SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of the ____
day of ___________, 1997, among CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a
Delaware limited liability company ("OpCo"), CRESCENT REAL ESTATE EQUITIES LIM
ITED PARTNERSHIP, a Delaware limited partnership ("Crescent"), and MAGELLAN
HEALTH SERVICES, INC., a Delaware corporation ("Magellan").
RECITALS:
A. Crescent, as landlord, and OpCo and each of certain wholly-owned
subsidiaries of OpCo (collectively, the "Initial OpCo Subs"), collectively as
tenant, are parties to that certain Master Lease Agreement of even date herewith
(as the same may be amended or modified, the "Lease").
B. Magellan, as franchisor, and OpCo, as franchisee, are parties to
that certain Master Franchise Agreement of even date herewith, and each of the
Initial OpCo Subs, as a franchisee, and Magellan, as franchisor, is a party to
an individual franchise agreement as described in the Master Franchise Agreement
(the Master Franchise Agreement and such individual franchise agreements,
together with any new franchise agreements now or hereafter entered into between
Magellan, as franchisor, and OpCo, any Initial OpCo Sub, or any other subsidiary
of OpCo now or hereafter in existence, as such Master Franchise Agreement,
individual franchise agreements or other franchise agreements may be amended or
modified, are referred to herein collectively as the "Franchise Agreement").
C. OpCo and Magellan desire to subordinate, to the extent set forth
herein, the payment and performance of the Franchise Agreement to the payment
and performance of certain obliga tions under the Lease upon the terms and
conditions set forth below, and Magellan and Crescent desire to establish
certain duties, rights and responsibilities among themselves with respect to the
obligations of the OpCo, the Initial OpCo Subs, and any other subsidiary of OpCo
now or hereafter in existence that enters into a franchise agreement with
Magellan (the Initial OpCo Subs and such other subsidiaries of OpCo being
hereinafter referred to collectively as the "OpCo Subs").
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration hereby acknowledged, and in order to induce Crescent to enter into
the Lease with OpCo, OpCo, Crescent and Magellan agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 "Additional Charges" shall have the meaning given such term in the
Lease payable with respect to the Term.
1.2 "Additional Rent" shall have the meaning given such term in the Lease
payable with respect to the Term.
1.3 "Business Day" shall mean any day other than Saturday, Sunday, or any
other day on which banking institutions in the states of Texas,
Georgia, and the State are authorized by law or executive action to
close.
1.4 "Collective Leased Properties" shall have the meaning given such term
in the Lease.
1.5 "Debtor Relief Laws" shall mean any applicable liquidation,
conservatorship, bank ruptcy, moratorium, rearrangement, insolvency,
reorganization or similar laws relating to the relief of debtors,
readjustment of indebtedness or composition, and affecting the rights
of creditors generally, which may from time to time be in effect.
1.6 "Franchise Agreement" shall have the meaning given such term in the
Recitals to this Agreement.
1.7 "Franchise Fees" shall mean, collectively, the franchise fees payable
to Magellan under the Franchise Agreement, including interest and late
charges, as well as any fees payable to Magellan by OpCo or any OpCo
Sub with respect to Joint Ventures and/or Managed Businesses (as such
terms are defined in the Master Franchise Agreement) pursuant to
Section 10 of the Master Franchise Agreement to the extent not already
included in the calculation of "Franchise Fees" as defined in the
Master Franchise Agreement.
1.8 "Lease" shall have the meaning given such term in the Recitals to this
Agreement.
1.9 "Lease Year" shall have the meaning given such term in the Lease.
1.10 "Leased Property" shall have the meaning given such term in the Lease.
1.11 "Minimum Rent" shall have the meaning given such term in the Lease
payable with respect to the Term.
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1.12 "Non-Priority Additional Rent" shall mean the amount of additional rent
with respect to any Lease Year in excess of the Priority Additional
Rent Base Amount.
1.13 "Non-Priority Additional Rent Monthly Amount" shall mean, for each
month in a Lease Year, the monthly installment of Additional Rent
payable for such month equal to one-twelfth (1/12th) of the difference
between (a) the total Additional Rent payable for such Lease Year minus
(b) the Priority Additional Rent Base Amount for such Lease Year
calculated for such month as provided below in the definition of
"Priority Addi tional Rent Base Amount."
