COMMERCIAL LEASE ▇▇. ▇▇-▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ LAND DEPARTMENT
THIS COMMERCIAL LEASE is entered into by and between the State of Arizona
(as "Lessor" acting by and through the Arizona State Land Department) and Sierra
Tucson L.L.C. (as "Lessee"). In consideration of the payment of Rent and the
performance by the parties of each of the provisions set forth herein, the
parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Affiliated Entity. An Affiliated Entity for purposes of this lease
shall mean a partnership, corporation, trust or other legal entity controlled by
or under common control of Lessee. "Control," for these purposes, shall mean
ownership of at least 25% of the stock, interest in profits, or beneficial
interest.
1.2 Change in Use. A change in the use of the Premises from a Permitted
Use as defined in Paragraph 6.1 to a use which is not a Permitted Use as defined
in Paragraph 6.1 (Uses).
1.3 Default As defined in Paragraph 17.1 (Events).
1.4 Department. The Arizona State Land Department and any successor
agency, board or commission.
1.5 Impositions. All assessments and charges for utilities and
communication services, all assessments imposed pursuant to the development,
construction and operation of any project on the Parcel, all license, permit
and other authorization fees, all taxes, duties, charges and assessments of
every kind and nature imposed by any public or governmental authority pursuant
to any current or subsequently enacted law, ordinance, regulation or order which
during the Term of the Lease become due, or imposed upon, charged against,
measured by or become a lien on (a) the Parcel; (b) any Improvements or personal
property of the Lessee located on the Parcel; (c) the interest of the Lessee in
this Lease or in the proceeds received by Lessee from any assignments and/or
subleases of the Premises.
1.6 Improvements. As defined in Paragraph 9.1 (Definitions).
1.7 Interest Rate: The rate of interest established pursuant to A.R.S. .
37-241 (D) or any successor statute.
1.8 Leasehold Mortgagee: As defined in Paragraph 19.1 (Definition).
1.9 Parcel: As defined in Paragraph 2.1 (Definition).
1.10 Premises: The Parcel together with all rights and easements
sements appurtenant thereto as expressly granted by this Lease, Improvements,
temporary or portable structures, and personal property located on, below or
above the Parcel.
1.11 Rent. "Rent"means Annual Rent, Base Rent, Alternative Base Rent, or
any adjustments thereto or combination thereof, including any and all payments
required by Lessee to Lessor.
ARTICLE 2 - PARCEL
2.1 Definition. Lessor hereby leases to Lessee for the Term, at the Rent,
and in accordance with the provisions set forth herein, the State Land in Pinal
County, Arizona described in Exhibit "A" attached hereto (the "Parcel") for the
uses and purposes specified in Article 6 (Use & Occupancy of Premises) hereof.
2.2 Condition. Lessee has examined the physical condition of the Parcel,
is familiar with it, and takes it "as is". Lessor makes no express or implied
warranties as to the physical condition of the Parcel.
ARTICLE 3 - TERM
3.1 Commencement; Expiration; Lease Year. The Term of this Lease shall be
for a period of no more than fifty (50) years commencing on October 23, 1998,
"Commencement Date", and ending on October 22, 2048, "Expiration Date", unless
sooner canceled or terminated as provided herein. A "Lease Year" shall
constitute the twelve (12) month period commencing with the Commencement Date
and each anniversary of the Commencement Date.
ARTICLE 4 - RENT
4.1 Annual Rent. Lessee shall pay Rent as provided herein to Lessor,
without notice or demand, each year in advance on the anniversary of the
commencement date of this Lease for the use and occupancy of the Parcel during
the Term of this Lease without offset or deduction.
4.2 Base Rent. Base Rent for the first Lease Year shall be $133,178.65.
If the Lessee is the lessee under former lease 03-98637, or an Affiliated Entity
of the lessee under former lease 03-98637, the Base Rent for the first Lease
Year shall be reduced by the sum of $39,307.76, which sum represents the amount
of rent paid by the former lessee for the period remaining for the 1998-99 lease
year subsequent to the Commencement Date of this Lease. For subsequent Lease
Years Base Rent shall be adjusted as follows:
(a) If there is no Change in Use, Base Rent shall be increased: (i)
First, by increases in Bed Capacity, calculated and phased in as set forth in
Paragraph 4.3 ("Adjustment to Base Rent Resulting From Increased Bed Capacity"),
and (ii) Secondly, and in addition, by the fixed Percentage Adjustments as set
forth in Paragraph 4.4 ("Fixed Percentage Adjustments to Base Rent"). A sample
rent schedule, based upon increases in Bed Capacity in Lease Years 5 and 10, is
attached as Exhibit "B".
(b) If there is a Change in Use, Base Rent shall be adjusted as set forth
in Paragraph 4.5 ("Alternative Adjustments to Base Rent").
4.3 Adjustment to Base Rent Resulting From Increased Bed Capacity. Base
Rent for the first Lease Year has been established by multiplying a Bed Capacity
of 55 by the sum of $2,421.43. At such time as Lessee shall experience an
increase in Bed Capacity, Base Rent shall be increased to an amount equal to the
product of the new Bed Capacity and the Base Rent Multiplier, phased in as set
forth below. Base Rent shall not be decreased should Lessee experience a
decrease in Bed Capacity. On or before June 1 of each Lease Year, Lessee shall
deliver to Lessor a statement signed by Lessee and either certified under oath
to be correct or certified by a Certified Public Accountant, setting forth
Lessee's Bed Capacity as of June 1 of the current year. Base Rent for the next
ensuing Lease Year shall reflect increases in Bed Capacity as of June 1 of the
current Lease Year. Increases in Bed Capacity occurring subsequent to June 1 of
the current Lease Year shall be reflected in the Lease Year following the
ensuing Lease Year.
(a) Phase In of Adjustments to Base Rent. Increases in Base Rent as a
result of increases in Bed Capacity shall be phased in over the ensuing five (5)
Lease Years. Each Lease Year, for the five (5) year period following an
increase in Bed Capacity, Base Rent shall be increased by an amount equal to the
Bed Capacity Differential divided by five (5).
(b) Bed Capacity. Bed Capacity shall mean the number of beds actually
available for use by patients or clients of Lessee for overnight occupancy.
(c) Base Rent Multiplier. The Base Rent Multiplier shall mean the sum of
$2,421.43, adjusted by cumulative, compounded 2% increases as of the first day
of every Lease Year, commencing with Lease Year 16.
(d) Bed Capacity Differential. The Bed Capacity Differential shall mean
the difference between (i) Bed Capacity as increased pursuant to this Paragraph
4.3 multiplied by the Base Rent Multiplier, and (ii) Bed Capacity immediately
prior to any increase multiplied by the Base Rent Multiplier.
4.4 Fixed Percentage Adjustments to Base Rent. In addition to the
adjustments set forth in Paragraph 4.3 ("Adjustment to Base Rent Resulting From
Increased Bed Capacity"), Base Rent shall be increased commencing with the Base
Rent due for Lease Year 6, and every 5th Lease Year thereafter, by a sum which
reflects a cumulative 10% increase over the Base Rent for the immediately
preceding Lease Year.
4.5 Alternative Adjustments to Base Rent. If there should be a Change in
Use during the Term of this Lease, Base Rent for the next ensuing Lease Year
shall be equivalent to the Base Rent for the preceding Lease Year, plus two
percent (2%) of that amount. Beginning with the fifth (5th) Lease Year
following the Change in Use, and every fifth (5th) year thereafter, Base Rent
shall be increased by a sum which reflects a cumulative 10% increase over the
Base Rent for the immediately preceding Lease Year.
4.6 Interest; Penalty. Lessee shall pay a penalty of five percent (5%)
plus interest on any amount of delinquent Rent. Interest shall accrue daily on
the delinquent amount and on the penalty at the Interest Rate until paid.
4.7 Notice and Demand. Unless the time for payment of Rent has previously
been extended pursuant to Paragraph 4.8 (Extension), if Lessor has not received
a Rent payment by the due date, the Lessor shall not be entitled to exercise any
right or remedy hereunder unless it has delivered to Lessee written notice
pursuant to A.R.S. 37-289 demanding that within thirty (30) days after the
receipt of such notice Lessee make such Rent payment and such thirty (30) day
period has expired.
4.8 Extension. Prior to or after the time the Annual Rent becomes due and
owing, Lessee may, in writing, request that Lessor extend the time for payment
of Rent or any portion thereof by up to three (3) successive ninety (90) day
periods (for a total extension of 270 days for each Lease Year). The Department
shall promptly notify Lessee of its approval or disapproval of such extension.
Such extended Rent shall be subject to the provisions of Paragraph 4.6
(Interest; Penalty) including interest and penalty charged to the Lessee.
4.9 Proration of Rent. Upon cancellation or termination of this Lease for
any reason Rent shall not be pro-rated unless specifically stipulated elsewhere
in this document or by written agreement of Lessor and Lessee.
ARTICLE 5 - ADDITIONAL AMOUNTS
5.1 Definition. In addition to the Annual Rent, Lessee shall also pay or
cause to be paid all Impositions and all other costs, expenses, liabilities,
obligations or other payments which Lessee under this Lease assumes and agrees
to pay, all of which are hereinafter referred to individually and collectively
as "Additional Amounts".
5.2 Payment. Lessee shall pay or cause to be paid all Additional Amounts
before any interest, penalty, fine or cost accrues for nonpayment; provided,
however, that if any Additional Amount may by law be paid in installments,
Lessee may pay such Additional Amounts in installments provided that such
installments do not extend past the Expiration Date. Lessee shall pay all such
installments and any applicable interest at the time they become due and before
any further penalty or fine may be added thereto.
5.3 Evidence. On request, Lessee shall provide Lessor with evidence of
payment of taxes on the Improvements, Removable Improvements, and personal
property on the Parcel and other Impositions by governmental authorities. As to
all other Additional Amounts, within a reasonable period after Lessee's receipt
of a written request, Lessee shall furnish to Lessor pertinent official receipts
or other proof satisfactory to Lessor evidencing the payment of any Additional
Amounts before the same become delinquent.
5.4 Interest. If Lessee fails to pay or cause to be paid in accordance
with this Article 5 any Additional Amounts, then Lessor shall have all the
rights and remedies provided in Paragraph 17.2 (Remedies) as in the case of
nonpayment of Rent and in Paragraph 17.1 (Events) including the right to
interest at the Interest Rate on all such Additional Amounts, if and to the
extent paid by Lessor from and after the date of Lessee's nonpayment.
