EXHIBIT 10.2
LEASE AGREEMENT
by and between
HERNANDO COUNTY, FLORIDA
a political subdivision of the State of Florida ("County")
and
HERNANDO HMA, INC.
LEASE AGREEMENT
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TABLE OF CONTENTS
PAGE
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ARTICLE I
RECITALS, DEFINITIONS AND DEMISE........ 2
1.1 RECITALS.................................... 2
1.2 DEFINITIONS................................. 2
1.3 DEMISE OF THE LEASED PREMISES............... 12
ARTICLE II
REPRESENTATIONS................. 12
2.1 REPRESENTATIONS OF LESSOR................... 12
2.2 REPRESENTATIONS OF LESSEE................... 14
ARTICLE III
LEASE TERM AND RENTAL PROVISIONS......... 15
3.1 LEASE TERM.................................. 15
3.2 EXPIRATION OR TERMINATION OF LEASE.......... 15
3.3 RENT........................................ 22
ARTICLE IV
OPERATION OF HOSPITAL FACILITIES......... 22
4.1 OPERATION OF HOSPITAL FACILITIES............ 22
ARTICLE V
TAXES AND UTILITIES............... 30
5.1 TAXES....................................... 30
5.2 UTILITIES................................... 31
ARTICLE VI
INSURANCE.................... 32
6.1 INSURANCE................................... 32
6.2 BLANKET POLICIES............................ 34
6.3 INCREASE IN COVERAGE........................ 34
6.4 QUALIFIED INSURER AND STANDARD PROVISIONS... 35
6.5 LIABILITY PROTECTION........................ 36
6.6 INSURANCE PROCEEDS.......................... 36
ARTICLE VII
MAINTENANCE AND REPAIR
ALTERATIONS AND IMPROVEMENTS........... 36
7.1 CONDITION OF HOSPITAL FACILITIES............ 36
7.2 REPAIRS..................................... 37
7.3 ALTERATIONS AND IMPROVEMENTS................ 37
7.4 REMOVAL OR DISPOSITION OF PROPERTY.......... 37
7.5 DAMAGED OR DESTROYED PROPERTY............... 38
7.6 CONSTRUCTION LIENS.......................... 39
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ARTICLE VIII
ASSIGNMENTS, SUBLEASES AND ENCUMBRANCES........ 40
8.1 ASSIGNMENTS AND TRANSFERS, BUSINESS
COMBINATIONS, AND RIGHT OF FIRST REFUSAL
TO LESSOR........................................ 40
8.2 RESTRICTIONS ON MORTGAGE OR OTHER
ENCUMBRANCES OF LEASED PREMISES BY LESSEE........ 44
ARTICLE IX
ADDITIONAL COVENANTS OF LESSEE............... 45
9.1 PROTECTION OF THE LEASED PREMISES................ 45
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES............... 45
10.1 EVENTS OF DEFAULT DEFINED........................ 45
10.2 REMEDIES ON DEFAULT.............................. 47
10.3 ADVANCES BY LESSOR............................... 47
10.4 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES.... 48
10.5 WAIVER........................................... 48
ARTICLE XI
ENVIRONMENTAL PROVISIONS.................. 49
11.1 COMPLIANCE....................................... 49
11.2 COMPLETION OF REMEDIAL WORK...................... 50
11.3 CLAIMS........................................... 51
11.4 ASBESTOS......................................... 51
ARTICLE XII
CONDEMNATION........................ 51
12.1 TAKING........................................... 51
12.2 LAST YEAR OF LEASE TERM.......................... 51
12.3 COLLECTION OF AWARDS............................. 52
12.4 NON-TERMINATION OF LEASE......................... 52
12.5 BUSINESS LOCATION EXPENSES....................... 52
ARTICLE XIII
ASSUMPTION OF RISK..................... 53
13.1 USE AND OCCUPATION............................... 53
13.2 LIABILITY........................................ 53
ARTICLE XIV
INDEMNITY......................... 54
14.1 GENERAL INDEMNITY................................ 54
14.2 CONTAMINATION INDEMNITY.......................... 54
ARTICLE XV
MISCELLANEOUS....................... 55
15.1 COVENANT OF QUIET ENJOYMENT...................... 55
15.2 COUNTERPARTS..................................... 55
15.3 BINDING EFFECT................................... 56
15.4 SEVERABILITY..................................... 56
15.5 ARTICLE AND SECTION CAPTIONS..................... 56
15.6 ENTIRE AGREEMENT................................. 56
15.7 GUARANTY AGREEMENT............................... 57
15.8 PLACE OF DELIVERY OF RENT AND NOTICES............ 57
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15.9 RADON GAS....................................... 58
15.10 LESSOR'S ACCESS TO LEASED PREMISES.............. 58
15.11 SURRENDER....................................... 59
15.12 RELATIONSHIP OF PARTIES......................... 61
15.13 BROKER'S COMMISSIONERS.......................... 61
15.14 INTERPRETATION AND VENUE........................ 61
15.15 TIME OF THE ESSENCE............................. 61
15.16 SOVEREIGN IMMUNITY.............................. 62
15.17 CERTIFICATION................................... 62
15.18 INDUCEMENT...................................... 63
15.19 MEMORANDUM OF LEASE............................. 63
15.20 FURTHER ASSURANCE............................... 63
Exhibit "A" Composite Legal Description - Leased Premises
Exhibit "B" Indigent Care Policy
Exhibit "C" Asbestos
Exhibit "D" Guaranty
Exhibit "E" Memorandum of Lease
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LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT is made as of the 1st day of June, 1998, by and
between HERNANDO COUNTY, FLORIDA, a political subdivision of the State of
Florida ("Lessor"), acting through its Board of County Commissioners, and
HERNANDO HMA, INC., a Florida for profit corporation ("Lessee").
RECITALS
--------
WHEREAS, Lessor has previously leased certain property in Hernando County,
Florida, to Regional Healthcare, Inc., a Florida not-for-profit corporation
("RHI"), and its predecessors for operation of Hospital Facilities (as
hereinafter defined) to benefit the residents of Hernando County and adjacent
areas;
WHEREAS, on or about Xxxxxxxx 00, 0000, XXX and its affiliates, Spring Hill
Regional Hospital, Inc. ("Spring Hill"), Hernando Healthcare Inc., ("HHI") and
Healthcare Realty Corporation ("HRC") filed Chapter 11 petitions with the United
States Bankruptcy Court, Middle District of Florida, Tampa Division (the
"Bankruptcy Court");
WHEREAS, the Debtors filed a Plan of Arrangement in the Bankruptcy Court
which contemplated the sale and/or lease of the Hospital Facilities to a third
party and subsequently entered into negotiations with the Lessee pertaining to
such transaction;
WHEREAS, pursuant to the provisions of that certain Definitive Agreement
dated as of the 12th day of March, 1998, by and among RHI, Spring Hill, HHI, and
Lessee, as amended by Amendment to Definitive Agreement dated May 18, 1998
(together the "Agreement"), Lessee has agreed to lease the Leased Premises (as
hereinafter defined)
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subsequent to the approval by the Bankruptcy Court of the Agreement and this
Lease Agreement.
WHEREAS, Lessor has agreed to lease the Leased Premises owned by Lessor to
Lessee upon, and subject to, the terms set forth herein, subsequent to the
approval by the Bankruptcy Court of the Agreement and this Lease Agreement and
at such time as delivery of the Lease Agreement is required under the terms of
the Agreement;
WHEREAS, Lessee has agreed to continue to operate the Leased Premises as
Hospital Facilities and to establish a Governing Board (as herein defined) that
would have certain advisory as well as specific responsibilities, all as
hereinafter set forth, in the oversight of the operation of the Hospital
Facilities; and
WHEREAS, pursuant to the provisions of Florida Statutes, Section 155.40,
Lessor has the authority to enter into this Lease Agreement.
AGREEMENTS
----------
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
and agreements hereinafter contained, Lessor and Lessee hereby agree as follows:
ARTICLE I
RECITALS, DEFINITIONS AND DEMISE
SECTION 1.1 RECITALS
-------------------------
The recitals stated above are true and correct and are incorporated into
this Lease by this reference.
SECTION 1.2 DEFINITIONS
----------------------------
The following terms, when used in this Lease, shall have the following
meaning:
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A. "Affiliate" means an entity which, directly or indirectly, controls,
is controlled by, or is under common control with, the referenced party.
B. "Brooksville Regional Hospital" means the hospital facilities known as
Brooksville Regional Hospital located on the land described for such facility in
Composite Exhibit "A" attached hereto and incorporated herein, together with all
improvements, additions and fixtures installed, constructed or placed thereon,
and all appurtenances and hereditaments pertaining thereto, whether now existing
or whether installed, placed or constructed thereon after the date of this
Lease, less any parts thereof which may be taken by exercise of the power of
eminent domain.
C. "Commencement Date" means as of June 1, 1998.
D. "Debtors" mean RHI, Spring Hill and HHI.
E. "Environmental Condition" means any noncompliance on or about the
Leased Premises with any Environmental Law caused by Lessee's Operations on the
Leased Premises.
F. "Environmental Law" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to the Handling (as
hereinafter defined), emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances, materials or wastes, including without limitation petroleum
products, into the environment including, without limitation, ambient air,
surface water, ground water, or land.
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G. "Environmental Notice" means any written notice or report of any the
following:
1) Any suit, proceeding, investigation, order, consent order,
injunction, writ, award, or action related to or affecting the Handling of
any Waste (as hereinafter defined) on or about the Leased Premises relating
to Lessee's Operations (as hereinafter defined) on the Leased Premises;
2) Any Spill or Environmental Condition on or about the Leased
Premises relating to Lessee's Operations on the Leased Premises;
3) Any dispute relating to the Handling of any Waste, Spill or
Environmental Condition on or about the Leased Premises relating to
Lessee's Operations on the Leased Premises;
4) Any claims by or against any insurer related to or arising out of
any Waste, Spill or Environmental Condition on or about the Leased Premises
relating to Lessee's Operations on the Leased Premises;
5) Any recommendations or requirements of any governmental or
regulatory authority, or insurer relating to any Handling of Waste, Spill,
or Environmental Condition on or about the Leased Premises, relating to
Lessee's Operations on the Leased Premises;
6) Any legal requirement or deficiency related to the Handling of
Waste, Spill or Environmental Condition on or about the Leased Premises
relating to Lessee's Operations on the Leased Premises; or
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7) Any notice given to a tenant, concessionaire, manager, or other
party or entity occupying or using the Leased Premises, or any part thereof
which has engaged in or engages in the Handling of any Waste on or about
the Leased Premises during the period of Lessee's Operations.
H. "Excluded Assets" means, collectively:
1) Cash, cash deposits and escrows, and all other cash equivalent
items of Lessee, including all investments of Lessee;
2) Lessee's corporate and fiscal records and other records pertaining
to the operation of the Hospital Facilities by Lessee which Lessee is
required by law to retain in its possession to the extent that such records
are not necessary for the operation of the Hospital Facilities by Lessor;
and
3) All refunds and reimbursements for periods within the Lease Term,
even if payable after the expiration of the Lease Term, available from
insurors, third party payors, Medicaid and Medicare under applicable rules
and regulations and other comparable programs;
4) All accounts receivable that exist and are available to the Lessee
for periods on or prior to the expiration or termination of the Lease; and
5) All notes payable held by Lessee as of the date of the expiration
or termination of the Lease, including notes signed by physicians.
