EXHIBIT 10.43
LEASE AGREEMENT
MPT OF NORTH CYPRESS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
LANDLORD
AND
NORTH CYPRESS MEDICAL CENTER OPERATING COMPANY, LTD.,
A TEXAS LIMITED PARTNERSHIP
TENANT
PROPERTY: NORTH CYPRESS HOSPITAL FACILITY
XXXXXX COUNTY, TEXAS
AS OF JUNE 1, 2005
Table of Contents
Page
ARTICLE I DEFINITIONS........................................................................................... 1
ARTICLE II LEASED PROPERTY AND TERM ............................................................................ 10
2.1 Leased Property and Term................................................................ 10
2.2 Conditions Precedent.................................................................... 11
2.3 Extension Rights........................................................................ 11
2.4 REA Restrictions........................................................................ 11
ARTICLE III RENT................................................................................................ 11
3.1 Base Rent............................................................................... 11
3.2 Additional Charges...................................................................... 12
3.3 Absolute Triple Net Lease............................................................... 12
3.4 Lease Deposit........................................................................... 13
ARTICLE IV IMPOSITIONS.......................................................................................... 14
4.1 Payment of Impositions.................................................................. 14
4.2 Adjustment of Impositions............................................................... 15
4.3 Utility Charges......................................................................... 15
4.4 Insurance Premiums...................................................................... 15
ARTICLE V NO TERMINATION........................................................................................ 15
5.1 Triple Net Lease........................................................................ 15
ARTICLE VI OWNERSHIP OF LAND AND PERSONAL PROPERTY.............................................................. 16
6.1 Ownership of the Land................................................................... 16
6.2 Tenant's Personal Property.............................................................. 16
ARTICLE VII CONDITION AND USE OF LEASED PROPERTY................................................................ 16
7.1 Condition of the Leased Property........................................................ 16
7.2 Use of the Leased Property.............................................................. 17
7.3 Landlord to Grant Easements............................................................. 18
ARTICLE VIII LEGAL AND INSURANCE REQUIREMENTS................................................................... 18
8.1 Compliance with Legal and Insurance Requirements........................................ 18
8.2 Legal Requirement Covenants............................................................. 18
8.3 Hazardous Materials..................................................................... 19
8.4 Healthcare Laws......................................................................... 20
8.5 Representations and Warranties.......................................................... 20
8.6 Single Purpose Entity................................................................... 21
8.7 Organizational Documents................................................................ 21
ARTICLE IX REPAIRS; RESTRICTIONs................................................................................ 22
9.1 Maintenance and Repair.................................................................. 22
9.2 Encroachments; Restrictions............................................................. 23
ARTICLE X CAPITAL ADDITIONS..................................................................................... 24
10.1 Construction of Capital Additions to the Leased Property................................ 24
10.2 Capital Additions Financed by Tenant.................................................... 26
10.3 Capital Additions Financed by Landlord.................................................. 26
10.4 Remodeling and Non-Capital Additions.................................................... 28
ARTICLE XI LIENS................................................................................................ 29
11.1 Liens................................................................................... 29
ARTICLE XII PERMITTED CONTESTS.................................................................................. 29
i
Table of Contents
Page
----
12.1 Permitted Contests...................................................................... 29
ARTICLE XIII INSURANCE.......................................................................................... 30
13.1 General Insurance Requirements.......................................................... 30
13.2 Additional Insurance.................................................................... 33
13.3 Waiver of Subrogation................................................................... 33
13.4 Form of Insurance....................................................................... 33
13.5 Increase in Limits...................................................................... 34
13.6 Blanket Policy.......................................................................... 34
13.7 No Separate Insurance................................................................... 34
ARTICLE XIV FIRE AND CASUALTY................................................................................... 34
14.1 Insurance Proceeds...................................................................... 34
14.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance............... 35
14.3 Reconstruction in the Event of Damage or Destruction Not Covered by Insurance........... 36
14.4 Tenant's Personal Property.............................................................. 36
14.5 Restoration of Tenant's Property........................................................ 36
14.6 No Abatement of Rent.................................................................... 36
14.7 Damage Near End of Term................................................................. 36
14.8 Termination of Right to Purchase and Substitution....................................... 37
14.9 Waiver.................................................................................. 37
ARTICLE XV CONDEMNATION......................................................................................... 37
15.1 Definitions............................................................................. 37
15.2 Parties' Rights and Obligations......................................................... 37
15.3 Total Taking............................................................................ 37
15.4 Partial Taking.......................................................................... 37
15.5 Restoration............................................................................. 38
15.6 Award Distribution...................................................................... 38
15.7 Temporary Taking........................................................................ 38
ARTICLE XVI DEFAULT............................................................................................. 38
16.1 Events of Default....................................................................... 38
16.2 Covenants and Events of Default......................................................... 41
16.3 Remedies................................................................................ 42
16.4 Additional Expenses..................................................................... 44
16.5 Waiver.................................................................................. 45
16.6 Application of Funds.................................................................... 45
16.7 Notices by Landlord..................................................................... 45
16.8 Landlord's Contractual Security Interest................................................ 45
16.9 Remedies Cumulative..................................................................... 46
ARTICLE XVII PURCHASE OF THE LEASED PROPERTY.................................................................... 46
17.1 Tenant's Option to Purchase............................................................. 46
17.2 Conveyance Terms........................................................................ 47
17.3 Landlord's Option to Purchase Tenant's Personal Property................................ 47
17.4 Survival................................................................................ 47
ii
Table of Contents
Page
----
ARTICLE XVIII HOLDING OVER...................................................................................... 47
18.1 Holding Over............................................................................ 48
ARTICLE XIX RISK OF LOSS........................................................................................ 48
19.1 Risk of Loss............................................................................ 48
ARTICLE XX INDEMNIFICATION...................................................................................... 48
20.1 Indemnification......................................................................... 48
ARTICLE XXI SUBLETTING; ASSIGNMENT AND SUBORDINATION............................................................ 49
21.1 Subletting; Assignment and Subordination................................................ 49
21.2 Attornment.............................................................................. 50
21.3 Sublease Limitation..................................................................... 50
21.4 Subordination........................................................................... 51
ARTICLE XXII OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES....................... 51
22.1 Estoppel Certificate.................................................................... 51
22.2 Financial Statements.................................................................... 51
22.3 Notices Regarding Licenses.............................................................. 52
ARTICLE XXIII INSPECTIONS AND FEES.............................................................................. 52
23.1 Inspection Fee.......................................................................... 52
ARTICLE XXIV TRANSFERS BY LANDLORD.............................................................................. 53
24.1 Transfer by Landlord.................................................................... 53
ARTICLE XXV QUIET ENJOYMENT..................................................................................... 53
25.1 Quiet Enjoyment......................................................................... 53
ARTICLE XXVI NOTICES............................................................................................ 53
26.1 Notices................................................................................. 53
ARTICLE XXVII APPRAISAL......................................................................................... 55
27.1 Appraisal............................................................................... 55
ARTICLE XXVIII FINANCING OF THE LEASED PROPERTY ................................................................ 56
28.1 Financing by Landlord................................................................... 56
ARTICLE XXIX SUBORDINATION AND NON-DISTURBANCE ................................................................. 56
29.1 Subordination, Non-Disturbance.......................................................... 57
ARTICLE XXX LICENSES .............................................................. ............................ 57
30.1 Maintaining Licenses.................................................................... 57
30.2 Transfers............................................................................... 57
30.3 Cooperation............................................................................. 58
30.4 No Encumbrance.......................................................................... 58
30.5 Notices................................................................................. 58
ARTICLE XXXI COMPLIANCE WITH HEALTHCARE LAWS ................................................................... 59
31.1 Compliance.............................................................................. 59
ARTICLE XXXII SALE PROCEED DISTRIBUTION/SYNDICATION............................................................. 60
32.1 Sales Proceed Distribution.............................................................. 60
32.2 Syndication............................................................................. 60
ARTICLE XXXIII MISCELLANEOUS ................................................................................... 61
33.1 General................................................................................. 61
33.2 Governing Law........................................................................... 61
iii
Table of Contents
Page
----
33.3 Transfer of Licenses..................................................................... 61
33.4 Landlord's Expenses...................................................................... 61
33.5 Entire Agreement; Modifications.......................................................... 62
33.6 Future Financing......................................................................... 62
33.7 Cash Injection........................................................................... 62
33.8 Additional Letter of Credit.............................................................. 62
33.9 Change in Ownership/Control.............................................................. 62
33.10 Landlord Securities Offering and Filings................................................. 63
33.11 Non-Recourse as to Landlord.............................................................. 63
33.12 Counterparts............................................................................. 63
33.13 No Waiver................................................................................ 63
33.14 Surrender................................................................................ 63
33.15 No Merger of Title....................................................................... 63
ARTICLE XXXIV MEMORANDUM OF LEASE................................................................................ 64
34.1 Memorandum............................................................................... 64
iv
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is dated as of the ___ day of June,
2005, but effective as of June 1, 2005, and is between MPT OF NORTH CYPRESS,
L.P., "(Landlord") a Delaware limited partnership, having its principal office
at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx, 00000, and NORTH
CYPRESS MEDICAL CENTER OPERATING COMPANY, LTD., ("Tenant"), a Texas limited
partnership, having its principal office at 0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000.
W I T N E S S E T H:
WHEREAS, Landlord and Northern Healthcare Land Ventures, Ltd. entered into
the Parking Area Ground Lease pursuant to which Landlord leased and rented from
Northern Healthcare Land Ventures, Ltd. the Northeast Parking Parcel;
WHEREAS, Landlord will, prior to the Commencement Date, purchase the Land
from North Cypress Property Holdings, Ltd. pursuant to, and subject to the terms
of, that certain Contract for Purchase and Sale of Real Property dated effective
as of June 1, 2005 (the "Land Purchase Contract");
WHEREAS, pursuant to that certain Sublease Agreement dated effective as of
June 1, 2005 (the "Pre-Construction Sublease") Tenant subleased the Land and the
Northeast Parking Parcel from Landlord and constructed thereon the Leased
Improvements;
WHEREAS, on the Commencement Date Tenant will convey title to the Leased
Improvements to Landlord pursuant to, and subject to the terms of, the Purchase
Agreement; and
WHEREAS, provided Landlord has purchased the Land from North Cypress
Property Holdings, Ltd. pursuant to the Land Purchase Contract and acquired
title to the Leased Improvements pursuant to the Purchase Agreement on or prior
to the Commencement Date, Landlord shall lease the Land and the Leased
Improvements and sublease the Northeast Parking Parcel to Tenant, and Tenant
shall lease the Land and Leased Improvements and sublease the Northeast Parking
Parcel from Landlord, on the terms and conditions herein set forth.
NOW THEREFORE, for and in consideration of the premises, the covenants and
representations herein made and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, Landlord and
Tenant do hereby agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to
them in this Article and include the plural as well as the singular, (b) all
accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with GAAP as at the time applicable, (c) all references in this
Lease to designated "Articles", "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Lease, and (d) the
words "herein", "hereof" and "hereunder" and other words of similar import refer
to this Lease as a whole and not to any particular Article, Section or other
subdivision:
Acceptance Notice: As defined in Section 32.2.
Additional Charges: As defined in Section 3.2.
Additional Letter of Credit: As defined in Section 32.8.
Adjustment Date: As defined in Section 3.1(b).
Affiliate: When used with respect to any corporation, limited liability
company, or partnership, any person, corporation, limited liability company,
partnership or other legal entity, which, directly or indirectly, controls or is
controlled by or is under common control with such corporation, limited
liability company, or partnership. For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any person, corporation,
limited liability company, partnership or other legal entity, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, corporation, limited
liability company, partnership or other legal entity, through the ownership of
voting securities, partnership interests or other equity interests.
Award: As defined in Section 15.1(c).
Base Rent: As defined in Section 3.1(a).
Building: As defined in Article II.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.
Capital Addition: One or more new buildings or one or more additional
structures annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land during the Term, including the
construction of a new wing or new story.
Capital Addition Cost: The cost of any Capital Addition whether or not
paid for by Tenant or Landlord. Such cost shall include (a) the cost of
construction of the Capital Addition, including site preparation and
improvement, materials, labor, supervision and certain related design,
engineering and architectural services, the cost of any fixtures, the cost of
construction financing and miscellaneous costs approved by Landlord, (b) if
agreed to by Landlord in writing in advance, the cost of any land contiguous to
the Leased Property purchased for the purpose of placing thereon the Capital
Addition or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, (c) the
cost of insurance, real estate taxes, water and sewage charges and other
carrying charges for such Capital Addition during construction, (d) the cost of
title insurance, (e) reasonable fees and expenses of legal counsel, (f) filing,
registration and recording taxes and fees, (g) documentary stamp taxes, transfer
taxes or other similar charges, if any, and (h) all reasonable costs and
-2-
expenses of Landlord and any Lending Institution which has committed to finance
the Capital Addition, including, but not limited to, (i) the reasonable fees and
expenses of their respective legal counsel, (ii) all printing expenses, (iii)
the amount of any filing, registration and recording taxes and fees, (iv)
documentary stamp taxes, intangible taxes and recording taxes, if any, (v) title
insurance charges, appraisal fees, if any, (vi) rating agency fees, if any, and
(vii) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Addition.
Capital Improvement Reserve: As defined in Section 9.1(e).
Code: The Internal Revenue Code of 1986, as amended.
Commencement Date: As defined in Article II.
Condemnation: As defined in Section 15.1(a).
Condemnor: As defined in Section 15.1(d).
Conditions Precedent: As defined in Section 2.2.
Consolidated Net Worth: At any time, the sum of the following for Tenant
and its respective consolidated subsidiaries on a consolidated basis determined
in accordance with GAAP.
(a) the amount of capital or stated capital (after deducting
the cost of any treasury shares), plus
(b) the amount of capital surplus and Retained Earnings (or,
in the case of a capital surplus or Retained Earnings deficit, minus the
amount of such deficit), minus
(c) the sum of the following (without duplication of
deductions in respect of items already deducted in arriving at surplus and
retained earnings): (i) unamortized debt discount and expense and (ii) any
write-up in book value of assets resulting from a revaluation thereof
pursuant to GAAP subsequent to the most recent Income Statements prior to
the date thereof, except any net write-up in value of foreign currency in
accordance with GAAP; any write-up resulting from reversal of a reserve
for bad debts or depreciation; and any write-up resulting from a change in
methods of accounting for inventory.
Construction Loan Agreement. As defined in Section 33.7.
Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the Term, such other
governmental index or computation with which it is replaced shall be used in
order to obtain substantially the same result as would be obtained if the
Consumer Price Index had not been discontinued or revised.
Cost Component: As defined in Section 3.1(a).
Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
held by Tenant, if any, with respect to the Leased Property, the Secondary
Leases or the Lessees.
-3-
Date of Taking: As defined in Section 15.1(b).
Deposit Reduction Criteria: As defined in Section 3.4(c).
EBITDAR: For any calculation period, earnings for such period before the
deduction of interest, taxes, depreciation, amortization and rent for such
period, as those terms are determined in accordance with GAAP.
EBITDAR Lease Coverage: For any calculation period, EBITDAR for such
period divided by the sum for such period of all scheduled lease payments, debt
service payments (including payments of principal and interest), and payments to
fund required reserves.
EBITDAR Total Fixed Charge Coverage: For any calculation period, EBITDAR
for such period divided by payments of Base Rent for such period.
Encumbrances: As defined in Article XXVIII.
Event of Default: As defined in Section 16.1.
Expansion Improvements: As defined in Section 10.1(a).
Extension Notice: As defined in Article II.
Extension Term: As defined in Article II.
Facility: The licensed general acute care hospital facility to be operated
in the Building, all improvements constructed in connection therewith and all
licenses and other intangibles necessary for the operation of such hospital
facility.
Facility Mortgage: As defined in Section 13.1.
Facility Mortgagee: As defined in Section 13.1.
Fair Market Value: The price at which property would change hands between
a willing seller and a willing buyer, neither being under any compulsion to buy
or sell and both having full knowledge of all facts relevant to the property.
Fair Market Value of the Leased Property: The Fair Market Value of the
Leased Property shall at any time be its Fair Market Value, including all
Capital Additions, and shall:
(a) be determined in accordance with the appraisal procedures set
forth in Article XXVII or in such other manner as shall be mutually
acceptable to Landlord and Tenant;
(b) not take into account any reduction in value resulting from any
indebtedness to which the Leased Property is subject and which encumbrance
Tenant or Landlord is otherwise required to remove pursuant to any
provision of this Lease or agrees to remove at or prior to the closing of
the transaction as to which the Fair Market Value of the Leased Property
determination is being made (the positive or negative effect on the value
of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment penalty and other terms and conditions
of any Encumbrance on the Leased Property, which is not so required or
agreed to be removed shall be taken into account in determining the Fair
Market Value of the Leased Property);
(c) assume this Lease is not terminated prior to the expiration of
the Fixed Term; and
-4-
(d) be based solely on the rents and other revenues generated and to
be generated pursuant to this Lease without any regard to Tenant's
operations.
Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Addition) less the Fair Market Value of the Leased
Property determined as if no Capital Addition paid for by Tenant had been
constructed.
Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.
Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.
Fixed Term: As defined in Article II.
Fixtures: As defined in Article II.
Full Replacement Cost: As defined in Section 13.1.
GAAP: Generally accepted accounting principles as consistently applied in
the United States and in effect from time to time.
Ground Rent Component: As defined in Section 3.1(a).
Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Law.
Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 6901, et seq., the
Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq., the Clean
Air Act, 42 U.S.C. Sections 741 et seq., the Clean Water Act, 33 U.S.C. Section
7401, et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2629,
the Safe Drinking Water Act, 42 U.S.C. Sections 300f-300j, and all similar
federal, state and local environmental statutes, ordinances and the regulations,
orders, or decrees now or hereafter promulgated thereunder.
Healthcare Laws: All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Xxxxx Law) (42 U.S.C. 1395nn), the Civil Monetary Penalties Law (42 U.S.C.
Section 1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et
seq.), Health Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or
Embezzlement (18 U.S.C. 669), False Statements (18 U.S.C. 1001), False
Statements (19 U.S.C. 1035), and Patient Inducement Statute, and equivalent
state statutes and any and all rules or regulations promulgated by governmental
entities with respect to any of the foregoing.
-5-
Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of
Landlord, all ad valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes), assessments (including, without
limitation, all assessments, charges and costs imposed under the Permitted
Exceptions, all assessments for public improvements or benefits, whether or not
commenced or completed prior to the date hereof and whether or not to be
completed within the Term), ground rents, water, sewer or other rents and
charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property
and/or the Rent (including all interest and penalties thereon due to any failure
in payment by Tenant), which at any time prior to, during or in respect of the
Term may be assessed or imposed on or in respect of or be a lien upon (a)
Landlord or Landlord's interest in the Leased Property, (b) the Leased Property
or any part thereof or any rent therefrom or any estate, right, title or
interest therein, or (c) any occupancy, operation, use or possession of, sales
from, or activity conducted on, or in connection with, the Leased Property or
the leasing or use of the Leased Property or any part thereof; provided,
however, nothing contained in this Lease shall be construed to require Tenant to
pay (1) any tax based on net income (whether denominated as a franchise or
capital stock, financial institutions or other tax) imposed on Landlord, or (2)
any transfer or net revenue tax of Landlord, or (3) any tax imposed with respect
to the sale, exchange or other disposition by Landlord of any portion of the
Leased Property or the proceeds thereof, or (4) except as expressly provided
elsewhere in this Lease, any principal or interest on any Encumbrance on the
Leased Property, except to the extent that any tax, assessment, tax levy or
charge which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term is totally or
partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof, in
which case Tenant shall pay.
Income Statements: For any fiscal year or other accounting period for
Tenant and its respective consolidated subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective Fiscal Year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP.
Insurance Requirements: All terms of any insurance policy required by this
Lease or any such additional insurance which Lessor may reasonably require and
all requirements of the issuer of any such policies.
Land: That tract of real property located in Xxxxxx County, Texas and
being more particularly described on EXHIBIT A attached hereto.
Land Purchase Contract: As defined in the second (2nd) `WHEREAS' clause of
this Lease.
Landlord: As defined in the Preamble and any successor or assign thereof.
Landlord's Notice Address: As defined in Section 13.4.
-6-
Lease: As defined in the Preamble.
Lease Deposit: As defined in Section 3.4.
Lease Assignment: That certain Assignment of Rents and Leases dated on or
about the Commencement Date executed by Tenant to Landlord, pursuant to the
terms of which Tenant will assign to Landlord each of the Secondary Leases and
Credit Enhancements, if any, as security for the obligations of Tenant under
this Lease, and any other obligations of Tenant to Landlord, or any Affiliate of
Tenant to Landlord.
Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.
Leased Improvements: As defined in Article II.
Leased Property: As defined in Article II.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting Tenant's operation of its business on the
Leased Property, the Leased Property or the construction, use or alteration of
the Leased Improvements (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, or alterations in or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Tenant (other than encumbrances created by Landlord without the consent
of Tenant), at any time in force affecting the Leased Property.
Lender. As defined in Section 33.7.
Lending Institution: Any insurance company, federally insured commercial
or savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, having a net worth of at least
$50,000,000.
Lessees: The lessees or tenants under the Secondary Leases.
Letter of Credit: As defined in Section 3.4(b).
Licenses: As defined in Section 30.1.
Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the Land and the
Leased Improvements and the operations of the Facility.
Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property pursuant to
a Management Agreement.
Medicaid: The medical assistance program established by the State under
Title XIX of the Social Security Act (42 U.S.C. Sections 1396 et seq.) and any
statute succeeding thereto.
-7-
Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.
Non-Capital Additions: As defined in Section 10.4.
Northeast Parking Parcel: That tract of real property located in Xxxxxx
County, Texas, and being more particularly described on EXHIBIT C attached
hereto.
Offer Notice Period: As defined in Section 33.2.
Offer Request Notice: As defined in Section 33.2.
Officer's Certificate: A certificate of Tenant signed by the Chairman of
the Board of Directors, the President, any Vice President or the Treasurer of
Tenant or another officer authorized to so sign by the Board of Directors or
other governing body of Tenant, or any other person whose power and authority to
act has been authorized by delegation in writing by any of the persons holding
the foregoing offices.
Organizational Documents: As defined in Section 8.7.
Overdue Rate: On any date, the rate per annum which is the greater of (i)
eighteen percent (18%) or (ii) the highest rate allowed by the laws of the
State.
Parking Area Ground Lease: That certain Net Ground Lease (Northeast
Parking Parcel) dated effective as of June 1, 2005, by and between Northern
Healthcare Land Ventures, Ltd., as landlord, and Landlord, as tenant, pursuant
to which the Northeast Parking Parcel is leased to Landlord.
Pre-Construction Sublease: As defined in the third (3rd) `WHEREAS' clause
of this Lease.
Permitted Exceptions: As defined in Article II.
Primary Intended Use: As defined in Section 7.2(b).
Prime Rate: The annual rate announced by Citibank in New York, New York,
to be the prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.
Purchase Agreement: The Purchase and Sale Agreement dated effective as of
June 1, 2005 between Tenant and Landlord, relating to the acquisition of the
Leased Improvements by Landlord from Tenant and the leasing of such improvements
by Landlord to Tenant.
Purchase Offer As defined in Section 33.2.
Put Option: As defined in Section 33.9.