1.14 "Permitted Payments" shall have the meaning given such term in Section
2.2.
1.15 "Plan" shall have the meaning given such term in Section 2.4(c).
1.16 "Priority Additional Rent Base Amount" for any Lease Year shall mean an
amount of Additional Rent equal to Ten Million Dollars ($10,000,000);
provided, however, that if Crescent, as landlord, funds, or makes an
irrevocable commitment to fund, Capital Expenditures (as defined in the
Lease) for any Lease Year in an amount in excess of Ten Million Dollars
($10,000,000) at OpCo's request, then the Priority Additional Rent Base
Amount for such Lease Year shall be increased to the amount of Capital
Expenditures funded or committed to be funded by Crescent for such
Lease Year. Notwithstanding the foregoing, in the event that, and for
so long as, the accrued and unpaid Franchise Fees equal or exceed
Fifteen Million Dollars ($15,000,000), then the Priority Additional
Rent Base Amount for any such Lease Year shall be reduced to $0.00;
provided, however, that if Crescent funds, or makes an irrevocable
commitment to fund, Capital Expenditures for any Lease Year in any
amount at OpCo's request, then the Priority Additional Rent Base Amount
for such Lease Year shall be increased from $0.00 to the amount of
Capital Expenditures funded or committed to be funded by Crescent for
such Lease Year. The Priority Additional Rent Base Amount shall be
computed monthly in advance of the payment of Rent required to be made
under the Lease for the next succeeding month. Such calculation shall
be made on the 25th day of the month, unless the 25th day of the month
is not a Business Day, in which event such calculation for such month
shall be made on the first Business Day following such 25th day.
Notwithstanding anything set forth above to the contrary, if any
request by OpCo to Crescent to fund Capital Expendi tures under the
Lease is for an amount in excess of the amount budgeted therefor in
OpCo's approved Annual Budget (as defined in OpCo's Operating
Agreement), then the Priority Additional Rent Base Amount shall not be
increased as provided above to the extent that the amount of such
request is above the budgeted amount unless such request
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is accompanied by OpCo's certification that Magellan has approved such
requested amount. Magellan acknowledges and agrees that Crescent shall
be entitled to rely upon OpCo's certification that any amount requested
either (i) is within the approved Annual Budget of OpCo or (ii) has
been approved by Magellan, and in the latter event such certification
by OpCo shall be accompanied by Magellan's written consent to such re
quested amount.
1.17 "Rent" shall mean, collectively, all Minimum Rent, including late
charges and default rate interest, and Additional Rent, but shall
exclude Additional Charges except to the extent that Additional Charges
include late charges and default rate interest.
1.18 "Rescission Event" shall have the meaning given such term in Section
3.4.
1.19 "Returned Payment" shall have the meaning given such term in Section
3.4.
1.20 "State" shall mean, as to each Leased Property, the state in which such
Leased Property is located.
1.21 "Term" shall have the meaning given such term in the Lease.
ARTICLE 2
SUBORDINATION
2.1 Agreement to Subordinate. Notwithstanding any provision in the
Franchise Agreement or any other agreement between Magellan and OpCo or
between Magellan and any OpCo Sub to the contrary, the Franchise Fees
(including any increases thereto effected from time to time by
amendments to the Franchise Agreement adding new Leased Properties to
the facilities covered thereby) are and shall be, to the extent and in
the manner hereinafter set forth, subject, subordinate and junior in
right of payment and liquidation to the prior irrevocable payment in
full of the Rent (other than Non-Priority Additional Rent), as the Rent
(other than Non-Priority Additional Rent) may be increased from time to
time by amendments to the Lease adding new Leased Properties that are
also covered by the Franchise Agreement to the Collective Leased
Properties. Magellan acknowledges receipt of a true and complete copy
of the Lease. Unless and until all Rent (other than Non-Priority
Additional Rent) shall have been fully paid and the Term shall have
expired, Magellan will not, except as otherwise expressly provided
herein, take or receive, or retain, from OpCo, any OpCo Sub, or any
other person or entity, by setoff or in any other
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manner, payment of all or any part of the Franchise Fees, or accept any
security therefor, and neither OpCo nor any OpCo Sub shall make, give
or permit, directly or indirectly, any such payment, and Magellan shall
not demand or xxx for any such payment to the extent prohibited in
Section 2.3. Notwithstanding the foregoing payment subordination, but
subject to the provisions of Sections 2.3 and 2.4, OpCo may pay, and
Magellan may receive, the Permitted Payments, as defined in Section
2.2.