I. "Governing Board" means the local governing board of the Hospital
Facilities, initially consisting of the present members of the Board of
Directors of Debtors and the Chief Executive Officer and Operations Vice
President of Lessee.
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J. "Guarantor" means Health Management Associates, Inc. a Delaware
corporation.
K. "Handling" means the use, treatment, storage, manufacture, processing,
distribution, transport, placement, handling, discharge, generation, production
or disposal.
L. "Hospital Facilities" means (i) Brooksville Regional Hospital and
Spring Hill Regional Hospital and any new hospital developed on the Leased
Premises by Lessee that replaces either Hospital (singularly, hereinafter
"Hospital"), (ii) medical offices and administrative facilities appurtenant to
Brooksville Regional Hospital and Spring Hill Regional Hospital, (iii) all
ancillary facilities pertaining to the operation of each of the Hospitals, and
(iv) all fixtures in the Hospital and the ancillary, office and administrative
facilities, all of which are located on the Leased Premises that were
transferred by the Debtors to Lessor immediately prior to the Commencement Date
of this Lease, whether now existing or whether installed, constructed or placed
on the Leased Premises after the date of this Lease, less any portions thereof
and interests therein released in writing by Lessor and Lessee from this Lease
or taken by the exercise of the power of eminent domain.
M. "Indemnified Parties" means Lessor and Lessor's successor and assigns,
including all employees, commissioners and administrators of the Lessor.
N. "Indemnity" means the indemnity provisions contained in this Lease in
favor of Lessor. Wherever this Lease requires Lessee to indemnify Lessor, such
indemnity shall extend to all claims arising in connection with the indemnified
matter and shall expressly include all of Lessor's attorneys' fees and costs and
consultants' fees.
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Upon written request of Lessor, Lessee shall defend and hold Lessor harmless and
shall undertake the defense of Lessor, at Lessee's sole expense, in connection
with any indemnity set forth in this Lease. Lessee shall have the right to
settle and/or compromise any claim that is the subject of Lessee's Indemnity
obligations provided for in this Lease. In no event shall Lessor be required or
obligated to advance any attorneys' fees and costs or consultant's fees as a
condition to enforcement of any indemnity of Lessee under this Lease. In the
event Lessee fails or refuses to undertake the defense of Lessor at Lessee's
expense or fails to pay, when incurred, the reasonable attorneys' fees and costs
and reasonable consultants' fees of Lessor after receiving such request, or if
Lessee fails to diligently and continuously conduct such defense after receiving
such request as determined by Lessor in its sole discretion, then if Lessor so
elects, Lessor may undertake such defense without reducing Lessee's obligation
to protect, indemnify and hold harmless Lessor as provided in this Lease, and
Lessee shall pay the costs incurred by Lessor in undertaking its own defense,
including but not limited to, reasonable attorneys' fees and costs and
reasonable consultants' fees. All such fees and costs incurred by Lessor shall
constitute a portion of the indemnification duties set forth in this Lease. It
is the intent of the parties that Lessee shall pay, address, and satisfy in full
all such fees and costs incurred by Lessor from the date of the assertion of any
claim through the appellate process at no expense to Lessor.
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O. "Judicial Determination" means the final decision of a court of
competent jurisdiction subsequent to expiration of all appeals and/or appeal
periods and the posting of a supersedeas bond, if required, in the appeal
process.
P. "Lease" and "Lease Agreement" mean this Lease Agreement and all duly
executed amendments thereto.
Q. "Lease Term" means the period that Lessee has the right to possession
under this Lease which shall begin on the Commencement Date and shall expire on
June 1, 2028, unless sooner terminated pursuant to the provisions of this Lease.
R. "Leased Premises" means:
1) The real property and facilities pertaining to Brooksville
Regional Hospital, Spring Hill Regional Hospital, Brooksville Service
Center, Brooksville Enrichment Center, Pinebrook Medical Center and parking
lot, all as specifically described in Composite Exhibit "A" attached hereto
and incorporated herein, including all buildings, improvements, additions,
appurtenances and hereditaments thereto, all of which are used as or
constitute a part of the Hospital Facilities.
2) A total of one hundred sixty-seven (167) licensed hospital beds
comprised of ninety-two (92) beds at Brooksville Regional Hospital and
seventy-five (75) beds at Spring Hill Regional Hospital (all of which are
appurtenances to Brooksville Regional Hospital) and any expansion or
additions thereto together with all improvements, fixtures and
appurtenances; and
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3) All other assets which make up and comprise the Hospital
Facilities, including medical offices and administrative facilities
appurtenant to Brooksville Regional Hospital and Spring Hill Regional
Hospital which were owned or operated by any of the Debtors and transferred
to Lessor immediately prior to the Commencement Date of this Lease,
(including, without limitation, Brooksville Enrichment Center, Brooksville
Service Center, Pinebrook Medical Center, and the Desoto Avenue Parking
Lot, all as more particularly described in Composite Exhibit "A") and all
fixtures and appurtenances thereto whether now existing or whether
installed, constructed or placed on the Leased Premises after the date of
this Lease, less any parts thereof and interests therein released in
writing from this Lease by Lessor and Lessee or taken by the exercise of
the power of eminent domain.
S. "Lessee" means Hernando HMA, Inc., a Florida for-profit corporation,
and its successors and assigns as specifically provided for in this Lease
Agreement, including any surviving, resulting or transferee corporation that may
be permitted under Section 8.1 of this Lease.
T. "Lessor" means Hernando County, a political subdivision of the State
of Florida, and its successors and assigns.
U. "Operations" means Lessee's or any other party's use or occupancy of
the Leased Premises from the date Lessee first enters the Leased Premises
through the expiration or termination of this Lease (or the date Lessee vacates
the Leased Premises, whichever is later).
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V. "Permitted Encumbrances" means those certain title exceptions set
forth in Schedule B, Section 2, subsections 6 through 17 of the Title
Commitment, and matters shown on the Survey.
W. "Rental Payment" means all payments due from Lessee to Lessor or
otherwise required to be paid by Lessee pursuant to the terms of this Lease.
X. "Spill" means any major spill, contamination, discharge, leakage,
release or escape of any Waste in or affecting the Leased Premises as a result
of Lessee's Operations, whether sudden or gradual, accidental or anticipated, or
of any other nature or manner that has previously occurred as a result of
Lessee's Operations or which may occur as a result of Lessee's Operations.
Y. "Spring Hill Regional Hospital" means the real property described for
such facility in Composite Exhibit "A" attached hereto and incorporated herein,
together with all improvements, additions, and fixtures installed, constructed
or placed thereon, and all appurtenances and hereditaments thereto, whether now
existing or whether installed, placed or constructed thereon after the date of
this Lease, less any parts thereof which may be taken by exercise of the power
of eminent domain.
Z. "Survey" means the following ALTA surveys of the Leased Premises
prepared by Xxxxx and Associates, Inc.: Drawing No. 222219-1 dated February 11,
1998, Drawing No. 342218-1 dated February 23, 1998, Drawing No. 342318-1 dated
February 23, 1998, and Drawing No. 182220-1 dated February 23, 1998, certified
in accordance with generally accepted professional standards, and describing the
boundaries,
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improvements, setbacks and all matters of record set forth in the Title
Commitment.
AA. "Taxes" means all real estate and personal property taxes, including
general and special assessments, and all other charges, taxes and assessments,
ordinary and extraordinary, foreseen and unforeseen, which are levied, imposed
or assessed upon or against this Lease, against the leasehold estate, against
the Leased Premises and against all leasehold improvements and all fixtures that
may be constructed or installed on the Leased Premises, as well as all sales,
use, excise, and all other taxes of any nature whatsoever now or hereafter
imposed by any lawful authority on all Rental and/or payments due or required
under this Lease. The term "Taxes" shall also include all fees for licenses and
permits, and all fees, charges, taxes and assessments, now or hereafter imposed,
foreseen and unforeseen, that may be due, levied or assessed against Lessee or
any business conducted on or affiliated with the Leased Premises during the
Lease Term.
BB. "Title Commitment" means the Leasehold Title Insurance Commitment
dated February 9, 1998, Case No. 9801043, issued by Lawyers Title Insurance
Corporation, that will insure as of the commencement of the Lease that the
Lessor and Lessee, as their respective interests may appear, have good and
marketable title to the Leased Premises, and that the Leased Premises are free
and clear of all liens, encumbrances, charges, assessments, taxes, easements,
restrictions and stipulations except for items shown on Schedule B - Section 1
of the Title Commitment that will be removed or satisfied at or before Closing
and the Permitted Encumbrances.
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CC. "Unwind" means the unwind transaction of this Lease as set forth in
Section 3.2(C).
DD. "Waste" means any contaminant, chemical, petroleum product, waste,
waste product, radioactive waste, poly-chlorinated biphenyls, asbestos,
hazardous or toxic substance, contaminant, pollutant, substance, or waste of any
kind, and any other substance which is regulated by any Environmental Law which
is caused by Lessee's Operations on the Leased Premises.
SECTION 1.3 DEMISE OF THE LEASED PREMISES
----------------------------------------------
For and in consideration of the Lessee's timely payment of the Rental
Payment and the Lessee's timely performance of the other covenants and
agreements of Lessee required under this Lease, Lessor does hereby demise and
lease to Lessee, and Lessee does hereby lease, take, and hire from Lessor, the
Leased Premises, and all appurtenances and hereditaments relating thereto.
ARTICLE II
REPRESENTATIONS
SECTION 2.1 REPRESENTATIONS OF LESSOR
------------------------------------------
Lessor makes the following representations to Lessee:
A. Lessor is a political subdivision of the State of Florida duly created
and existing pursuant to the laws and Constitution of the State of Florida, and
has the power to enter into this Lease.
X. Xxxxxx is duly authorized to execute and deliver this Lease and
contemporaneous with the signing of this Lease, shall deliver to Lessee a copy
of the Certified Resolution of the County Commission authorizing the appropriate
representative of the Lessor to sign the Lease and all other documents required
by the Lessor to effect the lease of the Leased Premises as provided herein.
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C. This Lease is the legally binding obligation of Lessor and is
enforceable against Lessor in accordance with its terms, except as
enforceability against Lessor may be affected by its bankruptcy, insolvency,
other laws governing creditors' rights generally, and equitable principles.
D. The leasing of the Leased Premises to Lessee will enable Lessee to
provide needed hospital and health care facilities in Hernando County and will
promote the health and welfare of the people of Hernando County.
X. Xxxxxx has good title to the Leased Premises and shall deliver to
Lessee such affidavits and certificates as may be reasonably necessary to delete
the standard exceptions to the title insurance policy to be issued pursuant to
the Title Commitment and shall deliver such instruments to Lessee as are
required to be delivered by the Lessor as set forth in Schedule B, Section 1, of
the Title Commitment.
X. Xxxxxx acknowledges that the Leased Premises are in compliance with
and in concurrence with all applicable land use and zoning regulations of
Hernando County, Florida, that pertain to those portions of the Leased Premises
located in the unincorporated areas of Hernando County, Florida, and represents
as to those portions of the Leased Premises that are located within any
municipality within Hernando County, Florida, that the Lessor is not aware of
nor has Lessor received any written notice of noncompliance of the Leased
Premises with respect to any zoning code of the applicable municipality.