5.5 Taxes. Lessee shall timely pay and discharge, without deduction or
abatement for any cause, all duties, taxes, charges, assessments, impositions
and payments, extraordinary as well as ordinary, unforeseen as well as foreseen,
of every kind and nature (under or by virtue of any current or subsequently
enacted law, ordinance, regulation or order of any public or governmental
authority), which during the Term are due, imposed upon, charged against,
measured by or become a lien on (i) any part of the Premises; (ii) the interest
of any of the parties to this Lease or in proceeds received pursuant to this
Lease; and (iii) the rent paid pursuant to this Lease. Lessee shall have the
right to contest any such taxes, assessments or other charges provided that the
fee interest of Lessor shall not thereby be encumbered. In the event of sale or
exchange of fee title to a private party taxes and assessments payable under
this paragraph shall exclude all municipal, State or federal income, gift,
estate inheritance or excess profit taxes assessed against Lessor.
ARTICLE 6 - USE AND OCCUPANCY OF PREMISES
6.1 Uses. The Premises shall be used solely and exclusively for
"Permitted Uses"; Permitted Uses shall mean an adult addictions\behavioral
health care and treatment facility, and ancillary uses, and such other uses as
may be allowed by applicable zoning, and other uses in the event Lessor so
determines and advises Lessee in writing.
6.2 Artifacts.
(a) Pursuant to A.R.S. 41-841 and 41-842, Lessee, Lessee's employees, and
Lessee's guests shall not excavate or collect any prehistoric or historic
archaeological specimens on the Premises without a permit from the Director of
the Arizona State Museum and written approval of Lessor pursuant to the terms of
this Lease. Lessee shall immediately report any unpermitted excavation or
collection or archaeological specimens on the Premises to the Arizona State
Museum and Lessor.
(b) Pursuant to A.R.S. 41-844, Lessee shall report to the Director of the
Arizona State Museum and Lessor any prehistoric or historic archaeological site,
or paleontological site, that is discovered on the Premises by Lessee, Lessee's
employees, or Lessee's guests, and shall, in consultation with the Director of
the Arizona State Museum and Lessor, immediately take all reasonable steps to
secure the preservation of the discovery.
6.3 Native Plants. Lessee shall not move, use, destroy, cut or remove or
permit to be moved, used, destroyed, cut or removed any cactus, protected native
plants or products of the land except that which is necessary for the use of the
Parcel, and then only with the prior written approval of Lessor, and such
permission shall not be unreasonably withheld or delayed. If the removal or
destruction of plants protected under the Arizona Native Plant Law is necessary
to the use of the Parcel, Lessee shall also obtain the prior written approval of
the Arizona Department of Agriculture.
6.4 Waste; Conformity to Law. Lessee shall not conduct or permit to be
conducted any public or private nuisance on the Premises, nor commit or permit
to be committed any waste thereon. Lessee shall maintain the entire Premises in
a clean and wholesome condition. Lessee shall not use or permit the Premises to
be used in any manner that is not in conformity with all federal, state, county,
and municipal laws, rules, and regulations, unless Lessor determines and advises
Lessee in writing otherwise.
6.5 Minerals. Lessor excepts and reserves out of the Parcel all oil,
gases, geothermal resources, coal, ores, minerals, fossils, and fertilizers of
every kind, which may be in or upon the Parcel, and the right to enter upon the
Parcel to inspect, explore or extract any such items. Lessee shall be entitled
to reasonable compensation for any damages resulting from the exercise of the
rights reserved hereunder.
6.6 Quiet Enjoyment. Lessee shall quietly have, hold and enjoy the Parcel
during the Term of this Lease so long as Lessee is in compliance with all the
provisions of this Lease.
6.7 Inspection. Except as otherwise provided herein its duly authorized
agents, employees and representatives shall have the right to enter upon and
inspect the Premises and all improvements thereon at a reasonable time, and in a
reasonable manner. In the course of any such inspection, Lessor shall at all
times maintain the confidentiality of Lessee's patients/clients.
6.8 Surrender. In the event this Lease is not renewed, Lessee shall
surrender peaceably the possession of the Premises upon expiration of the Term
of this Lease.
6.9 Zoning. Lessee agrees to abide by the applicable provisions of the
Pinal County zoning ordinances, unless Lessor determines and advises Lessee in
writing otherwise. To the extent consistent with the purpose of this Lease,
Lessor shall cooperate with Lessee in obtaining any necessary or desired site
plan and design review approvals, stipulation modifications, use permits and any
other necessary governmental approvals and shall execute and deliver such
petitions, plans, applications or other documents as Lessee may from time to
time reasonably request to effect such governmental approvals. Lessee shall not
rezone any part or all of the Parcel without Lessor's written consent.
6.10 Change in Use. Lessor shall not unreasonably withhold or delay a
request made by Lessee for a Change in Use, provided that such proposed Change
in Use (i) is consistent with Lessor approved zoning and (ii) is likely to
render the Premises more valuable than the Permitted Use. Lessor shall cause
the Parcel for which such Change in Use is requested to be promptly reappraised
to determine the then full value of the Parcel. Lessee shall be entitled to
obtain, at Lessee's cost, and submit to the Lessor an appraisal, for Lessor's
review and consideration for these purposes, from an independent qualified
appraiser previously approved by Lessor. The proposed use of underground
storage tanks or other environmentally hazardous activities shall be considered
reasonable grounds to withhold approval of a Change in Use.
6.11 Trespass. Lessee shall report to Lessor and appropriate law
enforcement authorities any known or suspected trespass or waste committed on
the Premises.
6.12 Repair and Maintenance. Lessor shall be under no obligation whatever
to maintain, repair, rebuild or replace any improvement on the Premises. Lessee
shall, subject to the provisions of Article 12 (Damage) and Article 15
(Condemnation) and at its own expense, keep and maintain the Premises in good
order, condition and repair in conformity with any applicable governmental
requirements and if applicable, those of the insurance underwriting board or
insurance inspection bureau having jurisdiction over the Premises.
ARTICLE 7 - EASEMENTS AND DEDICATIONS
7.1 Public Use Interests.
(a) Lessor hereby agrees to make land available for easements (hereinafter
called "Public Use Interests") for roadways, access, utilities, and drainage
over, under, upon and across such portions of the Parcel as are identified and
requested from time to time by Lessee and are reasonably necessary. Such Public
Use Interest may be perpetual easements, as required by pertinent governmental
authorities or public utilities or Lessor and permitted by state law, and may,
at Lessor's option survive cancellation or termination of this Lease and
leasehold interest created pursuant hereto.
(b) Before Lessor makes a Public Use Interest available, Lessee shall
deliver a legal description of the pertinent portion of the Parcel demised
herein, a completed Application for Right-of-Way and a notice describing the
nature of the Public Use Interest required.
(c) Easements requiring rights which transcend the rights granted herein,
either in scope or in time, must be purchased at a price and in the manner
required by Arizona law.
(d) After notification and upon receiving full compensation for the Public
Use Interest in the manner required by Arizona law, Lessor shall execute and
deliver a patent or easement, as the case may be, in recordable form for the
Public Use Interest to the purchaser of the Public Use Interest. The purchaser
of the Public Use Interest, if other than the pertinent governmental authority
or public utility, shall thereupon immediately dedicate the Public Use Interest
to the pertinent governmental authority or public utility and record such Public
Use Interest in the office of the Pinal County Recorder. Lessor shall also
execute such other and further documents as may be required to fully implement
the intent of this Paragraph; provided that, any other documents executed
pursuant to this Paragraph shall not affect any real property other than that
portion of the Parcel sold or leased for the Public Use Interest which is
included in the Parcel demised herein.
7.2 Temporary, Non-Exclusive Easements. At Lessee's election and without
further consent of Lessor, Lessee may, from time to time, create non-exclusive
easements or licenses over, under and across Parcel for roadway, access,
drainage and utilities including without limitation, water, power, gas,
electric, sewer, telephone, television, and other communications; provided,
however, that the term of such easements shall not survive the expiration or
termination of this Lease. Lessor shall not be entitled to any compensation for
such temporary, non-exclusive easements, except that Lessor shall be entitled to
and Lessee shall pay to Lessor fifteen percent (15%) of the revenue from such
uses as rent in addition to the Rent otherwise provided for in Article 4 (Rent)
of this lease.
7.3 Reservations. Lessor reserves those rights as required in A.R.S. .
37-287, and Lessee has those rights enumerated therein.
ARTICLE 8 - RECORDS
8.1 Record Keeping; Inspection. Lessee shall make and keep for the Term
of the Lease and either (i) five years thereafter; or (ii) until the conclusion
of any dispute concerning this Lease, whichever is later, appropriate books and
records concerning the operation of this Lease including but not limited to
Federal and State tax statements, receipts and other records. Upon five (5)
business days prior written notice Lessor, its duly authorized agents, employees
and representatives shall have the right at reasonable times during the Term of
this Lease and for either (i) five years thereafter; or (ii) until the
conclusion of any dispute concerning this Lease, whichever is later, to make
reasonable examination of those books, records or other material in order to
obtain information which Lessor deems necessary to administer this Lease.
Further, upon five (5) business days prior written notice Lessor, its duly
authorized agents, employees and representatives shall have the right at all
times during the term of any sublease or any extension thereof, and for either
(i) five years thereafter; or (ii) until the conclusion of any dispute
concerning this Lease, whichever is later, to make reasonable examination of any
sublessee's books, records or other material which Lessor deems necessary in
order to obtain information to administer Article 4 (Rent) of this Lease.
ARTICLE 9 - CONSTRUCTION AND IMPROVEMENTS
9.1 Definitions.
(a) "Improvement" means anything placed on or any disturbance of the
Parcel which is permanent in character, which is the result of labor or capital
expended by Lessee, or by its sublessees, successors or predecessors in
interest, on the Parcel in its reclamation or development, and which has
enhanced the value of the land. Anything placed on or any disturbance of the
Parcel during the Term of this Lease which does not constitute an "Improvement"
as defined herein will not be subject to reimbursement.
(b) "Removable Improvement" means anything not permanent in character
which is the result of labor or capital expended by the Lessee, its sublessees,
successors or predecessors in interest on the Parcel.
(c) "Reimbursable Improvement" means an Improvement on or of the Parcel
(i) for which Lessee shall be reimbursed by a succeeding lessee pursuant to
Arizona law, (ii) which is not removable, and (iii) which is either authorized
pursuant to the terms of this Lease or has been approved in writing by Lessor
prior to placement or disturbance.
