EXHIBIT 10.65
CHINO, CA
LEASE AGREEMENT
MPT OF CHINO, LLC,
a Delaware limited liability company
Lessor
AND
VERITAS HEALTH SERVICES, INC.
a California corporation
Lessee
AND
PRIME HEALTHCARE SERVICES, LLC,
a California limited liability company
Prime
Property:
One Hundred Twenty Six (126)-Bed Acute Care Hospital Facility
(Commonly referred to as the Chino Valley Medical Center)
0000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx 00000
November 30, 2005
Table of Contents
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ARTICLE I LEASED PROPERTY; TERM.................................. 1
ARTICLE II DEFINITIONS............................................ 2
ARTICLE III RENT................................................... 11
3.1 Base Rent.............................................. 11
3.2 Additional Charges..................................... 12
3.3 Absolute Net Lease..................................... 12
3.4 Lease Deposit.......................................... 12
3.5 Adjustments............................................ 12
3.6 Rent and Payments under Parking Lot Lease.............. 12
ARTICLE IV IMPOSITIONS............................................ 13
4.1 Payment of Impositions................................. 13
4.2 Adjustment of Impositions.............................. 13
4.3 Utility Charges........................................ 13
4.4 Insurance Premiums..................................... 13
ARTICLE V NO TERMINATION......................................... 14
5.1 Acknowledgement........................................ 14
ARTICLE VI OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY..... 14
6.1 Ownership of the Leased Property....................... 14
6.2 Lessee's Personal Property............................. 14
ARTICLE VII CONDITION AND USE OF LEASED PROPERTY................... 15
7.1 Condition of the Leased Property....................... 15
7.2 Use of the Leased Property............................. 15
7.3 Lessor to Grant Easements.............................. 16
ARTICLE VIII LEGAL AND INSURANCE REQUIREMENTS....................... 16
8.1 Compliance with Legal and Insurance Requirements....... 16
8.2 Legal Requirement Covenants............................ 17
8.3 Hazardous Materials.................................... 17
8.4 Healthcare Laws........................................ 17
8.5 Representations and Warranties......................... 18
8.6 Single Purpose Entity.................................. 18
8.7 Organizational Documents............................... 18
ARTICLE IX REPAIRS; RESERVE; RESTRICTIONS......................... 19
9.2 Reserves for Extraordinary Repairs..................... 20
9.3 Encroachments; Restrictions............................ 20
ARTICLE X CAPITAL ADDITIONS...................................... 21
10.1 Construction of Capital Additions to the Leased
Property............................................ 21
10.2 Capital Additions Financed by Lessee................... 21
10.3 Capital Additions Financed by Lessor................... 22
10.4 Salvage................................................ 24
ARTICLE XI LIENS.................................................. 24
ARTICLE XII PERMITTED CONTESTS..................................... 24
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ARTICLE XIII INSURANCE.............................................. 25
13.1 General Insurance Requirements......................... 25
13.2 Additional Insurance................................... 27
13.3 Waiver of Subrogation.................................. 27
13.4 Form of Insurance...................................... 27
13.5 Increase in Limits..................................... 28
13.6 Blanket Policy......................................... 28
13.7 No Separate Insurance.................................. 28
ARTICLE XIV FIRE AND CASUALTY...................................... 29
14.1 Insurance Proceeds..................................... 29
14.2 Reconstruction in the Event of Damage or Destruction
Covered by Insurance................................ 29
14.3 Reconstruction in the Event of Damage or Destruction
Not Covered by Insurance............................ 30
14.4 Lessee's Personal Property............................. 30
14.5 Restoration of Lessee's Property....................... 30
14.6 No Abatement of Rent................................... 30
14.7 Damage Near End of Term................................ 30
14.8 Termination of Right to Purchase....................... 30
14.9 Waiver................................................. 31
ARTICLE XV CONDEMNATION........................................... 31
15.1 Definitions............................................ 31
15.2 Parties' Rights and Obligations........................ 31
15.3 Total Taking........................................... 31
15.4 Partial Taking......................................... 31
15.5 Restoration............................................ 31
15.6 Award Distribution..................................... 31
15.7 Temporary Taking....................................... 32
ARTICLE XVI DEFAULT................................................ 32
16.1 Events of Default...................................... 32
16.2 Events of Default in Financial Covenants............... 36
16.3 Additional Expenses.................................... 38
16.4 Intentionally Omitted.................................. 38
16.5 Waiver................................................. 38
16.6 Application of Funds................................... 38
16.7 Notices by Lessor...................................... 38
16.8 Lessor's Contractual Security Interest................. 38
ARTICLE XVII LESSOR'S RIGHT TO CURE................................. 40
ARTICLE XVIII PURCHASE OF THE LEASED PROPERTY........................ 40
ARTICLE XIX HOLDING OVER........................................... 41
ARTICLE XX INTENTIONALLY OMITTED.................................. 41
ARTICLE XXI INTENTIONALLY OMITTED.................................. 41
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ARTICLE XXII RISK OF LOSS........................................... 41
ARTICLE XXIII INDEMNIFICATION........................................ 41
ARTICLE XXIV ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION...... 42
24.1 Assignment and Subletting.............................. 42
24.2 Sublease Limitations................................... 42
24.3 Sublease Subordination and Non-Disturbance............. 43
ARTICLE XXV OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES
AND OTHER CERTIFICATES.............................. 43
ARTICLE XXVI INSPECTION............................................. 45
ARTICLE XXVII NO WAIVER.............................................. 45
ARTICLE XXVIII REMEDIES CUMULATIVE.................................... 45
ARTICLE XXIX SURRENDER.............................................. 45
ARTICLE XXX NO MERGER OF TITLE..................................... 46
ARTICLE XXXI TRANSFERS BY LESSOR.................................... 46
ARTICLE XXXII QUIET ENJOYMENT........................................ 46
ARTICLE XXXIII NOTICES................................................ 47
ARTICLE XXXIV APPRAISAL.............................................. 48
ARTICLE XXXV PURCHASE RIGHTS........................................ 48
35.1 Lessee's Option to Purchase............................ 48
35.2 Lessor's Option to Purchase Lessee's Personal
Property............................................ 49
35.3 Lessor's Put Option.................................... 49
35.4 Lessee Substitution for Parking Lot Property........... 49
ARTICLE XXXVI INTENTIONALLY OMITTED.................................. 50
ARTICLE XXXVII FINANCING OF THE LEASED PROPERTY....................... 50
37.1 Financing by Lessor.................................... 50
ARTICLE XXXVIII SUBORDINATION AND NON-DISTURBANCE...................... 50
ARTICLE XXXIX LICENSES............................................... 51
ARTICLE XL COMPLIANCE WITH HEALTHCARE LAWS........................ 52
ARTICLE XLI LESSOR'S RIGHT TO SELL AND LESSEE'S RIGHT OF FIRST
REFUSAL............................................. 53
41.1 Lessor's Right to Sell................................. 53
41.2 Lessee's Right of First Refusal........................ 53
ARTICLE XLII MISCELLANEOUS.......................................... 53
42.1 General................................................ 53
42.2 Lessor's Expenses...................................... 54
42.3 Assets Purchased Pursuant to Purchase Options.......... 54
42.4 Entire Agreement; Modifications........................ 54
42.5 Lease Guaranty......................................... 54
42.6 Future Financing....................................... 54
42.7 Change in Ownership/Control............................ 54
42.8 Lessor Securities Offering and Filings................. 54
42.9 Non-Recourse as to Lessor.............................. 55
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42.10 Management Agreements.................................. 55
42.11 Prime's Right to Exercise Purchase Options............. 55
42.12 Governing Law.......................................... 55
42.13 Jurisdiction and Venue................................. 55
42.14 Counterparts........................................... 56
ARTICLE XLIII MEMORANDUM OF LEASE.................................... 56
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LEASE AGREEMENT
This LEASE AGREEMENT (the "Lease") is dated as of the 30th day of November,
2005, and is among MPT OF CHINO, LLC, a Delaware limited liability company
("Lessor"), having its principal office at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, VERITAS HEALTH SERVICES, INC., a California
corporation ("Lessee"), having its principal office at 0000 Xxxxxx Xxxxxx,
Xxxxx, Xxxxxxxxxx 00000, and PRIME HEALTHCARE SERVICES, LLC, a California
limited liability company ("Prime"), having its principal office at 00000 Xxxx
Xxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, Lessor is the current owner of that certain real property located
in Chino, San Bernardino County, California, which real property is more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference, and all improvements located thereon;
WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated
and delivered to Lessor as of the date hereof, whereby Prime assigned to Lessor,
and Lessor assumed from Prime, all of Prime's right, title and interest under
that certain Restated and Amended Lease (Parking Lot) dated April 7, 2001 (the
"Parking Lot Lease"), Lessor holds a leasehold interest in that certain real
property owned by Xxxxxxxx Lutheran Church (the "Parking Lot Lessor") more
particularly described in the Parking Lot Lease and on EXHIBIT B attached hereto
and incorporated herein by reference, and all improvements located thereon (the
"Parking Lot Property");
WHEREAS, Lessor has agreed to grant to Prime the right and option to
exercise the purchase options granted to Lessee hereunder pursuant and subject
to the terms, provisions and conditions set forth herein; and
WHEREAS, Lessor, Lessee and Prime desire to enter into this Lease on the
terms and conditions hereinafter provided.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
LEASED PROPERTY; TERM
Lessor and Lessee acknowledge and agree that this Lease is subject to
Lessor's continued leasehold interest in the Parking Lot Property and Lessee
accepts, assumes and agrees to perform and observe all of the terms, conditions,
provisions, limitations and obligations contained in the Parking Lot Lease to be
performed on the part of the Lessor as lessee therein, including the payment of
Parking Lot Rent, except as expressly modified and limited herein. In the event
of termination of the Parking Lot Lease, by lapse of time or for any other
reason, prior to the cancellation or termination of this Lease, this Lease shall
terminate in accordance with and subject to the rights, terms and conditions of
Sections 35.3 and 35.4 below. Upon and subject to the foregoing and the terms
and conditions hereinafter set forth, and subject to the rights of any tenants,
subtenants, lessees or sublessees under any Existing Leases as described in
Section 24.1 below, Lessor leases to Lessee and Lessee rents from Lessor all of
Lessor's rights and interest in and to the following property (collectively, the
"Leased Property"):
(a) the real property described on EXHIBIT A attached hereto (the
"Land");
(b) the Parking Lot Property including the real estate as described on
EXHIBIT B attached hereto (subject to the terms, provisions and conditions
of the Parking Lot Lease);
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(c) the Facility and all buildings, structures, Fixtures (as
hereinafter defined) and other improvements of every kind, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
and off-site), parking areas and roadways appurtenant to such buildings and
structures presently or hereafter situated upon the Land (but specifically
excluding the Power Generation Facility) and Capital Additions (as
hereinafter defined) financed by Lessor (collectively, the "Leased
Improvements");
(d) all easements, rights and appurtenances relating to the Land and
the Leased Improvements;
(e) all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, inspection reports, engineering and
environmental plans and studies, title reports, floor plans, landscape
plans and other plans relating to the Land and Leased Improvements; and
(f) all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection
with, and permanently affixed to or incorporated into the Leased
Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, and built-in oxygen and
vacuum systems, all of which, to the greatest extent permitted by law, are
hereby deemed by the parties hereto to constitute real estate, together
with all replacements, modifications, alterations and additions thereto,
but specifically excluding the Power Generation Facility, and all items
included within the category of Lessee's Personal Property as defined in
Article II below (collectively the "Fixtures").
SUBJECT, HOWEVER, to the matters set forth on EXHIBIT C attached hereto (the
"Permitted Exceptions"); Lessee shall have and hold the Leased Property for a
fixed term (the "Fixed Term") commencing on the date hereof (the "Commencement
Date") and ending at midnight on the last day of the one hundred and eightieth
(180th) month period after the Commencement Date, unless sooner terminated as
herein provided.
So long as Lessee is not in default, and no event has occurred which with
the giving of notice or the passage of time or both would constitute a default,
under any of the terms and conditions of this Lease, or under any of the terms
and conditions of the Other Leases (as hereinafter defined), Lessee shall have
the option to extend the Fixed Term of this Lease on the same terms and
conditions set forth herein for three (3) additional periods of five (5) years
each (each an "Extension Term"). Lessee may exercise each such option by giving
written notice to the Lessor at least three hundred sixty five (365) days prior
to the expiration of the Fixed Term or Extension Term, as applicable (the
"Extension Notice"). If during the period following the delivery of the
Extension Notice to Lessor, a default or breach by Lessee shall occur under this
Lease, or under any of the Other Leases, and such default or breach is not cured
within the applicable time periods as provided herein, Lessee shall be deemed to
have forfeited all Extension Options. If Lessee elects not to exercise its
option to extend, all subsequent options to extend shall be deemed to have
lapsed.
ARTICLE II
DEFINITIONS
For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP as at the time applicable,
(c) all references in this Lease to designated "Articles", "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:
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ACMs: As defined in Section 8.3.
Added Value Additional: As defined in Section 10.2.
Additional Charges: As defined in Section 3.2.
Adjustment Date: January 1 of each year commencing on January 1, 2007.
Affiliate: When used with respect to any corporation, limited liability
company, or partnership, the term "Affiliate" shall mean any person,
corporation, limited liability company, partnership or other legal entity,
which, directly or indirectly, controls or is controlled by or is under common
control with such corporation, limited liability company, or partnership. For
the purposes of this definition, "control" (including the correlative meanings
of the terms "controlled by" and "under common control with"), as used with
respect to any person, corporation, limited liability company, partnership or
other legal entity, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, corporation, limited liability company, partnership or other legal
entity, through the ownership of voting securities, partnership interests or
other equity interests.
Award: As defined in Section 15.1.
Base Rent: As defined in Section 3.1.
Business: The operation of the Facility and the engagement in and pursuit
and conduct of any business venture or activity related thereto.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.
Capital Additions: One or more new buildings or one or more additional
structures annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land during the Term, including the
construction of a new wing or new story.
Capital Addition Cost: The cost of any Capital Additions proposed to be
made by Lessee whether or not paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of the Capital Additions, including site
preparation and improvement, materials, labor, supervision and certain related
design, engineering and architectural services, the cost of any fixtures, the
cost of construction financing and miscellaneous costs approved by Lessor, (b)
if agreed to by Lessor in writing in advance, the cost of any land contiguous to
the Leased Property purchased for the purpose of placing thereon the Capital
Additions or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, (c) the
cost of insurance, real estate taxes, water and sewage charges and other
carrying charges for such Capital Additions during construction, (d) the cost of
title insurance, (e) reasonable fees and expenses of legal counsel, (f) filing,
registration and recording taxes and fees, (g) documentary stamp taxes, if any,
and (h) all reasonable costs and expenses of Lessor and any Lending Institution
which has committed to finance the Capital Additions, including, but not limited
to, (i) the reasonable fees and expenses of their respective legal counsel, (ii)
all printing expenses, (iii) the amount of any filing, registration and
recording taxes and fees, (iv) documentary stamp taxes, if any, (v) title
insurance charges, appraisal fees, if any, (vi) rating agency fees, if any, and
(vii) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.
Capital Improvement Reserve: As defined in Section 9.1(e).
Code: The Internal Revenue Code of 1986, as amended.
Combined EBITDAR: The combined EBITDAR of the Desert Valley Tenants as
reduced for any inter-company transactions.
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Combined Fixed Charges: The sum of the combined Lease Payments and required
principal and interest payments of the Desert Valley Tenants pursuant to the
Total Debt as reduced for any inter-company transactions.
Combined Lease Payments: The combined payments of Base Rent of the Desert
Valley Tenants required pursuant to this Lease and any other leases between the
Desert Valley Tenants and Lessor or any of Lessor's Affiliates.
Commencement Date: The date hereof.
Commitment Letter: The commitment letter between Lessor and Prime
Healthcare Systems, LLC (and their Affiliates) dated May 2, 2005, and executed
by Lessee on May 3, 2005, as amended.
Condemnation, Condemnor: As defined in Section 15.1.
Consolidated Net Worth: At any time, the sum of the following for
Guarantors or Lessee and their respective consolidated subsidiaries (excluding
PHS II) on a consolidated basis determined in accordance with GAAP.
(a) the amount of capital or stated capital (after deducting the cost
of any treasury shares), plus
(b) the amount of capital surplus and retained earnings (or, in the
case of a capital surplus or retained earnings deficit, minus the amount of
such deficit), minus
(c) the sum of the following (without duplication of deductions in
respect of items already deducted in arriving at surplus and retained
earnings): (i) unamortized debt discount and expense and (ii) any write-up
in book value of assets resulting from a revaluation thereof pursuant to
generally accepted accounting principles subsequent to the most recent
Statements of Cash Flow prior to the date thereof, except any net write-up
in value of foreign currency in accordance with GAAP; any write-up
resulting from reversal of a reserve for bad debts or depreciation; and any
write-up resulting from a change in methods of accounting for inventory.
Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the term of this Lease,
such other governmental index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.
CPI: The Consumer Price Index.
Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
held by Lessee, if any, with respect to the Leased Property, the Tenant Leases
or the Tenants.
Date of Taking: As defined in Section 15.1.
Desert Valley Tenants: The Lessee, the Guarantors and any of their
respective Affiliates who are also or who become tenants of Lessor or any of its
Affiliates; provided, however, Prime Healthcare Services II, LLC, as lessee
under the Xxxxxxx Oaks Lease (as hereinafter defined), shall not be included as
a Desert Valley Tenant for purposes of this Lease.
EBITDAR: Earnings before the deduction of interest, taxes, depreciation,
amortization and rent, as determined in accordance with GAAP.
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Encumbrances: As defined in Article XXXVII.
Energy Services Agreement: That certain Energy Services Agreement dated as
of December 15, 2004, by and between U.S. Power Corporation and Veritas
Healthcare Services, Inc. d/b/a Chino Valley Medical Center.
Equity Investment: The Purchase Price.
Events of Default: As defined in Section 16.1 and Section 16.2.
Existing Leases: As defined in Section 24.1.
Extension Notice: As defined in Article I.
Extension Term: As defined in Article I.
Extraordinary Repairs: All repairs to the Facility of every kind and
nature, whether interior or exterior, structural or non-structural (including,
without limitation, all parking decks and parking lots) which are considered to
be extraordinary in nature (as opposed to being ordinary or normal in nature),
as Lessee and/or Lessor may determine to be necessary or appropriate from time
to time during the Term.
Facility: The licensed one hundred twenty-six (126)-bed acute care hospital
facility and all improvements in connection therewith operated on the Land, but
specifically excluding the Power Generation Facility.
Facility Instrument: A note (whether secured or unsecured), loan agreement,
credit agreement, guaranty, security agreement, mortgage, deed of trust or other
security agreement pursuant to which a Facility Lender has provided financing to
Lessor in connection with the Leased Property or any part thereof, or financing
provided to Lessee, if such financing is provided by Lessor or any Affiliate of
Lessor, to Lessee, and any and all renewals, replacements, modifications,
supplements, consolidations, spreaders and extensions thereof.
Facility Lender: A holder (which may include any Affiliate of Lessor) of
any Facility Instrument.
Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) less the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by Lessee had been
constructed.
Fair Market Value: The Fair Market Value of the Leased Property, including
all Capital Additions, (a) and shall be determined in accordance with the
appraisal procedures set forth in Article XXXIV or in such other manner as shall
be mutually acceptable to Lessor and Lessee, (b) and shall not take into account
any reduction in value resulting from any indebtedness to which the Leased
Property is subject and which encumbrance Lessee or Lessor is otherwise required
to remove pursuant to any provision of this Lease or agrees to remove at or
prior to the closing of the transaction as to which such Fair Market Value
determination is being made. The positive or negative effect on the value of the
Leased Property attributable to the interest rate, amortization schedule,
maturity date, prepayment penalty and other terms and conditions of any
Encumbrance on the Leased Property, which is not so required or agreed to be
removed shall be taken into account in determining such Fair Market Value.
Notwithstanding anything contained herein to the contrary, any appraisal of the
Leased Property shall assume the Lease is in place for a term of fifteen (15)
years, and based solely on the rents and other revenues generated and to be
generated pursuant to this Lease without any regard to the Lessee's operations.
Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.
Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.
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Fixed Term: As defined in Article I.
Fixtures: As defined in Article I.
GAAP: Generally accepted accounting principles in the United States,
consistently applied.
Governmental Entity: Any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.
Guarantors: Jointly and severally, Prime Healthcare Services, LLC, a
California limited liability company, Prime Healthcare Services, Inc., a
Delaware corporation, Desert Valley Medical Group, Inc., a California
corporation, and Desert Valley Hospital, Inc., a California corporation.
Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Laws.
Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and all similar federal, state and local
environmental statutes, ordinances and the regulations, orders, or decrees now
or hereafter promulgated thereunder.
Healthcare Laws: All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Xxxxx Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section
1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health
Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement
(18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C.
1035), and Patient Inducement Statute, and equivalent state statutes and any and
all rules or regulations promulgated by governmental entities with respect to
any of the foregoing.
Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of Lessor,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes), assessments (including, without limitation,
all assessments, charges and costs imposed under the Permitted Exceptions, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term), ground rents, water, sewer or other rents and charges, excises, tax
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Lessee), and all other fees, costs and expenses which at any time prior to,
during or in respect of the Term hereof may be charged, assessed or imposed on
or in respect of or be a lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, sales from, or activity conducted on, or in connection
with, the Leased Property or the leasing or use of the Leased Property or any
part thereof; provided, however, nothing contained in this Lease shall be
construed to require Lessee to pay (1) any
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tax based on net income (whether denominated as a franchise or capital stock,
financial institutions or other tax) imposed on Lessor, or (2) any transfer or
net revenue tax of Lessor, or (3) any tax imposed with respect to the sale,
exchange or other disposition by Lessor of any portion of the Leased Property or
the proceeds thereof, or (4) except as expressly provided elsewhere in this
Lease, any principal or interest on any Encumbrance on the Leased Property,
except to the extent that any tax, assessment, tax levy or charge which Lessee
is obligated to pay pursuant to the first sentence of this definition and which
is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or
(2) is levied, assessed or imposed expressly in lieu thereof, in which case
Lessee shall pay.