REA: That certain Reciprocal Easement Agreement and Declaration of
Covenants, Conditions and Restrictions for Development and Operation of the
North Cypress Medical Center Campus, dated effective as of June 1, 2005, by and
among Northern Healthcare Land Ventures, Ltd., Northern Healthcare Land
Ventures-II, Ltd. and North Cypress Property Holdings, Ltd., recorded or to be
recorded in the land records of Xxxxxx County, Texas. The REA encumbers the Land
and the Northeast Parking Parcel.
Release: As defined in Section 8.3(b).
-8-
Rent: Collectively, the Base Rent and the Additional Charges.
Request: As defined in Section 10.3(a).
Retained Earnings: The accumulated undisturbed earnings of the Company
retained for future needs or for future distributions to owners of the Company.
Secondary Leases: All leases, subleases and other rental agreements
(written or verbal, now or hereafter in effect), if any, that grant a possessory
interest in and to any space in the Leased Property, or that otherwise have
rights with regard to the Leased Property, and all Credit Enhancements, if any,
held in connection therewith.
Security Agreement: That certain Security Agreement to be dated on or
about the Commencement Date executed by Tenant to Landlord, pursuant to the
terms of which Tenant will grant to Landlord a first lien and security interest
in all of Tenant's rights under this Lease and in and to certain of Tenant's
Personal Property and to all of the Licenses.
Single Purpose Entity: An entity which (i) exists solely for the purpose
of leasing the Leased Property and operating the Facility, (ii) conducts
business only in its own name, (iii) does not engage in any business other than
the operation of the Facility and those ancillary services normally performed by
a hospital, (iv) does not hold, directly or indirectly, any ownership interest
(legal or equitable) in any entity or any real or personal property other than
the interest in the Leased Property which it leases from Landlord hereunder, (v)
does not have any assets other than those related to its interest in the Leased
Property and does not have any debt other than as permitted by this Lease and
does not guarantee or otherwise obligate itself with respect to the debts of any
other person or entity, (vi) has its own separate books, records, accounts,
financial statements and tax returns (with no commingling of funds or assets),
(vii) holds itself out as being a company separate and apart from any other
entity, and (viii) observes limited liability company/partnership/corporate
formalities, as the case may be, independent of any other entity.
State: The state in which the Land is located.
Taking: A taking or voluntary conveyance during the Term 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.
TDH: Texas Department of Health.
Tenant: As defined in the Preamble and any successor and assign herein
permitted.
Tenant's Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers, trade fixtures or other
personal property, and consumable inventory and supplies, used or useful in the
operation of the Facility, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory, and Tenant's operating licenses
but excluding Tenant's accounts receivables and any items included within the
definition of Fixtures.
Term: The actual duration of this Lease from and after the Commencement
Date, including the Fixed Term and the Extension Terms (if exercised by Tenant)
and taking into account any termination.
Test Rate: As defined in Section 10.2(c)(ii).
-9-
Unsuitable for its Primary Intended Use: By reason of damage or
destruction, or a partial Taking by Condemnation, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, all relevant factors, and the effect of such damage or
destruction or partial Taking.
ARTICLE II
LEASED PROPERTY AND TERM
2.1 LEASED PROPERTY AND TERM. Subject to the satisfaction of the
Conditions Precedent in Section 2.2 below, upon and subject to all of the other
terms and conditions set forth in this Lease, Landlord leases to Tenant and
Tenant rents from Landlord the following property (collectively, the "Leased
Property"):
(a) the Land;
(b) the sixty-four (64) bed, two hundred twenty-five thousand
(225,000) gross square feet general acute care hospital building (the
"Building") located on the Land, all Fixtures and other improvements of
every kind including, but not limited to, alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on-site and
off-site), parking areas and roadways appurtenant to such buildings and
structures presently or hereafter situated upon the Land and related to
the Building, and Capital Additions financed by Landlord (collectively,
the "Leased Improvements");
(c) the Northeast Parking Parcel;
(d) all easements, rights and appurtenances relating to the Land,
the Northeast Parking Parcel and the Leased Improvements; and
(e) all permanently affixed equipment, machinery, fixtures and other
items of real and/or personal property, including all components thereof,
now and hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Building, the Land, and
the Northeast Parking Parcel, 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
vacuum systems, cable transmission, built-in oxygen and similar 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
(collectively, the "Fixtures").
1. SUBJECT, HOWEVER, to the matters set forth on EXHIBIT B attached hereto
and incorporated herein by reference (the "Permitted Exceptions"), Tenant
shall have and hold the Leased Property for a fixed term (the "Fixed
Term") commencing on the date on which Landlord acquires title to the
Leased Improvements pursuant to the Purchase Agreement (the "Commencement
Date"), and ending at midnight on the fifteenth (15th) anniversary of the
Commencement Date.
-10-
2.2 CONDITIONS PRECEDENT. The obligations of Landlord to lease the Leased
Property to Tenant and of Tenant to lease the Leased Property from Landlord are
subject to and conditioned upon, and the Term of this Lease shall commence only
upon, satisfaction of each of the following conditions precedent (the
"Conditions Precedent"):
(a) Landlord shall have acquired title to the Land pursuant to the
Land Purchase Contract;
(b) Landlord shall have acquired title to the Leased Improvements
pursuant to the Purchase Agreement; and
(c) No Landlord Default shall have occurred pursuant to Section 17.1
of the Pre-Construction Sublease resulting in the exercise of Tenant's
remedy under Section 17.2 thereof.
In the event that either or both of the Conditions Precedent specified in
Section 2.2(a) or (b) are not satisfied and the Land Purchase Contract and/or
the Purchase Agreement are terminated pursuant to their respective terms, then
this Lease shall thereupon terminate and be of no further force or effect and
the Pre-Construction Sublease shall continue in effect, or terminate, in
accordance with its terms. In the event the Condition Precedent specified in
Section 2.2(c) is not satisfied, then this Lease shall terminate and be of no
further force or effect effective upon Tenant's exercise of its remedy as
specified in Section 17.2 of the Pre-Construction Sublease.
2.3 EXTENSION RIGHTS. So long as no Event of Default has occurred and is
continuing under this Lease, Tenant shall have the option to extend the Fixed
Term of this Lease on the same terms and conditions set forth herein for three
(3) additional periods of five (5) years each (each an "Extension Term"). Tenant
may exercise each such option by giving written notice to Landlord at least six
(6) months prior to the expiration of the Fixed Term or the Extension Term, as
applicable (the "Extension Notice"). If during the period following the delivery
of the Extension Notice to Landlord, Tenant shall fail to comply with all of the
terms and provisions of this Lease or an Event of Default shall occur under this
Lease, Tenant shall be deemed to have forfeited all Extension Options, including
the extension for which the Extension Notice was given. If Tenant does not
timely deliver an Extension Notice, all subsequent options to extend shall be
deemed to have lapsed and the Term shall expire at the end of the Fixed Term or
then applicable Extension Term.
2.4 REA RESTRICTIONS. Pursuant to Section 9.03 of the REA, Tenant is
hereby notified that the restrictions, regulations and conditions regarding
operation and use of the Campus (as defined in the REA), a copy of which are
attached hereto as EXHIBIT D and by this reference made a part hereof, effect
the Premises and that Tenant must comply with the same.
ARTICLE III
RENT
3.1 BASE RENT. Tenant shall pay to Landlord, in advance and without
notice, demand, set off or counterclaim, in lawful money of the United States of
America, at Landlord's
-11-
address set forth herein or at such other place or to such other person, firms
or entity as Landlord from time to time may designate in writing, rent during
the Term, as follows:
(a) BASE RENT: Subject to adjustment as provided in Sections 3.1(b)
and 10.3(b)(iv), during the Term, Tenant shall pay Landlord rent (the
"Base Rent") in an amount equal to the sum of (a) ten and one-half percent
(10.5%) per annum of the Total Development Costs (as defined in and
determined under the Pre-Construction Sublease) [the portion of the Base
Rent specified in this clause (a) being referred to herein as the "Cost
Component"], plus (b) the amount set forth in Schedule 3 for the
applicable period [the portion of the Base Rent specified in this clause
(b) being referred to herein as the "Ground Rent Component"]. Base Rent
shall be payable in advance in equal, consecutive monthly installments on
the first (1st) day of each calendar month of the Term, commencing on
Commencement Date (prorated as to any partial month).
(b) ADJUSTMENT OF BASE RENT: Commencing on the first January 1
subsequent to the Commencement Date, and on each January 1 thereafter
(each an "Adjustment Date") during the Term, the Cost Component of the
Base Rent shall be increased by an amount equal to the greater of (A) two
and one-half percent (2.5%) per annum of the prior year's Cost Component,
or (B) the percentage by which the Consumer Price Index on the Adjustment
Date shall have increased over the Consumer Price Index figure in effect
on the then just previous Adjustment Date. If the previous year's Cost
Component of Base Rent is for a partial year, such Cost Component shall be
annualized for purposes of this adjustment.
3.2 ADDITIONAL CHARGES. In addition to the Base Rent (a) Tenant also will
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions relating to the Leased Property and the Facility,
including, without limitation, all licensure violations, civil monetary
penalties and fines, all common area expenses and other charges assessed against
the Leased Property and/or the Facility pursuant to the REA, and (b) in the
event of any failure on the part of Tenant to pay any of those items referred to
in clause (a) above, Tenant also will 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 Landlord shall have all
legal, equitable and contractual rights, powers and remedies provided in this
Lease, by statute or otherwise, in the case of non-payment of the Additional
Charges, as in the case of the Base Rent. If any installment of Base Rent or
Additional Charges shall not be paid within five (5) Business Days after its due
date, Tenant will pay Landlord on demand, as Additional Charges, a late charge
(to the extent permitted by law) computed at the Overdue Rate on the amount of
such installment, from the due date of such installment to the date of payment
thereof. To the extent that Tenant pays any Additional Charges to Landlord
pursuant to any requirement of this Lease, Tenant shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due.
3.3 ABSOLUTE TRIPLE NET LEASE. The Rent shall be paid absolutely net to
Landlord, so that this Lease shall yield to Landlord the full amount of the
installments of Base Rent and the payments of Additional Charges throughout the
Term, but subject to any other provisions of this
-12-
Lease which expressly provide for adjustment of Rent or other charges. Tenant
further acknowledges and agrees that all charges, assessments or payments of any
kind due and payable under the Permitted Exceptions shall be paid by Tenant as
such charges, assessments or payments become due and payable.
3.4 LEASE DEPOSIT.
(a) Tenant shall pay to Landlord on the Commencement Date a security
deposit in an amount equal to ten and one-half percent (10.5%) of the
Total Development Costs (as defined in and determined under the
Pre-Construction Sublease) [the "Lease Deposit"]. The Lease Deposit shall
be held by Landlord as security for the performance by Tenant of Tenant's
covenants and obligations under this Lease. The Lease Deposit shall not be
considered an advance payment of rental or a measure of Landlord's damages
in case of default by Tenant. Landlord may, from time to time, without
prejudice to any other remedy, use the proceeds thereof to make good any
arrearages of Rent, to satisfy any other covenant or obligation of Tenant
hereunder or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of any default by Tenant. Following any such
use of the Lease Deposit by Landlord, Tenant shall deliver to Landlord on
demand an amount sufficient to restore the aggregate amount held by
Landlord to the amount of the original Lease Deposit. If Tenant is not in
default at the termination of this Lease, and has complied with all of the
provisions of this Lease to be performed by Tenant, including surrender of
the Leased Property in accordance with the provisions hereof, the Lease
Deposit shall be returned by Landlord to Tenant, subject to any draws
which have previously been made by Landlord against the Lease Deposit and
not replenished by Tenant. Tenant will not assign or encumber Tenant's
interest in the Lease Deposit, and neither Landlord nor Landlord's
successors or assigns will be bound by any such attempted assignment or
encumbrance of the Lease Deposit. Landlord is not required to hold the
Lease Deposit in an interest bearing account; however in the event
Landlord, at its sole election, shall hold the Lease Deposit in an
interest bearing account; any interest earned on the Lease Deposit will be
for the sole benefit of the Landlord and shall not in any way reduce any
amounts owed by Tenant under the terms hereof. Except as otherwise
provided under applicable law, Landlord may co-mingle the Lease Deposit
with other funds of Landlord.
(b) The Lease Deposit, at Tenant's option, may be made by the
delivery to Landlord of a letter of credit in the required amount (the
"Letter of Credit"). The Letter of Credit shall be unconditional,
irrevocable and payable on demand, in the form attached hereto as EXHIBIT
E and by this reference made a part hereof, and the issuing bank shall be
Republic National Bank or a similar institution having comparable assets
which is acceptable to Landlord. The term of the Letter of Credit shall be
at least one (1) year and Tenant shall renew the Letter of Credit within
thirty (30) days prior to the expiration of the term of the Letter of
Credit and shall continue such renewals until such date which is sixty
(60) days beyond the expiration of the Term. In the event Tenant shall
fail to timely renew the Letter of Credit as provided above, Landlord
shall have the right to draw upon the Letter of Credit. The funds received
by Landlord from a drawing upon the Letter of Credit shall become the
Lease Deposit and shall be held and utilized in accordance with the terms
of this Lease.
-13-
(c) At such time as the operations from the Facility have a
sustained EBITDAR coverage of at least two (2) times Base Rent for two (2)
consecutive Fiscal Years (the "Deposit Reduction Criteria"), the amount of
the Lease Deposit shall be reduced by one-half. Tenant shall notify
Landlord in writing that Tenant has met the Deposit Reduction Criteria,
and shall provide Landlord with evidence satisfactory to Landlord that
Tenant has met the Deposit Reduction Criteria. Thereafter, Landlord, if
the Lease Deposit shall be a cash deposit, shall deliver one-half of the
Lease Deposit to Tenant. In the event the Lease Deposit held by Landlord
is a Letter of Credit, then upon receipt of the said notice and evidence
and a substitute Letter of Credit, which satisfies the conditions of
Section 3.4(b) in an amount equal to six (6) months of Base Rent, Landlord
shall return the original Letter of Credit to Tenant. For purposes of this
Lease, the reduced Lease Deposit as provided above or the substituted
Letter of Credit shall be deemed the "Lease Deposit".
ARTICLE IV
IMPOSITIONS
4.1 PAYMENT OF IMPOSITIONS. Subject to the terms of Article XII, Tenant
will pay, or cause to be paid, all Impositions before any fine, penalty,
interest or cost may be added for non-payment, such payments to be made directly
to the taxing authorities or other party to whom such Imposition is payable
where feasible, and Tenant will promptly, upon request, furnish to Landlord
copies of official receipts or other satisfactory proof evidencing such
payments. Tenant's obligation to pay the Impositions shall be deemed absolutely
fixed upon the date the Imposition becomes a lien upon the Leased Property or
any part thereof. If any Imposition may, at the option of the Landlord, lawfully
be paid in installments (whether or not interest shall accrue on the unpaid
balance of such Imposition), Tenant may exercise the option to pay the same (and
any accrued interest on the unpaid balance of such Imposition) in installments
and, in such event, shall pay such installments during the Term (subject to
Tenant's right of contest pursuant to the provisions of Article XII) as the same
respectively become due and before any fine, penalty, premium, further interest
or cost may be added thereto. Landlord, at its expense, shall prepare and file
all tax returns and reports as may be required by governmental authorities in
respect of Landlord's net income, gross receipts, franchise taxes and taxes on
its capital stock, and Tenant, at its expense and to the extent permitted by
applicable laws and regulations shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. If any refund shall be due from any taxing authority in respect of
any Imposition paid by Tenant, the same shall be paid over to or retained by
Tenant if no Event of Default shall have occurred hereunder and be continuing.
Any such funds retained by Landlord due to an Event of Default shall be applied
as provided in Article XVI. Landlord and Tenant 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, Tenant shall file all
personal property tax returns in such jurisdictions where filing is required and
Tenant may legally make such filing. Landlord, to the extent it possesses the
same, and Tenant, to the extent it possesses the same, will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal property. Where Landlord is
legally required to file personal
-14-
property tax returns, Tenant will be provided with copies of assessment notices
indicating a value in excess of the reported value in sufficient time for Tenant
to file a protest. Tenant may, upon giving notice to Landlord, at Tenant's
option and at Tenant's sole cost and expense, protest, appeal, or institute such
other proceedings as Tenant may deem appropriate to effect a reduction of real
estate or personal property assessments and Landlord, at Tenant's expense, shall
fully cooperate with Tenant in such protest, appeal, or other action. Xxxxxxxx
for reimbursement by Tenant to Landlord of personal property taxes shall be
accompanied by copies of a xxxx therefor and payments thereof which identify the
personal property with respect to which such payments are made.
4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination.
4.3 UTILITY CHARGES. Tenant will contract for, in its own name, and will
pay or cause to be paid all charges for electricity, power, gas, oil, water,
voice, video and data and other utilities used in the Facility during the Term.
4.4 INSURANCE PREMIUMS. Tenant will contract for in its own name and will
pay or cause to be paid all premiums for the insurance coverage required to be
maintained pursuant to Article XIII during the Term.
ARTICLE V
NO TERMINATION
5.1 TRIPLE NET LEASE. The parties hereto understand, acknowledge and agree
that this is an absolute triple net lease. Tenant shall remain bound by this
Lease in accordance with its terms and, without the consent of Landlord, shall
neither take any action to modify, surrender or terminate this Lease, nor seek
nor be entitled to any abatement, deduction, deferment or reduction of Rent, or
set-off against the Rent. The respective obligations of Landlord and Tenant
shall not be 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, Tenant's use of the Leased Property, or any portion
thereof, or the interference with such use by any person, corporation,
partnership or other entity, or by reason of eviction by paramount title; (c)
any claim which Tenant has or might have against Landlord or by reason of any
default or breach of any warranty by Landlord under this Lease or any other
agreement between Landlord and Tenant, or to which Landlord and Tenant are
parties, (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord, or (e) for any
other cause whether similar or dissimilar to any of the foregoing other than a
discharge of Tenant from any such obligations as a matter of law. Tenant hereby
specifically waives all rights, arising from any occurrence whatsoever, which
may now or hereafter be conferred upon it by law to (i) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (ii) entitle Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant
-15-
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Landlord and Tenant hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Tenant
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default.
ARTICLE VI
OWNERSHIP OF LAND AND PERSONAL PROPERTY
6.1 OWNERSHIP OF THE LAND. Tenant acknowledges that Landlord is the owner
of the Land and the ground lessee of the Northeast Parking Parcel, and that
Tenant has only the right to the possession and use of the Leased Property upon
the terms and conditions of this Lease.
6.2 TENANT'S PERSONAL PROPERTY. Tenant, at its expense, shall install,
affix, assemble and place on the Land or in the Leased Improvements, Tenant's
Personal Property, which Tenant's Personal Property shall be subject to the
security interests and liens as provided in Section 16.8 below. Tenant shall
not, without the prior written consent of Landlord (which consent may be
withheld in the event Tenant is in default hereunder), remove Tenant's Personal
Property from the Leased Property. Tenant shall provide and maintain during the
Term all such Tenant's Personal Property as shall be necessary in order to
operate the Facility in compliance with all licensure and certification
requirements, in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. If removal is authorized by Landlord as provided
herein, all of Tenant's Personal Property not removed by Tenant within thirty
(30) days following the expiration or earlier termination of this Lease shall be
considered abandoned by Tenant and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant,
without any payment to Tenant and without any obligation to Tenant to account
therefor. Tenant, at its expense, will restore the Leased Property and repair
all damage to the Leased Property caused by the removal of Tenant's Personal
Property, whether effected by Tenant or Landlord.
ARTICLE VII
CONDITION AND USE OF LEASED PROPERTY
7.1 CONDITION OF THE LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and that Tenant 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 satisfactory for its purpose hereunder. Tenant is leasing the Leased
Property "as is" in its present condition. Tenant waives any claim or action
against Landlord in respect of the condition of the Leased Property. LANDLORD
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE,
AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP
-16-
THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE
BY TENANT.
7.2 USE OF THE LEASED PROPERTY.
(a) Tenant covenants that it will apply for, obtain and maintain
throughout the Term all approvals and licenses needed to use and operate
the Leased Property and the Facility for the Primary Intended Use under
applicable local, state and federal law, including but not limited to
licensure approvals and Medicare and Medicaid certifications, provider
numbers, certificates of need, governmental approvals, and full
accreditation from all applicable governmental authorities and
accreditation organizations, if any, that are necessary for the operation
of the Facility as a general acute care hospital facility. Tenant
acknowledges that the Land and the Northeast Parking Parcel are encumbered
by the REA and agrees that Tenant will fully and completely comply with
the terms of the REA in connection with the use of the Leased Property and
the operation of the Facility.
(b) During the Term, Tenant shall use or cause to be used the Leased
Property as a general acute care hospital facility in accordance with the
approval received from TDH and as currently defined in the health care
industry and for such other uses as may be necessary in connection with or
incidental to such use (the "Primary Intended Use"). Tenant shall not use
the Leased Property or any portion thereof for any other use without the
prior written consent of Landlord, which Tenant agrees may be withheld in
Landlord's sole discretion. No use shall be made or permitted to be made
of the Leased Property and no acts shall be done which will cause the
cancellation of any insurance policy covering the Leased Property or any
part thereof, nor shall Tenant sell or otherwise provide to residents or
patients therein, or permit to be kept, used or sold in or about the
Leased Property any article which may be prohibited by law or by the
standard form of fire insurance policies, any other insurance policies
required to be carried hereunder or under applicable fire underwriters
regulations. Tenant, at its sole cost, shall comply with all requirements,
covenants and restrictions pertaining to the Leased Property, including,
without limitation, all of the Permitted Exceptions, and other
requirements of any insurance board, association, organization or company
necessary for the maintenance of the insurance, as herein provided,
covering the Leased Property and Tenant's Personal Property.
(c) Tenant covenants and agrees that during the Term Tenant will
continuously operate the Leased Property only as a provider of healthcare
services in accordance with the Primary Intended Use and that Tenant shall
maintain all required certifications for reimbursement and licensure and
all accreditations.
(d) Tenant shall not commit or suffer to be committed any waste on
the Leased Property, or in the Facility, nor shall Tenant cause or permit
any nuisance thereon.
(e) Tenant shall neither suffer nor permit the Leased Property or
any portion thereof, including any Capital Addition whether or not
financed by Landlord, or Tenant's
-17-
Personal Property, to be used in such a manner as (i) might reasonably
tend to impair Landlord's (or Tenant's, as the case may be) title thereto
or to any portion thereof, or (ii) may reasonably make possible a claim or
claims of adverse usage or adverse possession by the public, as such, or
of implied dedication of the Leased Property or any portion thereof.
7.3 LANDLORD TO GRANT EASEMENTS. Landlord, from time to time so long as no
Event of Default has occurred and is continuing, at the request of Tenant and at
Tenant's cost and expense, but subject to the approval of Landlord, which
approval shall not be unreasonably withheld, shall request the Land Owner to (a)
grant easements and other rights in the nature of easements, (b) release
existing easements or other rights in the nature of easements which are for the
benefit of the Leased Property, (c) dedicate or transfer unimproved portions of
the Leased Property for road, highway or other public purposes, (d) execute
petitions to have the Leased Property annexed to any municipal corporation or
utility district, (e) execute amendments to any covenants and restrictions
affecting the Leased Property and (f) execute and deliver to any person any
instrument appropriate to confirm or effect such grants, releases, dedications
and transfers (to the extent of its interest in the Leased Property), but only
upon delivery to Landlord and the Land Owner of an Officer's Certificate stating
(and such other information as Landlord and the Land Owner may reasonably
require confirming) that such grant, release, dedication, transfer, petition or
amendment is required for and not detrimental to the proper conduct of the
Primary Intended Use on the Leased Property and does not reduce the value of the
Leased Property and the Facility.
