LEASE AGREEMENT
CAPSTONE CAPITAL CORPORATION,
A MARYLAND CORPORATION
("LESSOR")
AND
MESA PSYCHIATRIC HOSPITAL, INC.,
AN ARIZONA CORPORATION
("LESSEE")
APRIL 12, 1995
TABLE OF CONTENTS
ARTICLE I
LEASED PROPERTY: TERM ............................................. 1
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ARTICLE II
RENT .............................................................. 2
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2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT ............ 2
2.2 CALCULATION OF INCREASES TO MINIMUM RENT ................ 3
2.3 ADDITIONAL CHARGES ...................................... 3
2.4 NET LEASE ............................................... 3
ARTICLE III
IMPOSITIONS ....................................................... 4
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3.1 PAYMENT OF IMPOSITIONS .................................. 4
3.2 PRORATION OF IMPOSITIONS ................................ 5
3.3 UTILITY CHARGES ......................................... 5
3.4 INSURANCE PREMIUMS ...................................... 5
ARTICLE IV
NO TERMINATION .................................................... 5
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ARTICLE V
OWNERSHIP OF LEASED PROPERTY ...................................... 6
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5.1 OWNERSHIP OF THE PROPERTY ............................... 6
5.2 PERSONAL PROPERTY ....................................... 6
ARTICLE VI
CONDITION AND USE OF LEASED PROPERTY .............................. 6
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6.1 CONDITION OF THE LEASED PROPERTY ........................ 6
6.2 USE OF THE LEASED PROPERTY .............................. 6
6.3 LESSOR TO GRANT EASEMENTS ............................... 7
ARTICLE VII
LEGAL INSURANCE AND FINANCIAL REQUIREMENTS ........................ 8
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7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS ........ 8
7.2 LEGAL REQUIREMENT COVENANTS ............................. 8
ARTICLE VIII
REPAIRS: RESTRICTIONS AND ANNUAL INSPECTIONS ...................... 8
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8.1 MAINTENANCE AND REPAIR; REMODELING ...................... 8
8.2 ENCROACHMENTS; RESTRICTIONS ............................. 9
8.3 ANNUAL INSPECTIONS ...................................... 10
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ARTICLE IX
CAPITAL ADDITIONS ................................................. 10
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9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY. 10
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE .................... 11
9.3 CAPITAL ADDITIONS FINANCED BY LESSOR .................... 12
9.4 REMODELING AND NON-CAPITAL ADDITIONS .................... 13
9.5 SALVAGE ................................................. 14
ARTICLE X
LIENS ............................................................. 14
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ARTICLE XI
PERMITTED CONTESTS ................................................ 14
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ARTICLE XII
INSURANCE ......................................................... 15
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12.1 GENERAL INSURANCE REQUIREMENTS .......................... 15
12.2 REPLACEMENT COST ........................................ 17
12.3 ADDITIONAL INSURANCE .................................... 17
12.4 WAIVER OF SUBROGATION ................................... 17
12.5 FORM OF INSURANCE ....................................... 18
12.6 CHANGE IN LIMITS ........................................ 18
12.7 BLANKET POLICY .......................................... 18
12.8 NO SEPARATE INSURANCE ................................... 18
ARTICLE XIII
FIRE AND CASUALTY ................................................ 19
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13.1 INSURANCE PROCEEDS ...................................... 19
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION
COVERED BY INSURANCE .................................... 19
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT
COVERED BY INSURANCE .................................... 20
13.4 LESSEE'S PROPERTY ....................................... 21
13.5 RESTORATION OF LESSEE'S PROPERTY ........................ 21
13.6 NO ABATEMENT OF RENT .................................... 21
13.7 DAMAGE NEAR END OF TERM ................................. 21
13.8 WAIVER .................................................. 21
ARTICLE XIV
CONDEMNATION ...................................................... 22
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14.1 PARTIES' RIGHTS AND OBLIGATIONS.......................... 22
14.2 TOTAL TAKING............................................. 22
14.3 PARTIAL TAKING........................................... 22
14.4 RESTORATION.............................................. 23
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14.5 AWARD DISTRIBUTION ....................................... 23
14.6 TEMPORARY TAKING ......................................... 23
ARTICLE XV
DEFAULT ............................................................ 23
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15.1 EVENTS OF DEFAULT ........................................ 23
15.2 REMEDIES ................................................. 25
15.3 ADDITIONAL EXPENSES ...................................... 26
15.4 WAIVER ................................................... 27
15.5 APPLICATION OF FUNDS ..................................... 27
15.6 NOTICES BY LESSOR ........................................ 27
ARTICLE XVI
LESSOR'S RIGHT TO CURE ............................................. 27
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ARTICLE XVII
PURCHASE OF THE LEASED PROPERTY .................................... 28
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ARTICLE XVIII
HOLDING OVER ....................................................... 29
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ARTICLE XIX
ABANDONMENT: OBSOLESCENCE .......................................... 29
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19.1 DISCONTINUANCE OF OPERATIONS ON THE LEASED PROPERTY ...... 29
19.2 OBSOLESCENCE OF THE LEASED PROPERTY; PURCHASE............. 29
19.3 CONVEYANCE OF LEASED PROPERTY ............................ 29
ARTICLE XX
SUBSTITUTION OF PROPERTY ................................................ 30
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20.l SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY ......... 30
20.2 CONDITIONS TO SUBSTITUTION ............................... 32
20.3 CONVEYANCE TO LESSEE ..................................... 33
20.4 EXPENSES ................................................. 33
ARTICLE XXI
RISK OF LOSS ....................................................... 34
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ARTICLE XXII
INDEMNIFICATION .................................................... 34
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ARTICLE XXIII
SUBLETTING AND ASSIGNMENT .......................................... 35
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23.1 SUBLETTING AND ASSIGNMENT ................................ 35
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT ............ 35
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ARTICLE XXIV
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS ................... 36
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ARTICLE XXV
INSPECTION ........................................................ 37
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ARTICLE XXVI
QUIET ENJOYMENT ................................................... 37
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ARTICLE XXVII
NOTICES ........................................................... 37
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ARTICLE XXVIII
APPRAISAL ......................................................... 39
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ARTICLE XXIX
PURCHASE RIGHTS ................................................... 40
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29.1 FIRST REFUSAL TO PURCHASE ............................... 40
ARTICLE XXX
DEFAULT BY LESSOR ................................................. 41
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30.1 DEFAULT BY LESSOR ....................................... 41
30.2 LESSEE'S RIGHT TO CURE .................................. 42
ARTICLE XXXI
ARBITRATION ....................................................... 42
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31.1 CONTROVERSIES ........................................... 42
31.2 APPOINTMENT OF ARBITRATORS .............................. 42
31.3 THIRD ARBITRATOR ........................................ 42
31.4 ARBITRATION PROCEDURE ................................... 42
31.5 EXPENSES ................................................ 43
ARTICLE XXXII
FINANCING OF THE LEASED PROPERTY .................................. 43
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ARTICLE XXXIII
SUBORDINATION. ATTORNMENT AND NON-DISTURBANCE ..................... 44
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ARTICLE XXXIV
EXTENDED TERMS .................................................... 44
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ARTICLE XXXV
MISCELLANEOUS ..................................................... 45
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35.1 NO WAIVER................................................ 45
35.2 REMEDIES CUMULATIVE...................................... 45
35.3 SURRENDER................................................ 45
35.4 NO MERGER OF TITLE....................................... 45
35.5 TRANSFERS BY LESSOR...................................... 45
35.6 GENERAL.................................................. 46
35.7 MEMORANDUM OF LEASE...................................... 46
35.8 TRANSFER OF LICENSES..................................... 46
ARTICLE XXXVI
GLOSSARY OF TERMS ................................................. 46
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v
LEASE
THIS LEASE ("Lease") dated April 12, 1995 is entered into by and between
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CAPSTONE CAPITAL CORPORATION, a Maryland corporation having its principal office
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessor") and
MESA PSYCHIATRIC HOSPITAL, INC., an Arizona corporation, having an office at c/o
Ramsay Health Care, Inc., One Poydras Avenue, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee").
ARTICLE I
LEASED PROPERTY: TERM
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Upon and subject to the terms and conditions hereinafter set forth, Lessor
Leases to Lessee and Lessee rents from Lessor all of Lessor's rights and
interest in and to the following real and personal property (collectively, the
"Leased Property"):
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(a) the real property more particularly described on Exhibit A
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attached hereto together with all covenants, licenses, privileges and
benefits thereto belonging, and any easements, rights-of-way, rights of
ingress and egress or other interests of Lessor in, on or to any land,
highway, street, road or avenue, open or proposed, in, on, across, in front
of, abutting or adjoining such real property, including all strips and
gores adjacent to or lying between such real property and any adjacent real
property (the "Land");
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(b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind (including all alleyways and connecting
tunnels, crosswalks, sidewalks, landscaping, parking lots and structures
and roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land and Capital Additions financed by Lessor
(but specifically excluding Capital Additions financed by Lessee), drainage
and all above-ground and underground utility structures) (collectively, the
"Leased Improvements");
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(c) all permanently affixed equipment, machinery, fixtures and other
items of real and/or personal property including all components thereof,
now and hereafter located in or on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and water
pollution control, waste disposal, air-cooling and air conditioning systems
and apparatus, sprinkler systems and fire and theft protection equipment,
carpet, moveable or immoveable walls or partitions and built-in oxygen and
vacuum systems, all of which are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items
included within the category of Personal Property (collectively the
"Fixtures");
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(d) the Personal Property;
(e) to the extent permitted by law, all permits, approvals and other
intangible property or any interest therein now or hereafter owned or held
by Lessor in connection with the Leased Property, including all contract
rights, agreements, water rights and reservations, zoning rights, business
licenses and warranties (including those relating to construction or
fabrication) related to the Leased Property or any part thereof; and
(f) all site plans, surveys, soil and substrata studies,
architectural drawings, plans and specifications, engineering plans and
studies, floor plans, landscape plans, and other plans and studies that
relate to the Land or the Improvements and are in Lessor's possession or
control;
SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached hereto
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(the "Permitted Exceptions"), to have and to hold for a fixed term of 15 years
(the "Fixed Term") commencing on April 12, 1995 (the "Commencement Date") and
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ending at midnight on the last day of the 180th month after the Commencement
Date.
ARTICLE II
RENT
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2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT. Lessee shall pay to
Lessor, without notice, demand, set off (except as set forth in Section 30.2
hereof) or counterclaim, in advance in lawful money of the United States of
America, at Lessor's address set forth herein or at such other place or to such
other person, firms or corporations as Lessor from time to time may designate in
writing, Minimum Rent, as adjusted annually pursuant to Section 2.1(b) during
the Term, as follows:
(a) Minimum Rent. Lessee will pay to Lessor as rent (as adjusted in
------------
accordance with clause (b) below, the "Minimum Rent") for the Leased Property
the annual sum of $1,026,00.00, payable in advance in 12 equal, consecutive
monthly installments of $85,500.00, on the first day of each calendar month
during the Term. Minimum Rent shall be prorated as to any partial month, and is
subject to adjustment as provided in Sections 9.3(b)(iv) and 20.1 below. The
prorated Minimum Rent for that portion of April, 1995, during which this Lease
is in effect is $54,150.00 and shall be paid upon the execution of this Lease.
(b) Increases to Minimum Rent. on each anniversary of the Commencement
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Date (each such anniversary being hereinafter referred to as an "Adjustment
Date"), commencing with the Adjustment Date occurring on April 1, 1996 and
continuing throughout the remainder of the Fixed Term and any Extended Terms,
the then-current Minimum Rent shall be increased effective as of such Adjustment
Date (i) in the case of the Adjustment Date occurring on April 1, 1996, by the
increase in the Consumer Price Index from the Commencement Date to the date
immediately preceding said Adjustment Date, and (ii) in the case of each
Adjustment Date thereafter, by the increase in the
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Consumer Price Index from the immediately preceding Adjustment Date to the date
immediately preceding such Adjustment Date; provided that in no event shall any
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such annual increase exceed three percent of the Minimum Rent in effect
immediately prior to such Adjustment Date.
(c) Payment of Minimum Rent. All payments of Minimum Rent shall be made in
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lawful money of the United States by wire transfer of same day funds to Lessor's
account # 0000040999 at First Commercial Bank, Birmingham, Alabama, ABA Routing
No. #▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, with advice to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ at (205)
967-2092 (or such other account or location specified by Lessor from time to
time in writing) on or before 2:00 p.m., Birmingham time, on any Business Day.
2.2 CALCULATION OF INCREASES TO MINIMUM RENT. On each Adjustment Date,
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Lessor will calculate the increase in the Minimum Rent for the one-year period
commencing with such Adjustment Date pursuant to the provisions of Section
2.1(b) hereof, and will provide Lessee written notice of same.
2.3 ADDITIONAL CHARGES. Lessee will also pay and discharge as and when due
all other amounts, liabilities, obligations and Impositions which Lessee assumes
or agrees to pay under this Lease and all fines, penalties, interest and costs
which may be added for non-payment or late payment of any such items
(collectively, the "Additional Charges"), and Lessor shall have all legal,
equitable and contractual rights, powers and remedies provided in this Lease,
by statute or otherwise, in the case of non-payment of the Additional Charges,
as well as the Minimum Rent. If any installment of Minimum Rent or Additional
Charges (but only as to those Additional Charges which are payable directly to
Lessor) shall not be paid within five Business Days after the date when due,
Lessee will pay Lessor on demand, as Additional Charges, (a) with respect to any
overdue installment of Minimum Rent, an amount equal to 10% of such
installment, and (b) with respect to any Additional Charges, interest (to the
extent permitted by law) computed at the Overdue Rate on the amount of such
installment, from the due date when due to the date of payment in full thereof.
In the event Lessor provides Lessee with written notice of failure to timely pay
any Additional Charges pursuant to Section 15.1(b) more than one time within any
twelve-month period, Lessee shall pay an administrative fee to Lessor in the
amount of $1,000.00 for each additional written notice Lessor gives pursuant to
Section 15.1(b) during the next twelve months. To the extent that Lessee pays
any Additional Charges to Lessor pursuant to any requirement of this Lease,
Lessee shall be relieved of its obligation to pay such Additional Charges to the
entity to which such Additional Charges would otherwise be due. Additional
Charges shall constitute Rent payable hereunder.
2.4 NET LEASE. The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the installments of Minimum
Rent and the payments of Additional Charges throughout the Term but subject to
any provisions of this Lease which expressly provide for payments by Lessor or
the adjustment of the Rent or other charges.
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ARTICLE III
IMPOSITIONS
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3.1 PAYMENT OF IMPOSITIONS. Subject to Article XI relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and Lessee will promptly upon
request furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. Lessee's obligation to pay such Impositions and
the amount thereof shall be deemed absolutely fixed upon the date such
Impositions become a lien upon the Leased Property or any part thereof. If any
such Imposition may lawfully be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof as the same become due and before any fine, penalty,
premium, further interest or cost may be added thereto. Lessor at its expense
shall, to the extent permitted by applicable law, prepare and file all tax
returns and reports as may be required by governmental authorities in respect of
Lessor's net income, gross receipts, franchise taxes and taxes on its capital
stock. Lessee at its expense shall, to the extent permitted by applicable laws
and regulations, prepare and file all other tax returns and reports in respect
of any Imposition as may be required by governmental authorities. If any refund
shall be due from any taxing authority in respect of any Imposition paid by
Lessee in respect of any period prior or subsequent to the date hereof, the same
shall be paid over to or retained by Lessee if no Event of Default shall have
occurred hereunder and be continuing. Any such funds retained by Lessor due to
an Event of Default shall be applied as provided in Article XV. Lessor and
Lessee shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to the Leased Property as may
be necessary to prepare any required returns and reports. In the event
governmental authorities classify any property covered by this Lease as personal
property, Lessee shall file all personal property tax returns in such
jurisdictions where filing is required. Lessor and Lessee will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal property. Where Lessor is
legally required to file personal property tax returns, and Lessee is obligated
for the same hereunder, Lessee will be provided with copies of assessment
notices in sufficient time for Lessee to file a protest. Lessee may, upon giving
30 days' prior written notice to Lessor, at Lessee's option and at Lessee's sole
cost and expense, protest, appeal, or institute such other proceedings as Lessee
may deem appropriate to effect a reduction of real estate or personal property
assessments and Lessor, if requested by Lessee and at Lessee's expense as
aforesaid, will cooperate with Lessee in such protest, appeal, or other action.
▇▇▇▇▇▇▇▇ for reimbursement by Lessee to Lessor of personal property taxes shall
be accompanied by copies of an invoice therefor and payments thereof which
identify the personal property with respect to which such payments are made.
Lessor will cooperate with Lessee in order that Lessee may fulfill its
obligations hereunder, including the execution of any instruments or documents
reasonably requested by Lessee.
