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Exhibit 10.24
FACILITY LEASE
MEDITRUST OF ARIZONA, INC.
(A DELAWARE CORPORATION)
AS
LESSOR
AND
ORNDA HEALTHCORP OF PHOENIX, INC.
(A CALIFORNIA CORPORATION)
AS
LESSEE
DATED AS OF FEBRUARY 1, 1995
FOR THE FOLLOWING PREMISES:
ST. LUKE'S MEDICAL CENTER
(INCLUDING 14.36 ACRES OF VACANT LAND)
0000 X. XXX XXXXX XXXXXX
XXXXXXX, XXXXXXX
TEMPE ST. LUKE'S HOSPITAL
0000 X. XXXX XXXXXX
XXXXX, XXXXXXX
TEMPE XXXXXXX XXXXXX XXXXXXXX
0000 X. XXXX XXXXXX
TEMPE, ARIZONA
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TABLE OF CONTENTS
ARTICLE 1............................................................................................... 1
LEASED PROPERTY; TERM; EXTENSIONS.............................................................. 1
1.1. Leased Property................................................................... 1
1.2 Term.............................................................................. 2
1.3 [INTENTIONALLY OMITTED]........................................................... 2
1.4 Extended Terms.................................................................... 2
ARTICLE 2............................................................................................... 2
DEFINITIONS AND RULES OF CONSTRUCTION.......................................................... 2
2.1 Definitions....................................................................... 2
2.2 Rules of Construction............................................................. 16
ARTICLE 3............................................................................................... 17
RENT........................................................................................... 17
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures................... 17
3.1.1 Base Rent.............................................................. 17
3.1.2 Additional Rent........................................................ 17
3.2. Quarterly Calculation and Payment of Additional Rent;
Reconciliation................................................................ 17
3.2.1 Quarterly Calculation and Estimate..................................... 17
3.2.2 Reconciliation......................................................... 18
3.2.3 Deficits............................................................... 18
3.2.4 Overpayments........................................................... 18
3.2.5 Final Determination.................................................... 18
3.3 Confirmation and Audit of Additional Rent......................................... 18
3.3.1. Maintain Accounting Systems............................................ 19
3.3.2. Audit by Lessor........................................................ 19
3.3.3 Deficiencies and Overpayments.......................................... 19
3.3.4 Confidentiality........................................................ 19
3.4. Additional Charges................................................................ 20
3.5 Net Lease......................................................................... 20
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3.6 No Lessee Termination or Offset................................................... 20
3.6.1 No Termination......................................................... 20
3.6.2 Waiver................................................................. 20
3.6.3 Independent Covenants.................................................. 21
3.7 Abatement of Rent Limited......................................................... 21
ARTICLE 4............................................................................................... 17
IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS.............................................. 21
4.1 Payment of Impositions............................................................ 21
4.1.1 Lessee To Pay.......................................................... 21
4.1.2 Installment Elections.................................................. 21
4.1.3 Returns and Reports.................................................... 22
4.1.4 Refunds................................................................ 22
4.1.5 Protest................................................................ 22
4.2 Notice of Impositions............................................................. 22
4.3 Adjustment of Impositions......................................................... 22
4.4 Utility Charges................................................................... 23
4.5 Insurance Premium................................................................. 23
4.6 Deposits.......................................................................... 23
4.6.1 Lessor's Option........................................................ 23
4.6.2 Use of Deposits........................................................ 24
4.6.3 Deficits............................................................... 24
4.6.4. Other Properties....................................................... 24
4.6.5. Transfers.............................................................. 24
4.6.6 [Intentionally Omitted]................................................ 25
4.6.7 Return................................................................. 25
ARTICLE 5............................................................................................... 25
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY; INSTALLATION, REMOVAL AND
REPLACEMENT OF PERSONAL PROPERTY; RESERVES..................................................... 25
5.1 Ownership of the Leased Property.................................................. 25
5.2 Personal Property; Removal and Replacement of
Personal Property........................................................... 25
5.2.1 Lessee To Equip Facility............................................... 25
5.2.2 Sufficient Personal Property........................................... 25
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5.2.3 Removal of Personal Property; Lessor's
Option to Purchase.............................................. 25
5.2.4 Purchase-Money Security Interests and Equipment
Leases...................................................... 26
ARTICLE 6............................................................................................... 27
SECURITY FOR LEASE OBLIGATION.................................................................. 27
6.1 Security for Lessee's Obligations................................................. 27
6.1.1 Security............................................................... 27
6.2 Credit Enhancement................................................................ 27
6.2.1. Cash Deposit & Letter of Credit
6.2.2 Credit Enhancement Reduction Conditions................................ 28
6.2.3 Application of Credit Enhancement...................................... 29
6.2.4 Replenishment of Cash Collateral....................................... 29
6.2.5 Interest on Cash Collateral............................................ 29
6.3 Guaranty.......................................................................... 30
ARTICLE 7............................................................................................... 30
CONDITION AND USE OF LEASED PROPERTY; MANAGEMENT AGREEMENTS.................................... 30
7.1 Condition of the Leased Property.................................................. 30
7.2 Use of the Leased Property; Compliance; Management................................ 30
7.2.1 Obligation to Operate.................................................. 30
7.2.2 Permitted Uses......................................................... 31
7.2.3 Compliance with Insurance Requirements................................. 31
7.2.4 No Waste............................................................... 31
7.2.5 No Impairment.......................................................... 31
7.2.6 No Liens............................................................... 31
7.3 Compliance with Legal Requirements................................................ 31
7.4 Management Agreements............................................................. 32
7.5 First-Class Operation; Best Efforts to Maximize................................... 32
7.6 Full Complement of Functions on Leased Property................................... 32
ARTICLE 8............................................................................................... 32
REPAIRS; RESTRICTIONS.......................................................................... 32
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8.1 Maintenance and Repair............................................................ 32
8.1.1 Lessee's Responsibility................................................ 32
8.1.2 No Lessor Obligation................................................... 33
8.1.3 Lessee May Not Obligate Lessor......................................... 33
8.2 Encroachments; Title Restrictions................................................. 33
ARTICLE 9............................................................................................... 34
STRUCTURAL ALTERATIONS AND CAPITAL ADDITIONS................................................... 34
9.1 Limitations....................................................................... 34
9.2 Structural Alterations and Construction of Capital Additions...................... 34
9.2.1 No Encumbrance......................................................... 34
9.2.2 Lessee's Proposal...................................................... 34
9.2.3 Lessor's Options....................................................... 35
9.2.4 Lessor May Elect to Finance............................................ 35
9.2.5 General Restrictions................................................... 35
9.3 Capital Additions Financed by Lessor.............................................. 35
9.3.1 Lessee's Financing Request............................................. 35
9.3.2 Lessor's General Requirements.......................................... 36
9.3.3 Payment of Costs....................................................... 37
9.4 Non-Capital Additions............................................................. 37
ARTICLE 10.............................................................................................. 38
WARRANTIES AND REPRESENTATIONS................................................................. 38
10.1 Representations and Warranties.................................................... 38
10.1.1 Existence; Power; Qualification........................................ 38
10.1.2 Valid and Binding...................................................... 38
10.1.3 Single Purpose......................................................... 38
10.1.4 No Violation........................................................... 38
10.1.5 Consents and Approvals................................................. 39
10.1.6 No Liens or Proceedings................................................ 39
10.1.7 No Burdensome Agreements............................................... 39
10.1.8 [Intentionally Omitted]................................................ 39
10.1.9 Adequate Capital, Not Insolvent........................................ 39
10.1.10 Not Delinquent......................................................... 39
10.1.11 [Intentionally Omitted]................................................ 39
10.1.12 Taxes Current.......................................................... 40
10.1.13 Financials and Projections Complete and Accurate....................... 40
10.1.14 No Investigations Pending.............................................. 40
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10.1.15 No Present Violations.................................................. 41
10.1.16 [Intentionally Omitted]................................................ 41
10.1.17 No Action By Governmental Authority.................................... 41
10.1.18 No Condemnation........................................................ 41
10.1.19 Rate Limitations....................................................... 41
10.1.20 [Intentionally Omitted]................................................ 41
10.1.21 [Intentionally Omitted]................................................ 41
10.1.22 ERISA.................................................................. 41
10.1.23 No Broker.............................................................. 41
10.1.24 No Improper Payments................................................... 41
10.1.25 Nothing Omitted........................................................ 42
10.1.26 No Margin Security..................................................... 42
10.1.27 [Intentionally Omitted]................................................ 42
10.1.28 Principal Place of Business............................................ 42
10.1.29 Permitted Encumbrances................................................. 42
10.1.30 No Material Off-Site Functions......................................... 43
10.1.31 Accreditation.......................................................... 43
10.1.32 Qualification for Services............................................. 43
10.1.33 No Notices of Deficiencies............................................. 43
10.1.34 No Labor Disputes...................................................... 43
10.2 Continuing Effect of Representations and Warranties............................... 43
ARTICLE 11.............................................................................................. 43
ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND INDEMNITY........................................ 43
11.1 Incorporation by Reference........................................................ 43
11.2 Compliance with Environmental Indemnity........................................... 44
11.3 Survival.......................................................................... 44
ARTICLE 12.............................................................................................. 44
FINANCIAL AND OTHER COVENANTS.................................................................. 44
12.1 Status Certificates............................................................... 44
12.2 Financial Statements; Reports; Notice and Information............................. 44
12.2.1 Obligation To Furnish.................................................. 44
(a) Annual Statements of Lessee and the Guarantor
(b) Monthly Statements of Lessee
(c) Quarterly Statements of Lessee
(d) Quarterly Statements of Guarantor
(e) Permits and Contracts
(f) Contract Notices
(g) Surveys and Inspection Reports
(h) Official Reports
(i) Other Financial Information
(j) Default Conditions
(k) Official Actions
(l) Audit Reports
(m) Adverse Developments
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(n) Line of Credit Default
(o) Stockholder Materials
12.2.2 Responsible Officer.................................................... 47
12.2.3 No Material Omission................................................... 47
12.2.4 Confidentiality........................................................ 47
12.3 Annual Budgets.................................................................... 48
12.4 Financial Covenants............................................................... 48
12.4.1 Debt Coverage Ratio of Lessee.......................................... 48
12.4.2 Compliance with Other Financial Covenants.............................. 48
12.4.3 No Guaranties.......................................................... 48
12.4.4 No Indebtedness........................................................ 49
12.5 Affirmative Covenants............................................................. 49
12.5.1 Maintenance of Existence............................................... 49
12.5.2 Materials.............................................................. 49
12.5.3 Compliance With Legal and Insurance Requirements And Other Matters..... 49
12.5.4 Books And Records...................................................... 49
12.5.5 Participation in Third Party Payor Programs............................ 50
12.5.6 Conduct of its Business................................................ 50
12.5.7 Address................................................................ 50
12.5.8 Inspection............................................................. 50
12.6 Additional Negative Covenants..................................................... 50
12.6.1 Restrictions........................................................... 50
12.6.2 No Liens............................................................... 50
12.6.3 Agreement Not Assignable............................................... 51
12.6.4 [Intentionally Omitted]................................................ 51
12.6.5 Forgiveness of Indebtedness............................................ 51
12.6.6 [Intentionally Omitted]................................................ 51
12.6.7 Changes in Fiscal Year and Accounting Procedures....................... 51
ARTICLE 13.............................................................................................. 52
INSURANCE AND INDEMNITY........................................................................ 52
13.1 General Insurance Requirements.................................................... 52
13.1.1 Types and Amounts of Insurance......................................... 52
13.1.2 Insurance Company Requirements......................................... 53
13.3.3 Policy Requirements.................................................... 53
13.1.4 Notices; Certificates and Policies..................................... 54
13.1.5 Lessor's Right to Place Insurance...................................... 54
13.1.6 Payment of Proceeds.................................................... 55
13.1.7 Irrevocable Power of Attorney.......................................... 55
13.1.8 Blanket Policies....................................................... 55
13.1.9 No Separate Insurance.................................................. 55
13.1.10 Self-Insurance Retention............................................... 56
13.2 Indemnity......................................................................... 56
13.2.1 Indemnification........................................................ 56
13.2.2 Indemnified Parties.................................................... 58
13.2.3 Limitation on Lessor Liability......................................... 58
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13.2.4 Risk of Loss........................................................... 58
ARTICLE 14.............................................................................................. 59
FIRE AND CASUALTY.............................................................................. 59
14.1 Restoration Following Fire or Other Casualty...................................... 59
14.1.1 Following Fire or Casualty............................................. 59
14.1.2 Procedures............................................................. 59
14.1.3 Disbursement of Insurance Proceeds Less Than $500,000.................. 60
14.1.4 Disbursement of Insurance Proceed. $500,000 or More................... 60
14.2 Disposition of Insurance Proceeds................................................. 63
14.2.1 Proceeds To Be Released to Pay For Work................................ 63
14.2.2 Proceeds Not To Be Released............................................ 64
14.2.3 Lessee Responsible for Short-Fall...................................... 65
14.3 [Intentionally Omitted.].......................................................... 65
14.4 Restoration of Lessee's Personal Property......................................... 65
14.5 No Abatement of Rent.............................................................. 65
14.6 Termination of Certain Rights..................................................... 65
14.7 Waiver............................................................................ 65
14.8 Application of Business Interruption Insurance.................................... 65
14.9 Obligation To Account............................................................. 66
ARTICLE 15.............................................................................................. 66
CONDEMNATION................................................................................... 66
15.1 Definitions....................................................................... 66
15.2 Parties' Rights and Obligations................................................... 66
15.3 Total Taking...................................................................... 66
15.4 Partial or Temporary Taking....................................................... 67
15.5 Restoration....................................................................... 67
15.6 Award Distribution................................................................ 68
15.7 Control of Proceedings............................................................ 68
ARTICLE 16.............................................................................................. 68
PERMITTED CONTESTS............................................................................. 68
16.1 Lessee's Right to Contest......................................................... 68
16.2 Lessor's Cooperation.............................................................. 69
16.3 Lessee's Indemnity................................................................ 69
ARTICLE 17.............................................................................................. 69
DEFAULT........................................................................................ 69
17.1 Events of Default................................................................. 69
17.2 Remedies.......................................................................... 72
17.3 Damages........................................................................... 73
17.4 Lessee Waivers.................................................................... 74
17.5 Application of Funds.............................................................. 74
17.6 [Intentionally Omitted]........................................................... 74
17.7 Lessee's Obligation to Purchase................................................... 74
17.7.1 Lessor's Option........................................................ 74
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17.7.2 Certain Definitions.................................................... 74
17.7.3 Closing and Payment.................................................... 74
17.7.4 "As-Is"; No Conditions................................................. 75
17.7.5 Unconditional Obligation............................................... 75
17.7.6 Perpetuities........................................................... 76
17.8 Lessor's Right to Cure............................................................ 76
17.9 No Waiver By Lessor............................................................... 76
17.10 Cumulative Remedies............................................................... 77
ARTICLE 18.............................................................................................. 77
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER............................................ 77
18.1 Yield-Up.......................................................................... 77
18.2 Transfer of Contracts and Permits................................................. 77
18.4 Holding Over...................................................................... 78
ARTICLE 19.............................................................................................. 78
PURCHASE OF THE LEASED PROPERTY................................................................ 78
19.1. Purchase of the Leased Property................................................... 78
19.2 Appraisal......................................................................... 78
19.2.1 Designation of Appraisers.............................................. 78
19.2.2 Appraisal Process..................................................... 79
19.2.3 Specific Enforcement and Costs......................................... 79
19.3 Lessee's Right of Refusal......................................................... 79
19.4 Lessee's Option to Purchase....................................................... 80
19.4.1 Conditions to Option................................................... 80
19.4.5 Payment of Option Price................................................ 81
19.4.6 Place and Time of Closing.............................................. 81
19.4.7 Condition of Leased Property........................................... 81
19.4.8 [Intentionally Omitted]................................................ 81
19.4.9 [Intentionally Omitted]................................................ 81
19.4.10 Merger by Deed......................................................... 81
19.4.11 Use of Purchase Price to Clear Title................................... 81
19.4.12 Lessee's Default....................................................... 82
19.4.13 Lessor's Default....................................................... 82
ARTICLE 20.............................................................................................. 82
SUBLETTING AND ASSIGNMENT...................................................................... 82
20.1 Subletting and Assignment......................................................... 82
20.2 Permitted Subleases............................................................... 83
20.3 Attornment........................................................................ 83
20.4 Permitted Assignments............................................................. 84
ARTICLE 21.............................................................................................. 84
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR.................................................... 84
21.1 No Merger of Title................................................................ 84
21.2 Transfers By Lessor............................................................... 84
21.3 Lessor May Grant Liens............................................................ 85
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21.4 Subordination and Non-Disturbance................................................. 85
ARTICLE 22.............................................................................................. 86
LESSOR OBLIGATIONS............................................................................. 86
22.1. Quiet Enjoyment................................................................... 86
22.2 Memorandum of Lease............................................................... 86
22.3 Default by Lessor
22.4 Lessor's Warranties and Representations........................................... 86
22.4.1 Existence; Power, Qualification....................................... 86
22.4.2 Valid and Binding...................................................... 86
22.4.3 No Violation.......................................................... 87
ARTICLE 23.............................................................................................. 87
NOTICES........................................................................................ 87
ARTICLE 24.............................................................................................. 88
LIMITATION OF MEDITRUST LIABILITY.............................................................. 88
ARTICLE 25.............................................................................................. 88
MISCELLANEOUS PROVISIONS....................................................................... 88
25.1 Broker's Fee Indemnification...................................................... 88
25.2 No Joint Venture or Partnership................................................... 89
25.3 Amendments, Waivers and Modifications............................................. 89
25.4 Captions and Headings............................................................. 89
25.5 Time is of the Essence............................................................ 90
25.6 Counterparts...................................................................... 90
25.7 Letter of Intent.................................................................. 90
25.8 WAIVER OF JURY TRIAL.............................................................. 90
25.9 Successors and Assigns............................................................ 90
25.10 No Third Party Beneficiaries...................................................... 91
25.11 Governing Law..................................................................... 91
25.12 General........................................................................... 91
25.13 True Lease........................................................................ 91
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LEASE
This lease ("Lease") is dated as of the 1st day of February, 1995 and
is between MEDITRUST OF ARIZONA, INC. ("Lessor"), a Delaware corporation having
its principal office at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, and
ORNDA HEALTHCORP OF PHOENIX, INC. ("Lessee"), a California corporation, having
its principal office c/o OrNda HealthCorp, Suite 700, 0000 Xxxx Xxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx, 00000.
ARTICLE 1
LEASED PROPERTY; TERM; EXTENSIONS
1.1. Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, Lessor leases to Lessee and Lessee rents and leases from
Lessor all of Lessor's rights and interests in and to the following real
property (collectively, the "Leased Property"):
(a) the real property described in EXHIBIT A attached hereto
(the "Land");
(b) all buildings, structures, and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines, and parking areas and roadways appurtenant to
such buildings and structures presently or hereafter situated upon the Land
(collectively, the "Leased Improvements");
(c) all easements, rights and appurtenances of every nature
and description now or hereafter relating to or benefitting any or all of the
Land and Leased Improvements (collectively, the "Related Rights"); and
(d) all building fixtures, including all components thereof,
now or 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 all items included within the category of
Personal Property which are not permanently affixed to or incorporated in the
Leased Property (collectively, the "Fixtures") (it being agreed that major items
of equipment used by Lessee as part of its health care related business within
the Leased Improvements, such as, without limitation, CT scanners, x-ray
equipment, and the like, are not Fixtures and shall be and remain the Personal
Property of Lessee throughout the term of this Lease).
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The Leased Property is leased in its present condition
without representation or warranty of any kind, either express or implied, by
Lessor and subject to: (i) the rights of parties in possession; (ii) the
existing state of title including all covenants, conditions, restrictions,
easements and other matters of record (including, without limitation, the
matters set forth in EXHIBIT B); (iii) all applicable laws, (iv) the lien of any
existing financing instruments, mortgages and deeds of trusts; and (v) any
matters, whether or not of a similar nature, which would be disclosed by an
inspection of the Leased Property or by an accurate survey thereof.
1.2 Term. The term of the Lease shall consist of: (i) the "Fixed Term"
commencing on February 1, 1995 ("Fixed Term Commencement Date") and ending on
January 31, 2010 ("Fixed Term Expiration Date"). This Lease may be sooner
terminated as hereinafter provided. In addition, Lessee shall have the option
for an Extended Term as provided for in Section 1.4
1.3 [Intentionally Omitted]
1.4 Extended Terms. Provided that this Lease has not been previously
terminated, and so long as no Event of Default shall have occurred and be
continuing, Lessee is hereby granted the right to extend the Fixed Term of this
Lease for one (1) five (5) year period (the "Extended Term") for a maximum Term,
if all such options are exercised, which ends on January 31, 2015. Lessee's
extension rights shall be exercised by Lessee only by giving written notice to
Lessor of such extension at least one hundred eighty (180) days, but not more
than three hundred sixty (360) days, prior to the termination of the Fixed Term.
During the Extended Term, all of the terms and conditions of this Lease shall
continue in full force and effect.
ARTICLE 2
DEFINITIONS AND RULES OF CONSTRUCTION
2.1 Definitions. For all purposes of this Lease and the other Lease
Documents, except as otherwise expressly provided or unless the context
otherwise requires, (i) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular,
(ii) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
at the time applicable, and (iii) all references in this Lease to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Lease.
Accounts: As defined in the UCC.
Accreditation Body: JCAHO, the Arizona Department of Health
and all other Persons having jurisdiction over the accreditation, certification,
evaluation or operation of the Facility.
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Additional Charges: As defined in Article 3.
Additional Rent: As defined in Article 3.
Additional Rent Commencement Date: As defined in Article 3.
Affiliate: With respect to any Person (i) and other Person
which, directly or indirectly, controls, or is controlled by, or is under common
control with, such Person, (ii) any other Person which owns, beneficially,
directly or indirectly thirty-five percent (35%) or more of the outstanding
capital stock, shares or equity interests of such Person, or (iii) any officer,
director, employee, general partner or trustee of such Person, or any other
Person controlling, controlled by, or under common control with, such Person
(excluding trustees and Persons serving in a fiduciary capacity who are not
otherwise an Affiliate of such Person). 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, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests. However,
unless and until such time as Horizon Mental Health Management, Inc. ("HMHMI")
may become a Subsidiary of Lessee or the Guarantor, HMHMI shall not be deemed to
be an "Affiliate" of either Lessee or the Guarantor.
Affiliated Parties Subordination Agreement: An agreement, in
form and substance satisfactory to Lessor in its reasonable discretion, relating
to the subordination of intercompany debt and payments of any kind between
Lessee, the Guarantor and any Affiliates of Lessee or the Guarantor which will
provide, among other things, that any payments to be made by Lessee to (a) any
Guarantor or any of its Affiliates or (b) any Affiliate of Lessee, in connection
with any transaction with such Person, including, without limitation, the
purchase, sale or exchange of any property, the rendering of any service to or
with any such Person (including, without limitation, all allocations of any
so-called corporate or central office costs, expenses and charges of any kind or
nature) or the making of any loan or other extension of credit, shall be
subordinate to the complete payment and performance of all Obligations under the
Lease Documents; provided, however, that all such subordinated payments will be
permitted to be paid when due and payable unless: (i) after giving effect to
such payment, Lessee shall be unable to comply with any of its Obligations under
any of the Lease Documents or (ii) an Event of Default has occurred or Lessee
has received notice regarding an event or state of facts which with the passage
of time would constitute an Event of Default if not cured by Lessee, and Lessee
has not yet effected such cure.
Award: As defined in Article 15.
Base Gross Revenues: The Gross Revenues of the Facility for
the period from February 1, 1995 through January 31, 1996, inclusive, as shown
by Lessee's financial statements included in Guarantor's Consolidated Financial
Statements.
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Base Rent: As defined in Article 3.
Business Day: Any day which is not a Saturday or Sunday and
which is not a day on which national banks in the State are authorized, or
obligated, by law or executive order, to close.
Capital Addition(s): One or more new building(s), or one or
more additional structure(s) annexed to any portion of any of the Leased
Improvements, or the material expansion of existing 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, or the renovation of existing
improvements on the Leased Property in order to provide a functionally new
facility needed or used to provide services not previously offered, or any
expansion, construction, renovation or conversion in order to increase the bed
capacity of a Facility, to change the purpose for which such beds are utilized,
or to change the utilization of any material portion of any of the Leased
Improvements.
Capital Additions Cost: The cost of any Capital Addition
proposed to be made by Lessee whether paid for by Lessee or Lessor. Such cost
shall include all costs and expenses of every nature whatsoever incurred
directly or indirectly in connection with the development, permitting,
construction and financing of a Capital Addition as determined by, or to the
satisfaction of, Lessor.
Cash Collateral: As defined in Section 6.2.1.
Cash Flow: With respect to the Lessee, the Net Income (or Net
Loss) for any period before income taxes and any allocation for corporate
overhead of the Guarantor and/or its management subsidiaries plus (i) the amount
of the provision for depreciation and amortization actually deducted on the
books of the applicable Person for the purposes of computing such Net Income (or
Net Loss) for the period involved, plus (ii) Rent, plus (iii) intercompany fees
or interest, but only to the extent subordinated pursuant to the Affiliated
Parties Subordination Agreement.
Closing Date: As defined in Section 17.7.
Code: The Internal Revenue Code of 1986, as amended.
Competitor: Any Person engaged in the ownership and/or
operation of acute care or psychiatric hospitals in either the Phoenix and Tempe
area or on a national basis. For the purpose of this definition, any Person
shall be deemed to be engaged in such ownership and/or operation if: (i) such
Person owns and/or operates such acute care hospitals; or, (ii) such person owns
a controlling interest in the Person who owns and operated such acute care
hospitals.
Condemnation; Condemnor: As defined in Article 15.
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Consolidated and Consolidating: When used with reference to
any term defined herein means that term as applied to the accounts of the
relevant Person and its Subsidiaries consolidated in accordance with GAAP.
Consolidated Financials: For any Fiscal Year or other
accounting period for any Person and its Consolidated Subsidiaries, statements
of earnings and retained earnings and of changes in Cash Flow 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, in accordance with GAAP setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with GAAP.
Contracts: All agreements and contracts now or hereafter in
effect with any Person related to the Facility, including, without limitation,
Provider Agreements, Patient Admission Agreements, Management Agreements,
contracts or agreements for architectural, design, engineering, construction and
repair services or for the purchase or provision of goods or services, or in any
way relating to the ownership, construction, development, maintenance,
management, repair, use, occupancy, possession or operation of the Facility.
Cost of Living Index: The Consumer Price Index, Urban Wage
Earners and Clerical Workers, All Items, Base 1982-1984 = 100, published by the
Bureau of Labor Statistics, U.S. Department of Labor, for the geographical area
which includes the Leased Property, or if said Index is not available, then an
available index for the State, or if not available, for the entire United
States, published by said bureau or its successor, or if none, by any other
instrumentality of the United States or of the State.
Credit Enhancement: As defined in Section 6.2.1.
Credit Enhancement Reduction Conditions: As defined in Section
6.4.2.
Current Assets: All Assets of any Person which would, in
accordance with GAAP, be classified as current assets of a Person conducting the
business the same as or similar to that of such Person, excluding however, any
and all advances to or Current Liabilities owed to such Person by its
Subsidiaries.
Current Liabilities: All liabilities of any Person which
would, in accordance with GAAP, be classified as current liabilities of a Person
conducting the business the same as or similar to that of such Person, including
without limitation, all Rent and any other lease rental payments and other
payments under leases and fixed payments of, and sinking fund payments with
respect to, Indebtedness required to be made within one (1) year from the date
of determination.
Date of Taking: As defined in Article 15.
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Debt Coverage Ratio: With respect to the Leased Property, the
ratio of (i) Cash Flow for each applicable period of time to (ii) the total of
all Base Rent and Additional Rent paid or payable during such period or accrued
for such period.
Deposit Pledge Agreement: The pledge and security agreement so
captioned and dated as of even date herewith between Lessee as "Pledgor" and
Lessor as "Secured Party."
Encumbrance: As defined in Section 21.3.
Environmental Laws: Collectively, all Legal Requirements now
or hereafter applicable to (i) environmental conditions on, under or about the
Leased Property or (ii) the existence, or any disposal, release, transportation,
generation or storage (whether or not on, from or about the Leased Property) of
any Hazardous Substances on or from the Leased Property or by Lessee, its
employees, agents or contractors, including, without limitation, Title 49, The
Environment, ARS Section 49-101 et seq., Title 18 Arizona Administrative Code,
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq., the Federal Resource Conservation and Recovery
Act, the Federal Water Pollution Control Act and the Federal Clean Air Act.
Event of Default: As defined in Article 17.
Excess Gross Revenues: Gross revenues less Base Gross
Revenues.
Extended Terms: As defined in Section 1.4.
Facility: The hospital buildings and other structures and
improvements located on the Land as the same may be modified from time to time
in accordance with this Lease. The portion of the Facility located in Phoenix is
known as St. Luke's Medical Center and the portion of the Facility located in
Tempe is known as Tempe St. Luke's Hospital and Tempe St. Luke's Medical Office
Building.
Fair Market Value of a Capital Addition: The amount by which
the Fair Market Value of the Leased Property upon the completion of a particular
Capital Addition exceeds the Fair Market Value of the Leased Property just prior
to the construction of the particular Capital Addition.
Fair Market Value of the Leased Property: The fair market
value of the Facility, including all Capital Additions, and including the Land
and all other portions of the Leased Property, and (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Section 19.2 or in such other manner as shall be
mutually acceptable to Lessor and Lessee, and (c) not taking into account any
reduction in value resulting from any encumbrance to which the Leased Property
is subject and which encumbrance Lessee or Lessor is otherwise
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required to remove at or prior to closing of the transaction. However, the
positive or negative effect on the value of the Leased Property attributable to
the interest rate, amortization schedule, maturity date, prepayment provisions
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 the Fair Market Value of the Leased Property. The Fair Market Value
shall be determined as the overall value based on due consideration of the
"income" approach, the "comparable sales" approach, and the "replacement cost"
approach.
Fee Mortgage and Fee Mortgagee: As defined in Section 21.3.
Fiscal Quarter: Each of the three (3) month periods commencing
with the first day of September, December, March and June.
Fiscal Year: The twelve (12) month period from September 1, to
August 31.
Fixed Term, Fixed Term Commencement Date and Fixed Term
Expiration Date: As defined in Section 1.2.
Fixtures: As defined in Article I.
GAAP: Generally accepted accounting principles. consistently
applied throughout the relevant period.
Governmental Authority: All agencies, authorities, bodies,
boards, commissions, courts, instrumentalities, legislatures, and offices of any
nature whatsoever of any government, or quasi-government, unit or political
subdivision, whether with a federal, state, county, district, municipal, city or
otherwise and whether now or hereinafter in existence.
Gross Revenues: The term "Gross Revenues" shall mean all
revenues (including rent, but only to the extent it does not "duplicate" other
revenues already attributed to Lessee from the party paying such rent as
provided below) received or receivable by Lessee or any Affiliate of Lessee or
the Guarantor from or by reason of the operation of the Facility (including any
Capital Additions), or any other use by Lessee or any Affiliate of Lessee or the
Guarantor of the Leased Property, including without limitation, all patient
revenues received or receivable for the use of, or otherwise by reason of, all
rooms, beds and other facilities provided, meals served, services performed,
space or facilities subleased or goods sold on or from the Leased Property, and
all revenues from parking or any other use made of the Land, including without
limitation, and except as provided below, any consideration received under any
subletting, licensing, or other arrangements with any Person relating to the
possession or use of any portion of the Leased Property and all revenues from
all ancillary services; provided, however, that Gross Revenues shall not include
non-operating revenues such as interest income or gain from the sale of assets
not sold in the ordinary course of business; and provided, further, that there
shall be deducted from such revenues:
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(i) contractual allowances (relating to any period during the
Term of this Lease) for xxxxxxxx not paid by or received from the
appropriate governmental agencies or Third Party Payors and ordinary
course adjustments for prior periods,
(ii) provisions for uncollectible amounts, including charity
care and courtesy and administrative discounts,
(iii) all proper patient billing credits and adjustments
according to GAAP relating to health care accounting,
(iv) federal, state or local sales, use, gross receipts and
excise taxes and any tax based upon or measured by said Gross Revenues
which is added to or made a part of the amount billed to the patient or
other recipient of such services or goods, whether included in the
billing or stated separately,
(v) provider discounts for hospital or other medical facility
utilization contracts,
(vi) the cost of any federal, state or local governmental
program imposed specifically to provide or finance indigent patient
care, excluding Medicaid, Medicare and the like, and
(vii) the cost of so-called "pass-through" payments (e.g.
capitation payments) to Persons other than Lessee or Lessee's
Subsidiaries for goods and/or services not provided by the Facility,
provided, however, that if any such revenues are included in the
calculation of Base Revenues, the same such revenues shall be included
in the calculation of Gross Revenues without regard to whether such
revenues are in fact received thereafter.