ARTICLE VIII
LEGAL AND INSURANCE REQUIREMENTS
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XII relating to permitted contests, Tenant, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements in respect of the
use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need, provider agreements, accreditations and other authorizations required
for any use of the Leased Property, the Facility and Tenant's Personal Property
then being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof, including without
limitation, any Capital Additions. Upon Landlord's request, Tenant shall deliver
copies of all such licenses, certificates of need, agreements and other
authorizations.
8.2 LEGAL REQUIREMENT COVENANTS. Tenant covenants and agrees that the
Leased Property and Tenant's Personal Property shall not be used for any
unlawful purpose. Tenant shall acquire and maintain and shall use its best
efforts to have Lessees acquire and maintain all licenses, certificates,
permits, provider agreements and other authorizations and approvals needed to
operate the Leased Property in a manner customary for the industry of the
Primary Intended Use and any other use conducted on the Leased Property as may
be permitted from time to time hereunder. Tenant further covenants and agrees
that Tenant's use of the Leased Property
-18-
and maintenance, alteration, and operation of the same, and all parts thereof,
shall at all times conform to all applicable local, state and federal laws,
ordinances, rules and regulations.
8.3 HAZARDOUS MATERIALS.
(a) During the Term, Tenant (i) shall comply, and cause the Leased
Property to comply, with all Hazardous Materials Laws applicable to the
Leased Property (including the making of all submissions to governmental
authorities required by Hazardous Materials Laws and the carrying out of
any remediation program specified by such authority), (ii) shall prohibit
the use of the Leased Property for the generation, manufacture,
refinement, production, or processing of any Hazardous Material or for the
storage, handling, transfer or transportation of any Hazardous Material
(other than in compliance with the Hazardous Materials Laws and in
commercially reasonable quantities in connection with the operation,
business and maintenance of the Leased Property as a hospital facility
and/or as a consumer or supplier of consumer products), (iii) shall not
permit to remain, install or permit the installation on the Leased
Property of any surface impoundments, underground storage tanks,
transformers containing polychlorinated biphenyl, or asbestos-containing
materials, and (iv) shall cause any improvements to or alterations of the
Leased Property to comply with the Hazardous Materials Laws, and in
connection with any such improvements or alterations shall remove any
Hazardous Materials present upon the Leased Property which are not in
compliance with Hazardous Materials Laws.
(b) Tenant agrees to protect, defend, indemnify and hold harmless
Landlord, its directors, officers, members, partners, employees and
agents, and any successors and assigns of Landlord from and against any
and all liability, including all foreseeable and all unforeseeable damages
including but not limited to attorneys' and consultants' fees, fines,
penalties and civil or criminal damages, directly or indirectly arising
out of the use, generation, storage, treatment, release, threatened
release, discharge, spill, presence or disposal of Hazardous Materials
from, on, at, to or under the Leased Property during the Term
(collectively, "Release"), and including, without limitation, the cost of
any required or necessary repair, response action, remediation,
investigation, cleanup or detoxification and the preparation of any
closure or other required plans arising out of or relating to any such
Release. This agreement to indemnify and hold harmless shall be in
addition to any other obligations or liabilities Tenant may have to
Landlord at common law under all statutes and ordinances or otherwise, and
shall survive following the date of expiration or earlier termination of
this Lease. Tenant expressly agrees that the representations, warranties
and covenants made and the indemnities stated in this Lease are not
personal to Landlord, and the benefits under this Lease may be assigned to
subsequent parties in interest to the chain of title to the Leased
Property, which subsequent parties in interest may proceed directly
against Tenant to recover pursuant to this Lease.
(c) Tenant shall promptly notify Landlord in writing upon Tenant's
learning of any:
-19-
(i) notice or claim to the effect that Tenant is or may be
liable to any person as a result of the release or threatened
release of any Hazardous Material into the environment from the
Leased Property;
(ii) notice that Tenant is subject to investigation by any
governmental authority evaluating whether any remedial action is
needed to respond to the release or threatened release of any
Hazardous Material into the environment form the Leased Property;
(iii) notice that the Leased Property is subject to any
environmental lien; and
(iv) notice of violation to Tenant or awareness by Tenant of a
condition which might reasonably result in a notice of violation of
any applicable Hazardous Material Law that could have a material
adverse effect upon the Leased Property.
(d) Tenant shall maintain a "best practices" protocol for disposal
of medical waste and upon request Tenant shall provide all evidence
thereof which Landlord may require.
8.4 HEALTHCARE LAWS. Tenant warrants and represents that this Lease and
all Secondary Leases are, and at all times during the Term will be, in
compliance with all Healthcare Laws. Tenant agrees to add a provision or
provisions to all of its third party agreements relating to the Leased Property
and/or the Facility, including, without limitation, all Secondary Leases, that
in the event it is determined that such agreement and/or sublease is in
violation of the Healthcare Laws, such agreement and/or sublease shall be
promptly renegotiated so that same are in compliance with all Healthcare Laws
and if the parties to such agreement or sublease cannot agree on the
modifications thereto, Tenant immediately shall terminate such agreement or
sublease. Tenant agrees promptly to notify Landlord in writing upon learning of
or upon receipt of any notice of investigation of any alleged Healthcare Law
violations. Tenant hereby agrees to indemnify and defend, at its sole cost and
expense, and hold harmless Landlord, its successors and assigns, from and
against and to reimburse Landlord with respect to any and all claims, demands,
actions, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorney's fees and court costs) of
any and every kind or character, known or unknown, fixed or contingent, asserted
against or incurred by Landlord at any time and from time to time by reason or
arising out of any breach by Tenant of any of the above covenants,
representations and warranties.
8.5 REPRESENTATIONS AND WARRANTIES. Tenant represents and warrants to the
Landlord as of the date hereof and as of the Commencement Date as follows:
(a) Tenant is a limited partnership duly organized and validly
existing under the laws of the State of Texas.
(b) Tenant is duly authorized to enter into, deliver and perform
this Lease and the Lease constitutes the valid and binding obligation of
Tenant, enforceable in accordance with its terms.
-20-
(c) Neither the entering into of this Lease nor the performance by
Tenant of its obligations hereunder will violate any provision of law or
any agreement, indenture, note or other instrument binding upon Tenant.
(d) No authority from or approval by any governmental body,
commission or agency or consent of any third party is required in
connection with the making or validity of and the execution, delivery and
performance of this Lease or the other documents referred to herein.
(e) There are no actions, suits or proceedings pending against or,
to the knowledge of Tenant, its shareholders, directors, officers,
employees and agents, threatened against or affecting Tenant or any
Affiliate, in any court or before or by any governmental department,
agency or instrumentality, an adverse decision in which could materially
and adversely affect the financial condition, business or operations of
Tenant or the ability of Tenant to perform its obligations under this
Lease or the other documents referred to herein.
(f) Tenant and its Affiliates are in compliance with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities.
(g) Tenant has obtained all certificates of need, Medicare billing
numbers, and other licenses and agreements required by the Healthcare Laws
to own and operate the Facility.
8.6 SINGLE PURPOSE ENTITY. Tenant is, at the time of the execution of this
Lease, and shall remain at all times during the Term, a Single Purpose Entity
created and to remain in good standing for the sole purpose of leasing the
Leased Property and operating the Facility in accordance with the terms of this
Lease. Simultaneously with the execution of this Lease, and as requested by
Landlord at other times during the Term, Tenant shall provide Landlord evidence
that Tenant is a Single Purpose Entity and is in good standing in the state of
its organization and in the State.
8.7 ORGANIZATIONAL DOCUMENTS. Tenant shall not permit or suffer, without
the prior written consent of Landlord (i) an amendment or modification of its
Organizational Documents or the organizational documents of any constituent
entity within Tenant, (ii) a change in the ownership or controlling interest in
the general partner of Tenant, (iii) change in the ownership of more than twenty
percent (20%) of the limited partnership interest in Tenant, (iv) any
dissolution or termination of its existence, or (v) change in its state of
formation or incorporation or its name. Tenant, prior to or simultaneously with
the execution of this Lease, has delivered to Landlord a true and complete copy
of the articles of incorporation and by-laws, articles of
organization/certificate of formation and limited liability company operating
agreement or certificate of limited partnership and partnership agreement, as
the case may be, creating Tenant, and all other documents creating and governing
Tenant (collectively, the "Organizational Documents"). Tenant warrants and
represents that the Organizational Documents (i) were duly executed and
delivered, (ii) are in full force and effect, and binding upon and enforceable
in accordance with their terms, (iii) constitute the entire understanding among
the shareholders, partners, or members of Tenant, and (iv) no breach exists
under the Organizational Documents
-21-
and no act has occurred and no condition exists which, with the giving of notice
or the passage of time, or both, would constitute a breach under the
Organizational Documents.
ARTICLE IX
REPAIRS; RESTRICTIONS
9.1 MAINTENANCE AND REPAIR.
(a) Tenant, at its expense, will keep the Leased Property and all
private roadways, sidewalks and curbs appurtenant thereto and Tenant's
Personal Property in good first class order and repair (whether or not the
need for such repairs occurs as a result of Tenant's use, any prior use,
the elements, the age of the Leased Property or any portion thereof) and,
except as otherwise provided in Articles XIV and XV, with reasonable
promptness, will make all necessary and appropriate repairs thereto of
every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or
arising by reason of a condition existing prior to the commencement of the
Term (concealed or otherwise). All repairs, to the extent reasonably
achievable, shall be at least equivalent in quality to the original work.
Tenant will not take or omit to take any action the taking or omission of
which might materially impair the value or the usefulness of the Leased
Property or any part thereof for the Primary Intended Use. Tenant shall
notify the Landlord of any and all repairs or improvements made to the
Leased Property in excess of Fifty Thousand and 00/100 Dollars
($50,000.00).
(b) Landlord shall not under any circumstances be required to build
or rebuild any improvements on the Leased Property, or to make any
repairs, replacements, alterations, restorations, or renewals of any
nature or description to the Leased Property, whether ordinary or
extraordinary, structural or non-structural, foreseen or unforeseen, or to
make any expenditure whatsoever with respect thereto in connection with
this Lease or to maintain the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by
Landlord shall be construed as (i) constituting the consent or request of
Landlord, expressed or implied, to any contractor, subcontractor, laborer,
materialman or vendor to or for the performance of any labor or services
or the furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to the Leased Property or
any part thereof, or (ii) giving Tenant 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 Landlord 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 Landlord in the Leased Property or any portion thereof.
(d) Unless Landlord shall convey any of the Leased Property to
Tenant pursuant to the provisions of this Lease, Tenant, upon the
expiration or prior termination of the Term, will vacate and surrender the
Leased Property to Landlord in the condition
-22-
in which the Leased Property was originally received from Landlord, except
as improved, constructed, repaired, rebuilt, restored, altered or added to
as permitted or required by the provisions of this Lease and except for
ordinary wear and tear (subject to the obligation of Tenant to maintain
the Leased Property in good order and repair during the Term), damage
caused by the gross negligence or willful acts of Landlord and damage or
destruction described in Article XIV or resulting from a Taking which
Tenant is not required by the terms of this Lease to repair or restore.
(e) All sums held by Landlord as part of the Capital Improvement
Reserve established pursuant to Pre-Construction Sublease shall be held by
Landlord as part of and shall constitute the Capital Improvement Reserve
established under the Lease. On each January 1 after the Commencement
Date, Tenant shall make annual deposits to a capital improvement reserve
(the "Capital Improvement Reserve") at a financial institution of the
Landlord's choosing. Such account shall require the signature of an
officer of Tenant and Landlord to make withdrawals. The first annual
deposit shall be equal to the product of the per bed deposit amount due
for the last deposit into a capital reserve account under the
Pre-Construction Sublease increased by two and one-half percent (2.5%)
times the number of beds in the Facility (the number of beds to be
determined by the actual number of beds certified to be available for use
in the Facility). On each January 1 thereafter during the Term, the above
indicated per bed deposit amount shall be increased by two and one-half
percent (2.5%) per annum cumulative. Notwithstanding anything contained
herein to the contrary, Tenant shall pay into the Capital Improvement
Reserve any amounts needed in excess of such required payments as needed
to undertake the required Capital Improvements. The amount in the Capital
Improvement Reserve, including interest, may be used by Tenant with
Landlord's approval, which such approval will not be unreasonably
withheld, or by Landlord with Tenant's approval, which such approval will
not be unreasonably withheld, to pay for capital improvements to the
Leased Property. Tenant hereby grants to Landlord a security interest in
all monies deposited into the Capital Improvement Reserve and Tenant,
within fifteen (15) days subsequent to the Commencement Date, shall
execute all documents necessary for Landlord to perfect its security
interest in the Capital Improvement Reserve. Landlord and Tenant agree
that the first dollars of all capital expenditures made in each year
during the Term shall be funded from the Capital Improvement Reserve
account to the full extent of such account.
9.2 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, 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 Landlord, Tenant shall, at its
expense, subject to its right to contest the existence of any encroachment,
violation or impairment, (a) obtain valid and effective waivers or settlements
of all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Landlord or Tenant or (b)
make such changes in the Leased Improvements, and take such other actions, as
Landlord in the good faith exercise of its judgment deems reasonably
practicable, to remove such encroachment, or to end such violation or
impairment, including, if necessary, the alteration of any of the
-23-
Leased Improvements, and in any event take all such actions as may be necessary
in order to be able to continue the operation of the Facility for the Primary
Intended Use substantially in the manner and to the extent the Facility was
operated prior to the assertion of such violation or encroachment. Any such
alteration shall be made in conformity with the applicable requirements of
Article X. Tenant's obligations under this Section 9.2 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 and Tenant shall be entitled to a credit
for any sums recovered by Landlord under any such policy of title or other
insurance.
ARTICLE X
CAPITAL ADDITIONS
10.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.
(a) (i) If no Event of Default shall have occurred and be continuing
under this Lease and the Secondary Leases, Tenant, except as expressly
provided in this Article X to the contrary, shall have the right, upon and
subject to the terms and conditions set forth below, to construct or
install Capital Additions on the Leased Property without the prior written
consent of Landlord, provided, however, except as expressly provided in
Section 10.2(d) hereof, Tenant shall not be permitted to create any
Encumbrance on the Leased Property in connection with such Capital
Addition. Prior to commencing construction of any Capital Addition,
Tenant, at Tenant's sole cost and expense, shall (i) submit to Landlord in
writing a proposal setting forth in reasonable detail any proposed Capital
Addition and shall provide to Landlord such plans and specifications,
certificates of need and other approvals, permits, licenses, contracts and
other information concerning the proposed Capital Addition as Landlord may
reasonably request, and (ii) obtain all necessary certificates of need,
state licensure surveys and all regulatory approvals of architectural
plans. Without limiting the generality of the foregoing, such proposal
shall indicate the approximate projected cost of constructing such Capital
Addition and the use or uses to which it will be put.
(ii) No Capital Addition shall be made without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed, (a) if the Capital Addition Cost of such proposed Capital
Addition, when aggregated with the costs of all Capital Additions made by
Tenant, would exceed twenty-five percent (25%) of the then Fair Market
Value of the Leased Property or would diminish the value of the Leased
Property, or (b) which would tie in or connect any Leased Improvements
with any other improvements on property adjacent to the Leased Property,
including, without limitation, tie-ins of buildings or other structures or
utilities. All Capital Additions shall be architecturally integrated and
consistent with the Leased Property.
(iii) Landlord acknowledges that Tenant intends to expand the Leased
Improvements in the following manner (the "Expansion Improvements"):
-24-
1. The opening of the fourth (4th) floor of the Building
from a shell to an active condition to add twenty-four (24)
more beds in the second (2nd) year subsequent to the
Commencement Date;
2. Construction of a fifth (5th) and sixth (6th) floor
to the Building to add forty-eight (48) additional beds in the
third (3rd) year subsequent to the Commencement Date;
3. Construction of four (4) additional operating rooms
and a fifty percent (50%) expansion of the square footage of
the emergency room in the third (3rd) year subsequent to the
Commencement Date.
4. Construction of deck parking in the fourth (4th) year
subsequent to the Commencement Date (such decked parking to be
the replacement parking for the parking area located on the
Northeast Parking Parcel);
5. Construction of additional improvements of a square
footage required to increase total bed capacity of the
Facility to between one hundred eighty (180) and two hundred
(200) beds in the fifth year subsequent to the Commencement
Date; and
6. Construction of a connection between the ground floor
of the Building and the professional office building which an
affiliate of Tenant intends to construct on a tract located
adjacent to and southwest of the Land.
Landlord agrees that it will approve the Expansion Improvements without
regard to the conditions set forth in Section 10.1(a)(iii) upon
satisfaction of the following conditions:
(i) Landlord shall have received, reviewed and approved all
plans and specifications for the Expansion Improvement, including
without limitation, architectural, engineering and landscaping
plans;
(ii) Tenant shall deliver to Landlord a copy of all permits
necessary or required to construct and operate the Expansion
Improvement, including without limitation, building permit,
certificate of need, and state license survey; and
(iii) Landlord shall determine, in its reasonable discretion,
that the Expansion Improvement will not result in a diminution in
the value of the Leased Property.
(b) Prior to commencing construction of any Capital Addition, for
which Tenant plans to borrow funds, Tenant shall first request Landlord to
provide funds to pay for such Capital Addition in accordance with the
provisions of Section 10.3. If Landlord declines or is unable to provide
such financing on terms acceptable to Tenant, the provisions of Section
10.2 shall apply. Notwithstanding any other provision of this Article X to
the contrary, no Capital Addition shall be made without the consent of
-25-
Landlord, which consent shall not be unreasonably withheld or delayed, if
the Capital Addition Cost of such proposed Capital Addition, when
aggregated with the costs of all Capital Additions made by Tenant, would
exceed twenty-five percent (25%) of the then Fair Market Value of the
Leased Property or would diminish the value of the Leased Property.
Furthermore, no Capital Addition shall be made which would tie in or
connect any Leased Improvements with any other improvements on property
adjacent to the Leased Property, including, without limitation, tie-ins of
buildings or other structures or utilities, unless Tenant shall have
obtained the prior written approval of Landlord, which approval in
Landlord's sole discretion may be granted or withheld. All Capital
Additions shall be architecturally integrated and consistent with the
Leased Property.
10.2 CAPITAL ADDITIONS FINANCED BY TENANT. If Tenant provides or arranges
to finance any Capital Addition, the following provisions shall be applicable:
(a) There shall be no adjustment in the Base Rent by reason of any
such Capital Addition.
(b) Upon the expiration or earlier termination of this Lease, except
by reason of the default by Tenant hereunder, Landlord shall compensate
Tenant for each Capital Addition paid for or financed by Tenant in one of
the following ways, determined in the sole discretion of Landlord:
(i) By purchasing all Capital Additions paid for by Tenant
from Tenant for cash in the amount of the Fair Market Added Value of
all such Capital Additions paid for or financed by Tenant; or
(ii) By purchasing all Capital Additions paid for by Tenant
from Tenant by delivering to Tenant Landlord's purchase money
promissory note in the amount of the Fair Market Added Value, due
and payable not later than eighteen (18) months after the date of
expiration or other termination of this Lease, bearing interest at
the test rate applicable under Section 1272 of the Code or any
successor section thereto ("Test Rate") or, if no such Test Rate
exists, at the Prime Rate, which interest shall be payable monthly,
and which note shall be secured by a mortgage on the Leased
Property, subject to all mortgages and encumbrances on the Leased
Property at the time of such purchase; or
(iii) Such other arrangement regarding such compensation as
shall be mutually acceptable to Landlord and Tenant.
(c) Landlord and Tenant agree that Tenant's construction lender for
Capital Additions shall have the right to secure its loan by a mortgage
upon Tenant's leasehold interest created hereunder provided such mortgage
(i) shall be in an amount not to exceed the cost of the Capital Additions,
(ii) shall be subordinate to this Lease and Landlord's rights herein,
(iii) shall be subordinate to any mortgage or encumbrance now existing or
hereinafter created, and (iv) shall be limited solely to Tenant's interest
in the Leased Property.
10.3 CAPITAL ADDITIONS FINANCED BY LANDLORD.
-26-
(a) Tenant shall request that Landlord provide or arrange financing
for a Capital Addition by providing to Landlord such information about the
Capital Addition (a "Request") as Landlord may request, including without
limitation, all information referred to in Section 10.1 above. Landlord
may, but shall be under no obligation to, obtain the funds necessary to
meet the Request. Within thirty (30) days subsequent to receipt of a
Request, Landlord shall notify Tenant as to whether it will finance the
proposed Capital Addition and, if so, the terms and conditions upon which
it will do so, including the terms of any amendment to this Lease. In no
event shall the portion of the projected Capital Addition Cost comprised
of land, if any, materials, labor charges and fixtures be less than ninety
percent (90%) of the total amount of such cost. Tenant may withdraw its
Request by notice to Landlord at any time before or after receipt of
Landlord's terms and conditions.
(b) If Landlord agrees to finance the proposed Capital Addition,
Tenant shall provide Landlord with the following prior to any advance of
funds:
(i) all customary or other required loan documentation;
(ii) any information, certificates of need, regulatory
approvals of architectural plans and other certificates, licenses,
permits or documents requested by either Landlord or any lender with
whom Landlord has agreed or may agree to provide financing which are
necessary to confirm that Tenant will be able to use the Capital
Addition upon completion thereof in accordance with the Primary
Intended Use, including all required federal, state or local
government licenses and approvals;
(iii) an Officer's Certificate and, if requested, a
certificate from Tenant's architect, setting forth in reasonable
detail the projected (or actual, if available) cost of the Capital
Addition;
(iv) an amendment to this Lease, duly executed and
acknowledged, in form and substance satisfactory to Landlord, and
containing such provisions as may be necessary or appropriate,
including without limitation, any appropriate changes in the legal
description of the Land, the Fair Market Value and the Rent, which
shall be increased in an amount at least equal to the principal and
interest on the debt incurred by Landlord to finance the Capital
Addition;
(v) a deed conveying title to Landlord to any land acquired
for the purpose of constructing the Capital Addition, free and clear
of any liens or encumbrances except those approved by Landlord and,
both prior to and following completion of the Capital Addition, an
as-built survey thereof satisfactory to Landlord;
(vi) endorsements to any outstanding policy of title insurance
covering the Leased Property and any additional land referred to in
Section 10.3(b)(v) above, or a supplemental policy of title
insurance covering the Leased Property and any additional land
referred to in Section 10.3(b)(v) above, satisfactory in
-27-
form and substance to Landlord (A) updating the same without any
additional exceptions, except as may be permitted by Landlord; and
(B) increasing the coverage thereof by an amount equal to the Fair
Market Value of the Capital Addition (except to the extent covered
by the owner's policy of title insurance referred to in subparagraph
(vii) below);
(vii) if required by Landlord, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Landlord
pursuant to subparagraph (v), free and clear of all liens and
encumbrances except those approved by Landlord and (B) a lender's
policy of title insurance satisfactory in form and substance to
Landlord and the Lending Institution advancing any portion of the
Capital Addition Cost;
(viii) if required by Landlord, prior to commencing the
Capital Addition, an M.A.I. appraisal of the Leased Property
indicating that the Fair Market Value of the Leased Property upon
completion of the Capital Addition will exceed the Fair Market Value
of the Leased Property prior thereto by an amount not less than one
hundred percent (100%) of the Capital Addition Cost; and
(ix) such other certificates (including, but not limited to,
endorsements increasing the insurance coverage, if any, at the time
required by Section 13.1), documents, opinions of counsel,
appraisals, surveys, certified copies of duly adopted resolutions of
the Board of Directors of Tenant authorizing the execution and
delivery of the lease amendment described above and any other
instruments as may be reasonably required by Landlord and any
Lending Institution advancing or reimbursing Tenant for any portion
of the Capital Addition Cost.
