EXHIBIT 10.2
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AMENDED AND RESTATED
PIONEER HOSPITAL LEASE
BY AND BETWEEN
HEALTH CARE PROPERTY INVESTORS, INC.
"LANDLORD"
AND
PIONEER VALLEY HOSPITAL, INC.
"TENANT"
DATED AS OF JUNE 28, 2002
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CONFIDENTIALITY NOTICE:
Certain information provided to Landlord by Tenant pursuant to this Lease
must be kept confidential as more particularly described in Section 24.4 of this
Lease.
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS...................................................................................... 2
ARTICLE II. LEASE OF PROPERTY............................................................................... 12
ARTICLE III. TERM OF LEASE.................................................................................. 13
3.1 Term of Lease........................................................................... 13
3.2 Option to Extend Term of Lease.......................................................... 13
ARTICLE IV. RENT............................................................................................ 14
4.1 [Intentionally Deleted]................................................................. 14
4.2 Payment of Base Rent, Percentage Rent and Additional Charges............................ 14
4.3 Base Rent............................................................................... 14
4.4 Percentage Rent......................................................................... 15
4.5 Confirmation of Percentage Rent......................................................... 16
4.6 Certificates Regarding Percentage Rent.................................................. 17
4.7 Additional Charges...................................................................... 17
4.8 Triple Net Lease........................................................................ 18
ARTICLE V. IMPOSITIONS...................................................................................... 18
5.1 Payment of Impositions.................................................................. 18
5.2 Notice of Impositions................................................................... 19
5.3 Adjustment of Impositions............................................................... 19
5.4 Utility Charges......................................................................... 19
5.5 Insurance Premiums...................................................................... 19
ARTICLE VI. TERMINATION OR ABATEMENT OF LEASE............................................................... 19
ARTICLE VII. OWNERSHIP OF PROPERTY.......................................................................... 20
7.1 Ownership of the Property............................................................... 20
7.2 Tenant's Personal Property; Security Interest........................................... 20
ARTICLE VIII. CONDITION AND USE OF PROPERTY................................................................. 21
8.1 Condition of the Property............................................................... 21
8.2 Use of the Property..................................................................... 22
8.3 Landlord to Grant Easements............................................................. 23
8.4 Hazardous Substances.................................................................... 23
ARTICLE IX. LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS................................................... 26
9.1 Compliance with Legal Requirements, Insurance Requirements and Instruments.............. 26
9.2 Covenants Regarding Legal Requirements.................................................. 26
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9.3 Representations and Warranties.......................................................... 27
ARTICLE X. CONDITION OF THE PROPERTY........................................................................ 27
10.1 Maintenance and Repair.................................................................. 27
10.2 Encroachments and Restrictions.......................................................... 28
ARTICLE XI. CAPITAL ADDITIONS............................................................................... 29
11.1 Construction of Capital Additions....................................................... 29
11.2 Capital Additions Financed or Paid for by Landlord...................................... 30
11.3 Capital Additions Paid for by Tenant.................................................... 32
11.4 Disposition of Capital Additions upon Expiration or Termination of Lease................ 32
11.5 Non-Capital Additions................................................................... 32
11.6 Salvage................................................................................. 32
11.7 Conflicts With Work Letter.............................................................. 33
ARTICLE XII. LIENS.......................................................................................... 33
ARTICLE XIII. CONTESTS...................................................................................... 33
ARTICLE XIV. INSURANCE...................................................................................... 34
14.1 General Insurance Requirements.......................................................... 34
14.2 Replacement Cost........................................................................ 36
14.3 Additional Insurance.................................................................... 36
14.4 Waiver of Subrogation................................................................... 36
14.5 Form of Insurance....................................................................... 37
14.6 Change in Limits........................................................................ 37
14.7 Blanket Policy.......................................................................... 37
14.8 No Separate Insurance................................................................... 37
ARTICLE XV. INSURANCE PROCEEDS.............................................................................. 38
15.1 Handling of Insurance Proceeds.......................................................... 38
15.2 Reconstruction in the Event of Damage or Destruction Covered by Insurance............... 38
15.3 Reconstruction in the Event of Damage or Destruction Not Covered by Insurance........... 39
15.4 Payment of Proceeds on Tenant's Property and Capital Additions Paid by Tenant........... 40
15.5 Restoration of Tenant's Property........................................................ 40
15.6 Abatement of Rent....................................................................... 40
15.7 Damage Near End of Term................................................................. 40
15.8 Termination of Option to Purchase....................................................... 41
15.9 Waiver.................................................................................. 41
ARTICLE XVI. CONDEMNATION................................................................................... 41
16.1 Definitions............................................................................. 41
16.2 Parties' Rights and Obligations......................................................... 42
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16.3 Total Taking............................................................................ 42
16.4 Allocation of Portion of Award.......................................................... 42
16.5 Partial Taking.......................................................................... 42
16.6 Temporary Taking........................................................................ 43
ARTICLE XVII. DEFAULTS AND REMEDIES......................................................................... 43
17.1 Events of Default....................................................................... 43
17.2 Certain Remedies........................................................................ 45
17.3 Termination and Damages................................................................. 46
17.4 Application of Funds.................................................................... 47
17.5 Failure to Conduct Business............................................................. 47
17.6 Landlord's Right to Cure Tenant's Default............................................... 47
17.7 Waiver.................................................................................. 47
ARTICLE XVIII. CURE BY TENANT OF LANDLORD DEFAULTS.......................................................... 48
ARTICLE XIX. PURCHASE OF PROPERTY BY TENANT................................................................. 48
19.1 Purchase of the Property................................................................ 48
19.2 Failure to Close Purchase............................................................... 49
ARTICLE XX. HOLDING OVER.................................................................................... 49
ARTICLE XXI. RISK OF LOSS................................................................................... 49
ARTICLE XXII. LIABILITY OF PARTIES.......................................................................... 50
22.1 Indemnification by Tenant............................................................... 50
22.2 Indemnification by Landlord............................................................. 51
22.3 Continuing Liability.................................................................... 51
ARTICLE XXIII. ASSIGNMENT AND SUBLETTING.................................................................... 51
23.1 Assignment and Subletting............................................................... 51
23.2 Attornment.............................................................................. 51
23.3 REIT Protection......................................................................... 52
23.4 Prohibition of Transfers................................................................ 52
23.5 High Capitalization Hospital Companies.................................................. 52
23.6 Certain Sale of Business Type Transactions.............................................. 53
23.7 Public Offering/Public Trading.......................................................... 54
ARTICLE XXIV. INFORMATION FROM TENANT....................................................................... 55
24.1 Officer's Certificates.................................................................. 55
24.2 Financial Information................................................................... 55
24.3 Licensing Information................................................................... 56
ARTICLE XXV. APPRAISALS OF THE PROPERTY..................................................................... 56
25.1 Appraisers.............................................................................. 56
25.2 Method of Appraisal..................................................................... 57
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ARTICLE XXVI. OPTIONS TO PURCHASE........................................................................... 57
26.1 Landlord's Option to Purchase Tenant's Personal Property; Transfer of Licenses.......... 57
26.2 First Offer to Purchase................................................................. 58
26.3 Inclusion of the Property with Other Property........................................... 59
26.4 Landlord's Election of 1031 Exchange.................................................... 59
26.5 Specific Performance of Options......................................................... 60
ARTICLE XXVII. FACILITY MORTGAGES........................................................................... 60
ARTICLE XXVIII. LIMITATION OF LIABILITY..................................................................... 61
ARTICLE XXIX. ADDITIONAL COVENANTS OF TENANT................................................................ 61
29.1 Additional Negative Covenants........................................................... 61
29.2 Additional Affirmative Covenants........................................................ 62
29.3 Security for the Lease.................................................................. 64
ARTICLE XXX. MISCELLANEOUS.................................................................................. 67
30.1 Landlord's Right to Inspect............................................................. 67
30.2 No Waiver............................................................................... 68
30.3 Remedies Cumulative..................................................................... 68
30.4 Acceptance of Surrender................................................................. 68
30.5 No Merger of Title...................................................................... 68
30.6 Conveyance by Landlord.................................................................. 68
30.7 Quiet Enjoyment......................................................................... 68
30.8 Notices................................................................................. 69
30.9 Survival of Terms; Applicable Law....................................................... 70
30.10 Exculpation of Landlord's and Tenant's Officers and Agents.............................. 70
30.11 Transfers Following Termination......................................................... 70
30.12 Tenant's Waivers........................................................................ 70
30.13 Memorandum of Lease..................................................................... 71
30.14 Arbitration............................................................................. 71
30.15 Modifications........................................................................... 71
30.16 Attorneys' Fees......................................................................... 71
30.17 Time is of the Essence.................................................................. 71
30.18 Counterparts............................................................................ 71
30.19 Brokers................................................................................. 71
30.20 Public Disclosure....................................................................... 72
30.21 Guaranty................................................................................ 72
ARTICLE XXXI. PRESERVATION OF FACILITY VALUE................................................................ 72
EXHIBITS
Exhibit A - Legal Description of the Land
Exhibit B - Intentionally Omitted
Exhibit C - Intentionally Omitted
Exhibit D - Permitted Encumbrances
Exhibit E - Work Letter
Exhibit F - Form of Guaranty
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AMENDED AND RESTATED
PIONEER HOSPITAL LEASE
This AMENDED AND RESTATED PIONEER HOSPITAL LEASE is executed as of
June 28, 2002, by and between HEALTH CARE PROPERTY INVESTORS, INC., a Maryland
corporation, having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Landlord ("LANDLORD"), and PIONEER VALLEY
HOSPITAL, INC. a Delaware corporation, having its principal office at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Tenant ("TENANT").
R E C I T A L S
A. Landlord, as successor in interest by merger to AHP of Utah,
Inc., a Utah corporation ("AHP UTAH"), and Tenant, as successor in interest to
▇▇▇▇▇▇▇▇▇▇ Pioneer Valley Hospital, Inc., a Utah corporation ("▇▇▇▇▇▇▇▇▇▇"), are
parties to that certain Pioneer Hospital Lease dated as of May 15, 1996, as
amended by that certain First Amendment to Pioneer Hospital Lease dated as of
August 15, 1996 (the "FIRST AMENDMENT"), that certain Second Amendment to Lease
dated as of November 6, 1996 (the "SECOND AMENDMENT"), and that certain Third
Amendment to Lease dated as of March 18, 1999 (the "THIRD AMENDMENT")
(collectively, as so amended, the "ORIGINAL LEASE"). The Original Lease covers
certain land, improvements, fixtures and related rights comprising the Pioneer
Valley Hospital located in the City of West Valley City, Salt Lake County, Utah,
as more particularly described in the Original Lease.
B. Tenant desires to construct a Capital Addition to the Facility
(as such terms are defined below) and to have Landlord fund a portion of the
costs associated therewith. Tenant also desires to further amend the Lease in
certain additional respects.
C. Landlord is willing to (i) consent to such Capital Addition, (ii)
fund a portion of such costs, and (iii) amend and restate the Original Lease
upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
ARTICLE I.
DEFINITIONS
For all purposes of this Lease, unless otherwise expressly provided
in this Agreement or the context in which such term is used indicates a contrary
intent, (a) the terms defined in this Article shall have the meanings ascribed
to them in this Article, (b) all accounting terms not otherwise defined in this
Article shall have the meanings ascribed to them in accordance with GAAP 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.
"1031 EXCHANGE" As defined in Section 26.4.
"2002 PROJECT" As defined in the Work Letter.
"2002 PROJECT COSTS" As defined in the Work Letter.
"ABSOLUTE ASSIGNMENT OF SUBLEASES AND RENTS" shall mean the Absolute
Assignment of Subleases and Rents dated as of May 15, 1996, by and between
Landlord and Tenant.
"ACCOMMODATOR" As defined in Section 26.4.
"ADDITIONAL CHARGES" shall have the meaning ascribed to such term in
Section 4.7.
"AFFILIATE" of any person or entity (the "Subject") shall mean (a)
any person which, directly or indirectly, controls or is controlled by or is
under common control with the Subject, (b) any person owning, beneficially,
directly or indirectly, ten percent (10%) or more of the outstanding capital
stock, shares or equity interests of the Subject or (c) any officer, director,
employee, general partner or trustee of the Subject or any person controlling,
controlled by or under common control with the Subject (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of the
Subject). As used in this definition, the term "person" means and includes
governmental agencies and authorities, political subdivisions, individuals,
corporations, limited liability companies, general partnerships, limited
partnerships, stock companies or associations, joint ventures, associations,
trusts, banks, trust companies, land trusts, business trusts and any other
entity of any form whatsoever, and "control" (including the correlative meanings
of the terms "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, through the ownership of a voting securities, partnership interests or
other equity interests, or through any other means. Notwithstanding the
foregoing, neither JLL, nor any Person that is an Affiliate of JLL but that
otherwise would not be deemed to be an Affiliate of Tenant without reference to
JLL, shall be deemed to be an Affiliate of Tenant.
"AHP UTAH" shall have the meaning ascribed to such term in Recital
A.
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"APPLICABLE CPI PERCENT" shall mean the percent equal to (x) the
quotient of (i) the CPI most recently published as of the date that payment of
Percentage Rent for the last Calendar Quarter of such Calculation Period is due,
divided by (ii) the CPI as of the comparable prior year date; minus (y) one, but
in no event less than 2.0%.
"AWARD" shall have the meaning ascribed to such term in Section
16.1(c).
"BASE GROSS REVENUES" shall mean the Gross Revenues for the 12-month
period commencing with the first full day of the first full calendar month of
the Fixed Term.
"BASE RENT" shall mean, for the Fixed Term, $7,024,401 per annum
and, for each Extended Term, if any, the applicable amount determined pursuant
to Section 4.3.
"BASE RENTAL RATE" shall mean for any Calculation Period the
quotient of (a) the Base Rent payable with respect to such Calculation Period
divided by (b) the Landlord's Total Investment for such Calculation Period.
"BUSINESS DAY" shall mean any day on which banking institutions in
New York, New York, are open for the conduct of normal banking business.
"CALCULATION PERIOD" shall mean a period of 12 consecutive months
commencing with the first day of the first full calendar month of the Fixed Term
or any anniversary of such date.
"CALENDAR QUARTER" shall mean the three-month periods in each
calendar year ending on March 31st, June 30th, September 30th and December 31st,
respectively.
"CAPITAL ADDITIONS" shall mean (a) one or more new buildings located
on the Land or to be used, directly or indirectly, as part of the Facility, (b)
one or more additional structures annexed to any portion of any of the
Improvements, (c) the material expansion of existing Improvements, (d) the
construction of a new wing or new story on existing Improvements, or (e) any
expansion, construction, renovation or conversion of existing Improvements or
the installation of new Fixtures therein to (i) increase the bed or service
capacity of the Facility or (ii) change the purpose for which the Facility is
utilized. Notwithstanding anything to the contrary contained in Article XI, in
the event it is necessary to ▇▇▇▇▇ or otherwise take corrective action with
respect to the existence of a Hazardous Substance (as hereinafter defined)
located in, on or under the Property or in the Improvements, such abatement or
corrective action shall not be deemed to be a Capital Addition and shall be the
sole responsibility of Tenant at its sole cost and expense. Notwithstanding
anything herein to the contrary, the 2002 Project shall at all times be deemed a
"Capital Addition" for purposes of this Lease.
"CAPITAL ADDITIONS COST" shall mean the cost of any Capital
Additions. Such cost shall include (a) the costs of constructing the Capital
Additions, including site preparation and improvement, materials, labor,
supervision, developer and administrative fees, the costs of design, engineering
and architectural services, the costs of fixtures, the costs of construction
financing (including, if funded by Landlord, capitalized interest at a rate
equal to the Prime Rate plus 250 basis points) and other similar costs approved
in writing by Landlord, (b) if agreed to by
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Landlord in writing in advance, the purchase price and other acquisition costs,
or applicable ground lease rental payable for any period such ground lease is in
effect to and including the date upon which such Capital Addition is completed
and occupied or in operation, as the case may be, of any land which is acquired
or leased for the purpose of placing thereon all or any portion of the Capital
Additions or for providing means of access thereto, or parking facilities
therefor (including the costs of surveying the same and recording, title
insurance and escrow fees and charges), (c) insurance premiums, real estate
taxes, water and sewage charges and other carrying charges for such Capital
Additions during their construction, (d) fees and expenses of legal counsel, (e)
any documentary transfer or similar taxes, (f) any applicable regulatory or
administrative fees and charges, and any costs, charges, fees or expenses paid
or incurred in connection with obtaining an applicable permits, licenses,
franchises, authorizations, certificates of need, certificates of occupancy an
similar authorizations and entitlements and (g) all other reasonable costs and
expenses of Landlord or Tenant, as applicable, and any lending institution which
has committed to finance the Capital Additions including, but not limited to,
(i) the fees and expenses of their respective legal counsel, (ii) any printing
duplicating and messenger expenses, (iii) any filing, registration and recording
taxes and fees, (iv) any documentary transfer or similar taxes, (v) any title
insurance charges and appraisal fees, (vi) any rating agency fees and (vii) any
commitment or similar fees charged by any lending institution financing or
offering to finance any portion of such Capital Additions. Notwithstanding the
foregoing, with respect to the 2002 Project, "Capital Additions Cost" shall mean
only the 2002 Project Costs.
"CASH FLOW" shall mean, for any period of determination, an amount
equal to the sum the amounts for such period of (i) net income before income
taxes and interest expense, (ii) depreciation, amortization and other similar
non-cash charges, (iii) Base Rent and (iv) Percentage Rent.
"CLAIMS" shall have the meaning specified in Section 22.1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMENCEMENT DATE" shall have the meaning ascribed to such term in
Section 3.1.
"COMPLETION DATE" shall have the meaning ascribed to such term in
the Work Letter."
"CONDEMNATION" shall have the meaning ascribed to such term in
Section 16.1(a).
"CONDEMNOR" shall have the meaning ascribed to such term in Section
16.1(d).
"CONSOLIDATED FINANCIALS" shall mean, for any fiscal year (or other
accounting period) for Tenant and consolidated Affiliates thereof statements of
earnings, retained earnings and cash flows 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
(or period), all of which shall be prepared in accordance with GAAP.
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"CONSOLIDATED NET WORTH" same mean, at any time, the sum of the
following for any person and its consolidated Subsidiaries, on a consolidated
basis determined in accordance with GAAP:
(i) the amount of capital or stated capital (after deducting
the cost of any shares, if applicable, held in its treasury), plus
(ii) 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
(iii) the sum of the following (without duplication of
deductions in respect of items already deducted in arriving at
surplus and retained earnings): (a) unamortized debt discount and
expense; and (b) any write-up in book value of assets resulting from
a revaluation thereof subsequent to the most recent Consolidated
Financials prior to the date , excluding, however, any (i) net
write-up in value of foreign currency in accordance with GAAP, (ii)
write-up resulting from a reversal of a reserve for bad debts or
depreciation, and (iii) write-up resulting from a change in methods
of accounting for inventory.
"CONTROLLING PERSON" shall mean any (i) person(s) which, directly or
indirectly (including through one or more intermediaries), controls Tenant and
would be deemed an Affiliate of Tenant, including any partners, shareholders,
principals, members, trustees and/or beneficiaries of any such person(s) to the
extent the same control Tenant and would be deemed an Affiliate of Tenant, and
(ii) person(s) which controls, directly or indirectly (including through one or
more intermediaries), any other Controlling Person(s) and which would be deemed
an Affiliate of any such Controlling Person(s). Notwithstanding the foregoing,
neither JLL, nor any Person that is an Affiliate of JLL but that otherwise would
not be deemed to be an Affiliate of Tenant without reference to JLL, shall be
deemed to be a Controlling Person.
"CPI" shall mean the Consumer Price Index for the region in which
the Facility is located (All Urban Consumers, 1982-84=100).
"DATE OF TAKING" shall have the meaning ascribed to such term in
Section 16.1(b).
"ENCUMBRANCE" shall have the meaning ascribed to such term in
Article XXVII.
"EVENT OF DEFAULT" shall have the meaning ascribed to such term in
Section 17.1.
"EXCESS REVENUE" shall mean, with respect to each Calculation
Period, the difference between the Gross Revenues for such Calculation Period
and the Base Gross Revenues.
"EXTENDED TERM" shall have the meaning ascribed to such term in
Section 3.2.
"FACILITY" shall mean the general acute care hospital presently
operated and to be operated on the Land, together with any Capital Additions.
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"FACILITY MORTGAGE" shall have the meaning ascribed to such term in
Section 14.1.
"FACILITY MORTGAGEE" shall have the meaning ascribed to such term in
Section 14.1.
"FAIR MARKET RENTAL" shall mean, with respect to the Property
(including any Capital Additions except to the extent paid for by Tenant) the
rental paid on a net basis as provided in Section 4.8 hereof which a willing
tenant not compelled to rent would pay to a willing landlord not compelled to
lease for the highest and best medical use and occupancy of such property
permitted pursuant to this Lease for the term in question, assuming that Tenant
is not in default under this Lease, but without taking into account Percentage
Rent. For purposes of this Lease, Fair Market Rental shall be determined in
accordance with the appraisal procedures set forth in Article XXV or as
otherwise mutually agreed upon by Landlord and Tenant.
"FAIR MARKET VALUE" shall mean, with respect to the Property,
including all Capital Additions, the price that a willing buyer not compelled to
buy would pay to a willing seller not compelled to sell for such property
(except as otherwise provided below), assuming that (a) this Lease is not in
effect with respect to the Property, (b) such seller must pay any closing costs
and title insurance premiums with respect to such sale, and (c) the Property is
fully licensed by all governmental agencies having jurisdiction thereof, and is
and will continue to be operated for the Primary Intended Use and is otherwise a
going concern. Notwithstanding the foregoing, the computation of Fair Market
Value shall assume that this Lease is in effect with respect to the Property in
the event that Tenant elects to acquire the Property pursuant to Section
15.2(b). For purposes of this Lease, Fair Market Value shall be determined in
accordance with the appraisal procedures set forth in Article XXV or as
otherwise mutually agreed upon by Landlord and Tenant.
"FISCAL YEAR" shall mean the 12-month period commencing January 1
and terminating December 31.
"FIXED TERM" shall have the meaning ascribed to such term in Section
3.1.
"FIXED TERM SECURITY LETTER OF CREDIT" shall have the meaning
ascribed thereto in Section 29.3(b).
"FIXTURES" shall have the meaning ascribed to such term in clause
(c) of Article II.
"GAAP" shall mean generally accepted accounting principles.
"GROSS REVENUES" shall mean all revenues received or receivable
from, in connection with, incidental to or by reason of the operation of the
Facility or any other use of the Property by Tenant or any Affiliate thereof,
including, without limitation, all revenues received or receivable, from the
Facility and all patient revenues received or receivable from, in connection
with or incidental to the use of or otherwise by reason of all rooms, beds and
other facilities provided, meals served, services performed, space or facilities
subleased or goods sold on the Property and including, without limitation
(except as provided below), arrangements with
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third parties relating to the possession or use of any portion of the Property;
provided, however, that Gross Revenues shall not include:
(i) any revenues from professional fees or charges by
physicians or providers of ancillary services when and to the extent
such charges are paid over to such physicians or providers of
ancillary services, or are accompanied by separate charges for the
use of the Facility or any portion thereof;
(ii) non-operating revenues such as interest income or income
from the sale of assets not sold in the ordinary course of business;
(iii) contractual allowances or reserves (relating to any
period during the Term) for ▇▇▇▇▇▇▇▇ not paid by or received from
the applicable governmental agencies or third party providers;
(iv) allowances according to GAAP for uncollectible accounts,
including credit card accounts, uncompensated care, charity care or
other administrative discounts and collection expenses;
(v) all patient billing credits and adjustments that are
appropriate according to GAAP relating to health care accounting;
(vi) all federal, state or local sales or excise taxes and any
tax based upon or measured by Gross Revenues which is added to or
trade a part of the amount billed to the patient or other recipient
of such services or goods, whether included in the ▇▇▇▇ or stated
separately;
(vii) all provider discounts for hospital or other medical
facility utilization contracts and credit card discounts;
(viii) all costs of any federal, state or local governmental
program imposed specially to provide or finance indigent patient
care;
(ix) all rental income, concession fees and other payments
received by Tenant from any Affiliate of Tenant; provided, however,
that any receipts of such Affiliate that would be deemed Gross
Revenues if received by Tenant shall be considered to be part of
Gross Revenues to the extent of Tenant's or any of its Affiliate's
percentage interest in such receipts;
(x) amounts received by Tenant pursuant to a sublease of any
portion of the Property if the rental paid by the sublessee under
the sublease is 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
would fail to qualify as `rents from real property' under Section
856(d) of the Code, or any similar or successor provisions thereto,
provided, however, that any receipts of such sublessee that would be
deemed Gross Revenues if received by Tenant shall be considered to
be part of Gross Revenues; and
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(xi) revenues attributable to services actually provided at
locations other than the Property, such as home health care and
other services.
"GUARANTORS" shall mean, collectively, Iasis and any future
guarantor of Tenant's obligations pursuant to this Lease (each individually, a
"Guarantor").
"GUARANTY" shall mean the Guaranty of Obligations dated June 28,
2002, executed by Guarantor, in substantially the form attached hereto as
Exhibit F, and any future written guaranty of Tenant's obligations hereunder
executed by a Guarantor.
"HAZARDOUS SUBSTANCES" shall mean those substances, materials, and
wastes listed in the United States Department of Transportation Table (49 CFR
172 101) or by the Environmental Protection Agency as hazardous substances (40
CFR Part 302) and amendments thereto, or such substances, materials and wastes
which are or become regulated under any applicable local, state or federal law
including, without limitation, any material, waste or substance which is (i)
hydrocarbons, petroleum and petroleum products, (ii) asbestos, (iii)
polychlorinated biphenyls, (iv) formaldehyde, (v) radioactive substances, (vi)
flammables and explosives, (vii) described as a "hazardous substance" pursuant
to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C.
Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33
U.S.C. Section 1317), (viii) defined as a "hazardous waste" pursuant to Section
1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq. (42 U.S.C. Section 6903), (ix) defined as a "hazardous substance" pursuant
to Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et. seq. (42 U.S.C. Section 9601), as the
same may be amended from time to time, or (x) any other substance, waste or
material which could presently or at any time in the future cause a detriment to
or impair the value or beneficial use of the Land or other Property (which, for
purposes of this definition shall include all air, soils, ground water, surface
water and soil vapor) or constitute or cause a health, safety or environmental
hazard on, under or about the Land or other Property or to any person who may
enter on, under, or about the Land or other Property or require remediation at
the behest of any governmental agency.
"IASIS" shall mean Iasis Healthcare Corporation, a Delaware
corporation, and its permitted successors and assigns.
"IMPACTED FACILITY" shall have the meaning specified in Section
15.2.
"IMPOSITIONS" shall mean all taxes (including without limitation all
real property taxes imposed upon the Land, Improvements or other portions of the
Property, including, but not limited to all tangible and intangible personal
property, ad valorem, sales, use, single business, gross receipts, transaction
privilege, documentary stamp (if any are associated with this Lease or the
transactions contemplated hereby), rent or similar taxes relating to or imposed
upon Landlord, any portion of the Property, Tenant or its business conducted
upon the Land), assessments (including without limitation all supplemental real
property tax assessments or assessments for public improvements or benefit,
whether or not commenced or completed prior to the Commencement Date, 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, franchise, inspection, authorization and similar fees) and all
other governmental
8
charges, in each case whether general or special, ordinary or extraordinary,
foreseen or unforeseen, of every character or nature whatsoever with respect to
or connected with the Property or the business conducted thereon by Tenant
(including all interest, penalties and fines thereon due to any failure or delay
in payment thereof) which at any time prior to, during or with respect to the
Term hereof may be assessed or imposed on or with respect to, or may be a lien
upon (a) Landlord's interest in the Property, (b) the Property or any part
thereof or any Rent therefrom or any estate, right, title or interest therein,
(c) Landlord's capital invested in the State as represented by the Property, or
(d) any occupancy, operation, use or possession of, or sales from, or activity
conducted on or in connection with the Property or the leasing or use of the
Property or any part thereof by Tenant.
"IMPROVEMENTS" shall have the meaning ascribed to such term in
clause (b) of Article II.
"INITIAL INVESTMENT COST" shall mean $57,073,000.
"INSURANCE REQUIREMENTS" shall mean all terms and conditions of any
insurance policy required by this Lease and all requirements of the issuer of
any such insurance policy.
"JLL" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ Fund III, L.P.
"LAND" shall mean all of that certain real property situated in the
City of West Valley City, County of Salt Lake, State of Utah and more
particularly described in Exhibit A attached hereto and incorporated herein by
reference, and any other parcel of land acquired or leased and made subject to
this Lease in connection with a Capital Addition.
"LANDLORD LENDER" shall have the meaning ascribed to that term in
Section 14.1.
"LANDLORD'S MAXIMUM COST" shall have the meaning ascribed to such
term as defined in the Work Letter.
"LANDLORD'S TOTAL INVESTMENT" shall mean an amount equal to the sum
of (x) the Initial Investment Cost plus all Capital Additions Costs pertaining
to the Property paid for by Landlord, including the 2002 Project Costs paid for
by Landlord, minus (y) $213,283, representing Landlord's investment in excess
land.
"LEASE" shall mean this document, as the same may be amended from
time to time in accordance herewith.
"LEGAL REQUIREMENTS" shall mean all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, common law, decrees and injunctions affecting the
Property or the maintenance, construction, use, alteration, occupancy or
operation thereof, whether now or hereafter enacted and in force (including any
of the foregoing which may require repairs, modifications or alterations in or
to the Property), all permits, licenses, certificates, franchises,
authorizations, land use entitlements, zoning and regulations relating thereto,
and all covenants, conditions, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Tenant (other than
9
encumbrances created by Landlord without the consent of Tenant), at any time in
force affecting the Property.
"MINIMUM REPURCHASE PRICE" shall mean the Landlord's Total
Investment less the net amount (after deduction of all reasonable legal fees and
other costs and expenses, including without limitation expert witness fees,
incurred by Landlord in connection with obtaining any such proceeds or awards)
of any proceeds of insurance paid to and retained by Landlord in accordance with
Article XV of this Lease and of any Awards received by Landlord and not applied
to restoration of the Property in accordance with Article XVI of this Lease.
"NOTICE" shall mean a notice given pursuant to Section 30.8 hereof.
"OFFICER'S CERTIFICATE" shall mean a certificate of Tenant signed by
the chief financial officer or another officer authorized so to sign by
resolutions adopted by the board of directors or the articles of incorporation
or by-laws of Tenant or by any other person whose power and authority to act has
been authorized by delegation in writing by the chief financial officer of
Tenant.
"OVERDUE RATE" shall mean, as of a specified date, a rate of
interest equal to the Prime Rate plus five percent per annum, but in no event
greater than the maximum rate of interest then permitted under applicable law.
"▇▇▇▇▇▇▇▇▇▇" shall have the meaning ascribed to such term in Recital
A.
"PAYMENT DATE" shall mean any due date for the payment of any
installment of Base Rent.
"PERCENTAGE RENT" shall mean the percentage rent payable by Tenant
to Landlord pursuant to Section 4.4.
"PERCENTAGE RENT COMMENCEMENT DATE" shall mean with respect to the
Fixed Term, the first day of the first full calendar month of the Fixed Term.
"PERMITTED ENCUMBRANCES" shall mean the matters, if any, set forth
in Exhibit D attached hereto and incorporated herein by reference.
A "PERSON" shall mean any natural person, corporation, limited
liability company, business trust, association, company, partnership or
government (or any agency or political subdivision thereof).
"PRIMARY INTENDED USE" shall mean a general acute care hospital
licensed by the State, and such additional uses which were licensed or applied
for as of the Commencement Date, or are permitted by Landlord from time to time
hereunder.
"PRIME RATE" shall mean the fluctuating rate of interest most
recently announced by ▇▇▇▇▇ Fargo at its principal office in San Francisco,
California as its "Prime Rate." The "Prime Rate" is one of ▇▇▇▇▇ Fargo's base
rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto. The "Prime Rate" is
10
evidenced by the recording thereof after its announcement in such internal
publication or publications as ▇▇▇▇▇ Fargo may designate and may not be the
lowest of ▇▇▇▇▇ Fargo's base rates. Any change in any of the interest rates
chargeable hereunder resulting from a change in the Prime Rate shall become
effective as of the Business Day on which each change in the "Prime Rate" is
announced.
"PROPERTY" shall have the meaning ascribed to such term in Article
II and shall further include all Capital Additions.
"PURCHASE AGREEMENT" shall mean that certain Purchase and Sale
Agreement dated as of May 15, 1996, by and between ▇▇▇▇▇▇▇▇▇▇, as seller, and
AHP Utah, as buyer, with respect to the Property.
"REMEDIAL WORK" shall have the meaning specified in Section 8.4.
"RENT" shall mean the Base Rent, Percentage Rent and Additional
Charges.
"SECURITY AGREEMENT" shall mean the Security Agreement dated as of
May 15, 1996, between Tenant, as Debtor, and Landlord, as Secured Party.
"SECURITY LETTER OF CREDIT" shall have the meaning ascribed thereto
in Section 29.3(c).
"STATE" shall mean the State of Utah.
"SUBSIDIARIES" shall mean corporations, partnerships, limited
liability companies, business trusts or other legal entities with respect to
which a person owns, directly or indirectly (including through one or more
intermediaries), more than fifty percent (50%) of the voting stock or
partnership, membership or other equity interest, respectively.
"TAKING" shall mean a taking or voluntary conveyance during the Term
hereof of all or any part of the Property, or any interest therein, right with
respect thereto or use thereof, as a result of, incidental to, or in settlement
of any condemnation or other eminent domain proceedings affecting such Property,
regardless of whether such Proceedings shall have actually been commenced.
"TANGIBLE NET WORTH" shall mean, as of the date of determination,
the sum of the following for any Person and its consolidated subsidiaries, if
any, on a consolidated basis, determined in accordance with GAAP (a) the amount
of capital or stated capital (after deducting the cost of any shares held in the
applicable entity's treasury); (b) plus the amount of capital surplus and
retained earnings; or (c) in the case of a capital or retained earnings deficit,
minus the amount of such deficit, (d) less the amount, if any, carried on the
books of the entity and any consolidated subsidiaries of the entity for
goodwill, patents, trademarks, copyrights, licenses, and other assets which are
properly classified as intangible assets under GAAP.
"TARGET PROPERTY" shall have the meaning ascribed to such term in
Section 26.4.
11
"TEN-YEAR TREASURY RATE" shall mean, as of the date of
determination, the monthly average yield to maturity of actively traded
marketable United States Treasury securities bearing a fixed rate of interest,
adjusted for a constant maturity of ten years, as calculated by the Federal
Reserve Board for the four preceding calendar weeks and published in said
board's Statistical Release H. 15.
"TENANT'S PERSONAL PROPERTY" shall mean all machinery, equipment,
furniture, furnishings, movable walls or partitions, computers or other personal
property, and consumable inventory and supplies, including, without limiting the
generality of the foregoing, mail boxes, desks, lamps, chairs, beds, bedstands,
non-affixed cabinetry, tables, and similar movable equipment, owned by Tenant
and used on the Land, but in no event any items included within the definition
of Fixtures.
"TERM" shall mean the Fixed Term and any Extended Terms, as the
context may require, unless earlier terminated pursuant to the Provisions of
this Lease.
"TOTAL RENT" shall mean the sum of Base Rent, Percentage Rent and
Additional Charges.
"TRANSFER" shall have the meaning ascribed to such term in Section
23.4.
"UNAVOIDABLE DELAYS" shall mean delays due to strikes, lockouts,
inability to procure materials, power failures, acts of God, governmental
restrictions, enemy action, civil commotion, unavoidable casualty and other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
control of either party hereto.
"▇▇▇▇▇ FARGO" shall mean ▇▇▇▇▇ Fargo Bank, N.A., a national banking
association.
"WORK LETTER" shall mean the 2002 Project Work Letter attached
hereto as Exhibit E to this Lease and incorporated herein by this reference."
ARTICLE II.