2.2 Permitted Payments. Notwithstanding any provision contained in this
Agreement to the contrary, so long no "Default" or "Event of Default"
(as defined therein) under or within the meaning of the Lease has
occurred and is continuing with respect to the payment of Rent (other
than Non-Priority Additional Rent), or would be created by making the
payments to Magellan hereinafter described, and so long as none of OpCo
or any OpCo Sub is the subject of any proceeding under any Debtor
Relief Laws, OpCo may pay to Magellan, and Magellan may accept from
OpCo, the regularly scheduled monthly install ment of the Franchise
Fees in any month, when due, as well as any accrued and unpaid monthly
installments of the Franchise Fees (collectively, the "Permitted
Payments"), after payment by OpCo of all Rent due for such month,
excluding the Non-Priority Additional Rent Monthly Amount for such
month. Further, notwithstanding any provi sion contained in this
Agreement to the contrary, except in the case of a Rescission Event,
Crescent shall not be entitled to recover from Magellan any Permitted
Payment or any portion thereof that has been properly made to Magellan
in accordance with the terms of this Section 2.2.
2.3 Agreement Not to Enforce Payment or Commence Action.
(a) Notwithstanding any provision contained in this Agreement, the
Franchise Agreement or any other agreement to the contrary, prior to
the payment in full of all Rent (other than Non-Priority Additional
Rent) payable under the Lease and the expiration of the Term, (i)
Magellan shall not object to, challenge, hinder or delay the exercise
by Crescent of any right or remedy it may have under or with respect
to the Lease or any other agreement, or otherwise at law or in equity,
against OpCo, any OpCo Sub or any of its or their assets or
properties, and (ii) Magellan shall have no right to file an
involuntary proceeding against OpCo or any OpCo Sub under any Debtor
Relief Laws or otherwise to enforce payment of any of the Permitted
Payments or any other portion of the Franchise Fees against OpCo or
any OpCo Sub, or to otherwise take any action against OpCo or any OpCo
Sub (including, without limitation, any proceeding under Debtor Relief
Laws), or against any property or assets of OpCo or any OpCo Sub, in
order to collect the Permitted Payments or any other portion of the
Franchise Fees, without the prior written consent of Crescent,
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if such action could reasonably be expected to lead to OpCo's or any
OpCo Sub's filing of a voluntary proceeding, or other creditors of OpCo
or any OpCo Sub filing an involuntary proceeding against OpCo or any
OpCo Sub, under any Debtor Relief Laws. However, so long as no
"Default" or "Event of Default" under the Lease has occurred and is
continuing with respect to the payment of Rent (other than Non-Priority
Additional Rent), and so long as none of OpCo or any OpCo Sub is the
subject of any proceeding under any Debtor Relief Laws, Magellan may
pursue any default remedy available under the Xxxx xxxxx Agreement or
at law or in equity or otherwise, except as provided above in this
Section 2.3.
(b) Each of Crescent and Magellan covenants to the other that it shall use
commercially reasonable best efforts to provide in a timely fashion
written notice of the commencement and progress of any remedial action
undertaken against OpCo or any OpCo Sub, includ ing providing to such
party copies of any and all correspondence to OpCo or any OpCo Sub
from such party with respect to any of such party's rights or remedies
and any plead ings or similar material; provided, however, that
failure to provide any such written notice or any such copies shall
not affect the validity of any action undertaken or render either
Crescent or Magellan liable to the other or to any other person or
entity.
