EXHIBIT (10)-56
LEASE AGREEMENT
Dated as of October 31, 2000
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as Owner Trustee
under the HEALTHSOUTH Corporation Trust 2000-1,
as Lessor
and
HEALTHSOUTH Corporation, as Lessee
--------------------------------------------------------------------------------
This Lease Agreement (the "Lease Agreement") is subject to a security interest
in favor of UBS AG, Stamford Branch, as Administrative Agent (the "Agent") under
the Security Agreement dated as of the date hereof among First Security Bank,
National Association, not individually except as expressly stated therein, but
solely as Owner Trustee under the HEALTHSOUTH Corporation Trust 2000-1, the
Lenders and the Agent, as amended, modified, supplemented, restated or replaced
from time to time. This Lease Agreement has been executed in several
counterparts. To the extent, if any, that this Lease Agreement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease
Agreement may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed by
the Agent on the signature page hereof.
TABLE OF CONTENTS
PAGE
ARTICLE I.........................................................................................................1
1.1. Definitions.....................................................................................1
ARTICLE II........................................................................................................1
2.1. Properties......................................................................................1
2.2. Lease Term......................................................................................2
2.3. Title...........................................................................................2
ARTICLE III.......................................................................................................2
3.1. Rent............................................................................................2
3.2. Payment of Basic Rent...........................................................................2
3.3. Supplemental Rent...............................................................................2
3.4. Performance on a Non-Business Day...............................................................3
3.5. Rent Payment Provisions.........................................................................3
ARTICLE IV........................................................................................................3
4.1. Utility Charges; Taxes..........................................................................3
ARTICLE V.........................................................................................................4
5.1. Quiet Enjoyment.................................................................................4
ARTICLE VI........................................................................................................4
6.1. Net Lease.......................................................................................4
6.2. No Termination or Abatement.....................................................................5
ARTICLE VII.......................................................................................................5
7.1. Ownership of the Properties.....................................................................5
ARTICLE VIII......................................................................................................6
8.1. Condition of the Properties.....................................................................6
8.2. Possession and Use of the Properties............................................................7
ARTICLE IX........................................................................................................7
9.1. Compliance with Legal Requirements and Insurance Requirements...................................7
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ARTICLE X.........................................................................................................8
10.1. Maintenance and Repair; Return..................................................................8
10.2. Environmental Inspection........................................................................9
ARTICLE XI........................................................................................................9
11.1. Modifications...................................................................................9
ARTICLE XII......................................................................................................10
12.1. Warranty of Title..............................................................................10
ARTICLE XIII.....................................................................................................11
13.1. Permitted Contests Other Than in Respect of Indemnities........................................11
ARTICLE XIV......................................................................................................11
14.1. Public Liability and Workers' Compensation Insurance...........................................11
14.2. Hazard and Other Insurance.....................................................................12
14.3. Coverage.......................................................................................12
ARTICLE XV.......................................................................................................13
15.1. Casualty and Condemnation......................................................................13
15.2. Environmental Matters..........................................................................15
15.3. Notice of Environmental Matters................................................................15
ARTICLE XVI......................................................................................................16
16.1. Termination Upon Certain Events................................................................16
16.2. Procedures.....................................................................................16
ARTICLE XVII.....................................................................................................16
17.1. Lease Events of Default........................................................................16
17.2. Surrender of Possession........................................................................19
17.3. Reletting......................................................................................19
17.4. Damages........................................................................................19
17.5. Final Liquidated Damages.......................................................................20
17.6. Waiver of Certain Rights.......................................................................21
17.7. Assignment of Rights Under Contract............................................................21
17.8. Environmental Costs............................................................................21
17.9. Remedies Cumulative............................................................................22
17.10. Notice of Default or Event of Default..........................................................22
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ARTICLE XVIII....................................................................................................22
18.1. Lessor's Right to Cure Lessee's Lease Defaults.................................................22
ARTICLE XIX......................................................................................................22
19.1. Provisions Relating to Lessee's Exercise of its Purchase Option................................22
19.2. No Termination With Respect to Less than all of the Properties.................................22
ARTICLE XX.......................................................................................................23
20.1. Early Purchase Option..........................................................................23
20.2. Purchase or Sale Option........................................................................23
ARTICLE XXI......................................................................................................24
21.1. Intentionally Deleted..........................................................................24
ARTICLE XXII.....................................................................................................24
22.1. Sale Procedure.................................................................................24
22.2. Application of Proceeds of Sale................................................................26
22.3. Indemnity for Excessive Wear...................................................................26
22.4. Appraisal Procedure............................................................................26
22.5. Certain Obligations Continue...................................................................27
ARTICLE XXIII....................................................................................................27
23.1. Holding Over...................................................................................27
ARTICLE XXIV.....................................................................................................28
24.1. Risk of Loss...................................................................................28
ARTICLE XXV......................................................................................................28
25.1. Assignment.....................................................................................28
25.2. Subleases......................................................................................28
ARTICLE XXVI.....................................................................................................29
26.1. No Waiver......................................................................................29
ARTICLE XXVII....................................................................................................29
27.1. Acceptance of Surrender........................................................................29
27.2. No Merger of Title.............................................................................29
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ARTICLE XXVIII...................................................................................................30
28.1. Incorporation of Covenants.....................................................................30
28.2. Additional Reporting Requirements..............................................................31
ARTICLE XXIX.....................................................................................................31
29.1. Notices........................................................................................31
ARTICLE XXX......................................................................................................32
30.1. Miscellaneous..................................................................................32
30.2. Amendments and Modifications...................................................................32
30.3. Successors and Assigns.........................................................................33
30.4. Headings and Table of Contents.................................................................33
30.5. Counterparts...................................................................................33
30.6. GOVERNING LAW..................................................................................33
30.7. Calculation of Rent............................................................................33
30.8. Memorandum of Lease............................................................................33
30.9. Allocations between the Lenders and the Holders................................................33
30.10. Limitations on Recourse........................................................................34
30.11. WAIVERS OF JURY TRIAL..........................................................................34
30.12. Existing Agreements............................................................................34
30.13. Power of Sale..................................................................................34
30.14. Exercise of Lessor Right.......................................................................34
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LEASE AGREEMENT
THIS LEASE AGREEMENT (as amended, supplemented or modified from time to time,
this "Lease"), dated as of October 31, 2000, is between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, having its principal
office at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, not individually,
but solely as Owner Trustee under the HEALTHSOUTH Corporation Trust 2000-1, as
Lessor (the "Lessor"), and HEALTHSOUTH Corporation, a Delaware corporation,
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, as Lessee (the "Lessee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to the terms and conditions of the Participation
Agreement (defined below), Lessor owns or leases under ground leases certain
parcels of real property, the Improvements on such real property and certain
Equipment; and
WHEREAS, the Basic Term shall commence with respect to the Properties
as of the date hereof; and
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, the Properties;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
1.1. Definitions.
Capitalized terms used but not otherwise defined in this Lease
have the respective meanings specified in Appendix A to the Participation
Agreement of even date herewith (as such may be amended, modified, supplemented,
restated and/or replaced from time to time in accordance with the terms thereof,
the "Participation Agreement") among the Lessee, First Security Bank, National
Association, not individually, except as expressly stated therein, but as Owner
Trustee under the HEALTHSOUTH Corporation Trust 2000-1, the Holders party
thereto, the Lenders party thereto and the Agent.
ARTICLE II
2.1. Properties.
Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor, each Property described in Exhibit A and Schedule I-A, Schedule I-B and
Schedule I-C attached thereto.
2.2. Lease Term.
The term of this Lease with respect to each Property (the
"Basic Term") shall continue from the date hereof (the "Basic Term Commencement
Date" or the "Term Commencement Date") and shall end on June 22, 2003 (the
"Basic Term Expiration Date"), unless the Term is earlier terminated in
accordance with the provisions of this Lease.
2.3. Title.
Each Property is leased to Lessee without any representation
or warranty, express or implied, by Lessor and subject to the rights of parties
in possession (if any), the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
title to any Property other than for Lessor Liens.
ARTICLE III
3.1. Rent.
(a) Lessee shall pay Basic Rent on each Payment Date, and on any
date on which this Lease shall terminate.
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid in immediately available funds
on the due date therefor (or within the applicable grace
period) to such account or accounts at such bank or banks as
Lessor shall from time to time direct.
(c) Lessee's inability or failure to take possession of all or any
portion of any Property on the Closing Date, whether or not
attributable to any act or omission of the Lessor, the Lessee,
or any other Person, or for any other reason whatsoever, shall
not delay or otherwise affect Lessee's obligation to pay Rent
for such Property in accordance with the terms of this Lease.
3.2. Payment of Basic Rent.
Basic Rent shall be paid absolutely net to Lessor or its
designee, so that this Lease shall yield to Lessor the full amount of Basic
Rent, without setoff, deduction or reduction.
3.3. Supplemental Rent.
Lessee shall pay to Lessor or its designee or to the Person
entitled thereto any and all Supplemental Rent promptly as the same shall become
due and payable, and if Lessee fails to pay any Supplemental Rent, Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent. Without limiting the
generality of the definition of "Supplemental Rent," Lessee shall pay to Lessor
as Supplemental Rent, among other things, on demand, to the extent permitted by
applicable Legal Requirements, (a) any and all unpaid fees, charges, payments
and other obligations (except the obligations of Lessor to pay the principal
amount of the Loans and the Holder Amount) due and
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owing by Lessor under the Credit Agreement, the Trust Agreement or any other
Operative Agreement (including specifically without limitation any amounts owing
to the Lenders under Section 2.11 or Section 2.12 of the Credit Agreement and
any amounts owing to the Holders under Section 3.9 or Section 3.10 of the Trust
Agreement) and (b) interest at the applicable Base Rate on any installment of
Basic Rent not paid when due (subject to the applicable grace period) for the
period for which the same shall be overdue and on any payment of Supplemental
Rent not paid when due or demanded by the appropriate Person for the period from
the due date or the date of any such demand, as the case may be, until the same
shall be paid. The expiration or other termination of Lessee's obligations to
pay Basic Rent hereunder shall not limit or modify the obligations of Lessee
with respect to Supplemental Rent. Unless expressly provided otherwise in this
Lease, in the event of any failure on the part of Lessee to pay and discharge
any Supplemental Rent as and when due, Lessee shall also promptly pay and
discharge any fine, penalty, interest or cost which may be assessed or added (a)
by any party to an Operative Agreement pursuant to the terms of such agreement
or (b) by any Person that is not a party to an Operative Agreement, in each case
for nonpayment or late payment of such Supplemental Rent, all of which shall
also constitute Supplemental Rent.
3.4. Performance on a Non-Business Day.
If any Basic Rent is required hereunder on a day that is not a
Business Day, then such Basic Rent shall be due on the corresponding Scheduled
Interest Payment Date. If any Supplemental Rent is required hereunder on a day
that is not a Business Day, then such Supplemental Rent shall be due on the next
succeeding Business Day.
3.5. Rent Payment Provisions.
Lessee shall make payment of all Basic Rent and Supplemental
Rent when due regardless of whether any of the Operative Agreements pursuant to
which same is calculated and is owing shall have been rejected, avoided or
disavowed in any bankruptcy or insolvency proceeding involving any of the
parties to any of the Operative Agreements. Such provisions of such Operative
Agreements and their related definitions are incorporated herein by reference
and shall survive any termination, amendment or rejection of any such Operative
Agreements.