LEASE OF PROPERTY
Landlord hereby leases, demises and lets to Tenant, and Tenant
hereby hires, takes and leases from Landlord, upon the terms and subject to the
conditions hereinafter set forth, TO HAVE AND TO HOLD, all of Landlord's right,
title and interest in and to all of the following (the "PROPERTY"):
(a) the Land;
(b) all buildings, structures and other improvements of every kind,
including but not limited to the Facility, all buildings and structures
hereafter constructed upon the Land and all alleyways and connecting tunnels,
sidewalks, utility pipes, conduits and lines (on-site and off-site), parking
areas, roadways and other related on-site and off-site improvements
12
appurtenant to such buildings and structures presently or hereafter situated
upon the Land, and any and all Capital Additions, including the 2002 Project
(the "IMPROVEMENTS");
(c) all "fixtures" as that term is defined in the State now and
hereafter located in, on or used and incorporated into the Land or Improvements;
all equipment (including non-movable medical equipment), machinery, fixtures and
other items of property, including all components thereof, now and hereafter
located in, on or used and incorporated into the Property, in alt cases so as to
constitute component parts thereof, including, without limitation, any and 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, equipment and apparatus,
sprinkler systems and fire and theft protection equipment, built-in oxygen and
vacuum systems, wiring, tubing, central clock systems, doctor register systems,
elevators, dumb waiters, intercom systems, nurse call systems, affixed cabinetry
and counters, pneumatic tube systems, vacuum cleaning systems, conveyor systems,
paging systems, mill work, x-ray protection, pass-through boxes, exhaust
systems, laboratory plumbing and piping, medical gas systems, nurse station
counters, emergency generators and similar items incorporated into and made a
component part of the Property, all of which to the greatest extent permitted by
law are hereby deemed by the parties hereto to constitute component parts of
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding Tenant's Personal Property (the
"FIXTURES"); and
(d) all easements, licenses, rights-of-way and appurtenances
relating to the Land and the Improvements.
ARTICLE III.
TERM OF LEASE
3.1 TERM OF LEASE. The initial term of this Lease commenced on May
15, 1996 (the "COMMENCEMENT DATE"), and, unless extended or terminated earlier
in accordance with the provisions of this Lease, shall remain in effect until
January 31, 2004 (the "FIXED TERM"). Tenant acknowledges that Landlord delivered
possession of the Property to Tenant on the Commencement Date.
3.2 OPTION TO EXTEND TERM OF LEASE.
Tenant shall have the right to renew this Lease for one (1) fifteen
(15)-year renewal term and then two (2) ten (10)-year renewal terms (each an
"EXTENDED TERM"), upon (i) giving Notice to Landlord of such renewal (x) with
respect to the first (1st) Extended Term, prior to August 1, 2003, but not
before June 1, 2003, and (y) with respect to the second (2nd) and third (3rd)
Extended Terms, not less than one hundred eighty (180) and not more than three
hundred sixty (360) days prior to the expiration of the then current Term and
(ii) delivering to Landlord concurrent with such Notice a reaffirmation of the
Guaranty executed by Guarantor stating, in substance, that Guarantor's
obligations under the Guaranty shall extend to this Lease, as extended by the
Extended Term. Notwithstanding the foregoing, if Tenant does not exercise its
option to extend the Term for the first (1st) Extended Term as provided above,
then Landlord shall have the right and option to extend the Term for the first
(1st) Extended Term by giving Notice of such renewal to Tenant on or before
November 1, 2003, and Tenant shall promptly
13
thereafter deliver to Landlord a reaffirmation of the Guaranty executed by
Guarantor stating, in substance, that Guarantor's obligations under the Guaranty
shall extend to this Lease, as extended by such Extended Term. During each
Extended Term, all of the terms and conditions of this Lease shall continue in
full force and effect except that the annual Base Rent for and during such
Extended Term shall be as set forth in Section 4.3(b).
Each such option may only be exercised by Tenant if, at the time
such option is exercised, (a) this Lease has not expired or been sooner
terminated and (b) an Event of Default is not continuing. Tenant's exercise of
any option to extend the term of this Lease for an Extended Term pursuant to
this Section 3.2 shall constitute Tenant's irrevocable and binding commitment to
lease the Property on the terms stated in this Lease for the whole of such
Extended Term. If Tenant is unable to exercise any option due to the provisions
of this Lease, the time during which such option may be exercised shall not be
extended or enlarged. Time is strictly of the essence with respect to the
requirement that Tenant give timely Notice of its exercise of any options
hereunder, and Tenant's failure timely to exercise any option strictly in
accordance with its terms shall constitute a material, irredeemable and
incurable failure to satisfy a condition precedent to the vesting of any rights
in Tenant pursuant to the option, and Tenant hereby expressly waives any right
to claim relief from forfeiture or any other form of equitable relief from the
consequences of any untimely exercise of any such option strictly in accordance
with its terms. The implied covenant of good faith and fair dealing, if any,
under this Lease shall not be construed to impose upon Landlord any obligation
to notify Tenant in advance of the impending deadline for the exercise of any
option hereunder, nor shall it obligate Landlord to excuse the tardy exercise of
any option, however slight. The failure of Tenant to exercise any of the options
for the Extended Terms within the respective times specified in this Section
shall thereby terminate any remaining such options, unless Landlord exercises
its option to extend the Term for the first (1st) Extended Term as provided
above, in which case Tenant shall nevertheless retain the option to renew the
Term for the second (2nd) and third (3rd) Extended Terms in accordance with the
foregoing provisions.
ARTICLE IV.
RENT
4.1 [INTENTIONALLY DELETED]
4.2 PAYMENT OF BASE RENT, PERCENTAGE RENT AND ADDITIONAL CHARGES.
During the Term, Tenant shall pay to Landlord at the times specified herein, in
lawful money of the United States of America, without right of offset or
deduction, by wire transfer of immediately available funds to such account or
accounts as Landlord may designate from time-to-time in a Notice, the Rent.
4.3 BASE RENT.
(a) BASE RENT DURING THE FIXED TERM. Commencing on the first
Business Day of the first full calendar month occurring coincident with or after
the Commencement Date and, thereafter, on the first day of each calendar month
occurring during the Fixed Term hereof, Tenant shall pay to Landlord Base Rent
in an amount determined by dividing (x) the then annual Base Rent by (y) 12,
provided that the first payment of Base Rent
14
shall include an additional amount for any partial calendar month occurring
between the Commencement Date and the date of the first payment of Base Rent.
Any payment of Base Rent for a period of less than one calendar month shall be
prorated based upon a 30-day month and the actual number of days elapsed.
(b) BASE RENT DURING THE EXTENDED TERMS.
(i) Base Rent shall be payable in equally monthly
installments on the first day of each calendar month during the Extended Terms.
The monthly installment of Base Rent for any partial calendar month at the
beginning or end of each Extended Term shall be prorated based upon the actual
number of days in such month.
(ii) Subject to upward adjustments as provided in clause
(iv) below, during the first (1st) Extended Term, annual Base Rent shall be the
sum of (x) Four Million Eight Hundred Twenty-Five Thousand Dollars
($4,825,000.00), plus (y) Seven Percent (7%) of the aggregate amount of all 2002
Project Costs funded or disbursed by Landlord pursuant to the Work Letter in
excess of Seven Million Dollars ($7,000,000.00) but less than Nine Million Five
Hundred Thousand Dollars ($9,500,000.00), plus (z) Ten Percent (10%) of the
aggregate amount of all 2002 Project Costs funded or disbursed by Landlord
pursuant to the Work Letter in excess of Nine Million Five Hundred Thousand
Dollars ($9,500,000.00).
(iii) Subject to upward adjustments as provided in
clause (iv) below, during each of the second (2nd) and third (3rd) Extended
Terms, annual Base Rent shall be the greater of (x) the then annual Fair Market
Rental as of the commencement of such Extended Term and (y) One Hundred Two and
One-Half Percent (102.5%) of annual Base Rent payable for the last Lease Year of
the immediately preceding Term.
(iv) Commencing upon the expiration of the first (1st)
Lease Year of each Extended Term, and upon the expiration of each Lease Year
thereafter during each such Extended Term, the annual Base Rent for each ensuing
Lease Year shall be increased to an amount equal to One Hundred Two and One-Half
Percent (102.5%) of the annual Base Rent payable for the immediately preceding
Lease Year.
4.4 PERCENTAGE RENT.
(a) "Percentage Rent" shall accrue, in the manner and at the
times set forth in this Section 4.4, in an amount equal to six percent of the
Excess Revenues for any Calculation Period commencing during the Fixed Term. On
August 14, 1996, and thereafter on the 45th day after the last day of every
Calendar Quarter commencing during the Fixed Term of this Lease, Tenant shall
pay Percentage Rent on a quarterly basis. The quarterly payment shall be
determined by (i) annualizing the Gross Revenues for the portion of the
Calculation Period ended (prorated for any partial period) as of the end of the
last Calendar Quarter, (ii) subtracting from such annualized Gross Revenues the
Base Gross Revenues to arrive at the Excess Revenues for such completed portion
of the Calculation Period, (iii) multiplying such Excess Revenues by six
percent, to arrive at annualized Percentage Rent, (iv) multiplying such
annualized Percentage Rent by a fraction the numerator of which is the number of
days elapsed in the Calculation Period through the end of the last Calendar
Quarter and the denominator of which is 360 and
15
(v) subtracting from the product thus obtained any Percentage Rent payments
previously made with respect to such Calculation Period.
(b) Notwithstanding subsection (a) of this Section 4.4 to the
contrary, in no event shall the increase in Percentage Rent due and payable
under this Lease with respect to any Calculation Period during the Fixed Term be
less than an amount equal to two percent of aggregate Base Rent and Percentage
Rent reserved hereunder for the immediately preceding Calculation Period, nor
shall it be greater than the amount determined by multiplying (i) the Applicable
CPI Percent by (ii) the aggregate Base Rent and Percentage Rent reserved
hereunder for the immediately preceding Calculation Period. In no event,
however, shall the Percentage Rent due and payable under this Lease with respect
to any Calculation Period during the Fixed Term be greater than the amount which
when added to the Base Rent reserved for such Calculation Period equals
$8,880,867.
(c) Notwithstanding anything to the contrary in this Lease,
Tenant shall have no obligation to pay Percentage Rent with respect to any
period during any Extended Term.
4.5 CONFIRMATION OF PERCENTAGE RENT. Tenant shall utilize or cause
to be utilized, an accounting system for the Property in accordance with GAAP,
which will accurately record and reflect all Gross Revenues for each Calculation
Period and each Calendar Quarter ending during such Calculation Period. Tenant
shall retain, for at least six years following the end of each Calculation
Period (and in all events until the reconciliation described in Section 4.6 for
such Calculation Period has been made), reasonably adequate records conforming
to the aforementioned accounting system showing all Gross Revenues for such
Calculation Period. Landlord, at its own expense, except as provided
hereinbelow, shall have the right, from time to time, to audit or cause to be
audited by its independent accountants or other independent authorized
representatives the information set forth in the Officer's Certificate regarding
Percentage Rent referred to in Section 4.6. In connection with such audits,
Landlord (or such accountants or authorized representatives, as the case may be)
may examine, audit and copy Tenant's records with respect thereto (including
supporting data and sales and excise tax returns), subject to any prohibitions
or limitations on disclosure of any such data under applicable law or
regulations, including, without limitation, any duly enacted "Patients' ▇▇▇▇ of
Rights" or similar legislation and such reasonable limitations as may be
necessary to preserve the confidentiality of the hospital-patient relationship
and the physician-patient privilege. If any such audit discloses a deficiency in
the payment of Percentage Rent, Tenant shall forthwith pay to Landlord the
amount of the deficiency, together with interest at the Overdue Rate, for the
period from the date when such payment should have been made to the date when
such payment is made. If any such audit discloses that Gross Revenues actually
received by Tenant for the Calculation Period to which such audit relates exceed
those reported by Tenant by more than five percent, Tenant shall pay all of
Landlord's costs, charges, fees and expenses related to such audit. Any
proprietary information obtained by Landlord pursuant to the provisions of this
Section 4.5 shall be treated as confidential, except that, subject to
appropriate confidentiality safeguards, such information may be used in any
litigation between Landlord and Tenant and may be disclosed by Landlord to
Owner, Landlord's lenders or prospective lenders. The obligations of Tenant
contained in this Section shall survive the expiration or earlier termination of
this Lease.
16
4.6 CERTIFICATES REGARDING PERCENTAGE RENT. Each payment of
Percentage Rent shall be delivered to Landlord, together with an Officer's
Certificate setting forth the calculation for the most of recently completed
Calendar Quarter and the Calculation Period to date (except in the event no
payment is due, in which case such Officer's Certificate shall be delivered to
Landlord at such time as such payment would otherwise be due). In addition,
within 90 days after each Calculation Period, Tenant shall deliver to Landlord
an Officer's Certificate reasonably acceptable to Landlord setting forth the
Gross Revenues, together with Tenant's computation of Percentage Rent paid (or
payable) for such Calculation Period. If the Percentage Rent due for any
Calculation Period, as shown in any such certificate, exceeds the sum of the
quarterly payments of Percentage Rent previously made by Tenant with respect to
such Calculation Period, Tenant promptly shall remit to Landlord the amount of
such deficit. If the Percentage Rent for such Calculation Period, as shown in
such certificate, is less than the sum of the quarterly payments of Percentage
Rent previously made by Tenant with respect to such Calculation Period, Landlord
shall credit such sum to the payment of Percentage Rent next due. The obligation
of Tenant to pay to Landlord Percentage Rent shall survive the expiration or
earlier termination of the Term, and a final reconciliation (taking into
account, among other relevant adjustments, any contractual allowances which are
accrued after such expiration or termination date but which relate to Gross
Revenues accrued prior to such expiration or termination date and Tenant's good
faith best estimate of the amount of any unresolved contractual allowances)
shall be made not later than seven years after expiration or termination. Tenant
shall advise Landlord within 60 days after such expiration or termination date
of Tenant's best estimate at that time of the approximate amount of such
adjustments, which estimate shall not be binding on Tenant.
4.7 ADDITIONAL CHARGES. Subject to Article XIII hereof, Tenant shall
pay and discharge as and when due and payable all Impositions and other amounts,
liabilities and obligations which Tenant assumes or agrees to pay under this
Lease. If Tenant fails or refuses to pay any of the items referred to in the
immediately preceding sentence, Tenant shall promptly pay and discharge every
fine, penalty, interest and cost which may arise or accrue for the non-payment
or late payment of such items. The aforementioned amounts, liabilities,
obligations, Impositions, fines, penalties, interest and costs are referred to
herein as "ADDITIONAL CHARGES." The Additional Charges shall constitute Rent
hereunder. If any Rent (but as to Additional Charges, only those which are
payable directly to Landlord) shall not be paid on its due date, Tenant shall
pay to Landlord on demand, as an Additional Charge, a late charge to the extent
permitted by law, computed at the Overdue Rate on the amount of such overdue
Rent from the due date of such Rent to the date such Rent is paid. Any payment
by Tenant of Additional Charges to Landlord pursuant to any requirement of this
Lease shall relieve Tenant of its obligation to pay such Additional Charges to
the entity to which they would otherwise be paid.
17
4.8 TRIPLE NET LEASE. This Lease is what is commonly called a "net
net net lease," it being understood that Landlord shall receive all Rent as
provided in this Article free and clear of any and all Impositions,
encumbrances, charges, obligations or expenses of any nature whatsoever in
connection with the ownership and operation of the Property. In addition to the
Rent reserved by this Article, except as expressly provided herein to the
contrary, Tenant shall pay to the parties respectively entitled thereto all
Impositions, insurance premiums, operating charges, maintenance charges,
construction costs and any other charges, costs and expenses which arise or may
be contemplated under any provisions of this Lease during the Term hereof. All
of such charges, costs and expenses shall constitute Rent, and upon the failure
of Tenant to pay any such costs, charges or expenses, Landlord shall have the
same rights and remedies as otherwise provided in this Lease for the failure of
Tenant to pay Rent. It is the intention of the parties hereto that this Lease
shall not be terminable for any reason by the Tenant and that Tenant shall in no
event be entitled to any abatement of or reduction in Rent payable under this
Lease except as herein expressly provided. Any present or future law to the
contrary shall not alter this agreement of the parties.
ARTICLE V.
IMPOSITIONS
5.1 PAYMENT OF IMPOSITIONS. Tenant shall pay, or cause to be paid,
all Impositions prior to delinquency and before any fine, penalty, interest or
cost may be added for non-payment (subject to Tenant's rights of contest
pursuant to the provisions of Article XIII). Such payments shall be made
directly to the authorities levying such Impositions, if possible. Tenant shall,
promptly upon request by Landlord, furnish to Landlord original or certified
copies of receipts or other reasonably satisfactory evidence of such payments.
Tenant's obligation to pay Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Property or any part thereof.
Notwithstanding the foregoing, if any such Imposition may, at the option of the
payor, lawfully be paid in installments (whether or not interest shall accrue on
the unpaid balance of such Imposition), Tenant may pay the same (and shall pay
any accrued interest on the unpaid balance of such Imposition) in installments,
and in such event shall pay such installments (subject to Tenant's right of
contest pursuant to the provisions of Article XIII) as the same become due and
before any fine, penalty, premium, further interest or cost is added thereto.
Landlord shall, at its expense and to the extent required or permitted by
applicable laws and regulations, prepare and file all returns with respect to
Landlord's net income, gross receipts, sales, use, single business, transaction
privilege, rent, ad valorem and franchise taxes (without waiving Landlord's
right to reimbursement therefore from Tenant to the extent that the same
constitutes Impositions), and with respect to taxes on Landlord's capital stock.
Tenant shall, at its expense, and to the extent required or permitted by
applicable laws and regulations, prepare and file all other tax returns and
reports with respect to any Imposition as may be required of Tenant by
governmental agencies or authorities. If any refund shall be due from any taxing
authority with respect to any Imposition paid by Tenant, the same shall be paid
over to and retained by Tenant unless an Event of Default shall have occurred
hereunder and be continuing, in which case such refund shall be paid over to and
retained by Landlord. Any such funds retained by Landlord due to an Event of
Default shall be applied as provided in Article XVII. Landlord and Tenant shall,
each upon a request by the other, provide such information as is maintained by
the party to whom the request is made with respect to the Property as may be
reasonably necessary to prepare any required returns or reports. If any
governmental agency or
18
authority classifies any property covered by this Lease as personal property,
Tenant shall file all personal property tax returns in such jurisdictions where
it may legally so file. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide to the other party,
promptly upon request, cost and depreciation records reasonably necessary for
filing returns for any property so classified as personal property. If Landlord
is legally required to file any personal property tax returns, Landlord shall
provide Tenant with copies of any assessment notices with respect thereto in
sufficient time for Tenant to file a protest with respect thereto if it so
elects pursuant to Article XIII. If no Event of Default is then continuing,
Tenant may at its option and sole cost and expense, upon Notice to Landlord,
protest, appeal or institute such other proceedings as Tenant reasonably may
deem appropriate to effect a reduction of real estate or personal property
assessments so long as such action is conducted in good faith and with due
diligence. In such event, Landlord, at Tenant's sole cost and expense, shall
fully cooperate with Tenant in such protest, appeal, or other action. Tenant
hereby agrees to indemnify, defend, save and hold Landlord harmless from and
against any and all losses, demands, claims, obligations and liabilities against
or incurred by Landlord in connection with such cooperation by Landlord.
▇▇▇▇▇▇▇▇ by either party to the other for reimbursement of personal property
taxes shall be accompanied by copies of a ▇▇▇▇ therefor and evidence of payments
thereof which identify the personal property with respect to which such payments
have been made.
5.2 NOTICE OF IMPOSITIONS. Landlord shall give prompt Notice to
Tenant of all Impositions payable by Tenant hereunder of which Landlord at any
time has knowledge. Notwithstanding the foregoing, however, Landlord's failure
to give any such Notice shall in no way diminish Tenant's obligations hereunder
to pay such Impositions, but Landlord shall be responsible for any fine, penalty
or interest resulting from its failure to give such notice and any default by
Tenant hereunder shall be obviated for a reasonable time (which shall not exceed
fifteen (15) Business Days) after Tenant receives Notice of any Imposition which
it is obligated to pay.
5.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed with respect to
the tax period during which the Term expires or terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such expiration or termination, so that Tenant is only obligated
to pay that portion of such Imposition(s) pertaining to the tax period within
the Term. The obligation of Tenant to pay its prorated share of Impositions
shall survive expiration or earlier termination of this Lease.
5.4 UTILITY CHARGES. Tenant shall pay or cause to be paid all
charges for all utilities, including but not limited to electricity, power, gas,
oil and water, used in the Property during the Term.
5.5 INSURANCE PREMIUMS. Tenant shall pay or cause to be paid all
premiums for insurance coverage required to be maintained pursuant to Article
XIV.
ARTICLE VI.
TERMINATION OR ABATEMENT OF LEASE
Without limiting the provisions of Section 4.8, Tenant, to the full
extent permitted by law, shall remain bound by this Lease in accordance with its
terms. Tenant shall not take any
19
action without the prior written consent of Landlord to modify, surrender or
terminate this Lease. The obligations of Landlord and Tenant hereunder shall be
separate and independent covenants and agreements, and Rent and all other sums
shall continue to be payable by Tenant hereunder in any event unless the
obligation of Tenant to pay the same terminates pursuant to the express
provisions of this Lease or by termination of this Lease (other than by reason
of an Event of Default). Without limiting the generality of the immediately
preceding sentence, Tenant shall not seek or be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against Rent, nor shall
the respective obligations of Landlord and Tenant be otherwise affected (except
as set forth in this Lease) by reason of: (a) any damage to, or destruction of,
all or any portion of the Property from whatever cause or any Taking of all or
any portion of the Property; (b) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of all or any portion of the Property, or the
interference with such use or with Tenant's quiet enjoyment of the Property by
any person or entity other than Landlord, or by reason of eviction by paramount
title; (c) any claim which Tenant has or may have against Landlord by reason of
any default or breach of any warranty by Landlord under this Lease or under 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 proceeding affecting
Landlord or any assignee or transferee of Landlord; or (e) 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). Except as specifically set
forth in this Lease to the contrary, Tenant hereby specifically waives all
rights, arising from any occurrence whatsoever, which (i) may now or hereafter
be conferred upon it by law to modify, surrender or terminate this Lease or quit
or surrender all or any portion of the Property or (ii) entitle Tenant to any
abatement, reduction, suspension or deferment of Rent or other sums payable by
Tenant hereunder.
ARTICLE VII.
OWNERSHIP OF PROPERTY
7.1 OWNERSHIP OF THE PROPERTY. As between Landlord and Tenant the
Property is, and throughout the Term shall continue to be, the property of
Landlord. Tenant has only the right to the exclusive possession and use of the
Property, upon the terms and subject to the conditions set forth in this Lease.
7.2 TENANT'S PERSONAL PROPERTY; SECURITY INTEREST. Tenant may, at
its expense, install, affix, assemble or place on the Property any items of
Tenant's Personal Property and may, subject to the conditions set forth below,
remove Tenant's Personal Property upon the expiration or earlier termination of
this Lease or in the ordinary course of business so long as any damage caused by
such removal shall be promptly repaired by Tenant. Notwithstanding the
foregoing, in order to secure the payment and the performance of all of Tenant's
obligations under this Lease, Tenant hereby grants to Landlord a security
interest in (and hereby pledges and collaterally assigns to Landlord) all of
Tenant's rights, title and interest in and to Tenant's Personal Property, all
whether now existing or hereafter acquired and hereby further agrees to execute
and deliver to Landlord, forthwith after demand by Landlord from time to time,
any security agreement in a form reasonably acceptable to Landlord and Tenant
and such additional writings and instruments, including without limitation
financing statements, as may be reasonably required by Landlord for the purpose
of effectuating the intent of this sentence and Tenant agrees that Landlord
shall have with respect to all Personal Property all rights and
20
remedies of a secured party under the Uniform Commercial Code as adopted in the
State, including, but not limited to, the right after the occurrence of an Event
of Default (and the expiration of any applicable cure periods, if any) to use or
sell Tenant's Personal Property, and Landlord shall not be required to remove
any of Tenant's Personal Property from the Property and in no event shall
Landlord be liable to Tenant for use of Tenant's Personal Property. Pending
disposition of Tenant's Personal Property by Landlord, Landlord shall be
entitled to use Tenant's Personal Property in connection with the operation (if
any) of the Facility. Tenant shall not permit the Property or Personal Property
to become subject to any liens or encumbrances of any kind without first
obtaining the prior written consent of Landlord, except for liens or
encumbrances permitted by Section 29.1(a). This Lease and the security interest
granted Landlord hereby shall be subordinate to any purchase money security
interest or capital lease permitted under Section 29.1(x). Landlord further
agrees that Tenant may lease Tenant's Personal Property, and Landlord shall
execute and deliver such agreements as may be reasonably required by any
permitted equipment lessor or the holder of a permitted purchase money security
interest to confirm that Landlord's lien on Tenant's Personal Property in
question is subordinate to the rights of such equipment lessor or lender and in
each case Tenant shall use commercially reasonable efforts to obtain from the
holder of the purchase money debt or lessor of Tenant's Personal Property, as
the case may be, its agreement to (i) notify Landlord or its successors and
assigns of any default by Tenant, (ii) allow Landlord or its successors and
assigns an opportunity to cure any default, (iii) recognize Landlord or its
successors and assigns as succeeding to Tenant's rights under the agreement in
question and to the undisturbed use of the equipment, provided that Landlord
fully complies with the tenors of such agreement, provided, that the failure by
Tenant, using reasonable efforts, to obtain the aforementioned agreements shall
not impair or deny Tenant's right to enter into leases involving Tenant's
Personal Property. Tenant shall provide and maintain on the Property during the
entire Term such Tenant's Personal Property as shall be necessary to operate the
Facility in compliance with all licensure and certification requirements, in
substantial compliance with all Legal Requirements and Insurance Requirements
and otherwise in accordance with customary practice in the health care industry
with respect to the Primary Intended Use or other uses then conducted on the
Property by Tenant and permitted hereunder. All Tenant's Personal Property not
removed by Tenant within thirty 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 and without any payment or obligation to account
to Tenant. Tenant shall, at its sole cost and expense, restore the Property to
the condition required by Section 10.1(d), including repair of all damage to the
Property caused by the removal of Tenant's Personal Property, whether effected
by Tenant or Landlord, except that caused by the gross negligence or willful
misconduct of Landlord.
ARTICLE VIII.
CONDITION AND USE OF PROPERTY
8.1 CONDITION OF THE PROPERTY. LANDLORD MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, AND SHALL BE SUBJECT TO NO LIABILITY WITH
RESPECT TO, NOR SHALL THE VALIDITY OF THIS LEASE BE AFFECTED BY ANY CLAIM,
DEMAND OR CAUSE OF ACTION REGARDING THE PROPERTY OR ANY PART THEREOF, EITHER AS
TO ITS DESIGN, CONDITION OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OR
OTHERWISE, OR AS TO THE
21
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT. TENANT
ACKNOWLEDGES AND AGREES THAT THE PROPERTY HAS BEEN INSPECTED BY TENANT, HAS BEEN
APPROVED FOR OCCUPANCY BY ALL GOVERNMENT AGENCIES HAVING JURISDICTION THEREOVER
AND IS SATISFACTORY TO IT IN ALL RESPECTS, INCLUDING FOR ITS PRIMARY INTENDED
USE, AND THAT TENANT IS LEASING THE PROPERTY "AS IS" IN ITS PRESENT CONDITION,
AND SUBJECT TO (A) THE EXISTING STATE OF TITLE, INCLUDING ALL COVENANTS,
CONDITIONS, RESTRICTIONS, EASEMENTS, LICENSES, LEGAL REQUIREMENTS, MORTGAGES,
DEEDS OF TRUST, ASSIGNMENTS OF LEASES, FIXTURE FILINGS AND OTHER FINANCING
INSTRUMENTS AND ANY AND ALL OTHER MATTERS OF RECORD AND OTHERWISE EXCEPT TO THE
EXTENT ANY OF THE FOREGOING WERE CAUSED OR CREATED BY LANDLORD, AND (B) MATTERS
WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE PROPERTY OR BY AN ACCURATE
SURVEY OF THE LAND. TENANT WAIVES ANY AND ALL CLAIMS, DEMANDS AND CAUSE OR
CAUSES OF ACTION HERETOFORE OR HEREAFTER ARISING AGAINST LANDLORD WITH RESPECT
TO THE CONDITION OF THE PROPERTY.
8.2 USE OF THE PROPERTY.
(a) Throughout the entire Term, Tenant shall obtain and shall
maintain in effect all permits, licenses, authorizations and approvals needed to
use and operate the Property and the Facility for Tenant's Primary Intended Use
in accordance with all Legal Requirements.
(b) Throughout the entire Term, Tenant shall use or cause to
be used and operated continuously the majority of the Property in accordance
with its Primary Intended Use and for such other uses as may be necessary in
connection with or incidental to such use. Tenant shall not use the Property or
any portion thereof for any other purpose whatsoever without the prior written
consent of Landlord. The parties agree that Landlord's consent will not be
deemed to be unreasonably withheld if, in the reasonable opinion of Landlord,
the Tenant's proposed use of the Property will significantly alter the character
or purpose or detract from the value or operating efficiency of the Property, or
significantly impair the revenue producing capability of the Property. With such
exceptions as are not material in the aggregate, no use shall be made or
permitted to be made of the Property and no acts shall be done which violate any
Legal Requirements or Insurance Requirements or which will cause the
cancellation of any insurance policy covering the Property or any part thereof,
nor shall Tenant sell or otherwise provide to patients therein, or permit to be
kept, used or sold in, about or under the Property any article which may be
prohibited by the Legal Requirements or Insurance Requirements. Tenant shall, at
its sole cost, comply with all of the requirements pertaining to the Property of
any insurance board, association, organization or company necessary for the
maintenance of the insurance required pursuant to this Lease.
(c) Tenant shall not commit or suffer to be committed any
waste nor shall Tenant cause or permit any nuisance on the Property.
22
(d) Tenant shall neither suffer nor permit all or any portion
of Tenant's Personal Property or the Property, including the 2002 Project and
any other Capital Addition whether or not financed or paid for by Landlord, to
be used in such a manner as (i) may impair the owner's title thereto or to any
portion thereof or (ii) may make possible a claim or claims of adverse usage,
adverse possession or implied dedication of all or any portion of the Property
to the public, except as is necessary in the ordinary and prudent operation of
the Property.
8.3 LANDLORD TO GRANT EASEMENTS. Subject to the provisions of this
Section 8.3, Landlord shall, 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 sole
cost and expense (but subject to the approval of Landlord, which approval shall
not be unreasonably withheld or delayed), (a) grant easements and other rights
in the nature of easements burdening the Property for the benefit of real
property adjacent to the Land or for the exclusive use and enjoyment of persons
or entities specified by Tenant in such request but only as may be necessary for
the operations of the Facility; (b) dedicate or transfer unimproved portions of
the Property for road, highway or other public purposes but only as may be
necessary for the operation of the Facility; (c) execute petitions to have the
Property annexed to any municipal corporation or utility district; and (d)
execute amendments to any covenants, conditions, restrictions and equitable
servitudes affecting the Property, but only if each such grant, dedication,
transfer, petition or amendment is not detrimental to the proper conduct of the
business of Tenant on the Property and does not materially reduce the value of
the Property in Landlord's reasonable discretion.
8.4 HAZARDOUS SUBSTANCES.
(a) All operations or activities upon, or any use or occupancy
of the Property, or any portion thereof, by Tenant, or any agent, contractor,
employee or subtenant of Tenant shall at all times during the Term be in all
respects in strict compliance with any and all Legal Requirements and Insurance
Requirements relating to Hazardous Substances, including, but not limited to,
the discharge and removal of Hazardous Substances. Tenant shall not sell or
otherwise provide to patients therein or permit to be kept, used or sold in,
about, on or under the Property any Hazardous Substances or any other article
which may be prohibited by the Legal Requirements or Insurance Requirements,
except that Tenant may store, handle, process, maintain or dispose of any
Hazardous Substances necessary to the Primary Intended Use and any other uses
permitted hereunder in strict compliance with the Legal Requirements and the
Insurance Requirements. Tenant shall pay all costs required properly to use,
handle and dispose of all Hazardous Substance and shall keep the Property free
and clear of any lien relating to Hazardous Substances which may be imposed
pursuant to the Legal Requirements and Insurance Requirements. Neither Tenant,
nor any agent, contractor, employee or subtenant of Tenant, shall allow the
manufacture, storage, voluntary transmission or presence of any Hazardous
Substances over or upon the Property (except in strict compliance with the Legal
Requirements and Insurance Requirements). Landlord, at its sole cost and
expense, shall have the right at any time with notice to Tenant (but not more
often than once in any calendar year) to conduct an environmental audit of the
Property and Tenant shall cooperate in the conduct of such environmental audit.
Furthermore, neither Tenant, nor any agent, contractor, employee or any
subtenant of Tenant, shall install or permit to be installed in or on the
Property friable asbestos or any substance containing asbestos or similarly
deemed hazardous by governmental authorities or the Legal Requirements
respecting such materials, and with respect to any such materials
23
currently present in the Property, shall promptly either (x) remove any material
which such Legal Requirements deem hazardous and require be removed, at its sole
cost and expense, or (y) otherwise comply with the Legal Requirements. Tenant
shall promptly notify Landlord in writing of any order, receipt of any notice of
violation or noncompliance with any applicable law, rule, regulation, standard
or order, any threatened or pending action by any regulatory agency or other
governmental authority or any claims made by any third party relating to
Hazardous Substances on, emanations on or from, releases on or from, or threats
of releases on or from any of the Property and shall promptly furnish Landlord
with copies of any correspondence, notices or legal pleadings in connection
therewith. Landlord shall have the right, but shall not be obligated, to notify
any governmental authority of any state of facts which may come to its attention
with respect to Hazardous Substances on, released from or emanating on or from
any part of the Property.
(b) Without limiting Section 22.1, Tenant shall, with the
right to participate in the applicable proceedings, indemnify, protect, defend
(with counsel reasonably approved by Landlord) and hold Landlord, and the
directors, officers, shareholders, employees and agents of Landlord, harmless
from any claims (including, but not limited to, third party claims for personal
injury or real or personal property damage), or natural resources damage,
actions, administrative proceedings (including informal proceedings), judgments,
damages, punitive damages, penalties, fines, costs, liabilities (including sums
paid in settlements of claims), interest or losses, including reasonable
attorneys' and paralegals' fees and expenses (including any such fees and
expenses incurred in enforcing the covenants and obligations of Tenant under
this Lease or collecting any sums due hereunder), consultant fees, and expert
fees, together with all other costs and expenses of any kind or nature ("COSTS")
that arise directly or indirectly from or in connection with the presence,
suspected presence, release or threatened release of any Hazardous Substance in
or into or at, on, about, under or within the Property, to the extent that such
Costs are not attributable to the gross negligence or willful misconduct of
Landlord. The indemnification provided in this Section 8.4(b) shall specifically
apply to and include claims or actions brought by or on behalf of employees or
contractors of Tenant or employees or contractors of Tenant, and, solely for
purposes of this indemnity, Tenant hereby expressly waives any immunity to which
Tenant may otherwise be entitled under any industrial or workers' compensation
laws. In the event Landlord shall suffer or incur any such Costs, Tenant shall
pay to Landlord the total of all such Costs suffered or incurred by Landlord
upon demand therefor by Landlord; provided, that Landlord shall not settle any
claims for such Costs or confess judgment thereto without the approval of
Tenant, which approval shall not unreasonably be withheld, and, provided,
further, that in the event Tenant fails to approve any such settlement or
confession of judgment, Tenant shall provide Landlord with sufficient security
for such Costs, as determined by Landlord in its sole discretion. Without
limiting the generality of the foregoing, the indemnification provided by this
Section 8.4(b) shall specifically cover Costs, including capital, operating and
maintenance costs, incurred in connection with any investigation or monitoring
of site conditions, any cleanup, containment, remedial, removal or restoration
work required or performed by any federal, state or local governmental agency or
political subdivision or performed by any non-governmental entity or person
because of the presence, suspected presence, release or suspected release of any
Hazardous Substance in or into the air, soil, groundwater, surface water or soil
vapor at, on, about, under or within the Property (or any portion thereof), and
any claims of third parties for loss or damage due to such Hazardous Substance,
to the extent that such Costs are not attributable to the gross negligence or
24
willful misconduct of Landlord. In addition, such indemnification shall include,
but not be limited to, all loss or damage sustained by Landlord or any third
party to whom Landlord may be liable due to any Hazardous Substance (i) that is
present or suspected to be present on, about, under or within the Property or
(ii) that migrates, flows, percolates, diffuses or in any way moves onto, into
or under the air, soil, groundwater, surface water or soil vapor at, on, about,
under or within the Property, irrespective of whether such Hazardous Substance
shall be present or suspected to be present on, about, under or within the
Property as a result of any release, discharge, disposal, dumping, spilling or
leaking (accidental or otherwise) onto the Property or caused by any person or
entity; provided, however, that the indemnification obligation arising out of
clauses (i) and (ii) above shall apply solely to the extent that such loss or
damage results from events occurring during the Term of this Lease and are not
attributable to the gross negligence or willful misconduct of Landlord.