Initial Purchase Price: A price equal to the purchase price paid by Lessor
(and its Affiliates, including, without limitation, MPT Operating Partnership,
L.P.) for the Leased Property pursuant to the Purchase Agreement, plus all costs
and expenses incurred in association with the purchase and lease of such Leased
Property, including, but not limited to, legal, appraisal, title, survey,
environmental, seismic, engineering and other fees and expenses paid in
connection with the inspection of the Leased Property and site visits, and fees
paid to advisors and brokers, except to the extent such items are paid by
Lessee.
Insurance Premiums: As defined in Section 4.4.
Insurance Requirements: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy, and such additional
insurance which the Lessor may reasonably require.
Land: As defined in Article I.
Lease: As defined in the Preamble.
Lease Assignment: That certain Assignment of Rents and Leases to be
effective the Commencement Date executed and delivered by Lessee to Lessor,
pursuant to the terms of which Lessee has assigned to Lessor each of the Tenant
Leases and Credit Enhancements, if any, as security for the obligations of
Lessee under this Lease (as this Lease may be amended, modified and/or restated
from time to time), the obligations of Guarantors under the Lease Guaranty and
any other obligations of Lessee to Lessor, any Guarantor or any Affiliate of
Lessee or any Guarantor to Lessor or any Affiliate of Lessor.
Lease Guaranty: That certain Lease Guaranty to be effective on the
Commencement Date executed and delivered by Guarantors in favor of Lessor
contemporaneously herewith.
Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.
Leased Improvements; Leased Property: Each as defined in Article I.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Lessee's operation of its business on the
Leased Property, along with the Leased Property or the construction, use or
alteration thereof (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, or alterations in or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Lessee (other than encumbrances created by Lessor without the consent
of Lessee), at any time in force affecting the Leased Property.
Lending Institution: Any insurance company, federally insured commercial or
savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any
7
corporation qualified to be treated for federal tax purposes as a real estate
investment trust, having a net worth of at least Fifty Million Dollars
($50,000,000).
Lessee: Veritas Health Services, Inc., a California corporation, and its
successors and permitted assigns, which, if required by Lessor, shall at all
times during the term of this Lease be a Single Purpose Entity created and to
remain in good standing as required hereunder for the sole purpose of leasing
and operating the Facility.
Lessee's Personal Property: All of Lessee's machinery, equipment, medical
equipment (including all medical equipment affixed to the Leased Property),
furniture, furnishings, trailers, movable walls or partitions, computers, trade
fixtures, consumable inventory and supplies and all other personal property
currently owned or acquired after the execution of this Lease, and used or
useful in the operation of the Facility, including, without limitation, all
items of furniture, furnishings, equipment, supplies and inventory, and Lessee's
operating licenses, but excluding Lessee's accounts receivable and any items
included within the definition of Fixtures (excluding the Power Generation
Facility, unless Lessee purchases the Power Generation Facility as provided in
the Energy Services Agreement).
Lessor: MPT of Chino, LLC, a Delaware limited liability company, and its
successors and assigns.
Licenses: As defined in Article XXXIX.
Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the real estate
and the Leased Improvements and the operations of the Facility.
Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property.
Market Value of Desert Valley Tenants: An amount equal to the collective
EBITDAR of the Desert Valley Tenants, on a trailing twelve (12) months basis,
multiplied by four (4).
Medicaid: The medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding
thereto.
Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.
MPT: Medical Properties Trust, Inc., an Affiliate of Lessor.
MPT Development Services: MPT Development Services, Inc., an Affiliate of
Lessor.
Officer's Certificate: A certificate of Lessee signed by the Chairman of
the Board of Directors, the President, any Vice President or the Treasurer of
Lessee or another officer or representative authorized to so sign by the Board
of Directors or other governing body of Lessee, or any other person whose power
and authority to act has been authorized by delegation in writing by any of the
persons holding the foregoing offices.
Option Price: As defined in Section 35.1.
Other Leases: All other leases entered into between Lessor or any Affiliate
of Lessor, on the one hand, and Lessee, any Guarantor, or any of their
respective Affiliates, on the other hand, but specifically excluding the Xxxxxxx
Oaks Lease.
Overdue Rate: On any date, a rate per annum equal to four percent (4%).
8
Parking Lot Interest: Lessor's leasehold interest in and to the Parking Lot
Property under the Parking Lot Lease. -
Parking Lot Lease: The Parking Lot Lease as defined in the Recitals of this
Lease.
Parking Lot Lessor: The Parking Lot Lessor as defined in the Recitals of
this Lease.
Parking Lot Property: The property leased pursuant to the Parking Lot
Lease.
Parking Lot Rent: All rent, additional rent and other costs and expenses
paid by Lessor or due and payable under the Parking Lot Lease.
Payment Date: Any due date for the payment of the installments of Base
Rent, Additional Rent, or any other sums payable under this Lease.
Permitted Exceptions: As defined in Article I.
PHS II: Prime Healthcare Services II, LLC, a California limited liability
company.
Power Generation Facility: The energy generation equipment and component
parts, supplies and other items used in connection therewith placed on and used
in connection with the operation of the Facility, as more particularly described
in the Energy Services Agreement.
Primary Intended Use: As defined in Article VII.
Prime: As defined in the Preamble.
Prime's Personal Property: All of Prime's machinery, equipment, medical
equipment (including all medical equipment affixed to the Leased Property),
furniture, furnishings, trailers, movable walls or partitions, computers, trade
fixtures, consumable inventory and supplies and all other personal property
currently owned or acquired after the execution of this Lease, and used or
useful in the operation of the Facility, including without limitation, all items
of furniture, furnishings, equipment, supplies and inventory.
Prime Rate: The annual rate announced by Citibank in New York, New York, to
be the prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.
Purchase Agreement: That certain Purchase and Sale Agreement dated as of
November 30, 2005, by and among Lessor, Lessee, the Guarantors and MPT Operating
Partnership, L.P.
Purchase Price: The Initial Purchase Price, plus all costs and expenses not
included in the Initial Purchase Price incurred or paid in connection with the
purchase and lease of the Leased Property, including, but not limited to, legal,
appraisal, title, survey, environmental, seismic, engineering and other fees and
expenses paid in connection with the inspection of the Leased Property, and paid
to advisors and brokers (except to the extent such items are paid by Lessee or
Prime), and shall include the costs of Capital Additions financed by Lessor (and
Lessor's Affiliates) as provided in Section 10.3 of this Lease (collectively the
"Purchase Price Adjustment").
Purchase Price Adjustment: As defined in the above definition of "Purchase
Price."
Put Event: As defined in Section 35.3.
Put Notice: As defined in Section 35.3.
Put Option: As defined in Section 35.3.
9
Real Estate Taxes: All real estate taxes, assessments and special
assessments and dues which shall be levied, or imposed upon the Leased Property
during the Term.
Removal Notice: As defined in Section 16.2.
Rent: Collectively, the Base Rent (as increased in accordance with the
provisions of Section 3.1(b) hereof) and the Additional Charges.
Request: As defined in Section 10.3(a).
Security Agreements: Those certain Security Agreements to be effective on
the Commencement Date executed and delivered by Lessee and Prime, individually,
to Lessor, pursuant to the terms of which Lessee and Prime have granted to
Lessor a first lien and security interest in all of Lessee's and Prime's rights
under this Lease (as this Lease may be amended, modified and/or restated from
time to time), to all of Lessee's Personal Property (excluding accounts
receivable) and certain of Prime's Personal Property, and to all of the
Licenses.
Xxxxxxx Oaks Lease: Any lease agreement entered into or to be entered into
between any Affiliate of Lessor and any Affiliate of Lessee relating to that
certain healthcare facility located in Xxxxxxx Oaks, California.
Single Purpose Entity: An entity which (i) exists solely for the purpose of
owning and/or leasing all or any portion of the Facility and conducting the
operation of the Business, (ii) conducts business only in its own name, (iii)
does not engage in any business other than the ownership and/or leasing all or
any portion of the Facility and the operation of the Business, (iv) does not
hold, directly or indirectly, any ownership interest (legal or equitable) in any
entity or any real or personal property other than the interest in the Facility
which it owns in the Facility and the other assets incident to the operation of
the Business, (v) does not have any debt other than as permitted by this Lease
or arising in the ordinary course of the Business and does not guarantee or
otherwise obligate itself with respect to the debts of any other person or
entity, other than as approved by Lessor, (vi) has its own separate books,
records, accounts, financial statements and tax returns (with no commingling of
funds or assets), (vii) holds itself out as being a company separate and apart
from any other entity, and (viii) maintains all corporate formalities
independent of any other entity.
Statements of Cash Flow: For any fiscal year or other accounting period for
Lessee or Guarantors and their respective consolidated subsidiaries, statements
of earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective Fiscal Year to
the end of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding period
in the preceding fiscal year, and prepared in accordance with GAAP.
Substitute Property: As defined in Section 35.4.
Taking: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.
Tenant: The lessees or tenants under the Tenant Leases, if any.
Tenant Leases: All leases, subleases, pharmacy leases and other rental
agreements (written or verbal, now or hereafter in effect), if any, including,
without limitation, the Existing Leases as described in Section 24.1 hereof that
grant a possessory interest in and to any space in or any part of the Leased
Property, or that otherwise have rights with regard to the Leased Property, and
all Credit Enhancements, if any, held in connection therewith.
Term: The actual duration of this Lease, including the Fixed Term and the
Extension Terms (if exercised by the Lessee) and taking into account any
termination.
10
Total Capitalization: Total Debt plus all capital account or stated capital
balances according to GAAP.
Total Debt: All indebtedness which, in accordance with GAAP, will be
included in determining total liabilities as shown on the liability side of a
balance sheet, including any such indebtedness represented by obligations under
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP, but excluding any nonrecourse indebtedness and excluding
any current liabilities.
Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto.
Unsuitable for Its Use or Unsuitable for Its Primary Intended Use: As used
anywhere in this Lease, the terms "Unsuitable for Its Use" or "Unsuitable for
Its Primary Intended Use" shall mean that, by reason of damage or destruction,
or a partial Taking by Condemnation, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, all relevant factors, and the effect of such damage or destruction or
partial Taking.
Victorville Lease: That certain Lease Agreement dated February 28, 2005, by
and among MPT of Victorville, LLC, as lessor, and Desert Valley Hospital, Inc.,
as lessee, whereby Desert Valley Hospital, Inc. leases the Victorville Property
from MPT of Victorville, LLC.
Victorville Property: The land and all improvements thereon subject to the
Victorville Lease.
ARTICLE III
RENT
3.1 BASE RENT. During the Term, Lessee shall pay to Lessor, in advance and
without notice, demand, set off or counterclaim, in lawful money of the United
States of America, at Lessor's address set forth herein or at such other place
or to such other person, firm or entity as Lessor from time to time may
designate in writing, Base Rent as follows:
(a) BASE RENT: Subject to adjustment as provided herein, Lessee shall
pay Lessor base rent (the "Base Rent") in a per annum amount equal to ten
percent (10%) multiplied by the Purchase Price, which as of the date hereof
is an annual amount of Two Million One Hundred Thousand and 00/100 Dollars
($2,100,000.00). Base Rent shall be payable in advance in equal,
consecutive monthly installments on or before the tenth (10th) day of each
calendar month during the Term, commencing on the Commencement Date
(prorated as to any partial month).
(b) ADJUSTMENT OF BASE RENT: Commencing on January 1, 2007, and on
each January 1 thereafter (each an "Adjustment Date") during the term of
this Lease, the Base Rent shall be increased, if any, by an amount equal to
the greater of (A) two percent (2%) per annum of the prior year's Base
Rent, or (B) the percentage by which the CPI on the Adjustment Date shall
have increased over the CPI figure in effect on the immediately preceding
January 1. If the previous year's Base Rent is for a partial year, Base
Rent shall be annualized based on the highest annual rate effective during
the preceding year. Notwithstanding anything contained herein to the
contrary, the parties hereto acknowledge and agree that all calculations of
Base Rent as specified herein have been made by multiplying the Initial
Purchase Price by ten percent (10%) per annum. In the event the Initial
Purchase Price is adjusted and increased by the Purchase Price Adjustment,
then all calculations of Base Rent shall be adjusted accordingly.
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3.2 ADDITIONAL CHARGES. In addition to the Base Rent (a) Lessee will also
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease, and all other amounts, liabilities, obligations and Impositions related
to the ownership, use, possession and operation of the Leased Property,
including, without limitation, the Parking Lot Rent, all costs of owning and
operating the Facility, all Real Estate Taxes, Insurance Premiums, maintenance
and capital improvements, all licensure violations, violations of and defaults
under any of the Permitted Exceptions, civil monetary penalties and fines, and
(b) in the event of any failure on the part of Lessee to pay any of those items
referred to in clause (a) above, Lessee will also promptly pay and reimburse
Lessor for all such amounts paid by Lessor and promptly pay and discharge every
fine, penalty, interest and cost which may be added for non-payment or late
payment of such items (the items referred to in clauses (a) and (b) above being
referred to herein collectively as the "Additional Charges"), and Lessor shall
have all legal, equitable and contractual rights, powers and remedies provided
in this Lease, by statute or otherwise, in the case of non-payment of the
Additional Charges, as in the case of the Base Rent. If any installment of Base
Rent or Additional Charges (but only as to those Additional Charges which are
payable directly to Lessor) shall not be paid within five (5) Business Days
after its due date, Lessee will pay Lessor on demand, as Additional Charges, a
late charge (to the extent permitted by law) computed at the Overdue Rate (or at
the maximum rate permitted by law, whichever is less) on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due. At any time during the Term, Lessor may require Lessee to pay
to Lessor or its Facility Lender estimates of Real Estate Taxes and Insurance
Premiums and Lessee shall pay to Lessor (or directly to a Facility Lender, if
requested by Lessor), upon written request from Lessor, such amounts as and when
required by Lessor (or the Facility Lender). All sums paid into escrow or
deposits shall not bear interest and may be commingled with Lessor's books,
accounts and funds; however, upon an Event of Default under this Lease, the
escrowed funds or deposits may be applied by Lessor (or the Facility Lender) to
all sums owed by Lessee to Lessor (or to sums owed to Facility Lender).
3.3 ABSOLUTE NET LEASE. The Rent shall be paid absolutely net to Lessor, so
that this Lease shall yield to Lessor the full amount of the installments of
Base Rent and the payments of Additional Charges throughout the Term, but
subject to any other provisions of this Lease which expressly provide for
adjustment of Rent or other charges. Lessee further acknowledges and agrees that
all charges, assessments or payments of any kind due and payable without notice,
demand, set off or counterclaim under the Permitted Exceptions shall be paid by
Lessee as they become due and payable.
3.4 LEASE DEPOSIT. Intentionally Omitted.
3.5 ADJUSTMENTS. Lessor and Lessee acknowledge that to the extent Lessee
fails to reimburse to Lessor any costs and expenses which otherwise would be
included in the definition of Purchase Price, then the Lessor shall recalculate
the Purchase Price to include such unreimbursed costs and expenses and deliver
to Lessee a letter confirming the Base Rent to be paid hereunder and such letter
shall constitute an amendment to the provisions of this Lease.
3.6 RENT AND PAYMENTS UNDER PARKING LOT LEASE. Lessee shall pay all Parking
Lot Rent directly to the Parking Lot Lessor as and when the Parking Lot Rent
becomes due and payable all as required under the Parking Lot Lease (a copy of
which has been provided to Lessee), and Lessee shall provide Lessor with
reasonable evidence of payment each month confirming that the Parking Lot Rent
has been timely paid or, at Lessor's request, Lessee shall pay the Parking Lot
Rent to Lessor at least five (5) business days prior to its due date under the
Parking Lot Lease.
12
ARTICLE IV
IMPOSITIONS
4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing or assessing authorities unless, in the case of escrows
and deposits required to be paid to Lessor or Facility Lender as provided in
Section 3.2 hereof, and Lessee will promptly, upon request, furnish to Lessor
copies of official receipts or other satisfactory proof evidencing such
payments. Lessee's obligation to pay such Impositions shall be deemed absolutely
fixed upon the date such Impositions become a lien upon the Leased Property or
any part thereof. If any such Imposition may, at the option of the Lessor,
lawfully be paid in installments (whether or not interest shall accrue on the
unpaid balance of such Imposition), Lessee may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments during the Term
hereof (subject to Lessee's right of contest pursuant to the provisions of
Article XII; and subject to the requirement to pay the full amount of escrows
and deposits as required under Section 3.2 hereof) as the same respectively
become due and before any fine, penalty, premium, further interest or cost may
be added thereto. Lessor, at its expense, shall, to the extent permitted by
applicable law, prepare and file all tax returns and reports as may be required
by governmental authorities in respect of Lessor's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Lessee, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Lessee, the same shall be paid
over to or retained by Lessee if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XVI. Lessor and Lessee shall,
upon request of the other, provide such data as is maintained by the party to
whom the request is made with respect to the Leased Property as may be necessary
to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Lessee shall file all personal property tax returns in such jurisdictions where
it may legally so file. Lessor, to the extent it possesses the same, and Lessee,
to the extent it possesses the same, will provide the other party, upon request,
with cost and depreciation records necessary for filing returns for any property
so classified as personal property. Where Lessor is legally required to file
personal property tax returns, Lessee will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Lessee to file a protest. Lessee may, upon giving notice to Lessor, at
Lessee's option and at Lessee's sole cost and expense, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to effect a
reduction of real estate or personal property assessments and Lessor, at
Lessee's expense as aforesaid, shall fully cooperate with Lessee in such
protest, appeal, or other action. Xxxxxxxx for reimbursement by Lessee to Lessor
of personal property taxes shall be accompanied by copies of a xxxx therefor and
payments thereof which identify the personal property with respect to which such
payments are made.
4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates, unless Lessee purchases the
Leased Property pursuant to the purchase options expressly provided herein,
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Imposition is imposed before or after such termination, and Lessee's obligation
to pay its prorated share thereof shall survive such termination.
4.3 UTILITY CHARGES. Lessee will contract for, in its own name, and will
pay or cause to be paid when due all charges for electricity, power, gas, oil,
water and other utilities used in connection with the Leased Property during the
Term, including, without limitation, all impact and tap fees necessary for the
operation of the Facility.
4.4 INSURANCE PREMIUMS. Lessee will contract for in its own name and will
pay or cause to be paid when due all premiums for the insurance coverage
required to be maintained pursuant to Article XIII during the Term (the
"Insurance Premiums"); provided, however, that if required by Lessor, such
premiums shall be paid as required under Section 3.2 hereof. At Lessor's option
and provided that the costs of such coverages collectively do
13
not exceed the costs of such insurance obtained by Lessee, Lessor may obtain the
insurance coverages required herein and, in such event, Lessee shall reimburse
Lessor for the costs of such coverages immediately upon request by Lessor.
ARTICLE V
NO TERMINATION
5.1 ACKNOWLEDGEMENT. The parties hereto understand, acknowledge and agree
that this is an absolute triple net lease. Lessee shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, any Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
or the interference with such use by any person, corporation, partnership or
other entity, or by reason of eviction by paramount title; (c) any claim which
Lessee has or might have against Lessor or by reason of any default or breach of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor, or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default.
ARTICLE VI
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor (except for the Parking Lot Property with
respect to which Lessor holds a leasehold interest pursuant to the Parking Lot
Lease), and that Lessee has only the right to the possession and use of the
Leased Property upon the terms and conditions of this Lease and the Parking Lot
Lease.
6.2 LESSEE'S PERSONAL PROPERTY. Lessee, at its expense, shall install,
affix, assemble and place on the Leased Property, the Lessee's Personal
Property, which Lessee's Personal Property shall be subject to the security
interests and liens as provided in Section 16.8 of this Lease. Lessee shall not,
without the prior written consent of Lessor (which consent may be withheld in
the event Lessee is in default hereunder) remove any of the Lessee's Personal
Property from the Leased Property. Lessee shall provide and maintain during the
entire Term all such Lessee's Personal Property as shall be necessary in order
to operate the Facility in compliance with all licensure and certification
requirements, in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. If removal is authorized by Lessor as provided
herein, all of Lessee's Personal Property not removed by Lessee within seven (7)
days following the expiration or earlier termination of this Lease shall be
considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving notice thereof to Lessee,
without any payment to Lessee and without any obligation to Lessee to account
therefor. Lessee will, at its expense,
14
restore the Leased Property and repair of all damage to the Leased Property
caused by the removal of Lessee's Personal Property, whether effected by Lessee,
Lessor, any Lessee lender, or any Lessor lender.
ARTICLE VII
CONDITION AND USE OF LEASED PROPERTY
7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. Lessee
warrants and represents that (a) it has been in possession of the Leased
Property since approximately 2001, (b) the Leased Property is in compliance with
all of the requirements, restrictions and conditions as set forth in the
Permitted Exceptions, and (c) the use of the Leased Property for the Primary
Intended Use will not violate any of the Permitted Exceptions. LESSOR MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, SUITABILITY,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT.
7.2 USE OF THE LEASED PROPERTY.
(a) Lessee covenants that it will obtain and maintain throughout the
entire Term all approvals needed to use and operate the Leased Property and
the Facility for the Primary Intended Use, as defined below, under
applicable local, state and federal law, including but not limited to
licensure approvals and Medicare and/or a Medicaid certifications, provider
numbers, certificates of need, governmental approvals, and full
accreditation from all applicable governmental authorities, if any, that
are necessary for the operation of the Facility as a one hundred twenty-six
(126) bed acute care hospital facility.