To the extent that the Leased Property is subleased by Lessee to a
Subsidiary of Lessee or the Guarantor or otherwise made available for use by a
Subsidiary of Lessee of the Guarantor who conducts any Primary Intended Use,
Other Permitted Use or any other health-care related business thereon, Gross
Revenues shall be calculated for all purposes of this Lease by including the
Gross Revenues of such Subsidiaries with respect to the subleased property, or
property so used, i.e., Gross Revenue generated from the operations conducted on
such subleased property, or portion of the Leased Property so used, shall be
included directly in the Gross Revenues for the purpose of determining
Additional Rent payable under this Lease and the rent received or receivable by
such Subsidiary lessee or user from or under such subleases or other arrangement
shall be excluded from Gross Revenues for such purpose. In addition, to the
extent any such Subsidiary provides goods or services to Lessee or any other
Subsidiary of Lessee or the Guarantor which are in turn provided to or on
account of a patient at the Facility, or a patient in any other location owned
or operated by a Subsidiary of Guarantor and financed or leased by a Meditrust
Affiliate such that the Subsidiary of Lessee or the Guarantor owes or may owe
additional interest or additional rent on account thereof to a
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Meditrust Affiliate, only the revenue generated by the provision of such goods
or service to or for the account of the patient shall be included in Gross
Revenues, and the inter-Subsidiary sale shall be excluded from Gross Revenues.
However, if any such inter-Subsidiary sales are so excluded from Gross Revenues,
a fair market value imputed rent for the space occupied by the Subsidiary of
Lessee or the Guarantor at the Leased Property shall be included in Gross
Revenues. As to any lease, license or other arrangement to use space of a
portion of the Leased Property to a non-Subsidiary of Lessee or the Guarantor,
only the rental actually received by Lessee from such non-Subsidiary shall be
included in Gross Revenues, provided, however, that such rent shall be a fair
market rent comparable to that rent which would be charged to any arm's length
third-party.
Guarantor: OrNda Healthcorp, a Delaware corporation.
Guaranty: The guaranty dated as of even date executed by Guarantor in
favor of Lessor.
Hazardous Substances: Collectively, (a) "oil," "hazardous materials,"
"hazardous waste," "hazardous substance," or any other material or substance
which may be dangerous to health or the environment, either separately or in
combination with any other substance, when "generated," "stored," "utilized,"
"heated," "disposed," "released," "transported," or otherwise "managed," as the
foregoing terms in quotations are defined by Environmental Laws, (b) crude or
refined oil (including waste oil, asbestos, polychlorobiphenyls ("PCBs"), radon
gas, urea formaldehyde, flammable explosives, radioactive or nuclear materials,
toxic wastes and any other similar substances, or (c) any chemical, contaminant,
solvent, material, pollutant or substance that may be dangerous or detrimental
to the Leased Property, the environment, or the health or safety of the
patients, staff or other Persons likely to be present at the Leased Property or
of owners or occupants of other real property nearby the Leased Property. The
term Hazardous Substances as defined herein, shall not, however, include
cleaning or maintenance materials, biomedical wastes and pharmaceuticals and
other materials and substances which may be dangerous to health or environment
of the types and in the quantities normally stocked or stored by health care
providers similar to the Facility so long as Lessee shall use, store and dispose
of all such cleaning and maintenance materials, biomedical wastes and
pharmaceuticals in accordance with all applicable Environmental Laws and all
other Legal Requirements.
Impositions: Collectively, all taxes (including, without limitation,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes), assessments (including, without limitation,
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 and sewer rents, water charges or other rents and
charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), transfer taxes and
recordation taxes imposed as a result of this Lease or any extensions hereof,
and all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or
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foreseen or unforeseen, of every character in respect of either or both of the
Leased Property and the Rent (including all interest and penalties thereon due
to any failure in payment by Lessee), which at any time prior to, during or in
respect of the Term hereof and thereafter until the Premises are yielded-up to
Lessor as required by the terms of this Lease, may be 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 any part thereof, or the leasing or use of the
Leased Property or any part thereof. Notwithstanding the foregoing, nothing
contained in this shall be construed to require Lessee to pay (1) any tax based
on net income (whether denominated as a franchise or capital stock or other tax)
imposed on Lessor or any other Person, except Lessee or its successors, or (2)
any transfer or net revenue tax of Lessor or any other Person except Lessee and
its successors 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; provided,
however, the provisions set forth in clauses (1) and (2) of this sentence shall
not be applicable 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
computing the amount of any franchise tax or capital stock tax which may be or
become an Imposition, the amount payable by Lessee shall be equitably
apportioned based upon all properties owned by Lessor.
Indebtedness: The total of all obligations of a Person, whether current
or long-term which in accordance with GAAP would be included as liabilities upon
such Person's balance sheet at the date as of which Indebtedness is to be
determined, including, without limitation, the Total Purchase Price.
Institutional Lender: 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 corporation qualified to be treated for federal
tax purposes as a real estate investment trust, having a net worth of at least
$100,000,000.
Insurance Requirements. All terms of any insurance policy required by
this Lease, all requirements of the issuer of any such policy with respect to
the Leased Property and activities conducted thereon, and the requirements of
any insurance board, association or organization or underwriters' regulations
pertaining to the Leased Property.
Land: As defined in Article I.
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Lease: As defined in the preamble.
Lease Documents: This Lease, the Guaranty, the Deposit Pledge
Agreement, and any and all other instruments, documents, certificates or
agreements executed or furnished by Lessee, Guarantor, or any Affiliate of
Lessee or Guarantor, in connection with this Lease or any of the other Lease
Documents.
Lease Year: The twelve (12) month period beginning February 1 and
ending January 31.
Leased Improvements; Leased Property: Each as defined in Article I. The
term "Leased Property" shall also be deemed to include the Facility unless the
context within which such term is used is clearly intended to exclude the
Facility.
Leasehold Improvement Agreement: An agreement in form mutually
acceptable to Lessor and Lessee covering the manner in which Lessee will
construct Capital Additions to the Leased Property and the manner in which
Lessor will finance such Capital Additions, which agreement will be executed, if
at all , pursuant to the provisions of Section 9.3.1.
Legal Requirements: All federal, state, county, municipal, local and
other governmental statutes, ordinances, by-laws, codes, rules, regulations,
restrictions, orders judgments, decrees and injunctions (including, without
limitation, all applicable building, health code, zoning, subdivision, and other
land use and health-care licensing statutes, ordinances, by-laws, codes, rules
and regulations), whether now or hereafter enacted, affecting any one or more of
the Leased Property or the construction, development, maintenance, management,
repair, use or operation of all or any portion of the Leased Property,
including, without limitation, any of the foregoing which may (i) require
repairs, modifications or alterations in or to the Leased Property, (ii) in any
way affect (adversely or otherwise) the use and enjoyment of the Leased Property
or (iii) require the clean-up, remediation or other treatment of any Hazardous
Substances on the Leased Property. Without limiting the foregoing, the term
Legal Requirements includes all Environmental Laws and shall also include all
Permits and Contracts issued or entered into by any Governmental Authority,
quasi-governmental authority, any Accreditation Body, or any Third Party Payor,
and all Permitted Encumbrances.
Lessee: As defined in the preamble of this Lease.
Lessor: As defined in the preamble of this Lease.
Managed Care Plans: All health maintenance organizations, preferred
provider organizations, individual practice associations, competitive medical
plans, and similar arrangements.
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Management Agreement: Any agreement, whether written or oral, between
Lessee and any other party (including, but not limited to, an Affiliate of
Lessee) to manage or operate the Facility on behalf of Lessee or any permitted
sublessee.
Manager: The Person so designated in the Management Agreement.
Material Adverse or Material Adverse Change: Any change or effect that,
taken as a whole, (a) has a materially adverse effect on the business, assets,
properties, operations, or financial condition or prospects of either Lessee or
the Guarantor and its Consolidated Subsidiaries, taken as a whole; (b)
materially impairs the ability of Lessee, or the Guarantor and its consolidated
Subsidiaries, taken as a whole, to perform any of their respective obligations
to Lessor with respect to this Lease or the Lease Documents; (c) materially
impairs the validity or enforceability of, or materially impairs the rights,
remedies or benefits available to Lessor under any of the Lease Documents; (d)
with respect to the Leased Property, materially impairs the value of the Leased
Property or the ability to use the Leased Property for Primary Intended Uses; or
(e) with respect to Insurance Requirements, will render any policy of insurance
required under this Lease void or otherwise unenforceable. Similarly, the phrase
"in All Material Respects" shall mean that compliance is being made with the
particular requirement to which such phrase relates in such a manner as to
assure that there will be no Material Adverse Effect suffered by any of Lessor,
Lessee, the Guarantor or the Leased Property as a result of the failure to fully
comply with such requirements.
Meditrust: As defined in Article 24.
Meditrust Affiliate: Meditrust and its Subsidiaries
Net Income (or Net Loss): The net income (or net loss, expressed as a
negative number) of a Person for any period, after all expenses and other
charges determined in accordance with GAAP.
Notice To Purchase: As defined in Section 17.7.
Obligations: As defined in Section 6.1.1.
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 authorized to so sign by the Board of Directors or
By-Laws 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 one of the
foregoing offices.
Option Price: As defined in Section 19.4.
Other Permitted Uses: To the extent permitted under Legal Requirements
and under Insurance Requirements, and so long as the same do not have a Material
Adverse Effect on the Leased Property: (i) medical or dental laboratories, (ii)
day care center, (iii)
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pharmacy, (iv) florists and card shops which do not have a separate entrance,
(v) private practice of medicine and related uses by individual physicians or
physician groups, (vi) outpatient services, (vii) any uses similar to, or
complementary to any of the foregoing typically present in a hospital campus
setting and (viii) ancillary parking.
Overdue Rate: On any date, a rate per annum equal to the greater of:
(i) one hundred twenty percent (120%) of the Prime Rate, or (ii) 18%; provided,
however, in no event shall the Overdue Rate be greater than the maximum rate
then permitted under applicable law.
Patient Accounts: All accounts of Lessee arising out of or in
connection with the provision of services or goods to patients at the Facility,
or otherwise.
Patient Admission Agreements: All contracts, agreements and consents
executed by or on behalf of any patient or other Person seeking services at the
Facility, including, without limitation, assignments of benefits and guarantees.
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 Encumbrances: The Permitted Title Exceptions reflected on
EXHIBIT B to this Lease, plus Permitted Prior Security Interests in Personal
Property, if any, plus liens in favor of Lessor as provided for in the Lease
Documents; however, with respect to any provision of this Lease which requires
Lessee to comply with Permitted Encumbrances, Lessee shall have no obligation to
assume the debt obligation evidenced by any lien imposed against the Leased
Property by the Lessor pursuant to Article 21 of this Lease (unless Lessee has
expressly agreed in writing to be bound).
Permitted Uses: The Primary Intended Use and Other Permitted Uses.
Permitted Prior Security Interests in Personal Property: As defined in
Section 6.1.2.
Permits: Collectively, all permits, licenses, approvals, variances,
permissive uses, accreditations, certificates, certifications, consents,
agreements, contracts, contract rights, franchises, interim licenses, permits
and other authorizations of every nature whatsoever required by, or issued
under, applicable Legal Requirements, benefiting, relating to or affecting the
Leased Property or the Facility, or the construction, development, maintenance,
management, use or operation thereof, and all renewals, replacements and
substitutions therefor, now or hereafter required or issued by any Governmental
Authority of any nature, or maintained or used by Lessee, or entered into with
any Governmental Authority.
Person: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land
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trust, business trust, unincorporated organization, or other entity, government
or agency, or political subdivision thereof, or other Governmental Authority.
Personal Property: All machinery, equipment, furniture, furnishings,
movable walls or partitions, computers or trade fixtures, accounts, goods,
general intangibles, books and records, instruments, chattel paper or other
personal property, and consumable inventory and supplies, owned or leased by
Lessee and used or useful in Lessee's business on the Leased Property and
removable without causing material damage to the Leased Property, including
without limitation all items of furniture, furnishings, equipment, vehicles,
supplies and inventory, together with all replacements, modifications,
alterations, and additions thereto, except items, if any, included within the
definition of Fixtures.
Place of Closing: As defined in Section 17.7.
Primary Intended Use: Use of the Facility as an acute care or
behavioral health hospital, skilled nursing unit, rehabilitation facility and
related medical offices and outpatient services.
Prime Rate: The prime rate of, and as so designated by, the Reference
Bank, as announced from time to time.
Principal Credit Agreement: As defined in Section 12.4.2.
Principal Place of Business: Xxxxx 000, 0000 Xxxx Xxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000.
Provider Agreements: All participation, provider and reimbursement
agreements or arrangements now or hereafter in effect for the benefit of Lessee
or any permitted sublessee which is an Affiliate of Lessee or the Guarantor in
connection with the operation of the Facility relating to any right of payment
or other claim arising out of or in connection with Lessee's, or any permitted
sublessee's, participation in any Third Party Payor Program.
Purchaser: As defined in Section 12.7.E.
Put Price: As defined in Section 17.7.
Reference Bank: Fleet Bank of Connecticut, N.A., or any other major
bank or financial institution reasonably selected by Lessor.
Related Party Agreements: The instruments, documents, leases and other
agreements which evidence or secure the Related Party Transactions.
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Related Party Transactions: All loans, leases and other transactions of
every nature and description between or among (a) any Meditrust Affiliate, and
(b) any of Lessee, any Guarantor, or any Affiliate of Lessee or the Guarantor.
Rent: Collectively, the Base Rent, Additional Rent and the Additional
Charges.
Rolling Period: With respect to any Fiscal Quarter, such Fiscal Quarter
and the three (3) immediately preceding Fiscal Quarters, if any; provided that
for purposes of this definition, no Fiscal Quarter prior to Fiscal Quarter
commencing March 1, 1995 shall be utilized.
State: The state of Arizona.
Stated Amount: Three Million Six Hundred Ten Thousand Seven Hundred
Fifty Dollars ($3,610,750).
Subsidiary or Subsidiaries: With respect to any Person, any corporation
or other entity of which such Person, directly, or indirectly, through another
Subsidiary or otherwise, owns, or has the right to control or direct the voting
of, fifty percent (50%) or more of the outstanding capital stock or other
ownership interest having general voting power (under ordinary circumstances).
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.
Tangible Net Worth: An amount determined in accordance with GAAP equal
to the total assets of any Person, excluding the total intangible assets of such
Person, minus the total liabilities of such Person. Total intangible assets
shall be deemed to include, but shall not be limited to, the excess of cost over
book value of acquired businesses accounted for by the purchase method,
formulae, trademarks, trade names, patents, patent rights and deferred expenses,
including, but not limited to, unamortized debt discount and expense,
organizational expense and experimental and development expenses.
Tangible Personal Property: Personal Property excluding Accounts,
general intangibles, instruments and chattel paper as defined in the Uniform
Commercial Code, but expressly including books, records and patient records.
Term: Collectively, the Fixed Term and the Extended Term which has
become effective pursuant to Section 1.4, as the context may require, unless
earlier terminated pursuant to the provisions hereof.
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Third Party Payor: Medicare, Medicaid, Blue Cross and/or Blue Shield,
private insurers and any other Person which presently or in the future maintains
Third Party Payor Programs.
Third Party Payor Programs: All third party payor programs in which
Lessee presently or in the future participates, including without limitation,
Medicare, Medicaid, Blue Cross and/or Blue Shield, Managed Care Plans, other
private insurance plans and employee assistance programs.
Total Purchase Price: Sixty-Five Million Six Hundred and Fifty Thousand
Dollars and 00/100 ($65,650,000.00).
UCC: The Uniform Commercial Code as in effect from time to time in the
State.
Unsuitable For Its Primary Intended Use: As used anywhere in this
Lease, the term "Unsuitable For Its Primary Intended Use" shall mean that, by
reason of damage or destruction, or a partial or temporary Taking by
Condemnation, in the good faith judgment of Lessee, the Facility cannot be
operated on a commercially practicable basis for the Primary Intended Use,
taking into account, among other relevant factors, the number of usable beds
affected by such damage or destruction or partial or temporary Taking.
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.
Work Certificates: As defined in Section 14.1.4.
2.2 Rules of Construction. The following rules of construction shall
apply to the Lease and each of the other Lease Documents: (a) references to
"herein," "hereof" and "hereunder" shall be deemed to refer to this Lease, or
the other applicable Lease Document, and shall not be limited to the particular
text or section or subsection in which such words appear; (b) the use of any
gender shall include all genders and the singular number shall include the
plural and vice versa as the context may require; (c) references to Lessor's
attorney shall be deemed to include without limitation special counsel and local
counsel for Lessor; (d) reference to attorneys' fees and expenses shall be
deemed to include all costs for administrative, paralegal and other support
staff; (e) references to Leased Property shall be deemed to include all of the
Leased Property; (f) the term "including," when following any general statement,
will not be construed to limit such statement to the specific items or matters
as provided immediately following the term "including" (whether or not
non-limiting language such as "without limitation" or "but not limited to" or
words of similar import are also used), but rather will be deemed to refer to
all of the items or matters that could reasonably fall within the broadest scope
of the general statement; and (g) any requirement that financial statements be
Consolidated
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in form shall apply only to such financial statements as relate to a period
during any portion of which the relevant Person has one or more subsidiaries.
ARTICLE 3
RENT
3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures.
Lessee will pay to Lessor, 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
as Lessor from time to time may designate in writing, rent for the Leased
Property, as follows:
3.1.1 Base Rent: Lessee shall pay a rent ("Base Rent") per
annum equal to Seven Million, Two Hundred Twenty-One Thousand, Five Hundred
Dollars and 00/100 ($7,221,500.00), which is calculated on the basis of the
Total Purchase Price times eleven percent (11%). Base Rent shall be paid monthly
in advance on the first day of each month in equal monthly installments
representing 1/12th of the Base Rent due for the full Lease Year in question.
3.1.2 Additional Rent: In addition to the Base Rent, Lessee
shall pay to Lessor rent ("Additional Rent") in an amount equal to the greater
of (a) three percent (3%) of Excess Gross Revenues for the Lease Year in
question or (b) the product of (i) the Base Rent times (ii) a fraction of which
the numerator is the Cost of Living Index as of January 31 of the Lease Year for
which such Additional Rent is being paid (i.e., the last day of such Lease Year)
and the denominator is the Cost of Living Index as of the Fixed Term
Commencement Date. Additional Rent shall accrue commencing on February 1, 1996
("Additional Rent Commencement Date"), and shall be payable thereafter quarterly
in arrears during the Term on the first day of each Fiscal Quarter commencing on
March 1, 1996 (although such first payment shall only relate to February, 1996
rather than the full Fiscal Quarter) and there shall be a reconciliation as
provided in Section 3.2 below. However, in no event shall the Additional Rent
for any Lease Year exceed four percent (4%) of the total of the Base Rent and
Additional Rent paid for the immediately preceding Lease Year, provided that any
10% surcharge levied pursuant to Section 3.2.3 below shall no be considered
Additional Rent for purposes of this limitation.
3.2. Quarterly Calculation and Payment of Additional Rent;
Reconciliation.
3.2.1 Quarterly Calculation and Estimate. Lessee shall
calculate and pay Additional Rent quarterly on the first day of each Fiscal
Quarter for the prior Fiscal Quarter, based on one quarter of the Excess Gross
Revenues estimated reasonably by Lessee at the beginning of each Fiscal Year,
but in no event less than one quarter of the Excess Gross Revenues for the
previous Lease Year. If Gross Revenues are reduced as a result of casualty to or
a Taking of the Leased Property or permanent reduction of rates paid by Third
Party Payors, or by the termination of a sublease, or by the discontinuation
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of business by a Lessee Affiliate at the Leased Property, then, the estimate can
be reasonably reduced to reflect the changed circumstances.
3.2.2 Reconciliation. For each Fiscal Quarter after the
Additional Rent Commencement Date, on or before the last day of the next
succeeding Fiscal Quarter, Lessee shall deliver to Lessor an Officer's
Certificate reasonably acceptable to Lessor and Certified by the chief financial
officer of Lessee, setting forth the actual Gross Revenues for the immediately
preceding Fiscal quarter (for example, the Officer's Certificate relating to the
Fiscal Quarter ending May 31, shall be delivered on or before August 31) and the
actual increase in the Cost of Living Index for the same Fiscal Quarter. The
first quarterly reconciliation and adjustment of Additional Rent shall be made
not later than the last day of the Fiscal Quarter in which such Officer's
Certificate has been delivered (and so, to continue the foregoing example, the
reconciliation and adjustment on Additional Rent for the Fiscal Quarter ending
May 31 shall be made not later than August 31 of the immediately succeeding
Fiscal Quarter).
3.2.3 Deficits. If the Additional Rent, as finally determined
for any Fiscal Quarter, exceeds the sum of the quarterly payment of Additional
Rent previously paid by Lessee with respect to said Fiscal Quarter, Lessee
shall, within thirty (30) days after such determination should have been made
under Section 3.2.2, pay such deficit to Lessor. Further, if the deficit in
Additional Rent payable for the full Fiscal Year exceeds by ten percent (10%) or
more the Additional Rent actually paid for the applicable Fiscal Year, then
Lessee shall also pay Lessor interest on such deficit at the Overdue Rate from
the date originally due (i.e., the original quarterly payment date on which such
payment should have been made until paid in full).
3.2.4 Overpayments. If the Additional Rent, as finally
determined, for any Fiscal Quarter is less than the amount previously paid with
respect to said Fiscal Quarter by Lessee, Lessee shall notify Lessor to grant
Lessee a credit in an amount equal to such difference against Additional Rent
next coming due or, if requested in writing by Lessee, will refund the same to
Lessee within thirty (30) days after receipt of such written request.
3.2.5 Final Determination. The obligation to pay Additional
Rent shall survive the expiration or earlier termination of the Term, and a
final reconciliation, taking into account, among other relevant adjustments, any
contractual allowances which related to the Gross Revenues accrued prior to such
expiration or termination date, but which have been determined to be not payable
after such expiration or termination date, and Lessee's good faith best estimate
of the amount of any unresolved contractual allowances shall be made not later
than one (1) year after said expiration or termination date. Lessee shall advise
Lessor within sixty (60) days after such expiration or termination date of
Lessee's best estimate at that time of the approximate amount of such
adjustments, which estimate shall not be binding on Lessee or have any legal
effect whatsoever.
3.3 Confirmation and Audit of Additional Rent.
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3.3.1. Maintain Accounting Systems. Lessee shall utilize, or
cause to be utilized, an accrual basis accounting system for the Leased Property
in accordance with its usual and customary practices to enable Lessee to prepare
financial statements substantially in accordance with GAAP. Lessee shall retain,
for at least three (3) years after the expiration of each Fiscal Year (and in
any event until the final reconciliation described in Section 3.2 above has been
made), reasonably adequate records conforming to such accounting system showing
all Gross Revenues for such Fiscal Year.
3.3.2. Audit by Lessor. Lessor, at its own expense except as
provided hereinbelow, shall have the right from time to time to have its
accountants or representatives audit the information set forth, or required to
be set forth, in the Officer's Certificate referred to in Section 3.2 and in
connection with such audits to examine Lessee's records with respect thereto
(including supporting data, income tax and sales tax returns), subject to any
prohibitions or limitations on disclosure of any such data under applicable law
or regulations, including without limitation, any duly enacted "Patients' Xxxx
of Rights" or similar legislation including such limitations as may be necessary
to preserve the confidentiality of any Facility-patient relationship and any
physician-patient privilege.
3.3.3. Deficiencies and Overpayments. If any such audit
discloses a deficiency in the reporting of Gross Revenues, and either Lessee
agrees with the result of such audit or the matter is compromised or determined
by legal proceedings, Lessee shall forthwith pay to Lessor the amount of the
deficiency in Additional Rent which would have been payable by it had such
deficiency in reporting Gross Revenues not occurred, as finally agreed or
determined, together with interest on the additional Additional Rent which
should have been payable by it, at the Overdue Rate from the earliest date when
said payment should have been made by Lessee pursuant to Section 3.2.1 above to
the date of payment thereof; provided, however, that as to any audit that is
commenced more than two (2) years after the date Gross Revenues for any Quarter
are reported by Lessee to Lessor, the deficiency, if any, with respect to
Additional Rent shall bear interest as permitted herein only from the date such
determination of deficiency is made, unless such deficiency is the result of
gross negligence or willful misconduct on the part of Lessee or any Affiliate
thereof. If any such audit discloses that the Gross Revenues actually received
by Lessee for any Fiscal Year exceed those reported by Lessee by more than 10%,
Lessee shall pay the reasonable cost of such audit and examination. If any audit
conducted by Lessor pursuant to this Section discloses that Lessee has overpaid
Additional Rent, Lessor shall notify Lessee and such amount shall be dealt with
in the same manner as an overpayment under Section 3.2.4 above.
3.3.4. Confidentiality. Any proprietary information obtained
by Lessor pursuant to the provisions of this Section shall be treated as
confidential, except that such information may be used in any litigation or
arbitration proceedings between the parties and except, further, that Lessor may
disclose such information to prospective purchasers or lenders, subject in each
case to the provisions of Section 12.2.4 below. The obligations of Lessor and
Lessee contained in this Section shall survive the expiration or earlier
termination of this Lease.
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3.4. Additional Charges. Subject to the rights to contest as set forth
in Article 15, in addition to the Base Rent and Additional Rent, (a) Lessee will
also pay and discharge as and when due and payable all Impositions and other
amounts, liabilities and obligations which Lessee assumes or agrees to pay under
this Lease, 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 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 well as the Base Rent and
Additional Rent. 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.
3.5 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 Rent throughout the Term.
3.6 No Lessee Termination or Offset.
3.6.1 No Termination. Except as may be otherwise specifically
and expressly provided in this Lease, Lessee, to the extent not prohibited by
law, 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 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 Lease Document, 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.
3.6.2 Waiver. Lessee, to the fullest extent not prohibited by
applicable law, hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (b) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums
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payable by Lessee hereunder, except as otherwise specifically and expressly
provided in this Lease.
3.6.3 Independent Covenants. 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 ("except in those instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of an Event of Default.
3.7 Abatement of Rent Limited. There shall be no abatement of Rent on
account of any casualty, Taking or other event, except that in the event of a
partial Taking or a temporary Taking as described in Section 15.4, the Base Rent
shall be abated as follows: (a) in the case of such a partial Taking, the Total
Purchase Price shall be reduced for the purposes of calculating Base Rent
pursuant to Section 3.1(a) or the Put Price pursuant to Section 17.7.2. or the
Option Price pursuant to Section 19.4 by subtracting therefrom, as applicable,
the net amount of the Award received by Lessor, and (b) in the case of such a
temporary Taking, by reducing the Base Rent for the period of such a temporary
Taking, by the net amount of the Award received by Lessor.
For the purposes of this Section 3.7, the "net amount of the Award
received by Lessor" shall mean the Award paid to Lessor on account at such
Taking, minus all costs and expenses incurred by Lessor in connection therewith,
and minus any amounts paid to or for the account of Lessee by Lessor to
reimburse for the costs and expenses of reconstructing the Facility following
such Taking in order to create a viable and functional Facility under all of the
circumstances.
ARTICLE 4
IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS
4.1 Payment of Impositions.
4.1.1 Lessee-To Pay. Subject to Section 4.1.5 below, Lessee
will pay or cause to be paid all Impositions on or before the due date, such
payments to be made directly to the taxing authority where feasible. For
purposes of this section, "due date" shall mean the day immediately before the
date on which any fine, penalty, interest or cost may be added to such
Imposition on account of non-payment. Subject to Section 4.1.2, 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.
4.1.2 Installment Elections. If any such Imposition may, at
the option of the taxpayer, 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
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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 to contest pursuant to the provisions of Section 4.1.5 below)
as the same respectively become due and before any fine, penalty, premium,
further interest or cost may be added thereto.
4.1.3 Returns and Reports. 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 Impositions as may be required by Governmental Authorities. 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 is required by law to 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 costs and depreciation records
necessary for filing returns for any property so classified as personal
property. If Lessor receives any assessment notice with regard to any personal
property tax relating to any Personal Property within the Leased Improvements,
Lessor shall use its best efforts to provide Lessee with copies of such
assessment notices within a time frame which allows Lessee to file a protest
pursuant to Article 16 below.
4.1.4 Refunds. If no Event of Default shall have occurred
hereunder and be continuing, any refund due from any taxing authority in respect
of any Imposition paid by Lessee shall be paid over to or retained by Lessee. If
an Event of Default shall have occurred and be continuing, such funds shall be
at Lessor's option paid over to Lessor and/or retained by Lessor and applied as
provided in Section 6.2.3.
4.1.5 Protest. Lessee may, upon giving notice to Lessor, and
subject to compliance with the provisions of' Article 16, contest, 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 in any reasonable way with
Lessee in such protest, appeal, or other action.
4.2 Notice of Impositions. Lessor shall give prompt notice to Lessee of
all Impositions payable by Lessee hereunder of which Lessor at any time has
knowledge, but Lessor's failure to give any such notice shall in no way diminish
Lessee's obligations hereunder to pay such Impositions under Lessee knew, or
reasonably should have known, about the existence of such Imposition.
4.3 Adjustment of Impositions. Impositions imposed in respect of the
period during which the Term terminates shall be adjusted and prorated between
Lessor and
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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.
4.4 Utility Charges. Lessee will pay or cause to be paid all charges
for electricity, power, gas, oil, water, telephone and other utilities used in
the Leased Property during the Term and thereafter until Lessee yields up the
Leased Property in the manner required by this Lease.
4.5 Insurance Premiums. Lessee will pay or cause to be paid, or
otherwise satisfactorily provide for the payment in installments of, all
premiums for the insurance coverage required to be maintained pursuant to
Article 13 during the Term, and thereafter until Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and Lessee shall furnish Lessor with evidence satisfactory
to Lessor that all such premiums have been so paid or so provided for prior to
the Fixed Term Commencement Date and thereafter at least ten (10) days prior to
the expiration of the then-effective policy of insurance to which such premium
relates. Notwithstanding the foregoing, Lessee may pay such insurance premiums
to the insurer monthly installments so long as the applicable insurer is
contractually obligated to give Lessor not less than thirty (30) days notice of
non-payment and so long as no Event of Default has occurred and is continuing
uncured under any of the Lease Documents. In the event of the failure of Lessee
either to comply with the insurance requirements in Article 13, or to pay the
premiums for such insurance, or to deliver such policies or certificates thereof
to Lessor at the times required, Lessor shall be entitled, but shall have no
obligation, to effect such insurance and pay the premiums therefor, which
premiums shall be repayable to Lessor with interest at the Overdue Rate upon
written demand therefor, and failure to repay the same with interest within ten
(10) days after such demand shall constitute an Event of Default.
4.6 Deposits.
4.6.1 Lessor's Option. At the option of Lessor, which may be
exercised at any time after the occurrence of an Event of Default,
Lessee shall, upon written request of the Lessor, on the first date on
the calendar month immediately following such request, and on the day
of each calendar month thereafter (each of which dates is hereinafter
referred to as a "Monthly Deposit Date"), while this Lease is in
effect, pay to and deposit with Lessor a sum equal to one-twelfth
(1/12th) of the Impositions to be levied, charged, filed, assessed or
imposed upon or against the Leased Property within one (1) year after
said Monthly Deposit Date and a sum equal to one-twelfth (1/12th) of
the premiums which Lessor will have to pay to utilize the so-called
"stand by" insurance policies of Meditrust to provide the coverage
supplied by the insurance policies required pursuant to Article 13 of
this Lease. If the amount of the Impositions to be levied, charged,
assessed or imposed or insurance premiums to be paid within the ensuing
one (1) year period shall not be fixed upon any Monthly Deposit Date,
such amount for the purpose of computing the deposit to be made by
Lessee hereunder shall be estimated by Lessor with an appropriate
adjustment to be promptly made between
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Lessor and Lessee as soon as the affixed amount is determinable. In
addition, Lessor may at its option, require that any particular deposit
be greater than one-twelfth (1/12th) of the estimated amount payable
within one (1) year after said Monthly Deposit Date, if such additional
deposit is required in order to provide to Lessor a sufficient fund
from which to make payment of all Impositions on or before the next due
date of any installment thereof, or to make payment of any required
insurance premiums not later than the due date thereof.
4.6.2 Use of Deposits. The sums deposited by Lessee under this
Section 4.6 shall be held by Lessor and shall be applied in payment of the
Impositions or insurance premiums, as the case may be, when due. No trust shall
be created by such deposits and any such deposits may be commingled with other
assets of Lessor, and in the discretion of Lessor, invested by Lessor and if so
invested all Interest thereon shall be held by Lessor for payment of Impositions
or premiums, as the case may be. Lessee shall give not less than ten (10) days
prior written notice to Lessor in each instance when an Imposition or insurance
premium is due, specifying the Imposition or premium to be paid in the amount
thereof, the place of payment, and the last day on which the same may be paid in
order to comply with the requirements of this Lease. If Lessor, in violation of
its obligations under this Lease, does not pay any Imposition or insurance
premium when due, for which a sufficient Deposit exists, Lessee shall not be in
default hereunder by virtue of the failure to pay such Imposition or such
insurance premium and shall not be responsible for any late payment penalty or
fine associated therewith.