2.4 In Furtherance of Subordination.
(a) In the event (i) of any distribution, division or application,
voluntary or involuntary, by operation of law or otherwise, of all or
any substantial part of the assets or business of OpCo or any OpCo Sub
to creditors of OpCo or any OpCo Sub, or (ii) upon any indebt edness
of OpCo or any OpCo Sub becoming due and payable by reason of any
dissolu tion, liquidation or other winding up of OpCo or any OpCo Sub
or its business, or by reason of any sale, receivership, insolvency,
reorganization or bankruptcy proceedings, assignment for the benefit
of creditors, or any arrangement or proceeding by or against OpCo or
any OpCo Sub for any relief under any Debtor Relief Laws (whether
voluntary or involuntary), or any other marshaling of the assets and
liabilities of OpCo or any OpCo Sub, until the Rent (other than
Non-Priority Additional Rent) has been paid in full (sub ject,
however, to the terms of Section 3.4 below) (A) all payments and
distributions of any kind or character (whether in cash, property or
securities) in respect of the Franchise Fees to which Magellan would
be entitled if the Franchise Fees were not subordinated as provided
herein shall be made directly to Crescent for application in
accordance with the terms of the Lease, and (B) Magellan shall not
seek the lifting, for its own benefit, of any automatic stay or
similar restriction imposed by reason of any such arrangement or
proceeding.
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(b) All payments or distributions on or with respect to the Franchise Fees
which are received by Magellan contrary to the provisions of this
Agreement, whether in cash, properties or securities (including
without limitation any distributions received on account of any
security interests, liens, or other encumbrances), shall be received
in trust for the benefit of Crescent, shall be segregated from other
funds and property held by Magellan and shall be forthwith paid over
to Crescent in the same form as so received (with any neces sary
endorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of non-cash property or securities) for, the
payment or prepayment of the Rent (other than Non-Priority Additional
Rent) in accordance with the terms of the Lease. In the event of any
failure by Magellan to make any such endorsement or assignment,
Crescent is hereby irrevocably authorized to make the same.
(c) Magellan shall file in a timely manner a claim or claims, in the form
required in any proceeding described in subsection (a) above, for the
full outstanding amount of the Franchise Fees and shall use
commercially reasonable best efforts to cause said claim or claims to
be approved and all payments and other distributions in respect
thereof to be made directly to Crescent until all Rent (other than
Non-Priority Additional Rent) pay able under the Lease has been paid
in full. Magellan irrevocably authorizes and empow ers Crescent, in
connection with any proceeding or distribution described in subsection
(a) above, in the name of Magellan or otherwise, to demand, xxx for,
collect and receive and receipt for any and all such payments or
distributions, and file, prove, and vote or consent in any such
proceedings with respect to any and all claims of Magellan relating to
the Franchise Fees if Magellan shall not have duly filed such claim or
proof of claim at least ten (10) days prior to the last day on which
such claim or proof of claim may be filed. Magellan agrees that (i)
without the prior written consent of Crescent, which consent shall not
be unreasonably withheld, it will not vote such claim in favor of any
plan of reorganization or similar structure (a "Plan") under which the
terms of the Lease are changed in any way, and (ii) it will not vote
against any Plan if Crescent votes in favor of the same unless, under
such Plan, the Franchise Fees, or any portion thereof, would not be
subordinate in right of payment to distributions to Crescent on
account of the Rent (other than Non-Priority Additional Rent).
Magellan further agrees that, in view of the difficulty of estimating
damages from any violation by Magellan of the terms of this subsection
(c), Crescent shall be entitled to injunctive relief to prevent or
rescind any action taken by Magellan in violation of this subsection
(c), as well as damages and other forms of relief available for breach
of contract.
(d) Crescent shall be entitled to enforce specific performance of this
Agreement at any time when Magellan shall have failed to comply with
any of the provisions of this Agreement
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applicable to it. Magellan hereby irrevocably waives any defense based
on the adequacy of a remedy at law which might be asserted as a bar to
such remedy of specific perfor xxxxx.
(e) Nothing provided in this Agreement is intended to relieve OpCo of its
obligation to pay Franchise Fees due under the Franchise Agreement.
2.5 Application of Payments Received. All payments and distributions
received by Crescent in respect of the Franchise Fees, to the extent
received in or converted into cash, may be applied by Crescent first to
the payment of any and all expenses (including reasonable attorneys'
fees and legal expenses) paid or incurred by Crescent in enforcing this
Agree ment or in endeavoring to collect or realize upon any of the
Franchise Fees or any secu rity therefor, and any balance shall, solely
as between Magellan and Crescent, be applied by Crescent, in such order
of application as Crescent may from time to time select, toward the
payment of Rent (other than Non-Priority Additional Rent) remaining
unpaid, but as between OpCo or any OpCo Sub and its creditors, no such
payments or distribu tions of any kind or character shall be deemed to
be payments or distributions in respect of Rent.