(c) Upon making a Request, whether or not such financing is actually
consummated, Tenant shall pay or agree to pay, upon demand, all reasonable
costs and expenses of Landlord and any Lending Institution which has
committed to finance such Capital Addition which have been paid or
incurred by them in connection with the financing of the Capital Addition,
including, but not limited to, (i) the fees and expenses of their
respective counsel, (ii) all printing expenses, (iii) the amount of any
filing, registration and recording taxes and fees, (iv) documentary stamp
taxes. transfer taxes, intangible taxes, and other similar charges, if
any, (v) title insurance charges, appraisal fees, if any, rating agency
fees, if any, and (vi) commitment fees, if any, and (vii) costs of
obtaining regulatory and governmental approvals, including but not limited
to any required certificates of need, for the construction, operation, use
or occupancy of the Capital Addition.
10.4 REMODELING AND NON-CAPITAL ADDITIONS. Subject to Article IX, Tenant
shall have the right and the obligation to make additions, modifications or
improvements to the Leased Property which are not Capital Additions
("Non-Capital Additions") from time to time as it, in its discretion, may deem
to be desirable for the Primary Intended Use and to permit the Tenant to comply
fully with its obligations set forth in this Lease, provided that such action
will be undertaken expeditiously, in a workmanlike manner and will not
significantly alter the character or purpose or detract from the value or
operating efficiency of the Leased Property and will not
-28-
significantly impair the revenue producing capability of the Leased Property or
adversely affect the ability of the Tenant to comply with the provisions of this
Lease. The cost of Non-Capital Additions, modifications and improvements shall,
without payment by Landlord at any time, be included under the terms of this
Lease and, upon expiration or earlier termination of this Lease, shall pass to
and become the property of Landlord.
ARTICLE XI
LIENS
11.1 LIENS. Subject to the provisions of Article XII relating to permitted
contests, Tenant will not directly or indirectly create or allow to remain and
will promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT B, (c) restrictions, liens
and other encumbrances which are consented to in writing by Landlord, or any
easements granted pursuant to the provisions of Section 7.3, (d) liens for those
taxes of Landlord which Tenant is not required to pay hereunder, (e) liens for
Impositions or for sums resulting from noncompliance with Legal Requirements so
long as (1) the same are not yet payable or are payable without the addition of
any fine or penalty or (2) such liens are in the process of being contested as
permitted by Article XII, (f) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either disputed or not yet due, provided that (1)
the payment of such sums shall not be postponed for more than sixty (60) days
after the completion of the action giving rise to such lien and such reserve or
other appropriate provisions as shall be required by law or GAAP shall have been
made therefor or (2) any such liens are in the process of being contested as
permitted by Article XII, and (g) any liens which are the responsibility of
Landlord pursuant to the provisions of Article XXIX of this Lease. Unless
otherwise expressly provided herein, Tenant shall not mortgage or grant any
interest in, or otherwise assign, any part of the Tenant's rights and interests
in this Lease, the Leased Property or any permits, licenses, certificates of
need (if any) or any other approvals required to operate the Facility during the
Term without the prior written consent of the Landlord, which may be withheld at
Landlord's sole discretion; provided nothing in this sentence shall prohibit or
be deemed to prohibit the sale of additional limited partnership interest in
Tenant as allowed under this Lease.
ARTICLE XII
PERMITTED CONTESTS
12.1 PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount, validity
or application, in whole or in part, of any Imposition, Legal Requirement,
Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim not
otherwise permitted by Article XI, provided that (a) in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the Leased Property, (b) neither the Leased
Property nor any Rent nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited,
-29-
attached or lost, (c) in the case of a Legal Requirement, Landlord would not be
in any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings, (d) in the event that any
such contest shall involve a sum of money or potential loss in excess of Fifty
Thousand Dollars and 00/100 Dollars ($50,000.00), then, in any such event, (i)
provided the Consolidated Net Worth of Tenant is then in excess of Fifty Million
Dollars and 00/100 Dollars ($50,000,000.00), Tenant shall deliver to Landlord an
Officer's Certificate to the effect set forth in clauses (a), (b) and (c), to
the extent applicable, or (ii) in the event the Consolidated Net Worth of Tenant
is not then in excess of Fifty Million Dollars and 00/100 Dollars
($50,000,000.00), then Tenant shall deliver to Landlord and its counsel an
opinion of Tenant's counsel to the effect set forth in clauses (a), (b) and (c),
to the extent applicable, (e) in the case of a Legal Requirement and/or an
Imposition, lien, encumbrance or charge, Tenant shall give such reasonable
security as may be demanded by Landlord to insure ultimate payment of the same
and to prevent any sale or forfeiture of the affected portion of the Leased
Property or the Rent by reason of such non-payment or non-compliance; provided,
however, the provisions of this Article XII shall not be construed to permit
Tenant to contest the payment of Rent or any other sums payable by Tenant to
Landlord hereunder, (f) in the case of an Insurance Requirement, the coverage
required by Article XIII shall be maintained, and (g) if such contest be finally
resolved against Landlord or Tenant, Tenant 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. Landlord, at Tenant's expense, shall
execute and deliver to Tenant such authorizations and other documents as may
reasonably be required in any such contest and, if reasonably requested by
Tenant or if Landlord so desires, Landlord shall join as a party therein. Tenant
shall indemnify and save Landlord harmless against any liability, cost or
expense of any kind that may be imposed upon Landlord in connection with any
such contest and any loss resulting therefrom.
ARTICLE XIII
INSURANCE
13.1 GENERAL INSURANCE REQUIREMENTS. During the Term, Tenant shall at all
times keep the Leased Property and all property located in or on the Leased
Property, including Tenant's Personal Property, insured against loss or damage
from such causes as are customarily insured against, by prudent owners of
similar facilities. Without limiting the generality of the foregoing, Tenant
shall obtain and maintain in effect throughout the Term, the kinds and amounts
of insurance deemed necessary by Landlord, including the insurance described
below. All insurance shall be written by insurance companies (i) acceptable to
Landlord, (ii) that are rated at least an "A-VIII" or better by Best's Insurance
Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better, and (iii) authorized, licensed and qualified to do
insurance business in the State. The aggregate amount of coverage by a single
company must not exceed five percent (5%) of the insurance company's
policyholders' surplus. The policies must name Landlord (and any other entities
as Landlord may deem necessary) as an additional insured and losses shall be
payable to Landlord and/or Tenant as provided in Article XIV. Each insurance
policy required hereunder must (i) provide primary insurance without right of
contribution from any other insurance carried by Landlord, (ii) contain an
express waiver by the insurer of any right of subrogation, setoff or
counterclaim against any insured party thereunder including Landlord, (iii)
permit Landlord to pay premiums at
-30-
Landlord's discretion, and (iv) as respects any third party liability claim
brought against Landlord, obligate the insurer to defend Landlord as an
additional insured thereunder. In addition, the policies shall name as an
additional insured the holder ("Facility Mortgagee") of any mortgage, deed of
trust or other security agreement securing any Encumbrance placed on the Leased
Property in accordance with the provisions of this Lease ("Facility Mortgage"),
if any, by way of a standard form of mortgagee's loss payable endorsement. Any
loss adjustment shall require the written consent of Landlord and each affected
Facility Mortgagee. Evidence of insurance and/or Impositions shall be deposited
with Landlord and, if requested, with any Facility Mortgagee(s). If any
provision of any Facility Mortgage which constitutes a first lien on the Leased
Property requires deposits of insurance to be made with such Facility Mortgagee,
Tenant shall either pay to Landlord monthly the amounts required and Landlord
shall transfer such amounts to such Facility Mortgagee or, pursuant to written
direction by Landlord, Tenant shall make such deposits directly with such
Facility Mortgagee. The policies on the Leased Property, including the Leased
Improvements, the Fixtures and Tenant's Personal Property, shall insure against
the following risks:
(a) All Risks or Special Form Property insurance against loss or
damage to the building and improvements, including but not limited to,
perils of fire, lightning, water, wind, theft, vandalism and malicious
mischief, plate glass breakage, and perils typically provided under an
Extended Coverage Endorsement and other forms of broadened risk perils,
and insured on a "replacement cost" value basis to the extent of the full
replacement value of the Leased Property. The policy shall include
coverage for subsidence. The deductible amount thereunder shall be borne
by the Tenant in the event of a loss and the deductible must not exceed
Ten Thousand and 00/100 Dollars ($10,000.00) per occurrence. Further, in
the event of a loss, Tenant shall abide by all provisions of the insurance
contract, including proper and timely notice of the loss to the insurer,
and Tenant further agrees that it will notify Landlord of any loss in the
amount of Twenty Five Thousand and 00/100 Dollars ($25,000.00) or greater
and that no claim at or in excess of Twenty Five Thousand and 00/100
Dollars ($25,000.00) thereunder shall be settled without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed by Landlord.
(b) Flood and earthquake insurance shall be required only in the
event that the Leased Property is located in a flood plain or earthquake
zone.
(c) Insurance against loss of earnings in an amount sufficient to
cover not less than twelve (12) months' lost earnings and written in an
"all risks" form, either as an endorsement to the insurance required under
Section 13.1(a) above, or under a separate policy.
(d) Worker's compensation insurance covering all employees in
amounts that are customary for Tenant's industry.
(e) Commercial General Liability in a primary amount of at least
Five Million and 00/100 Dollars ($5,000,000.00) per occurrence, bodily
injury for injury or death of any one person and One Hundred Thousand and
00/100 Dollars ($100,000.00) for property damage for damage to or loss of
property of others, subject to a Xxx Xxxxxxx xxx
-00-
00/000 Xxxxxxx ($10,000,000.00) annual aggregate policy limit for all
bodily injury and property damage claims, occurring on or about the Leased
Property or in any way related to the Leased Property, including but not
limited to, any swimming pools or other rehabilitation and recreational
facilities or areas that are located on the Leased Property or otherwise
related to the Leased Property. Such policy shall include coverages of a
Broad Form nature, including, but not limited to, Explosion, Collapse and
Underground (XCU), Products Liability, Completed Operations, Broad Form
Contractual Liability, Broad Form Property Damage, Personal Injury,
Incidental Malpractice Liability, and Host Liquor Liability (if
applicable).
(f) Automobile and vehicle liability insurance coverage for all
owned, non-owned, leased or hired automobiles and vehicles in a primary
limit amount of One Million and 00/100 Dollars ($1,000,000.00) per
occurrence for bodily injury; One Hundred Thousand and 00/100 Dollars
($100,000.00) per occurrence for property damage; subject to an annual
aggregate policy limit of One Million and 00/100 Dollars ($1,000,000.00).
(g) Umbrella liability insurance in the minimum amount of Ten
Million and 00/100 Dollars ($10,000,000.00) for each occurrence and
aggregate combined single limit for all liability, with a Ten Thousand and
00/100 Dollars ($10,000.00) self-insured retention for exposure not
covered in underlying primary policies. The umbrella liability policy
shall name in its underlying schedule the policies of commercial general
liability, garage keepers liability, automobile/vehicle liability and
employer's liability under the Worker's Compensation Policy.
(h) Professional liability insurance for any physician employed by
Tenant or other employee or agent of Tenant providing services at the
Facility in an amount not less than Five Million and 00/100 Dollars
($5,000,000.00) per individual claim and Ten Million and 00/100 Dollars
($10,000,000.00) annual aggregate.
(i) A commercial blanket bond covering all employees of the Tenant,
including its officers and the individual owners of the insured business
entity, whether a joint-venture, partnership, proprietorship or
incorporated entity, against loss as a result of their dishonesty. Policy
limit shall be in an amount of at least One Million and 00/100 Dollars
($1,000,000.00) subject to a deductible of no more than Ten Thousand and
00/100 Dollars ($10,000.00) per occurrence.
The term "Full Replacement Cost" as used herein, shall mean the actual
replacement cost thereof from time to time, including increased cost of
construction endorsement, less exclusions provided in the normal fire
insurance policy. In the event either Landlord or Tenant believes that the
Full Replacement Cost has increased or decreased at any time during the
Term, it shall have the right to have such Full Replacement Cost
re-determined by the fire insurance company which is then providing the
largest amount of fire insurance carried on the Leased Property,
hereinafter referred to as the "impartial appraiser". The party desiring
to have the Full Replacement Cost so re-determined shall forthwith, on
receipt of such determination by such impartial appraiser, give written
notice thereof to the other party hereto. The determination of such
impartial appraiser
-32-
shall be final and binding on the parties hereto, and Tenant shall
forthwith increase, or may decrease, the amount of the insurance carried
pursuant to this Article XIII, as the case may be, to the amount so
determined by the impartial appraiser. Tenant shall pay the fee, if any,
of the impartial appraiser.
13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Tenant shall maintain such additional insurance as may be required from time to
time by any Facility Mortgagee and shall further at all times maintain adequate
worker's compensation insurance coverage for all persons employed by Tenant at
the Facility, in accordance with the requirements of applicable local, state and
federal law.
13.3 WAIVER OF SUBROGATION. All insurance policies carried by either party
covering the Leased Property, the Fixtures, the Facility and/or Tenant's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party. The parties hereto agree that their policies
will include such a waiver clause or endorsement so long as the same is
obtainable without extra cost, and in the event of such an extra charge the
other party, at its election, may pay the same, but shall not be obligated to do
so.
13.4 FORM OF INSURANCE. All of the policies of insurance referred to in
this Article XIII shall be written in form satisfactory to Landlord and by
insurance companies satisfactory to Landlord. Tenant shall pay all of the
premiums therefor, and shall deliver such original policies, or a certified copy
thereof (which is certified in writing by a duly authorized agent for the
insurance company as a "true and certified" copy of the policy), or in the case
of a blanket policy, a copy of the original policy, to Landlord effective with
the Commencement Date and furnished annually thereafter (and, with respect to
any renewal policy, at least fifteen (15) days prior to the expiration of the
existing policy) and in the event of the failure of Tenant either to obtain such
insurance in the names herein called for or to pay the premiums therefor, or to
deliver such policies or certified copies of such policies to Landlord at the
times required, Landlord shall be entitled, but shall have no obligation, to
obtain such insurance and pay the premiums therefor, which premiums shall be
repayable to Landlord upon written demand therefor, and failure to repay the
same shall constitute an Event of Default. Each insurer mentioned in this
Article XIII shall agree, by endorsement on the policy or policies issued by it,
or by independent instrument furnished to Landlord, that it will give to
Landlord sixty (60) days' prior written notice (at Landlord's notice address as
specified in this Lease ("Landlord's Notice Address") before the policy or
policies in question shall be altered, allowed to expire or canceled. The
parties hereto agree that all insurance policies, endorsements and certificates
which provide that the insurer will "endeavor to" give notice before same may be
altered, allowed to expire or canceled will not be acceptable to Landlord.
Notwithstanding anything contained herein to the contrary, all policies of
insurance required to be obtained by Tenant hereunder shall provide (i) that
such policies will not lapse, terminate, be canceled, or be amended or modified
to reduce limits or coverage terms unless and until Landlord has received not
less than sixty (60) days' prior written notice at Landlord's Notice Address,
and (ii) that in the event of cancellation due to non-payment of premium, the
insurer will provide not less than ten (10) days' prior written notice to
Landlord at Landlord's Notice Address.
-33-
13.5 INCREASE IN LIMITS. In the event that Landlord shall at any time deem
the limits of the personal injury, property damage or general public liability
insurance then carried to be insufficient, the parties shall endeavor to agree
on the proper and reasonable limits for such insurance to be carried and such
insurance shall thereafter be carried with the limits thus agreed on until
further change pursuant to the provisions of this Article XIII. If the parties
shall be unable to agree thereon, the proper and reasonable limits for such
insurance to be carried shall be determined by an impartial third party selected
by the parties. Nothing herein shall permit the amount of insurance to be
reduced below the amount or amounts required by any of the Facility Mortgages.
13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Article XIII, Tenant'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 Tenant provided that:
(a) Any such blanket policy or policies are acceptable to and have
been approved by the Landlord;
(b) Any such blanket policy or policies shall not be changed,
altered or modified without the prior written consent of the Landlord; and
(c) Any such blanket policy or policies shall otherwise satisfy the
insurance requirements of this Article XIII (including the requirement of
sixty (60) days' written notice before the expiration or cancellation of
such policies as required by Section 13.4) and shall provide for
deductibles in amounts acceptable to Landlord.
13.7 NO SEPARATE INSURANCE. Tenant shall not, on Tenant's own initiative
or pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article XIII to be furnished by, or which may reasonably be
required to be furnished by, Tenant, or increase the amounts of any then
existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of the
insurance, including in all cases Landlord and all Facility Mortgagees, 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. Tenant shall immediately notify Landlord of the taking out of any such
separate insurance or of the increasing of any of the amounts of the then
existing insurance by securing an additional policy or additional policies.
ARTICLE XIV
FIRE AND CASUALTY
14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property or any portion thereof and insured under any
policy of insurance required by Article XIII shall be paid to Landlord and held
by Landlord in trust (subject to the provisions of Section 14.7) and shall be
made available for reconstruction or repair, as the case may be, of any damage
to or destruction of the Leased Property, or any portion thereof, and shall be
paid out by
-34-
Landlord from time to time for the reasonable cost of such reconstruction or
repair. Any excess proceeds of insurance remaining after the completion of the
restoration or reconstruction of the Leased Property (or in the event neither
Landlord nor Tenant is required or elects to repair and restore, all such
insurance proceeds) shall be retained by Landlord free and clear upon completion
of any such repair and restoration except as otherwise specifically provided
below in this Article XIV. All salvage resulting from any risk covered by
insurance shall belong to Landlord except that any salvage relating to Capital
Additions paid for by Tenant or to Tenant's Personal Property shall belong to
Tenant.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
(a) Except as provided in Section 14.7, if during the Term, the
Leased Property is totally or partially destroyed from a risk covered by
the insurance described in Article XIII and the Facility is thereby
rendered Unsuitable for its Primary Intended Use, Tenant shall have the
option, by giving written notice to Landlord within sixty (60) days
following the date of such destruction, to (i) restore the Facility to
substantially the same condition as existed immediately before the damage
or destruction, or (ii) so long as Tenant is not in default, or no event
has occurred which with the giving of notice or the passage of time or
both would constitute a default, under this Lease and the Secondary
Leases, to purchase Landlord's interest in the Leased Property from
Landlord for a purchase price equal to the Fair Market Value Purchase
Price of the Leased Property immediately prior to such damage or
destruction. In the event Landlord does not accept Tenant's offer to so
purchase within thirty (30) days after Landlord's receipt of Tenant's
notice, Tenant may, after giving Landlord thirty (30) days' prior written
notice, either withdraw its offer to purchase and proceed to restore the
Facility to substantially the same condition as existed immediately before
the damage or destruction or, terminate this Lease and, in the latter
event, Landlord shall be entitled to retain the insurance proceeds, and
Tenant shall pay to Landlord on demand, the amount of any deductible or
uninsured loss arising in connection therewith.
(b) Except as provided in Section 14.7, if during the Term, the
Leased Improvements are totally or partially destroyed from a risk covered
by the insurance described in Article XIII, but the Facility is not
thereby rendered Unsuitable for its Primary Intended Use, Tenant shall
restore the Facility to substantially the same condition as existed
immediately before the damage or destruction. Such damage or destruction
shall not terminate this Lease; provided, however, if Tenant cannot within
a reasonable time obtain all necessary governmental approvals, including
building permits, licenses, conditional use permits and any certificates
of need, after diligent efforts to do so, in order to be able to perform
all required repair and restoration work and to operate the Facility for
its Primary Intended Use in substantially the same manner as immediately
prior to such damage or destruction, so long as Tenant is not in default,
or no event has occurred which with the giving of notice or the passage of
time or both would constitute a default, under the terms of this Lease and
the Secondary Leases, Tenant shall have the option to purchase Landlord's
interest in the Leased Property for a purchase price equal to the Fair
Market Value Purchase Price of the Leased Property immediately prior to
such damage or destruction.
-35-
(c) If the cost of the repair or restoration exceeds the amount of
proceeds received by Landlord from the insurance required under Article
XIII, Tenant shall be obligated to contribute any excess amount needed to
restore the Facility prior to use of the insurance proceeds. Such amount
shall be paid by Tenant to Landlord (or a Facility Mortgagee if required)
to be held in trust together with any other insurance proceeds for
application to the cost of repair and restoration.
(d) In the event Landlord accepts Tenant's offer to purchase
Landlord's interest in the Leased Property, this Lease shall terminate
upon payment of the purchase price and Landlord shall remit to Tenant all
insurance proceeds being held in trust by Landlord or the Facility
Mortgagee if applicable.
14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article XIII but that would have been covered if Tenant
carried the insurance customarily maintained by, and generally available to, the
operators of reputable health care facilities in the region in which the
Facility is located, then whether or not such damage or destruction renders the
Facility Unsuitable for its Primary Intended Use, Tenant shall restore the
Facility to substantially the same condition it was in immediately before such
damage or destruction and this Lease shall not terminate or be terminated as a
result of such damage or destruction. If such damage or destruction is not
material, Tenant shall restore the Leased Property at Tenant's expense.
14.4 TENANT'S PERSONAL PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Tenant's Personal Property or Capital
Additions financed by Tenant shall be paid to Landlord and Landlord shall hold
such insurance proceeds in trust to pay the cost of repairing or replacing the
damage to Tenant's Personal Property or the Capital Additions financed by
Tenant.
14.5 RESTORATION OF TENANT'S PROPERTY. If Tenant is required or elects to
restore the Facility as provided in Sections 14.2 or 14.3, Tenant also shall
restore all alterations and improvements made by Tenant, Tenant's Personal
Property and all Capital Additions paid for by Tenant.
14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and
effect and Tenant's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during any period required
for repair and restoration.
14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections
14.2 or 14.3 to the contrary, if damage to or destruction of the Facility occurs
during the last thirty (30) months of the Term, and if such damage or
destruction cannot be fully repaired and restored within six (6) months
immediately following the date of loss, either party shall have the right to
terminate this Lease by giving notice to the other within thirty (30) days after
the date of damage or destruction, in which event Landlord shall be entitled to
retain the insurance proceeds and Tenant shall pay to Landlord on demand the
amount of any deductible or uninsured loss arising in connection therewith;
provided, however, that any such notice given by Landlord shall be void
-36-
and of no force and effect if Tenant exercises an available option to extend the
Term for one Extended Term within thirty (30) days following receipt of such
termination notice.
14.8 TERMINATION OF RIGHT TO PURCHASE AND SUBSTITUTION. Any termination of
this Lease pursuant to this Article XIV or otherwise shall cause any right to
purchase granted to Tenant under this Lease to be terminated and to be without
further force and effect.
14.9 WAIVER. Tenant hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.
ARTICLE XV
CONDEMNATION
15.1 DEFINITIONS.
(a) "Condemnation" means (i) the exercise of any governmental power,
whether by legal proceedings or otherwise, by a Condemnor or (ii) a
voluntary sale or transfer by Landlord to any Condemnor, either under
threat of Condemnation or while legal proceedings for Condemnation are
pending.