ARTICLE IV
4.1. Utility Charges; Taxes.
Lessee shall pay or cause to be paid all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service and all
other rents and utilities used in or on any Property and related real property
during the Term. Lessee shall be entitled to receive any credit or refund with
respect to any utility charge paid by Lessee. Unless a Lease Default or Lease
Event of Default shall have occurred and be continuing, the amount of any credit
or refund received by Lessor on account of any utility charges paid by Lessee,
net of the costs and expenses incurred by Lessor in obtaining such credit or
refund, shall be promptly paid over to Lessee. In addition, Lessee shall pay or
cause to be paid all taxes or tax assessments against any Property. All charges
for utilities and all taxes or tax assessments imposed with respect to any
Property for a billing period (or in the cases of tax assessments, a tax period)
during which this Lease expires or terminates shall be adjusted and prorated on
a daily basis between Lessor and Lessee, and each party shall pay or reimburse
the other for such party's pro rata share thereof.
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ARTICLE V
5.1. Quiet Enjoyment.
Subject to the rights of Lessor contained in Sections 17.2 and
17.3 and the other terms of this Lease and the other Operative Agreements and so
long as no Lease Event of Default shall have occurred and be continuing, Lessee
shall peaceably and quietly have, hold and enjoy each Property for the
applicable Term, free of any claim or other action by Lessor or anyone
rightfully claiming by, through or under Lessor (other than Lessee) with respect
to any matters arising from and after the Basic Term Commencement Date.
ARTICLE VI
6.1. Net Lease.
This Lease shall constitute a net lease. Any present or future
law to the contrary notwithstanding, this Lease shall not terminate, nor shall
Lessee be entitled to any abatement, suspension, deferment, reduction, setoff,
counterclaim, or defense with respect to the Rent, nor shall the obligations of
Lessee hereunder be affected (except as expressly herein permitted and by
performance of the obligations in connection therewith) by reason of (a) any
damage to or destruction of any Property or any part thereof; (b) any taking of
any Property or any part thereof or interest therein by Condemnation or
otherwise; (c) any prohibition, limitation, restriction or prevention of
Lessee's use, occupancy or enjoyment of any Property or any part thereof, or any
interference with such use, occupancy or enjoyment by any Person or for any
other reason; (d) any title defect, Lien or any matter affecting title to any
Property; (e) any eviction by paramount title or otherwise; (f) any default by
Lessor hereunder; (g) any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding relating to or affecting the Agent,
any Lender, Lessor, Lessee, any Holder or any Governmental Authority; (h) the
impossibility or illegality of performance by Lessor, Lessee or both, (i) any
action of any Governmental Authority or any other Person; (j) Lessee's
acquisition of ownership of all or part of any Property; (k) breach of any
warranty or representation with respect to any Property or of any Operative
Agreement; (1) any defect in the condition, quality or fitness for use of any
Property or any part thereof; or (m) any other cause or circumstance whether
similar or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The foregoing clause (j) shall not
prevent the termination of the Lease in accordance with the terms hereof if the
Lessee purchases all of the Properties pursuant to Section 20.1 or 20.2. The
parties intend that the obligations of Lessee hereunder shall be covenants,
agreements and obligations that are separate and independent from any
obligations of Lessor hereunder and shall continue unaffected unless such
covenants, agreements and obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Lessor and Lessee
acknowledge and agree that the provisions of this Section 6.1 have been
specifically reviewed and agreed to, and that this Lease has been negotiated by
the parties.
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6.2. No Termination or Abatement.
Lessee shall remain obligated under this Lease in accordance
with its terms and shall not take any action to terminate, rescind or avoid this
Lease, notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting Lessor or any
Governmental Authority, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or liquidator of
Lessor or any Governmental Authority or by any court with respect to Lessor,
Lessee, any Holder, or any Governmental Authority. Lessee hereby waives all
right (a) to terminate or surrender this Lease (except as permitted under the
terms of the Operative Agreements) or (b) to avail itself of any abatement,
suspension, deferment, reduction, setoff, counterclaim or defense with respect
to any Rent. Lessee shall remain obligated under this Lease in accordance with
its terms and Lessee hereby waives any and all rights now or hereafter conferred
by statute or otherwise to modify or to avoid strict compliance with its
obligations under this Lease. Notwithstanding any such statute or otherwise,
Lessee shall be bound by all of the terms and conditions contained in this
Lease.
ARTICLE VII
7.1. Ownership of the Properties.
(a) Lessor and Lessee intend that (i) for financial accounting
purposes with respect to Lessee (A) this Lease will be treated
as an "operating lease" pursuant to Statement of Financial
Accounting Standards No. 13, as amended, (B) Lessor will be
treated as the owner and lessor of the Properties and (C)
Lessee will be treated as the lessee of the Properties, but
(ii) for federal and all state and local income tax purposes,
for bankruptcy purposes and all other purposes (A) this Lease
will be treated as a financing arrangement and (B) Lessee will
be treated as the owner of the Properties and will be entitled
to all tax benefits ordinarily available to owners of property
similar to the Properties for such tax purposes, and (C) all
payments of Basic Rent shall be deemed to be interest
payments. Consistent with the foregoing, Lessee intends to
claim depreciation and cost recovery deductions associated
with the Properties, and Lessor agrees not to take any
inconsistent position on its income tax returns. Neither
Lessor, the Agent, any Lender, any Holder, UBS Warburg LLC,
Deutsche Bank Securities, Inc., The Chase Manhattan Bank nor
Deutsche Bank AG, New York Branch makes any representation or
warranty with respect to the foregoing matters described in
this Section 7.1 and will assume no liability for the Lessee's
accounting treatment of this transaction.
(b) For all purposes other than as set forth in Section 7.1(a)(i),
Lessor and Lessee intend this Lease to constitute a finance
lease and not a true lease. Lessor and Lessee further intend
and agree that, for the purpose of securing Lessee's
obligations hereunder (i) this Lease shall be deemed to be a
security agreement and financing statement within the meaning
of Article 9 of the Uniform Commercial Code respecting each of
the Properties to the extent such is personal property and an
irrevocable grant and conveyance of each Property to the
Lessor as security for the Lessee's obligations hereunder to
the extent such is real
5
property; (ii) the acquisition of title (or to the extent
applicable, a leasehold interest) in the Properties referenced
in Article II shall be deemed to be (A) a grant by Lessee to
Lessor of a lien on and security interest in all of Lessee's
right, title and interest in and to each Property and all
proceeds (including without limitation insurance proceeds) of
each Property, whether in the form of cash, investments,
securities or other property, and (B) an assignment by Lessee
to Lessor of all rents, profits and income produced by each
Property; and (iii) notifications to Persons holding such
Property, and acknowledgments, receipts or confirmations from
financial intermediaries, bankers or agents (as applicable) of
Lessee shall be deemed to have been given for the purpose of
perfecting such security interest under applicable law. Lessor
and Lessee shall promptly take such actions as may be
necessary or advisable in either party's opinion (including
without limitation the filing of Uniform Commercial Code
Financing Statements or Uniform Commercial Code Fixture
Filings) to ensure that the lien and security interest in the
Properties will be deemed to be a perfected lien and security
interest of first priority under applicable law and will be
maintained as such throughout the Term.
ARTICLE VIII
8.1. Condition of the Properties.
LESSEE ACKNOWLEDGES AND AGREES THAT IT IS LEASING THE
PROPERTIES "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) BY LESSOR AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE,
(B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY), (C) ANY STATE OF
FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, (D) ALL
APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL REQUIREMENTS WHICH MAY
EXIST ON THE DATE HEREOF. NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY
HOLDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY
WHATSOEVER AS TO THE TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART
THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER
LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY
PART THEREOF, TO COMPLY WITH ANY LEGAL REQUIREMENT. THE LESSEE HAS BEEN AFFORDED
FULL OPPORTUNITY TO INSPECT EACH PROPERTY AND THE IMPROVEMENTS THEREON (IF ANY),
IS (INSOFAR AS THE LESSOR, THE AGENT, EACH LENDER AND EACH HOLDER ARE CONCERNED)
SATISFIED WITH THE RESULTS OF ITS INSPECTIONS AND IS ENTERING INTO THIS LEASE
SOLELY ON THE BASIS OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL RISKS
INCIDENT TO THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, AS BETWEEN THE
LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS, ON THE ONE HAND, AND THE LESSEE,
ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
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8.2. Possession and Use of the Properties.
(a) At all times during the Term, the Properties shall be used by
Lessee or any sublessee permitted under Section 25.2 for the
provision of rehabilitation and other healthcare services and
related activities in the ordinary course of its business.
Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Properties as
contemplated by this Lease. Lessee shall not commit or permit
any waste of the Properties or any part thereof.
(b) Lessee represents and warrants that the address stated in
Section 29.1 of this Lease is the chief place of business and
chief executive office of Lessee (as such terms are used in
Section 9-103 (or other corresponding section) of the Uniform
Commercial Code of any applicable jurisdiction), and Lessee
will provide Lessor with prior written notice of any change of
location of its chief place of business or chief executive
office. Regarding the Properties, Lessee represents and
warrants that Schedules I-A and I-B hereto correctly identify
the initial location of the related Equipment and
Improvements, and Schedule I-C hereto contains an accurate
legal description for the Land. Lessee has no other places of
business where the Equipment or Improvements will be located
other than as identified on Schedule I-C.
(c) Lessee will not attach or incorporate any item of Equipment to
or in any other item of equipment or personal property or to
or in any real property (except the Land identified in
Schedule I-C) in a manner that could give rise to the
assertion of any Lien on such item of Equipment by reason of
such attachment or the assertion of a claim that such item of
Equipment has become a fixture and is subject to a Lien in
favor of a third party that is prior to the Liens thereon
created by the Operative Agreements.
(d) At all times during the Term, Lessee will comply with all
obligations under, and (to the extent no Event of Default has
occurred and is continuing and provided that such exercise
will not impair the value of any Property) shall be permitted
to exercise all rights and remedies under, all operation and
easement agreements and related or similar agreements
applicable to each Property.
ARTICLE IX
9.1. Compliance with Legal Requirements and Insurance Requirements.
Subject to the terms of Article XIII relating to permitted
contests, Lessee, at its sole cost and expense, shall (i) comply with all
material Legal Requirements (including without limitation all Environmental
Laws), and all Insurance Requirements relating to the Properties, including the
use, development, construction, operation, maintenance, repair, refurbishment
and restoration thereof, whether or not compliance therewith shall require
structural or extraordinary changes in the Improvements or interfere with the
use and enjoyment of any Property, and (ii)
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procure, maintain and comply with all material licenses, permits, orders,
approvals, consents and other authorizations required for the construction, use,
maintenance and operation of any Property and for the use, development,
construction, operation, maintenance, repair and restoration of the
Improvements.
ARTICLE X
10.1. Maintenance and Repair; Return.
(a) Lessee, at its sole cost and expense, shall maintain each
Property in good condition, repair and working order (ordinary
wear and tear excepted) and make all necessary repairs
thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or
nonstructural, or foreseen or unforeseen, in each case as
required by all Legal Requirements, Insurance Requirements,
and manufacturer's specifications and standards and on a basis
consistent with the operation and maintenance of properties or
equipment comparable in type and function to such Property and
in compliance with standard industry practice, subject,
however, to the provisions of Article XV with respect to
Condemnation and Casualty.
(b) Lessee shall not move, use or relocate any component of any
Property beyond the boundaries of the Land without Lessor's
prior written consent, which consent shall not be unreasonably
withheld or delayed.
(c) If any material component of any Property becomes worn out,
lost, destroyed, damaged beyond repair or otherwise
permanently rendered unfit for use, Lessee, at its own
expense, will within a reasonable time replace such component
with a replacement component which is free and clear of all
Liens (other than Permitted Liens) and has a value, utility
and useful life at least equal to the component replaced. All
components which are added to any Property shall immediately
become the property of, and title thereto shall vest in,
Lessor, and shall be deemed incorporated in such Property and
subject to the terms of this Lease as if originally leased
hereunder.
(d) Upon reasonable advance notice, Lessor and its agents shall
have the right to inspect each Property and the maintenance
records with respect thereto at any reasonable time during
normal business hours but shall not materially disrupt the
business of Lessee.