(d) "Current Appraised Value" means the appraised value of a Reimbursable
Improvement at the time Lessee is reimbursed.
(e) "Initial Construction" means those Improvements existing on the Parcel
as of the Commencement Date of this Lease, which have a value for purposes of
amortization and reimbursement pursuant to this Paragraph 9.1 of $4,700,000.
(f) "Additional Construction" shall mean newly constructed Improvements,
permanently attached to the ground, together with ancillary fixtures, which
directly increase the income generating capability of this Lease and are
reasonably expected to correspondingly increase the rental income to Lessor;
repair, maintenance and remodeling of existing Improvements are specifically
excluded from the definition of Additional Construction, regardless of the
amount of such expenditures, or whether such expenditures are expensed or
capitalized
9.2 Prior Approval. Lessee shall not place or construct or permit to be
placed or constructed any Improvement or Removable Improvement on or to the
Premises, other than:
Those Improvements necessary for the continued use of the Parcel for Permitted
Uses as set forth in Paragraph 6.1 ("Permitted Uses") of this Lease.
All other Improvements are prohibited. Prior to applying for a building permit
or prior to beginning construction if no permit is required, Lessee shall submit
to Lessor a completed, current form known as an Application To Place Improvement
("Application"). No construction shall begin until Lessor approves in writing
the Application. The Application shall include plans and specifications
(including but not limited to grading, construction and landscape plans) showing
the nature, location, approximate cost, and quality of the proposed
Improvements. Drainage and waste disposal plans must be submitted with the
Application. Plans submitted must be stamped by an Arizona registered engineer
or architect. The work shall be completed by an Arizona registered contractor.
The location of completed Improvements, as built construction plans stamped by
an Arizona registered engineer or architect, and any other information required
by Lessor, shall be submitted to Lessor within thirty (30) days following the
completion of construction on Lessor's form known as Report Of Improvement
Placed With Prior Approval. Any Improvements placed on the Premises shall
conform to existing laws and ordinances applicable to construction and
maintenance in the jurisdiction where the Premises are located, unless Lessor
determines and advises Lessee in writing otherwise.
9.3 Utilities; New Construction. Gas, electric, power, telephone, water,
sewer, cable television and other utility or service lines of every nature shall
be placed and kept underground unless Lessor grants prior written approval
otherwise. All Improvements shall be of new construction and no Improvements
shall be moved from any other location onto the Premises without Lessor's prior
written approval.
9.4 Annual Statement. Within 180 days after each anniversary of the
commencement date of this Lease, Lessee shall file with Lessor a sworn statement
setting forth the general description of any Improvements placed on the Premises
during the prior lease year and the actual cash value of such Improvements.
Lessee shall not be deemed to be in default hereunder if the actual cash value
is incorrect so long as Lessee made the determination in good faith.
9.5 Ownership. All Improvements constructed upon the Premises by Lessee
shall be the property of Lessee or any successor in interest to whom Lessee
specifically conveys all or any part of the Improvements, and shall, unless they
become the property of Lessor, be subject to assessment for taxes in the name of
Lessee, the same as other property of Lessee. Within sixty (60) days prior to
or ninety (90) days following the expiration or termination of this Lease,
Lessee may remove those Improvements which belong to it, have been previously
approved by Lessor in writing, are free of any liens and can be removed without
causing injury to the Parcel. At its option, Lessor may waive any of the above
listed prerequisites to Lessee's removal of Improvements on the Parcel. Lessee
may, with Lessor's prior written approval and within the time allowed for
removal, sell its Improvements to the succeeding Lessee. Lessee's rights under
this Paragraph 9.5 shall survive any termination or cancellation of this Lease.
Such surviving rights shall not restrict Lessor's ability to release the land
and are subject to A.R.S. 37-288 and 37-293.
9.6 Subleases. In connection with any sublease or assignment filed with
Lessor, Lessee may sell all of its right, title and interest in and to any and
all Improvements and may allow sublessees or assignees to construct
Improvements, subject to the provisions of Paragraph 6.1 (Uses) in which event
the party that purchases or constructs such Improvements, and its successors and
assigns, except as may be set forth in any agreement between Lessee and such
party, shall thereafter be deemed to be the owner of Improvements with respect
thereto, and shall be subject to the requirements, and enjoy the benefits, of
this Article as to such Improvements.
9.7 Insurance Proceeds. Subject to the rights of any pertinent Leasehold
Mortgagees, the owner of Improvements and Removable Improvements shall be
entitled to any casualty insurance or condemnation proceeds resulting from the
destruction or taking of any Improvements or Removable Improvements; provided,
however, that the Lessee shall remain obligated to pay to Lessor the Rent under
Article 4 (Rent), and the provisions of Article 15 (Condemnation) shall govern
the disposition of condemnation awards that include Lessor's interest in the fee
title to the Parcel.
9.8 Reimbursement; Amortization.
(a) For purposes of this Lease only, all Reimbursable Improvements
constructed on the Parcel during the term of this lease shall be fully amortized
by Lessee, for purposes of reimbursement under A.R.S. 37-242 and 37-293,
according to the schedule set forth in this Paragraph 9.8, unless otherwise
agreed to in writing by Lessor and Lessee. Under no circumstances shall any
Improvements be considered to have a value greater than zero upon the Expiration
Date of this Lease, except as specifically set forth below. This Paragraph is
not applicable to valuation of Improvements in the event of condemnation; the
rights of Lessee to share in the net proceeds of any award in the event of
condemnation are set forth in Article 15 (Condemnation).
(b) The value of Improvements for purposes of Lessee's reimbursement shall
be the lesser of: (i) the unamortized cost of the Improvements as determined
according to the amortization schedule set forth in this Paragraph 9.8, or (ii)
the Current Appraised Value of the Parcel as improved by the Reimbursable
Improvements less the Current Appraised Value of the Parcel as vacant and
available at its highest and best use. If the difference between the Current
Appraised Value as improved and as vacant is zero or less, the Improvements will
have no Current Appraised Value for purposes of reimbursement.
(c) The cost of Improvements constituting Initial Construction shall be
amortized for a fifty (50) year period, beginning on the Commencement Date of
this Lease.
(d) The cost of Improvements constituting Additional Construction shall be
amortized by extending the amortization schedule for Improvements constituting
Initial Construction by one (1) year for every $250,000 of cost, provided that
in no event shall the total amortization period for Initial Construction plus
Additional Construction exceed sixty (60) years. The cost of Improvements
constituting Additional Construction shall be amortized by adding that cost to
the unamortized value of existing Improvements and dividing that sum by a
denominator which constitutes the total amortization period (the initial fifty
(50) year period plus any additional periods, not to exceed sixty (60)) minus
the number which correlates to the Lease Year in which the Additional
Construction is complete and ready for occupancy (with the first Lease Year
equal to one (1)). Notwithstanding the foregoing, Improvements placed in Lease
Year 35 (2033) and after shall be amortized as set forth above in this
subparagraph (d), except that the denominator shall be multiplied by sixty-five
percent 65%.
9.9 Use and Removal of Water. This Lease does not confer upon Lessee, its
assignees or sublessees, any express or implied rights to the use or removal of
surface or ground water from the Parcel.
9.10 Improvements Dedicated to Public Use. Lessee shall have no right to
reimbursement for Improvements that are dedicated or otherwise committed or
transferred to public use.
ARTICLE 10 - LIENS
10.1 Payment; Indemnity. Lessee shall be responsible for payment of all
costs and charges for any work done by or for it on the Premises or in
connection with Lessee's occupancy thereof, and Lessee shall keep the Premises
free and clear of all mechanics' liens and other liens and encumbrances on
account of work done for or authorized by Lessee or persons or entities claiming
under Lessee or bond over such liens according to State law. Lessee expressly
agrees to and shall indemnify and hold Lessor harmless against liability,
damages, costs, attorney's fees and all other expenses or loss on account of
claims of lien or other encumbrances of laborers or materialmen or others for
work performed or materials or supplies furnished for or authorized by Lessee or
persons or entities claiming under Lessee. Further, any contracts between
Lessee, Lessee's assignee or sublessee, and any contractors or subcontractors
shall expressly hold Lessor harmless against any liability arising from such
contracts, as described above.
10.2 Notice. Should any claims of lien or other encumbrances be filed
against the Parcel or any action purporting to affect the title to the Parcel be
commenced, the party receiving notice of such lien or action shall immediately
give the other party written notice thereof.
10.3 Contest. Notwithstanding anything contained herein to the contrary,
after written notice to Lessor, Lessee may contest by appropriate legal
proceeding, conducted in good faith and with due diligence, the amount, validity
or application, in whole or in part, of any Imposition, legal requirement, lien,
encumbrance, charge or any other adverse claim against all or any part of the
Premises provided that: (a) the fee interest of Lessor shall not thereby by
encumbered; and (b) Lessor shall not thereby become subject to any civil or
criminal liability whatsoever for Lessee's failure to comply.
ARTICLE 11 - INSURANCE AND INDEMNITY
11.1 Indemnity. Except to the extent occurring or existing prior to the
Commencement Date hereof, Lessee hereby expressly agrees to indemnify and hold
Lessor harmless, or cause Lessor to be indemnified and held harmless, from and
against all liabilities, obligations, damages, penalties, claims, causes of
action, costs, charges and expenses, including attorney's fees and costs, which
may be imposed upon or incurred by or asserted against Lessor by reason of any:
(a) accident, injury or damage to any person or property occurring on or about
the Premises or any portion thereof; (b) use, non-use or condition of the
Premises or any portion thereof; or (c) failure on the part of Lessee to perform
or comply with any of the provisions of this Lease; except that none of the
foregoing shall apply to Lessor's intentional conduct or active negligence nor
to the intentional conduct or active negligence of Lessor's agents, servants,
contractors or subcontractors. If any action or proceeding is brought against
Lessor by reason of any such occurrence, Lessee, upon Lessor's written request
and at Lessee's expense, will resist and defend such action or proceeding, or
cause the same to be resisted either by counsel designated by Lessee or where
such occurrence is covered by liability insurance, by counsel designated by the
insurer.
11.2 Policies. Lessee, at its expense, shall at all times during the Term
of this Lease, and any extension thereof, maintain in full force a policy or
policies of commercial general liability insurance, including property damage,
written by one or more responsible insurance companies licensed to do business
in the State of Arizona, and each policy shall be written on an occurrence
basis, which insure Lessee and Lessor against liability for injury to persons
and property and death of any person or persons occurring in, on or about the
Premises, or arising out of Lessee's maintenance, use and occupancy thereof.