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3.2 PRORATION OF IMPOSITIONS. Any Imposition imposed in respect of the
tax-fiscal period during which the Term terminates shall be prorated between
Lessor and Lessee, whether or not such Imposition is imposed before or after
such termination, and Lessee's and Lessor's obligation to pay their respective
prorated shares thereof shall survive such termination.
3.3 UTILITY CHARGES. Lessee will, or will cause Tenants to, contract for,
in its own name, and will pay or cause to be paid, all charges for, electricity,
power, gas, oil, water and other utilities used in the Leased Property during
the Term.
3.4 INSURANCE PREMIUMS. Lessee will contract for, in its own name, and
will pay or cause to be paid all premiums for, the insurance coverage required
to be maintained by Lessee pursuant to Article XII.
ARTICLE IV
NO TERMINATION
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Except as provided in this Lease, Lessee shall remain bound by this Lease
in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor, Lessee or
Guarantor be otherwise affected, by reason of (a) any damage to or destruction
of the Leased Property or any portion thereof from whatever cause, or any Taking
of the Leased Property or any portion thereof, (b) the lawful or unlawful
prohibition of or restriction upon Lessee's use of the Leased Property or any
portion thereof, or the interference with such use by any person, corporation,
partnership or other entity, or by reason of eviction by paramount title, (c)
any claim which Lessee has or might have against Lessor or by reason of any
default or breach of any warranty by Lessor under this Lease or any other
agreement between Lessor and Lessee or to which Lessor and Lessee are parties,
(d) any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution, winding up or other proceedings affecting Lessor or
any assignee or transferee of Lessor, or (e) for any other cause whatsoever,
whether similar or dissimilar to any of the foregoing. Lessee hereby
specifically waives all rights arising from any occurrence whatsoever which may
now or hereafter be conferred upon it by law to (i) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (ii) entitle Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Lessee hereunder, except as
otherwise specifically provided in this Lease. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim or seek any damages it may have against Lessor as a result of a breach by
Lessor of the terms of this Lease.
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ARTICLE V
OWNERSHIP OF LEASED PROPERTY
----------------------------
5.1 OWNERSHIP OF THE PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor and that Lessee has only the right to the
possession and use of the Leased Property upon the terms and conditions of this
Lease.
5.2 PERSONAL PROPERTY. Lessee may (and shall as provided hereinbelow), at
its expense, install, affix or assemble or place on any parcels of the Land or
in any of the Improvements any items of the Personal Property, and may remove,
replace or substitute for the same from time to time in the ordinary course of
Lessee's business. Lessee shall provide and maintain during the entire Term all
such Personal Property as shall be necessary in order to operate the Facility in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
ARTICLE VI
CONDITION AND USE OF LEASED PROPERTY
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6.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise acquired knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. Lessor
makes no warranty or representation, express or implied, in respect of the
Leased Property or any part thereof, either as to its fitness for use,
suitability, design or condition for any particular use or purpose or otherwise,
as to quality of the material or workmanship therein, latent or patent, it being
agreed that all such risks are to be borne by Lessee. Lessee acknowledges that
the Leased Property has been inspected by Lessee and is satisfactory to it in
all respects.
6.2 USE OF THE LEASED PROPERTY.
(a) After the Commencement Date and during the entire Term, Lessee shall
use or cause to be used the Leased Property and the improvements thereon as a
licensed comprehensive mental health hospital facility including a licensed
subacute care unit, and for such other uses as may be necessary in connection
with or incidental to such use (the "Primary Intended Use"). Lessee shall not
use the Leased Property or any portion thereof for any other use without the
prior written consent of Lessor.
(b) Lessee covenants and warrants that (i) it has obtained and will
maintain all Federal, state and local approvals, authorizations, consents and
permits necessary for the
6
use and operation of the Leased Property and the Facility for the Primary
Intended Use, (ii) it is and will remain fully qualified to participate in and
receive payment under private insurance programs having broad application and
federal, state and local governmental programs providing for payment or
reimbursement for services rendered, and (iii) it is and will remain accredited
by the Joint Commission on Accreditation on Health Care Organizations or any
successor organization providing like inspection and accreditation.
(c) Lessee covenants and agrees that during the Term it will continuously
operate the Leased Property in accordance with its Primary Intended Use and
maintain its certifications for reimbursement, licensure and accreditation.
(d) Lessee shall not commit or suffer to be committed any waste on the
Leased Property or in the Facility, or permit any nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, to be used in such a manner as (i) might reasonably tend to impair
Lessor's or Lessee's estate therein or in any portion thereof, or (ii) may
reasonably result in a claim or claims of adverse usage or adverse possession by
the public, as such, or of implied dedication of the Leased Property or any
portion thereof.
(f) Lessee will not utilize any Hazardous Materials on the Leased Property
except in accordance with applicable Legal Requirements and will not permit any
contamination which may require remediation under any applicable Hazardous
Materials Law. Lessee agrees not to dispose of any Hazardous Materials or
substances within the sewerage system of the Leased Property, and that it will
handle all "red bag" wastes in accordance with applicable Hazardous Materials
Laws.
6.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time, at the
request of Lessee and at Lessee's cost and expense, but subject to the approval
of Lessor (which approval will not be unreasonably withheld), (a) grant
easements and other rights in the nature of easements, (b) release existing
easements or other rights in the nature of easements which are for the benefit
of the Leased Property, (c) dedicate or transfer unimproved portions of the
Leased Property for road, highway or other public purposes, (d) execute
petitions to have the Leased Property annexed to any municipal corporation or
utility district, (e) execute amendments to any covenants and restrictions
affecting the Leased Property, and (f) execute and deliver such instruments as
may be necessary or appropriate to confirm or effect such grants, releases,
dedications and transfers (to the extent of its interest in the Leased
Property), but only upon delivery to Lessor of an Officer's Certificate stating
(and such other information as Lessor may reasonably require confirming) that
such grant, release, dedication, transfer, petition or amendment is required or
beneficial for and not detrimental to the proper conduct of the business of
Lessee on the Leased Property and does not reduce the value thereof.
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ARTICLE VII
LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
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7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XI relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all material Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require structural change in
any of the Leased Improvements or interfere with the use and enjoyment of the
Leased Property, and (b) directly or indirectly with the cooperation of Lessor,
but at Lessee's sole cost and expense, procure, maintain and comply with all
material licenses, certificates of need and other authorizations required for
(i) any use of the Leased Property then being made, and for (ii) the proper
erection, installation, operation and maintenance of the Leased Improvements or
any part thereof, including any Capital Additions.
7.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property shall not be used for any unlawful purpose. Lessee shall,
directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost
and expense, acquire and maintain all licenses, certificates, permits and other
authorizations and approvals needed to operate the Leased Property in its
customary manner for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder. Lessee further
covenants and agrees that Lessee's use of the Leased Property and Lessee's
maintenance, alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable Legal Requirements.
ARTICLE VIII
REPAIRS: RESTRICTIONS AND ANNUAL INSPECTIONS
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8.1 MAINTENANCE AND REPAIR; REMODELING.
(a) Lessee, at its expense, will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto in reasonably good order and
repair (whether or not the need for such repairs occurs as a result of Lessee's
use, any prior use, the elements, the age of the Leased Property or any portion
thereof), and except as otherwise provided in Articles XIII and XIV, with
reasonable promptness will make all necessary and appropriate repairs thereto of
every kind and nature (including remodeling to the extent necessary to maintain
the desirability of the Leased Property), whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition existing prior to or after the commencement
of the Term of this Lease (concealed or otherwise). All repairs and remodeling
shall, to the extent reasonably achievable, be at least equivalent in quality to
the original work and shall be accomplished by Lessee or a party selected by
Lessee. Lessee will not take or omit to take any action the taking or omission
of which might impair the value or usefulness of the Leased Property or any part
thereof for the Primary Intended Use. If Lessee fails to perform any of its
8
obligations hereunder, or if Lessor reasonably determines that action is
necessary and is not being taken, Lessor may, on giving thirty days' written
notice to Lessor (other than in a case reasonably deemed by Lessor to be an
emergency, in which no such notice shall be required), without demand on Lessee,
perform any such obligations in such manner and to such extent and take such
other action as Lessor may deem appropriate, and all costs, expenses and charges
of Lessor relating to any such action shall be payable by Lessee to Lessor in
accordance with Section 2.3.
(b) Except for the use of any insurance proceeds (to the extent required
by Sections 13.1 and 13.2 hereof) and any Award (to the extent required by
Section 14.3), Lessor shall not under any circumstances be required to build or
rebuild any improvements on the Leased Property, or to make any repairs,
replacements, alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto in connection with this Lease, or to maintain
the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as (i) constituting the consent or request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any particular labor or services or the
furnishing of any particular materials or other property for the construction,
alteration, addition, repair or demolition of or to the Leased Property or any
part thereof, or (ii) giving Lessee any right, power or permission to contract
for or permit the performance of any labor or services or the finishing of any
materials or other property in such fashion as would permit the making of any
claim against Lessor in respect thereof or to make any agreement that may
create, or in any way be the basis for, any right, title, interest, lien, claim
or other encumbrance upon the estate of Lessor in the Leased Property or any
portion thereof.
(d) Unless Lessor shall convey any of the Leased Property to Lessee
pursuant to the provisions of this Lease, Lessee will, upon the expiration or
prior termination of this Lease, vacate and surrender the Leased Property to
Lessor in the condition in which the Leased Property was originally received
from Lessor and except as repaired, rebuilt, restored, altered or added to as
permitted or required by the provisions of this Lease, except for ordinary wear
and tear (subject to the obligation of Lessee to maintain the Property in good
order and repair during the entire Term), damage caused by the gross negligence
or willful acts of Lessor, and damage or destruction described in Article XIII
or resulting from a Taking described in Article XIV which Lessee is not required
by the terms of this Lease to repair or restore.
8.2 ENCROACHMENTS; RESTRICTIONS. If any of the Improvements shall at any
time encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any
applicable Legal Requirement, restrictive covenant or other agreement affecting
the Leased Property, or any part thereof,
9
or shall impair the rights of others under any easement or right-of-way to which
the Leased Property is subject, then promptly upon the request of Lessor, Lessee
shall at its expense (a) obtain valid and effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee, or (b)
make such changes in the Improvements, and take such other actions, as Lessor in
the good faith exercise of its judgment deems reasonably practicable, to remove
such encroachment or to end such violation or impairment including, if
necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to continue the operation of
the Facility for the Primary Intended Use in the manner and to the extent the
Facility was operated prior to the assertion of such violation or encroachment.
Any such alteration shall be made in conformity with the applicable requirements
of Article IX. Lessee's obligations under this Section 8.2 shall be in addition
to and shall in no way discharge or diminish any obligation of any insurer under
any policy of title or other insurance and Lessee shall be entitled to a credit
for any sums recovered by Lessor under any such policy of title or other
insurance.
8.3 ANNUAL INSPECTIONS. During each year of the Term after the first
anniversary of the Commencement Date, Lessor and its agents shall have the
right to inspect the Leased Property and all systems contained therein at any
reasonable time to determine Lessee's compliance with its obligations under this
Lease, including those obligations set forth in Article VII and this Article
VIII. Lessee shall be responsible for the costs of such inspections, which costs
shall not exceed on an annual basis the sum of $1,500.00.
ARTICLE IX
CAPITAL ADDITIONS
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9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.
(a) If no Event of Default shall have occurred and be continuing, Lessee
shall have the right, upon and subject to the terms and conditions set forth
below, to construct or install Capital Additions on the Leased Property with the
prior written consent of Lessor; provided, however, that Lessor's consent shall
------------------
not be required for any Capital Addition the estimated cost of which, when added
to the estimated cost of all other Capital Additions commenced within the same
calendar year, does not exceed $50,000; and provided, further, that Lessee shall
------------------
not be permitted to create any Encumbrance on the Leased Property in connection
with such Capital Addition without first complying with Section 9.1(b) hereof.
Prior to commencing construction of any Capital Addition, Lessee shall submit to
Lessor in writing a proposal setting forth in reasonable detail any proposed
Capital Addition and shall provide to Lessor such plans and specifications,
permits, licenses, contracts and other information concerning the proposed
Capital Addition as Lessor may reasonably request. Without limiting the
generality of the foregoing, such proposal shall indicate the approximate
projected cost of constructing such Capital Addition and the use or uses to
which it will be put.
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(b) Prior to commencing construction of any Capital Addition (other than a
Capital Addition the Capital Addition Cost of which is reasonably projected by
Lessee not to exceed $100,000 or a Capital Addition financed solely by Lessee or
an Affiliate of Lessee), Lessee shall first request Lessor to provide funds to
pay for such Capital Addition in accordance with the provisions of Section 9.3.
If Lessor declines or is unable to provide such financing on terms acceptable to
Lessee in Lessee's sole discretion, or if Lessee is prohibited under the terms
of any material credit facility (after having made reasonable requests
thereunder) from borrowing from Lessor, then Lessee may arrange or provide other
financing, subject to the provisions of Section 9.2. Additionally, Lessor shall
reasonably cooperate with Lessee regarding the grant of any consents or
easements or the like necessary or appropriate in connection with any Capital
Addition; provided that no Capital Addition shall be made which would tie in or
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connect any Leased Improvements on the Leased Property with any other
improvements on property adjacent to the Leased Property (and not part of the
Land covered by this Lease), including tie-ins of buildings or other structures
or utilities, unless Lessee shall have obtained the prior written approval of
Lessor. All proposed Capital Additions shall be architecturally integrated and
consistent with the Property.
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee finances or arranges
to finance any Capital Addition with a party other than Lessor or if Lessee pays
cash for any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:
(a) There shall be no adjustment in the Minimum Rent by reason of any such
Capital Addition.
(b) Upon the expiration or earlier termination of this Lease, Lessor
shall compensate Lessee for all Capital Additions paid for or financed by Lessee
in any of the following ways:
(i) By purchasing all Capital Additions paid for by Lessee from
Lessee for cash in the amount of the Fair Market Added Value at the time of
purchase by Lessor of all such Capital Additions paid for or financed by
Lessee; or
(ii) Such other arrangement regarding such compensation as shall be
mutually acceptable to Lessor and Lessee.
Any amount owed by Lessee to Lessor under this Lease at such termination or
expiration may be deducted from any compensation for Capital Additions payable
by Lessor to Lessee under this Section 9.2.
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9.3 CAPITAL ADDITIONS FINANCED BY LESSOR.
(a) If so required by Section 9.1, Lessee shall request that Lessor
provide or arrange financing for a Capital Addition by providing to Lessor such
information about the Capital Addition as Lessor may reasonably request (a
"Request"), including all information referred to in Section 9.1 above. Lessor
may but shall be under no obligation to provide or obtain funds necessary to
meet the Request. Within 30 days of receipt of a Request, Lessor shall notify
Lessee as to whether it will finance the proposed Capital Addition and, if so,
the terms and conditions upon which it would do so, including the terms of any
amendment to this Lease. In the case of any proposed financing to be provided by
Lessor, in no event (i) shall the portion of the projected Capital Addition Cost
comprised of land (if any), materials, labor charges and fixtures be less than
90% of the total amount of such cost, or (ii) shall Lessee or any of its
Affiliates be entitled to any commission or development fee, directly or
indirectly, as a portion of the Capital Addition Cost. Any Capital Addition not
financed by Lessor must still be approved in writing by Lessor pursuant to the
terms of Section 9.1 hereof. Lessee may withdraw its Request by notice to Lessor
at any time before or after receipt of Lessor's terms and conditions.
(b) If Lessor agrees to finance the proposed Capital Addition, Lessor's
obligation to advance any funds shall be subject to receipt of all of the
following, in form and substance reasonably satisfactory to Lessor:
(i) such loan documentation as may be required by Lessor;
(ii) any information, certificates, licenses, permits or documents
requested by Lessor, or by any lender with whom Lessor has agreed or may
agree to provide financing, necessary to confirm that Lessee will be able
to use the Capital Addition upon completion thereof in accordance with the
Primary Intended Use, including all required federal, state or local
government licenses and approvals;
(iii) an Officer's Certificate and, if requested, a certificate from
Lessee's architect, setting forth in detail reasonably satisfactory to
Lessor the projected (or actual, if available) cost of the proposed Capital
Addition;
(iv) an amendment to this Lease, duly executed and acknowledged, in
form and substance satisfactory to Lessor and Lessee (the "Lease
Amendment"), containing such provisions as may be necessary or appropriate
due to the Capital Addition, including any appropriate changes in the legal
description of the Land and the Rent, all such changes to be mutually
agreed upon by Lessor and Lessee;
(v) a deed conveying title to Lessor to any land and improvements or
other rights acquired for the purpose of constructing the Capital Addition,
12
free and clear of any liens or encumbrances except those approved in
writing by Lessor and, both prior to and following completion of the
Capital Addition, an as-built survey thereof reasonably satisfactory to
Lessor;
(vi) endorsements to any outstanding policy of title insurance
covering the Leased Property or a supplemental policy of title insurance
covering the Leased Property reasonably satisfactory in form and substance
to Lessor (A) updating the same without any additional exceptions, except
as may be permitted by Lessor; and (B) increasing the coverage thereof by
an amount equal to the Fair Market Value of the Capital Addition (except to
the extent covered by the owner's policy of title insurance referred to in
subparagraph (vii) below);
(vii) if required by Lessor, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Lessor pursuant
to subparagraph (v), free and clear of all liens and encumbrances except
those approved by Lessor and (B) a lender's policy of title insurance
satisfactory in form and substance to Lessor and the Lending Institution
advancing any portion of the Capital Addition Cost ;
(viii) if required by Lessor upon completion of the Capital Addition,
an M.A I appraisal of the Leased Property; and
(ix) such other certificates (including endorsements increasing the
insurance coverage, if any, at the time required by Section 12.1),
documents, opinions of Lessee's counsel, appraisals, surveys, certified
copies of duly adopted resolutions of the Board of Directors of Lessee
authorizing the execution and delivery of the Lease Amendment and any other
instruments or documents as may be reasonably required by Lessor.