4.6.3 Deficits. If for any reason the sum on deposit with
Lessor under this Section 4.6 shall not be sufficient to pay an Imposition or
insurance premium in full (or in installments) within the time specified
therefor in this Lease, then, within ten (10) days after demand by Lessor,
Lessee shall deposit sufficient sums so that Lessor may pay such Imposition or
premium in full (or in installments as otherwise provided for herein), together
with any penalty or interest thereon. Lessor may change its estimate of any
Imposition or insurance premium for any period on the basis of a change in an
assessment or tax rate on the basis of a prior miscalculation or for any other
good faith reason; in which event, within ten (10) days after demand by Lessor,
Lessee shall deposit with Lessor the amount in excess of the sums actually
deposited which would theretofore have been payable under the revised estimate.
4.6.4. Other Properties. If any Imposition shall be levied,
charged, filed, assessed, or imposed upon or against the Leased Property, and if
such Imposition shall also be a levy, charge, assessment or imposition upon or
for any other real or personal property not a part of the Leased Property, then
the computation of the amounts to be deposited under this Section 4.6 shall be
based upon the entire amount of such Imposition and Lessee shall not have the
right to apportion any deposit with respect to such Imposition.
4.6.5. Transfers. Upon any assignment of this Lease by Lessor,
Lessor shall have the right to transfer all amounts deposited pursuant to the
provisions of this Section 4.6 and still in its possession to such assignee (as
the subsequent holder of this
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Lease) and upon such assignee's assumption of Lessor's obligations under this
Lease, the original lessor named herein shall thereupon be completely released
from all liability arising thereafter with respect to such deposits and Lessee
shall look solely to said assignee, as the subsequent holder of this Lease, in
reference thereto, except that Lessor shall remain liable for any failure to
properly deal with such deposit which occurred prior to such assignment by
Lessor.
4.6.6 [Intentionally Omitted].
4.6.7 Return. Upon the expiration or earlier termination this
Lease, so long as Lessee has paid and performed all of Lessee's Obligations, any
sums then held by Lessor under this Section 4.6 shall be refunded to Lessee.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
INSTALLATION, REMOVAL AND REPLACEMENT OF
PERSONAL PROPERTY; RESERVES
5.1 Ownership of the Leased Property. Lessee acknowledges that the
Leased Property is the property of Lessor and that Lessee has only the right to
the exclusive possession and use of the Leased Property upon the terms and
conditions of this Lease.
5.2 Personal Property; Removal and Replacement of Personal Property.
5.2.1 Lessee To Equip Facility. Lessee shall be responsible,
at its sole cost and expense, to install, affix or assemble or place on the
Leased Property, sufficient items of Personal Property to enable the operation
of the Facility in a first-class manner in accordance with the requirements of
this Lease for the Primary Intended Use, and such Personal Property and
replacements thereof, shall be at all times the property of Lessee.
5.2.2 Sufficient Personal Property. Lessee shall maintain
during the entire Term all Personal Property and shall provide at its expense
all necessary replacements thereof, as may be necessary in order to operate the
Facility in a first class manner 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.
5.2.3 Removal of Personal Property; Lessor's Option to
Purchase. Lessee will, at its sole cost and expense, restore the Leased Property
to the condition required by Section 9.1(a), including repair of all damage to
the Leased Property caused by the removal of Lessee's Tangible Personal
Property, whether effected by Lessee or Lessor. Upon the termination of this
Lease, Lessor shall have the options which may be exercised prior to or within
sixty (60) days following termination of (a) acquiring some or all Lessee's
Tangible Personal Property upon payment of the fair market value thereof; or (b)
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requiring Lessee to remove its Tangible Personal Property not so purchased by
Lessor. If Lessor exercised the option to purchase Lessee's Tangible Personal
Property, the price shall be reduced by the amount of the discounted present
value of all payments due on any equipment leases treated as a capital lease
under GAAP or any other Permitted Prior Security Interests affecting any of the
Tangible Personal Property which Lessor elects to retain. If Lessor requires the
removal of some or all of Lessee's Tangible Personal Property, then all of
Lessee's Personal Property not purchased by Lessor and not removed by Lessee
within thirty (30) days following the request 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 account therefor.
5.2.4 Purchase-Money Security Interests and Equipment Leases.
Notwithstanding any other provisions hereof, Lessee may (a) grant priority
purchase money security interests in items of Tangible Personal Property, (b)
lease Tangible Personal Property from equipment lessors, and (c) grant a
priority security interest in Patient Accounts to an Institutional Lender which
is providing a working capital line of credit -- so long as in each instance
with respect to purchase-money security interests in items of Tangible Personal
Property and leases of Tangible Personal Property from equipment lessors which
represent a liability (calculated as described below) exceeding $2,000,000 for
any single item of Tangible Personal Property or $10,000,000 in the aggregate
for any group of items of Tangible Personal Property (other than with respect to
any purchase money security interests or equipment leases existing as of the
Fixed Term Commencement Date): (i) the secured party or equipment lessor enters
into an agreement reasonably satisfactory to Lessor under which Lessor shall be
afforded the option of curing defaults and the option of succeeding to the
rights of Lessee, (ii) all the terms, conditions and provisions of the
financing, security interest or lease are reasonably acceptable to Lessor, (iii)
Lessee provides a true and complete copy, as executed, of each such purchase
money security agreement, financing documents and equipment lease and all
amendments thereto, (iv) no such security interest, financing agreement or lease
is cross-defaulted or cross-collateralized with any other obligation, and (v) if
the secured party or equipment Lessor is not an Affiliate of Lessee, of
Guarantor, or of any Affiliate of Lessee or Guarantor, all the terms and
conditions of such security agreement or lease are at least as favorable to
Lessee as those customarily given by arm's-length, third party secured lenders
or lessors. Security interests granted by Lessee in full compliance with the
provisions of this Section 5.2.4 are referred to as "Permitted Prior Security
Interests in Personal Property". For purposes of this Section, the "liability"
represented by a Permitted Prior Security Interest in Personal Property shall be
the principal face amount of the note in case of a purchase-money security
interest or the discounted present value of the total of all payments to be made
under the lease in the case of an equipment lease; further, any purchase-money
security interest or lease for which recourse is limited solely to the leased
equipment or equipment subject to the purchase-money security interest and for
which there is no cross-default or cross-collateralization feature, shall not be
included as a liability for purposes of this calculation.
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ARTICLE 6
SECURITY FOR LEASE OBLIGATIONS
6.1 Security for Lessee's Obligations.
6.1.1 Security. In order to secure the payment and performance
of all of Lessee's obligations under this Lease and under each of the other
Lease Documents, all of which are collectively called the "Obligations", Lessee
agrees (a) to provide or cause there to be provided to Lessor (i) the Credit
Enhancement described below and (ii) the Guaranty and (b) to request when next
modifying the Principal Agreement, and use reasonable efforts to obtain,
permission from the lenders under the Principal Credit Agreement, and also any
consents to such assignment required from any landlord's under any such leases,
to permit Lessee to grant to Lessor a collateral assignment (in form and
substance reasonably satisfactory to Lessor) of all of Lessee's interest as
lessee in any premises outside of the Leased Property which is used in any was
as an adjunct to the activities conducted by Lessee on the Leased Property;
provided, however, such collateral assignment shall provide, among other things,
that Lessor will have no liability whatsoever under such assignment unless and
until Lessor elects to dispossess Lessee from, and take possession itself of,
the premises subject to such lease(s) and that Lessee shall be entitled to enjoy
all the rights of Lessee under all such leases until an Event of Default
hereunder.
6.2 Credit Enhancement.
6.2.1 Cash Deposit/Letter of Credit. In order to further
secure Lessee's performance of the Obligations, on the Fixed Term Commencement
Date, Lessee shall provide to Lessor a credit enhancement (the "Credit
Enhancement") for the benefit of Lessor in the form of either (i) cash or other
specified investments approved by Lessor in Lessor's name (the "Cash
Collateral"), (ii) a Letter of Credit as described in subsection (b) below or
(iii) some combination of Cash Collateral and Letter of Credit, as Lessee may
elect from time to time, provided that such Credit Enhancement is in the total
of the Stated Amount. The Credit Enhancement may be drawn upon by Lessor upon
any Event of Default involving the failure of Lessee to pay to Lessor any
amounts owed by Lessee to Lessor under the terms of any of the Lease Documents.
Lessee shall maintain the Credit Enhancement in the full Stated Amount
throughout the Term unless any of the Credit Enhancement Reduction Conditions
described in Section 6.2.2 occurs.
(a) Any portion of the Credit Enhancement provided by Cash
Collateral shall be in form and substance, and if Lessor elects a form of Cash
Collateral other than actual cash, from a bank continually acceptable to Lessor
in Lessor's reasonable discretion and shall be pledged to Lessor pursuant to the
Deposit Pledge Agreement.
(b) With respect to any portion of the Credit Enhancement
provided by a letter of Credit (the "Letter of Credit"), Lessee shall provide an
irrevocable Letter of
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Credit in favor of the Lessor (and satisfactory to Lessor in all respects).
Without limiting the foregoing, the Letter of Credit must provide that it shall
inure to the benefit of Lessor's successors and assigns and may be successively
transferred, and must be issued by an Institutional Lender satisfactory to
Lessor, in its reasonable discretion (it being agreed that Bank of Nova Scotia
is satisfactory to Lessor subject, however, to the last paragraph of this
Section 6.2.1). Lessee covenants and agrees to take all necessary actions to
maintain such Letter of Credit (or any substitute for such Letter of Credit
delivered pursuant to this Section 6.2.1) in effect so long as any portion of
the Credit Enhancement is being provided by the Letter of Credit.
Any Letter of Credit delivered pursuant to this Section shall also
provide that Lessor shall receive at least ninety (90) days' prior written
notice of the termination of expiration or the Letter of Credit from the issuer
thereof, and that if such notice is not provided the Letter of Credit shall
automatically be extended for one (1) year. Within sixty (60) days after the
issuer's sending such notice of expiration or termination, Lessee shall provide
Lessor with a substitute Letter of Credit to replace the then expiring Letter of
Credit, at which time Lessor will return the expiring Letter of Credit. Such
substitute Letter of Credit shall meet all the requirements set forth above with
respect to the original Letter of Credit. Lessee's failure to provide a
substitute Letter of Credit as set forth above shall constitute an Event of
Default under the Lease Documents which shall entitle Lessor to exercise all of
the rights and remedies set forth in the Loan Documents, including, without
limitation, the right to draw the full amount of the then expiring Letter of
Credit.
If any time while Lessor is holding a Letter of Credit pursuant to this
Section, the rating of the issuer of such Letter of Credit drops below Xxxxx'x
single "A" or such equivalent rating from some other rating agency as Lessor may
choose in its reasonable discretion (if the Xxxxx'x rating becomes unavailable
or Lessor for any other reason elects to no longer rely on Xxxxx'x as a rating
agency), Lessor shall immediately notify Lessee of such fact, and upon receipt
of such notice from Lessor Lessee shall provide Lessor with Cash Collateral or a
substitute Letter of Credit (again meeting all the requirements of the Letter of
Credit set forth above) within thirty (30) days and upon delivery of such new
Letter of Credit, the prior Letter of Credit shall be returned to Lessee.
Lessee's failure to provide such Cash Collateral or Letter of Credit shall
constitute an Event of Default under the Lease Documents which shall entitle
Lessor to exercise all rights and remedies set forth in the Loan Documents,
including, without limitation, the right to draw in full the Letter of Credit
whose issuer has the unsatisfactory Xxxxx'x Rating.
6.2.2 Credit Enhancement Reduction Conditions. If, after the
Fixed Term Commencement Date, the following conditions (the "Credit Enhancement
Reduction Conditions") are fulfilled: (a) there exists no Event of Default under
the Lease and Lessee has received no notice regarding an event or state of facts
which, with the passage of time, would constitute an Event of Default if not
cured by Lessee, and Lessee has not yet effected such cure; and (b) either (i)
the Guarantor achieves a rating of BB or better from Standard & Poors (the "Half
Reduction Condition") or (ii) the Guarantor
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achieves an investment grade rating of BBB- or better from Standard & Poors (a
"Full Reduction Condition"). In the event of the occurrence of the Half
Reduction Condition, or (iii) Lessee and the Guarantor execute and deliver to
Lessor an Affiliated Parties Subordination Agreement (also a "Full Reduction
Condition"); then, upon the receipt of evidence reasonably satisfactory to
Lessor of satisfaction of any one of the Credit Enhancement Reduction
Conditions, the required Credit Enhancement shall be reduced to one half (1/2%)
of the Stated Amount in the case of the occurrence of the Half Reduction
Condition or eliminated entirely in case of occurrence of a Full Reduction
Condition. In the event of the occurrence of the Half Reduction Condition, the
remaining amount of the Credit Enhancement shall continue to be held by Lessor
as collateral security for the Obligations of Lessee as provided in Section
6.2.1 above until the earlier of (x) the occurrence of Full Reduction Condition
or (y) all Obligations of Lessee under the Lease Documents have been paid and
satisfied in full following which, upon written request of Lessee, the balance
shall be paid to or at the direction of Lessee.
6.2.3 Application of Credit Enhancement. Upon the occurrence
of any Event of Default involving the failure of Lessee to pay to Lessor any
amount owed by Lessee to Lessor under the terms of any of the Lease Documents,
Lessor shall be entitled, at its option, to use all or any portion of the Credit
Enhancement, including interest thereon, then held by it to pay any amount
otherwise payable by Lessee or the Guarantor under any of the Lease Documents,
in accordance with the terms of this Lease or the other Lease Documents.
6.2.4 Replenishment of Cash Collateral. If at anytime after
any portion of the Credit Enhancement has been so reduced or eliminated, Lessee
fails to continue to satisfy either the Half Reduction Condition or one of the
Full Reduction Conditions, then within thirty (30) days after the change in
rating by Standard & Poors or other event which causes such Reduction Conditions
no longer to be satisfied, without any requirement of notice or demand by
Lessor, Lessee shall re-establish the required Credit Enhancement in the manner
provided in Section 6.2.1 in an amount sufficient to reinstate either the full
Stated Amount, in the case of a failure to meet even the Half Reduction
Condition or one-half (1/2) the Stated Amount in the event of a failure to meet
either of the Full Reduction Conditions (although while still meeting the Half
Reduction Condition). Further, if Lessor expends any of the Credit Enhancement
to pay any amount payable by Lessee, or otherwise applies the same to or towards
the Obligations, Lessee shall, upon demand of Lessor, immediately augment either
the Cash Collateral or the Letter of Credit so as to increase the amount Held by
Lessor as the Credit Enhancement to either the full Stated Amount or one-half
the Stated Amount (depending upon which, if any, of the Credit Enhancement
Reduction Conditions is then being met).
6.2.5 Interest on Cash Collateral. Any interest accrued on the
Cash Collateral shall be paid to Lessee semi-annually provided that there is no
Event of Default then outstanding and Lessee has received no notice regarding an
event or state of facts which, with the passage of time, would constitute an
Event of Default if not cured by Lessee, and Lessee has not yet effected such
cure.
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6.3 Guaranty. All of Lessee's Obligations shall be unconditionally and
irrevocably guaranteed by OrNda Healthcorp, a Delaware corporation, pursuant to
a written guarantee of even date herewith in favor of Lessor.
ARTICLE 7
CONDITION AND USE OF LEASED PROPERTY;
MANAGEMENT AGREEMENTS
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 purposes 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. LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR ANY PARTICULAR
PURPOSE OR USE, ITS DESIGN OR CONDITION OR OTHERWISE, OR AS TO DEFECTS IN
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL RISKS RELATING TO THE DESIGN, CONDITION OR USE OF THE LEASED
PROPERTY ARE TO BE BORNE BY LESSEE.
If at any time or from time to time during the Term of this Lease,
Lessor reasonably believes that either of the conditions described in (a) or (b)
below may exist, then at the request of Lessor, Lessee shall engage one (1) or
more independent professional consultants, engineers and inspectors, qualified
to do business in the State and acceptable to Lessor to perform any testing or
other inspections of the Leased Property and the Facility as Lessor may
reasonably request in order to detect the presence of any condition: (a) that
may be harmful, or present a health hazard, to the patients and other occupants
of the Facility, or (b) that constitutes a breach or violation of any of the
Lease Documents. In the event that Lessor determines that the results of such
testing or inspections are unsatisfactory, within thirty (30) days of notice
from Lessor, Lessee shall take such appropriate remedial actions as may be
reasonably requested by Lessor to correct such unsatisfactory conditions and
shall thereafter diligently and continuously prosecute such remedial actions to
completion within the time limits prescribed in this Lease or the other Lease
Documents.
7.2 Use of the Leased Property; Compliance; Management.
7.2.1 Obligation to Operate. Lessee covenants that it will
continuously operate the Leased Property for the Primary Intended Use (and other
Permitted Uses as applicable) and maintain in All Material Respects its
qualifications for licensure and accreditation as required by Legal Requirements
and Insurance Requirements.
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7.2.2 Permitted Uses. During the entire Term, Lessee shall use
the Leased Property and the Facility, or cause the Leased Property and the
Facility to be used only for the Primary Intended Use and Other Permitted Uses
and for such other uses as may be incidental thereto. Lessee shall not use the
Leased Property or any portion thereof for any other use without the prior
written consent of Lessor.
7.2.3 Compliance with Insurance Requirements. 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
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 any of the Insurance
Requirements. Further, Lessee shall, at its sole cost and expense, take whatever
other action may be necessary to comply in All Material Respects with all
Insurance Requirements.
7.2.4 No Waste. 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.
7.2.5 No Impairment. Lessee shall neither suffer nor permit
the Leased Property or any portion thereof to be used in such a manner as (i)
might reasonably tend to impair Lessor's 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.
7.2.6 No Liens. Lessee shall in no event cause, permit or
suffer any lien to exist with respect to the Leased Property other than
Permitted Encumbrances.
7.3 Compliance with Legal Requirements. Lessee covenants and agrees
that the Leased Property shall not be used for any unlawful purpose and that
Lessee, at its sole cost and expense, will promptly (a) comply in All Material
Respects with all Legal Requirements relating to 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
Property or interfere with the use and enjoyment of the Leased Property and (b)
procure, maintain and comply in All Material Respects with all Contracts and
Permits for any use of the Leased Property for the Primary Intended Use or Other
Permitted Uses, and Property for the Primary Intended Use or Other Permitted
Uses, and for the proper erection, installation, operation, and maintenance of
the Leased Property or any part thereof. Unless an Event of Default has occurred
and is continuing under the Lease or Lessee has received a notice regarding an
event or state of facts which, with the passage of time, would constitute an
Event of Default if not cured by Lessee, and Lessee has not yet effected such
cure, Lessee may, upon prior written notice to Lessor, contest any Legal
Requirements to the extent permitted by, and in accordance with, Article 16
below.
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7.4 Management Agreements. Lessee represents and warrants that there is
no management agreement in force and effect with respect to the Facility.
Further, throughout the Term Lessee shall not enter into any Management
Agreement where the annual fees thereunder exceed $500,000 unless the identity
of the manager and all of the terms and conditions thereof have been previously
approved in writing by Lessor, which approval will not be unreasonably withheld
or delayed.
7.5 First-Class Operation; Best Efforts to Maximize. Lessee further
covenants that the operation of the Facility shall be conducted in a manner
consistent with standards and practices recognized in the health care industry
as those customarily utilized by first class business operations. Subject to the
foregoing standard and any applicable Legal Requirements, Lessee shall use its
best efforts to maximize the Facility's Net Income.
7.6 Full Complement of Functions on Leased Property. During the Term of
this Lease, Lessee will not move off of the Leased Property any function
presently performed thereon, or otherwise conduct any health care related
function at a site which is not part of the Leased Property, where the failure
to perform such function on the Leased Property would have a Material Adverse
Effect on the ability of any Person to conduct the proper and efficient
operation of the Facility, both legally and practically, for the Primary
Intended Use, using only those buildings, facilities, improvements and other
functions then still located on the Leased Property, unless (a) such off-site
function is conducted on property leased to Lessee where such off-site lease has
been assigned to Lessor, or (b) if such function is performed on off-site
property owned by Lessee, Lessee has offered to Lessor the opportunity to
finance such off-site property as though it were a Capital Addition.
ARTICLE 8
REPAIRS; RESTRICTIONS
8.1 Maintenance and Repair.
8.1.1 Lessee's Responsibility. Lessee, at its sole cost and
expense, will keep the Leased Property and all private roadways, sidewalks and
curbs appurtenant thereto which are under Lessee's control in good order and
repair (whether or not the need for such repairs occurs as a result of Lessee's
use, any prior use, the elements, or the age of the Leased Property or any
portion thereof, or any other cause) and, except as otherwise provided in
Articles 14 and 15, shall, with the exercise of all reasonable efforts, promptly
undertake and diligently complete all necessary and appropriate repairs,
replacements, renovations, restorations, and alterations 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
(concealed or otherwise) existing prior to the commencement of, or during, the
Term of this Lease and thereafter until Lessee yields-up the Premises in the
manner required by this Lease. Lessee shall also be obligated at its expense to
make all repairs, modifications, replacements, and renovations necessary to
comply with all Legal Requirements and Insurance Requirements applicable
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to the Leased Property so that it can be legally operated for its Primary
Intended Use. All repairs, replacements, renovations, alterations and
modification shall be done in a good and workmanlike manner in compliance with
all Legal Requirements and Insurance Requirements and the requirements of
Article 9, using new materials suited for their intended purpose and shall be
consistent with the operation of the Facility for the Primary Intended Use in
accordance with this Lease. With respect to any repairs, replacements,
renovations, alterations or modifications having a cost of $100,000 or greater,
Lessee shall provide Lessor with written notice of such work and a general
description of the work to be undertaken; this notice may be provided as part of
the quarterly reporting made by Lessee under Section 12.2.1(c). Lessee will not
take or omit to take any action the taking or omission of which would have a
Material Adverse Effect on the Leased Property.
8.1.2 No Lessor Obligation. Lessor shall not under any
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacements, renovations, alterations,
restorations, modifications, or renewals of any nature or description to the
Leased Property, whether ordinary or extraordinary, structural or
non-structural, foreseen or unforeseen, or, except as provided in Article 9, to
make any expenditure whatsoever with respect thereto in connection with this
Lease, or to maintain the Leased Property in any way.
8.1.3 Lessee May Not Obligate Lessor. Except in the case of an
express and specific written agreement by Lessor to the contrary, nothing
contained in this Lease and no action or inaction by Lessor shall be construed
as (a) constituting the consent or request of Lessor, express or implied, to any
contractor, subcontractor, laborer, materialman or vendor to or for the
performance of any labor or services for the construction, alteration, addition,
repair or demolition of or to the Leased Property or any part thereof, or (b)
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.
8.2 Encroachments; Title 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 lawful 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 sole
cost and expense, subject to Lessee's right to contest the existence of any
encroachment, violation or impairment (as provided in Article 16), at Lessee's
option, (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 Lessee in
the good faith exercise of its judgment deems reasonably
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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, Lessee shall take all such actions as may be
necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and to the
extent the Leased Improvements were operated prior to the assertion of such
violation of encroachment. Any such alteration shall be made in conformity with
the applicable requirements of Article 9. Notwithstanding the foregoing, Lessee
shall have no obligation to remove any encroachment which existed as of the
Fixed Term Commencement Date, unless the failure to remove of such encroachment
will violate a Legal Requirement so as to have a Material Adverse Effect on the
Leased Property. Lessee's obligations under this Section 8.2 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.
ARTICLE 9
STRUCTURAL ALTERATIONS AND
CAPITAL ADDITIONS
9.1 Limitations. Without the prior written consent of Lessor, which
consent may be withheld or granted by Lessor in its reasonable discretion,
Lessee shall make no structural alterations or changes to the Leased Property or
Capital Additions, except as may be expressly required or permitted pursuant to
Articles 8 and 9 hereof, and shall not enlarge or reduce the size of the
Facility; provided however that with respect to any Capital Additions costing
less than $5,000,000 in the aggregate during any consecutive twelve (12) month
period, Lessee shall not be required to obtain Lessor's prior consent, but must
nevertheless comply with all other applicable requirements of this Lease
relating to the manner in which construction activities on the Lease Property
shall be conducted, including, without limitation, Sections 8.1.1, 9.2.1, 9.2.5
and 9.4 (but specifically excluding Sections 9.2.2, 9.2.3, 9.2.4, and 9.3).
9.2 Structural Alterations and Construction of Capital Additions. As to
Capital Additions for which Lessor has granted its prior written approval, the
following provisions shall apply unless otherwise agreed.
9.2.1 No Encumbrance. Lessee shall not be permitted to create
any recorded Encumbrance on the Leased Property in connection with such
structural change or Capital Addition without the express written consent of
Lessor.
9.2.2 Lessee's Proposal. If Lessee desires to make a Capital
Addition and the aggregate cost of all Capital Additions has been or will be
during any consecutive twelve (12) month period more than $5,000,000 (and after
such $5,000,000 threshold has been exceeded, any Capital Addition costing more
than $250,000 for such consecutive twelve (12) month period), Lessee shall
submit to Lessor in writing a proposal setting forth in reasonable detail any
such proposed work and shall provide to Lessor such plans and specifications,
Permits, contracts and other information concerning the proposed
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work as Lessor may reasonably request. Without limiting the generality of the
foregoing, any such proposal relating to a Capital Addition shall indicate the
approximate projected cost of constructing such Capital Addition, the use or
uses to which it will be put and a good faith estimate of the change, if any, in
the Gross Revenues that Lessee anticipates will be caused by the addition of
such Capital Addition to the Leased Property.
9.2.3 Lessor's Options. Lessor shall have the options of: (a)
denying permission for a Capital Addition unless required by applicable Legal
Requirements, (b) offering to finance the Capital Addition pursuant to Section
9.3, (c) allowing Lessee to pay for or separately finance the Capital Addition
subject to the same limits and conditions imposed under Section 9.4 with respect
to improvements which are not Capital Additions or (d) any combination thereof.
Unless Lessor notifies Lessee in writing of a contrary election within twenty
(20) days of Lessee's request, Lessor shall be deemed to have denied the request
for the Capital Addition.
9.2.4 Lessor May Elect to Finance. If Lessor elects to offer
financing for the proposed Capital Addition and Lessee accepts such offer, the
provisions of Section 9.3 shall apply.
9.2.5 General Restrictions. Without in any way limiting
Lessor's options with respect to proposed Capital Additions or structural
changes: (a) no Capital Addition or other alteration or change shall be made
which significantly alters the character or purpose of the Leased Property or
otherwise has any Material Adverse Effect on the value, utility or
revenue-producing capability of the Leased Property; (b) no Capital Addition or
other alteration or change shall be made which would tie in or connect 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 shall be subject to Lessor's reasonable
discretion; and (c) all proposed Capital Additions or structural alterations and
changes shall be architecturally integrated and consistent with the Leased
Property. However, in any instance where Lessor has reviewed and approved
Lessee's plans and specifications for any Capital Additions or structural
changes, such approval shall be deemed to constitute Lessor's agreement that all
of the conditions (a) through (c) above have been satisfied with respect to such
work.
9.3 Capital Additions Financed by Lessor.
9.3.1 Lessee's Financing Request. Lessee shall submit to
Lessor a request that Lessor provide or arrange financing for a Capital Addition
and shall provide to Lessor such information about the Capital Addition as
Lessor may reasonably request, including without limitation all information
referred to in Section 9.2 above. Lessee understands that Lessor shall be under
no obligation to agree to such request and Lessor understands that Lessee need
not accept Lessor's financing proposal. Nevertheless, Lessor shall notify Lessee
within thirty (30) days of receipt of such information as to whether it will
finance the proposed Capital Addition and, if so, the terms and conditions
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upon which it would do so (which shall be Meditrust's then prevailing terms and
conditions for similar type loans), including the terms of any amendment to this
Lease (including, without limitation, an increase in Base Rent based on Lessor's
or its Affiliate's then existing terms and prevailing conditions to compensate
Lessor for the additional funds advanced by it). Lessee may withdraw its request
by notice to Lessor at any time before or after receipt of Lessor's terms and
conditions, until such time as Lessee has executed a mutually acceptable
Leasehold Improvement Agreement. If Lessor provides or arranges for the
financing thereof, such Capital Additions shall be constructed by Lessee
pursuant to such Contracts, plans and specifications as Lessor or any Affiliate
of Lessor shall approve, with funding to be made in accordance with Lessor's or
such Affiliate then standard construction loan requirements and procedures which
may include, without limitation, the procedures applicable to Work under
Sections 14.1.3 and 14.1.4, all as shall be specified in the Leasehold
Improvement Agreement.
9.3.2 Lessor's General Requirements. If Lessor agrees to
finance the proposed Capital Addition and Lessee accepts Lessor's proposal
therefor, Lessee shall provide to Lessor, in addition to all other items which
Lessor or an Affiliate of Lessor may require, the following:
(a) prior to any advance of funds, any information, opinions,
certificates, Permits or documents reasonably requested by either Lessor or any
other Person who is or may be participating with Lessor in any way in such
financing, which are necessary to confirm that Lessee will be able to use the
Capital Addition upon completion thereof in accordance with the Primary Intended
Use or Other Permitted Uses, evidence satisfactory to Lessor that all Permits
required for the construction and use of the Capital Addition have been received
and are in full force and effect, not subject to appeal, except only for those
Permits which cannot in the normal course be obtained prior to commencement or
completion of the construction, so long as Lessor and such other Person are
provided with reasonable evidence that the same will be available in the normal
course of business without unusual condition;
(b) prior to any advance of funds, an Officer's Certificate
and, if requested, a certificate from Lessee's architect, setting forth in
reasonable detail the projected (or actual, if available) Capital Additions
Cost;
(c) bills of sale, instruments of transfer and other documents
required by Lessor so as to vest title to the Capital Additions in Lessor free
and clear of all liens, and an amendment to this Lease, duly executed and
acknowledged, in form and substance reasonably satisfactory to Lessor and
Lessee, providing for such changes as may be appropriate, including, without
limitation, changes in the Base Rent, the legal description of the Land, or the
Total Purchase Price;
(d) upon payment therefor, a deed conveying to Lessor title to
any land acquired for the purpose of constructing the Capital Additions free and
clear of any liens or encumbrances except those approved by Lessor, and, upon
completion of the
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Capital Addition, a final as-built survey thereof reasonably satisfactory to
Lessor, if required by Lessor and any other items which are reasonable requested
by Lessor;
(e) during and following the advance of funds and the
completion of the Capital Addition, endorsements to any outstanding policy of
title insurance covering the Leased Property or commitments therefor
satisfactory in form and substance to Lessor (i) updating the same without any
additional exception except as may be reasonably permitted by Lessor; and (ii)
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 (f) below);
(f) following the advance of funds, if appropriate, an owner's
policy of title insurance insuring fee simple title to any land conveyed to
Lessor pursuant to subparagraph (d) free and clear of all liens and encumbrances
except those approved by Lessor; and
(g) during or following the advancement of funds, prints of
architectural and engineering drawings relating to the Capital Additions and
such other certificates (including, but not limited to, endorsements increasing
the amount of title insurance coverage) documents, opinions of counsel,
appraisals, surveys, certified copies of duly adopted resolutions of the board
of directors of Lessee authorizing the execution and delivery of the lease
amendment and any other documents and instruments as may be reasonably required
by Lessor and any Person participating with Lessor in any way in the financing
of the Capital Additions Cost.
9.3.3 Payment of Costs. By virtue of accepting Lessor's
proposal to finance a Capital Addition, whether or not such financing is
actually consummated, Lessee shall have agreed to pay when due all reasonable
costs and expenses of Lessor paid or incurred by it in connection with the
financing of the Capital Addition, including, but not limited to, (a) the
reasonable fees and expenses of Lessor's counsel, (b) all photocopying expenses,
(c) the amount of any filing, registration and recording taxes and fees, if any,
(d) documentary stamp taxes, if any, (e) title insurance charges, appraisal
fees, if any, and rating agency fees, if any, and (f) commitment fees, in any.
9.4 Non-Capital Additions. Lessee shall have the right to make
alterations, additions, modifications or improvements to the Leased Property
which are not Capital Additions from time to time as it may deem to be desirable
or necessary for its uses and purposes, but in so doing, Lessee shall always
comply with and satisfy the conditions of Section 9.2.5. The cost of such
non-Capital Additions, alternations, modifications or improvements to the Leased
Property shall be paid by Lessee, and all such non-Capital Additions,
modifications and improvements shall, without payment by Lessor at any time, be
included under the terms of this Lease and become a part of the Leased Property
and upon expiration or earlier termination of this Lease shall pass to and
become the property of Lessor. Notwithstanding the foregoing, all such
alterations, additions, modifications and improvements which affect the
structure of the Facility, or which involve the expenditure of more than
$5,000,000 shall be undertaken only upon
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compliance with the provisions of Section 14.1.3 and all Legal Requirements and
all other requirements of this Lease (excluding, however, those provisions
relating to Lessor financing of Capital Additions). Lessor shall grant easements
for roads, utilities and rights of way as are reasonably necessary for any
Capital Addition or other work performed by Lessee under this Lease provided
that such easement shall not have a Material Adverse Effect on the Leased
Property or any portion thereof.