(b) Beginning on the Commencement Date and during the entire Term,
Lessee shall use the Leased Property and the improvements thereon only as a
one hundred twenty-six (126) bed acute care hospital facility and for such
other legal ancillary uses as may be necessary in connection with or
incidental to such uses, subject to any covenants, restrictions and
easements relating to the Facility (the "Primary Intended Use"). Lessee
shall not use the Leased Property or any portion thereof for any other use,
nor change the number or type of beds within the Facility, nor reconfigure
or rearrange any portion of the Leased Property or the Facility without the
prior written consent of Lessor, which consent Lessee agrees may be
withheld in Lessor's sole discretion. No use shall be made or permitted to
be made of the Leased Property and no acts shall be done which will cause
the cancellation of any insurance policy covering the Leased Property or
any part thereof, nor shall Lessee sell or otherwise provide to residents
or patients therein, or permit to be kept, used or sold in or about the
Leased Property any article which may be prohibited by law or by the
standard form of fire insurance policies, any other insurance policies
required to be carried hereunder, or fire underwriters regulations. Lessee
shall, at its sole cost, comply with all of the requirements, covenants and
restrictions pertaining to the Leased Property, including, without
limitation, all of the Permitted Exceptions, and other requirements of any
insurance board, association, organization or company necessary for the
maintenance of the insurance, as herein provided, covering the Leased
Property and Lessee's Personal Property.
(c) Lessee covenants and agrees that during the Term it will
continuously operate the Leased Property only as a provider of healthcare
services in accordance with the Primary Intended Use and Lessee
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shall maintain its certifications for reimbursement and licensure and all
accreditations necessary to maintain its Medicare and Medicaid
certifications.
(d) Lessee shall not commit or suffer to be committed any waste on the
Leased Property, or in the Facility, nor shall Lessee cause or permit any
nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, or Lessee's Personal Property, to be used in such a manner as (i)
might reasonably tend to impair Lessor's (or Lessee's, as the case may be)
title thereto or to any portion thereof, 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 of the Leased Property or any
portion thereof.
(f) Lessee agrees that during the entire term of this Lease, Lessor
shall have the right and option to erect a sign on the Leased Property
stating that the Leased Property is owned by the Lessor. Such sign shall be
in a size, and shall be erected in a location, reasonably acceptable to
Lessor and approved by Lessee, which approval shall not be unreasonably
withheld, conditioned or delayed.
7.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time so long as no
default, and no event has occurred which with the giving of notice or the
passage of time or both would constitute a default, has occurred and is
continuing under this Lease, the Other Leases, at the request of Lessee and at
Lessee's cost and expense, but subject to the approval of Lessor (a) grant
easements and other rights in the nature of easements, (b) release existing
easements or other rights in the nature of easements which are for the benefit
of the Leased Property, (c) dedicate or transfer unimproved portions of the
Leased Property for road, highway or other public purposes, (d) execute
petitions to have the Leased Property annexed to any municipal corporation or
utility district, (e) execute amendments to any covenants and restrictions
affecting the Leased Property and (f) execute and deliver to any person any
instrument appropriate to confirm or effect such grants, releases, dedications
and transfers (to the extent of its interest in the Leased Property), but only
upon delivery to Lessor of an Officer's Certificate stating (and such other
information as Lessor may reasonably require confirming) that such grant,
release, dedication, transfer, petition or amendment is required for and not
detrimental to the proper conduct of the Primary Intended Use on the Leased
Property and does not reduce its value.
ARTICLE VIII
LEGAL AND INSURANCE REQUIREMENTS
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XII relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements in respect of the
use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need, Medicare and Medicaid provider agreements, accreditations and other
authorizations required for any use of the Leased Property and Lessee's Personal
Property then being made, and for the proper erection, installation, operation
and maintenance of the Leased Property or any part thereof, including without
limitation, any Capital Additions. Upon Lessor's request, Lessee shall deliver
copies of all such licenses, certificates of need, agreements and other
authorizations. Lessee hereby agrees to indemnify and defend, at Lessee's sole
cost and expense, and hold Lessor, its successors and assigns harmless from and
against, and to reimburse Lessor and its successors and assigns with respect to
any and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.1.
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8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose. Lessee shall use its best efforts to have tenants acquire and
maintain all licenses, certificates, permits, provider agreements and other
authorizations and approvals needed to operate the Leased Property and all
equipment and machinery used in or in connection with the Leased Property in its
customary manner for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder. Lessee further
covenants and agrees that Lessee's use of the Leased Property, the use of all
equipment and machinery used in connection with the Leased Property, and the
maintenance, alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable local, state and federal laws,
ordinances, rules and regulations.
8.3 HAZARDOUS MATERIALS. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Hazardous
Materials Laws), no Hazardous Materials shall be installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or disposed
of, or otherwise present in, on or under the Leased Property. No activity shall
be undertaken on the Leased Property which would cause (i) the Leased Property
to become a treatment, storage or disposal facility of hazardous waste,
infectious waste, biomedical or medical waste, within the meaning of, or
otherwise bring the Leased Property within the ambit of RCRA or any Hazardous
Materials Laws, (ii) a release or threatened release of Hazardous Material from
the Leased Property within the meaning of, or otherwise bring the Leased
Property within the ambit of, CERCLA or XXXX or any Hazardous Materials Laws or
(iii) the discharge of Hazardous Material into any watercourse, surface or
subsurface of body of water or wetland, or the discharge into the atmosphere of
any Hazardous Material which would require a permit under any Hazardous
Materials Laws. No activity shall be undertaken with respect to the Leased
Property which would cause a violation or support a claim under RCRA, CERCLA,
XXXX or any Hazardous Materials Laws. No investigation, administrative order,
litigation or settlement with respect to any Hazardous Material is, to the best
of the Lessee's knowledge, threatened or in existence with respect to the Leased
Property. No notice has been served on Lessee from any entity, governmental body
or individual claiming any violation of any Hazardous Materials Laws, or
requiring compliance with any Hazardous Materials Laws, or demanding payment or
contribution for environmental damage or injury to natural resources. Lessee has
not obtained and Lessee has no knowledge of any reason Lessee will be required
to obtain any permits, licenses, or similar authorizations to occupy, operate or
use the Improvements or any part of the Leased Property by reason of any
Hazardous Materials Laws. Lessee hereby agrees to indemnify and defend, at its
sole cost and expense, and hold Lessor, its successors and assigns, harmless
from and against and to reimburse Lessor with respect to any and all claims,
demands, actions, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorney's fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor at any time and from time to
time by reason or arising out of any breach or violation of any Hazardous
Materials Laws. Lessee shall, at its sole cost, expense, risk and liability,
remove or cause to be removed from the Leased Property all Hazardous Materials
generated in connection with the Primary Intended Use and as found in hospital
and healthcare facilities, including, without limitation, all infectious waste
materials, syringes, needles and any materials contaminated with bodily fluids
of any type, character or description of whatsoever nature in accordance with
all Hazardous Materials Laws. Lessee shall not dispose of any such infectious
waste and Hazardous Materials in any receptacles used for the disposal of normal
refuse. Within thirty (30) days following the Commencement Date, Lessee shall
institute an operations and maintenance program designed by an environmental
consultant reasonably satisfactory to Lessor with respect to asbestos-containing
materials ("ACMs") consistent with Guidelines for Controlling
Asbestos-Containing Materials in Buildings (USEPA, 1985) and other relevant
guidelines. Such maintenance program shall continuously remain in effect during
the Term. Lessee shall inspect and maintain all ACMs on a regular basis and
ensure that all ACM's are maintained in a condition that prevents exposure to
the ACMs at all times.
8.4 HEALTHCARE LAWS. Lessee warrants and represents that this Lease and all
subleases are, and at all times during the term of this Lease will be, in
compliance with all Healthcare Laws. Lessee agrees to add to all of its third
party agreements relating to the Leased Property, including, without limitation,
all subleases, that in the event it is determined that such agreement and/or
sublease is in violation of the Healthcare Laws, such agreement
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and/or sublease shall be renegotiated so that same are in compliance with all
Healthcare Laws. Lessee agrees promptly to notify Lessor in writing of receipt
of any notice of investigation of any alleged Healthcare Law violations. Lessee
hereby agrees to indemnify and defend, at Lessee's sole cost and expense, and
hold Lessor, its successors and assigns harmless from and against and to
reimburse Lessor and its successors and assigns with respect to any and all
claims, demands, actions, causes of action, losses, damages, liabilities, costs
and expenses (including, without limitation, reasonable attorneys' fees and
court costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor, its successors and assigns,
at any time and from time to time by reason or arising out of any breach by
Lessee of any of the representations and warranties set forth in this Section
8.4.
8.5 REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants to
Lessor that as of the date hereof: (i) Lessee is a corporation duly organized
and existing under the laws of the State of California and is duly authorized to
enter into, deliver and perform this Lease and the other documents referred to
herein and such agreements constitute the valid and binding obligations of
Lessee, enforceable in accordance with their terms, (ii) neither the entering
into this Lease or the other documents referred to herein nor the performance by
Lessee of its obligations hereunder or under the other documents referred to
herein will violate any provision of law or any agreement, indenture, note or
other instrument binding upon Lessee, (iii) no authority from or approval by any
governmental body, commission or agency or consent of any third party is
required in connection with the making or validity of and the execution,
delivery and performance of this Lease or the other documents referred to
herein, (iv) there are no actions, suits or proceedings pending against or, to
the knowledge of Lessee, threatened against or affecting Lessee or any of its
Affiliates, in any court or before or by any governmental department, agency or
instrumentality, an adverse decision in which could materially and adversely
affect the financial condition, business or operations of Lessee or the ability
of Lessee to perform its obligations under this Lease or the other documents
referred to herein, (v) Lessee and each of its Affiliates is in compliance in
all material respects with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities, and (vi) Lessee has obtained and
delivered copies thereof to Lessor on the Commencement Date all certificates of
need, Medicare billing numbers, other licenses and agreements required for the
operation of the Facility.
8.6 SINGLE PURPOSE ENTITY. Except as otherwise set forth on SCHEDULE 8.6,
Lessee represents, warrants, covenants and agrees that Lessee has always been,
is, and shall remain at all times during the term of this Lease, a Single
Purpose Entity created and to remain in good standing for the sole purpose of
leasing and operating the Facility in accordance with the terms of this Lease.
Simultaneously with the execution of this Lease, and as requested by Lessor at
other times during the term of this Lease, Lessee shall provide Lessor evidence
that Lessee is a Single Purpose Entity and is in good standing in the state of
its organization and in the state in which the Leased Property is located.
8.7 ORGANIZATIONAL DOCUMENTS. Lessee shall not permit or suffer, without
the prior written consent of Lessor an amendment or modification of its
Organizational Documents (as defined below), or the organizational documents of
any constituent entity within the Lessee, which changes Lessee's status as a
single purpose entity, (ii) any dissolution or termination of its existence, or
(iii) change in its state of formation or incorporation or its name. Lessee has,
simultaneously with the execution of this Lease, delivered to Lessor a true and
complete copy of its articles of incorporation and bylaws creating Lessee, and
all other documents creating and governing the Lessee (collectively, the
"Organizational Documents"). Lessee warrants and represents that the
Organizational Documents (i) were duly executed and delivered, (ii) are in full
force and effect and binding upon and enforceable in accordance with their
terms, (iii) constitute the entire understanding among the shareholders,
partners and members of Lessee, and (iv) no breach exists under the
Organizational Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time or both would constitute a
breach under the Organizational Documents.
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ARTICLE IX
REPAIRS; RESERVE; RESTRICTIONS
9.1 MAINTENANCE AND REPAIR.
(a) Lessee, at its expense, will keep the Leased Property (including
the Power Generation Facility) and all private roadways, sidewalks and
curbs appurtenant thereto, and Lessee's Personal Property in good first
class order and repair (whether or not the need for such repairs occurs as
a result of Lessee's use, any prior use, the elements, the age of the
Leased Property or any portion thereof) and, except as otherwise provided
in Articles XIV and XV, with reasonable promptness, will make all necessary
and appropriate repairs thereto of every kind and nature, whether interior
or exterior, structural or non-structural, ordinary or extraordinary,
foreseen or unforeseen or arising by reason of a condition existing prior
to the commencement of the Term of this Lease (concealed or otherwise),
including, without limitation, all required seismic repairs, replacements
and upgrades. All repairs shall, to the extent reasonably achievable, be at
least equivalent in quality to the original work. Lessee will not take or
omit to take any action the taking or omission of which might materially
impair the value or the usefulness of the Leased Property or any part
thereof for the Primary Intended Use. Notwithstanding anything contained
herein to the contrary, Lessee shall make additions, modifications and
remodeling to the Leased Property which are not Capital Additions from time
to time which are necessary for the Primary Intended Use and which permit
the Lessee to comply fully with its obligations set forth in this Lease,
provided that any such action will be undertaken expeditiously, in a
workmanlike manner and will not significantly alter the character or
purpose or detract from the value or operating efficiency of the Leased
Property and will not significantly impair the revenue producing capability
of the Leased Property or adversely affect the ability of the Lessee to
comply with the provisions of this Lease. Such additions, modifications and
remodeling shall, without payment by Lessor at any time, be included under
the terms of this Lease and shall be the property of Lessor. Lessee shall
notify the Lessor of any and all repairs, improvements, additions,
modifications and remodeling made to the Leased Property in excess of
Twenty Five Thousand and 00/100 Dollars ($25,000.00) and obtain consent
from Lessor prior to making such repairs, improvements, additions,
modifications and remodeling.
(b) Lessor shall not under any circumstances be required to build or
rebuild any improvements on the Leased Property, or to make any repairs,
replacements, alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or non-structural, foreseen or unforeseen, or to make any
expenditure whatsoever with respect thereto in connection with this Lease,
or to maintain the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by
Lessor shall be construed as (i) constituting the consent or request of
Lessor, expressed or implied, to any contractor, subcontractor, laborer,
materialman or vendor to or for the performance of any labor or services or
the furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to the Leased Property or
any part thereof, or (ii) giving Lessee any right, power or permission to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would
permit the making of any claim against Lessor in respect thereof or to make
any agreement that may create, or in any way be the basis for, any right,
title, interest, lien, claim or other encumbrance upon the estate of Lessor
in the Leased Property or any portion thereof.
(d) Unless Lessor shall convey any of the Leased Property to Lessee
pursuant to the provisions of this Lease, Lessee will, upon the expiration
or prior termination of the Term, vacate and surrender the Leased Property
to Lessor in the condition in which the Leased Property was originally
received from Lessor, except as improved, repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this
Lease and except for ordinary wear and tear (subject to the obligation of
Lessee to
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maintain the Leased Property in good order and repair during the entire
Term of the Lease), damage caused by the gross negligence or willful acts
of Lessor and damage or destruction described in Article XIV or resulting
from a Taking described in Article XV which Lessee is not required by the
terms of this Lease to repair or restore.
9.2 RESERVES FOR EXTRAORDINARY REPAIRS. Commencing on the Commencement
Date, with respect to the initial payment, and on or before the last day of each
calendar quarter thereafter, beginning with the quarter ending March 31, 2006,
Lessee shall make quarterly deposits to a reserve (the "Reserve") at a financial
institution of the Lessor's choosing, provided, however, that the first such
deposit on the Commencement Date, shall be prorated. Subject to the immediately
preceding sentence, each deposit to be made pursuant to this Section 9.2 shall
be equal to the sum of Two Thousand Five Hundred and 00/100 Dollars ($2,500.00)
per bed per annum. For the period commencing on the Commencement Date and ending
on December 31, 2005, the number of beds shall be assumed to be one hundred
twenty-six (126). Beginning on January 1, 2006, and on each January 1
thereafter, the number of beds shall be determined by the actual number of beds
placed in service or certified to be available for use in the Facility, which
shall not be reduced without the prior written consent of Lessor. The account to
which such payments are made shall require the signature of an officer of Lessee
and Lessor to make withdrawals. Beginning on January 1, 2007, and on each
January 1 thereafter during the entire Lease Term, such payment into the Reserve
shall be increased by two percent (2%) per annum. Notwithstanding anything
contained herein to the contrary, Lessee shall pay into the Reserve any amounts
needed in excess of such required payments as provided herein. The amounts in
the Reserve, including interest, shall be used to pay for Extraordinary Repairs
on the Facility, or, in the event Lessee fails to make any required
non-Extraordinary Repairs, Lessor may use funds in the Reserve for that purpose
as well, without the necessity of obtaining the signature of an officer of
Lessee. Lessee shall replenish amounts drawn from the Reserve at the rate of
one-twelfth (1/12th) of the total amount withdrawn per month, until completely
replenished. Lessee hereby grants to Lessor a security interest in all monies
deposited into the Reserve and Lessee shall, within fifteen (15) days from the
Commencement Date, execute all documents necessary for Lessor to perfect its
security interest in the Reserve. Lessor and Lessee agree that the first dollars
of all expenditures for Extraordinary Repairs made in each year during the Term
shall be funded from the Reserve account to the full extent of such account;
provided, however, that if Lessor, in its reasonable discretion, determines at
any time that the balance then remaining in the Reserve account is insufficient
to pay in full for the present and future anticipated Extraordinary Repairs on
the Facility, Lessor shall retain funds in the Reserve account in an amount
sufficient to pay in full for Extraordinary Repairs and Lessee will deposit
additional sums into the account from time to time, upon the written request of
Lessor, in amounts equal to the difference between the then balance in the
Reserve account and the cost to complete the present and future Extraordinary
Repairs so that at all times there is an adequate amount in the Reserve account
to pay for such items on a going forward basis. So long as no default has
occurred under any of the terms hereof, and no event has occurred which with the
giving of notice or the passage of time or both would constitute a default
hereunder, any amounts remaining in the Reserve, after the payment of and the
reimbursement for the Extraordinary Repairs on the Facility, at the expiration
of this Lease shall be returned to Lessee. Lessee consents to Lessor's pledge of
the Reserve to any Facility Lender, subject to Lessor's obligation to return any
remaining amounts in the Reserve to Lessee pursuant to this Section 9.2.
9.3 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, restrictive covenant or other agreement affecting
the Leased Property, or any part thereof, or shall impair the rights of others
under any easement or right-of-way to which the Leased Property is subject, then
promptly upon the request of Lessor, Lessee shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment,
(a) obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Lessor or Lessee or (b) make such changes in the
Leased Improvements, and take such other actions, as Lessor in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, or to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Facility without such violation, encroachment or impairment. Any such alteration
shall be made in
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conformity with the applicable requirements of Article X. Lessee's obligations
under this Section 9.3 shall be in addition to and shall in no way discharge or
diminish any obligation of any insurer under any policy of title or other
insurance and Lessee shall be entitled to a credit for any sums paid by Lessee
and recovered by Lessor under any such policy of title or other insurance.
ARTICLE X
CAPITAL ADDITIONS
10.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.
(a) If no Event of Default shall have occurred or be continuing under
this Lease, the Other Leases and the Tenant Leases, Lessee shall have the
right, upon and subject to the terms and conditions set forth below, to
construct or install Capital Additions on the Leased Property without the
prior written consent of Lessor, provided, however, except as expressly
provided in Section 10.2(d) hereof, Lessee shall not be permitted to create
any Encumbrance on the Leased Property, in connection with such Capital
Addition. Prior to commencing construction of any Capital Addition, Lessee
shall, at Lessee's sole cost and expense (i) submit to Lessor in writing a
proposal setting forth in reasonable detail any proposed Capital Addition,
(ii) submit to Lessor such plans and specifications, certificates of need
and other approvals, permits, licenses, contracts and other information
concerning the proposed Capital Addition as Lessor may reasonably request,
and (iii) obtain all necessary certificates of need, state licensure
surveys and all regulatory approvals of architectural plans. Without
limiting the generality of the foregoing, such proposal shall indicate the
approximate projected cost of constructing such Capital Addition, and the
use or uses to which it will be put.
(b) Prior to commencing construction of any Capital Addition, Lessee
shall first request Lessor to provide funds to pay for such Capital
Addition in accordance with the provisions of Section 10.3. If Lessor
declines or is unable to provide such financing on terms acceptable to
Lessee, the provisions of Section 10.2 shall apply. Notwithstanding any
other provision of this Article X to the contrary, no Capital Additions
shall be made without the consent of Lessor, which consent shall not be
unreasonably withheld or delayed, if the Capital Addition Cost of such
proposed Capital Addition, when aggregated with the costs of all Capital
Additions made by Lessee, would exceed twenty-five percent (25%) of the
then Fair Market Value of the Leased Property or would diminish the value
of the Leased Property. Furthermore, no Capital Addition shall be made
which would tie in or connect the Leased Property and/or any Leased
Improvements on the Leased Property with any other improvements on property
adjacent to the Leased Property (and not part of the Land covered by this
Lease) including, without limitation, tie-ins of buildings or other
structures or utilities, unless Lessee shall have obtained the prior
written approval of Lessor, which approval in Lessor's sole discretion may
be granted or withheld. All proposed Capital Additions shall be
architecturally integrated and consistent with the Leased Property.
10.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee provides or arranges
to finance any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:
(a) The above referenced proportion of the Fair Market Added Value of
Capital Additions paid for by Lessee to the Fair Market Value of the entire
Leased Property expressed as a percentage is referred to herein as the
"Added Value Additional". The Added Value Additional determined as provided
above for each Capital Addition financed or paid for by Lessee shall remain
in effect until any subsequent Capital Addition.
(b) There shall be no adjustment in the Base Rent by reason of any
such Capital Addition.