(c) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually consummated, Lessee shall pay the reasonable costs
and expenses of Lessor and any Lending Institution which has committed to
finance such Capital Addition paid or incurred in connection with the financing
of the Capital Addition, including (i) the fees and expenses of their respective
counsel, (ii) the amount of any recording or transfer taxes and fees, (iii)
documentary stamp taxes, if any, (iv) title insurance charges, (v) appraisal
fees, if any, and (vi) commitment fees, if any.
9.4 REMODELING AND NON-CAPITAL ADDITIONS. Lessee shall have the right and
the obligation to make additions, modifications or improvements to the Leased
Property which are not Capital Additions, including tenant improvements made in
connection with the Tenant Leases, from time to time as may reasonably be
necessary for its uses and purposes and to permit the Lessee to comply fully
with its obligations set forth in this Lease; provided that such action will be
--------
undertaken expeditiously, in a workmanlike manner and will not
13
significantly alter the character or purpose or detract from the value or
operating efficiency of the Leased Property and will not significantly impair
the revenue-producing capability of the Leased Property or adversely affect the
ability of the Lessee to comply with the provisions of this Lease. Title to all
non-Capital Additions, modifications and improvements shall, without payment by
Lessor at any time, be included under the terms of this Lease and, upon
expiration or earlier termination of this Lease, shall pass to and become the
property of Lessor.
9.5 Salvage. All materials which are scrapped or removed in connection
with the making of Capital Additions permitted by Section 9.1 or repairs
required by Article VIII . shall be or become the property of Lessee; provided
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that Lessor may require Lessee to dispose of such materials within 15 days.
ARTICLE X
LIENS
-----
Subject to the provisions of Article XI relating to permitted contests,
Lessee will not directly or indirectly create or suffer to exist and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in Exhibit B attached hereto, (c)
---------
restrictions, liens and other encumbrances which are consented to in writing by
Lessor, or any easements granted pursuant to the provisions of Section 6.3 of
this Lease, (d) liens for those taxes of Lessor which Lessee is not required to
pay hereunder, (e) subleases permitted by Article XXIII, (f) liens for
Impositions or for sums resulting from noncompliance with Legal Requirements so
long as (1) the same are not yet payable or are payable without the addition of
any fine or penalty or (2) such liens are in the process of being contested in
accordance with the provisions of Article XI, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
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60 days after the completion of the action (including any appeal from any
judgment rendered therein) giving rise to such lien and such reserve or other
appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor, or (2) any such liens are
in the process of being contested in accordance with the provisions of Article
XI, and (h) any Encumbrance placed on the Leased Property by Lessor.
ARTICLE XI
PERMITTED CONTESTS
------------------
Lessee, after ten days' prior written notice to Lessor, on its own or on
Lessor's behalf (or in Lessor's name), but at Lessee's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance,
charge or claim (collectively "Charge") not otherwise permitted by
14
Article X which is required to be paid or discharged by Lessee or any Tenant;
provided that (a) in the case of an unpaid Charge, the commencement and
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continuation of such proceedings, or the posting of a bond or certificate of
deposit as may be permitted by applicable law, shall suspend the collection
thereof from Lessor and from the Leased Property; (b) neither the Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; (c)
Lessor would not be in any immediate danger of civil or criminal liability for
failure to comply therewith pending the outcome of such proceedings; (d) in the
event that any such contest shall involve a sum of money or potential loss in
excess of $25,000.00, then Lessee shall deliver to Lessor and its counsel an
Officer's Certificate as to the matters set forth in clauses (a), (b) and (c)
and such opinions of legal counsel to Lessee as Lessor may request; (e) in the
case of an Insurance Requirement, the coverage required by Article XII shall be
maintained; and (f) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or otherwise comply with the applicable Charge; provided further that
----------------
nothing contained herein shall be construed to permit Lessee to contest the
payment of Rent, or any other sums payable by Lessee to Lessor hereunder.
Lessor, at Lessee's expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in any such
contest and, if reasonably requested by Lessee or if Lessor so desires and then
at its own expense, Lessor shall join as a party therein. Lessor shall do all
things reasonably requested by Lessee in connection with such action. Lessee
shall indemnify and save Lessor harmless against any liability, cost or expense
of any kind that may be imposed upon Lessor in connection with any such contest
and any loss resulting therefrom.
ARTICLE XII
INSURANCE
---------
12.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Lessee
shall at all times keep the Leased Property and all property located in or on
the Leased Property insured with the kinds and amounts of insurance described
below and written by companies reasonably acceptable to Lessor authorized to do
insurance business in the state in which the Leased Property is located. The
policies must name Lessor as an additional insured and losses shall be payable
to Lessor and/or Lessee as provided in Article XIII. In addition, the policies
shall name as an additional insured the holder ("Facility Mortgagee") of any
mortgage, deed of trust or other security agreement securing any Encumbrance
placed on the Leased Property or any part thereof in accordance with the
provisions of Article XXXII ("Facility Mortgage"), if any, by way of a standard
form of mortgagee's loss payable endorsement. Any loss adjustment in excess of
$50,000.00 shall require the written consent of Lessor and each affected
Facility Mortgagee. Evidence of insurance shall be deposited with Lessor and, if
requested, with any Facility Mortgagee(s). If any provision of any Facility
Mortgage which constitutes a first lien on the Leased Property requires deposits
of insurance to be made with such Facility Mortgagee, Lessee shall either pay to
Lessor monthly the amounts required and Lessor shall transfer such amounts to
such Facility
15
Mortgagee or, pursuant to written direction by Lessor, Lessee shall make such
deposits directly with such Facility Mortgagee. The policies on the Leased
Property, including the Leased Improvements, the Fixtures and the Personal
Property, shall insure against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief,
extended coverage perils commonly known as "All Risk" and all physical loss
perils, including sprinkler leakage and business interruption, in an amount
not less than the then Full Replacement Cost thereof (as defined below in
Section 12.2) after deductible with a replacement cost endorsement
sufficient to prevent Lessee from becoming a co-insurer together with an
agreed value endorsement;
(b) Loss or damage by explosion of steam boilers, pressure vessels or
similar apparatus now or hereafter installed in the Facility, in such
limits with respect to any one accident as may be reasonably requested by
Lessor from time to time;
(c) Loss of rental under a rental value insurance policy covering
risk of loss during the first 12 months of reconstruction necessitated by
the occurrence of any of the hazards described in Sections 12.1(a) or
12.1(b), in an amount sufficient to prevent Lessee from becoming a co-
insurer; provided that in the event that Lessee shall not be in default
--------
hereunder and Lessor shall receive any proceeds from such rental insurance
which, when added to rental amounts received with respect to the applicable
time period, exceed the amount of rental owed by Lessee hereunder, Lessor
shall immediately pay such excess to Lessee;
(d) Loss or damage by hurricane and earthquake in the amount of the
Full Replacement Cost, after deductible;
(e) Claims for personal injury or property damage under a policy of
comprehensive general public liability insurance including insurance
against assumed or contractual liability including indemnities under this
Lease, with amounts not less than $5,000,000.00 per occurrence in respect
of bodily injury and death and $10,000,000.00 for property damage; provided
--------
that if it becomes customary for tenants occupying similar buildings in the
same City where the Leased Property is located to be required to provide
liability coverage with higher limits than the foregoing, then Lessee shall
provide Lessor with an insurance policy with coverage limits that are not
less than such customary limits;
(f) Claims for personal injury under such policies of hospital
professional liability insurance and physicians malpractice and
professional liability insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
usually carried by providers of similar health care services in the same
general areas in which Lessee operates, provided that the first $500,000
--------
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of such insurance may be pursuant to a plan of self-insurance for which
adequate provision has been made; and
(g) Flood (when the Leased Property is located in whole or in part
within a designated flood plain area) and such other hazards and in such
amounts as may be customary for comparable properties in the area issued by
insurance companies authorized to do business in the state in which the
Leased Property is located.
If Lessee shall engage or cause to be engaged any contractor to perform work on
the Leased Property, Lessee shall require such contractor to carry and maintain
insurance coverage comparable to the foregoing requirements, at no expense to
Lessor; except that in cases where such coverage is excessive in light of the
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work being done, Lessee may allow any such contractor to carry or maintain
alternative coverage in reasonable amounts upon Lessor's prior written consent,
which shall not be unreasonably withheld.
12.2 REPLACEMENT COST. The term "Full Replacement Cost" as used herein
shall mean the actual replacement cost of the Facility from time to time,
including increased cost of construction endorsement, less exclusions provided
in the normal fire insurance policy. In the event Lessor or Lessee believes that
the Full Replacement Cost has increased or decreased at any time during the
Term, it shall have the right at its own expense to have such Full Replacement
Cost redetermined by the insurance company which is then providing the largest
amount of casualty insurance carried on the Leased Property, hereinafter
referred to as the "impartial appraiser". The party desiring to have the Full
Replacement Cost so redetermined shall forthwith, on receipt of such
determination by the impartial appraiser, give written notice thereof to the
other party hereto. The determination of such impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Article to the
amount so determined by the impartial appraiser.
12.3 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain such additional insurance as may be reasonably required
from time to time by any Facility Mortgagee which is consistent with insurance
coverage for similar buildings in the city where the Leased Property is located
or required pursuant to any applicable Legal Requirement, and shall at all times
maintain adequate worker's compensation insurance coverage for all persons
employed on the Leased Property, in accordance with all applicable Legal
Requirements.
12.4 WAIVER OF SUBROGATION. All insurance policies carried by either party
covering the Leased Property, the Fixtures, the Facility and/or the Personal
Property, including contents, fire and casualty insurance, shall expressly waive
any right of subrogation on the part of the insurer against the other party. The
parties hereto agree that their policies will include such a waiver clause or
endorsement so long as the same is obtainable without extra cost, and in the
event of such an extra charge the other party, at its election, may request and
pay the same, but shall not be obligated to do so.
17
12.5 FORM OF INSURANCE. All of the policies of insurance referred to
in this Section shall be written in form reasonably satisfactory to Lessor by
insurance companies reasonably satisfactory to Lessor; provided that the
--------
deductibles for insurance required by Sections 12.1(a) and (b) shall be no
greater than $50,000.00 and the deductible for coverage required by Section
12.1(c) shall be no greater than $100,000.00. Lessee shall pay all premiums
therefor, and deliver such policies or certificates thereof to Lessor prior to
their effective date (and, with respect to any renewal policy, at least 30 days
prior to the expiration of the existing policy). In the event of the failure of
Lessee to effect such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certificates thereof to Lessor
at the times required, Lessor shall be entitled, but shall have no obligation,
to enact such insurance and pay the premiums therefor, which premiums shall be
repayable by Lessee to Lessor upon written demand therefor, and failure to repay
the same shall constitute an Event of Default within the meaning of Section
15.1(c). Each insurer mentioned in this Section shall agree, by endorsement on
the policy or policies issued by it, or by independent instrument furnished to
Lessor, that it will give to Lessor prior written notice before the policy or
policies in question shall be altered, allowed to expire or canceled.
12.6 CHANGE IN LIMITS. In the event that Lessor shall at any time
reasonably and in good faith believe the limits of the personal injury, property
damage or general public liability insurance then carried to be insufficient,
the parties shall endeavor to agree on the proper and reasonable limits for such
insurance to be carried and such insurance shall thereafter be carried with the
limits thus agreed on until further change pursuant to the provisions of this
Section. If the parties shall be unable to agree thereon, the proper and
reasonable limits for such insurance shall be determined by an impartial third
party selected by the parties, the costs of which shall be divided equally
between the parties. Such redeterminations, whether made by the parties or by
arbitration, shall be made no more frequently than every year. Nothing herein
shall permit the amount of insurance to be reduced below the amount or amounts
reasonably required by any Facility Mortgagee.
12.7 BLANKET POLICY. 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 and maintained by Lessee; provided 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 provided further that the requirements of this Article XII are
----------------
otherwise satisfied.
12.8 NO SEPARATE INSURANCE. Without the prior written consent of Lessor,
Lessee shall not, on Lessee's own initiative or pursuant to the request or
requirement of any third party, take out separate insurance concurrent in form
or contributing in the event of loss with that required in this Article XII to
be furnished by, or which may reasonably be required by a Facility Mortgagee to
be furnished by, Lessee, or increase the amounts of any then-existing insurance
required under this Article XII by securing an additional policy or
18
additional policies, unless all parties having an insurable interest in the
subject matter of the insurance, including in all cases Lessor and all Facility
Mortgagees, are included therein as additional insureds and the loss is payable
under said insurance in the same manner as losses are required to be payable
under this Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then-existing insurance required under this Article XII by securing an
additional policy or additional policies.
ARTICLE XIII
FIRE AND CASUALTY
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13.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property or any portion thereof and insured under any
policy of insurance required by Article XII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 13.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair in accordance with this Article XIII after Lessee has
expended an amount equal to or exceeding the deductible under any applicable
insurance policy. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property shall be
retained by Lessee free and clear upon completion of any such repair and
restoration except as otherwise specifically provided below in this Article
XIII; provided that in the event neither Lessor nor Lessee is required or
--------
elects to repair or restore the Leased Property, then all such insurance
proceeds shall be retained by Lessor. All salvage resulting from any risk
covered by insurance shall belong to Lessee, including any salvage relating to
Capital Additions paid for by Lessee.
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED
BY INSURANCE.
(a) Except as provided in Section 13.7, if during the Term the Facility is
totally or partially destroyed from a risk covered by the insurance described in
Article XII and the Facility thereby is rendered Unsuitable for its Primary
Intended Use, Lessee shall have the option, by giving notice to Lessor within 60
days following the date of such destruction, to (i) apply all proceeds payable
with respect thereto to restore the Facility to substantially the same condition
as existed immediately before the damage or destruction or such other condition
consistent with the Primary Intended Use as may be approved by Lessor in
writing, which consent shall not be unreasonably withheld if such other
condition would not, in Lessor's good faith judgment, result in a reduction in
the value of the Leased Property or negatively affect the ability of Lessee to
pay Rent hereunder as and when due, or (ii) offer to substitute a new property
pursuant to and in accordance with the provisions of Article XX. In the event
Lessee does not make an offer or Lessor does not accept Lessee's offer to
substitute for the Leased Property within 30 days after the date of such offer,
Lessee shall either (i) within 3O days after the end of such 30-day period
(or, if no offer is made, within 60 days following the date of such destruction)
proceed to restore the Facility to
19
substantially the same condition as existed immediately before the damage or
destruction or such other condition consistent with the Primary Intended Use as
may be approved by Lessor in writing, which consent shall not be unreasonably
withheld if such other condition would not, in Lessor's good faith judgment,
result in a reduction in the value of the Leased Property or negatively affect
the ability of Lessee to pay Rent hereunder as and when due, or (ii) within 60
days after the end of such 30-day period (or, if no offer is made, within 60
days following the date of such destruction), acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Repurchase Price of the Leased
Property immediately prior to such damage or destruction.
(b) Except as provided in Section 13.7, if during the Term the Facility is
partially destroyed from a risk covered by the insurance described in Article
XII, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall restore the Facility to substantially the same
condition as existed immediately before the damage or destruction or such other
condition consistent with the Primary Intended Use as may be approved by Lessor
in writing, which consent shall not be unreasonably withheld if such other
condition would not, in Lessor's good faith judgment, result in a reduction in
the value of the Leased Property or negatively affect the ability of Lessee to
pay Rent hereunder as and when due. Such damage or destruction shall not
terminate this Lease; provided that if Lessee cannot within a reasonable time
--------
obtain all necessary governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need, after diligent
efforts to do so, in order to be able to perform all required repair and
restoration work and to operate the Facility for its Primary Intended Use in
substantially the same manner as immediately prior to such damage or
destruction, Lessee may either (i) offer pursuant to Article XX to substitute a
new property, substantially equivalent to the Leased Property immediately before
such damage or destruction, or (ii) after the fourth anniversary of the
Commencement Date, purchase the Leased Property for a purchase price equal to
the Minimum Repurchase Price of the Leased Property immediately prior to such
damage or destruction.