ARTICLE 10
WARRANTIES AND REPRESENTATIONS
10.1 Representations and Warranties. Lessee hereby represents and
warrants to, and covenants and agrees with, Lessor that, subject to the matters,
if any, set forth in Lessee's "Disclosure Statement" which is annexed hereto as
EXHIBIT E, and also subject to the materiality standards stated in Section
17.1(j) below as follows:
10.1.1 Existence; Power; Qualification. Lessee is a
corporation duly organized, validly existing and in good standing under the laws
of California. Lessee has all requisite corporate power to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted and is duly qualified to do business and is in good standing in each
jurisdiction (including the State) where such qualification is necessary or
desirable in order to carry out its business as now conducted and as proposed to
be conducted. As of the date of this Lease, Lessee does not have any
Subsidiaries and Lessee is not a member of any partnership or joint venture.
Subject to Section 20.4, Lessee is a wholly-owned Subsidiary of the Guarantor by
virtue of its being wholly-owned by an intermediary subsidiary which is, in
turn, wholly-owned by an intermediary subsidiary, which is a direct wholly-owned
Subsidiary of the Guarantor.
10.1.2 Valid and Binding. Lessee is duly authorized to make
and enter into all of the Lease Documents to which Lessee is a party and to
carry out the transactions contemplated therein. All of the Lease Documents to
which Lessee is a party have each been duly executed and delivered by Lessee,
and each is a legal, valid and binding obligation of Lessee, enforceable in
accordance with its terms.
10.1.3 Single Purpose. Lessee is, and during the entire time
that this Lease remains in force and effect shall be, engaged in no business,
trade or activity other than the operation of the Leased Property for the
Primary Intended Use and Other Permitted Uses.
10.1.4 No Violation. The execution, delivery and performance
of the Lease Documents and the consummation of the transactions thereby
contemplated will not, either (a) result in any breach of, or constitute a
default under, or result in the acceleration, or constitute an event which, with
notice or passage of time, or both, will result in default or acceleration of
any obligation of Lessee or the Guarantor under any of the Permits and Contracts
or any other contract, mortgage, lien, lease, agreement, instrument, franchise,
arbitration award, judgment, decree, bank loan or credit agreement,
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trust indenture or other instrument to which Lessee or the Guarantor is a party
or by which Lessee or the Guarantor may be bound or affected nor (b) violate or
contravene any Legal Requirements, restriction, order, judgment, writ decree or
injunction to which Lessee or the Guarantor is subject.
10.1.5 Consents and Approvals. No consent or approval or other
authorization of, or exemption by, or declaration or filing with, any Person and
no waiver of any right by any Person is required to authorize or permit, or is
otherwise required in connection with the execution, delivery and performance of
the Lease Documents, except (a) for those which have already been obtained or,
if not yet obtained, applied for (and will be received in due course) and (b) as
otherwise expressly contemplated by this Lease.
10.1.6 No Liens or Proceedings. There are no actions, suits,
investigations or proceedings including, without limitation, liens or
garnishments, pending or, to the best of Lessee's knowledge and belief,
threatened: (a) against or affecting Lessee, or the Guarantor, which if
adversely resolved against Lessee or the Guarantor, would adversely affect the
ability of any of the foregoing to perform their respective obligations under
the Lease Documents; (b) against or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession or operation thereof; or (c) which may involve or affect
the validity, priority or enforceability of any of the Lease Documents, at law
or in equity, or before or by any arbitrator or Governmental Authority.
10.1.7 No Burdensome Agreements. Neither Lessee or the
Guarantor is a party to any agreement the terms of which now adversely affect
or, as far as can be reasonably foreseen will adversely affect, its respective
financial condition or business or the operation of the Leased Property.
10.1.8 [Intentionally Omitted].
10.1.9 Adequate Capital, Not Insolvent. After giving effect to
the consummation of the transactions contemplated by the Lease Documents, Lessee
and the Guarantor each: (a) will be able to pay its debts as they become due;
(b) will have sufficient funds and capital to carry on its business as now
conducted or as contemplated to be conducted (in accordance with the terms of
the Lease Documents); (c) will own property having a value both at fair
valuation and at present fair saleable value greater than the amount required to
pay its debts as they become due; and (d) will not be rendered insolvent as
determined by applicable law.
10.1.10 Not Delinquent. Neither Lessee nor the Guarantor are
delinquent or claimed to be delinquent under any obligation for the payment of
borrowed money.
10.1.11 [Intentionally Omitted].
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10.1.12 Taxes Current. Lessee and the Guarantor have filed all
federal, state and local tax returns which are required to be filed as to which
extensions are not currently in effect and have paid all taxes, assessments,
impositions, fees and other governmental charges (including interest and
penalties) which have become due pursuant to such returns or pursuant to any
assessment or notice of tax claim or deficiency received by Lessee or the
Guarantor. No tax liability has been asserted by the Internal Revenue Service
against Lessee or the Guarantor or any other federal, state or local taxing
authority for taxes, assessments, impositions, fees or other governmental
charges (including interest or penalties thereon) in excess of those already
paid, except such taxes, assessments, charges, levies or claims where the
validity or amount thereof is currently being contested in good faith by
appropriate proceedings and Lessee or the Guarantor has set aside on its books
proper reserves (to the extent required by GAAP) adequate with respect thereto.
10.1.13 Financials and Projections Complete and Accurate. Each
of the financial statements of Lessee and of the Guarantor given, and to be
given, to Lessor in connection with the Lease fairly presented, and will fairly
present, the financial condition of Lessee and the Guarantor, as the case may
be, as of the date thereof and for the periods covered thereby, having been
prepared in accordance with GAAP. There has been no Material Adverse Change
since the date of the latest financial statements of Guarantor with respect to
the Tangible Net Worth of the Guarantor or with respect to any other matters
contained in the financial statements submitted to Lessor prior to the execution
of this Lease. The projected financial information furnished by the Lessee to
the Lessor for use in connection with the transactions contemplated by this
Lease and the other Lease Documents were prepared in good faith and are based on
the good faith estimates and assumptions of the management of Lessee and the
Guarantor and neither Lessee nor the Guarantor has any reason to believe that
such projections are not reasonable; it being recognized, however, that
projections as to future events are not to be viewed as fact and that the actual
results during the period or periods covered by any such projections probably
will differ from the projected results and that the difference may be material
and there has been no adverse change in the business, assets or condition,
financial or otherwise of Lessee or the guarantor since the submission of such
projected financial information.
10.1.14 No Investigations Pending. There are not actions or
investigations pending or, to the best knowledge and belief of Lessee,
threatened, anticipated or contemplated (nor, to the knowledge of Lessee, is
there any basis therefor) against or affecting Lessee, the Leased Property or
the Guarantor before any Governmental Authority, Accreditation Body or Third
Party Payor which could prevent or hinder the consummation of the transactions
which could prevent or hinder the consummation of the transactions contemplated
hereby or call into question the validity of any of the Lease Documents or any
action taken or to be taken in connection with the transactions contemplated
thereunder or which in any single case or in the aggregate will result in any
adverse change in the business, prospects, condition, affairs or operations of
Lessee, the Leased Property or the Guarantor, or any impairments of the right or
ability
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of Lessee of the Guarantor to carry on its operations as now conducted or
proposed to be conducted.
10.1.15 No Present Violations. Lessee and the Leased Property
and the ownership, construction, development, maintenance, management, repair,
use, occupancy, possession and operation thereof comply with all Legal
Requirements and there is no claim of any violation thereof known to Lessee.
10.1.16 [Intentionally Omitted].
10.1.17 No Action By Governmental Authority. There is no
action pending or, to the best knowledge and belief of Lessee, recommended, by
any Governmental Authority having jurisdiction thereof, either to revoke,
repeal, cancel, modify, withdraw or suspend any Permit or Contract relating to
the Leased Property, or any other action of any other type which could have an
adverse effect on the Leased Property.
10.1.18 No Condemnation. There is no Condemnation or similar
proceeding pending with respect to or affecting the Leased Property, and Lessee
is not aware, to the best of Lessee's knowledge and belief, that any such
proceeding is contemplated.
10.1.19 Rate Limitations. Except as disclosed on EXHIBIT F
attached hereto and incorporated herein by reference, the State currently
imposes no restrictions or limitations on rates which may be charged by Lessee
to private pay patients receiving services at the Facility.
10.1.20 [Intentionally Omitted].
10.1.21 [Intentionally Omitted].
10.1.22 ERISA. No employee pension benefit plan maintained by
Lessee or the Guarantor has any accumulated funding deficiency within the
meaning of the ERISA, nor does Lessee or the Guarantor have any liability to the
PBGC established under ERISA in connection with any employee pension benefit
plan (or other class of benefit which the PBGC has elected to insure), and there
have been no "reportable events" (not waived) or "prohibited transactions" with
respect to any such plan, as those terms are defined in Section 4043 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as now or hereafter
amended, respectively.
10.1.23 No Broker. Neither Lessee nor the Guarantor nor any of
their respective Affiliates have dealt with any broker or agent in connection
with this Lease.
10.1.24 No Improper Payments. Neither Lessee nor the Guarantor
or its Subsidiaries have: (a) made any contributions, payments or gifts of its
funds or
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property to or for the private use of any government official, employee, agent
or other Person where either the payment or the purpose of such contribution,
payment or gifts is illegal under the laws of the United States, any state
thereof or any other jurisdiction (foreign or domestic); (b) established or
maintained any unrecorded fund or asset for any purpose or has made any false or
artificial entries on any of its books or records for any reason; (c) made any
payments to any Person with the intention or understanding that any part of such
payment was to be used for any other purpose other than that described in the
documents supporting the payment; or (d) made any contribution, or has
reimbursed any political gift or contribution made by any other Person, to
candidates for public office, whether federal, state or local, where such
contribution is in violation of applicable law.
10.1.25 Nothing Omitted. The certificates, agreements,
statements including, without limitation, any financial statements concerning
the financial condition of Lessee or Guarantor, furnished to or to be furnished
to Lessor or its attorneys in connection with this Lease and the other Lease
Documents, taken as a whole, do not contain and will not contain any untrue
statement of a material fact, nor omit and will not omit to state any material
fact where such omission would have the effect of rendering any of the
statements contained herein and therein misleading. There is no fact within the
special knowledge of Lessee or the Guarantor which has not been disclosed herein
or in writing to Lessor that would have an adverse effect, now or in the future,
on the business, properties, assets or condition, financial or otherwise, of the
Guarantor, Lessee or the Leased Property.
10.1.26 No Margin Security. Lessee is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of the Total Purchase Price
will be used by the Lessee to purchase or carry any margin security or to extend
credit to others for the purpose of purchasing or carrying any margin security
or in any other manner which would involve a violation of any of the regulations
of the Board of Governors of the Federal Reserve System. Lessee is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
10.1.27 [Intentionally Omitted].
10.1.28 Principal Place of Business. The principal place of
business of Lessee is, and during the entire Term of this Lease will be, located
at St. Luke's Medical Center, 0000 Xxxx Xxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000, Attention: CEO, unless changed in the manner required by Section 12.5.7
below.
10.1.29 Permitted Encumbrances. None of the Permitted
Encumbrances has, or is likely to have an adverse impact upon, nor interfere
with or impede in any material respect, the operation of the Leased Property for
the Primary Intended Use.
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10.1.30 No Material Off-Site Functions. All building
facilities and other improvements necessary, both legally and practically, for
the proper and efficient operation of the Facility for the Primary Intended Use
are presently located on the Leased Property.
10.1.31 Accreditation. The Facility is accredited by the JCAHO
and there are not known deficiencies in either the Leased Property or any
services provided at the Facility that would prevent the extension of the
accreditation of the Facility by any of the immediately preceding named
Accreditation Bodies after their next regularly scheduled inspections.
10.1.32 Qualification for Services. Lessee or the Facility is
fully qualified as a provider of service under, and participates in, all Third
Party Payor Programs and referral programs as are necessary for the prudent
operation of the Facility in the good faith exercise of commercially reasonable
business judgment.
10.1.33 No Notices of Deficiencies. Neither Lessee nor the
Facility has received any outstanding notice of any claim, requirement or demand
of any Governmental Authority, Accreditation Body, Third Party Payor or any
insurance body having or claiming any licensing, certifying, supervising,
evaluating or accrediting authority over the Facility to rework or redesign the
Facility, its professional staff or its professional services, procedures and
practices in any material respect or to provide additional furniture, fixtures,
equipment or inventory so as to make the Facility conform to or comply with any
Legal Requirement.
10.1.34 No Labor Disputes. There are no proceedings now
pending, or to the best of Lessee's knowledge, threatened with respect to the
operation of the Facility before the National Labor Relations Board, State
Commission on Human Rights and Opportunities, State Department of Labor, U.S.
Department of Labor or any other Governmental Authority having jurisdiction of
employee rights with respect to hiring, tenure and conditions of employment, and
Lessee has not experienced any material controversy with its employees or with
any labor organization.
10.2 Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease (except for Sections
10.1.5, 10.1.9, 10.1.13, 10.1.15, 10.1.19, 10.1.23, 10.1.26, 10.1.29 and
10.1.30) shall constitute continuing representations and warranties which shall
remain true, correct and complete throughout the Term.
ARTICLE 11
ENVIRONMENTAL REPRESENTATIONS,
WARRANTIES AND INDEMNITY
11.1 Incorporation by Reference. Lessee and the Guarantor have executed
and delivered to Lessor an "Environmental Indemnity Agreement" dated as of even
date
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herewith. All of the representations, warranties, terms, provisions and
conditions set forth in the Environmental Indemnity are incorporated herein by
this reference and made a part hereof.
11.2 Compliance with Environmental Indemnity. Lessee covenants and
agrees that Lessee and Guarantor shall each pay, perform and observe all of the
obligations and conditions imposed upon either of them in the Environmental
Indemnity Agreement. Any amounts expended by any of the Indemnified Parties
under the Environmental Indemnity Agreement, and not reimbursed thereunder,
shall be repayable by Lessee upon demand as an Additional Charge hereunder.
11.3 Survival. The indemnity provisions set forth in the Environmental
Indemnity Agreement and incorporated herein by reference shall survive the
expiration or earlier termination of this Lease.
ARTICLE 12
FINANCIAL AND OTHER COVENANTS
12.1 Status Certificates. At any time and from time to time upon
Lessee's receipt of not less than ten (10) Business Days' prior 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 Section shall be addressed to such prospective
purchaser or mortgagee of the Leased Property as Lessor may request and may be
relied upon by Lessor and any such prospective purchaser or mortgagee of the -
Leased Property. Similarly, Lessor shall also provide to Lessee within ten (10)
Business Days after written request therefor from Lessee an Officer's
Certificate containing the statements set forth in the first sentence of this
Section and addressed as Lessee may request.
12.2 Financial Statements; Reports; Notice and Information.
12.2.1 Obligation To Furnish. Lessee will furnish and cause
Guarantor to furnish the following statements, information and other materials
to Lessor:
(a) Annual Statements of Lessee and the Guarantor.
Within one hundred (100) days after the end of each of its Fiscal Years, (i) a
copy of the Consolidated Financials for the Guarantor, for the preceding Fiscal
Year, certified and audited by Ernst & Young or some other so-called "Big Six"
accounting firm (or the then equivalent of the so-called "Big Six") (herein
called the "Designated CPA") and within one hundred thirty (130) days after the
end of its Fiscal Year, a financial statement of Lessee certified as true and
correct by Lessee, which financial statement shall include (i) a detailed
balance sheet for Lessee as of the last day of such Fiscal Year and a statement
of earnings from the Leased Property for such fiscal year showing, among other
things, all rents and other income therefrom and all expenses paid or incurred
in connection with
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the operation of the Leased Property), (ii) a statement certified as true and
correct by Lessee setting forth all Subleases of the Leased Property as of the
last day of such Fiscal Year, the respective areas demised thereunder, the names
of the Sublesssees thereunder, the respective expiration dates of the Subleases,
the respective rentals provided for therein, and such other information
pertaining to the Subleases as may be reasonably requested by Lessor, and (iii)
a statement certified as true and correct by Lessee setting forth all leases of
space located outside the Leased Property used in any way in connection with the
operation of the Facility, as of the last day of such Fiscal Year, which
statement shall also set forth the respective areas leased, the respective
expiration dates of such leases, respective rental rate provided for therein,
the use to which such rented space is being put, and such other information
pertaining to such leases as may be reasonably requested by Lessor, and (iv) an
annual inventory of Personal Property owned or leased by Lessee and used in
connection with the Facility together with a list of all security interests or
leases affecting the same. Simultaneously with the delivery of their respective
annual financial statements, each of Lessee and the Guarantor shall also deliver
statements certified as true and correct by Lessee and the Guarantor, as the
case may be, stating that to the best of the signer's knowledge and belief after
making due inquiry Lessee or the Guarantor, as the case may be, is not in
default in the performance or observance of any of the terms of this Lease or
the Guaranty, or the other Lease Documents, or if Lessee or the Guarantor, as
the case may be, shall be so in default to its knowledge, specifying all such
defaults, the nature thereof and the steps being taken to immediately remedy the
same.
(b) Monthly Statements of Lessee. Within forty (40)
days after the end of each calendar month during the Term of this Lease, an
unaudited balance sheet and detailed month and year to date income and expense
statement for the Facility which shall include a comparison to corresponding
budget figures and occupancy statistics prepared by Lessee in the ordinary
course in its business from time to time.
(c) Quarterly Statements of Lessee. Within sixty (60)
days after the end of each Fiscal Quarter, unaudited consolidated Financials for
Lessee certified as true and correct by Lessee, which shall also include: (i)
the calculation of Additional Rent for such Quarter; (ii) a schedule of all real
estate tax and insurance payments which became due during such Quarter and the
amounts paid in satisfaction of the same; (iii) commencing with the Fiscal
Quarter ending May 31, 1995, an express written calculation showing compliance
or non-compliance, as the case may be, with the specific financial covenants set
forth in Section 12.4; (iv) the work reports required by Section 8.1.1. for work
commenced during the relevant Quarter; and (v) copies of any and all real estate
leases or subleases which Lessee has entered into during the relevant Quarter.
(d) Quarterly Statements of Guarantor. Within sixty
(60) days after the end of each Fiscal Quarter, unaudited consolidated
Financials for Guarantor certified as true and correct by Guarantor, together
with evidence reasonably satisfactory to Lessor of compliance with all financial
covenants contained in the Principal Credit Agreement.
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(e) Permits and Contracts. Within fifteen (15)
Business Days after written request by Lessor, true and complete copies of all
Permits and material Contracts, including, without limitation, any Provider
Agreement with Medicaid, Medicare or any other Provider Agreements that provides
twenty-five percent (25%) or more of the Gross Revenues from patients of the
Facility, not previously delivered to Lessor.
(f) Contract Notices. Within fifteen (15) Business
Days after written request by Lessor (which shall specify in reasonable detail
the particular items being requested), true and complete copies of any notices,
consents, terminations or statements of any kind or nature having a material
impact on the operation of the Facility and relating to any of the Contracts
(other than those notices, consents or statements issued the ordinary course of
business), not previously delivered to Lessor.
(g) Surveys and Inspection Reports. Upon receipt
thereof, true and complete copies of all material health care-related surveys,
and inspection reports.
(h) Official Reports. Within fifteen (15) Business
Days after written request by Lessor (which shall specify in reasonable detail
the particular items being requested), completion or filing thereof, complete
copies of all applications, notices, statements, reports and other similar
reports and/or filings of any kind having a material impact on the operation of
the Facility provided by Lessee to any Governmental Authority, Accreditation
Body, Medicare, Medicaid or any Third Party Payor that provides twenty-five
percent (25%) or more of the Gross Revenues from Patients of the Facility.
(i) Other Financial Information. With reasonable
promptness, such other information respecting the financial condition and
affairs of Lessee, the Facility and the Guarantor as Lessor may reasonably
request from time to time, including, without limitation, copies of all notices,
demands, claims, bills and receipts in relation to the Impositions and insurance
premiums for the Leased Property received by Lessee or the Guarantor and copies
of any tax returns and other reports which Lessee has filed under Section 4.1.3.
(j) Default Conditions. As soon as possible, and in
the event within five (5) days after Lessee or Guarantor obtain knowledge of any
Event of Default under the Lease, or any event or state of facts which, with the
giving of notice or lapse of time, or both, will constitute an Event of Default,
a written statement of Lessee setting forth the details of such Event of
Default, event or state of fact and the action which Lessee has taken or
proposes to take with respect thereto.
(k) Official Actions. Promptly after the commencement
thereof, notice of all actions, suits and proceedings before any Governmental
Authority or Accreditation Body affecting Lessee or the Facility, which could
have a Material Adverse Effect on either Lessee or the Facility.
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(1) Audit Reports. Promptly after receipt, a copy of
all audits or reports submitted to Lessee by any independent public accountant
in connection with any annual, special or interim audits of the books of Lessee
and, if requested by Lessor, any letter of comments directed by such accountant
to the management of Lessee.
(m) Adverse Developments. Promptly after Lessee
acquires knowledge thereof, written notice of: (i) the potential termination of
any Permit or Provider Agreement necessary for the corporation of the Facility;
(ii) any loss, damage or destruction to or of the Leased Property in excess of
$100,000 regardless of whether the same is covered by insurance); (iii) any
material controversy with employees of Lessee or any controversy with any labor
organization; (iv) any controversy that calls into question the eligibility of
Lessee or the Facility for the participation in any Medicaid, Medicare, Arizona
Health Care Cost Containment System or other Third Party Payor Program that
provides twenty-five percent (25%) or more of the Gross Revenues from patients
of the Facility; (v) any refusal of reimbursement by Medicare, Medicaid or any
other Third Party Payor which singularly or together with all other such
refusals by Medicare, Medicaid or any other Third Party Payor constituting
twenty-five percent (25%) or more of the Gross Revenues from Patients of the
Facility could have a material adverse affect on the financial condition of
Lessee; and (vi) any other development which could have a Material Adverse
Effect on the condition, financial or otherwise of Lessee, or Guarantor, or of
the Leased Property.
(n) Line of Credit Default. Within three (3) Business
days after becoming aware of a claim by any Person that Lessee or the Guarantor
is in default of any line of credit arrangement for credit in excess of
$5,000,000, notice of any such claim of default.
(o) Stockholder Materials. Simultaneously with
mailing to any stockholders the Guarantor, copies of all materials distributed
to stockholders, including without limitation, any 10K or 10Q report.
12.2.2 Responsible Officer. Any certificate, instrument,
notice, or other document to be provided to Lessor hereunder by Lessee or
Guarantor shall be signed by an executive officer of Lessee or Guarantor, as the
case may be, having a position of Vice President or higher, and with respect to
financial matters, any such certificate, instrument, notice or other document
shall be signed by the chief financial officer or treasurer of such Person.
12.2.3 No Material Omission. No certificate, instrument, notice
or other document, including without limitation, any financial statements
furnished by Lessee pursuant to the terms hereunder shall contain any untrue
statements of a material fact or shall omit to state any material fact necessary
in order to prevent all statements contained therein from being misleading.
12.2.4 Confidentiality. Lessor shall afford any information
received pursuant to this Section the same degree of confidentiality that Lessor
affords similar
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information to any Competitor of Lessee or any Affiliate of any such
Competitor. Further Lessor will use reasonable efforts to notify any recipients
of such information proprietary to Lessor and specifically agrees that it will
not deliver any such information to any Competitor of Lessee or any Affiliate of
any such Competitor. Further, Lessor will use reasonable efforts to notify any
recipients of such information from Lessor to observe the same standards of
confidentiality and, except with respect to the banks insurance companies and
other Persons utilized by Lessor or Meditrust as a financing source, to obtain
confidentiality agreements from such parties prior to delivery of any
information. However, Lessor does not in any way warrant or represent that such
information received from Lessee or the Guarantor shall remain confidential and
Lessor shall have the unconditional right to disclose as necessary any such
information: (a) in the event Lessor sells, transfer, conveys or participates
any interest in or assigns the Lease or the Leased Property (except to a
Competitor or any Affiliate of any such Competitor), or (b) in connection with
the enforcement of any of the rights and remedies of Lessor under this Lease or
the other Lease Documents. Without limiting the foregoing, Lessor may also
utilize any information furnished to it hereunder as and to the extent (i)
counsel to Lessor determines that such utilization is necessary pursuant to 15
U.S.C. 77a-77aa or 15 U.S.C. 78a-78jj and the rules and regulations promulgated
thereunder, and (ii) Lessor is required by any Governmental Authority to
disclose any such information.
12.3 Annual Budgets. Within forty-five (45) days after the end of each
Fiscal Year, Lessee shall submit to Lessor a proposed financial and capital
expenditures budget for the Leased Property for the next Fiscal Year.
12.4 Financial Covenants. So long as the Lease Term continues or Lessee
is in possession of all or any portion of the Leased Property, Lessee covenants
and agrees that:
12.4.1 Debt Coverage Ratio of Lessee. Lessee shall maintain for
each Fiscal Quarter a Debt Coverage Ratio equal to or greater than 1.5:1 for the
Rolling Period relating to such Fiscal Quarter.
12.4.2 Compliance with Other Financial Covenants. Lessee and
the Guarantor shall continuously satisfy any and all financial covenants
specified in the Credit, Security, and Pledge Agreement, dated as of April 19,
1994, among CrNda HealthCorp, Summit Health, Ltd. and AHM Acquisition Co., Inc.,
as the Borrowers, and various Guarantors named therein, and the Bank of Nova
Scotia as Administrative Agent for the various Lenders named therein, together
with all successor, replacement, modification and amendment agreements thereto
(the "Principal Credit Agreement"), as the same may be amended or waived by the
Lenders under the Principal Credit Agreement from time to time.
12.4.3 No Guaranties. At no time shall Lessee assume,
guarantee, endorse, contingently agree to purchase or otherwise become directly
or contingently liable (including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise to invest in any debtor or otherwise to assure
any creditor against loss) in connection with any
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Indebtedness of any other Person, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business or by virtue of so-called "physician support agreements"
given to induce physicians to practice at or in conjunction with the Facility or
such guaranties as Lessee may be required to give under the Principal Credit
Agreement.
12.4.4 No Indebtedness. Lessee shall not create, incur, assume
or suffer to exist any liability for borrowed money except (a) indebtedness to
Lessor under the Lease Documents, (b) Impositions allowed pursuant hereto, (c)
unsecured normal trade debt incurred in the ordinary course of business, (d)
Permitted Prior Security Interests in Personal Property, (e) indebtedness to the
Guarantor or any Affiliate of the Guarantor or Lessee, (f) indebtedness incurred
to construct a Capital Addition which is not financed by Lessor after Lessee's
compliance with provisions of Section 9.2.2, 9.2.3 and 9.2.4 above, and (g) any
secured indebtedness which is non-recourse to Lessee.
12.5 Affirmative Covenants. So long as the Lease Term continues or
Lessee is in possession of all or any portion of the Leased Property, Lessee
covenants and agrees that:
12.5.1 Maintenance of Existence. If Lessee is a corporation,
trust or partnership, during the entire time that this Lease remains in full
force and effect, Lessee shall keep in effect its existence and rights as a
corporation, trust or partnership under the laws of the state of its
incorporation or formation and its right to own property and transact business
in the State.
12.5.2 Materials. Except as provided in Section 6.1.2 with
respect to Lessee's Personal Property, Lessee shall not suffer the use in
connection with any renovations or other construction relating to the Facility
of any materials, fixtures or equipment intended to become part of the Facility
which are purchased upon lease or conditional xxxx of sale or to which Lessee
does not have absolute and unencumbered title, and Lessee covenants to cause to
be paid punctually all sums becoming due for labor, materials, fixtures or
equipment used or purchased in connection with any such renovations or
construction, subject to Lessee's right to contest to the extent provided for in
Article 16.
12.5.3 Compliance With Legal and Insurance Requirements And
Other Matters. Lessee and the Leased Property and all uses thereof shall comply
in All Material Respects with (i) all Legal Requirements, (ii) all Permits and
Contracts, (iii) all Insurance Requirements, (iv) the Lease Documents and (v)
the Permitted Encumbrances.
12.5.4 Books And Records. Lessee and Guarantor (but only to
the extent particular balances relating to Lessee or the Leased Property are
kept solely on the books of the Guarantor) shall cause to be kept and
maintained, and shall permit Lessor and its representatives to inspect at all
reasonable times with prior reasonable notice, accurate books of accounts in
accordance with GAAP reflecting all financial transactions
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of Lessee (showing, without limitation, all materials ordered and received and
all disbursements, accounts payable and accounts receivable in connection with
the operation of the Leased Property).
12.5.5 Participation in Third Party Payor Programs. Lessee
shall participate in and shall continue to remain eligible to participate in,
all Third Party Payor Programs, all as shall be necessary for the prudent
operation of the Facility in the good faith exercise of commercially reasonable
business judgment.
12.5.6 Conduct of its Business. Lessee will maintain, and cause
any Manager to maintain, experienced and competent professional senior
management with respect to its business and with respect to the Leased Property.
12.5.7 Address. Lessee shall provide Lessor thirty (30) days'
prior written notice of any change of its Principal Place of Business from its
current Principal Place of Business. Lessee shall maintain records relating to
its business and the collateral for the Obligations solely at its Principal
Place of Business and at the Leased Property, or at such ether locations that
Lessee typically stores files (provided Lessor is made aware of such storage
location).
12.5.8 Inspection. At reasonable times and upon reasonable
notice Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property as provided in Section 7.1 above, but such inspection shall
at all times be conducted so as not to interfere with the professional or
clinical operations at the Facility.
12.6 Additional Negative Covenants. So long as the Term continues or
Lessee is in possession of all or any portion of the Leased Property, Lessee
covenants and agrees that:
12.6.1 Restrictions. Except as may otherwise be expressly
provided herein or in any of the other Lease Documents, Lessee shall not,
without the prior written consent of Lessor, in each instance, which consent may
be withheld in the sole and absolute discretion of Lessor: (a) convey, assign,
hypothecate, transfer, dispose of or encumber, or permit the conveyance,
assignment, transfer, hypothecation, disposal or encumbrance of all or any part
of any legal or beneficial interest in the Leased Property except for subleases
made in accordance with the other provisions of this Lease); (b) dispose of or
delegate any right to manage or receive any of the Gross Revenues in violation
of any of the Lease Documents; (c) (i) collect funds as consideration or deposit
for the occupancy or leasing of any portion of the Leased Property or collect
any of the Gross Revenues in excess of three (3) months in advance, without
forthwith depositing the same with Lessor in a special account or (ii) withdraw
or disburse any such funds except for sums attributable to the current month or
upon a default or in accordance with the applicable Contract.
12.6.2 No Liens. Lessee will not directly or indirectly create
or allow to remain and will promptly discharge at its expense any lien,
encumbrance, attachment,
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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 and any permitted Subleases, (b) the matters, if any, set forth in
EXHIBIT B, (c) restrictions, liens and other encumbrances which are consented to
in writing by Lessor, (d) liens for those taxes of Lessor which Lessee is not
required to pay hereunder, (e) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either not yet due or being contested in strict
compliance with the terms and conditions of Article 16 below, (f) any liens
which are the responsibility of Lessor pursuant to the provisions of Article 36
of this Lease, and (g) liens for Impositions which either are not yet due and
payable or are being contested in strict compliance with the terms and
conditions of Article 16 below.
12.6.3 Agreement Not Assignable. Lessee shall not suffer any
attachment, whether by trustee process or otherwise, to be made or attempted
against Lessee's interest in, to or under this Lease or any of the other Lease
Documents, or its rights in the Leased Property, or in or to any payment,
advance or other sums hereunder or thereunder, and, except for any permitted
subleases or assignments as provided in Article 20 below, shall not, without the
prior written consent of Lessor in each instance, which consent may be withheld
in Lessor's sole and absolute discretion, assign or transfer any of the same, or
any interest therein. Any such assignment or transfer made without Lessor's
consent shall be void and of no force or effect.
12.6.4 [Intentionally Omitted].
12.6.5 Forgiveness of Indebtedness. Lessee will not waive, or
permit any Manager which is a Subsidiary of Lessee to waive, any debt or claim,
except in the ordinary course of its business.
12.6.6 [Intentionally Omitted].
12.6.7 Changes in Fiscal Year and Accounting Procedures. Lessee
shall not, without the prior written consent of Lessor, in each instance, which
consent may be withheld in Lessor's reasonable discretion (a) change its fiscal
year (except if required by law or regulation or if such change is being
effected by company-wide basis for the Guarantor and all of its Subsidiaries
provided that such company-wide change shall not have the effect of reducing any
Additional Rent which would otherwise have been paid but for such change in
fiscal year) or (b) change, alter, amend or in any manner modify except in
accordance with GAAP any of its current accounting procedures related to the
method of revenue recognition, billing procedures or determinations of doubtful
accounts or bad debt expenses nor will Lessee permit any of its Subsidiaries to
change its fiscal year or suffer or permit any circumstance to exist in which
any Subsidiary is not controlled, directly or indirectly by Lessee.
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ARTICLE 13
INSURANCE AND INDEMNITY
13.1 General Insurance Requirements. During the Term of this Lease and
thereafter until Lessee yields-up the Leased Property in the manner required by
this Lease, Lessee shall at its sole cost and expense keep the Leased Property,
the Personal Property located thereon and the business operations conducted
thereon insured as set forth below.