(b) "Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value
awarded, paid or received on a total or partial Condemnation.
(d) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.
15.3 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.
15.4 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for its Primary Intended Use, Tenant
shall have the option (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or, so long as Tenant is not in default, or no event
has occurred which with the giving of notice or the passage of time or both
would constitute a default, under the terms of this Lease and the Secondary
Leases, or (b) to offer to acquire Landlord's interest in the Leased Property
from Landlord for a purchase price equal to the Fair Market Value Purchase Price
of the Leased Property immediately prior to such partial Taking, in which event
this Lease shall terminate upon payment of the purchase price. Tenant shall
exercise its option by giving
-37-
Landlord notice thereof within sixty (60) days after Tenant receives notice of
the Taking. In the event Landlord does not accept Tenant's offer to so purchase
within thirty (30) days after receipt of the notice described in the preceding
sentence, Tenant may either (a) withdraw its offer to purchase and proceed to
restore the Facility, to the extent possible, to substantially the same
condition as existed immediately before the partial Taking or (b) terminate this
Lease by written notice to Landlord.
15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Tenant
shall accomplish all necessary restoration.
15.6 AWARD DISTRIBUTION. In the event Landlord accepts Tenant's offer to
purchase the Leased Property, as described in clause (b) of Section 15.4, the
entire Award shall belong to Tenant provided no Event of Default is continuing
and Landlord agrees to assign to Tenant all of its rights thereto. In any other
event, the entire Award shall belong to and be paid to Landlord, except that, if
this Lease is terminated, and subject to the rights of the Facility Mortgagee,
Tenant shall be entitled to receive from the Award, if and to the extent such
Award specifically includes such items, the following:
(a) A sum attributable to the Capital Additions for which Tenant
would be entitled to reimbursement at the end of the Term pursuant to the
provisions of Section 10.2(c) and the value, if any, of the leasehold
interest of Tenant under this Lease; and
(b) A sum attributable to Tenant's Personal Property and any
reasonable removal and relocation costs included in the Award.
If Tenant is required or elects to restore the Facility, Landlord agrees
that, subject to the rights of the Facility Mortgagees, its portion of the Award
shall be used for such restoration and it shall hold such portion of the Award
in trust, for application to the cost of the restoration.
15.7 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and the
Base Rent shall not be abated or reduced during such period of Taking.
ARTICLE XVI
DEFAULT
16.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
hereunder:
(a) if Tenant shall fail to make a payment of Rent or any other
monetary payment due and payable by Tenant under this Lease when the same
becomes due and payable, or
-38-
(b) if Tenant shall fail to observe or perform any other term,
covenant or condition of this Lease and such failure is not cured by
Tenant within a period of thirty (30) days after receipt by Tenant of
written notice thereof from Landlord (provided, however, in no event shall
Landlord be required to give more than one (1) written notice per calendar
year), 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 Tenant proceeds promptly and with due diligence to cure the
failure and diligently completes the curing thereof within sixty (60) days
after receipt by Tenant of Landlord's notice of default, or
(c) if Tenant shall:
(i) admit in writing its inability to pay its debts generally
as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(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, or
(vi) admits in writing that Tenant cannot meet its obligations
as they become due; or is declared insolvent according to any law;
or assignment of Tenant's property is made for the benefit of
creditors; or a receiver or trustee is appointed for Tenant or its
property; or the interest of Tenant under this Lease is levied on
under execution or other legal process; or any petition is filed by
or against Tenant to declare Tenant bankrupt or to delay, reduce or
modify Tenant's capital structure if Tenant be a corporation or
other entity (provided that no such levy, execution, legal process
or petition filed against Tenant shall constitute a breach of this
Lease if Tenant shall vigorously contest the same by appropriate
proceedings and shall remove or vacate the same within thirty (30)
days from the date of its creation, service or filing); or
(d) if any License is terminated or if Tenant or the Facility is
excluded from participation in Medicare, Medicaid or other governmental
payor programs by a final adjudication, or
(e) except as a result of damage, destruction or a partial or
complete Condemnation, the abandonment or vacation of the Leased Property
by Tenant (Tenant's absence from the Leased Property for thirty (30)
consecutive days shall constitute abandonment), or the failure by Tenant
to continuously operate the Facility in accordance with the terms of this
Lease, or
-39-
(f) if Tenant shall, after a petition in bankruptcy is filed against
it, be adjudicated a bankrupt or if a court of competent jurisdiction
shall enter an order or decree appointing, without the consent of Tenant,
as the case may be, a receiver of Tenant or of the whole or substantially
all of its property, or approving a petition filed against it seeking
reorganization or arrangement of Tenant under the federal bankruptcy laws
or any other applicable law or statute of the United States of America or
any state thereof, and such judgment, order or decree shall not be vacated
or set aside or stayed within ninety (90) days from the date of the entry
thereof, or
(g) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution, or shall, in any
manner, permit the sale or divestiture of substantially all of its assets
other than in connection with a merger or consolidation of Tenant into, or
a sale of substantially all of Tenant's assets to, another corporation,
provided that if the survivor of such merger or the purchaser of such
assets shall assume all of Tenant's obligations under this Lease by a
written instrument, in form and substance reasonably satisfactory to
Landlord, accompanied by an opinion of counsel, reasonably satisfactory to
Landlord and addressed to Landlord stating that such instrument of
assumption is valid, binding and enforceable against the parties thereto
in accordance with its terms (subject to usual bankruptcy and other
creditors' rights exceptions), and provided, further, that if, immediately
after giving effect to any such merger, consolidation or sale, Tenant or
such other corporation (if not the Tenant) surviving the same, shall have
a Consolidated Net Worth not less than the Consolidated Net Worth of
Tenant immediately prior to such merger, consolidation or sale, all as to
be set forth in an Officer's Certificate delivered to Landlord within
thirty (30) days of such merger, consolidation or sale, an Event of
Default shall not be deemed to have occurred, or
(h) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding and
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of written notice thereof from Landlord (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with
Article XII hereof), or
(i) if any of the representations or warranties made by Tenant in
the Purchase Agreement or in the certificates delivered in connection
therewith are or become untrue in any material respect, and which is not
cured within ten (10) days after notice from Landlord, or
(j) a default by Tenant as described in Section 16.2 below, or
(k) a default or event of default shall occur under the Lease
Assignment, Security Agreement or any other agreement between Landlord or
any Affiliate of Landlord and Tenant or any Affiliate of Tenant, which is
not cured within the cure period as provided therein, or
-40-
(l) if Tenant defaults under the Secondary Leases or fails or
refuses to enforce the terms and conditions of the Secondary Leases, which
is not cured within the cure period as provided therein, or
(m) if Tenant causes or fails to prevent a payment default on any of
its corporate debt or other leases or is declared to be in material
default by any of its corporate lenders and such default is not cured
within any applicable cure periods, or
(n) if a default occurs under any other leases between Tenant or its
Affiliates and Landlord and its Affiliates and such default is not cured
within any applicable cure periods.
16.2 COVENANTS AND EVENTS OF DEFAULT. In addition to those matters set
forth in Section 16.1, the occurrence of any of the following events shall
constitute an Event of Default:
(a) If, based on a quarterly test, Tenant's Consolidated Net Worth
shall be less than the below stated amount in the applicable period:
Year Consolidated Net Worth
---- ----------------------
2005 12,500,000
2006 11,000,000
2007 9,000,000
2008 9,000,000
2009 12,000,000
2010 and after 15,000,000
(b) If EBITDAR Total Fixed Charge Coverage shall be less than the
amount calculated per applicable period as provided below:
EBITDAR Testing Periods: Calculation:
----------------------- ------------
Year One: - For Year One as Tested at the End of the 4th Quarter 0.5 times EBITDAR
Year Two: - For Quarters 1, 2, and 3 (Tested Quarterly) 0.5 times EBITDAR
- For Year Two as Tested at the End of the 4th Quarter 0.75 times EBITDAR
Year Three: - For Quarters 1 and 2 (Tested Quarterly) 1.0 times EBITDAR
- For Quarters 3 and 4 (Tested Quarterly) 1.2 times EBITDAR
Year Four: (and - Tested Quarterly 1.5 times EBITDAR
thereafter)
(c) If EBITDAR Lease Coverage shall be less than the amount
calculated per applicable period as provided below:
-41-
EBITDAR Testing Periods: Calculation:
----------------------- --------------
Year One: - For Year One as Tested at the End of the 4th Quarter 0.6 times EBITDAR
Year Two: - For Quarters 1, 2, and 3 (Tested Quarterly) 0.6 times EBITDAR
- For Year Two as Tested at the End of the 4th Quarter 1.2 times EBITDAR
Year Three: - For Quarters 1 and 2 (Tested Quarterly) 1.5 times EBITDAR
- For Quarters 3 and 4 (Tested Quarterly) 1.8 times EBITDAR
Year Four: (and - Tested Quarterly 2.0 times EBITDAR
thereafter)
(d) Tenant, on a consolidated basis, shall experience six (6)
consecutive quarters of falling net revenue, and EBITDAR (based on
trailing twelve (12) months) shall be less than 1.5 times Tenant's Rent
payments; or
(e) Tenant shall be in payment default on any of its corporate debt
or other leases or be declared to be in material default by any of its
corporate lenders, unless such default is cured within any applicable cure
periods.
16.3 REMEDIES. If an Event of Default shall have occurred, Landlord,
except as expressly provided to the contrary herein, shall have the right at its
election, then or at any time thereafter, to pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law,
in equity or by other provisions of this Lease, without notice or demand.
(a) Without any notice or demand whatsoever, Landlord may take any
one or more of the actions permissible at law to insure performance by
Tenant of Tenant's covenants and obligations under this Lease. In this
regard, it is agreed that if Tenant deserts or vacates the Leased
Property, Landlord may enter upon and take possession of the Leased
Property in order to protect it from deterioration and continue to demand
from Tenant the monthly rentals and other charges provided in this Lease,
without any obligation to relet; but that if Landlord does, at its sole
discretion, elect to relet the Leased Property, such action by Landlord
shall not be deemed as an acceptance of Tenant's surrender of the Leased
Property unless Landlord expressly notifies Tenant of such acceptance in
writing pursuant to subsection (b) of this Section 16.3, Tenant hereby
acknowledging that Landlord shall otherwise be reletting as Tenant's agent
and Tenant furthermore hereby agreeing to pay to Landlord on demand any
deficiency that may arise between the monthly rentals and other charges
provided in this Lease and that are actually collected by Landlord. It is
further agreed in this regard that in the event of any default described
in Section 16.1, Landlord shall have the right to enter upon the Leased
Property by force, if necessary, without being liable for prosecution or
any claim for damages therefor, and do whatever Tenant is obligated to do
under the terms of this Lease; and Tenant agrees to reimburse Landlord on
demand for any expenses which Landlord may incur in thus effecting
compliance with Tenant's obligations under this Lease, and Tenant further
agrees that Landlord shall not be liable for any damages resulting to
Tenant from such action.
-42-
(b) Landlord may terminate this Lease by written notice to Tenant,
in which event Tenant shall immediately surrender the Leased Property to
Landlord, and if Tenant fails to do so, Landlord may, without prejudice to
any other remedy which Landlord may have for possession or arrearages in
Rent (including any late charge which may have accrued pursuant to Section
3.4), enter upon and take possession of the Leased Property and expel or
remove Tenant and any other person who may be occupying the Leased
Property or any part thereof, by force, if necessary, without being liable
of prosecution or any claim for damages therefor. Tenant hereby waives any
statutory requirement of prior written notice for filing eviction or
damage suits for nonpayment of rent. In addition, Tenant agrees to pay to
Landlord on demand the amount of all loss and damage which Landlord may
suffer by reason of any termination effected pursuant to this subsection
(b), said loss and damage to be determined, at Landlord's option, by
either of the following alternative measures of damages:
(i) Until Landlord is able, although Landlord shall be
under no obligation to attempt, to relet the Leased Property,
Tenant shall pay to Landlord on or before the first day of
each calendar month, the Rent and other charges provided in
this Lease. After the Leased Property has been relet by
Landlord, Tenant shall pay to Landlord on the tenth (10th) day
of each calendar month the difference between the Rent and
other charges provided in this Lease for the preceding
calendar month and that actually collected by Landlord for
such month. If it is necessary for Landlord to bring suit in
order to collect any deficiency, Landlord shall have a right
to allow such deficiencies to accumulate and to bring an
action on several or all of the accrued deficiencies at one
time. Any such suit shall not prejudice in any way the right
of Landlord to bring a similar action for any subsequent
deficiency or deficiencies. Any amount collected by Landlord
from subsequent tenants for any calendar month, in excess of
the monthly rentals and other charges provided in this Lease,
shall be credited to Tenant in reduction of Tenant's liability
for any calendar month for which the amount collected by
Landlord will be less than the monthly rentals and other
charges provided in this Lease; but Tenant shall have no right
to such excess other than the above-described credit.
(ii) When Landlord desires, Landlord may demand a final
settlement. Upon demand for a final settlement, Landlord shall
have a right to, and Tenant hereby agrees to pay, the
difference between the total of all monthly rentals and other
charges provided in this Lease for the remainder of the Lease
Term and the reasonable rental value of the Leased Property
for such period, such difference to be discounted to present
value at a rate equal to the lowest rate of capitalization
(highest present worth) reasonably applicable at the time of
such determination and allowed by applicable law. If Landlord
elects to exercise the remedy prescribed in subsection (a)
above, this election shall in no way prejudice Landlord's
right at any time thereafter to cancel said election in favor
of the remedy prescribed in subsection (b) above. Similarly,
if Landlord elects to compute damages in the manner prescribed
by subsection (b)(i) above, this election shall in no way
prejudice Landlord's right at any time thereafter to demand a
final settlement in accordance with this subsection (b)(ii)
above.
-43-
Pursuit of any of the above remedies shall not preclude
pursuit of any other remedies prescribed in other sections of
this Lease and any other remedies provided by law or equity.
Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed
or construed to constitute a waiver of such default.
(c) Landlord may require Tenant to cancel the Management Agreement
and to replace the Management Company with a company of Landlord's
choosing.
(d) Landlord, without waiving or releasing any obligation or Event
of Default, may (but shall be under no obligation to) at any time
thereafter make any payment or perform any act required to be made or
performed under this Lease by Tenant for the account and at the expense of
Tenant, and, to the extent permitted by law, may enter upon the Leased
Property for such purpose and take all such action thereon as, in
Landlord's opinion, may be necessary or appropriate therefor. No such
entry shall be deemed an eviction of Tenant. All sums so paid by Landlord
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 Landlord, shall be paid by Tenant to
Landlord on demand.
(e) In addition to other rights and remedies Landlord may have
hereunder and at law and in equity, in the event Tenant defaults under
this Lease, (i) Landlord shall have the right, but not the obligation or
responsibility to hire all or some of the employees of Tenant, and Tenant
hereby acknowledges that no non-compete or non-solicitation agreement is
either implied or expressed hereunder relating to such employees; (ii)
Tenant is deemed to have assigned to Landlord, at Landlord's sole option,
all service agreements (including, without limitation, all medical
director agreements); (iii) Tenant is deemed to have assigned and
transferred to Landlord, at Landlord's sole option, all supplies and
inventory used or usable in the operation of the Leased Property; and (iv)
Tenant is deemed, at Landlord's sole discretion, to have transferred and
assigned to Landlord all Licenses and agreements, including, without
limitation, all Medicare and Medicaid provider numbers, or is hereby
deemed, at Landlord's sole discretion, to agree to transfer to the
Landlord all of the Licenses, including, without limitation, all Medicare
and Medicaid provider numbers.
16.4 ADDITIONAL EXPENSES. Tenant shall compensate Landlord for (i) all
administrative expenses, (ii) all expenses incurred by Landlord in repossessing
the Leased Property (including among other expenses, any increase in insurance
premiums caused by the vacancy of the Leased Property), (iii) all expenses
incurred by Landlord in reletting (including among other expenses, repairs,
remodeling, replacements, advertisements and brokerage fees), (iv) all
concessions granted to a new tenant or tenants upon reletting (including among
other concessions, renewal options), (v) Landlord's reasonable attorneys' fees
and expenses, (vi) all losses incurred by Landlord as a direct or indirect
result of Tenant's default (including among other losses any adverse action by
mortgagees), and (vii) a reasonable allowance for Landlord's administrative
efforts, salaries and overhead attributable directly or indirectly to Tenant's
default and Landlord's pursuing the rights and remedies provided herein and
under applicable law.
-44-
16.5 WAIVER. If this Lease is terminated pursuant to Section 16.3, Tenant
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.
16.6 APPLICATION OF FUNDS. Any payments otherwise payable to Tenant which
are received by Landlord under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Tenant's
obligations in the order which Landlord may reasonably determine or as may be
prescribed by the laws of the State.
16.7 NOTICES BY LANDLORD. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Tenant of the nature and approximate extent of any default, it being
agreed that Tenant is in good or better position than Landlord to ascertain the
exact extent of any default by Tenant hereunder.
16.8 LANDLORD'S CONTRACTUAL SECURITY INTEREST. Tenant hereby grants to
Landlord an express first and prior contract lien and security interest, in
Tenant's interest in all property which may be placed on the Leased Property
(including fixtures, equipment, chattels and merchandise), and also upon all
proceeds of any insurance which may accrue to Tenant by reason of destruction of
or damage to any such property and also upon all of Tenant's interest as Tenant
and rights and options to purchase fixtures, equipment and chattels placed on
the Leased Property (in case of fixtures, equipment and chattels leased to
Tenant which are placed on the Leased Property). All exemption laws are hereby
waived in favor of such lien and security interest and in favor of Landlord's
statutory landlord lien. This lien and security interest are given in addition
to any statutory landlord lien and shall be cumulative thereto. Landlord shall
have at all times a valid security interest to secure payment of all rentals and
other sums of money becoming due hereunder from Tenant, and to secure payment of
any damages or loss which Landlord may suffer by reason of the breach by Tenant
of any covenant, agreement or condition contained herein, upon all inventory,
merchandise, goods, wares, equipment, fixtures, furniture, improvements and
other tangible personal property of Tenant presently, or which may hereafter be,
situated in or about the Leased Property, and all proceeds therefrom and
accessions thereto and, except as a result of sales made in the ordinary course
of Tenant's business, such property shall not be removed without the consent of
Landlord until all arrearages in rent as well as any and all other sums of money
then due to Landlord or to become due to Landlord hereunder shall first have
been paid and discharged and all the covenants, agreements and conditions hereof
have been fully complied with and performed by Tenant. Upon the occurrence of an
Event of Default Landlord, in addition to any other remedies provided herein,
may enter upon the Leased Property and take possession of any and all inventory,
merchandise, goods, wares, equipment, fixtures, furniture, improvements and
other personal property of Tenant situated in or about the Leased Property,
without liability for trespass or conversion, and sell the same at public or
private sale, with or without having such property at the sale, after giving
Tenant reasonable notice of the time and place of any public sale of the time
after which any private sale is to be made, at which sale the Landlord or its
assigns may purchase unless otherwise prohibited by law. Unless otherwise
provided by law, and without intending to exclude any other manner of giving
Tenant reasonable notice, the requirement of reasonable
-45-
notice shall be met, if such notice is given in the manner prescribed in this
Lease at least seven (7) days before the time of sale. Any sale made pursuant to
the provision of this Section 16.8 shall be deemed to have been a public sale
conducted in commercially reasonable manner if held in the above-described
premises or where the property is located after the time, place and method of
sale and a general description of the types of property to be sold have been
advertised in a daily newspaper published in the county in which the property is
located, for five (5) consecutive days before the date of the sale. The proceeds
from any such disposition, less any and all expenses connected with the taking
of possession, holding and selling of the property (including reasonable
attorney's fees and legal expenses), shall be applied as a credit against the
indebtedness secured by the security interest granted in this paragraph. Any
surplus shall be paid to Tenant or as otherwise required by law; Tenant shall
pay any deficiencies forthwith. Upon request by Landlord, Tenant agrees to
execute and deliver to Landlord a financing statement in form sufficient to
perfect the security interest of Landlord in the aforementioned property and
proceeds thereof under the provision of the Uniform Commercial Code (or
corresponding state statute or statutes) in force in the State, as well as any
other state the laws of which Landlord may at any time consider to be
applicable.
16.9 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Landlord or Tenant now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Landlord or Tenant
of any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Landlord or Tenant of any or all of such
other rights, powers and remedies.
ARTICLE XVII
PURCHASE OF THE LEASED PROPERTY
17.1 TENANT'S OPTION TO PURCHASE. So long as no Event of Default has
occurred and is continuing under the terms of this Lease and the Secondary
Leases, at the expiration of this Lease, Tenant shall have the option, to be
exercised by written notice to Landlord at least sixty (60) days prior to the
expiration of this Lease, to purchase Landlord's interest in the Leased Property
at a purchase price equal to the greater of (i) the Fair Market Value of the
Leased Property, or (ii) purchase price paid by Landlord to Tenant pursuant to
the Purchase Agreement, plus Landlord's interest in any Capital Additions funded
by the Landlord, as increased by an amount equal to the greater of (A) two and
one-half percent (2.5%) per annum from the date hereof, or (B) the rate of
increase in the Consumer Price Index on each Adjustment Date. Notwithstanding
anything contained herein to the contrary, in no event shall the purchase price
be less than the Fair Market Value of the Leased Property. Unless expressly
otherwise provided in this Section 17.1, in the event Tenant exercises such
option to purchase Landlord's interest in the Leased Property, (i) the terms set
forth in Section 17.2 shall apply, and (ii) the sale/purchase must be closed
within ninety (90) days after the date of the written notice from Tenant to
Landlord of Tenant's intent to purchase. If Tenant does not exercise Tenant's
option to purchase as specified herein, Landlord shall be free after the
expiration of said sixty (60) day period to sell Landlord's interest in the
Leased Property to any party on any terms as it deems acceptable in its sole
discretion.
-46-
17.2 CONVEYANCE TERMS. In the event Tenant purchases Landlord's interest
in the Leased Property from Landlord pursuant to Section 17.1, Landlord, upon
receipt from Tenant of the applicable purchase price, together with full payment
of any unpaid Rent due and payable with respect to any period ending on or
before the date of the purchase, shall deliver to Tenant an appropriate special
warranty deed, xxxx of sale, assignment or other similar instrument of
conveyance conveying the entire interest of Landlord in and to the Leased
Property to Tenant in the condition as received from Tenant, free and clear of
all encumbrances other than (a) those that Tenant has agreed hereunder to pay or
discharge, (b) those mortgage liens, if any, which Tenant has agreed in writing
to accept and to take title subject to, (c) any other Encumbrances permitted to
be imposed on the Leased Property under the provisions of Article XXVIII which
are assumable at no cost to Tenant or to which Tenant may take subject without
cost to Tenant, and (d) any matters affecting the Leased Property on or as of
the Commencement Date. The difference between the applicable purchase price and
the total of the encumbrances assigned or taken subject to shall be paid in cash
to Landlord, or as Landlord may direct, in federal or other immediately
available funds except as otherwise mutually agreed by Landlord and Tenant. The
closing of any such sale shall be contingent upon and subject to Tenant
obtaining all required governmental consents and approvals for such transfer and
if such sale shall fail to be consummated by reason of the inability of Tenant
to obtain all such approvals and consents, any options to extend the Term which
otherwise would have expired during the period from the date when Tenant elected
or became obligated to purchase the Leased Property until Tenant's inability to
obtain the approvals and consents is confirmed shall be deemed to remain in
effect for thirty (30) days after the end of such period. All expenses of such
conveyance, including, without limitation, the cost of title examination or
standard coverage title insurance, survey, attorneys' fees incurred by Landlord
in connection with such conveyance, transfer taxes, recording fees and similar
charges shall be paid for by Tenant.