(c) In the event any investigation or monitoring of site
conditions or any clean-up, containment, restoration, removal or other such work
("REMEDIAL WORK") is required under any applicable Legal Requirements,
including, but not limited to, any judicial order or order of any governmental
entity, or in order to comply with any agreements affecting the Property because
of, or in connection with, any occurrence or event described in Section 8.4(b),
Tenant shall perform or cause to be performed the Remedial Work in compliance
with such law, regulation, order or agreement and subject to the final review
and approval of Landlord, which approval shall not be unreasonably withheld or
delayed; provided, however, that Tenant may withhold such performance pursuant
to a good faith dispute regarding the application, interpretation or validity of
the law, regulation, order, or agreement, subject to the requirements of Section
8.4(d); provided, further, however, that Landlord shall reasonably cooperate
with Tenant to the extent necessary to deliver such authorizations as may be
required in order for Tenant to perform its obligations under this Section
8.4(c). All Remedial Work shall be performed by one or more contractors,
selected by Tenant and approved in advance in writing by Landlord, which
approval shall not be unreasonably withheld or delayed, and under the
supervision of a consulting engineer, selected by Tenant and approved in advance
in writing by Landlord, which approval shall not be unreasonably withheld or
delayed. All costs and expenses of Remedial Work shall be paid by Tenant,
including, but not limited to, the charges of such contractors and consulting
engineer, and Landlord's reasonable attorneys' and paralegals' fees and other
costs incurred in connection with the monitoring or review of such Remedial
Work. In performing its obligations hereunder, Tenant shall be subrogated to any
rights Landlord may have under any indemnifications or warranties from any
present, future or former owners, tenants or occupants or users of the Property,
to the extent available. In the event Tenant shall fail timely to commence,
diligently to prosecute to completion or to complete to Landlord's reasonable
satisfaction any necessary Remedial Work, Landlord may, but shall not be
required to, cause such Remedial Work to be performed, and all costs and
expenses thereof paid or incurred by Landlord in connection therewith shall be
Costs within the meaning of Section 8.4(b). Landlord's disapproval of or
dissatisfaction with any Remedial Work shall be deemed to be reasonable so long
as Landlord's requirements for any Remedial Work are consistent with the then
current requirements and standards imposed by prudent institutional investors in
connection with their management of real property. All such Costs shall be due
and payable upon demand therefor by Landlord. If Tenant fails to perform its
obligations hereunder, Landlord shall be subrogated to any rights Tenant may
have under any indemnifications from any present, future or
25
former owners, tenants or other occupants or users of the Property relating to
the matters covered by this Section 8.4.
(d) Notwithstanding any provision of this Section 8.4 to the
contrary, but without limiting the provisions of Article XIII, Tenant shall be
permitted to contest or cause to be contested, subject to compliance with the
requirements of this Section 8.4(d) and Article XIII, by appropriate action any
Remedial Work requirement, and Landlord shall not perform such requirement on
its behalf, so long as Tenant has given Landlord written notice that Tenant is
contesting or shall contest or cause to be contested the same, and Tenant
actually contests or causes to be contested the application, interpretation or
validity of the law, regulation, order or agreement pertaining to the Remedial
Work by appropriate proceedings conducted in good faith with due diligence,
provided that such contest shall not subject Landlord to civil liability
whatsoever. Tenant shall give such security or assurances as may be reasonably
required by Landlord to insure compliance with the Legal Requirements pertaining
to the Remedial Work (and payment of all costs, expenses, interest and penalties
in connection therewith) and to prevent any sale, forfeiture or loss by reason
of such nonpayment or noncompliance.
(e) All of the obligations of Tenant under this Section 8.4
shall survive expiration or earlier termination of this Lease. The provisions of
this Section may be enforced by Landlord without regard to any other rights and
remedies Landlord may have against Tenant under this Lease and without regard to
any limitations on Landlord's recourse as may be otherwise provided in this
Lease. Tenant agrees that, notwithstanding any provision in this Lease to the
contrary, a separate action or actions to enforce Tenant's obligations under
this Section 8.4 may be brought and prosecuted against Tenant. Any costs and
other payments required to be paid by Tenant to Landlord under this Section 8.4
which are not paid within fifteen days of demand therefor shall thereupon be
considered delinquent. Tenant shall pay to Landlord immediately upon demand
therefor interest on such overdue amounts, from the date when due until paid, at
the Overdue Rate.
ARTICLE IX.
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS
9.1 COMPLIANCE WITH LEGAL REQUIREMENTS, INSURANCE REQUIREMENTS AND
INSTRUMENTS. Subject to the rights of Tenant as provided in Article XIII
relating to permitted contests, Tenant, at its sole cost and expense, shall
promptly (a) comply with all applicable Legal Requirements and Insurance
Requirements with respect to the use, operation, maintenance, repair and
restoration of the Property, whether or not compliance therewith shall require
structural change in any of the Improvements or interfere with the use and
enjoyment of the Property, and (b) procure, maintain and comply with all
appropriate licenses, certificates of need, provider agreements and other
permits, licenses, franchises and authorizations required for any use of the
Property and Tenant's Personal Property then being made, and for the proper
erection, installation, operation and maintenance of the Property or any part
thereof, including without limitation any Capital Additions.
9.2 COVENANTS REGARDING LEGAL REQUIREMENTS. Tenant covenants and
agrees that it shall not use the Property or Tenant's Personal Property for any
purpose which violates the Legal Requirements. Tenant has obtained or duly
applied for and shall maintain all
26
appropriate licenses, certificates, permits, provider agreements, franchises,
authorizations and approvals necessary to operate the Property in its customary
manner for the Primary Intended Use, and any other use conducted on the Property
by Tenant and permitted by Landlord hereunder. Tenant may, however, contest the
legality or applicability of any such Legal Requirement as provided in Article
XIII hereof.
9.3 REPRESENTATIONS AND WARRANTIES. As a material inducement to
Landlord to enter into this Lease with Tenant, Tenant hereby makes the following
representations and warranties to Landlord that:
(a) Tenant is a corporation duly organized and validly
existing under the laws of the State of Delaware and is in good standing under
the laws of the State of Utah, and has all requisite and necessary power and
authority to execute and deliver this Lease to Landlord, and any other documents
referenced or required herein to be executed and delivered by Tenant to Landlord
hereunder; and
(b) this Lease, and any other, documents referenced or
required herein to be executed and delivered by Tenant to Landlord hereunder, do
not and shall not violate any instrument, judgment, decree or order to which
Tenant is a party or by which Tenant is bound.
ARTICLE X.
CONDITION OF THE PROPERTY
10.1 MAINTENANCE AND REPAIR.
(a) Tenant, at its sole cost and expense, shall keep the
Property and all private roadways, sidewalks and curbs appurtenant thereto and
which are under Tenant's control in good order, condition and repair and, except
as otherwise expressly provided to the contrary in Article XIV, XV, or XVI with
reasonable promptness, shall make all necessary and appropriate repairs and
replacements thereto of every kind and nature, whether interior or exterior,
structural or nonstructural, ordinary or extraordinary, patent or latent,
foreseen or unforeseen, or arising by reason of a condition existing prior to
the commencement of the Term of this Lease and regardless of the cause
necessitating repair. Tenant shall also be obligated at its expense to make all
repairs, modifications and renovations necessary to comply with all licensing,
safety and health and building code, regulations applicable to the Property so
that it can be legally operated for its Primary Intended Use. All repairs by
Tenant shall, to the extent reasonably achievable, be at least equal in quality
to the original work. Tenant shall not take or omit to take any action, the
taking or omission of which might materially impair the value or the usefulness
of all or any portion of the Property for the Primary Intended Use. Tenant shall
give Landlord ten days' prior Notice of any repair, replacement, modification or
renovation pursuant to this Section the cost of which exceeds $250,000 and,
prior to commencing any such repair, replacement, modification or renovation,
shall provide to Landlord either (i) a lien payment and completion bond in form
and substance and issued by a surety reasonably acceptable to Landlord or (ii) a
payment and completion guaranty in form and substance and executed by a
guarantor reasonably acceptable to Landlord, as Tenant may elect.
Notwithstanding the foregoing, if Tenant obtains Landlord's prior written
approval of the general contractor performing such repair, replacement,
27
modification or renovation, the foregoing requirements to obtain a completion
bond or completion guaranty shall be deemed waived.
(b) Landlord shall not under any circumstances be required to
make any repairs, replacements, alterations, restorations or renewals of any
nature or description to the Property, whether interior or exterior, structural
or non-structural, ordinary or extraordinary, patent or latent, foreseen or
unforeseen, or to make any expenditure whatsoever with respect thereto, in
connection with this Lease, nor shall Landlord under any circumstances be
required to maintain the Property in any other way, except as specifically
provided herein. Tenant hereby waives, to the fullest extent permitted by law,
the right to make repairs at the expense of Landlord pursuant to any law or
equitable principle in effect at the time of the execution of this Lease or
hereafter enacted. Landlord shall have the right to give, record and post, as
appropriate, notices of non-responsibility under any mechanic's lien laws now or
hereafter existing, and any other notices of a similar nature that Landlord may
reasonably elect to give, record or post from time to time during the Term. If
reasonably possible, any such notices shall be posted so as not to interfere
with Tenant's business.
(c) Nothing contained in this Lease, and no action or inaction
by Landlord, shall be deemed or construed in any manner 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 all or any
portion of the Property 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 a manner as would permit
the making of any claim against Landlord with respect thereto, or to make any
agreement that may create, or in any way may be the basis for the assertion of
any right, title, interest, lien, claim or other encumbrance upon the estate of
Landlord in all or any portion of the Property.
(d) Unless Landlord conveys title to any of the Property to
Tenant pursuant to the provisions of this Lease, Tenant shall, upon the
expiration or earlier termination of this Lease, vacate and surrender the
Property to Landlord in the condition in which the Property was originally
received from Landlord, except as repaired, rebuilt, restored, altered or added
to as permitted or required by the provisions of this Lease, and except for
ordinary wear and tear (but subject to the obligation of Tenant under this
Section to maintain the Property in good order, condition and repair during the
entire Term of this Lease) and except for damage or destruction by casualty or
condemnation which Tenant is not required to repair by the provisions of this
Lease.
10.2 ENCROACHMENTS AND RESTRICTIONS. If any of the Improvements
shall at any time during the Term violate any agreement or condition contained
in any lawful covenant, condition, restriction, equitable servitude or other
agreement affecting all or any portion of the Property, or shall impair the
rights of others under any easement or right-of-way burdening the Property,
provided that such agreement, covenant, condition, restriction or easement has
not been created by Landlord, then promptly upon the request of Landlord, or at
the behest of any person affected by violation or impairment and in such case,
in the event of an adverse final determination, Tenant shall either (a) obtain
valid and effective waivers or settlements of all
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claims, liabilities and damages resulting from each such encroachment, violation
or impairment, whether the same shall affect Landlord or Tenant, provided that
Landlord shall consent to all such settlements or waivers or (b) make such
changes in the Improvements and take such other actions as Tenant in the
reasonable and good faith exercise of its judgment deems practicable to remove
such encroachment and to end such violation or impairment, including, if
necessary, the alteration of any of the improvements provided that Landlord
shall consent to all such alterations and the changes are not the result of any
condition created solely by Landlord. With respect to any encroachments
identified on the ALTA surveys of the Property delivered by ▇▇▇▇▇▇▇▇▇▇ to
Landlord's predecessor-in-interest pursuant to the Purchase Agreement, Landlord
agrees that it shall not require Tenant to obtain a waiver of or otherwise
correct any such encroachment unless and until an affected third party notifies
Landlord of its objection to any such encroachment. In any event Tenant shall,
subject to Landlord's consent, take all such actions as may be necessary in
order to be able to continue the operation of the Improvements for the Primary
Intended Use substantially in the manner and to the extent the Improvements were
operated prior to the assertion of such violation or impairment. Tenant shall
not be responsible for any claims covered by Landlord's title insurance policy,
and Landlord agrees that any proceeds recovered under such title insurance
policy shall be made available to Tenant to remedy the claimed violation or
restriction.
ARTICLE XI.
CAPITAL ADDITIONS
11.1 CONSTRUCTION OF CAPITAL ADDITIONS.
(a) If no Event of Default shall have occurred and be
continuing, Tenant may, subject to the terms and conditions contained in this
Article, construct or install Capital Additions on the Property. All Capital
Additions costing in excess of $250,000 shall require the prior written approval
of Landlord, which approval shall not be unreasonably withheld or delayed as
expressly provided herein. It shall not be unreasonable for the Landlord to
withhold its consent if any appraisal obtained by Landlord shows that the fair
market value of the Capital Addition as proposed to be built is less than the
cost of the Capital Additions. Tenant shall not be permitted to create any
Encumbrance on the Property in connection with any such Capital Addition,
without Landlord's prior written consent (which consent shall not be
unreasonably withheld or delayed).
(b) Prior to commencing construction of any Capital Addition,
Tenant shall 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, permits, licenses, contracts and other
information concerning the proposed Capital Addition as Landlord may reasonably
request. Without limiting the generality of the foregoing, such proposal shall
indicate the approximate projected cost of constructing such Capital Addition,
the use or uses to which it will be put and a good faith estimate of whether any
reduction in the Gross Revenues will be caused by such Capital Addition. Tenant
shall not commence to build any Capital Addition unless Tenant shall first have
provided Landlord with either (i) a lien payment and completion bond in form and
substance and issued by a surety reasonably acceptable to Landlord in an amount
equal to 150% of the reasonably anticipated cost of such Capital Additions or
(ii) a payment and completion guaranty in form and substance and executed by a
guarantor reasonably
29
acceptable to Landlord. Notwithstanding the foregoing, if Tenant obtains
Landlord's prior written approval of the general contractor making such Capital
Addition, the foregoing requirements to obtain a completion bond or completion
guaranty shall be deemed waived.
(c) No Capital Addition shall be made which would tie in or
connect any Improvements with any other improvements on property adjacent to the
Property (and not part of the Property), including without limitation, tie-ins
of buildings or other structures or utilities unless Tenant shall have obtained
the prior written consent of Landlord, which consent Landlord may grant,
withhold or delay in its sole discretion. All proposed Capital Additions shall
be architecturally integrated and consistent with the Property.
(d) Notwithstanding anything to the contrary in this Section
11.1, Tenant covenants and agrees to commence, complete and perform timely all
obligations of Tenant with respect to the 2002 Project as set forth in the Work
Letter.
11.2 CAPITAL ADDITIONS FINANCED OR PAID FOR BY LANDLORD.
(a) Tenant may request that Landlord provide or arrange
financing for any Capital Addition expected to cost in excess of $250,000 by
providing to Landlord such information about such Capital Addition as Landlord
may reasonably request. Landlord may, but shall be under no obligation to, meet
the request, and within 30 days of receipt of such information, Landlord shall
notify Tenant as to whether it will finance the proposed Capital Addition and,
if so, the terms and conditions upon which it would do so, including the terms
of any amendment to this Lease (including, without limitation, the increase in
Base Rent to compensate Landlord for the additional funds advanced by it).
Notwithstanding the foregoing, Landlord shall not finance the cost of any
proposed Capital Addition if such cost is less than $250,000. In no event shall
the portion of the material, labor charges and fixtures of the Capital Additions
Cost be less than seventy-five percent (75%) of the total amount of such cost.
Tenant shall, within thirty (30) days of Tenant's receipt of Landlord's Notice
that Landlord will finance the proposed Capital Addition, give Landlord a notice
accepting or rejecting Landlord's proposed financing.
(b) If Landlord finances the Capital Additions Cost of the
proposed Capital Addition, Tenant shall provide Landlord with the following
(unless waived by Landlord in writing):
(i) prior to any disbursement of funds, such
information, certificates, licenses, permits, authorizations, evidence of zoning
and other documents reasonably requested by Landlord, or by any third party
lender with whom Landlord has agreed or may agree to provide financing, as
necessary to confirm that Tenant will be able to use the Capital Addition upon
completion thereof in accordance with the Primary Intended Use for such Capital
Addition, including all required federal, state or local government licenses,
permits, authorizations and approvals;
(ii) prior to any disbursement of funds, an Officer's
Certificate and, if requested, a certificate from Tenant's architect, setting
forth in reasonable detail the projected (or actual, if available) Capital
Additions Cost;
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(iii) prior to or coincident with the first disbursement
of funds, an amendment to this Lease (together with a memorandum thereof in
recordable form), duly executed and acknowledged, in form and substance
reasonably satisfactory to Landlord and Tenant, providing for an increase in the
Base Rent on the terms and conditions determined in accordance with Section
11.2(a), along with the legal description of any land obtained in connection
with such Capital Addition and such other provisions as may be necessary or
appropriate;
(iv) prior to or coincident with the first disbursement
of funds, a construction and development agreement setting forth the terms for
Landlord's financing and Tenant's construction of such Capital Additions;
(v) prior to or coincident with payment for any land
obtained in connection with such Capital Addition, a deed conveying to Landlord
title to such land, or, if applicable, a ground lease on terms acceptable to
Landlord, which title or leasehold shall be free and clear of any liens,
encumbrances or other exceptions to or matters affecting title except those
approved by Landlord, and, upon completion of the Capital Addition, a final
as-built survey thereof reasonably satisfactory to Landlord;
(vi) during construction and following completion of the
Capital Addition, endorsements to any outstanding policy of title insurance
covering the Property, or commitments therefor reasonably satisfactory in form
and content to Landlord (x) updating the same without any additional exception
except such as may be reasonably permitted by Landlord and (y) adding to its
coverage any land acquired or leased in connection with such Capital Addition
and 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) following the advance of funds, if appropriate,
(x) an extended coverage 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 (y) a
lender's policy of title insurance reasonably satisfactory in form and substance
to Landlord and to any Lender with whom Landlord has agreed or may agree to
provide financing; and
(viii) during or following the advancement of funds,
prints of architectural and engineering drawings relating to the Capital
Addition and such other certificates (including, but not limited to,
endorsements increasing the insurance coverage, if any, at the time required by
Section 14.1), 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, construction and
development agreement and any other instruments as may be reasonably required by
Landlord and any lender from whom Landlord has agreed or may agree to obtain
financing.
(c) Any new mortgage or supplement to any existing mortgage
entered into by Landlord with any lending institution covering the Property or
any land referred to in
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subparagraph (iv) above shall be subject to the rights of Tenant under this
Lease, as this Lease may be amended from time to time.
(d) If Landlord finances the cost of any such Capital
Addition, Tenant will reimburse Landlord for all reasonable fees, costs and
expenses (including fees and costs of in-house and outside attorneys) incurred
by Landlord in connection therewith.
(e) Notwithstanding anything to the contrary in this Section
11.2, the provisions of this Section 11.2 shall have no application to the 2002
Project.
11.3 CAPITAL ADDITIONS PAID FOR BY TENANT. If Landlord does not
finance the cost of a Capital Addition under the terms of Section 11.2 and
Tenant elects nevertheless to construct or cause to be constructed such Capital
Addition, (i) Tenant shall not commence any construction with respect to such
Capital Addition without first obtaining the lien payment and completion bond or
payment and completion guaranty described in Section 11.1, unless the same is
not required by the terms of Section 11.1, (ii) Tenant shall pay the cost of
such Capital Addition, and there shall be no adjustment in the Rent or
Landlord's Total Investment by reason of any such Capital Addition; provided,
however, that the foregoing shall not apply to the construction of the 2002
Project.
11.4 DISPOSITION OF CAPITAL ADDITIONS UPON EXPIRATION OR TERMINATION
OF LEASE. Upon the expiration or earlier termination of this Lease, all Capital
Additions shall pass to and become the property of Landlord, free and clear of
all encumbrances. Notwithstanding anything to the contrary in this Lease, upon
the expiration or earlier termination of this Lease, Landlord shall not be
obligated to reimburse Tenant for any replacements, rebuildings, alterations,
additions, substitutions, and/or improvements that are surrendered as part of or
with the Property or Capital Additions.
11.5 NON-CAPITAL ADDITIONS. Tenant shall have the right to make
additions, modifications or improvements to the Property which are not Capital
Additions from time to time as it, in its reasonable discretion, may deem to be
desirable for the Property's uses and purposes permitted hereunder, provided
that such action does not (i) significantly and adversely alter the character or
purpose or detract in any manner from the value or operating efficiency of the
Property, (ii) significantly impair the revenue-producing capability of the
Property, or (iii) materially and adversely affect the ability of Tenant to
comply with the provisions of this Lease, and provided that, if the cost of such
non-capital additions, modifications or improvements exceed $250,000, Tenant
gives Landlord ten days' prior Notice of such addition, modification or
improvement. The cost of such non-capital additions, modifications or
improvements to the Property shall be paid by Tenant, and all such 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.
11.6 SALVAGE. All materials which are scrapped or removed in
connection with the construction of either Capital Additions permitted by
Section 11.1, non-capital additions permitted by Section 11.5, or repairs
required by Article X shall be or become the property of the party which paid
for, or provided the financing for such work.
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11.7 CONFLICTS WITH WORK LETTER. The provisions of the Work Letter
shall govern any conflicting provisions of this Article XI.
ARTICLE XII.
LIENS
Subject to the provisions of Article XIII relating to permitted
contests, Tenant shall not directly or indirectly create or allow to remain and
shall promptly discharge at its expense any lien, encumbrance, security
interest, attachment, title retention agreement or claim upon the Property or
any attachment, levy, claim or encumbrance in respect of Rent, not including,
however, (a) this Lease, (b) Permitted Encumbrances, (c) restrictions, liens and
other encumbrances which are created by, in favor of, or consented to in writing
by Landlord or expressly permitted under Section 29.1(a) hereof, (d) liens for
taxes or assessments or other governmental charges and levies if not yet
delinquent, or if in good faith being contested or litigated, provided that
Tenant maintains a reserve against such taxes, assessments, charges or levies in
an amount deemed adequate by Landlord and furnishes security reasonably
satisfactory to Landlord for the payment of such taxes, assessments, charges and
levies, (e) subleases in existence as of the Commencement Date, and subleases
permitted by Article XXIII, (f) liens for Impositions or for sums resulting from
noncompliance with Legal Requirements so long as the same are not yet payable or
are payable without the addition of any fine or penalty and are in the process
of being contested as permitted by Article XIII, (g) liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either disputed or not yet
due, provided that (i) the payment of such sums shall not be postponed for more
than five 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 (ii) any such liens are in the process of being
contested as permitted by Article XIII, (h) any liens which are the
responsibility of Landlord pursuant to the provisions of Article XXVII, are
directly created or permitted by Landlord, or are filed against the Property as
a result of Landlord's acts or omissions and not related to or a consequence of
Tenant's acts or omissions (i) purchase money security interests on equipment
constituting Tenant's Personal Property and leases of such equipment, (j)
judgment and other similar liens, provided that the execution or other
enforcement of such liens is effectively stayed and the claims secured thereby
are being actively contested in good faith and by appropriate proceedings in
accordance with the requirements of this Lease, (k) liens constituting renewals,
extensions or replacements of liens described in the foregoing clauses, but
only, in the case of each such renewal, extension or replacement lien, to the
extent of the original principal amount of the obligation so secured, and to the
extent that such renewal, extension or replacement lien is limited to all or
part of :he property that secured the lien extended, renewed or replaced.
ARTICLE XIII.
CONTESTS
Tenant, on its own or on Landlord's behalf (or in Landlord's name),
but at Tenant's sole cost and expense, upon Notice to Landlord, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
without prejudice to Landlord's rights hereunder 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
33
otherwise permitted by Article XII, 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 Property, (b) neither the Property nor any
Rent therefrom nor any part thereof or interest therein would be subject to any
risk of being sold, forfeited, attached, foreclosed, or lost, (c) in the case of
a Legal Requirement, Landlord would not be in any danger of incurring any lien,
charge, fine, penalty, or other 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
$100,000 then, in any such event, Tenant shall deliver to Landlord an Officer's
Certificate to the effect set forth in clauses (a), (b) and (c), to the extent
applicable, (e) in the case of a Legal Requirement 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 Property or the Rent by reason
of such non-payment or noncompliance, which security may be a guaranty in form
and substance acceptable to Landlord and executed by a guarantor acceptable to
Landlord: provided, however, the provisions of this Article shall not be
construed to permit Tenant to contest the payment of Rent (except as to contests
concerning the method of computation or the basis of levy of any Imposition) or
any other sums payable by Tenant to Landlord hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIV 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 XIV.
INSURANCE
14.1 GENERAL INSURANCE REQUIREMENTS. Tenant shall at all times
maintain policies of insurance insuring the Property, and all property located
in or on the Property including, without limitation, all Capital Additions,
Tenant's Personal Property and all other property located in or on the Property,
all satellite clinics operated by Tenant on the Property; and the business
operated by Tenant, against the kind of risks and in the amounts of coverage
described below. All such insurance shall be written by companies of recognized
responsibility authorized to conduct an insurance business in the State. All
such insurance (other than insurance with respect to Tenant's Personal Property)
shall name Tenant as the insured, and Landlord shall be named as an additional
insured on all liability type policies. Proceeds of all property, loss of rental
and business interruption type policies shall be payable to Landlord or Tenant
as provided in Article XV. All such insurance shall name as an additional
insured or loss payee, as appropriate, the holder (a "FACILITY MORTGAGEE") of
any mortgage, deed of trust or other security agreement securing any Encumbrance
placed on the Property in accordance with the provisions of Article XXVII
("FACILITY MORTGAGES") by way of a standard form of mortgagee's loss payable
endorsement. Any loss adjustment or other settlement in excess of
34
$250,000 shall require the written consent of Landlord and each Facility
Mortgagee and any other lender of Landlord or its Affiliates ("LANDLORD LENDER")
having any contractual insurance requirements which would impact on the
insurance requirements of this Lease to the extent so required and Landlord has
given Tenant written notice thereof. Certificates or, if requested by Landlord,
certified copies, of all insurance policies obtained pursuant to this Article
shall be deposited with Landlord and, if requested, with any Facility
Mortgagees) or Landlord Lender(s). The policies on the Property, including the
Improvements, Fixtures and Tenant's Personal Property, shall insure against the
following risks:
(a) loss or damage by fire, vandalism and malicious mischief,
extended coverage perils ("all risk"), and all physical loss perils insurance
including but not limited to sprinkler leakage, in an amount not less than 100%
of the then full replacement cost thereof (as defined below in Section 14.2) or
such lesser amount as is approved by Landlord in writing;
(b) loss or damage by explosion of steam boilers, pressure
vessels or similar apparatus, now or hereafter installed in the Facility in such
amounts with respect to any one accident as may be reasonably requested by
Landlord from time to time of not less than full replacement cost;
(c) business interruption or loss of rental under a rental
value insurance policy covering risk of loss during the lesser of the first 12
months of reconstruction or the actual reconstruction period necessitated by the
occurrence of any of the hazards described in Sections 14.1(a) or 14.1(b), in an
amount sufficient to prevent Landlord from becoming a coinsurer;
(d) claims for personal injury or property damage under a
policy of comprehensive general public liability insurance or commercial general
liability insurance. Such coverage shall have a minimum combined single limit of
liability of at least $5 million and a general aggregate limit of at least $5
million, with $5 million umbrella coverage. Any such policy shall be written to
apply to all bodily injury, property damage, personal injury and other covered
losses, however occasioned, subject to standard policy exclusions, occurring
during the policy term, and shall be endorsed to provide that such coverage
shall be primary and that any insurance maintained by Landlord shall be excess
insurance only. Such coverage shall also contain endorsements: (i) deleting any
employee exclusion on personal injury coverage; (ii) including employees as
additional insureds; (iii) deleting any liquor liability exclusion; and (iv)
providing for coverage of employer's automobile non-ownership liability. All
such insurance shall provide for severability of interests; shall provide that
an act or omission of one of the named insureds shall not reduce or avoid
coverage to the other named insureds; and shall afford coverage for all claims
based on acts, omissions, injury and damage, which claims occurred or arose (or
the onset of which occurred or arose) in whole or in part during the policy
period. Tenant shall also maintain employers liability insurance with a limit of
no less than $1 million per employee and $1 million per occurrence and workers'
compensation insurance as required by law;
(e) claims arising out of medical malpractice in an amount not
less than $2 million for each person and $2 million for each occurrence;
35
(f) flood (to the extent Improvements constituting a part of
the Property are located in whole or in part within an area designated by an
appropriate agency or authority of the United States as a flood plain) and such
other hazards and in such amounts as may be customary for comparable properties
in the area and as may be available from insurance companies, insurance pools,
or other appropriate companies authorized to do business in the State;
(g) during any period during which any Capital Addition is
under construction, course of construction insurance and all risks insurance in
such amounts as Landlord shall reasonably require;
(h) such other hazards and in such amounts as may be customary
for comparable properties in Salt Lake City, Utah and as may be available from
insurance companies, insurance pools, or other appropriate companies authorized
to do business in the State at rates which are economically practicable in
relation to the risks covered; and
(i) any other insurance in such form and in such amounts as
Landlord tray reasonably request.
14.2 REPLACEMENT COST. The term "full replacement cost" as used
herein shall mean the actual replacement cost of the Property requiring
replacement from time to time, less exclusions provided in a normal fire
insurance policy (which, on the Commencement Date is agreed to be not more than
$60,000,000). If either party believes that full replacement cost (the then
replacement cost less such exclusions) has increased or decreased at any time
during the Lease Term, it may have such full replacement cost redetermined by
the insurer then providing the largest amount of fire insurance coverage carried
on the Property.
14.3 ADDITIONAL INSURANCE. In addition to the insurance described in
Section 14.1, throughout the Term Tenant shall maintain such additional
insurance as may be required from time to time by Landlord provided that the
types and amounts of any such additional insurance required by Landlord is then
customarily maintained by the operators of similar health care facilities in
Salt Lake County, Utah. Tenant shall further maintain adequate workers'
compensation insurance coverage for all persons employed by Tenant on the
Property. Such workers' compensation insurance shall be in accordance with the
requirements of applicable local, state and federal law.
14.4 WAIVER OF SUBROGATION. All property insurance policies carried
by Landlord or Tenant covering the Property, the Fixtures, the Facility or
Tenant's Personal Property shall expressly waive any right of subrogation on the
part of the insurer against the other party. Landlord and Tenant agree that the
respective policies of insurance carried by them will include such waiver
clauses or endorsements so long as the same are available and obtainable without
extra cost. If such clauses and endorsements are only available upon the payment
of an extra charge, the other party, at its election, may pay the same, but
shall not be obligated to do so; provided that the Tenant shall at all times be
obligated to carry the policies of insurance required under this Article
regardless of whether the waiver of subrogation required under this Section 14.4
is available.
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14.5 FORM OF INSURANCE. All of the policies of insurance referred to
in this Article shall be written in a form, and issued by insurance companies,
reasonably satisfactory to Landlord. Landlord agrees that it will not
unreasonably withhold or delay its approval as to the form of the policies or
the insurance companies selected by Tenant. Tenant shall pay all of the premiums
therefor, and shall deliver an original or certified copy of any policy, or
renewal thereof, to Landlord, any Facility Mortgagee and any Landlord Lender at
least 10 days prior to the expiration of the existing policy to which such
renewal policy relates. If Tenant either fails to effect such insurance as
herein required or to pay the premiums therefor, or to deliver such policies or
certified copies thereof to Landlord at the times required, Landlord shall be
entitled, but shall have no obligation, to effect such insurance and pay the
premiums therefor, which premiums shall be repayable to Landlord upon demand
therefor in a Notice, and failure by Tenant to repay the same shall constitute
an Event of Default within the meaning of Section 17.1(d). Each insurer
mentioned in this Article 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 (and to any Facility Mortgagee and Landlord Lender of which
Tenant has notice, if required) 30 days prior written notice before such policy
or policies expire, are altered or are cancelled.
14.6 CHANGE IN LIMITS. If either party shall at any time deem the
limits of the personal injury or property damage public liability insurance or
malpractice insurance then carried by Tenant to be insufficient or excessive,
the parties shall endeavor in good faith to agree promptly upon the proper and
reasonable limits for such insurance to be carried, and such insurance shall
thereafter be carried with the limits thus agreed upon until further change
pursuant to the provisions of this Section.
14.7 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this Article, 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 so long as (a) the
coverage afforded to Landlord is not reduced or diminished or otherwise altered
from that which would exist under a separate policy meeting all other
requirements of this Lease by reason of the use of such blanket policy of
insurance and (b) the requirements of this Article are otherwise satisfied.
14.8 NO SEPARATE INSURANCE. Tenant shall not obtain separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article XIV to be furnished by, or which may reasonably be
required to be furnished by Tenant, nor shall Tenant increase the amount 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
named therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this Lease. Tenant
shall immediately notify Landlord of the obtaining of any such separate
insurance or of the increasing of any of the amounts of the then existing
insurance.
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ARTICLE XV.
INSURANCE PROCEEDS
15.1 HANDLING OF INSURANCE PROCEEDS. Subject to Section 15.4 hereof,
all proceeds from any policy of insurance required by Article XIV of this Lease
shall be paid to Landlord and held in trust by Landlord (subject to the
provisions of Section 15.7) and shall be made available for reconstruction,
repair or replacement, as the case may be, of any damage to or destruction of
all or any portion of the Property to which such proceeds relate, and shall be
paid out by Landlord from time to time subject to the provisions hereof for the
cost of such reconstruction, repair or replacement. Any unused portion shall be
retained by Landlord free and clear upon completion of such repair and
restoration but shall be applied by Landlord against Tenant's obligations for
Rent next coming due under this Lease. If neither Landlord nor Tenant is
required or elects to repair and restore, and the Lease is terminated without
purchase by Tenant as described in Section 15.2(a), then all such insurance
proceeds shall be retained by Landlord. All salvage resulting from any risk
covered by insurance shall belong to Landlord, except that any salvage relating
to Tenant's Personal Property shall be the property of Tenant.
15.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
(a) Except as provided in Section 15.7, if during the Term a
portion of the Property is totally destroyed or materially damaged by a risk
covered by the insurance described in Article XIV so that the Facility is
rendered unsuitable for its Primary Intended Use (taking into account all
relevant factors, including but not limited to the number of useable beds, the
amount of square footage reasonably available for use by Tenant and the type and
amount of Gross Revenues lost) (the "IMPACTED FACILITY"), Tenant shall at its
option either (i) restore the Impacted Facility to substantially the same
condition as existed immediately before the damage or destruction and this Lease
shall continue in full force and effect or (ii) offer to purchase the Property
from Landlord for a purchase price equal to the greater of the Minimum
Repurchase Price or the Fair Market Value of the Property immediately prior to
such damage or destruction. If Tenant restores the Impacted Facility, the
insurance proceeds shall be paid out by Landlord to Tenant or its designee from
time to time as reasonably requested by Tenant to pay for the reasonable costs
of such restoration and any excess proceeds remaining after such restoration
shall be retained by Tenant.
(b) Except as provided in Section 15.7, if during the Term,
the Improvements or Fixtures are partially destroyed due to a risk covered by
the insurance described in Article XIV but the Impacted Facility is not thereby
rendered unsuitable for the Primary Intended Use, in Tenant's reasonable opinion
(taking into account all relevant factors, including but not limited to the
number of useable beds, the amount of square footage reasonably available for
use by Tenant and the type and amount of Gross Revenues lost), Tenant shall
restore the Impacted 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, that if Tenant cannot, with
reasonable diligence and within a reasonable time, obtain all government
approvals, including building permits, licenses, conditional use permits and any
certificates of need, necessary to perform all required repair and restoration
work and to operate the Impacted Facility in substantially the same manner and
for the Primary Intended Use, Tenant
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shall either (i) offer to purchase the Property for a purchase price equal to
the greater of the Minimum Repurchase Price or the Fair Market Value immediately
prior to such damage or destruction or (ii) continue to operate under the Lease
which shall remain in full force and effect and Landlord shall be entitled to
retain the insurance proceeds, less the amount needed to restore the Property so
that the portion of the Facility unaffected by the casualty can be used as a
complete architectural unit. If Tenant shall make such offer and Landlord does
not accept the same within 120 days of Landlord's receipt of such offer, Tenant
may either (x) withdraw such offer, in which case this Lease shall remain in
full force and effect and Tenant shall proceed to restore the Impacted Facility
as soon as reasonably practicable to substantially the same condition as existed
immediately before such damage or destruction, or (y) terminate this Lease after
recovery by Landlord of all insurance proceeds and the payment by Tenant of any
shortfall in cash. If Tenant so restores the Impacted Facility, insurance
proceeds shall be paid out by Landlord from time to time to pay for the
reasonable costs of such restoration, and any excess proceeds remaining after
such restoration shall be retained by Landlord.