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(c) Upon the expiration or earlier termination of this Lease, except
by reason of the default by Lessee hereunder, Lessor shall, if Lessee does
not purchase the Leased Property as provided herein, compensate Lessee for
all Capital Additions paid for or financed by Lessee in any of the
following ways, determined in the sole discretion of Lessor:
(i) By purchasing all Capital Additions paid for by Lessee from
Lessee for cash in the amount of the Fair Market Added Value of all
such Capital Additions paid for or financed by Lessee; or
(ii) By purchasing such Capital Additions from Lessee by
delivering to Lessee Lessor's purchase money promissory note in the
amount of said Fair Market Added Value, due and payable not later than
eighteen (18) months after the date of expiration or other termination
of this Lease, bearing interest at the test rate applicable under
Section 1272 of the Code or any successor section thereto ("Test
Rate") or, if no such Test Rate exists, at the Prime Rate, which
interest shall be payable monthly, and which note shall be secured by
a mortgage on the Leased Property, subject to all mortgages and
encumbrances on the Leased Property at the time of such purchase; or
(iii) Such other arrangement regarding such compensation as shall
be mutually acceptable to Lessor and Lessee.
(d) Lessor and Lessee agree that Lessee's lender for Capital Additions
shall have the right to secure its loan by a mortgage upon the Leased
Property provided such mortgage (i) shall not exceed the cost of the
Capital Additions being made with the proceeds of such loan, (ii) shall be
subordinate to Lessor's acquisition cost and any Capital Additions paid for
by the Lessor of the Leased Property, (iii) shall be subordinate to any
mortgage or encumbrance now existing or hereinafter created, including,
without limitation, Facility Instruments, (iv) the term of the loan shall
not extend beyond the term of this Lease, (v) such lender executes all
subordination and other documents and certificates reasonably required by
the Facility Lenders, and (vi) shall be limited solely to Lessee's interest
in the Leased Property.
10.3 CAPITAL ADDITIONS FINANCED BY LESSOR.
(a) Lessee shall request that Lessor provide or arrange financing for
a Capital Addition by providing to Lessor such information about the
Capital Addition as Lessor may request (a "Request"), including without
limitation, all information referred to in Section 10.1 above. Lessor may,
but shall be under no obligation to, obtain the funds necessary to meet the
Request. Within thirty (30) days of receipt of a Request, Lessor shall
notify Lessee as to whether it will finance the proposed Capital Addition
and, if so, the terms and conditions upon which it would do so, including
the terms of any amendment to this Lease. In no event shall the portion of
the projected Capital Addition Cost comprised of land, if any, materials,
labor charges and fixtures be less than ninety percent (90%) of the total
amount of such cost. Lessee may withdraw its Request by notice to Lessor at
any time before or after receipt of Lessor's terms and conditions.
(b) If Lessor agrees to finance the proposed Capital Addition, Lessee
shall provide Lessor with the following prior to any advance of funds:
(i) all customary or other required loan documentation, if the
Capital Addition is to be financed through the incurrence of debt;
(ii) any information, certificates of need, regulatory approvals
of architectural plans and other certificates, licenses, permits or
documents requested by either Lessor or any lender with whom Lessor
has agreed or may agree to provide financing which are necessary to
confirm that
22
Lessee will be able to use the Capital Addition upon completion
thereof in accordance with the Primary Intended Use, including all
required federal, state or local government licenses and approvals;
(iii) an Officer's Certificate and, if requested, a certificate
from Lessee's architect, setting forth in reasonable detail the
projected (or actual, if available) cost of the proposed Capital
Addition;
(iv) an amendment to this Lease, duly executed and acknowledged,
in form and substance satisfactory to Lessor (the "Lease Amendment"),
and containing such provisions as may be necessary or appropriate,
including without limitation, any appropriate changes in the legal
description of the Land, the Fair Market Value and the Rent, which
shall be increased to take into account an adjustment to the Purchase
Price in an amount equal to the equity contributed by Lessor to
finance the Capital Addition or, in the case of debt financing, the
principal and interest on the debt incurred by Lessor to finance the
Capital Addition;
(v) a grant deed conveying title to Lessor to any land acquired
for the purpose of constructing the Capital Addition, free and clear
of any liens or encumbrances except those approved by Lessor and, both
prior to and following completion of the Capital Addition, an as-built
survey thereof satisfactory to Lessor;
(vi) endorsements to any outstanding policy of title insurance
covering the Leased Property and any additional land referred to in
subparagraph (v) above, or a supplemental policy of title insurance
covering the Leased Property and any additional land referred to in
subparagraph (v) above, satisfactory in form and substance to Lessor
(A) updating the same without any additional exceptions, except as may
be permitted by Lessor; and (B) increasing the coverage thereof by an
amount equal to the Fair Market Value of the Capital Addition (except
to the extent covered by the owner's policy of title insurance
referred to in subparagraph (vii) below);
(vii) if required by Lessor, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Lessor
pursuant to subparagraph (v), free and clear of all liens and
encumbrances except those approved by Lessor and (B) a lender's policy
of title insurance satisfactory in form and substance to Lessor and
the Lending Institution advancing any portion of the Capital Addition
Cost;
(viii) if required by Lessor, prior to commencing the Capital
Addition, an M.A.I. appraisal of the Leased Property indicating that
the value of the Leased Property upon completion of the Capital
Addition will exceed the Fair Market Value of the Leased Property
prior thereto by an amount not less than one hundred percent (100%) of
the Capital Addition Costs; and
(ix) such other certificates (including, but not limited to,
endorsements increasing the insurance coverage, if any, at the time
required by Section 13.1), documents, contracts, opinions of counsel,
appraisals, surveys, certified copies of duly adopted resolutions of
the governing body of Lessee authorizing the execution and delivery of
the Lease Amendment and any other instruments as may be reasonably
required by Lessor and any Lending Institution advancing or
reimbursing Lessee for any portion of the Capital Addition Cost.
(c) Lessor and Lessee agree that Lessor shall have the right, in the
exercise of its reasonable discretion and after consulting with Lessee, to
designate the general contractor, developer, architect, construction
company, engineer and other parties which will participate in the
development of the Capital Addition. Lessor and Lessee further agree that
Lessor shall control the preparation and negotiation of the
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definitive agreements with such parties and Lessor will give Lessee an
opportunity to review such definitive agreements prior to their execution.
(d) Upon making a Request to finance a Capital Addition, whether or
not such financing is actually consummated, Lessee shall pay or agree to
pay, upon demand, all reasonable costs and expenses of Lessor and any
Lending Institution which has committed to finance such Capital Addition
which have been paid or incurred by them in connection with the financing
of the Capital Addition, including, but not limited to, (i) the fees and
expenses of their respective counsel, (ii) all printing expenses, (iii) the
amount of any filing, registration and recording taxes and fees, (iv)
documentary stamp taxes, if any, (v) title insurance charges, appraisal
fees, if any, rating agency fees, if any, and (vi) commitment fees, if any,
and (vii) costs of obtaining regulatory and governmental approvals,
including but not limited to any required certificates of need, for the
construction, operation, use or occupancy of the Capital Addition.
10.4 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 10.1 or repairs
required by Article IX shall be or become the property of Lessor.
ARTICLE XI
LIENS
Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT C, (c) restrictions, liens
and other encumbrances which are consented to in writing by Lessor, or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
sixty (60) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII, and (g) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXVII of this Lease. Unless otherwise expressly provided
herein, Lessee shall not mortgage or grant any interest or security interest in,
or otherwise assign, any part of Lessee's rights and interests in this Lease,
the Leased Property, Lessee's Personal Property, or any permits, licenses,
certificates of need (if any) or any other approvals required to operate the
Leased Property during the Term without the prior written consent of Lessor,
which may be withheld at Lessor's sole discretion.
ARTICLE XII
PERMITTED CONTESTS
Lessee, on its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, after two (2) business days' prior written notice to Lessor,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by Article XI, provided
that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Lessor and from the Leased
Property, (b) neither the Leased Property nor any Rent therefrom nor any part
thereof or interest therein would be in any immediate danger of being sold,
forfeited, attached or lost, (c) in the case of a Legal
24
Requirement, Lessor would not be in any immediate danger of civil or criminal
liability for failure to comply therewith pending the outcome of such
proceedings, (d) in the event that any such contest shall involve a sum of money
or potential loss in excess of Fifty Thousand Dollars ($50,000), then, in any
such event, (i) provided the Consolidated Net Worth of Lessee and/or Guarantors
is then in excess of Fifty Million Dollars ($50,000,000), Lessee shall deliver
to Lessor an Officer's Certificate to the effect set forth in clauses (a), (b)
and (c), to the extent applicable, or (ii) in the event the Consolidated Net
Worth of Lessee and/or Guarantors is not then in excess of Fifty Million Dollars
($50,000,000), then Lessee shall deliver to Lessor and its counsel an opinion of
Lessee's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable, (e) in the case of a Legal Requirement and/or an Imposition,
lien, encumbrance or charge, Lessee shall give such reasonable security as may
be demanded by Lessor to insure ultimate payment of the same and to prevent any
sale or forfeiture of the affected portion of the Leased Property or the Rent by
reason of such non-payment or non-compliance; provided, however, the provisions
of this Article XII shall not be construed to permit Lessee to contest the
payment of Rent (except as to contests concerning the method of computation or
the basis of levy of any Imposition or the basis for the assertion of any other
claim) or any other sums payable by Lessee to Lessor hereunder, (f) in the case
of an Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be required in any
such contest and, if reasonably requested by Lessee or if Lessor so desires,
Lessor shall join as a party therein. Lessee shall indemnify and save Lessor
harmless against any liability, cost or expense of any kind that may be imposed
upon Lessor in connection with any such contest and any loss resulting
therefrom.
ARTICLE XIII
INSURANCE
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Lessee
shall at all times keep the Leased Property and all property located in or on
the Leased Property, including Lessee's Personal Property, insured against loss
or damage from such causes as are customarily insured against, by prudent owners
of similar facilities. Without limiting the generality of the foregoing, Lessee
shall obtain and maintain in effect throughout the Lease Term, the kinds and
amounts of insurance deemed necessary by the Lessor and as described below.
After prior written notice to Lessee, Lessor may, at Lessor's option, obtain the
insurance coverages required from Lessee herein (excluding coverages for
worker's compensation and professional liability) provided that (i) the
insurance coverages obtained by Lessee may be terminated without penalty or cost
to Lessee, (ii) the costs of such coverages obtained by Lessor collectively do
not exceed the costs of the insurance obtained by Lessee and (iii) the coverages
obtained by Lessor are comparable to that obtained or to be obtained by Lessee
hereunder. In the event Lessor obtains such insurance coverages, Lessee shall
reimburse Lessor for the costs of such coverages immediately upon request by
Lessor. The insurance shall be written by insurance companies (i) acceptable to
the Lessor, (ii) that are rated at least an "A-VII" or better by Best's
Insurance Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better, and (iii) authorized, licensed and qualified to do
insurance business in the state in which the Leased Property is located.
Notwithstanding the foregoing or any other provision of this Article XIII,
Lessor acknowledges and agrees that the insurance coverages required under
subparagraphs (d), (h) and (e) of this Section 13.1 are being handled through a
captive insurance company, the identity of which has been disclosed to the
Lessee and Lessor. The aggregate amount of coverage by a single company must not
exceed five percent (5%) of the insurance company's policyholders' surplus. The
policies must name Lessor (and any other entities as Lessor may deem necessary)
as an additional insured and losses shall be payable to Lessor and/or Lessee as
provided in Article XIV. Each insurance policy required hereunder must (i)
provide primary insurance without right of contribution from any other insurance
carried by Lessor, (ii) contain an express waiver by the insurer of any right of
subrogation, setoff or counterclaim against any insured party thereunder
including Lessor, (iii) permit Lessor to pay premiums at Lessor's discretion,
and (iv) as respects any third party liability claim brought against Lessor,
obligate the insurer to defend Lessor as an additional insured thereunder. In
addition, the policies shall name as an
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additional insured any Facility Lender by way of a standard form of mortgagee's
loss payable endorsement. Any loss adjustment shall require the written consent
of Lessor and each affected Facility Lender. Evidence of insurance and/or
Impositions shall be deposited with Lessor and, if requested, with any Facility
Lender. If any provision of any Facility Instrument requires deposits of
insurance to be made with such Facility Lender, Lessee shall either pay to
Lessor monthly the amounts required and Lessor shall transfer such amounts to
such Facility Lender or, pursuant to written direction by Lessor, Lessee shall
make such deposits directly with such Facility Lender. The policies on the
Leased Property, including the Leased Improvements, the Fixtures and Lessee's
Personal Property, shall insure against the following risks:
(a) All Risks or Special Form Property insurance against loss or
damage to the building and improvements, including but not limited to,
perils of fire, lightning, water, wind, theft, vandalism and malicious
mischief, plate glass breakage, and perils typically provided under an
Extended Coverage Endorsement and other forms of broadened risk perils, and
insured on a "replacement cost" value basis to the extent of the full
replacement value of the Leased Property. The policy shall include coverage
for subsidence. The deductible amount thereunder shall be borne by the
Lessee in the event of a loss and the deductible must not exceed Ten
Thousand and 00/100 Dollars ($10,000.00) per occurrence. Further, in the
event of a loss, Lessee shall abide by all provisions of the insurance
contract, including proper and timely notice of the loss to the insurer,
and Lessee further agrees that it will notify the Lessor of any loss in the
amount of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater
and that no claim at or in excess of Twenty-Five Thousand and 00/100
Dollars ($25,000.00) shall be settled without the prior written consent of
Lessor, which consent shall not be unreasonably withheld or delayed.
(b) Flood and earthquake insurance shall be required only in the event
that the Leased Property is located in a flood plain or earthquake zone.
Such insurance to be in an amount equal to the Full Replacement Cost value
of the Facility, subject to no more than a Twenty-Five Thousand Dollars
($25,000) per occurrence deductible and such policy shall include coverage
for subsidence.
(c) Insurance against loss of earnings in an amount sufficient to
cover not less than twelve (12) months' lost earnings and written in an
"all risks" form, either as an endorsement to the insurance required under
subparagraph (a) above, or under a separate policy.
(d) Worker's compensation insurance covering all employees in amounts
that are customary for the Lessee's industry.
(e) Commercial General Liability in a primary amount of at least Three
Million and 00/100 Dollars ($3,000,000.00) per occurrence, bodily injury
for injury or death of any one person and One Hundred Thousand and 00/100
Dollars ($100,000.00) for Property Damage for damage to or loss of property
of others, subject to a Ten Million and 00/100 Dollars ($10,000,000.00)
annual aggregate policy limit for all bodily injury and property damage
claims, occurring on or about the Leased Property or in any way related to
the Leased Property, including but not limited to, any swimming pools or
other rehabilitation and recreational facilities or areas that are located
on the Leased Property otherwise related to the Leased Property. Such
policy shall include coverages of a Broad Form nature, including, but not
limited to, Explosion, Collapse and Underground (XCU), Products Liability,
Completed Operations, Broad Form Contractual Liability, Broad Form Property
Damage, Personal Injury, Incidental Malpractice Liability, and Host Liquor
Liability.
(f) Automobile and vehicle liability insurance coverage for all owned,
non-owned, leased or hired automobiles and vehicles in a primary limit
amount of One Million and 00/100 Dollars ($1,000,000.00) per occurrence for
bodily injury; One Hundred Thousand and 00/100 Dollars ($100,000.00) per
occurrence for property damage; subject to an annual aggregate policy limit
of One Million and 00/100 Dollars ($1,000,000.00).
26
(g) Umbrella liability insurance in the minimum amount of Ten Million
and 00/100 Dollars ($10,000,000.00) for each occurrence and aggregate
combined single limit for all liability, with a Ten Thousand and 00/100
Dollar ($10,000.00) self-insured retention for exposure not covered in
underlying primary policies. The umbrella liability policy shall name in
its underlying schedule the policies of professional liability, commercial
general liability, garage keepers liability, automobile/vehicle liability
and employer's liability under the workers compensation policy.
(h) Professional liability insurance for any physician employed or
other employee or agent of the Lessee providing services at the Leased
Property in an amount not less than Three Million and 00/100 Dollars
($3,000,000.00) per individual claim and Ten Million and 00/100 Dollars
($10,000,000.00) annual aggregate.
(i) A commercial blanket bond covering all employees of the Lessee,
including its officers and the individual owners of the insured business
entity, whether a joint-venture, partnership, proprietorship or
incorporated entity, against loss as a result of their dishonesty. Policy
limit shall be in an amount of at least One Million and 00/100 Dollars
($1,000,000.00) subject to a deductible of no more than Ten Thousand and
00/100 Dollars ($10,000.00) per occurrence.
The term "Full Replacement Cost" as used herein, shall mean the actual
replacement cost thereof from time to time, including increased cost of
construction endorsement, less exclusions provided in the normal fire
insurance policy. In the event either Lessor or Lessee believes that the
Full Replacement Cost has increased or decreased at any time during the
Term, it shall have the right to have such Full Replacement Cost
re-determined by the fire insurance company which is then providing the
largest amount of fire insurance carried on the Leased Property,
hereinafter referred to as the "impartial appraiser". The party desiring to
have the Full Replacement Cost 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 Lessee
shall forthwith increase, or may decrease, the amount of the insurance
carried pursuant to this Article, as the case may be, to the amount so
determined by the impartial appraiser. Lessee shall pay the fee, if any, of
the impartial appraiser.
13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain such additional insurance, including, without limitation,
adequate loss of rents insurance with respect to casualty or condemnation events
to the extent the coverage set forth in Section 3.1(c) is not adequate, as may
be required from time to time by any Facility Lender and shall further at all
times maintain adequate worker's compensation insurance coverage for all persons
employed by Lessee on the Leased Property, in accordance with the requirements
of applicable local, state and federal law.
13.3 WAIVER OF SUBROGATION. All insurance policies to be obtained by Lessee
as required hereunder, including, without limitation, insurance policies
covering the Leased Property, the Fixtures, the Facility, and/or Lessee's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the Lessor. Lessee shall obtain insurance policies which will
include such a waiver clause or endorsement regardless of whether same is
obtainable without extra cost, and in the event of such an extra charge Lessee
shall pay the same.
13.4 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section shall be written in form satisfactory to Lessor and by insurance
companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor,
and shall deliver such original policies, or in the case of a blanket policy, a
copy of the original policy certified in writing by a duly authorized agent for
the insurance company as a "true and certified" copy of the policy, to the
Lessor effective with the Commencement Date and furnished annually thereafter
(and, with respect to any renewal policy, at least fifteen (15) days prior to
the expiration of the existing policy) and in the event of the failure of Lessee
either to obtain such insurance in the names herein called for or to pay the
premiums therefor, or to deliver
27
such policies or certified copies of such policies (if allowed hereunder) to
Lessor at the times required, Lessor shall be entitled, but shall have no
obligation, to obtain such insurance and pay the premiums therefor, which
premiums shall be repayable to Lessor upon written demand therefor, and failure
to repay the same shall constitute an Event of Default within the meaning of
Section 16.1(c). Each insurer mentioned in this Section shall agree, by
endorsement on the policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor sixty (60) days' prior written
notice (at Lessor's notice address as specified in this Lease (the "Lessor's
Notice Address")) before the policy or policies in question shall be altered,
allowed to expire or canceled. The parties hereto agree that all insurance
policies, endorsements and certificates which provide that the insurer will
"endeavor to" give notice before same may be altered, allowed to expire or
canceled will not be acceptable to Lessor. Notwithstanding anything contained
herein to the contrary, all policies of insurance required to be obtained by the
Lessee hereunder shall provide (i) that such policies will not lapse, terminate,
be canceled, or be amended or modified to reduce limits or coverage terms unless
and until Lessor has received not less than sixty (60) days' prior written
notice at the Lessor's Notice Address, with a simultaneous copy to MPT Operating
Partnership, LP, Attention: Its President, 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, and (ii) that in the event of cancellation due to
non-payment of premium, the insurer will provide not less than ten (10) days'
prior written notice to the Lessor at the Lessor's Notice Address, with a
simultaneous copy to MPT Operating Partnership, LP, Attention: Its President,
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000.
13.5 INCREASE IN LIMITS. In the event that Lessor shall at any time in its
reasonable discretion deem the limits of the personal injury, property damage or
general public liability insurance then carried to be 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. Nothing herein shall permit the amount of
insurance to be reduced below the amount or amounts required by any of the
Facility Instruments.
13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Section, Lessee'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 Lessee provided that
(a) Any such blanket policy or policies are acceptable to and have
been approved by the Lessor;
(b) Any such blanket policy or policies shall not be changed, altered
or modified without the prior written consent of the Lessor; and
(c) Any such blanket policy or policies shall otherwise satisfy the
insurance requirements of this Article XIII (including the requirement of
thirty (30) days' written notice before the expiration or cancellation of
such policies as required by Section 13.4 hereof) and shall provide for
deductibles in amounts acceptable to Lessor.
13.7 NO SEPARATE INSURANCE. Lessee shall not, on Lessee's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished by, or which may reasonably be required
to be furnished by, Lessee, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Lenders, are included therein as
additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Lease. Lessee shall
immediately notify Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional policy or additional policies.