All commercial general liability and personal property damage policies shall
contain a provision that Lessor, named as an additional insured, shall be
entitled to recovery under the policies for any loss occasioned to it, its
servants, agents and employees by reason of the negligence or wrongdoing of
Lessee, its servants, agents and employees or sublessee. Further, the policies
shall provide that their coverage is primary over any other insurance coverage
available to the Lessor, its servants, agents and employees. All policies of
insurance delivered to Lessor must contain a provision that the company writing
the policy shall give to Lessor ten (10) days notice in writing in advance of
any cancellation or lapse, or the effective date of any reduction in the amounts
of insurance.
11.3 Amounts. The insurance as described in Paragraph 11.2 (Policies)
herein shall afford protection not less than $5,000,000 in combined single
limits for bodily injury and property damage liability and each liability policy
or policies shall be written on an occurrence basis; provided, however, that the
minimum amount of coverage for the above shall be adjusted upward on Lessor's
reasonable request to be made no more frequently than once every two (2) years
so that such respective minimum amounts of coverage shall not be less than the
amounts then required by statute or generally carried on similarly improved real
estate in the County herein described, whichever is greater. If at any time
Lessee fails, neglects or refuses to cause such insurance to be provided and
maintained, then Lessor may, at its election, procure or renew such insurance
and any amounts paid therefor by Lessor shall be an additional amount due at the
next date Rent is due and payable.
11.4 Blanket Policy. Notwithstanding anything to the contrary in this
Article, Lessee's obligations to carry the insurance provided for herein may be
brought within the coverage of a so-called blanket policy or policies of
insurance maintained by Lessee, provided, however, that the coverage afforded
Lessor will not be reduced by reason of the use of such blanket policy of
insurance.
11.5 Copies. Copies of said policies shall be delivered to Lessor prior to
Lessee's occupancy of the Premises along with a current certificate of
insurance. Lessee shall maintain with Lessor a current certificate of insurance
and a current copy of the policy during this Lease.
ARTICLE 12 - DAMAGE
12.1 Lessee's Obligations If the Parcel or any building or other
Improvement or Removable Improvement located thereon is damaged or destroyed
during the Term of this Lease, Lessee may, but shall be under no obligation to,
arrange, at its expense for the repair, restoration and reconstruction of the
same substantially to its former condition, but such damage or destruction shall
not terminate this Lease or relieve Lessee from its duties and liabilities
hereunder or, as Lessee may elect, for development and construction of a
substantially different project consistent with a permitted use approved by
Lessor pursuant to Paragraph 6.10 (Change in Use).
ARTICLE 13 - TRADE FIXTURES AND PERSONAL PROPERTY
13.1 Personal Property. Any trade fixtures, signs, store equipment, and
other personal property installed in or on the Parcel by Lessee or any sublessee
shall remain their property subject to the provisions of this Lease. Lessee
shall have the right, provided it is not then in breach hereunder, at any time
to remove any and all of the same, subject to the restrictions of Paragraph 9.5
(Ownership).
ARTICLE 14 - ASSIGNMENTS AND SUBLEASES
14.1 Financing. Without further approval by Lessor, Lessee shall have the
right at any time and from time to time during the Term of this Lease to assign
or otherwise encumber by way of mortgages, deeds of trust or other documents or
instruments, all or any part of its right, title and interest in and to this
Lease to any person or entity for the purpose of obtaining financing. An
assignment pursuant to this Paragraph 14.1 shall not relieve Lessee of any
obligations hereunder. The provisions Paragraph 14.2 (Other Assignments) shall
not in anyway limit Lessee's right to obtain leasehold financing as set forth
herein.
14.2 Other Assignments. With Lessor's prior written approval, which shall
not be unreasonably withheld or delayed, Lessee may at any time and from time to
time during the Term of this Lease assign all or any part of its rights,
interest and obligations hereunder to all of the Premises. Lessee shall request
approval for any assignment by submitting an application therefore on such forms
as Lessor may require. Lessee shall not be deemed to have assigned its
interests herein as a result of (a) any addition or withdrawal of a partner, if
Lessee is a partnership, (b) any change in stock ownership, if Lessee is a
corporation, (c) any change in the beneficial ownership, if Lessee is any other
form of entity, or (d) assignment by Lessee of part or all of its interest
herein to an Affiliated Entity.
14.3 Subleases. So long as there is then no uncured default, Lessee may
sublease portions of the Premises with the prior written approval of Lessor upon
submission of a copy of the proposed sublease, which approval shall not be
unreasonably withheld or delayed, provided the following conditions are
satisfied:
(a) No sublease shall relieve Lessee of its responsibility to pay and
perform all of its obligations hereunder;
(b) Lessee shall not be entitled under a sublease to collect rent which is
prepaid in excess of one year in advance, unless Lessee either: (i) prepays Rent
for the portion of the Parcel covered by the sublease, or (ii) provides Lessor
with a letter of credit or other bond which is in such form as is reasonably
satisfactory to Lessor and secures payment to Lessor of the pro rata portion of
such prepaid rent which Lessor would be entitled to receive as Rent under this
Lease for the pertinent portion of the Premises;
(c) The proposed use of the portion of the Premises subject to the
sublease must be a Permitted Use under this Lease;
(d) The term of the sublease is for a period of not less than 2 years;
(e) Such sublease provides that any violation of any provisions of this
Lease, whether by act or omission, by a sublessee shall be a default under the
sublease, entitling the lessor thereunder to terminate such sublease and
exercise other remedies as a result thereof;
(f) Such sublease contains the attornment provisions of Paragraph 14.4
(Attornment);
(g) Such sublease is an arms-length transaction negotiated in good faith
and provides for rental rates comparable to existing market rates; and
(h) Such sublease is on a form of lease which has been previously approved
by Lessor or is otherwise entered into upon terms and conditions which are
reasonably satisfactory to Lessor.
14.4 Attornment. If this Lease is terminated prior to the expiration of
its term, then, so long as a sublessee complies with the terms and conditions
set forth in its sublease, it shall attorn thereunder directly to Lessor, Lessor
shall attorn to such sublessee, including recognizing the rights of any lenders
under the sublease, and Lessor shall not disturb such sublessee, in accordance
with the terms of the pertinent sublease; provided, however, that:
(a) Lessor's obligations thereunder shall be no greater and its rights no
less than those set forth in this Lease;
(b) No sublessee shall be required to make any payment to Lessor unless
and until such sublessee shall have received written notice from Lessor of the
termination of this Lease and direction that payments and performance thereafter
be made directly to Lessor. Thereafter, upon such sublessee's timely payment or
performance to Lessor, Lessor shall not be entitled to claim a default for not
having received any corresponding payment or performance from Lessee. If a
sublessee, however, receives conflicting written notices demanding payment or
performance from Lessor and Lessee, such sublessee shall have the right to
interplead such payment and/or other matters in any court of competent
jurisdiction, in which event such sublessee shall not be deemed in default.
Payment or performance when and as ordered by such court shall constitute full
performance. So long as a sublessee has made payment for performance to Lessor
or interpleaded such matters and is not subject to termination for default of
the pertinent sublease, Lessor shall not join that sublessee as a party
defendant in any action or proceeding or take any other action for the purpose
of terminating sublessee's interest and estate because of any default under or
termination of this Lease. Moreover, notwithstanding the termination of this
Lease, so long as Lessee has complied with the requirements hereof relating to
subleases, Lessor shall recognize any and all subleases entered into pursuant to
the terms hereof and any executory contracts to sublease pursuant to the terms
hereof; provided, however, that any and all benefits which would thereafter
accrue to Lessee under the sublease shall belong to Lessor;
(c) Lessor shall not be liable for any act or omission of any prior lessor
(including Lessee);
(d) Lessor shall not be subject to any offsets or defenses which the
sublessee may have against any prior lessor (including Lessee);
(e) Lessor shall not be bound by any payment in respect of rent, common
area expenses, or other additional charges, as described in the sublease, which
the sublessee might have paid for more than one rental period in advance to any
prior lessor (including Lessee);
(f) Lessor shall not be bound by any agreement or modification of the
sublease made without the written consent of Lessor;
(g) Lessor shall not be bound by any provision set forth in the sublease
requiring the sublessor to indemnify or hold the sublessee harmless;
(h) Lessor shall not be bound by any covenant to undertake or complete any
construction of the Parcel or Premises or any portion thereof; and
(i) Lessor shall not be bound by any obligation to make any payment to the
sublessee.
ARTICLE 15 - CONDEMNATION
15.1 Definition; Division. Lessor, any pertinent Leasehold Mortgagees and,
if Lessee is not in default, Lessee, shall cooperate in prosecuting and
collecting their respective claims for an award on account of a taking of all
or any portion of the Premises and all damages or awards (with any interest
thereon) to which Lessor, Lessee or any pertinent Leasehold Mortgagees may be
entitled by reason of any taking of all or any portion of the Premises (herein
referred to as "Condemnation Proceeds"). In the event of the taking or
condemnation by any competent authority for any public or quasi-public use or
purpose of all or any portion of the Premises at any time during the Lease Term,
the rights of Lessor, Lessee, or any Leasehold Mortgagees, to share in the net
proceeds of any award for land, Improvements and damages upon any such taking,
shall be apportioned as follows:
(a) Lessor shall receive the fair market value of its reversionary
interest under this Lease (exclusive of any value attributable to Improvements)
plus the net present value of the Rent due pursuant to the terms of this Lease
for the period and proportionate acreage so condemned; for purposes of
calculating the net present value, the Rent due shall be discounted at a rate
equivalent to the current prevailing long-term interest rate established by the
state treasurer on the date this Lease was approved by the Arizona State Land
Department board of appeals.
(b) Lessee shall receive that portion attributed to the then fair market
value of Lessee's leasehold interest in the Premises so taken. The fair market
value of Lessee's leasehold interest shall be the value of the Improvements
constructed thereon, plus the amount, if any, by which economic or market rent
for the property so condemned exceeds the contract rent pursuant to the terms of
this Lease.