ARTICLE 3
MISCELLANEOUS
3.1 Notices. Whenever any notice is required or permitted hereunder, such
notice shall be in writing and (a) sent by certified mail, postage
prepaid, return receipt requested, (b) given by established overnight
commercial courier for delivery on the next Business Day with delivery
charges prepaid or duly charged, (c) personally hand-delivered or (d)
sent by facsimile transmission with confirmation of receipt received,
to the applicable address or facsimile number set forth below:
As to Crescent: Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Crescent Real Estate Equities, Ltd.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
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with copies to: Xxxxx X. Xxxx, Esq.
Senior Vice President, Law
Crescent Real Estate Equities, Ltd.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Xxxxxxxx X. Xxxxx, Esq.
Shaw, Pittman, Xxxxx & Xxxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
As to OpCo or any
OpCo Sub: Charter Behavioral Health Systems, LLC
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Legal Counsel
Facsimile: (000) 000-0000
with a copy to:
As to Magellan: Xxxxx X. Xxxxx, Esq.
Executive Vice President,
Administrative Services and General Counsel
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx X. Xxxxxx
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
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Notices which are mailed shall be deemed effective upon receipt. Notices which
are hand-delivered shall be deemed effective upon tender to a natural person at
the address shown. Notices which are delivered by overnight courier shall be
deemed given on the next Business Day after delivery to such courier. Notices
which are delivered by facsimile transmission shall be deemed received upon
electronic confirmation of delivery.
3.2 No Waivers. No failure or delay on the part of any party to exercise,
and no course of dealing with respect to, any right, power or privilege
under this Agreement or any docu ment or instrument relating to the
Lease or the Franchise Agreement shall operate as a waiver thereof. No
single or partial exercise of any such right, power or privilege shall
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The remedies herein provided are
cumulative and not exclusive of any reme dies provided by law.
3.3 Amendments, Supplements and Waivers. The provisions of this Agreement
may not be amended, modified or waived except by the written agreement
of Magellan and Crescent (without any necessity for notice to or
consent by OpCo or any OpCo Sub, which notice and consent are expressly
WAIVED by OpCo). The provisions of this Agreement shall be solely for
the benefit of Crescent and Magellan and may not be relied upon or
enforced by OpCo, any OpCo Sub or any other person or entity other than
Crescent and Magellan.
3.4 Continuing Agreement; Successors and Assigns. This Agreement is a
continuing agree ment and shall be binding upon and, except as provided
in Section 3.3, inure to the benefit of each of the parties hereto, and
their respective successors and assigns. Further, this Agreement shall
remain in full force and effect until the Rent shall have been irrevo
cably paid in full and shall continue to be effective, or be
reinstated, as the case may be, if at any time any payment of all or
any part of the Rent (a "Returned Payment") is re scinded or must
otherwise be returned upon the insolvency, bankruptcy or reorganization
of OpCo or any OpCo Sub, or by reason of the operation of any other
applicable law or order of court (a "Rescission Event"), all as though
such payment had not been made. No party hereto shall sell, assign,
pledge, encumber or otherwise dispose of the Franchise Agreement or the
Lease, as the case may be, or any amounts payable thereunder, unless
such sale, assignment, pledge, encumbrance or disposition is made
expressly subject to the terms and provisions of this Agreement.
Nothing herein is intended or shall be construed to give any other
person any right, remedy or claim with respect to this Agree ment, the
Lease, or the Franchise Agreement. Notwithstanding the foregoing,
Magellan shall be entitled to collaterally assign its rights but not
its obligations under the Franchise Agreement, subject to the terms and
provisions of this Agreement, as well as its rights but not its
obligations under this Agreement, to any of its lenders.
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3.5 Severability. If any provision of this Agreement is held to be illegal,
invalid or unen forceable under present or future laws during the term
hereof, such provision shall be fully severable, this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provi
sions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as a part of
this Agreement a legal, valid and enforceable provision as similar in
terms to the illegal, invalid or unenforceable provision as may be
possible.
3.6 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument. In making proof of this Agreement it shall not be
necessary to produce or account for more than one such counterpart.
3.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND GOV
ERNED BY THE LAWS OF THE STATE OF DELAWARE AND THE UNITED
STATES OF AMERICA.