(c) In the event Lessor accepts Lessee's offer to purchase the Leased
Property or to provide a Substitute Property, this Lease shall terminate upon
payment of the purchase price and execution and delivery of all appropriate
documentation, or execution and delivery of all documents required in connection
with a Substitute Property under Article XX and Lessor shall remit to Lessee, or
allow Lessee a credit toward the purchase price in an amount equal to, all
insurance proceeds being held in trust by Lessor.
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 13.7 below, if during the Term the
Facility is totally or materially destroyed from a risk which is not covered by
Lessee's insurance described in Article XII (whether or not such damage or
destruction renders the Facility Unsuitable for Its Primary Intended Use),
Lessee at its option shall either (a) restore the Facility to substantially its
condition immediately before such damage or destruction or such other condition
consistent with the Primary Intended Use as may be approved by Lessor in
20
writing, which consent shall not be unreasonably withheld if such other
condition would not, in Lessor's good faith judgment, result in a reduction in
the value of the Leased Property or negatively affect the ability of Lessee to
pay Rent hereunder as and when due, and such damage or destruction shall not
terminate this Lease, or (b) acquire the Leased Property from Lessor for a
purchase price equal to the Minimum Repurchase Price immediately prior to such
damage or destruction or (c) if all of the criteria for such substitution are
satisfied, offer to substitute a new property substantially equivalent to the
Leased Property immediately before such damage or destruction pursuant to the
provisions of Article XX; provided, however, that if such damage or destruction
------------------
is not material in the reasonable opinion of Lessor, Lessee shall restore the
Leased Property.
13.4 LESSEE'S PROPERTY. Lessee shall use any insurance proceeds payable by
reason of any loss of or damage to any of the Personal Property to restore such
personal property to the Leased Property with items of substantially equivalent
value to the items being replaced.
13.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects to
restore the Facility as provided in Sections 13.2 or 13.3, Lessee shall also
restore the Personal Property as required pursuant to Section 13.4 and all
Capital Additions paid for or financed by Lessor. Insurance proceeds payable by
reason of damage to Capital Additions paid for or financed by Lessor shall be
paid to Lessor and Lessor shall hold such insurance proceeds in trust to pay the
cost of repairing or replacing such Capital Additions in the event Lessee does
not terminate this Lease or purchase or substitute for the Leased Property as
provided in Section 13.2 above.
13.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall remain unabated during any period required for
repair and restoration.
13.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections
13.2 or 13.3 to the contrary, if damage to or destruction of the Facility occurs
during the last 12 months of the Term, and if such damage or destruction cannot
be fully repaired and restored within the lesser of (i) six months or (ii) the
period remaining in the Term immediately following the date of loss, either
party shall have the right to terminate this Lease by giving notice to the other
within 30 days after the date of damage or destruction, in which event Lessor
shall be entitled to retain the insurance proceeds and Lessee shall pay to
Lessor on demand the amount of any deductible or uninsured loss arising in
connection therewith; provided that any such notice given by Lessor shall be
--------
void and of no force and effect if Lessee exercises an available option to
extend the Term for one Extended Term, or one additional Extended Term, as the
case may be, within 30 days following receipt of such termination notice.
13.8 WAIVER. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.
21
ARTICLE XIV
CONDEMNATION
------------
14:1 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XIV.
14.2 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking, and the
Minimum Rent and all Additional Charges paid or payable hereunder shall be
prorated and paid to the date of Taking.
14.3 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation such that the Facility is not thereby rendered
Unsuitable for Its Primary Intended Use, this Lease shall remain in effect, and
to the extent required by the last sentence of Section 14.5 Lessor shall make
available to Lessee the proceeds of any such Taking for the restoration of the
Leased Property to substantially the same condition as existed immediately
before such Taking or such other condition consistent with the Primary Intended
Use as may be approved by Lessor in writing, which consent shall not be
unreasonably withheld if such other condition would not, in Lessor's good faith
judgment, result in a reduction in the value of the Leased Property or
negatively affect the ability of Lessee to pay Rent hereunder as and when due.
If, however, the Facility is thereby rendered Unsuitable for Its Primary
Intended Use, Lessee shall have the right (a) to take such proceeds of any Award
as shall be necessary and restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking or such other condition consistent with the Primary
Intended Use as may be approved by Lessor in writing, which consent shall not be
unreasonably withheld if such other condition would not, in Lessor's good faith
judgment, result in a reduction in the value of the Leased Property or
negatively affect the ability of Lessee to pay Rent hereunder as and when due,
or (b) to offer to substitute a new property pursuant to and in accordance with
the provisions of Article XX. Lessee shall exercise its option by giving Lessor
notice thereof within 60 days after Lessee receives notice of the Taking. In the
event Lessee does not make an offer or Lessor does not accept Lessee's offer to
substitute for the Leased Property within 30 days after receipt of the notice
described in the preceding sentence, Lessee shall either (a) withdraw its offer
to substitute for the Leased Property and within 30 days after the end of such
30-day period (or, if no offer is made, within 60 days following the date of
such Taking) proceed to restore the Facility, to the extent possible, to
substantially the same condition as existed immediately before the partial
Taking or such other condition consistent with the Primary Intended Use as may
be approved by Lessor in writing, which consent shall not be unreasonably
withheld if such other condition would not, in Lessor's good faith judgment,
result in a reduction in the value of the Leased Property or negatively affect
the ability of Lessee to pay Rent hereunder as and when due, or (b) within 60
days after the end of such 30-day period (or, if no offer is made, within 60
days following the date of such Taking), acquire the Leased Property from Lessor
for a purchase
22
price equal to the Minimum Repurchase Price of the Leased Property immediately
prior to such Taking.
14.4 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 14.3, Lessee
shall accomplish all necessary restoration.
14.5 AWARD DISTRIBUTION. In the event Lessor accepts Lessee's offer
substitute a new property for the Leased Property or Lessee purchases the Leased
Property pursuant to Section 14.3 above, the entire Award shall belong to Lessee
and Lessor agrees to assign to Lessee all of its rights thereto. Except as
otherwise provided in Section 14.3 above, in any other event, the entire Award
shall belong to and be paid to Lessor, except that, if this Lease is terminated,
and subject to the rights of the Facility Mortgagee, Lessee shall be entitled to
receive from the Award, if and to the extent there is included in such Award any
sum attributable to the Capital Additions for which Lessee would be entitled to
reimbursement at the end of the Term pursuant to the provisions of Section
9.2(b). If Lessee is required or elects to restore the Facility, Lessor agrees
that, subject to the rights of the Facility Mortgagees (as limited by clause (c)
of the second proviso of Article XXXIII), its portion of the Award shall be used
-------
for such restoration and it shall hold such portion of the Award in trust for
application to the cost of the restoration.
14.6 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six months. During any such six-month period all the
provisions of this Lease shall remain in full force and effect and the Rent
shall not be abated or reduced during such period of Taking; provided that
--------
Lessee will receive any compensation from the Taking authority as a result of
such temporary Taking.
ARTICLE XV
DEFAULT
-------
15.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute events of default (individually, an "Event of Default"
and, collectively, "Events of Default") hereunder:
(a) Lessee shall fail to make a payment of the Rent payable by Lessee
under this Lease within five (5) Business Days of the date when due; or
(b) Lessee or Guarantor shall fail to observe or perform any other term,
covenant or condition of this Lease, the Guaranty or any other document executed
in connection therewith, and either (i) such failure shall continue for more
than 30 days after notice thereof is given by Lessor to such party, unless such
failure is not reasonably capable of being cured within such 30-day period (but
is reasonably capable of being cured within 60
23
days after such notice) and such party commences action to cure such failure
within such 30-day period and diligently and continuously prosecutes such action
to completion and causes such failure to be cured within 60 days after such
notice (or within 90 days after such notice, in the event that Unavoidable
Delays prevent completion within 60 days), or (ii) such failure is not
reasonably capable of being cured within 60 days after such notice of such
failure is given; or
(c) Lessee or Guarantor shall:
(i) admit in writing its inability to pay its debts generally as
they become due.
(ii) file a petition in bankruptcy or a petition to take advantage
of any insolvency law,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property,
(v) file a petition or answer seeking reorganization or arrangement
under the Federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof, or
(vi) be in default with respect to any Indebtedness in the
outstanding amount of (i) in the case of Lessee, at least $50,000, and (ii)
in the case of Guarantor, at least $1,000,000, which default shall have
resulted in an acceleration of the maturity of such Indebtedness; or
(d) An event of default shall occur under any other lease between Lessor
and Lessee or under the RHCI Lease or any other documents executed by RHCI or
any guarantor of the RHCI Lease in connection therewith; or
(e) Lessee shall attempt to make any assignment or sublease in violation
of Section 23.1 hereof; or
(f) As at the end of each fiscal quarter, commencing with the fiscal
quarter ending June 30, 1995, Lessee shall fail to maintain a Cash Flow Coverage
Ratio of at least 1.5 to 1.0 for the twelve-month period then ended; or
(g) As of the end of each fiscal quarter, commencing with the fiscal
quarter ending June 30, 1995, Lessee shall fail to maintained a Combined Cash
Flow Coverage Ratio of at least 1.15 to 1.0 at the end of each fiscal quarter
for the twelve-month period then ended; provided that a default under this
--------
clause (g) with respect to any twelve-month
24
period shall not constitute an Event of Default hereunder if at the time of such
default (i) RHCI shall have maintained, based on audited Financial Statements, a
Cash Flow Coverage Ratio of 1.5 to l.0 for a period of two consecutive fiscal
years ending on or subsequent to June 30, 1997, and (ii) during such two-year
period Lessee shall have maintained a Cash Flow Coverage Ratio of at least 1.5
to 1.0 and a Combined Cash Flow Coverage Ratio of at least 1.15 to l.0.
15.2 REMEDIES. If an Event of Default shall have occurred, Lessor may, at
its election, then or at any time thereafter, pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without further notice or demand, except as
hereinafter provided:
(a) Without any notice or demand whatsoever, Lessor may take any one or
more actions permissible at law to ensure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee abandons or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease. Lessor shall use reasonable efforts to relet but shall have no
absolute obligation to relet. If Lessor does, at its sole discretion, elect to
relet the Leased Property, such action by Lessor shall not be deemed as an
acceptance of Lessee's surrender of the Leased Property unless Lessor expressly
notifies Lessee of such acceptance in writing, Lessee hereby acknowledging that
Lessor shall otherwise be reletting as Lessee's agent. It is further agreed in
this regard that in the event of any Event of Default described in this Article
XV, Lessor shall have the right to enter upon the Leased Property and do
whatever Lessee is obligated to do under the terms of this Lease; and Lessee
agrees to reimburse Lessor on demand for any reasonable expenses which Lessor
may incur in thus effecting compliance with Lessee's obligations under this
Lease, and further agrees that Lessor shall not be liable for any damages
resulting to Lessee from such action, except as may result from Lessor's gross
negligence or willful misconduct.
(b) Lessor may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearage in rent (including any interest
which may have accrued pursuant to Section 2.3 of this Lease or otherwise),
enter upon and take possession of the Leased Property and expel or remove Lessee
and any other person who may be occupying said premises or any part thereof. In
addition, Lessee agrees to pay to Lessor on demand the amount of all loss and
damage which Lessor may suffer by reason of any termination effected pursuant to
this subsection (b), said loss and damage to be determined, at Lessor's option,
by either of the following alternative measures of damages:
(i) Although Lessor shall be under no absolute obligation to attempt
and shall be obligated only to use reasonable efforts to relet the Leased
Property, until the Leased Property is relet Lessee shall pay to Lessor
25
on or before the first day of each calendar month the monthly rentals and
other charges provided in this Lease. After the Leased Property has been
relet by Lessor, Lessee shall pay to Lessor on the 5th (fifth) day of each
calendar month the excess, if any, of the monthly rentals and other charges
provided in this Lease for the preceding calendar month over the monthly
rentals and other charges actually collected by Lessor for such month. If
it is necessary for Lessor to bring suit in order to collect any
deficiency, Lessor shall have a right to allow such deficiencies to
accumulate and to bring an action on several or all of the accrued
deficiencies at one time. Any such suit shall not prejudice in any way the
right of Lessor to bring a similar action for any subsequent deficiency or
deficiencies. Any amount collected by Lessor from subsequent tenants for
any calendar month in excess of the monthly rentals and other charges
provided in this Lease shall be credited to Lessee in reduction of Lessee's
liability for any calendar month for which the amount collected by Lessor
will be less than the monthly rentals and other charges provided in this
Lease, but Lessee shall have no right to such excess other than the above
described credit; or
(ii) When Lessor desires, Lessor may demand a final settlement not
to exceed the Minimum Repurchase Price at the time of such final
settlement. Upon demand for a final settlement, Lessor shall have a right
to, and Lessee hereby agrees to pay, the difference between (a) the total
of all monthly rentals and other charges provided in this Lease for the
remainder of the Term and (b) the reasonable rental value of the Leased
Property for such period (including a reasonable time to relet the Leased
Property), as determined pursuant to the provisions of Article XXVIII
hereof, such difference to be discounted to present value at a rate equal
to the lowest rate of capitalization (highest present worth) reasonably
consistent with industry standards at the time of such determination and
allowed by applicable law.
The rights and remedies of Lessor hereunder are cumulative, and pursuit of
any of the above remedies shall not preclude pursuit of any other remedies
prescribed in other sections of this Lease and any other remedies provided by
law or equity. Forbearance by Lessor to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Event of Default.
l5.3 ADDITIONAL EXPENSES. In addition to payments required pursuant to
subsections (a) and (b) of Section 15.2 above, Lessee shall compensate Lessor
for all reasonable expenses incurred by Lessor in repossessing the Leased
Property (including any increase in insurance premiums caused by the vacancy of
the Leased Property), all reasonable expenses incurred by Lessor in reletting
(including repairs, remodeling, replacements, advertisements and brokerage
fees), all reasonable concessions granted to a new tenant upon reletting
(including renewal options), all fees and expenses incurred by Lessor as a
direct or indirect result of any appropriate action by a Facility Mortgagee, any
26
expenses of Lessor incurred for the installation of separate lines or meters for
any public utilities not previously metered separately from adjacent property of
Lessee and a reasonable allowance for Lessor's administrative efforts, salaries
and overhead attributable directly or indirectly to Lessee's default and
Lessor's pursuing the rights and remedies provided herein and under applicable
law.
l5.4 WAIVER. If this Lease is terminated pursuant to law or the provisions
of this Article XV, Lessee waives, to the extent permitted by applicable law,
(a) any right of redemption, reentry or repossession and (b) the benefit of any
laws now or hereafter in force exempting property from liability for rent or for
debt.
l5.5 APPLICATION OF FUNDS. All payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.
l5.6 NOTICES BY LESSOR. The provisions of this Article XV concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if it shall generally apprise
Lessee of the nature and approximate extent of any default.
ARTICLE XVI
LESSOR'S RIGHT TO CURE
----------------------
If Lessee, without the prior written consent of Lessor, shall fail to make
any payrnent, or to perform any act required to be made or performed under this
Lease and to cure the same within the relevant time periods provided in Section
15.l, Lessor, without waiving or releasing any obligation or Event of Default,
may (but shall be under no obligation to) make such payment or perform such act
for the account and at the expense of Lessee, and may, to the extent permitted
by law, enter upon the Leased Property for such purpose and take all such action
thereon as, in Lessor's opinion, may be necessary or appropriate therefor. No
such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor,
together with a late charge thereon (to the extent permitted by law) at the
overdue Rate from the date on which such sums or expenses are paid or incurred
by Lessor, and all costs and expenses (including reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by Lessee to Lessor on demand. The obligations of Lessee and rights of
Lessor contained in this Article shall survive the expiration or earlier
termination of this Lease.