15.2 Termination. If the whole or materially all of the Premises shall be
taken or condemned, this Lease, at Lessee's option as set forth below, shall
cease and terminate, and Lessee's obligations to pay Rent, Additional Amounts
and other charges hereunder shall be apportioned as of the date of vesting of
title in such taking or condemnation proceedings. For the purposes of this
Article, a taking or condemnation of materially all of the Premises, as
distinguished from a taking or condemnation of the whole of the Premises, means
a taking of such scope that the untaken portion of the Premises is not
reasonably usable for Lessee's purposes or insufficient to permit the
restoration of the then existing Improvement thereon so as to constitute
Improvements capable of producing a proportionately fair and reasonable net
annual income, taking into consideration the payment of all operating expenses
thereof including but not limited to Rent and all other charges herein reserved,
and after the performance of all covenants, agreements and provisions herein
provided to be performed by Lessee. The determination of what constitutes a
fair and reasonable net annual income shall be governed by reference to the
average net annual income produced by the Premises during the five-year period
immediately preceding the taking (or, if the taking occurs during the first five
years of the Lease Term, during the Lease Term to date). As used above, the
term "operating expenses" does not include depreciation or income taxes. If
there is any controversy as to whether materially all of the Premises have been
taken, the controversy shall be resolved by arbitration.
If materially all of the Premises are taken or condemned, then Lessee, at
its option, upon thirty (30) days prior notice to Lessor, given at any time
within ninety (90) days after the vesting of title in the condemnor, may cancel
and terminate this Lease as to the entire Premises. The Rent and other charges
hereunder shall be prorated as of this date of termination.
15.3 No Termination. In the event of a partial taking or condemnation,
i.e., a taking or condemnation of less than materially all of the Premises, this
Lease (except as hereinafter provided) shall nevertheless continue, but the Rent
for the Lease Year in which such condemnation occurs shall be pro-rated as of
the date of such condemnation and that portion of the Rent attributable to that
portion of the Premises so taken shall be credited to Lessee's obligations next
arising under this Lease, and the Rent shall thereafter be reduced
proportionately to reflect the loss of the land taken. In the event that there
be any controversy over such proportionate reduction in the Rent, the
controversy shall be resolved by arbitration.
15.4 Temporary Taking. If the whole or any part of the Premises or of the
Lessee's interest under this Lease be taken or condemned by any competent
authority for its or their temporary use or occupancy for a period which is
fewer than four (4) months, this Lease shall not terminate by reason thereof and
Lessee shall continue to pay, in the manner and at the times herein specified,
the full amounts of the annual rent and all other charges payable by Lessee
hereunder, and, except only to the extent that Lessee may be prevented from so
doing pursuant to the terms of the order of the condemning authority, to perform
and observe all of the other terms, covenants, conditions and obligations
imposed upon Lessee under this Lease, as though such taking or condemnation had
not occurred. If the whole or any part of the Premises or the Lessee's interest
in this Lease be taken or condemned by a competent authority for its or their
temporary use or occupancy for a period which is in excess of 4 months, this
lease may be terminated at the option of Lessee upon notice given within thirty
(30) days of the taking or condemnation. Notwithstanding anything to the
contrary herein, in the event of any temporary taking or condemnation the Lessee
shall, if this Lease has not been terminated as provided in this Paragraph 15.4,
be entitled to receive the entire amount of any award made for such taking or
condemnation, whether paid by way of damages, Rent or otherwise, unless such
period of temporary use or occupancy shall extend to or beyond the Expiration
Date, in which case such award shall be apportioned between the Lessor and the
Lessee as of such Expiration Date.
ARTICLE 16 - LESSOR'S RIGHT TO PERFORM AND INSPECT
16.1 Right. If a default occurs hereunder, then thirty (30) days with
respect to monetary defaults or forty-five (45) days with respect to nonmonetary
defaults (or such additional time as may be necessary to effect a cure in the
exercise of reasonable diligence) after Lessee's receipt of written notice of
such default, Lessor may, but without being obligated to do so, cure such
default by making such payment or performing such act for the account and at the
expense of Lessee. No such payment or performance by Lessor shall operate to
release or discharge Lessee from any obligation hereunder. All sums paid by
Lessor, pursuant to this Article 16 and all reasonable costs and expenses
(including reasonable attorneys' fees and costs) so incurred shall constitute
Additional Amounts payable by Lessee to Lessor on demand.
16.2 Inspection. Lessee acknowledges and agrees that Lessor and its
authorized representatives shall have the right to enter the Premises and any
portion thereof at all reasonable times following reasonable notice (but in no
event less than forty-eight (48) hours prior notice, except in case of
emergency) to inspect for compliance with the terms of this Lease, and may take
all such action as may be necessary or appropriate for such purposes.
Furthermore, Lessee acknowledges and agrees that, at any time within one year
prior to the Expiration Date and upon reasonable notice, Lessor may enter the
Premises or any portion thereof for the purpose of showing the same to
prospective tenants, purchasers or mortgagees and, with the prior approval of
Lessee, may display on the Premises advertisements for sale or lease; provided,
however, that Lessor may only enter and inspect the structures after reasonable
notice and during reasonable business hours. In the course of any such
inspection or showing, Lessor shall at all times maintain the confidentiality of
Lessee's patients/clients. No entry pursuant to this Section shall constitute
an eviction.
ARTICLE 17 - DEFAULT AND REMEDIES
17.1 Events. Default shall only be deemed to have occurred in the
following situations and Lessee shall not be deemed in default hereunder for
the purpose of Lessor's exercise of any right or privilege herein until the
following applicable notice and grace period has expired:
(a) If Lessee fails to pay any installment of Rent, or any penalty or
accrued interest thereon as required by the provisions of Article 4 (Rent), and
such failure continues for thirty (30) days after the receipt of notice of
default from Lessor, unless the time for the payment has been previously
extended pursuant to Paragraph 4.8 (Extension).
(b) If Lessee fails to perform or comply with any other Term of this Lease
and such failure continues for forty-five (45) days after the receipt of notice
of default from Lessor; provided, however, that with respect to any such failure
which is of such nature that although curable, it cannot, with due diligence and
adequate resources, be cured within forty-five (45) days, a default shall not be
deemed to exist if Lessee commences curing such failure within the forty-five
(45) day period and thereafter proceeds with reasonable diligence and action to
complete curing such failure.
(c) To the extent then allowed by law, if Lessee files a voluntary
petition in bankruptcy which is not dismissed within 90 days after the filing
thereof; is adjudicated bankrupt or insolvent; files any petitions or answers
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state or
other statute, law or regulation; seeks, consents to, or acquiesces in the
appointment of any trustee, receiver, or liquidator of Lessee, or of all or any
substantial part of its respective property or of the pertinent portion of the
Premises; makes any general assignments for the benefit of creditors; or admits
in writing its inability to pay its debts generally as they become due.
(d) To the extent then allowed by law, if a petition is filed against
Lessee seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other similar relief under any present or future
federal, state or other statute, law, or regulation, which remains undismissed
or unstayed for an aggregate of ninety (90) days (whether or not consecutive),
or if a trustee, receiver, or liquidator of Lessee, or of all or any substantial
part of its properties or of the Premises is appointed without the consent or
acquiescence of Lessor and such appointment remains unvacated or unstayed for an
aggregate of ninety (90) days (whether or not consecutive).
17.2 Remedies. Subject to the notice and cure provisions set out in
Paragraph 17.1 (Events) and the rights of any assignee, sublessee or Leasehold
Mortgagee, if default exists, Lessor may at its option, exercise, in addition to
its rights at law or in equity, any of those remedies set forth below:
(a) Lessor shall have the right, at its election, to reenter the Premises,
or any part thereof, either with or without process of law, and to expel, remove
and put out Lessee and persons occupying the Premises under Lessee, using such
force as may be necessary in so doing, to take full possession of and control
over the Premises and to have, hold and enjoy the same and to receive all rental
income of and from the same. No reentry by Lessor shall be deemed an acceptance
of a surrender of this Lease, nor shall it absolve or discharge Lessee from any
liability under this Lease. Upon such reentry, all rights of Lessee to occupy
or possess the Premises shall cease and terminate.
(b) Lessor shall have the right, at its election, with or without reentry
as provided in subparagraph (a) immediately above, to give written notice to
Lessee stating that this Lease and the Term hereby demised shall terminate on
the date specified by such notice, and upon the date specified in such notice
this Lease and the Term hereby demised and all rights of Lessee hereunder shall
terminate. Upon such termination, Lessee shall quit and peacefully surrender to
Lessor the Premises and the Improvements then situated hereon.
(c) At any time and from time to time after such reentry, Lessor may relet
the Premises, or any part thereof, in the name of Lessor or otherwise, for such
term or terms (which may be greater or less than the period which would
otherwise have constituted the balance of the Term of this Lease), and on such
conditions (which may include concessions or free rental) as Lessor, in its
reasonable discretion, may determine and may collect and receive the rental
therefor. However, in no event shall Lessor be under any obligation to relet
the Premises or any part thereof, and Lessor shall in no way be responsible or
liable for any failure to relet or for any failure to collect any rental due
upon any such reletting. Even though it may relet the Premises, Lessor shall
have the right thereafter to terminate this Lease and all of the rights of
Lessee in or to the Premises.
(d) Unless Lessor shall have notified Lessee in writing that it has
elected to terminate this Lease, no such reentry or action in lawful detainer or
otherwise to obtain possession of the Premises shall relieve Lessee of its
liability and obligations under this Lease; and all such liability and
obligations shall survive any such reentry. In the event of any such reentry,
whether or not the Premises, or any part thereof, shall have been relet, Lessee
shall pay to Lessor the entire Rental and all other charges required to be paid
by Lessee up to the time of such reentry of this Lease, and thereafter Lessee,
until the end of what would have been the Term of this Lease in the absence of
such reentry, shall be liable to Lessor, and shall pay to Lessor, as and for
liquidated and agreed damages for Lessee's default:
(i) The amount of Rent and Additional Amounts which would be payable
under this Lease by Lessee if this Lease were still in effect, less
(ii) The net proceeds of any reletting, after deducting all of
Lessor's reasonable expenses in connection with such reletting, including
without limitation all reasonable repossession costs, brokerage commissions,
legal expenses, attorneys' fees, alteration and repair costs and expenses of
preparation for such reletting. Lessor's reasonable expenses of reletting shall
not include the cost of constructing any new Improvements on the Parcel nor
shall any duty of Lessor to mitigate damages be construed as obligating Lessor
to construct new Improvements on the Parcel.
Lessee shall pay such damages to Lessor annually on the date that payment of
Rent is due, and Lessor shall be entitled to recover from Lessee annually as the
same shall arise. Lessee shall be liable for such damages on an annual basis,
whether or not in any prior Lease Year or Lease Years the net proceeds described
in subparagraph (ii) above shall have exceeded the Annual Rental and Additional
Amounts described in subparagraph (i) above.