(c) If Tenant elects to repair or restore any damage or
destruction to the Property and the cost of any such repair or restoration
exceeds the amount of proceeds received by Landlord from the insurance required
under Article XIV, Tenant shall contribute any and all excess amounts necessary
to repair or restore the Facility. Tenant shall provide Landlord with a payment
or completion guaranty in form and substance reasonably acceptable to Landlord.
If no acceptable guarantor is available, Tenant shall pay Landlord the amount of
such difference, which amount shall be held in trust, together with any other
insurance proceeds, for application to the cost of repair and restoration as
such repair and restoration progresses.
(d) If Landlord accepts Tenant's offer to purchase the
Property as set forth in this Section 15, this Lease shall terminate as to the
Property upon payment of the purchase price therefor and Landlord shall
thereupon remit to Tenant all insurance proceeds pertaining to the Property less
Landlord's reasonable expenses, including attorneys' fees, and assign Landlord's
rights in any uncollected insurance proceeds to Tenant.
15.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT
COVERED BY INSURANCE. Except as provided in Section 15.7 below, if during the
Term the Facility is totally destroyed or materially damaged (i) from a risk not
covered by insurance described in Article XIV but that would have been covered
if Tenant carried the insurance customarily maintained by, and generally
available to, the operators of reputable facilities which are used for the
Primary Intended Use in the region in which the Facility is located, (ii) from a
risk for which insurance coverage is voided due to any act or omission by
Tenant, or (iii) as result of an earthquake, whether or not such damage or
destruction renders the Impacted Facility unsuitable for its Primary Intended
Use (taking into account all relevant factors, including but not limited to the
number of useable beds, the amount of square footage reasonably available for
use by Tenant and the type and amount of Gross Revenues lost), Tenant shall
restore the Impacted Facility to substantially the same condition as existed
immediately before such damage or destruction and not terminate this Lease.
Except as provided in Section 15.7 below, if during the Term the Facility is
totally destroyed or materially damaged from a risk not covered by insurance
described in Article XIV and not described in clause (i), (ii) or (iii) of the
immediately preceding sentence, whether or not such Facility is thereby rendered
unusable for its Primary Intended Use (taking into account all relevant factors,
including, but not limited to, the number of useable
39
beds, the amount of square footage reasonably available for use by Tenant and
the type and amount of Gross Revenues lost), Tenant shall, at its option, either
(i) restore the Impacted Facility to substantially the same condition as existed
immediately prior to such damage or destruction and this Lease shall continue in
full force and effect or (ii) offer to purchase the Property from Landlord for a
purchase price equal to the greater of the Minimum Repurchase Price or the Fair
Market Value of the Property immediately prior to such damage or destruction. If
this Lease continues in full force and effect, Tenant shall continue to pay
Rent, in the manner and at the times herein specified, including the full
amounts of Base Rent, Percentage Rent and Additional Charges, provided that
during the period of restoration when the Facility is not suitable for its
Primary Intended Use, Tenant shall pay Percentage Rent at a rate equal to the
Percentage Rent for the immediately preceding Fiscal Year during which
Percentage Rent accrued.
15.4 PAYMENT OF PROCEEDS ON TENANT'S PROPERTY AND CAPITAL ADDITIONS
PAID BY TENANT. Notwithstanding any provision herein, all insurance proceeds
payable by reason of any loss of or damage to any of Tenant's Personal Property
or Capital Additions paid for by Tenant shall be paid to Tenant and Tenant shall
hold such insurance in trust to pay the cost of repairing or replacing damaged
Tenant's Personal Property or Capital Additions paid for by Tenant; provided,
however, that if the damaged Tenant's Personal Property or Capital Additions
paid for by Tenant were no longer necessary to Tenant's operations prior to
their destruction, Tenant shall not be obligated to repair or replace them.
15.5 RESTORATION OF TENANT'S PROPERTY. Upon any restoration of the
Impacted Facility as provided in Section 15.2 or 15.3, Tenant shall either (i)
at Tenant's sole cost and expense, restore all alterations and improvements made
by Tenant, Tenant's Personal Property and all Capital Additions paid for by
Tenant, or (ii) at Tenant's sole cost and expense, replace such alterations and
improvements, Tenant's Personal Property or Capital Additions with improvements
or items of the same or better quality and utility in the operation of the
Property; provided, however, that if the damaged Tenant's Personal Property or
Capital Additions paid for by Tenant were no longer necessary to Tenant's
operations prior to their destruction, Tenant shall not be obligated to replace
them.
15.6 ABATEMENT OF RENT. Unless and until Tenant shall pay the
purchase price for the Property to Landlord in accordance with this Article XV
(and this Lease is thereby terminated or otherwise terminated as provided in
this Article XV), in the event of any damage or destruction of the Property,
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 not be
abated by reason of any damage or destructions to the Property or the subsequent
loss of Landlord's entitlement to the Property.
15.7 DAMAGE NEAR END OF TERM. Notwithstanding the foregoing, if
damage to or destruction of the Facility occurs during the last eight (8) months
of the Fixed Term or the last twelve (12) months of any Extended Term, if Tenant
has not elected to extend such term, and if such damage or destruction cannot be
fully repaired and restored within six months immediately following the date of
loss, then Tenant shall have the right to terminate this Lease by giving written
Notice thereof to Landlord within 30 days after the date of such damage or
destruction, in which event, Landlord shall collect any insurance proceeds to
which it is entitled,
40
and Tenant shall assign Tenant's rights in any additional insurance proceeds. In
the event that the Facility is totally destroyed or damaged (i) from a risk not
covered by insurance described in Article XIV but that would have been covered
if Tenant carried the insurance customarily maintained by, and generally
available to, the operators of reputable facilities which are used for the
Primary Intended Use in the region in which the Facility is located, (ii) from a
risk for which insurance coverage is voided due to any act or omission by
Tenant, or (iii) as a result of an earthquake, whether or not such damage or
destruction renders the Facility unsuitable for its Primary Intended Use (taking
into account all relevant factors, including but not limited to the number of
useable beds, the amount of square footage reasonably available for use by
Tenant and the type and amount of Gross Revenues lost), then Tenant shall pay to
Landlord a sum equal to the amount reasonably necessary to repair such damage or
destruction if Tenant elects to terminate the Lease. Notwithstanding anything to
the contrary in this Section 15.7, if any damage or destruction of the Facility
occurs during the last eight (8) months of the Fixed Term, then the foregoing
provisions shall not apply unless neither Landlord nor Tenant has elected to
extend the Term of this Lease for the first (1st) Extended Term as provided in
Section 3.2 by the date that is ten (10) Business Days after the date of such
damage or destruction.
15.8 TERMINATION OF OPTION TO PURCHASE. Any termination of this
Lease pursuant to this Article shall cause any option to purchase granted to
Tenant under this Lease and the right to extend the Term by any Extended Term to
be terminated and to be without further force or effect.
15.9 WAIVER. Tenant hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction of the
Facility which Landlord is obligated to restore or may restore under any of the
provisions of this Lease.
ARTICLE XVI.
CONDEMNATION
16.1 DEFINITIONS.
For purposes of this Article XVI the following terms have the
meanings specified in this Section 16.1.
(a) "CONDEMNATION" means (a) the exercise of any governmental
power, whether by legal proceedings or otherwise, by a Condemnor, or (b) a
voluntary sale or transfer by Landlord with Tenant's consent (provided no Event
of Default has occurred and is continuing at such time) to any Condemnor, either
under threat of condemnation or while legal proceedings for condemnation are
pending.
(b) "DATE OF TAKING" means the earlier of: (i) the first date
the Condemnor has the right to immediate possession of the property being
condemned, or (ii) the date on which Tenant's quiet possession is materially
disturbed by a Condemnation proceeding such that it is impractical to continue
operations of the Facility.
(c) "AWARD" means all compensation, sums and any other value
awarded, paid or received on a total or partial condemnation.
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(d) "CONDEMNOR" means any public or quasi-public authority, or
private corporation or individual, having the power of condemnation.
16.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is
any Taking of all or any part of the Property or of any interest in this Lease
by Condemnation, the rights and obligations of the parties with respect to such
Condemnation shall be determined by this Article.
16.3 TOTAL TAKING. If title to the whole of Tenant's interest in the
Property shall be taken or condemned by any Condemnor, this Lease shall cease
and terminate as of the Date of Taking. If title to less than the whole of the
Property shall be so taken or condemned, which nevertheless renders the Property
unsuitable for its Primary Intended Use, in Tenant's reasonable opinion (taking
into account all relevant factors, including but not limited to the number of
useable beds, the amount of square footage reasonably available for use by
Tenant, and the type and amount of Gross Revenues lost), Tenant and Landlord
each shall have the option by Notice to the other, at any time prior to the
taking of possession by, or the date of vesting of title in, such Condemnor,
whichever first occurs, to terminate this Lease as of such earlier to occur
date. Upon such earlier to occur date, if such Notice has been given, this Lease
shall cease and terminate. In either of such events, all Rent paid or payable by
Tenant hereunder shall be apportioned as of the date the Lease shall have been
so terminated as aforesaid.
16.4 ALLOCATION OF PORTION OF AWARD. Subject to the rights of any
Facility Mortgagee, the total Condemnation Award made with respect to all or any
portion of the Property shall be distributed to Landlord and Tenant ratably in
accordance with the value of their respective interests in and to such Property
as hereafter set forth in this Section 16.4. All of the Award shall be the sole
and exclusive property of Landlord and shall be payable to Landlord, subject to
the rights of any Facility Mortgagee; provided that any portion of such
Condemnation Award which is expressly allocated by the Condemnor to the taking
of Tenant's leasehold interest in the Property, any loss of business by Tenant
during the remaining Term of this Lease, the taking of Tenant's Personal
Property, or any removal and relocation expenses of Tenant in any such
proceedings shall be the sole property of and payable to Tenant; provided,
however, that in any event Landlord shall receive from such Condemnation Award,
subject to the rights of the Facility Mortgagees, no less than the greater of
the Fair Market Value of the portion of the Property subject to such Taking
prior to the institution of the Condemnation and Landlord's Total Investment
with respect to such property. In any Condemnation proceedings Landlord and
Tenant each shall seek their own Award in conformity herewith, at their own
expense.
16.5 PARTIAL TAKING. If title to less than the whole of the Property
shall be taken or condemned, and the Property is still suitable for its then
Primary Intended Use, in Tenant's reasonable opinion, or if Tenant or Landlord
shall be entitled (but shall not elect) to terminate this Lease as provided in
Section 16.3 hereof, Tenant at its own cost and expense shall with all
reasonable diligence restore the untaken portion of any Improvements so that
such improvements shall constitute a complete architectural unit of the same
general character and condition (as nearly as may be possible under the
circumstances) as the Improvements existing immediately prior to such
Condemnation or Taking. Landlord and Tenant shall each contribute to the cost of
restoration that part of their Award specifically allocated to such restoration,
if any (or if no such specific allocation is made, a just, fair and reasonable
portion of its Award as reasonably determined by Landlord and Tenant or by
arbitration in accordance with Section
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28.14 if Landlord and Tenant are unable to agree within 30 days of the Award),
together with any and all severance and other damages awarded for any taken
Improvements; provided, however, the amount of such contribution shall not
exceed such cost. If such amounts are not sufficient to cover the cost of
restoration Landlord and Tenant shall contribute any additional amounts needed
for restoration in proportion to the amounts already contributed by them,
provided that in no event shall Landlord contribute any amount to such
restoration in excess of its Award. Thereafter, any excess restoration cost
shall be borne solely by Tenant. Landlord agrees that Tenant shall be entitled
to an equitable abatement of Base Rent in the event of a partial taking of the
Property, but such abatement shall be strictly limited to any amount of excess
Award paid to Landlord after the restoration cost has been paid.
16.6 TEMPORARY TAKING. If the whole or any part of the Property or
of Tenant's interest under this Lease shall be taken or condemned by any
Condemnor for its temporary use or occupancy for a period of not more than one
hundred-eighty (180) days, this Lease shall not terminate, and Tenant shall
continue to pay, in the manner and at the times herein specified, the full
amounts of Base Rent, Percentage Rent, if any, and Additional Charges, provided
that during any such Temporary Taking Tenant shall pay Percentage Rent at a rate
equal to the average Percentage Rent during the three immediately preceding
Fiscal Years (or if three Fiscal Years shall not have elapsed, the average
during the last preceding Fiscal Years occurring during the Term). Except to the
extent Tenant may be prevented from so doing pursuant to the terms of the order
of the Condemnor, Tenant shall continue to perform and observe all of the other
terms, covenants, conditions and obligations hereof on the part of the Tenant to
be performed and observed as though such Taking or Condemnation had not
occurred. Upon any such Taking or Condemnation described in this Section, the
entire amount of any such Award made for such Taking or Condemnation allocable
to the Term of this Lease, whether paid by way of damages, Rent or otherwise,
shall be paid to Tenant. Tenant covenants that upon the termination of any such
Taking or Condemnation set forth in this Section, Tenant will, at its sole cost
and expense (subject to any contribution by Landlord as set forth in Section
16.5), restore the Property as nearly as may be reasonably possible to the
condition in which the same was immediately prior to such Taking or
Condemnation, unless such period of temporary use or occupancy shall expire less
than six months prior to termination of this Lease or extend beyond the
expiration of the Term, in which case Tenant shall not be required to make such
restoration.
ARTICLE XVII.
DEFAULTS AND REMEDIES
17.1 EVENTS OF DEFAULT. Any one or more of the following events
shall be deemed an "EVENT OF DEFAULT" hereunder:
(a) Tenant shall fail to pay Rent payable by Tenant under this
Lease when the same becomes due and payable;
(b) Any representation or warranty made by the Tenant in
connection with this Lease or the Security Agreement or the Absolute Assignment
of Subleases and Rents, or in any report, certificate, financial statement or
other instrument furnished in connection herewith or therewith, from time to
time, whether under Article XXIV of this Lease or otherwise, shall prove to be
false or misleading in any material respect, provided, that Tenant shall have a
43
period of 15 days after Notice thereof from Landlord to take whatever action
that may be necessary such that the subject representation or warranty would no
longer be false or misleading;
(c) 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 15 days after Notice thereof from Landlord, unless such
failure cannot with due diligence be cured within a period of 15 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;
(d) Tenant shall: (i) admit in writing its inability to pay
its debts generally as they mature, (ii) make a general assignment for the
benefit of its creditors, (iii) have appointed a trustee, receiver or liquidator
pursuant to an order of a court of competent jurisdiction of itself or of the
whole or any part of its property which is not discharged in sixty (60) days,
(iv) terminate or suspend its business, (v) have any of its assets executed
upon, attached or judicially seized and such execution, attachment or seizure is
not vacated or set aside within sixty (60) days;
(e) Tenant shall: (i) file a voluntary case under any
applicable bankruptcy, insolvency, debtor relief or other similar law or statute
of the United States of America or any State thereof now or hereinafter in
effect ("BANKRUPTCY LAWS"), or (ii) consent to or acquiesce in the appointment
of a receiver, liquidator, assignee, trustee, custodian or sequestrator (or
similar official of itself or of the whole or any part of its property) which is
not discharged in sixty (60) days;
(f) Tenant shall, on a petition filed against it under any
applicable Bankruptcy Laws, be adjudicated a bankrupt or have an order for
relief thereunder entered against it or fail to oppose any such proceeding or if
a court of competent jurisdiction shall enter an order or decree appointing,
without its consent, a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of itself or of the whole or any part of its
property and such judgment, order or decree shall not be vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof;
(g) Tenant shall be liquidated or dissolved, or shall
voluntarily begin proceedings toward such liquidation or dissolution, or shall,
in any manner, permit the sale or divestiture of substantially all of its assets
in a manner not permitted by this Lease;
(h) an Event of Default under the terms of the Security
Agreement, or the Absolute Assignment of Subleases and Rents shall occur and be
continuing (after the expiration of any cure periods, if any, set forth
therein);
(i) Tenant shall fail to make when due any scheduled payment
with respect to indebtedness unless such failure is being diligently contested
in good faith and such failure shall continue for five days following its
receipt of written advice with respect thereto, if the effect of such failure
could reasonably be anticipated to have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of Tenant;
44
(j) any Notification Event described in Section 29.2(e) shall
occur, which is reasonably likely to result in liability to the Tenant having a
material adverse effect on the business, operations, properties or condition
(financial or otherwise) of Tenant and Tenant shall fail to cure (to Landlord's
reasonable satisfaction) the events or state of affairs constituting such
Notification Event within thirty days after notice thereof was due from Tenant
pursuant to Section 29.2(e);
(k) the estate or interest of Tenant in the 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 60 days after
commencement thereof or 30 days after Notice thereof from Landlord (unless
Tenant shall be contesting such lien or attachment in good faith in compliance
with this Lease;
(l) except to the extent impractical due to damage,
destruction or a partial Condemnation, Tenant voluntarily ceases to operate the
majority of the Property for its Primary Intended Use and other uses permitted
under this Lease;
(m) Except as otherwise permitted under Article XXIII, Iasis
should cease to own, beneficially or as of record, directly or indirectly
through one or more subsidiaries, all of the capital stock of Tenant.
No Event of Default (other than a failure to make a payment of
money) shall be deemed to exist under clause (c) above during any time the
curing thereof is prevented by an Unavoidable Delay, provided that upon the
cessation of such Unavoidable Delay, Tenant immediately shall remedy such
default.
Tenant shall immediately notify Landlord of the occurrence of any
event set forth in subsections 17.1(b) through (m) of which Tenant has actual
knowledge and the failure to do so shall constitute an immediate Event of
Default.
17.2 CERTAIN REMEDIES. Upon any Event of Default, Landlord shall
have all legal, equitable and contractual rights, powers and remedies provided
either in this Lease, at common law or in equity, or by statute or otherwise.
Without limiting the foregoing, if an Event of Default occurs, is
not cured within the period, if any, for any such cure provided in Section 17.1,
and is continuing, Tenant shall, to the extent permitted by law and if required
by Landlord so to do, immediately surrender to Landlord the Property and quit
the same. To the extent permitted by applicable law, Landlord may enter upon and
repossess the Property by reasonable force, summary proceedings, ejectment or
otherwise, and may remove Tenant and all other persons and any and all personal
property from the Property subject to rights of any residents or patients and to
any requirement of law. Tenant hereby assents to and waives all legal notice to
vacate the Property. Landlord may so terminate Tenant's right of possession and
may repossess the Premises without liability for trespass or conversion, without
demand or notice of any kind to Tenant and without terminating this Lease, in
which event Landlord may, but shall be under no obligation to, relet the same
for the account of Tenant for such rent and upon such terms as shall be
satisfactory to Landlord. Neither the repossession of the Property, the failure
of Landlord to relet the Property, nor the
45
reletting of all or any portion of the Property, shall relieve Tenant of its
liability and obligation hereunder, all of which shall survive any such
repossession or reletting.
17.3 TERMINATION AND DAMAGES.
(a) Upon the occurrence of any Event of Default, Landlord
shall have the right, to the extent permitted by applicable law, to terminate
this Lease and Tenant's right to possession of the Property by any lawful means,
upon ten days' Notice of such termination (which Notice shall run concurrent
with any Notice required to be given by Section 17.1 and during which time
Tenant shall have the opportunity to cure any such Event of Default), in which
case, if Tenant shall fail to cure all Events of Default within the foregoing
ten-day period, this Lease shall terminate and all of Tenant's rights hereunder
shall cease and Tenant shall immediately surrender possession of the Property to
Landlord and, in such event, Landlord shall be entitled to recover from Tenant
all damages incurred by reason of Tenant's default. Furthermore, Landlord shall
also have all rights and remedies provided in Section 17.2 and Section 17.3(d).
If any litigation is commenced with respect to any alleged default under this
Lease, the prevailing party in such litigation shall receive, in addition to its
damages incurred, its reasonable attorneys' fees, and all costs and expenses
incurred in connection therewith. Neither the termination of this Lease pursuant
to this Section 17.3, the repossession of the Property, the failure of Landlord,
notwithstanding reasonable good faith efforts to relet the Property, nor the
reletting of all or any portion of the Property, shall relieve Tenant of its
liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. Upon any such termination, Tenant shall
forthwith pay to Landlord all Rent due and payable with respect to the Property
to and including the date of such termination. Thereafter Tenant shall promptly
pay to Landlord the full amount of Landlord's damages suffered by reason of
Tenant's breach of this Lease, which damages shall include, but are not limited
to the sum of:
(i) the worth at the time of the award of the unpaid
Rent earned at the time of such termination, repossession or reletting;
(ii) the worth at the time of the award, of the amount
by which the unpaid Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided;
(iii) the worth at the time of the award of the amount
by which the unpaid Rent for the balance of the Term after the time of the award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; and
(iv) any other amount necessary to compensate Landlord
for the costs incurred in regaining possession and reletting the Property,
including, but not limited to, brokerage fees and commissions, construction
costs, rent concessions, and all legal costs and expenses.
(b) the "worth at the time of the award" of the amounts
referred to in clauses (i) and (ii) of subsection (a) of this Section 17.3 shall
be computed by allowing interest at the Overdue Rate. The "worth at the time of
the award" of the amount referred to in clause (iii) of subsection (a) of this
Section 17.3 shall be determined by a Court having jurisdiction thereof
46
using the lowest rate of capitalization (highest present worth) reasonably
applicable at the time of such determination and allowed by applicable law.
(c) Percentage Rent, for the purposes of this Section 17.3,
shall be a sum equal to the Percentage Rent for the Fiscal Year immediately
preceding the Fiscal Year in which the termination, re-entry or repossession
takes place and during which Percentage Rent accrued.
(d) Alternatively, if Landlord does not elect to terminate
this Lease, then Tenant shall pay to Landlord, at Landlord's option, as and for
agreed damages for such Event of Default without termination of Tenant's right
to possession of the Property or any portion thereof, each installment of said
Rent and other sums payable by Tenant to Landlord under the Lease as the same
becomes due and payable, together with interest at the Overdue Rate from the
date when due until paid, and Landlord may enforce, by action or otherwise, any
other term or covenant of this Lease.
17.4 APPLICATION OF FUNDS. Any payments which are made to and
received by Landlord under any of the provisions of this Lease during the
continuance of any Event of Default shall be applied to Tenant's obligations in
the order which Landlord may determine or as may be prescribed by applicable
laws.
17.5 FAILURE TO CONDUCT BUSINESS. For the purpose of determining
rental loss damages or Percentage Rent, if Tenant fails to conduct business upon
the Property, and thereby causes the exact damages or the amount of Percentage
Rent to be unascertainable, Percentage Rent for such period shall be deemed to
be the Percentage Rent during the immediately preceding Fiscal Year during which
Percentage Rent accrued.
17.6 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT. If an Event of
Default occurs under this Lease and is not cured within the time provided under
this Lease with respect to such Event of Default, Landlord, without waiving or
releasing any obligation of Tenant, and without waiving any such Event of
Default, may (but shall be under no obligation to) at any time thereafter cure
such default for the account and at the expense of Tenant, and may, to the
extent permitted by law, enter upon the Property for such purpose and take all
such action thereon as, in Landlord's sole judgment, may be necessary or
appropriate with respect thereto. No such entry by Landlord on the Property
shall be deemed an eviction of Tenant. All sums so paid by Landlord and all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses, in each case as permitted by law) so incurred,
together with a late charge thereon (to the extent permitted by law) computed at
the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Landlord until the date reimbursed, shall be reimbursed by Tenant to
Landlord on demand. The obligations of Tenant and rights of Landlord contained
in this Article shall survive the expiration or earlier termination of this
Lease.
17.7 WAIVER. If this Lease is terminated pursuant to the provisions
of this Article, Tenant waives, to the extent permitted by applicable law, (a)
any right of redemption, re-entry or repossession, (b) any right to trial by
jury in the event of summary proceedings to enforce the remedies set forth in
this Article, and (c) the benefit of any laws now or hereafter enforced
exempting property from liability for rent or for debt.
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ARTICLE XVIII.
CURE BY TENANT OF LANDLORD DEFAULTS
Landlord shall be in default of its obligations under this Lease if
Landlord shall fail to observe or perform any term, covenant or condition of
this Lease on its part to be performed, and such failure shall continue for a
period of 30 days after Notice thereof from Tenant (or such shorter time as may
be necessary in order to protect the health or welfare of any patient or other
resident of the Property), unless such failure cannot be cured with due
diligence within a period of 30 days (or the above described shorter time, as
applicable), in which case such failure shall not be deemed to continue if
Landlord, within said 30 day period (or the above described shorter time, as
applicable), proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof. The time within which Landlord shall be
obligated to cure any such failure shall also be subject to extension of time
due to the occurrence of any Unavoidable Delay. If Landlord fails to commence or
complete such cure as provided herein, Tenant may cure such default, and for so
long as Tenant continues to pay Rent, Tenant shall have the right by separate
and independent action to pursue any claim it may have against Landlord for
monetary damages for Landlord's failure to cure such default, including, without
limitation, all costs and expenses of Tenant (including attorneys' fees and
expenses). In the event Tenant acquires the Property pursuant to the option
granted hereunder, Tenant, at its option, shall be entitled to offset against
the purchase price the amount of any damages owing from Landlord to Tenant.
ARTICLE XIX.
PURCHASE OF PROPERTY BY TENANT
19.1 PURCHASE OF THE PROPERTY. If Tenant purchases the Property from
Landlord pursuant to any of the terms of this Lease, Landlord shall, except as
otherwise expressly provided, 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 such purchase,
deliver to Tenant an ALTA Owner Policy of Title Insurance or such equivalent
policy of title insurance as may be available in the State and which is
reasonably acceptable to Tenant, together with such endorsements, reinsurance
agreements and direct access agreements as Tenant may reasonably request,
together with an appropriate special warranty deed or other conveyance conveying
marketable fee simple title in and to the Property to Tenant in the condition
set forth in Article XXVI, except that the Property shall be free and clear of
all mortgages and encumbrances other than (a) those Tenant has agreed hereunder
to pay or discharge, (b) those mortgages which Tenant has agreed in writing to
accept and to take title subject to on the date the Property was originally
conveyed to Landlord and which are not in default, (c) encumbrances required to
be imposed on the Property under Section 8.3, and (d) any other encumbrances
permitted to be imposed on the Property under the provisions of Article XXVII
which are assumable at no cost or expense to Tenant or to which Tenant may take
subject without cost or expense to Tenant. The difference between the applicable
purchase price and the total amount of the encumbrances assumed or taken subject
to, if a positive number, shall be paid in cash to Landlord or as Landlord may
direct, in federal or other immediately available funds, unless otherwise
mutually agreed by Landlord and Tenant; provided, that Landlord shall be
obligated to pay to Tenant in cash any negative difference between the
applicable purchase price and the total amount of the encumbrances so assumed or
taken subject to by Tenant. All
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reasonable expenses of conveying the Property to Tenant, including, without
limitation, the cost of the aforementioned title insurance and attorneys' fees
incurred by Landlord in connection with such conveyance and release, and
documentary transfer and similar taxes, recording fees and expenses of Tenant's
counsel, shall be paid by Tenant.
19.2 FAILURE TO CLOSE PURCHASE. The closing of any such sale shall
be contingent upon and subject to Tenant obtaining all required governmental
consents and approvals for such transfer. If such sale shall fail to be
consummated by reason of the inability of Tenant to obtain all such approvals
and consents and if the Term would otherwise expire, then this Lease shall
remain in effect on a month-to-month basis (on the terms of the Lease in effect
upon the expiration of such Term and notwithstanding any provision of Article
XX) until the earlier of: (i) the consummation of the purchase or (ii) the 90th
day following the end of the Term. In the event Tenant is unable to consummate
the purchase during the Term or such 90 day extension of the Term for any reason
which is beyond the control of the Tenant, Tenant's option under Section 3.2
herein to elect Extended Terms shall be reinstated during the last 90 days of
the Term or, such 90 day extension, as applicable, to prevent Tenant's
forfeiture of its leasehold under this Lease due to the failure to close the
Purchase of the Property, provided Tenant exercises such option by delivering a
Notice to Landlord prior to the expiration of the Term, or such 90 day
extension, as applicable, and such Extended Term shall commence or shall be
deemed to have commenced immediately following the last day of the Term.
ARTICLE XX.
HOLDING OVER
If Tenant for any reason remains in possession of the Property after
the expiration or earlier termination of the Term, such possession shall be a
month-to-month tenancy during which time Tenant shall pay to Landlord as rental
each month the aggregate of (i) one and one half (1-1/2) times one-twelfth of
the aggregate total Base Rent and Percentage Rent (if any) payable with respect
to the last 12-month period of the Term just expired or terminated, (ii) all
Additional Charges accruing during the month with respect to which such payment
relates, and (iii) all other sums, if any, payable by Tenant pursuant to the
provisions of this Lease with respect to the Property. During such period of
month-to-month 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 month-to-month
tenancies, to continue its occupancy and use of the 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 the Term.
ARTICLE XXI.
RISK OF LOSS
During the Term of this Lease, Tenant shall bear the risk of loss or
of decrease in the enjoyment and beneficial use of the Property resulting from
the damage or destruction thereof by fire, the elements, casualties, thefts,
riots, wars or any other cause, or resulting from foreclosures, attachments,
levies or executions (other than those caused by Landlord and those claiming
from, through or under Landlord) and, in the absence of the gross negligence,
willful misconduct or breach of this Lease by Landlord, Landlord shall in no
event be responsible
49
therefor nor shall any of the events mentioned in this Section entitle Tenant to
any abatement of Rent except as specifically provided in this Lease.
ARTICLE XXII.
LIABILITY OF PARTIES
22.1 INDEMNIFICATION BY TENANT. Notwithstanding the existence of any
insurance provided for in Article XIV, and notwithstanding the policy limits of
any such insurance, Tenant shall, subject to applicable law, indemnify, defend,
save and hold Landlord harmless from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
("CLAIMS") (including, without limitation, reasonable attorneys' fees and
expenses), to the extent permitted by law, imposed upon, incurred by or asserted
against Landlord arising out of, connected with or incidental to:
(a) any Hazardous Substance located at, in, on, under or about
the Property due to the act or omission of Tenant, including any improvements,
repairs, handling, removal or other actions taken by Tenant in order to comply
with all rules and regulations promulgated by any applicable federal, state, or
local government rule and regulation with respect to any such Hazardous
Substance or related problems that Landlord or Tenant becomes aware of;
(b) any accident, injury to or death of persons, or loss of or
damage to property, occurring on or about the Property or adjoining sidewalks,
alleys or roadways, including without limitation any claims of malpractice;
(c) any past, present or future use, misuse, non-use,
condition, management, maintenance or repair by Tenant of the Property or
Tenant's Personal Property and any litigation, proceeding or claim by
governmental entities or other third parties to which Landlord is made a party
or other participant related to the Property or Tenant's Personal Property or
such use, misuse, non-use, condition, management, maintenance or repair thereof,
including but not limited to any failure to perform obligations (other than
condemnation proceedings) to which Landlord is made a party;
(d) any Impositions which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease;
(e) any failure on the part of Tenant to perform or comply
with any of the terms of this Lease; and
(f) the non-performance of any of the terms and provisions of
any and all existing and future subleases of the Property to be performed by
Tenant thereunder.
Any amounts payable by Tenant under this Section shall be paid
within ten days after Tenant's liability therefor is determined by litigation or
otherwise. If such amounts are not timely paid, they shall bear a late charge
(to the extent permitted by law) at the Overdue Rate from the date of such
determination to the date paid. 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 sees fit.
Nothing herein shall be
50
construed as requiring Tenant to indemnify, defend or hold Landlord harmless
against Landlord's own sole gross negligence or willful misconduct.
22.2 INDEMNIFICATION BY LANDLORD. Landlord shall indemnify, defend,
save and hold Tenant harmless from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) imposed
upon, incurred by or asserted against Tenant arising out of, connected with or
incidental to the sole or gross negligence or willful misconduct of Landlord;
provided, however, that Tenant's right to indemnification as provided herein
shall be subject to the limitation set forth in Article XXVIII.
22.3 CONTINUING LIABILITY. Tenant's and Landlord's liability under
this Article shall survive any termination of this Lease and shall continue for
the term provided herein or as permitted by the laws of the State, whichever is
longer.
ARTICLE XXIII.
ASSIGNMENT AND SUBLETTING
23.1 ASSIGNMENT AND SUBLETTING. Subject to the provisions of Section
23.3 below and any other express conditions or limitations set forth in this
Lease, Tenant may, without the consent of Landlord, and in addition to leases
and subleases in effect on the Commencement Date, (a) sublet up to an aggregate
of 25% of the rentable square footage of the Facility, to concessionaires or
other third party users or operators thereof, provided that (i) any subletting
to any party shall not individually as to any one such subletting, or in the
aggregate, materially diminish the actual or potential Percentage Rent payable
under this Lease and (ii) Tenant, at the request of Landlord, executes a
Collateral Assignment of Subleases and Rents in favor of Landlord in a form
reasonably acceptable to Landlord as security for the obligations of Tenant
hereunder, or (b) transfer or assign its rights hereunder (iii) to a joint
venture, partnership or other entity in which Tenant holds a controlling
interest and, in the case of a partnership, Tenant is the general partner, or
(iv) in connection with a public offering of equity interests in an Affiliate of
Tenant, to such Affiliate, provided that Landlord reasonably determines that
such Affiliate has a Tangible Net Worth at least equal to that of Tenant.
23.2 ATTORNMENT. Tenant shall insert in each sublease permitted
under Section 23.1 provisions reasonably satisfactory to Landlord which provide
for the benefit of Landlord 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, either
attorn to Landlord and waive any right the sublessee may have to terminate the
sublease or surrender possession under such sublease, and (c) in the event the
sublessee receives 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 otherwise 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 owed to Landlord under this Lease.
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23.3 REIT PROTECTION. Anything contained in this Lease to the
contrary notwithstanding, (i) no Transfer (as defined below) shall be
consummated on any basis such that the rental or other amounts to be paid by the
occupant, assignee, manager or other transferee thereunder would be based, in
whole or in part, on the income or profits derived by the business activities of
the occupant, assignee, manager or other transferee; (ii) Tenant shall not
consummate a Transfer with any person in which Landlord owns an interest,
directly or indirectly (by applying constructive ownership rules set forth in
Section 856(d)(5) of the Code); and (iii) Tenant shall not consummate a Transfer
with any person or in any manner which could cause any portion of the amounts
received by Landlord pursuant to this Lease or any sublease to 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 or which could cause any other
income of Landlord to fail to qualify as income described in Section 856(c)(2)
of the Code.
23.4 PROHIBITION OF TRANSFERS. Except as expressly permitted by
Sections 23.1, 23.5, 23.6 and 23.7, or any of such Sections, Tenant shall not,
without Landlord's prior written consent, which may be withheld in Landlord's
sole and absolute discretion, either directly or indirectly or through one or
more step transactions or tiered transactions, voluntarily or by operation of
law, (i) assign, sublease, convey, sell, pledge, mortgage, hypothecate or
otherwise encumber, transfer or dispose of all or any part of this Lease or
Tenant's leasehold estate hereunder, (ii) convey, sell, assign, transfer or
dispose of any stock or partnership, membership or other interests (whether
equity or otherwise) in Tenant (which shall include any conveyance, sale,
assignment, transfer or disposition of any stock or partnership, membership or
other interests (whether equity or otherwise) in any Controlling Person(s)), if
such conveyance, sale, assignment, transfer or disposition results, directly or
indirectly, in a change in control of Tenant (or in any Controlling Person(s)),
(iii) dissolve, merge or consolidate Tenant (which shall include any
dissolution, merger or consolidation of any Controlling Person) with any other
person, if such dissolution, merger or consolidation, directly or indirectly,
results in a change in control of Tenant or in any Controlling Person(s), (iv)
sell, convey, assign, or otherwise transfer all or substantially all of the
assets of Tenant (which shall include any sale, conveyance, assignment, or other
transfer of all or substantially all of the assets of any Controlling
Person(s)), or (v) enter into or permit to be entered into any agreement or
arrangement to do any of the foregoing or to grant any option or other right to
any person to do any of the foregoing (each of the aforesaid acts referred to in
clauses (i) through (v) being referred to herein as a "TRANSFER").