(e) In addition to any Appraisal required by Section 5.3 of the
Participation Agreement, Lessee shall cause to be delivered to
Lessor (at Lessee's sole expense) any additional Appraisals
(or reappraisals) as Lessor or the Agent may deem appropriate
(i) if an Event of Default has occurred and is continuing, or
(ii) if any one of Lessor, the Agent, any Lender or any Holder
is required pursuant to any applicable Legal Requirement to
obtain such an Appraisal (or reappraisal).
(f) Lessor shall under no circumstances be required to build any
improvements on any Property, make any repairs, replacements,
alterations or renewals of any
8
nature or description to such Property, make any expenditure
whatsoever in connection with this Lease or maintain any
Property in any way. Lessor shall not be required to maintain,
repair or rebuild all or any part of any Property, and Lessee
waives the right to (i) require Lessor to maintain, repair, or
rebuild all or any part of any Property (unless such repairs
are needed to cure damage to a Property caused by the gross
negligence or willful misconduct of the Lessor), or (ii) make
repairs at the expense of Lessor pursuant to any Legal
Requirement, Insurance Requirement, contract, agreement,
covenants, condition or restriction at any time in effect.
(g) Lessee shall, upon the expiration or earlier termination of
this Lease with respect to the Properties, if Lessee shall not
have exercised its Purchase Option with respect to the
Properties, surrender the Properties to Lessor, or the third
party purchaser, as the case may be, subject to Lessee's
obligations under this Lease (including without limitation
Sections 9.1, 10.1(a)-(f), 10.2. 11.1 12.1, 22.1 and 23.1) and
the other Operative Agreements.
10.2. Environmental Inspection.
If (a) Lessee has not given notice of the exercise of its
Purchase Option on the Expiration Date pursuant to Section 20.2, or (b) Lessee
has given notice, pursuant to Section 20.2 of its election to remarket the
Properties pursuant to Section 22.1 then, in either case, not more than 120 days
nor less than 60 days prior to the Expiration Date, Lessee shall, at its sole
cost and expense, provide to Lessor and the Agent a report by a reputable
environmental consultant selected by Lessee, which report shall be in form and
substance reasonably satisfactory to Lessor and the Agent and shall include
without limitation a "Phase I" environmental report (or update of a prior "Phase
I" report that was previously delivered to the Lessor and the Agent) on each of
the Properties. If the report delivered pursuant to the preceding sentence
recommends that a "Phase II" report or other supplemental report be obtained,
the Lessee shall, at its own cost and expense, not less than thirty (30) days
prior to such Expiration Date or Payment Date, provide to Lessor and the Agent
such "Phase II" or other report, in form and substance reasonably satisfactory
to Lessor and the Agent. If Lessee fails to provide such Phase I, Phase II or
other supplemental reports with respect to any Property within the time periods
required by this Section 10.2, or if such report or reports are not satisfactory
in scope or content to the Agent or the Lessor (in their sole discretion), then
notwithstanding any other provision of this Lease, Lessor may require Lessee to
purchase all of the Properties on such Expiration Date or Payment Date for the
Termination Value thereof, plus all Rent due and payable, and all other amounts
due and owing under any Operative Agreement.
ARTICLE XI
11.1. Modifications.
Lessee at its sole cost and expense, at any time and from time
to time without the consent of Lessor may make alterations, renovations,
improvements and additions to any Property or any part thereof and substitutions
and replacements therefor (collectively, "Modifications") and shall make any
Modifications required by all applicable Legal
9
Requirements; provided, that: (i) except for any Modification required to be
made pursuant to a Legal Requirement, no Modification shall materially impair
the value, utility or useful life of any Property from that which existed
immediately prior to such Modification; (ii) the Modification shall be done
expeditiously and in a good and workmanlike manner; (iii) Lessee shall comply
with all material Legal Requirements (including all Environmental Laws) and
Insurance Requirements applicable to the Modification, including without
limitation the obtaining of all permits and certificates of occupancy, and the
structural integrity of any Property shall not be adversely affected; (iv) to
the extent required by Section 14.2(a), Lessee shall maintain builders' risk
insurance at all times when a Modification is in progress; (v) subject to the
terms of Article XIII relating to permitted contests, Lessee shall pay all costs
and expenses and discharge any Liens arising with respect to the Modification;
(vi) such Modification shall comply with the requirements of this Lease
(including without limitation Sections 8.2 and 10.1); and (vii) no Improvements
shall be demolished. Modifications that (y) are not required for any Property or
any part thereof pursuant to any Legal Requirement or otherwise and (z) are
severable from the applicable Property without damage or other loss of value to
such Property (other than the value added by such Modification) shall become
property of the Lessee, and title to such Modifications shall rest with the
Lessee. Except as set forth in the immediately preceding sentence, all
Modifications shall become property of the Lessor and shall be subject to this
Lease, and title to any component of any Property comprising any such
Modifications shall immediately vest in Lessor.
ARTICLE XII
12.1. Warranty of Title.
(a) Lessee agrees that, except as otherwise provided herein and
subject to the terms of Article XIII relating to permitted
contests, Lessee shall not directly or indirectly create or
allow to remain, and shall promptly discharge at its sole cost
and expense, (i) any Lien, defect, attachment, levy, title
retention agreement or claim upon any Property or any
Modifications or (ii) any Lien, attachment, levy or claim with
respect to the Rent or with respect to any amounts held by the
Agent pursuant to the Credit Agreement, in each case other
than Permitted Liens and Lessor Liens. Lessee shall promptly
notify Lessor in the event it receives actual knowledge that a
Lien other than a Permitted Lien or Lessor Lien has occurred
with respect to any Property, and Lessee represents and
warrants to, and covenants with, Lessor that the Liens in
favor of the Lessor created by the Operative Agreements are
first priority perfected Liens subject only to Permitted
Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or
implied, to or for the performance by any contractor,
mechanic, laborer, materialman, supplier or vendor of any
labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition
of or to any Property or any part thereof NOTICE IS HEREBY
GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
LESSEE, OR TO ANYONE HOLDING A PROPERTY OR
10
ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR
MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN
AND TO SUCH PROPERTY.
ARTICLE XIII
13.1. Permitted Contests Other Than in Respect of Indemnities.
Except to the extent otherwise provided for in Section 13 of
the Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial proceedings conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any Legal Requirement, or
utility charges payable pursuant to Section 4.1 or any Lien, attachment, levy,
encumbrance or encroachment, and Lessor agrees not to pay, settle or otherwise
compromise any such item, provided that (a) the commencement and continuation of
such proceedings shall suspend the collection of any such contested amount from,
and suspend the enforcement thereof against, the subject Property, Lessor, each
Holder, the Agent and each Lender; (b) there shall not be imposed a Lien (other
than Permitted Liens) on any Property and no part of any Property nor any Rent
shall be in any danger of being sold, forfeited, lost or deferred; (c) at no
time during the permitted contest shall there be a risk of the imposition of
criminal liability or material civil liability on Lessor, any Holder, the Agent
or any Lender for failure to comply therewith; and (d) in the event that, at any
time, there shall be a material risk of extending the application of such item
beyond the end of the Term, then Lessee shall deliver to Lessor an Officer's
Certificate certifying as to the matters set forth in clauses (a), (b) and (c)
of this Section 13.1. Lessor, at Lessee's sole cost and expense, shall execute
and deliver to Lessee such authorizations and other documents as may reasonably
be required in connection with any such contest and, if reasonably requested by
Lessee, shall join as a party therein at Lessee's sole cost and expense.
ARTICLE XIV
14.1. Public Liability and Workers' Compensation Insurance.
During the Term, Lessee shall procure and carry, at Lessee's
sole cost and expense, commercial general liability insurance for claims for
injuries or death sustained by persons or damage to property while on a Property
or the premises where the Equipment is located and such other public liability
coverages as are then customarily carried by similarly situated companies
conducting business similar to that conducted by Lessee. Such insurance shall be
on terms and in amounts that are no less favorable than insurance maintained by
Lessee with respect to similar properties and equipment that it owns and are
then carried by similarly situated companies conducting business similar to that
conducted by Lessee. The policies shall be endorsed to name Lessor, the Holders,
the Agent and the Lenders as additional insureds and, to the extent of their
interest, loss payees. The policies shall also specifically provide that such
policies shall be considered primary insurance which shall apply to any loss or
claim before any contribution by any insurance which Lessor, any Holder, the
Agent or any Lender may have in force. Lessee shall, in the operation of each
Property, comply with the applicable workers' compensation laws and protect
Lessor, each Holder, the Agent and each Lender against any liability under such
laws.
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14.2. Hazard and Other Insurance.
(a) During the Term, Lessee shall keep, or cause to be kept, each
Property insured against loss or damage by fire and other
risks and shall maintain builders' risk insurance during
construction of any Improvements or Modifications in amounts
not less than the replacement value from time to time of such
Property and on terms that (a) are no less favorable than
insurance covering other similar properties owned by Lessee
and (b) are then carried by similarly situated companies
conducting business similar to that conducted by Lessee. The
policies shall be endorsed to name Lessor, the Holders, the
Agent and the Lenders, to the extent of their respective
interests, as additional loss payees; provided, that so long
as no Lease Event of Default has occurred and is continuing,
any loss payable under the insurance policies required by this
Section will be paid to Lessee.
(b) If, during the Term, the area in which a Property is located
is designated a "flood-prone" area pursuant to the Flood
Disaster Protection Act of 1973, or any amendments or
supplements thereto, then Lessee shall comply with the
National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973. In addition, Lessee will
fully comply with the requirements of the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of
1973, as each may be amended from time to time, and with any
other Legal Requirement concerning flood insurance to the
extent that it may apply to any such Property.
14.3. Coverage.
(a) As of the date of this Lease and annually thereafter so long
as this Lease remains in effect, Lessee shall furnish Lessor
and the Agent with certificates prepared by the insurers or
insurance broker of Lessee showing the insurance required
under Sections 14.1 and 14.2 to be in effect, naming (except
with respect to workers' compensation insurance) Lessor, the
Holders, the Agent and the Lenders as additional insureds and
loss payees and evidencing the other requirements of this
Article XIV. All such insurance shall be at the cost and
expense of Lessee and provided by nationally recognized,
financially sound insurance companies. Such certificates shall
include a provision for thirty (30) days' advance written
notice by the insurer to Lessor and the Agent in the event of
cancellation or material alteration of such insurance. If a
Lease Event of Default has occurred and is continuing and
Lessor so requests, Lessee shall deliver to Lessor copies of
all insurance policies required by Sections 14.1 and 14.2.
(b) Lessee agrees that any insurance policy required by Sections
14.1, 14.2(a) and 14.2(b) shall include an appropriate
provision that such policy will not be invalidated should
Lessee waive, at any time, any or all rights of recovery
against any party for losses covered by such policy or due to
any breach of warranty,
12
fraud, action, inaction or misrepresentation by Lessee or any
Person acting on behalf of Lessee. Lessee hereby waives any
and all such rights against the Lessor, the Holders, the Agent
and the Lenders to the extent of payments made to any such
Person under any such policy.
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of
loss with any insurance required under this Article XIV,
except that Lessor may carry separate liability insurance at
Lessor's sole cost so long as (i) Lessee's insurance is
designated as primary and in no event excess or contributory
to any insurance Lessor may have in force which would apply to
a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required
under this Article XIV to be subject to a coinsurance
exception of any kind.
(d) Lessee shall pay as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, shall
renew or replace each policy prior to the expiration date
thereto and shall otherwise maintain the coverage required by
such Sections without any lapse in coverage.