13.1.1 Types and Amounts of Insurance. Lessee's insurance
shall include the following:
(a) property loss and physical damage insurance on an all-risk
basis (with only such exceptions as Lessor may in its reasonable discretion
approve) covering the Leased Property (exclusive of Land) for its full
replacement cost, with an agreed-amount endorsement and a deductible not in
excess of $200,000 including, without limitation, coverage for increased cost of
construction, cost of demolition, the value of the undamaged portion of the
Facility, contingent liability from the operation of building laws and soft
costs. During any period of construction, such insurance shall, if necessary, be
on a builder's-risk, completed value, non-reporting form with permission to
occupy;
(b) flood insurance (if the Leased Property or any portion
thereof is situated in an area which is considered a flood risk area by the U.S.
Department of Housing and Urban Development: in limits reasonably acceptable to
Lessor;
(c) boiler and machinery insurance (providing coverage against
loss or damage caused by explosion of steam boilers, pressure vessels or similar
vessels, now or hereafter installed on the Leased Property) in limits reasonably
acceptable to Lessor;
(d) earthquake insurance (if deemed necessary by Lessor in
limits and with deductibles reasonably acceptable to Lessor;
(e) environmental impairment liability insurance (if
available) in limits and with deductibles reasonably acceptable to Lessor;
(f) business interruption insurance in an amount equal to
twelve (12) months of Rent due under this Lease;
(g) comprehensive general public liability insurance including
coverages commonly found in the Broad Form Commercial Liability Endorsements
with amounts not less than TWENTY-FIVE MILLION DOLLARS ($25,000,000) per
occurrence with respect to bodily injury and death and TWENTY-FIVE MILLION
DOLLARS ($25,000,000) for property damage with a deductible or self-insurance
retention of not more than THREE MILLION DOLLARS ($3,000,000) (except as the
self-insurance retention may be increased as provided in Section 13.1.10 below),
or such
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higher limits as Lessor may from time to time reasonably require during the Term
of this Lease so as to render such coverage comparable to those in place for
other operators of similar facilities;
(h) malpractice insurance in an amount not less than
TWENTY-FIVE MILLION DOLLARS ($25,000,000) for each medical incident with a
deductible or self-insurance retention of not more than THREE MILLION DOLLARS
($3,000,000) (except as the self-insurance retention may be increased as
provided in Section 13.1.10 below), or such higher limits as Lessor may from
time to time reasonably require during the Term of this Lease so as to render
such coverage comparable to those in place for other operators of similar
facilities;
(i) physical damage insurance on an all-risk basis (with only
such exceptions as Lessor in its reasonable discretion shall approve) covering
Lessee's Tangible Personal Property for the full replacement cost thereof and
with a deductible not in excess of 1% of the full replacement cost thereof;
(j) Workers' Compensation and Employers' Liability Insurance
providing protection against all claims arising out of injuries to all employees
of Lessee or of a sub-lessee (employed on the Leased Property or any portion
thereof) in amounts equal for Workers' Compensation, to the statutory benefits
payable to employees in the State and for Employers' Liability, to limits of not
less than ONE HUNDRED THOUSAND DOLLARS ($100,000) for injury by accident, ONE
HUNDRED THOUSAND DOLLARS ($100,000) per employee for disease and FIVE HUNDRED
THOUSAND DOLLARS ($500,000) disease policy limit; and
(k) such other insurance as Lessor from time to time may
reasonably require and also, as may from time to time be required by applicable
Legal Requirements.
13.1.2 Insurance Company Requirements. All such insurance
required by this Lease or the other Lease Documents shall be issued and
underwritten by insurance companies licensed to do business in the State or
authorized to do business in the State through licensed brokers and which
companies have and maintain a rating of A- :XII or better by A.M. Best Co.
13.1.3 Policy Requirements. Every policy of insurance from
time to time required under this Lease or the other Lease Documents shall name
Lessor as owner of the Leased Property, loss payee, and additional insured as
its interests may appear. If an insurance policy covers properties other than
the Leased Property, then Lessor shall be so named with respect only to the
Leased Property. Each such policy, where applicable or appropriate, shall:
(a) include an agreed amount endorsement and a loss
payee, additional insured, secured party or other endorsements, in forms
reasonably acceptable to Lessor;
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(b) include a mortgagee, secured party, loss payable
and additional insured endorsement acceptable to each Fee Mortgagee;
(c) provide that the coverages may not be cancelled
or except upon thirty (30) days' prior written notice to Lessor and any Fee
Mortgagee;
(d) be payable to Lessor or any Fee Mortgagee
notwithstanding any defense or claim that the insurer may have to the payment of
the same against any other Person holding any other interest in the Leased
Property;
(e) be endorsed with standard noncontributory clauses
in favor of and in form reasonably acceptable to Lessor and any Fee Mortgagee;
(f) expressly waive any right of subrogation on the
part of the insurer against Lessor, any Fee Mortgagee or Lessee; and
(g) otherwise be in such forms as shall be acceptable
to Lessor, in its reasonable discretion.
13.1.4 Notices; Certificates and Policies. Lessee shall
promptly provide to Lessor copies of any and all notices (including notice of
non-renewal), claims and demands which Lessee receives from insurers of the
Leased Property. At least ten (10) days prior to the expiration of any insurance
policy required hereunder, Lessee shall deliver to Lessor certificates and
evidence of insurance relating to all renewals and replacements thereof,
together with evidence, satisfactory to Lessor, of payment of the premiums
thereon. Lessee shall deliver to Lessor original counterparts copies certified
by the insurance company to be true and complete copies, of all insurance
policies required hereunder within ten (10) days after receipt thereof by
Lessee. Further, Lessee shall not materially modify any coverages required above
without at least thirty (30) days prior written notice to Lessor.
13.1.5 Lessor's Right to Place Insurance. If Lessee shall fail
to obtain any insurance policy required hereunder by Lessor, or shall fail to
deliver the certificate and evidence of insurance relating to any such policy to
Lessor, or if any insurance policy required hereunder, or any part thereof,
shall expire or be cancelled or become void or voidable by reason of Lessee's
breach of any condition thereof, or if Lessor determines that such insurance
coverage is unsatisfactory by reason of the failure or impairment of the capital
of any insurance company which wrote any such policy, upon demand by Lessor,
Lessee shall promptly obtain new or additional insurance coverage on the Leased
Property, or for those risks required to be insured by the provisions hereof,
satisfactory to Lessor, and, at its option, Lessor may obtain such insurance and
pay the premium or premiums therefor, in which event any amount so paid or
advanced by Lessor and all costs and expenses incurred in connection therewith
(including, without limitation, attorneys' fees and expenses and court costs),
with interest thereon at the Overdue Rate, and shall be a demand obligation of
Lessee to Lessor payable as an Additional Charge.
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13.1.6 Payment of Proceeds. All insurance policies required
hereunder (except for general public liability, malpractice, workers'
compensation and employers liability insurance) shall provide that in the event
of loss, injury or damage, subject to the rights of any Fee Mortgagee, all
proceeds shall be paid to Lessor alone (rather than jointly to Lessee and
Lessor), except that insurance proceeds relating to damage to Personal Property,
business interruption insurance in excess of twelve (12) months Base Rent and
Additional Rent or payments for casualty damage to the Leased Property in an
amount where the total payment for such casualty damage claim is less than FIVE
HUNDRED THOUSAND DOLLARS ($500,000) shall be paid directly to Lessee rather than
Lessor provided there exists no Event of Default hereunder and Lessee has not
received any notice regarding any event or state of facts which, with the
passage of time, would constitute an Event of Default if not cured by Lessee,
and Lessee has not yet effected such cure. Lessor is hereby authorized to adjust
and compromise any such loss with the consent of Lessee or, following any Event
of Default, whether or not cured, without the consent of Lessee, and to collect
and receive such proceeds in the name of Lessor and Lessee, and Lessee appoints
Lessor (or any agent designated by Lessor) as Lessee's attorney-in-fact with
full power of substitution, to endorse Lessee's name upon any check in payment
thereof. Subject to the provisions of Sections 14.1 and 14.2 hereof, such
insurance proceeds shall be applied first toward reimbursement of all costs and
expenses of Lessor in collecting said insurance proceeds, then toward payment of
the Obligations or any portion thereof, then due and payable, in such order as
Lessor determines, and then in whole or in part toward restoration, repair or
reconstruction of the Leased Property for which such insurance proceeds shall
have been paid.
13.1.7 Irrevocable Power of Attorney. The power of attorney
conferred on Lessor pursuant to the provisions of Section 13.1.6 is coupled with
an interest, shall be irrevocable for so long as this Lease is in effect or any
Obligations arising under any of the Lease Documents, and shall survive and not
be affected by any disability or incapacity which Lessee may suffer. Such power
of attorney is provided solely to protect the interests of Lessor and shall not
impose any duty on Lessor to exercise any such power, and neither Lessor nor
such attorney-in-fact shall be liable for any act, omission, error in judgment
or mistake of law, except as the same may result from its gross negligence or
willful misconduct.
13.1.8 Blanket Policies. Notwithstanding anything to the
contrary contained herein, 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 the Guarantor and its
Affiliates; provided, however, that the coverage afforded to Lessor shall not be
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all other requirements of this Lease by reason
of the use of such blanket policy of insurance, and provided further that the
requirements of this Section 13.1.8 are otherwise satisfied.
13.1.9 No Separate Insurance. Lessee shall not, on Lessee's
own initiative or pursuant to the request or requirement of any other Person,
take out separate insurance concurrent in form or contributing in the event of
loss with the insurance required
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pursuant to Section 13.1.1 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 Lessor, 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 insurance
policy or policies.
13.1.10 Self-Insurance Retention. Notwithstanding the
foregoing, Lessee may satisfy the insurance requirements of Section 13.1.1 by
participating in the program of insurance in which Lessee, the Guarantor and the
Affiliates of Lessee and the Guarantor participate in a self-insurance retention
pool of not more than two dollars ($2) per occurrence for each $1,000 of Gross
Revenues of the Guarantor and twenty dollars ($20) in the aggregate for each
$1,000 of Gross Revenues of the Guarantor, as the Guarantor's Gross Revenues are
set forth in the Consolidated Financial Statements of the Guarantor (or any pro
forma combined audited financial statements provided thereafter by Lessee or the
Guarantor). However, insurance coverages complying with the requirements
specified herein shall be maintained for all amounts in excess of the
self-insurance retention.
13.2 Indemnity.
13.2.1 Indemnification. Except with respect to the gross
negligence or willful misconduct of Lessor, as to which no indemnity is
provided, Lessee hereby agrees to defend with counsel acceptable to Lessor,
indemnify and hold harmless Lessor and each of the other Indemnified Parties
(defined below in Section 13.2.2) from and against all damages, losses, claims,
liabilities, obligations, penalties, causes of action, costs and expenses
(including, without limitation, attorneys' fees, court costs and other expenses
of litigation, but excluding any indirect or consequential damages) suffered by,
or claimed or asserted against, Lessor or any of the other Indemnified Parties
directly or indirectly, at any time after the Fixed Term Commencement Date based
on, arising out of or resulting from: (a) Lessor's ownership of the Leased
Property or the use and occupancy of the Leased Property or any business
conducted therein, (b) any act, fault, omission to act or misconduct by Lessee,
or any Affiliate of Lessee, or any employee, agent, licensee, business invitee,
guest, customer, contractor or sublessee of Lessee or any Affiliate of Lessee
during the Term of the Lease, (c) any accident, injury or damage whatsoever
caused to any Person during the Term of the Lease, including without limitation
any claim of malpractice, or to the property of any Person in or about the
Leased Property or outside of the Leased Property where such accident, injury or
damage results or is claimed to have resulted from any act, fault, omission to
act or misconduct by Lessee, or any Affiliate of Lessee, or any employee, agent,
licensee, contractor or sublessee of Lessee or any Affiliate of Lessee, or (d)
any breach by Lessee or by any Affiliate of Lessee in the performance or
observance of the terms, covenants or provisions of this Lease and each of the
other Lease Documents. Any amounts which become payable by Lessee under this
Section 13.2.1 shall be paid as an Additional Charge within ten (10)
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days after liability therefor on the part of Lessor is demanded, 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 demand to the date of payment. All claims for
indemnification under this Lease shall be asserted and resolved as follows:
(i) If any claim or demand for which Lessee would be
liable to a Person claiming indemnification (an "Indemnified Party") is asserted
against or sought to be collected from the Indemnified Party (a "Claim"), the
Indemnified Party shall deliver a "Notice" (herein so called) with reasonable
promptness to Lessee. Lessee will notify the Indemnified Party within ten (10)
days after receipt of the Notice (the "Notice Period") whether Lessee accepts
liability for the Claim or disputes its obligation to indemnify the Indemnified
Party hereunder. If Lessee does not notify the Indemnified Party within the
Notice Period that Lessee disputes its obligation, the Claim will be
conclusively deemed a liability of Lessee hereunder. The assumption by Lessee of
the defense of the Claim constitutes an admission by Lessee that the Claim is
one for which Lessee is ultimately liable under this paragraph.
(ii) If Lessee timely notifies the Indemnified Party
that Lessee accepts liability for the Claim, then Lessee will have the right to
defend with counsel at all times reasonably acceptable to Lessor, at Lessee's
sole cost and expense, any Claim by all appropriate proceedings, which
proceedings will be diligently prosecuted by Lessee to a final conclusion or
settled at the discretion of Lessee (with the consent of the Indemnified Party).
(iii) If Lessee fails to notify the Indemnified Party
within the Notice Period that Lessee accepts liability for a Claim, or if Lessee
gives such notice but fails to diligently prosecute or settle the Claim, or
Lessee fails to give any notice whatsoever within the Notice Period, then the
Indemnified Party will have the right (but not the obligation) to defend, at the
sole cost and expense of Lessee, the Claim by all appropriate proceedings, which
proceedings will be diligently prosecuted by the Indemnified Party to a final
conclusion or settled at the discretion of the Indemnified Party.
(iv) If Lessee notifies the Indemnified Party within
the Notice Period that Lessee disputes its obligation to indemnify the
Indemnified Party against a Claim, Lessee and the Indemnified Party shall
proceed in good faith to negotiate a resolution of such dispute within sixty
(60) days following receipt of the Notice. If such dispute is resolved, whether
or not by negotiation, in favor of Lessee, Lessee will not be required to bear
the costs and expenses of the Indemnified Party's defense.
(v) Lessee shall pay the amount of any liability to
the Indemnified Party within ten (10) days following the earlier of (A) the date
on which such liability is finally determined by a court of competent
jurisdiction subject to no further appeals agreed upon in settlement, or, (B)
the date on which the Indemnified Party is otherwise required to make payment on
such liability. In the event the Indemnified Party is not paid in full for its
claim a timely manner after Lessee's obligation to
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indemnify and the amount thereof has been determined with this paragraph, the
amount due shall bear interest from the date that Lessee received the Notice
until paid at the Overdue Rate.
(vi) Any estimated amount of a Claim submitted in a
Notice shall not be conclusive of the final amount of such Claim.
13.2.2 Indemnified Parties. As used in this Lease the term
"Indemnified Parties" shall mean Lessor; any Fee Mortgagee; and their respective
successors and assigns and the respective employees, servants, agents,
attorneys, officers, directors, shareholders, partners and owners thereof and
their respective Affiliates. The indemnity provided for in Section 13.2 shall
survive any termination of this Lease.
13.2.3 Limitation on Lessor Liability. Neither Lessor nor any
Affiliate of Lessor shall be liable to Lessee or any Affiliate of Lessee, or to
any other Person whatsoever for any damage, injury, loss, compensation, or claim
(including, but not limited to, any claim for the interruption of or loss to any
business conducted on the Leased Property) based on, arising out of or resulting
from any cause whatsoever (excluding any such damage, injury, loss, compensation
or claim, any default (beyond any applicable notice and grace periods) of Lessor
under this Lease), including, but not limited to, the following: (a) repairs to
any portion or all of the Leased Property; (b) interruption in use of all or any
portion of the Leased Property; (c) any accident or damage resulting from the
use or operation of all or any portion of the Leased Property or any business
conducted thereon; (d) the termination of this Lease by reason of casualty or
condemnation; (e) any fire, theft or other casualty or crime; (f) the actions,
omissions or misconduct of any other Person; (g) damage to any property; or (h)
any damage from the flow or leaking of water, rain or snow. All Personal
Property of Lessee or any other Person on the Leased Property shall be at the
sole risk of Lessee and Lessor shall not in any manner be held responsible
therefor. Notwithstanding the foregoing, Lessor shall not be released from
liability for any injury, loss, damage or liability suffered directly by Lessee
to the extent caused directly by the gross negligence or willful misconduct of
Lessor, its servants employees or agents acting within the scope of their
authority on or about the Leased Property or in regards to the Lease; provided,
however, that in no event shall Lessor, its servants, employees or agents have
any liability based on any loss with respect to or interruption in the operation
of any business at the Leased Property or for any indirect or consequential
damages.
13.2.4 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, levies or executions is assumed by Lessee and, in the absence of
the gross negligence or willful misconduct as set forth in Section 13.2.3,
Lessor shall in no event be answerable or accountable therefor (except for the
obligation to account for insurance proceeds and Awards to the extent provided
for in Articles 14 and 15) nor shall any of the events mentioned in this Section
entitle Lessee to
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any abatement of Rent (except for an abatement, if any, as specifically provided
for in Sections 3.2.1 and 3.7).
ARTICLE 14
FIRE AND CASUALTY
14.1 Restoration Following Fire or Other Casualty.
14.1.1 Following Fire or Casualty. In the event of any damage
or destruction to the Leased Property by reason of fire or other hazard or
casualty, Lessee shall proceed with reasonable diligence to perform such
repairs, replacement and reconstruction work (hereinafter referred to as the
"Work") to restore the Leased Property to the condition it was in immediately
prior to such damage or destruction and to a condition adequate to operate the
Facility for its Primary Intended Use and in compliance with Legal Requirements.
All Work shall be performed and completed in accordance with all Legal
Requirements and the other requirements of this Lease. Such Work shall be
commenced as promptly as reasonably practicable after the occurrence of the
damage or destruction in question and shall be diligently prosecuted by Lessee
and completed as soon as reasonably practicable, but no event later than twenty
four (24) months after the occurrence of the damage or destruction in question.
In the event the damage or destruction to the Leased Property by reason of fire
or other hazard or casualty exceeds One Hundred Thousand Dollars ($100,000), as
determined by Lessee at its reasonable discretion, Lessee shall immediately give
written notice of such damage or destruction to Lessor.
14.1.2 Procedures. In the event that such casualty results in
damage or destruction to the Leased Property in excess of FIVE HUNDRED THOUSAND
DOLLARS ($500,000), prior to commencing the Work, Lessee shall comply with the
following requirements unless exigent circumstances require Lessee to perform
some or all of the Work (in which case Lessee shall promptly notify Lessor of
any such Work performed):
(a) Lessee shall furnish to Lessor complete plans and
specifications for the Work (hereinafter referred to as the "Plans and
Specifications"), for Lessor's approval, in each instance, which approval may be
withheld in Lessor's reasonable discretion. The Plans and Specifications shall
bear the signed approval thereof by an architect, licensed to do business in the
state where the Leased Property is located, satisfactory to Lessor and shall be
accompanied by a written estimate from the architect, bearing the architect's
seal, of the entire cost of completing the Work, and to the extent feasible, the
Plans and Specifications shall provide for Work of such nature, quality and
extent, that, upon the completion thereof, the Leased Property shall be at least
equal in value and general utility to its value and general utility prior to the
damage or destruction or Taking and shall be adequate to operate the Facility
for the Primary Intended Use;
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(b) Lessee shall furnish to Lessor certified or
photostatic copies of all Permits and Contracts required by all applicable Legal
Requirements in connection with the commencement and conduct of the Work;
(c) [Intentionally Omitted];
(d) Lessee shall furnish to Lessor such insurance
with respect to the Work (in addition to the insurance required under Section
13.1 hereof) in such amounts and in such forms as is required by Lessee in its
reasonable discretion; and
(e) Lessee shall not commence any of the Work until
Lessee shall have complied with the requirements set forth in clauses (a)
through (d) immediately above, as applicable, and thereafter Lessee shall
perform the Work diligently, in a good and workmanlike fashion and in good faith
in accordance with (i) the Plans and Specifications referred to clause (a)
immediately above, (ii) the Permits and Contracts referred to in clause (b)
immediately above and (iii) all applicable Legal Requirements and other
applicable requirements of this Lease.
14.1.3 Disbursement of Insurance Proceeds Less Than $500.000.
In the event of any loss or damage to the Leased Property which, in the
aggregate, does not exceed $500,000 (determined by Lessor in its reasonable
discretion), all proceeds relating thereto shall be paid to Lessee in a lump sum
to defray the cost of the repair or restoration needed to respond to such loss
or damage, provided that (a) there does not exist an Event of Default under this
Lease and (b) Lessee has received no notice regarding an event or state of facts
which, with the passage of time, would constitute an Event of Default if not
cured by Lessee, and Lessee has not yet effected such cure.
14.1.4 Disbursement of Insurance Proceed. $500000 or More.
With respect to any loss or damage in excess of $500,000, if Lessor is required
to apply any property insurance proceeds toward repair or restoration of the
Leased Property as provided in Section 14.2, then as long as the Work is being
diligently performed by Lessee in accordance with the terms and conditions of
this Lease, Lessor shall disburse such insurance proceeds from time to time
during the course of the Work in accordance with and subject to satisfaction of
the following provisions and conditions. Lessor shall not be required to make
disbursements more often than at thirty (30) day intervals. Lessee shall submit
a written request for each disbursement at least ten (10) Business Days in
advance and shall comply with the following requirements in connection with each
disbursement.
(a) Prior to the commencement of any Work, Lessee
shall have received Lessor's written approval of the Plans and Specifications
and the Work shall be supervised by an experienced construction manager with the
consultation of an architect or engineer qualified and licensed to do business
in the State;
(b) Each request for payment shall be accompanied by
(i) a certificate of the architect or engineer, bearing the architect's or
engineer's seal, and (ii) a
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certificate of the general contractor, qualified and licensed to do business in
the State (collectively, the "Work Certificates"), each dated not more than ten
(10) days prior to the application for withdrawal of funds, and each stating:
(A) that all of the Work performed as of the
date of the certificates has been completed in compliance with the approved
Plans and Specifications and applicable Contract and all applicable Legal
Requirements;
(B) that the sum then requested to be
withdrawn has been paid by Lessee or is justly due to contractors,
subcontractors, materialmen, engineers, architects or other Persons, whose names
and addresses shall be stated therein, who have rendered or furnished certain
services or materials for the Work, and the certificate shall also include a
brief description of such services and materials and the principal subdivisions
or categories thereof and the respective amounts so paid or due to each of said
Persons in respect thereof and stating the progress of the Work up to the date
of said certificate;
(C) that the sum then requested to be
withdrawn, plus all sums previously withdrawn, does not exceed the cost of the
Work insofar as actually accomplished up to the date of such certificate;
(D) that the remainder of the funds held by
Lessor will be sufficient to pay for the full completion of the Work in
accordance with the Plans and Specifications;
(E) that no part of the cost of the services
and materials described in the applicable Work Certificate has been or is being
made the basis of the withdrawal of any funds in any previous or then pending
application; and
(F) that, except for the amounts, if any,
specified in the applicable Work Certificate to be due for services and
materials, there is no outstanding indebtedness known, after due inquiry, which
is then due and payable for work, labor, services or materials in connection
with the Work which, if unpaid, might become the basis of a vendor's,
mechanic's, laborer's or materialman's statutory or other similar lien upon the
Leased Property.
(c) Lessee shall deliver to Lessor satisfactory
evidence that the Leased Property and all materials and all property described
in the Work Certificates are free and clear of all mortgages, liens, charges or
encumbrances, except (i) encumbrances, if any, securing indebtedness due to
Persons (whose names and addresses and the several amounts due them shall be
stated therein) specified in an applicable Work Certificate, which encumbrances
shall be released with respect to all prior payments received by such Person out
of prior Work Certificates as a condition precedent to the funding of the then
applicable Work Certificate, (ii) any Fee Mortgage and (iii) the Permitted
Encumbrances. Lessor shall accept as satisfactory evidence of the foregoing lien
waivers in customary form from the general contractor and all subcontractors
performing the Work, together
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with an endorsement of a title insurance company acceptable to Lessor, dated as
of the date of the making of the disbursement, confirming the foregoing.
(d) If the Work involves alteration of the exterior
of a building or of other site improvements, Lessee shall deliver to Lessor,
upon the request of Lessor, an "as-built" survey of the Leased Property dated of
a date within ten (10) days prior to the making of the final advances (or
revised to a date within ten (10) days prior to the advance) showing no
encroachments other than the Permitted Encumbrances, if any, and those, if any,
acceptable to Lessor.
(e) Lessee shall deliver to Lessor an opinion of
counsel (reasonably satisfactory to Lessor both as to counsel and as to the form
of opinion) prior to the first and the final advances that the Leased Property,
if or as repaired, replaced or rebuilt in accordance with the approved Plans and
Specifications, shall comply with all applicable Legal Requirements.
Lessor, at its option, may waive any of the foregoing requirements in
whole or in part in any instance. Upon compliance by Lessee with the foregoing
requirements (except for such requirements, if any, as Lessor may have expressly
elected to waive), and to the extent of (i) the insurance proceeds, if any,
which Lessor is required by the express terms of this Lease to apply to
restoration of the Leased Property pursuant to the provisions of this Lease, and
(ii) all other cash deposits made by Lessee, Lessor shall make available for
payment to the Persons named in the Work Certificate the respective amounts
stated in said certificate(s) to be due, subject to a retention of 10% as to all
hard costs of the work ("Retainage"). It is understood that the Retainage is
intended to provide a contingency fund to assure Lessor that the Work shall be
fully completed in accordance with the Plans and Specifications and the
requirements of Lessor. Upon the full and final completion of all of the Work in
accordance with the provisions hereof , the Retainage shall be made available
for payment to those Persons entitled thereto who agree in writing to deliver
full and complete lien releases in exchange for such payment.
(f) Upon completion of the Work, and as a condition
precedent to making the final advance in addition to the requirements set forth
above, Lessee shall promptly deliver to Lessor:
(i) written certificates of the architect or
engineer, bearing the architect's or engineer's seal, and the general
contractor, certifying that the Work has been fully completed in a good and
workmanlike manner in accordance with the Plans and Specifications and all Legal
Requirements;
(ii) a written report and policy of a title
insurance company acceptable to Lessor insuring the Leased Property against all
mechanic's and materialman's liens or final lien waivers from the general
contractor and all subcontractors;
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(iii) to the extent not already previously
provided in subsection (b) above, a certificate by Lessee in form and substance
satisfactory to Lessor, listing all costs and expenses in connection with the
completion of the Work and the amount paid by Lessee with respect to the Work;
and
(iv) a temporary certificate of occupancy
(or photocopy thereof) and all other applicable Permits and Contracts issued by
or entered into with any Governmental Authority with respect to the Leased
Property and its Primary intended use and by the appropriate Board of Fire
Underwriters or other similar bodies acting in and for the locality in which the
Leased Property is situated; provided that within thirty (30) days after
completion of the Work, Lessee shall obtain and deliver to Lessor a permanent
certificate of occupancy for the Leased Property.
(v) a copy of a recorded notice of
Completion pursuant to ARS Section 33-993C.
(g) Upon completion of the Work and delivery of the documents
required pursuant to the provisions of this Section 14.1, Lessor shall pay over
the Retainage to Lessee, or to those Persons entitled thereto and if there shall
be insurance proceeds, or cash deposits, other than the Retainage, held by
Lessor in excess of the amounts withdrawn pursuant to the foregoing provisions,
then Lessor shall pay over such proceeds, awards or cash deposits to Lessee,
provided that (a) there does not exist an Event of Default under this Lease and
(b) Lessee has received no notice regarding an event or state of facts which,
with the passage of time, would constitute an Event of Default if not cured by
Lessee, and Lessee has not yet effected such cure.
(h) No inspections or any approvals of the Work during or
after construction shall constitute a warranty or representation by Lessor, or
any of its agents, as to the technical sufficiency, adequacy or safety of any
structure or any of its component parts, including, without limitation, any
fixtures, equipment or furnishings, or as to the subsoil conditions or any other
physical condition or feature pertaining to the Leased Property.
14.2 Disposition of Insurance Proceeds.
14.2.1 Proceeds To Be Released to Pay For Work. Except as
provided for in Section 14.2.2, Lessor shall release proceeds of property
insurance held by it to pay for the Work in accordance with the provisions and
procedures set forth in this Article 14, only if:
(a) all of the terms, conditions and provisions of
Sections 14.1 and 14.2.1 are satisfied;
b) there does not then exist an Event of Default
under this Lease or under any of the other Lease Documents and Lessee has
received no notice
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regarding an event or state of facts which, with the passage of time, would
constitute an Event of Default if not cured by Lessee, and Lessee has not yet
effected such cure;
(c) Lessor shall be reasonably satisfied that Lessee
(and, if not Lessee, then Guarantor) has adequate liquid financial resources to
complete all such Work notwithstanding any possible shortfall in available
insurance proceeds;
(d) No sublease entered into after the date of this
Lease, affecting the Leased Property, the operation of the Facility immediately
prior to such damage or taking, shall have been cancelled or terminated, nor
contain any still exercisable right to cancel or terminate, due to such damage
or taking where such cancellation or termination would have a Material Adverse
Effect on Lessee or the financial viability of the Leased Property; and
(e) The proceeds or awards are released under the
funding arrangements specified in Section 14.1 hereof.
14.2.2 Proceeds Not To Be Released. If the Leased Property is
damaged to the extent it is rendered Unsuitable For Its Primary Intended Use and
if either: (a) Lessee, after exercise of diligent efforts, cannot within a
reasonable time (not in excess of ninety (90) days) 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 Work and to again operate the Facility for
its Primary Intended Use within twenty-four (24) months from the occurrence of
the damage or destruction in substantially the manner as immediately prior to
such damage or destruction, or (b) such damage or destruction occurs during the
last forty (40) months of the Term and would reasonably require more than
twenty-four (24) months to obtain all Permits and complete the Work, then Lessee
may either (i) acquire the Leased Property from Lessor pursuant to Article 19
for a purchase price equal to the greater of (A) the Total Purchase Price or (B)
the Fair Market Value of the Leased Property, with the Fair Market Value to be
determined as of the day immediately prior to such damage or destruction and
prior to any other damage or destruction which has not been fully repaired,
restored or replaced, in which event Lessee shall be entitled upon payment of
the full purchase price to receive all property insurance proceeds (less any
costs and expenses incurred by Lessor in collecting the same), or (ii) terminate
this Lease in which event (subject to the provisions of the last sentence of
this Section 14.2.2) Lessor shall be entitled to receive and retain the
insurance proceeds; provided, however, that Lessee shall only have such right of
termination effective upon payment to Lessor of all Rent due through the date of
termination plus an amount, which when added to (x) the Fair Market Value of the
Leased Property as affected by all unrepaired or unrestored casualty or damage
(and giving due regard for delays, costs and expenses incident to completing all
repair or restoration required to fully repair or restore the same), plus (y)
the amount of insurance proceeds actually received by Lessor (net of costs and
expenses incurred by Lessor in collecting the same), equals (z) the greater of
the Total Purchase Price or the Fair Market Value of the Leased Property prior
to all such damage or destruction. If
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such termination becomes effective, Lessor shall assign to Lessee any
outstanding insurance claims.
14.2.3 Lessee Responsible for Short-Fall. If the cost of the
Work exceeds the amount of proceeds received by Lessor from the property
insurance required under Article 13 (net of Costs and expenses incurred by
Lessor in collecting the same) and Lessee has not exercised any of its rights to
purchase or terminate under Section 14.2.2, Lessee shall be obligated to
contribute any excess amount needed to repair or restore the Leased Property and
pay for the Work. Such amount shall be paid by Lessee toward the cost of the
Work prior to Lessor releasing any property insurance proceeds toward the cost
thereof.
14.3 [Intentionally Omitted.]
14.4 Restoration of Lessee's Personal Property. If Lessee is required
or elects to restore the Facility, Lessee shall either (a) restore all
alterations and improvements made by Lessee, and Lessee's Personal Property; or
(b) replace such alterations and improvements and Lessee's Personal Property
with improvements or items of the same or better quality and utility in the
operation of the Leased Property.
14.5 No Abatement of Rent. In no event shall any Rent xxxxx as a result
of any casualty.
14.6 Termination of Certain Rights. Any termination of this Lease
pursuant to this Article 14 shall cause any right of Lessee to extend as well as
any right of refusal or any right of Lessee to purchase contained in this Lease
to be terminated and to be without further force or effect.
14.7 Waiver. Lessee hereby waives any statutory rights of termination
which may arise by reason of any damage or destruction of the Facility which
Lessee is obligated to restore or may restore under any of the provisions of
this Lease.
14.8 Application of Business Interruption Insurance. A portion of the
proceeds of business interruption insurance equal to the amount of Base Rent and
Additional Rent, payable for the next twelve (12) months, as reasonably
projected by Lessor, shall be paid to Lessor and dealt with as follows: (a) if
the Work has been completed in accordance with this Lease and all Rent is
current, and there exists no Event of Default and Lessee has received no notice
regarding an event or state of facts which, with the passage of time, would
constitute an Event of Default if not cured by Lessee, and Lessee has not yet
effected such cure, such proceeds shall be paid to Lessee to the extent not
previously applied pursuant to (b) below; provided, however, that (b) if Rent is
not kept current during the course of the Work, Lessor may elect (but shall not
be required) to apply such proceeds to any Rent then due.