(e) In the event of any breach or threatened breach by Lessee of any of
the terms, covenants or agreements contained in this Lease, Lessor shall have,
in addition to any specific remedies provided in this Lease, the right to invoke
any right or remedy allowed by law or in equity or by statute or otherwise,
including the right to enjoin such breach or threatened breach.
17.3 Waiver. No waiver or breach of any Term of this Lease shall be
construed as a waiver of any succeeding breach of the same or any other term.
ARTICLE 18 - HOLDING OVER
18.1 No Holding over. There shall not be any holding over by Lessee or any
assignee or sublessee, upon the expiration or cancellation of this Lease for any
reason. If nevertheless there be any holding over by Lessee or any assignee or
sublessee, the holding over shall give rise to a tenancy at the sufferance of
Lessor upon the same terms and conditions as are provided for herein with a Rent
for the holdover period commensurate with, but in no event less than, the
previous year's Rent.
ARTICLE 19 - MORTGAGES
19.1 Definition. Any instrument including, but not limited to, a deed of
trust, mortgage, agreement for sale or other security device which creates an
encumbrance on Lessee's or any sublessee's leasehold interest, and which is
filed with Lessor as set forth in this Article 19 (Mortgages), is herein
referred to as a "Permitted Mortgage" unless it is held by an Affiliated Entity,
and the holder of the Permitted Mortgage is herein referred to as a "Leasehold
Mortgagee". In no event shall an Affiliated Entity be deemed a Leasehold
Mortgagee.
19.2 Filing. No Leasehold Mortgagee shall be entitled to the rights set
forth in this Article 19 (Mortgages) until a true copy thereof is filed with
Lessor. The term of any such obligation secured by a Permitted Mortgage shall
not be longer than the then remaining Term of this Lease, as such may be
extended.
19.3 Preconditions. Lessee, or any sublessee leasing under a sublease
approved by Lessor, from time to time during the Term of this Lease may make one
or more Permitted Mortgages upon their leasehold interests, or any fractional
portion thereof without the prior written consent of the Lessor; provided that:
(a) The Lessee, sublessee or the Leasehold Mortgagee shall promptly
deliver to the Lessor in the manner herein provided for the giving of notice to
the Lessor, a true copy of the Permitted Mortgage and of any assignment thereof
and shall notify the Lessor of the address of the Leasehold Mortgagee to which
notices may be sent; and
(b) Each Permitted Mortgage shall contain provisions permitting the
disposition and application of condemnation awards in the manner provided in
this Lease.
19.4 Conditions. With respect to any Permitted Mortgage filed in
accordance with the provisions of Paragraph 19.2 (Filing) hereof, the following
provisions shall apply:
(a) Lessor, upon providing Lessee any notice of: (i) default under this
Lease, or (ii) a termination of this Lease, or (iii) a matter on which Lessor
may predicate or claim a default, shall at the same time provide a true copy of
such notice to every Leasehold Mortgagee. No such notice by Lessor to Lessee
shall be deemed to have been duly given unless and until a copy thereof has been
so provided to every Leasehold Mortgagee that has filed a notice with Lessor in
accordance with Paragraph 19.2 (Filing). From and after such notice has been
given to a Leasehold Mortgagee, such Leasehold Mortgagee shall have the same
period after the receipt of such notice for remedying any default or acts or
omissions which are the subject matter of such notice or causing the same to be
remedied, as is given Lessee. If an event of default is of a nature that it can
reasonably be cured, by lawful means, only by Leasehold Mortgagee obtaining
actual physical possession of the Premises, or any part thereof, the period for
curing the default shall be extended so long as (i) the Leasehold Mortgagee is
pursing such self-help as is available under applicable law or (ii) such
Leasehold Mortgagee shall be diligently attempting to obtain, in a court of
competent jurisdiction, the right to actual physical possession of the Premises
or any part thereof, and the Leasehold Mortgagee cures all other events of
default which are susceptible of being cured by the Leasehold Mortgagee.
(b) Any Leasehold Mortgagee shall have the right, but not the obligation,
to cure any default of Lessee hereunder whether the same consists of the
failure to pay Rent or any other sums due and owing hereunder or the failure to
perform any other matter or thing which the Lessee is hereby required to do or
perform, and the Lessor shall accept such performance on the part of the
Leasehold Mortgagee as though the same had been done or performed by the Lessee.
(c) Any Leasehold Mortgagee may, at the time of any damage or destruction,
by fire or otherwise, to all or any portion of the Premises or any property
thereon, at no cost or expense to Lessor, repair or replace the same, as the
case may be.
(d) Lessor will take no action by reason of any default on the part of
Lessee so long as the periods for the Leasehold Mortgagee's opportunity to cure
Lessee's defaults as set forth herein have not run. In the event Lessor issues
an order canceling this Lease, the order shall not become final until any
foreclosure action by a Leasehold Mortgagee, registered with Lessor pursuant to
Paragraph 19.2 (Filing) of this Lease, is finally resolved, if the Leasehold
Mortgagee does both of the following:
(i) Within thirty (30) days of the date of issuance of a notice of
default, files written notice the Lessor of its intent to proceed with a
foreclosure action, and
(ii) Within one hundred twenty days (120) of the date of issuance of
a notice of default, has commenced either a foreclosure action in court or a
nonjudicial foreclosure of a deed of trust, and has provided Lessor with a
certified copy of the complaint or other document that officially commences the
foreclosure process, and thereafter prosecutes the foreclosure with reasonable
diligence.
Such Leasehold Mortgagee shall not be required to continue such possession or
continue such foreclosure or other proceedings if the default which would have
been the reason for serving such a notice shall be cured. In addition, so long
as Lessor has provided notice and an opportunity to cure to Lessee and any
Leasehold Mortgagee as provided herein, nothing herein shall preclude the Lessor
from exercising any rights or remedies under this Lease with respect to any
other default by the Lessee during any period of such forbearance. If the
Leasehold Mortgagee holding a Permitted Mortgage encumbering Lessee's leasehold
interest or a purchaser at a foreclosure or trustee's sale (a "Purchaser") shall
acquire title to Lessee's leasehold interest by foreclosure, or by assignment in
lieu of foreclosure, or otherwise, and shall cure all defaults of Lessee which
are required to be cured by such Leasehold Mortgagee or Purchaser pursuant
hereto, as the case may be, then such defaults of Lessee or any prior holder of
the Lessee's leasehold interests which are not required to be cured by such
Leasehold Mortgagee (or Purchaser) shall no longer be deemed to be defaults
hereunder.
(e) Any Leasehold Mortgagee or Purchaser of the Lessee's or, if
applicable, any sublessee's leasehold interest (or any portion thereof) may
become the legal owner and holder of all or a portion of this Lease or such
sublease by judicial or non-judicial foreclosure of a Permitted Mortgage or as a
result of the assignment of this Lease or such sublease in lieu of foreclosure
without Lessor's consent, whereupon such Leasehold Mortgagee or Purchaser at a
foreclosure sale shall immediately become and remain liable under this Lease (or
such sublease) to the same extent as Lessee (or such sublessee), and any and all
benefits that would thereafter accrue to Lessee (or such sublessee) under this
Lease (or such sublease) shall belong to such Leasehold Mortgagee or Purchaser.
In case any such Leasehold Mortgagee or Purchaser by foreclosure of Lessee's
interest becomes the owner and holder of this Lease, any of the same events
described in Paragraph 17.1 (Events) by such Leasehold Mortgagee or Purchaser
shall constitute a default, and Lessor shall be entitled to the same remedies,
but only with respect to that part or portion of the Premises held under this
Lease by such Leasehold Mortgagee or Purchaser. Nothing contained herein shall
be construed or interpreted to preclude Lessor from exercising any of its rights
and remedies hereunder if Leasehold Mortgagee or Purchaser, within the periods
provided herein, fails to cure any event of default occurring after the
Leasehold Mortgagee or Purchaser acquires its interest herein.
(f) If such Leasehold Mortgagee or Purchaser is a trustee, each and every
obligation of such trustee shall be binding upon it solely in its fiduciary
capacity and shall have no force and effect against such trustee in its
individual capacity.
(g) Lessor shall upon request of a Leasehold Mortgagee execute,
acknowledge and deliver to such Leasehold Mortgagee, an agreement prepared at
the sole cost and expense (excluding, however, the cost of any attorneys' fees
incurred by Lessor) of Lessee, the Leasehold Mortgagee or the sublessee if the
Permitted Mortgage is on any sublessee's interest, in form satisfactory to such
Leasehold Mortgagee between Lessor, Lessee (or sublessee), and Leasehold
Mortgagee, agreeing to all of the provisions of this Section.
(h) Lessor agrees that the name of any Leasehold Mortgagee may be added as
an additional insured or to the "loss payable endorsement" or named under a
standard mortgagee clause of any and all insurance policies carried by Lessee
(or sublessee, if applicable). The proceeds arising from any insurance policies
are to be held by a bank or trust company chosen by such Leasehold Mortgagee
which is authorized to do business in Arizona and has a net worth of
$10,000,000.00 or more (the "Depository"), and distributed pursuant to the
provisions of this Lease, or, subject to Lessor's prior approval, by the
Leasehold Mortgagee whose Permitted Mortgage encumbers Lessee's interest and is
prior in lien to any other Leasehold Mortgagee, but the Leasehold Mortgagee may
reserve its right to apply to the mortgage debt all, or any part, of Lessee's
share of such proceeds pursuant to the Permitted Mortgage.
(i) Any Leasehold Mortgagee shall be given prompt notice by Lessor of any
arbitration proceedings or legal proceedings by the parties hereto involving
obligations under this Lease, and shall have the right to intervene therein and
be made a party to such proceedings, and the parties hereto do hereby consent to
such intervention. In the event that any Leasehold Mortgagee shall not elect to
intervene or become a party to such proceedings, the Leasehold Mortgagee shall
receive notice of, and a copy of, any award or decision made in said arbitration
proceedings which shall be binding on all Leasehold Mortgagees not intervening
after receipt of notice of arbitration.
(j) As to any Permitted Mortgage of Lessee's leasehold interest, Lessor
consents to a provision therein for an assignment of rents due from sublessee to
the holder thereof, effective upon any default under such Permitted Mortgage,
subject to Lessee's or Lessor's right to collect such rents. The holder thereof
in any action to foreclose the same shall be entitled to the appointment of a
receiver.
(k) Nothing herein contained shall be deemed to impose any obligation on
the part of Lessor to deliver physical possession of the Premises to any
Leasehold Mortgagee, or to its nominee. Lessor agrees, however, that Lessor
will, at the sole cost and expense of such Leasehold Mortgagee, or its nominee,
cooperate in the prosecution of summary proceedings to evict the then defaulting
Lessee (or sublessee, if applicable).