(e) Notwithstanding anything to the contrary contained in this
Section, Lessee's obligations to carry the insurance provided
for herein may be brought within the coverage of a so-called
blanket policy or policies of insurance carried or maintained
by Lessee; provided, however, that the coverage afforded
Lessor will not be reduced or diminished or otherwise be
different from that which would exist under separate policies
meeting all other requirements of this Lease, and that the
requirements of this Article XIV are otherwise satisfied.
ARTICLE XV
15.1. Casualty and Condemnation.
(a) Subject to the provisions of this Article XV and Article XVI
(in the event Lessee delivers, or is obligated to deliver, a
Termination Notice), and prior to the occurrence and
continuation of a Lease Default or Lease Event of Default,
Lessee shall be entitled to receive (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and
interest in) any award, compensation or insurance proceeds
under Sections 14.2(a) or (b) hereof to which Lessee or Lessor
may become entitled by reason of their respective interests in
each Property (i) if all or a portion of such Property is
damaged or destroyed in whole or in part by a Casualty or (ii)
if the use, access, occupancy, easement rights or title to
such Property or any part thereof is the subject of a
Condemnation; provided, however, that if a Lease Default or
Lease Event of Default shall have occurred and be continuing,
such award, compensation or insurance proceeds shall be paid
directly to Lessor or, if received by Lessee, shall be held in
trust for Lessor, and shall be paid over by Lessee to Lessor
and held in accordance with the terms of this paragraph (a).
All amounts held by Lessor hereunder on account of any award,
compensation or insurance proceeds either paid directly to
Lessor or turned over to Lessor shall be held as security for
the performance of Lessee's obligations hereunder.
13
(b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such
Casualty or Condemnation and shall pay all expenses thereof.
At Lessee's reasonable request, and at Lessee's sole cost and
expense, Lessor and the Agent shall participate in any such
proceeding, action, negotiation, prosecution or adjustment.
Lessor and Lessee agree that this Lease shall control the
rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.
(c) If Lessee shall receive notice of a Casualty or a possible
Condemnation of a Property or any interest therein where
damage to such Property is estimated to equal or exceed ten
percent (10%) of the Property Cost of such Property, Lessee
shall give notice thereof to the Lessor and to the Agent
promptly after the receipt of such notice.
(d) In the event of a Casualty or a Condemnation (regardless of
whether notice thereof must be given pursuant to paragraph
(c)), this Lease shall terminate with respect to such Property
in accordance with Section 16.1 if Lessee, within thirty (30)
days after such occurrence, delivers to Lessor and the Agent a
Termination Notice to such effect.
(e) If, pursuant to this Section 15.1, this Lease shall continue
in full force and effect following a Casualty or Condemnation
with respect to a Property, Lessee shall, at its sole cost and
expense and using, if available, the proceeds of any award,
compensation or insurance with respect to such Casualty or
Condemnation (including, without limitation, any such award,
compensation or insurance which has been received by the Agent
and which should be turned over to Lessee pursuant to the
terms of the Operative Agreements, and if not available or
sufficient, using its own funds), promptly and diligently
repair any damage to such Property caused by such Casualty or
Condemnation in conformity with the requirements of Sections
10.1 and 11.1, using the as-built plans and specifications or
manufacturer's specifications for the applicable Improvements
or Equipment (as modified to give effect to any subsequent
Modifications, any Condemnation affecting the Property and all
applicable Legal Requirements), so as to restore such Property
to substantially the same condition, operation, function and
value as existed immediately prior to such Casualty or
Condemnation. In such event, title to such Property shall
remain with Lessor.
(f) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under this
Section 15.1 affect Lessee's obligations to pay Rent pursuant
to Section 3.1.
(g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1 (e), if during the Term, a Casualty
occurs with respect to any Property or Lessee receives notice
of a Condemnation with respect to any Property, and
14
following such Casualty or Condemnation, (i) such Property
cannot reasonably be restored, repaired or replaced on or
before the 180th day prior to the Expiration Date (if such
Casualty or Condemnation occurs during the Term) to
substantially the same condition as existed immediately prior
to such Casualty or Condemnation, or (ii) on or before such
day such Property is not in fact so restored, repaired or
replaced, then Lessee shall be required to purchase such
Property on the next Payment Date and pay Lessor the
Termination Value for such Property, plus any and all Rent
then due and owing, plus all other amounts then due and owing
(including without limitation amounts described in clause
FIRST of Section 22.2).
15.2. Environmental Matters.
Promptly upon Lessee's actual knowledge of the presence of
Hazardous Substances in any portion of a Property in concentrations and
conditions that constitute an Environmental Violation and as to which, in the
reasonable opinion of Lessee, the cost to undertake any legally required
response, clean up, remedial or other action might result in a cost to Lessee of
more than $100,000, Lessee shall notify Lessor in writing of such condition. In
the event of any Environmental Violation (regardless of whether notice thereof
must be given), Lessee shall, not later than thirty (30) days after Lessee has
actual knowledge of such Environmental Violation, either deliver to Lessor a
Termination Notice pursuant to Section 16.1 if applicable, or, at Lessee's sole
cost and expense, promptly and diligently undertake and complete any response,
clean up, remedial or other action necessary to remove, cleanup or remediate the
Environmental Violation in accordance with all Environmental Laws. If Lessee
does not deliver a Termination Notice pursuant to Section 16.1, Lessee shall,
upon completion of remedial action by Lessee, cause to be prepared by a
reputable environmental consultant acceptable to Lessor a report describing the
Environmental Violation and the actions taken by Lessee (or its agents) in
response to such Environmental Violation, and a statement by the consultant that
the Environmental Violation has been remedied in full compliance with applicable
Environmental Law.
15.3. Notice of Environmental Matters.
Promptly, but in any event within thirty (30) days from the
date Lessee has actual knowledge thereof, Lessee shall provide to Lessor written
notice of any pending or threatened Environmental Claim involving any
Environmental Law or any Release on or in connection with any Property. All such
notices shall describe in reasonable detail the nature of the claim, action or
proceeding and Lessee's proposed response thereto. In addition, Lessee shall
provide to Lessor, within five (5) Business Days of receipt, copies of all
material written communications with any Governmental Authority relating to any
Environmental Law in connection with the Property. Lessee shall also promptly
provide such detailed reports of any such material Environmental Claims as may
reasonably be requested by Lessor.
15
ARTICLE XVI
16.1. Termination Upon Certain Events.
If any of the following occur: (i) if the requirements of
Section 15.1(c) are satisfied, or (ii) if the requirements of Section 15.1(d)
are satisfied and Lessee has determined pursuant to such section that following
the applicable Casualty or Condemnation this Lease shall terminate with respect
to the affected Property, or (iii) Lessee has determined pursuant to the second
sentence of Section 15.2 that, due to the occurrence of an Environmental
Violation, this Lease shall terminate with respect to the affected Property,
then Lessee shall be obligated to deliver, within thirty (30) days of its
receipt of notice of the applicable Condemnation or the occurrence of the
applicable Casualty or Environmental Violation, a written notice to the Lessor
in the form described in Section 16.2(a) (a "Termination Notice") of the
termination of this Lease with respect to the affected Property.
16.2. Procedures.
(a) A Termination Notice shall contain: (i) notice of termination
of this Lease with respect to the affected Property on a
Payment Date not more than sixty (60) days after Lessor's
receipt of such Termination Notice (the "Termination Date");
and (ii) a binding and irrevocable agreement of Lessee to pay
the Termination Value for the applicable Property, any and all
Rent then due and owing and all other amounts then due and
owing from Lessee under any of the Operative Agreements
(including without limitation amounts described in clause
FIRST of Section 22.2) and purchase such Property on such
Termination Date.
(b) On the Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, any and all
Rent then due and owing and all other amounts then due and
owing from Lessee under any of the Operative Agreements
(including without limitation amounts described in clause
FIRST of Section 22.2), and Lessor shall convey such Property,
or the remaining portion thereof, if any, to Lessee (or
Lessee's designee), all in accordance with Section 19.1.
ARTICLE XVII
17.1. Lease Events of Default.
If any one or more of the following events (each a "Lease
Event of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent
(except as set forth in clause (ii)) within five (5) Business
Days after the same has become due and payable or (ii) any
Termination Value, on the date any such payment is due, or any
payment of Basic Rent or Supplemental Rent due on the due date
of any such payment of Termination Value, or any amount due on
the Expiration Date;
16
(b) Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in Section
17.1(a)(ii)) due and payable within three (3) Business Days
after receipt of notice that such payment is due;
(c) Lessee shall fail to maintain insurance as required by Article
XIV of this Lease;
(d) Lessee or any Consolidated Entity, as the case may be, shall
fail to observe or perform any term, covenant or provision
(including without limitation any term, covenant or provision
applying to Lessee and such Consolidated Entity under the
Incorporated Covenants) of Lessee or any Consolidated Entity,
as the case may be, under this Lease or any other Operative
Agreement to which Lessee is a party other than those set
forth in Sections 17.1(a), (b) or (c) hereof, and such failure
shall remain uncured for a period of thirty (30) days after
the earlier of receipt of written notice from Lessor thereof
or a Responsible Officer of Lessee becomes aware of such
failure;
(e) Lessee shall default in the performance or observance of any
other provision of this Lease or any other Operative Agreement
to which Lessee is a party other than those set forth in
Sections 17.1(a), (b), (c) or (d) hereof, and shall not cure
such default within thirty days after the first to occur of
(i) the date the Agent, Lenders or Lessor gives written or
telephonic notice of the default to Lessee, or (ii) the date
the Lessee otherwise has notice thereof;
(f) A default shall be made (i) in the payment of any Indebtedness
(other than obligations under the Operative Agreements) of the
Lessee or any Consolidated Entity when due or (ii) in the
performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to
which any such Indebtedness may have been issued, created,
assumed, guaranteed or secured by the Lessee or any
Consolidated Entity, if the effect of such default is to
accelerate the maturity of such Indebtedness or to permit the
holder thereof to cause such Indebtedness to become due prior
to its stated maturity, and such default shall not be cured
within 10 days after the occurrence of such default, and the
amount of the Indebtedness involved exceeds $5,000,000;
(g) The liquidation or dissolution of Lessee, or the suspension of
the business of Lessee, or the filing by Lessee of a voluntary
petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the
United States Bankruptcy Code, as amended, or under any other
insolvency act or law, state or federal, now or hereafter
existing, or any other action of Lessee indicating its consent
to, approval of or acquiescence in, any such petition or
proceeding; the application by Lessee for, or the appointment
by consent or acquiescence of Lessee of a receiver, a trustee
or a custodian of Lessee for all or a substantial part of its
property; the making by Lessee of any assignment for the
benefit of creditors; the inability of Lessee or the admission
by Lessee in writing of its inability to pay its debts as they
mature; or Lessee taking any corporate action to authorize any
of the foregoing;
17
(h) The filing of an involuntary petition against Lessee in
bankruptcy or seeking reorganization, arrangement readjustment
of its debts or for any other relief under the United States
Bankruptcy Code, as amended, or under any other insolvency act
or law, state or federal, now or hereafter existing; or the
involuntary appointment of a receiver, a trustee or a
custodian of Lessee for all or a substantial part of its
property; or the issuance of a warrant of attachment,
execution or similar process against any substantial part of
the property of Lessee, and the continuance of any of such
events for ninety (90) days undismissed or undischarged;
(i) The adjudication of Lessee as bankrupt or insolvent;
(j) The entering of any order in any proceedings against Lessee
decreeing the dissolution, divestiture or split-up of Lessee,
and such order remains in effect for more than sixty (60)
days;
(k) Any material report, certificate, financial statement or other
instrument delivered to Lessor by or on behalf of Lessee
pursuant to the terms of this Lease or any other Operative
Agreement shall be false or misleading in any material respect
when made or delivered;
(l) A final judgment (after all avenues of appeal and all
applicable appeal periods have expired), which with other
outstanding final judgments against Lessee exceeds an
aggregate of $500,000 shall be rendered against Lessee, and if
within thirty (30) days after entry thereof such judgment
shall not have been discharged, paid or bonded or execution
thereon stayed pending appeal, or if within thirty (30) days
after the expiration of any such stay such judgment shall not
have been discharged;
(m) Any "Event of Default" (as defined in the Existing HEALTHSOUTH
Credit Agreement, as such agreement may be amended,
supplemented or restated from time to time, to the extent the
Majority Lenders and the Agent agree to any such amendments,
otherwise the form of HEALTHSOUTH Credit Agreement existing
before such amendment will continue to control with respect to
the Operative Agreements) (hereinafter referred to as
"Existing HEALTHSOUTH Corporation Credit Agreement Event of
Default") shall have occurred and be continuing (or, in the
event the Existing HEALTHSOUTH Credit Agreement has been
terminated, would have occurred and be continuing had the
HEALTHSOUTH Credit Agreement continued to exist) beyond any
applicable notice, grace or cure period (if any) included
within the definition of such Existing HEALTHSOUTH Corporation
Credit Agreement Event of Default;
(n) Any material Environmental Violation with respect to which
notice to the Lessor is required to be given in accordance
with Section 15.2 shall have occurred and be continuing,
unless (i) the Lessee shall completely remediate such
Environmental Violation to the reasonable satisfaction of the
Agent and the Lessor within 90 days following the date the
Lessee has actual knowledge of such Environmental
18
Violation or (ii) the Lessee shall consummate the purchase of
the affected Property in accordance with and at the price
required by Section 16.2 by the earlier of (A) 60 days after
the Lessor's receipt of the respective Termination Notice
under Section 16.2(a) or (B) 90 days after the Lessee has
actual knowledge of such Environmental Violation;
(o) Any Operative Agreement shall cease to be in full force and
effect, other than due to its expiration or termination in
accordance with its terms; or
(p) If the Guarantor shall default in the performance of any
obligations under the Guarantee.