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X. Xxxxxx, without independent investigation, is not aware of any
litigation or claims made against the Leased Premises other than claims that
were made through the Bankruptcy Court.
SECTION 2.2 REPRESENTATIONS OF LESSEE
------------------------------------------
Lessee makes the following representations to Lessor:
A. Lessee is a duly incorporated for-profit corporation, in good standing
under the laws of the State of Florida, and empowered to operate hospital and
health care facilities under the laws of the State of Florida.
B. Lessee is duly authorized to enter into this Lease and to perform its
obligations under this Lease.
C. This Lease is the legally binding obligation of Lessee and is
enforceable against Lessee in accordance with its terms, except as
enforceability against Lessee may be affected by its bankruptcy, insolvency,
other laws governing creditors' rights generally, and equitable principles.
D. Lessee is in compliance in all material respects with all applicable
statutes, rules, regulations and requirements of all applicable governmental
entities having jurisdiction over Lessee and its operations, including, without
limitation, the Florida Agency for Health Care Administration, and Lessee has
timely filed all reports, data and other information required to be filed by it
with such governmental entities.
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E. Lessee and Guarantor expressly represent that they have the requisite
skills, financial ability and management expertise to operate the Hospital
Facilities.
ARTICLE III
LEASE TERM AND RENTAL PROVISIONS
SECTION 3.1 LEASE TERM
---------------------------
The Lease Term shall begin on the Commencement Date and, subject to the
provisions of this Lease, shall continue for a period of thirty (30) years
thereafter.
SECTION 3.2 EXPIRATION OR TERMINATION OF LEASE
---------------------------------------------------
A. Upon the expiration of the Lease Term or earlier termination of this
Lease by a Judicial Determination in the event of a default by Lessee hereunder,
other than the early Unwind termination as set forth in Section 3.2(C) hereof,
Lessee shall for no consideration relinquish and surrender to Lessor possession
of the Leased Premises and Lessee shall also convey to Lessor by (i) quit claim
deed all of its interest in the Leased Premises, including, without limitation,
the Brooksville Regional Hospital, Brooksville Enrichment Center, Brooksville
Service Center, Pinebrook Medical Center, and the Desoto Avenue Parking Lot, and
any additional structures developed by Lessee on the Leased Premises, and (ii)
xxxx of sale without warranties of all hospital licenses, certificates and
permits for the Hospital Facilities, including, but not limited to, the
certificates of need and rights to the hospital beds so licensed, and all
tangible and intangible personal property including furniture, fixtures,
equipment, inventories, and medical records necessary for the Operations that
are located on the Leased Premises, other than tangible and intangible property
described herein as Excluded Assets, free and clear of any
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Taxes (except as to ad valorem taxes, if any, for the balance of the year of
closing hereunder), indebtedness, liens or encumbrances, but such conveyances
and transfers shall be subject to (a) the Permitted Encumbrances, (b) all
restrictions, covenants, reservations, and easements placed of record by Lessee
that were approved and joined in by Lessor, (c) ad valorem taxes, if any, for
the balance of the year of closing hereunder, and (d) all applicable zoning and
land use restrictions. It is the intention of the parties to this Lease
Agreement that in the event of the expiration of the Lease Term or earlier
termination of this Lease by a Judicial Determination in the event of a default
by Lessee under the Lease Agreement (other than the Excluded Assets), that the
Leased Premises and all tangible and intangible property necessary for the
immediate and continued operation of the Hospital Facilities by Lessor as acute
care hospital facilities be conveyed, transferred or assigned, or to the extent
not transferable or assignable made available to the Lessor including, but not
limited to, all licenses and permits held by the Lessee for the operation of the
Hospital Facilities.
B. Upon expiration of the Lease Term or early termination of this Lease
by a Judicial Determination in the event of a default by Lessee hereunder or in
the event of the "unwind" transaction described in Section 3.2(C), the Lessor
shall have the option of requiring Lessee to transfer to Lessor for the
consideration herein described all right, title and interest in and to any and
all other health care facilities that Lessee may have developed in Hernando
County, subsequent to the Commencement Date, for new medical technology or new
medical related services or for certain material hospital services transferred
from the Hospitals in accordance with Section 4.1(c) that
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were not developed on the Leased Premises (the "New Improvements"). The
definition of New Improvements shall include all licenses, certificates and
permits for the New Improvements, including, but not limited to, certificates of
need and all tangible property including the then remaining furniture, fixtures,
equipment and other tangible and intangible personal property, including medical
records necessary for the operation that is conducted at the New Improvements
other than those specific items of tangible and intangible property described
herein as Excluded Assets. In consideration for the transfer of the New
Improvements to Lessor, the Lessor agrees to pay to Lessee in immediately
available funds on the date of transfer of the New Improvements to Lessor an
amount equal to the fair market value of the New Improvements and the business
operated therein. Prior to the date of transfer of the New Improvements to
Lessor, the Lessee shall deliver to Lessor a written notice setting forth the
fair market value for the New Improvement. Lessor shall, within ninety (90) days
after receipt of the notice, either accept or reject the fair market value
determination of Lessee. If Lessor objects, then Lessor and Lessee shall each
select an MAI commercial real estate appraiser, with at least ten (10) years
experience in appraising hospital facilities, in the State of Florida. Upon
selection, Lessor's and Lessee's appraiser shall work together in good faith to
agree upon the fair market value. If after thirty (30) days of selection of the
appraisers by Lessor and Lessee a dispute continues, then in that event both
appraisers shall select a third appraiser meeting the criteria described above.
Once the third appraiser has been selected, then, as soon thereafter as
practical but within forty-five (45) days, the third appraiser shall make its
determination as
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to which of the estimates received from the original appraisers most closely
reflects the fair market value of the New Improvements. The determination by the
third appraiser shall be rendered in writing to both the Lessor and Lessee and
shall be final and binding upon them. The parties shall share equally in the
cost of the third appraiser. Upon the final determination of value of the New
Improvements, the Lessor shall pay such amount as provided for herein or reject
the sum so determined and not purchase the New Improvements.
In the event that Lessee has, in accordance with the terms of this Lease
Agreement, transferred to the New Improvements certain material hospital
services from the Hospital Facilities pursuant to Section 4.1(C) and the Lessor
determines that it will not purchase the New Improvements the Lessee shall prior
to the closing contemplated under this Article III restore to the Hospital
Facilities, to the greatest extent possible and with all reasonable effort, the
material hospital services transferred or relocated to the New Improvements. In
addition, if the Lessee has reduced, liquidated or eliminated any hospital
services or facilities in accordance with Section 4.1(C) hereof from the
Hospital Facilities that are rebuilt or reconstituted on a facility not located
on the Leased Premises or a New Improvement, then in that event, the Lessee
shall restore such facility to the Hospital Facilities prior to the time of the
transfers as contemplated herein.
- 18 -
C. The Lessor shall have the right at any time after the first anniversary
of the Commencement Date, but prior to the third anniversary of the Commencement
Date, to in good faith "unwind" the lease transaction contemplated hereby, to
reacquire Lessee's interest in the Leased Premises, to terminate the Lease and
to purchase the New Improvements, all hospital licenses, certificates and
permits for the Hospital Facilities and New Improvements, including, but not
limited to, the certificates of need and the rights to hospital beds so
licensed, and all tangible and intangible property including the then remaining
furniture, fixtures, equipment and medical records necessary for Operations that
are located on the Leased Premises and New Improvements, other than those
specific items of tangible and intangible property described herein as Excluded
Assets, by paying to Lessee an amount equal to the product of (i) EBITDA for the
Hospital Facilities and New Improvements, multiplied by (ii) seven (7). Sixty
(60) days prior to the date of closing of the "unwind" ("Unwind Closing"),
Lessee shall present to the Lessor its calculation of EBITDA (EBITDA as used
herein is defined as earnings before interest, taxes, depreciation and
amortization) accomplished in accordance with generally acceptable accounting
principles for the twelve month period immediately preceding the notice of the
value of EBITDA provided Lessor by Lessee sixty (60) days prior to the date of
the Unwind Closing. Upon receipt of the notice of value but prior to the date of
the Unwind Closing, the Lessor may have its auditors
- 19 -
review the calculation of EBITDA. In the event there is any discrepancy of the
calculation of this amount, the Lessor and Lessee shall resolve their
differences or, alternatively, Lessee and Lessor jointly will immediately select
an independent public accounting firm to resolve such dispute prior to the date
of the Unwind Closing, which resolution will be final and binding. In the event
Lessor still disagrees with the EBITDA calculation subsequent to such final
resolution, the Lessor may not close and in such event the Unwind Closing and
the rights provided to Lessor pursuant to this Section 3.2(c) shall be
terminated and of no further force and effect. The fees and expenses of such
accounting firm will be shared by Lessor and Lessee in proportion to the
relative amounts of the dispute and the amount resolved to be determined for the
account of Lessor and Lessee, respectively. In order to exercise the unwind
option, the Lessor shall give Lessee written notice thereof at least 180 days
prior to the date of the Unwind Closing and shall tender the required funds as
calculated above to Lessee on the date of the Unwind Closing, and Lessee and
Lessor will cooperate reasonably with each other in effecting such "unwind"
(including matters of transition), execute such documentation (including
conveyance and assignment documents) as is reasonably necessary to effect the
"unwind" (including the transfer to the Lessor of the Leased Premises, New
Improvements and tangible and intangible personal property, other than the
Excluded Assets, necessary for operations that are located on the Leased
Premises, New Improvements) and all licenses and permits pertaining to the
Leased Premises and New Improvements, free and clear of any indebtedness, liens
or encumbrances but subject to the provisions described in Section 3.2(A)(a)-
(d). In addition, the parties hereto
- 20 -
agree to make appropriate adjustments post Unwind Closing to reflect a purchase
price using an EBITDA for the twelve (12) month period immediately preceding the
Unwind Closing.
D. In the event of an "unwind" the Lessor shall and does hereby covenant
not to sell or lease the Hospital Facilities to any other party for a period of
three (3) years from the date of the Unwind Closing except to a qualified not-
for-profit entity satisfying the following requirements: (i) the not-for-profit
entity shall be a local entity managed and totally controlled by Hernando County
residents, (ii) the local not-for-profit entity shall not be an Affiliate of any
other not-for-profit organization, (iii) the local not-for-profit entity shall
operate and maintain the Hospital Facilities, (iv) the local not-for-profit
entity shall not pay any rent or other remuneration to the County, other than
nominal rent or remuneration, for the Hospital Facilities, and (v) the financing
for the purchase and operation of the Hospital Facilities as described herein
shall be accomplished by County using traditional governmental financing
techniques.
E. Upon expiration of the Lease Term or early termination of the Lease by
a Judicial Determination by virtue of a default by Lessee under the Lease, the
Lessee hereby agrees that for a period of three (3) years following such
termination of the Lease, that Lessee shall not operate any competing hospital
facilities (other than New Improvements not purchased by Lessor or other
healthcare previously consented to by Lessor) within Hernando County except with
the express written consent of the Lessor. This covenant not to compete is
specifically not applicable to the termination or expiration of the
- 21 -
Lease Term by virtue of an Unwind Closing that occurs pursuant to the provisions
of Section 3.2(B).