(l) Lessee may delegate irrevocably to any Leasehold Mortgagee holding a
Permitted Mortgage encumbering Lessee's leasehold interest the authority to
exercise any or all of Lessee's rights hereunder, but no such delegation shall
be binding upon Lessor unless and until either Lessee or said Leasehold
Mortgagee gives to Lessor a true copy of a written instrument effecting such
delegation. Such delegation of authority may be effected by the terms of the
Permitted Mortgage itself, in which case the service upon Lessor of a true copy
of the Permitted Mortgage in accordance with this Article 19 (Mortgages),
together with a written notice specifying the provision therein which delegates
such authority to said Leasehold Mortgagee, shall be sufficient to give Lessor
notice of such delegation. The rights set forth in this paragraph shall not
affect, modify, or limit the rights of the Leasehold Mortgagee contained in this
Lease or Lessee's duties and obligations hereunder.
(m) No payment made to Lessor by a Leasehold Mortgagee shall constitute an
agreement that such payment is, in fact, due under the terms of this Lease. A
Leasehold Mortgagee having made any payment to Lessor pursuant to Lessor's
wrongful, improper, or mistaken demand shall be entitled to the return of any
such payment or a portion thereof provided such Leasehold Mortgagee shall have
made demand therefor not later than one year after the date of its payment.
(n) Lessor shall, without charge, at any time and from time to time
hereafter, within ten (10) days after written request of Lessee, any sublessee,
or Leasehold Mortgagee to do so, certify by written instrument duly executed and
acknowledged to any Leasehold Mortgagee or sublessee, Purchaser, assignee of any
right, title or interest of Lessee in this Lease or proposed Leasehold Mortgagee
sublessee, Purchaser, or assignee of any right, title or interest of Lessee in
this Lease or any other person, firm, or corporation specified in such request:
(i) as to whether this Lease has been supplemented or amended, and if so, the
substance and manner of such supplement or amendment; (ii) as to the existence
of any default hereunder to the best of Lessor's knowledge; (iii) as to the
Commencement Date and Expiration Date of the Lease Term; (iv) acknowledging that
the lienholder is a Leasehold Mortgagee; (v) as to whether the Lessor has
assigned its interests or any portion thereof in this Lease and, to the best of
its knowledge, as to whether the Lessee has assigned it interests or any portion
thereof in the Lease; (vi) certifying that, to the best of Lessor's knowledge,
there has been no violation of any law, ordinance or governmental rule or
regulation relating to the Premises; (vii) acknowledging that the creation of
the Permitted Mortgage or the Leasehold Mortgagee's acquisition of Lessee's
interest in the Premises by foreclosure or otherwise will not constitute an
event of default under the Lease; and (viii) as to any other matters as may be
reasonably so requested. Any such certificate may be relied upon by the Lessee
and any other person, firm, or corporation to whom the same may be exhibited or
delivered.
(o) Nothing herein contained shall require any Leasehold Mortgagee or
Purchaser, as a condition to its exercise of rights, to cure any default of
Lessee not reasonably susceptible of being cured by such Leasehold Mortgagee or
Purchaser, including but not limited to, a default related to bankruptcy and
insolvency and any other sections of this Lease that may impose conditions of
default not susceptible to being cured by a Leasehold Mortgagee or Purchaser.
Such failure to cure shall not constitute a default hereunder upon the Leasehold
Mortgagee or Purchaser taking possession of the Premises through foreclosure of
the Leasehold Mortgage or Deed-in-Lieu thereof.
(p) So long as any Permitted Mortgage of Lessee's leasehold interest is in
existence, unless all Leasehold Mortgagees holding Permitted Mortgages of
Lessee's leasehold interest shall otherwise consent in writing, the fee title to
the Premises and the leasehold estate of Lessee therein created by this Lease
shall not merge but shall remain separate and distinct, notwithstanding the
acquisition of such fee title by Lessee or by a third party, by purchase or
otherwise. In addition, this Lease shall not be terminated or modified by an
agreement between Lessor and Lessee without the consent of all Leasehold
Mortgagees.
19.5 Limitations. This Lease grants to any Leasehold Mortgagee only those
rights expressly set forth herein, regardless of the terms of the Permitted
Mortgages or other documents executed in connection therewith.
ARTICLE 20 - ENVIRONMENTAL MATTERS
20.1 Definition of Regulated Substances and Environmental Laws. For
purposes of this Lease, the term "Environmental Laws" shall include but not be
limited to any relevant federal, state, or local environmental laws, and the
regulations, rules and ordinances, relating to environmental matters, and
publications promulgated pursuant to the local, state, and federal laws and any
rules or regulations relating to environmental matters. For the purpose of this
Agreement, the term "Regulated Substances" shall include but not be limited to
substances defined as "regulated substance," "solid waste," "hazardous waste,"
"hazardous materials," "hazardous substances," "toxic materials," "toxic
substances," "inert materials," "pollutants," "toxic pollutants," "herbicides,"
"fungicides," "rodenticides," "insecticides," "contaminates," "pesticides,"
"asbestos," "environmental nuisance," "criminal littering," or "petroleum
products" as defined in Environmental Laws.
20.2 Compliance with Environmental Laws. Lessee/Permittee ("Lessee") shall
strictly comply with all Environmental Laws, including, without limitation,
water quality, air quality, and handling, transportation, storage, treatment, or
disposal of any Regulated Substance on, under, or from the Premises. Without
limiting the foregoing, compliance includes that Lessee shall: (i) comply with
all reporting obligations imposed under Environmental Laws; (ii) obtain and
maintain all permits required by Environmental Laws and provide a copy to Lessor
within ten business days of receipt of the permit; (iii) provide copies of all
documentation required by Environmental Laws to Lessor within ten business days
of Lessee's submittal and/or receipt of the documentation; (iv) during the Term
of this Lease, provide copies of all information it receives or obtains
regarding any and all environmental matters relating to the Premises, including
but not limited to environmental audits relating to the Premises regardless of
the reason for which the information was obtained or whether or not the
information was required by Environmental Laws; and (v) prevent treatment,
storage, disposal, handling or use of any Regulated Substances within the
Premises without prior written authorization from Lessor.
20.3 Designated Compliance Officer. Lessee at all times shall employ or
designate an existing employee, consultant or representative (the "Designated
Compliance Officer") who is responsible for knowing all Environmental Laws
affecting Lessee and Lessee's business and monitoring Lessee's continued
compliance with applicable Environmental Laws. Upon request by Lessor, Lessee
shall make the Designated Compliance Officer available to discuss Lessee's
compliance, answer any questions, and provide such reports and confirming
information as Lessor may reasonably request.
20.4 Audit. At any time Lessor has reason to believe that there may exist
a violation of the Environmental Laws on, over or beneath the Premises, Lessor
may request the Lessee to provide an environmental audit of the Premises
performed by an Arizona registered professional engineer or an Arizona
registered geologist. Lessee shall pay the entire cost of the audit.
20.5 Environmental Assessment. At any time during the Term of this Lease
Lessor has reason to believe that there may exist a violation of the
Environmental Laws on, over or beneath the Premises, Lessor may require Lessee
to obtain one Phase I environmental assessment of the Premises performed by an
Arizona registered professional engineer or an Arizona registered geologist.
If, based upon the Phase I environmental assessment or its own independent
investigation, Lessor identifies any possible violation of Environmental Laws or
the terms of this Lease, Lessor may require Lessee to conduct additional
environmental assessments as Lessor deems appropriate for the purpose of
ensuring that the Premises are in compliance with Environmental Laws. The Phase
I assessment, or any other assessment required by Lessor, shall be obtained for
the benefit of both Lessee and Lessor. A copy of the Phase I report shall be
provided both to Lessee and Lessor. Lessor, in its sole discretion, shall have
the right to require Lessee to perform additional assessments of any damage to
the Premises arising out of any violations of Environmental Laws. If Lessee
fails to obtain any assessment required by Lessor, Lessee shall pay the entire
costs of any and all assessments required by Lessor, notwithstanding the
expiration or termination of the Lease.
20.6 Indemnity for Environmental Damage. Lessee shall defend, indemnify
and hold Lessor harmless from and against any and all liability, obligations,
losses, damages, penalties, claims, environmental response and cleanup costs and
fines, and actions, suits, costs, taxes, charges, expenses and disbursements,
including legal fees and expenses of whatever kind or nature (collectively,
"claims" or "damages") imposed on, incurred by, or reserved against Lessor in
any way relating to or arising out of any non-compliance by Lessee, Lessee.s
successors or sublessees, with any Environmental Laws, the existence or presence
from and after the Commencement Date of any Regulated Substance, on, under, or
from the Premises, and any claims or damages in any way relating to or arising
out of the removal, treatment, storage, disposition, mitigation, cleanup or
remedying of any Regulated Substance on, under, or form the Premises by the
Lessee, its agents, contractors, or subcontractors.
20.7 Scope of Indemnity. This indemnity shall include, without limitation,
claims or damages arising out of any and all violations of Environmental Laws
regardless of any real or alleged fault, negligence, willful misconduct, gross
negligence, breach of warranty, or strict liability on the part of any of the
indemnitees. This indemnity shall survive the expiration or termination of this
Lease and/or transfer of all or any portion of the Premises and shall be
governed by the laws of the State of Arizona.
20.8 Lessee's Participation in the Defense. In the event any action or
claim is brought or asserted against Lessor which is or may be covered by this
indemnity, the Lessee shall fully participate, at Lessee's expense, in the
defense of the action or claim including but not limited to the following: (i)
the conduct of any required cleanup, removal or remedial actions and/or
negotiations, (ii) the conduct of any proceedings, hearings, and/or litigation,
and (iii) the negotiation and finalization of any agreement or settlement.
Lessor shall retain the right to make all final decisions concerning the
defense.
20.9 Restoration. Prior to the termination of this Lease and in addition
to those obligations set forth in this Lease, Lessee shall restore the Premises
by removing any and all Regulated Substances. In addition, the restoration
shall include, but not be limited to, removal of all waste and debris deposited
by the Lessee. If the Premises or any portions thereof are damaged or destroyed
as a result of the existence or presence of any Regulated Substance or if the
Premises or any portions thereof are damaged or destroyed in any way relating to
or arising out of the removal, treatment, storage, disposition, mitigation,
cleanup or remedying of any Regulated Substance, the Lessee shall arrange, at
its expense, for the repair, removal, remediation, restoration, and
reconstruction to the Premises to the original condition existing on the date
that the Lessee first occupied the Premises, to the satisfaction of Lessor. In
any event, any damage, destruction, or restoration by Lessee shall not relieve
Lessee from its obligations and liabilities under this Lease.