23.5 HIGH CAPITALIZATION HOSPITAL COMPANIES. Notwithstanding
anything that may be to the contrary in this Lease, but subject to the
provisions of Section 23.3, Landlord's consent shall not be required in
connection with any assignment of this Lease or subletting of the Property in
its entirety to any third party, so long as each of the following conditions is
satisfied:
(i) such proposed assignee or subtenant is a corporation
specializing and primarily focusing on the provision of health care
services, and a substantial portion of its business is the operation and
management of acute care hospitals;
(ii) the common stock of such proposed assignee or subtenant
is publicly traded on the New York Stock Exchange, NASDAQ, or other
comparable securities exchange;
52
(iii) the market value of such publicly traded common stock is
not less than One Billion Five Hundred Million Dollars ($1,500,000,000.00)
as of the effective date of such transaction;
(iv) in connection with such assignment or subletting there is
no change in the Primary Intended Use of the Property and no material
change in the business conducted at or from the Property;
(v) any sublease shall be subject to all of the terms and
provisions of this Lease and shall be in accordance with the other
provisions of this Section 23;
(vi) any assignee shall assume all of the obligations of the
Tenant hereunder accruing subsequent to the effective date of such
assignment by an instrument in writing in form and substance reasonably
satisfactory to Landlord. A copy of such executed assumption shall be
delivered to Landlord along with the notice specified in clause (viii)
below;
(vii) within ten (10) days after the effective date of such
assignment or subletting, Tenant shall notify Landlord in writing of the
occurrence of such event, the effective date thereof, the facts placing
the same within the provisions of this Section 23.5 and any change in the
address for ▇▇▇▇▇▇▇▇ and Notices to Tenant pursuant to this Lease,
accompanied by an executed copy of any assumption or sublease required
pursuant to this Lease; and
(viii) no Event of Default or other event or circumstance
which, with notice or lapse of time or both, would constitute an Event of
Default, shall have occurred and be continuing hereunder.
Upon the effective date of any assignment effected in compliance with this
Section 23.5, Tenant and Iasis shall be released from their respective
obligations under this Lease and Guaranty to which Iasis is a party to the
extent such obligations accrue on or after the date of such assignment.
Furthermore, provided that a replacement Fixed Term Security Letter of Credit or
Security Letter of Credit, as applicable, has been delivered to Landlord by the
applicable assignee in compliance with Article XXIX, Landlord shall return the
Fixed Term Security Letter of Credit or Security Letter of Credit, as
applicable, previously delivered by Tenant within ten (10) days after Landlord's
receipt of the notice and document described in subparagraph (vii) above.
23.6 CERTAIN SALE OF BUSINESS TYPE TRANSACTIONS. Notwithstanding
anything that may be to the contrary in this Article XXIII, but subject to the
provisions of Section 23.3, so long as Iasis at the time of a transaction
hereinafter described has other significant assets other than its interest
(whether direct or indirect) in this Lease and the Facility, Landlord shall not
unreasonably withhold or condition its consent to any (a) sale or transfer of
all or substantially all of the outstanding capital stock of Iasis or a sale or
transfer of all or substantially all of the assets of Iasis, in each case to a
single purchaser or transferee in a single transaction or (b) a merger,
consolidation or stock exchange to which Iasis is a party so long as the same
does not effect an assignment of this Lease or a subletting of the Property
otherwise prohibited by this Lease.
53
Among the factors which Landlord may consider in determining whether to grant
its consent to such transaction are the following (all of which are deemed
reasonable for Landlord to consider):
(i) Whether the Consolidated Net Worth of the purchaser or
transferee resulting from a transaction of the type described in clause
(a) above or the surviving party resulting from a sale or transaction of
the type described pursuant to clause (b) above, as the case may be,
following the effectiveness of such event will be greater than the higher
of (A) the average Consolidated Net Worth of Iasis for the twelve (12)
month period immediately prior to the effectiveness of such event, or (B)
the Consolidated Net Worth of Iasis as of December 31, 2001, in either
case as determined in accordance with GAAP.
(ii) The debt to equity ratio of the purchaser or transferee
resulting from a transaction of the type described in clause (a) above or
the surviving party resulting from a Transfer pursuant to clause (b)
above, as the case may be, following the effectiveness of such event shall
be less than the lesser of (A) the average debt to equity ratio of Iasis
for the twelve (12) month period immediately prior to the effectiveness of
such event, or (B) the debt to equity ratio of Iasis as of December 31,
2001, in each case as determined by GAAP. For purposes of this clause
(ii), "debt" shall include the capitalized value of any leases required to
be capitalized in accordance with GAAP to which Iasis and/or such
transferee or surviving entity (and/or their consolidated Subsidiaries)
are parties and the same shall be demonstrated by financial statements
prepared in accordance with GAAP.
(iii) Whether such party assumes the obligations of Iasis
under the Guaranty pursuant to a written assumption in form and substance
reasonably acceptable to Landlord, and whether Iasis remains liable under
the Guaranty. No such assumption of the Guaranty by such party shall,
however, release Iasis of any of its duties, covenants or obligations
thereunder.
(iv) Whether an Event of Default or other event or
circumstance which, with notice or lapse of time or both, would constitute
an Event of Default, shall have occurred and be continuing hereunder.
(v) Such other information as Landlord reasonably deems
relevant to such decision.
As used in this Section 23.6, "other significant assets" shall mean
that Iasis has either (1) at least five (5) acute care hospitals under
lease, ownership or management, other than the Facility or (2) other net
current assets, whether direct or indirect, other than its interests
(whether direct or indirect) in this Lease, which in the aggregate total
not less than One Hundred Million Dollars ($100,000,000).
23.7 PUBLIC OFFERING/PUBLIC TRADING. Notwithstanding anything that
may be to the contrary in this Article XXIII, this Lease shall not restrict any
Transfer of any stock of Tenant or any Controlling Person(s) as a result of a
public offering of Tenant's or such Controlling Person's stock which (a)
constitutes a bona fide public distribution of such stock
54
pursuant to a firm commitment underwriting or a plan of distribution registered
under the Securities Act of 1933 and (b) results in such stock being listed for
trading on the American Stock Exchange or the New York Stock Exchange or
authorized for quotation on the NASDAQ National Market immediately upon the
completion of such public offering. In addition, so long as such stock of Tenant
or any such Controlling Person(s) is listed for trading on any such exchange or
authorized for quotation on such market, the transfer or exchange of such stock
over such exchange or market shall not be deemed a Transfer hereunder unless the
same (whether in one transaction or in any step or series of transactions)
results, directly or indirectly, in a change in control of Tenant or such
Controlling Person(s) (including pursuant to a tender or similar offer to
acquire the outstanding and issued securities of Tenant or such Controlling
Person(s)).
ARTICLE XXIV.
INFORMATION FROM TENANT
24.1 OFFICER'S CERTIFICATES. At any time and from time to time, upon
not less than 20 days' Notice by Landlord, Tenant shall furnish to Landlord an
Officer's Certificate certifying that this Lease is unmodified and in full force
and effect (or that this Lease is in full force and effect as modified and
setting forth the modifications), the date to which the Rent has been paid,
whether there exists any Event of Default or any situation which, with the
giving of notice, passage of time, or both, would constitute an Event of Default
hereunder based upon Tenant's current knowledge, whether Tenant contends that
Landlord is in default hereunder, and if Tenant so contends, the basis for such
contention, the date upon which the Term terminates, and such other information
as Landlord reasonably may request. The failure by Tenant to deliver such
estoppel certificate to Landlord within 20 days of Landlord's request therefor
shall be conclusively deemed to be Tenant's certification (i) that this Lease is
in full force and effect, without modification except as represented by
Landlord; (ii) that there are no uncured defaults in Landlord's performance
hereunder, and (iii) that not more than one month's rent has been paid in
advance. Any such certificate furnished pursuant to this Section 24.1 may be
relied upon by Landlord, any prospective purchaser of the Property, and any
Facility Mortgagee or Landlord Lender.
24.2 FINANCIAL INFORMATION. Tenant shall furnish, the following
statements to Landlord:
(a) within 120 days after the end of each Fiscal Year a
balance sheet and statements of revenues and expenses and changes in retained
earnings and cash flows for Tenant, all certified by independent public
accountants of recognized standing reasonably acceptable to Landlord, such
statements to be prepared in accordance with GAAP consistently applied, to be
for such Fiscal Year and the immediately preceding Fiscal Year and to be in
comparative columnar form; provided, however, that if Tenant's certified balance
sheet and statements are consolidated with any Affiliates of Tenant, then such
consolidated balance sheet and statements shall be deemed satisfactory for
purposes of this Section 24.2(a);
(b) within 45 days after the end of each of the first three
fiscal quarters of each Fiscal Year, financial statements similar to those
referred to in clause (a) above, but only certified by the principal financial
or other appropriate officer of Tenant as having been prepared in accordance
with GAAP consistently applied (but which may exclude footnote disclosures),
55
such financial statements to be for the period from the beginning of such Fiscal
Year (and immediately preceding Fiscal Year) to the end of such quarter (and
comparable quarter); provided, however, that if Tenant does not prepare such
financial statements on a basis not consolidated with any Affiliates of Tenant,
then such consolidated financial statements shall be deemed satisfactory for
purposes of this Section 24.2(b);
(c) concurrent with the statements furnished pursuant to
clauses (a) and (b) above, an Officer's Certificate stating that, after making
due inquiry, no Event of Default has occurred and is continuing under this
Lease, or if such Event of Default has occurred, to such officer's knowledge,
specifying all such Events of Default, the nature of such Events of Default, and
the steps being taken to remedy the same;
(d) within 45 days after the end of each fiscal quarter,
quarterly and year-to-date operating statistics;
(e) as requested in a Notice by Landlord, within 30 days after
the end of each month during the Term or Extended Term, any and all operational,
statistical and/or financial statements, as prepared and distributed by Tenant
in the ordinary course of business; 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.
24.3 LICENSING INFORMATION. Tenant shall promptly furnish to
Landlord complete copies of all surveys, examinations, inspections, compliance
certificates and similar reports of any kind issued to Tenant by any
governmental agencies or authorities having jurisdiction over the licensing of
the operation of the Property which are material to the Property or the
Facility, their ownership or operation.
24.4 CONFIDENTIALITY. Landlord acknowledges that pursuant to or in
connection with this Lease Landlord may receive from Tenant information
regarding Iasis and the subsidiaries of Iasis (including Tenant) that may be
confidential or that otherwise may not have been made available to the public.
Accordingly, Landlord agrees to maintain the confidentiality of all information
regarding Iasis and its subsidiaries that is provided to Landlord pursuant to or
in connection with this Lease, and not to disclose any such information to any
persons other than its accountants, attorneys, underwriters, investors,
prospective lenders or purchasers, or as otherwise required by law.
ARTICLE XXV.
APPRAISALS OF THE PROPERTY
25.1 APPRAISERS. If at any time it becomes necessary to determine
the Fair Market Value or Fair Market Rental of the Property for any purpose
under this Lease, and the parties are unable to agree thereupon, the party
required or permitted to give Notice of such required determination shall
include in the Notice the name of a person selected to act as appraiser on its
behalf. Within ten days after such Notice, Landlord or Tenant, as the case may
be, shall by Notice to Tenant or Landlord, as the case may be, either agree to
the appointment of the appraiser identified in such initial Notice, in which
case such appraiser shall be the sole
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appraiser for purposes of determining the Fair Market Value or Fair Market
Rental, as the case may be, or shall appoint a second person as an appraiser on
its behalf. Any appraiser appointed pursuant to this Section must (i) be a
member of the American Institute of Real Estate Appraisers (or any successor
organization thereto), (ii) have at least five years' experience in the
valuation of private hospitals and (iii) be neither an employee nor former
employee of Landlord or Tenant or their Affiliates. The appraiser(s) thus
appointed shall, within 45 days after the date of the Notice appointing the
first appraiser, proceed to appraise the Property to determine the Fair Market
Value or Fair Market Rental thereof (as the case may be) as of the relevant date
(giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date). In the case of two appraisers, except as
provided in Section 25.2, the two appraisals shall be averaged to determine the
Fair Market Value or Fair Market Rental, as the case may be. In any event, the
appraised value determined in accordance with this Section shall be final and
binding on Landlord and Tenant.
25.2 METHOD OF APPRAISAL. Any appraisal required or permitted by the
terms of this Lease shall be conducted in a manner consistent with sound
appraisal practice, taking into account the market, cost and business enterprise
(income) approaches. Notwithstanding the provisions of Section 25.1, if the
difference between the appraisal amounts determined by the appraisers appointed
pursuant to Section 25.1 exceeds ten percent of the lesser of such appraisal
amounts, then the two appraisers shall have 20 days to appoint a third
appraiser. If no such appraiser is appointed within such 20 days or within 90
days of the original request for a determination of Fair Market Value or Fair
Market Rental (as the case may be), whichever is earlier, either Landlord or
Tenant may refer the matter to arbitration as set forth in Section 30.13. Any
appraiser appointed by the original appraisers or through arbitration shall be
instructed to determine the Fair Market Value or Fair Market Rental (as the case
may be) within 45 days after the appointment of such appraiser. The
determination of the three appraisers which differs most in the terms of dollar
amount from the determinations of the other two appraisers shall be excluded,
and 50% of the sum of the remaining two determinations shall be the appraised
value, which appraised value shall be final and binding upon Landlord and Tenant
as the Fair Market Value or Fair Market Rental of the Property, as the case tray
be. If the lowest and highest appraised values are equidistant in amount from
the middle appraised value, then such middle appraised value shall be the Fair
Market Value or Fair Market Rental (as the case may be). The provisions of this
Article 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 each shall 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 XXVI.
OPTIONS TO PURCHASE
26.1 LANDLORD'S OPTION TO PURCHASE TENANT'S PERSONAL PROPERTY;
TRANSFER OF LICENSES. Provided Tenant has not exercised its option pursuant to
Section 26.2 hereof, effective upon not less than ninety (90) days prior notice
given at any time within one hundred eighty (180) days prior to the expiration
of the Term of this Lease, or upon such shorter Notice as shall be reasonable if
this Lease is terminated prior to its expiration date, Landlord shall have
57
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 then fair market value thereof (as determined by the appraisal
process set forth in Section 25), taking into account, and with appropriate
price adjustments for, all equipment leases, conditional sale contracts, UCC-1
financing statements and other encumbrances to which such Tenant's Personal
Property is subject. Upon the expiration or termination of the Lease and such
purchase by Landlord, Tenant shall use good faith efforts, at Landlord's sole
cost and expense, to transfer and assign to Landlord or its designee, or assist
Landlord or its designee in obtaining, any contracts, licenses, and certificates
required for the then operation of the Facility.
26.2 FIRST OFFER TO PURCHASE. Provided no Event of Default, or event
which, with notice or lapse of time or both, would constitute an Event of
Default, has occurred and is continuing hereunder, Tenant shall have a first
offer option to purchase not less than all of the Property upon the same terms
and conditions as Landlord shall propose to sell the Property, or upon the same
terms and conditions of any offer from a third party to purchase the Property
which Landlord intends to accept (or has accepted subject to Tenant's right of
first offer herein); provided, however that such first offer option shall not
apply to (a) any sale, transfer or other conveyance of the Property or any
interest therein by Landlord to an Affiliate of Landlord, (b) a sale or transfer
of all or substantially all of the outstanding capital stock of Landlord or a
sale or transfer of all or substantially all of the assets of Landlord, in each
case to a single purchaser or transferee in a single transaction, (c) a merger,
consolidation or share exchange to which Landlord is a party, or (d)(i) a
conveyance of the Property or portion thereof as security to a bona fide lender
for value, or (ii) a transfer of the Property or portion thereof to any such
lender or any subsequent holder of the indebtedness secured by an interest in
the Property by reason of foreclosure or deed in lieu of foreclosure. If, during
the Term, Landlord reaches such agreement with a third party or proposes to
offer the Property for sale, Landlord shall promptly notify Tenant of the
purchase price and all other material terms and conditions of such agreement or
proposed sale. Tenant shall have thirty (30) days after receipt of such notice
from Landlord within which time to exercise Tenant's option to purchase. Tenant
may exercise such option by (i) giving written notice to Landlord within such
thirty (30)-day period and (ii) delivering to Landlord concurrent with such
notice a reaffirmation of the Guaranty executed by Guarantor stating, in
substance, that Guarantor's obligations under the Guaranty shall extend to the
purchase contract formed by Landlord and Tenant upon proper and timely exercise
of such option. If Tenant exercises its option within the time and in the manner
herein provided, then such transaction shall be consummated within sixty (60)
days (or such longer period as may be permitted under the terms and conditions
of any offer from a third party, if applicable) after the date of receipt by
Landlord of notice of such exercise in the manner herein provided, at the price
to Tenant and in accordance with the terms and conditions of such agreement, if
any, and the provisions of Article XIX. If Tenant shall not exercise Tenant's
option to purchase within said thirty (30) day period after receipt of said
notice from Landlord and within the manner herein provided, Landlord shall be
free for a period of six (6) months after the expiration of said thirty (30)-day
period to sell the Property to any third party at a price and upon terms no less
favorable in any material respect to Landlord than those so offered to Tenant.
(For purposes of this Section 26.2, a price shall not be deemed materially less
favorable to Landlord if such price is equal to or greater than ninety-seven
percent (97%) of the price offered to Tenant.) If such sale is not
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consummated, Tenant's right of first offer as provided in this Section shall be
reinstituted, as to any subsequent proposed sale of the Property during the Term
of this Lease.
26.3 INCLUSION OF THE PROPERTY WITH OTHER PROPERTY. Notwithstanding
anything to the contrary herein in this Section 26, except with respect to
transactions of the type described in clauses (a) through (d) in Section 26.2
above as to which Tenant shall not have a right of first offer, if and only if,
(1) Landlord proposes to sell the Property, or receives an offer from a third
party to purchase the Property which Landlord intends to accept (or has accepted
subject to Tenant's right of first offer herein), and such proposed sale
includes property in addition to the Property, or (2) in connection with the
proposed sale of the Property, Landlord or an Affiliate of Landlord is also
proposing to sell concurrent or substantially concurrent with the sale of the
Property other property of Landlord or an Affiliate of Landlord to the same
third-party and/or its Affiliates, then the following shall apply:
(x) Tenant's right of first offer as herein provided, shall
apply only with respect to the Property.
(y) If the terms of the proposed sale do not specifically
allocate a purchase price to the Property, Landlord shall reasonably determine
the same and include such allocation in Landlord's written notice to Tenant of
the proposed sale or third party offer.
26.4 LANDLORD'S ELECTION OF 1031 EXCHANGE. In the event that Tenant
exercises its right of first offer to purchase as provided in this Article XXVI,
Landlord may elect to sell the Property to Tenant in the form of a tax-deferred
exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended ("1031 EXCHANGE"). In the event that Landlord shall so elect, Landlord
shall give written notice to Tenant and any escrow holder of such election and
the following shall apply:
(a) Simultaneous Exchange. Landlord may attempt to identify
before the closing other property which qualifies as "like-kind" property for a
1031 Exchange (the "TARGET PROPERTY") by giving written notice to Tenant and any
escrow holder and identifying to such escrow holder the Target Property prior to
the closing.
(b) Non-simultaneous Exchange. If Landlord has not so
identified the Target Property before the closing, then Landlord shall proceed
with the closing unless Landlord at its option enters into an exchange agreement
with an accommodation party ("ACCOMMODATOR") in order to facilitate a
non-simultaneous or so-called "Starker deferred" exchange. If an Accommodator is
so designated, Landlord shall cause the Accommodator (i) to acquire title to the
Property from Landlord at or before the closing and, (ii) to transfer title in
the Property to Tenant on the closing.
(c) Expenses and Documents. Tenant shall fully cooperate with
any such 1031 Exchange, including but not limited to executing and delivering
additional documents requested or approved by Landlord; provided, that Tenant
shall not be required to incur any additional costs or liabilities or financial
obligations as a consequence of any of the foregoing exchange transactions.
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26.5 SPECIFIC PERFORMANCE OF OPTIONS. The parties acknowledge that:
(a) The irrevocable right and options herein granted by one
party to the other are a moving consideration and a principal cause of this
transaction without which neither party would have entered it.
(b) The parties hereto agree that damages for breach of the
option provisions hereof are insusceptible of reasonable measure, and
accordingly they agree that specific performance and injunctive relief are
appropriate remedies for nonperformance.
If either party shall fail or refuse to consummate the sale and
transfer of Tenant's Personal Property or the Property, as the case may be,
pursuant to the options granted by Section 26.1 or 26.2 or extend the Term
hereof under Section 19.2, then the aggrieved party may forthwith apply to a
court of competent jurisdiction for a decree of specific performance ordering
the transfer of Tenant's Personal Property or the Property, as the case may be,
upon payment of the applicable purchase price therefor, or the extension of the
Term hereof upon payment of the applicable monthly rent. If Landlord rejects
Tenant's tender of the applicable purchase price or the applicable monthly rent,
as the case may be, then Tenant's tender of such funds into the court registry
shall be deemed equivalent to payment.
ARTICLE XXVII.
FACILITY MORTGAGES
Without the consent of Tenant, Landlord may, subject to the terms
and conditions set forth below in this Section, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrance, security
interest or title retention agreement ("ENCUMBRANCE") upon the Property, or any
portion thereof or interest therein, whether to secure any borrowing or other
means of financing or refinancing. Any such Encumbrance (i) shall contain the
right to prepay (whether or not subject to a prepayment penalty, which penalty
shall be paid by Landlord); (ii) shall be paid in full and released and
reconveyed in the event Tenant purchases the Property pursuant to the applicable
provisions of this Lease; and (iii) shall not provide for negative
capitalization of interest. Tenant agrees that it shall subordinate this Lease
to any mortgage, security interest or deed of trust that may hereafter from time
to time be recorded on Landlord's interest in the Property, and to any and all
advances made or to be made thereunder, and to renewals, replacements and
extensions thereof. Tenant's failure to deliver any reasonable written
subordination document requested by Landlord in accordance with the preceding
sentence within ten Business Days after Notice thereof shall constitute an Event
of Default hereunder. Any such subordination, however, shall be subject to the
condition precedent that the mortgagee under such mortgage or the beneficiary
under such deed of trust enter into a written non-disturbance and attornment
agreement with Tenant, in form and content satisfactory to Tenant, whereunder it
is agreed that in the event of a sale or foreclosure under such mortgage or deed
of trust, the purchaser of the Property (including the mortgagee or beneficiary
under such mortgage or deed of trust), shall acquire or hold the Property
subject to this Lease so long as no Event of Default has occurred and is
continuing hereunder, and so long as Tenant recognizes such purchaser as the
landlord under this Lease and agrees, if requested to do so, to attorn to such
purchaser and, if instructed to do so by such purchaser, to make rental payments
directly to it. Landlord represents and warrants to Tenant that as of the date
of this Lease, there are no
60
mortgages or deeds of trust executed by Landlord or under which Landlord has
assumed liability encumbering the Property.
ARTICLE XXVIII.
LIMITATION OF LIABILITY
Tenant specifically agrees that neither Landlord nor any officer,
shareholder, employee or agent of Landlord (each of which shall, for purposes of
this Article XXVII, be considered an Affiliate of Landlord) shall be held to any
personal liability, jointly or severally, for any obligation of, or claims
against Landlord, Tenant agreeing to look solely to Landlord's equity interest
in the Property or to Landlord's interests or interests of subsidiaries of
Landlord in other properties leased to Tenant or Affiliates of Tenant for
recovery of any judgment from Landlord, except that Landlord's obligations under
Section 19.1 and Article XXVII, clause (ii) shall be a general and unlimited
liability of Landlord. The provisions contained in the foregoing sentence are
not intended to, and shall not, limit any right that Tenant might otherwise have
to obtain injunctive relief against Landlord or Landlord's successors in
interest, or any action not involving the personal liability of Landlord
(original or successor). In no event shall Landlord (original or successor) or
any Affiliate of Landlord be required to respond in monetary damages from
Landlord's assets other than Landlord's equity interest in the Property.
Furthermore, except as otherwise expressly provided herein, in no event shall
Landlord or any Affiliate of Landlord (original or successor) ever be liable to
Tenant for any indirect or consequential damages suffered by Tenant from
whatever cause.
ARTICLE XXIX.
ADDITIONAL COVENANTS OF TENANT
29.1 ADDITIONAL NEGATIVE COVENANTS. Tenant covenants and agrees with
Landlord that, during the Term hereof, Tenant shall not, either directly or
indirectly:
(a) FIXED CHARGE COVERAGE RATIO. Prior to the expiration of
the Fixed Term, permit the ratio of: (i) (a) Tenant's Cash Flow to (b) the sum
of Total Rent payable hereunder and principal and interest payments payable by
Tenant for any calendar quarter to be less than 2.0 to 1.0; provided, however,
that the failure of Tenant to comply with the foregoing ratio shall not
constitute an Event of Default if a Fixed Term Security Letter of Credit in the
amount of twelve monthly installments of Base Rent is in effect or is obtained
within ten Business Days after such failure.
(b) SALE OF ASSETS. Other than in the ordinary course of
business, sell, lease, transfer or otherwise dispose of all or any substantial
part of its properties, equipment or assets, except for (x) equipment or
properties which are no longer useful in its business or have been replaced, (y)
during any 12-month period, equipment or property with an aggregate market value
not exceeding $250,000, and (z) other transfers permitted by Article XXIII of
this Lease.
(c) CONSOLIDATION OR MERGER. Consolidate with or merge into
any other entity or permit any other corporation to merge into it unless (i) it
is the survivor or (ii) after giving pro forma effect to the merger, based on
its financial statements and the financial statements of the other entity or
entities participating in the merger, for, in each case, its most
61
recently completed fiscal year or quarter, there is no violation of any of the
covenants of this Lease to be observed or performed by Tenant.
(d) [INTENTIONALLY OMITTED].
(e) TRANSACTIONS WITH AFFILIATES. Except as permitted under
Article XXIII above, commencing as of the Commencement Date, unless and until
Tenant's obligation to maintain the Fixed Term Security Letter of Credit or the
Security Letter of Credit as provided in Section 29.3 hereof has been
extinguished, sell, lease, transfer or otherwise dispose of any of its
properties or assets (relating to the Property) to, or enter into any contract,
agreement, understanding, loan, advance or guaranty with, or for the benefit of,
any Affiliate of Tenant, except (i) in the ordinary course of business and on
terms that are no less favorable than those that could have been obtained in a
comparable transaction with an unrelated person, and (ii) involving an aggregate
amount not exceeding $250,000 for all Affiliates of Tenant in any twelve month
period.
(f) ADDITIONAL FINANCIAL COVENANT. Prior to the expiration of
the Fixed Term, permit the ratio of its current assets, excluding any encumbered
(other than in favor of Landlord) and legally restricted current assets, to
current liabilities (both determined in accordance with GAAP) to be less than
one-to-one; provided, however, that the failure of Tenant to comply with the
foregoing ratio shall not constitute an Event of Default if a Fixed Term
Security Letter of Credit in the amount of twelve monthly installments of Base
Rent is in effect or is obtained within ten Business Days after such failure.
(g) LIMITATION ON BUSINESS. Change or alter the operations of
the Facility as presently conducted if the effect thereof could reasonably be
anticipated to have a material adverse effect on the business, properties,
condition (financial or otherwise) or operations of the Facility.
(h) NON-COMPLYING USES. With such exceptions as are not
material in the aggregate, use the Property or permit the Property to be used in
violation of any Legal Requirements or Insurance Requirements or in a manner
which will cause the cancellation of any insurance policy covering the Property
or any part thereof or any provider agreement.
29.2 ADDITIONAL AFFIRMATIVE COVENANTS. Tenant covenants and agrees
with Landlord that, during the Term hereof, Tenant shall:
(a) MAINTENANCE OF PROPERTIES AND INTANGIBLE ASSETS.
(i) Maintain its corporate existence in good standing.
(ii) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence and, with such
exceptions, if any, as are not material in the aggregate, to obtain and, having
obtained, preserve, renew and keep in full force and effect all customary
accreditation, rights, licenses and permits and, with such exceptions, if any,
as are not material in the aggregate, comply with all laws and regulations
applicable to it and conduct and operate the Facility in substantially the
manner, with such changes as may from time to time be considered by management
as necessary or appropriate, in which it is presently
62
conducted and operated, and at all times, with such exceptions as are not
material in the aggregate, to obtain, maintain, preserve and protect all
necessary franchises, provider agreements, contract rights, trademarks and trade
names used or useful in its operations and preserve all its assets which are
used or useful in the conduct of its operations, and keep the same in working
order and condition, and, with such exceptions as are not material in the
aggregate, from time to time to make, or cause to be made, all necessary
repairs, renewals, replacements, betterments and improvements thereto, so that
the operation of the Facility may be properly and advantageously conducted at
all times. Without limiting the generality of the foregoing, Tenant shall use or
cause the Property to be used for the Primary Intended Use and only for such
other uses as may be necessary in connection with or incidental to said use or
as may be agreed to by Landlord in accordance with the terms of this Lease. With
such exceptions as are not material in the aggregate, no use shall be made or
permitted to be made of the Property and no acts shall be done which violate any
Legal Requirements or Insurance Requirements or which will cause the
cancellation of any insurance policy covering the Property or any part thereof
or any provider agreements. Tenant shall comply in all material respects with
all Legal Requirements and all Insurance Requirements.
(iii) Tenant, immediately upon obtaining knowledge of
facts which are reasonably likely to result in an action by any Federal, state
or local agency (or the staff thereof) to revoke, withdraw or suspend any
permit, license, conditional use permit, variance certificate, certificate of
need, letter of nonreviewability, provider agreement or other governmental
approval, or an action of any other type, which would have a material adverse
effect on the Tenant or the operations of the Facility, shall notify the
Landlord thereof immediately.
(b) OBLIGATIONS AND TAXES. With such exceptions as are not
material individually or in the aggregate, none of which exceptions results in
the creation of a lien prohibited by this Lease on any property of Tenant, pay
all indebtedness and obligations in accordance with customary trade practices
and pay and discharge promptly all taxes, assessments and governmental charges
or levies imposed on it or upon its income and profit, or upon any of its
property, real, personal or mixed, or upon any part thereof, before the same
shall become in default, as well as pay before they shall become in default all
lawful claims for labor, material and supplies or otherwise which, if unpaid,
might become a lien or charge upon such Property or any part thereof.
(c) LITIGATION NOTICE. Give Landlord prompt notice of any
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency which, if adversely determined, would materially
adversely affect the business, operations, properties, assets or condition
(financial or otherwise) of Tenant.
(d) NOTICE OF CERTAIN EVENTS. Give Landlord prompt Notice of
any Event of Default of which it has actual knowledge or any event of which it
has actual knowledge which, with the passage of time or the giving of notice, or
both, would constitute an Event of Default.
(e) PENSION PLANS. Tenant shall notify Landlord within ten
business days of the occurrence of any of the following events ("NOTIFICATION
EVENTS") with respect to
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Tenant's Plans (as defined in ERISA) and within ten days of obtaining knowledge
of any Notification Event with respect to Plans of its Affiliates: (i) the
termination of a Plan, unless such Plan can be terminated without material
adverse effect on the business, properties or condition (financial or otherwise)
of Tenant; (ii) the failure to make contributions to any of Tenant's Plans
(including any Multiemployer Plans) in a timely manner and in sufficient amount
to comply with the requirements of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"); (iii) the failure to comply with all material
requirements of ERISA and the Code which relate to such Plans and Multiemployer
Plans (as defined by ERISA), where such failure to comply would have a material
adverse effect on the business, properties or condition (financial or otherwise)
of Tenant; (iv) receipt by Tenant of any notice of the institution of any
proceeding or other action which may directly result in the termination of any
Plans or Multiemployer Plans; (v) a Termination Event or Reportable Event (as
defined by ERISA) with respect to a Plan; and (vi) any event or condition which
would cause the lien provided for under Section 4068 of ERISA to attach to the
assets of Tenant. Tenant shall not fail to make any payments to any
Multiemployer Plan that Tenant may be required to make under any agreement
relating to any Multiemployer Plan, ERISA or any other law pertaining thereto,
except for any payments being contested in good faith in accordance with Article
XIII with respect to which Tenant has established adequate reserves or which, if
not made, would not have a material adverse effect on the business, properties
or condition (financial or otherwise) of Tenant.
29.3 SECURITY FOR THE LEASE.
(a) SECURITY AGREEMENT. On or before the Commencement Date,
Tenant shall execute and deliver to Landlord the Security Agreement.
(b) SECURITY LETTER OF CREDIT - FIXED TERM. As security for
the timely and faithful performance by Tenant of each and every one of Tenant's
obligations under this Lease, Tenant shall, on the Commencement Date and
continuing through the expiration of the Fixed Term, deliver and maintain an
irrevocable standby letter of credit which (A) is issued or confirmed by a bank
having capital or surplus of at least $1 billion and whose senior unsecured debt
securities are rated "A2" or better by ▇▇▇▇▇'▇ Investors Service or "A" or
better by Standard & Poor's Rating Service, provided none of such securities is
subject to a "credit watch with negative implications," (B) is payable, in whole
or in part, "at sight" upon Landlord's presentation to the issuing or confirming
bank of a draft or other document in the amount therein stated to be due and (C)
is otherwise in form and substance reasonably satisfactory to Landlord (such
security letter of credit, as the same may be augmented, increased, renewed or
replaced as hereinafter provided, is referred to herein as the "FIXED TERM
SECURITY LETTER OF CREDIT"), and which contains the undertaking of such bank in
the amount of the sum of twelve monthly installments of Base Rent. If Landlord
shall draw any amount, representing an amount equal to the obligation or
obligations of Tenant hereunder, against the Fixed Term Security Letter of
Credit, which it shall be entitled to do if an Event of Default has occurred and
is continuing (and any applicable cure period, if any, has expired), and apply
the proceeds of such drawing against any obligation or obligations of Tenant
hereunder in such amount or amounts as Landlord, in its sole discretion, shall
decide, Tenant shall cause either (i) an additional Fixed Term Security Letter
of Credit to be issued or (ii) the bank's undertaking under the original Fixed
Term Security Letter of Credit to be increased, in either case, in an amount
equal to the amount of such drawing within five Business Days following Tenant's
receipt of notice of such drawing. Tenant
64
shall (x) renew the Fixed Term Security Letter of Credit at least annually and
shall deliver to Landlord such renewal Fixed Term Security Letter of Credit at
least 30 days prior to the expiration of the previous Fixed Term Security Letter
of Credit and (y) replace the Fixed Term Security Letter of Credit with a new
Fixed Term Security Letter of Credit in favor of any permitted assignee of
Landlord's interest under this Lease (provided Tenant shall have received 30
days' prior notice of such assignment) and shall deliver to Landlord's assignee
such replacement Fixed Term Security Letter of Credit in time for the scheduled
closing of Landlord's assignment of its interest under this Lease. After the
Fixed Term Security Letter of Credit is established, Tenant may reduce the
amount of the Fixed Term Security Letter of Credit to six monthly installments
of Base Rent if, for the period of four consecutive calendar quarters most
recently completed as of the date of determination, Tenant is in compliance with
Sections 29.1(a) and 29.1(f) hereof, as reflected in financial statements
prepared in accordance with GAAP as set forth in an Officer's Certificate
delivered not later than sixty (60) days after the end of such most recent
quarter. Such Officer's Certificate shall be accompanied by an appropriate cash
flow statement and a compilation report thereon, without material qualification,
of Tenant's independent public accountants. If and after Tenant's obligation to
maintain the Fixed Term Security Letter of Credit has been so reduced, Tenant
will be obligated to increase such letter to twelve monthly installments of Base
Rent within ten (10) business days after each time it delivers financial
information to Landlord pursuant to Section 24.2 hereof which indicates that
Tenant has failed to comply with any requirement of Sections 29.1(a) or 29.1(f)
for the most recent period of two consecutive calendar quarters and such
obligation will remain in effect until Tenant has subsequently satisfied the
requirements of Sections 29.1(a) and 29.1(f) for another period of four
consecutive calendar quarters.
Tenant's failure to timely deliver or maintain any Fixed Term
Security Letter of Credit in accordance with this Section 29.3(b) shall
constitute an immediate Event of Default (which shall not require the giving of
Notice) and, in such event, Landlord shall have the right to draw the entire
balance of the Fixed Term Security Letter of Credit, as the case may be, and
apply the proceeds against any obligation or obligations of Tenant hereunder in
such amount or amounts as Landlord, in its sole discretion, shall decide and
exercise any other remedies permitted Landlord hereunder, at law or in equity.
Landlord shall not be deemed to hold any funds drawn under the Fixed Term
Security Letter of Credit in trust but shall not commingle such funds with other
assets of Landlord. Tenant shall not be entitled to any interest with respect to
any such funds held by Landlord.
(c) LETTERS OF CREDIT - EXTENDED TERM.