F. Contemporaneous with the expiration of the Lease Term or early
termination as described above, the Lessee shall provide Lessor with evidence of
tail insurance evidencing that Lessee has maintained professional negligence
liability insurance with minimum limits of liability of $1,000,000 for each
occurrence and $3,000,000 in the aggregate, which insurance shall be provided to
Lessor to protect Lessor from any claims or liabilities arising from Lessee's
operation of the Hospital Facilities.
SECTION 3.3 RENT
---------------------
The annual rental payment for the Leased Premises for each year of the
Lease Term (the "Rental Payment") shall be in the amount of Three Hundred
Thousand and 00/100 Dollars ($300,000.00). This Rental Payment shall be paid to
Lessor by Lessee on the Commencement Date and on each anniversary date of the
Commencement Date during the Lease Term.
ARTICLE IV
OPERATION OF HOSPITAL FACILITIES
SECTION 4.1 OPERATION OF HOSPITAL FACILITIES
-------------------------------------------------
A. Lessee covenants and agrees that during the entire Lease Term, Lessee
will continuously operate as going concerns the Hospital Facilities as (i) two
general acute care hospitals with programs for the diagnosis, treatment, and
care of sick and injured persons, without discrimination on account of race,
creed, color, national origin, or sex, consistent with accepted principles of
hospital financial management and (ii) ancillary services necessary and proper
for the Hospitals, including, without limitation, radiology,
- 22 -
pathology, laboratory, diagnostic imaging services, chemotherapy, inhalation,
pulmonary and physical therapy, practice of medicine and health care services,
and (iii) administrative offices related thereto as may be customary and proper
for a general acute care hospital. Any change in such operation shall be
determined by the Governing Board and Lessor as described in Section 4.1(C).
Lessee further covenants and agrees that it will not deny emergency hospital
care to any person based on ability to pay; provided, however, Lessee shall have
the right to refuse to admit patients because of lack of facilities or
appropriate personnel or to protect the welfare of patients already admitted and
Lessee may adopt and amend from time to time appropriate rules respecting the
admission of patients provided, however, that such rules are consistent with the
terms of this Lease. Notwithstanding anything to the contrary contained in this
Subsection, Lessee shall treat indigent patients as required under applicable
Florida law. Lessee acknowledges that on the Commencement Date, it shall
continue the same indigent care program that was previously adopted by Debtors
for the Hospital Facilities, a copy of which is attached hereto as Exhibit "B"
(the "Indigent Care Policy"), and that it shall in the future provide, at the
minimum, indigent care to the extent as specified in the Indigent Care Policy
and as may be specifically required by the provisions of Chapter 87-92, Laws of
Florida, and Florida Statutes, Section 155.40, and any other applicable
provision of federal or state law.
- 23 -
B. Lessee shall establish and maintain, at all times during the Lease
Term, a Governing Board for the Hospitals. The Governing Board shall consist of
fifteen (15) members initially comprised of the present members of the Board of
Directors of the Debtors and the Executive Director and Operations Vice
President of the Hospitals. Guarantor may increase the size of the Governing
Board at any time and from time to time with an additional two (2)
representatives selected by Guarantor. In the event that either or both of the
two additional members are members of the medical staff of the Hospitals, the
prospective candidates must be approved by the Medical Executive Committee of
the candidate's Hospital prior to final selection by Guarantor. The size of the
Governing Board, however, may neither be reduced nor increased (except for the
two (2) additional representatives that may be selected by Guarantor as
described above) without the consent of the Governing Board. At all times
during the term of the Lease, not less than the greater of ten (10) or a
majority of the members of the Governing Board, will be residents of Hernando
County, Florida, who are not officers, employees or agents of Guarantor, or any
of its Affiliates or directors of Guarantor or any of its Affiliates. The terms
of each member of the Governing Board other than those members selected by
Guarantor shall be staggered, with a maximum term for any member of three (3)
years. Each member of the Governing Board may serve for two consecutive terms,
and then is required to remain off the Governing Board for one year after the
completion of such successive terms. If a Governing Board member dies,
voluntarily leaves such position sooner or is removed from such position by a
vote of the Governing Board or if a Governing Board member's term expires, or if
the size of the Governing Board is
- 24 -
increased beyond seventeen (17) members by the Governing Board, the vacancies
and/or additions so created shall be filled by the Governing Board recommending
one or more candidates to fill each of such positions to Guarantor for
Guarantor's sole approval, which approval shall not be unreasonably withheld.
Notwithstanding the preceding sentences, Guarantor may select up to four (4)
members of the Governing Board (including the Executive Director and Operation's
Vice President of the Hospitals) as described herein, without recommendations
from the Governing Board as to such members. A quorum of the Governing Board
shall consist of a majority of its members. Members of the Governing Board may
be present in person or by means of communications equipment whereby all members
of the Governing Board can hear each other simultaneously. Actions by the
Governing Board shall be by a majority of a quorum. Governing Board's powers and
responsibilities shall include:
1) Adopting a hospital vision, mission and value statement, and any
amendments thereto, assisting in developing policies and monitoring
progress toward strategic goals;
2) For the term of the Lease the Governing Board shall have the right
to approve the hiring or termination of the Executive Director of the
Hospitals, which approval shall not be unreasonably withheld;
3) Approval of any change of the name of any of the Hospitals;
- 25 -
4) Participating on an advisory basis in development of and reviewing
all operating and capital budgets and facility plans;
5) Granting medical staff membership and clinical privileges and,
when necessary, taking disciplinary action consistent with credentialing
processes, medical staff by-laws and strategic plans;
6) Monitoring medical staff and Hospital compliance with the Joint
Commission for Accreditation of Healthcare Organizations ("JCAHO") and
Health Care Financing Administration's ("HCFA") conditions of participation
in the Medicaid and Medicare programs;
7) Fostering community relationships; and
8) Review of operating information provided by Lessee regarding
performance of the Hospital Facilities for the period from the prior
meeting to the then current meeting of the Governing Board. In addition to
financial statements and operating statistics for the Hospital for the
aforesaid period, the Governing Board shall also be provided with the
results of an annual financial audit of the Hospitals as certified by an
independent public accounting firm. The Lessor shall also receive the
results of the aforesaid financial audit, copies of the annually released
corporate information of Guarantor, and a copy of the asset inventory
prepared in connection with the annual financial audit of the Hospitals.
C. During the term of the Lease, Lessee shall operate the Hospital
Facilities as full service hospitals substantially in the same manner as
currently operated; provided, however that if Lessee
- 26 -
reasonably determines that any material hospital services or facilities should
be changed, reduced, liquidated or eliminated, Lessee may change, reduce,
liquidate or eliminate such services or facilities only upon the prior approval
of the Governing Board and Lessor.
D. Lessee agrees to provide the same level of care to indigents as
provided by the Hospitals immediately prior to the Commencement Date as
described in the Agreement. Lessee acknowledges that any patient presented to
the emergency room who has a medical emergency or who, in the judgment of a
staff physician, has an immediate emergency need will be treated in accordance
with such policies. No such patient will be turned away because of age, race,
gender or inability to pay. Lessee will ensure that the Hospitals will continue
to provide medical services to patients covered by the Medicare and Medicaid
programs.
E. In insuring a modern full-service hospital, Lessee is committed to
providing the equipment and capital improvements that are and will be needed by
the Hospital Facilities to serve the medical needs of the community through
state of the art facilities. Lessee shall fund and pay, and Guarantor shall
cause Lessee to fund and pay, for capital expenditures and improvements to the
Hospital Facilities to the extent as provided for in Section 12.7(d) of the
Agreement, the terms of which are hereby incorporated herein by reference, and,
thereafter during the Lease Term, to the extent necessary to maintain the
Hospital Facilities as two full-service acute care facilities, to maintain the
licenses for the Hospital
- 27 -
Facilities issued by the State of Florida, and to maintain the accreditation of
the Hospital Facilities by JCAHO and HCFA.
F. Lessee will offer employment on an "at will" basis, as of the
Commencement Date, and at their salaries on the Commencement Date, to all of the
employees of Debtors (including senior management) who are active employees of
Debtors as of the Commencement Date performing services at the Hospital
Facilities. The employees will retain their current seniority, as of the
Commencement Date, with regard to vacation and sick time accrual under Lessee's
plans. Such employees shall continue to vest in their accrued benefit of
Debtor's Pension Plan, as hereinafter defined, determined as of the date of
closing based on service with Lessee (the full vesting under the Pension Plan is
five (5) years). In addition, such employees shall also be given credit for any
years of service with Debtors for purposes of Lessee's qualified retirement
plans with respect to eligibility, participation and vesting. Lessee's
retirement plan requires one full year of service to be eligible to participate
and seven (7) years to be fully vested. With respect to health insurance
coverage, exclusions for pre-existing conditions and applicable waiting periods
will be waived. The salaries of the employees at the Commencement Date will
provide the base for future merit increases. In the event of an employee
reduction, Lessee will pay severance based on position and length of service
with Debtors and Lessee in accordance with a severance policy that is applicable
generally to all Lessee employees. In addition to a severance payment, eligible
employees will also have normal and customary rights to health plan continuation
coverage as mandated by Section 4980B of the Code or applicable state health
care continuation coverage statutes. Lessee agrees that it will not effect
- 28 -
any reductions in work force for a period of twelve (12) months after the
Commencement Date other than reductions through attrition, flexible staffing for
seasonal adjustments, or decreases in patient census.
G. Lessee acknowledges that all of the Debtors obligations and
liabilities with respect to the pension plan for the current employees of the
Debtors are evidenced by the plan described as Regional Healthcare, Inc. Pension
Plan and Trust Agreement as amended and restated, effective as of January 1,
1989 (the "Pension Plan"). Lessee agrees to be the plan sponsor and assume and
be responsible for all obligations and liabilities set forth in the Pension
Plan. It is understood that the Lessee shall freeze the Pension Plan pursuant to
applicable law immediately subsequent to the Commencement Date. Lessee shall
service such Pension Plan in order to insure that the benefits are distributed
to qualified beneficiaries of the Pension Plan. It is further understood that
Lessee shall maintain the Pension Plan in accordance with all applicable laws
and shall under no circumstances borrow from such funds. All Pension Plan funds
shall be used solely for the benefit of the participants of the Pension Plan and
to pay for custodial and other administrative expenses associated with the
Pension Plan.
H. Lessee covenants and agrees that during the entire Lease Term, the
Hospital Facilities shall be operated as two full service hospitals providing
all essential services necessary to maintain their hospital licenses issued by
the Agency for Healthcare Administration, or its successor, and full
accreditation by JCAHO, HCFA and any comparable successor accreditation body, as
a general acute care hospitals, unless otherwise prescribed by applicable health
planning
- 29 -
regulations approved by Lessor. It is, however, understood that on the
Commencement Date the Hospital Facilities are subject to conditional
accreditation issued by JCAHO. Lessee shall undertake to review, cure and
correct the deficiencies that exist in the Hospital Facilities as to eliminate
the conditional accreditation as soon as reasonably possible.
I. Lessee shall comply with all laws, rules, regulations, and
requirements of all federal, state, and local governments and agencies and
departments thereof which are applicable to it or to licensed hospitals in the
State of Florida, including, but not limited to, Florida Statutes, Sections
155.40 and 155.41 and shall at all times have in effect all licenses necessary
for the operation of the Hospital Facilities as contemplated by this Lease;
provided, however, that nothing herein shall preclude Lessee from challenging in
good faith any of such laws, rules, regulations, or requirements.