Notwithstanding the foregoing, Lessor may at its option use or release
such insurance proceeds to pay for the Work and if an Event of Default exists,
Lessor may
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apply all such insurance proceeds towards Lessee's Obligations or
hold such proceeds as security therefor.
14.9 Obligation To Account. Lessor shall upon Lessee's written request,
not more than once a month, provide a written accounting of the application of
all insurance proceeds received by Lessor. Interest income earned on the
property insurance proceeds shall follow the disbursement of such proceeds in
accordance with the provisions of this Lease.
ARTICLE 15
CONDEMNATION
15.1 Definitions. The following terms shall have the meanings ascribed
to them below:
(a) "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation.
(b) "Condemnation" or "Taking" 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 Taking or while legal proceedings for Condemnation or
Taking are pending.
(c) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of condemnation.
(d) "Date of Taking" means the date the Condemnor has the
right to possession of the property being condemned.
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,
the rights and obligations of the parties shall be determined by this Article
15.
15.3 Total Taking. If there is a permanent Taking of all or
substantially all of the Leased Property, Lessee shall purchase the Leased
Property for the Total Purchase Price and otherwise in accordance with Section
19.1 within thirty (30) days after the receipt by Lessor and Lessee of the
notice of the relevant Taking and upon such purchase of the Property by Lessee,
this Lease shall terminate and the Award related to such Taking shall belong
entirely to Lessee. If there is a permanent Taking of all or substantially all
of either that portion of the Facility known as St. Luke's Medical Center or
that portion of the Facility known as Tempe St. Luke's Hospital and Tempe St.
Luke's Medical Office Building, this Lease shall terminate with respect to the
portion of the Facility against which the Taking has occurred but shall continue
with respect to the remaining portion of the Facility, provided, however, (a)
the Total Purchase Price shall be
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reduced by the amount of the net proceeds of such Award and (b) the Base Rent
shall be reduced to reflect such reduction of the Total Purchase Price.
15.4 Partial or Temporary Taking. If there is a permanent Taking of a
portion of the Leased Property, or if there is a temporary Taking of all or a
portion of the Leased Property, this Lease shall remain in effect so long as
both (I) St. Luke's Medical Center and (II) Tempe St. Luke's Hospital and Tempe
St. Luke's Medical Office Building, are not thereby rendered permanently
Unsuitable For Its Primary Intended Use or temporarily Unsuitable For Its
Primary Intended Use for a period not likely to or which does not exceed two
hundred and seventy (270) days. If however, both (I) St. Luke's Medical Center
and (II) Tempe St. Luke's Hospital and Tempe St. Luke's Medical Office Building
are thereby so rendered permanently or temporarily Unsuitable For Its Primary
Intended Use: (a) Lessee shall have the right to restore the Facility, at its
own expense (subject to the right under certain circumstances as provided for in
Section 15.5 to receive the net proceeds of an Award for reimbursement), to the
extent possible, to substantially the same condition as existed immediately
before the partial or temporary Taking, or (b) Lessee shall have the right to
acquire the Leased Property from Lessor, upon payment of all Rent due through
the date the purchase price is paid, in accordance with Article 19 for a
purchase price equal to the greater of (A) the Total Purchase Price, or (B) the
Fair Market Value of the Leased Property, with the Fair Market Value of the
Leased Property to be determined as of the day immediately prior to such partial
or temporary Taking, in which event this Lease shall terminate upon payment of
such purchase price. However, Lessor may overrule Lessee's election under clause
(a) or (b) and instead either (x) terminate this Lease as of the date when
Lessee is required to surrender possession of the portion of the Leased Property
so taken; or (y) compel Lessee to keep the Lease in full force and effect and to
restore the Facility as provided in clause (a) above, but only if the Facility
may be operated so as to produce Gross Revenues of at least eighty percent (80%)
of the average Gross Revenues for the three (3) Fiscal Years immediately
preceding the year in which the Taking has occurred. Lessee shall exercise its
option by giving Lessor notice thereof within sixty (60) days after Lessee
receives notice of the Taking. Lessor shall exercise its option to terminate by
giving Lessor notice thereof within ninety (90) days after Lessor receives
notice of the Taking. If, as the result of any such partial or temporary Taking,
this Lease is not terminated as provided above, Lessee shall be entitled to
abatement of Rent, but only to the extent, if any, provided for in Section 3.7,
effective as of the date when Lessee is required to surrender possession of the
portion of the Leased Property so taken.
15.5 Restoration. If there is a partial or temporary 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 and Lessor shall
release the net proceeds of such Award to reimburse Lessee for the actual
reasonable costs and expenses thereof, subject to all of the conditions and
provisions set forth in Article 14 relating to insurance proceeds as though the
Taking was a casualty and the Award was insurance proceeds. If the cost of the
restoration exceeds the amount of the Award (net of costs and expenses incurred
in obtaining the Award), Lessee shall be obligated to contribute any excess
amount needed to restore the Facility or pay for such costs and expenses.
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15.6 Award Distribution. In the event Lessee completes the purchase of
the Leased Property as described in Section 15.3 or Section 15.4, the entire
Award shall, upon payment of the purchase price and all Rent due under the
Lease, belong to Lessee and Lessor agrees to assign to Lessee all of its rights
thereto, except as otherwise provided in Section 15.5 above. In any other event,
the entire Award shall belong to and be paid to Lessor. In the case of a
temporary taking, notwithstanding any provisions herein to the contrary, and
provided there does not exist an Event of Default under the Lease or any of the
other Lease Documents and Lessee has not received any notice regarding any event
or state of facts which, with the passage of time, would constitute an Event of
Default if not cured by Lessee, and Lessee has not effected such cure, Lessor
shall release the proceeds from any such Award which relate to the Term of this
Lease to Lessee to restore the Leased Property in accordance with the provisions
of this Lease. To the extent Lessor retains any Award or any portion of an
Award, the amounts so retained shall reduce the Total Purchase Price with the
result that Base Rent will be reduced accordingly.
15.7 Control of Proceedings. All proceedings involving any taking and
the prosecution of claims arising out of any taking against the Condemnor shall
be conducted, prosecuted and settled by Lessor, subject to the rights of any Fee
Mortgagee. in its sole and absolute discretion unless and until Lessee completes
the purchase of the Leased Property as provided for in Section 15.4 (which deals
with partial or temporary Takings).
ARTICLE 16
PERMITTED CONTESTS
16.1 Lessee's Right to Contest. To the extent of the express references
made to this Article 16 in other sections of this Lease, Lessee, on its own or
on Lessor's behalf (or in Lessor's name), but at Lessee's sole cost and expense,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, with attorneys reasonably satisfactory to Lessor, the amount,
validity or application, in whole or in part, of any Imposition, Legal
Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge
or claim relating to the Leased Property 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 in All Material Respects, (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
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 Twenty-Five Thousand ($25,000), then, in any such
event, Lessee shall deliver to Lessor an Officer's Certificate and opinion of
counsel, if appropriate 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,
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Lessee shall give such cash security, bond or other security reasonably
satisfactory to Lessor as may be demanded in good faith 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, (f) in the case of an Insurance Requirement, the
coverages required by Article 13 shall be maintained, (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, and (h) no Event of Default under this
Lease has occurred and Lessee has not received any notice regarding any event or
state of facts which, with the passage of time, would constitute an event of
default if not cured by Lessee, and Lessee has not effected such cure; PROVIDED,
HOWEVER, the provisions of this Article 16 shall not be construed to permit
Lessee to contest the payment of Rent or any other sums payable by Lessee to
Lessor hereunder.
16.2 Lessor's Cooperation. Lessor, at Lessee's sole cost and expense,
shall execute and deliver to Lessee such authorizations and other documents as
may reasonably be required in any such contest, so long as the same does not
expose Lessor to any civil or criminal liability, and, if reasonably requested
by Lessee or if Lessor so desires because of a reasonable concern regarding the
attorneys being retained by Lessee, Lessor shall join as a party therein.
16.3 Lessee's Indemnity. Lessee, as more particularly provided for in
Section 13.2, shall indemnify, defend (with counsel acceptable to Lessor) and
save Lessor harmless against any liability, cost or expense of any kind,
including, without limitation, attorneys' fees and expenses that may be imposed
upon Lessor in connection with any such contest and any loss resulting therefrom
and in the enforcement of this indemnification.
ARTICLE 17
DEFAULT
17.1 Events of Default. Any one or more of the following events shall
be an "Event of Default" hereunder:
(a) An Event of Default continuing beyond applicable grace periods, if
any, as so defined under any other lease transactions or loan transactions of
any kind or nature, now existing or in the future entered into, between (i)
Lessor, or any Affiliate of Lessor, and (ii) Lessee, or any Affiliate of Lessee,
or Guarantor, or any Affiliate of Guarantor, including, but not limited to,
under any of the Lease Documents;
(b) Lessee shall fail (i) to make a payment of Base Rent and/or
Additional Rent payable by Lessee under this Lease when the same becomes due and
payable, and such failure continues for ten (10) days following the due date
thereof, or (ii) to deposit and maintain the Credit Enhancement as required
under Section 6.2 when the same
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becomes due and payable, and such failure continues for ten (10) days after the
due date thereof, or (iii) to make a payment of Additional Charges payable by
Lessee to Lessor under this Lease when the same becomes due and payable, and
such failure to pay Additional Charges continues for ten (10) days after written
notice to Lessee of such failure;
(c) Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease on its part to be performed, and such failure is not
cured by Lessee within a period of thirty (30) days after receipt by Lessee of
notice specifying such failure, unless such cure is commenced but 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 a period of one hundred twenty (120) days after such notice and
such failure does not impair Lessor's rights with respect to the Leased
Property; PROVIDED, HOWEVER, that with respect to the Events of Default
specified in clauses (d) through (n) below, there shall be no required notice
nor any grace period except as may be specifically set forth in the particular
clause in question;
(d) The filing by or against Lessee or any Guarantor of any petition
under Federal or state law pertaining to bankruptcy or insolvency or for a
reorganization or other relief (except that in respect of involuntary
proceedings there shall be a sixty (60) day grace period in which Lessee may
cure the default by obtaining the final dismissal of such proceedings);
(e) A receiver, trustee or similar officers' or creditors' committee
shall be appointed to take charge of any property of or to operate or wind up
the affairs of Lessee or Guarantor (except that in respect of involuntary
proceedings there shall be a sixty (60) day grace period in which Lessee may
cure the default by obtaining the final dismissal of such proceedings);
(f) Lessee or 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 any
assignment, trust, mortgage or other transfer in trust or otherwise 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, (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, (vi) commit any act which would permit the entry
of an order for relief under the Bankruptcy Reform Act of 1978 (or any successor
thereto), or (vii) make or offer a composition of Lessee's or Guarantor's debts,
as the case may be, with its creditors;
(g) Lessee or Guarantor shall be liquidated or dissolved, or shall
begin proceedings toward such liquidation or dissolution, or Lessee shall, in
any manner, permit the sale or divestiture of substantially all of its assets;
or, there is a merger or consolidation of Lessee into, or a sale of Lessee or
substantially all of Lessee's assets to,
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another corporation other than a merger with, or a consolidation into or sale
to, another corporation which is a wholly-owned Subsidiary of the Guarantor
which assumes the obligations of Lessee hereunder and which continues to satisfy
the requirement that Lessee be a single purpose entity;
(h) the estate or interest of Lessee in the Leased Property or any part
thereof shall be taken by execution or by process of law or 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 notice thereof from Lessor (unless Lessee shall
be diligently and continuously contesting such lien or attachment in good faith
in accordance with Article 16 hereof);
(i) except as a result of damage or destruction which results from a
casualty or a partial or complete Condemnation or as a result of the performance
of repairs required by the provisions of this Lease or the construction of
improvements made in accordance with the provisions of this Lease, Lessee ceases
operations on any material portion of the Leased Property for a period in excess
of thirty 30 days;
(j) (1) any of the representations or warranties made in this Lease or
any of the other Lease Documents proves to be inaccurate when made and as a
result there is a Material Adverse Effect on any of Lessee, the Guarantor or the
Leased Property or (2) any of the warranties or representations which continue
in effect during the Term of this Lease pursuant to Section 10.2 become
inaccurate during the Term of this Lease and as a result there is a Material
Adverse Effect on any of Lessee, the Guarantor or the Leased Property, and in
the event of either (1) or (2) above, such inaccuracy is not cured within thirty
(30) days after receipt by Lessee of notice from Lessor of such in inaccuracy,
provided, however, that if (A) such cure is commenced but cannot with due
diligence be fully effected within a period of thirty (30) days, then as long as
Lessee proceeds promptly and with due diligence to effect such cure and
diligently completes the curing thereof within a period of one hundred twenty
(120) days after such notice and (B) such failure to cure does not create any
irreparable Material Adverse Effect on either the Leased Property or Lessor's
rights under the Lease Documents, there shall be no Event of Default on account
of any such inaccuracy until such 120-day period has fully elapsed;
(k) the dissolution or cessation of existence, or sale of all or
substantially all of the assets, of the Guarantor (unless the same is the result
of a merger or consolidation of Guarantor into, or a sale of Guarantor or
substantially all of Guarantor's assets to, a Person with a Tangible Net Worth
equal to or greater than the Tangible Net Worth of Guarantor as of the date of
such merger, consolidation or sale and such Person assumes, by execution of a
new Guaranty, all past, present and future obligations of the Guarantor under
this Lease and all of the other Lease Documents), (ii) the Guarantor shall fail
to make any payment when due under the Guaranty or (iii) if any other default
shall occur under the Guaranty which is not cured within thirty (30) days after
notice;
(l) any default by Lessee or Guarantor under any credit or other
financing agreement in connection with Lessee's or such Guarantor's major lines
of credit (i.e.,
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involving $5,000,000 or more), which is not cured within the applicable grace
period, if any, set forth in the documents and agreements evidencing such major
line of credit;
(m) [Intentionally Omitted]
(n) any transfer of any beneficial interest in Lessee (other than as
permitted by Article 20 or a transfer to the Guarantor or an Affiliate of Lessee
or the Guarantor so long as Lessee and/or such Affiliate remains a wholly-owned
(i.e., Lessee and all intermediary corporations in the chain of ownership
between one Guarantor and Lessee are 100% owned by either the Guarantor or by a
100% owned Subsidiary of the Guarantor and if such transferee assumes the
obligations of Lessee under the Lease Documents), direct or indirect, Subsidiary
of Guarantor) or any transfer, assignment or subletting of all or any portion of
the Leased Property not in strict compliance with the provisions of Article 20.
17.2 Remedies.
(a) If any Event of Default shall have occurred, Lessor may at its
option terminate this Lease by giving Lessee not less than ten (10) days' notice
of such termination, or exercise any one or more of its rights and remedies
under this Lease, or the other Lease Documents, or as available at law or in
equity and upon the expiration of the time fixed in such notice, the Term shall
terminate (but only if Lessor shall have specifically elected by a written
notice to so terminate the Lease) and all rights of Lessee under this Lease
shall cease. Notwithstanding the foregoing, in the event of Lessee's failure to
pay Base Rent and/or Additional Rent, if such Base Rent and/or Additional Rent
remains unpaid beyond ten (10) days from the due date thereof, Lessor shall not
be obligated to give ten (10) days notice of such termination or exercise of any
of its other rights and remedies under this Lease, or the other Lease Documents,
or otherwise available at law or in equity, and Lessor shall be at liberty to
pursue any one or more of such rights or remedies without further notice. No
taking of possession of the Leased Property by or on behalf of Lessor, and no
other act done by or on behalf of Lessor, shall constitute an acceptance of
surrender of the Leased Property by Lessee or reduce Lessee's obligations under
this Lease or the other Lease Documents, unless otherwise expressly agreed to in
a written document signed by an authorized officer or agent of Lessor.
(b) Lessee shall, to the extent not prohibited by law, pay as
Additional Charges all costs and expenses incurred by or on behalf of Lessor,
including, without limitation, reasonable attorney's fees and expenses, as a
result of any Event of Default hereunder.
(c) If any Event of Default shall have occurred, whether or not this
Lease has been terminated pursuant to Paragraph (a) of this Section, Lessee
shall, to the extent not prohibited by law, if required by Lessor so to do, upon
not less than ten (10) days' prior notice from Lessor, immediately surrender to
Lessor the Leased Property pursuant to the provisions of Paragraph (a) of this
Section and quit the same, and Lessor may enter upon and repossess the Leased
Property by reasonable force, summary proceedings, ejectment or otherwise, and
may remove Lessee and all other Persons and any and all of Lessee's
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Personal Property from the Leased Property subject to the rights of any patients
or any sublessees who are not Affiliates of either Lessee or any Guarantor and
to any requirement of law. Lessor shall use reasonable, good faith efforts to
relet the Leased Property or otherwise mitigate damages suffered by Lessor as a
result of Lessee's breach of this Lease.
(d) In addition to all of the rights and remedies of Lessor set forth
in this Lease and the other Lease Documents, if Lessee shall fail to pay any
Rent due to Lessor hereunder (whether denominated as Base Rent, Additional Rent
or Additional Charges) within five (5) Business Days after same shall have
become due and payable, then and in such event Lessee shall also pay to Lessor a
late payment service charge (in order to partially defray Lessor's
administrative and other overhead expenses) equal to two hundred-fifty ($250)
dollars plus interest on such unpaid sum per day for each day or part thereof
after the Payment Date thereof during which such payment shall not have been
received by Lessor at the Overdue Rate, permissible under applicable law, it
being understood that nothing herein shall be deemed to extend the due date for
payment of any sums required to be paid by Lessee hereunder or to relieve Lessee
of its obligation to pay such sums at the time or times required by this Lease.
17.3 Damages. None of (a) the termination of this Lease pursuant to
Section 17.2, (b) the eviction of Lessee or the repossession of the Leased
Property, (c) the failure of Lessor, notwithstanding reasonable good faith
efforts, to relet the Leased Property, (d) the reletting of all or any portion
thereof, or (e) the failure of Lessor to collect or receive any rentals due upon
any such reletting, shall relieve Lessee of its liability and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting. In any such event, Lessee shall forthwith pay to Lessor all Rent due
and payable with respect to the Leased Property to and including the date of
such termination, repossession or eviction. Thereafter, Lessee shall forthwith
pay to Lessor, at Lessor's option, either:
(i) the sum of: (A) all Rent that is due and unpaid at the
date of termination, repossession or eviction, whichever is later, together with
interest thereon at the Overdue Rate to the date of payment, plus (B) the worth
(calculated in the manner stated below) of the amount by which the unpaid Rent
for the balance of the Term after such date exceeds the fair market rental value
of the Leased Property for the balance of the Term, plus (C) any other amount
necessary to compensate Lessor for all the detriment proximately caused by
Lessee's failure to perform its obligations under this Lease or which in the
ordinary course would be likely to result therefrom; or
(ii) each installment of Rent and other sums payable by Lessee
to Lessor under this Lease as the same would have become due and payable if
Lessee's right of possession or other rights under the Lease had not been
terminated, or if Lessee had not been evicted, or if the Leased Property had not
been repossessed which Rent and other sums shall bear interest at the Overdue
Rate from the date when due until paid, and Lessor may enforce, by action or
otherwise, any other term or covenant of this Lease. There shall be credited
against Lessee's obligation under this Clause (B) amounts actually
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collected by Lessor from another tenant to whom the Facility may have actually
been leased or, if Lessor is operating the Facility for its own account, the
actual Cash Flow of the Facility.
In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such determination and allowed by
applicable law and the Additional Rent shall be deemed to be the same as the
average Additional Rent of the preceding five (5) full Fiscal Years, or if
shorter, the average Additional Rent for the Fiscal Years or portions thereof
since the date that Additional Rent commenced to accrue or such other amount as
either party shall prove reasonably could have been earned during the remainder
of the Term or any portion thereof.
17.4 Lessee Waivers. If this Lease is terminated pursuant to Section
17.2, Lessee waives, to the extent not prohibited 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 17, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.
17.5 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 required by the laws of the State.
17.6 [Intentionally Omitted].
17.7 Lessee's Obligation to Purchase.
17.7.1 Lessor's Option. Lessor shall have the option to
require Lessee to purchase the Leased Property from Lessor for the Put Price
upon not less than ninety (90) days prior written notice ("Notice to Purchase")
given at any time if an Event of Default has occurred under the Lease and is
continuing.
17.7.2 Certain Definitions. As used in this provision: (a)
"Put Price" shall mean the sum of (i) all Rent due and unpaid under the Lease
through the date of payment of the Put Price, plus (ii) the Option Price as
calculated in Section 19.4.4; (b) "Closing Date" shall mean the date so
specified in the Notice To Purchase; and (c) "Place of Closing" shall mean the
place so specified in the Notice To Purchase.
17.7.3 Closing and Payment. Upon the exercise of such option
by Lessor, Lessee shall purchase and acquire the Leased Property at 11:00 a.m.
local time on the Closing Date and shall pay the Put Price to Lessor in
immediately available federal funds on the Closing Date upon delivery of a
special warranty deed from Lessor conveying all of Lessor's right, title and
interest in and to the Leased Property (including, without limitation, any
leasehold interest either as lessor or lessee, which may have been assigned
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to Lessor in conjunction with this Lease) at the Place of Closing. Upon delivery
of the deed and payment of the Put Price, the parties obligations under this
Lease and all of the other Lease Documents shall terminate except for (a) the
indemnification obligations set forth herein, (b) the obligation to adjust
Additional Rent or (c) any other provision of this Lease which expressly
provides that it survives termination. Such conveyance shall be made subject to
all Permitted Encumbrances, the claims of all Persons claiming by, through or
under Lessee or any Affiliate thereof, and any other matters assented to by
Lessee or any Affiliate thereof, and all matters for which Lessee or any
Affiliate thereof has responsibility under any of the Lease Documents, but
otherwise shall not be conveyed subject to any lien or encumbrance created by
Lessor or any person who succeeds to the interest of Lessor under the Lease
(other than an Encumbrance permitted under Article 21 which may be assumed, or
taken subject to, without cost to Lessee); it being agreed that if Lessee
assumes any outstanding mortgage encumbering the Leased Property, the amount of
cash payable against the Put Price on the Closing Date shall be reduced by the
amount of mortgage indebtedness assumed by Lessee. Lesser may use all or any
portion of the Put Price to discharge any liens or encumbrances created by
Lessor or any other person who subsequently holds the interest of Lessor under
the Lease (provided that releases or discharges are recorded or filed
simultaneously with the deed or arrangements therefor reasonably satisfactory to
the title insurer are made for obtaining such releases or discharges). All
expenses of such conveyance including, without limitation, the cost of title
examination, title insurance, reasonable attorneys' fees, transfer taxes and
recording taxes and other fees incurred by Lesser in connection with such
conveyance, shall be paid by Lessee without deduction from the Put Price.
17.7.4 "As-Is"; No Conditions. The Leased Property and the
entire interest of Lessor therein shall be conveyed to Lessee in "AS IS"
condition, with absolutely no warranties or representations of any nature
whatsoever, either express or implied (except for the special warranty covenants
of the special warranty deed), and without any adjustment for any reason to the
Put Price other than for assumed liabilities contemplated by this Lease. Lessor
shall also release and assign to Lessee any interest pending insurance claims or
pending claims to any Award. No fact or condition including, but not limited to,
any damage or destruction to the Leased Property, the existence of any violation
of any Legal Requirements, the absence or validity of any Permits or Contracts,
or the bankruptcy or insolvency of Lessee or of any Affiliate thereof, shah
constitute, on any basis whatsoever, grounds for Lessee to refuse to complete
the purchase as required by this provision.
17.7.5 Unconditional Obligation. Lessee unconditionally agrees
to purchase the Leased Property if and to the extent required by this provision
in accordance with the terms hereof and agrees that its obligation to so
purchase shall be subject to specific enforcement by Lessor. The obligation to
purchase the Leased Property set forth in this provision shall be a separate and
distinct Obligation of Lessee which is in addition to, but not in limitation of,
all other obligations of Lessee hereunder or under any of the other Lease
Documents.
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17.7.6 Perpetuities. If not sooner terminated, the obligation to
Purchase under this provision shall terminate twenty (20) years following the
death of the last surviving member of the class of Persons consisting of all
lineal descendants of the late Xxxxxx X. Xxxxxxx (the father of the late Xxxx X.
Xxxxxxx, former President of the United States) who are living on the date
hereof.
17.8 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 17.1, Lessor,
after five (5) Business Days' prior notice to Lessee (except in an emergency
when such shorter notice shall be given as is reasonable under the
circumstances), and 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 as an Additional Charge. The obligations of Lessee and rights
of Lessor contained in this Article shall survive the expiration or earlier
termination of this Lease.
17.9 No Waiver By Lessor. Lessor shall not by any act, delay, omission or
otherwise (including, without limitation, the exercise of any right or remedy
hereunder) be deemed to have waived any of its rights or remedies hereunder or
under any of the other Lease Documents unless such waiver is in writing and
signed by Lessor, and then, only to the extent specifically set forth therein.
No waiver at any time of any of the terms, conditions, covenants,
representations or warranties or time periods for performance of any of the
Lease Documents shall be construed as a waiver of any other term, condition,
covenant, representation or warranty of any of the Lease Documents, nor shall
such a waiver in any once instance or circumstances be construed as a waiver of
the same term, condition, covenant, representation or warranty in any subsequent
instance or circumstance. No such failure, delay or waiver shall be construed as
creating a requirement that Lessor must thereafter, as a result of such failure,
delay or waiver, give notice to Lessor or the Guarantor, or any other Person
that Lessor does not intend to, or may not, give a further waiver or to refrain
from insisting upon the strict performance of the terms, conditions, covenants,
representations and warranties set forth in the Lease Documents before Lessor
can exercise any of its rights or remedies under any of the Lease Documents or
before any Event of Default under any of the Lease Documents can occur, or as
establishing a course of dealing for interpreting the conduct of and agreements
between Lessor and Lessee, the Guarantor, or any other Person.
The acceptance by Lessor of any payment that is less than payment in full
of all amounts then due under any of the Lease Documents at the time of the
making of such
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payment shall not: (a) constitute a waiver of the right to exercise any of
Lessor's remedies at that time or at any subsequent time; (b) constitute an
accord and satisfaction; or (c) nullify any prior exercise of any remedy,
without the express written consent of Lessor. Any failure by Lessor to take any
action under this Lease or any of the other Lease Documents by reason of a
default hereunder or thereunder, or indulgences granted from time to time, shall
not be construed as a novation of this Lease or any of the other Lease Documents
or as a waiver of such right or of the right of Lessor thereafter (i) to insist
upon strict compliance with the terms of this Lease or any of the other Lease
Documents, or (ii) to prevent the exercise of such right of acceleration or any
other right granted hereunder or under applicable law; and to the maximum extent
not prohibited by applicable law, Lessor hereby expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.
17.10 Cumulative Remedies. With exception of Lessor's exercise of its
rights under Section 17.7 above, the rights and remedies set forth under this
Lease are in addition to all other rights and remedies afforded to Lessor under
any of the other Lease Documents or at law or in equity, all of which are hereby
reserved by Lessor, and this Lease is made and accepted without prejudice to any
such rights and remedies. All of the rights and remedies of Lessor under each of
the Lease Documents shall be separate and cumulative and may be exercised
concurrently or successively in Lessor's sole and absolute discretion.
ARTICLE 18
SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
18.1 Yield-Up. Lessee shall, upon the expiration or prior termination of
the Term, vacate and surrender and yield-up the Leased Property to Lessor in
good repair and condition, in compliance with all Legal Requirements, all
Insurance Requirements, and in compliance with the provisions of Article 8
(which deal with maintenance and repair) except for: (a) ordinary wear and tear
(subject to the obligation of Lessee to maintain the Leased Property in good
order and repair during the entire Term of the Lease); (b) damage caused by the
gross negligence or willful acts of Lessor; and (c) any damage or destruction
described in Article 14 or resulting from a Taking described in Article 15 which
Lessee is not required by the terms of this Lease to repair or restore.
18.2 Transfer of Contracts and Permits. In the ninety (90) day period
prior to any termination of this Lease and following any Event of Default, at
Lessor's option, Lessee shall use its best efforts to transfer and assign to
Lessor or its designee, or assist Lessor or its designee in obtaining, any
Contracts and Permits (other than those Contracts, including Provider
Agreements, which are included in the definition of Accounts Receivable)
required or used by Lessee for the then operation of the Facility. Upon the
termination of this Lease (other than as a result of Lessee's purchase of the
Leased Property pursuant to Section 17.7, Section 19.3 or Section 19.4), at
Lessor's
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option, Lessor shall assume all obligations which are to be performed under the
Contracts and Permits from and after the date of such termination.
18.3 No Acceptance of Surrender. Except at the termination of the Term in
the ordinary course, 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.
18.4 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 without written authorization from Lessor, such possession shall be
as a tenant at sufferance during which time Lessee shall pay as rental each
month (i) 118% of one-twelfth of the aggregate Base Rent and Additional Rent
payable with respect to the last complete Fiscal Year prior to the expiration or
earlier termination of the Term; and (ii) all Additional Charges accruing during
the month. 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
tenants at sufferance, 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. If Lessee becomes such a tenant at sufferance, Lessee shall not
be held to a term longer than month-to-month.
ARTICLE 19
PURCHASE OF THE LEASED PROPERTY
19.1. Purchase of the Leased Property. Except to the extent inconsistent
with the provisions of Section 19.4 (in which event the provisions of Section
19.4 shall govern any sale made pursuant to the Purchase Option), in the event
Lessee purchases the Leased Property from Lessor pursuant to any of the terms of
this Lease, the provisions of Section 17.7 shall apply as though such sale were
being conducted as a "put" under said Section 17.7.
19.2 Appraisals.
19.2.1 Designation of Appraisers. In the event that it becomes
necessary to determine the Fair Market 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 appraiser on its behalf. 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 appraiser on its
behalf.
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19.2.2 Appraisal Process. 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 thirty (30) days after the
date of the notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market 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 appraiser
shall have been so appointed, or if two appraisers shall have been so appointed
but only one such appraiser shall have made such determination within 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 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 shall be an amount equal to 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 appraisers shall have 20 days to appoint a third 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
20 days of such request, and both parties shall be bound by any appointment so
made within such twenty (20) day period. If no such appraiser shall have been
appointed within such 20 days or within 90 days of the original request for a
determination of Fair Market Value, whichever is earlier, either Lessor or
Lessee may apply to any court having jurisdiction to have such appointment made
by such court. Any appraiser appointed by the original appraisers, by the
American Arbitration Association or by such court shall be instructed to
determine the Fair Market Value within 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 appraisers shall be
excluded, and fifty percentage (50%) of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value for such interest.
19.2.3 Specific Enforcement and Costs. 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 cost and expenses incurred in
connection with each appraisal.
19.3 Lessee's Right of Refusal. During the Term of the Lease, so long as
there exists no Event of Default, under this Lease at the time of exercise and
on the date of closing, and Lessee has not received any notice regarding any
event or state of facts which, with the passage of time, would constitute an
event of default if not cured by Lessee, and Lessee has not effected such cure,
Lessee shall have a "Right of First Refusal" as hereinafter described. If Lessor
receives a bona fide written offer to purchase the Leased Property from a Person
(the "Offer") acceptable to Lessor in Lessor's sole and absolute discretion and
Lessor elects, in Lessor's sole and absolute discretion, to sell,
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ground lease or otherwise transfer the Leased Property other than is permitted
by Article 21 below in accordance with the Offer, Lessor shall notify Lessee and
Lessee shall have thirty (30) days following Lessee's receipt of Lessor's notice
of the Offer to elect to purchase the Leased Property on the same terms and
conditions as specified in the Offer. Unless Lessor receives notice from Lessee
within such thirty (30) day period setting forth Lessee's election to so
purchase the Leased Property and unless thereafter Lessee completes the
acquisition of the Leased Property exactly as provided for, and by the date
specified, in the Offer, Lessor shall be at liberty, and shall have the absolute
and unconditional right, to sell the Leased Property to any Person within the
next twelve (12) months substantially on the terms and conditions set forth in
the Offer or on any other terms and conditions more favorable to Lessor and such
sale, if so completed, shall extinguish Lessee's Right of First Refusal.
Lessee's Right of First Refusal shall not apply to and shall survive: (a) any
sale or transfer of the Leased Property or any portion thereof to Meditrust or
any Affiliate of Lessor or of Meditrust; or (b) any foreclosure of any Fee
Mortgage. The Right of Refusal shall in all events terminate upon any
termination of this Lease.
19.4 Lessee's Option to Purchase.
19.4.1 Conditions to Option. On the conditions (which conditions
Lessor may waive, at its sole option, by notice to Lessee at any time) that (a)
at the time of exercise and on the date of Closing, there exists no Event of
Default, under this Lease and, Lessee has not received any notice regarding any
event or state of facts which, with the passage of time, would constitute an
Event of Default if not cured by Lessee, and Lessee has not effected such cure,
and (b) Lessee strictly complies with the provisions of this Section, then
Lessee shall have the option to purchase (the "Purchase Option"), the Leased
Property, at the price and upon the terms hereinafter set forth.