(i) During each Extended Term, as additional security
for the timely and faithful performance by Tenant of each and every one of
Tenant's obligations under this Lease at the times, in the amounts and for the
purposes set forth below, Tenant shall, deliver and maintain an irrevocable
standby letter of credit which (A) is issued or confirmed by a bank having
capital or surplus of at least $1 billion and whose senior secured debt
securities are rated "A2" or better by ▇▇▇▇▇'▇ Investors Service or "A" or
better by Standard and Poor's Rating Service, provided none of such securities
is subject to a "credit watch with negative implications," (B) is payable, in
whole or in part, "at sight" upon Landlord's presentation to the issuing or
confirming bank of a draft or other document in the amount therein stated to be
due and (C) is in the amount specified below and otherwise in form and substance
reasonably
65
satisfactory to Landlord (such security letter of credit, as the same may be
augmented, increased, renewed or replaced as hereinafter provided, is referred
to herein as the "SECURITY LETTER OF CREDIT"). Each Security Letter of Credit
shall provide that it will be honored upon a signed statement by Landlord that
Landlord is entitled to draw upon any Security Letter of Credit under this
Lease, and shall require no signature or statement from any party other than
Landlord. No notice to Tenant shall be required to enable Landlord to draw upon
the Security Letter of Credit. Each Security Letter of Credit shall also provide
that following the honor of any drafts in an amount less than the aggregate
amount of the Security Letter of Credit, the financial institution shall return
the original Security Letter of Credit to Landlord and Landlord's rights as to
the remaining amount of the Security Letter of Credit will not be extinguished.
In the event of a transfer of Landlord's interest in the Property, Landlord
shall have the right to transfer the Security Letter of Credit to the transferee
and thereupon shall, without any further agreement between the parties, be
released by Tenant from all liability therefor, and it is agreed that the
provisions hereof shall apply to every transfer or assignment of the Security
Letter of Credit to a new Landlord. The Security Letter of Credit may be
assigned as security in connection with a Facility Mortgage. If the financial
institution from which Tenant has obtained a Security Letter of Credit shall
admit in writing its inability to pay its debts generally as they become due,
file a petition in bankruptcy or a petition to take advantage of any insolvency
act, make a general assignment for the benefit of its creditors, or consent to
the appointment of a receiver of itself or of the whole or any substantial part
of its property, or 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, then Tenant shall
obtain a replacement Security Letter of Credit within thirty (30) days of such
act from another financial institution satisfactory to Landlord.
(ii) The initial Security Letter of Credit required
under this Section 29.3(c) shall be obtained and delivered to Landlord on or
prior to that date which is thirty (30) days prior to the commencement of the
first (1st) Extended Term. Each Security Letter of Credit covering a subsequent
period shall be obtained and delivered to Landlord not less than thirty (30)
days prior to the expiration of the then existing Security Letter of Credit
("LETTER OF CREDIT DATE"). Promptly after the delivery to Landlord of any
Security Letter of Credit in compliance with this Section 29.3(c), Landlord
shall return any existing Fixed Term Security Letter of Credit or Security
Letter of Credit then in its possession. The term for each such Security Letter
of Credit shall begin no later than the expiration date of the previous Security
Letter of Credit and shall comply with all requirements of this Section 29.3(c).
(iii) The amount of the Security Letter of Credit shall
be determined as follows:
(A) The Security Letter of Credit in effect during
any Lease Year shall be in an amount equal to the annual Base Rent payable by
Tenant under this Lease for such Lease Year.
(B) Notwithstanding clauses (i) and (ii) above,
Tenant shall be entitled to reduce the amount of the Security Letter of Credit
for the then current Lease Year to the following percentage of the amount
otherwise required by subclause (A) above if the
66
senior unsecured debt issued by Iasis is rated as follows (or higher) by ▇▇▇▇▇'▇
Investors Service and Standard and Poor's Rating Service:
Moody's Rating/Standard and Poor's Percentage
---------------------------------- ----------
B1 / B+ 75%
Ba3 / BB- 50%
Ba2 / BB 0%
In the event that following any such
reduction of such Security Letter of Credit to such percentage of the amount
otherwise required by subclause (A) above, such senior unsecured debt rating for
either Moody's or Standard and Poor's decreases below such applicable rating,
then the applicable percentage (including 100%, if applicable) of the amount of
the Security Letter of Credit otherwise required by subclause (A) above and this
subclause (B) shall be reinstated and Tenant shall immediately deliver to
Landlord such Security Letter of Credit in such increased amount.
(iv) Landlord shall have the right to draw upon a
Security Letter of Credit up to its full amount whenever (A) an Event of Default
hereunder has occurred, or (B) an event or circumstance has occurred which with
notice would constitute an Event of Default hereunder, but the transmittal of
any such notice is barred by applicable law. In addition, if Tenant fails to
obtain a satisfactory Security Letter of Credit prior to the applicable Letter
of Credit Date, Landlord may draw upon the full amount of the then existing
Security Letter of Credit without giving any notice or time to cure to Tenant.
No such draw shall cure or constitute a waiver of an Event of Default, be deemed
to fix or determine the amounts to which Landlord is entitled to recover under
this Lease or otherwise, or be deemed to limit or waive Landlord's right to
pursue any remedies provided for in this Lease. If all or any portion of a
Security Letter of Credit is drawn against by Landlord, Tenant shall, within two
(2) business days after demand by Landlord, cause the issuer of such Security
Letter of Credit to issue Landlord, at Tenant's expense, a replacement or
supplementary Security Letter of Credit in the form required pursuant to this
Section 29.3(c) such that at all times during the Term, Landlord shall have the
ability to draw on one or more Security Letters of Credit totaling, in the
aggregate, the amount required pursuant to clause (iii) above; provided,
however, that simultaneously with the delivery of any such replacement
supplementary Security Letter of Credit, Landlord shall return to Tenant any
proceeds of any prior drawing that have not been applied to the cure of any
Event of Default.
ARTICLE XXX.
MISCELLANEOUS
30.1 LANDLORD'S RIGHT TO INSPECT. Landlord and its authorized
representatives may, at any time and from time to time, upon reasonable notice
to Tenant, inspect the Property during usual business hours subject to any
security, health, safety or patient business confidentiality requirements of
Tenant or any governmental agency, or created by any Insurance Requirement or
Legal Requirement relating to the Property.
67
30.2 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
provided hereunder, 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 of any such term. To the extent permitted by applicable 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.
30.3 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 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.
30.4 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease
or of all or any portion of or interest in the Property 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 by
Tenant.
30.5 NO MERGER OF TITLE. There shall be no merger of this Lease or
of the leasehold estate created hereby if the same person, firm, corporation or
other entity acquires, owns or holds, directly or indirectly, this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, and the fee estate in the Property.
30.6 CONVEYANCE BY LANDLORD. Simultaneously with any transfer of
interest in the Property (except pursuant to Article XXVII), Landlord shall
cause to be transferred to the same transferee a similar interest in all
properties owned by Landlord or its Affiliates and leased to Tenant or its
Affiliates. If Landlord or any successor owner of the Property conveys the
Property in accordance with the terms hereof (other than as security for a
debt), and the grantee or transferee of the Property expressly assumes 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, thereupon shall be released from all liabilities and obligations of Landlord
under this Lease.
30.7 QUIET ENJOYMENT. So long as Tenant pays all Rent as the same
becomes due and fully complies with all of the terms of this Lease and fully
performs its obligations hereunder, Landlord warrants, represents and covenants
that Tenant shall peaceably and quietly have, hold and enjoy the Property for
the Term hereof, 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. Except as otherwise provided in this Lease, no failure by Landlord to
comply with the foregoing covenant shall give Tenant any right to cancel or
terminate this Lease or ▇▇▇▇▇, reduce or make a deduction from or offset against
the Rent or any other sum payable under this Lease, or to fail or refuse 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
68
Landlord as a result of a breach by Landlord of the covenant of quiet enjoyment
contained in this Section and, in the event Tenant acquires the Property
pursuant to the option granted hereunder, offset, at Tenant's option, against
the purchase price the amount of any damages owing from Landlord to Tenant.
30.8 NOTICES. All notices, demands, requests, consents, approvals
and other communications ("NOTICE" or "NOTICES") hereunder shall be in writing
and delivered by personal delivery, courier or messenger service, express or
overnight mail, or by registered or certified mail, return receipt requested and
postage prepaid, or by facsimile, addressed to the respective parties as
follows:
If to Landlord: Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Tenant: Pioneer Valley Hospital, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Chief Operating Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Iasis Healthcare Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to: Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party may hereafter designate. Personally
delivered Notices sent by courier or messenger service or by express or
overnight mail or by facsimile shall be effective upon receipt, and Notices
given by mail shall be complete at the time of deposit in the U.S. mail system,
but any prescribed period of Notice and any right or duty to do any act or make
any response within any prescribed period or on a date certain after the service
of such Notice given by mail shall be extended five (5) days.
69
30.9 SURVIVAL OF TERMS; APPLICABLE LAW. Anything contained is this
Lease to the contrary notwithstanding, all claims against, and liabilities of,
Tenant or Landlord arising prior to any date of termination of this Lease shall
survive such termination for two years, except for third party claims based on
alleged tortious actions and omissions of Tenant during the term of this Lease,
which third party claims shall survive the term of this Lease. If any term or
provision of this Lease or any application thereof shall be invalid or
unenforceable for any reason whatsoever, the remainder of this Lease and any
other application of such term or provisions shall not be affected thereby. If
any late charge or any interest rate provided for in any provision of this Lease
based upon a rate in excess of the maximum rate permitted by applicable law,
such charges shall be fixed at the maximum permissible rate. Neither this Lease
nor any provision hereof may be changed, waived, discharged, modified or
terminated except by an instrument in writing and in recordable form, signed by
Landlord and Tenant. Subject to any limitations on assignment contained in this
Lease, 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. THIS LEASE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH, BUT
NOT INCLUDING ITS CONFLICTS OF LAWS RULES.
30.10 EXCULPATION OF LANDLORD'S AND TENANT'S OFFICERS AND AGENTS.
This Lease is made on behalf of Landlord and Tenant by an officer thereof, not
individually, but solely in such officer's capacity in such office as authorized
by the directors of Landlord or Tenant. The obligations of this Lease are not
binding upon, nor shall resort be had to, the private property of any of the
directors, shareholders, members, officers, employees or agents of Landlord or
Tenant personally, but bind only Landlord's and Tenant's property. The provision
contained in the foregoing sentence is not intended to, and shall not, limit any
right that Landlord or Tenant might otherwise have to obtain injunctive relief
against the other party or its successors in interest, or any action not
involving the personal liability of the directors, shareholders, members,
officers, employees or agents of Landlord or Tenant. Except as otherwise
expressly provided herein, in no event shall either party ever be liable to the
other party for any indirect or consequential damages suffered by a party from
whatever cause.
30.11 TRANSFERS FOLLOWING TERMINATION. Upon the expiration or
earlier termination of the Term, Tenant shall use good faith efforts to transfer
to Landlord or Landlord's nominee, or to cooperate with Landlord or Landlord's
nominee in connection with the processing by Landlord or Landlord's nominee of
any applications for, all licenses, operating permits and other governmental
authorizations and all contracts (including contracts with governmental or
quasi-governmental entities) which may be necessary for the operation of the
Facility; provided, however, that the costs and expenses of any such transfer or
the processing of any such application shall be paid by Landlord or Landlord's
nominee.
30.12 TENANT'S WAIVERS. Tenant waives all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance and waives all notices of the existence,
creation, or incurring of new or additional obligations, except as expressly
granted herein.
70
30.13 MEMORANDUM OF LEASE. Landlord and Tenant shall, upon the
request of either party, enter into a short form memorandum of this Lease and
all options contained herein, in form suitable for recording under the laws of
the State in which the Property is located. Tenant shall pay all costs and
expenses of recording such memorandum of this Lease.
30.14 ARBITRATION. Any controversy arising out of, connected with or
incidental to this Lease (except disputes concerning determinations of Fair
Market Value which shall be resolved exclusively as provided in Article XXV)
shall be decided by binding arbitration in Salt Lake City, Utah, under the
expedited procedures of the American Arbitration Association, provided that
claim is within the applicable period of limitation. Depositions to obtain
discovery may be taken upon good cause, upon leave to do so granted by the
arbitrator.
30.15 MODIFICATIONS. No provision of this Lease may be amended,
supplemented or otherwise modified except by an agreement in writing signed by
the parties hereto or their respective successors in interest.
30.16 ATTORNEYS' FEES. If either party commences an action against
the other to interpret or enforce any of the terms of this Lease or because of
the breach by the other party of any of the terms hereof, the losing or
defaulting party shall pay to the prevailing party reasonable attorneys' fees,
costs and expenses incurred in connection with the prosecution or defense of
such action.
30.17 TIME IS OF THE ESSENCE. Time is hereby expressly made of the
essence with respect to each and every term and provision of this Lease,
including, but in no way limiting the generality of the foregoing, each and
every time constraint and deadline imposed by the terms of this Lease and the
obligation of the Tenant to exercise the options set forth in this Lease,
including, without limitation, the rights and options set forth in Articles III,
XIX and XXVI within the respective time periods set forth herein. The parties
intend that they be strictly bound by the provisions concerning the timing of
performance of their respective obligations contained in this Lease. Further, if
any attempt is made by either party to perform an obligation required by it to
be performed or comply with a provision of this Lease required by it to be
complied with, in any manner, other than in strict compliance with the time
constraints applicable thereto, even if such purported attempt is but one day
late, then such purported attempt at performance or compliance shall be deemed
(i) violative of this "Time is of the Essence" clause, (ii) in contravention of
the intent of the parties hereto, and (iii) null and void and of no force and
effect.
30.18 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original but when taken together
shall constitute one and the same instrument.
30.19 BROKERS. Tenant warrants that it has not had any contact or
dealings with any person or real estate broker which would give rise to the
payment of any fee or brokerage commission in connection with this Lease, and
Tenant shall indemnify, protect, hold harmless and defend Landlord from and
against any liability with respect to any fee or brokerage commission arising
out of any act or omission of Tenant. Landlord warrants that it has not had any
contact or dealings with any person or real estate broker which would give rise
to the payment of any fee or brokerage commission in connection with this Lease,
and Landlord shall
71
indemnify, protect, hold harmless and defend Tenant from and against any
liability with respect to any fee or brokerage commission arising out of any act
or omission of Landlord.
30.20 PUBLIC DISCLOSURE. Any release to the public of information
with respect to the construction contemplated herein or any matters set forth in
this Lease or the Work Letter, other than as required by law, will be made only
in a form approved by Landlord and Tenant. The provisions of this Section 30.20
shall survive the expiration or earlier termination of this Lease.
30.21 GUARANTY. Landlord and Tenant acknowledge that a material
consideration to Landlord for its execution and delivery of this Lease is the
guaranty of Tenant's obligations hereunder by Iasis. Accordingly, concurrently
with Tenant's execution and delivery of this Agreement, Tenant shall deliver to
Landlord the Guaranty executed by Iasis.
30.22 AMENDED AND RESTATED LEASE. This Lease amends and restates in
its entirety the Original Lease.
ARTICLE XXXI.
PRESERVATION OF FACILITY VALUE
Tenant acknowledges that a fair return to Landlord on its investment
in the Property is dependent, in part, on the concentration on the Property and
all Capital Additions during the Term of the hospital business of Tenant and its
Affiliates in the geographical area described below. Accordingly, Landlord and
Tenant agree that during the Term and for a period of two (2) years thereafter,
neither Tenant nor any of its Affiliates, directly or indirectly, shall operate,
own, manage or have any interest in or otherwise participate in or receive
revenues from any other facility or institution providing services or similar
goods to those provided in connection with the Facility and its Primary Intended
Use, within a three and one-half (3 1/2)-mile radius outward from the outside
boundary of the Property. All distances shall be measured on a straight line
rather than on a driving distance basis. In the event that any portion of such
other facility or institution is located within such restricted area the entire
facility or institution shall be deemed located within such restricted area.
72
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as
of the date first above written.
HEALTH CARE PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: Senior Vice President
-----------------------------------
PIONEER VALLEY HOSPITAL, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Title: CEO
-----------------------------------
73
EXHIBIT A
Pioneer Fee Property
PARCEL 1:
BEGINNING at a point South 89(degrees)56'54" West 1054.1 feet and North
0(degrees)04'58" West 173.0 feet from the Southeast corner of Section ▇▇,
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian, (said point also
being on the Westerly line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇), which point is also the
Northeast corner of the HCA Properties, Inc. property contained in that certain
Warranty Deed recorded September 11, 1981 as Entry No. 3603565, in Book 5291, at
Page 153 of the Official Records; and running thence West along said HCA
Properties, Inc., North boundary line, 100.00 feet to the Northwest corner of
the HCA Properties, Inc. property; thence along the West boundary of the said
HCA Properties, Inc. property South 0(degrees)04'58" East 140.0 feet to the
North line of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇; thence along said North line of said ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ 89(degrees)56'54" West 171.0 feet to a point on the West line of
the Southeast quarter of the Southeast quarter of said Section 30; thence along
said West line North 1295 feet to the 1/16 Section line; thence East 425.88
feet, more or less, to a point on the West line of vacated ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇;
thence along said West line South 0(degrees)05' East 150.24 feet, more or less,
to a point of tangency with a 144.69 foot radius curve to the right; thence
Southwesterly 124.27 feet along said curve to a point of tangency; thence South
49(degrees)07'42" West 38.22 feet to a point of tangency with a 205.32 foot
radius curve to the left; thence Southwesterly 175.79 feet along said curve to a
point of tangency; thence South 723.44 feet to the point of BEGINNING.
TOGETHER WITH the West one-half of the vacated street (▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇)
abutting a portion of the said property on the East.
EXCEPTING THEREFROM the following described property conveyed to National Health
Investors, Inc. in that certain Special Warranty Deed recorded March 2, 1993 as
Entry No. 5445234, in Book 6613, at Page 1040 of the Official Records, to-wit:
BEGINNING at a point on the West line of the Southeast quarter of the Southeast
quarter of Section ▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇(▇▇▇▇▇▇▇)▇▇'▇▇" West along the
Section line 1323.97 feet and North 0(degrees)08'49" West 1093.53 feet from the
Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base
and Meridian; and running thence North 0(degrees)08'49" West along said West
line 234.16 feet to the Northwest corner of the Southeast quarter of the
Southeast quarter of said Section 30; thence North 89(degrees)57'12" East along
the North line of said Southeast quarter of the Southeast quarter 279.72 feet;
thence South 0(degrees)08'49" East 113.80 feet; thence South 45(degrees)08'49"
East 43.64 feet; thence South 00(degrees)08'49" East 6.02 feet; thence North
89(degrees)51'11" East 6.02 feet; thence South 45(degrees)08'49" East 109.16
feet to a point on a curve to the right, the radius point of which bears North
53(degrees)23'53" West 144.69 feet; thence Southwesterly along the arc of said
curve 31.63 feet to a point of tangency; thence South 49(degrees)07'42" West
38.22 feet to a point of a 205.32 foot radius curve to the left; thence
Southwesterly along the arc of said curve 37.77 feet; thence North
45(degrees)08'49" West 186.99
feet; thence South 89 (degrees) 51' 11" West 5.23 feet; thence South
0 (degrees) 08' 49" East 62.88 feet; thence South 89 (degrees) 51' 11"
West 179.63 feet to the point of BEGINNING.
PARCEL 2:
BEGINNING at a point on the North right of way line of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and the
West right of way line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, said point being South 89 (degrees)
56' 54" West 1057.25 feet, more or less, and North 0 (degrees) 03' 06" West 33
feet from the Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West,
Salt Lake Base and Meridian; and running thence North 0 (degrees) 03' 06" West
along said West right of way line 140.0 feet, more or less, to the Southerly
boundary line of the Valley West Hospital, Inc. property as described in that
certain Warranty Deed recorded January 26, 1979 as Entry No. 3229774, in Book
4806, at Page 585, Salt Lake County Recorder's Office; thence South 89 (degrees)
56' 54" West along said South boundary line 100.0 feet, more or less, to an
Easterly boundary line of Valley West Hospital's property as described in the
Warranty Deed described hereinabove; thence South 0 (degrees) 03' 06" East along
said East boundary line 140.0 feet, more or less, to the North right of way line
of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇; thence North 89 (degrees) 56' 54" East along said North
right of way line 100.00 feet, more or less, to the point of BEGINNING.
PARCEL 3:
BEGINNING at a point 885.275 feet West and 33 feet North from the Southeast
corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and
Meridian; and running thence West along the North line of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
108.525 feet, more or less, to the East line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇; thence North 0
(degrees) 04' 58" West along said East line 167 feet; thence North 89 (degrees)
56' 54" East 108.525 feet, more or less; thence South 167 feet to the point of
BEGINNING.
PARCEL 4:
BEGINNING at a point South 89 (degrees) 56' 54" West 994.1 feet and North 0
(degrees) 04' 58" West 283.0 feet from the Southeast corner of Section ▇▇,
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian, (which point of
beginning is on the Easterly line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇); and running thence North
0 (degrees) 04' 58" West 365 feet; thence East 300 feet; thence North 0
(degrees) 04' 58" West 320.0 feet; thence West 275.99 feet to a point on a
145.32 foot radius curve to the right; thence Northeasterly 39.70 feet along
said curve to a point of tangency; thence North 49 (degrees) 07' 42" East 38.22
feet to a point on a 204.69 foot radius curve to the left; thence Northeasterly
175.81 feet along said curve to a point of tangency; thence North 0 (degrees)
05' West 150.28 feet, more or less, to the 1/16 Section line; thence East 343.88
feet, more or less; thence South 710.0 feet; thence West 32.88 feet; thence
South 265.255 feet; thence South 89 degrees 56' 54" West 285.00 feet; thence
South 0 (degrees) 04' 58" East 70.00 feet; thence South 89 (degrees) 56' 54"
West 180.53 feet to the point of BEGINNING.
EXCEPTING THEREFROM that portion located within the bounds of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
(also known as Pioneer Parkway).
TOGETHER WITH the East one-half of the vacated street (▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇)
abutting a portion of said property on the West.
A-2
PARCEL 5:
BEGINNING at a point North along the Section line 796.505 feet and West 170.35
feet from the Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West,
Salt Lake Base and Meridian; and running thence West 324.65 feet; thence North
178.25 feet; thence East 324.65 feet; thence South 178.25 feet to the point of
BEGINNING.
PARCEL 6:
BEGINNING at point in the center of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 618.255 feet North of the
Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base
and Meridian; and running thence North 178.25 feet; thence West 495 feet; thence
South 178.25 feet; thence East 495 feet to the point of BEGINNING.
EXCEPTING THEREFROM those portions located within the bounds of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (also known as Pioneer Parkway).
PARCEL 7:
BEGINNING at a point on the East line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, said point being
North 0 (degrees) 02'10" West along the section line 788.49 feet and East 33.0
feet from the Southwest corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West,
Salt Lake Base and Meridian; and running thence North 0 (degrees) 02'10" West
along said East line 200.00 feet; thence East 420.00 feet; thence South 0
(degrees) 02'10" East 200.00 feet; thence West 420.00 feet to the point of
BEGINNING.
PARCEL 8:
BEGINNING North 0 (degrees) 02'10" West 788.1 feet and North 89 (degrees) 57'50"
East 40 feet from the Southwest corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1
West, Salt Lake Base and Meridian; and running thence North 0 (degrees) 02'10"
West 1.78 feet; thence East 413 feet; thence South to the North line of Rockwood
Way; thence Westerly along said North line to the point of BEGINNING.
A-3
DESCRIPTIONS OF RAISED PLANTED PORTIONS OF THE DESIGNATED THREE MEDIAN ISLANDS
"A", "B" AND "C" LOCATED TOTALLY WITHIN DEDICATED ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AND
REMAINING IN PRIVATE OWNERSHIP ARE AS FOLLOWS:
PLANTED MEDIAN 'A'
Beginning at a point North 651.27 feet and West 860.12 feet from the Southeast
corner of ▇▇▇▇▇▇▇ ▇▇, ▇ ▇ ▇, ▇ ▇ ▇, ▇▇▇ & ▇; thence Southwesterly 29.59 feet
along a curve to the left having a radius of 109.63 feet and a central angle
of 15(degrees) 27'58"; thence Southwesterly 10.76 feet along a curve to the
right having a radius of 111.30 feet and a central angle of 5(degrees) 32'17";
thence South 2.00 feet; thence East 44.21 feet; thence Northeasterly 29.59 feet
along a curve to the left having a radius of 109.63 feet and a central angle of
15(degrees) 27'58"; thence Northeasterly 10.76 feet along a curve to the right
having a radius of 111.30 feet and a central angle of 5(degrees) 32'17"; thence
North 2.00 feet; thence West 44.21 feet to the point of beginning, containing
0.012 acres +/-.
PLANTED MEDIAN 'B'
Beginning at a point North 651.27 feet and West 653.76 feet from the Southeast
corner of ▇▇▇▇▇▇▇ ▇▇, ▇ ▇ ▇, ▇ ▇ ▇, ▇▇▇ & ▇; thence Southwesterly 29.59 feet
along a curve to the left having a radius of 109.63 feet and a central angle of
15(degrees) 27'58"; thence Southwesterly 10.76 feet along a curve to the right
having a radius of 111.30 feet and a central angle of 5(degrees) 32'17"; thence
South 2.00 feet; thence East 58.15 feet; thence Northeasterly 29.59 feet along
a curve to the left having a radius of 109.63 feet and a central angle of
15(degrees) 27'58"; thence Northeasterly 10.76 feet along a curve to the right
having a radius of 111.30 feet and a central angle of 5(degrees) 32'17"; thence
North 2.00 feet; thence West 58.15 feet to the point of beginning, containing
0.014 acres +/-.
PLANTED MEDIAN 'C'
Beginning at a point North 651.27 feet and West 461.45 feet from the Southeast
corner of ▇▇▇▇▇▇▇ ▇▇, ▇ ▇ ▇, ▇ ▇ ▇, ▇▇▇ & ▇; thence Southwesterly 13.09 feet
along a curve to the left having a radius of 4.17 feet and a central angle of
180(degrees) 00'00"; thence East 95.74 feet; thence Northeasterly 80.72 feet
along a curve to the left having a radius of 154.17 feet and a central angle of
30(degrees) 00'00"; thence N 60(degrees) 00'00" E 94.24 feet; thence
Northeasterly 17.78 feet along a curve to the left having a radius of 99.17
feet and a central angle of 10(degrees) 16'24"; thence N 49(degrees) 43'36" E
22.89 feet; thence Northeasterly 4.20 feet along a curve to the right having a
radius of 100.83 feet and a central angle of 2(degrees) 23'03"; thence N
30(degrees) 00'00" W 2.00 feet; thence S 60 (degrees) 00'00" W 138.59 feet;
thence Southwesterly 76.36 feet along a curve to the right having a radius of
145.83 feet and a central angle of 30(degrees) 00'00"; thence West 95.74 feet
to the point of beginning, containing 0.058 acres +/-.
Excepting therefrom the following real property:
Order No. 96-1526
PARCEL 1:
Beginning at a point on the East line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, said point being
North 0 (degrees) 02'10" West along the section line 788.49 feet and East 33.0
feet from the Southwest corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West,
Salt Lake Base and Meridian; and running thence North 0 (degrees) 02'10" West
along said East line 200.00 feet; thence East 420.00 feet; THENCE SOUTH 0
(degrees) 02'10" East 200.00 feet thence West 420.00 feet to the point of
beginning.
PARCEL 2:
Beginning North 0 (degrees) 02'10" West 788.1 feet and North 89 (degrees) 57'50"
East 40 feet from the Southwest corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1
West, Salt Lake Base and Meridian; and running thence North 0 (degrees) 02'10"
West 1.78 feet; thence East 413 feet; thence South to the North line of Rockwood
Way; thence West along said North line to the point of beginning.
EXHIBIT D
To Pioneer Hospital Lease
Pioneer Permitted Encumbrances
8. (Affects a portion of Parcel 2)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer show that taxes for the year 1995 have
been paid in the amount of $2,558.08. (▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇-▇▇▇-▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇)
(Affects a portion of Parcel 2)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer show that taxes for the year 1995 have
been paid in the amount of $246,882.15. (▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇-▇▇▇-▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇)
(Affects Parcel 3)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer show that taxes for the year 1995 have
been paid in the amount of $1,613.38. (▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇-▇▇▇-▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇)
(Affects Parcel 4)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer show that taxes for the year 1995 have
been paid in the amount of $1,980.93. (▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇-▇▇▇-▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇)
(Affects Parcel 5)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer show that taxes for the year 1995 have
been paid in the amount of $25,046.46. (▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇-▇▇▇-▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer shown that taxes for the year 1995 have
been paid in the amount of $21,502.35. (▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇-▇▇▇-▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇)
(Affects Parcel 7)
Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake County Treasurer show that taxes for the year 1995 have
been paid in the amount of $4,007.61. (▇▇▇▇▇▇▇ No. ▇▇-▇▇-▇▇▇-▇▇▇ and Tax
District No. 24)
9. Said property lies within the boundaries of West Valley City, and is
subject to any and all charges and assessments thereof. (Phone No.
▇▇▇-▇▇▇▇)
NOTE: Delinquent Special Assessment charges may have been reported to Salt
Lake County by West Valley City. It is recommended that when checking with
the said City care should be taken to specifically ask if any delinquent
charges have been certified to the Salt Lake County Treasurer.
10. Said property lies within the boundaries of ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Improvement
District, and is subject to any and all charges and assessments thereof.
(Phone No. ▇▇▇-▇▇▇▇)
NOTE: Delinquent Special Assessment charges may have been reported to Salt
Lake County by ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Improvement District. It is recommended that
when checking with the said District care should be taken to specifically
ask if any delinquent charges have been certified to the Salt Lake County
Treasurer.
11. A right of way and easement for a water ditch and incidental purposes as
disclosed by mesne instruments of record, including that certain Warranty
Deed recorded August 25, 1943 as Entry No. 958185, in Book 354, at Page 218
of the Official Records, through and across said property as follows:
Commencing 618.255 feet North of the Southeast corner of Section ▇▇,
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian, and running
thence West 495 feet; thence North 356.50 feet; thence East 3 feet; thence
South 353.50 feet; thence East 492 feet; thence South 3 feet to beginning.
12. A right of way as disclosed by that certain Warranty Deed recorded October
24, 1962 as Entry No. 1877142, in Book 1978, at Page 261 of the Official
Records, through and across said property as follows:
Beginning at a point on the North line of a 4 rod street which is South
89(degrees)56'54" West 993.80 feet and North 00(degrees)04'58" West 33.00
feet from the Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1
West, Salt Lake Base and Meridian, and running thence North
00(degrees)04'58" West 1008.00 feet; thence South 89(degrees)56'54" West
60.00 feet; thence South 00(degrees)04'58" East 498.00 feet; thence South
89(degrees)56'54" West 169.90 feet to point of tangency with a 20 foot
radius curve to the right; thence along said curve for an arc distance of
15.50 feet to a point of tangency with a 50 foot radius reverse curve to
the left; thence along said curve for an arc distance of 234.60 feet to a
point of tangency with a 20 foot radius reverse curve to the right; thence
along said curve for an arc distance of 15.50 feet; thence North
89(degrees)56'54" East 169.92 feet; thence South 00(degrees)04'58" East
450.00 feet to the North line of said street; thence North
89(degrees)56'54" East 60.00 feet along said street to the point of
beginning.
13. A right of way and easement 60 feet in width to lay, maintain, operate,
repair, inspect, protect, remove and replace pipe lines, valves, valve
boxes and other gas transmission and distribution facilities, as created
in favor of MOUNTAIN FUEL SUPPLY COMPANY by instrument recorded March 5,
1963 as Entry No. 1903412, in Book 2023, at Page 365 of the Official
Records, through and across said property as follows:
The land of the Grantor, located in the Southeast quarter of the Southeast
quarter of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and
Meridian; the center line of said right of way and easement shall extend
through and across the above described land and premises as follows,
to-wit: Beginning at a point 1020 feet West and 33 feet North from the
Southeast corner of said Section 30; thence North 0(degrees)04'58" West
1008.00 feet.
-2-
14. A right of way and easement for the erection and continued maintenance,
repair, alteration, and replacement of electric transmission, distribution,
and telephone circuits, and 4 guy anchors and 5 poles, with the necessary
guys, stubs, cross-arms and other attachments thereon, or affixed thereto,
for the support of said circuits, as created in favor of UTAH POWER & LIGHT
COMPANY by instrument recorded March 27, 1963 as Entry No. 1908451, in Book
2031, at Page 621 of the Official Records, through and across said property
as follows:
Beginning at the South boundary line of the Grantors' land at a point 33
feet North and 992 feet West, more or less, from the Southeast corner of
Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian;
thence North 21(degrees) 22' West 24 feet, more or less; thence North
0(degrees) 05' West 644 feet; thence East 53 feet on said land and being in
the Southeast quarter of the Southeast quarter of said Section 30.
15. A right of way and easement for the erection and continued maintenance,
repair, alteration, and replacement of electric transmission, distribution,
and telephone circuits, and one guy anchor and 2 poles, with the necessary
guys, stubs, crossarms and other attachments thereon, or affixed thereto,
for the support of said circuits, as created in favor of UTAH POWER & LIGHT
COMPANY by instrument recorded January 20, 1964 as Entry No. 1973580, in
Book 2145, at Page 234 of the Official Records, through and across said
property as follows:
Beginning on the East boundary fence of the Grantors' land at a point 1319
feet North and 495 feet West, more or less, from the Southeast corner of
Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian;
thence South 89(degrees) 57' West 471.5 feet; thence South 50(degrees) 42'
West 34 feet to the West boundary fence of said land and being in the
Southeast quarter of the Southeast quarter of said Section 30.
16. A right of way and easement for the erection and continued maintenance,
repair, alteration, and replacement of electric transmission, distribution,
and telephone circuits, and one guy anchor and 2 poles, with the necessary
guys, stubs, crossarms and other attachments thereon, or affixed thereto,
for the support of said circuits, as created in favor of UTAH POWER & LIGHT
COMPANY by instrument recorded January 20, 1964 as Entry No. 1973581, in
Book 2145, at Page 235 of the Official Records, through and across said
property as follows:
Beginning on the East boundary fence of the Grantors' land at a point 1300
feet North and 990 feet West, more or less, from the Southeast corner of
Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian;
thence South 50(degrees) 42' West 10.4 feet; thence South 0(degrees) 05'
East 245 feet, more or less, to the South boundary line of said land and
being in the Southeast quarter of the Southeast quarter of said Section 30.
- 3 -
17. A right of way and easement for the erection and continued maintenance,
repair, alteration, and replacement of electric transmission, distribution
and telephone circuits, and no guy anchors and 1 pole, with the necessary
guys, stubs, crossarms and other attachments thereon, or affixed thereto,
for the support of said circuits, as created in favor of UTAH POWER & LIGHT
COMPANY by instrument recorded January 20, 1964 as Entry No. 1973582, in
Book 2145, at Page 236 of the Official Records, through and across said
property as follows:
Beginning on the North boundary line of the Grantors' land at a point 1050
feet North and 1000 feet West, more or less, from the Southeast corner of
Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian;
thence South 0(degrees)05' East 355 feet, more or less, to an existing pole
on said land and being in the Southeast quarter of the Southeast quarter of
said Section 30.
18. Intentionally omitted.
19. A right of way and easement as disclosed by means instruments of record,
including that certain Quit-Claim Deed recorded as Entry No. 2885193, in
Book 4424, at Page 297 of the Official Records, through and across said
property as follows:
Beginning at a point on the North line of a 4 rod Street which is South
89(degrees)56'54" West 993.80 feet and North 00(degrees)04'58" West 33.00
feet from the Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1
West, Salt Lake Base and Meridian, and running thence North
00(degrees)04'58" West 1008.00 feet; thence South 89(degrees)56'54" West
60.00 feet; thence South 00(degrees)04'58" East 1008.00 feet to the North
line of said street; thence North 89(degrees)56'54" East 60.00 feet along
said street to the point of beginning.
20. A right of way and easement 6 feet in width to construct, operate,
maintain and remove communication and other facilities, as created in favor
of THE MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY by instrument
recorded April 15, 1981 as Entry No. 3554551, in Book 5237, at Page 70 of
the Official Records, through and across said property as follows:
An easement six (6) feet in width described by a center line with three (3)
feet on each side as follows: Commencing 885.275 feet West and North 197
feet from Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West,
Salt Lake Base and Meridian; thence South 89(degrees)56'54" West 108.525
feet to end.
- 4 -
21. (Affects Parcel 2)
Any existing easements for utilities which may have been constructed
through, over or under that portion of the herein described property shown
as being a portion of vacated ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, as disclosed by Ordinance
recorded August 19, 1982 as Entry No. 3703755, in Book 5403, at Page 2835
of the Official Records.