ARTICLE 21 - ARBITRATION
21.1 Jurisdiction. The parties hereby agree that after Lessee has
exhausted its administrative remedies as may be required by law, all claims,
disputes and other matters in question hereunder shall be subject to arbitration
as set forth below; provided, however, that the arbitrators shall have no power
to change any of the provisions of this Lease in any respect nor shall they have
any power to make an award of reformation and the jurisdiction of the
arbitrators is hereby expressly limited accordingly.
21.2 Request. Either party may serve the other with a written request for
arbitration which shall also specify the name and address of one person
designated to act as arbitrator on behalf of that party. Within thirty (30)
days after the service of such request, the other party shall give to the first
party written notice specifying the name and address of the person designated to
act as arbitrator on its behalf. If the other party fails to so notify the
first party within the time above specified, then the appointment of the second
arbitrator shall be made by the first arbitrator. The two arbitrators chosen
shall meet within ten (10) days after the second arbitrator is appointed and
shall appoint a third arbitrator who shall be a competent, impartial person, and
in the event of their being unable to agree upon such appointment within ten(10)
days after the time aforesaid, the said arbitrator shall be selected by the
parties themselves if they can agree thereon within a further period of twenty
(20) days. If the parties do not so agree, then either party on behalf of both
may request the American Arbitration Association to appoint such third
arbitrator. The person so appointed pursuant to this Article must be an
attorney-at-law actively engaged in the practice of law in Arizona for at least
ten (10) years.
21.3 Rules. Said arbitration shall be conducted in accordance with the
rules for Commercial arbitration then in effect for the American Arbitration
Association or any successor organization thereto.
21.4 Decision. The arbitrators shall render their decision, upon the
concurrence of at least two of their number, within thirty (30) days after the
appointment of the third arbitrator. Their decision shall be in writing and
counterpart copies shall be delivered to each of the parties. A decision in
which any two of the arbitrators acting hereunder concur may be appealed de novo
directly to the Superior Court of Arizona, Maricopa County within thirty (30)
days of the date of the decision. Unless so appealed, such decision shall in
all cases be final, binding and conclusive upon the parties and judgment upon
the decision may be entered by any court having jurisdiction thereof.
21.5 Fees. Unless otherwise required by the decision of the arbitrators,
each party shall pay the fees and expenses of the original arbitrator appointed
by such party or in whose stead, as above provided, such arbitrator was
appointed, and the fees and expenses of the third arbitrator, if any shall be
borne equally by the parties. Each party shall bear the expense of its own
counsel, experts, and preparation and presentation of proof.
21.6 Injunctive Relief. Nothing contained herein shall preclude either
party from obtaining temporary restraining orders or other injunctive relief
issued by courts of law or equity pending the outcome of arbitration pursuant
hereto.
21.7 Mandatory Arbitration. To the extent applicable, Lessor and Lessee
agree to make use of mandatory arbitration pursuant to A.R.S. . 12-133.
ARTICLE 22 - MUTUAL CANCELLATION
22.1 Mutual Cancellation. This Lease may be terminated as to all or part
of the Parcel prior to the Expiration Date upon written agreement signed by both
Lessor and Lessee. The agreement shall specify the terms and conditions of such
a cancellation and may include but shall not be limited to an acceleration of
the amortization of the improvements.
22.2 Proration of Rent. Upon cancellation or termination for any reason
Rent shall not be pro-rated unless specifically stipulated elsewhere in this
document.
ARTICLE 23 - MISCELLANEOUS
23.1 Rights. This Lease grants Lessee only those rights expressly and
unequivocally granted herein and Lessor retains and reserves all other rights in
the Premises.
23.2 Binding Effect. Each provision of this Lease shall extend to, be
binding on and inure to the benefit of not only Lessee but each of its
respective heirs, administrators, executors, successors and assigns. When
reference is made in this Lease to either "Lessor" or "Lessee", the reference
shall be deemed to include, wherever applicable, the heirs, administrators,
executors, successors and assigns of the parties. This Lease shall be binding
upon all subsequent owners of the Premises, and of any interest or estate
therein or lien or encumbrance thereon.
23.3 No Partnership. The relationship of the parties is that of Lessor and
Lessee, and it is expressly understood and agreed that Lessor does not in any
way or for any purpose become a partner of Lessee or a joint venturer with
Lessee in the conduct of Lessee's business or otherwise, and that the provisions
of any agreement between Lessor and Lessee relating to Rent are made solely for
the purpose of providing a method by which Rent is to be measured and
ascertained.
23.4 Quitclaim Upon Termination. After the expiration, cancellation, or
termination of this Lease, Lessee shall execute, acknowledge and deliver to
Lessor within thirty (30) days after written demand from Lessor to Lessee, any
document requested by Lessor quitclaiming any right, title or interest in the
Leasehold to Lessor or other document required by any reputable title company to
remove the cloud of this Lease from the Premises; provided, however, such
document shall not act to diminish or terminate any rights of the owner of
Improvements to remove the Improvements as set forth herein.
23.5 Titles. The titles to the Articles of this Lease are not a part of
this Lease and shall have no effect upon the construction or interpretation of
any part of the Lease.
23.6 Notices. Any notice to be given or other document to be delivered to
Lessee or Lessor hereunder shall be in writing and delivered to Lessee or Lessor
by depositing same in the United States Mail, with prepaid postage thereon and
addressed as follows:
TO Lessor: Arizona State Land Department
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
TO Lessee: Address of Record, with a copy to all Leasehold Mortgagees
Lessee must notify Lessor by written notice of any change in address within
thirty (30) days. Lessor may, by written notice to Lessee, designate a
different address. A copy of any notice to Lessee shall also be given to all
Leasehold Mortgagees. Notice shall be deemed given upon delivery in case of
personal delivery or five (5) days following deposit in the U.S. Mails.
23.7 No Promise To Sell. Lessee acknowledges that it has not been induced
to enter into this Lease by any promise from Lessor or any of its agents,
servants or employees that the Parcel will be offered for sale at any time.
23.8 Cancellation. Lessor may cancel this Lease within three (3) years of
execution, without penalty or further obligation, if any person significantly
involved in initiating, negotiating, securing, drafting or creating the Lease on
behalf of Lessor or any of its departments or agencies is, at any time while the
Lease or any extension of the Lease is in effect, an employee of any other party
to the Lease in any capacity, or a consultant to any other party of the Lease
with respect to the subject matter of the Lease. The cancellation shall be
effective when written notice from the Governor is received by all other
parties to the Lease unless the notice specifies a later time. This
provision is subject to the statutory rights of all Leasehold Mortgagees as
provided by law and the statutory limits on this right of cancellation.
23.9 Applicable Law. This lease is subject to all current and subsequently
enacted rules, regulations and laws applicable to State lands and to the rights
and obligations of Lessors and Lessees. No provision of this Lease shall create
any vested right in Lessee except as otherwise specifically provided in this
Lease.
23.10 Amendment. This Lease may be amended only as permitted by law,
in writing and upon agreement by Lessor and Lessee.
23.11 Attorneys' Fees. In any action arising out of this Lease, the
prevailing party is entitled to recover reasonable attorneys' fees and costs in
addition to the amount of any judgment, costs and other expenses as determined
by the court. In the case of Lessor, reasonable attorneys' fees shall be
calculated at the reasonable market value for such services when rendered by
private counsel, notwithstanding that it is represented by the Arizona Attorney
General's Office or other salaried counsel.
23.12 Execution. This document is submitted for examination. This is
not an option or offer to lease or grant a permit. This document shall have no
binding effect on the parties unless and until executed by Lessor (after
execution by the Lessee), and a fully executed copy is delivered to the Lessee.
23.13 Severability. If any provision of this Lease or any application
thereof shall be invalid or unenforceable, the Lease shall remain in full force
and effect if such provision was not a material inducement to the benefitted
party and the remaining provisions permit the parties to achieve the practical
benefits of the arrangements contemplated hereby.
23.14 Mortgagee Request. If any Leasehold Mortgagee to whom the Lessee
proposes to make a Permitted Mortgage on Lessee's leasehold interest shall
require as a condition to making any loan secured by such Permitted Mortgage
that Lessor agree to amend this Lease, then Lessor expressly agrees that it will
make the requested amendments; provided that, the amendments do not impair
Lessor's interests and can be legally effected without conducting a public
hearing or advertising and offering this Lease as so amended at any public
auction.
23.15 Memorandum. The parties shall execute and Lessee shall cause to
be recorded, at Lessee's option, a memorandum of this Lease suitable for
recording purposes, in the Official Records of Pinal County, Arizona. The
Lessee shall be responsible for preparing and recording the necessary documents
and all costs associated therewith.
23.16 Cooperation. The parties hereto agree to fully and reasonably
cooperate so as to allow Lessee to develop the Parcel consistent with this Lease
and the applicable zoning. Lessor's cooperation shall not include any
obligation on the part of Lessor to expend any monies on behalf of Lessee.
Lessor's cooperation shall include, but not be limited to, cooperation by
executing applications and petitions for any zoning and rezoning in accordance
with Article 6 (Use & Occupancy of Premises), and cooperation by executing such
other and further documents as may be reasonably required by Lessee to carry out
the intent of the parties contemplated by this Lease.
23.17 Construction. The parties acknowledge that they have both had
the benefit of legal counsel in negotiating and drafting this lease. They
therefore agree that, notwithstanding anything contained herein to the contrary,
this Lease and all of its terms, provisions and conditions shall be construed
fairly and not against either Lessor or the Lessee.
23.18 Governing Law. Since the parcel is situated in Arizona, this
Lease shall be governed by, construed and enforced in accordance with the laws
of the State of Arizona. Any legal proceeding arising out of this Lease shall
be brought in the Superior Court of Arizona, Maricopa County.
IN WITNESS HEREOF, the parties hereto have signed this Lease, effective the day
and year set forth previously herein.
LESSOR: LESSEE:
STATE OF ARIZONA SIERRA TUCSON L.L.C.
Arizona State Land Commissioner By: NextHealth, Inc., its Managing
Member
By: /s/ ▇▇▇▇▇▇▇ ▇. Oxford By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Oxford ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
Dated: December 10, 1998 Dated: October 23, 1998