19.4.2. Exercise of Option. This Purchase Option shall permit
Lessee to purchase the Leased Property on any of the seventh (7th), tenth
(10th), twelfth (12th), fifteenth (15th) and, if the option for the Extended
Term has been effectively exercised, the twentieth (20th) anniversaries of the
Fixed Term Commencement Date (any of such dates hereinafter called a "Permitted
Option Date") and shall be exercised by notice given by Lessee to Lessor (the
"Lessee's Purchase Option Notice") at least one hundred eighty (180) days (but
not more than two hundred seventy (270) days) prior to the relevant Permitted
Option Date.
19.4.3 Conveyance. If this Purchase Option is so exercised, the
Leased Property shall be conveyed by a good and sufficient special warranty deed
(the "Deed") running to Lessee or to such grantee as Lessee may designate by
notice to Lessor at least seven (7) days before the Time of Closing. The Deed
shall convey insurable title thereto, free from encumbrances and encroachments
from or on the Leased Property, except: (a) applicable laws and regulations of
any Governmental Authority; (b) taxes for the period beginning with the Fixed
Term Commencement Date; (c) any liens for municipal betterments that are not due
as of the Time of Closing; and (d) (i) the matters listed in Exhibit B attached
hereto, (ii) any encumbrances created by Lessee and (iii) any other
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encumbrances recorded after the Fixed Term Commencement Date provided such other
encumbrances do not unreasonably interfere with the use and enjoyment of the
Leased Property for the Primary Intended Use.
19.4.4 Calculation of Option Price. The price (the "Option Price") for the
Leased Property pursuant to this Purchase Option shall be equal to the sum of
(a) the "Total Purchase Price" (reduced only by the amounts of: (i) any Award
previously received and retained by Lessor net of the costs of obtaining the
same and (ii) any insurance proceeds previously received and retained by Lessor,
net of costs of obtaining the same) plus (b) the amount, if any, by which the
Fair Market Value of the Leased Property at the time of closing exceeds the Fair
Market Value of the Leased Property at the Fixed Term Commencement Date less any
increases to the Fair Market Value of the Leased Property which is attributable
solely to those Capital Additions paid for by Lessee pursuant to the provisions
of Article 9 of this Lease.
19.4.5 Payment of Option Price. The Option Price shall be paid by
Lessee at the Time of Closing in immediately available federal funds.
19.4.6 Place and Time of Closing. If this Purchase Option is
exercised, the closing shall occur and the Deed shall be delivered (the
"Closing") at the Phoenix office of Lessor at 11:00 a.m. (M.S.T.) on the
relevant Permitted Option Date (such time, as the same may be extended by mutual
written agreement of Lessor and Lessee, being hereinafter referred to as the
"Time of Closing"). It is agreed that time is of the essence of this Purchase
Option.
19.4.7 Condition of Leased Property. The Leased Property is to be
purchased "AS IS" and "WHERE IS" as of the Time of Closing, with absolutely no
warranties or representations of any nature whatsoever, either express or
implied except for the special warranty covenants of the special warranty deed).
19.4.8 [Intentionally Omitted]
19.4.9 [Intentionally Omitted]
19.4.10 Merger by Deed. The acceptance of the Deed by Lessee or
the grantee designated by Lessee, as the case may be, shall be deemed to be a
full performance and discharge of every agreement and obligation to be performed
by Lessor and Lessee contained or expressed in this Lease and in all of the
other Lease Documents, except for (a) the indemnification obligations set forth
herein, (b) the obligation to adjust Additional Rent, or (c) any other provision
of this Lease which expressly provides that it survives termination.
19.4.11 Use of Purchase Price to Clear Title. To enable Lessor to
make conveyance as provided in this Section 19.4, Lessor may, at the Time of
Closing, use the Purchase Price or any portion thereof to clear the title of any
or all encumbrances or interests, provided that all instruments so procured are
recorded contemporaneously with
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the Closing or reasonable arrangements acceptable to Lessee and title insurer
are made for a recording subsequent to the Time of Closing.
19.4.12 Lessee's Default. If Lessee delivers Lessee's Purchase
Option Notice and fails to consummate the purchase of the Leased Property in
accordance with the terms hereof for any reason other than a Lessor's default as
described in Section 19.4.13 below: (a) Lessee shall thereafter have no further
right to purchase the Leased Property pursuant to this Section 19.4, although
this Lease shall otherwise continue in full force and effect; and (b) Lessor
shall have the right to xxx for specific performance of Lessee's obligations to
purchase the Leased Property provided such suit for specific performance is
commenced within one (1) year after the relevant Permitted Option Date on which
such sale was supposed to occur.
19.4.13 Lessor's Default. If Lessor defaults in its obligations to
Lessee under this Section 19.4, Lessee shall have the right to xxx for specific
performance of Lessor's obligations to sell the Leased Property in accordance
with the provisions of this Lease provided such suit for specific performance is
commenced within one (1) year after the relevant Permitted Option Date on which
such sale was supposed to occur. However, Lessor's defaults hereunder shall be
limited to the following: (a) Lessor refuses to deliver the Deed or any other
related instruments contemplated by this Section 19.4; (b) Lessor fails or is
unable to remove either (i) any voluntary lien securing the payment of money
imposed against the Leased Property by Lessor or (ii) any other encumbrances
created by Lessor and not permitted under Section 19.4.3(d) (iii) above; or (c)
Lessor's failure or inability to remove any involuntary liens existing against
the Leased Property as a result of claims made against Lessor (other than
involuntary liens which would have been avoided if Lessee had fully and
punctually performed all of its obligations under this Lease and the other Lease
Documents). If Lessee commences such suit for specific performance and prevails,
Lessor shall also be liable to Lessee for all reasonable attorneys' fees and
other costs incurred by Lessee in connection with such suit for specific
performance.
ARTICLE 20
SUBLETTING AND ASSIGNMENT
20.1 Subletting and Assignment. Except as specifically set forth in
Sections 20.2 and 20.4 below, Lessee may not, without the prior written consent
of Lessor, which consent shall be at Lessor's sole and absolute discretion,
assign this Lease or sublet all or any part of the Leased Property. For purposes
of this Section 20.1, the term "assign" shall be deemed to include, but not be
limited to, any one or more sales, pledges (other than pledges to the lenders
under the Principal Credit Agreement) or other transfers hereafter of any of the
capital stock of Lessee or sales or pledges or other transfers of the capital or
substantially all of the assets of Lessee, but shall exclude any such stock
sales or transfers to an Affiliate of Lessee, so long as Lessee and/or such
Affiliate remains a wholly-owned, direct or indirect, Subsidiary of the
Guarantor which assumes all
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obligations of Lessee hereunder and continues to satisfy the requirement that
Lessee hereunder be a single purpose entity as required by the provisions of
this Lease.
20.2 Permitted Subleases. Notwithstanding the foregoing, Lessee shall have
the right to enter into subleases of portions of the Leased Property without
Lessor's prior consent with respect to (a) any subleases under which a physician
is the sublessee, (b) any sublease involving less than 5,000 square of space in
the aggregate to any particular sublessee, or (c) any other sublease which is
executed in compliance with the following requirements:
(i) the portion of the Leased Property to be sublet shall not
include any space or area, other than any such space or area within medical
office buildings located at the Facility, which is required for or used in
connection with the Primary Intended Use nor shall the subletting detract in any
material manner from the Primary Intended Use;
(ii) the only uses permitted under the sublet shall be for one or
more specified Other Permitted Uses;
(iii) Lessor shall be provided with evidence reasonably
satisfactory to it that the proposed subtenant is of sound business reputation
and has the financial capacity to pay and perform its obligations in connection
with the approved sublet;
(iv) the proposed sublet shall not be at less than the then
current fair market value rent (provided that space may be sublet to an
Affiliate, including for the purposes of this clause only an entity which is
controlled by or under common control with Guarantor or Lessee, so long as for
the purpose of computing the Additional Rent, the then current fair market value
rent is imputed); and
(v) the form and content of the sublease has been approved by
Lessor (it being agreed that once a "form sublease" has been approved by Lessor,
only material deviations from the approved form sublease shall require further
approval by Lessor).
Lessor shall be provided with not less than thirty (30) days prior written
notice from Lessee of any proposed sublet for which consent is required, which
written notice shall be accompanied by detailed information and data sufficient
to enable Lessor to fully evaluate the proposal. Lessor shall not unreasonably
withhold, delay or condition its approval as to the reputation and financial
capacity of the subtenant or the equivalence of the proposed sublet rent to fair
market value rent (as provided in clauses (c) and (d)), but all other items of
approval under clause (e) shall be subject to Lessor's sole and absolute
discretion. As to any approved subletting, Lessor shall provide a
non-disturbance of possession and recognition agreement for the subtenant so
long as the subtenant provides an agreement to attorn in accordance with Section
20.3. below.
20.3 Attornment. Lessee shall insert in each sublease permitted under
Section 21.2, provisions to the effect that (a) such sublease is subject and
subordinate to all of the
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terms and provisions of this Lease and to the rights of Lessor hereunder, (b)
except in the case of a sublease with an Affiliate of Lessee or the Guarantor,
in the event this Lease shall terminate before the expiration of such sublease,
the sublessee thereunder will attorn to Lessor and waive any right the sublessee
may have to terminate the sublease or to surrender possession thereunder as a
result of the termination of this Lease, (c) in the event this Lease shall
terminate before the expiration of a sublease with an Affiliate of Lessee or the
Guarantor, the sublessee thereunder will, at Lessor's option, either vacate or
attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder, as a result of the termination
of this Lease, and (d) in the event the sublessee receives a written notice from
Lessor or Lessor's assignees, if any, stating that an Event of Default has
occurred and is continuing under this Lease, the sublessee 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.
20.4 Permitted Assignments. Notwithstanding Section 20.1 above, (a)
Lessee, and any permitted successors and assigns, may convey minority,
non-controlling stock ownership interests in Lessee to physicians who are
members in good standing of the medical staff of the Facility, so long as Lessee
remains a majority-owned, direct or indirect, Subsidiary of the Guarantor or (b)
Lessee may merge with, or consolidate into or be sold to, another corporation
which is a wholly-owned Subsidiary of the Guarantor, which assumes all
obligations of Lessee hereunder and which continues to satisfy the requirement
that Lessee be a single purpose entity.
ARTICLE 21
TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
21.1 No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby with the fee estate in the Leased Property by
reason of the fact that the same Person 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.
21.2 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, Lessor or such
successor owner, as the case may be, shall thereupon be released from all future
liabilities and obligations, but not past liabilities and obligations, of Lessor
under this Lease arising or accruing from and after the date 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.
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21.3 Lessor May Grant Liens. Without the consent of Lessee, Lessor may,
subject to the terms and conditions set forth below in this Section 21.3, from
time to time, directly or indirectly, create or otherwise cause to exist any
lien, encumbrance or title retention agreement ("Encumbrance") upon Lessor's
interest in the Leased Property, or any portion thereof or interest therein,
whether to secure any borrowing or other means of financing or refinancing,
provided that Lessee shall have no obligation to make payments under such
Encumbrances and, unless otherwise expressly agreed by Lessee in writing, such
Encumbrances are subject to Lessee's leasehold estate. Lessee hereby agrees that
any such Encumbrance may provide that Lessee's right of first refusal set forth
in Section 19.3 above to purchase the Leased Property, if any, shall not be
applicable upon a foreclosure sale or transfer in lieu thereof; however, both
Lessee's right of first refusal under Section 19.3 and Lessee's option to
purchase the Leased Property in accordance with Section 19.4 above shall
expressly survive a foreclosure sale or transfer in lieu thereof. Lessee shall
subordinate this Lease to the lien of any such Encumbrance, on the condition
that the beneficiary or holder of such Encumbrance executes a non-disturbance
agreement in conformity to Section 21.4. To the extent that any such Encumbrance
consists of a mortgage or deed of trust on Lessor's interest in the Leased
Property the same shall be called a "Fee Mortgage" and the holder thereof shall
be called a "Fee Mortgagee".
21.4 Subordination and Non-Disturbance. As a condition to Lessee's
agreement to subordinate, Lessor will obtain and deliver to Lessee (and to any
subtenant which is not an Affiliate of Lessee or of Guarantor agreements by the
holder of any Fee Mortgage entered into after the date hereof which consents to
this Lease and agrees that, notwithstanding any such xxxxxxxxx, mortgage, deed
of trust, right, title or interest or any other Encumbrance, 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 cancelled at any time, except in the event an Event of Default
occurs, in which case the terms and provisions expressly set forth herein shall
apply; provided, however, that Lessee delivers an agreement of the type
described in the following paragraph if so requested by the holder of an
Encumbrance.
At the request from time to time by one or more holders of any Encumbrance
that may hereafter be placed upon the Leased Property or any part thereof by
Lessor, and any and all renewals, replacements, modifications, consolidations,
spreaders and extensions thereof, Lessee and each subtenant) will subordinate
this Lease and all of Lessee's rights and estate hereunder to each such
Encumbrance and agree with each such holder that Lessee will attorn to and
recognize such holder or the purchaser at any foreclosure sale or any sale under
a power of sale contained in any such Encumbrance as Lessor under this Lease for
the balance of the Term then remaining and to effect that purpose, Lessee agrees
to execute and deliver such instruments in recordable from as are reasonably
requested by Lessor or much mortgage holder; provided, however, that each such
holder simultaneously executes, delivers and records a written agreement as
provided in the preceding paragraph.
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ARTICLE 22
LESSOR OBLIGATIONS
22.1. Quiet Enjoyment. So long as no Event of Default shall have occurred
and be continuing, 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 the Permitted
Encumbrances thereafter 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 perform 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.
22.2 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. Lessee shall pay all recording costs and taxes associated
therewith.
22.3 Default by Lessor. Lessor shall be in default of its obligations
under this Lease only if Lessor shall fail to observe or perform any term,
covenant or condition of this Lease on its part to be performed and such failure
is not cured by Lessor within a period of thirty (30) days after notice thereof
from Lessee (or such shorter time as may be necessary in order to protect the
health or welfare of any Persons at the Facility), 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 Lessor has commenced such cure
within such thirty (30) day period and proceeds promptly and with due diligence
to cure the failure and diligently completes the curing thereof within one
hundred twenty (120) days.
22.4 Lessor's Warranties and Representations.
22.4.1 Existence; Power; Qualification. Lessor is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. Lessor has all requisite corporate power to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted and is duly qualified to do business and is in good standing in each
jurisdiction (including the State) where such qualification is necessary or
desirable in order to carry out its business as now conducted and as proposed to
be conducted.
22.4.2 Valid and Binding. Lessor is duly authorized to make and
enter into all of the Lease Documents to which Lessor is a party and to carry
out the transactions contemplated therein. All of the Lease Documents to which
Lessor is a party
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have each been duly executed and delivered by Lessor, and each is a legal, valid
and binding obligation of Lessor, enforceable in accordance with its terms.
22.4.3 No Violation. The execution, delivery and performance of
the Lease Documents and the consummation of the transactions thereby
contemplated shall not result in any breach of, or constitute a default under,
or result in the acceleration, or constitute an event which, with notice or
passage of time, or both, will result in default or acceleration of any
obligation of Lessor under any of the Permits and Contracts or any other
contract, mortgage, lien, lease, agreement, instrument, franchise, arbitration
award, judgment, decree, bank loan or credit agreement, trust indenture or other
instrument to which Lessor, is a party or by which Lessor may be bound or
affected and do not violate or contravene any Legal Requirements, restriction,
order, judgment, writ decree or injunction to which Lessor is subject.
ARTICLE 23
NOTICES
Any notice, request, demand, statement or consent made hereunder or under
any of the other Lease Documents shall be in writing and shall be deemed given
when personally delivered or tendered for delivery during normal business hours
by recognized courier service, sent by certified mail, return receipt requested,
or sent by a nationally recognized commercial overnight delivery service with
provision for a receipt, postage or delivery charges prepaid, and addressed as
follows:
If to Lessee: OrNda HealthCorp of Phoenix, Inc.
c/o OrNda HealthCorp
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx,
V.P. and Treasurer
With a copy to
Lessee's counsel: OrNda HealthCorp
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
If to the Guarantor: OrNda HealthCorp
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx,
V.P. and Treasurer
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If to Lessor: Meditrust of Arizona, Inc.
c/o Meditrust Mortgage Investments, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President
With copies to: Meditrust Mortgage Investments, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
and Xxxxx Xxxx III, Esq.
Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or such other address as Lessor, Lessee or Guarantor shall hereinafter from time
to time designate in a written notice to the others given in such manner. Any
notice given to Lessee or Guarantor by Lessor at any time shall not imply that
such notice or any further or similar notice was or is required.
ARTICLE 24
LIMITATION OF MEDITRUST LIABILITY
The Declaration of Trust establishing Meditrust, dated August 6, 1995 (the
"Declaration"), as amended, a copy of which is duly filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the trustees under the Declaration collectively as
trustees, but not individually or personally; and that no trustee, officer,
shareholder, employee or agent of Meditrust or its subsidiaries or other
Affiliates shall be held to any personal liability, jointly, or severally, for
any obligation of, or claim against Meditrust or its subsidiaries. All Persons
dealing with Meditrust or Lessor, in any way, shall look only to the assets of
Meditrust or Lessor, as applicable, for the payment of any sum or the
performance of any obligations. Notwithstanding the foregoing, Lessee hereby
acknowledges and agrees that Meditrust is not a party to this Lease and that
Lessee shall look only to the assets of Lessor for the payment of any sum or
performance of any obligations due by or from Lessor pursuant to the terms and
provisions hereof.
ARTICLE 25
MISCELLANEOUS PROVISIONS
25.1 Broker's Fee Indemnification. Lessee shall and hereby agrees to
indemnify, defend (with counsel at all times reasonably acceptable to Lessor)
and hold
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Lessor harmless from and against any and all claims for premiums or other
charges, finder's fees taxes, brokerage fees or commissions and other similar
compensation due in connection with any of the transactions contemplated by the
Lease Documents. This indemnification shall include all attorneys' fees and
expenses and court costs reasonably incurred by Lessor in connection with the
defense against any such claims and the enforcement of this indemnification
agreement and shall survive the termination of this Lease.
25.2 No Joint Venture or Partnership. Neither anything contained in any of
the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between Lessor and Lessee.
Lessee is not the agent or representative of Lessor and nothing contained herein
or in any of the other Lease Documents shall make, or be construed to make,
Lessor liable to any Person for goods delivered or services performed with
respect to the Leased Property or for debts or claims accruing against Lessee.
Lessee's obligations hereunder and under all of the Lease Documents are for the
benefit of and are enforceable and shall be enforceable by Lessor and are not
for the benefit of or enforceable by any other person except for successors and
assigns of Lessor and Lessee and the Guarantor.
25.3 Amendments, Waivers and Modifications. This Lease and the other Lease
Documents set forth the entire agreement of the parties with respect to the
subject matter hereof, and none of the terms, covenants, conditions, warranties
or representations contained in this Lease or in any of the other Lease
Documents may be renewed, replaced, amended, modified, extended, substituted,
revised, waived, consolidated or terminated except by an agreement in writing
signed by the Person against whom enforcement is sought or except as otherwise
expressly provided for herein or in another Lease Document. The provisions of
this Lease shall extend and be applicable to all renewals, replacements,
amendments, extensions, substitutions, revisions, consolidations and
modifications of the Lease and the other Lease Documents and the Permits and the
Contracts; references herein and in the other Lease Documents, to the Permits
and the Contracts shall be deemed to include any renewals, replacements,
amendments, extensions, substitutions, revisions, consolidations or
modifications thereof. Notwithstanding the foregoing, any reference contained in
any of the Lease Documents, whether express or implied, to any renewal,
replacement, amendment, extension, substitution, revisions, consolidation or
modification of the Lease or any of the other Lease Documents or the Permits or
the Contracts is not intended to constitute an agreement or consent by Lessor or
Lessee to any such renewal, replacement, amendment, substitution, revisions,
consolidation or modification; but, rather as a reference only, to those
instances where Lessor or Lessee may give, agree or consent to any such renewal,
replacement, amendment, extension, substitution, revision, consolidation or
modification as the same may be required pursuant to the terms, covenants and
conditions of any of the Lease Documents.
25.4 Caption and Headings. The captions and headings set forth in this
Lease and each of the other Lease Documents are included for convenience and
reference only, and the words contained therein shall in no way be held or
deemed to define, limit,
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describe, explain, modify, amplify or add to the interpretation, construction or
meaning of, or the scope or intent of, the Lease, any of the other Lease
Documents or any parts hereof or thereof.
25.5 Time is of the Essence. Time is of essence of each and every term,
condition, covenant and warranty set forth herein or in any of the other Lease
Documents.
25.6 Counterparts. This Lease may be executed in one or more counterparts,
each of which taken together shall constitute an original and all of which shall
constitute one in the same instrument.
25.7 Letter of Intent. This Lease and the other Lease Documents supersede
in all respects the letter dated January 12, 1995 (and all prior iterations
thereof) from Meditrust to Lessee ("Letter of Intent").
25.8 WAIVER 0F JURY TRIAL. TO THE MAXIMUM EXTENT NOT PROHIBITED BY
APPLICABLE LAW, LESSEE AND LESSOR HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY HERETO MAY NOW OR HEREAFTER HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE LEASE OR ANY OF THE LEASE DOCUMENTS. Lessee hereby certifies
that neither Lessor nor any of Lessor's representatives, agents or counsel has
represented expressly or otherwise that Lessor would not, in the event of any
such suit, action or proceeding seek to enforce this waiver to the right of
trial by jury and acknowledges that Lessor has been induced by this waiver
(among other things) to enter into the transactions evidenced by this Lease and
the other Lease Documents and further acknowledges that Lessee has read the
provisions of this Lease, and in particular, the paragraph containing this
waiver, has consulted legal counsel, understands the rights that it is granting
in this Lease and the rights that it is waiving in this paragraph in particular
and makes the waiver set forth herein knowingly, voluntarily and intentionally;
and Lessor hereby makes the same certification and acknowledgement to Lessee.
25.9 Successors and Assigns. This Lease and the other Lease Documents
shall (a) be binding upon, and inure to the benefit of, Lessee and Lessee's
legal representatives and permitted successors and assigns, and (b) be binding
upon, and inure to the benefit of, Lessor and any other Person who may now or
hereafter hold the interest of Lessor under this Lease and their respective
successors and assigns. Notwithstanding the foregoing, except for permitted
subleases, other Permitted Encumbrances and as otherwise set forth in this
Lease, Lessee shall not assign any of its rights or obligations hereunder or
under any of the other Lease Documents without the prior written consent of
Lessor, in each instance, which consent may be withheld Lessor's sole and
absolute discretion. However, in the event Lessor enters into any sort of
participation arrangement with any Person regarding this Lease (as distinct from
a sale of the Leased Property or any other complete transfer of Lessor's
interest in this Lease), Lessor will remain the
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party responsible for administering this Lease and will be the party with whom
Lessee will deal regarding all matters relating to this Lease.
25.10 No Third Party Beneficiaries. This Lease is solely for the benefit
of Lessor, its successors and assigns, and Lessee, its permitted successors and
assigns and nothing contained herein shall confer upon any person other than
Lessee or Lessor, their successors and assigns, any right to insist upon or to
enforce the performance or observance of any of the obligations contained
herein, except only as may be otherwise specifically provided for in this case
with respect to non-competition covenants. All conditions to the obligations of
Lessor to advance or make available proceeds of insurance or Condemnation, or to
release any deposits held for Impositions or insurance premiums are imposed
solely and exclusively for the benefit of Lessor and Lessee, their successors
and assigns. No other Person shall have standing to require satisfaction of such
conditions in accordance with their terms, and no other Person shall, under any
circumstances, be a beneficiary of such conditions, any or all of which may be
freely waived in whole or in part by Lessor at any time if in Lessor's sole and
absolute discretion, Lessor deems it advisable or desirable to do so.
25.11 Governing Law. This Lease shall be construed and the rights and
obligations of Lessor and Lessee shall be determined in accordance with the laws
of the State.
To the maximum extent not prohibited by applicable law, each of Lessor and
Lessee hereby submits to the non-exclusive jurisdiction of the courts of the
State and the United States District Court for the District in which the Leased
Property is situated as well as to the jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of any suit,
action or other proceeding arising out of or which respect to this Lease or any
of the other Lease Documents and expressly waives any and all objections Lessor
or Lessee, as applicable, may have as to venue in any of such courts.
25.12 General. Except as specifically provided in this Lease to the
contrary, all claims against, and liabilities of, Lessee or Lessor arising prior
to any date of termination of this Lease shall survive such 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. Lessee waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance and waives all notices
of the existence, creation, or incurring of new or additional obligations,
except as to all of the foregoing as expressly provided for herein.
25.13 True Lease. Lessor and Lessee agree that this Lease is in all
respects a lease arrangement and is not intended as, and shall not be construed
to be, a financing
91
102
arrangement of any sort. Moreover, all rights and remedies between and among
Lessor and Lessee shall be those rights and remedies as are applicable to a
lessor lessee relationship and not those applicable to a borrower/lender
relationship.
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
attested by their respective officers thereunto duly authorized.
LESSEE:
ORNDA HEALTHCORP OF PHOENIX, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
LESSOR:
MEDITRUST OF ARIZONA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx,
Senior Vice President
92
103
STATE OF TENNESSEE )
) SS.
County of Davidson )
On this 6th day of March, 1995, before me the undersigned Notary Public,
personally appeared, Xxxxx X. Xxxxxxxx, the Vice President of Ornda Healthcorp
of Phoenix Inc., known to me to be the person whose name is subscribed to the
within instrument, and acknowledged that the executed the same for the purposes
therein contained.
WITNESS my hand and official seal.
______________________________________
Notary Public
My Commission expires: _______________
STATE OF MASSACHUSETTS )
) ss.
County of Norfolk )
On this 25th day of February, 1995, before me, the undersigned Notary
Public, personally appeared Xxxxxxx X. Xxxxxxxx, the Senior Vice President of
Meditrust of Arizona, Inc., known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for the purposes therein contained.
WITNESS my hand and official seal.
By: _____________________________
Notary Public
My Commission expires: __________
93
104
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
105
EXHIBIT A-1
NO. 000-000-000000
PARCEL NO. 1:
Lots 8 through 24, inclusive, Block 1, of MONTEZUMA PLACE, according to the plat
of record in the office of the County Recorder of Maricopa County, Arizona,
recorded in Book 1 of Maps, Page 40;
EXECPT the South 7 feet of Lots 8, 9 and 10; and
EXECPT that portion of Lots 8, 9 and 10 lying within Van Buren Street; and
EXCEPT that portion of Lots 11 and 12 lying within 40 feet of the center line of
the Phoenix-Tempe State Highway as set forth in instrument recorded July 15,
1931 in Book 259 of Deeds, Page l66.
PARCEL NO. 2:
Xxxx 0, 0, 0, 0, 0, 0 and 10, of XXXXX HEIGHTS, according to the plat of record
in the office of the County Recorder of Maricopa County, Arizona, recorded in
Book 15 of Maps, Page 43;
EXCEPT those portions of Lots 1 and 3 lying within the West 47 feet of the
Southwest quarter of Section 3, Township 1 North, Range 3 East of the Gila and
Salt River Base and Meridian, Maricopa County, Arizona; and
EXCEPT that part of Lot 1, described as follows:
BEGINNING at the intersection of the North line of said Lot 1 with the East Line
of said West 47 feet;
thence Southerly along said East line a distance of 4 feet;
thence Northeasterly to a point on said North line which is 4 feet East of
the POINT OF BEGINNING;
thence to the POINT OF BEGINNING.
PARCEL NO. 3:
Lots 8 through 18, inclusive, Block A, of MONTEZUMA HEIGHTS, according to the
plat of record in the office of the County Recorder of Maricopa County, Arizona,
recorded in Book 6 of Maps, Page 50.
Continued...
106
EXHIBIT A-1 Page 2
(201-800-461381)
PARCEL NO. 4:
Lots 4 through 19, inclusive, Block B, of MONTEZUMA HEIGHTS according to the
plat of record in the office of the County Recorder of Maricopa County, Arizona,
recorded in Book 6 of Maps Page 50;
EXCEPT the West 5-1/2 feet of Lot 4; and
EXCEPT those portions of Lots 4 and 5 lying within 40 feet of the center line of
the 18 foot Phoenix-Tempe State Highway as it existed on April 4, 1930, as
conveyed by Deeds recorded in Book 259 of Deeds, Pages 156 and 161.
PARCEL NO. 5:
Lots 1 through 16, inclusive, Block D, of MONTEZUMA HEIGHTS, according to the
plat of record in the office of the County Recorder of Maricopa County, Arizona,
recorded in Book 6 of Maps, Page 50.
PARCEL NO. 6:
Lots 1 through 13, inclusive, Block F, of MONTEZUMA HEIGHTS according to the
plat of record in the office of the County Recorder of Maricopa County, Arizona,
recorded in Book 6 of Maps, Page 50;
EXCEPT BEGINNING at the Northwest corner of Lot 4;
thence East, along the North line of Lot 4, a distance of 8 feet
thence South to a point on the South line of Lot 4, a distance of 5 feet East of
the Southwest corner of Lot 4;
thence West 5 feet to the Southwest corner of Lot 4;
thence North 50 feet to the POINT OF BEGINNING.
PARCEL NO. 7:
The North half of that portion of the East-West alley adjoining Xxxx 0, 0 xxx 0
xx Xxxxx F, of MONTEZUMA HEIGHTS, according to the plat of record in the office
of the County Recorder of Maricopa County, Arizona, recorded in Book 6 of Maps,
Page 50, and lying between the Southerly prolongation of the East line of Lot 5
and the Southerly prolongation of a line parallel to and 2.6 feet West of the
East line of Xxx 0 xx xxxx Xxxxx X, XXXXXXXXX XXXXXXX; and
Continued...
107
EXHIBIT A-1 Page 3
(201-800-461381)
The South half of that portion of the East-West alley adjoining Lot 4 on the
North in Block F of MONTEZUMA HEIGHTS, according to Book 6 of Maps, Page 50,
records of Maricopa County, Arizona, and included between the Northerly
prolongation of the East line parallel to and 8 feet East of the West line of
said Xxx 0 xx xxxx Xxxxx X, XXXXXXXXX XXXXXXX.
PARCEL NO. 8:
Xxx 0, xx XX. XXXX'X XXXXXXXX XXXXXXX XXXXXX, according to the plat of record in
the office of the County Recorder of Maricopa County, Arizona, recorded in Book
220 of Maps, Page 46; and Xxx 0, xx XX. XXXX'X XXXXXXXX XXXXXXX XXXXXX - XXXX 0,
according to the plat of record in the office of the County Recorder of Maricopa
County, Arizona, recorded in Book 234 of Maps, Page 49.
EXCEPT that portion of Parcel No. 8 described as follows:
Xxx 0, xx XXXXXXXXXX XXXXXXXXX RESEARCH CENTER, according to the plat of record
in the office of the County Recorder of Maricopa County, Arizona, recorded in
Book 265 of Maps, Page 7.
PARCEL NO. 9:
Tracts 2 and 3, inclusive, of ST. LUKE'S PLACE, according to the plat of record
in the office of the County Recorder of Maricopa County, Arizona, recorded in
Book __27 of Maps, Page 35.
PARCEL NO. 10:
Xxxx 0 xxx 00, Xxxxx X, xx XXXXXXXXX XXXXXXX, according to the plat of record in
the office of the County Recorder of Maricopa County, Arizona, recorded in Book
6 of Maps, Page 50;
TOGETHER with that part of the South half of Xxxxxx Street (abandoned; shown as
Toltec Street on said plat) lying between the Northerly prolongations of the
West line of said Lot 9 and a line which is parallel with and 7.5 feet East of
the East line of said Lot 9; and
TOGETHER with that part of the West half of the abandoned alley adjoining in the
East line of said lots and lying between the Easterly prolongations of the North
line of said Lot 9 and the South line of said Lot 10;
Said street and alley having been abandoned by Resolution No. 15702 of the City
of Phoenix, Arizona, as recorded in the office of said County Recorder in Docket
15450, Page 1583 thereof.
Continued...
108
EXHIBIT A-1 Page 4
(201-800-461381)
PARCEL NO. 11:
Lot 1, of XXXXXXXXXX ARTHRITIS RESEARCH CENTER, according to the plat of record
in the office of the County Recorder of Maricopa County, Arizona, recorded in
Book 265 of Maps, Page 7;
EXCEPT that portion of said Xxx 0, XXXXXXXXXX XXXXXXXXX RESEARCH CENTER
described as follows:
COMMENCING at the intersection of Xxxxxxxx Street and the South line of Section
3, Township 1 North, Range 3 East, from which the Southwest corner of said
Section 3 bears North 89 degrees 53 minutes 17 seconds West, a distance of
994.37 feet;
thence North 00 degrees 03 minutes 43 seconds West along the monument line of
Xxxxxxxx Street a distance of 253.44 feet to a point;
thence South 89 degrees 53 minutes 41 seconds East, a distance of 25.00 feet to
a point on the Easterly right of way line of Xxxxxxxx Street and the TRUE POINT
OF BEGINNING;
thence continuing South 89 degrees 53 minutes 41 seconds East, a distance or
274.83 feet to a point on the Westerly right xx xxx xxxx xx 00xx Xxxxxx;
thence South 00 degrees 03 minutes 18 seconds East along said right of way line
a distance of 186.86 feet to an angle point;
thence South 45 degrees 02 minutes 36 seconds West, a distance of 25.41 feet to
a point on the Northerly right of way line of Van Buren Street;
thence North 89 degrees 51 minutes 04 seconds West (record), North 89 degrees 51
minutes 52 seconds West (measured) along said right of way line a distance of
201.89 feet (record), 201.83 feet (measured) to a point on the Easterly line of
said Xxx 0, XXXXXXXXX XXXXXXX, according to Book 6 of Maps, Page 50, in the
records of Maricopa County;
thence North 00 degrees 03 minutes 28 seconds West along said Easterly line, a
distance of 140.89 feet to a point;
thence South 89 degrees 54 minutes 57 seconds West, a distance of 54.98 feet to
a point on the Easterly right of way line of Xxxxxxxx Street;
thence North 00 degrees 03 minutes 43 seconds West along said Easterly right of
way line a distance of 64.05 feet to the TRUE POINT OF BEGINNING.