ARTICLE V
TAXES AND UTILITIES
SECTION 5.1 TAXES
----------------------
Lessee shall pay all Taxes, if any, prior to delinquency. If Lessee
desires to contest the validity of any Taxes for which Lessee is responsible,
Lessee may do so without being in default under its obligation to pay Taxes,
provided Lessee institutes appropriate legal proceedings to contest the validity
of the tax or assessment. If assessed, Lessee shall comply with Florida
Statutes, Sections 194.171(3) (or shall obtain an injunction, if necessary, or
such other provision as may be specified by law) to prevent the sale of any tax
certificate or the sale of any property subject to the tax lien by reason of
non-payment of the tax or assessment being contested in
- 30 -
such legal proceedings. If Lessee fails to comply with Florida Statutes,
Sections 194.171(3) (or to obtain such injunction, or if any injunction so
obtained is dissolved), Lessee shall deposit with Lessor at least thirty (30)
days before the contested tax or assessment would become delinquent for non-
payment (or within ten (10) days of dissolution of the injunction), an amount
which is sufficient to pay in full the contested tax or assessment, including,
without limitation, all penalties and attorneys' fees and costs if the
adjudication in such proceedings should be adverse to Lessee. Lessor shall have
the right to make any such payment; provided, however, Lessor shall refund to
Lessee any portion of the deposit retained by Lessor which shall be determined
by the court not to be due to the taxing authorities on account of such taxes,
penalties or attorneys' fees and costs.
SECTION 5.2 UTILITIES
--------------------------
Lessee shall pay all charges for gas, electric power, water, sewer, and all
other utilities and services necessary or desirable for the operation,
maintenance, use, and upkeep of the Hospital Facilities and the Leased Premises.
- 31 -
ARTICLE VI
INSURANCE
SECTION 6.1 INSURANCE
--------------------------
Lessee covenants that it will obtain and maintain at all times during the
Lease Term the insurance for the Hospital Facilities and all tangible personal
property used in connection therewith as described in this Article and all other
insurance for the Hospital Facilities that Lessee and Lessor reasonably deem
necessary or appropriate. Lessee will cause the Hospital Facilities and all
tangible personal property used in connection therewith at all times to be
reasonably insured against all such risks as are customarily insured against in
connection with the operation of hospital facilities of type and size comparable
to the Hospital Facilities within the State of Florida in areas comparable to
Hernando County. In connection therewith, Lessee will carry and maintain, or
cause to be carried and maintained, as minimum requirements, and pay, or cause
to be paid, timely the premiums for at least the following insurance when and as
such insurance is commercially available:
A. With respect to the Leased Premises including the Hospital Facilities
and all tangible personal property used in connection therewith, fire insurance,
with uniform standard extended coverage endorsements, and vandalism and
malicious mischief insurance with the broadest coverage approved for issuance in
the State of Florida, including insurance against loss or damage from lightning,
windstorm, hurricane, tornado, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles, and smoke, in an amount equal to the
replacement cost of the Hospital Facilities and all tangible
- 32 -
personal property used in connection therewith, excluding land and foundations;
B. Commercial general liability, property damage and bodily injury
insurance, insuring Lessor and Lessee against any liability whatsoever
occasioned by any accident, injury or damage suffered or occurring on or about
the Leased Premises or any appurtenance thereto. Lessee shall also procure and
maintain during the Lease Term contractual liability insurance coverage for the
performance of Lessee's indemnity obligations under this Lease. Each liability
policy shall be for the minimum amount of $1,000,000.00 combined single limit
coverage per accident.
C. Worker's compensation insurance in the minimum amount required by the
laws of the State of Florida;
D. Comprehensive automobile liability insurance with limits of not less
than $1,000,000.00 per person and $1,000,000.00 per occurrence for bodily injury
and not less than $1,000,000.00 per occurrence for property damage;
E. So long as the Medical Malpractice Liability Reform Act, Section
766.105 et seq., Florida Statutes, or any similar law or laws providing
insurance to health care providers against liability for death, injury, loss or
damage occurring in the examination, diagnosis, treatment, or care of any
patient is in effect in the State of Florida (or in the United States if
applicable within the State of Florida), a policy or policies of medical
liability and malpractice insurance with limits not less than the basic
coverage, if any, required under such law or laws, which policy or policies
shall be in such form as may be required under such law or laws
- 33 -
(provided that, in lieu of maintaining such policy or policies, the Lessee may
comply with any self-insurance requirements respecting qualifications for such
insurance if the laws of the State of Florida provide for such qualification by
self-insuring in lieu of maintaining such policy or policies) and the Lessee
will take any and all other actions required for the Lessee to qualify and to
remain qualified for such insurance.
F. Directors and Officers liability insurance for the benefit of Lessee,
Guarantor and the members of the Governing Board shall be obtained in accordance
with policies, procedures and amounts generally applicable to other hospital
facilities owned or operated by Guarantor.
SECTION 6.2 BLANKET POLICIES
---------------------------------
Any property insurance required to be carried under this Article may be
included as part of any blanket or other policy or policies of insurance as long
as the minimum coverage standards required by this Lease are met or exceeded for
the Hospital Facilities independently of coverage for other properties or
facilities covered by such policies.
SECTION 6.3 INCREASE IN COVERAGE
-------------------------------------
The minimum limits and coverage for liability policies shall be increased
from time to time, as reasonably determined by Lessee and Lessor, to assure full
protection to Lessor against claims for injury (including death) and damage to
property.
- 34 -
SECTION 6.4 QUALIFIED INSURER AND STANDARD PROVISIONS
----------------------------------------------------------
Lessee covenants that each insurance policy required by this Article: (i)
shall be issued by such insurer or insurers as are financially responsible, are
capable and qualified to write the respective insurance in the State of Florida
and of recognized standing; and (ii) shall be in such form and with such
provisions (including, without limitation, the loss payable clause, the waiver
of subrogation or right of recovery claim clause, deductible clause and the
designation of the named insured parties) as are generally considered standard
provisions for the type of insurance involved and are reasonably acceptable to
Lessor. Lessor agrees that in the event of destruction of all or any part of
the Leased Premises, all insurance proceeds paid as a result of such casualty
shall be made available to Lessee for payment for the repair, restoration or
replacement of the portion of the Leased Premises damaged or destroyed. All
insurance required under this Lease shall be written with insurance companies
authorized to do business in the state of Florida and reasonably acceptable to
Lessor. The cost of all premiums on the policies shall be paid by Lessee. The
form and substance of all policies shall be subject to the approval of Lessor.
The policies shall contain a clause that the insurer will not cancel or change
the insurance coverage without first giving Lessor thirty (30) days' prior
written notice. The original policies or binders shall be delivered to Lessor
within ten (10) days of the commencement of this Lease. Lessee shall also
furnish Lessor with original or binders of renewal policies for each such policy
at least ten (10) days prior to the expiration date of the expiring policy. All
policies
- 35 -
(exclusive of worker's compensation) required under this Section shall name
Lessor as an additional named insured.
SECTION 6.5 LIABILITY PROTECTION
-------------------------------------
Lessee will provide for and insure in the commercial general liability
policies required above, not only its own liability in respect of the matters
there mentioned, but also the interest of Lessor as an additional insured party.
Lessee will not, without the prior written consent of Lessor, settle or consent
to the settlement of any pending or threatened litigation or claims for which
Lessee is obligated under the provisions of this Section to insure the interest
of Lessor.
SECTION 6.6 INSURANCE PROCEEDS
-----------------------------------
All insurance proceeds paid as compensation for loss or damage to the
Leased Premises as a result of any casualty shall be the property of Lessee to
be used in accordance with Section 7.5 and, if not used by Lessee as provided in
Section 7.5, shall be provided to Lessor.
ARTICLE VII
MAINTENANCE AND REPAIR
ALTERATIONS AND IMPROVEMENTS
SECTION 7.1 CONDITION OF HOSPITAL FACILITIES
-------------------------------------------------
Lessee accepts the Hospital Facilities in the condition existing on the
Commencement Date, "as is, where is, with all faults." Lessee shall keep and
maintain the Hospital Facilities and tangible personal property used therein in
good repair and operating condition, reasonable wear, tear, and depreciation
excepted, and subject to
- 36 -
replacement in the normal course of business at Lessee's own expense during the
Lease Term.
SECTION 7.2 REPAIRS
------------------------
Lessee shall make all repairs (including replacements) to the Hospital
Facilities, and tangible personal property used therein, foreseen and
unforeseen, structural or otherwise, whether or not caused by Lessee's act or
omission, that may be necessary to keep and maintain the Hospital Facilities and
tangible personal property used therein in good repair and operating condition
and in compliance with all applicable rules, codes, laws, regulations, and
ordinances of all governmental and quasi governmental agencies or boards having
jurisdiction over the Hospital Facilities during the Lease Term.
SECTION 7.3 ALTERATIONS AND IMPROVEMENTS
---------------------------------------------
Lessee shall have the right, at its own expense, to make such additions,
alterations, improvements in or to the Hospital Facilities as it deems necessary
or desirable, provided that neither the value of the Hospital Facilities nor
their utility for the purposes described in Section 4.1 is thereby materially
impaired, and provided, further, that all permanent or structural additions,
alterations, improvements, or replacements shall be deemed a part of the
Hospital Facilities and shall become the property of Lessor without further cost
to Lessor.
SECTION 7.4 REMOVAL OR DISPOSITION OF PROPERTY
---------------------------------------------------
If Lessee is not in default under this Lease, and provided such change is
not governed by the approval requirements set forth in Section 4.1(C) hereof,
Lessee shall have the right from time to time to remove any or all non-
structural improvements, furniture, equipment and fixtures in the Hospital
Facilities, provided Lessee repairs any
- 37 -
damage to the Hospital Facilities caused by such removal, and provided Lessee
restores at the time of termination of the Lease as provided herein that portion
of the Hospital Facilities affected by such removal to the condition existing
prior to the installation of the item so removed (and provides a substitution or
replacement of any item so removed if such item constitutes a part of the Leased
Premises necessary or desirable for continued use of the Hospital Facilities as
full service general acute care hospitals).
If any property or structure, or any furnishings, machinery, equipment, or
other improvement constituting a part of or used in the Leased Premises or the
Operations shall become inadequate, obsolete, worn out, unsuitable, undesirable,
or unnecessary and if its demolition, disposal or removal will not impair the
structural soundness, efficiency, or the economic value of the Leased Premises,
Lessee may demolish, remove, or dispose of such property and may, to the extent
permitted by law, sell, trade in, exchange, replace or otherwise dispose of
same, in whole or in part, as long as the Leased Premises and the Operations
remain functional and operational as contemplated in Section 4.1 hereof.
SECTION 7.5 DAMAGED OR DESTROYED PROPERTY
----------------------------------------------
If any part of the Hospital Facilities shall be destroyed or damaged by
fire or other casualty Lessee shall promptly replace, repair, rebuild, and
restore the property damaged or destroyed to substantially the same condition as
existed prior to such damage or destruction, with such alterations and additions
as will not impair the capacity or character of the applicable Hospital
Facilities for the purposes stated in Section 4.1, applying so much as may be
necessary of the net proceeds of insurance received by Lessee by
- 38 -
virtue of any such damage or destruction and paying from Lessee's own funds for
the cost of such replacement, repair, rebuilding, or restoration, either on
completion thereof or as the work progresses, if such insurance proceeds shall
not be sufficient to pay for all such work.