22. A right of way and easement 16 feet in width to lay, maintain, operate,
repair, inspect, protect, remove and replace pipe lines, valves, valve
boxes and other gas transmission and distribution facilities, as created in
favor of MOUNTAIN FUEL SUPPLY COMPANY by instrument recorded December 22,
1982 as Entry No. 3742037, in Book 5427, at Page 336 of the Official
Records, through and across said property as follows:
Land of the Grantor located in the Southeast quarter of Section ▇▇,
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian, the center
line of said right of way and easement shall extend through and across the
above described land and premises as follows, to-wit: Beginning at a point
North 31.90 feet and West 1317.15 feet from the Southeast corner of said
Section 30; thence North 382.00 feet; thence East 35.00 feet.
23. Notes and other matters set forth in that certain Dedication Plat for ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ recorded March 28, 1983 as Entry No. 3773932, in Book 83-3 of
Plats, at Page 41 of the Official Records.
24. A right of way and easement 16 feet in width to lay, maintain, operate,
repair, inspect, protect, remove and replace pipe lines, valves, valve
boxes and other gas transmission and distribution facilities, as created in
favor of MOUNTAIN FUEL SUPPLY COMPANY by instrument recorded May 6, 1983 as
Entry No. 3789802, in Book 5457, at Page 99 of the Official Records,
through and across said property as follows:
Land of the Grantor located in the East half of the Southeast quarter of
Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian,
the center line of said right of way and easement shall extend through and
across the above described land and premises as follows to-wit: Beginning
at a point North 762.51 feet and West 43.74 feet from the Southeast corner
of said Section 30; thence West 50.01 feet; thence on a curve to the left
with a central angle of 30 (degrees) 00'00" and a radius of 150.00 feet and
a length of 78.54 feet; thence South 60 (degrees) 00'00" West 143.77 feet;
thence on a curve to the right with a central angle of 30 (degrees) 00'00",
a radius of 127.00 feet a length of 66.50 feet; thence West 160.00 feet to
Grantor's West property line.
Also beginning at a point North 708.76 feet and West 234.20 feet from the
Southeast corner of said Section 30; thence North 245.00 feet; thence West
225.00 feet; thence South 115.00 feet.
25. Any existing easements for utilities which may have been constructed
through, over or under that portion of the herein described property shown
as being a portion of vacated ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, as disclosed by Ordinance
recorded March 26, 1984 as Entry No. 3920620, in Book 5541, at Page 1626 of
the Official Records.
-5-
26. A right of way and easement for ingress and egress as disclosed by mesne
instruments, including that certain Quit-Claim Deed recorded April 8, 1986
as Entry No. 4226795, in Book 5753, at Page 2326 of the Official Records,
through and across said property as follows:
Beginning at a point where the centerline of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ intersects
the North line of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ extended West, said point being South
89 (degrees) 56'54" West 1023.80 feet and North 0 (degrees) 04'24" East
676.02 feet from the Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇,
▇▇▇▇▇ 1 West, Salt Lake Base and Meridian; and running thence West 30.00
feet; thence North 0 (degrees) 04'24" East 220.46 feet to a point of a
205.321 foot radius curve to the right; thence Northeasterly along the arc
of said curve 74.06 feet; thence East 66.19 feet to a point on a curve to
the left the radius point of which is South 59 (degrees) 58'45" East
145.321 feet, thence Southwesterly along the arc of said curve 75.96 feet
to a point of tangency; thence South 0 (degrees) 04'24" West 220.38 feet;
thence West 30.00 feet to the point of beginning.
27. A right of way and easement to construct, operate, maintain and remove
communications and other facilities, as created in favor of THE MOUNTAIN
STATES TELEPHONE AND TELEGRAPH COMPANY by instrument recorded August 28,
1990 as Entry No. 4958403, in Book 6247, at Page 2629 of the Official
Records, through and across said property as follows:
Commencing at a point on the North line of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ said point
being South 89 (degrees) 56'54" West 1325.1 feet and North 0 (degrees)
04'58" West 33.00 feet from the Southeast corner of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian; thence North 62.00 feet;
thence East 4.0 feet; thence South 37.0, thence East 6.0 feet; thence South
25.0 feet more or less to the North line of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇; thence along
North line South 89 (degrees) 56'54" West 10.0 feet to the point of
beginning.
28. The Recitals, Covenants, Conditions, Restrictions, and Easements and/or
Rights of Way contained in that Special Warranty Deed recorded March 2,
1993 as Entry No. 5445234, in Book 6613, at Page 1040 of the Official
Records.
29. A right of way and easement to lay, maintain, operate, repair, inspect,
protect, remove and replace pipelines, valves, valve boxes and other gas
transmission and distribution facilities, as created in favor of MOUNTAIN
FUEL SUPPLY COMPANY by instrument recorded October 8, 1993 as Entry No.
5626108, in Book 6773, at Page 1447 of the Official Records, through and
across said property as follows:
Beginning at a point South 89 (degrees) 56'54" West 994.10 feet and North 0
(degrees) 04'58" West 676.00 feet from the Southeast corner of Section ▇▇,
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian; thence South
89 (degrees) 56'54" West 30.00 feet; thence North 0 (degrees) 04'58" West
212.00 feet; thence Northeasterly on a 205.32 foot radius curve to the
right 175.79 feet; thence North 49 (degrees) 07'42" East 38.22 feet; thence
Northerly on a 144.69 foot radius curve to the left 124.27 feet; thence
North 0 (degrees) 05'00" West 141.99 feet; thence North 89 (degrees) 57'12"
East 30.00 feet; thence South 0 (degrees) 05'00" East 142.00 feet; thence
Southwesterly on a 174.69 foot radius curve to the right 150.04 feet;
thence South 49 (degrees) 07'42" West 38.22 feet; thence Southerly on a
175.32 foot radius curve to the left 150.11 feet; thence South 0 (degrees)
04'58" East 212.00 feet to the point of beginning.
- 6 -
30. A right of way and easement to lay, maintain, operate, repair, inspect,
protect, remove and replace pipelines, valves, valve boxes and other gas
transmission and distribution facilities, as created in favor of MOUNTAIN
FUEL SUPPLY COMPANY by instrument recorded November 1, 1993 as Entry No.
5644734, in Book 6791, at Page 1283 of the Official Records, through and
across said property as follows:
Beginning at a point South 89 (degrees) 56' 54" West 994.10 feet and North
0 (degrees) 04' 58" West 676.00 feet from the Southeast corner of Section
▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West, Salt Lake Base and Meridian; thence
South 89 (degrees) 56' 54" West 30.00 feet; thence North 0 (degrees) 04'
58" West 212.00 feet; thence Northeasterly on a 205.32 foot radius curve to
the right 175.79 feet; thence North 49 (degrees) 07' 42" East 38.22 feet;
thence Northerly on a 144.69 foot radius curve to the left 124.27 feet;
thence North 0 (degrees) 05' 00" West 141.99 feet; thence North 89
(degrees) 57' 12" East 30.00 feet; thence South 0 (degrees) 05' 00" East
142.00 feet; thence Southwesterly on a 174.69 foot radius curve to the
right 150.04 feet; thence South 49 degrees 07' 42" West 38.22 feet; thence
Southerly on a 175.32 foot radius curve to the left 150.11 feet; thence
South 0 (degrees) 04' 58" East 212.00 feet to the point of beginning.
31. (Affects Parcel 6 and that portion of Parcel 2 assessed under ▇▇▇▇▇▇▇ No.
▇▇-▇▇-▇▇▇-▇▇▇)
There is no recorded means of ingress and egress to a public road from said
property, and it is assumed that there exists a valid and subsisting
easement for that purpose over adjoining properties, but the Company does
not make any representation as to the existence and/or adequacy of access
to and from said property.
EXCEPTIONS ▇▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇, INCLUSIVE, AFFECT PARCEL 8 AND PARCEL 9
32. Taxes for the year 1996 and thereafter, not yet due or payable. The records
of the Salt Lake City Treasurer show that taxes for the year 1995 have been
paid in the amount of $4,916.89. (▇▇▇▇▇▇▇ No. ▇▇-▇▇-▇▇▇-▇▇▇ and Tax
District No. 24)
33. Said property lies within the boundaries of West Valley City, and is
subject to any and all charges and assessments thereof. (Phone No.
▇▇▇-▇▇▇▇)
NOTE: Delinquent Special Assessment charges may have been reported to Salt
Lake County by West Valley City. It is recommended that when checking with
the said City care should be taken to specifically ask if any delinquent
charges have been certified to the Salt Lake County Treasurer.
34. Said property lies within the boundaries of ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Improvement
District, and is subject to any and all charges and assessments thereof.
(Phone No. ▇▇▇-▇▇▇▇)
NOTE: Delinquent Special Assessment charges may have been reported to Salt
Lake County by ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Improvement District. It is recommended that
when checking with the said District care should be taken to specifically
ask if any delinquent charges have been certified to the Salt Lake County
Treasurer.
-7-
35. A right of way and easement to construct, operate, maintain and remove
communication and other facilities, as created in favor of THE MOUNTAIN
STATES TELEPHONE AND TELEGRAPH COMPANY by instrument recorded May 15, 1972
as Entry No. 2456184, in Book 3072, at Page 399, and re-recorded July 10,
1973 as Entry No. 2553313, in Book 3369, at Page 277 of the Official
Records, through and across said property (exact location not given).
EXCEPTION NO. 36 AND EXCEPTION NO. 37 AFFECT PARCELS 2 THROUGH 9, INCLUSIVE
36. Matters disclosed by that certain ALTA/ACSM Land Title Survey, dated August
8, 1995, bearing certificate date of November 6, 1995, prepared by ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Inc., as Job No. 03094-955, certified by ▇▇▇▇ ▇. ▇▇▇▇▇▇, License
No. 142765.
37. Water rights, claims, or title to water.
-8-
EXHIBIT E
2002 PROJECT WORK LETTER
In connection with that certain Amended and Restated Pioneer
Hospital Lease dated as of June 28, 2002 (the "Agreement"), by and between
HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation ("Landlord"), and
PIONEER VALLEY HOSPITAL, INC., a Delaware corporation ("Tenant"), to which this
2002 Project Work Letter (this "Work Letter") is attached, Landlord and Tenant
hereby agree to the terms and conditions set forth in this Work Letter relating
to the construction, performance, and payment of the 2002 Project (as defined
below). Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Lease.
1. Definitions. The definitions set forth in this Section 1 shall
apply with respect to this Work Letter, the 2002 Project, and the Lease. For all
purposes of this Work Letter, except as otherwise expressly provided or unless
the context otherwise requires, (i) the terms defined in this Section 1 have the
meanings assigned to them in this Section 1 and shall include the plural as well
as the singular; (ii) all references in this Work Letter to designated
"Sections" and other subdivisions are to the designated Sections and other
subdivisions of this Work Letter; (iii) the word "including" shall have the same
meaning as the phrase "including, without limitation," and other similar
phrases; and (iv) the words "herein," "hereof" and "hereunder" and other similar
words refer to this Work Letter as a whole and not to any particular Section or
other subdivision.
2002 Project: An addition/expansion to and remodeling of the
Facility as more particularly depicted on and to be constructed/performed in
accordance with the 2002 Project Plans, including (A) the fixtures referred to
in and/or shown thereon, (B) to the extent not shown on the 2002 Project Plans,
additions to the parking facilities so as to provide sufficient parking spaces
to comply with all Legal Requirements and as otherwise necessary for the
operation of the Facility (including the 2002 Project) for its Primary Intended
Use, (iii) all Offsite Improvements and (iv) any and all site preparation,
landscaping and drainage works and all other improvements necessary to comply
with all Legal Requirements and/or for the operation of the Facility (including
the 2002 Project) for its Primary Intended Use.
2002 Project Budget: The budget approved by Landlord and Tenant
pursuant to Section 2.3 of this Work Letter, together with (i) a detailed
estimate report to be prepared by Tenant or its General Contractor and delivered
to and approved by Landlord prior to, on or promptly following the execution and
delivery of the Lease and this Work Letter, which report shall also provide a
detailed cost breakdown of all hard construction costs for the 2002 Project and
(ii) any other detailed budget information as Landlord may reasonably request
and approve from Tenant, including a further breakdown of such hard construction
costs to a level of detail that will allow Landlord to determine the actual cost
and percentage of completion of construction as of the date of any Request for
Advance.
2002 Project Costs: All the costs and expenses incurred in
connection with the construction/performance of the 2002 Project, as
contemplated by the 2002 Project Budget, including the costs of
constructing/performing work depicted by the 2002 Project Plans and otherwise in
accordance with applicable provisions of this Work Letter, costs for bonds,
costs
and fees for surveys, costs for title work and premiums for title insurance,
environmental fees and expenses, architect fees, engineering costs, the cost of
purchase and installation of any fixtures or other property included as part of
the 2002 Project and all governmental licenses and fees. Without limiting the
foregoing, 2002 Project Costs shall include, without duplication, all amounts
funded or advanced by Landlord pursuant to this Work Letter on account of the
2002 Project.
2002 Project Plans: (i) The final plans and specifications for the
construction/performance of the 2002 Project as prepared by the Architect and
approved by Landlord and Tenant in accordance with Section 2 of this Work
Letter, and (ii) all amendments, modifications and supplements thereto which do
not require the approval of Landlord or Tenant or which have been approved by
Landlord and Tenant subsequent to the approval of the plans and specifications
described in clause (i).
Approved Preliminary Plans: As defined in Section 2.1 of this Work
Letter.
Architect: An architect and/or engineer selected by Tenant in
connection with the design and construction of the 2002 Project and approved by
Landlord, which approval shall not be unreasonably withheld or delayed so long
as such architect is licensed in the State and has experience with the type and
scope of the project for which he/she is being retained.
Completion Date: The date on which the construction and performance
of the 2002 Project have been substantially completed such that Landlord has
received the following: (i) a certificate of substantial completion from the
Architect in the form attached hereto as Schedule 1, (ii) a certificate of
occupancy or its equivalent issued in accordance with all Legal Requirements and
by the appropriate Governmental Authority having jurisdiction over the Property
which permits the occupancy and use of the improvements constructed as part of
the 2002 Project, and (iii) all other licenses, authorizations and permits, if
any, required by any Governmental Authority for the use and operation of the
2002 Project as part of the Facility for its Primary Intended Use. For purposes
of this Work Letter, "substantially completed" shall mean that the improvements
being constructed/performed as part of the 2002 Project and all other work which
Tenant is obligated to perform under this Work Letter with respect to the 2002
Project have been completed in accordance with the 2002 Project Plans and the
applicable provisions of this Work Letter and the Lease, notwithstanding the
fact that Punch-List Items remain to be performed.
Construction Contracts: The contracts between Tenant and the General
Contractor, Tenant and the Architect and/or Tenant and any other contractor
(including subcontractors) relating to rendering of services or furnishing of
materials in connection with the construction/performance of the 2002 Project,
and contracts between the General Contractor and any subcontractor and contracts
between any of the foregoing and any other Person relating to rendering of
services or furnishing of materials in connection with construction/performance
of the 2002 Project.
General Contractor: The general contractor selected by Tenant and
approved by Landlord in connection with the construction/performance of any
approved Capital Additions, including the 2002 Project, which approval of such
general contractor shall not be unreasonably withheld or delayed so long as such
general contractor has all required State and local licenses
2
and permits, is bondable and has sufficient experience with the size, type and
scope of the 2002 Project.
Governmental Authority: The United States, the state, county, city
and political subdivisions in which the Property is located or which exercise
jurisdiction over the Property or the construction/performance of the 2002
Project, and any court administrator, agency, department, commission, board,
bureau or instrumentality of any of them which exercises jurisdiction over the
Property or the construction/performance of the 2002 Project.
Landlord's Maximum Cost: The sum of Twelve Million Dollars
($12,000,000.00).
Major Subcontractors: Subcontractors, materialmen and other vendors
with Construction Contracts in excess of Fifteen Thousand Dollars ($15,000.00).
Each subcontractor, materialmen or any other vendors proposed by Tenant or
General Contractor to be Major Subcontractors hereunder shall be subject to the
approval of Landlord, which approval may be conditioned upon Landlord's review
of competing bids for work proposed to be performed by such subcontractor,
materialmen or other vendors.
Offsite Improvements: (i) Any streets, roads, walks, curbs and the
like (whether or not ultimately dedicated for public use and/or maintenance)
necessary to provide access to public roads, streets and highways, (ii) any
improvements and other works necessary or desirable for the provision of
utilities to the 2002 Project and/or the existing Facility and (iii) any other
improvements on property other than the Land that are (A) required by Legal
Requirements, (B) necessary for the construction/performance of the 2002 Project
in accordance with the 2002 Project Plans and the applicable provisions of the
Lease or this Work Letter, and/or (C) necessary for operation of the Facility
(including the 2002 Project) for its Primary Intended Use.
Outside Completion Date: June 30, 2005, as such date may be extended
by the mutual agreement of Landlord and Tenant.
Proposed Budget: As defined in Section 2.3 of this Work Letter.
Proposed Final Plans: As defined in Section 2.2 of this Work Letter.
Proposed Preliminary Plans: As defined in Section 2.1 of this Work
Letter.
Punch List Items: Minor details of construction, mechanical
adjustments or decorations which remain to be completed with respect to the 2002
Project following the Completion Date and which do not (i) prevent the issuance
of a certificate of occupancy (or the local equivalent thereof) for the 2002
Project and/or (ii) materially interfere with Tenant's use of the Facility
(including the 2002 Project) for its Primary Intended Use.
Remaining Funds: The unadvanced portion of Landlord's Maximum Cost,
if any.
Request for Advance: Certificates of Tenant and, to the extent
applicable, the Architect, in each case on the appropriate American Institute of
Architects ("AIA") form, including form G702 together with attached AIA form
G703 (or equivalent, which AIA form
3
G703 or equivalent shall be modified to include columns for the original
estimate of scheduled values for each line item, changes to the scheduled values
for each line item and a revised scheduled value for each line item after any
such change) and/or such other form(s) as Landlord may hereafter reasonably
request, which shall: (i) set forth the Persons to whom money is owed and the
amount owed each; (ii) certify among other things that such amounts represent
payments due for services actually rendered or materials actually acquired or
furnished in connection with the construction/performance of the 2002 Project;
(iii) state that the sum requested is 2002 Project Cost within the 2002 Project
Budget for such item; (iv) be accompanied by copies of billing statements, fee
schedules, documentation supporting all costs to date, copies of all
subcontracts not previously submitted and vouchers or invoices from the Persons
named therein, in form reasonably satisfactory to Landlord; (v) refer to an
attached schedule, to be verified by the Architect (if any) or other reliable
Person reasonably acceptable to Landlord prior to the advance being requested,
identifying in a manner reasonably satisfactory to Landlord all materials not
yet affixed or incorporated into the 2002 Project but which have been covered by
certificates submitted to date, including the current certificate; (vi) contain
a statement, to be verified by the Architect (if any) or other reliable Person
reasonably acceptable to Landlord prior to the advance being requested, that all
such materials not yet affixed or incorporated into the 2002 Project have been
stored at the Property or at one or more other bonded locations approved by
Landlord identified therein (specifying the materials located at each location)
under adequate safeguards to minimize the possibility of loss, damage or
commingling with other materials or projects, and that builder's risk insurance
coverage for such materials stored off the Property is not less than the full
insurable value of such materials then being stored off the Property; and (vii)
be accompanied by appropriate waivers of lien rights (to the extent not
previously received and approved by Landlord) with respect to work and materials
for which funds have already been advanced pursuant to this Work Letter, or
which were performed or were supplied prior to the Commencement Date, executed
by the General Contractor (if any) and all Major Subcontractors no more than one
month in arrears. Notwithstanding anything set forth herein to the contrary, the
Request for Advance for the first advance of funds by Landlord hereunder and/or
for each advance that is for an item on the 2002 Project Budget that is not a
hard cost shall mean such certificate with respect thereto as Landlord may
reasonably request. To the extent that any payment, funding or accrual of 2002
Project Costs by Landlord hereunder is attributable or allocable to one or more
of the categories comprising the 2002 Project, Landlord shall allocate such 2002
Project Costs among such categories as Landlord shall reasonably determine.
Tenant's Affidavit: A sworn affidavit of Tenant, in form and
substance satisfactory to Landlord, stating that to the best of Tenant's
knowledge, all labor and material bills of every kind and character incurred by
Tenant to the date of such affidavit in connection with the 2002 Project have
been paid in accordance with the payment provisions of the applicable
Construction Contracts except for the unpaid bills to be paid from the proceeds
of the current Request for Advance and disputed items for which funds have been
reserved by Landlord, and that the builder's risk insurance described in Section
3.4(d)(i) contains sufficient coverage for the construction/performance of the
2002 Project, including the value of materials stored off the Property.
4
2. Preparation of 2002 Plans. The following shall apply with respect
to the preparation and approval of the 2002 Plans:
2.1 Approval of Preliminary Plans. Promptly after the
execution of this Work Letter, Landlord and Tenant or their designated
representatives shall meet to determine the design, layout and materials to be
used in constructing the 2002 Project. During such discussions, Tenant and its
consultants shall supply to Landlord and its consultants and the Architect as
much detailed information as reasonably available regarding Tenant's
requirements and desires for the 2002 Project. At the conclusion of such
discussions, Tenant will cause the Architect to prepare plans, specifications,
and working drawings (the "Proposed Preliminary Plans"). When prepared, copies
of the Proposed Preliminary Plans shall be supplied to Landlord and the General
Contractor for review and comment. The Proposed Preliminary Plans shall contain
sufficient detail to identify the location of all interior improvements to the
Improvements, all interior and exterior ADA/Title 24 compliance work, all
internal structural systems, exterior facade, landscape and parking areas and
any roof installation. Approval of the Proposed Preliminary Plans shall not be
unreasonably withheld, delayed or conditioned by Landlord. The Proposed
Preliminary Plans will be deemed approved by Landlord unless Landlord gives
written notice of disapproval to Tenant and the Architect within thirty (30)
days following the giving of the Proposed Preliminary Plans to Tenant,
specifying in reasonable detail the matters disapproved. In the event of timely
and proper disapproval of the Proposed Preliminary Plans, Landlord and Tenant
shall promptly meet so as to reach agreement on any changes and Tenant shall
cause the Architect to revise the same to meet such objections or comments
received from Landlord, and to resubmit the same for approval pursuant to this
same process. Such process shall continue until the Proposed Preliminary Plans
are approved or deemed approved by all parties. Approved plans, specifications
and working drawings resulting from such process are referred to herein as the
"Approved Preliminary Plans."
2.2 Approval of Final Plans. Promptly upon approval of the
Approved Preliminary Plans, Tenant shall cause the Architect to prepare and
submit for approval by Landlord proposed final plans, specifications and working
drawings for the 2002 Project (the "Proposed Final Plans"). The Proposed Final
Plans shall include all exterior and interior portions of the 2002 Project
(including but not limited to all ADA/Title 24 compliance work, all mechanical,
utilities and heating, ventilating and air conditioning systems, the exterior
facade, landscape and irrigation work, parking areas, and any roof
installations). Such Proposed Final Plans shall be in sufficient detail to
permit bidding thereon by the General Contractor (which schedule shall be deemed
to be a part of the Proposed Final Plans), and the obtaining of all governmental
permits and approvals. Copies of the Proposed Final Plans shall be delivered to
Landlord for review pursuant to the process detailed in Section 2.1 of this Work
Letter. Approval of the Proposed Final Plans shall not be unreasonably withheld,
delayed or conditioned by Landlord. Landlord may not disapprove the Proposed
Final Plans with respect to any matter included in the Approved Preliminary
Plans. The Proposed Final Plans will be deemed approved by Landlord unless
Landlord gives written notice of disapproval to Tenant and the Architect within
ten (10) business days after the delivery of the Proposed Final Plans to
Landlord, specifying in reasonable detail the items disapproved. If Landlord
timely and properly disapproves the Proposed Final Plans, Landlord and Tenant
shall promptly meet so as to reach agreement on any changes and Tenant shall
cause the Architect to revise the same to meet such objections (to the extent
agreed upon) and to resubmit the same for approval within the same time periods
as provided above. The foregoing process shall continue until the Proposed ▇▇▇▇▇
▇
Plans are approved or deemed approved by Landlord, and the resulting product
from the foregoing process, and subject to any changes approved by Landlord in
connection with the approval of the Proposed Budget, shall be called the "2002
Project Plans." Tenant shall submit the 2002 Project Plans to General Contractor
for pricing, and General Contractor will prepare a schedule itemizing the costs
thereof.
2.3 Approval of Budget. Promptly upon approval of the 2002
Project Plans, Tenant shall prepare and submit for approval by Landlord a
proposed budget for the 2002 Project (the "Proposed Budget"). Approval of the
Proposed Budget shall not be unreasonably withheld, delayed or conditioned by
Landlord. The Proposed Budget will be deemed approved by Landlord unless
Landlord gives written notice of disapproval to Tenant within twenty (20) days
after the delivery of the Proposed Budget to Landlord, specifying in reasonable
detail the items disapproved. If Landlord timely and properly disapproves the
Proposed Budget, Landlord and Tenant shall promptly meet so as to reach
agreement on any changes and Tenant shall revise the same to meet such
objections (to the extent agreed upon) and to resubmit the same for approval
within the same time periods as provided above. The foregoing process shall
continue until the Proposed Budget is approved or deemed approved by Landlord,
and the resulting product from the foregoing process is herein called the "2002
Project Budget."
3. 2002 Project. Without limiting or duplicating any other
obligation or liability of Tenant under the Lease, the following shall apply
with respect to the 2002 Project and the construction/performance and funding
thereof:
3.1 Obligations of Tenant.
(a) Construction/Performance of 2002 Project. Tenant shall
be responsible to arrange, supervise, coordinate and carry out all services
necessary for the construction, performance and completion of the 2002 Project
in accordance with the 2002 Project Plans and the applicable provisions of this
Work Letter, and Tenant undertakes and accepts such responsibility with the
understanding that all 2002 Project Costs up to Landlord's Maximum Cost will be
funded by Landlord to Tenant or its designee pursuant to, but subject to the
applicable terms of, this Section 3. Subject to the performance by Landlord of
its obligations under Section 3.7, Tenant shall cause the 2002 Project to be
completed substantially in accordance with the 2002 Project Plans and the terms
of the Construction Contracts for an amount not to exceed the Landlord's Maximum
Cost and the Completion Date to occur by the Outside Completion Date (subject to
Unavoidable Delays). If and to the extent total 2002 Project Costs exceed the
Landlord's Maximum Cost, Tenant shall pay and shall not be reimbursed for such
excess. If total 2002 Project Costs do not exceed Landlord's Maximum Cost,
Tenant shall not be entitled to any portion of the difference between Landlord's
Maximum Cost and total 2002 Project Costs.
(b) Duties and Responsibilities. Without limiting or
duplicating Tenant's obligations under the Lease, the duties and
responsibilities of Tenant with respect to the 2002 Project shall specifically
include the following:
(i) Subject to the other provisions of this Work
Letter, to negotiate and enter into Construction Contracts and other agreements
necessary for
6
construction/performance of the 2002 Project in accordance with the 2002 Project
Plans, which such contracts, by their terms, may be assigned by Tenant to
Landlord;
(ii) To establish operating procedures and a system of
records and accounts suitable for record keeping during construction/performance
satisfactory to Landlord;
(iii) To administer and monitor the performance under
all Construction Contracts and other agreements relating to the
construction/performance of the 2002 Project and the monthly reporting of the
status of estimated costs of completing the same in relation to the 2002 Project
Budget and other applicable budgets;
(iv) To manage and coordinate contractors, engineers,
architects and other consultants and monitor their compliance with their
respective contracts or agreements;
(v) To monitor and review and, when in the judgment of
Tenant it is in the best interest of Landlord, propose changes in the 2002
Project Plans or in any budget relating to the construction/performance of the
2002 Project;
(vi) To review and make a recommendation to Landlord
with respect to payment of all applications for payment under the Construction
Contracts and other agreements relating to the construction/performance of the
2002 Project and make payments of any and all bills, invoices or other matters
calling for payment by Tenant or Landlord or for the Landlord's account in
connection with the construction/performance of the 2002 Project, all in
accordance with the provisions of this Section 3;
(vii) To coordinate with the Architect and any
inspector or other consultant employed or engaged by Landlord in the performance
of periodic inspections of the Property in order to confirm that the materials
furnished and work performed are in accordance with the 2002 Project Plans and
that the work on the 2002 Project is progressing on schedule;
(viii) To stop the work and cause the correction of
any defect in the materials or workmanship furnished by any contractor or of any
failure by any contractor to perform its obligations under its Construction
Contract and to promptly inform Landlord of any instances of faulty materials
and/or workmanship, all when, as and if known by Tenant;
(ix) To make available to Landlord, upon request, the
identities of and copies of contracts with all subcontractors and any other
Person supplying labor or materials for the construction/performance of the 2002
Project;
(x) To obtain all approvals necessary to
construct/perform the 2002 Project and to operate the Facility for its Primary
Intended Use; and
(xi) To notify Landlord promptly upon the occurrence
of any event constituting an Unavoidable Delay.
7
(c) Performance of Duties. Tenant agrees that, subject
to the performance by Landlord of its obligations under this Section 3, Tenant
shall act with prudence and diligence in performing its duties and
responsibilities under this Work Letter, with respect to the 2002 Project and in
good faith in the best interests of Landlord, Tenant and the Facility.
3.2 Completion Guarantee. Subject to the performance by
Landlord of its obligations under Section 3.7, the following shall apply:
(a) Construction and Cost Guarantee. Tenant
unconditionally guarantees to Landlord (i) the construction/performance of the
2002 Project in accordance with the 2002 Project Plans and all covenants and
obligations of Tenant under the Lease and this Work Letter, by the Outside
Completion Date (subject only to the performance by Landlord of its obligations
under this Section 3 and Unavoidable Delays) and (ii) the payment without
demand, and without right to reimbursement therefor, of all development,
construction and related costs of the 2002 Project incurred for any reason
whatsoever in excess of the Landlord's Maximum Cost.
(b) Failure to Construct. Without limiting any other right
or remedy of Landlord under the Lease, if for any reason or under any
contingency the General Contractor or any Major Subcontractor shall default
under a Construction Contract, fail to commence, or abandon construction of, the
2002 Project, or fail to complete the 2002 Project within the maximum
construction time in accordance with the terms of the Construction Contracts,
then in any such event, without the need of any demand by Landlord, Tenant shall
assume all responsibility for and control over the construction, performance and
completion of the 2002 Project and shall cause the 2002 Project to be fully
completed in accordance with this Work Letter on or before the Outside
Completion Date (subject only to the performance by Landlord of its obligations
under this Section 3 and Unavoidable Delays), other than Punch List Items.
Without limiting any other right or remedy of Landlord under the Lease, if
Tenant fails to cause the 2002 Project to be completed in accordance with the
2002 Project Plans prior to the Outside Completion Date other than the Punch
List Items, Landlord, at Landlord's option, shall have the right to complete the
2002 Project in accordance with the 2002 Project Plans and expend such sums as
Landlord reasonably deems proper in order so to complete the 2002 Project. The
amount of any and all expenditures made by Landlord pursuant to this clause (b)
which, when combined with all 2002 Project Costs previously funded by Landlord,
are in excess of Landlord's Maximum Cost, shall be immediately due and payable
by Tenant to Landlord as an Additional Charge, together with interest thereon
from the date of such expenditure to the date paid by Tenant at the Overdue Rate
(but in no event greater than the maximum rate of interest then permitted by
law). Said interest shall accrue on a daily basis. Upon any assumption by
Landlord of the obligation to complete the 2002 Project as provided herein,
Tenant shall forthwith surrender and deliver to Landlord, or Landlord's
designee, any funds which have been received from Landlord but have not been
disbursed by Tenant, and all records, plans, specifications, permits and other
governmental approvals, purchase agreements, contracts, receipts for deposits,
unpaid bills and all other records, papers and documents in the possession of
Tenant relating to the 2002 Project.
(c) Completion of Punch List Items. All Punch List Items,
other than those reasonably requiring more than thirty (30) days to complete due
to long scheduling or ordering time or other reasonable factors, shall be
completed within thirty (30)
8
days after the Completion Date, but in no event later than thirty (30) days
after the Outside Completion Date. Any Punch List Items reasonably requiring
more than thirty (30) days to complete shall be diligently pursued and completed
as promptly as practicable, but in no event later than ninety (90) days after
the Outside Completion Date.
3.3 [Intentionally Deleted]
3.4 Other Covenants of Tenant. Subject to the performance by
Landlord of its obligations under Section 3.7, the following shall apply:
(a) Construction/Performance of the 2002 Project. Tenant
will cause the construction/performance of 2002 Project to be prosecuted by
Tenant in accordance with the 2002 Project Plans in a good and workmanlike
manner and in accordance with sound building and engineering practices and all
applicable Legal Requirements and all restrictive covenants affecting the
Property. All materials, fixtures or articles used in the
construction/performance of the 2002 Project, or to be used in the operation
thereof shall be substantially in accordance with the 2002 Project Plans as
approved by Landlord. Tenant shall ensure that no asbestos or
asbestos-containing materials or other Hazardous Substances will be contained in
the completed 2002 Project. Tenant will cause the construction/performance of
the 2002 Project to be completed substantially in accordance with the 2002
Project Plans on or before the Outside Completion Date (subject only to the
performance by Landlord of its obligations under this Section 3 and Unavoidable
Delays), free and clear of liens or claims for liens for material supplied and
for labor or services performed in connection with the construction of the 2002
Project (except for permitted contests pursuant to Article XIII of the Lease).
(b) Legal Requirements. Tenant will cause all Legal
Requirements and all restrictive covenants affecting the Property to be complied
with promptly, and Landlord will be furnished, on demand, evidence of such
compliance.
(c) Change Orders, Defects.
(i) Tenant may, without obtaining the prior written
approval of Landlord, change the 2002 Project Plans, permit the 2002 Project
Plans to be changed or permit construction/performance of the 2002 Project other
than in accordance with the 2002 Project Plans; provided, however, that if (1)
any such change would (w) change the basic structure or character of the
Facility; (x) materially change the appearance of the Facility; (y) change or
reduce the quality of the basic building systems, including the mechanical,
electrical, sprinkler, plumbing, life-safety, heating, air conditioning and
ventilation systems within the Facility or (z) result in a material item of the
2002 Project not being performed, (2) any single change in the 2002 Project
Plans would involve an amount in excess of Fifteen Thousand Dollars
($15,000.00), (3) any number of changes in the 2002 Project Plans would involve
in the aggregate an amount not in excess of Two Hundred Fifty Thousand Dollars
($250,000.00), or (4) any such change in the 2002 Project Plans would result in
the 2002 Project Costs exceeding the Landlord's Maximum Cost, then in any such
event Tenant must obtain the prior written approval of Landlord prior to
implementing such change, which approval may be given or withheld in the sole
and absolute discretion of Landlord.
9
(ii) Tenant will at its sole cost and expense and not
as part of the 2002 Project Costs correct or cause to be corrected any defect in
the 2002 Project or any departure from the 2002 Project Plans not approved by
Landlord or permitted herein without such approval or any encroachment by any
part of the 2002 Project on or over any building lines, easements, property
lines or other restricted areas which any survey or inspection reflects.
(d) Construction Insurance. To the extent not already
maintained or covered by Tenant pursuant to Article XIV of the Lease, Tenant
will at all times maintain or cause to be maintained the following insurance
during the construction/performance of the 2002 Project (including through the
date of completion of the Punch List Items):
(i) Builder's risk insurance covering the
construction/performance of the 2002 Project, in a face amount of not less than
the full insurable value of the 2002 Project and materials supplied in
connection therewith, with appropriate provisions made to include coverage of
materials stored off the Property in an amount not less than the full insurable
value of such materials stored off the Property from time to time.
(ii) Errors and omissions insurance by any Architect
in an amount at least equal to One Million Dollars ($1,000,000.00) which can be
applied to the construction/performance of the 2002 Project, covering the entire
period of design and construction/performance of the 2002 Project, including
completion of the Punch-List Items.
All such insurance maintained or caused to be maintained by Tenant pursuant to
clauses (i) and (ii) of this clause (c) shall name Landlord as an additional
insured. All insurance maintained or caused to be maintained by Tenant pursuant
to clause (i) of this clause (c) shall name Tenant, Landlord and any General
Contractor or other contractor, jointly, as loss payee. In addition, all such
insurance to be maintained or caused to be maintained by Tenant shall otherwise,
to the extent applicable, comply with the provisions of and shall be in addition
to the insurance specified in Article XIV of the Lease.
(e) [Intentionally Omitted].