17.3 LANDLORD'S OPTION TO PURCHASE TENANT'S PERSONAL PROPERTY. Effective
on not less than ninety (90) days' prior written notice given at any time within
one hundred eighty (180) days prior to the expiration of the Term, but not later
than ninety (90) days prior to such expiration, or such shorter notice as shall
be appropriate if this Lease is terminated prior to the expiration date for a
reason other than a default by Landlord, Landlord shall have the option to
purchase all (but not less than all) of Tenant's Personal Property, if any, at
the expiration or termination of this Lease, for an amount equal to the net
sound insurable value thereof (current replacement cost less accumulated
depreciation on the books of Tenant pertaining thereto), subject to, and with
appropriate price adjustments for, all equipment leases, conditional sale
contracts, security interests and other encumbrances to which Tenant's Personal
Property is subject; provided Landlord's option to purchase Tenant's personal
property shall not be exercised during any period in which Tenant has the right,
pursuant to this Lease, to operate the Facility.
17.4 SURVIVAL. Tenant's purchase rights under this Article XVII shall
survive the sale or conveyance of Landlord's interest in the Leased Property and
shall run with this Lease in favor of Tenant's successors and assigns.
ARTICLE XVIII
HOLDING OVER
-47-
18.1 HOLDING OVER. If Tenant shall for any reason remain in possession of
the Leased Property after the expiration of the Term or any earlier termination
of the Term, such possession shall be as a tenancy at will during which time
Tenant shall pay as rental each month, one and one-quarter times the aggregate
of (a) one-twelfth of the aggregate Base Rent payable with respect to the last
complete Lease Year prior to the expiration of the Term; (b) all Additional
Charges accruing during the month and (c) all other sums, if any, payable by
Tenant pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, Tenant shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
tenancies at will, to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Landlord to the holding over of Tenant after the expiration or earlier
termination of this Lease.
ARTICLE XIX
RISK OF LOSS
19.1 RISK OF LOSS. During the Term, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Landlord and those claiming from, through or under Landlord) is
assumed by Tenant and, Landlord shall in no event be answerable or accountable
therefor nor shall any of the events mentioned in this Article XIX entitle
Tenant to any abatement of Rent except as specifically provided in this Lease.
ARTICLE XX
INDEMNIFICATION
20.1 INDEMNIFICATION. NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE
PROVIDED FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY
SUCH INSURANCE, TENANT WILL PROTECT, INDEMNIFY, SAVE HARMLESS AND DEFEND
LANDLORD FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES,
PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES), TO THE EXTENT PERMITTED BY LAW,
IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LANDLORD BY REASON OF: (A) ANY
ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERSONAL PROPERTY OCCURRING
ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS, INCLUDING WITHOUT
LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO USE, CONDITION,
MAINTENANCE OR REPAIR BY TENANT OF THE LEASED PROPERTY, (C) ANY IMPOSITIONS
(WHICH ARE THE OBLIGATIONS OF TENANT TO PAY PURSUANT TO APPLICABLE PROVISIONS OF
THIS LEASE), (D) ANY FAILURE ON THE PART OF TENANT TO PERFORM OR COMPLY WITH ANY
OF THE TERMS OF THIS LEASE, AND (E) THE NON-PERFORMANCE OF ANY OF THE TERMS AND
PROVISIONS OF ANY AND ALL EXISTING AND FUTURE SUBLEASES OF THE LEASED PROPERTY
TO BE
-48-
PERFORMED BY THE LANDLORD (TENANT) THEREUNDER. ANY AMOUNTS WHICH BECOME PAYABLE
BY TENANT UNDER THIS SECTION SHALL BE PAID WITHIN THIRTY (30) DAYS AFTER
LIABILITY THEREFOR ON THE PART OF LANDLORD IS DETERMINED BY LITIGATION OR
OTHERWISE AND, IF NOT TIMELY PAID, SHALL BEAR A LATE CHARGE (TO THE EXTENT
PERMITTED BY LAW) AT THE OVERDUE RATE FROM THE DATE OF SUCH DETERMINATION TO THE
DATE OF PAYMENT. TENANT, AT ITS EXPENSE, SHALL CONTEST, RESIST AND DEFEND ANY
SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR INSTITUTED AGAINST LANDLORD OR MAY
COMPROMISE OR OTHERWISE DISPOSE OF THE SAME AS TENANT AND LANDLORD SEE FIT.
NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LANDLORD AGAINST ITS OWN
NEGLIGENCE OR OMISSIONS OR WILLFUL MISCONDUCT. TENANT'S LIABILITY FOR A BREACH
OF THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE ANY TERMINATION AND THE
EXPIRATION OF THIS LEASE.
ARTICLE XXI
SUBLETTING; ASSIGNMENT AND SUBORDINATION
21.1 SUBLETTING; ASSIGNMENT AND SUBORDINATION. Tenant shall not assign the
Lease or sublease the Leased Property or engage any Management Company or allow
any Lessees to engage any Management Company without Landlord's prior written
consent. Tenant, if required by Landlord, shall assign all of Tenant's rights
under the Management Agreement to Landlord. All Management Agreements entered
into in connection with the Leased Property or any portion thereof shall
expressly contain provisions acceptable to Landlord which (i) require an
assignment of the Management Agreement to Landlord upon request by Landlord,
(ii) confirm and warrant that all sums in excess of One Million Dollars
($1,000,000.00) per year which are due and payable under the Management
Agreement are subordinate to this Lease, (iii) grant Landlord the right to
terminate the Management Agreement (individually or collectively, if more than
one (1) upon a default hereunder or upon a default under such applicable
Management Agreement, (iv) require the Management Company to execute and deliver
to Landlord within ten (10) days from Landlord's request an assignment and/or
subordination agreement as required by Landlord and/or Landlord's lender
providing financing to Landlord, in such form and content as is acceptable to
Landlord and/or its lender. Tenant agrees to execute and deliver (and/or require
the tenants to execute and deliver, if applicable) an assignment and/or
subordination agreement relating to the Management Agreement entered into in
connection to the Leased Property, which assignment and/or subordination
agreement shall be in such form and content as reasonably acceptable to the
Landlord and/or any lender providing financing to Landlord, and shall be
delivered to Landlord within ten (10) days from Landlord's request. Any sublease
approved by Landlord shall be subordinate to this Lease and may be terminated or
left in place by Landlord in the event of a termination of this Lease. Landlord
shall not unreasonably withhold its consent to any other or further subletting
or assignment; provided that (a) in the case of a subletting, the sublessee
shall comply with the provisions of this Article XXI, (b) in the case of an
assignment, the assignee shall assume in writing and agree to keep and perform
all of the terms of this Lease on the part of Tenant to be kept and performed
and shall be and become jointly and severally liable with Tenant for the
performance thereof and the assignee has credit and operating characteristics
equal or greater than that of Tenant, (c) an original counterpart of each such
-49-
sublease and assignment and assumption, duly executed by Tenant and such
sublessee or assignee, as the case may be, in form and substance satisfactory to
Landlord, shall be delivered promptly to Landlord, and (d) in case of either an
assignment or subletting, Tenant shall remain primarily liable, as principal
rather than as surety, for the prompt payment of the Rent and for the
performance and observance of all of the covenants and conditions to be
performed by Tenant hereunder. Notwithstanding anything contained herein to the
contrary, Landlord and Tenant agree that all subleases, including, without
limitation, all physician subleases (whether individually or physician groups)
must provide (i) for a minimum lease term of sixty (60) months from the date
that such sublessee or physician opens to the public for business; (ii) must be
in compliance with all Legal Requirements and Healthcare Laws, including,
without limitation, all Xxxxx and Anti-Kickback rules and regulations and
Landlord shall have the right, in its reasonable discretion, to review and
approve/disapprove such compliance before consenting thereto; (iii) each
sublessee and physician must sign a personal guaranty guaranteeing the full
payment and performance under the sublease; (iv) must not violate the use
restrictions as set forth in Section 7.2, and (v) must contain an express
prohibition against leasehold financing by Tenant, sublessee and assignee. If
conditions (i) through (iv) are not met, then Landlord's disapproval of any
subleases not containing such terms and conditions shall be deemed reasonable.
21.2 ATTORNMENT. Tenant shall insert in each sublease permitted under
Section 21.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Landlord hereunder, (b) in the event this Lease shall terminate before the
expiration of such sublease, the sublessee thereunder will, at Landlord's
option, attorn to Landlord 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) that sublessee shall from time to time upon
request of Tenant or Landlord furnish within ten (10) days an estoppel
certificate relating to the sublease, and (d) in the event the sublessee
receives a written notice from Landlord or Landlord's assignees, if any, stating
that Tenant is in default 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 Landlord or Landlord's assignees, if any, as the case may be, shall
be credited against the amounts owing by Tenant under this Lease.
21.3 SUBLEASE LIMITATION. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not sublet the Leased Property on any basis such
that the rental to be paid by the sublessee thereunder would be based, in whole
or in part, on either (a) the income or profits derived by the business
activities of the sublessee, or (b) any other formula such that any portion of
the sublease rental received by Landlord would fail to qualify as "rents from
real property" within the meaning of Section 856(d) of the Code, or any similar
or successor provision thereto. Provided also, Tenant shall not sublet any
portion of the Leased Property for a term extending beyond the Fixed Term
without the express consent of Landlord. In addition, all subleases shall comply
with the Healthcare Laws. Landlord and Tenant acknowledge and agree that any
subleases entered into relating to the Leased Property, whether or not approved
by Landlord, shall not, without the prior written consent of Landlord, be deemed
to be a direct lease between Landlord and any sublessee.
-50-
21.4 SUBORDINATION. Any sublease approved by Landlord shall be subordinate
to this Lease and may be terminated or left in place by Landlord in the event of
a termination of this Lease. Tenant hereby agrees that all payments and fees
payable under the Management Agreements are subordinate to the payment of the
obligations under this Lease and all other documents executed in connection with
the Purchase Agreement. Tenant agrees to execute and cause the Management
Company to execute (and cause the tenants to execute, if applicable) a
subordination agreement relating to the Management Agreements (and the Secondary
Leases), which subordination agreement shall be in such form and content as is
acceptable to Landlord.
ARTICLE XXII
OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES
22.1 ESTOPPEL CERTIFICATE. From time to time, each party hereto, on or
before the date specified in a request therefor made by the other party, which
date shall not be earlier than ten (10) days from the making of such request,
but not more than three (3) times per calendar year, shall execute, acknowledge
and deliver to the other party a certificate evidencing whether or not (i) this
Lease is in full force and effect; (ii) this Lease has been amended in any way;
and (iii) there are any existing defaults on the part of either party hereunder,
to the knowledge of such other party, and specifying the nature of such
defaults, if any; (iv) stating the date to which rent and other amounts due
hereunder, if any, have been paid; and (v) such other matters as may reasonably
be requested by such party. Each certificate delivered pursuant to this Section
23.1 may be relied on by any prospective transferee of Landlord's or Tenant's
interest hereunder and any lender of Landlord or Tenant.
22.2 FINANCIAL STATEMENTS. During the Term, Tenant will furnish the
following statements to Landlord, which must be in such form and detail as
Landlord, from time to time, may reasonably request:
(a) within ninety (90) days after the end of Tenant's fiscal year, a
copy of the Income Statements for the preceding fiscal year and an
Officer's Certificate stating that to the best of the signer's knowledge
and belief after making due inquiry, Tenant is not in default in the
performance or observance of any of the terms of this Lease and no
condition currently exists that would, but for the giving of any required
notice or expiration of any applicable cure period, constitute an Event of
Default, or, if Tenant shall be in default to its knowledge, specifying
all such defaults, the nature thereof and the steps being taken to remedy
the same, and
(b) within ninety (90) days after the end of Tenant's fiscal year,
audited financial statements of Tenant and the operations performed in the
Facility, prepared by a nationally recognized accounting firm or an
independent certified public accounting firm acceptable to Landlord, which
statements shall include a balance sheet and statement of income and
expenses and changes in cash flow all in accordance with GAAP, and
-51-
(c) within forty-five (45) days after the end of each quarter,
current financial statements of Tenant and the operations performed in the
Facility on a quarterly, year-to-date, and prior year comparable basis,
certified to be true and correct by an officer of Tenant, and
(d) within thirty (30) days after the end of each month, current
operating statements of the Facility, including, but not limited to
operating statistics, certified to be true and correct by an officer of
the Tenant, and
(e) within ten (10) days subsequent to receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying agencies
that the license and/or the Medicare and/or Medicaid certification and/or
managed care contract of the Facility is being downgraded to a substandard
category, revoked, or suspended, or that action is pending or being
considered to downgrade to a substandard category, revoke, or suspend such
Facility's license or certification, and
(f) with reasonable promptness, such other information respecting
the financial condition and affairs of Tenant as Landlord may reasonably
request from time to time.
Landlord reserves the right to require such other financial
information from Tenant at such other times as Landlord shall deem
reasonably necessary.
22.3 NOTICES REGARDING LICENSES. Within ten (10) days of receipt, Tenant
shall furnish to Landlord copies of any and all notices (regardless of form)
from any and all licensing or certifying agencies that any license or
certification, including, without limitation, the Medicare or Medicaid
certification of the Facility, is being downgraded, revoked or suspended, or
that action is pending or being considered to downgrade, revoke or suspend such
Facility's license or certification.
ARTICLE XXIII
INSPECTIONS AND FEES
23.1 INSPECTION FEE. Tenant shall permit Landlord and its authorized
representatives to inspect the Leased Property during usual business hours
subject to any security, health, safety or confidentiality requirements of
Tenant, any governmental agency, any Insurance Requirements relating to the
Leased Property or imposed by law or applicable regulations. On the Commencement
Date and thereafter on January 1st of each year during the Term, Tenant shall
pay to Landlord an inspection fee to cover the cost of the physical inspection
of the Leased Property. The amount payable for the inspection fee on the
Commencement Date is Seven Thousand Five Hundred and 00/100 Dollars ($7,500.00)
and the amount of such inspection fee shall be increased by an amount equal to
two and one-half percent (2.5%) per annum on each January 1st.
-52-
ARTICLE XXIV
TRANSFERS BY LANDLORD
24.1 TRANSFER BY LANDLORD. Tenant understands that Landlord may sell its
interest in the Leased Property in whole or in part. Tenant agrees that any
purchaser of Landlord's interest in the Leased Property may exercise any and all
rights of Landlord, as fully as if such purchaser was the original landlord
hereunder; provided, however, such purchaser shall be subject to the same
restrictions imposed upon Landlord hereunder. Landlord may divulge to any such
purchaser all information, reports, financial statements, certificates and
documents obtained by it from Tenant. If Landlord or any successor owner of
Landlord's interest in the Leased Property shall convey such interest in the
Leased Property, other than as security for a debt, and the purchaser of such
interest in the Leased Property shall expressly assume all obligations of
Landlord hereunder arising or accruing from and after the date of such
conveyance or transfer, Landlord or such successor owner, as the case may be,
shall thereupon be released from all future liabilities and obligations of the
Landlord under this Lease arising or accruing from and after the date of such
conveyance or other transfer as to Landlord's interest in the Leased Property
and all such future liabilities and obligations shall thereupon be binding upon
the new owner.
ARTICLE XXV
QUIET ENJOYMENT
25.1 QUIET ENJOYMENT. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Tenant shall peaceably and quietly have, hold
and enjoy the Leased Property for the Term, free of any claim or other action by
Landlord or anyone claiming by, through or under Landlord, but subject to all
liens and encumbrances of record as of the date hereof or hereafter consented to
by Tenant. No failure by Landlord to comply with the foregoing covenant shall
give Tenant any right to cancel or terminate this Lease, or to fail to pay any
other sum payable under this Lease, or to fail to perform any other obligation
of Tenant hereunder. Notwithstanding the foregoing, Tenant shall have the right
by separate and independent action to pursue any claim it may have against
Landlord as a result of a breach by Landlord of the covenant of quiet enjoyment
contained in this Article XXV.
ARTICLE XXVI
NOTICES
26.1 NOTICES. All notices, demands, consents, approvals, requests and
other communications required or permitted to be given under this Lease shall be
in writing and shall be (a) delivered in person, (b) sent by certified mail,
return receipt requested to the appropriate party at the address set out below,
(c) sent by Federal Express, Express Mail or other comparable courier addressed
to the appropriate party at the address set out below, or (d) transmitted by
facsimile transmission to the facsimile number for each party set forth below:
-53-
(a) if to Tenant: North Cypress Medical Center Operating
Company, Ltd.
0000 Xxxxx Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, M.D.
Phone: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxxxxx Xxxxx & Diamond, LLC
00 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Zimmerman, Axelrad, Xxxxx, Xxxxx & Xxxx P.C.
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx & Xxxxxx
First City Tower, Suite 2300
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) if to Landlord: MPT of North Cypress, L.P.
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.,
Executive Vice President & General
Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx, Xxxxxxx & Xxxxxx, LLP
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
-54-
Each notice, demand, consent, approval, request and other communication
shall be effective upon receipt and shall be deemed to be duly received if
delivered in person or by a national courier service, when left at the address
of the recipient and if sent by facsimile, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine from which the
facsimile was sent indicating that the facsimile was sent in its entirety to the
recipient's facsimile number; provided that if a notice, demand, consent,
approval, request or other communication is served by hand or is received by
facsimile on a day which is not a Business Day, or after 5:00 p.m. on any
Business Day at the addressee's location, such notice or communication shall be
deemed to be duly received by the recipient at 9:00 a.m. on the first Business
Day thereafter. Rejection or other refusal by the addressee to accept, or the
inability to deliver because of a changed address or changed facsimile number of
which no notice was given, shall be deemed to be receipt of the notice, demand,
consent, approval, request or communication sent. Any party shall have the
right, from time to time, to change the address or facsimile number to which
notice to it shall be sent by giving to the other party or parties at least ten
(10) days prior notice of the changed address or changed facsimile number.
ARTICLE XXVII
APPRAISAL
27.1 APPRAISAL. In the event that it becomes necessary to determine the
Fair Market Value of the Leased Property, Fair Market Value Purchase Price or
Fair Market Added Value for any purpose of this Lease, the party required or
permitted to give notice of such required determination shall include in the
notice the name of a person selected to act as an appraiser on its behalf.
Landlord and Tenant agree that any appraisal of the Leased Property shall be
without regard to the termination of this Lease and shall assume the Lease is in
place for a term of fifteen (15) years, and based solely on the rents and other
revenues generated and to be generated pursuant to this Lease without any regard
to Tenant's operations. Within ten (10) days after receipt of any such notice,
Landlord (or Tenant, as the case may be) shall by notice to Tenant (or Landlord,
as the case may be) appoint a second person as an appraiser on its behalf. The
appraisers thus appointed (each of whom must be a member of the American
Institute of Real Estate Appraisers or any successor organization thereto)
shall, within forty-five (45) days after the date of the notice appointing the
first (1st) appraiser, proceed to appraise the Leased Property, to determine the
Fair Market Value of the Leased Property, Fair Market Value Purchase Price or
Fair Market Added Value as of the relevant date (giving effect to the impact, if
any, of inflation from the date of their decision to the relevant date);
provided, however, that if only one (1) appraiser shall have been so appointed,
or if two (2) appraisers shall have been so appointed but only one (1) such
appraiser shall have made such determination within fifty (50) days after the
making of Tenant's or Landlord's request, then the determination of such
appraiser shall be final and binding upon the parties. If two (2) appraisers
shall have been appointed and shall have made their determinations within the
respective requisite periods set forth above and if the difference between the
amounts so determined shall not exceed ten percent (10%) of the lesser of such
amounts, then the Fair Market Value of the Leased Property, Fair Market Value
Purchase Price or Fair Market Added Value shall be an amount equal to fifty
percent (50%) of the sum of the amounts so determined. If the difference between
the amounts so determined shall exceed ten percent (10%) of the lesser of such
amounts, then such two (2) appraisers shall have twenty (20) days to appoint a
third appraiser, but if such appraisers fail to do so, then either
-55-
party may request the American Arbitration Association or any successor
organization thereto to appoint an appraiser within twenty (20) days of such
request, and both parties shall be bound by any appointment so made within such
20-day period. If no such appraiser shall have been appointed within such twenty
(20) days or within ninety (90) days of the original request for a determination
of Fair Market Value of the Leased Property, Fair Market Value Purchase Price or
Fair Market Added Value, whichever is earlier, either Landlord or Tenant may
apply to any court having jurisdiction to have appointment made by such court.
Any appraiser appointed, by the American Arbitrator Association or by such court
shall be instructed to determine the Fair Market Value of the Leased Property,
Fair Market Value Purchase Price or Fair Market Added Value within thirty (30)
days after appointment of such appraiser. The determination of the appraiser
which differs most in terms of dollar amount from the determinations of the
other two (2) appraisers shall be excluded, and fifty percent (50%) of the sum
of the remaining two (2) determinations shall be final and binding upon Landlord
and Tenant as the Fair Market Value of the Leased Property, Fair Market Value
Purchase Price or Fair Market Added Value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Landlord and Tenant shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.
ARTICLE XXVIII
FINANCING OF THE LEASED PROPERTY
28.1 FINANCING BY LANDLORD. Landlord agrees that, if it grants or creates
any mortgage, lien, encumbrance or other title retention agreement
("Encumbrances") upon Landlord's interest in the Leased Property or any portion
thereof, Landlord will use reasonable efforts to obtain an agreement from the
holder of each such Encumbrance whereby such holder agrees (a) to give Tenant
the same notice, if any, given to Landlord of any default or acceleration of any
obligation underlying any such Encumbrance or any sale in foreclosure of such
Encumbrance, (b) to permit Tenant, after twenty (20) days prior written notice,
to cure any such default on Landlord's behalf within any applicable cure period,
in which event Landlord agrees to reimburse Tenant for any and all reasonable
out-of-pocket costs and expenses incurred to effect any such cure (including
reasonable attorneys' fees), (c) to permit Tenant to appear with its
representatives and to bid at any foreclosure sale with respect to any such
Encumbrance, (d) that, if subordination by Tenant is requested by the holder of
each such Encumbrance, to enter into an agreement with Tenant containing the
provisions described in Article XXIX and (e) Landlord further agrees that no
such Encumbrance shall in any way prohibit, derogate from, or interfere with
Tenant's right and privilege to collaterally assign its leasehold and contract
rights hereunder provided such collateral assignment and rights granted to the
assignee thereunder shall be subordinate to the rights of the holder of an
Encumbrance as provided in Article XXIX hereof.