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ARTICLE XIV
FIRE AND CASUALTY
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 14.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to repair and restore,
all such insurance proceeds) shall be retained by Lessor free and clear upon
completion of any such repair and restoration except as otherwise specifically
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Lessor except that any salvage relating to Capital
Additions paid for by Lessee or to Lessee's Personal Property shall belong to
Lessee.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
(a) Except as provided in Section 14.7, if during the Term, the Leased
Property is totally or partially destroyed from a risk covered by the
insurance described in Article XIII and the Facility thereby is rendered
Unsuitable for its Primary Intended Use, Lessee shall have the option, by
giving written notice to Lessor within sixty (60) days following the date
of such destruction, to (i) restore the Facility to substantially the same
condition as existed immediately before the damage or destruction, or (ii)
so long as Lessee is not in monetary or payment default of any kind, and no
event has occurred which with the giving of notice or the passage of time,
or both, would constitute such a default, under this Lease, the Other
Leases and the Tenant Leases, purchase the Leased Property (including the
Parking Lot Interest) from Lessor for a purchase price equal to the Option
Price as defined in Section 35.1 (less the amount of any insurance proceeds
held by Lessor), or (iii) so long as the damage or destruction was not
caused by the negligence of Lessee, its agents, servants, employees or
contractors, terminate this Lease and, in this event, Lessor shall be
entitled to retain the insurance proceeds, and Lessee shall pay to Lessor
on demand, the amount of any deductible or uninsured loss arising in
connection therewith. In the event Lessee purchases the Leased Property
pursuant to this Section 14.2(a), the terms set forth in Article XVIII
shall apply and the sale/purchase must be closed within ninety (90) days
after the date of the written notice from Lessee to Lessor of Lessee's
intent to purchase, unless a different closing date is agreed upon in
writing by Lessor and Lessee.
(b) If during the Term, the Leased Improvements and/or the Fixtures
are totally or partially destroyed from a risk covered by the insurance
described in Article XIII, but the Facility is not thereby rendered
Unsuitable for its Primary Intended Use, Lessee shall restore the Facility
to substantially the same condition as existed immediately before the
damage or destruction. Such damage or destruction shall not terminate this
Lease; provided, however, if Lessee cannot within a reasonable time obtain
all necessary governmental approvals, including building permits, licenses,
conditional use permits and any certificates of need, after diligent
efforts to do so, in order to be able to perform all required repair and
restoration work and to operate the Facility for its Primary Intended Use
in substantially the same manner as immediately prior to such damage or
destruction, so long as Lessee is not in monetary or payment default of any
kind, and no event has occurred which with the giving of notice or the
passage of time or both would constitute such a default, under the terms of
this Lease, the Other Leases and the Tenant Leases, Lessee shall have the
option, by giving written notice to Lessor within sixty (60) days following
the date of such damage or destruction, to purchase the Leased Property
(including the Parking Lot Interest) for a purchase price equal to the
Option Price as defined in Section 35.1 (less the amount of any insurance
proceeds held by Lessor). In the event Lessee purchases the Leased Property
pursuant to this Section 14.2(b), the terms set forth in Article XVIII
shall apply and the sale/purchase must be closed within ninety (90) days
after the date of the
29
written notice from Lessee to Lessor of Lessee's intent to purchase, unless
a different closing date is agreed upon in writing by Lessor and Lessee.
(c) If the cost of the repair or restoration exceeds the amount of
proceeds received by Lessor from the insurance required under Article XIII,
Lessee shall be obligated to contribute any excess amount needed to restore
the Facility prior to use of the insurance proceeds. Such amount shall be
paid by Lessee to Lessor (or a Facility Lender if required) to be held in
trust together with any other insurance proceeds for application to the
cost of repair and restoration.
(d) In the event Lessee purchases the Leased Property, this Lease
shall terminate upon payment of the Option Price (less the amount of any
insurance proceeds held by Lessor) and Lessor shall remit to Lessee all
insurance proceeds being held in trust by Lessor or the Facility Lender if
applicable.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article XIII but that would have been covered if Lessee
carried the insurance customarily maintained by, and generally available to, the
operators of reputable health care facilities in the region in which the
Facility is located, then, whether or not such damage or destruction renders the
Facility Unsuitable for its Use, Lessee shall, at its sole cost and expense,
restore the Facility to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease. If such damage or destruction is not material, Lessee
shall restore the Leased Property at Lessee's expense.
14.4 LESSEE'S PERSONAL PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee's Personal Property or Capital
Additions financed by Lessee shall be paid to Lessor and Lessor shall hold such
insurance proceeds in trust to pay the cost of repairing or replacing the damage
to Lessee's Personal Property or the Capital Additions financed by Lessee.
14.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects to
restore the Facility as provided in Sections 14.2 or 14.3, Lessee shall also
restore all alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions paid for by Lessee.
14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall remain unabated during any period required for
repair and restoration.
14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections
14.2 or 14.3 to the contrary but subject to the option of Lessee to purchase the
Leased Property as provided in Section 35.1 by giving Lessor written notice
within sixty (60) days following the date of such damage or destruction, if
damage to or destruction of the Facility occurs during the last twenty-four (24)
months of the Term, and if such damage or destruction cannot be fully repaired
and restored within six (6) months immediately following the date of loss,
either party shall have the right to terminate this Lease by giving notice to
the other within sixty (60) days after the date of damage or destruction, in
which event Lessor shall be entitled to retain the insurance proceeds and Lessee
shall pay to Lessor on demand the amount of any deductible or uninsured loss
arising in connection therewith; provided, however, that any such notice given
by Lessor shall be void and of no force and effect if Lessee exercises an
available option to extend the Term for one Extended Term within thirty (30)
days following receipt of such termination notice.
14.8 TERMINATION OF RIGHT TO PURCHASE. Any termination of this Lease
pursuant to this Article XIV shall cause any right to purchase under any other
provisions of this Lease granted to Lessee under this Lease to be terminated and
to be without further force and effect.
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14.9 WAIVER. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.
ARTICLE XV
CONDEMNATION
15.1 DEFINITIONS.
(a) "Condemnation" means (i) the exercise of any governmental power,
whether by legal proceedings or otherwise, by a Condemnor or (ii) a
voluntary sale or transfer by Lessor to any Condemnor, either under threat
of Condemnation or while legal proceedings for Condemnation are pending.
(b) "Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value awarded,
paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.
15.4 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for its Primary Intended Use, Lessee
shall have the option (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or (b) so long as Lessee is not in monetary or
payment default of any kind, and no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default, under the
terms of this Lease, the Other Leases and the Tenant Leases to acquire the
Leased Property (including the Parking Property Interest) from Lessor for a
purchase price equal to the Option Price as defined in Section 35.1, in which
event this Lease shall terminate upon payment of the Option Price. Lessee shall
exercise its option by giving Lessor notice thereof within sixty (60) days after
Lessee receives notice of the Taking. In the event Lessee exercises the option
to purchase the Leased Property pursuant to this Section 15.4, the terms set
forth in Article XVIII shall apply and the sale/purchase must be closed within
thirty (30) days after the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase, unless a different closing date is agreed upon in
writing by Lessor and Lessee.
15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Lessee
shall accomplish all necessary restoration.
15.6 AWARD DISTRIBUTION. In the event Lessee exercises the purchase option
as described in clause (b) of Section 15.4, the entire Award shall belong to
Lessee provided no Event of Default is continuing and Lessor agrees to assign to
Lessee all of its rights thereto. In any other event, the entire Award shall
belong to and be paid to Lessor, except that, if this Lease is terminated, and
subject to the rights of the Facility Lender, Lessee shall be entitled to
receive from the Award, if and to the extent such Award specifically includes
such items, the following:
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(a) A sum attributable to the Capital Additions for which Lessee would
be entitled to reimbursement at the end of the Term pursuant to the
provisions of Section 10.2(c) and the value, if any, of the leasehold
interest of Lessee under this Lease; and
(b) A sum attributable to Lessee's Personal Property and any
reasonable removal and relocation costs included in the Award.
If Lessee is required or elects to restore the Facility, Lessor agrees that,
subject to the rights of the Facility Lenders, its portion of the Award shall be
used for such restoration and it shall hold such portion of the Award in trust,
for application to the cost of the restoration. Notwithstanding any provision of
this Lease to the contrary, any Award retained by Lessor and not used for
restoration shall be taken into account as an amount received by Lessor for
purposes of calculating the Option Price as defined in Section 35.1.
15.7 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and the
Base Rent shall not be abated or reduced during such period of Taking.
ARTICLE XVI
DEFAULT
16.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
or defaults hereunder:
(a) a default or event of default shall occur under any of the Other
Leases that is not cured within the applicable cure period as provided
therein, or
(b) if Lessee shall fail to make a payment of the Rent or any other
monetary payment due and payable by Lessee under this Lease when the same
becomes due and payable, or
(c) if Lessee shall fail to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by Lessee
within a period of thirty (30) days after receipt by Lessee of written
notice thereof from Lessor (provided, however, in no event shall Lessor be
required to give more than one (1) written notice per calendar year for a
non-monetary default), unless such failure cannot with due diligence be
cured within a period of thirty (30) days, in which case such failure shall
not be deemed to continue if Lessee proceeds promptly and with due
diligence to cure the failure and diligently completes the curing thereof
within sixty (60) days after receipt by Lessee of Lessor's notice of
default, or
(d) if Lessee or any Guarantor shall:
(i) admit in writing its inability to pay its debts generally as
they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
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(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state thereof,
(e) if Lessee's license as defined in Article XXXIX or participation
or certification in Medicare, Medicaid or other governmental payor programs
is terminated, or
(f) if Lessee admits in writing that it cannot meet its obligations as
they become due; or is declared insolvent according to any law; or
assignment of Lessee's property is made for the benefit of creditors; or a
receiver or trustee is appointed for Lessee or its property; or the
interest of Lessee under this Lease is levied on under execution or other
legal process; or any petition is filed by or against Lessee to declare
Lessee bankrupt or to delay, reduce or modify Lessee's capital structure if
Lessee be a corporation or other entity (provided that no such levy,
execution, legal process or petition filed against Lessee shall constitute
a breach of this Lease if Lessee shall vigorously contest the same by
appropriate proceedings and shall remove or vacate the same within thirty
(30) days from the date of its creation, service or filing), or
(g) the abandonment or vacation of the Leased Property by Lessee
(Lessee's absence from the Leased Property for thirty (30) consecutive days
shall constitute abandonment), or Lessee fails to continuously operate the
Facility in accordance with the terms of this Lease, or
(h) if the Lessee or any Guarantor shall, after a petition in
bankruptcy is filed against it, be adjudicated a bankrupt or if a court of
competent jurisdiction shall enter an order or decree appointing, without
the consent of Lessee or such Guarantor, as the case may be, a receiver of
Lessee or such Guarantor or of the whole or substantially all of its
property, or approving a petition filed against it seeking reorganization
or arrangement of Lessee or such Guarantor under the federal bankruptcy
laws or any other applicable law or statute of the United States of America
or any state thereof, and such judgment, order or decree shall not be
vacated or set aside or stayed within ninety (90) days from the date of the
entry thereof, or
(i) if Lessee or any Guarantor shall be liquidated or dissolved, or
shall begin proceedings toward such liquidation or dissolution, or shall,
in any manner, permit the sale or divestiture of substantially all of its
assets other than in connection with a merger or consolidation of Lessee or
such Guarantor into, or a sale of substantially all of Lessee's or such
Guarantor's assets to, another corporation, provided that if the survivor
of such merger or the purchaser of such assets shall assume all of Lessee's
obligations under this Lease by a written instrument, in form and substance
reasonably satisfactory to Lessor, accompanied by an opinion of counsel,
reasonably satisfactory to Lessor and addressed to Lessor stating that such
instrument of assumption is valid, binding and enforceable against the
parties thereto in accordance with its terms (subject to usual bankruptcy
and other creditors' rights exceptions), and provided, further, that if,
immediately after giving effect to any such merger, consolidation or sale,
Lessee or such other corporation (if not the Lessee) surviving the same,
together with Guarantors, shall have a Consolidated Net Worth not less than
the Consolidated Net Worth of Lessee or Guarantors immediately prior to
such merger, consolidation or sale, all as to be set forth in an Officer's
Certificate delivered to Lessor within thirty (30) days of such merger,
consolidation or sale, an Event of Default shall not be deemed to have
occurred, or
(j) if the estate or interest of Lessee in the Leased Property or any
part thereof shall be levied upon or attached in any proceeding and the
same shall not be vacated or discharged within the later of ninety (90)
days after commencement thereof or thirty (30) days after receipt by Lessee
of written notice thereof from Lessor (unless Lessee shall be contesting
such lien or attachment in good faith in accordance with Article XII
hereof), or
(k) if, except as a result of damage, destruction or a partial or
complete Condemnation, Lessee voluntarily ceases operations on the Leased
Property for a period in excess of ninety (90) days, or
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(l) if any of the representations or warranties made by Lessee or any
of the Sellers named in the Purchase Agreement or in the certificates
delivered in connection therewith are or become untrue in any material
respect, and which is not cured within ten (10) days after notice from
Lessor, or
(m) a default shall occur under the Guaranty, or
(n) a default or event of default shall occur under the Lease
Assignment, Purchase Agreement, Assignment of Rents and Leases, Security
Agreements or any other agreement between Lessor or any Affiliate of
Lessor, on the one hand, and Lessee, any Guarantor, or any of their
respective Affiliates, on the other hand, which is not cured within the
cure period as provided therein, or
(o) if Lessee defaults under the Tenant Leases or fails or refuses to
enforce the terms and conditions of the Tenant Leases, or
(p) if a payment default occurs with respect to any of Lessee's or any
Guarantor's debt or other leases or is declared to be in material default
by any of its lenders and such default is not cured within the applicable
cure periods provided therefor.
Notwithstanding anything contained herein to the contrary, a default under the
Xxxxxxx Oaks Lease or a default under the guaranty executed by the guarantors
guaranteeing the obligations of the lessee under the Xxxxxxx Oaks Lease shall
not constitute a default under this Lease.
If an Event of Default shall have occurred, Lessor may pursue any one or more of
the remedies set forth in Sections 16.1A through D below and in Section 16.2
hereof, in addition to any remedies which may be permitted by law or by other
provisions of this Lease, without notice or demand, except as hereinafter
provided. Lessor may exercise these remedies at the time of an Event of Default
or at any time thereafter; provided, however, that if Lessor fails to exercise
any such remedy within six (6) months following the occurrence of such Event of
Default, Lessee may cure such default, provided such cure occurs prior to
Lessor's exercise of such remedy and, provided further, that any cure by Lessee
within such six (6) month period shall have no effect on Lessor's right to
exercise any such remedy within such six (6) month period.
A. Without any notice or demand whatsoever, Lessor may take any one or more
of the actions permissible at law to insure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee deserts or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease, without any obligation to relet; but that if Lessor does, at its
sole discretion, elect to relet the Leased Property, such action by Lessor shall
not be deemed as an acceptance of Lessee's surrender of the Leased Property
unless Lessor expressly notifies Lessee of such acceptance in writing pursuant
to subsection B of this Section 16.1, Lessee hereby acknowledging that Lessor
shall otherwise be reletting as Lessee's agent and Lessee furthermore hereby
agreeing to pay to Lessor on demand any deficiency that may arise between the
monthly rentals and other charges provided in this Lease and that are actually
collected by Lessor. It is further agreed in this regard that in an Event of
Default described in this Section 16.1, Lessor shall have the right to enter
upon the Leased Property without being liable for prosecution or any claim for
damages therefor, and do whatever Lessee is obligated to do under the terms of
this Lease; and Lessee agrees to reimburse Lessor on demand for any expenses
which Lessor may incur in thus effecting compliance with Lessee's obligations
under this Lease, and Lessee further agrees that Lessor shall not be liable for
any damages resulting to the Lessee from such action.
X. Xxxxxx may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearages in rent (including any interest
which may have accrued pursuant to Section 3.3 of this Lease), enter upon and
take possession of the Leased Property and expel or remove Lessee and any other
person who may be occupying the Leased Property or any part thereof without
34
being liable of prosecution or any claim for damages therefor. Lessee hereby
waives any statutory requirement of prior written notice for filing eviction or
damage suits for nonpayment of rent. In addition, Lessee agrees to pay to Lessor
on demand the amount of all loss and damage which Lessor may suffer by reason of
any termination effected pursuant to this subsection B, said loss and damage to
be determined by:
(i) The worth at the time of award of the unpaid rent which had
been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee
proves could have been reasonably avoided;
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and
(iv) Any other amount necessary to compensate the Lessor for all
the detriment proximately caused by the Lessee's failure to perform
its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited
to, all reasonable legal expenses and other related costs incurred by
Lessor following an Event of Default, all costs incurred by Lessor in
recovering the Leased Property and restoring the Leased Property to
good order and condition, and/or in remodeling, renovating or
otherwise preparing the Leased Property for reletting, and all costs
(including, without limitation, any brokerage commissions and
reasonable attorneys' fees) incurred by Lessor in reletting the Leased
Premises.
The "worth at the time of award" of the amounts referred to in paragraphs
(i) and (ii) above is computed by allowing interest at a rate equal to the
lowest rate of capitalization (highest present worth) reasonably applicable at
the time of such determination and allowed by applicable law. The worth at the
time of award of the amount referred to in paragraph (iii) above is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
C. In addition to other rights and remedies Lessor may have hereunder and
at law and in equity, if an Event of Default occurs under this Lease, (i) Lessee
is deemed to have assigned to Lessor, at Lessor's sole option, all service
agreements (including, without limitation, all medical director agreements);
(ii) to the extent permitted by law, Lessee is deemed, at Lessor's sole
discretion, to have transferred and assigned to Lessor all Licenses and
agreements, including, without limitation, all Medicare and Medicaid provider
numbers, and (iii) to the extent permitted by law, if required by Lessor,
transfer to the Lessor all of the Licenses, including, without limitation, all
Medicare and Medicaid provider numbers. In the event there are legal limitations
on any of the foregoing remedies, Lessee further hereby covenants and agrees
that it will take all actions necessary to orderly transfer the operations and
occupancy of the Leased Property to the Lessor, including cooperating with
respect to the transfer to Lessor of Licenses, provider numbers and other
agreements.
D. In addition to the above remedies, in the Event of Default hereunder by
Lessee, Lessor, at its option, may have one or more of the following remedies in
addition to all other legal rights and remedies:
(i) Lessor may serve upon Lessee notice that its Lease and the
then unexpired term hereof shall terminate and become absolutely void
on a date specified in such notice, which shall be the date of such
notice or such later date as may be required by law, and the Lease,
and well as the right, title, and interest of Lessee hereunder shall,
except as to the rights and remedies of Lessor upon termination as
provided herein, terminate and become void in the same manner and with
the same force and effect as if the date filed in such notice were the
date originally specified for the expiration of the Lease term; and
Lessee shall then immediately quit and surrender to Lessor the Leased
Property, including any and all buildings and improvements thereon,
and Lessor may then
35
or at any time thereafter, without judicial proceedings of any kind,
enter into and repossess the Leased Property, and may remove all
occupants and any property thereon without being liable for any action
or prosecution of any kind for such entry or the manner thereof, or
loss of or damage to any property upon the Leased Property. In the
event of any such termination of this Lease, and in addition to any
other rights and remedies Lessor may have, Lessor shall have all of
the rights and remedies of a Lessor provided by Section 1951.2 of the
California Civil Code.
(ii) In addition, Lessor shall have all the rights and remedies
described in Section 1951.4 of the California Civil Code (Lessor may
continue the Lease in effect after Lessee's breach and abandonment and
recover rent as it becomes due, if Lessee has the right to sublease or
assign subject only to reasonable limitations).
(iii) Lessor may immediately terminate Lessee's right of
possession of the Leased Property, but not terminate the Lease, and
without notice or demand enter upon the Leased Property or any part
thereof and take absolute possession of the same, and at Lessor's sole
option may relet the Leased Property or any part thereof for such
terms and such rents as Lessor may reasonable elect. In the event
Lessor shall elect to so relet, then rent received by Lessor from such
reletting shall be applied first, to the payment of any indebtedness
other than Rent due hereunder from Lessee to Lessor, second, to the
payment of any cost of such reletting, including, without limitation,
refurbishing costs and leasing commissions, and third, to the payment
of Rent due and unpaid hereunder, and Lessee shall satisfy and pay any
deficiency upon demand therefor from time to time. Any entry into and
possession of the Leased Property by Lessor shall be without liability
or responsibility to Lessee and shall not be in lieu of or in
substitution for any other legal rights of Lessor hereunder. Lessee
further agrees that Lessor may file suit to recover any sums due under
the terms of this Lease and that no recovery of any portion due Lessor
hereunder shall be any defense to any subsequent action brought for
any amount not therefore reduced to judgment in favor of Lessor.
Reletting of the Leased Property shall not be construed as an election
on the part of Lessor to terminate this Lease and, notwithstanding any
such reletting without termination, Lessor may at any time thereafter
elect to terminate this Lease for default.
16.2 EVENTS OF DEFAULT IN FINANCIAL COVENANTS.
Compliance with financial covenants set forth in subparagraphs (a) and (b) of
this Section 16.2 below will be determined on a combined basis using the
combined financial statements and information of Desert Valley Tenants.
(a) The failure or breach of any one or more of the following shall
constitute a default and breach of this Section 16.2 and the Lessor shall have
the rights and remedies provided for herein:
(i) Combined EBITDAR shall equal or exceed one hundred
seventy-five percent (175%) of Combined Fixed Charges;
(ii) Total Debt of the Desert Valley Tenants shall not exceed
fifty percent (50%) of the greater of (A) the Total
Capitalization of the Desert Valley Tenants, or (B) the Market
Value of Desert Valley Tenants;
(iii) Combined EBITDAR shall equal or exceed two hundred fifty
percent (250%) of Combined Lease Payments; or
(iv) The Desert Valley Tenants shall not experience three (3)
consecutive quarters with declines in net revenue and generate
Combined EBITDAR of less than two hundred percent (200%) of
Combined Lease Payments.