then, in any such event, (i) Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee fifteen (15) days notice of such termination, and this
Lease shall terminate, and all rights of Lessee under this Lease shall cease.
Lessee shall, to the fullest extent permitted by law, pay as Supplemental Rent
all costs and expenses incurred by or on behalf of Lessor, including without
limitation reasonable fees and expenses of counsel, as a result of any Lease
Event of Default hereunder.
17.2. Surrender of Possession.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall, upon thirty (30) days written notice, surrender to
Lessor possession of the Properties. Lessor may enter upon and repossess the
Properties by such means as are available at law or in equity, and may remove
Lessee and all other Persons and any and all personal property and Lessee's
equipment and personalty and severable Modifications from the Properties. Lessor
shall have no liability by reason of any such entry, repossession or removal
performed in accordance with applicable law. Upon the written demand of Lessor,
Lessee shall return the Properties promptly to Lessor, in the manner and
condition required by, and otherwise in accordance with the provisions of,
Section 22.1(c) hereof
17.3. Reletting.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessor may, but shall be under no obligation to, relet any
Property, for the account of Lessee 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) and on such conditions (which may include concessions
or free rent) and for such purposes as Lessor may determine, and Lessor may
collect, receive and retain the rents resulting from such reletting. Lessor
shall not be liable to Lessee for any failure to relet a Property or for any
failure to collect any rent due upon such reletting.
17.4. Damages.
Neither (a) the termination of this Lease pursuant to Section
17.1; (b) the repossession of any Property; nor (c) the failure of Lessor to
relet any Property, the reletting of all or any portion thereof, nor the failure
of Lessor to collect or receive any rentals due upon any
19
such reletting, shall relieve Lessee of its liabilities and obligations
hereunder, all of which shall survive any such termination, repossession or
reletting. If any Lease Event of Default shall have occurred and be continuing
and notwithstanding any termination of this Lease pursuant to Section 17.1,
Lessee shall forthwith pay to Lessor all Rent and other sums due and payable
hereunder to and including the date of such termination. Thereafter, on the days
on which the Basic Rent or Supplemental Rent, as applicable, are payable under
this Lease or would have been payable under this Lease if the same had not been
terminated pursuant to Section 17.1 and until the end of the Term hereof or what
would have been the Term in the absence of such termination, Lessee shall pay
Lessor, as current liquidated damages (it being agreed that it would be
impossible accurately to determine actual damages) an amount equal to the Basic
Rent and Supplemental Rent that are payable under this Lease or would have been
payable by Lessee hereunder if this Lease had not been terminated pursuant to
Section 17.1, less the net proceeds, if any, which are actually received by
Lessor with respect to the period in question of any reletting of any Property
or any portion thereof, provided that Lessee's obligation to make payments of
Basic Rent and Supplemental Rent under this Section 17.4 shall continue only so
long as Lessor shall not have received the amounts specified in Section 17.5. In
calculating the amount of such net proceeds from reletting, there shall be
deducted all of Lessor's, any Holder's, the Agent's and any Lender's reasonable
expenses in connection therewith, including repossession costs, reasonable
brokerage or sales commissions, reasonable fees and expenses for counsel and any
necessary repair or alteration costs and expenses incurred in preparation for
such reletting. To the extent Lessor receives any damages pursuant to this
Section 17.4, such amounts shall be regarded as amounts paid on account of Rent.
Lessee specifically acknowledges and agrees that its obligations under this
Section 17.4 shall be absolute and unconditional under any and all circumstances
and shall be paid or performed, as the case may be, without notice or demand and
without any abatement, reduction, diminution, setoff, defense, counterclaim or
recoupment whatsoever.
17.5. Final Liquidated Damages.
If a Lease Event of Default shall have occurred and be
continuing, whether or not this Lease shall have been terminated pursuant to
Section 17.1 and whether or not Lessor shall have collected any current
liquidated damages pursuant to Section 17.4, Lessor shall have the right to
recover, by demand to Lessee and at Lessor's election, and Lessee shall pay to
Lessor, as and for final liquidated damages, but exclusive of the indemnities
payable under Section 13 of the Participation Agreement, and in lieu of all
current liquidated damages beyond the date of such demand (it being agreed that
it would be impossible accurately to determine actual damages) the sum of (a)
the Termination Value of all Properties plus (b) all other amounts owing in
respect of Rent and Supplemental Rent heretofore accruing under this Lease and
all other amounts then due and owing by the Lessee under any Operative
Agreement. Upon payment of the amount specified pursuant to the first sentence
of this Section 17.5, Lessee shall be entitled to receive from Lessor, either at
Lessee's request or upon Lessor's election, in either case at Lessee's cost, an
assignment of Lessor's entire right, title and interest in and to the
Properties, the Improvements, Fixtures, Modifications and Equipment, in each
case in recordable form and otherwise in conformity with local custom and free
and clear of the Lien of this Lease (including the release of any memorandum of
Lease recorded in connection therewith) and any Lessor Liens. The Properties
shall be conveyed to Lessee "AS IS" `WHERE IS" and in their then present
physical condition. If any statute or rule of law shall limit the amount of such
final
20
liquidated damages to less than the amount agreed upon, Lessor shall be entitled
to the maximum amount allowable under such statute or rule of law; provided,
however, Lessee shall not be entitled to receive an assignment of Lessor's
interest in the Property, the Improvements, Fixtures, Modifications or Equipment
or documents unless Lessee shall have paid in full the Termination Value and all
other amounts due and owing hereunder and under the other Operative Agreements.
Lessee specifically acknowledges and agrees that its obligations under this
Section 17.5 shall be absolute and unconditional under any and all circumstances
and shall be paid or performed, as the case may be, without notice or demand
(except as otherwise specifically provided herein) and without any abatement,
reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever.
17.6. Waiver of Certain Rights.
If this Lease shall be terminated pursuant to Section 17.1,
Lessee waives, to the fullest extent permitted by law, (a) any notice of
re-entry or the institution of legal proceedings to obtain re-entry or
possession; provided, however, that the Lessor or the Agent shall make a good
faith effort to provide notice to the Lessee of any such action, but the failure
to provide such notice for any reason shall not result in the invalidity of any
action so taken and shall not give rise to any rights on the part of the Lessee;
(b) any right of redemption, re-entry or possession; (c) the benefit of any laws
now or hereafter in force exempting property from liability for rent or for
debt, and (d) any other rights which might otherwise limit or modify any of
Lessor's rights or remedies under this Article XVII.
17.7. Assignment of Rights Under Contract.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall upon Lessor's demand immediately assign, transfer and
set over to Lessor all of Lessee's right, title and interest in and to each
agreement executed by Lessee in connection with the purchase, construction,
development, use or operation of all Properties (including, without limitation,
a right, title and interest of Lessee with respect to all warranty, performance,
service and indemnity provisions), as and to the extent that the same relate to
the purchase, construction, use and operation of any Property.
17.8. Environmental Costs.
If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessee shall pay directly to any third party (or at Lessor's
election, reimburse Lessor) for the cost of any environmental testing or
remediation work undertaken respecting any Property as such testing or work is
deemed appropriate in the reasonable judgment of Lessor, Lessee shall pay all
amounts referenced in the immediately preceding sentence within ten (10) days of
any request by Lessor for such payment.
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17.9. Remedies Cumulative.
The remedies herein provided shall be cumulative and in
addition to (and not in limitation of) any other remedies available at law,
equity or otherwise, including, without limitation, any mortgage foreclosure
remedies.
17.10. Notice of Default or Event of Default.
Lessee shall promptly notify the Lessor and the Agent if any
Responsible Officer of Lessee has received notice, or has actual knowledge, of
any Default or Event of Default.
ARTICLE XVIII
18.1. Lessor's Right to Cure Lessee's Lease Defaults.
Lessor, without waiving or releasing any obligation or Lease
Event of Default, may (but shall be under no obligation to) remedy any Lease
Event of Default for the account and at the sole cost and expense of Lessee,
including the failure by Lessee to maintain the insurance required by Article
XIV, and may, to the fullest extent permitted by law, and notwithstanding any
right of quiet enjoyment in favor of Lessee, enter upon any Property, or real
property owned or leased by Lessee and take all such action thereon as may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
any lessee. All reasonable out-of-pocket costs and expenses so incurred
(including without limitation reasonable fees and expenses of counsel), together
with interest thereon at the Base Rate from the date on which such sums or
expenses are paid by Lessor, shall be paid by Lessee to Lessor on demand.
ARTICLE XIX
19.1. Provisions Relating to Lessee's Exercise of its Purchase
Option.
Subject to Section 19.2, in connection with any termination of
this Lease pursuant to the terms of Section 16.2, or in connection with Lessee's
exercise of its Purchase Option or its option to purchase all the Properties
pursuant to Section 20.1, upon the date on which this Lease is to terminate, and
upon tender by Lessee of the amounts set forth in Sections 16.2(b), 20.1 or
20.2, as applicable, Lessor shall execute and deliver to Lessee (or to Lessee's
designee), at Lessee's cost and expense a deed and an assignment of Lessor's
entire interest in the Properties, in recordable form and otherwise in
conformity with local custom and free and clear of the Lien of this Lease and
any Lessor Liens attributable to Lessor but without any other warranties (of
title or otherwise) from the Lessor. All Property shall be conveyed to Lessee
"AS IS" "WHERE IS" and in then present physical condition.
19.2. No Termination With Respect to Less than all of the
Properties.
Lessee shall not be entitled to exercise its Purchase Option
separately with respect to less than all of the Properties or that portion of
any Property consisting of Land, Equipment and Improvements but shall be
required to exercise its Purchase Option with respect to all Properties.