ARTICLE XXIX
SUBORDINATION AND NON-DISTURBANCE
-56-
29.1 SUBORDINATION, NON-DISTURBANCE. At the request from time to time by
one or more holders of a mortgage or deed of trust that may hereafter be placed
by Landlord upon Landlord's interest in the Leased Property or any part thereof,
and any and all renewals, replacements, modifications, consolidations, spreaders
and extensions thereof, within ten (10) days from the date of request, Tenant
shall execute and deliver, and shall have all subtenants or sublessees of the
Leased Property execute and deliver within such ten (10) day period, to such
holders a written agreement in a form reasonably acceptable to such holder
whereby Tenant and such subtenants and sublessees subordinate this Lease and all
of their rights and estate hereunder to each such mortgage or deed of trust that
encumbers Landlord's interest in the Leased Property or any part thereof and
agree with each such holder that Tenant and all such subtenants and sublessees
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 mortgage or deed of
trust, as the case may be, as Landlord under this Lease for the balance of the
Term then remaining, subject to all of the terms and provisions of this Lease;
provided, however, that each such holder simultaneously executes and delivers a
written agreement (a) consenting to this Lease and agreeing that,
notwithstanding any such other mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Tenant and such subtenants and sublessees shall not be disturbed in peaceful
enjoyment of the Leased Property or the subleased property (as applicable) nor
shall this Lease (nor the applicable subleases) be terminated or canceled at any
time, except in the event Tenant or such applicable subtenant or sublessee is in
default under this Lease or the applicable subleases; (b) agreeing that for any
period while it is Landlord hereunder, it will perform, fulfill and observe all
of Landlord's representations, warranties and agreements set forth herein; and
(c) agreeing, unless otherwise expressly provided in the mortgage or deed of
trust, that all proceeds of the casualty insurance described in Article XIV of
this Lease and all Awards described in Article XV will be made available for
restoration of the Leased Property as and to the extent required by this Lease,
subject only to reasonable regulation regarding the disbursement and application
thereof.
ARTICLE XXX
LICENSES
30.1 MAINTAINING LICENSES. Tenant shall maintain at all times during the
Term and any holdover period all federal, state and local governmental licenses,
approvals, qualifications, variances, certificates of need, franchises,
accreditations, certificates, certifications, consents, permits and other
authorizations necessary for the operation of the Facility (collectively, the
"Licenses"), and shall qualify and comply with all applicable laws as they may
from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.
30.2 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, which may be granted or withheld in Landlord's sole discretion, effect
or attempt to effect any change in the license category or status of the
Facility or any part thereof. Under no circumstances shall Tenant have the right
to transfer any of the Licenses to any location other than the Facility or to
any other person or entity (except to Landlord as contemplated herein), whether
before, during or after the Term. Following the termination of this Lease,
Tenant shall retain no rights whatsoever
-57-
to the Licenses, and Tenant will not move or attempt to move the Licenses to any
other location. To the extent that Tenant has or will extend any right, title,
or claim of right whatsoever in and to the Licenses or the right to operate the
Facility, all such right, title, or claim of right shall automatically revert to
the Landlord or to Landlord's designee upon termination of this Lease, to the
extent allowed by law. Upon any termination of this Lease or any Event of
Default (which Event of Default is not cured within any applicable grace period
and which results in Landlord terminating this Lease), Landlord shall have the
sole, complete, unilateral, absolute and unfettered right to cause all Licenses
to be reissued in Landlord's name or in the name of Landlord's designee upon
application therefor to the issuing authority, and to further have the right to
have any and all provider and/or third party payor agreements as a provider in
the Medicare and/or Medicaid and other federal healthcare programs issued in
Landlord's name or in the name of Landlord's designee.
30.3 COOPERATION. Upon termination of this Lease and for reasonable
periods of time immediately before and after such termination, Tenant shall use
its best efforts to facilitate an orderly transfer of the operation and
occupancy of the Facility to Landlord or any new Tenant or operator selected by
Landlord, it being understood and agreed that such cooperation shall include,
without limitation, (a) Tenant's assignment, if and to the extent allowed by
law, to Landlord or Landlord's new Tenant or operator of any and all Licenses,
(b) Tenant's use of best efforts to maintain, to the maximum extent allowed by
applicable law, the effectiveness of any and all such Licenses until such time
as any new Licenses necessary for any new lessee or operator to operate the
Facility have been issued, and (c) the taking of such other actions as are
required by applicable law or as are reasonably requested by Landlord. Upon any
termination of this Lease or Event of Default (which Event of Default is not
cured within any applicable grace period and which results in Landlord
terminating this Lease), Landlord shall have the sole, complete, unilateral,
absolute and unfettered right to cause any and all Licenses to be reissued in
Landlord's name or in the name of Landlord's designee upon application therefor
to the appropriate authority, if required, and to further have the right to have
any and all Medicare and Medicaid and any other provider and/or third party
payor agreements issued in Landlord's name or in the name of Landlord's
designee. The provisions of this Article XXX are in addition to the other
provisions of this Lease.
30.4 NO ENCUMBRANCE. It is an integral condition of this Lease that Tenant
covenants and agrees not to sell, move, modify, cancel, surrender, transfer,
assign, sell, relocate, pledge, secure, convey or in any other manner encumber
any License or any governmental or regulatory approval, consent or authorization
of any kind to operate the Facility.
30.5 NOTICES. Tenant shall immediately (within two (2) Business Days)
notify Landlord in writing of any notice, action or other proceeding or inquiry
of any governmental agency, bureau or other authority whether federal, state, or
local, of any kind, nature or description, which could adversely affect any
material License or Medicare and/or Medicaid-certification status, or
accreditation status of the Facility, or the ability of Tenant to maintain its
status as the licensed and accredited operator of the Facility or which alleges
noncompliance with any law. Tenant shall immediately (within two (2) Business
Days) upon Tenant's receipt, furnish Landlord with a copy of any and all such
notices and Landlord shall have the right, but not the obligation, to attend
and/or participate, in Landlord's sole and absolute discretion, in any such
actions or proceedings. Tenant shall act diligently to correct any deficiency or
deal
-58-
effectively with any "adverse action" or other proceedings, inquiry or other
governmental action, so as to maintain the licensure and Medicare and/or
Medicaid-certification status stated herein in good standing at all times.
Tenant shall not agree to any settlement or other action with respect to such
proceedings or inquiry which affects the use of the Leased Property or any
portion thereof as provided herein without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed. Tenant
agrees to sign, acknowledge, provide and deliver to Landlord (and if Tenant
fails to do so upon request of Landlord, Tenant hereby irrevocably appoints
Landlord, as agent of Tenant for such express purposes) any and all documents,
instruments or other writings which are or may become necessary, proper and/or
advisable to cause any and all hospital licenses required for the Primary
Intended Use, DHS provider agreements, and/or state or federal Title XVIII
and/or Title XIX provider agreements to be obtained (either in total or
individually) in the name of Landlord or the name of Landlord's designee in the
event that Landlord reasonably determines in good faith that (irrespective of
any claim, dispute or other contention or challenge of Tenant) there is any
breach, default or other lapse in any representation, warranty, covenant or
other delegation of duty to Tenant (beyond any applicable grace or cure period)
and the issuing government agency has threatened or asserted that such license
or provider agreement will terminate or has lapsed or that Tenant's license or
certification or accreditation status is in jeopardy. This power is coupled with
the ownership interest of Landlord in and to the Facility and all incidental
rights attendant to any and all of the foregoing rights.
ARTICLE XXXI
COMPLIANCE WITH HEALTHCARE LAWS
31.1 COMPLIANCE. Tenant hereby covenants, warrants and represents to
Landlord that as of the Commencement Date and throughout the Term: (i) Tenant
shall be, and shall continue to be validly licensed, Medicare and Medicaid
certified, and, if required, accredited to operate the Facility in accordance
with the applicable rules and regulations of the State, federal governmental
authorities and accrediting bodies, including, but not limited to, the United
States Department of Health and Human Services, TDH and the Centers for Medicare
and Medicaid Services; and/or (ii) Tenant shall be, and shall continue to be,
certified by and the holder of valid provider agreements with Medicare and
Medicaid issued by the Centers for Medicare and Medicaid Services and TDH and
shall remain so certified and shall remain such a holder in connection with its
operation of the Primary Intended Use on the Leased Property as a licensed and
Medicare and Medicaid certified general acute care hospital facility; (iii)
Tenant shall be, and shall continue to be in compliance with and shall remain in
compliance with all state and federal laws, rules, regulations and procedures
with regard to the operation of the Facility, including, without limitation,
compliance under HIPAA; (iv) Tenant shall operate the Facility in a manner
consistent with high quality rehabilitation services and sound reimbursement
principles under the Medicare and/or Medicaid programs and as required under
state and federal law; and (v) Tenant shall not abandon, terminate, vacate or
fail to renew any license, certification, accreditation, certificate, approval,
permit, waiver, provider agreement or any other authorization which is required
for the lawful and proper operation of the Facility or in any way commit any act
which will or may cause any such license, certification, accreditation,
certificate, approval, permit, waiver, provider agreement or other authorization
to be revoked by any federal, state or local governmental authority or
accrediting body having jurisdiction thereof.
-59-
ARTICLE XXXII
SALE PROCEED DISTRIBUTION/SYNDICATION
32.1 SALES PROCEED DISTRIBUTION. If during the Term, Landlord shall sell
Landlord's interest in the Leased Property, the net sales proceeds from such
sale shall be distributed as follows:
(a) to Landlord in amount equal to the purchase price paid by
Landlord to Tenant pursuant to the Purchase Agreement plus an amount which
will provide Landlord with an internal rate of return of fifteen percent
(15%);
(b) the balance of the net sales proceeds shall be divided equally
between Landlord and Tenant.
32.2 SYNDICATION. Subject to the Healthcare Laws, Landlord will offer
Tenant and any physicians which own an interest in Tenant the opportunity to
purchase up to any aggregate forty-nine percent (49%) of the member interest in
Landlord. Such offer shall be made by Landlord to Tenant and its physicians
owners within fifteen (15) days subsequent to receipt by Landlord of written
notice from Tenant requesting such offer be made (the "Offer Request Notice"),
which notice shall include the names and addresses of all parties eligible to
receive the offer. Tenant shall have the right to submit the Offer Request
Notice only during the period which is not less than six (6) months and no more
than nine (9) months subsequent to the Commencement Date (the "Offer Notice
Period"). In the event Tenant fails to deliver to Landlord the Offer Request
Notice during the Offer Notice Period, then neither Tenant nor its physician
owners shall have any further right to acquire any member interest in Landlord.
If the Offer Request Notice shall be timely given, then Landlord, within thirty
(30) days subsequent to receipt of the Offer Request Notice, shall deliver to
the parties identified in the Offer Request Notice an offer (the "Purchase
Offer") allowing such parties to purchase from Landlord, at a price determined
on the basis of the historical cost of the assets owned by Landlord (which price
shall be set forth in the Purchase Offer), up to an aggregate of forty-nine
percent (49%) of the member interest in Landlord. Tenant and its physician
owners will invest on an equal basis (based on the historical costs of
Landlord's assets) with the members of Landlord. In the event Tenant or any one
or more of its physician owners shall wish to accept the Purchase Offer, Tenant,
within fifteen (15) days subsequent to the date of the Purchase Offer, shall
provide written notice to Landlord of the acceptance of the Purchase Offer (the
"Acceptance Notice"), which notice shall set forth the parties which accept the
Purchase Offer and the percentage of member interest to be acquired by each
party (up to an aggregate of forty-nine percent (49%) of the member interest in
Landlord). Thereafter, the conveyance of the member interest shall occur on the
fifteenth (15th) day subsequent to Landlord's receipt of the Acceptance Notice
and on such date the parties which accepted the Purchase Offer shall pay the
purchase price for such party's member interest and Landlord shall convey such
interest to such party. Landlord shall have no obligation to convey any member
interest to any party which is not listed in the Acceptance Notice and Tenant
hereby indemnifies and holds harmless Landlord with respect to any claims,
causes of action, damages, costs, fees, expenses or other liabilities which
Landlord may or does incur as a result of any threatened or actual claims by
parties not listed in the Acceptance Notice.
-60-
In the event the Acceptance Notice is not timely delivered to Landlord, Landlord
shall have no further obligation to convey any member interest to Tenant and its
physician owners.
ARTICLE XXXIII
MISCELLANEOUS
33.1 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of this Lease
or any application thereof shall be invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby and a like but valid and enforceable provision shall replace
the invalid or unenforceable provision. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate. Neither this Lease nor any provision hereof may
be changed, waived, discharged or terminated except by an instrument in writing
and in recordable form signed by Landlord and Tenant. All the terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The headings in this
Lease are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
33.2 GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State without regard to principles of conflicts
of law.
33.3 TRANSFER OF LICENSES. Upon the expiration or earlier termination of
the Term, and except as prohibited by law, Tenant shall transfer to Landlord or
Landlord's nominee, without additional consideration to Tenant, the Licenses,
and all contracts, including contracts with governmental or quasi-governmental
entities which may be necessary or useful in the operation of the Facility.
Tenant hereby grants to Landlord a landlord's lien on the License and all
contracts, including contracts with governmental or quasi-governmental entities,
which may be necessary or useful in the operation of the Facility. For purposes
of effecting the transfers herein described and all assignments and transfers
described in Article XVI, Tenant hereby nominates and irrevocably designates and
appoints Landlord its true and lawful agent and attorney-in-fact, either in the
name of Landlord or in the name of Tenant to do all acts and things and execute
all documents which Landlord may deem necessary or advisable to effect the
transfers and assignments set forth in this Section 33.3 and Article XVI,
including without limitation preparing, signing and filing any and all
agreements, documents and applications necessary to effect such transfers or
assignments.
33.4 LANDLORD'S EXPENSES. In addition to other provisions herein, Tenant
agrees and shall pay and reimburse Landlord's costs and expenses, including
legal fees, incurred or resulting from and relating to (a) requests by Tenant
for approval or consent under this Lease, (b) requests by Landlord for approval
or consent under this Lease, (c) any circumstances or developments which give
rise to Landlord's right of consent or approval, (d) circumstances resulting
from any action or inaction by Tenant contrary to the lease provisions, and (e)
a request for changes including, but not limited to (i) the permitted use of the
Leased Property, (ii) alterations and
-61-
improvements to the Leased Improvements, (iii) subletting or assignment, and
(iv) any other changes in the terms, conditions or provisions of this Lease.
Such expenses and fees shall be paid by Tenant within thirty (30) days of the
submission of a statement for the same or such amount(s) shall become Additional
Charges and subject to the Overdue Rate after thirty (30) days.
33.5 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Landlord and Tenant.
33.6 FUTURE FINANCING. Tenant hereby agrees that if at any time during the
Term Tenant purchases or contemplates the purchase of a facility, or property to
be used, for the operation of a business for the Primary Intended Use, Tenant
shall notify Landlord in writing of such purchase or contemplated purchase, and
Landlord shall have the first opportunity to provide financing for such purchase
upon terms mutually agreeable to Landlord and Tenant. Such financing will be
contingent upon, among other things, performance benchmarks acceptable to
Landlord and Landlord's satisfaction and approval of other due diligence
requirements.
33.7 CASH INJECTION. As of the Commencement Date, Tenant shall have
received from its equity owners at least Fifteen Million and No/100 Dollars
($15,000,000.00) in cash equity. So long as Tenant shall maintain the
Consolidated Net Worth required under this Lease, such cash equity may be used
for acquisition, pre-opening and operating expenses of the Facility and shall
not be distributed to its equity owners. Upon request from Landlord from time to
time, Tenant shall provide to Landlord evidence that such cash equity is in
place and has not been distributed to Tenant's equity owners. During the Term,
Tenant shall maintain Consolidated Net Worth in those amounts required under by
Section 16.2(a) above.
33.8 ADDITIONAL LETTER OF CREDIT. In the event Tenant obtains a letter of
credit or other form of credit enhancement from a sublessee, subtenant,
operating company, management company, or any other individual or entity
relating to the Facility, (the "Additional Letter of Credit"), such Additional
Letter of Credit shall name Landlord as a beneficiary thereunder and shall be in
a form acceptable to Landlord. Tenant hereby grants to Landlord a security
interest in the Additional Letter of Credit. Tenant, within ten (10) subsequent
to receipt of request therefore from Landlord, shall execute, and cause any
applicable sublessee, subtenant, operating company, management company, or any
other individual or entity to execute and deliver, all documents (including,
without limitation, all bank/lender required documents) necessary for Landlord
to perfect its security interest in the Additional Letter of Credit.
33.9 CHANGE IN OWNERSHIP/CONTROL. If at any time during the Term, there
shall be a change in the ownership of the limited partnership interests in
Tenant as it exists on the date of this Lease such that twenty percent (20%) or
more of the limited partnership interest shall be transferred by the owners
thereof, then in such event, Landlord shall have the following rights: (i) the
right to demand and require Tenant to purchase the Leased Property (the "Put
Option"); (ii) the right to terminate this Lease; and (iii) the right to
exercise any and all remedies set forth in this Lease or allowed at law or in
equity. Landlord may exercise its rights under this Section
-62-
33.9 by written notice to Tenant. If Landlord shall exercise the Put Option, the
purchase price for the Leased Property and the conveyance terms with respect to
such conveyance shall be the same as the purchase price and conveyance terms set
forth in Article XVII.
33.10 LANDLORD SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, Tenant agrees to cooperate with Landlord and
its Affiliates in connection with any securities offerings and filings and in
connection therewith, Tenant shall furnish Landlord with such financial and
other information as Landlord shall request and Landlord and its Affiliates
shall have the right of access, at reasonable business hours and upon advance
notice, to the Facility and all documentation and information relating to the
Facility and have the right to disclose any information regarding this Lease,
the Tenant, the Leased Property, the Facility and such other additional
information or documents which Landlord and/or its Affiliates may reasonably
deem necessary.
33.11 NON-RECOURSE AS TO LANDLORD. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against Landlord's interest in
the Leased Property and not against any other assets, properties or funds of (i)
Landlord, (ii) any director, officer, general partner, member, shareholder,
limited partner, beneficiary, employee or agent of Landlord or any general
partner or manager of Landlord or any of its general partners or members (or any
legal representative, heir, estate, successor or assign of any thereof), (iii)
any predecessor or successor partnership or corporation (or other entity) of
Landlord or any of its general partners, members, shareholders, officers,
directors, employees or agents, either directly or through Landlord or its
general partners, members, shareholders, officers, directors, employees or
agents or any predecessor or successor partnership or corporation (or other
entity), or (iv) any person affiliated with any of the foregoing, or any
director, officer, employee or agent of any thereof.
33.12 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
33.13 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or any such term. To the extent permitted by law, no waiver of
any breach shall affect or alter this Lease, which shall continue in full force
and effect with respect to any other then existing or subsequent breach.
33.14 SURRENDER. No surrender to Landlord 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 Landlord and no act by
Landlord or any representative or agent of Landlord, other than such a written
acceptance by Landlord, shall constitute an acceptance of any such surrender.
33.15 NO MERGER OF TITLE. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created
-63-
hereby or any interest in this Lease or such leasehold estate and (b) the fee
estate in the Leased Property.
ARTICLE XXXIV
MEMORANDUM OF LEASE
34.1 MEMORANDUM. Landlord and Tenant, promptly upon the request of either,
shall enter into a short form memorandum of this Lease, in form suitable for
recording under the laws of the state in which the Leased Property is located in
which reference to this Lease, and all options contained herein, shall be made.
[Signatures appear on following pages]
-64-
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed by their incumbent and duly authorized representatives as of the date
set forth below.
LANDLORD:
MPT OF NORTH CYPRESS, L.P., a Delaware limited
partnership
By: MPT of North Cypress, LLC, a Delaware limited
liability company, its general partner
By: MPT Operating Partnership, L.P., a Delaware
limited partnership, its sole member
By: Medical Properties Trust, LLC, a
Delaware limited liability company,
its general partner
Date: June 13, 2005 By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------------------
Print Name: Xxxxxx X. Xxxxx, Xx.
------------------------------------
Title: President & CEO
-----------------------------------------
TENANT:
NORTH CYPRESS MEDICAL CENTER OPERATING COMPANY, LTD.,
a Texas limited partnership
By: North Cypress Medical Center Operating Company
GP, LLC, a Texas limited liability company, its
general partner
Date: June 8, 2005 By: /s/ Xxxxxx X. Xxxxx, M.D.
Name: Xxxxxx X. Xxxxx, M.D.