(f) Liens on Materials. Tenant shall not at any time
during the performance of the work, make or cause to be made, or permit any
General Contractor or any other contractor to make, any contract for materials
or equipment of any kind or nature whatsoever to be incorporated in or to become
a part of the Property, title to which is not good or which is subject to any
lien or title retention arrangement other than inchoate mechanic's liens. Tenant
will deliver to Landlord, on demand, true copies of any contracts, bills of
sale, statements, receipted vouchers, or agreements, under which Tenant claims
title to any materials, fixtures, or articles used in the
construction/performance of the 2002 Project.
(g) Storage of Materials. Tenant will cause all materials
acquired or furnished in connection with the construction/performance of the
2002 Project, but not affixed or incorporated into the Property, to be stored at
the Property or at bonded locations approved by Landlord, in each case under
adequate safeguards to minimize the possibility of loss, theft, damage or
commingling with other materials or projects. Tenant will employ suitable means
to protect from theft or vandalism the Property and all tools and building
materials stored on the Property.
10
(h) Inspections. Without limiting any of Landlord's rights
or remedies under the Lease, at any time during regular business hours, Landlord
and/or its representatives will be permitted to enter upon the Property and any
other location where materials for the 2002 Project are being stored to inspect
the same and all materials to be used in the construction/performance thereof,
and to examine all detailed plans and shop drawings which are or may be kept at
the construction site, provided that in so doing, Landlord shall not
unreasonably interfere with the construction/performance of the 2002 Project.
Upon request, Landlord will be furnished with reasonable information regarding
the construction/performance of the 2002 Project from Tenant, any Architect, any
General Contractor and any other contractors or subcontractors.
(i) Notices. Without limiting any other obligation of
Tenant under the Lease, Tenant will furnish Landlord with a copy of any (A)
notice or claim made by any Governmental Authority pertaining to the Property,
(B) any notice of any termination, late payment or other material aspect of any
Construction Contract involving more than Fifteen Thousand Dollars ($15,000.00),
together with a copy of each such Construction Contract and (C) any fire,
casualty, notice of any condemnation or other event materially affecting the
Property.
(j) Use of Funds, Deficiency.
(i) Tenant shall expend all the proceeds of each
advance hereunder for 2002 Project Costs in amounts and for the purposes
provided in the 2002 Project Budget and for no other purpose whatsoever.
(ii) Tenant will promptly advise Landlord if and when
(1) 2002 Project Costs shall exceed or appear likely to exceed the Landlord's
Maximum Cost or (2) 2002 Project Costs with respect to any particular item in
the 2002 Project Budget shall exceed or appear likely to exceed the amount
specified for any such item in the 2002 Project Budget, and shall give Landlord
sufficiently detailed information with respect thereto.
(iii) If, in the reasonable good faith judgment of
Landlord, it appears at any time or from time to time that the Remaining Funds
will be insufficient to complete the construction/performance of the 2002
Project substantially in accordance with the 2002 Project Plans on or before the
Outside Completion Date, and to pay for all 2002 Project Costs incurred in
connection with such construction/performance, or if any other expenses are
required for such completion which were not scheduled in the 2002 Project
Budget, Landlord may request that Tenant demonstrate that the Remaining Funds
are sufficient for such completion and payment. If Tenant does not so
demonstrate to Landlord's reasonable satisfaction within five (5) Business Days
of receipt of Landlord's request to do so, then Tenant shall make arrangements
for additional monies to be made available as shall, in the reasonable good
faith judgment of Landlord, when added to the Remaining Funds, be sufficient so
as to complete and/or pay for the construction/performance of the 2002 Project.
Such additional monies of Tenant shall be applied for payment of costs prior to
Landlord advancing any additional funds under this Work Letter.
(k) Documents at Completion. Without limiting any
provisions of this Work Letter, from time to time as requested by Landlord and
as soon as
11
practicable following the Completion Date, Tenant shall supply or cause to be
supplied to Landlord such reasonable documents and information pertaining to the
2002 Project and the construction, performance and/or completion of the same as
Landlord reasonably shall request.
(l) Assignment of Construction Contracts. At the request
of Landlord, Tenant shall assign to Landlord each Construction Contract to which
Tenant is a party utilizing an assignment instrument in form and substance
reasonably acceptable to Landlord and shall cause each other party to such
Construction Contract to consent to such assignment, if required by the terms
thereof.
3.5 Additional Events of Default. In addition to and without
limiting the "Events of Default" set forth in the Lease, any one or more of the
following shall also constitute an "Event of Default" under the Lease:
(a) Tenant fails to perform any of the obligations to be
performed by Tenant under this Work Letter with respect to the 2002 Project, and
such failure is not cured within thirty (30) days after notice thereof from
Landlord or, if such failure cannot reasonably be cured within such thirty (30)
day period, such longer period as reasonably may be required to remedy such
default as long as Tenant has commenced such cure within such thirty (30) day
period, thereafter diligently prosecutes such cure and completes such cure not
later than sixty (60) days after notice from Landlord but in any event prior to
the Outside Completion Date (subject to Unavoidable Delays); or
(b) Tenant fails to satisfy any condition to an advance
under this Work Letter for a period in excess of thirty (30) days, or, if such
failure cannot reasonably be cured within such thirty (30) day period, such
longer period as reasonably may be required to remedy such failure as long as
Tenant has commenced such cure within such thirty (30) day period, thereafter
diligently prosecutes such cure and completes such cure within ninety (90) days
but in any event prior to the Outside Completion Date.
(c) Tenant uses any monies advanced by Landlord under this
Work Letter for any purpose other than as allowed or contemplated under this
Work Letter; or
(d) Except as a result of a casualty, Condemnation or
other Unavoidable Delay, work on the 2002 Projects ceases for thirty (30)
consecutive days for any reason; or
(e) Except as a result of a casualty, Condemnation or
other Unavoidable Delay, the Completion Date does not occur by the Outside
Completion Date, free and clear of mechanics', materialmen's and other liens
(except for permitted contests pursuant to Article XIII of the Lease); or
(f) Except for change orders allowed pursuant to the
provisions of this Work Letter, Tenant modifies, amends or terminates any
Construction Contract without Landlord's written consent; or
(g) Any mechanics', materialmen's or other lien is filed
or asserted against the Property, or any part thereof, or any suit or other
proceeding is instituted to
12
enforce or foreclose such a lien (except for permitted contests pursuant to
Article XIII of the Lease).
3.6 Advances of Funds by Landlord.
(a) Funding. Subject to the satisfaction by Tenant of the
conditions set forth in Section 3.7 of this Work Letter and the other provisions
of this Work Letter, Landlord will advance to Tenant funds up to the Landlord's
Maximum Cost (less all costs, fees, allowances and charges of Landlord which are
included within 2002 Project Costs) for the purpose of paying or reimbursing
Tenant for the payment of the 2002 Project Costs.
(b) Limitation of Funding Obligation. Landlord shall not
be obligated to advance to Tenant any sums (i) in excess of the Landlord's
Maximum Cost or for which a Request for Advance is received more than one
hundred twenty (120) days after the Outside Completion Date, (ii) when any of
the conditions set forth in Section 3.7 of this Work Letter have not been met or
fulfilled.
(c) Advances of Funds by Landlord. Draw requests will be
reviewed monthly and will be based on the percentage of completion to date of
each construction line item listed in the 2002 Project Budget. All advances of
funds under this Work Letter shall be made by Landlord in accordance with a
Request for Advance. Each Request for Advance shall be honored within ten (10)
Business Days of receipt of the same delivered in accordance with the Notice
provisions of the Lease together with the information required therein, subject,
however, to the limitations herein. In no event shall Landlord be required to
make any advance for a particular line item which, when aggregated with prior
advances, is in excess of the 2002 Project Budget for such line item except to
the extent amounts from contingency line items are unused and/or to the extent
savings, in Landlord's reasonable good faith discretion, in other budget line
items remain unused. Landlord shall issue checks payable to, or otherwise
advance funds to, Tenant, the payees designated in a Request for Advance or
jointly to Tenant and such payees, as Landlord shall reasonably determine;
provided, however, that notwithstanding the foregoing, at Tenant's request, all
disbursements of 2002 Project Costs by Landlord in excess of $5,000.00 shall be
disbursed directly to such payees rather than to Tenant or jointly with Tenant.
Advances of funds to such payees or jointly to Tenant and any such payee shall
constitute an advance hereunder as though advanced directly to Tenant.
(d) Holdbacks. Any advances for costs and expenses of
labor and materials connected with the construction/performance of the 2002
Project shall be limited to Ninety Percent (90%) of such costs and expenses (or
such other amounts, if any, as reasonably approved by Landlord and negotiated in
the applicable Construction Contracts) and shall be made in accordance with the
payment schedule of the Construction Contract with any General Contractor or
other contractor. The final advance of proceeds representing the applicable
retainage for any particular item will not be made until the last to occur of
(i) the Completion Date, (ii) completion of all Punch List Items and (iii) the
date Landlord receives, as applicable, (1) all final lien releases and waivers
provided for herein, (2) an "As-Built" set of plans and specifications (if
reasonably requested by Landlord based upon the nature of the 2002 Project), (3)
an ALTA "As-Built" survey (if reasonably requested by Landlord based upon the
nature of the 2002 Project), and (4) such other documents as Landlord may
reasonably request. Notwithstanding the foregoing, if (i) any subcontractor has
completed the work required of such
13
subcontractor pursuant to such subcontractor's applicable Construction Contract,
and (ii) such subcontractor has executed and delivered to Landlord a lien
release and waiver with respect to such work, then Landlord shall, in addition
to the foregoing amounts, disburse to Tenant an amount necessary to compensate a
subcontractor for such work in accordance with the terms of the applicable
Construction Contract. Except as provided herein, in no event shall any portion
of such retainage be paid if any mechanics' and/or materialmen's liens or other
encumbrances have been filed and remain on the Property (except for permitted
contests pursuant to Article XIII of the Lease); provided, however, that if
Landlord has received all required materials other than those listed in item (1)
above with respect to an item because a mechanics' and/or materialmen's lien or
other encumbrance has been filed and remains on the Property, which lien or
encumbrance is being contested by Tenant in accordance with Article XIII of the
Lease, then Landlord shall release to Tenant such funds, if any, necessary to
reduce the retainage for a particular item to the amount reasonably required by
Landlord as security for such lien or encumbrance which amount shall not be less
than one hundred fifty percent (150%) of the amount of such lien or encumbrance.
3.7 Conditions to Landlord Obligations to Advance Funds.
Landlord shall not be obligated to make any advance of funds under this Work
Letter, including the first advance, unless and until the following conditions
shall have been satisfied (with proof thereof in form and sufficiency as may be
reasonably requested by Landlord):
(a) Approvals/Entitlements. To the extent not theretofore
received and approved by Landlord and to the extent of a material change not
permitted herein without approval, Landlord shall have received and approved (i)
the 2002 Project Plans; (ii) the 2002 Project Budget(s); (iii) all Construction
Contracts with any General Contractor, any Architect and any Major Subcontractor
that may be requested by Landlord; and (iv) all authorizations and permits
required by any Governmental Authority for the construction/performance of the
2002 Project, including building and grading permits, a foundation letter (if
applicable to the 2002 Project) and such other authorizations and permits as are
required for the use and operation of the Facility for its Primary Intended Use,
to the extent then procurable.
(b) [Intentionally Deleted]
(c) [Intentionally Deleted]
(d) Insurance. Landlord shall have received certificates
with respect to the insurance required to be carried by Tenant or other Persons
pursuant to Section 3.4(d) above, together with evidence satisfactory to
Landlord that the premiums therefor have been paid in full.
(e) Payment and Performance Bonds. Landlord shall have
received the payment and performance bond(s) fulfilling he requirements set
forth in Section 3.4 above and shall have made arrangements, to the extent
applicable and prescribed by Legal Requirements, for the recordation and/or
filing of the same for recordation in the Official Records in the County in
which the Land is located, along with a copy of the approved Construction
Contract with the General Contractor.
14
(f) No Default. No Event of Default shall have occurred
under the Lease (including this Work Letter) and no event or condition shall
exist which, with notice and/or lapse of time, or both, would constitute such an
Event of Default under the Lease (including this Work Letter).
(g) Condemnation; Casualty. No Condemnation shall be
pending or threatened and no casualty shall have occurred, in either case with
respect to the Property or any portion thereof.
(h) Other Documents and Assurances. Landlord shall have
received such other documents and assurances as Landlord shall have reasonably
requested, including any endorsements to Landlord existing policy of title
insurance updating the same without any additional exception except as may be
approved by Landlord and increasing the policy limit thereof to an amount equal
to the 2002 Project Costs funded or accrued by Landlord.
(i) Request for Advance. Landlord shall have received and
approved (A) a Request for Advance accompanied by all necessary documents and
certificates as set forth in the definition thereof; (B) a Tenant's Affidavit;
and (C) to the extent applicable, a certificate from the Architect, or if no
Architect, from an officer of Tenant or any other reliable Person acceptable to
Landlord, to the effect that in such Person's opinion (1) the
construction/performance of the 2002 Project theretofore performed is in
accordance with the 2002 Project Plans and (2) the amount requested is
appropriate in light of the percentage of construction completed and amount of
stored material.
(j) Architect, Contractor Letters. Landlord shall have
received from each of the Architect, General Contractor, and Major
Subcontractors a letter, in form and substance satisfactory to Landlord, which,
among other things, (i) states that, in the event of a default by Tenant under
the contract with the undersigned, the undersigned agrees to perform for
Landlord at Landlord's request under the terms of the applicable Construction
Contract, (ii) to the best knowledge of the undersigned certifies to Landlord
that the 2002 Project Plans comply with all Legal Requirements, and that the
work performed by the undersigned has been completed in accordance with the 2002
Project Plans, and (iii) confirms such other matters consistent with the terms
and provisions of this subsection (j).
(k) Proceedings. Landlord shall have reviewed and approved
all corporate proceedings to be taken by Tenant and Guarantor in connection with
the transactions contemplated under the Lease and this Work Letter.
(l) Opinion of Counsel. Landlord shall have received an
opinion or opinions of counsel (which counsel may, in Tenant's and Guarantor's
discretion, be in-house counsel) to Tenant and Guarantor, to the effect that (A)
each of Tenant and Guarantor is duly organized, validly existing and in good
standing in its state of organization/formation and is qualified to do business
in the State; the execution and delivery of the Lease, this Work Letter and the
Guaranty and all other documents to be executed by Tenant or Guarantor, as
applicable, thereunder and hereunder have been duly authorized; and (B) the
execution and delivery of the Lease, this Work Letter and the Guaranty and all
other documents to be executed and delivered by Tenant or Guarantor hereunder
and the consummation of the transactions contemplated
15
thereunder and hereunder do not and will not constitute an event of default
under, or a violation of the articles/certificate of incorporation or by-laws of
Tenant or Guarantor.
3.8 Miscellaneous Provisions Applicable to 2002 Project.
(a) Ownership of 2002 Project. At all times the 2002
Project shall be owned entirely by Landlord subject to the leasehold interest of
Tenant under the Lease with respect to the 2002 Project. Upon the request of
Landlord, Tenant shall execute and/or cause any Affiliate of Tenant to execute
such documents as Landlord may reasonably request evidencing and confirming
Landlord's ownership of such 2002 Project.
(b) Advance Not a Waiver. No advance of funds under this
Work Letter shall constitute a waiver of any of the conditions to Landlord's
obligation to make further advances nor, if Tenant is unable to satisfy any such
condition, shall any such advance have the effect of precluding Landlord from
thereafter declaring such inability to be an Event of Default under the Lease.
(c) Conditions for Benefit of Landlord. All conditions to
the obligations of Landlord hereunder are imposed solely for the benefit of
Landlord and no other Person shall have standing to require satisfaction of such
conditions.
(d) Compliance Responsibility. Notwithstanding the review
and approval by Landlord of the 2002 Project Plans or any other matter, Landlord
shall have no responsibility for compliance by the Property, the 2002 Project or
the construction/performance of the 2002 Project with Legal Requirements, sound
architectural or engineering practices or other matters.
(e) Notices. Any Notices with respect to Request for
Advances and/or change orders (only) shall be sent to Landlord in accordance
with the provisions for notices in the Lease.
(f) Incorporation. This Work Letter is incorporated into
and shall form a part of the Lease.
[Signatures on Next Page]
16
IN WITNESS WHEREOF, the parties hereto have caused this Work Letter
to be executed as of June 28, 2002.
"Landlord" "Tenant"
HEALTH CARE PROPERTY INVESTORS, INC., PIONEER VALLEY HOSPITAL, INC.,
a Maryland corporation a Delaware corporation
By:__________________________________ By:_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice Name:_____________________________
President, General Counsel and Title:____________________________
Corporate Secretary
17
Schedule 1 to Work Letter
Architect's Completion Certificate
_____________, 200__
Health Care Property Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Re: Construction of ____________________ in West Valley City, Utah
Gentlemen:
I hereby certify that construction of the above-referenced building has
been completed in substantial accordance with the attached drawings and
specifications and in compliance with all applicable laws, rules and
regulations.
Very truly yours,
______________________
By ___________________
Enclosures
[West Valley City, Utah]
EXHIBIT F
GUARANTY OF OBLIGATIONS
The undersigned, IASIS HEALTHCARE CORPORATION, a Delaware
corporation (whether one or more, "Guarantor"), as a material and necessary
inducement to HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation
("Owner"), to enter into (x) a 2002 Project Work Letter, of even date herewith
(the "Work Letter"), and (y) an Amended and Restated Pioneer Hospital Lease, of
even date herewith, with Pioneer Valley Hospital, Inc., a Delaware corporation
("Lessee"), as Lessee, amending and restating both that certain Pioneer Hospital
Lease dated as of May 15, 1996, between Owner's predecessor in interest, AHP of
Utah, Inc., a Utah corporation, as Landlord, and Lessee's predecessor in
interest, ▇▇▇▇▇▇▇▇▇▇ Pioneer Valley Hospital, Inc., a Utah corporation, as
previously amended by (i) that certain First Amendment to Pioneer Hospital Lease
dated as of August 15, 1996, (ii) that certain Second Amendment to Lease dated
as of November 6, 1996, and (iii) that certain Third Amendment to Lease dated as
of March 18, 1999 (as so amended, the "Lease"), with respect to certain property
further described therein (the "Property"), hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to
Owner:
(a) the payment when due of all costs, expenses, fees, rents
and other sums payable by Lessee under the Lease, the Work Letter and all other
documents and agreements entered into by Lessee in connection therewith
(collectively, the "Documents") and the full, faithful and prompt performance
when due of each and every one of the terms, conditions and covenants to be kept
and performed by Lessee under any of the Documents, including, without
limitation, (i) any and all indemnification and insurance obligations, (ii) all
obligations to operate, repurchase, rebuild, restore or replace the Property or
any facilities or improvements now or hereafter constituting a portion of the
Property, (iii) all obligations of the Lessee under the Lease resulting from the
exercise of any renewal or extension option under the Lease, and (iv) all
obligations of the Lessee to purchase the Property upon exercise of any option
to purchase or right of first refusal under the Lease; and
(b) the payment, on demand, of any fees, costs and charges of
enforcement of the Documents, and the preservation and protection of Property
and collateral from Lessee, if any, which would be owing by Lessee under clause
(a) above, but for the effect of the federal Bankruptcy Code or any other state
or local debtor relief law.
The foregoing obligations are hereafter collectively referred to as the
"Guaranteed Obligations." In the event of the failure of Lessee to pay or
perform any of the Guaranteed Obligations when due, Guarantor shall forthwith
pay or perform the same, as applicable, and pay all damages that may result from
the non-payment or non-performance thereof to the full extent provided under
each of the Documents. Guarantor acknowledges that the Guaranteed Obligations
may exceed the payment or performance obligations of Lessee under the Documents.
Payments by Guarantor in respect of the Guaranteed Obligations shall be made to
Owner in immediately available federal funds to an account designated by Owner.
2. Guarantor represents, warrants and covenants that:
(a) Guarantor is duly organized/formed, validly existing and,
to the extent applicable, in good standing under the laws of its state of
organization/formation and has full power, authority and legal right to execute
and to deliver and to perform and observe the obligations and provisions of this
Guaranty;
(b) this Guaranty has been duly authorized, executed and
delivered by Guarantor, and constitutes the valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms;
(c) Guarantor is solvent, has timely and accurately filed all
tax returns required to be filed by it and is not in default in the payment of
any taxes levied or assessed against it or any of its assets, or subject to any
judgment, audit, order, decree, rule or regulation of any governmental authority
which could reasonably be expected to materially and adversely affect the
financial condition or operations of Guarantor or the ability of Guarantor or
carry out its obligations under this Guaranty;
(d) no consent, approval or other authorization of, or
registration, declaration or filing with, any governmental authority is required
for the due execution and delivery by Guarantor of this Guaranty, or for the
performance by or the validity or enforceability hereof against Guarantor;
(e) there are no actions, proceedings or investigations,
including a Taking (as defined in the Lease) or tax audits, pending or
threatened, against or affecting Guarantor, seeking to enjoin, challenge or
collect damages in connection with the transactions contemplated under the
Documents or which could reasonably be expected to materially and adversely
affect the financial condition or operations of Guarantor or the ability of
Guarantor to carry out its obligations under this Guaranty;
(f) Guarantor has delivered to Owner copies of its financial
statements for the period(s) ended as follows: December 31, 2001. Such financial
statements are true, correct and complete in all material respects, have been
prepared from and in accordance with the books and records of Guarantor and
fairly present the financial position and, to the extent applicable, the results
of Guarantor's operations at the date(s) and for the period(s) indicated;
(g) since the date of Guarantor's financial statements, there
has been no material adverse change in the financial condition of Guarantor from
that disclosed in its financial statements described in Section 2(f) above; and
(h) [Intentionally Omitted];
(i) neither this Guaranty nor any certificate, statement or
other document furnished or to be furnished to Owner by or on behalf of
Guarantor in connection with the transactions contemplated under the Documents
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
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3. Guarantor hereby unconditionally and irrevocably indemnifies,
protects and agrees to defend and hold harmless Owner from and against any and
all loss, cost or expense, including costs and reasonable legal fees, arising
from the breach or violation of any representation or warranty of Guarantor
hereunder.
4. In such manner, upon such terms and at such times as Owner in its
sole discretion deems necessary or expedient, and without notice to or consent
by Guarantor, which notice and consent are hereby expressly waived by Guarantor,
Owner may alter, compromise, accelerate, extend or change the time or manner for
the payment or the performance of any Guaranteed Obligation; extend, amend or
terminate any of the Documents; release Lessee or any other party to a Document
by consent to any assignment (or otherwise) as to all or any portion of the
Guaranteed Obligations; release, substitute or add any one or more guarantors,
lessees or sublessees (including by consent to sublease or otherwise); accept
additional or substituted security for any Guaranteed Obligation; or release or
subordinate any security for any Guaranteed Obligation. No exercise or
non-exercise by Owner of any right hereby given Owner, no neglect or delay in
connection with exercising any such right, no dealing by Owner with Lessee, any
other guarantor or any other Person (as defined in the Lease), and no change,
impairment, release or suspension of any right or remedy of Owner against any
Person, including Lessee and any other guarantor or other Person, shall in any
way affect any of the obligations of Guarantor hereunder or any security
furnished by Guarantor or give Guarantor any recourse or right of offset against
Owner. If Owner has exculpated Lessee or any other party to a Document from
liability in whole or in part and/or agreed to look solely to the Property, any
security for the Guaranteed Obligations or any other asset for the satisfaction
of the Guaranteed Obligations, such exculpation and/or agreement shall not
affect the obligations of Guarantor hereunder, it being understood that
Guarantor's obligations hereunder are independent of the obligations of Lessee,
any other guarantor and any other party to a Document, and are to be construed
as if no such exculpation or agreement had been given to Lessee, any other
guarantor or any other party to a Document. It is further understood and agreed
that if any such exculpation or agreement has been or at any time hereafter is
given to Lessee, any other guarantor or any other party to a Document, Owner has
done or will do so in reliance upon the agreement of Guarantor expressed herein.
5. [Intentionally Omitted].
6. Guarantor hereby waives and relinquishes all rights and remedies
now or hereafter accorded by applicable law to sureties and/or guarantors or any
other accommodation parties, under any statutory provision, common law or any
other provision of law, custom or practice, and agrees not to assert or take
advantage of any such rights or remedies, including, without limitation, (a) any
right to require Owner to proceed against Lessee, any other guarantor or any
other Person or to proceed against or exhaust any security held by Owner at any
time or to pursue any other remedy in Owner's power before proceeding against
Guarantor; (b) any defense based upon any lack of authority of the officers,
directors, partners or agents acting or purporting to act on behalf of Lessee or
any other Person, or any defect in the formation of Lessee or any other Person;
(c) any defense that may arise by reason of the incapacity, lack of authority,
insolvency, bankruptcy, death or disability of any other guarantor or other
Person or the failure of Owner to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other guarantor or
other Person; (d) notice of the existence, creation or
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incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of Lessee or any other party to a Document, or any
creditor thereof, or on the part of any other guarantor or other Person under
any other instrument in connection with any obligation or evidence of
indebtedness held by Owner or in connection with any Guaranteed Obligation; (e)
any defense based upon an election of remedies by Owner which destroys or
otherwise impairs any subrogation rights of Guarantor or any right of Guarantor
to proceed against Lessee or any other party to a Document for reimbursement, or
both; (f) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; (g) any duty on the part of
Owner to disclose to Guarantor any facts Owner may now or hereafter know about
Lessee or any other party to a Document, regardless of whether Owner has reason
to believe that any such fact materially increases the risk beyond that which
Guarantor intends to assume or has reason to believe that any such fact is
unknown to Guarantor or has a reasonable opportunity to communicate such fact to
Guarantor, it being understood and agreed that Guarantor is fully responsible
for being and keeping informed of the financial condition of Lessee and all
other parties to the Documents and of all circumstances bearing on the risk of
non-payment or non-performance of any Guaranteed Obligation; (h) any defense
arising because of Owner's election, in any proceeding instituted under the
federal Bankruptcy Code, of the application of Section 1111(b)(2) of the federal
Bankruptcy Code; (i) any defense based upon the validity or enforceability of,
or change in, this Guaranty, or any Document; (j) any defense or rights arising
under any appraisal, valuation, stay, extension, marshaling of assets,
redemption or similar law or requirement, which may delay, prevent or otherwise
affect the performance by Guarantor of any of the Guaranteed Obligations; (k)
diligence, presentment and demand; (l) any requirement to mitigate any damages
resulting from any default under any of the Documents; and (m) any defense based
on any borrowing or grant of a security interest under Section 364 of the
federal Bankruptcy Code. Without limiting the generality of the foregoing or any
other provision hereof, Guarantor hereby expressly waives any and all benefits
which might otherwise be available to guarantors under the laws of the state in
which the Property is located, in each instance to the extent such laws, or any
one of them, are applicable to this Guaranty, any of the Documents or any of the
Guaranteed Obligations.
7. Until all of the Guaranteed Obligations have been satisfied and
discharged in full, Guarantor shall not exercise its right of subrogation and
Guarantor hereby waives any right to enforce any remedy which Owner now has or
may hereafter have against Lessee, any other guarantor or any other party to a
Document and any benefit of, and any right to participate in, any security or
other assets now or hereafter held by Owner with respect to any of the
Documents.
8. All existing and future indebtedness and other obligations to
Guarantor of Lessee and each other party to a Document and the right of
Guarantor to withdraw any capital invested by Guarantor in Lessee is hereby
subordinated to the Guaranteed Obligations. From and after the occurrence of any
event of default under any of the Documents after the expiration of any grace or
cure period, no portion of such subordinated indebtedness or capital shall be
paid or withdrawn, nor will Guarantor accept any payment of or on account of any
such indebtedness or as a withdrawal of capital, without the prior written
consent of Owner. At Owner's request, following the occurrence and during the
continuance of any event of default under any of the Documents after the
expansion of any grace or cure period, Guarantor shall cause Lessee or such
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other party to pay to Owner all or any part of such subordinated indebtedness or
capital which Guarantor is entitled to withdraw for application by Owner to the
Guaranteed Obligations. Any payment of such subordinated indebtedness and any
capital which Guarantor is entitled to withdraw which is received by Guarantor
after receipt of the above-referenced request shall be received by Guarantor in
trust for Owner, and Guarantor shall cause the same to be paid immediately to
Owner on account of the Guaranteed Obligations. No such payment shall reduce or
affect in any manner the liability of Guarantor under this Guaranty.
9. Guarantor shall file in any bankruptcy or other proceeding in
which the filing of claims is required by law all claims which Guarantor may
have against Lessee or any other party to a Document or relating to any
indebtedness or obligations of Lessee or any other party to a Document to
Guarantor and will assign to Owner all rights of Guarantor thereunder. If
Guarantor does not file any such claim, Owner, as attorney-in-fact for
Guarantor, is hereby authorized to do so in the name of Guarantor or, in Owner's
discretion, to assign the claim to a nominee and to cause a proof of claim to be
filed in the name of Owner's nominee. The foregoing power of attorney is coupled
with an interest and is irrevocable. Owner or its nominee shall have the sole
right to accept or reject any plan proposed in any such proceeding and to take
any other action which a party filing a claim is entitled to do. In all such
cases, whether in administration, bankruptcy or otherwise, the person or persons
authorized to pay such claim shall pay to Owner the amount payable on such claim
and, to the full extent necessary for that purpose, Guarantor hereby assigns to
Owner all of Guarantor's rights to any such payments or distributions to which
Guarantor would otherwise be entitled; provided, however, that Guarantor's
obligations hereunder shall not be satisfied except to the extent that Owner
receives cash in full or property acceptable to Owner by reason of such payment
or distribution. If Owner receives anything under this Guaranty other than cash
in full or property acceptable to Owner, the same shall be held as collateral
for amounts due under this Guaranty.
10. With or without notice to Guarantor, Owner, in Owner's sole
discretion and at any time and from time to time and in such manner and upon
such terms as Owner deems fit, may (a) apply any or all payments or recoveries
from Lessee or from any other guarantor or party to a Document or realized from
any security, in such manner and order of priority as Owner may determine, to
any indebtedness or obligation of Lessee with respect to any of the Documents,
whether or not such indebtedness or obligation is a Guaranteed Obligation or is
otherwise secured or is due at the time of such application, and (b) refund to
Lessee any payment received by Owner under any Document.
11. The amount of Guarantor's liability and all rights, powers and
remedies of Owner hereunder and under any other agreement now or at any time
hereafter in force between Owner and Guarantor, including, without limitation,
any other guaranty executed by Guarantor relating to any indebtedness or other
obligation of Lessee to Owner, shall be cumulative and not alternative, and such
rights, powers and remedies shall be in addition to all rights, powers and
remedies given to Owner by law. This Guaranty is in addition to and exclusive of
any other guaranty of the Guaranteed Obligations, including, without limitation,
any other guaranty.
12. The obligations of Guarantor hereunder are primary, direct and
independent of the obligations of Lessee and any other party to a Document,
including, without limitation, any other guarantor, and, in the event of any
default under any of the Documents
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following the expiration of any grace or cure period, a separate action or
actions may be brought and prosecuted against Guarantor, whether or not Lessee
or any other party to a Document, including, without limitation, any other
guarantor, is joined therein or a separate action or actions are brought against
Lessee or any other party to a Document, including, without limitation, any
other guarantor. Owner may maintain successive actions for other defaults.
Owner's rights hereunder shall not be exhausted by its exercise of any of its
rights or remedies or by any such action or by any number of successive actions
until and unless all Guaranteed Obligations have been paid in full in cash or
performed in full.
13. Guarantor shall pay to Owner reasonable attorneys' fees and all
costs and other expenses which Owner reasonably expends or incurs in collecting
or compromising or enforcing payment or performance of the Guaranteed
Obligations or in enforcing this Guaranty, whether or not suit is filed,
including, without limitation, all reasonable attorneys' fees and all costs and
other expenses reasonably expended or incurred by Owner in connection with any
insolvency, bankruptcy, reorganization, arrangement or other similar proceedings
involving Guarantor which in any way affects the exercise by Owner of its rights
and remedies hereunder.
14. If any provision or portion of this Guaranty is declared or
found by a court of competent jurisdiction to be unenforceable or null and void,
such provision or portion hereof shall be deemed stricken and severed from this
Guaranty, and the remaining provisions and portions hereof shall continue in
full force and effect.
15. This Guaranty shall inure to the benefit of Owner, its
successors and assigns, including, without limitation, the assignees of any of
the Guaranteed Obligations, and any subsequent owners or encumbrancers of the
Property, and shall bind the heirs, executors, administrators, personal
representatives, successors and assigns of Guarantor, whether by operation of
law or otherwise; provided, however, that Guarantor may not, without Owner's
prior written consent, which such consent may be granted or withheld in Owner's
sole discretion, assign or transfer any of its rights, powers, duties or
obligations hereunder. This Guaranty may be assigned by Owner with respect to
all or any portion of the Guaranteed Obligations to any subsequent owners or
encumbrancers of the Property. When so assigned, Guarantor shall be liable to
the assignees under this Guaranty without in any manner affecting the liability
of Guarantor hereunder with respect to any of the Guaranteed Obligations
retained by Owner.
16. No provision of this Guaranty or right of Owner hereunder can be
waived in whole or in part, nor can Guarantor be released from its obligations
hereunder, except by a writing duly executed by an authorized officer of Owner.
17. When the context and construction so require, all words used in
the singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa. The term
"Lessee," as used herein, shall mean the party herein so named and its
respective successors and assigns, whether by operation of law or otherwise,
including, without limitation, a debtor in possession under Chapter 11 of the
federal Bankruptcy Code and any other Person at any time assuming or succeeding
to all or substantially all of the Guaranteed Obligations. If more than one
Person is a Guarantor hereunder, the obligations of all such Persons shall be
joint and several.
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18. Guarantor represents and warrants that the value of the
consideration received, and to be received, by Guarantor in connection with the
transactions contemplated under the Documents is worth at least as much as the
liabilities and obligations of Guarantor under this Guaranty, and that such
liabilities and obligations are expected to benefit Guarantor either directly or
indirectly.
19. EXCEPT WHERE FEDERAL LAW IS APPLICABLE AND UNLESS OTHERWISE
EXPRESSLY PROVIDED HEREIN, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.
20. EACH OF GUARANTOR AND OWNER, BY OWNER'S ACCEPTANCE OF THIS
GUARANTY, ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH
RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS OF THE UNITED
STATES AND THE STATE IN WHICH THE PROPERTY IS LOCATED. EACH OF GUARANTOR AND
OWNER, BY OWNER'S ACCEPTANCE OF THIS GUARANTY, HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING
UNDER THIS GUARANTY OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF OWNER AND GUARANTOR WITH RESPECT TO THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH OF GUARANTOR AND OWNER, BY OWNER'S ACCEPTANCE OF THIS GUARANTY, HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE A COPY
OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR
AND/OR OWNER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
Guarantor's Initials: _____________
_____________
21. Except as provided in any other written agreement now or at any
time hereafter in force between Owner and Guarantor, this Guaranty shall
constitute the entire agreement of Guarantor with Owner with respect to the
subject matter hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding upon Owner or
Guarantor unless expressed herein.
22. This Guaranty shall remain in full force and effect and continue
to be effective in the event any petition is filed by or against Lessee, any
other party to a Document or Guarantor for liquidation or reorganization, in the
event Guarantor becomes insolvent or makes an assignment for the benefit of
creditors or in the event a receiver or trustee is appointed for all or any
significant part of the assets of Lessee, any other party to a Document or
Guarantor, and
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shall continue to be effective or be reinstated, as the case may be, if at any
time payment or performance of the Guaranteed Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by Owner, whether as a "voidable preference,"
"fraudulent conveyance" or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Guaranteed Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
23. Guarantor will from time to time promptly execute and deliver
all further instruments and take all further action that may be necessary or
desirable, or that Owner may reasonably request, in order to enable Owner to
exercise and enforce its rights and remedies under this Guaranty or to carry out
the provisions and purposes hereof.
24. Any notice, demand and other communication hereunder shall be
given in accordance with the provisions therefor set forth in the Lease, except
that for purposes of this Guaranty the address for notice for Guarantor is set
forth below its signature hereto.
25. This Guaranty amends, restates, supersedes and replaces any and
all guaranty or suretyship agreements heretofore executed and delivered by
Guarantor in connection with the Lease or any of the other Documents.
[Signatures on Next Page]
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EXECUTED as of this 28th day of June, 2002.
"Guarantor"
IASIS HEALTHCARE CORPORATION,
a Delaware corporation
By: ________________________________
Its: _______________________________
Address for Notices:
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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