27
ARTICLE XVII
PURCHASE OF THE LEASED PROPERTY
-------------------------------
In the event Lessee purchases the Leased Property from Lessor pursuant to
any of the terms of this Lease, Lessor shall, upon receipt from Lessee of the
applicable purchase price, together with full payment of any unpaid Rent due
and payable with respect to any period ending on or before the date of the
purchase and any other amounts owing to Lessor hereunder, deliver to Lessee an
appropriate special warranty deed (in substantially the same form used to convey
the Leased Property to Lessor) and any other documents reasonably requested by
Lessee to convey the interest of Lessor in and to the Leased Property to Lessee,
and such other standard documents usually and customarily prepared in connection
with such transfers, free and clear of all encumbrances other than (a) those
that Lessee has agreed hereunder to pay or discharge, (b) those mortgage liens,
if any, which Lessee has agreed in writing and in its discretion to accept and
to take title subject to, (c) any other Encumbrances permitted to be imposed on
the Leased Property under the provisions of Article XXXII which are assumable at
no cost to Lessee, and (d) any matters affecting the Leased Property on or as of
the Commencement Date. The difference between the applicable purchase price and
the total of the encumbrances assigned or taken subject to shall be paid in cash
to Lessor, or as Lessor may direct, in federal or other immediately available
funds except as otherwise mutually agreed by Lessor and Lessee. The closing of
any such sale shall be contingent upon and subject to Lessee obtaining all
required governmental consents and approvals for such transfer. If such sale
shall fail to be consummated by reason of the inability of Lessee to obtain
all such approvals and consents, any options to extend the Term which otherwise
would have expired during the period from the date when Lessee elected or became
obligated to purchase the Leased Property until Lessee's inability to obtain the
approvals and consents is confirmed shall be deemed to remain in effect for 30
days after the end of such period. The closing with respect to any such sale
shall be appropriately timed to accommodate the determination of the Minimum
Repurchase Price in accordance with Article XXVIII. All expenses of such
conveyance, including the cost of title examination or standard coverage title
insurance, attorneys' fees incurred by Lessor in connection with such
conveyance, and transfer taxes, shall be paid by Lessor. Recording fees and
similar charges shall be paid for by Lessee. Additionally, any sale to Lessee
shall be subject to delivery of an opinion of Lessor's counsel confirming that
(i) the sale will not result in ordinary recapture income to the Lessor pursuant
to Code Section 1245 or 1250 or any other Code provision, (ii) the sale will
result in income, if any, to the Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or in the tax imposed under Code Section 857(b)(6), and
(iii) the sale, together with all other substitutions and sales made or
requested by Lessee pursuant to any other leases with Lessor of properties
hereto or any other transfers of the Leased Property or the properties leased
under other such operating leases, during the relevant time period, will not
jeopardize the qualification of Lessor as a real estate investment trust under
Code Sections 856-860. In the event that Lessor's counsel cannot deliver such an
opinion, the parties hereto agree to endeavor to enter into an alternate
arrangement such that the economic benefits conferred upon the
28
parties under this Lease are not impaired (such arrangements to include, by way
of example and not limitation, deferral of the conveyance until such time as
such opinion can be delivered).
ARTICLE XVIII
HOLDING OVER
------------
If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time lessee shall pay
as rental each month an amount equal to the sum of (a) 150% of the aggregate of
1/12 of the aggregate Minimum Rent payable with respect to the last complete
year prior to the expiration of the Term plus (b) all Additional Charges
----
accruing during such month plus (c) all other sums, if any, payable pursuant to
----
the provisions of this Lease with respect to the leased Property. During such
period of tenancy, Lessee and Lessor shaLl be obligated to perform and observe
all of the terms, covenants and conditions of this Lease and to continue its
occupancy and use of the Leased Property. Nothing contained herein shall
constitute the consent, express or implied, of Lessor to the holding over of
Lessee after the expiration or earlier termination of this Lease.
ARTICLE XIX
ABANDONMENT: OBSOLESCENCE
-------------------------
19.1 DISCONTINUANCE OF OPERATIONS ON THE LEASED PROPERTY; SUBSTITUTION. If
Lessee has discontinued use of the Leased Property for its Primary Intended Use
for 90 consecutive days without Lessor's prior written consent, for alterations
or remodeling pursuant to Article IX or otherwise, Lessee, if Lessor has not
terminated this Lease as provided in Section 15.1, will offer to substitute a
new property or properties pursuant to and in accordance with the provisions of
Article XX, on the first Payment Date occurring not less than 120 days after the
date of such discontinuance of business operations.
19.2 OBSOLESCENCE OF THE LEASED PROPERTY; PURCHASE. If the Leased Property
becomes Unsuitable for its Primary Intended Use, all as set forth in an
officer's Certificate delivered to Lessor, and if Lessor has not terminated this
Lease as provided in Section 15.1, Lessee may after the fifteenth anniversary of
the Commencement Date purchase the Leased Property for a purchase price equal to
the Minimum Repurchase Price on the first Payment Date occuring not less than
120 days after the date of such officer's Certificate.
19.3 CONVEYANCE OF LEASED PROPERTY. In the event Lessee elects to purchase
the Leased Property pursuant to Section 19.2, then on the first Payment Date
occurring not less than 120 days after the date of the Officer's Certificate
referred to in Section 19.2, Lessor shall, upon receipt from Lessee of the
purchase price provided for above and any Rent or other sums then due and
payable under this Lease (excluding the installment of Minimum Rent due on the
date of conveyance), convey the Leased Property to Lessee on such date
29
in accordance with the provisions of Article XVII and this Lease shall thereupon
terminate as to the Leased Property.
ARTICLE XX
SUBSTITUTION OF PROPERTY
------------------------
20.1 SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY.
(a) In the event a right or requirement of substitution of the leased
property arises as a result of (i) damage or destruction of the Leased Property
as set forth in Article XIII hereof, (ii) a Taking of a portion of the Leased
Property as set forth in Section 143 hereof, or (iii) the discontinuance of the
use of the Leased Property as set forth in Section 19.1 hereof, and provided
--------
that no Event of Default shall have occurred and be continuing, Lessee shall
have the right (subject to fulfillment of the conditions set forth below in this
Article XX and upon notice to Lessor) to substitute one or more properties
(collectively referred to as "Substitute Properties" or individually as a
"Substitute Property") on a monthly Payment Date specified in such notice
(the "Substitution Date") occurring not less than 90 days after receipt by
Lessor of such notice. The notice shall be in the form of an Officer's
Certificate and shall specify the reason(s) for the proposed substitution and
the proposed Substitution Date. Notwithstanding anything contained herein to the
contrary, any other substitution for the Leased Property shall require the prior
written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.l(a) above,
Lessee shall present to Lessor one or more properties (or groups of properties)
each of which property (or groups of properties) shall provide Lessor with a
yield (i.e., an annual return on its equity in such property) not less than
-----
Lessor's yield from the Leased Property at the time of such proposed
substitution (or in the case of substitution because of damage or destruction,
the yield immediately prior to such damage or destruction) and as reasonably
projected over the remaining Term of this Lease and shall have a Fair Market
Value substantially equivalent to the Fair Market Value of the Leased Property.
Lessor shall have a period of 90 days within which to review such information
and either accept or reject the Substitute Properties so presented unless Lessee
is required by a court order or administrative action to divest or otherwise
dispose of the Leased Property within a shorter time period, in which case the
time period shall be shortened appropriately to meet the reasonable needs of
Lessee, but in no event shall said period be less than 30 Business Days after
Lessor's receipt of said notice (subject to further extension for any period of
time in which Lessor is not timely provided with the information provided for
--------
in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend
that the Substitute Properties fail to meet all the conditions for substitution
set forth in this Article XX, including the provisions of Sections 20.1(d), (e)
and (f) below, the matter shall be submitted to arbitration in accordance with
Article XXXI and the time periods for Lessor's approval or rejection shall be
tolled during the period of such arbitration.
30
(c) In the event that on or before the expiration of the applicable time
period for Lessor's review, Lessor has rejected the Substitute Property or
Properties so presented, then Lessee shall, for a period of 60 days after the
expiration of such period, have the right to terminate this Lease as to the
Leased Property upon notice to Lessor accompanied by an offer to purchase the
Leased Property on the first Payment Date occurring at least 90 days after the
date of such notice, as specified in such notice, for a purchase price equal to
the greater of the Fair Market Value Purchase Price or the Minimum Repurchase
Price, and this Lease shall terminate on the purchase date.
(d) Lessee's right to offer substitution as set forth in this Article XX
is subject to the conditions set forth in Section 20.2 below, and to the
delivery of an opinion of counsel for Lessor confirming that (i) the
substitution of the Substitute Property for the Leased Property will qualify as
an exchange solely of property of a like-kind under Section 1031 of the Code,
in which, generally, except for "boot" such as cash needed to equalize exchange
values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii)
the substitution or sale will not result in ordinary recapture income to Lessor
pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the
substitution or sale will result in income, if any, to Lessor of a type
described in Code Section 856(c)(2) or 856(c)(3) and will not result in income
of the types described in Code Section 856(c)(4) or result in the tax imposed
under Code Section 857(b)(6), and (iv) the substitution or sale, together with
all other substitutions and sales made or requested by Lessee pursuant to any
other leases with Lessor of properties hereto or any other transfers of the
Leased Property or the properties leased under other such operating leases,
during the relevant time period, will not jeopardize the qualification of Lessor
as a real estate investment trust under Code Sections 856-860.
(e) In the event that the equity value of the Substitute Property or
group of Substitute Properties (i.e., the Fair Market Value of the Substitute
Property or group of Substitute Properties minus the encumbrances subject to
which Lessor will take the Substitute Property or group of Substitute
Properties) as of the Substitution Date is greater than the equity value of the
Leased Property (i.e., the Fair Market Value of the Leased Property minus the
encumbrances subject to which Lessee will take the Leased Property) as of the
Substitution Date (or in the case of damage or destruction, the Fair Market
Value immediately prior to such damage or destruction), Lessor shall pay to
Lessee an amount equal to the difference, subject to the limitation set forth
below. In the event that said equity value of the Substitute Property or group
of Substitute Properties is less than said equity value of the Leased Property,
Lessee shall pay to Lessor an amount equal to the difference, subject to the
limitation set forth below. Notwithstanding the foregoing, neither Lessor nor
Lessee shall be obligated to consummate any such substitution if such party
would be required to make a payment to the other in excess of an amount equal
to ten percent of the Fair Market Value of the Leased Property (the amount of
cash paid by one party to the other being hereinafter referred to as the "Cash
Adjustment").
31
(f) The Rent for such Substitute Property in all respects shall
provide Lessor with a yield at the time of such substitution (i.e., annual
return on its investment in such Substitute Property) not less than the Current
Yield (and reasonably expected to be received thereafter throughout the Term of
this Lease) from the Leased Property, taking into account the Cash Adjustment
paid or received by Lessor and any other relevant factors.
(g) The Minimum Repurchase Price of the Substitute Property shall be an
amount equal to the Minimum Repurchase Price of the Leased Property (i)
increased by any Cash Adjustment paid by Lessor pursuant to paragraph (e) above,
or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to paragraph
(e) above.
20.2 CONDITIONS TO SUBSTITUTION. On the Substitution Date, the Substitute
Property will become the Leased Property hereunder upon delivery by Lessee to
Lessor of the following items in form and substance reasonably satisfactory to
Lessor:
(a) an Officer's Certificate certifying that (i) the Substitute Property
has been accepted by Lessee for all purposes of this Lease and there has been no
material damage to the improvements located on the Substitute Property nor is
any condemnation or eminent domain proceeding pending with respect thereto;
(ii) all permits, licenses and certificates (including a permanent,
unconditional certificate of occupancy and, to the extent permitted by law, all
certificates of need and licenses) which are necessary to permit the use of the
Substitute Property in accordance with the provisions of this Lease have been
obtained and are in full force and effect; (iii) under applicable zoning and use
laws, ordinances, rules and regulations the Substitute Property may be used for
the purposes contemplated by Lessee and all necessary subdivision approvals have
been obtained; (iv) there are no mechanic's or materialmen's liens outstanding
or threatened to the knowledge of Lessee against the Substitute Property arising
out of or in connection with the construction of the improvements thereon, other
than those being contested by Lessee pursuant to Article XI; (v) any mechanic's
or materialmen's liens being contested by Lessee will be promptly paid by Lessee
if such contest is resolved in favor of the mechanic or materialman; (vi) to the
best knowledge of Lessee, there exists no Event of Default under this Lease, and
no defense, offset or claim exists with respect to any sums to be paid by Lessee
hereunder; and (vii) any exceptions to Lessor's title to the Substitute Property
do not materially interfere with the intended use of the Substitute Property by
Lessee;
(b) a special warranty deed with warranties against claims arising under
Lessee conveying to Lessor title to the Substitute Property free and clear of
any liens and encumbrances except those approved in writing or assumed by
Lessor;
(c) a lease duly executed, acknowledged and delivered by Lessee containing
the same terms and conditions as are contained herein except that (i) the legal
description of the Land shall refer to the Substitute Property, (ii) the Minimum
Repurchase Price, Rent and any Additional Charges for the Substitute Property
shall be consistent with the
32
requirements of Section 20.1, and (iii) such other changes therein as may be
necessary or appropriate under the circumstances shall be made;
(d) a standard owner's or lessee's (as applicable) policy of title
insurance covering the Substitute Property (or a valid, binding, unconditional
commitment therefor), dated the Substitution Date, in current form and
including mechanics' and materialmen's lien coverage, issued to Lessor by a
title insurance company reasonably satisfactory to Lessor. Such policy shall (i)
insure (A) Lessor's fee title to the Substitute Property, subject to no liens or
encumbrances except those approved or assumed by Lessor, and (B) that any
restrictions affecting the Substitute Property have not been violated and that a
further violation thereof will not result in a forfeiture or reversion of title,
(ii) be in an amount at least equal to the Fair Market Value of the Substitute
Property, and (iii) contain such endorsements as may be reasonably requested by
Lessor;
(e) certificates of insurance with respect to the Substitute Property
fulfilling the requirements of Article XII;
(f) current appraisals or other evidence satisfactory to Lessor, in its
sole discretion, as to the current Fair Market Values of such Substitute
Property;
(g) all available revenue data relating to the Substitute Property for the
period from the date of opening for business of the Facility on such Substitute
Property to the date of Lessee's most recent Fiscal-Year end, or for the most
recent three years, whichever is less; and
(h) such other certificates, documents, opinions of counsel and other
instruments as may be reasonably required by Lessor.
20.3 CONVEYANCE TO LESSEE. on the Substitution Date or the date specified
in the notice given pursuant to Section 20.1 Lessor will convey the Leased
Property to Lessee in accordance with the provisions of Article XVII (except as
to payment of any expenses in connection therewith which shall be governed by
Section 20.4 below) upon either (a) payment in cash therefor or (b) conveyance
to Lessor of the Substitute Property, as appropriate.
20.4 EXPENSES. Lessee shall pay or cause to be paid, on demand, all
reasonable costs and expenses paid or incurred by Lessor in connection with the
substitution and conveyance of the Leased Property and the Substitute Property,
including without limitation (a) fees and expenses of Lessor's counsel, (b) the
amount of any recording taxes and fees, (c) the cost of preparing and recording,
if appropriate, a release of the Leased Property from the lien of any mortgage,
(d) broker's fees and commissions for Lessee, if any, (e) documentary stamp and
transfer taxes, if any, (f) title insurance charges, and (h) escrow fees, if
any.
33
ARTICLE XXI
RISK OF LOSS
------------
Except as otherwise provided in this Lease, during the Term of this Lease,
the risk of loss or of decrease in the enjoyment and beneficial use of the
Leased Property in consequence of the damage or destruction thereof by fire, the
elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than by Lessor and those
claiming from, through or under Lessor) is assumed by Lessee, and Lessor shall
in no event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of Rent except as
specifically provided in this Lease.
ARTICLE XXII
INDEMNIFICATION
---------------
Notwithstanding the existence of any insurance or self insurance provided
for in Article XII, and without regard to the policy limits of any such
insurance or self insurance, Lessee will protect, indemnify, save harmless and
defend Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable attorneys'
fees and expenses), to the extent permitted by law, imposed upon or incurred by
or asserted against Lessor by reason of: (a) any accident, injury to or death of
persons or loss to property occurring on or about the Leased Property, including
any claims of malpractice, (b) any use, misuse, no use, condition, maintenance
or repair by Lessee of the Leased Property, (c) any Impositions (which are the
obligations of Lessee to pay pursuant to the applicable provisions of this
Lease), (d) any failure on the part of Lessee to perform or comply with any of
the terms of this Lease, (e) the non-performance of any of the terms and
provisions of any and all existing and future subleases of the Leased Property
to be performed by Lessee as landlord thereunder and (f) the violation of any
Hazardous Materials Law, in each case of (a) through (f) above occurring while
this Lease is in effect or Lessee is in possession of the Leased Property or any
part thereof Any amounts which become payable by Lessee under this Section
shall be paid within 20 days after liability therefor on the part of Lessor is
finally determined by litigation or otherwise (including the expiration of any
time for appeals) and, if not timely paid, shall bear interest (to the extent
permitted by law) at the overdue Rate from the date of such determination to
the date of payment. Lessee, at its expense, shall contest, resist and defend
any such claim, action or proceeding asserted or instituted against Lessor or
may compromise or otherwise dispose of the same as Lessee sees fit. Lessor shall
cooperate with Lessee in a reasonable manner to permit Lessee to satisfy
Lessee's obligations hereunder, including the execution of any instruments or
documents reasonably requested by Lessee. Nothing herein shall be construed as
indemnifying Lessor or its agents for their own negligent acts or omissions or
willful misconduct. Lessee's liability for a breach of the provisions of this
Article shall survive any termination of this Lease.
