Section 15.4 of the Lease is
hereby deleted in its entirety and replaced with the following:
"15.4 Landlord shall at all times during the term maintain in full
force and effect a policy or policies of commercial general liability
insurance insuring against loss, damage or liability for injury to or death
of any person or loss or
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damage to property occurring in the Common Facilities (as defined in
Exhibit "B" hereto) or in the public areas of the Building, with not less
than $2,000,000.00 combined single limit for both bodily injury and
property damage, including contractual liability (including Landlord's
indemnification obligations under this Lease). The liability insurance
required to be carried by Landlord hereunder shall be on an occurrence (as
opposed to claims made) basis. Landlord may at any time and from time to
time increase such insurance limits to a level which Landlord reasonably
deems necessary for its full and adequate protection. Landlord shall also
at all times during the term maintain in full force and effect a policy or
policies of fire insurance with an extended coverage endorsement with
respect to the Common Facilities, and Landlord may maintain such other
coverage endorsements, including, but not limited to "All Risk," vandalism
and earthquake insurance, as Landlord deems necessary or advisable with
respect thereto. The actual cost of all insurance obtained by Landlord
hereunder shall be included in Total Operating Expenses (as defined in
Exhibit "B" hereto)."
(e) Damage or Destruction. The first sentence of clause (ii)(A)
of Paragraph 13(n) of the Restatement is hereby amended to read as follows:
"In the event such Premises, access to them, or the Parking Areas
or driveway serving such Premises are wholly or partially destroyed by fire
or other casualty covered by the insurance required to be maintained by
Landlord under the terms of the Lease, as hereby amended, or any insurance
coverage actually carried by Landlord with respect thereto, Landlord shall
rebuild, repair or restore the Premises and access thereto to substantially
the same condition as when the same were furnished to Tenant, excluding any
improvements installed therein by Tenant and Tenant's personal property,
and the Lease, as hereby amended, will continue in full force and effect
with respect to such Premises."
(f) Tenant's Option to Maintain Insurance. Notwithstanding
anything to the contrary in this Paragraph 6, so long as Tenant is not in
default (i.e., after any applicable notice and cure period) under the Lease, as
hereby amended, Tenant shall have the option at any time during the term of the
Lease to maintain the insurance described in clauses (a) and (d) of Section 15.2
of the Original Lease. Such option shall be exercised, if at all, upon not less
than sixty (60) days' prior written notice to Landlord stating, in substance,
that Tenant is electing to maintain such insurance. In the event that Tenant
shall be entitled to exercise such option and shall do so in such manner, then
from and after the sixtieth (60th) day following the effective date of Tenant's
notice to Landlord through the expiration of the term, (i) Tenant shall, at its
sole cost and expense, maintain such insurance and (ii) the provisions of
subparagraphs (a), (c), (d) and (e) of this Paragraph 6 shall have no further
force or application with respect to the Lease, as hereby amended. In addition,
Tenant shall not be responsible for any portion of the cost of the insurance
incurred by Landlord pursuant to subparagraph (a) above for any period
subsequent to the sixtieth (60th) day following the effective date of Tenant's
notice to Landlord.
7. Effective Date of Paragraphs. The amendments to the Lease provided for
in Paragraphs 6(a) through (e) hereof shall be effective as of December 1, 1995,
notwithstanding the later execution and delivery hereof by Landlord and Tenant.
8. Defined Terms. Any term used in this Amendment and not otherwise
defined herein shall have the meaning assigned to such term in the Lease.
9. Lease in Effect. Landlord and Tenant acknowledge and agree that the
Lease, as hereby amended, remains in full force and effect in accordance with
its terms. In the event of any conflict between the terms of this Amendment and
the terms of the Original Lease and/or the Restatement, the terms of this
Amendment shall control.
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IN WITNESS WHEREOF, the parties have executed this First Amendment to
Complete Restatement of Lease Amendments and Amendment to Building Lease as of
the day and year first above
written.
"Tenant" "Landlord"
APRIA HEALTHCARE GROUP INC., X. X. XXXXXXXXXX & SONS,
a Delaware corporation a California general
partnership
By
------------------------- By
Title -------------------------------
------------------------- Managing Partner
By
------------------------- By
Title --------------------------------
------------------------- Managing Partner
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EXHIBIT "A"
Site plan, indicating the layout of Harbor Gateway Business Center in Costa
Mesa, California and the location of premises within the Business Center to be
leased by Tenant from Landlord pursuant to this First Amendment to Complete
Restatement of Lease Amendments and Amendment to Building Lease.
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