SECTION 7.6 CONSTRUCTION LIENS
-----------------------------------
Lessor's interest in the Leased Premises shall not be subject to liens for
improvements made by Lessee and Lessee shall have no power or authority to
create any lien or permit any lien to attach to Lessee's leasehold or to the
estate, reversion or other estate of Lessor in the Leased Premises or any
improvements of which the Leased Premises are a part. All contractors,
artisans, mechanics and laborers and other persons supplying design services,
materials or labor or contracting with Lessee with respect to the Leased
Premises or any part thereof, or any party entitled to claim a construction lien
under the laws of Florida (whether same shall proceed in law or in equity) are
hereby charged with notice that they shall look solely to Lessee to secure
payment of any amounts due for work done or material furnished to Lessee
relating to the Leased Premises, or for any other purpose during the Lease Term.
Lessee covenants and agrees that Lessee shall indemnify the Indemnified
Parties against all such claims and Lessee covenants and agrees to transfer any
claimed or asserted lien to a bond or such other security as may be permitted by
law within thirty (30) days of the assertion of any such lien or claim of lien.
In the event Lessee fails to transfer such lien to bond or other security within
such thirty (30) day period then, in addition to its other remedies specified in
this Lease, Lessor shall have the right to discharge
- 39 -
the lien or to transfer the lien claimed to bond or other security permitted by
law and in any such event Lessee shall pay all costs so incurred by Lessor
immediately upon demand therefor.
ARTICLE VIII
ASSIGNMENTS, SUBLEASES AND ENCUMBRANCES
SECTION 8.1 ASSIGNMENTS AND TRANSFERS, BUSINESS COMBINATIONS, AND
--------------------------------------------------------------------
RIGHT OF FIRST REFUSAL TO LESSOR
--------------------------------
A. Assignment and Transfers. Lessee shall have the right to assign
------------------------
its interest in this Lease or to sublease all or any portion of the Leased
Premises or its real estate interest in the Leased Premises or Guarantor or its
Affiliates shall have the right to sell or transfer fifty percent (50%) or more
of the voting stock of Lessee or enter into any transaction changing the control
of Lessee (whether in a single transaction or a series of transactions) only
with the prior written consent of Lessor.
B. Competing Properties Acquired by Business Combination. Any sale,
-----------------------------------------------------
purchase, merger, other reorganization, partnership, affiliation, or other
transaction (in any case, a "Business Combination") pursuant to which Guarantor
(or any of its Affiliates) or any corporation or other entity surviving or
resulting from such Business Combination (or any of its Affiliates) will own or
operate or have any interest in the ownership or operation of any other hospital
in Hernando County, Florida, and/or Bayonet Point Hospital, in Pasco County,
Florida (the "Other Hospitals") must be approved by the Lessor; provided,
however, as to Bayonet Point Hospital, said approval shall not be unreasonably
withheld; provided further, however, that the Lessor shall be deemed to have
consented to such Business Combination if Guarantor (and all of its Affiliates)
and
- 40 -
any other company surviving such Business Combination (and all of its
Affiliates) have, within twelve (12) months after the date on which such
Business Combination becomes effective, divested themselves of their entire
right, title and interest in the Other Hospitals, whether held directly or
indirectly, and any interest, whether direct or indirect, in the management or
operation of the Other Hospitals.
C. Transfer of Control of Guarantor.
--------------------------------
1) In the event that, at any time during the Lease Term, Guarantor
proposes (i) a transfer or sale (whether in a single transaction or series of
transactions) of fifty percent (50%) or more of the voting stock of Guarantor,
or substantially all of the assets of Guarantor, to a third party which was not
an Affiliate of Guarantor immediately prior to such transfer or sale, or (ii)
the merger or consolidation of Guarantor with or into a third party which was
not an Affiliate of Guarantor immediately prior to such merger or consolidation
(other than a merger or consolidation in which Guarantor is the surviving entity
thereof) (each a "Disposition"), then the Lessor shall have the following
options:
(a) Approve the Disposition and thereby consent to the transaction by and
between the third party and Lessee; or
(b) Disapprove the Disposition to the third party.
- 41 -
2) In the event the Lessor disapproves the Disposition as described in
Section 8.1 C.1)(b), the Lessor shall elect one of the following options: (i)
Lessor may purchase the Leased Premises, New Improvements and all tangible and
intangible personal property used therein, other than the Excluded Assets, of
Lessee that would be transferred to Lessor at the time of termination of the
Lease (the "Termination Assets"), within one hundred and eighty (180) days from
the date the Lessor disapproves the Disposition, upon payment of the fair market
value for the Termination Assets as hereinafter described (the "Lease Asset
Value"), or (ii) the Lessor will, within one hundred and eighty (180) days from
the date the Lessor disapproves the Disposition, find a purchaser acceptable to
Lessor that will purchase and close on the Termination Assets as provided for
herein. If the Lessor does not exercise its rights under Section 8.1 C.1)(a) or
Section 8.1 C.1)(b) within the time frame set forth herein, the Lessor shall be
deemed to have consented to the Disposition and to the transaction by and
between the Acquiror (as herein defined) and Guarantor.
3) In the event a Disposition transaction as described in Section 8.1
C.1)is proposed, Guarantor shall give written notice to Lessor ("Disposition
Notice"), containing the name, address, qualifications, financial information
and background of the third party with whom the Disposition is proposed (the
"Acquiror").
4) The Disposition Notice shall also set forth the Lease Asset Value for
the Termination Assets. Lessor shall, within ninety (90) days after receipt of
the Disposition Notice, either accept or reject the Disposition. In addition,
if Lessor disagrees with Guarantor's determination of the Lease Asset Value,
then Lessor and Guarantor
- 42 -
shall each select an MAI commercial real estate appraiser, with at least 10
years' experience in appraising hospital facilities, in the southeast region of
the United States. Upon selection, Lessor's and Guarantor's appraisers will work
together in good faith to agree upon the fair market value of the Termination
Assets, taking into consideration the remaining term of the Lease, and the
business operated therein. If after thirty (30) days of selection of the
appraisers by Lessor and Guarantor a dispute continues, then in that event, both
appraisers shall select a third appraiser meeting the criteria described above.
Once the third appraiser has been selected, then, as soon thereafter as
practicable but within thirty (30) days, the third appraiser shall make its
determination as to which of the estimates received from the original appraisers
most closely reflects the fair market value of the Termination Assets. The
determination by the third appraiser shall be rendered in writing to both the
Lessor and Guarantor and shall be final and binding upon them. The parties shall
share equally in the cost of the third appraiser.
5) If the final determination of the Lease Asset Value is acceptable to
Lessor, then, within thirty (30) days following the final determination of the
Lease Asset Value, Guarantor and Lessor will enter into an agreement setting
forth the terms and conditions of the sale of the Termination Assets for the
Lease Asset Value. The parties' efforts in that regard will be pursued
diligently and in good faith, and the agreement entered into by Lessor and
Guarantor will contain only those terms and conditions that would be customary
to consummate the transaction in accordance with the provisions hereof,
including those with respect to any required governmental approvals, transfers
of Licenses and Permits and contracts, and other
- 43 -
provisions necessary to ensure that Lessor receives in the Termination Asset
those assets required to operate the Hospital Facilities as an acute care, in-
patient hospital facility.
6) In evaluating the third party seeking to purchase, merge or consolidate
with Lessee and/or Guarantor, the Lessor shall in each and every instance
determine if the third party satisfies the conditions described in Section 8.1
A. hereof, and if it does, the Lessor shall approve the third party and the
transaction so contemplated.
7) In the event that the Lessor does not agree with the final determination
of the Lease Asset Value or fails to close under the purchase agreement
described above, then in that event Guarantor may complete the Disposition
transaction with the Acquiror. In such event, the Acquiror shall take the
Termination Assets subject to all terms set forth in this Lease Agreement.
8) Lessee and Guarantor will afford to Lessor and its counsel, accountants
and other representatives reasonable access to the books and records of Lessee
and Guarantor relevant to the operation of the Hospital Facilities, and promptly
will furnish Lessor with all information as Lessor may reasonably request in
connection therewith.
SECTION 8.2 RESTRICTIONS ON MORTGAGE OR OTHER ENCUMBRANCES
---------------------------------------------------------------
OF LEASED PREMISES BY LESSEE
----------------------------
Except as otherwise expressly provided in this Lease, Lessee shall have no
power or authority to mortgage, pledge, sell, assign, transfer, convey, or make
any other disposition or encumbrance of the Leased Premises or Lessee's
leasehold interest in the Lease Agreement without the prior written consent of
Lessor. It shall be an express condition of any such mortgage, sale, assignment,
transfer, conveyance or other disposition or encumbrance, that it shall be
- 44 -
subject to all of the terms and conditions of this Lease, and that any transfer
as a result of the exercise of any remedies in favor of a mortgagee or lien
holder shall be subject to the provisions of Section 8.1, above, requiring
Lessor's (additional) consent thereto.
ARTICLE IX
ADDITIONAL COVENANTS OF LESSEE
SECTION 9.1 PROTECTION OF THE LEASED PREMISES
--------------------------------------------------
Lessee shall use reasonable care in performing its duties to protect the
Leased Premises. Lessee covenants that it will not knowingly permit anything to
be done on or about the Leased Premises that will adversely affect, impair, or
contravene any policies of insurance that may be carried on the Leased Premises
or any part thereof against loss or damage by fire, casualty, or otherwise.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 EVENTS OF DEFAULT DEFINED
------------------------------------------
Each of the following shall be an event of default under this Lease and the
terms "event of default" or "default" shall mean, whenever they are used in this
Lease, any one or more of the following events:
- 45 -
A. Failure by Lessee to observe and perform any covenant, condition, or
agreement on its part to be observed or performed which can be cured by the
payment of money, for a period of thirty (30) days after written notice is given
by Lessor to Lessee, specifying such failure; or
B. Failure by Lessee to observe and perform any covenant, condition, or
agreement on its part to be observed or performed other than the payment of
money, for a period of sixty (60) days after written notice is given by Lessor
to Lessee, specifying such failure; provided, however, if the failure stated in
the notice cannot be corrected within such sixty (60) day period, Lessee shall
not be deemed to be in default if corrective action is instituted by Lessee
within such sixty (60) day period and is diligently pursued until the corrective
action is completed; or
C. The dissolution or liquidation of Lessee or the filing by Lessee of a
voluntary petition in bankruptcy, or the filing of an involuntary petition in
bankruptcy against Lessee (unless such petition is dismissed within one hundred
twenty (120) days after it was filed); failure by Lessee promptly to lift any
execution, garnishment, or attachment of such consequence as will impair its
ability to carry on its operation of the Hospital Facilities; Lessee's seeking
of or consenting to or acquiescing in the appointment of a receiver of the
Leased Premises; the commission by Lessee of an act of bankruptcy, or
adjudication of Lessee as bankrupt; or any assignment by Lessee for the benefit
of its creditors, or the entry by Lessee into an agreement of composition with
its creditors. The term "dissolution or liquidation of Lessee" as used in this
subsection, shall not be construed to include (i) the cessation of
- 46 -
the corporate existence of Lessee resulting either from a merger or
consolidation of Lessee into or with another corporation, (ii) an administrative
dissolution of Lessee by the Florida Department of State, because of the failure
of Lessee to file its annual report with the Department of State provided that
Lessee is reinstated as a corporation within ninety (90) days after such
administrative dissolution, or (iii) a transfer of all or substantially all of
Lessee's assets as permitted under this Lease.