34
ARTICLE XXIII
SUBLETTING AND ASSIGNMENT
-------------------------
23.1 SUBLETTING AND ASSIGNMENT. Without the prior written consent of
Lessor, Lessee may not assign or sublet all or any part of the Leased Property,
except pursuant to (a) Tenant Leases for office space rented to physicians and
other health care professionals having patients at the Leased Property, provided
--------
that the aggregate square footage demised under all such physician leases may
not exceed 6,300 square feet, (b) Permitted Assignments for Security, and (c)
that certain Agreement of Lease dated November 1, 1994 (the "TCV Lease") between
Transitional Care Ventures (Arizona), Inc. and Ramsay Health Care, Inc
("Ramsay") and assigned to Lessee, or any lease of the same or substantially
the same square footage as is demised under the TCV Lease for the same or
substantially the same purposes for which the premises demised under the TCV
Lease is currently used. Any lease executed pursuant to the foregoing exceptions
to the prohibition on assignment shall expressly state that they are
subordinate to this Lease. Any attempted assignment or subletting in violation
of this provision shall be null and void and of no force or effect and shall
constitute a breach of this Lease by Lessee. At the expiration or earlier
termination of this Lease for any reason, Lessee shall assign its rights under
all Tenant Leases then in effect to Lessor, provided that Lessee shall have the
--------
right to terminate any Tenant Lease with a Tenant which is an affiliate of
Lessee.
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT. Except for existing
Tenant Leases, Lessee shall insert in each sublease permitted under Section 23.1
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of this Lease and to the rights of Lessor
hereunder, (b) in the event this Lease shall terminate before the expiration of
such sublease, the sublessee thereunder will, at Lessor's option, attorn to
Lessor and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder as a result of the termination of this Lease,
and (c) in the event the sublessee receives a written notice from Lessor or
Lessor's assignees, if any, stating that Lessee is in default under this Lease,
the sublessee shall thereafter be obligated to pay all rentals accruing under
said sublease directly to the party giving such notice, or as such party may
direct. All rentals received from the sublessee by Lessor or Lessor's assignees,
if any, shall be credited against amounts owing by Lessee under this Lease.
Lessor agrees that notwithstanding any default, termination, expiration, sale,
entry or other act or omission of Lessee pursuant to the terms of this Lease, or
at law or in equity, a Tenant's possession shall not be disturbed unless such
possession may otherwise be terminated pursuant to the terms of the applicable
Tenant Lease. Lessor hereby agrees, upon Lessee's request, to execute a
nondisturbance agreement in favor of any Tenant or in favor of any sublessee
under any sublease permitted under Section 23.1 above; provided that the Tenant
--------
or any such sublessee has acknowledged all of the foregoing provisions and
executed all documents required by this Section 23.2.
35
ARTICLE XXIV
OFFICERS'S CERTIFICATES AND FINANCIAL STATEMENTS
------------------------------------------------
(a) At any time and from time to time within 14 (fourteen) days following
written request by Lessor, Lessee will furnish to Lessor an Officer's
Certificate certifying that this Lease is unmodified and in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications) and the dates to which the Rent has been paid. Any such
officer's Certificate furnished pursuant to this Article maybe relied upon by
Lessor and any prospective purchaser of the Leased Property.
(b) Lessee will furnish or cause to be furnished the following statements
to Lessor:
(i) within 120 days after the end of each of Lessee's fiscal years
(A) a copy of Lessee's audited Financial Statements for such fiscal year,
(B) an Officer's Certificate stating that no Event of Default, or event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default, has occurred and is continuing and has not
been waived, or, if there shall have occurred and be continuing such an
Event of Default or event, specifying the nature thereof and the steps
being taken to remedy the same, (C) a current rent or lease roll for the
Leased Property setting forth rental information in reasonable detail
regarding all of the Tenants and Tenant Leases, including any space
utilized by Lessee, and (D) a calculation of the Cash Flow Coverage Ratio
and Combined Cash Flow Coverage Ratio for such fiscal year;
(ii) within 120 days after the end of each of Guarantor's fiscal
years (A) a copy of Guarantor's audited Consolidated Financial Statements
for such fiscal year, and (B) an Officer's Certificate stating that no
Event of Default involving Guarantor, or event which, with the giving of
notice or the passage of time, or both, would constitute such an Event of
Default, has occurred and is continuing and has not been waived, or, if
there shall have occurred and be continuing such an Event of Default or
event, specifying the nature thereof and the steps being taken to remedy
the same;
(iii) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year of Lessee, (A) a copy of Lessee's balance
sheet and statement of earnings for such quarter, together with Lessee's
utilization statements produced in the ordinary course of business, which
Lessor will hold in confidence, (B) an Officer's Certificate stating that
no Event of Default or event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default, has
occurred and is continuing and has not been waived, or, if there shall have
occurred and be continuing such an Event of Default or event, specifying
the nature thereof and the steps being taken to remedy the same, and (C) a
calculation of the Cash Flow Coverage Ratio and Combined Cash Flow Coverage
Ratio for such fiscal quarter;
36
(iv) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year of Guarantor, (A) a copy of Guarantor's
unaudited Consolidated Financial Statements for such fiscal quarter, and
(B) an Officer's Certificate stating that no Event of Default involving
Guarantor or event which, with the giving of notice or the passage of time,
or both, would constitute an Event of Default involving Guarantor, has
occurred and is continuing and has not been waived, or, if there shall have
occurred and be continuing such an Event of Default or event, specifying
the nature thereof and the steps being taken to remedy the same; and
(v) with reasonable promptness, such other information respecting
the financial condition, affairs and properties of Lessee and Guarantor as
Lessor may reasonably request from time to time.
ARTICLE XXV
INSPECTION
----------
Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property during usual business hours subject to any security, health,
safety or confidentiality requirements of Lessee or any governmental agency, any
Insurance Requirements relating to the Leased Property, and rights of Tenants.
ARTICLE XXVI
QUIET ENJOYMENT
---------------
So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably; and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to pay any other
sum payable under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right by
separate and independent action to pursue any claim or seek any damages it may
have against Lessor as a result of a breach by Lessor of the covenant of quiet
enjoyment contained in this Article.
ARTICLE XXVII
NOTICES
-------
All notices, demands, requests and other communications or documents to be
provided under this Lease shall be in writing and shall be given to the party at
its address or telecopy number set forth below or such other address or telecopy
number as the party may later specify for that purpose by notice to the other
party. Each notice shall, for all purposes shall be deemed given and received:
37
(i) If given by telecopy, when the telecopy is transmitted to the
party's telecopy number specified below and confirmation of complete
receipt is received by that transmitting party during normal business hours
on any Business Day, or on the next Business Day if not confirmed during
normal business hours;
(ii) If hand delivered, when delivered;
(iii) If given by nationally recognized and reputable overnight
delivery service, the day on which the notice is actually received by the
party; or
(iv) If given by certified mail, return receipt requested, postage
prepaid, two Business Days after posted with the United States Postal
Service, at the address of the party specified below:
If to Lessor:
CAPSTONE CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Sirote & Permutt, P.C.
2OO Clinton Avenue, N.W.
Suite 1000
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If intended for Lessee:
MESA PSYCHIATRIC HOSPITAL, INC.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
Ramsay Health Care, Inc.
One Poydras Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:
38
Telecopy:
With a copy to:
▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE XXVIII
APPRAISAL
---------
In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price, the Fair Market Added Value, the Minimum
Repurchase Price or the Fair Market Rental Value of the Leased Property or a
Substitute Property for any purpose of this Lease, the party required or
permitted to give notice of such required determination shall include in the
notice the name of a person selected to act as an appraiser on its
behalf. Within ten days after receipt of any such notice, Lessor (or
Lessee, as the case may be) shall by notice to Lessee (or Lessor, as the case
may be) appoint a second person as an appraiser on its behalf. The appraisers
thus appointed (each of whom must be a member of the American Institute of Real
Estate Appraisers or any successor organization thereto) shall, within 45 days
after the date of the notice appointing the first appraiser, proceed to appraise
the Leased Property or the Substitute Property, as the case may be, to determine
any of the foregoing values as of the relevant date (giving effect to the
impact, if any, of inflation from the date of their decision to the relevant
date); provided that if only one appraiser shall have been so appointed, or if
--------
two appraisers shall have been so appointed but only one such appraiser shall
have made such determination within 50 days after the making of Lessee's or
Lessor's request, then the determination of such appraiser shall be final and
binding upon the parties. If two appraisers shall have been appointed and shall
have made their determinations within the respective requisite periods set forth
above and if the difference between the amounts so determined shall not exceed
ten percent of the lesser of such amounts, then the Fair Market Value or Fair
Market Added Value or the Fair Market Rental Value shall be an amount equal to
50% of the sum of the amounts so determined. If the difference between the
amounts so determined shall exceed l0% of the lesser of such amounts, then such
two appraisers shall have 20 days to appoint a third appraiser, but if such
appraisers fail to do so, then either party may request the American Arbitration
Association or any successor organization thereto to appoint an appraiser within
20 days of such request, and both parties shall be bound by any appointment so
made within such 20-day period. If no such appraiser shall have been appointed
within such 20 days or within 90 days of the original request for a
determination of Fair Market Value or Fair Market Added Value or the Fair Market
Rental Value, whichever is earlier, either Lessor
39
or Lessee may apply to any court having jurisdiction to have appointment made by
such court. Any appraiser appointed, by the American Arbitration Association or
by such court, shall be instructed to determine the Fair Market Value or Fair
Market Added Value or the Fair Market Rental Value within 30 days after
appointment of such appraiser. The determination of the appraiser which differs
most in terms of dollar amount from the determinations of the other two
appraisers shall be excluded, and 50% of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value or Fair Market Added Value or the Fair Market Rental Value for such
interest. However, in the event that following the appraisal performed by said
third appraiser, the dollar amount of two of such appraisals are higher and
lower, respectively, than the dollar amount of the remaining appraisal in equal
degrees, the determinations of both the highest and lowest appraisal,
respectively, shall be rejected and the determination of the remaining appraisal
shall be final and binding upon Lessor and Lessee as the Fair Market Value or
Fair Market Added Value or the Fair Market Rental Value for such interest. This
provision for determination by appraisal shall be specifically enforceable to
the extent such remedy is available under applicable law, and any determination
hereunder shall be final and binding upon the parties except as otherwise
provided by applicable law. Lessor and Lessee shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half of the
fees and expenses of the third appraiser and one-half of all other costs and
expenses incurred in connection with each appraisal.
ARTICLE XXIX
PURCHASE RIGHTS
---------------
29.1 FIRST REFUSAL TO PURCHASE. (a) During the initial Term hereof
(provided that Lessee is not in material default at such time), and during any
--------
extended Term (whether or not Lessee is in material default at such time),
Lessee shall have a first refusal option to purchase the Leased Property upon
the same terms and conditions as Lessor, or its successors and assigns, shall
have received an offer from a third party to purchase the Leased Property, which
Lessor intends to accept (or has accepted subject to Lessee's right of first
refusal granted herein). If, during the Term, Lessor receives such an offer or
reaches such agreement with a third party, Lessor shall promptly notify Lessee
of the purchase price and all other material terms and conditions of such
agreement together with a copy of such offer, and Lessee shall have 60 days
after receipt of such notice from Lessor within which time to exercise Lessee's
option to purchase. If Lessee exercises its option, then such purchase shall be
consummated within the time set forth in the third-party offer and in accordance
with the provisions of Article XVII hereof to the extent not inconsistent
herewith.If Lessee does not exercise Lessee's option to purchase within said 60-
day period after receipt of said notice from Lessor, Lessor shall be free for a
period of 180 days after the expiration of said 60-day period to sell the Leased
Property to the third party at the price and terms set forth in such offer.
Whether or not such sale is consummated, Lessee shall be entitled to exercise
its right of first refusal as provided in this section, as to any subsequent
sale of the Leased Property during the Term of this Lease.
40
(b) During the twelve-month period commencing on the last date of the
initial Term hereof (provided that this Lease has not been terminated prior to
--------
said date), or during the twelve-month period commencing on the date of the
expiration or earlier termination of any Extended Term (upon the occurrence of
an Event of Default or otherwise), Lessee shall have a first refusal option to
purchase the Leased Property upon the same terms and conditions as Lessor, or
its successors and assigns, shall have received an offer from a third party to
purchase the Leased Property, which Lessor intends to accept (or has accepted
subject to Lessee's right of first refusal granted herein). If during such
twelve-month period Lessor receives such an offer or reaches such agreement with
a third party, Lessor shall promptly notify Lessee of the purchase price and all
other material terms and conditions of such agreement together with a copy of
such offer, and lessee shall have 30 days after receipt of such notice from
Lessor within which time to exercise Lessee's option to purchase. If Lessee
exercises its option, then such purchase shall be consummated within the time
set forth in the third-party offer and in accordance with the provisions of
Article XVII hereof to the extent not inconsistent herewith. If Lessee does not
exercise Lessee's option to purchase within said 30-day period after receipt of
said notice from Lessor, Lessor shall be free for the remainder of such twelve-
month period to sell the Leased Property to the third party at the price and
terms set forth in such offer. Whether or not such sale is consummated, Lessee
shall be entitled to exercise its right of first refusal as provided in this
section as to any subsequent sale of the Leased Property during such twelve-
month period.
ARTICLE XXX
DEFAULT BY LESSOR
-----------------
30.l DEFAULT BY LESSOR. Lessor shall be in default of its obligations under
this Lease if Lessor shall fail to observe or perform any term, covenant or
condition of this Lease on its part to be performed and such failure shall
continue for a period of 30 days after written notice thereof is received by
Lessor, unless such failure cannot with due diligence be cured within a period
of 30 days, in which case such failure shall not be deemed to continue if
Lessor, within said 30-day period, proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof. The time within
which Lessor shall be obligated to cure any such failure shall also be subject
to extension of time due to the occurrence of any Unavoidable Delay. In the
event Lessor fails to cure any such default, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee hereunder or at law or in equity, may purchase the Leased
Property from Lessor for a purchase price equal to the greater of the Fair
Market Value Purchase Price or the Minimum Repurchase Price of the Leased
Property minus an amount equal to any damage suffered by Lessee by reason of
such default. In the event Lessee elects to purchase the Leased Property, it
shall deliver a notice thereof to Lessor specifying a Payment Date occurring no
less than 90 days subsequent to the date of such notice on which it shall
purchase the Leased Property, and the same shall be thereupon conveyed in
accordance with the provisions of Article XVII. Any sums owed Lessee by Lessor
hereunder shall bear interest at the Overdue Rate from the date due and payable
until the date paid.
41
30.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Section 30.l, if
Lessor shall breach any covenant to be performed by it under this Lease, Lessee,
after notice to and demand upon Lessor in accordance with Section 30.1, without
waiving or releasing any obligation of Lessor hereunder, and in addition to all
other remedies available hereunder and at law or in equity to Lessee, may (but
shall be under no obligation at any time thereafter to) make such payment or
perform such act for the account and at the expense of Lessor. All sums so paid
by Lessee and all costs and expenses (including reasonable attorneys' fees) so
incurred, together with interest thereon at the Overdue Rate from the date on
which such sums or expenses are paid or incurred by Lessee, shall be paid by
Lessor to Lessee on demand or set off against the Rent. The rights of Lessee
hereunder to cure and to secure payment from Lessor in accordance with this
Section 30.2 shall survive the termination of this Lease.
ARTICLE XXXI
ARBITRATION
-----------
31.1 CONTROVERSIES. Except with respect to the payment of Minimum Rent
hereunder, in case any controversy shall arise between the parties hereto as to
any of the requirements of this Lease or the performance thereof which
controversy the parties shall be unable to settle by agreement or as otherwise
provided herein, such controversy shall be determined by arbitration to be
initiated and conducted as provided in this Article XXXI.
31.2 APPOINTMENT OF ARBITRATORS. The party or parties requesting
arbitration shall serve upon the other a written demand therefor specifying the
matter to be submitted to arbitration, and nominating an arbitrator. Within 20
days after receipt of such written demand and notification, the other party
shall, in writing, nominate a competent disinterested person and the two
arbitrators so designated shall within ten days thereafter, select a third
arbitrator and give immediate written notice of such selection to the parties
and shall fix in said notice a time and place for the first meeting of the
arbitrators, which meeting shall be held as soon as conveniently possible after
the selection of all arbitrators, at which time and place the parties to the
controversy may appear and be heard.