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The covenants described in this Section 16.2(a) (i) -- (iv) shall first
become effective at the end of the first full calendar quarter subsequent to the
Commencement Date and shall be tested at the end of each subsequent calendar
quarter. Until the first anniversary of the Commencement Date, all operating
measures shall be calculated from the Commencement Date and on a trailing twelve
(12) month basis thereafter.
Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (a) items (i) through (iv) of this Section 16.2(a), Lessor may, at
its option, upon five (5) days' written notice to Lessee (any such notice
requiring such termination being herein referred to as the "Removal Notice"),
require Lessee to terminate the engagement of any Management Company managing
the Facility and replace such Management Company with a manager chosen by Lessor
(or, if there is no Management Company managing the Facility at that time,
Lessor may require the Lessee to engage a Management Company acceptable to
Lessor and enter into a contract with such Management Company upon terms and
conditions acceptable to Lessor). In the event Lessor elects to require a change
in the management of the Facility, such exercise to change management shall be
subject to the right of Lessee to purchase the Leased Property (including the
Parking Lot Interest) on the terms described in Article XXXV herein, provided
Lessee gives Lessor written notice of its intention to exercise such purchase
right within five (5) days following receipt of the Removal Notice. In the event
Lessee exercises its right to purchase as allowed in this Section 16.2(a), such
purchase shall be closed within the time period and subject to the provisions
set forth in Article XXXV herein.
(b) The failure or breach of any one or more of the following
covenants shall constitute a default and breach of this Section 16.2(b) and
Lessor shall have the rights and remedies provided for herein:
(i) Total Debt of the Desert Valley Tenants shall not exceed
eighty percent (80%) of the greater of (A) the Total
Capitalization of the Desert Valley Tenants or (B) the Market
Value of Desert Valley Tenants;
(ii) The Desert Valley Tenants shall not experience six (6)
consecutive quarters with declines in net revenue and generate
Combined EBITDAR of less than two hundred percent (200%) of the
Combined Lease Payments; or
(iii) Neither Lessee nor any Guarantor shall be in payment
default on any of its corporate debt or other leases or be
declared to be in material default by any of its corporate
lenders, unless such default is cured within the cure periods
provided for therein.
The covenants described in this Section 16.2(b) (i) - (iii) shall first
become effective at the end of the first full calendar quarter subsequent to the
Commencement Date and shall be tested at the end of each subsequent calendar
quarter. Until the first anniversary of the Commencement Date, all operating
measures shall be calculated from the Commencement Date and on a trailing twelve
(12) month basis thereafter.
Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (b) items (i) through (iii) of this Section 16.2(b), Lessor may, at
its option, upon delivery of the Removal Notice, require Lessee to terminate the
engagement of the Management Company managing the Facility and replace such
Management Company with manager chosen by Lessor (or, if there is no Management
Company managing the facility at that time, Lessor may require the Lessee to
engage a Management Company acceptable to Lessor and enter into a contract with
such Management Company upon terms and conditions acceptable to Lessor), and
Lessor may, at its option, proceed with all other remedies Lessor deems
necessary, including, without limitation, terminating this Lease and pursuing
all other customary remedies available hereunder, at law and in equity;
provided, however, that in the event Lessor elects to require a change in the
management of the Facility, such exercise to change management shall be subject
to the right of Lessee to purchase the Leased Property (including the Parking
Lot Interest) on the terms described in Article XXXV herein, provided Lessee
gives Lessor written notice of its intention to exercise such purchase right
within five (5) days following receipt of the Removal Notice. In the event
Lessee
37
exercises its right to purchase as allowed in this Section 16.2(a), such
purchase shall be closed within the time period and subject to the provisions
set forth in Article XXXV.
(c) Notwithstanding any provision hereof, any breach of items (i)
through (iv) of subparagraph (a) of this Section 16.2, or items (i) and
(ii) of subparagraph (b) of this Section 16.2 shall not be deemed to be a
default or breach permitting Lessor to exercise the remedies set forth in
such subparagraphs if, within fifteen (15) days following the date of such
breach, Lessee obtains and delivers to Lessor an unconditional and
irrevocable letter of credit from a bank acceptable to Lessor (the "Letter
of Credit") naming Lessor beneficiary thereunder, in a dollar amount which
would result in the various EBITDAR coverage ratios set forth in such
clauses being satisfied, or an amount which would adequately reduce the
debt amount used in the calculation of the EBITDAR coverage ratios to
satisfy such clauses, and upon terms, conditions and provisions acceptable
to Lessor (including, without limitation, provisions allowing Lessor to
assign all of its rights under such Letter of Credit to Lessor's lender).
(d) The parties hereto agree, that if Desert Valley Hospital, Inc.
("DVH") exercises the option to purchase the Victorville Property, as
contemplated by the Victorville Lease, then, notwithstanding that DVH may
no longer satisfy all of the requirements to be included as a Desert Valley
Tenant under this Lease, the net cash flow after capital costs from DVH's
operation of the Victorville Property shall be taken into account in
determining whether the various EBITDAR coverage ratios set forth in this
Section 16.2 are or remain satisfied.
16.3 ADDITIONAL EXPENSES. It is further agreed that, in addition to
payments required pursuant to subsections A and B of Section 16.1 above, Lessee
shall compensate Lessor for (i) all administrative expenses, (ii) all expenses
incurred by Lessor in repossessing the Leased Property (including among other
expenses, any increase in insurance premiums caused by the vacancy of the Leased
Property), (iii) all expenses incurred by Lessor in reletting (including among
other expenses, repairs, remodeling, replacements, advertisements and brokerage
fees), (iv) all concessions granted to a new tenant or tenants upon reletting
(including among other concessions, renewal options), (v) Lessor's reasonable
attorneys' fees and expenses, (vi) all losses incurred by Lessor as a direct or
indirect result of Lessee's default (including among other losses any adverse
action by mortgagees), and (vii) a reasonable allowance for Lessor's
administrative efforts, salaries and overhead attributable directly or
indirectly to Lessee's default and Lessor's pursuing the rights and remedies
provided herein and under applicable law.
16.4 Intentionally Omitted.
16.5 WAIVER. If this Lease is terminated pursuant to Section 16.1, Lessee
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
16.6 APPLICATION OF FUNDS. Any payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.
16.7 NOTICES BY LESSOR. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Lessee of the nature and approximate extent of any default, it being
agreed that Lessee is in good or better position than Lessor to ascertain the
exact extent of any default by Lessee hereunder.
16.8 LESSOR'S CONTRACTUAL SECURITY INTEREST. Subject to the Prior Lien of
Lessee's Primary Lender (as such terms are defined herein), to secure the
payment of all rent due and to become due hereunder and the faithful performance
of this Lease by Lessee and to secure all other indebtedness, obligations and
liabilities of Lessee to
38
Lessor now existing or hereafter incurred, and all Obligations (as defined in
the Security Agreements), Lessee and Prime hereby give to Lessor an express
first and prior lien and security interest in all property (excluding the Power
Generation Facility, unless and until Lessee purchases the Power Generation
Facility at which time Lessee shall execute all documents necessary to xxxxx
Xxxxxx a first and prior lien and security interest in the Power Generation
Facility) which may be placed on the Leased Property (including all equipment
affixed therein, fixtures, equipment (including medical equipment whether or not
affixed to the Leased Property), chattels and merchandise and also upon all
proceeds of any insurance which may accrue to Lessee and/or Prime by reason of
destruction of or damage to any such property and also upon all of Lessee's
interest as lessee and Lessee's rights and options to purchase fixtures,
equipment and chattels placed on the Leased Property (in case of fixtures,
equipment and chattels leased to Lessee which are placed on the Leased
Property). All exemption laws are hereby waived in favor of such lien and
security interest and in favor of Lessor's statutory landlord lien. This lien
and security interest are given in addition to any statutory landlord lien and
shall be cumulative thereto. Except as limited in favor of the Primary Lender as
set forth in this Section 16.8, Lessor shall have at all times a valid security
interest to secure payment of all rentals and other sums of money becoming due
hereunder from Lessee, and to secure payment of any damages or loss which Lessor
may suffer by reason of the breach by Lessee or Prime of any covenant, agreement
or condition contained herein, upon all inventory, merchandise, goods, wares,
equipment (including medical equipment whether or not affixed to the Leased
Property), fixtures, furniture, improvements and other tangible personal
property of Lessee presently, or which may hereafter be, situated in or about
the Leased Property (excluding the Power Generation Facility, unless and until
Lessee purchases the Power Generation Facility), and all proceeds therefrom and
accessions thereto and, except as a result of sales made in the ordinary course
of Lessee's business, such property shall not be removed without the consent of
Lessor until all arrearages in rent as well as any and all other sums of money
then due to Lessor or to become due to Lessor hereunder shall first have been
paid and discharged and all the covenants, agreements and conditions hereof have
been fully complied with and performed by Lessee. Upon the occurrence of an
Event of Default by Lessee, Lessor may, in addition to any other remedies
provided herein, enter upon the Leased Property and take possession of any and
all inventory, merchandise, goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Lessee and Prime situated in or
about the Leased Property (excluding the Power Generation Facility, unless
Lessee purchases the Power Generation Facility), without liability for trespass
or conversion, and sell the same at public or private sale, with or without
having such property at the sale, after giving Lessee and Prime reasonable
notice of the time and place of any public sale of the time after which any
private sale is to be made, at which sale the Lessor or its assigns may purchase
unless otherwise prohibited by law. Unless otherwise provided by law, and
without intending to exclude any other manner of giving Lessee and/or Prime
reasonable notice, the requirement of reasonable notice shall be met, if such
notice is given in the manner prescribed in this Lease at least seven (7) days
before the time of sale. Any sale made pursuant to the provision of this
paragraph shall be deemed to have been a public sale conducted in commercially
reasonable manner if held in the above-described premises or where the property
is located after the time, place and method of sale and a general description of
the types of property to be sold have been advertised in a daily newspaper
published in the county in which the property is located, for five (5)
consecutive days before the date of the sale. The proceeds from any such
disposition, less any and all expenses connected with the taking of possession,
holding and selling of the property (including reasonable attorney's fees and
legal expenses), shall be applied as a credit against the indebtedness secured
by the security interest granted in this paragraph. Any surplus shall be paid to
Lessee and/or Prime, as applicable, or as otherwise required by law; the Lessee
and/or Prime shall pay any deficiencies forthwith. Upon request by Lessor,
Lessee and Prime agree to execute (if required by law; provided, however, Lessor
shall have the right to file a UCC-1 financing statement (and all amendments,
modifications and extensions thereto) at any time as provided in the Security
Agreements) and deliver to Lessor a financing statement in form sufficient to
perfect the security interest of Lessor in the aforementioned property and
proceeds thereof under the provision of the Uniform Commercial Code (or
corresponding state statute or statutes) in force in the state in which the
Leased Property is located, as well as any other state the laws of which Lessor
may at any time consider to be applicable.
As used herein, the term "Primary Lien of Lessee's Primary Lender" means
any first priority lien granted by Lessee or Prime in any of Lessee's or Prime's
machinery, equipment (including medical equipment whether or not affixed to the
Leased Property, but excluding the Power Generation Facility, unless Lessee
purchases the Power
39
Generation Facility), furniture, furnishings, tools, movable walls or
partitions, computers, signage, trade fixtures, supplies, inventory, or any
other tangible personal property placed on the Leased Property and used or
useful in Lessee's business conducted at or on the Leased Property (the
"Collateral"), which may be given in connection with Lessee's or Prime's lender
(the "Primary Lender") providing financing for Lessee and Prime to purchase such
items of Collateral or in connection with the refinancing of any such items of
Collateral. In the event Lessee and/or Prime obtains financing from a Primary
Lender or refinances such items of Collateral, Lessee and/or Prime shall use
commercially reasonable efforts to obtain from its Primary Lender a consent to a
secondary lien on such Collateral in favor of Lessor, in form and content
reasonably acceptable to the Primary Lender and the Lessor. Lessee and Prime, as
applicable, covenant and agree not to place or allow any other liens to be
placed on the Collateral. Lessee and Prime, as applicable, covenant and agree
that all indebtedness (except for the indebtedness owed to the Primary Lender)
owed by Lessee and/or Prime under all agreements executed in connection with the
Lessee's and/or Prime's financing of Lessee's Personal Property and Prime's
Personal Property to be used in connection with the operation of the Facility
shall be subordinate to all monetary obligations under this Lease and Lessee and
Prime shall not to place or allow any other liens to be placed on the Lessee's
Personal Property or Prime's Personal Property, respectively. At the request of
Lessor from time to time, Lessee and/or Prime shall execute and shall obtain
from all parties to such financing arrangements executed written confirmation of
such subordination (in form and content as is acceptable to Lessor), which shall
be delivered to Lessor within ten (10) days from Lessor's request.
ARTICLE XVII
LESSOR'S RIGHT TO CURE
If Lessee shall fail to make any payment, or to perform any act required to
be made or performed under this Lease and to cure the same within the relevant
time periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.
ARTICLE XVIII
PURCHASE OF THE LEASED PROPERTY
18.1 In the event Lessee purchases the Leased Property from Lessor pursuant
to any of the terms of this Lease, including, without limitation Section 35.1,
Lessor shall, upon receipt from Lessee of the applicable purchase price,
together with full payment of any unpaid Rent due and payable with respect to
any period ending on or before the date of the purchase, deliver to Lessee an
appropriate special warranty deed, assignment agreement or other instrument of
conveyance conveying the entire interest of Lessor in and to the Leased Property
to Lessee in the condition as received from Lessee and/or Prime, free and clear
of all encumbrances other than (a) those that Lessee has agreed hereunder to pay
or discharge, (b) those mortgage liens, if any, which Lessee has agreed in
writing to accept and to take title subject to, (c) any other Encumbrances
permitted to be imposed on the Leased Property under the provisions of Article
XXXVII which are assumable at no cost to Lessee or to which Lessee may take
subject without cost to Lessee, and (d) any matters affecting the Leased
Property on or as of the Commencement Date. The difference between the
applicable purchase price and the total of the encumbrances assigned or taken
subject to shall be paid in cash to Lessor, or as Lessor may direct, in federal
or other immediately available funds except as otherwise mutually agreed by
Lessor and Lessee. The closing of any such sale shall be contingent upon and
subject to Lessee obtaining all required governmental consents and approvals for
such transfer and if such sale
40
shall fail to be consummated by reason of the inability of Lessee to obtain all
such approvals and consents, any options to extend the Term of this Lease which
otherwise would have expired during the period from the date when Lessee elected
or became obligated to purchase the Leased Property until Lessee's inability to
obtain the approvals and consents is confirmed shall be deemed to remain in
effect for thirty (30) days after the end of such period. All expenses of such
conveyance, including, without limitation, the cost of title examination or
standard coverage title insurance, survey, attorneys' fees incurred by Lessor in
connection with such conveyance, transfer taxes, prepayment penalties and any
other fees with respect to any Facility Instrument, recording fees and similar
charges shall be paid for by Lessee.
ARTICLE XIX
HOLDING OVER
If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time Lessee shall pay
as rental each month, one and one-half times the aggregate of (a) one-twelfth of
the aggregate Base Rent and Percentage Rent payable with respect to the last
complete Lease Year prior to the expiration of the Term; (b) all Additional
Charges accruing during the month and (c) all other sums, if any, payable by
Lessee pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, Lessee shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
tenancies at will, to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease.
ARTICLE XX
INTENTIONALLY OMITTED
ARTICLE XXI
INTENTIONALLY OMITTED
ARTICLE XXII
RISK OF LOSS
During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee and, Lessor shall in no event be answerable or accountable
therefor nor shall any of the events mentioned in this Section entitle Lessee to
any abatement of Rent except as specifically provided in this Lease.
ARTICLE XXIII
INDEMNIFICATION
NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE OR SELF INSURANCE PROVIDED
FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH
INSURANCE OR SELF INSURANCE, LESSEE WILL PROTECT, INDEMNIFY,
41
SAVE HARMLESS AND DEFEND LESSOR FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS,
CLAIMS, DAMAGES, PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES), TO THE EXTENT
PERMITTED BY LAW, IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR BY
REASON OF: (A) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERCENTAGE
TO PROPERTY OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS,
INCLUDING WITHOUT LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO
USE, CONDITION, MAINTENANCE OR REPAIR BY LESSEE OF THE LEASED PROPERTY, (C) ANY
IMPOSITIONS (WHICH ARE THE OBLIGATIONS OF LESSEE TO PAY PURSUANT TO THE
APPLICABLE PROVISIONS OF THIS LEASE), (D) ANY FAILURE ON THE PART OF LESSEE TO
PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE, AND (E) THE
NON-PERFORMANCE OF ANY OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND
FUTURE SUBLEASES OF THE LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD (LESSEE)
THEREUNDER. ANY AMOUNTS WHICH BECOME PAYABLE BY LESSEE UNDER THIS SECTION SHALL
BE PAID WITHIN FIFTEEN (15) DAYS AFTER LIABILITY THEREFOR ON THE PART OF LESSOR
IS DETERMINED BY LITIGATION OR OTHERWISE AND, IF NOT TIMELY PAID, SHALL BEAR A
LATE CHARGE (TO THE EXTENT PERMITTED BY LAW) AT THE OVERDUE RATE FROM THE DATE
OF SUCH DETERMINATION TO THE DATE OF PAYMENT. LESSEE, AT ITS EXPENSE, SHALL
CONTEST, RESIST AND DEFEND ANY SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR
INSTITUTED AGAINST LESSOR OR MAY COMPROMISE OR OTHERWISE DISPOSE OF THE SAME AS
LESSEE SEES FIT. NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LESSOR
AGAINST ITS OWN NEGLIGENT ACTS OR OMISSIONS OR WILLFUL MISCONDUCT. LESSEE'S
LIABILITY FOR A BREACH OF THE PROVISIONS OF THIS ARTICLE XXIII SHALL SURVIVE ANY
TERMINATION OF THIS LEASE.
ARTICLE XXIV
ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION
24.1 ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or
sublease any portion of the Leased Property without Lessor's prior written
consent. Lessor shall not unreasonably withhold its consent to any subletting or
assignment, provided that (a) in the case of a subletting, the sublease and the
sublessee shall comply with the provisions of this Article XXIV, (b) in the case
of an assignment, the assignee shall assume in writing and agree to keep and
perform all of the terms of this Lease on the part of Lessee to be kept and
performed and shall be and become jointly and severally liable with Lessee for
the performance thereof, (c) an original counterpart of each such sublease and
assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor, and (d) in case of either an assignment
or subletting, Lessee shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the obligations, covenants and conditions to be performed
by Lessee hereunder and under all of the other documents executed in connection
herewith. Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that there currently exists certain leases or subleases on
the Leased Property as described on EXHIBIT D attached hereto (collectively the
"Existing Leases"). Any modifications, amendments and restatements of the
Existing Leases must be approved by Lessor in accordance with this Article XXIV.
Notwithstanding anything contained herein to the contrary, any proposed assignee
of Lessee and any proposed sublessee or subtenant must each have an equal or
stronger credit rating than the Lessee on the Commencement Date. Lessor's
failure or refusal to approve an assignment to an assignee or a subletting to a
sublessee or subtenant without the required credit rating shall be reasonable.
Within ten (10) business days following the Commencement Date, Lessor shall
obtain from the sublessees under the Existing Leases estoppel certificates in
form and substance acceptable to Lessor.
24.2 SUBLEASE LIMITATIONS. In addition to the sublease limitations as set
forth in Section 24.1 above, anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet the Leased Property on any basis such
that the rental to be paid by the sublessee or subtenant thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee or subtenant, or (b) any other formula such
that any portion of the sublease rental received by Lessor would fail to qualify
as "rents from real property" within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto. Provided also, Lessee shall not
sublet any portion of the Leased Property for a term extending beyond the Fixed
Term hereof without the express consent of Lessor. In addition, all subleases
shall comply with the Healthcare Laws. Lessor and Lessee acknowledge and agree
that all subleases entered into relating to the Leased Property, whether or not
42
approved by Lessor, shall not, without the prior written consent of Lessor, be
deemed to be a direct lease between Lessor and any sublessee or subtenant.
Lessee agrees that all subleases submitted for Lessor approval as provided
herein must include provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease, to the rights
of Lessor hereunder, and to all financing documents relating to any Lessor
financing in connection with the Facility, (b) in the event this Lease shall
terminate or be terminated before the expiration of the sublease, the sublessee
or subtenant will, at Lessor's option, attorn to Lessor and waive any right the
sublessee or subtenant may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease, (c) at
Lessor's option, the sublease may be terminated or left in place by Lessor in
the event of a termination of this Lease, (d) the obligations and performance of
the sublessee or subtenant must be guaranteed by guarantors acceptable to
Lessor, (e) sublessee or subtenant shall from time to time upon request of
Lessee or Lessor furnish within ten (10) days from request an estoppel
certificate in form and content acceptable to Lessor or its lender relating to
the sublease, (f) in the event the sublessee or subtenant receives a written
notice from Lessor or Lessor's assignees, if any, stating that Lessee is in
default under this Lease, the sublessee or subtenant shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the party
giving such notice, or as such party may direct (all rentals received from the
sublessee by Lessor or Lessor's assignees, if any, as the case may be, shall be
credited against the amounts owing by Lessee under this Lease), (g) and that
such sublease shall at all times be subject to the obligations and requirements
as set forth in this Article XXIV, and (h) sublessee or subtenant shall provide
to Lessor upon written request such officer's certificates and financial
statements as Lessor may request from time to time.