SECTION 10.2 REMEDIES ON DEFAULT
------------------------------------
If any event of default described in Section 10.1 shall occur, Lessor,
without limiting its other remedies under the law or pursuant to the provisions
of this Lease, may elect to terminate this Lease, and exclude Lessee from
possession of the Leased Premises after giving Lessee written notice of its
election to cancel and terminate this Lease and in any such event Lessee shall
execute and deliver to Lessor, if necessary, all documents and items required
pursuant to the provisions of Section 3.2. No termination shall be implied or
effective unless Lessor elects in writing to terminate this Lease. In addition,
the Lessor shall have the right to seek payment of all amounts due hereunder to
be paid by Lessee or loaned to Lessee by Lessor pursuant to Section 10.3 hereof.
SECTION 10.3 ADVANCES BY LESSOR
-----------------------------------
In addition to the foregoing remedy, if Lessee fails to pay the premiums on
policies to provide the full insurance coverage required by this Lease, fails to
pay any Taxes at or prior to the time they are required to be paid, or fails to
keep the Hospital Facilities in good order and repair or fails to perform any
other covenants or agreements on Lessee's part to be performed hereunder,
Lessor, after
- 47 -
first giving Lessee reasonable prior notice of any such failure on its part, may
(but shall not be obligated to) pay the premiums on such insurance, pay such
taxes or other charges, or make such repairs, renewals, and replacements as may
be necessary to maintain the Hospital Facilities properly and in good order and
repair and in a reasonably safe condition, or perform such acts which Lessee has
failed to perform and all amounts advanced or paid therefor by Lessor shall
become an additional obligation of Lessee to Lessor. Lessee hereby agrees to pay
the same upon demand to Lessor together with interest thereon at the maximum
rate then permitted to be charged by private parties in contracts governed by
Florida law.
SECTION 10.4 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES
--------------------------------------------------------------
In the event Lessor or Lessee is required to employ an attorney or incur
other expenses for the enforcement or interpretation of this Lease, the non-
prevailing party will, on demand therefor, pay to the other party its attorneys'
fees (including fees for paralegals and legal assistants) and costs and expenses
incurred out of court, in the trial court, on appeal or in bankruptcy,
mediation, arbitration or any administrative proceedings.
SECTION 10.5 WAIVER
-----------------------
Any of the terms or conditions of this Lease may be waived at any time and
from time to time, in writing, by both parties; provided, however, that except
as otherwise specifically provided in this Lease, no failure or delay on the
part of either party in exercising any of its respective rights hereunder upon
any failure by the other party to perform or observe any condition, covenant or
provision herein contained shall operate as a waiver thereof, nor shall any
single or partial exercise of any of such rights preclude any other or
- 48 -
further exercise thereof or the exercise of any other right hereunder. No waiver
or release of any of the terms, conditions, or provisions of this Lease shall be
valid or asserted or relied upon by either party hereto or offered in any
judicial proceeding or otherwise, unless the same is in writing, and duly
executed by the party granting such waiver or release.
ARTICLE XI
ENVIRONMENTAL PROVISIONS
SECTION 11.1 COMPLIANCE
---------------------------
Lessee covenants and warrants that Lessee's Operations on the Leased
Premises will at all times substantially comply with and conform to all
Environmental Laws, including without limitation, those Environmental Laws which
relate to the Handling of any Waste on or about the Leased Premises. Upon
receipt of any material Environmental Notice whatsoever, Lessee shall deliver to
Lessor a true, correct and complete copy of any written Environmental Notice.
In the event (i) of any Environmental Notice; or (ii) if Lessee has caused,
suffered or permitted, directly or indirectly, any Spill or Environmental
Condition on or about the Leased Premises, or (iii) if any Spill or
Environmental Condition has occurred on or about the Leased Premises or
otherwise affecting the Leased Premises, then Lessee shall immediately take all
of the following actions:
A. Notify Lessor;
- 49 -
B. Promptly commence and diligently pursue all steps necessary to clean
up any such Spill and any contamination related to the Spill or to remediate or
xxxxx such Environmental Condition and Environmental Notice;
C. Promptly provide Lessor with copies of all reports, data, proposals,
test results or analyses, assessment or remediation plans relating to such
incidents;
X. Xxxxx the Environmental Condition and the Environmental Notice and
otherwise restore the Leased Premises or affected property to the condition
required by all applicable laws and regulations; provided, however, if any laws
or regulations hereafter enacted shall prescribe more stringent standards than
those in effect at the time any remediation is effected, Lessee shall perform
any work required to bring the Leased Premises into compliance with such
stricter standards at Lessee's sole expense; and
E. Fully cooperate with Lessor with respect to any such incident,
including permitting Lessor to monitor and inspect all activities; provided,
however, Lessor shall not interfere with any remediation work that may be in
progress.
SECTION 11.2 COMPLETION OF REMEDIAL WORK
--------------------------------------------
In the event Lessee shall fail to commence the remedial work in timely
fashion or fail to prosecute the remedial work to completion within a reasonable
time after commencement of such work, Lessor may, but shall not be required to,
cause the remedial work to be performed, subject fully to the Environmental
Indemnification provisions of this Lease, and Lessee shall pay for all such work
as the costs are incurred.
- 50 -
SECTION 11.3 CLAIMS
-----------------------
Lessee shall immediately notify Lessor of any material claims for damages,
penalties or otherwise against Lessor or Lessee described above.
SECTION 11.4 ASBESTOS
-------------------------
Without representation or warranty by Lessor as to its content or to the
existence or non-existence of asbestos in the Leased Premises, attached hereto
as Exhibit "C" is a description of certain asbestos that is present in the
Leased Premises.
ARTICLE XII
CONDEMNATION
SECTION 12.1 TAKING
-----------------------
If any competent authority, for any public or quasi-public purposes, takes
or condemns, or if Lessor makes a conveyance in lieu of a taking or condemnation
of, either (i) the whole of the Leased Premises, or (ii) such part of the Leased
Premises as hereafter defined so as to prevent or substantially impair the use
of the Leased Premises for the purposes stated in Section 4, then the Lease Term
shall automatically cease and terminate on the date possession of the Leased
Premises is required by, or surrendered to, the condemning authority.
SECTION 12.2 LAST YEAR OF LEASE TERM
----------------------------------------
If any competent authority, for any public or quasi- public purpose, takes
or condemns, or if Lessor makes a conveyance in lieu of a taking or condemnation
of, any part of the Leased Premises in the last year of the Lease Term such that
the use of the premises for the purposes stated in Section 4 is prohibited or
substantially impaired, either party shall have the right to terminate this
Lease
- 51 -
by written notice to the other party tendered no later than thirty (30) days
following the date possession is required by the condemning authority. If either
party elects so to terminate, the Lease Term shall cease and terminate as of the
date when possession of the area so taken is required by, or surrendered to, the
condemning authority.
SECTION 12.3 COLLECTION OF AWARDS
-------------------------------------
In the event of a complete or partial taking of the Leased Premises, the
parties agree that Lessor shall be entitled to collect the portion of the award
paid by the condemning authority attributable to the land, permanent
improvements and all estates or interests therein that is equal to the expired
portion of the Lease Term expressed as a percentage and Lessee shall collect the
balance of the award. Lessee, however, may also claim business relocation
damages described in Section 12.5 herein.
SECTION 12.4 NON-TERMINATION OF LEASE
-----------------------------------------
In the event of a partial taking of the Leased Premises which does not
result in termination of this Lease then, Lessee shall, at Lessee's expense,
promptly repair, restore and reconstruct the Leased Premises and Lessor shall
make available to Lessee such portion of the condemnation awards as may be
required to pay for such repairs and restoration. The restoration shall be made
as nearly as possible to the condition existing immediately prior to such taking
of the Leased Premises and improvements thereon.
SECTION 12.5 BUSINESS LOCATION EXPENSES
-------------------------------------------
Nothing in this Section shall be deemed to prohibit Lessee from claiming
compensation from the condemning authority (but not from Lessor) for business
relocation expenses in connection with such taking.
- 52 -
ARTICLE XIII
ASSUMPTION OF RISK
SECTION 13.1 USE AND OCCUPATION
-----------------------------------
To the maximum extent permitted by law, Lessee agrees to use and occupy the
Leased Premises at its own risk, and hereby (for itself and all persons claiming
under, by or through Lessee) releases Lessor and its servants, contractors, and
employees, from all claims and demands of every kind resulting from any
accident, damage, injury, or death occurring thereon, unless solely due to such
party's gross negligence or willful misconduct. Lessee expressly covenants and
agrees that Lessor shall not be liable to Lessee or Lessee's contractors,
licensees, agents, guests, invitees, or employees for any injury, damage, or
loss to its, his or their persons or property by any cause whatsoever,
including, without limitation, construction defects, water, rain, sleet, fire,
storms, negligence and accidents, breakage, stoppage, or leaks of gas, water,
heating, sewer pipes, boilers, wiring or plumbing or any other defect in, on or
about the Leased Premises.
SECTION 13.2 LIABILITY
--------------------------
Lessee expressly assumes all liability for or on account of all claims,
suits, liability and expense arising from claims for injury, loss or damage, on
or about or relating to the Leased Premises except those caused by the acts of
Lessor or Lessor's agents, contractors or representatives.
- 53 -
ARTICLE XIV
INDEMNITY
SECTION 14.1 GENERAL INDEMNITY
----------------------------------
Lessee agrees to indemnify Lessor and to defend and hold the Indemnified
Parties harmless from and against all liability and damage caused by or growing
out of any injury, death, loss or damage to persons or property upon the Leased
Premises or arising from Lessee's Operations upon the Leased Premises during the
Lease Term (except to the extent caused by Lessor's acts), including, without
limitation, the obligation to pay all attorneys' fees and costs, and
consultants' fees incurred by Lessor as a result thereof. Lessee and Lessor
acknowledge that the Indemnity obligation of Lessee as to notice, settlement and
attorneys' fees are as set forth in Section 1.2(N) herein. Lessee shall also
indemnify, defend and hold the Indemnified Parties harmless from and against any
losses, liabilities, damages, interests, fines, penalties, expenses, and
attorneys' fees and costs based upon, arising out of or otherwise in respect to,
noncompliance with any governmental law, statute, regulation, ordinance, or
administrative or judicial judgment or order relating to Lessee's Operations on
the Leased Premises except as to those matters of non-compliance that existed as
of the Commencement Date for the Hospital Facilities and the operation thereof.
SECTION 14.2 CONTAMINATION INDEMNITY
----------------------------------------
As a material inducement to Lessor to enter into this Lease, Lessee shall
hold the Indemnified Parties harmless from all judgments or claims, and shall
assume the burden and expense of defending all suits, administrative
proceedings, and negotiations of any description with any and all persons,
political subdivisions or government
- 54 -
agencies arising out of any of the occurrences of any Spill or Environmental
Conditions on the Leased Premises which may occur as a result of Lessee's
Operations on the Leased Premises.