31.3 THIRD ARBITRATOR. In case the notified party or parties shall fail
to make a selection upon notice, as aforesaid, or in case the first two
arbitrators selected shall fail to agree upon a third arbitrator within ten days
after their selection, then such arbitrator or arbitrators may, upon application
made by either of the parties to the controversy, after 20 days' written notice
thereof to the other party or parties, have a third arbitrator appointed by any
judge of any United States court of record having jurisdiction in the state in
which the Leased Property is located or, if such office shall not then exist, by
a judge holding an office most nearly corresponding thereto.
31.4 ARBITRATION PROCEDURE. Said arbitrators shall give each of the
parties not less than ten days' written notice of the time and place of each
meeting at which the parties or any of them may appear and be heard and after
hearing the parties in regard to the matter
42
in dispute and taking such other testimony and making such other examinations
and investigations as justice shall require and as the arbitrators may deem
necessary, they shall decide the questions submitted to them. The decision of
said arbitrators in writing signed by a majority of them shall be final and
binding upon the parties to such controversy. In rendering such decisions and
award, the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Lease.
31.5 EXPENSES. The expenses of such arbitration shall be divided between
Lessor and Lessee unless otherwise specified in the decision of the arbitrators.
Each party in interest shall pay the fees and expenses of its own counsel.
ARTICLE XXXII
FINANCING OF THE LEASED PROPERTY
--------------------------------
Lessor agrees that it will not grant or create any mortgage, deed of trust,
lien, encumbrance or other title retention agreement upon the Leased Property to
secure any indebtedness of Lessor (an "Encumbrance"), unless the holder of each
such Encumbrance shall simultaneously with or prior to recording the Encumbrance
agree (a) to give Lessee the same notice, if any, given to Lessor of any default
or acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure of such Encumbrance, (b) to permit Lessee to appear with its
representatives and to bid at any public foreclosure sale with respect to any
such Encumbrance and (c) to enter into an agreement with Lessee containing the
provisions described in Article XXXII of this Lease. Lessee agrees to execute
and deliver to Lessor or the holder of an Encumbrance any written agreement
required by this Article within ten days of written request thereof by Lessor or
the holder of an Encumbrance.
Lessee hereby consents to the assignment of and grant of a security
interest and lien in this Lease together with the other documents and
instruments delivered to Lessor by Lessee pursuant hereto and in connection
herewith (collectively, the "Assigned Documents"), including all rights of
Lessor in, to and under each Assigned Document, by Lessor to NationsBank of
Georgia, National Association, as Agent (the "Agent") for itself and the other
lenders from time to time parties to that certain Revolving Credit and
Reimbursement Agreement dated as of June 22, 1994, among Lessor, the lenders
party thereto (the "Lenders") and the Agent, as amended by that certain
Amendment Agreement No. 1 to Revolving Credit and Reimbursement Agreement
and Certain Other Loan Documents dated as of October 26, 1994, and by that
certain Amendment Agreement No. 2 to Revolving Credit and Reimbursement
Agreement and Certain Other Loan Documents dated as of March 17, 1995 (as so
amended and as it may be further amended, modified or supplemented from time to
time, the "Credit Agreement"), pursuant to which the Lenders have established a
revolving credit facility and letter of credit facility in favor of Lessor.
Lessee hereby further agrees to execute a Consent to Assignment in substantially
the form attached hereto as Exhibit E. Lessee further agrees that in connection
---------
with the execution
43
of any such assignment by Lessor, Lessee will execute and deliver to the Agent a
tenant estoppel certificate in substantially the form attached hereto as Exhibit
-------
F.
--
ARTICLE XXXIII
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
---------------------------------------------
At the request from time to time by one or more holders of an Encumbrance
that may hereafter be placed upon the Leased Property or any part thereof, and
any and all renewals, replacements, modifications, consolidations, spreaders and
extensions thereof, Lessee will subordinate this Lease and all of Lessee's
rights and estate hereunder to each such Encumbrance and will attorn to and
recognize such holder (or the purchaser at any foreclosure sale or any sale
under a power of sale contained in any such Encumbrance or a holder by a deed in
lieu of foreclosure, as the case may be) as Lessor under this Lease for the
balance of the Term then remaining, subject to all of the terms and provisions
of this Lease, provided that each such holder simultaneously with or prior to
--------
recording any such Encumbrance executes and delivers a written agreement in
recordable form (a) consenting to this Lease and agreeing that, notwithstanding
any such other lease, mortgage, deed of trust, right, title or interest, or any
default, expiration, termination, foreclosure, sale, entry or other act or
omission under, pursuant to or affecting any of the foregoing, Lessee shall not
be disturbed in peaceful enjoyment of the Leased Property nor shall this Lease
be terminated or canceled at any time, except in the event Lessor shall have the
right to terminate this Lease under the terms and provisions expressly set forth
herein; (b) agreeing that it will be bound by all the terms of this Lease
(including all terms with respect to repurchase and substitution of the Leased
Property and extension of the Term) and perform and observe all of Lessor's
obligations set forth herein; and (c) agreeing that all proceeds of the casualty
insurance described in Article XIII of this Lease and all Awards described in
Article XIV will be made available to Lessor for restoration of the Leased
Property as and to the extent required by this Lease, subject only to reasonable
regulation regarding the manner of disbursement and application thereof. Lessee
agrees to execute and deliver to Lessor or the holder of an Encumbrance any
written agreement required by this Article within ten days of written request
thereof by Lessor or the holder of an Encumbrance. Lessee agrees to execute at
the request from time to time of Lessor or an institutional investor a
certificate setting forth any defaults of Lessor hereunder and the dates through
which Rent has been paid and such other matters as may be reasonably requested.
ARTICLE XXXIV
EXTENDED TERMS
--------------
If no Event of Default shall have occurred and be continuing, Lessee is
hereby granted the right to extend the Term of this Lease for three consecutive
five-year periods ("Extended Term") for a maximum possible Term of 30 years, by
giving written notice to Lessor of each such extension at least 180 days, but
not more than 270 days, prior to the expiration of the then-current Term;
subject, however, to the provisions of Section 13.7 hereof. Lessor agrees to use
its best efforts to provide Lessee with prior written notice at
44
least 210 days prior to the expiration of the then-current Term. Lessee may not
exercise its option for more than one Extended Term at a time. During each
Extended Term, all of the terms and conditions of this Lease shall continue in
full force and effect, except that the Minimum Rent for and during each of the
Extended Terms shall be the Fair Market Rental Value on the first day of such
Extended Term. In any event, the Minimum Rent shall continue to be adjusted
throughout each of the Extended Terms pursuant to the provisions of Section
2.1(b) hereof
ARTICLE XXXV
MlSCELLANEOUS
-------------
35.1 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
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or any such term. To the extent permitted by law, no waiver of
any breach shall affect or alter this Lease, which shall continue in full force
and effect with respect to any other then existing or subsequent breach.
35.2 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
35.3 SURRENDER. No surrender to Lessor of this Lease or of the Leased
Property or any part thereof, or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.
35.4 NO MERGER OF TITLE. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or (b) such leasehold estate and the fee estate in the
Leased Property.
35.5 TRANSFERS BY LESSOR. If Lessor or any successor owner of the Leased
Property shall convey the Leased Property in accordance with the terms hereof,
other than solely as security for a debt, the grantee or transferee of the
Leased Property shall expressly assume all obligations of Lessor hereunder
arising or accruing from and after the date of such conveyance or transfer, and
shall be reasonably capable of performing the obligations of
45
Lessor hereunder and Lessor or such successor owner, as the case may be, shall
thereupon be released from all future liabilities and obligations of Lessor
under this Lease arising or accruing from and after the date of such conveyance
or other transfer and all such future liabilities and obligations shall
thereupon be binding upon the new owner.
35.6 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee and Lessor
against the other arising out of or relating to this Lease and arising prior to
any date of termination of this Lease shall survive such termination. If any
term or provision of this Lease or any application thereof shall be invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any late charges provided
for in any provision of this Lease are based upon a rate in excess of the
maximum rate permitted by applicable law, the parties agree that such charges
shall be fixed at the maximum permissible rate. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated except by an
instrument in writing and in recordable form signed by Lessor and Lessee. All
the terms and provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. The
headings in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. This Lease shall be governed by and
construed in accordance with the laws of Alabama, but not including its conflict
of laws rules. This Lease may be executed in one or more counterparts, each of
which shall be an original but, when taken together, shall constitute but one
document.
35.7 MEMORANDUM OF LEASE. Lessor and Lessee shall promptly upon the request
of either, enter into a short form memorandum of this Lease in form suitable for
recording under the laws of the state in which the Leased Property is located in
which reference to this Lease, and all options contained herein, shall be made.
35.8 TRANSFER OF LICENSES. Upon the expiration or earlier termination of
the Term, Lessee shall take all action necessary to effect or useful in
effecting the transfer to Lessor or Lessor's nominee of all licenses, operating
permits and other governmental authorizations and all service contracts which
may be necessary or useful in the ownership of the Facility and which relate
exclusively to the Facility which have not previously been transferred or
assigned to Lessor, other than permits or licenses which pertain to the
operation of Lessee's business.
ARTICLE XXXVI
GLOSSARY OF TERMS
-----------------
36.1 For purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
XXXVI have the meanings assigned to them in this Article XXXVI and include the
plural as well as the singular, (b) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles as at the time
46
applicable, (c) all references in this Lease to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections and
other subdivisions of this Lease, (d) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Lease as a whole and
not to any particular Article, Section or other subdivision, (e) the word
"including" shall mean "including without limitation", and (f) all consents
required of Lessor hereunder shall be in Lessor's sole and absolute discretion.
For purposes of this Lease, the following terms shall have the meanings
indicated:
"Additional Charges" has the meaning set forth in Section 2.3 hereof.
"Adjustment Date" has the meaning set forth in Section 2.1(b) hereof.
"Affiliate", when used with respect to Lessee, means any person directly or
indirectly controlling, controlled by or under direct or indirect common
control with Lessee. For the purposes of this definition, "control", as used
with respect to any person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such person, through the ownership of voting securities, partnership interests
or other equity interests.
"Agent" has the meaning set forth in Article XXXII hereof
"Assigned Documents" has the meaning set forth in Article XXXII hereof
"Award" means all compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
"Bountiful" means Bountiful Psychiatric Hospital, Inc., a Utah corporation
and the owner of 100% of the issued and outstanding stock of Lessee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks in the City of Birmingham, Alabama
are closed.
"Capital Additions" means one or more new buildings or one or more
additional structures annexed to any portion of any of the Leased Improvements
constructed on any parcel or portion of the Land during the Term, including the
construction of a new wing or new story, or the rebuilding of the existing
Leased Improvements or any portion thereof not normal, ordinary or recurring to
maintain the Leased Property.
"Capital Addition Cost" means the cost of any Capital Additions proposed to
be made by Lessee whether paid for by Lessee or Lessor. Such cost shall include
and be limited to (a) the cost of construction of the Capital Additions,
including site preparation and improvement, materials, labor, supervision and
certain related design, engineering and architectural services and the cost of
any fixtures, construction financing and miscellaneous items approved in writing
by Lessor, (b) if agreed to by Lessor in writing in advance, the
47
cost of any land contiguous to the Leased Property purchased for the purpose of
placing thereon the Capital Additions or any portion thereof or for providing
means of access thereto, or parking facilities therefor, including the cost of
surveying the same, (c) the cost of insurance, real estate taxes, water and
sewage charges and other carrying charges for such Capital Additions during
construction, (d) the cost of title insurance, (e) reasonable fees and expenses
of legal counsel and accountants, (f) filing, registration and recording taxes
and fees, (g) documentary stamp taxes, if any, (h) environmental assessments and
boundary surveys, and (i) all reasonable costs and expenses of Lessor and any
lending institution which has committed to finance the Capital Additions,
including, (A) the reasonable fees and expenses of their respective legal
counsel, (B) all printing expenses, (C) the amount of any filing, registration
and recording taxes and fees, (D) documentary stamp taxes, if any, (E) title
insurance charges, appraisal fees, if any, (F) rating agency fees, if any, and
(G) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.
"Cash Adjustment" has the meaning set forth in Section 20.1(d).
"Cash Flow Coverage Ratio" means, as of the end of any fiscal quarter, the
ratio of (a) Net Income for the twelve-month period ending at the end of such
quarter to (b) Total Rent payable in respect of such twelve-month period, as
evidenced by Financial Statements covering such period.
"Charge" has the meaning set forth in Article XI hereof
"Code" means the Internal Revenue Code of 1986, as amended.
"Combined Cash Flow Coverage Ratio" means, as of the end of any fiscal
quarter, the ratio of (a) Net Income for the twelve-month period ending at the
end of such quarter to (b) Combined Total Rent payable in respect of such
twelve-month period, as evidence by Financial Statements covering such period.
"Combined Total Rent" for any period means the total amount of (a) Minimum
Rent payable by Lessee hereunder and by RHCI under the RHCI Lease, and (b) all
rental expense of Lessee and RHCI as lessee in respect of operating and
capitalized leases (but excluding items that constitute additional Rent or
Additional Charges hereunder and under the RHCI Lease), in each case of (a) and
(b) in respect of such period.
"Commencement Date" has the meaning set forth in Article I.
"Condemnation" means the transfer of all or any part of the Leased Property
as a result of (i) the exercise of any governmental power, whether by legal
proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or transfer by
Lessor to any Condemnor, either under threat of Condemnation or while legal
proceedings for Condemnation are pending.
48
"Condemnor" means any public or quasi-public authority or private
corporation or individual having the power of Condemnation.
"Consolidated Financial Statements" means, for any Person and for any
accounting period, statements of earnings and retained earnings and of changes
in cash flows for such Person and its subsidiaries on a consolidated basis for
such period and for the period from the beginning of the respective fiscal year
of such Person to the end of such period and the related balance sheet as at the
end of such period, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year of such Person, containing appropriate notes, and prepared in
accordance with generally accepted accounting principles consistently applied,
subject to normal year-end adjustment. All Consolidated Financial Statements in
respect of any fiscal year shall be audited by an independent accounting firm
acceptable to Lessor.
"Consumer Price Index" or "CPI" means the Consumer Price Index for All
Urban Consumers for the U.S. City Average for all Items (1982-1984=100) as
published by the United States Department of Labor, Bureau of Labor Statistics.
If the manner in which the Consumer Price Index is determined by the Bureau of
Labor Statistics shall be substantially revised (including a change in the base
index year), an adjustment shall be made by Lessor in such revised index which
would produce results equivalent, as nearly as possible, to those which would
have been obtained if the Consumer Price Index had not been so revised. If the
consumer Price Index shall become unavailable to the public because publication
is discontinued or otherwise, or if equivalent data is not readily available to
enable Lessor to make the adjustment referred to in the preceding sentence,
Lessor will substitute therefor a comparable index reasonably acceptable to
Lessee based upon changes in the cost of living or purchasing power of the
consumer dollar published by any other governmental agency or, if no such index
shall be available, then a comparable index published by a major bank or other
financial institution or by a university or a recognized financial publication.
"Credit Agreement" has the meaning set forth in Article XXXII hereof.
"Credit Enhancements" means all cash collateral, security deposits,
security interests, letters of credit, pledges, prepaid rent or other sums,
deposits or interests held by Lessee, if any, to secure obligations with respect
to the Leased Property, Tenant Leases or Tenants.
"Current Yield" means as of any date the annual Minimum Rent, as adjusted
from time-to-time pursuant to the terms of this Lease, divided by the sum of (i)
the purchase price as set forth in the Purchase and Sale Agreement plus (ii) all
Capital Addition Costs paid for or financed by Lessor which have not been repaid
by Lessee.
"Date of Taking" means the date the Condemnor has the right to possession
of the property being condemned.
49
"Encumbrance" has the meaning set forth in Article XXXII.
"Event of Default" has the meaning set forth in Section 15.1.
"Extended Term" has the meaning set forth in Article XXXIV.
"Facility" means the five one-story buildings containing approximately
39,786 gross square feet which comprise the psychiatric hospital facility and
related tenant space to be operated on the leased property.
"Facility Mortgage" has the meaning set forth in Section 12.1.
"Facility Mortgagee" has the meaning set forth in Section 12.1.
"Fair Market Added Value" means the Fair Market Value (as hereinafter
defined) of the Leased Property (including all Capital Additions) less the Fair
Market Value of the Leased Property determined as if no Capital Additions paid
for by Lessee without financing by Lessor had been constructed.
"Fair Market Rental Value" means the fair market rental value of the Leased
Property or any Substitute Property, (a) assuming the same is unencumbered by
this Lease, (b) determined in accordance with the appraisal procedures set forth
in Article XXVIII or in such other manner as shall be mutually acceptable to
Lessor and Lessee, and (c) not taking into account any reduction in value
resulting from an indebtedness to which the Leased Property or Substitute
Property may be subject.