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ARTICLE XX
20.1. Early Purchase Option.
Provided that no Lease Default of the types specified in
Sections 17.1 (a), (b), (h), (i) or (j) or any Lease Event of Default shall have
occurred and be continuing and provided that the Election Notice referred to in
Section 20.2 has not been delivered, Lessee shall have the option, exercisable
by giving the Agent and Lessor no more than one hundred twenty (120) days and no
less than sixty (60) days irrevocable written notice of Lessee's election to
exercise such option, to purchase all (but not less than all) of the Properties
on a Scheduled Interest Payment Date as identified in such written notice, at a
price equal to the Termination Value for the Properties (which the parties do
not intend to be a "bargain" purchase price), and Lessee at such time shall also
pay any and all Rent then due and owing and all other amounts then due and owing
by Lessee under this Lease and under any other Operative Agreement (including
without limitation amounts, if any, described in clause FIRST of Section 22.2).
If Lessee exercises its option to purchase the Properties free and clear of the
Lien of this Lease and any Lessor Liens with respect to the Property pursuant to
this Section 20.1, Lessor shall transfer to Lessee all of Lessor's right, title
and interest in and to each Property as of the Scheduled Interest Payment Date
on which such purchase occurs.
20.2. Purchase or Sale Option.
Not less than 120 days and no more than 180 days prior to the
Expiration Date, Lessee may give Lessor and Agent irrevocable written notice
(the "Election Notice") that Lessee is electing to exercise either (a) the
option to purchase all, but not less than all, of the Properties on the
Expiration Date (the "Purchase Option") or (b) the option to remarket all of the
Properties and cause a sale of all of the Properties pursuant to the terms of
Section 22.1 (the "Sale Option"), such sale to occur on the Expiration Date. If
Lessee does not give an Election Notice indicating the Sale Option at least 120
days and not more than 180 days prior to the then current Expiration Date, then
Lessee shall be deemed to have elected the Purchase Option for the Expiration
Date. Lessor shall have no obligation to sell any Property unless all of the
Properties are sold on the Expiration Date. If Lessee shall (i) elect (or be
deemed to elect) to exercise the Purchase Option, or (ii) elect to remarket all
of the Properties pursuant to Section 22.1 and fail to deliver the environmental
report required by Section 10.2 at the time specified in such Section, or (iii)
elect to remarket all of the Properties pursuant to Section 22.1 and fail to
cause all of the Properties to be sold in accordance with the terms of Section
22.1 on the Expiration Date on which such a sale of all of the Properties is
required in connection with such election, then in each case, Lessee shall pay
to Lessor on the Expiration Date an amount equal to the Termination Value for
all the Properties (which the parties do not intend to be a "bargain" purchase)
plus all Rent and other amounts then due and payable under this Lease or under
any other Operative Agreement (including without limitation the amounts
described in clause FIRST of Section 22.2), and, upon receipt of such amount,
Lessor shall transfer to Lessee all of Lessor's right, title and interest in and
to the Properties in accordance with Section 19.1. If the Lessee elects the
Purchase Option or the Sale Option and fails to perform its obligations under
this Lease with respect to such option, a Lease Event of Default shall be deemed
to occur.
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ARTICLE XXI
21.1. Intentionally Deleted.
ARTICLE XXII
22.1. Sale Procedure.
(a) During the Marketing Period, Lessee, on behalf of the Lessor,
shall obtain bids for the cash purchase of all of the
Properties in connection with a sale to one or more purchasers
to be consummated on the Expiration Date for the highest price
available, shall notify Lessor promptly of the name and
address of each prospective purchaser and the cash price which
each prospective purchaser shall have offered to pay for the
Properties and shall provide Lessor with such additional
information about the bids and the bid solicitation procedure
as Lessor may reasonably request from time to time. Lessor may
reject any and all bids and may assume sole responsibility for
obtaining bids by giving Lessee written notice to that effect;
provided, however, that notwithstanding the foregoing, Lessor
may not reject the highest bid for the Properties submitted by
the Lessee if such bid is greater than or equal to the sum of
the Limited Recourse Amount for the Properties, plus all
reasonable costs and expenses referred to in clause FIRST of
Section 22.2 and represent bona fide offers from one or more
third party purchasers and provided further, that Lessor may
not reject a bid from the Houston Purchaser (defined below)
with respect to all Property located in Houston, Texas, or a
bid from the Topeka Purchaser (defined below) with respect to
all Property located in Topeka, Kansas in each case if and
only if each of the following conditions in clauses (y) and
(z) are met: (y) such bid is at least equal to the Termination
Value of such Property (whether or not it is the highest bid
for such Property), plus all reasonable costs and expenses
referred to in clause FIRST of Section 22.2 related to such
Property. If the price which a prospective purchaser or
purchasers shall have offered to pay for the Property is less
than the sum of the Limited Recourse Amount plus all
reasonable costs and expenses referred to in clause FIRST of
Section 22.2 and represents a bona fide offer from such
purchaser and (z) with respect to all Properties other than
such Property (the "Other Properties"), the Lessee has
received (and the Lessor has accepted) bids from one or more
prospective purchasers, such bids are greater than or equal to
the sum of the Limited Recourse Amounts for the Other
Properties, plus all reasonable costs and expenses referred to
in clause FIRST of Section 22.2, Lessor may elect to retain
the Properties by giving Lessee prior written notice of
Lessor's election to retain the Properties, and upon receipt
of such notice, Lessee shall surrender the Properties to
Lessor pursuant to Section 10.1. Unless Lessor shall have
elected to retain the Properties pursuant to the preceding
sentence, Lessee shall arrange for Lessor to sell the
Properties free and clear of the Lien of this Lease and any
Lessor Liens attributable to it, without recourse or warranty
(of title or otherwise), for cash on the last day of the
Marketing Period (such date being hereafter referred to as the
"Sale Date") to the purchaser or purchasers identified by
Lessee or Lessor, as the case may be; provided, however,
solely as
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to Lessor or the Trust Company, in its individual capacity,
any Lessor Lien shall not constitute a Lessor Lien so long as
Lessor or the Trust Company, in its individual capacity, is
diligently contesting such Lessor Lien by appropriate
proceedings in good faith and Lessor indemnifies such
purchaser with respect to such Lessor Lien. Lessee shall
surrender the Properties so sold or subject to such documents
to the purchaser in the condition specified in Section 10.1.
Lessee shall not take or fail to take any action which would
have the effect of unreasonably discouraging bona fide third
party bids for the Property. Lessor shall have no obligation
to sell any Property on the Sale Date unless all of the
Properties are sold on the Sale Date. If the Properties are
not either (i) sold on the Sale Date in accordance with the
terms of this Section 22.1, or (ii) retained by the Lessor
pursuant to an affirmative election made by the Lessor
pursuant to the third sentence of this Section 22.1(a), then
the Lessee shall be obligated to pay the Lessor on the Sale
Date an amount equal to the Termination Value for the
Properties (plus all Rent and other amounts then due and
payable under this Lease and any other Operative Agreements)
in accordance with the terms of Section 20.2. For the purposes
of this paragraph, "Houston Purchaser" shall mean Houston
Rehabilitation Associates, a Delaware general partnership; and
"Topeka Purchaser" shall mean Kansas Rehabilitation Hospital,
Inc., a Delaware corporation.
(b) If the Properties are sold on the Sale Date to a third party
purchaser or purchasers in accordance with the terms of
Section 22.1(a) and the aggregate purchase price paid for the
Properties minus the sum of all costs and expenses referred to
in clause FIRST of Section 22.2 is less than the sum of the
Termination Value for the Properties plus all Rent and other
amounts then due and payable under this Lease and under any
other Operative Agreements (hereinafter such difference shall
be referred to as the "Deficiency Balance"), then the Lessee
hereby unconditionally promises to pay to the Lessor on the
Sale Date the lesser of (i) the Deficiency Balance, or (ii)
the Maximum Residual Guarantee Amount for the Properties. If
the Properties are retained by the Lessor pursuant to an
affirmative election made by the Lessor pursuant to the third
sentence of Section 22.1(a), then the Lessee hereby
unconditionally promises to pay to the Lessor on the Sale Date
an amount equal to the Maximum Residual Guarantee Amount for
the Properties.
(c) In the event that the Properties are either sold to a third
party purchaser or purchasers on the Sale Date or retained by
the Lessor in connection with an affirmative election made by
the Lessor pursuant to the third sentence of Section 22.1(a),
then in either case on the Sale Date the Lessee shall provide
Lessor or such third party purchaser or purchasers with (i)
all permits, certificates of occupancy, governmental licenses
and authorizations necessary to use and operate the Properties
for their intended purposes, (ii) such easements, licenses,
rights-of-way and other rights and privileges in the nature of
an easement as are reasonably necessary or desirable in
connection with the use, repair, access to or maintenance of
the Properties for its intended purpose or otherwise as the
Lessor shall reasonably request, (iii) a services agreement
covering such services as Lessor or such third party purchaser
may reasonably request and having a reasonable
25
duration, in order to use and operate the Properties for their
intended purposes at such rates (not in excess of arm's-length
fair market rates) as shall be acceptable to Lessee and Lessor
or such third party purchaser or purchasers, and (iv) an
assignment to the Lessor or such third party purchaser or
purchasers (as the case may be) of any existing service
agreements relating to the Properties, to the extent such
agreements are assignable. All assignments, licenses,
easements, agreements and other deliveries required by clauses
(i) and (ii) of this paragraph (c) shall be in form reasonably
satisfactory to the Lessor or such third party purchaser or
purchasers, as applicable, and shall be fully assignable
(including both primary assignments and assignments given in
the nature of security) without payment of any fee, cost or
other charge.
22.2. Application of Proceeds of Sale.
The Lessor shall apply the proceeds of sale of the Properties
in the following order of priority:
(a) FIRST, to pay or to reimburse Lessor for the payment of all
reasonable costs and expenses incurred by Lessor in connection
with the sale;
(b) SECOND, so long as the Participation Agreement, the Credit
Agreement or the Trust Agreement is in effect and any Loan,
Holder Advance or any amount is owing to the Lenders, the
Holders or any other Person under any Operative Agreement, to
the Agent to be applied pursuant to the terms in the Operative
Agreements; and
(c) THIRD, to the Lessee.
22.3. Indemnity for Excessive Wear.
If the proceeds of the sale described in Section 22.1 with
respect to the Properties, less all expenses incurred by Lessor in connection
with such sale, shall be less than the Limited Recourse Amount with respect to
the Properties, and at the time of such sale it shall have been reasonably
determined (pursuant to the Appraisal Procedure) that the Fair Market Sales
Value of the Properties, shall have been impaired by greater than expected wear
and tear during the term of the Lease, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Net Sale Proceeds Shortfall, whichever amount is less.
22.4. Appraisal Procedure.
For determining the Fair Market Sales Value of the Properties
or any other amount which may, pursuant to any provision of any Operative
Agreement, be determined by an appraisal procedure, Lessor and Lessee shall use
the following procedure (the "Appraisal Procedure"). Lessor and Lessee shall
endeavor to reach a mutual agreement as to such amount for a period of ten (10)
days from commencement of the Appraisal Procedure under the applicable section
of the Lease, and if they cannot agree within ten (10) days, then two qualified
appraisers, one chosen by Lessee and one chosen by Lessor, shall mutually agree
thereupon, but
26
if either party shall fail to choose an appraiser within twenty (20) days after
notice from the other party of the selection of its appraiser, then the
appraisal by such appointed appraiser shall be binding on Lessee and Lessor. If
the two appraisers cannot agree within twenty (20) days after both shall have
been appointed, then a third appraiser shall be selected by the two appraisers
or, failing agreement as to such third appraiser within (30) days after both
shall have been appointed, by the American Arbitration Association. The
decisions of the three appraisers shall be given within twenty (20) days of the
appointment of the third appraiser and the decision of the appraiser most
different from the average of the other two shall be discarded and such average
shall be binding on Lessor and Lessee; provided that if the highest appraisal
and the lowest appraisal are equidistant from the third appraisal, the third
appraisal shall be binding on Lessor and Lessee. The fees and expenses of each
appraiser shall be paid by Lessee.