3.8 WAIVER OF JURY TRIAL. EACH OF OPCO, MAGELLAN AND CRESCENT hereby
irrevocably waives, to the full extent permitted by applicable law, any
right to have a jury participate in resolving any dispute arising out
of, in connection with, related to, or incidental to this Agreement.
3.9 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MAT
TER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PAR
TIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
3.10 Amendment of Franchise Agreement. Magellan agrees that, unless and
until all Rent (other than Non-Priority Additional Rent) shall have
been irrevocably paid in full (sub ject, however, to the terms of
Section 3.4 above) and the Term shall have expired, with out Crescent's
prior written consent the Franchise Agreement shall not be amended,
modified, or supplemented by any of the parties thereto in any manner
that would in crease or accelerate payment of the Franchise Fees or any
installment thereof, except for an increase in the Franchise Fees in
connection with the addition of a new Leased Prop erty to the
facilities covered by the Franchise Agreement or in connection with the
imple mentation of New Products (as defined in the Franchise
Agreement). If the Franchise Agreement is amended without Crescent's
prior written consent in a manner that violates the provisions of this
Section 3.10, then the increased or accelerated portion of the Xxxx
xxxxx Fees shall be subordinate and junior in right of payment and
liquidation to the prior irrevocable payment in full of all Rent,
Additional Rent (including all Non-Priority Additional Rent), and all
Additional Charges.
3.11 No Subrogation Until Payment in Full. Without Crescent's prior written
consent, Xxxxx xxx shall not be entitled to be subrogated to any of the
rights of Crescent against OpCo, any OpCo Sub, or any other person or
entity, or any liens, security interests or assign ments now or
hereafter securing the Lease, until all of the Rent (other than
Non-Priority Additional Rent) shall have been irrevocably paid in full
(subject, however, to the terms of Section 3.4 above) and the Term
shall have expired.
3.12 Amendment of Lease. Crescent may, at any time and from time to time,
without the consent of or notice to Magellan, and without impairing or
releasing the obligations of Magellan hereunder, (a) enter into any
amendment or modification of the Lease, includ ing, without limitation,
any amendment which extends the maturity of the Fixed Term or any
Extended Term, except the fourth Extended Term (as such terms are
defined in the Lease), of the Lease (whether or not in accordance with
the renewal options set forth therein) or extends or reduces any
installment of Rent or waives any Default or Event of Default
thereunder; (b) exercise or refrain from exercising any rights against
OpCo, any OpCo Sub or any other person or entity; (c) subject to the
terms and provisions of Section 2.5 hereof, apply any sums by
whomsoever paid or however realized to the Lease; (d) sell, exchange,
release, surrender, realize upon or otherwise deal with, in any manner
and in any order, any property whatsoever and by whomsoever at any time
pledged or mort gaged to secure the Lease; (e) release anyone liable in
any manner for the payment or collection of any Rent, and (f) settle or
compromise all or any part of the Rent and subor dinate the payment of
any part of the Rent to the payment of any other indebtedness.
Notwithstanding the foregoing, Crescent shall not, without prior notice
to and written consent of Magellan, amend or modify the Lease in any
manner that would increase the amount or accelerate the payment of Rent
or any installment thereof (other than Non-Priority Additional Rent and
other than an increase in Rent in connection with the addition of new
Leased Properties to the Collective Leased Properties) or that would
extend the Term beyond the fourth Extended Term. In the event that
Crescent, OpCo and the OpCo Subs amend the Lease to increase the amount
or accelerate the payment of the Rent or any installment thereof (other
than Non-Priority Additional Rent and other than
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an increase in Rent in connection with the addition of new Leased
Properties to the Collective Leased Properties) payable thereunder, or
to extend the Term beyond the fourth Extended Term, this Agreement
shall remain in full force and effect and the Franchise Fees shall
continue to be subject, subordinate and junior in right of payment and
liquidation to the prior irrevocable payment of the Rent (other than
Non-Priority Additional Rent) to the extent and in the manner set forth
herein as though the Rent payable under the Lease had not been so
increased or the Term so extended beyond the fourth Extended Term;
provided, however, that in the event that Crescent, OpCo and the OpCo
Subs, without the prior written consent of Magellan, so amend the Lease
to in crease the amount or accelerate the payment of Minimum Rent or
Additional Rent (other than Non-Priority Additional Rent), then the
portion of the Rent constituting such in crease or the portion of the
Rent or any installment thereof so accelerated, as applicable, shall be
subordinate and junior in right of payment and liquidation to the prior
irrevocable payment of the Franchise Fees to the extent and in the
manner that the Franchise Fees are subordinated pursuant to this
Agreement.