24.3 SUBLEASE SUBORDINATION AND NON-DISTURBANCE. Within ten (10) days after
request by Lessor, Lessee shall cause any subtenant or sublessee to execute and
deliver to Lessor a subordination agreement relating to the sublease of such
subtenant or sublessee, which subordination agreement shall be in such form and
content as is acceptable to Lessor. At the request from time to time by any
Facility Lender, within ten (10) days from the date of request, Lessee shall
cause any subtenant or sublessee of the Leased Property to execute and deliver
within such ten (10) day period, to such Facility Lender a written agreement in
a form reasonably acceptable to such Facility Lender whereby such subtenant or
sublessee subordinates the sublease and all of its rights and estate thereunder
to each Facility Instrument and agrees with each such Facility Lender that such
subtenant or sublessee will attorn to and recognize such Facility Lender or the
purchaser at any foreclosure sale or any sale under a power of sale contained in
any such Facility Instrument, as Lessor under this Lease for the balance of the
Term then remaining, subject to all of the terms and provisions of the sublease.
Lessee shall use its best efforts to cause the service company under the Energy
Services Agreement to execute and deliver to Lessor a subordination and estoppel
certificate or agreement (the "Energy Services Estoppel") relating to the Energy
Services Agreement as soon as practicable but in no event later than thirty (30)
days following the Commencement Date, which Energy Services Estoppel shall be in
form and content acceptable to Lessor. Lessee agrees to reimburse Lessor,
immediately upon written request, for all amounts disbursed by Lessor and its
Affiliates pursuant to the Energy Services Agreement and the Energy Services
Estoppel.
ARTICLE XXV
OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES
(a) At any time and from time to time within twenty (20) days
following written request by Lessor, Lessee will furnish to Lessor an
Officer's Certificate certifying that this Lease is unmodified and in full
force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications) and the dates to which the
Rent has been paid. Any such Officer's Certificate furnished pursuant to
this Article may be relied upon by Lessor and any prospective purchaser of
the Leased Property.
(b) Lessee will furnish, or cause to be furnished, the following
statements to Lessor, which must be in such form and detail as Lessor may
from time to time, but not unreasonably, request:
43
(i) within ninety (90) days after the end of each year, audited
financial statements of Lessee, the Guarantors and, if Lessee owns any
assets or conducts any other operations other than for the Facility, the
Facility separately, prepared by a nationally recognized accounting firm or
an independent certified public accounting firm reasonably acceptable to
Lessor, which statements shall include a balance sheet and statement of
income and expenses and changes in cash flow all in accordance with
generally accepted accounting principles for the year then ended (it being
agreed that Lessor shall bear the cost of any premium over normal charges
that such accounting firm may charge in order to prepare such statements on
an expedited basis (so long as Lessee has ordered such statements in a
timely manner)), and
(ii) within forty-five (45) days after the end of each quarter,
current financial statements of Lessee, the Guarantors and, if Lessee owns
any assets or conducts any other operations other than for the Facility,
the Facility separately, certified to be true and correct by an officer of
Lessee, and
(iii) within thirty (30) days after the end of each month current
operating statements of the Facility, including, but not limited to
operating statistics, certified to be true and correct by an officer of the
Lessee, and
(iv) within ten (10) days of receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying agencies
that any license or certification, including, without limitation, the
Medicare and/or Medicaid certification and/or managed care contract of the
Facility is being downgraded to a substandard category, revoked, or
suspended, or that action is pending or being considered to downgrade to a
substandard category, revoke, or suspend such Facility's license or
certification, and
(v) with reasonable promptness, such other information respecting
the financial condition and affairs of Lessee and the Guarantors as Lessor
may reasonably request from time to time.
(c) Upon Lessor's request, Lessee will furnish to Lessor a certificate
in form acceptable to Lessor certifying that no Event of Default as defined
herein or in any of the Other Leases, then exists and no event has occurred
(that has not been cured) and no condition currently exists that would, but
for the giving of any required notice or expiration of any applicable cure
period, constitute a default.
(d) Within two (2) business days of receipt, Lessee shall furnish to
Lessor copies of all notices and demands from any third party payor,
including, without limitation, Medicare and/or Medicaid, concerning
overpayment which will or may result in a repayment or a refund in excess
of One Million Dollars ($1,000,000). Lessee hereby agrees that in the event
of receipt of such notices or demands Lessor shall have the right, at
Lessor's option, to participate in the appeal of such notices and demands.
(e) Lessee shall furnish to Lessor on a monthly basis ongoing status
reports (in form and content acceptable to Lessor) of any governmental
investigations of the Lessee, the Guarantors, or any of their respective
Affiliates, or the Facility, conducted by the United States Attorney, State
Attorney General, the Office of the Inspector General of the Department of
Health and Human Services, or any other Governmental Entity.
(f) Lessee shall furnish to Lessor immediately upon receipt thereof
copies of all notices of adverse events or deficiencies as defined by
regulations or standards of the American Osteopathic Association or the
equivalent of the accrediting body relied upon by the Lessee in the
operation of the Facility or any part thereof.
(g) Lessee shall furnish to Lessor immediately upon receipt thereof
copies of all notices that the Lessee and/or the Desert Valley Tenants are
not in compliance with the Standards for Privacy of Individually
Identifiable Health Information and the Transaction and Code Set Standards
which were promulgated pursuant to the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA").
44
(h) Lessor reserves the right to (A) require such other financial
information from Lessee, and (B) require the Lessee to provide such other
financial information from the Desert Valley Tenants, at such other times
as it shall deem reasonably necessary. All financial statements and
information must be in such form and detail as Lessor shall from time to
time, but not unreasonably, request.
Subject to the rights of Lessor as provided in Section 42.8 of this
Lease, Lessor and Lessee agree that all financial information disclosed
pursuant to this Article XXV shall be kept in strictest confidence and
shall not be disclosed to any person or entity.
ARTICLE XXVI
INSPECTION
Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property and the Power Generation Facility during usual business
hours subject to any security, health, safety or confidentiality requirements of
Lessee, any governmental agency, any Insurance Requirements relating to the
Leased Property, or imposed by law or applicable regulations.
ARTICLE XXVII
NO WAIVER
No failure by Lessor or Lessee to insist upon the strict performance of any
term hereof or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.
ARTICLE XXVIII
REMEDIES CUMULATIVE
To the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Lessor or Lessee now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Lessor or Lessee of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor or Lessee of any or all of such other rights, powers and remedies.
ARTICLE XXIX
SURRENDER
No surrender to Lessor of this Lease or of the Leased Property or any part
of any thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.
45
ARTICLE XXX
NO MERGER OF TITLE
There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same person, firm, corporation or other
entity may acquire, own or hold, directly or indirectly, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.
ARTICLE XXXI
TRANSFERS BY LESSOR
If Lessor or any successor owner of the Leased Property shall convey the
Leased Property in accordance with the terms hereof, other than as security for
a debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.
ARTICLE XXXII
QUIET ENJOYMENT
So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder and under the Other Leases, Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property for the Term hereof, free of
any claim or other action by Lessor or anyone claiming by, through or under
Lessor, but subject to all liens and encumbrances of record as of the date
hereof or hereafter consented to by Lessee. No failure by Lessor to comply with
the foregoing covenant shall give Lessee any right to cancel or terminate this
Lease, or to fail to pay any other sum payable under this Lease, or to fail to
perform any other obligation of Lessee hereunder. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Article.
Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that the Lessee has received and reviewed copies of the
Existing Leases. Lessee agrees that it will not disturb the rights of the
tenants under the Existing Leases.
Lessee agrees that it will not disturb the rights of the tenants under the
Tenant Leases, if any, and will enforce all of the obligations of the tenants
under such Tenant Leases and will pay and perform all of the obligations to be
performed under the Tenant Leases as if Lessee is the lessor or landlord
thereunder. In addition, Lessor and Lessee acknowledge that the Lessee has taken
an assignment of certain contracts relating to the operation of the facility
located on the Leased Property (the "Contracts"), which Contracts require that
certain space in the Leased Property be provided as more particularly described
in the Contracts. Lessee agrees to abide by the terms and perform the
obligations under the Contracts. Lessee hereby agrees to indemnify and hold
Lessor harmless from any liabilities and damages incurred by the Lessor as a
result of the Lessee's default under the Tenant Leases and the Contracts.
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ARTICLE XXXIII
NOTICES
All notices, demands, consents, approvals, requests and other
communications under this Lease shall be in writing and shall be either (a)
delivered in person, (b) sent by certified mail, return receipt requested, (c)
delivered by a recognized over-night delivery service or (d) sent by facsimile
transmission and addressed as follows:
(a) if to Lessee: Veritas Health Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: (000)000-0000
if to Prime: Prime Healthcare Services, LLC
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxx Xxxxx
Fax: (000) 000-0000
with a copies to: Desert Valley Hospital, Inc.
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
(b) if to Lessor: MPT of Chino, LLC
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to: Xxxxxx X. Xxxx, Esq.
Baker, Donelson, Bearman, Xxxxxxxx & Xxxxxxxxx
0000 XxxxxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the
addressee's location, such notice or communication shall be deemed to be duly
received by the recipient at 9:00 a.m. on the first Business Day thereafter.
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ARTICLE XXXIV
APPRAISAL
In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Added Value of the Leased
Property for any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in the notice the name of a
person selected to act as an appraiser on its behalf. Lessor and Lessee agree
that any appraisal of the Leased Property shall be without regard to the
termination of this Lease or any purchase options contained herein and shall
assume the Lease is in place for a term of fifteen (15) years, and based solely
on the rents and other revenues generated and to be generated pursuant to this
Lease without any regard to Lessee's operations. Within ten (10) days after
receipt of any such notice, Lessor (or Lessee, as the case may be) shall by
notice to Lessee (or Lessor, as the case may be) appoint a second person as an
appraiser on its behalf. The appraisers thus appointed (each of whom must be a
member of the American Institute of Real Estate Appraisers or any successor
organization thereto) shall, within forty-five (45) days after the date of the
notice appointing the first (1st) appraiser, proceed to appraise the Leased
Property to determine the Fair Market Value, Fair Market Value Purchase Price or
Fair Market Added Value thereof as of the relevant date (giving effect to the
impact, if any, of inflation from the date of their decision to the relevant
date); provided, however, that if only one (1) appraiser shall have been so
appointed, or if two (2) appraisers shall have been so appointed but only one
(1) such appraiser shall have made such determination within fifty (50) days
after the making of Lessee's or Lessor's request, then the determination of such
appraiser shall be final and binding upon the parties. If two (2) appraisers
shall have been appointed and shall have made their determinations within the
respective requisite periods set forth above and if the difference between the
amounts so determined shall not exceed ten percent (10%) of the lesser of such
amounts, then the Fair Market Value, Fair Market Value Purchase Price or Fair
Market Added Value shall be an amount equal to fifty percent (50%) of the sum of
the amounts so determined. If the difference between the amounts so determined
shall exceed ten percent (10%) of the lesser of such amounts, then such two (2)
appraisers shall have twenty (20) days to appoint a third (3rd) appraiser, but
if such appraisers fail to do so, then either party may request the American
Arbitration Association or any successor organization thereto to appoint an
appraiser within twenty (20) days of such request, and both parties shall be
bound by any appointment so made within such 20-day period. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value, Fair
Market Value Purchase Price or Fair Market Added Value, whichever is earlier,
either Lessor or Lessee may apply to any court having jurisdiction to have
appointment made by such court. Any appraiser appointed, by the American
Arbitrator Association or by such court shall be instructed to determine the
Fair Market Value, Fair Market Value Purchase Price or Fair Market Added Value
within thirty (30) days after appointment of such appraiser. The determination
of the appraiser which differs most in terms of dollar amount from the
determinations of the other two (2) appraisers shall be excluded, and fifty
percent (50%) of the sum of the remaining two (2) determinations shall be final
and binding upon Lessor and Lessee as the Fair Market Value, Fair Market Value
Purchase Price or Fair Market Added Value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.
ARTICLE XXXV
PURCHASE RIGHTS
35.1 LESSEE'S OPTION TO PURCHASE. So long as Lessee is not in monetary or
payment default of any kind, or no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default (except as
otherwise expressly provided in Section 16.2) under the terms of this Lease, the
Other Leases and the Tenant Leases, at any time from and after the third
anniversary of the Commencement Date, Lessee shall have the option, to be
exercised by ninety (90) days' prior written notice to the Lessor, to purchase
the Leased Property
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(including the Parking Lot Interest) at a purchase price sufficient to cause
Lessor to receive, on an unleveraged basis, a sum equal to (i) the Purchase
Price of the Leased Property, and (ii) an amount sufficient to yield to Lessor
an internal rate of return thereon that is equal to eleven percent (11%) per
year, taking into account all payments of Base Rent received by Lessor prior to
the closing date of such purchase (the "Option Price"). Unless expressly
otherwise provided in this Section 35.1, in the event Lessee exercises such
option to purchase the Leased Property, (i) the terms set forth in Article XVIII
shall apply, (ii) Lessee shall continue paying Rent as required under this Lease
until the purchase is closed, and (iii) the sale/purchase must be closed within
ninety (90) days after the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase, unless a different closing date is agreed upon in
writing by Lessor and Lessee.
35.2 LESSOR'S OPTION TO PURCHASE LESSEE'S AND PRIME'S PERSONAL PROPERTY.
Effective on not less than ninety (90) days' prior written notice given at any
time within one hundred eighty (180) days prior to the expiration of the Term of
this Lease, but not later than ninety (90) days prior to such expiration, or
such shorter notice as shall be appropriate if this Lease is terminated prior to
its expiration date, Lessor shall have the option to purchase all (but not less
than all) of Lessee's Personal Property and Prime's Personal Property, if any,
at the expiration or termination of this Lease, for an amount equal to the net
sound insurable value thereof (current replacement cost less accumulated
depreciation on the books of Lessee pertaining thereto), subject to, and with
appropriate price adjustments for, all equipment leases, conditional sale
contracts, security interests and other encumbrances to which Lessee's Personal
Property and Prime's Personal Property are subject. Notwithstanding anything
contained in this Section 35.2 to the contrary, the options to purchase granted
under this Section 35.2 do not pertain to any of the Licenses, it being
understood and agreed that all matters relating to the transfer of the Licenses
are addressed in Article XXXIX hereof.
35.3 LESSOR'S PUT OPTION. Subject to the terms and conditions of Section
35.1 above and Section 35.4 below, if, at any time during the Term, Lessor
receives notice that the Parking Lot Lease will not be renewed in favor of the
Lessor beyond December 31, 2013, or that Lessor's rights with respect thereto
are or will be terminated, or if Lessor receives notice that the Parking Lot
Property cannot be used for parking for the Facility (each, a "Put Event"), then
Lessor, subject to terms and provisions of Section 35.4 below, shall have the
right and option (the "Put Option") to sell and convey to Lessee, and to cause
Lessee to purchase and acquire from Lessor, all of the Leased Property
(including the Parking Lot Interest which will be assigned to and assumed by
Lessee at the time of closing) for the Option Price (as defined in Section
35.1). In the event Lessor exercises the Put Option, the terms set forth in
Article XVIII shall apply and the sale/purchase must be closed within ninety
(90) days after the date of Lessor's written notice (the "Put Notice") to Lessee
of the Put Event, unless a different closing date is agreed upon in writing by
Lessor and Lessee.
35.4 LESSEE SUBSTITUTION FOR PARKING LOT PROPERTY. If in Lessor's
discretion, it becomes necessary to exercise the Put Option, Lessee shall first
have the right, within thirty (30) days following the Put Notice and subject to
the other terms and provisions of this Section 35.4, to substitute one or more
properties (collectively referred to as the "Substitute Property") to be used
for parking for the Facility; it being understood and agreed that Lessor shall
not be obligated to accept any Substitute Property which: (i) does not satisfy
applicable zoning and use laws, ordinances, rules and regulations; or (ii) in
Lessor's sole discretion would create an undue burden or inconvenience for
parking at the Facility. If Lessor accepts the Substitute Property, the
Substitute Property shall be conveyed to Lessor by general warranty deed, the
terms of Article XVIII shall apply and the purchase and conveyance to Lessor
must be closed within ninety (90) days after the Put Notice (or, if the
Substitute Property is obtained by Lessee by a lease, such lease shall be
assigned to Lessor by written instrument in form and substance reasonably
acceptable to Lessor within ninety (90) days after the Put Notice) and Lessor
and Lessee agree to enter into a written amendment to this Lease in form and
substance acceptable to Lessor to make the Substitute Property subject to all of
the terms and provisions of this Lease. In the event Lessor rejects the
Substitute Property pursuant to this Section 35.4, Lessee shall purchase the
Leased Property in accordance with the terms and provisions of Section 35.3
above. Lessee shall obtain and deliver to Lessor all due diligence documentation
required by Lessor in connection with or relating to the Substitute Property
(including, without limitation, surveys, environmental reports, soil test
reports and property condition reports) and Lessee shall pay all costs and
expenses of Lessee and Lessor paid or incurred in connection
49
with the substitution (or attempted substitution) of property under this Section
35.4, including, without limitation, any increase in rents or expenses related
to the Substitute Property.
ARTICLE XXXVI
INTENTIONALLY OMITTED
ARTICLE XXXVIII
FINANCING OF THE LEASED PROPERTY
37.1 FINANCING BY LESSOR. Lessor agrees that, if it grants or creates any
mortgage, lien, encumbrance or other title retention agreement ("Encumbrances")
upon the Leased Property, Lessor will use reasonable efforts to obtain an
agreement from the holder of each such Encumbrance whereby such holder agrees
(a) to give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure of such Encumbrance, (b) to permit Lessee, after twenty (20) days
prior written notice, to cure any such default on Lessor's behalf within any
applicable cure period, in which event Lessor agrees to reimburse Lessee for any
and all reasonable out-of-pocket costs and expenses incurred to effect any such
cure (including reasonable attorneys' fees), (c) to permit Lessee to appear with
its representatives and to bid at any foreclosure sale with respect to any such
Encumbrance, (d) that, if subordination by Lessee is requested by the holder of
each such Encumbrance, to enter into an agreement with Lessee containing the
provisions described in Article XXXVIII of this Lease, and (e) Lessor further
agrees that no such Encumbrance shall in any way prohibit, derogate from, or
interfere with Lessee's right and privilege to collaterally assign its leasehold
and contract rights hereunder provided such collateral assignment and rights
granted to the assignee thereunder shall be subordinate to the rights of the
holder of an Encumbrance as provided in Article XXXVIII hereof.
ARTICLE XXXVIII
SUBORDINATION AND NON-DISTURBANCE
At the request from time to time by one or more Facility Lenders, within
ten (10) days from the date of request, Lessee shall execute and deliver to such
Facility Lender a written agreement in a form reasonably acceptable to such
Facility Lender whereby Lessee subordinates this Lease and all of its rights and
estate hereunder (except for Lessee's purchase options as expressly provided in
this Lease) to each Facility Instrument that encumbers the Leased Property or
any part thereof and agrees with each such Facility Lender that Lessee will
attorn to and recognize such Facility Lender or the purchaser at any foreclosure
sale or any sale under a power of sale contained in any such Facility
Instrument, as the case may be, as Lessor under this Lease for the balance of
the Term then remaining, subject to all of the terms and provisions of this
Lease; provided, however, that each such Facility Lender simultaneously executes
and delivers a written agreement consenting to this Lease and agreeing that,
notwithstanding any such other mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Lessee shall not be disturbed in peaceful enjoyment of the Leased Property nor
shall this Lease be terminated or canceled at any time, except in the event
Lessee is in default under this Lease.
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ARTICLE XXXIX
LICENSES
Lessee shall maintain at all times during the Term hereof and any holdover
period all federal, state and local governmental licenses, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary or useful in the operation of the Facility (collectively,
the "Licenses'), and shall qualify and comply with all applicable laws as they
may from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.
Lessee shall not, without the prior written consent of Lessor, which may be
granted or withheld in its sole discretion, effect or attempt to effect any
change in the license category or status of the Facility or any part thereof.
Under no circumstances shall Lessee have the right to transfer any of the
Licenses to any location other than the Facility or to any other person or
entity (except to Lessor as contemplated herein), whether before, during or
after the Term hereof. Following the termination of this Lease, Lessee shall
retain no rights whatsoever to the Licenses, and Lessee will not move or attempt
to move the Licenses to any other location. To the extent that Lessee has or
will extend any right, title, or claim of right whatsoever in and to the
Licenses or the right to operate the Facility, all such right, title, or claim
of right shall automatically revert to the Lessor or to Lessor's designee upon
termination of this Lease, to the extent permitted by law. Upon any termination
of this Lease or any breach or default by Lessee hereunder (which breach or
default is not cured within any applicable grace period and which results in
Lessor terminating this Lease), to the extent permitted by law, Lessor shall
have the sole, complete, unilateral, absolute and unfettered right to cause all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the issuing authority, and to further have the
right to have any and all provider and/or third party payor agreements as a
provider in the Medicare and/or Medicaid and other federal healthcare programs
issued in Lessor's name or in the name of Lessor's designee.
Upon the termination of this Lease and for reasonable periods of time
immediately before and after such termination, Lessee shall use its best
efforts, without additional consideration to Lessee, to facilitate an orderly
transfer of the operation and occupancy of the Facility to Lessor or any new
lessee or operator selected by Lessor, it being understood and agreed that such
cooperation shall include, without limitation, (a) Lessee's transfer and
assignment, if and to the extent permitted by law, to Lessor, Lessor's nominee
or Lessor's new lessee or operator of any and all Licenses, (b) Lessee's use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new Lessee or operator to operate the Facility have been
issued, and (c) the taking of such other actions as are required by applicable
law or as are reasonably requested by Lessor. Upon any termination of this Lease
or any breach or default by Lessee hereunder (which breach or default is not
cured within any applicable grace period and which results in Lessor terminating
this Lease), to the extent permitted by law, Lessor shall have the sole,
complete, unilateral, absolute and unfettered right to cause any and all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the appropriate authority, if required, and to
further have the right, to the extent permitted by law, to have any and all
Medicare and Medicaid and any other provider and/or third party payor agreements
issued in Lessor's name or in the name of Lessor's designee. The provisions of
this Section are in addition to the other provisions of this Lease.