22.5. Certain Obligations Continue.
During the Marketing Period, the obligation of Lessee to pay
Rent with respect to the Properties (including the installment of Basic Rent due
on the Expiration Date) shall continue undiminished until payment in full to
Lessor of the sale proceeds, if any, the Maximum Residual Guarantee Amount, the
amount due under Section 22.3, if any, and all other amounts due to Lessor with
respect to the Properties. Lessor shall have the right, but shall be under no
duty, to solicit bids, to inquire into the efforts of Lessee to obtain bids or
otherwise to take action in connection with any such sale, other than as
expressly provided in this Article XXII.
ARTICLE XXIII
23.1. Holding Over.
If Lessee shall for any reason remain in possession of the
Properties after the expiration or earlier termination of this Lease (unless
Properties are conveyed to Lessee), such possession shall be as a tenancy at
sufferance during which time Lessee shall continue to pay Supplemental Rent that
would be payable by Lessee hereunder were the Lease then in full force and
effect with respect to the Properties and Lessee shall continue to pay Basic
Rent at 110% of the Basic Rent that would otherwise be due and payable at such
time. Such Basic Rent shall be payable from time to time upon demand by Lessor
and such additional 10% amount shall be applied by the Lessor to the payment of
the Loans pursuant to the Credit Agreement and the Holder Advances pursuant to
the Trust Agreement pro rata between the Loans and the Holder Advances. During
any period of tenancy at sufferance, Lessee shall, subject to the first sentence
of this paragraph, be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights hereunder other
than the right, to the extent given by law to tenants at sufferance, to continue
their occupancy and use of the Properties. Nothing contained in this Article
XXIII shall constitute the consent, express or implied, of Lessor to the holding
over of Lessee after the expiration or earlier termination of this Lease as to
the Properties (unless the Properties are conveyed to Lessee) and nothing
contained herein shall be read or construed as preventing Lessor from
maintaining a suit for possession of the Properties or exercising any other
remedy available to Lessor at law or in equity.
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ARTICLE XXIV
24.1. Risk of Loss.
During the Term, unless Lessee shall not be in actual
possession of the Properties solely by reason of Lessor's exercise of its
remedies of dispossession under Article XVII, the risk of loss or decrease in
the enjoyment and beneficial use of the Properties as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be answerable or
accountable therefor.
ARTICLE XXV
25.1. Assignment.
(a) Lessee may not assign, mortgage, pledge or encumber this Lease
or any of its rights or obligations hereunder in whole or in
part to any Person without the prior written consent of the
Agent, the Lessor, each Lender and each Holder, with such
consent to be given or withheld in the sole discretion of each
such party.
(b) No such assignment or other relinquishment of possession to
the Properties shall in any way discharge or diminish any of
the obligations of Lessee to Lessor hereunder and Lessee shall
remain directly and primarily liable under this Lease.
25.2. Subleases.
(a) Except as set forth in this Section 25.2, Lessee may not
sublet any Property or portion thereof without first obtaining
the prior written consent of the Lessor and the Agent, which
consent may be given or withheld in the sole discretion of
each such party.
(b) Lessee may, without the consent of Lessor or the Agent, sublet
a Property to a Subsidiary of Lessee, or sublet professional
space constituting a portion of a Property to healthcare
providers, in each case if and only if:
(i) Lessee remains fully liable for all obligations
(including without limitation all Rent and other
obligations with respect to such subleased Properties
and any other Properties) under this Lease and the other
Operative Agreements;
(ii) Such sublease is in writing and is expressly subject and
subordinate to the rights of the Lessor, the Agent, the
Lenders and the Holders under this Lease, the Security
Agreement, each Mortgage Instrument and all other
Operative Agreements; and
(iii) Such sublease is on commercially reasonable terms and at
market rates, and has a term that does not extend past
the Expiration Date, and such Property is at all times
used for the purposes set forth in this paragraph and in
the definition of "Property".
28
(c) No sublease or other relinquishment of possession to any
Property shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder and Lessee shall
remain directly and primarily liable under this Lease as to
the portion of the Property so sublet.
(d) Each insurance policy carried by Lessee pursuant to Article
XIV hereof shall be endorsed to name each sublessee, under any
such sublease as an additional insured. Prior to the
effectiveness of any such sublease, Lessee shall deliver a
copy thereof to the Lessor and the Agent.
(e) Promptly but in any event at least thirty (30) days prior to
the execution and delivery of any sublease permitted by this
Article XXV, Lessee shall notify Lessor and the Agent of the
execution of such sublease.
ARTICLE XXVI
26.1. No Waiver.
No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy upon a
default hereunder, and no acceptance of full or partial payment of Rent during
the continuance of any such default, shall constitute a waiver of any such
default or of any such term. To the fullest extent permitted by law, no waiver
of any default shall affect or alter this Lease, and this Lease shall continue
in full force and effect with respect to any other then existing or subsequent
default.
ARTICLE XXVII
27.1. Acceptance of Surrender.
No surrender to Lessor of this Lease or of all or any portion
of the Properties or of any interest therein shall be valid or effective unless
agreed to and accepted in writing by Lessor and the Agent and, prior to the
payment or performance of all obligations under the Credit Documents, the Agent,
and no act by Lessor or the Agent or any representative or agent of Lessor or
the Agent, other than a written acceptance, shall constitute an acceptance of
any such surrender.
27.2. No Merger of Title.
There shall be no merger of this Lease or of the leasehold
estate created hereby by reason of the fact that the same Person may acquire,
own or hold, directly or indirectly, in whole or in part, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, (b) any right, title or interest in any Property, (c) any Notes, or (d)
a beneficial interest in Lessor.
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ARTICLE XXVIII
28.1. Incorporation of Covenants.
(a) Reference is made to that certain Credit Agreement dated as of
October 31, 2000 (the "Existing HEALTHSOUTH Corporation Credit
Agreement") among HEALTHSOUTH Corporation, UBS AG, Stamford
Branch, as agent, and the other financial institutions party
thereto. Further reference is made to the covenants contained
in Articles VII and VIII of the Existing HEALTHSOUTH
Corporation Credit Agreement (hereinafter referred to as the
"Incorporated Covenants"). The Lessee agrees with the Lessor
that, effective as of the date hereof (whether or not the
Basic Term has commenced), the Incorporated Covenants (and all
other relevant provisions of the Existing HEALTHSOUTH
Corporation Credit Agreement related thereto) are hereby
incorporated by reference into this Lease to the same extent
and with the same effect as if set forth fully herein and
shall inure to the benefit of the Lessor, without giving
effect to any waiver, amendment, modification or replacement
of the Existing HEALTHSOUTH Corporation Credit Agreement or
any term or provision of the Incorporated Covenants occurring
subsequent to the date of this Lease, except to the extent
otherwise specifically provided in the following provisions of
this paragraph. In the event a waiver is granted under the
Existing HEALTHSOUTH Corporation Credit Agreement or an
amendment or modification is executed with respect to the
Existing HEALTHSOUTH Corporation Credit Agreement, and such
waiver, amendment or modification affects the Incorporated
Covenants, then such waiver, amendment or modification shall
be effective with respect to the Incorporated Covenants as
incorporated by reference into this Lease only if consented to
in writing by the Majority Lenders. In the event of any
replacement of the Existing HEALTHSOUTH Corporation Credit
Agreement with a similar credit facility (the "New Facility")
the covenants contained in the New Facility which correspond
to the covenants contained in Articles VII and VIII of the
Existing HEALTHSOUTH Corporation Credit Agreement shall become
the Incorporated Covenants hereunder only if consented to in
writing by the Majority Lenders and, if such consent is not
granted, then the covenants contained in Articles VII and VIII
of the Existing HEALTHSOUTH Corporation Credit Agreement
(together with any modifications or amendments approved in
accordance with this paragraph) shall continue to be the
Incorporated Covenants hereunder. If the Existing HEALTHSOUTH
Corporation Credit Agreement (or any such New Facility, as the
case may be) is terminated and not replaced, then the
covenants contained in Articles VII and VIII of the Existing
HEALTHSOUTH Corporation Credit Agreement (together with any
modifications or amendments thereto, or to covenants of the
New Facility, in each case approved in accordance with this
paragraph) shall continue to be the Incorporated Covenants
hereunder.
(b) Financial Statements, Reports, etc. Without limiting the
generality of the foregoing, from and after the date hereof
(whether or not the Basic Term has commenced with respect to
any Property), to the extent that the Incorporated
30
Covenants require the Lessee or any of its Subsidiaries to
deliver any financial statement, certificate, notice, report,
or other document or information to the Existing Credit Agent
(or any other agent or lender under the applicable credit
facility), the Lessee shall, and shall cause its Subsidiaries
to, simultaneously deliver a copy of such financial statement,
certificate, notice, report, document or information to the
Agent, each Lender, each Holder and (upon Lessor's request)
the Lessor.
28.2. Additional Reporting Requirements.
Without limiting the generality of the foregoing, from and
after the date hereof, the Lessee will deliver, or will cause to be delivered,
to the Agent, each Lender, each Holder and (upon the Lessor's request) the
Lessor:
(i) Such other information regarding the financial condition
or operations of the Lessee or its Subsidiaries as the
Agent shall reasonably request from time to time or at
any time;
(ii) Promptly after the same shall have become known to any
officer of the Lessee, a notice describing any action,
suit or proceeding at law or in equity or by or before
any Governmental Authority that, if adversely
determined, might impair the ability of the Lessee to
perform its obligations under this Agreement or any
other Operating Agreement or which might have a Material
Adverse Effect;
(iii) Prompt notice in writing of the occurrence of any Lease
Default or Lease Event of Default.
ARTICLE XXIX
29.1. Notices.
All notices, demands, requests, consents, approvals and other
communications hereunder shall be in writing and delivered personally or by a
nationally recognized overnight courier service or mailed (by registered or
certified mail, return receipt requested, postage prepaid) or telecopied with a
confirming notice, addressed to the respective parties, as follows:
If to Lessee:
HEALTHSOUTH Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
31
With a copy to:
HEALTHSOUTH Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to Lessor:
First Security Bank, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email:
with a copy to the Agent:
UBS AG, Stamford Branch
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇.▇▇▇
or such additional parties or other address as such party may hereafter
designate, and shall be effective upon receipt or refusal thereof.
ARTICLE XXX
30.1. Miscellaneous.
Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any provision of
this Lease shall be held to be unenforceable in any jurisdiction, such
unenforceability shall not affect the enforceability of any other provision of
this Lease in such jurisdiction or of such provision or of any other provision
hereof in any other jurisdiction.
30.2. Amendments and Modifications.
Neither this Lease nor any provision hereof may be amended,
waived, discharged or terminated except by an instrument in writing in
recordable form signed by Lessor and Lessee.
32
30.3. Successors and Assigns.
All the terms and provisions of this Lease shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
30.4. Headings and Table of Contents.
The headings and table of contents in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
30.5. Counterparts.
This Lease may be executed in any number of counterparts, each
of which shall be an original, but all of which shall together constitute one
and the same instrument.
30.6. GOVERNING LAW.
AS TO MATTERS RELATING TO THE CREATION, PERFECTION, AND
FORECLOSURE OF LIENS, AND ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST ANY LEASED
PROPERTY, THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE IN WHICH THE APPLICABLE LEASED PROPERTY IS LOCATED. THIS LEASE
SHALL IN ALL OTHER RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
30.7. Calculation of Rent.
All calculation of Rent payable hereunder shall be computed
based on the actual number of days elapsed over a year of 360 days.
30.8. Memorandum of Lease.
This Lease shall not be recorded, provided Lessor and Lessee
shall promptly record a Memorandum of this Lease (in substantially the form of
Exhibit B attached hereto) in the local filing office at Lessee's cost and
expense, and as required under applicable law to sufficiently evidence this
Lease in the applicable real estate filing records.