3.13 Further Assurances. Each of Magellan and OpCo will, at its expense and
at any time and from time to time, promptly execute and deliver all
further instruments and documents (including without limitation
assignments and proofs of claim), and promptly take all further action
(including, without limitation, filing proofs of claim and taking other
actions to collect the Franchise Fees), or cause such instruments and
documents to be executed and delivered and such actions to be taken,
that may be necessary or desirable, or that Crescent may reasonably
request, in order to protect any right or interest granted or purported
to be granted hereby or to enable Crescent to exercise and enforce its
rights and remedies hereunder. For purposes of this Section 3.13,
"promptly" shall be deemed to mean within five (5) Business Days after
written request therefor unless in the judg ment of Crescent, exercised
in good faith, faster action is required to achieve the intended
purpose.
3.14 Representations and Warranties. Each of Magellan, Crescent and OpCo
hereby repre sents and warrants as to itself that (i) the execution,
delivery and performance by such party of this Agreement have been duly
and validly authorized by all necessary action and (ii) this Agreement
has been duly and validly executed and delivered by such party and
constitutes the legal, valid and binding obligation of such party,
enforceable against such party in accordance with its terms, except as
such enforcement may be limited by bank ruptcy, conservatorship,
receivership, insolvency, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
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3.15 Expenses, Etc. OpCo agrees to pay, upon demand, to Crescent the amount
of any and all losses, costs and expenses, including the fees and
expenses of Crescent's counsel, which Crescent may incur as a result of
any breach by OpCo of its obligations hereunder or in connection with
the exercise or enforcement of any of Crescent's rights or interests
hereunder, which exercise or enforcement results directly or indirectly
from, or arises by reason of, any action or any failure to take an
action required of OpCo hereunder. Xxxxx xxx agrees to pay, upon
demand, to Crescent the amount of any and all losses, costs and
expenses, including the fees and expenses of Crescent's counsel, which
Crescent may incur as a result of any breach by Magellan of its
obligations hereunder or in connection with the exercise or enforcement
of any of Crescent's rights or interests hereunder, which exercise or
enforcement results directly or indirectly from, or arises by reason
of, any action or any failure to take any action required of Magellan
hereunder. Crescent shall not have any obligation to make demand of, or
take any action against, OpCo under this Section 3.15 prior to making
demand of, or taking action against, Magellan pursuant to this Section
3.15.
3.16 Arbitration in Some Events. Disputes between Magellan and Crescent
relating to amounts owing to Magellan or Crescent under the Franchise
Agreement or the Lease, as such agreements are affected by this
Agreement, will be subject to resolution by binding arbitration in
Delaware before the American Arbitration Association and governed by
the Commercial Arbitration Rules then in effect. Nothing set forth in
this Section 3.16, however, shall impair or restrict in any way either
party's right to seek equitable relief in connection with the
enforcement of this Agreement.
3.17 Consent to Assumption of Franchise Agreement. Magellan hereby consents
to the assumption by Crescent or Crescent's designee of the Franchise
Agreement and all rights and obligations of the franchisee thereunder
from the date of such assumption in the event of an Event of Default by
OpCo under the Lease and exercise by Crescent of its election, in its
sole and absolute discretion, under the remedies provisions of the
Lease to assume or have its designee assume all of the revenue
producing contracts relating to the Collec tive Leased Properties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
WITNESS: CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation
By: By: _______________________________
Name: ________________________ Xxxxxx Xxxxxxx
Title: _________________________ President and Chief Executive Officer
CHARTER BEHAVIORAL HEALTH
SYSTEMS, LLC
By: [Magellan Member]
By: ___________________________ By: ________________________________
Name: _________________________ Name: ______________________________
Title: _________________________ Title: _______________________________
By: [Crescent Member]
By: __________________________ By: ________________________________
Name: ________________________ Name: ______________________________
Title: _________________________ Title: _______________________________
MAGELLAN HEALTH SERVICES, INC.
By: ___________________________ By: ________________________________
Name: ________________________ Name: ______________________________
Title: _________________________ Title: _______________________________
[ADD ACKNOWLEDGMENTS]
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