Title: Chairman of the Board
EXHIBIT A
PROPERTY DESCRIPTION
METES AND BOUNDS DESCRIPTION
PROPOSED NORTH CYPRESS PROPERTY HOLDINGS TRACT
12.985 NET ACRES
Revised June 7, 2005
All that certain 13.958 acre (608,019 square foot) tract of land situated in the
X. X. Xxxxxx Survey, Abstract Number 295 and in the Xxxxxxx Xxxxx Survey,
Abstract Number 489, both in Xxxxxx County, Texas, being out of and a part of a
called 13.5055 acre tract of land as described by deed recorded under Xxxxxx
County Clerk's File Number Y175041 and a called 19.855 acre tract of land as
described by deed recorded under Xxxxxx County Clerk's File Number X441181 and
being more particularly described by metes and bounds as follows: (All bearings
based on the Texas State Plane Coordinate System, South Central Zone)
COMMENCING FOR REFERENCE at a 5/8-inch iron rod with plastic cap stamped
"BENCHMARK ENGR" set in the northerly right-of-way line of U.S. Highway 290
(right-of-way width, varies) at the most southerly corner of the residue of a
tract of land as described in a conveyance to Xxxxx Xxxxxx Xxxxxx, Supreme Lodge
of Slavonic Benevolent Order of the State of Texas tract by deed recorded in
Volume 3703, Page 68 of the Xxxxxx County Deed Records for the most westerly
corner of said 13.5055 acre tract, from which a 5/8-inch iron rod found bears
South 09 degrees 30' 17" East, a distance of 1.56 feet;
THENCE, North 37 degrees 21' 26" East, along the northwesterly line of said
13.5055 acre tract, a distance of 381.03 feet to the POINT OF BEGINNING and
being the most westerly corner of the herein described tract;
THENCE, North 37 degrees 21' 26" East, continuing along the northwesterly line
of said 13.5055 acre tract, a distance of 418.26 feet to an exterior corner of
the herein described tract;
THENCE, South 54 degrees 00' 08" East, a distance of 474.00 feet to the
beginning of a curve to the left;
THENCE, southeasterly, a distance of 140.10 feet along the arc of said curve to
the left having a radius of 336.00 feet through a central angle of 23 degrees
53' 23" and a chord that bears South 64 degrees 35' 08" East, a distance of
139.08 feet to the point of reverse curvature of a curve to the right;
THENCE, southeasterly, a distance of 30.07 feet along the arc of said curve to
the right having a radius of 166.78 feet through a central angle of 10 degrees
19' 55" and a chord that bears South 71 degrees 21' 52" East, a distance of
30.03 feet to the point of reverse curvature of a curve to the left;
THENCE, northeasterly, a distance of 37.36 feet along the arc of said curve to
the left having a radius of 28.00 feet through a central angle of 76 degrees 27'
08" and a chord that bears North 75 degrees 34' 31" East, a distance of 34.65
feet to the point of tangency of said curve;
THENCE, North 37 degrees 20' 57" East, a distance of 40.04 feet to an interior
corner of the herein described tract;
THENCE, North 52 degrees 38' 34" West, a distance of 9.81 feet to a 5/8-inch
iron rod found in the northwesterly line of said 19.855 acre tract at the most
southerly corner of a called 10.00 acre tract of land as described by deed
recorded under Xxxxxx County Clerk's File Number X647241 and being the most
easterly corner of said 13.5055 acre tract for an exterior corner of the herein
described tract;
THENCE, North 37 degrees 21' 26" East, along the northwesterly line of said
19.855 acre tract, a distance of 223.69 feet to a 5/8-inch iron rod found for an
angle point of said 10.00 acre tract, said 19.855 acre tract and the herein
described tract;
THENCE, North 87 degrees 37' 41" East, along the north line of said 19.855 acre
tract, a distance of 413.32 feet to a 5/8-inch iron rod found in the west
right-of-way line of Huffmeister Road (100-foot wide right-of-way) at the
southeast corner of a called 5.1348 acre tract of land as described by deed
recorded under Xxxxxx County Clerk's File Number X647240 for the northeast
corner of said 19.855 acre tract and the herein described tract;
THENCE, South 02 degrees 41' 38" East, along said west right-of-way line, a
distance of 55.63 feet to an exterior corner of the herein described tract;
THENCE, South 86 degrees 39' 10" West, a distance of 250.74 feet to the
beginning of a curve to the left;
THENCE, northwesterly, a distance of 23.43 feet along the arc of said curve to
the left having a radius of 15.00 feet through a central angle of 89 degrees 28'
55" and a chord that bears North 47 degrees 26' 05" West, a distance of 21.12
feet to the point of tangency of said curve;
THENCE, South 87 degrees 49' 25" West, a distance of 71.75 feet to the point of
curvature of a curve to the left;
THENCE, southwesterly, a distance of 119.81 feet along the arc of said curve to
the left having a radius of 136.00 feet through a central angle of 50 degrees
28' 28" and a chord that bears South 62 degrees 35' 11" West, a distance of
115.97 feet to the point of tangency of said curve;
THENCE, South 37 degrees 20' 57" West, a distance of 171.52 feet to the point of
curvature of a curve to the left;
THENCE, southeasterly, a distance of 38.43 feet along the arc of said curve to
the left having a radius of 28.00 feet through a central angle of 78 degrees 38'
20" and a chord that bears South 01 degrees 58' 13" East, a distance of 35.48
feet to the point of reverse curvature of a curve to the right;
THENCE, southeasterly, a distance of 48.88 feet along the arc of said curve to
the right having a radius of 166.78 feet through a central angle of 16 degrees
47' 36" and a chord that bears South 32 degrees 53' 36" East, a distance of
48.71 feet to the point of reverse curvature of a curve to the left;
THENCE, southeasterly, a distance of 70.04 feet along the arc of said curve to
the left having a radius of 136.00 feet through a central angle of 29 degrees
30' 24" and a chord that bears South 39 degrees 15' 00" East, a distance of
69.27 feet to the point of tangency of said curve;
THENCE, South 54 degrees 00' 12" East, a distance of 13.04 feet to the point of
curvature of a curve to the left;
THENCE, southeasterly, a distance of 28.21 along the arc of said curve to the
left having a-radius of 86.00 feet through a central angle of 18 degrees 47' 38"
and a chord that bears South 63 degrees 24' 01" East, a distance of 28.08 feet
to the point of reverse curvature of a curve to the right;
THENCE, southeasterly, a distance of 103.49 feet along the arc of said curve to
the right having a radius of 54.50 feet through a central angle of 108 degrees
47' 38" and a chord that bears South 18 degrees 24' 01" East, a distance of
88.62 feet to the point of tangency of said curve;
THENCE, South 35 degrees 59' 48" West, a distance of 119.12 feet to the point of
curvature of a curve to the left;
THENCE, southwesterly, a distance of 77.35 feet along the arc of said curve to
the left having a radius of 112.00 feet through a central angle of 39 degrees
34' 10" and a chord that bears South 16 degrees 12' 43" West, a distance of
75.82 feet to the point of reverse curvature of a curve to the right;
THENCE, southwesterly, a distance of 85.39 along the arc of said curve to the
right having a radius of 48.00 feet through a central angle of 101 degrees 55'
41" and a chord that bears South 47 degrees 23' 29" West, a distance of 74.57
feet to the point of reverse curvature of a curve to the left;
THENCE, southwesterly, a distance of 21.93 along the arc of said curve to the
left having a radius of 20.00 feet through a central angle of 62 degrees 49' 24"
and a chord that bears South 66 degrees 56' 37" West, a distance of 20.85 feet
to the point of tangency of said curve;
THENCE, South 35 degrees 31' 55" West, a distance of 81.68 feet to the point of
curvature of a curve to the left;
THENCE, southwesterly, a distance of 12.07 along the arc of said curve to the
left having a radius of 18.00 feet through a central angle of 38 degrees 25' 39"
and a chord that bears South 16 degrees 19' 05" West, a distance of 11.85 feet
to the end of said curve;
THENCE, South 36 degrees 01' 56" West, a distance of 13.90 feet to an exterior
corner of the herein described tract;
THENCE, North 75 degrees 46' 46" West, a distance of 1.78 feet to the point of
curvature of a curve to the right;
THENCE, northwesterly, a distance of 14.05 feet along the arc of said curve to
the right having a radius of 110.00 feet through a central angle of 07 degrees
19' 12" and a chord that bears North 72 degrees 07' 10" West, a distance of
14.04 feet to an interior corner of the herein described tract;
THENCE, South 36 degrees 01' 56" West, a distance of 42.41 feet to the point of
curvature of a curve to the left;
THENCE, southwesterly, a distance of 45.27 feet along the arc of said curve to
the left having a radius of 150.00 feet through a central angle of 17 degrees
17' 31" and a chord that bears South 27 degrees 23' 35" West, a distance of
45.10 feet to the point of tangency of said curve;
THENCE, South 18 degrees 44' 49" West, a distance of 169.30 feet to a point in
the northerly right-of-way line of U.S. Highway 290 (right-of-way width, varies)
and being on the arc of a curve to the right at the most southerly corner of the
herein described tract;
THENCE, northwesterly, along said northerly right-of-way line a distance of 8.72
feet along the arc of said curve to the right having a radius of 477.47 feet
through a central angle of 01' 02' 47" and a chord that bears North 70 degrees
43' 47" West, a distance of 8.72 feet to a Texas Department of Transportation
monument found at the point of tangency of said curve;
THENCE, North 70 degrees 12' 24" West, continuing along said northerly
right-of-way line, a distance of 13.91 feet to a Texas Department of
Transportation monument found at the point of curvature of a curve to the right;
THENCE, northwesterly, continuing along said northerly right-of-way line a
distance of 436.10 feet along the arc of said curve to the right having a radius
of 2,694.79 feet through a central angle of 09 degrees 16' 20" and a chord that
bears North 65 degrees 34' 13" West, a distance of 435.63 feet to an exterior
corner of the herein described tract;
THENCE, North 28 degrees 41' 36" East, a distance of 35.02 feet to the point of
curvature of a curve to the left;
THENCE, northeasterly, a distance of 17.75 feet along the arc of said curve to
the left having a radius of 63.00 feet through a central angle of 16 degrees 08'
24" and a chord that bears North 20 degrees 37' 25" East, a distance of 17.69
feet to the point of reverse curvature of a curve to the right;
THENCE, northeasterly, a distance of 46.03 feet along the arc of said curve to
the right having a radius of 112.50 feet through a central angle of 23 degrees
26' 36" and a chord that bears North 24 degrees 16' 31" East, a distance of
45.71 feet to the point of tangency of said curve;
THENCE, North 35 degrees 59' 48" East, a distance of 141.39 feet to the point of
curvature of a curve to the right;
THENCE, northeasterly, a distance of 21.07 feet along the arc of said curve to
the right having a radius of 37.50 feet through a central angle of 32 degrees
11' 39" and a chord that bears North 52 degrees 05' 38" East, a distance of
20.79 feet to an interior corner of the herein described tract;
THENCE, North 54 degrees 00' 12" West, a distance of 69.48 feet to an interior
corner of the herein described tract;
THENCE, South 36 degrees 00' 04" West, a distance of 4.37 feet to an exterior
corner of the herein described tract;
THENCE, North 54 degrees 19' 03" West, a distance of 186.81 feet to an exterior
corner of the herein described tract;
THENCE, North 35 degrees 40' 57" East, a distance of 15.94 feet to an interior
corner of the herein described tract;
THENCE, North 54 degrees 19' 03" West, a distance of 40.00 feet to an exterior
corner of the herein described tract;
THENCE, North 35 degrees 40' 57" East, a distance of 98.56 feet to an interior
corner of the herein described tract;
THENCE, North 54 degrees 19' 03" West, a distance of 235.19 feet to the POINT OF
BEGINNING and containing a computed area of 13.958 acres (608,019 square feet)
land. SAVE AND EXCEPT the following described tract;
SAVE AND EXCEPT TRACT
COMMENCING FOR REFERENCE at a 5/8-inch iron rod found in the northwesterly line
of said 19.855 acre tract at the most southerly corner of a called 10.00 acre
tract of land as described by deed recorded under Xxxxxx County Clerk's File
Number X647241 and being the most easterly corner of said 13.5055 acre tract;
THENCE, South 37 degrees 21' 26" West, along the southeasterly line of said
13.5055 acre tract and along the northwesterly line of said 19.855 acre tract, a
distance of 553.87 feet to a point;
THENCE, South 52 degrees 38' 34" East, a distance of 28.91 feet to the POINT OF
BEGINNING and being an angle point of the herein described;
THENCE, North 76 degrees 11' 04" East, a distance of 35.74 feet to an angle
POINT;
THENCE, South 53 degrees 58' 04" East, a distance of 117.23 feet to an exterior
corner of the herein described tract;
THENCE, South 36 degrees 01' 56" West, a distance of 30.50 feet to an interior
corner of the herein described tract;
THENCE, South 53 degrees 58' 04" East, a distance of 5.52 feet to an exterior
corner of the herein described tract;
THENCE, South 36 degrees 01' 56" West, a distance of 252.00 feet to the most
southerly corner of the herein described tract;
THENCE, North 53 degrees 58' 04" West, a distance of 34.80 feet to the point of
curvature of a curve to the left;
THENCE, southwesterly, a distance of 3.93 feet along the arc of said curve to
the left having a radius of 2.50 feet through a central angle of 90 degrees 00'
00" and a chord that bears South 81 degrees 01' 56" West, a distance of 3.54
feet to the point of tangency of said curve;
THENCE, South 36 degrees 01' 56" West, a distance of 16.00 feet to an exterior
corner of the herein described tract;
THENCE, North 53 degrees 58' 04" West, a distance of 90.50 feet to an exterior
corner of the herein described tract;
THENCE, North 36 degrees 01' 56" East, a distance of 15.50 feet to the point of
curvature of a curve to the left;
THENCE, northwesterly, a distance of 3.93 feet along the arc of said curve to
the left having a radius of 2.50 feet through a central angle of 90 degrees 00'
00" and a chord that bears North 08 degrees 58' 04" West, a distance of 3.54
feet to the point of tangency of said curve;
THENCE, North 53 degrees 58' 04" West, a distance of 15.50 feet to an exterior
corner of the herein described tract;
THENCE, North 36 degrees 01' 56" East, a distance of 255.68 feet to the POINT OF
BEGINNING and containing a computed area of 0.973 of one acre (42,392 square
feet) land, resulting in a net acreage of 12.985 acres (565,627 square feet) of
land.
This description is based on a survey made on the ground of the property and is
issued in conjunction with an exhibit map entitled "PROPOSED NORTH CYPRESS
PROPERTY HOLDINGS TRACT" prepared by Benchmark Engineering Corporation, Job
Number 03112.
EXHIBIT B
PERMITTED EXCEPTIONS
1. All taxes for the year in which the Commencement Date occurs which are not
yet due and payable, and any additional taxes resulting from reassessment
of subject property.
2. Restrictions recorded in Volume 5943, Page 51, of the Deed Records of
Xxxxxx County, Texas.
3. Terms, conditions and stipulations regarding development of the subject
property, as set forth and defined in instrument filed for record under
Clerk's File No. R488062, of the Official Records of Xxxxxx County, Texas.
4. Easement to Xxxxxx County Municipal Utility District No. 248 recorded in
Clerk's File No. T954404, of the Official records of Xxxxxx County, Texas
granting an easement 20 feet wide along the north 83.13 feet of the east
property line.
5. Mineral and/or royalty interest recorded in Volume 5943, Page 51, of the
Deed records of Xxxxxx County, Texas.
6. Mineral and/or royalty interest recorded in Volume 7725, Page 211, of the
Deed records of Xxxxxx County, Texas.
7. Ordinance #1999-262, of the City of Houston, passed March 24, 1999, and
amendments, pertaining to the platting and replatting of real property and
the establishment of building set back lines along major thoroughfares
within such boundaries.
8. City of Houston Ordinance 91-1701 regarding the planting, preservation and
maintenance of trees and decorative landscaping, a certified copy of which
is filed for record under Clerk's File No. N556388, of the Official
Records of Xxxxxx County, Texas.
9. Inclusion within Xxxxxx County Municipal Utility District No. 248.
10. Terms and conditions of that certain Net Ground Lease (Northeast Parking
Parcel) between Northern Healthcare Land Ventures, Ltd., as Lessor and MPT
of North Cypress, L.P. as Lessee, a memorandum of which is recorded June
_____, 2005 under Clerk's File No. _____ of Official Records.
11. Terms and conditions of that certain Reciprocal Easement Agreement and
Declaration of Covenants, Conditions, and Restrictions for Development and
Operation of the North Cypress Medical Center Campus recorded June _____,
2005 under Clerk's File No. _____ of Official Records.
EXHIBIT C
NORTHEAST PARKING PARCEL
METES AND BOUNDS DESCRIPTION
PROPOSED NORTHEAST PARKING LOT
1.878 ACRES
May 6, 2005
All that certain 1.878 acre (81,823 square foot) tract of land situated in the
Xxxxxxx Xxxxx Survey, Abstract Number 489, Xxxxxx County, Texas, being out of
and a part of a called 19.855 acre tract of land as described by deed recorded
under Xxxxxx County Clerk's File Number X441181 and being more particularly
described by metes and bounds as follows: (All bearings based on the Texas State
Plane Coordinate System, South Central Zone)
COMMENCING FOR REFERENCE at a 5/8-inch iron rod found in the west right-of-way
line of Huffmeister Road (100-foot wide right-of-way) at the southeast xxxxx of
a called 5.1348 acre tract of land as described by deed recorded under Xxxxxx
County Clerk's File Number X647240 and being the northeast corner of said 19.855
acre tract, from which a 5/8-inch iron rod found at an angle point of a called
10.00 acre tract of land as described by deed recorded under Xxxxxx County
Clerk's File Number X647241 and said 19.855 acre tract bears South 87 degrees
37' 41" West, a distance of 413.32 feet;
THENCE, South 02 degrees 41' 38" East, along said west right-of-way line, a
distance of 55.63 feet to the POINT OF BEGINNING and being the northeast corner
of the herein described tract;
THENCE, South 02 degrees 41' 38" East, continuing along said west right-of-way
line, a distance of 322.86 feet TO the beginning of a curve to the right at the
southeast corner of the herein described tract;
THENCE, southwesterly, a distance of 18.21 feet along the arc of said curve to
the right having a radius of 28.00 feet through a central angle of 37 degrees
15' 57" and a chord that bears South 68 degrees 59' 10" West, A distance of
17.89 feet to the point of tangency of said curve;
THENCE, South 87 degrees 37' 09" West, a distance of 233.74 feet to the
southwest corner of the herein described Tract;
THENCE, North 02 degrees 41' 38" West, a distance of 324.35 feet to the
northwest corner of the herein described Tract;
THENCE, North 86 degrees 39' 10" East, a distance of 250.74 feet to the POINT OF
BEGINNING and containing a compuTed area of 1.878 acres (81,823 square feet)
land.
This description is based on a survey made on the ground of the property and is
issued in conjunction with an exhibit map entitled "PROPOSED NORTHEAST PARKING
LOT" prepared by Benchmark Engineering Corporation, Job Number 03112.
EXHIBIT D
RESTRICTIONS, RULES AND REGULATIONS
OPERATIONS AND USE
NAME OF CAMPUS
1. The name of the Campus is North Cypress Medical Center Campus and the name
may not be changed without prior written consent of all the Parties.
PERMITTED USES
2. Subject to the limitations set forth in this Article, the Campus may be used
only for the development, construction, leasing, operation, and maintenance of
hospitals, professional office buildings, medical services, retail business
establishments and related facilities (such as the Common Areas) customarily
located in a first class medical Campus.
PROHIBITED NUISANCES
3. No Party may conduct or permit any activity or use on its Parcel that:
(a) Constitutes a private or public nuisance.
(b) Emits any noise or sound that is objectionable due to intermittence,
loudness, frequency, beat, or pitch.
(c) Emits any obnoxious odor.
(d) Involves the use of any noxious, toxic, hazardous, or corrosive
chemical, fuel, gas, or other substance, except in the Hospital Areas where such
substances may be used in connection with the provision of medical services or
in the operation of the hospital in the Hospital Areas.
(e) Produces dust or dirt.
(f) Involves a risk of fire, explosion, or other dangerous hazard.
(g) Involves the burning or incineration of garbage or refuse.
(h) Violates a law, ordinance, or regulation of any governmental agency.
PROHIBITED OPERATIONS AND USES
4. No Parcel may be used for any of the following:
(a) Storage or warehousing, except by a retail establishment for temporary
storage of goods intended for sale at its establishment, or by a hospital for
temporary storage of goods intended for use in the operation of the hospital.
(b) Manufacturing, industrial, or residential uses.
(c) Displaying merchandise in Common Areas.
(d) Entertainment or recreational uses which include, but are not limited
to: bowling alleys; skating rinks; theaters; video or other game arcades; health
spas (except in the Hospital Areas), studios, gyms, night clubs; massage
parlors; pool or billiard halls; pornographic or sexually oriented stores,
materials including books, videos, films, discs or sex performances, and card
rooms.
(e) Educational, training, or instructional uses, such as beauty schools,
xxxxxx colleges, business or technical colleges, or other facilities oriented
toward students or trainees rather than customers), provided nothing in this
subparagraph shall be deemed to prohibit a hospital from being a teaching
hospital.
FAST-FOOD USES
5. "Fast-food" establishments are permitted on the Campus.
RESTAURANT USES
6. Restaurants are permitted in the Campus subject to the following conditions:
(a) The restaurant is located in the Commercial Areas.
(b) A restaurant is located in the Hospital Areas as an accessory use to
the operation of the Hospital Areas.
(c) An Occupant operating a restaurant must, at the Occupant's sole cost
and expense, keep the Common Areas at all times free of trash and debris
generated by the restaurant and its customers. No portion of this cost may be
included in the Common Area Maintenance Costs.
(d) A lease to an Occupant operating a restaurant must contain provisions
incorporating the preceding requirements.
RULES AND REGULATIONS
7. The Parties may from time to time adopt Rules and Regulations pertaining to
the use of all Common Areas and other areas of the Campus by Occupants and
Users, provided that no rule or regulation shall abrogate or modify the rights
granted to any Party under this Agreement. Moreover, all Rules and Regulations
apply equally and without discrimination to all Owners,
Users and Occupants. As part of its obligations to manage, operate, and maintain
the Campus, the Owner must enforce these Rules and Regulations with respect to
the Owner's Parcel. No portion of the Common Areas may be used for commercial
purpose by an Occupant or User except as permitted by this Agreement or by the
Rules and Regulations.
SIGNS
8. The regulations and restrictions for posting signs in Commercial Areas of the
Campus are:
No sign, symbol, advertisement, or billboard may be constructed, used,
maintained, erected, posted, displayed, or permitted on or about any portion of
the Campus except as expressly allowed as follows
(a) One storefront, establishment name sign may be used for each retail
establishment in the Campus provided that such sign:
(i) Identifies the name, business, or symbol of the establishment.
(ii) Does not advertise any particular item of merchandise (other
than as may be contained in the store's trade name).
(iii) Is harmonious with the general exterior architectural style of
the buildings in the Campus.
(iv) Is of a type, size, and design commonly found in first class
regional centers.
(v) Complies with the dimensional, floor level elevation, location,
and style of lettering specifications approved by the Project Architect. The
Project Architect has approved the foregoing signage specifications for the
construction of the hospital in the Hospital Areas.
(vi) Otherwise complies with the sign criteria and requirements
established in this document.
(vii) Has been approved by the Project Architect.
9. The regulations and restrictions for posting signs in the Hospital Areas of
the Campus are those which have been approved by the Project Architect
(hereinafter defined).
SOUND AND LIGHT PROJECTIONS
10. No Occupant may operate or maintain any system or electronic device (such as
loudspeakers or search lights) that projects sound or light beyond the confines
of the Occupant's retail establishment. A sound system for the Campus as a
whole, if approved by the Parties, may be installed for general promotional
purposes.
EXHIBIT E
FORM OF LETTER OF CREDIT
DATE
IRREVOCABLE STANDBY LETTER OF CREDIT NO.
TO:
WE HEREBY ESTABLISH OUR IRREVOCABLE LETTER OF CREDIT NO. IN YOUR FAVOR AT
THE REQUEST AND FOR THE ACCOUNT OF , FOR THE SUM NOT TO EXCEED IN ALL U.S.
DOLLARS (US $ ) AVAILABLE BY YOUR SIGHT DRAFT ON US, ACCOMPANIED BY:
1. BENEFICIARY'S STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF CERTIFYING THAT PAYMENT WAS NOT RECEIVED FROM
AND REMAINS UNPAID AT THE TIME OF DRAWING.
2. INVOICE SHOWING THE AMOUNT OWED.
PARTIAL DRAWINGS ARE PERMITTED.
ALL DRAFTS SO DRAWN MUST BE MARKED "DRAWN UNDER REPUBLIC NATIONAL BANK STANDBY
LETTER OF CREDIT NO. , DATED .
THIS CREDIT EXPIRES AT OUR COUNTERS ON . THE ORIGINAL OF THIS LETTER OF
CREDIT MUST ACCOMPANY ALL DRAWINGS.
WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED BY US UPON PRESENTATION.
THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION XX. 000 (0000
XXXXXXXX).
XXXXXXXX NATIONAL BANK
SCHEDULE 3
GROUND RENT COMPONENT OF BASE RENT
Annual Ground Monthly
Period Rent Component Installment
------ -------------- -----------
June 1, 2005 - December 31, 2009 $ 63,468.00 $ 5,289.00
January 1, 2010 - December 31, 2014 $ 68,545.00 $ 5,712.00
January 1, 2015 - December 31, 2019 $ 74,029.00 $ 6,169.00
January 1, 2020 - December 31, 2024 $ 79,951.00 $ 6,663.00
January 1, 2025 - December 31, 2029 $ 86,347.00 $ 7,196.00
January 1, 2030 - December 31, 2034 $ 93,255.00 $ 7,771.00
January 1, 2035 - December 31, 2039 $100,715.00 $ 8,393.00
January 1, 2040 - December 31, 2044 $108,772.00 $ 9,064.00
January 1, 2045 - December 31, 2049 $117,474.00 $ 9,790.00
January 1, 2050 - December 31, 2054 $126,872.00 $10,573.00
January 1, 2055 - December 31, 2059 $137,022.00 $11,418.00
January 1, 2060 - December 31, 2064 $147,984.00 $12,332.00
January 1, 2065 - December 31, 2069 $159,822.00 $13,319.00
January 1, 2070 - December 31, 2074 $172,608.00 $14,384.00
January 1, 2075 - December 31, 2079 $186,417.00 $15,535.00
January 1, 2080 - December 31, 2084 $201,330.00 $16,777.00
January 1, 2085 - December 31, 2089 $217,436.00 $18,120.00
January 1, 2090 - December 31, 2094 $234,831.00 $19,569.00
January 1, 2095 - December 31, 2099 $253,618.00 $21,135.00
January 1, 2100 - May 31, 2104 $273,907.00 $22,826.00