Continued...
109
EXHIBIT A-1 Page 5
(201-800-461381)
PARCEL NO. 12:
A permanent irrevocable easement for public utilities created by instrument
recorded _______ in ______________, of Official Records modifying; easement
recorded December 28, 1990 in 90-575500, of Official Records on and over the
following described property:
COMMENCING at the intersection of Xxxxxxxx Street and the South line of Section
3, Township 1 North, Range 3 East, from which the Southwest corner of said
Section 3 bears North 89 degrees 51 minutes 17 seconds West, a distance of
994.37 feet;
thence North 00 degrees 03 minutes 43 seconds West along the monument Line of
Xxxxxxxx Street a distance of 253.44 feet to a point;
thence South 89 degrees 53 minutes 41 seconds East, a distance of 25.00 feet to
a point on the Easterly right of way line of Xxxxxxxx Street and the TRUE POINT
OF BEGINNING;
thence continuing South 89 degrees 53 minutes 41 seconds East, distance of
274.83 feet to a point on the Westerly right of line of 00xx Xxxxxx;
thence South 00 degrees 03 minutes 18 seconds East along said right of way line
a distance of 186.86 feet to an angle point;
thence South 45 decrees 02 minutes 36 seconds West, a distance of 25.41 feet to
a point on the Northerly right of way line of Van Buren Street;
thence North 89 degrees 51 minutes 04 seconds West (record), North 89 degrees 51
minutes 52 seconds West (measured) along said right of way line a distance of
201.89 feet (record), 201.83 feet (measured) to a point on the Easterly line of
said Xxx 0, XXXXXXXXX XXXXXXX, according to Book 6 of Maps, Page 50, in the
records of Maricopa County;
thence North 00 degrees 03 minutes 28 seconds West along said Easterly line, a
distance of 140.89 feet to a point;
thence South 89 degrees 54 minutes 57 seconds West, a distance of 54.98 feet to
a point on the Easterly right of way line of Xxxxxxxx Street;
thence North 00 degrees 03 minutes 43 seconds West along said Easterly right of
way line a distance of 64.05 feet to the POINT OF BEGINNING.
110
EXHIBIT A-2
NO. 000-000-000000
PARCEL NO. 1:
All that portion of the Northwest quarter of the Southwest quarter of Section
22, Township 1 North, Range 4 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona, described as follows:
BEGINNING at a point in the center line of the Xxxxxx Xxxxx, 38 feet West and
631 feet South of the place where the East and West center line of Section 22,
Township 1 North, Range 4 East, crosses the center line of Mill Avenue;
thence West 822.45 feet (recorded 822 feet) to a fence along the boundary of
Southern Pacific Railway right-of-way;
thence in a Southeasterly direction along the Northeasterly right-of-way line of
the Southern Pacific Railway and parallel thereto to a point 62.4 feet West of
the center line of Mill Avenue and which point is the fence along the West side
of Mill Avenue;
thence in a Northerly direction 628.49 feet (recorded 630 feet) along said fence
making the West boundary of Mill Avenue to the point of beginning;
EXCEPTING therefrom all that portion lying Easterly of the Westerly line of the
land described as follows:
COMMENCING at the intersection of the centerline of Mill Avenue and the
centerline of Xxxxxx Xxxx as depicted on the plat of COLLEGE VIEW, a subdivision
according to Book 30 of Maps, Page 4, records of Maricopa County, Arizona;
thence South 89 degrees 25 minutes 29 seconds West, along the centerline of said
Xxxxxx Xxxx, 70.00 feet;
thence South 00 degrees 34 minutes 31 seconds East 30.00 feet, to the South line
of said Xxxxxx Xxxx, said point being the TRUE POINT OF BEGINNING;
thence South 37 degrees 28 minutes 01 seconds East, 25.01 feet, to a point on a
line parallel to and 55 feet Westerly of centerline of said Mill Avenue;
thence South 00 degrees 36 minutes 00 seconds East, along said parallel line,
636.80 feet to a point on the West line of said Mill Avenue;
thence North 01 degrees 36 minutes 03 seconds East along said West line, 326.10
feet;
Continued . . .
111
EXHIBIT A-2 Page 2
(201-800-661382)
thence North 00 degrees 49 minutes 10 seconds East, along said West line, 100.00
feet;
thence North 00 degrees 36 minutes 00 seconds West, along said West line, 220.97
feet;
thence North 45 degrees 35 minutes 11 seconds West, along said West line, 14.15
feet to the South line of said Xxxxxx Xxxx;
thence South 89 degrees 25 minutes 29 seconds West, along said South line, 20.00
feet to the TRUE POINT OF BEGINNING.
PARCEL NO. 2:
That part of the Northwest quarter of the Southwest quarter of Section 22,
Township 1 North, Range 4 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona, described as follows:
COMMENCING at the intersection of the West line of Mill Avenue and the South
line of Xxxxxx Xxxx as shown on the plat of COLLEGE VIEW, recorded in Xxxx 30 of
Maps, Page 4, records of Maricopa County, Arizona;
thence South 89 degrees 25 minutes West, a distance of 250 feet along the South
line of said Xxxxxx Xxxx to the POINT OF BEGINNGIN;
thence continuing South 89 degrees 25 minutes West a distance of 90 feet more or
less to the Northeast corner of said Lot 7 of said COLLEGE VIEW;
thence South 0 degrees 36 minutes East a distance of 115 feet the Northwest
corner of Lot 5 of said COLLEGE VIEW;
thence North 89 degrees 25 minutes East a distance of 90 feet, more or less,
along the North line of said Lot 5 to a point 250 feet from the West line of
Mill Avenue;
thence North 0 degrees 36 minutes West a distance of 115 feet the POINT OF
BEGINNING.
PARCEL NO. 3:
That part of Lot 5, of COLLEGE VIEW, according to the plat of record in the
office of the County Recorder of Maricopa County, Arizona, recorded in Book 30
of Maps, Page 4, described as follows:
BEGINNING at a point on the North Line of said Xxx 0, Xxxxx 00 xxxxxxx 00
xxxxxxx Xxxx a distance of 250 feet from the Northeast corner of said lot;
Continued . . .
112
EXHIBIT A-2 Page 3
(201-800-661382)
thence continuing South 89 degrees 25 minutes West a distance of 90 feet, more
or less, to the Northwest corner of said lot;
thence South 0 degrees 36 minutes West, a distance of 119.44 feet to the
Southwest corner of said lot;
thence North 88 degrees 50 minutes 10 seconds East along the South line of said
lot a distance of 90 feet, more or less, to a point 250 feet from the West line
of Mill Avenue;
thence North 0 degrees 36 minutes East a distance of 119.44 feet, more or less,
to the POINT OF BEGINNING.
PARCEL NO. 4:
The East 75 feet of Lot 7, of COLLEGE VIEW, according to the plat of record in
the office of the County Recorder of Maricopa County, Arizona, recorded in Book
30 of Maps, Page 4.
PARCEL NO. 5:
The West 25 feet of Lot 7 and the East 50 feet of Lot 9, of COLLEGE VIEW,
according to the plat of record in the office of the County Recorder of Maricopa
County, Arizona, recorded in Book 30 of Maps, Page 4.
PARCEL NO. 6:
The West half of Lot 9 and the East 25 feet of Lot 11, of COLLEGE VIEW,
according to the plat of record in the office of the County Recorder of Maricopa
County, Arizona, recorded in Book 30 of Maps, Page 4.
PARCEL NO. 7:
That part of Lot 5, of COLLEGE VIEW, according to the plat of record in the
office of the County Recorder of Maricopa County, Arizona, recorded in Book 30
of Maps, Page 4, and
That part of the Northwest quarter of the Southwest quarter of Section 22,
Township 1 North, Range 4 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona, described as follows:
BEGINNING at the intersection of the West line of Mill Avenue and the South Line
of Xxxxxx Xxxx, as shown on said plat of COLLEGE VIEW;
Continued...
113
EXHIBIT A-2 Page 4
(201-800-661382)
thence South 89 degrees 25 minutes West along said South line, 250 feet;
thence Southerly parallel with the said West line of Mill Avenue to the South
line of said Lot 5;
thence Easterly along said South line, 250 feet to said West line of Mill
Avenue;
thence Northerly along said West line, 231.02 feet to the POINT OF BEGINNING;
EXCEPT the following 3 parcels deeded to the City of Tempe by Deed recorded in
Docket 9638, Page 687, records of Maricopa County, Arizona, described as
follows:
PARCEL NO. A:
The East 2.00 feet of Lot 5, of COLLEGE VIEW, according to the plat of record in
the office of the County Recorder of Maricopa County, Arizona, recorded in Book
30 of Maps, Page 4.
PARCEL NO. B:
The East 2.00 feet of that part of the Northwest quarter of the Southwest
quarter of Section 22, Township 1 North, Range 4 East of the Gila and Salt River
Base and Meridian, Maricopa County, Arizona, described as follows:
FROM the Northwest Corner of that said Northwest quarter of the Southwest
quarter of Section 22;
thence North 89 degrees 25 minutes East along the quarter Section line, 1075.65
feet to the West line of Mill Avenue;
thence South 0 degrees 36 minutes East along the West line of Mill Avenue,
405.00 feet to the POINT OF BEGINNING of the parcel of land herein described and
the Northeast corner thereof;
thence South 0 degrees 36 minutes East along the Xxxx Xxxx xx Xxxx Xxxxxx,
000.00 feet;
thence South 89 degrees 25 minutes West, 340.00 feet;
thence North 0 degrees 36 minutes West, 115.00 feet to the South Line of
Xxxxxx Xxxx;
Continued...
114
EXHIBIT A-2 Page 5
(201-800-661382)
thence North 89 degrees 25 minutes East along the South line of Xxxxxx Xxxx,
340.00 feet to the POINT OF BEGINNING.
PARCEL NO. C:
That part of the Northwest quarter of the Southwest quarter of Section 22,
Township 1 North, Range 4 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona, described as follows:
FROM the Northwest corner of said Northwest quarter of the Southwest quarter
of said Section 22;
thence North 89 degrees 25 minutes East along the quarter section line 1075.65
feet to the West line of Mill Avenue;
thence South 0 degrees 36 minutes East along the West line of Mill Avenue,
405.00 feet to a point on the South line of Xxxxxx Xxxx;
thence South 89 degrees 25 minutes West 2.00 feet to the POINT OF BEGINNING;
thence continuing South 89 degrees 25 minutes West, along the South line of
Xxxxxx Xxxx, 10.00 feet;
thence Southeasterly to a point 40.00 feet West of the centerline of Mill
Avenue, said point being 10.00 feet South of the POINT OF BEGINNING;
thence North to the POINT OF BEGINNING; and
EXCEPT the following parcel deeded to the City of Tempe by Deed recorded in
86-314301, of Official Records, records of County, Arizona, described as
follows:
PARCEL NO. D:
COMMENCING at the intersection of the centerline of Mill Avenue and the
centerline of Xxxxxx Xxxx as depicted on the plat of COLLEGE VIEW, a subdivision
according to Book 30 of Maps, Page 4, records of Maricopa County, Arizona;
thence South 89 degrees 25 minutes 29 seconds West, along the centerline of said
Xxxxxx Xxxx, 70.00 feet;
thence South 00 degrees 34 minutes 31 seconds East 30.00 feet, the South line of
said Xxxxxx Xxxx, said point of being the TRUE POINT OF BEGINNING;
Continued . . .
115
EXHIBIT A-2 Page 6
(201-800-661382)
thence South 37 decrees 28 minutes 01 seconds East, 25.01 feet, to a point on a
line parallel to and 55.00 feet Westerly of the centerline of said Mill Avenue;
thence South 00 degrees 36 minutes 00 seconds East, along said parallel line,
636.80 feet to a point on the West line of said Mill Avenue;
thence North 01 degrees 36 minutes 03 seconds East, along said West line, 326.10
feet;
thence North 00 degrees 49 minutes 10 Seconds East, along said West line, 100.00
feet;
thence North 00 degrees 36 minutes 00 seconds West, along said West Line, 220.97
feet;
thence North 45 degrees 35 minutes 11 seconds West, along said West line, 14.15
feet to the South line of said Xxxxxx Xxxx;
thence South 89 degrees 25 minutes 29 seconds West, along said South line, 20.0
feet to the TRUE POINT OF BEGINNING.
PARCEL NO. 8:
Lots 11 and 13, of COLLEGE VIEW, according to the plat of record in the office
of the County Recorder of Maricopa County, Arizona, recorded in Book 30 of Maps,
Page 4;
EXCEPT the East 25 feet of Xxx 00.
000
XXXXXXX X-0
XXXXXXXXXXXXX, XXXXXXXXXXXXXX AND ATTORNMENT AGREEMENT
This SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") is made as of February 1, 1995 by and among MEDITRUST OF ARIZONA,
INC., a Delaware corporation, having its principal place of business at 000
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (together with all successors
and assigns, hereinafter referred to as the "Landlord"), ORNDA, HEALTHCORP OF
PHOENIX, INC., a California corporation, having its principal place of business
at 0000 Xxxx Xxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (together with all
successors and assigns, hereinafter referred to as the "Tenant"), and MEDITRUST,
a Massachusetts business trust, having its principal place of business at 000
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (together with all successors
and assigns, hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, the Lender has made a loan (the "Loan") to the Landlord in the
original principal amount of SIXTY-FIVE MILLION SIX HUNDRED FIFTY THOUSAND
DOLLARS ($65,650,000.00), which Loan is evidenced by a Promissory Note dated as
of February 1, 1995 made payable by the Landlord to the order of the Lender (as
amended in writing from time to time, hereinafter referred to as the "Note");
WHEREAS, payment of the indebtedness evidenced by the Note is secured, in
part, by a Deed of Trust and Assignment of Rents (as amended in writing from
time to time, hereinafter referred to as the "Deed of Trust") of even date and
recorded in the Maricopa County (Arizona) Recorder's Office in Docket ______,
Page ___, by the Landlord in favor of the Lender, encumbering the Landlord's fee
interest in the real property and all of the improvements now or hereafter
located thereon in Phoenix and Tempe, Maricopa County, Arizona (hereinafter
collectively referred to as the "Mortgaged Property") as more particularly
described on EXHIBITS A-1 and A-2 attached hereto and incorporated herein by
reference;
WHEREAS, the Note, the Deed of Trust and all other documents and
instruments now or hereafter evidencing or securing the repayment of, or
otherwise pertaining to and executed and delivered in connection with the Loan,
each as amended in writing from time to time, are hereinafter collectively
referred to as the "Loan Documents" and all indebtedness and all other
covenants, terms, conditions and warranties under the Loan Documents are
hereinafter collectively referred to as the "Mortgaged Indebtedness";
1
117
WHEREAS, the Landlord and the Tenant have entered into a certain Facility
Lease (as amended in writing from time to time, hereinafter referred to as the
"Lease") of even date respecting the Mortgaged Property; and
WHEREAS, the Lender has required that the Tenant execute and deliver this
Agreement as a condition of the Lender's agreeing to make the Loan;
NOW, THEREFORE, in consideration of the foregoing premises and the sum of
Ten Dollars ($10) and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties do hereby covenant and
agree as follows:
1. Subordination. The Tenant hereby agrees that the Lease and any
amendments, consolidations, substitutions, extensions, renewals, replacements or
modifications thereof, and all of its right, title and interest in and to the
Mortgaged Property, including, without limitation, any options to purchase and
rights of first refusal relating thereto, are and shall be subject and
subordinate in all respects to all of the Loan Documents, including, without
limitation, the lien of the Deed of Trust, and to all amendments, increases,
revisions, substitutions, renewals, modifications, consolidations, replacements
and extensions thereof, to the full extent of the Mortgaged Indebtedness with
the same force and effect as if the Note, the Deed of Trust and all other Loan
Documents were each made, delivered and/or recorded prior to the making,
delivery and/or recording of the Lease (or any memorandum or notice thereof).
2. Nondisturbance. So long as there is no default (beyond any applicable
notice and grace period expressly given the Tenant in the Lease to cure such
default) in the payment of rent or in the performance or fulfillment of any of
the terms, warranties, representations, covenants or conditions of the Lease,
the Tenant's possession of the Mortgaged Property and the Tenant's rights and
privileges under the Lease or any extensions or renewals thereof which may be
effected in accordance with any option granted in the Lease shall not be
diminished or interfered with by the Lender, and the Tenant's occupancy of the
Mortgaged Property shall not be disturbed by the Lender during the term of the
Lease or any extensions or renewals thereof.
3. Attornment. If the interest of the Landlord shall be transferred to the
Lender or any other person by reason of the Lender's exercise of any of its
rights or remedies under the Loan Documents, including, without limitation, the
exercise of the power of sale under the Deed of Trust or other proceeding
brought to enforce the rights of the holder of the Deed of Trust, by deed in
lieu of foreclosure or by any other method (each such other persons being
hereinafter referred to as a "Purchaser"), and the Lender or such Purchaser
succeeds to the interest of the Lender in the Mortgaged Property, the Tenant
shall be bound to the Lender or such Purchaser, and the Lender or such Purchaser
shall be bound to the Tenant under all of the terms, covenants, conditions and
warranties under the Lease for the balance of the term thereof remaining and any
extensions or renewals thereof which may be effected in accordance with any
option granted in the Lease, with the same force and effect as if the Lender or
such Purchaser were the Landlord under the Lease, and the Tenant does hereby
attorn to the Lender or such
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Purchaser as its landlord, said attornment to be effective and self-operative
without the execution of any further instruments on the part of any parties
hereto immediately upon the Lender or such Purchaser succeeding to the interest
of the Landlord in the Mortgaged Property.
Without limiting the foregoing, within fifteen (15) business days after
written request by the Lender or such Purchaser, the Tenant agrees to execute
and deliver to the Lender or such person, any instrument of further assurance
reasonably requested by the Lender or such Person to confirm and acknowledge
such attornment.
Notwithstanding anything to the contrary contained herein, the Tenant
shall be under no obligation to pay rent or any other charges due under the
Lease to the Lender or such Purchaser until the Tenant receives written notice
from the Lender or such Purchaser that it has succeeded to the interest of the
Landlord in the Mortgaged Property (or that the Lender has exercised its rights
under the Deed of Trust) and directing where such rent should be delivered.
4. Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provisions for
a receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed to the addresses set forth on the first page of this Agreement or at
such other place as either party hereto may from time to time hereafter
designate to the other in writing. Any notice given to the Tenant by the Lender
at any time shall not imply that such notice or any further or similar notice
was or is required.
5. Governing Law. This Agreement shall be construed, and the rights
and obligations of the Tenant and the Lender shall be determined, in
accordance with the laws of the Commonwealth of Massachusetts, except that
the laws of the State of Arizona.
6. Successors and Assigns. This Agreement shall (a) be binding on the
Tenant and the Tenant's heirs, executors, administrators, legal representatives,
and permitted successors and assigns and (b) inure to the benefit of the Lender,
any person who may now or hereafter hold any interest in the Loan and their
respective successors and assigns. Notwithstanding the foregoing, the Tenant
shall not assign or otherwise transfer this Agreement or any of its rights or
obligations hereunder without the express written consent of the Lender in each
instance, which consent may be withheld in the Lender's sole and absolute
discretion.
7. Limitation of Liability. The Declaration of Trust establishing the sole
shareholder of the Lender, Meditrust, a Massachusetts business trust, dated
August 6, 1985 (hereinafter referred to as the "Declaration"), a copy of which,
together with all amendments thereto, is duly filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the trustees under the Declaration collectively as
trustees, but not individually or personally;
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119
and that no trustee, officer, shareholder, employee or agent of Meditrust or its
Subsidiaries shall be held to any personal liability, jointly, or severally, for
any obligation of, or claim against Meditrust or any of its Subsidiaries. All
Persons dealing with Meditrust or the Lender, in any way, shall look only to the
assets of Meditrust or the Lender, respectively, for the payment of any sum or
the performance of any obligation. Furthermore, in no event shall the Lender or
Meditrust ever be liable to the Tenant for any indirect or consequential damages
suffered by the Tenant resulting from any cause whatsoever. Notwithstanding the
foregoing, the Tenant hereby acknowledges and agrees that Meditrust is not a
party to this Agreement and that the Tenant shall look only to the assets of the
Lender for the payment of any sum or performance of any obligation due by or
from the Lender pursuant to the terms, covenants and conditions hereof.
8. Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
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120
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument on the date first above-mentioned.
TENANT:
ORNDA HEALTHCORP OF PHOENIX, INC., a
California corporation
By: _______________________________
Name: _____________________
Title: ______________________
hereunto duly authorized
LANDLORD:
MEDITRUST OF ARIZONA, INC., a Delaware
corporation
By: _______________________________
Xxxxxxx X. Xxxxxxxx, Senior
Vice President
LENDER:
MEDITRUST, a Massachusetts business trust
By: _______________________________
Name: _____________________
Title: ______________________
hereunto duly authorized
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121
STATE OF: _____________
COUNTY OF:______________ February ___, 1995
Then personally appeared the above-named ____________________ who swore
that he is the _______________ of OrNda HealthCorp of Phoenix, Inc., and
acknowledged the foregoing instrument to be his free act and deed and the
free act and deed of said OrNda HealthCorp of Phoenix, Inc., before me,
____________________________________
Notary Public
My commission expires: _____________
COMMONWEALTH OF MASSACHUSETTS
Norfolk, ss February ___, 1995
Then personally appeared the above-named Xxxxxxx X. Xxxxxxxx who swore
that he is the Senior Vice President of Meditrust of Arizona, Inc., and
acknowledged the foregoing instrument to be his free act and deed and the
free act and deed of said Meditrust of Arizona, Inc., before me,
____________________________________
Notary Public
My commission expires: _____________
COMMONWEALTH OF MASSACHUSETTS
Norfolk, ss February ____, 1995
Then personally appeared the above-named _________________, who swore that
he is the __________________ of Meditrust, and acknowledged the foregoing
instrument to be his free act and deed and the free act and deed of said
Meditrust, before me,
____________________________________
Notary Public
My commission expires: _____________
6
122
EXHIBIT A-4
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
This SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") is made as of February 1, 1995 by and among MEDITRUST OF ARIZONA,
INC., a Delaware corporation, having its principal place of business at 000
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (together with all successors
and assigns, hereinafter referred to as the "Landlord"), ORNDA HEALTHCORP OF
PHOENIX, INC., a California corporation, having its principal place of business
at 0000 Xxxx Xxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (together with all
successors and assigns, hereinafter referred to as the "Tenant"), and MEDITRUST,
a Massachusetts business trust, having its principal place of business at 000
Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (together with all successors
and assigns, hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, the Lender has made a loan (the "Loan") to the Land1ord in the
original principal amount of SIXTY-FIVE MILLION SIX HUNDRED FIFTY THOUSAND
DOLLARS ($65,650,000.00), which Loan is evidenced by a Promissory Note dated as
of February 1, 1995 made payable by the Landlord to the order of the Lender (as
amended in writing from time to time, hereinafter referred to as the "Note");
WHEREAS, payment of the indebtedness evidenced by the Note is secured, in
part, by a Deed of Trust and Assignment of Rents (as amended in writing from
time to time, hereinafter referred to as the "Deed of Trust") of even date and
recorded in the Maricopa County (Arizona) Recorder's Office in Docket ______,
Page _____ by the Landlord in favor of the Lender, encumbering the Landlord's
fee interest in the real property and all of the improvements now or hereafter
located thereon in Phoenix and Tempe, Maricopa County, Arizona (hereinafter
collectively referred to as the "Mortgaged Property") as more particularly
described on EXHIBITS A-1 and A-2 attached hereto and incorporated herein by
reference;
WHEREAS, the Note, the Deed of Trust and all other documents and
instruments now or hereafter evidencing or securing the repayment of, or
otherwise pertaining to and executed and delivered in connection with the Loan,
each as amended in writing from time to time, are hereinafter collectively
referred to as the "Loan Documents" and all indebtedness and all other
covenants, terms, conditions and warranties under the Loan Documents are
hereinafter collectively referred to as the "Mortgaged Indebtedness";
WHEREAS, St. Luke's Hospital Medical Center (the successor of which is the
Landlord), as Lessor, and St. Luke's Medical Office Building Partnership, Ltd.
the successor of which is the Tenant), as lessee, entered into a certain Lease
(as amended in
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writing from time to time, the "Lease") respecting a portion of the Mortgaged
Property, a memorandum of which Lease is recorded with Maricopa County
Recorder's Office on February 15, 1980 in Docket 14228, Page 773, as affected by
a Supplement recorded with Maricopa County recorder's Office in Docket 14257,
Page 1141; and
WHEREAS, the Lender has required that the Tenant execute and deliver this
Agreement as a condition of the Lender's agreeing to make the Loan;
NOW, THEREFORE, in consideration of the foregoing premises and the sum of
Ten Dollars ($10) and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties do hereby covenant and
agree as follows:
1. Subordination. The Tenant hereby agrees that the Lease and any
amendments, considerations, substitutions, extensions, renewals, replacements or
modifications thereof, and all of its right, title and interest in and to the
Mortgaged Property, including, without limitation, any options to purchase and
rights of first refusal relating thereto, are and shall be subject and
subordinate in all respects to all of the Loan Documents, including, without
limitation, the lien of the Deed of Trust, and all amendments, increases,
revisions, substitutions, renewals, modifications, consolidations, replacements
and extensions thereof, the full extent of the Mortgaged Indebtedness with the
same force and effect as if the Note, the Deed of Trust and all other Loan
Documents were each made, delivered and/or recorded prior to the making,
delivery and/or recording of the Lease (or any memorandum or notice thereof).
2. Nondisturbance. So long as there is no default (beyond any applicable
notice and grace period expressly given the Tenant in the Lease to cure such
default) in the payment of rent or in the performance or fulfillment of any of
the terms, warranties, representations, covenants or conditions of the Lease,
the Tenant's possession of the Mortgaged Property and the Tenant's rights and
privileges under the Lease or any extensions or renewals thereof which may be
effected in accordance with any option granted in the lease shall not be
diminished or interfered with by the Lender, and the Tenant's occupancy of the
Mortgaged Property shall not be disturbed by the Lender during the term of the
ease or any extensions or renewals thereof.
3. Attornment. If the interest of the Landlord shall be transferred to the
Lender or any other person by reason of the Lender's exercise of any of its
rights or remedies under the Loan Documents, including, with limitation, the
exercise of the power of sale under the Deed of Trust or other proceeding
brought to enforce the rights of the holder of the Deed of Trust by deed in lieu
of foreclosure or by any other method (each such other persons being hereinafter
referred to as a "Purchaser"), and the Lender or such purchaser succeeds to the
interest of the Lender in the Mortgaged Property, the Tenant shall be bound to
the Lender or such Purchaser, and the Lender or such Purchaser shall be bound to
the Tenant under all of the terms, covenants, conditions and warranties under
the Lease for the balance of the term thereof remaining and any extensions or
renewals thereof which may be effected in accordance with any option granted in
the Lease, with the same force and effect as if the Lender or such Purchaser
were the Landlord under the
2
124
Lease, and the Tenant does hereby attorn to the Lender or such Purchaser as its
landlord, said attornment to be effective and self-operative without the
execution of any further instruments on the part of any parties hereto
immediately upon the Lender or such Purchaser succeeding to the interest of the
Landlord in the Mortgaged Property.
Without limiting the foregoing, within fifteen (l5) business days after
written request by the Lender or such Purchaser, the Tenant agrees to execute
and deliver to the Lender or such person, any instrument of further assurance
reasonably requested by the Lender or such Person to confirm and acknowledge
such attornment.
Notwithstanding anything to the contrary contained herein, the Tenant
shall be under no obligation to pay rent or any other charges due under the
Lease to the Lender or such Purchaser until the Tenant receives written notice
from the Lender or such Purchaser that it has succeeded to the interest of the
Landlord in the Mortgaged Property (or that the Lender has exercised its rights
under the Deed of Trust) and directing where such rent should be delivered.
4. Notices. Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if personally
delivered, sent by certified mail, return receipt requested, or sent by a
nationally recognized commercial overnight delivery service with provisions for
a receipt, postage or delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery service and
addressed to the addresses set forth on the first page of this Agreement or at
such other place as either party hereto may from time to time hereafter
designate to the other in writing. Any notice given to the Tenant by the Lender
at any time shall not imply that such notice or any further or similar notice
was or is required.
5. Governing Law. This Agreement shall be construed, and the rights
and obligations of the Tenant and the Lender shall be determined, in
accordance with the laws of the Commonwealth of Massachusetts, except that
the laws of the State of Arizona.
6. Successors and Assigns. This Agreement shall (a) be binding on the
Tenant and the Tenant's heirs, executors, administrators, legal representatives,
and permitted successors and assigns and (b) inure to the benefit of the Lender,
any person who may now or hereafter hold any interest in the Loan and their
respective successors and assigns. Notwithstanding the foregoing, the Tenant
shall not assign or otherwise transfer this Agreement or any of its rights or
obligations hereunder without the express written consent of the Lender in each
instance, which consent may be withheld in the Lender's sole and absolute
discretion.
7. Limitation of Liability. The Declaration of Trust establishing the sole
shareholder of the Lender, Meditrust, a Massachusetts business trust, dated
August 6, 1985 (hereinafter referred to as the "Declaration"), a copy of which,
together with all amendments thereto, is duly filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, provides that the name
"Meditrust" refers to the trustees under the Declaration collectively as
trustees, but not individually or personally;
3
125
and that no trustee, officer, shareholder, employee or agent of Meditrust or its
Subsidiaries shall be held to any personal liability, jointly, or severally, for
any obligation of, or claim against Meditrust or any of its Subsidiaries. All
Persons dealing with Meditrust or the Lender, in any way, shall look only to the
assets of Meditrust or the Lender, respectively, for the payment of any sum or
the performance of any obligation. Furthermore, in no event shall the Lender or
Meditrust ever be liable to the Tenant for any indirect or consequential damages
suffered by the Tenant resulting from any cause whatsoever. Notwithstanding the
foregoing, the Tenant hereby acknowledges and agrees that Meditrust is not a
party to this Agreement and that the Tenant shall look only to the assets of the
Lender for the payment of any sum or performance of any obligation due by or
from the Lender pursuant to the terms, covenants and conditions hereof.
8. Time of the Essence. Time is of the essence of each and every
term, condition, covenant and warranty set forth herein.
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126
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument on the date first above-mentioned.
TENANT:
ORNDA HEALTHCORP OF PHOENIX, INC., a
California corporation
By: ______________________________
Name: ______________________
Title: _______________________
hereunto duly authorized
LANDLORD:
MEDITRUST OF ARIZONA, INC., a Delaware
corporation
By: ____________________________
Xxxxxxx X. Xxxxxxxx,
Senior Vice President
LENDER:
MEDITRUST, a Massachusetts business trust
By: _______________________________
Name: ______________________
Title: _______________________
hereunto duly authorized
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127
STATE OF: ________________
COUNTY OF:______________ February _____, 1995
Then personally appeared the above-named ____________________ who swore
that he is the _______________ of OrNda HealthCorp of Phoenix, Inc., and
acknowledged the foregoing instrument to be his free act and deed and the
free act and deed of said OrNda HealthCOrp of Phoenix, Inc., before me,
____________________________________
Notary Public
My commission expires: _______________
COMMONWEALTH OF MASSACHUSETTS
Norfolk, ss February ___, 1995
Then personally appeared the above-named Xxxxxxx X. Xxxxxxxx, who swore
that he is the Senior Vice President of Meditrust of Arizona, Inc., and
acknowledged the foregoing instrument to be his free act and deed and the
free act and deed of said Meditrust of Arizona, Inc., before me,
____________________________________
Notary Public
My commission expires: _______________
COMMONWEALTH OF MASSACHUSETTS
Norfolk, ss February ___, 1995
Then personally appeared the above-named ___________________, who swore
that he is the _____________________ of Meditrust and acknowledged the foregoing
instrument to be his free act and deed and the free act and deed of said
Meditrust, before me,
____________________________________
Notary Public
My commission expires: _______________
6
128
EXHIBIT B
PERMITTED TITLE EXCEPTIONS
105
129
EXHIBIT C
[Intentionally Omitted]
106
130
EXHIBIT D
[Intentionally Omitted]
107
131
EXHIBIT E
LESSEE'S DISCLOSURE STATEMENT
NONE
108
132
EXHIBIT F
RATE LIMITATIONS IMPOSITIONS
Rate Filing Requirements in Arizona - failure to file could result in
refunds based on last-filed rates
109