"Fair Market Value" means the fair market value of the Leased Property or
any Substitute Property, including all Capital Additions, (a) assuming the same
is unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article XXVIII or in such other manner as shall be
mutually acceptable to Lessor and Lessee, and (c) not taking into account any
reduction in value resulting from any indebtedness to which the Leased Property
or such Substitute Property is subject or which encumbrance Lessee or Lessor is
otherwise required to remove pursuant to any provision of this Lease or agrees
to remove at or prior to the closing of the transaction as to which such Fair
Market Value determination is being made. The positive or negative effect on the
value of the Leased Property or Substitute Property attributable to the interest
rate, amortization schedule, maturity date, prepayment penalty and other terms
and conditions of any Encumbrance on the Leased Property or any Substitute
Property, as the case may be, which is not so required or agreed to be removed
shall be taken into account in determining such Fair Market Value.
"Fair Market Value Purchase Price" means the Fair Market Value less the
Fair Market Added Value.
50
"Financial Statements" means, for any Person and for any accounting
period, statements of earnings and retained earnings and of changes in cash
flows for such Person for such period and for the period from the beginning of
the respective fiscal year of such Person to the end of such period and the
related balance sheet as at the end of such period, all in reasonable detail and
setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year of such Person, containing
appropriate notes and prepared in accordance with generally accepted accounting
principles consistently applied (except to the extent that this Lease shall be
accounted for as an operating Lease by lessee), and subject to normal year-end
adjustment. All Financial Statements in respect of any fiscal year beginning
with the fiscal year ending June 30, 1995 shall be audited by an independent
accounting firm mutually acceptable to Lessor and Lessee.
"Fiscal Year" means the 12-month period from July 1 to the next succeeding
June 30.
"Fixed Term" has the meaning set forth in Article I.
"Fixtures" has the meaning set forth in Article I.
"Full Replacement Cost" has the meaning set forth in Section 12.2.
"Guarantor" means Ramsay.
"Guaranty" means a guaranty of the obligations of Lessee hereunder,
executed by the Guarantor.
"Hazardous Materials" means any substance, including asbestos or any
substance containing asbestos, the group of organic compounds known as
polychlorinated biphenyls, flammable explosives, radioactive materials, medical
waste, chemicals, pollutants, effluents, contaminants, emissions or any other
or related materials and items included in the definition of hazardous or toxic
wastes, materials or substances under any Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or ordinance relating
to environmental conditions, medical waste and industrial hygiene, including the
Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and all similar federal, state and local
environmental statutes and ordinances, whether heretofore or hereafter enacted
or effective and all regulations, orders, or decrees heretofore or hereafter
promulgated thereunder.
51
"Impositions" means, collectively, all taxes relating to the Leased
Property, including all ad valorem, sales and use, gross receipts, action,
privilege, rent (with respect to the Tenant Leases) or similar taxes,
assessments (including all assessments for public improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term), water, sewer or other rents and charges,
excises, tax levies, fees (including license, permit, inspection, authorization
and similar fees), and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of the Leased Property and/or the Rent (including all
interest and penalties thereon due to any failure in payment by Lessee), which
at any time prior to, during or in respect of the Term hereof may be assessed
or imposed on or in respect of or be a lien upon (a) Lessor or Lessor's interest
in the Leased Property, (b) the Rent, the Leased Property or any part thereof or
any rent therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, sales from, or activity conducted
on, or in connection with, the Leased Property or the Tenant Leases or use of
the Leased Property or any part thereof; provided that nothing contained in this
--------
Lease shall be construed to require Lessee to pay (1) any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Lessor, (2) any transfer or net revenue tax of Lessor, (3) any tax
imposed with respect to the sale, exchange or other disposition by Lessor of any
portion of the Leased Property or the proceeds thereof, or (4) except as
expressly provided elsewhere in this Lease, any principal or interest on any
Encumbrance on the Leased Property, except to the extent that any tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1), (2) or (3) is levied, assessed or imposed expressly in lieu thereof
"Indebtedness" with respect to Lessee or Guarantor means: (i) any debt (a)
for borrowed money or (b) evidenced by a bond, note, debenture or similar
instrument (including purchase money obligations and accounts payable and other
obligations created or assumed in the course of business in connection with the
obtaining of materials or services) given in connection with the acquisition of
any business, property or assets, whether by purchase, merger, consolidation or
otherwise, or (c) which is a direct or indirect obligation which arises as a
result of banker's acceptances or bank letters of credit issued to secure
obligations of such person, or to secure the payment of bonds issued for the
benefit of such person, whether contingent or otherwise; (ii) any debt of others
described in the preceding clause (i) which such person has guaranteed or for
which it is otherwise liable; (iii) the obligation of such person as lessee
under any lease of property which is (a) reflected on such person's balance
sheet as a capitalized lease or (b) an operating lease; and (iv) any deferral,
amendment, renewal, extension, supplement or refunding of any liability of the
kind described in any of the preceding clauses (i), (ii) and (iii).
"Insurance Requirements" means all terms of any insurance policy required
by this Lease and all requirements of the issuer of any such policy.
52
"Land" has the meaning set forth in Article I.
"Lease" means this Lease.
"Leased Improvements" and "Leased Property" have the meanings set forth in
Article I.
"Legal Requirements" means all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Leased Property or the construction, use
or alteration thereof, whether now or hereafter enacted and in force, including
any which may (a) require repairs, modifications or alterations of or to the
Leased Property, or (b) in any way adversely affect the use and enjoyment
thereof, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, actions and encumbrances contained in
any instruments, either of record or known to Lessee (other than encumbrances
created by Lessor without the consent of Lessee), at any time in force affecting
the Leased Property.
"Lenders" has the meaning set forth in Article XXXII hereof.
"Lending Institution" means any insurance company, federally insured
commercial or savings bank, national banking association, savings and loan
association, employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension plan, college or university, or real estate investment
including any corporation qualified to be treated for federal tax purposes as a
real estate investment trust having a net worth of at least $50,000,000.
"Lessee" means Mesa Psychiatric Hospital, Inc., an Arizona corporation, its
successors and assigns.
"Lessor" means CAPSTONE CAPITAL CORPORATION, a Maryland corporation, and
its successors and assigns.
"RHCI" means RHCI San Antonio, Inc., a Delaware corporation.
"RHCI Lease" means that certain Lease Agreement dated April 12, 1995
between RHCI and Capstone Capital of San Antonio, Ltd., an Alabama limited
partnership.
"Minimum Rent" has the meaning set forth in Section 2.1 hereof.
"Minimum Repurchase Price" means the greater of (i) the Fair Market Value
of the Leased Property at the time of repurchase hereunder by Lessee, or (ii)
the Purchase Price paid to Lessee for the Leased Property pursuant to the
Purchase and Sale Agreement as such amount is increased at the rate of three
percent compounded annually for each year (to be prorated for partial years)
between the Commencement Date and the date of
53
repurchase by Lessee, plus the sum of all Capital Addition Costs paid for or
----
financed by Lessor which as of the date of repurchase of the Leased Property
have not been repaid by Lessee, less the net amount (after deduction of all
reasonable legal fees and other costs and expenses, including expert witness
fees, incurred by Lessor in connection with obtaining any such award or
proceeds) of all Awards received by Lessor from Condemnation of the Leased
Property and all insurance proceeds in excess of the costs of any restoration
which are retained by Lessor.
"Net Income" of Lessee means, for any period, net income before Federal and
state taxes and interest expense paid or payable in respect of such period, plus
----
amounts which, in the determination of net income for such period, have been
deducted for amortization of debt discount in respect of Indebtedness of Lessee
for borrowed money, depreciation of tangible assets, amortization of intangible
assets, Total Rent payable in respect of such period, and management fees paid
or payable to Guarantor in respect of such period, all as determined in
accordance with generally accepted accounting principles consistently applied
(except to the extent that this Lease shall be accounted for as an operating
lease by Lessee).
"Officer's Certificate" means a certificate of Lessee signed by the
Chairman of the Board of Directors, the President, any Vice President or another
officer authorized to so sign by the Board of Directors or By-Laws of Lessee, or
any other person whose power and authority to act has been authorized by
delegation in writing by any of the persons holding the foregoing offices.
"Overdue Rate" means as of any date, a rate per annum equal to the Prime
Rate as of such date, plus two percent, but in no event greater than the maximum
rate then permitted under applicable law.
"Payment Date" means any due date for the payment of the installments of
Minimum Rent under this Lease.
"Permitted Assignment for Security" means an assignment of Lessee's
leasehold interest hereunder as collateral security for funded indebtedness of
Lessee or an Affiliate of Lessee, pursuant to documentation which (i) expressly
provides that such assignment and all rights of the assignee thereunder shall be
subject and subordinate in all respects to the terms of this Lease, and to any
Encumbrance upon the Leased Property then existing or thereafter granted or
created by Lessor, provided that the holder of any such Encumbrance complies
with Articles XXXII an XXXIII hereof (including without limitation the
provisions with respect to subordination and non-disturbance contained therein),
(ii) obligates the assignee thereunder to execute and deliver reasonably
appropriate documentation to evidence such subordination to Lessor and to the
holder of any such Encumbrance, provided that such holder complies with the
provisions of said Articles XXXII and XXXIII, and (iii) is otherwise approved by
Lessor, which approval shall not be unreasonably withheld.
54
"Person" means a natural person, corporation, partnership, trust,
association, limited liability company or other entity.
"Personal Property" means the personal property listed in Exhibit D hereto.
---------
"Primary Intended Use" has the meaning set forth in Section 6.2(a).
"Prime Rate" means the annual rate announced by the Wall Street Journal or
its successors from time to time as being its prime rate. The prime rate is an
index rate used by the Wall Street Journal to establish lending rates and may
not necessarily be its most favorable lending rate. Any change in the Prime Rate
hereunder shall take effect on the effective date of such change in the prime
rate as established by the Wall Street Journal, without notice to Lessee or any
other action by Lessor. Interest shall be computed on the basis that each year
contains 360 days, by multiplying the principal amount by the per annum rate set
forth above, dividing the product so obtained by 360, and multiplying the
quotient thereof by the actual number of days elapsed.
"Purchase and Sale Agreement" means the agreement dated on or about April
12, 1995, between Lessee as "Seller" and Lessor as "Purchaser" relating to the
acquisition by Lessor of the Leased Property.
"Ramsay" means Ramsay Health Care, Inc., a Delaware corporation and owner
of 100% of the issued and outstanding stock of Bountiful.
"Rent" means, collectively, the Minimum Rent and the Additional Charges.
"Request" has the meaning set forth in Section 9.3(a).
"Substitution Date" has the meaning set forth in Section 20.1.
"Substitute Properties" has the meaning set forth in Section 20.1.
"Taking" means a taking or voluntary conveyance during the Term hereof of
all or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any Condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" means all leases, subleases, assignments and other rental
agreements (written or verbal, now or hereafter in effect), if any, that grant a
possessory interest in and to any space in the Improvements, or that otherwise
grant rights with regard to the Leased Property, and all Credit Enhancements, if
any, held in connection therewith.
55
"Term" means the Fixed Term and any Extended Term as to which Lessee has
exercised its options to extend contained in Article XXXIV hereof unless earlier
terminated pursuant to the provisions hereof
"Total Rent" for any period means the total amount of (a) Minimum Rent
payable by Lessee hereunder and (b) all rental expense of Lessee as lessee in
respect of operating and capitalized leases (but excluding items that constitute
additional Rent or Additional Charges hereunder), in each case of (a) and (b) in
respect of such period.
"Unavoidable Delays" means delays due to strikes, lockouts, inability to
procure materials after the exercise of due diligence, power failure, acts of
God, governmental restrictions, enemy action, civil commotion, fire, unavoidable
casualty or other causes beyond the control of the party responsible for
performing an obligation hereunder, provided that lack of funds shall not be
--------
deemed a cause beyond the control of either party hereto unless such lack of
funds is caused by the failure of the other party hereto to perform any
obligations of such other party under this Lease.
"Unsuitable for Its Primary Intended Use" as used anywhere in this Lease,
shall mean that, by reason of damage or destruction, or a partial Taking, in the
good faith judgment of Lessee, reasonably exercised, the Facility cannot be
profitably operated for its Primary Intended Use, taking into account all
relevant factors.
56
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized as of the date first written
above.
LESSOR:
CAPSTONE CAPITAL CORPORATION,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Senior Vice President
Date April 12, 1995
---------------------------------------
Lessor's Tax Identification Number:
▇▇-▇▇▇▇▇▇▇
LESSEE:
MESA PSYCHIATRIC HOSPITAL, INC.,
an Arizona corporation
By: [SIGNATURE ILLEGIBLE]
--------------------------------------
Its: Vice President
--------------------------------------
Date April 12, 1995
--------------------------------------
Lessee's Tax Identification Number:
93-O92581O
EXHIBIT A
PROPERTY DESCRIPTION
That part of the East half of the Northwest quarter of the Northeast quarter of
Section 16, Township 1 North, Range 5 East of the Gila and Salt River Base and
Meridian, Maricopa County, Arizona, described as follows:
Commencing at the Northeast corner of said Section 16, thence South 88 degrees
40 minutes 15 seconds West, 1253.68 feet to the Northeast corner of said East
half of the Northwest quarter of the Northeast quarter and the point of
beginning;
Thence South 00 degrees 10 minutes 08 seconds East, 698.01 feet along the East
line of said Northwest quarter of the Northeast quarter of the Northwesterly
Right-of-Way line of those certain premises described in instrument recorded in
Docket 9044, Page 917, records of Maricopa County, Arizona;
Thence along said Northwesterly Right-of-Way along a curve to the left having a
radius of 470.74 feet, a delta of 32 degrees 30 minutes 03 seconds, and a chord
bearing and distance of South 35 degrees 19 minutes 23 seconds West, 263.46
feet, to a Point of Spiral Curve;
Thence continuing along said Northwesterly Right-of-Way, along said spiral curve
to the left, having an "A" of 10 and a chord bearing and distance of South 14
degrees 10 minutes 49 seconds West, 115.49 feet, to a Point of Curve;
Thence continuing along said Northwesterly Right-of-Way along a curve to the
left having a radius of 3183.02 feet a delta of 00 degrees 52 minutes 34
seconds and a chord bearing and distance of South 10 degrees 25 minutes 43
seconds West, 48.66 feet;
Thence along a non-tangent line, North 12 degrees 58 minutes O8 seconds West
(North 12 degrees 43 minutes West, Record) 381.00 feet to a point on the South
line of the North 695.00 feet of said Northwest quarter of the Northeast quarter
said point being South 88 degrees 40 minutes 15 seconds West (Record South 88
degrees 47 minutes West), 275.00 feet from the East line of said Northwest
quarter of the Northeast quarter;
Thence South 88 degrees 40 minutes 15 seconds West, 349.01 feet along said South
line of the North 695.0 feet;
Thence North 00 degrees 09 minutes 15 seconds West 695.15 feet, along a line
3.00 feet East of and parallel to the West line of said East half of the
Northwest quarter of the Northeast quarter to a point on the North line of said
Section 16;
Thence North 88 degrees 40 minutes 15 seconds East, 623.84 feet along the North
line of said Section 16 to the Point of Beginning.
EXCEPT the following described parcel:
Commencing at the Northeast ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
East; Thence South 88 degrees 40 minutes 15 seconds West continuing along the
North line of said Section 16, a distance of 1,253.66 feet to the point of
beginning;
Thence South 88 degrees 40 minutes 15 seconds West continuing along the North
line of said Section 16, a distance of 623.83 feet;
Thence South 00 degrees, l0 minutes three seconds East a distance of 162.62
feet;
Thence North 64 degrees 41 minutes 35 seconds East a distance of 196.89 feet;
Thence North 88 degrees 31 minutes 01 seconds East a distance of 445.59 feet;
Thence North 00 degrees l0 minutes 33 seconds West a distance of 81.40 feet to
the point of beginning.
EXHIBIT B
PERMITTED EXCEPTIONS
1. Mineral rights, water rights, reservations and exclusions as contained in the
Patent conveying said land.
2. Taxes for the year 1995, a lien not yet due and payable.
3. Easement for electric lines as set forth in instrument recorded May 9, 1955
in Docket 1619, Page 273.
4. Easement for public utilities as set forth in instrument recorded March 2O,
1986 at Recorders No. 86-133372.
5. Easement for public utilities as reserved by the City of Mesa in Resolution
No. 5660, recorded December 19, 1985 at Recorders No. 85-601514.
6. Encroachment of West end of wall over west property line by 1.31 feet near
Northwest corner of property, as per survey dated April 5, 1995 made by
▇▇▇▇▇▇▇/▇▇▇▇ Consulting Engineers.
7. The matter described in General Note 5 to survey dated April 5, 1995 made by
▇▇▇▇▇▇▇/▇▇▇▇ Consulting Engineers.
8. Rights of parties in possession under existing written Tenant Leases.
9. Except the part, if any, lying within the Eureka Canal Right-of-Way or the
Crosscut Canal Right-of-Way.
EXHIBIT C
[Intentionally Left Blank]
EXHIBIT D
PERSONAL PROPERTY
None