It is an integral condition of this Lease that Lessee covenants and agrees
not to sell, move, modify, cancel, surrender, transfer, assign, sell, relocate,
pledge, secure, convey or in any other manner encumber any License or any
governmental or regulatory approval, consent or authorization of any kind to
operate the Facility. To the extent permitted by law, Lessee hereby grants to
Lessor a landlord's lien on the Licenses.
Lessee shall immediately (within two (2) business days) notify Lessor in
writing of any notice, action or other proceeding or inquiry of any governmental
agency, bureau or other authority whether federal, state, or local, of any kind,
nature or description, which could adversely affect any material License or
Medicare and/or Medicaid-
51
certification status, or accreditation status of the Facility, or the ability of
Lessee to maintain its status as the licensed and accredited operator of the
Facility or which alleges noncompliance with any law. Lessee shall immediately
(within two (2) business days) upon Lessee's receipt, furnish Lessor with a copy
of any and all such notices and Lessor shall have the right, but not the
obligation, to attend and/or participate, in Lessor's sole and absolute
discretion, in any such actions or proceedings. Lessee shall act diligently to
correct any deficiency or deal effectively with any "adverse action" or other
proceedings, inquiry or other governmental action, so as to maintain the
licensure and Medicare and/or Medicaid-certification status stated herein in
good standing at all times. Lessee shall not agree to any settlement or other
action with respect to such proceedings or inquiry which affects the use of the
Leased Property or any portion thereof as provided herein without the prior
written consent of Lessor, which consent shall not be unreasonably withheld or
delayed. Lessee agrees to sign, acknowledge, provide and deliver to Lessor (and
if Lessee fails to do so upon request of Lessor, Lessee hereby irrevocably
appoints Lessor, as agent of Lessee for such express purposes) any and all
documents, instruments or other writings which are or may become necessary,
proper and/or advisable to cause any and all hospital licenses required for the
Primary Intended Use, Department of Human Services of the State of California
("DHS") provider agreements, and/or state or federal Title XVIII and/or Title
XIX provider agreements to be obtained (either in total or individually) in the
name of Lessor or the name of Lessor's designee in the event that Lessor
reasonably determines in good faith that (irrespective of any claim, dispute or
other contention or challenge of Lessee) there is any breach, default or other
lapse in any representation, warranty, covenant or other delegation of duty to
Lessee (beyond any applicable grace or cure period) and the issuing government
agency has threatened or asserted that such license or provider agreement will
terminate or has lapsed or that Lessee's license or certification or
accreditation status is in jeopardy. This power is coupled with the ownership
interest of Lessor in and to the Facility and all incidental rights attendant to
any and all of the foregoing rights.
ARTICLE XL
COMPLIANCE WITH HEALTHCARE LAWS
Lessee hereby covenants, warrants and represents to Lessor that as of the
Commencement Date and throughout the Term: (i) Lessee shall be, and shall
continue to be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Facility in accordance with the applicable
rules and regulations of the State of California, federal governmental
authorities and accrediting bodies, including, but not limited to, the United
States Department of Health and Human Services, DHSS, DHS and CMS; and/or (ii)
Lessee shall be, and shall continue to be, certified by and the holder of valid
provider agreements with Medicare/Medicaid issued by DHHS, DHS and/or CMS and
shall remain so certified and shall remain such a holder in connection with its
operation of the Primary Intended Use on the Leased Property as a licensed and
Medicare and/or Medicaid certified acute care hospital facility; (iii) Lessee
shall be, and shall continue to be in substantial compliance with and shall
remain in substantial compliance with all state and federal laws, rules,
regulations and procedures with regard to the operation of the Facility,
including, without limitation, substantial compliance under HIPAA; (iv) Lessee
shall operate the Facility in a manner consistent with high quality acute care
services and sound reimbursement principles under the Medicare and/or Medicaid
programs and as required under state and federal law; and (v) Lessee shall not
abandon, terminate, vacate or fail to renew any license, certification,
accreditation, certificate, approval, permit, waiver, provider agreement or any
other authorization which is required for the lawful and proper operation of the
Facility or in any way commit any act which will or may cause any such license,
certification, accreditation, certificate, approval, permit, waiver, provider
agreement or other authorization to be revoked by any federal, state or local
governmental authority or accrediting body having jurisdiction thereof.
52
ARTICLE XLI
LESSOR'S RIGHT TO SELL AND LESSEE'S RIGHT OF FIRST REFUSAL
41.1 LESSOR'S RIGHT TO SELL. Lessee understands that Lessor may sell its
interest in the Leased Property in whole or in part at any time, subject to this
Lease and the rights of Lessee as expressly provided in this Lease. The Lessee
agrees that any purchaser may exercise any and all rights of Lessor as fully as
if such had made the purchase of the Leased Property directly from the Lessee as
set out in the Purchase Agreement. Lessor may divulge to any such purchaser all
information, reports, financial statements, certificates and documents obtained
by it from Lessee.
41.2 LESSEE'S RIGHT OF FIRST REFUSAL. If, during the Term, Lessor shall
receive from Health Care Property Investors, Inc., a Maryland corporation (or
any affiliate thereof) (the "Transferee") a written, bona fide offer to purchase
the Leased Property, and Lessor is willing to accept such offer, so long as
Lessee is not in monetary or payment default of any kind, or no event has
occurred which with the giving of notice or the passage of time or both would
constitute such a default under the terms of this Lease, the Other Leases and
the Tenant Leases, Lessor must first present such offer to Lessee and allow
Lessee the right to purchase the Leased Property upon the same price, terms and
conditions as set forth in such offer except as otherwise expressly set forth
herein; provided, however, in the event Transferee makes a bona fide offer to
purchase any time after the second anniversary of the Commencement Date, in lieu
of such right of first refusal, Lessee may exercise its option to purchase as
provided in Section 35.1. Lessor shall make such offer by delivery of written
notice to Lessee (the "Notice") which shall contain the amount to be paid for
the Leased Property (including the amount and type of any consideration other
than cash), the terms of payment, the date on which the Leased Property is
proposed to be sold and all other terms and conditions of such transfer. For a
period of ten (10) days following the date of the Notice (the "Option Period"),
Lessee shall have the right, option and privilege (but not the obligation) to
purchase the Leased Property. If Lessee determines to purchase the Leased
Property, it shall deliver written notice of that fact to Lessor within the
Option Period and such delivery shall create an agreement between Lessor and
Lessee pursuant to which Lessor shall sell and Lessee shall purchase the Leased
Property from Lessor (i) at the price and upon the terms and conditions stated
in the Notice, and (ii) in accordance with the terms, conditions and provisions
set forth in Article XVIII, and the sale/purchase must be closed on the earlier
of (A) the closing date as stated in the Notice, or (B) ninety (90) days (the
"Closing Period") from the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase. If Lessee does not exercise its option to purchase
the Leased Property within the Option Period, or if Lessee does not close the
purchase within the Closing Period, then Lessee's option and the right of first
refusal shall be deemed not to have been exercised and Lessor may thereafter
sell the Property to the Transferee or any other party on any terms as Lessor
deems acceptable in its sole discretion, subject to this Lease and the rights of
Lessee as expressly provided in this Lease.
ARTICLE XLII
MISCELLANEOUS
42.1 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of this Lease
or any application thereof shall be invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby. If any late charges provided for in any provision of this
Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing and
in recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
53
42.2 LESSOR'S EXPENSES. In addition to other provisions herein, Lessee
agrees and shall pay and/or reimburse Lessor's reasonable costs and expenses,
including legal fees, incurred or resulting from and relating to (a) requests by
Lessee for approval or consent under this Lease Agreement; (b) requests by
Lessor for approval or consent under this Lease and all other documents executed
between Lessor and Lessee in connection herewith, (c) any circumstances or
developments which give rise to Lessor's right of consent or approval, (d)
circumstances resulting from any action or inaction by Lessee contrary to the
lease provisions, and (e) a request for changes including, but not limited to,
(i) the permitted use of the Leased Property, (ii) alterations and improvements
to the Leased Improvements, (iii) subletting or assignment, and (iv) any other
changes in the terms, conditions or provisions of this Lease. Such expenses and
fees shall be paid by Lessee within thirty (30) days of the submission of a
statement for the same or such amount(s) shall become Additional Charges and
subject to the Overdue Rate after the 30 days.
42.3 ASSETS PURCHASED PURSUANT TO PURCHASE OPTIONS. In connection with any
purchase options granted to Lessee hereunder, in the event Lessee exercises such
purchase options, the term "Leased Property" shall also include any "Assets" as
such term is defined in the Purchase Agreement.
42.4 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Lessor and Lessee.
42.5 LEASE GUARANTY. Lessee shall cause to be delivered to Lessor
simultaneously herewith the fully executed Lease Guaranty.
42.6 FUTURE FINANCING. Lessee hereby agrees that if at any time during the
Term Lessee purchases or contemplates the purchase of a facility, or property to
be used, for the operation of a business for the Primary Intended Use, Lessee
shall notify Lessor in writing ("Lessee's Notice") of such purchase or
contemplated purchase, and Lessor shall have the first opportunity to provide
financing for such purchase, expansion or renovation upon terms mutually
agreeable to Lessor and Lessee. Lessor shall notify Lessee in writing on or
before the expiration of twenty (20) business days after receipt of Lessee's
Notice whether Lessor is interested in providing such financing. If Lessor
agrees to provide the financing, the terms and conditions of such financing will
be contingent upon, among other things, performance benchmarks acceptable to
Lessor and the Lessor's satisfaction and approval of other due diligence
requirements.
42.7 CHANGE IN OWNERSHIP/CONTROL. So long as this Lease remains in effect,
the aggregate ownership of the current members or shareholders of Lessee and the
Guarantors shall not be reduced below fifty-one (51%) percent.
42.8 LESSOR SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, Lessee shall cooperate with Lessor or MPT in
connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Leased Property and
Facility, and in connection therewith, the Lessee shall furnish MPT with such
financial and other information as MPT shall request. MPT may disclose that
Lessor has entered into this Lease with Lessee and Prime and may provide and
disclose information regarding this Lease, the Lessee, the Guarantors, the
Leased Property and the Facility, and such additional information which MPT may
reasonably deem necessary, to its proposed investors in such public offering or
private offering of securities, or any current or prospective lenders with
respect to such financing. Upon reasonable advance notice, MPT and any lender
providing financing for the Leased Property shall have the right, subject to the
execution of a written confidentiality agreement on terms reasonably acceptable
to MPT, such lender and Lessee, to access, examine and copy all agreements,
records, documentation and information relating to the Lessee and the
Guarantors, the Leased Property and Facility, and to discuss such affairs and
information with the officers, employees and independent public accountants of
the Lessee and Guarantors as often as may reasonably be desired.
54
42.9 NON-RECOURSE AS TO LESSOR. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Lessor
under this Lease shall be enforced only against the Leased Property and not
against any other assets, properties or funds of (i) Lessor, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of Lessor or any general partner of Lessor or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(iii) any predecessor or successor partnership or corporation (or other entity)
of Lessor or any of its general partners, shareholders, officers, directors,
employees or agents, either directly or through Lessor or its general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof.
42.10 MANAGEMENT AGREEMENTS. Lessee shall not engage any Management Company
or allow any tenants, subtenants or sublessees of the Facility to engage any
Management Company, without Lessor's prior written consent, which consent shall
not be unreasonably withheld; provided, however, Lessor's rights relating to any
Management Company as set forth in Section 16.2 hereof shall be at Lessor's sole
and absolute discretion. Lessee shall, if required by Lessor, assign all of
Lessee's rights under the Management Agreements to Lessor and Lessor shall be
entitled to assign same to Lessor's lender. At the request of the Lessor from
time to time, Lessee shall execute and deliver (and require the tenants,
subtenants or sublessees to execute and deliver, if applicable) an assignment
and/or subordination agreement relating to the Management Agreements, which
assignment and/or subordination agreement shall be in such form and content as
reasonably acceptable to Lessor and/or any lender providing financing to Lessor,
and shall be delivered to Lessor within ten (10) days after Lessor's request.
Lessee hereby agrees that all payments and fees payable under the Management
Agreements are and shall be subordinate to the payment of the obligations under
this Lease and all other documents executed in connection with this Lease and
the Purchase Agreement. Lessee agrees that all Management Agreements entered
into in connection with the Leased Property shall expressly contain provisions
acceptable to Lessor which (i) require an assignment of the Management
Agreements to Lessor upon request by Lessor, (ii) confirm and warrant that all
sums due and payable under the Management Agreements are subordinate to this
Lease, (iii) xxxxx Xxxxxx the right to terminate the Management Agreement
(individually or collectively, if more than one (1)) upon a default hereunder or
upon a default under such applicable Management Agreement, (iv) require the
Management Company to execute and deliver to Lessor within ten (10) days from
Lessor's request an estoppel certificate, assignment and/or subordination
agreement as required by Lessor and/or Lessor's lender providing financing to
Lessor, in such form and content as is acceptable to Lessor and/or its lender,
and (v) all fees due and payable under any Management Agreements, shall be
subordinate to all monetary obligations under this Lease. At the request of the
Lessor from time to time, Lessee shall execute and obtain from all parties
subject to such Management Agreements executed written confirmation of such
assignment or subordination, which shall be delivered to Lessor within ten (10)
days from Lessor's request.
42.11 PRIME'S RIGHT TO EXERCISE PURCHASE OPTIONS. Lessor hereby consents to
and agrees that Prime may exercise any of Lessee's rights and options to
purchase as set forth herein pursuant to the same terms and conditions provided
to Lessee under this Lease.
42.12 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.
42.13 JURISDICTION AND VENUE. LESSOR AND LESSEE CONSENT TO PERSONAL
JURISDICTION IN THE STATE OF DELAWARE. LESSOR AND LESSEE AGREE THAT ANY ACTION
OR PROCEEDING ARISING FROM OR RELATED TO THIS LEASE SHALL BE BROUGHT AND TRIED
EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. LESSEE
EXPRESSLY ACKNOWLEDGES THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND
LESSEE AGREES NOT TO SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY LESSOR IN
SAID
55
COURTS. FURTHER, LESSOR AND LESSEE IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN ANY INCONVENIENT
FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY CERTIFIED MAIL
ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO ARTICLE XXXIII HEREOF
SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.
42.14 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
ARTICLE XLIII
MEMORANDUM OF LEASE
Lessor and Lessee shall, promptly upon the request of either, enter into a
short form memorandum of this Lease, in form suitable for recording under the
laws of the state in which the Leased Property is located in which reference to
this Lease, and all options contained herein, shall be made.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
56
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized.
LESSOR:
MPT OF CHINO, LLC
By: MPT OPERATING PARTNERSHIP, L.P.
Its: Sole Member
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Its: President and Chief Executive
Officer
57
LESSEE:
VERITAS HEALTH SERVICES, INC.
By: /s/ Xxx Xxxxx
------------------------------------
Name: Xxx Xxxxx
----------------------------------
Its: CEO
-----------------------------------
PRIME:
PRIME HEALTHCARE SERVICES, LLC
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
----------------------------------
Its: Manager
-----------------------------------
58
STATE OF ALABAMA
JEFFERSON COUNTY
On this ______ day of ___________, 2005, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared XXXXXX X. XXXXX, XX., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who executed the
within instrument as President and Chief Executive Officer of MPT Operating
Partnership, L.P., the Sole Member of MPT OF CHINO, LLC, a Delaware limited
liability company, and acknowledged to me that such limited partnership, as the
Sole Member of such limited liability company executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.
----------------------------------------
NOTARY PUBLIC
Printed Name:
--------------------------
My Commission Expires:
-----------------
[AFFIX NOTARY SEAL]
00
XXXXX XX XXXXXXXXXX
XXX XXXXXXXXXX XXXXXX
Xx this ______ day of ___________, 2005, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared _________________, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed the within
instrument as _____________ of VERITAS HEALTH SERVICES, INC., a California
corporation, and acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.
----------------------------------------
NOTARY PUBLIC
Printed Name:
--------------------------
My Commission Expires:
-----------------
[AFFIX NOTARY SEAL]
00
XXXXX XX XXXXXXXXXX
XXX XXXXXXXXXX XXXXXX
Xx this ______ day of ___________, 2005, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared _______________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person who executed the within
instrument as _____________ of PRIME HEALTHCARE SERVICES, LLC, a California
limited liability company, and acknowledged to me that such corporation executed
the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.
----------------------------------------
NOTARY PUBLIC
Printed Name:
--------------------------
My Commission Expires:
-----------------
[AFFIX NOTARY SEAL]
61
SCHEDULE 8.6
Exceptions to Single Purpose Entity Requirements
None.
62
EXHIBIT A
Legal Description
PARCEL A: Parcel 1 of Parcel Map No. 11169 in the City of Chino, County of San
Bernardino, State of California, as per Map recorded in Book 131, Pages 29 and
30 of Parcel Maps, in the Office of the County Recorder of said County, together
with those portions of 00xx Xxxxxx, Xxxxxx Xxxxxx and Jefferson Avenue which
would pass with a conveyance of said parcels by operation of law.
PARCEL A-1: And the non-exclusive easements and rights for vehicular and
pedestrian ingress and egress, parking of motor vehicles, and use of drainage
facilities as set forth in the Declaration of Reciprocal Easements for Parking,
Driveways and Drainage recorded August 7, 1992, as Instrument No. 92-328555, and
May 27, 1993, as Instrument No. 93-227512, Official Records.
63
EXHIBIT B
Parking Lot Land Legal Description
Being a portion of the Southerly 402 feet of the Northerly 562.71 feet of the
Westerly 394.26 feet of the Easterly 515.26 feet of Xxx 00, Xxxxxxx 0, Xxxxxxxx
0 Xxxxx, Xxxxx 8 West, San Bernardino Meridian, according to Map of Subdivision
of Part of Rancho Santa Xxx Del Chino, in the City of Chino, County of San
Bernardino, State of California, as per Map recorded in Book 6, Page 15 of Maps,
in the Office of the County Recorder of said County, more particularly described
as follows:
Beginning at the most northwesterly corner of the land described above; thence N
89 degrees 49' 32" E, 394.26 feet to the Northeasterly corner of said land;
thence S 0 degrees 12' 12" E, 147.50 feet to a point in said Easterly line of
said land; thence S 89 degrees 49' 32" W, 394.26 feet to the Westerly line of
said land; thence N 0 degrees 12' 12" W, 147.50 feet to the point of beginning.
64
EXHIBIT C
Permitted Exceptions
1. General and special taxes and assessments for the fiscal year 2005-2006, a
lien not yet due or payable.
2. Supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, a lien not yet due or
payable.
3. An easement for pipelines and incidental purposes in the document recorded in
Book 373 of Deeds, Page 49.
4. An easement for pipelines and incidental purposes in the document recorded in
Book 373 of Deeds, Page 50.
5. An easement for pipelines and incidental purposes in the document recorded in
Book 754 of Deeds, Page 14.
6. An easement for road and utilities and incidental purposes in the document
recorded in Book 3526, Page 577 of Official Records.
7. An easement for above ground or underground conduits or both and incidental
purposes, recorded in Book 7976, Page 868 of Official Records.
8. An easement for street and highway purposes and incidental purposes, recorded
in Book 8142, Page 582 of Official Records.
9. An easement for street and highway purposes and incidental purposes, recorded
in Book 8142, Page 584 of Official Records.
10. An easement for above ground or underground conduits or both and incidental
purposes, recorded in Book 8479, Page 932 of Official Records.
11. An easement for above ground or underground conduits or both and incidental
purposes, recorded in Book 8560, Page 673 of Official Records.
12. The fact that the land lies within the boundaries of the Central City
Amended Redevelopment Project Area, as disclosed by the document recorded
December 28, 1981, as Instrument No. 81-279411 of Official Records.
65
13. An easement shown or dedicated on Parcel Map No. 11169 filed or recorded in
Book 131, Pages 29 and 30 of Parcel Maps for vehicular ingress and egress, storm
water drainage and incidental purposes.
14. An easement for above ground or underground conduits or both and incidental
purposes in the document recorded November 19, 1987, as Instrument No. 87-410734
of Official Records.
15. An easement for above ground or underground conduits or both and incidental
purposes in the document recorded June 9, 1988, as Instrument No. 87-183995 of
Official Records.
16. The terms and provisions contained in an easement for parking, driveways and
drainage purposes and incidental purposes in the document recorded August 7,
1992, as Instrument No. 92-328555 of Official Records.
17. An easement for street, road and utilities and incidental purposes in the
document recorded August 31, 1992, as Instrument No. 92-360268 of Official
Records.
18. The terms and provisions contained in an easement for walkways, driveways
and parking areas and incidental purposes in the document recorded May 27, 1993,
as Instrument No. 93-227512 of Official Records.
19. The terms and provisions contained in the document entitled "Declaration of
Reciprocal Easements for Parking, Driveways, Drainage" recorded January 5, 2005
as Instrument No. 2005-0008635 of Official Records.
66
EXHIBIT D
Existing Leases
Medical Office Building Lease dated January 20, 2000, with Xxxxx Xxxx, M.D.
Medical Office Building Lease dated December 10, 1999, with Mao-Jin Fu, M.D.
Medical Office Building Lease dated January 20, 2000, with Xxxxxx X. Xxxxxxxxxx,
M.D.
Medical Office Building Lease dated January 20, 2000, with Xxxxxx X. Xxx, M.D.
Ground Lease dated as of January 21, 1994, as amended by that certain Amendment
to Ground Lease dated as of June 16, 1995, wherein DHS Management Services, Inc.
is the current tenant for the MRI Facility.
67