30.9. Allocations between the Lenders and the Holders.
Notwithstanding any other term or provision of this Lease to
the contrary, the allocations of the proceeds of the Properties and any and all
other Rent and other amounts received hereunder shall be subject to the
inter-creditor provisions between the Lenders and the Holders contained in the
Operative Agreements (or as otherwise agreed among the Lenders and the Holders
from time to time).
33
30.10. Limitations on Recourse.
Notwithstanding anything contained in this Lease to the
contrary, Lessee agrees to look solely to Lessor's estate and interest in the
Properties for the collection of any judgment requiring the payment of money by
Lessor in the event of liability by Lessor, and no other property or assets of
Lessor or any shareholder, owner or partner (direct or indirect) in or of
Lessor, or any director, officer, employee, beneficiary, Affiliate of any of the
foregoing shall be subject to levy, execution or other enforcement procedure for
the satisfaction of the remedies of Lessee under or with respect to this Lease,
the relationship of Lessor and Lessee hereunder or Lessee's use of the
Properties or any other liability of Lessor to Lessee. Nothing in this Section
shall be interpreted so as to limit the terms of Sections 6.1 or 6.2.
30.11. WAIVERS OF JURY TRIAL.
THE LESSOR AND THE LESSEE IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LEASE OR
ANY COUNTERCLAIM THEREIN.
30.12. Existing Agreements.
The single executed original of this Lease marked "THIS
COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page thereof
and containing the receipt of the Agent therefor on or following the signature
page thereof shall be the original executed counterpart of this Lease (the
"Original Executed Counterpart"). To the extent that this Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Lease may be
created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
30.13. Power of Sale.
Without limiting any other remedies set forth in this Lease,
in the event that a court of competent jurisdiction rules that this Lease
constitutes a mortgage, deed of trust or other secured financing as is the
intent of the parties, then the Lessor and the Lessee agree that the Lessee
hereby grants, bargains, sells, conveys, mortgages, and grants a security
interest in the Properties (and any additional property described in Exhibit A)
WITH POWER OF SALE, and that, upon the occurrence of any Event of Default, the
Lessor shall have the power and authority, to the extent provided by law or the
Operative Agreements, after prior notice and lapse of such time as may be
required by law, to foreclose its interest (or cause such interest to be
foreclosed) in all or any part of any Property, to appoint or obtain the
appointment of a receiver for all or any part of the Property, and to exercise
any other right or remedy that may be available under applicable law to the
holder of a mortgage, deed of trust, security deed or other secured financing.
30.14. Exercise of Lessor Right.
The Lessee hereby acknowledges and agrees that the rights and
powers of the Lessor under this Lease have been collaterally assigned to the
Agent pursuant to the terms of the Security Agreement and the other Operative
Agreements, and that the Lessor has encumbered
34
the Properties by various Mortgage Instruments made by the Lessor in favor of
the Agent, all as security for certain indebtedness and obligations described
therein of the Lessor to the Agent, the Lenders and the Holders under the
Operative Agreements. Lessee hereby consents to said assignment and said
Mortgage Instruments in favor of the Agent and further acknowledges and agrees
as follows:
(a) In the event that a court of competent jurisdiction rules that
this Lease constitutes a mortgage, deed of trust, security
deed or other secured financing as is the intent of the
parties, then the Lessor and the Lessee agree that the
Lessor's collateral assignment of this Lease to the Agent
shall be deemed to be a collateral assignment of such
mortgage, deed of trust, security deed or other secured
financing, and the Agent as such collateral assignee shall be
entitled to exercise any and all rights and remedies of the
Lessor set forth herein during the existence of any Event of
Default, including without limitation the Lessor's rights to
obtain a receiver, to obtain possession of the Properties and
the rents and revenues thereof, to foreclose this Lease, to
sell the Lessee's interest in the Properties, and to exercise
any other rights or remedies that may then be available to the
Lessor under applicable law on account of such Event of
Default.
(b) Lessee's interest in the Properties is junior and subordinate
to the lien of any Mortgage Instruments made by the Lessor in
favor of the Agent against the respective Properties from time
to time in connection with the Operative Agreements; provided,
however, that for so long as no Event of Default shall have
occurred and be continuing, (i) the Agent shall not disturb
Lessee's possession of the Properties through any foreclosure
or other remedial action against the Properties under any
Mortgage Instrument, and (ii) if Lessor's interest in any
Property shall be transferred to any Person other than the
Lessee as the result of the Agent's foreclosure or other
remedial action under any Mortgage Instrument, the Lessee
shall (upon request of the Agent) attorn to such transferee
and recognize the transferee as the Lessee's landlord under
this Lease.
(c) During the existence of an Event of Default, the Agent as
holder of the Mortgage Instruments and as collateral assignee
of this Lease may exercise any and all rights and remedies
that may then be available under applicable law to the Agent
in either or both capacities, whether exercised singly,
successively or concurrently. Without limiting the generality
of the foregoing, the Agent as collateral assignee may enforce
the Lessee's payment obligations under this Lease (regardless
of whether this Lease shall be deemed a mortgage, deed of
trust, security deed or other secured financing) even if
Lessee's interest and estate in any Property under this Lease
shall have been extinguished or forfeited under applicable law
through the foreclosure or other enforcement of any Mortgage
Instrument.
[Remainder of page intentionally left blank]
35
IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.
HEALTHSOUTH Corporation, as Lessee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as
Owner Trustee under the HEALTHSOUTH
Corporation Trust 2000-1, as Lessor
By: /s/ Arge Pavlos
-------------------------------------------
Name: Arge Pavlos
Title: Trust Officer
36
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on this 31st day of October, 2000.
UBS AG, Stamford Branch
as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
Title: Executive Director
By: /s/ ▇▇▇▇▇▇▇ ▇. Saint
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Saint
Title: Associate Director
37
EXHIBIT A TO THE LEASE
Description of Properties
The Properties subject to this Lease includes the Land described on
Schedule I-C attached hereto, and all Equipment on and Improvements to such
Land, including without limitation the Equipment described on Schedule I-B
attached hereto and the Improvements described on Schedule I-C attached hereto.
In addition, to the extent that a court of competent jurisdiction rules
that this Lease constitute a mortgage, deed of trust or other secured financing,
the Lessee hereby grants, bargains, sells, conveys, mortgage and grants a
security interest WITH POWER OF SALE in each of the following:
1. All buildings, structures, fixtures, and other improvements of every
kind existing at any time and from time to time on or under the real property
described on Schedule I-C (such real property, together with any and all
appurtenances to such buildings, structures or improvements, including
sidewalks, utility pipes, conduits and lines, parking areas and roadways, and
including all Lease Modifications and other additions to or changes in the Lease
Improvements at any time (all of the foregoing in this paragraph 1 being
referred to as the "Lease Improvements");
2. All easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and passages, sewer
rights, waters, water courses, water rights and powers, and all estate, rights,
title, interests, privileges, liberties, tenements, hereditaments and
appurtenances whatsoever, in any way belonging, relating or appertaining to any
of the Properties hereinabove described, or which hereafter shall in any way
belong, relate or be appurtenant thereto, whether now owned or hereafter
acquired by Lessee, and the reversion and reversions, remainder and remainders,
rents, issues and profits thereof, and all the estate, right, title, interest,
property, possession, claim and demand whatsoever, at law as well as in equity,
of Lessee in and to the same, including but not limited to all judgments, awards
of damages and settlements hereafter made resulting from condemnation
proceedings involving Lessee taking the Properties described in Paragraphs 1 and
2 hereof, or any part thereof, under the power of eminent domain, or for any
damage (whether caused by such taking or otherwise) to the Properties
hereinabove described or any part thereof or to any rights appurtenant thereto,
and all proceeds of any sales or other dispositions of the Properties or any
part thereof (all of the foregoing in this paragraph 2 being referred to as the
"Lease Easements");
3. All right, title and interest of the Lessee in and to all of the
fixtures, chattels, business machines, machinery, apparatus, equipment,
furnishings, fittings and articles of personal property of every kind and nature
whatsoever, and all appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case, attachments, components,
parts and accessories) currently owned or subsequently acquired by the Lessee
and now or subsequently attached to, or contained in, comprising a portion of or
used or usable in any way in connection with the Properties, including but
without limiting the generality of the foregoing, all equipment referred to in
the Appraisals and the Equipment Schedules pursuant to the Lease or the
Participation Agreement, all computer hardware, and all heating, electrical, and
mechanical equipment, fighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description, but excluding Tangible Personal Property
(all of the foregoing in this Paragraph 3 being referred to as the "Lease
Equipment");
4. All alterations, renovations, improvements and additions to the
Land, any Lease Improvements or any Lease Equipment or any part thereof and
substitutions and replacements therefor (all of the foregoing in this Paragraph
4 being referred to as the "Lease Modifications");
5. All right, title and interest of the Lessee in and to all of the
fixtures, furnishings and fittings of every kind and nature whatsoever, and all
appurtenances and additions thereto and substitutions or replacements thereof
(together with, in each case, attachments, components, parts and accessories)
currently owned or subsequently acquired by the Lessee and now or subsequently
attached to, or contained in or used or usable in any way in connection with any
of the Properties; together with (i) all property affixed to or located on the
Properties which to the fullest extent permitted by law, shall be deemed
fixtures and a part of the real property, (ii) all materials delivered to the
Properties for use in any construction being conducted thereon, and owned by
Lessee, (iii) all contract rights, general intangibles, actions and rights in
action including all rights to insurance proceeds, arising out of or related to
any of the foregoing property described in subparagraphs (i) and (ii) of this
Paragraph 5 and Paragraphs 1, 2 and 11, and (iv) all products, replacements,
additions, substitutions, renewals and accessions of any of the foregoing (all
of the foregoing in this paragraph being referred to as the "Lease Fixtures";
all Land, Lease Fixtures, Lease Equipment, the Lease Improvements, Lease
Easements and the Lease Modifications are being collectively referred to herein
as the "Property");
6. All estate, right, title, claim or demand whatsoever of the Lessee,
in possession or expectancy, in and to the Properties or any part thereof;
7. All right, title and interest of the Lessee in and to all
substitutes, modifications and replacements of, and all additions, accessions
and improvements to the Properties, subsequently acquired by the Lessee or
constructed, assembled or placed by the Lessee on the Land, immediately upon
such acquisition, release, construction, assembling or placement, and in each
such case, without any further conveyance, assignment or other act by the
Lessee;
8. All right, title and interest of the Lessee in and to all unearned
premiums under insurance policies now or subsequently obtained by the Lessee
relating to the Properties and the Lessee's interest in and to all proceeds of
any such insurance policies, including without limitation the right to collect
and receive such proceeds; and all awards and other compensation, including
without limitation the interest payable thereon and the right to collect and
receive the same, made to the present or any subsequent owner of the Properties
for the taking by eminent domain, condemnation or otherwise, of all or any part
of the Properties or any easement or other right therein;
2
9. All right, title and interest of the Lessee in and to (i) all
consents, licenses, certificates and other governmental approvals relating to
construction, use or operation of the Properties or any part thereof and (ii)
all Plans and Specifications relating to the Properties;
10. All rents, royalties, issues, profits, revenue, income and other
benefits from the Properties; together with a right, title and interest of
Lessee in and to any and all leases now or hereafter on or affecting the
Properties, together with all security therefor and monies payable thereunder;
and
11. All proceeds, both cash and noncash, of any of the foregoing.
3
SCHEDULE I-A
(Equipment)
None.
SCHEDULE I-B
(Improvements)
All Improvements now or hereafter located on the Land described in Schedule I-C.
SCHEDULE I-C
(Land)
EXHIBIT B TO THE LEASE
FORM OF MEMORANDUM OF LEASE