By its execution of this Lease, Lessee acknowledges the receipt and
sufficiency of Fifty Dollars ($50.00) paid by Lessor as separate consideration
for all indemnities provided and given by Lessee in this Lease, which sum also
is separate (and sufficient) consideration for all other indemnities provided by
Lessee to Lessor under this Lease, including, without limitation, Lessee's
indemnification of Lessor described in other Sections of this Lease.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 COVENANT OF QUIET ENJOYMENT
--------------------------------------------
So long as Lessee performs and observes all of the covenants and agreements
on its part herein contained, it shall peaceably and quietly have, hold, and
enjoy the Leased Premises during the Lease Term subject to all terms and
provisions hereof, against the lawful claims of all persons or entities claiming
by, through or under Lessor.
SECTION 15.2 COUNTERPARTS
-----------------------------
This Lease may be executed in counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument.
- 55 -
SECTION 15.3 BINDING EFFECT
-------------------------------
This Lease shall inure to the benefit of, and shall be binding upon,
Lessor, Lessee, Guarantor and their respective authorized successors and assigns
as provided for herein.
SECTION 15.4 SEVERABILITY
-----------------------------
In the event any provision of this Lease shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
SECTION 15.5 ARTICLE AND SECTION CAPTIONS
---------------------------------------------
The Article and Section headings and captions contained herein are included
for convenience only and shall not be considered a part hereof or affect in any
manner the construction or interpretation hereof.
SECTION 15.6 ENTIRE AGREEMENT
---------------------------------
This Lease may not be modified, amended or otherwise changed orally, but
may only be modified, amended or otherwise changed by an agreement in writing
signed by both parties. This Lease Agreement and its accompanying guaranty
constitute the entire agreement between the parties and there are no oral or
other agreements between the parties affecting this Lease. This Lease Agreement
supersedes and cancels any and all previous negotiations, arrangements,
agreements, and understandings between the parties hereto with respect to the
subject matter thereof, and no such outside or prior agreements shall be used to
interpret or to construe this Lease. There are no promises, covenants,
representations or inducements in addition to, or at variance with any of the
terms of this Lease Agreement except the Guaranty.
- 56 -
SECTION 15.7 GUARANTY AGREEMENT
-----------------------------------
That certain guaranty of even date signed by Health Management Associates,
Inc., a true and complete copy of which is attached hereto as Exhibit "D", is
given by Guarantor to induce Lessor to execute this Lease.
SECTION 15.8 PLACE OF DELIVERY OF RENT AND NOTICES
------------------------------------------------------
Rent accruing hereunder, as well as all notices, shall be paid or delivered
to Lessor at the address indicated below until Lessee is notified otherwise.
All notices given to Lessee hereunder shall be delivered to Lessee at the
address indicated below until Lessor is notified otherwise.
All notices, to be effective, shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid or by
personal delivery or courier service by which the sending party obtains a
receipt confirming delivery or inability to deliver the notice to the party to
whom the notice was addressed. Any notice required to be given or that may be
given under this Lease shall be deemed to be given upon the date of receipt
thereof, or if delivery is refused, on the date of first attempted delivery
thereof.
Any party designated to receive notice may change its address to any other
place in the United States of America by giving notice of such change of address
to the other party.
- 57 -
If to Lessor: Hernando County Board of
County Commissioners
County Courthouse
00 Xxxxx Xxxx Xxxxxx, Xxxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman
with copy to: R. Xxxxx Xxxx, Esquire
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
If to Lessee: Hernando HMA, Inc.
0000 Xxxxxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
with copy to: 0000 Xxxxxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx, Vice President
and General Counsel
Lessor and Lessee may, by notice given hereunder, designate any further or
different addresses to which subsequent notices or other communications shall be
sent.
SECTION 15.9 RADON GAS
-------------------------
The following disclosure is hereby made by Lessor to Lessee as required by
Florida law:
Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that
exceed Federal and State guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your County Public Health Unit.
SECTION 15.10 LESSOR'S ACCESS TO LEASED PREMISES
----------------------------------------------------
Lessor shall have the right to enter the Leased Premises at reasonable
business hours for the purposes of inspecting the Leased
- 58 -
Premises, and Lessor shall also have the right to make access available at all
reasonable business hours to agents and consultants (or to prospective tenants
of the Leased Premises during the last twelve (12) months of the Lease Term). If
Lessee fails to make necessary repairs to the Leased Premises within applicable
grace periods after notice of the need therefor, Lessor shall also have the
right to enter the Leased Premises for the purpose of making necessary repairs
thereto. In addition, during the last year of the Lease Term the Lessee shall
and does hereby authorize representatives of the Lessor access to the Leased
Premises acting in the capacity of a transition team for the purpose of
familiarizing themselves with the operation, organization and management of the
Hospital Facilities and all furniture, fixtures and equipment utilized in the
operation of the Hospital Facilities. The activities of the transition team
shall be conducted in such a way so as to not interfere with the operation of
the Hospital Facilities.
SECTION 15.11 SURRENDER
---------------------------
All alterations, additions and improvements made during the Lease Term on
the Leased Premises and all additions and/or replacement of tangible personal
property used in the Operations shall remain upon the Leased Premises in the
absence of any agreement to the contrary, and Lessor will accept the Leased
Premises and such tangible personal property in such condition as may be
subsequently improved or, as to personal property, replaced by Lessee after the
commencement of Lessee's Operations on the Leased Premises. Except as expressly
provided in this Lease to the contrary, Lessee shall deliver and surrender to
Lessor possession of the Leased Premises and all tangible and intangible
personal property other than the Excluded Assets at
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the expiration of this Lease, or its earlier termination as herein provided,
broom clean, and in as reasonably good condition and repair as the same shall be
on the date of commencement of Lessee's Operations (or, if applicable, in such
better condition and repair as the Leased Premises may have been put by Lessee
during the continuance of Lessee's Operations), ordinary wear and tear excepted,
together with all tangible personal property and replacement thereof, including
furniture, fixtures, equipment and inventory located thereon. Any and all
tangible personal property that becomes obsolete during the Lease Term may be
discarded without replacement provided that such discarded tangible personal
property is replaced with such other tangible personal property as is necessary
for the continuation of state of the art services being provided at the Hospital
Facilities.
Notwithstanding anything herein to the contrary, at the expiration or
termination of this Lease, the Leased Premises shall be returned to Lessor in
conformity and compliance with all applicable laws, regulations and ordinances;
provided, however, if any laws, regulations or ordinances hereafter enacted
shall prescribe more stringent standards for remediation that those in effect at
the time remediation of an Environmental Condition was effected, Lessee shall
perform all work required to bring the Leased Premises into compliance with such
stricter standards at Lessee's sole cost and expense. If such additional work
is required after the expiration or termination of this Lease, Lessee shall
commence the work within thirty (30) days of Lessor's notice of the need
therefor, and shall complete the work with reasonable diligence thereafter.
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SECTION 15.12 RELATIONSHIP OF PARTIES
-----------------------------------------
Nothing contained herein shall be deemed or construed by the parties
hereto, nor by any third party, as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto, it being
understood and agreed that neither the method of computation of Rent, nor any
other provision contained herein, nor any acts of the parties herein, shall be
deemed to create any relationship between the parties hereto other than the
relationship of landlord and tenant. Whenever the singular number is used in
this Lease, the same shall include the plural, and the neuter gender shall
include the feminine and masculine genders.
SECTION 15.13 BROKER'S COMMISSIONERS
----------------------------------------
Each of the parties represents and warrants that it has dealt with no
broker in the negotiation and consummation of this Lease. Each of the parties
agrees to indemnify the other against all liabilities from any claims for
brokers' commissions or finder's fees asserted against the indemnified party.
SECTION 15.14 INTERPRETATION AND VENUE
------------------------------------------
This Lease shall be construed and interpreted according to the laws of the
State of Florida and venue for enforcement shall be in Hernando County, Florida.
SECTION 15.15 TIME OF THE ESSENCE
-------------------------------------
Time is of the essence in the performance of Lessee's obligations under
this Lease.
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SECTION 15.16 SOVEREIGN IMMUNITY
------------------------------------
The parties hereto acknowledge that by virtue of Lessor signing this Lease
Agreement which contains specific indemnity rights from Lessee that Lessor has
not waived its right of sovereign immunity as to any tort claim that may or may
not exist against Lessor by virtue of any act by or failure to act of Lessor.
SECTION 15.17 CERTIFICATION
-------------------------------
On each and every Anniversary Date of the Lease, the Lessee shall deliver
to Lessor a Certificate ratifying to Lessor the compliance (the "Certificate of
Compliance") by Lessee of all of the material covenants, representations and
warranties of Lessee as set forth in this Lease. The Certification of
Compliance shall be delivered on or before thirty (30) days after the expiration
of each anniversary date of the Lease.
The Lessee shall also provide to the Lessor, ninety (90) days after the
close of each fiscal year of the Lessee, a report setting forth the status of
all material covenants, representations, terms, conditions, and warranties under
this Lease, which report shall contain such information as may be reasonable and
necessary in order to enable Lessor to confirm Lessee's compliance with all of
the material terms, conditions, covenants, representations, and warranties set
forth in this Lease, including but not limited to indigent care, equipment
inventory, financial reports of the Hospital Facilities, insurance coverage, and
compliance with licensure and accreditation provisions.
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SECTION 15.18 INDUCEMENT
----------------------------
The parties acknowledge and agree that Lessor would not enter into this
Lease if the Rent described in this Lease were not absolutely net to Lessor or
if full service acute hospital care will not be available in Hernando County or
if Lessor were to incur any liability whatsoever, foreseen or unforeseen, as a
result of Lessee's exercise of any of its rights under this Lease. Accordingly,
anything herein to the contrary notwithstanding, Lessee expressly covenants and
agrees to pay all expenses, costs, fees and charges of any nature whatsoever
arising in connection with or attributable to the Leased Premises or this Lease,
and, to assure Lessee's performance, Lessee's parent, Health Management
Associates, has delivered its guaranty of payment and performance of Lessee's
obligations simultaneously with Lessee's execution of this Lease.
SECTION 15.19 MEMORANDUM OF LEASE
-------------------------------------
The parties hereto agree that a Memorandum of Lease in the form attached
hereto as Exhibit "E" shall be placed of record among the public records of
Hernando County, Florida.
SECTION 15.20 FURTHER ASSURANCE
-----------------------------------
The parties hereto shall perform with all due diligence all acts,
applications, authorizations, assignments, transfers, and consents as necessary
or appropriate to the fulfillment of the provisions of this Lease Agreement, and
will cooperate with each other and execute any and all documents required under
this Lease Agreement or that are incident thereto.
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IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be duly
executed as of the day and year first above written.
HERNANDO COUNTY, FLORIDA, a political
subdivision of the State of Florida
By:/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------
Chairman of the Board of County Commissioners
HERNANDO HMA, INC., a Florida
corporation
By:/s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------------
Title: Vice Chairman
------------------------------
STATE OF FLORIDA
COUNTY OF ____________
The foregoing instrument was acknowledged before me this ____ day of
__________________ , 1997, by ______________________________________________
_______________ and ____________________________________ as Chairman and Clerk,
respectively of the Board of County Commissioners of HERNANDO COUNTY, FLORIDA, a
political subdivision of the State of Florida, on behalf of the _____________ ,
who is personally known to me or has produced (state) driver's license no.
______________________ as identification.
My Commission Expires: ___________________________________
Notary Public (Signature)
(AFFIX NOTARY SEAL) ___________________________________
(Printed Name)
___________________________________
(Title or Rank)
___________________________________
(Serial Number, if any)
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